<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
EVERGREEN MEDIA CORPORATION
(Exact name of registrant as specified in its charter)
---------------------
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<S> <C> <C>
DELAWARE 4832 75-2247099
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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<TABLE>
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SCOTT K. GINSBURG
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
433 EAST LAS COLINAS BOULEVARD 433 EAST LAS COLINAS BOULEVARD
IRVING, TEXAS 75039 IRVING, TEXAS 75039
(972) 869-9020 (972) 869-9020
(Address, including zip code, and telephone number, (Name, address, including zip code, telephone
including area code, of registrant's principal
executive offices) number, including area code, of agent for service)
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Copies to
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JOHN D. WATSON, JR., ESQ. JEREMY W. DICKENS, ESQ.
LATHAM & WATKINS WEIL, GOTSHAL & MANGES LLP
1001 PENNSYLVANIA AVENUE, N.W. 100 CRESCENT COURT, SUITE 1300
WASHINGTON, D.C. 20004-2505 DALLAS, TEXAS 75201
(202) 637-2200 (214) 746-7720
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and all
other conditions to the Merger (as defined herein) of Chancellor Broadcasting
Corporation with and into Evergreen Mezzanine Holdings Corporation and
Chancellor Radio Broadcasting Company with and into Evergreen Media Corporation
of Los Angeles pursuant to the Merger Agreement (as defined herein), described
in the accompanying Joint Proxy Statement/Prospectus have been satisfied or
waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SHARES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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Common Stock, $.01 par value.............. 17,315,289 shares $37.88 $655,903,147.30 $198,758.53
- ------------------------------------------------------------------------------------------------------------------------------
7% Convertible Preferred Stock, $.01 par
value................................... 2,200,000 shares $50.00 $110,000,000.00 $ 33,333.50
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value.............. 3,039,544 shares(3) $-- $-- $-- (3)
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(1) Based upon the assumed number of shares that may be issued in the merger
described herein. Such assumed number is based upon the maximum number of
shares of Common Stock that is currently expected to be issued in the Merger
to holders of Chancellor Common Stock, as well as an additional 50,000
shares of Common Stock that may be issued to persons that may exercise
options to acquire shares of Chancellor Class A Common Stock between the
date hereof and the Effective Time. As of July 28, 1997, 10,443,719 shares
of Chancellor Class A Common Stock were issued and outstanding, and
8,547,910 shares of Chancellor Class B Common Stock were issued and
outstanding. Holders of such shares will, upon consummation of the Merger,
receive 0.9091 shares of Common Stock for each share of Chancellor Class A
Common Stock and Class B Common Stock held by such person. Accordingly,
based on the number of shares of Chancellor Class A Common Stock and
Chancellor Class B Common Stock outstanding as of July 28, 1997, 17,265,289
shares of Common Stock will be issued to such persons.
(2) Estimated solely for purpose of computing the registration fee. The proposed
maximum offering price per share for the Common Stock, calculated in
accordance with Rule 457(f)(1), is $37.88, which represents the average of
the high and low prices reported on July 25, 1997 for shares of Chancellor
Class A Common Stock on The Nasdaq Stock Market. The proposed maximum
offering price per share for the 7% Convertible Preferred Stock, calculated
in accordance with Rule 457(f)(2), is $50.00, which represents the
liquidation preference for each such share. The total registration fee of
$232,092.03 is offset, under Rule 457(b) of the Securities Act, against the
fee of $111,250.43 previously paid in connection with the filing on June 5,
1997 of preliminary proxy materials relating to the Merger.
(3) Represents shares of Common Stock issuable upon conversion of the 7%
Convertible Preferred Stock from time to time. Pursuant to Rule 457(i) of
the Securities Act, no registration fee is required with respect to such
shares of Common Stock as no separate consideration will be received for the
shares of Common Stock issuable upon conversion of the 7% Convertible
Preferred Stock. Based upon the current conversion price of $36.19 per share
of 7% Convertible Preferred Stock, which is subject to adjustment in certain
circumstances, a maximum of 3,039,544 shares of Common Stock may be issued
upon conversion of the 7% Convertible Preferred Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
JOINT PROXY STATEMENT/PROSPECTUS
EVERGREEN MEDIA CORPORATION
CHANCELLOR BROADCASTING COMPANY
JOINT PROXY STATEMENT
---------------------
EVERGREEN MEDIA CORPORATION
PROSPECTUS
SHARES OF COMMON STOCK
SHARES OF 7% CONVERTIBLE PREFERRED STOCK
---------------------
This Joint Proxy Statement/Prospectus relates to the proposed merger (the
"Parent Merger") of Chancellor Broadcasting Corporation, a Delaware corporation
("Chancellor"), with and into Evergreen Mezzanine Holdings Corporation, a
Delaware corporation ("EMHC") and a direct, wholly owned subsidiary of Evergreen
Media Corporation, a Delaware corporation ("Evergreen"), and the related
proposed merger (the "Subsidiary Merger" and, together with the Parent Merger,
the "Merger") of Chancellor Radio Broadcasting Company, a Delaware corporation
and a direct subsidiary of Chancellor ("CRBC"), with and into Evergreen Media
Corporation of Los Angeles, a Delaware corporation and a direct, wholly owned
subsidiary of EMHC ("EMCLA"), pursuant to the Agreement and Plan of Merger dated
as of February 19, 1997, as amended and restated (the "Merger Agreement"), among
Chancellor, CRBC, Evergreen, EMHC and EMCLA. This Joint Proxy
Statement/Prospectus also is being delivered to holders of shares of 7%
Convertible Preferred Stock of Chancellor in connection with each such holder's
decision whether to exercise appraisal rights pursuant to Section 262 of the
Delaware General Corporation Law in connection with the Merger. Upon
