1
JOINT BIDDING AGREEMENT
This Joint Bidding Agreement ("Agreement") is made as of this 14th day
of July 1997, by and among Chancellor Broadcasting Company, a Delaware
corporation ("Chancellor"), Evergreen Media Corporation, a Delaware corporation
("Evergreen"), HM2/Chancellor, L.P., a Delaware limited partnership ("Xxxxx
Muse"), and Xxxxxx Acquisition Corporation, a Delaware corporation ("Merger
Sub").
RECITALS:
A. Chancellor, Chancellor Radio Broadcasting Company, a
Delaware corporation and a subsidiary of Chancellor ("CRBC"), and Evergreen
have entered into an Agreement and Plan of Merger dated as of February 19, 1997
(as amended from time to time, the "Chancellor Merger Agreement"), pursuant to
which, as presently contemplated to be amended, Chancellor and CRBC will each
be merged with and into a direct and indirect subsidiary, respectively, of
Evergreen (collectively, the "Chancellor Merger").
B. Evergreen and Chancellor have entered into an Agreement
and Plan of Merger dated as of July 14, 1997 (the "Merger Agreement") by and
among Evergreen, Chancellor, Merger Sub, which is owned 100% by Evergreen, and
Xxxx Media Group, Inc., a Delaware corporation ("Target"), pursuant to which
Merger Sub will commence an offer to purchase for cash all of the issued and
outstanding shares of common stock, par value $.01 per share ("Target Common
Stock"), of Target at a price of $11.00 per share in cash, subject to the terms
and conditions contained in the Merger Agreement (the "Offer"), to be followed
by a merger of Merger Sub with and into Target, with Target surviving the
merger (the "Merger").
C. The parties have reached certain understandings and
agreements regarding the Offer and the Merger, including without limitation the
sharing of certain of the risks and benefits related thereto and the ownership
and operation of Merger Sub, in the event the Offer is consummated prior to the
consummation of the Chancellor Merger.
NOW, THEREFORE, in consideration of the foregoing premises, and
in further consideration of the mutual agreements herein contained, the parties
agree as follows:
2
1. DEFINED TERMS. Capitalized terms used herein and not otherwise
defined shall have the meanings given such terms in the Merger Agreement. For
the purposes of this Agreement, the following terms shall have the meanings set
forth below:
(a) "Base Amount" shall mean an amount equal to the sum of the
Evergreen Funded Amount plus the Bridge Fee, plus an additional amount equal to
the Equity Funding Rate on the sum of the foregoing amounts and accruing from
the Equity Contribution Date (as defined in Section 3(a) hereof) to, but not
including, the date of exercise of the Options pursuant to Section 3(b)
hereof.
(b) "Bridge Fee" shall mean an amount equal to 1% of the Evergreen
Funded Amount.
(c) "Common Equity" shall mean the Voting Common Stock and the Non-
Voting Common Stock.
(d) "Common Stock" shall mean the common stock, par value $0.01 per
share, of Merger Sub, and any voting common equity securities of Intermediate
Sub (as defined in Exhibit A) should it be formed.
(e) "Evergreen Funded Amount" shall mean an amount equal to 30% of
the Equity Contribution Amount (as defined in Section 3(a) hereof).
(f) "Equity Funding Rate" shall mean the weighted average cost of
funds under the revolving credit component of the Senior Credit Facility of
Evergreen Media Corporation of Los Angeles during the period(s) as to which
such rate is calculated.
(g) "Non-Voting Common Stock" shall mean non-voting common stock, par
value $.01 per share, of Merger Sub, and any non-voting common equity
securities of Intermediate Sub should it be formed.
2. TERM. This Agreement shall automatically terminate, without
further action by the parties hereto, upon consummation of the Chancellor
Merger.
3. INITIAL EQUITY CONTRIBUTION; OPTION
(a) Immediately prior to Merger Sub's acceptance for payment of the
shares of Target Common Stock pursuant to the Offer, Evergreen and Chancellor
shall contribute to Merger Sub (the "Equity Contribution") an aggregate amount
which, together with any
2
3
indebtedness to be incurred by Merger Sub to finance the Offer and the Merger,
is sufficient to fund the aggregate amount required to be paid by Merger Sub to
pursuant to the Offer and the Merger plus an additional $20 million (the
"Equity Contribution Amount"), excluding the payment of any Transaction Fees
and Expenses (as defined in Section 3(b) below). The Equity Contribution Amount
shall be paid in cash and shall be made 80% by Evergreen and 20% by Chancellor.
In exchange for Chancellor's equity contribution, Chancellor shall issue such
number of shares of Non-Voting Common Stock which represents 20% of the issued
and outstanding Common Equity.