consummation of the Merger, Evergreen will be renamed Chancellor Media
Corporation, EMHC will be renamed Chancellor Mezzanine Holdings Corporation and
EMCLA will be renamed Chancellor Media Corporation of Los Angeles. Evergreen is
also referred to herein as the "Surviving Corporation," EMHC, as the corporation
surviving the Parent Merger, is also referred to herein as the "Surviving
Mezzanine Corporation" and EMCLA, as the corporation surviving the Subsidiary
Merger, is also referred to herein as the "Surviving Subsidiary Corporation." If
the Merger is consummated, (i) each share of Evergreen Class A Common Stock and
Evergreen Class B Common Stock (collectively, "Evergreen Common Stock")
outstanding immediately prior to the Effective Time (as defined in the Merger
Agreement) will be reclassified, changed and converted into one share of Common
Stock of the Surviving Corporation ("Surviving Corporation Common Stock"), (ii)
each share of $3.00 Convertible Exchangeable Preferred Stock of Evergreen
outstanding immediately prior to the Effective Time ("Evergreen $3.00
Convertible Preferred Stock") will remain outstanding as one share of $3.00
Convertible Exchangeable Preferred Stock of the Surviving Corporation, (iii)
each share (other than treasury shares, which will be cancelled as a result of
the Merger) of Chancellor Class A Common Stock and Chancellor Class B Common
Stock outstanding immediately prior to the Effective Time (collectively,
"Chancellor Common Stock") will be converted into the right to receive 0.9091
shares (the "Exchange Ratio") of Surviving Corporation Common Stock, (iv) each
share of 7% Convertible Preferred Stock of Chancellor outstanding immediately
prior to the Effective Time ("Chancellor Parent Convertible Preferred Stock"),
other than shares of the Chancellor Parent Convertible Preferred Stock for which
appraisal rights have been exercised pursuant to Section 262 ("Section 262") of
the Delaware General Corporation Law (the "DGCL"), will be converted into the
right to receive one share of preferred stock of the Surviving Corporation
having substantially identical powers, preferences and relative rights as the
Chancellor Parent Convertible Preferred Stock (the "Surviving Corporation 7%
Convertible Preferred Stock"), (v) each share of EMHC Common Stock outstanding
immediately prior to the Effective Time will remain outstanding as one share of
Common Stock of the Surviving Mezzanine Corporation, (vi) each share of EMCLA
Common Stock outstanding immediately prior to the Subsidiary Merger Effective
Time (as defined in the Merger Agreement) will remain outstanding as one share
of Common Stock of the Subsidiary Surviving Corporation, (vii) each share of
CRBC Common
(Continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 23 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE MERGER.
This Joint Proxy Statement/Prospectus, the accompanying forms of proxy and
the other enclosed documents are first being mailed to stockholders of Evergreen
and Chancellor on or about August 4, 1997.
THE SHARES OF SURVIVING CORPORATION COMMON STOCK AND SURVIVING CORPORATION 7%
CONVERTIBLE PREFERRED STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Joint Proxy Statement/Prospectus is August 1, 1997.
<PAGE> 3
Stock outstanding immediately prior to the Subsidiary Merger Effective Time will
be cancelled, (viii) each share of 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock of CRBC outstanding immediately prior to the
Subsidiary Merger Effective Time (the "CRBC Series A Preferred Stock"), other
than shares of CRBC Series A Preferred Stock for which appraisal rights have
been exercised pursuant to Section 262, will be converted into the right to
receive one share of preferred stock of the Subsidiary Surviving Corporation
having substantially identical powers, preferences and relative rights as the
CRBC Series A Preferred Stock (the "Surviving Subsidiary Series A Preferred
Stock") and (ix) each share of 12% Exchangeable Preferred Stock of CRBC
outstanding immediately prior to the Subsidiary Merger Effective Time (the "CRBC
Junior Preferred Stock"), other than shares of CRBC Junior Preferred Stock for
which appraisal rights have been exercised pursuant to Section 262, will be
converted into the right to receive one share of preferred stock of the
Subsidiary Surviving Corporation having substantially identical powers,
preferences and relative rights as the CRBC Junior Preferred Stock (the
"Surviving Subsidiary Junior Preferred Stock"). The transaction is subject to
various conditions, including approval by the stockholders of Chancellor at
their Special Meeting (the "Chancellor Special Meeting") and approval by the
stockholders of Evergreen at their Annual Meeting (the "Evergreen Annual
Meeting"), described herein. In connection with the execution of the Merger
Agreement, certain stockholders of Chancellor and Evergreen entered into a
stockholders agreement (the "Stockholders Agreement") pursuant to which such
stockholders agreed, among other things, to vote all shares of capital stock of
Chancellor and Evergreen held by such parties in favor of the transactions
contemplated by the Merger Agreement. Such stockholders control approximately
90.3% of the combined voting power of the Chancellor Common Stock and
approximately 44.3% of the combined voting power of the Evergreen Common Stock.
See "The Stockholders Agreement."
Holders of outstanding shares of Evergreen Class A Common Stock are
currently entitled to one vote per share on all matters presented for a vote of
stockholders, while holders of outstanding shares of Evergreen Class B Common
Stock are, subject to certain limited exceptions, entitled to ten votes per
share on all matters presented for a vote of stockholders. Holders of
outstanding shares of Chancellor Class A Common Stock are currently entitled to
one vote per share on all matters presented for a vote of Chancellor
stockholders, while holders of outstanding shares of Chancellor Class B Common
Stock are, subject to certain limited exceptions, currently entitled to ten
votes per share on all matters presented for a vote of Chancellor stockholders.
If the Merger is consummated, holders of outstanding shares of Surviving
Corporation Common Stock will be entitled to one vote per share on all matters
presented for a vote of stockholders.