(b) Chancellor and Evergreen shall each pay (or reimburse to the
other) one-half of all fees and expenses paid or payable by Evergreen,
Chancellor and Merger Sub in connection with the transactions contemplated by
the Merger Agreement, including, without limitation, fees and expenses incurred
by any of them in connection with the HSR Act and reasonable fees and expenses
of attorneys, accountants, investment banking firms and other advisors and
representatives; provided that the financial advisory fee payable by Chancellor
as provided in Section 9(d) hereof shall be borne by Chancellor ("Transaction
Fees and Expenses") and shall be the only fee payable to HM2 (as hereinafter
defined) or its affiliates in connection with the Offer and the Merger.
(c) Evergreen, Chancellor and Merger Sub agree that (i) any amounts
to be received by them or Merger Sub pursuant to Section 10.3 of the Merger
Agreement shall be shared one-half by Evergreen and one-half by Chancellor
(after deducting the portion of any such amounts required to be shared with
Xxxxx Xxxxxx Inc. pursuant to the engagement letters between Evergreen and
Chancellor, and Xxxxx Xxxxxx Inc., respectively, each dated July 7, 1997);
provided that any such amounts which represent the reimbursement of any
Transaction Fees and Expenses incurred by either Chancellor or Evergreen shall
be allocated to the party that actually incurred such expenses (to the extent
such party had not previously been reimbursed for such expenses pursuant to
Section 3(b) hereof or otherwise).
(d) Evergreen hereby agrees (i) to sell, at Chancellor's election,
such number of shares of Common Stock which would give Chancellor, together
with such other shares of Common Stock owned by Chancellor, 49.9% of the issued
and outstanding Common Equity (the "Chancellor Purchase Right") and (ii) to
sell, at Xxxxx Muse's election, such number of shares of Common Stock which
would give Xxxxx Muse 0.1% of the issued and outstanding Common Equity (the
"Xxxxx Muse Purchase Right" and, together with the Chancellor Purchase Right,
the "Purchase Rights"). The exercise price payable upon exercise of the
Purchase Rights shall be the product of (A) 99.67% multiplied by the Base
Amount, in the case of the Chancellor Purchase Right, and (B) 0.33% multiplied
by the Base Amount, in the case of the Xxxxx Muse Purchase Right (the "Purchase
Price"). The Chancellor Purchase
3
4
Right and the Xxxxx Muse Purchase Right may not be exercised separately.
Subject to any requisite filing and related early termination or expiration of
the waiting period under the HSR Act, the Purchase Rights are exercisable in
full by Chancellor and Xxxxx Muse at any time within 120 days after the date
the Chancellor Merger Agreement is terminated (the "Expiration Date") upon not
less than three business days prior written notice to Evergreen, which notice
shall be a joint notice from Chancellor and Xxxxx Muse and shall specify the
effective date of the proposed purchase. The Purchase Price payable upon
exercise of the Purchase Rights shall be made by wire transfer of immediately
available funds on the purchase date to such account as Evergreen shall
designate at least one business day prior to the purchase date. Upon the
payment of the Purchase Prices, all Non-Voting Common Stock held by Chancellor
shall automatically convert to Common Stock.
(e) In the event the Options are not exercised on or prior to the
Expiration Date, Evergreen shall have the option, within 90 days following the
Expiration Date, to purchase from Chancellor, for an aggregate amount equal to
the amount of the Equity Contribution made by Chancellor, the shares of Common
Stock issued to Chancellor in connection with such Equity Contribution.
4. TAKING OF CERTAIN ACTIONS.
(a) Pursuant to their respective rights under the Merger Agreement,
Evergreen and Chancellor shall jointly control the defense of any action, suit,
or proceeding initiated by Target in connection with the Merger Agreement, and
neither party shall consent to the settlement or compromise of such action
without the prior written consent of the other (not to be unreasonably withheld
or delayed). All losses, costs, expenses and damages (collectively, "Losses"),
if any, required to be paid by Evergreen, Chancellor or Merger Sub shall be
shared equally by Chancellor and Evergreen and reimbursed to the other, as
appropriate. In furtherance of the foregoing, Chancellor and Evergreen shall
each indemnify and hold harmless the other from and against any and all Losses
related to or arising in any manner out of the Merger or the Offer to the
extent necessary to cause each of Chancellor and Evergreen to share such Losses
equally. Notwithstanding the foregoing, neither Evergreen nor Chancellor shall
be liable to the other party in respect of any Losses that resulted solely from
the gross negligence or wilful misconduct of such other party.