This Joint Proxy Statement/Prospectus constitutes the proxy statement of
Evergreen to solicit proxies from its stockholders for use at the Evergreen
Annual Meeting scheduled for September 3, 1997. At that meeting, stockholders of
Evergreen eligible to vote will be asked to consider and vote on a proposal to
approve (i) the Merger Agreement, (ii) the approval of the issuance of 0.9091
shares of Surviving Corporation Common Stock to Chancellor stockholders for each
share of Chancellor Common Stock outstanding immediately prior to the
consummation of the Merger pursuant to the Merger Agreement, (iii) the approval
of the assumption by Evergreen of currently outstanding options to purchase
shares of Chancellor Class A Common Stock held by certain officers, directors,
employees and consultants of Chancellor and its subsidiaries and (iv) the
amendment and restatement of the Amended and Restated Certificate of
Incorporation of Evergreen (the "Evergreen Certificate"). The foregoing proposal
is referred to as the "Evergreen Merger Proposal." Based on the number of shares
of Chancellor Common Stock and options to purchase shares of Chancellor Class A
Common Stock outstanding on July 28, 1997, Evergreen currently expects to issue
17,265,289 shares of Surviving Corporation Common Stock to holders of Chancellor
Common Stock and to assume options to purchase 1,989,543 shares of Chancellor
Class A Common Stock. In addition, stockholders of Evergreen eligible to vote
will be asked to consider and vote upon a proposal to elect eight directors to
the Evergreen Board of Directors (the "Evergreen Board").
This Joint Proxy Statement/Prospectus also constitutes the proxy statement
of Chancellor to solicit proxies from its stockholders for use at the Chancellor
Special Meeting scheduled for September 3, 1997. At that meeting, stockholders
of Chancellor eligible to vote will be asked to consider and vote on a proposal
to approve the Merger Agreement (the "Chancellor Merger Proposal").
This Joint Proxy Statement/Prospectus also constitutes a prospectus of the
Surviving Corporation with respect to (i) the shares of Surviving Corporation
Common Stock which may be issued to holders of the
ii
<PAGE> 4
Chancellor Common Stock in the Merger and (ii) the shares of Surviving
Corporation 7% Convertible Preferred Stock which may be issued to holders of the
Chancellor Parent Convertible Preferred Stock in the Merger. Shares of Surviving
Corporation Common Stock issuable in the Merger will be listed on The Nasdaq
Stock Market. For a description of the Surviving Corporation Common Stock and
the Surviving Corporation 7% Convertible Preferred Stock to be issued in the
Merger, see "Description of Surviving Corporation Capital Stock," "General
Comparison of Stockholders Rights" and "Description of Surviving Corporation 7%
Convertible Preferred Stock."
All information concerning Evergreen, EMHC and EMCLA contained in this
Joint Proxy Statement/ Prospectus has been furnished by Evergreen, and all
information herein concerning Chancellor and CRBC has been furnished by
Chancellor.
AVAILABLE INFORMATION
Each of Evergreen and Chancellor is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). The
reports, proxy statements and other information filed by Evergreen and
Chancellor with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and should be available at the Commission's
Regional Offices in New York (7 World Trade Center, 13th Floor, New York, New
York 10048); Los Angeles (Suite 500 East, Tishman Building, 5757 Wilshire
Boulevard, Los Angeles, California 90036); and Chicago (500 West Madison Avenue,
Suite 1400, Chicago, Illinois 60661). Copies of such material can also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a Web Site at http://www.sec.gov which contains reports and other
information regarding registrants that file electronically with the Commission.
In addition, material filed by Evergreen and Chancellor can be inspected at the
offices of The Nasdaq Stock Market, Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
Evergreen has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
shares of the Surviving Corporation Common Stock and shares of Surviving
Corporation 7% Convertible Preferred Stock to be issued pursuant to the Merger
Agreement. This Joint Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits thereto
filed by Evergreen, certain portions of which have been omitted pursuant to the
rules and regulations of the Commission and to which portions reference is
hereby made for further information with respect to Evergreen, Chancellor and
the securities offered hereby. Such additional information may be obtained from
the Commission's principal office in Washington, D.C. Statements contained in
this Joint Proxy Statement/Prospectus as to the contents of any contract or
other document referred to herein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. The Registration Statement and the exhibits
thereto may be inspected without charge at the offices of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and copies may be obtained from the
Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by Evergreen
pursuant to the Exchange Act are incorporated by reference in this Joint Proxy
Statement/Prospectus:
1. Evergreen's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
2. Evergreen's Current Reports on Form 8-K dated February 16, 1997 and
filed March 9, 1997, dated April 1, 1997 and filed May 9, 1997, dated
May 27, 1997 and filed May 28, 1997, dated May 27, 1997 and filed May
29, 1997, dated May 30, 1997 and filed June 4, 1997, dated June 11, 1997
and filed June 12, 1997, dated June 16, 1997 and filed July 2, 1997 and
dated July 7, 1997 and filed July 31, 1997;
3. Evergreen's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.
iii
<PAGE> 5
The following documents previously filed with the Commission by Chancellor
pursuant to the Exchange Act are incorporated by reference in this Joint Proxy
Statement/Prospectus:
1. Chancellor's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended on Form 10-K/A;
2. Chancellor's Current Reports on Form 8-K dated January 3, 1997 and filed
January 7, 1997, dated January 23, 1997 and filed February 6, 1997, as
amended on Form 8-K/A dated April 29, 1997, dated February 13, 1997 and
filed March 11, 1997, dated June 3, 1997 and filed June 4, 1997, dated
June 18, 1997 and filed June 25, 1997, and dated July 2, 1997 and filed
July 17, 1997 ; and
3. Chancellor's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.
All documents filed by Evergreen or Chancellor pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the date of the Chancellor Special Meeting and
the Evergreen Annual Meeting shall be deemed to be incorporated by reference in
this Joint Proxy Statement/Prospectus and to be a part hereof from the dates of
filing such documents or reports. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Joint Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which is also incorporated or deemed to be
incorporated herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER
THAN CERTAIN EXHIBITS TO DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE), ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM A
COPY OF THIS JOINT PROXY STATEMENT/PROSPECTUS HAS BEEN DELIVERED UPON WRITTEN OR
ORAL REQUEST, IN THE CASE OF EVERGREEN DOCUMENTS, TO EVERGREEN MEDIA
CORPORATION, 433 EAST LAS COLINAS BOULEVARD, IRVING, TEXAS 75039, ATTENTION:
CORPORATE SECRETARY, TELEPHONE NUMBER (972) 869-9020, AND IN THE CASE OF
CHANCELLOR DOCUMENTS, TO CHANCELLOR BROADCASTING COMPANY, 12655 N. CENTRAL
EXPRESSWAY, SUITE 405, DALLAS, TEXAS, ATTENTION: CORPORATE SECRETARY, TELEPHONE
NUMBER (972) 239-6220. IN ORDER TO ENSURE DELIVERY PRIOR TO THE RESPECTIVE
MEETINGS, REQUESTS SHOULD BE RECEIVED BY AUGUST 27, 1997.