(b) Pursuant to their respective rights under the Merger Agreement,
Evergreen and Chancellor shall jointly control any action, suit, or proceeding
initiated by or on behalf of Chancellor, Evergreen or Merger Sub against Target
in connection with the Merger Agreement to recover any Losses incurred by
Chancellor, Evergreen or Merger Sub as a result of the termination or breach of
the Merger Agreement. Any amounts recovered by
4
5
Merger Sub in any such action shall be shared one-half by Chancellor and one-
half by Evergreen; provided that any such amounts which represent the
reimbursement of any Transaction Fees and Expenses incurred by either
Chancellor or Evergreen shall be allocated to the party that actually incurred
such expenses (to the extent such party had not previously been reimbursed for
such expenses pursuant to Section 3(b) hereof or otherwise). All costs of
prosecuting any such action, suit or proceeding shall be borne equally by
Chancellor and Evergreen.
(c) Without the prior written consent of Chancellor (not to be
unreasonably withheld or delayed), Evergreen agrees that it will not, and that
it will cause Merger Sub not to, enter into any amendments, modifications or
supplements to the Merger Agreement.
(d) The parties shall cooperate in the prompt preparation, filing and
prosecution of applications for HSR Act clearance for the consummation of the
Offer and the Merger and the other transactions contemplated hereby and the
Merger Agreement, and any other consents that are necessary to effect the
transactions contemplated by the Merger Agreement and this Agreement
(collectively, the "Applicable Consents").
5. REPRESENTATIONS AND WARRANTIES.
(a) Chancellor represents and warrants to Evergreen as follows:
(i) Chancellor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to enter into this Agreement and
consummate the transactions contemplated hereby to be consummated by it. The
execution and delivery by Chancellor of this Agreement and the consummation by
it of the transactions contemplated hereby to be consummated by it have been
duly authorized by all necessary corporate action on the part of Chancellor.
This Agreement has been duly executed and delivered by Chancellor and, assuming
the due execution and delivery of this Agreement by Evergreen, constitutes a
valid and binding obligation, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by Chancellor
does not, and the performance by Chancellor of the transactions contemplated
hereby to be performed by it will not (A) conflict with the certificate of
incorporation or bylaws of Chancellor, (B) subject to obtaining the requisite
consent, if any, of the lenders party to Chancellor's and
5
6
CRBC's credit facilities, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a benefit under, any material contract or permit,
order, judgment or decree to which Chancellor is a party or by which it is
bound, or (C) subject to obtaining the Applicable Consents, constitute a
violation of any law or regulation applicable to Chancellor.
(iii) The shares of Common Stock to be acquired by Chancellor
pursuant to this Agreement are being acquired for its own account for
investment purposes and without a view to distribution of such shares in
violation of the Securities Act of 1933.
(b) Evergreen represents and warrants to Chancellor as follows:
(i) Evergreen is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to enter into this Agreement and
consummate the transactions contemplated hereby to be consummated by it. The
execution and delivery by Evergreen of this Agreement and the consummation by
it of the transactions contemplated hereby to be consummated by it have been
duly authorized by all necessary corporate action on the part of Evergreen.
This Agreement has been duly executed and delivered by Evergreen and, assuming
the due execution and delivery of this Agreement by Chancellor, constitutes a
valid and binding obligation, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by Evergreen
does not, and the performance by Evergreen of the transactions contemplated
hereby to be performed by it will not (A) conflict with the certificate of
incorporation or bylaws of Evergreen, (B) conflict with, or result in any
violation of, or constitute a default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, any material
contract or permit, order, judgment or decree to which Evergreen is a party or
by which it is bound, or (C) subject to obtaining the Applicable Consents,
constitute a violation of any law or regulation applicable to Evergreen.
(iii) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $.01 per share, of which 800 shares
were issued and outstanding and held beneficially and of record by Evergreen,
free and clear of all pledges, claims, liens,
6
7
charges, encumbrances and security interests of any kind or nature whatsoever.
Except as provided in the previous sentence, no shares of capital stock or
securities of Merger Sub are authorized, issued, reserved for issuance or
outstanding. Except for this Agreement, no person or entity has any outstanding
options, warrants, subscription or other rights, agreements or commitments that
either obligates Evergreen or Merger Sub to issue, sell, or transfer or
otherwise acquire or vote any shares of capital stock of Merger Sub.
6. EXECUTION OF STOCKHOLDERS AGREEMENT. On the Equity Contribution
Date, Chancellor, Xxxxx Muse and Evergreen shall enter into a stockholders
agreement containing terms consistent with those set forth on the term sheet
attached hereto as Exhibit A. The parties hereto shall promptly commence to
negotiate in good faith the definitive form of such stockholders agreement,
with a final form to be agreed upon prior to the Equity Contribution Date (the
"Stockholders Agreement").
7. TAX SHARING AGREEMENT/TAX INDEMNITY. The parties hereto
acknowledge that Merger Sub, Target, and their respective subsidiaries will
become members of the affiliated group (as defined in Section 1504(a) of the
Internal Revenue Code of 1986, as amended) of which Evergreen is the common
parent, and such affiliated group will file a consolidated federal income tax
return. Accordingly, the parties hereto agree to negotiate in good faith tax
sharing and other equitable agreements concerning such relationship prior to
the Equity Contribution Date.
8. MISCELLANEOUS.
(a) Any general notices, releases, statements or communications to
the general public or the press relating to this Agreement or the Merger
Agreement and the transactions contemplated hereby and thereby shall be made
only at such times and in such manner as may be mutually agreed upon by
Evergreen and Chancellor; provided that the parties hereto shall be entitled to
issue such press releases and to make such public statements as are required by
applicable law, in which case the other party shall be advised thereof and the
parties shall use their reasonable efforts to cause a mutually agreeable
release or announcement to be issued. Once information has been made available
to the general public in accordance with this Agreement, this Section 8(a)
shall no longer apply to such information.
(b) Any notices or other correspondence delivered pursuant to this
Agreement shall be delivered in accordance with the terms of the Merger
Agreement and to the respective addresses of the parties hereto set forth in
the Merger Agreement.
7
8
(c) No party hereto shall take any action which is materially
inconsistent with its obligations under this Agreement without the prior
written consent of the other parties hereto.
(d) Prior to the Equity Contribution Date, Chancellor, Evergreen, and
Merger Sub will take such action as is necessary to authorize for issuance the
shares of Non-Voting Common Stock to be issued pursuant to Section 3(a) hereof.
Such Non-Voting Common Stock shall be identical in all respects to the Common
Stock, except that it will not have the right to vote. The shares of Non-
Voting Common Stock to be issued to Chancellor the Chancellor Acquiring Entity
pursuant hereto will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights.
(e) In lieu of the fees that might be payable pursuant to the
Financial Advisory Agreement among Chancellor, CRBC and HM2/Management
Partners, L.P. ("HM2"), Evergreen acknowledges that HM2 shall be entitled to
financial advisory fees equal to $1,500,000, payable upon consummation of the
Offer (which amount is in addition to any amounts payable under the Financial
Advisory Agreement as a result of the consummation of the Chancellor Merger).
In the event that the Chancellor Merger is consummated prior to the
consummation of the Offer, Evergreen hereby consents to and agrees that the
termination of the Financial Advisory Agreement upon the consummation of the
Chancellor Merger shall be expressly contingent upon the receipt by HM2, if and
at the time of consummation of the Offer, of all fees under such Financial
Advisory Agreement for which HM2 is entitled upon the consummation of the Offer
as if the Offer had been consummated prior to the Chancellor Merger.
(f) This Agreement will be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns, but,
except as provided in the next sentence hereof, will not be assignable or
delegable by any party hereto without the prior written consent of the other
parties (which consent shall not be unreasonably withheld). The Xxxxx Muse
Purchase Right shall be assignable to Chancellor or any direct or indirect
subsidiary of Chancellor or any other Affiliate of Xxxxx Muse without the prior
written consent of Evergreen. In addition, notwithstanding anything to the
contrary contained herein, Evergreen shall have the right to transfer up to
0.1% of the Common Stock and, in connection therewith, to assign to such
transferee, on a pro rata basis (0.1%), Evergreen's rights and obligations
under this Agreement. Nothing expressed or implied in this Agreement is
intended or will be construed to confer upon or give any person or entity other
8
9
than the parties hereto any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.
(g) This Agreement, including without limitation, the interpretation,
construction and validity hereof, shall be governed by the Laws of the State of
New York without regard to principles of conflicts of laws.
(h) This Agreement may be executed in two or more counterparts, each
of which will be deemed an original, but all of which together with constitute
one and the same agreement.
9
10
IN WITNESS WHEREOF, the parties hereto executed this Agreement as of the
day and year first above written.
CHANCELLOR BROADCASTING COMPANY
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EVERGREEN MEDIA CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
HM2/CHANCELLOR, L.P.
By: HM2 GP/CHANCELLOR, L.P.,
its general partner
By: XXXXX, XXXX XX PARTNERS,
L.P., its general partner
By: XXXXX, MUSE & CO.