No person has been authorized to give any information or to make any
representation other than those contained in this Joint Proxy
Statement/Prospectus in connection with the solicitation of proxies or the
offering of securities made hereby and, if given or made, such information or
representation must not be relied upon as having been authorized by Evergreen or
Chancellor. Neither the delivery of this Joint Proxy Statement/Prospectus nor
any distribution of the securities offered hereby shall under any circumstances
create an implication that there has not been any change in the affairs of
Evergreen or Chancellor since the date hereof or that the information set forth
or incorporated by reference herein is correct as of any time subsequent to its
date. This Joint Proxy Statement/Prospectus does not constitute an offer to
sell, or a solicitation of an offer to purchase, any securities, or the
solicitation of a proxy in any jurisdiction in which, or to any person to whom,
it is unlawful to make such offer or solicitation of an offer or proxy
solicitation.
FORWARD-LOOKING INFORMATION
This Joint Proxy Statement/Prospectus contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to inherent uncertainties and to a wide
variety of significant business, economic and competitive risks, including,
among others, those described herein. Such uncertainties and risks include,
among others: substantial leverage and the history of net losses; the necessity
of governmental approval for a number of the transactions discussed in the Joint
Proxy Statement/Prospectus; certain conditions to consummation of the Merger;
certain risks associated with the closing and integration of acquisitions;
competition; government regulation; general economic and business conditions;
dependence on key personnel; restrictions imposed by terms of indebtedness;
limitation on ability to pay dividends; control of Evergreen and the Surviving
Corporation; and other factors referenced in this Joint Proxy
Statement/Prospectus. See "Risk Factors." Consequently, actual events,
circumstances, effects and results may vary significantly from those included in
or contemplated or implied by
iv
<PAGE> 6
such forward-looking statements. Consequently, the forward-looking statements
contained herein should not be regarded as representations by Evergreen,
Chancellor or any other person that the projected results can or will be
achieved. Statements attributable to Evergreen, Chancellor or persons acting on
their behalf are expressly qualified by the factors described in this Joint
Proxy Statement/Prospectus that could cause actual results to differ materially
from either party's expectations.
v
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TABLE OF CONTENTS
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SUMMARY..................................................... 1
The Companies............................................. 1
The Stockholder Meetings.................................. 5
The Merger................................................ 8
The Merger Agreement...................................... 11
Market Prices............................................. 16
Summary Pro Forma Financial Information................... 17
Comparative Per Share Data................................ 19
Evergreen Media Corporation Selected Consolidated
Historical Financial Data.............................. 20
Chancellor Broadcasting Company Selected Consolidated
Historical Financial Data.............................. 22
RISK FACTORS................................................ 24
Substantial Leverage; History of Net Losses and
Insufficiency of Earnings to Cover Fixed Charges....... 24
Necessity of Governmental Reviews and Approvals Prior to
Consummation of the Pending Transactions; Required
Dispositions........................................... 25
FCC Consent for Merger.................................... 26
Conditions to Consummation of Merger...................... 26
Integration of Acquisitions; Operations of Katz........... 26
Fixed Exchange Ratio Despite Possible Change in Stock
Prices................................................. 27
Uncertainty as to Market Price of Surviving Corporation
Common Stock........................................... 28
Competitive Nature of Radio Broadcasting.................. 28
Antitrust Matters......................................... 28
Radio Broadcasting Industry Subject to Federal
Regulation............................................. 29
Interests of Certain Persons in the Merger................ 29
Dependence on Key Personnel............................... 30
Restrictions Imposed by Terms of Indebtedness and
Preferred Stock........................................ 30
Limitations on Ability to Pay Dividends................... 30
Control of Evergreen and the Surviving Corporation........ 31
THE COMPANIES............................................... 32
Evergreen................................................. 32
General................................................ 32
Completed Evergreen Transactions....................... 33
Pending Evergreen Transactions......................... 35
Evergreen Financing Transactions....................... 37
Chancellor................................................ 37
General................................................ 37
Completed Chancellor Transactions...................... 38
Pending Chancellor Transactions........................ 39
Chancellor Financing Transactions...................... 39
Katz Acquisition....................................... 39
The Combined Companies.................................... 40
THE MEETINGS................................................ 45
The Annual Meeting of Evergreen........................... 45
The Special Meeting of Chancellor......................... 47
THE MERGER.................................................. 49
Background and Reasons for the Merger: Evergreen.......... 49
Background and Reasons for the Merger: Chancellor......... 54
Opinion of Financial Advisor to the Evergreen Board....... 58
Opinion of Financial Advisor to the Chancellor Board...... 63
Interests of Certain Persons in the Merger................ 66
Evergreen.............................................. 66
Chancellor............................................. 67
Appraisal and Dissenters' Rights.......................... 69
Resale of Surviving Corporation Common Stock and Surviving
Corporation 7% Convertible Preferred Stock............. 72
</TABLE>
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<TABLE>
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Anticipated Accounting Treatment.......................... 73
Certain Federal Income Tax Consequences................... 73
Cash In Lieu of a Fractional Share..................... 74
Regulatory Concerns....................................... 75
Federal Communications Commission...................... 75
Antitrust Matters...................................... 77
THE MERGER AGREEMENT........................................ 78
General................................................... 78
Effective Time............................................ 78
Conversion of Shares...................................... 78
Treatment of Stock Options................................ 79
Exchange Procedures....................................... 79
Directors and Officers.................................... 81
Certificate of Incorporation and Bylaws................... 82
Representations and Warranties............................ 82
Certain Covenants......................................... 82
Conditions to the Merger.................................. 84
Additional Agreements..................................... 84
Indemnification and Insurance............................. 85
Termination............................................... 86
Amendment and Modification................................ 86
Fees and Expenses......................................... 86
THE STOCKHOLDERS AGREEMENT.................................. 86
DESCRIPTION OF SURVIVING CORPORATION CAPITAL STOCK.......... 87
General................................................... 87
Common Stock.............................................. 87
Preferred Stock........................................... 88
Delaware General Corporation Law Section 203.............. 88
Certain Effects of Authorized But Unissued Stock.......... 88
Transfer Agent............................................ 89
GENERAL COMPARISON OF STOCKHOLDERS RIGHTS................... 89
Authorized Capital Stock.................................. 89
Delisting and Deregistration of Chancellor Class A Common
Stock; Listing of Surviving Corporation Common Stock... 90
Pre-emptive Rights........................................ 90
Dividends and Other Distributions......................... 90
Liquidation Rights........................................ 91
Conversion of Class B Common Stock........................ 91
Voting Rights Generally................................... 91
Amendment of Certificate of Incorporation; Amendment of
Bylaws................................................. 92
Action by Written Consent................................. 92
Special Meetings of Stockholders.......................... 93
Voting for the Election of Directors...................... 93
Number and Qualification of Directors..................... 94
Classification of Board................................... 94
Transactions Involving Officers or Directors.............. 94
Indemnification of Directors and Officers and Limitation
of Liability........................................... 95
Restrictions on Foreign Ownership......................... 96
DESCRIPTION OF SURVIVING CORPORATION 7% CONVERTIBLE
PREFERRED STOCK........................................... 97
General................................................... 97
Dividends................................................. 97
Liquidation Rights........................................ 99
Voting Rights............................................. 99
</TABLE>
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Change of Control......................................... 100
Redemption at Option of the Surviving Corporation......... 102
Conversion Rights......................................... 102
MANAGEMENT AFTER THE MERGER................................. 104
Board of Directors........................................ 104
Executive Officers........................................ 104
EVERGREEN PROPOSALS......................................... 104
Evergreen Proposal 1: Approval of the Merger Agreement and
the Transactions Contemplated Thereby.................. 104
Evergreen Proposal 2: Election of Directors............... 105
Evergreen Board of Directors........................... 105
Nominees............................................... 106
Surviving Corporation Board of Directors.................. 106
Evergreen Board of Directors and Committees............... 107
Compliance with Section 16(a) of the Securities Exchange
Act of 1934............................................ 107
Compensation of Directors................................. 108
Compensation of Executive Officers........................ 108
Employment Agreements..................................... 110
Compensation Committee Interlocks and Insider
Participation in Compensation Decisions................ 112
REPORT OF THE COMPENSATION COMMITTEE OF THE EVERGREEN BOARD
OF DIRECTORS.............................................. 112
Performance Graph........................................... 117
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 117
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 118
EVERGREEN STOCKHOLDER PROPOSALS FOR 1998.................... 118
GENERAL..................................................... 118
CHANCELLOR MERGER PROPOSAL.................................. 119
EXPERTS..................................................... 119
LEGAL MATTERS............................................... 120
GLOSSARY OF CERTAIN TERMS AND MARKET AND INDUSTRY DATA...... 121
PRO FORMA FINANCIAL INFORMATION............................. P-1
</TABLE>
ANNEXES
<TABLE>
<S> <C> <C>
Annex A Agreement and Plan of Merger among Chancellor Broadcasting
Company, Chancellor Radio Broadcasting Company, Evergreen
Media Corporation, Evergreen Mezzanine Holdings Corporation
and Evergreen Media Corporation of Los Angeles, dated as of
February 19, 1997, as amended and restated on July 31, 1997
(including Amended and Restated Certificate of Incorporation
of the Surviving Corporation attached as Annex III
thereto).................................................... A-1
Annex B-1 Opinion of Wasserstein Perella & Co., Inc................... B-1-1
Annex B-2 Letter of Wasserstein Perella & Co., Inc. dated August 1,
1997........................................................ B-2-1
Annex C Opinion of Greenhill & Co., LLC............................. C-1
Annex D Section 262 of the General Corporation Law of the State of
Delaware.................................................... D-1
</TABLE>
viii
<PAGE> 10
SUMMARY
The following is a summary of certain information contained in this Joint
Proxy Statement/Prospectus. It is qualified in its entirety by reference to the
more detailed information contained elsewhere in this Joint Proxy
Statement/Prospectus or incorporated by reference herein, in the accompanying
annexes and in the documents referred to herein. Stockholders are urged to read
this Joint Proxy Statement/Prospectus in its entirety. Certain capitalized terms
used in this Joint Proxy Statement/Prospectus are defined under the caption
"Glossary of Certain Terms and Market and Industry Data." As used herein, unless
the context otherwise clearly requires, "Evergreen" refers to Evergreen Media
Corporation and its consolidated subsidiaries, "Chancellor" refers to Chancellor
Broadcasting Company and its consolidated subsidiaries and the "Surviving
Corporation" refers to the Surviving Corporation and its consolidated
subsidiaries. All share and per share data of Evergreen in this Joint Proxy
Statement/Prospectus give effect to Evergreen's three-for-two common stock split
effected in the form of a stock dividend paid on August 26, 1996.