INCORPORATED, its general
partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
XXXXXX ACQUISITION CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
10
11
Exhibit A
Stockholders Agreement Term Sheet
1. Parties. Chancellor, Evergreen, and Merger Sub (which will be replaced
by an intermediate holding company ("Intermediate Sub") to which the
parties will contribute their interests in Target following the later of
(i) the Merger and (ii) termination of the Chancellor Merger Agreement).
2. CEO. The Chief Executive Officer of Intermediate Sub and Merger Sub
shall be Xxxxx X. Xxxxxxxx, who shall not be removed prior to the
exercise of the Purchase Rights except by the vote of 3/4 of the entire
board of directors. Upon exercise of the Purchase Rights, Xxxxx X.
Xxxxxxxx will resign as Chief Executive Officer and Chancellor and
Evergreen shall take such action within their power to remove Xxxxx X.
Xxxxxxxx as Chief Executive Officer).
3. Election of Directors. Subsequent to the Merger and prior to the date
the Purchase Rights are exercised, Chancellor have the right to have 1
designee present at all meetings of the Board of Directors of
Intermediate Sub (the "Board of Directors"). Following exercise of the
Purchase Rights, the Board of Directors shall consist of an even number
of directors (not less than four and not more than eight), with
Chancellor entitled to elect one-half of such directors and Evergreen
entitled to elect one-half of such directors. Any vacancy created by the
removal or resignation of any director will be filled by the stockholder
that elected such director.
4. Required Board Approvals. Except as required by paragraph 2, all matters
requiring Board of Director approval shall be decided by the affirmative
vote of a majority of the total number of directors then serving.
5. Super-Majority Provisions. Prior to the exercise of the Purchase Rights,
the consent or vote of 100% (reduced by any shares transferred by
Chancellor) of the outstanding Common Equity shall be required for
Merger Sub to do any of the following: (i) directly or indirectly
through any subsidiaries acquire, by way of merger, purchase of stock or
assets, or otherwise, any business other than the business conducted by
Target and its subsidiaries on the Equity Contribution Date; (ii) except
for the transactions contemplated hereunder, directly or indirectly
through any subsidiaries engage in transaction or series of transactions
with any Affiliates (other than pursuant to representation agreements
existing at or prior to the date of the Merger or entered into
consistent with the terms of such pre-existing representation
12
agreements); (iii) amend its certificate of incorporation or bylaws;
(iv) directly or indirectly through any subsidiaries sell all or
substantially all of its assets; or (iv) dissolve or liquidate.
6. Deadlock. After exercise of the Purchase Rights, if the Board of
Directors are deadlocked on any matter that comes before the Board of
Directors for a vote, Chancellor and Evergreen agree to use good faith
efforts to resolve such deadlocks within thirty days after such deadlock
occurs. If such deadlock is not resolved within such thirty day period,
then on the first day after such thirty day period and for a period of
ten business days thereafter, either party ("Offeror") may deliver a
notice to the other party ("Offeree") setting forth a price per share at
which Offeror proposes to purchase all of the shares of common stock of
Merger Sub (or the Intermediate Sub) owned by Offeree. Within twenty
business days after Offeree's receipt of such notice, Offeree shall
respond to Offeror, which response either (i) accepts the offer
contained in Offeror's notice or (ii) offers to purchase all of the
shares of common stock of Merger Sub owned by the Offeror at the price
per share specified in Offeror's notice. If Offeree fails to respond to
Offeror's notice during such twenty business day period, Offeree shall
be deemed to have accepted the offer contained in Offeror's notice.
7. Right of First Refusal/Tag Along Rights. If Chancellor or Evergreen or
Xxxxx Muse desires to sell any of its shares of Common Stock pursuant to
a bona fide offer, such selling stockholder will first be required to
offer to sell such shares to the other stockholder on the same terms and
conditions as those contained in the offer. If the other stockholder
declines to exercise its right of first refusal, such stockholder will
have the right to tag-along, on a pro rata basis, in such sales of
Common Stock, and the number of shares to be sold by the selling
stockholder shall be reduced accordingly.
8. Transfers Subject to Agreement. No sale, transfer or other disposition
of shares of Common Stock of Merger Sub shall be effective unless the
transferee shall agree to be bound by the provisions of the Stockholders
Agreement and the Joint Bidding Agreement applicable to the transferor
of such shares.
9. Termination. The Stockholders Agreement will terminate upon the earlier
to occur of (a) the consummation of the transactions contemplated by the
Agreement and Plan of Merger dated as of February 19, 1997, as amended,
among Chancellor, Evergreen, and Chancellor Radio Broadcasting Company
or (b) the tenth anniversary of the Stockholders Agreement.