THE COMPANIES
Evergreen Media
Corporation................ Evergreen (which will be renamed Chancellor Media
Corporation upon consummation of the Merger)
currently owns and operates radio stations across
the United States, including stations in 11 of the
nation's 12 largest radio markets (Los Angeles, New
York, Chicago, Dallas, San Francisco, Washington,
D.C., Philadelphia, Houston, Boston, Detroit and
Miami). Evergreen's strategy is to secure the
leading clusters of radio stations in each of the
markets in which it operates. At July 28, 1997,
without giving effect to the Pending Transactions
(as defined) Evergreen's portfolio of stations
consisted of 41 radio stations (27 FM and 14 AM) in
11 of the 12 largest radio revenue markets,
including clusters of between three and five FM
stations ("superduopolies") in six of the nation's
12 largest radio revenue markets (New York,
Chicago, San Francisco, Philadelphia, Washington,
D.C. and Detroit). Evergreen's portfolio is
diversified in terms of format, target
demographics, geographic location and phase of
development. Because of the size and geographic
breadth of its portfolio, Evergreen believes that
it is not unduly reliant on the performance of any
one station or market. Evergreen also believes that
the diversity of its portfolio of radio stations
helps to insulate Evergreen from downturns in
specific markets and changes in musical tastes.
Chancellor Broadcasting
Company.................. Chancellor currently owns and operates radio
stations in 17 large markets across the United
States (Los Angeles, New York, Chicago, San
Francisco, Washington, D.C., Atlanta, Detroit,
Denver, Minneapolis/ St. Paul, Phoenix, Cincinnati,
Pittsburgh, Sacramento, Orlando, Nassau/Suffolk
(Long Island), Riverside/San Bernardino and
Jacksonville). Chancellor's strategy is to focus on
owning and operating ratio stations in the top 40
United States markets, which account for a
disproportionately large percentage of radio
advertising revenue. At July 28, 1997, without
giving effect to the Pending Transactions,
Chancellor's portfolio of stations consists of 53
radio stations (37 FM and 16 AM) in 17 large
markets, including superduopolies in five of its 17
markets (Los Angeles, Denver, Minneapolis/ St.
Paul, Phoenix and Orlando). Chancellor employs a
wide variety of programming formats, including
country, oldies, news/talk, adult contemporary,
progressive album rock, contemporary hit radio,
sports and classical.
1
<PAGE> 11
Pending Evergreen
Transactions............. On April 4, 1997, Evergreen entered into three
separate asset purchase agreements (the "Gannett
Agreements") with Pacific and Southern Company,
Inc., a subsidiary of Gannett Co., Inc. ("P&S"),
under which Evergreen will acquire one FM station
and one AM station in Chicago, one FM station and
one AM station in Houston, and one FM station in
Dallas (the "Gannett Stations"), for an aggregate
purchase price of $340.0 million in cash, subject
to an upward adjustment of up to $10.0 million
depending on the timing of the consummation of the
transactions (the "Gannett Acquisition"). Although
there can be no assurances, Evergreen expects that
the Gannett Acquisition will be completed
subsequent to the Merger. Evergreen has also
entered into an agreement to acquire one FM station
in Philadelphia for an aggregate purchase price of
$37.8 million and two FM stations in Dallas for an
aggregate purchase price of $83.5 million and has
entered into an agreement to sell the station to be
acquired in Philadelphia, as well as four
additional stations (in Chicago, San Francisco and
Washington, D.C.), for an aggregate sales price of
$67.3 million. Evergreen must complete certain of
these dispositions prior to the consummation of the
Merger in order for the Surviving Corporation to
remain in compliance with the multiple ownership
limitations established by the Federal
Communications Commission (the "FCC") pursuant to
the Telecommunications Act of 1996 (the "1996
Act"). The foregoing transactions are collectively
referred to as the "Pending Evergreen
Transactions."
Pending Chancellor
Transactions............. Chancellor has entered into an agreement to sell
one FM station in Detroit for $37.0 million in
cash. Chancellor has also entered into an agreement
to acquire one FM station in Denver for $26.0
million in cash. Chancellor must complete the
disposition of the Detroit station prior to
consummation of the Merger in order for the
Surviving Corporation to comply with the multiple
ownership limitations established by the FCC
pursuant to the 1996 Act. The foregoing
transactions are collectively referred to as the
"Pending Chancellor Transactions."
Katz Acquisition........... On July 14, 1997, Evergreen, Chancellor and Katz
Media Group, Inc. ("Katz") entered into an
agreement pursuant to which a jointly owned
affiliate of Evergreen and Chancellor would acquire
Katz, a full-service media representation firm, in
a transaction valued at approximately $373 million
(the "Katz Acquisition"). Under the terms of the
Katz Acquisition, shareholders of Katz would be
offered in a tender offer $11.00 in cash for each
share of common stock of Katz, and shares not
purchased in the tender offer would be converted in
a second-step merger into the right to receive
$11.00 in cash per share, subject to statutory
appraisal and dissenters' rights. Assuming
completion of the Katz Acquisition, debt of Katz of
approximately $218 million would be assumed in the
transaction. Consummation of the Katz Acquisition
is subject to the tender of a majority of Katz
shares on a fully diluted basis, approval of the
shareholders of Katz and the receipt of certain
regulatory approvals, including the expiration or
termination of the waiting period required by the
Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"). Although there
can be no assurances, Evergreen and Chancellor
currently expect that the Katz Acquisition
2
<PAGE> 12
will be completed in the third quarter of 1997,
prior to the consummation of the Merger.
Evergreen Financing
Transactions............. Evergreen has financed the Evergreen Viacom
Acquisition and certain of its other recently
completed transactions, and anticipates that it
will finance the Pending Evergreen Transactions,
with the proceeds of the following transactions:
(i) the issuance and sale in June 1997 by Evergreen
(the "Evergreen Convertible Preferred Stock
Offering") of 5,990,000 shares of $3.00 Convertible
Exchangeable Preferred Stock of Evergreen (the
"Evergreen $3.00 Convertible Preferred Stock")
which generated gross proceeds of $299.5 million;
(ii) the amendment and restatement of EMCLA's
senior credit facility (the "EMCLA Senior Credit
Facility") among EMCLA and a syndicate of
commercial lenders on April 25, 1997, as amended on
June 26, 1997, to, among other things, provide for
a total current commitment of $1.75 billion,
consisting of a $1.25 billion reducing revolving
credit facility and a $500.0 million term loan
facility (EMCLA expects that the revolving credit
facility and the term loan facility will be
increased to $1.60 billion and $900.0 million,
respectively, upon consummation of the Merger);
(iii) the cash proceeds of Evergreen's pending
dispositions (excluding the Douglas AM Dispositions
(as defined), of $49.3 million; and (iv) deposits
previously made by Evergreen of $8.4 million
related to the Bonneville Acquisition (as defined).
Chancellor Financing
Transactions............. Chancellor has financed the Chancellor Viacom
Acquisition, and anticipates that it will finance
the Pending Chancellor Transactions, with the
proceeds of the following transactions: (i) the
issuance and sale on June 24, 1997 by CRBC (the
"CRBC 8 3/4% Notes Offering") of its 8 3/4% Senior
Subordinated Notes Due 2007 (the "CRBC 8 3/4%
Notes"); (ii) the amendment and restatement of
CRBC's senior credit facility (the "CRBC Restated
Credit Facility") among CRBC and a syndicate of
commercial lenders on July 2, 1997 to, among other
things, provide for a total current commitment of
$750.0 million; (iii) borrowings under an interim
loan of $170.0 million that Chancellor closed on
July 2, 1997 (the "Chancellor Interim Financing");
and (iv) the cash proceeds of Chancellor's pending
dispositions of $37.0 million. Upon consummation of
the Merger, all borrowings under the CRBC Restated
Credit Facility and the Chancellor Interim
Financing will be repaid by Evergreen, which is
expected to borrow funds under the EMCLA Senior
Credit Facility for such purpose.
Combined Companies......... After giving effect to the Merger, the Pending
Evergreen Transactions and the Pending Chancellor
Transactions (collectively, the "Pending
Transactions"), the Surviving Corporation will own
and operate a radio station portfolio consisting of
97 radio stations (69 FM and 28 AM) in 22 large
markets, including each of the nation's 12 largest
radio revenue markets. The Surviving Corporation's
radio station portfolio will include the first or
second ranked station cluster in terms of revenue
share in 14 of its 22 markets, and the Surviving
Corporation will have assembled superduopolies of
four or more FM stations in 11 markets (Los
Angeles, New York, Chicago, San Francisco,
Philadelphia, Washington, D.C., Detroit, Denver,
Minneapolis/St. Paul, Phoenix and Orlando).
Assuming completion of the Katz Acquisition, the
Surviving Corporation will
3
<PAGE> 13
also own and operate Katz, a full service media
representation firm serving multiple types of
electronic media, with leading market shares in the
representation of radio and television stations and
cable television systems. See "The Companies -- The
Combined Companies."
4
<PAGE> 14
THE STOCKHOLDER MEETINGS
THE EVERGREEN ANNUAL MEETING
Time, Date and Place....... The Evergreen Annual Meeting will be held at The
Omni Mandalay Hotel, 221 East Las Colinas
Boulevard, Irving, Texas 75039, on September 3,
1997 at 10:00 a.m., C.D.T.
Purpose of the Evergreen
Annual Meeting ........... Holders of Evergreen Common Stock will consider and
vote upon the proposals to: (1)(i) approve the
Merger Agreement and the Merger; (ii) approve the
issuance of 0.9091 shares of Surviving Corporation
Common Stock to holders of Chancellor Common Stock
for each share of Chancellor Common Stock
outstanding immediately prior to the consummation
of the Merger; (iii) approve the assumption by
Evergreen of currently outstanding options to
purchase shares of Chancellor Class A Common Stock
held by certain officers, directors, employees and
consultants of Chancellor and its subsidiaries; and
(iv) approve the amendment and restatement of the
Evergreen Certificate; and (2) elect eight
directors to the Evergreen Board. Proposal 1 above
is referred to as the "Evergreen Merger Proposal"
and Proposal 2 above is referred to as the
"Additional Evergreen Proposal." Evergreen
stockholders will also consider and vote upon such
other matters incidental to the foregoing as may
properly come before the Evergreen Annual Meeting
or any adjournments thereof.
Record Date, Quorum,
Required Vote............. The close of business on July 25, 1997 has been
fixed as the record date for determining holders of
shares of Evergreen Common Stock entitled to vote
at the Evergreen Annual Meeting. As of the close of
business on July 25, 1997, 39,135,235 shares of
Evergreen Class A Common Stock and 3,114,066 shares
of Evergreen Class B Common Stock were outstanding
and entitled to vote. The presence in person or by
proxy of the holders of a majority of the shares of
Evergreen Common Stock outstanding and entitled to
vote at the Evergreen Annual Meeting shall
constitute a quorum at the Evergreen Annual
Meeting. Assuming the presence of a quorum, the
approval of the issuance of Surviving Corporation
Common Stock to holders of Chancellor Common Stock
pursuant to the Merger Agreement and the assumption
of outstanding options to purchase shares of
Chancellor Class A Common Stock pursuant to the
Merger Agreement each requires, under rules
applicable to companies whose securities are traded
on The Nasdaq Stock Market, the affirmative vote of
a majority of the votes cast in respect of the
shares of Evergreen Common Stock present and
entitled to vote, in person or by proxy, at the
Evergreen Annual Meeting. Assuming the presence of
a quorum, under Section 242(b) of the DGCL, the
approval of the amendment and restatement of the
Evergreen Certificate pursuant to the Merger
Agreement requires (i) the affirmative vote of a
majority of the total number of votes entitled to
be cast by all holders of shares of Evergreen
Common Stock entitled to vote at the Evergreen
Annual Meeting, voting as a single class and (ii)
the affirmative vote of a majority of the total
number of votes entitled to be cast by holders of
Evergreen Class B Common Stock entitled to vote at
the Evergreen Annual Meeting, voting separately as
a class. Accordingly, approval of the Evergreen
Merger Proposal will require the affirmative vote
of a majority of the total number of votes
5
<PAGE> 15
entitled to be cast by all holders of shares of
Evergreen Common Stock entitled to vote at the
Evergreen Annual Meeting, voting as a single class,
and the affirmative vote of a majority of the total
number of votes entitled to be cast by holders of
Evergreen Class B Common Stock entitled to vote at
the Evergreen Annual Meeting, voting separately as
a class. Assuming the presence of a quorum,
directors will be elected by the affirmative vote
of a plurality of the votes cast in respect of the
shares of Evergreen Common Stock present and
entitled to vote, in person or by proxy, at the
Evergreen Annual Meeting. Each share of Evergreen
Class A Common Stock is entitled to one vote and
each share of Evergreen Class B Common Stock is
entitled to ten votes with respect to the Evergreen
Merger Proposal and the Additional Evergreen
Proposal.
As of the close of business on July 25, 1997,
directors and executive officers of Evergreen and
their affiliates were the beneficial owners of
818,063 shares of Evergreen Class A Common Stock
(including all currently exercisable stock options
and options exercisable within 60 days of July 25,
1997 owned by certain executive officers of
Evergreen) and 3,114,066 shares of Evergreen Class
B Common Stock (all of which are owned by Scott K.
Ginsburg). The 3,114,066 shares of Evergreen Class
B Common Stock owned by Mr. Ginsburg represent 7.4%
of all outstanding shares of Evergreen Common Stock
and 44.3% of all voting power (assuming exercise of
all currently exercisable stock options and options
exercisable within 60 days after July 25, 1997).
Mr. Ginsburg, Thomas O. Hicks, Chairman of the
Chancellor Board, and certain holders of Chancellor
Common Stock that are affiliates of Mr. Hicks
(together with Mr. Hicks, the "Hicks Stockholders")
have entered into a Stockholders Agreement (the
"Stockholders Agreement") dated as of February 19,
1997, pursuant to which (i) Mr. Ginsburg has
agreed, subject to certain conditions, to vote all
shares of Evergreen Common Stock held by him in
favor of approval of the Merger Agreement and the
transactions contemplated thereby and (ii) the
Hicks Stockholders have agreed, subject to certain
conditions, to vote all shares of Chancellor Common
Stock held by such holders in favor of approval of
the Merger Agreement and the transactions
contemplated thereby. Such stockholders control
approximately 90.3% of the combined voting power of
the Chancellor Common Stock and approximately 44.3%
of the combined voting power of the Evergreen
Common Stock. See "The Stockholders Agreement."
Interests of Certain
Persons in the Merger..... In considering the recommendations of the Evergreen
Board, stockholders should be aware that certain
directors, officers and stockholders of Evergreen
have interests in the Merger that are different
from, or in addition to, the interests of
Evergreen's stockholders generally. Among other
things, (i) Mr. Ginsburg has entered the
Stockholders Agreement and (ii) Mr. Ginsburg has
entered into a memorandum of agreement with
Evergreen, Chancellor and CRBC regarding Mr.
Ginsburg's continued employment by the Surviving
Corporation following consummation of the Merger.
See "The Merger -- Interest of Certain Persons in
the Merger."
6
<PAGE> 16
THE CHANCELLOR SPECIAL MEETING
Time, Date and Place....... The Chancellor Special Meeting will be held at The
Hotel Crescent Court, 400 Crescent Court, Dallas,
Texas 75201, on September 3, 1997, at 10:00 a.m.,
C.D.T.
Purpose of the Chancellor
Special Meeting.......... Holders of Chancellor Common Stock will consider
and vote upon a proposal to approve and adopt the
Merger Agreement (the "Chancellor Merger Proposal")
and transact such other business incidental to the
foregoing as may properly come before the
Chancellor Special Meeting or any adjournments
thereof.
Record Date, Quorum,
Required Vote............ The close of business on July 30, 1997 has been
fixed as the record date for determining holders of
shares of Chancellor Common Stock entitled to vote
at the Chancellor Special Meeting. As of July 28,
1997, 10,443,719 shares of Chancellor Class A
Common Stock and 8,547,910 shares of Chancellor
Class B Common Stock were outstanding and entitled
to vote. The presence in person or by proxy of the
holders of a majority of the shares of Chancellor
Common Stock outstanding and entitled to vote at
the Chancellor Special Meeting shall constitute a
quorum at the Chancellor Special Meeting. Assuming
the presence of a quorum, the affirmative vote of a
majority of the total number of votes entitled to
be cast by all holders of shares of Chancellor
Common Stock at the Chancellor Special Meeting is
required to approve and adopt the Merger and the
Merger Agreement. Each share of Chancellor Class A
Common Stock is entitled to one vote and each share
of Chancellor Class B Common Stock is entitled to
ten votes with respect to the Chancellor Merger
Proposal.
As of July 28, 1997, directors and executive
officers of Chancellor and their affiliates were
the beneficial owners of 2,445,468 shares of
Chancellor Class A Common Stock (including all
currently exercisable stock options and options
exercisable within 60 days of July 28, 1997 owned
by certain directors and executive officers of
Chancellor) and 8,547,910 shares of Chancellor
Class B Common Stock. The 1,815,365 shares of
Chancellor Class A Common Stock and 8,484,410
shares of Chancellor Class B Common Stock
beneficially owned by the Hicks Stockholders
represent 54.2 % of all outstanding shares of
Chancellor Common Stock and 90.3% of all voting
power. Mr. Ginsburg and the Hicks Stockholders have
entered into the Stockholders Agreement, pursuant
to which (i) Mr. Ginsburg had agreed, subject to
certain conditions, to vote all shares of Evergreen
Common Stock held by him in favor of approval of
the Merger Agreement and the transactions
contemplated thereby and (ii) the Hicks
Stockholders have agreed, subject to certain
conditions, to vote all shares of Chancellor Common
Stock held by such holders in favor of approval of
the Merger Agreement and the transactions
contemplated thereby. Such stockholders control
approximately 90.3% of the combined voting power of
the Chancellor Common Stock and approximately 44.3%
of the combined voting power of the Evergreen
Common Stock. See "The Stockholders Agreement." The
affirmative vote of the Hicks Stockholders is
sufficient to ensure the adoption of the Chancellor
Merger Proposal.
7
<PAGE> 17
Interests of Certain
Persons in the Merger.... In considering the recommendations of the
Chancellor Board, stockholders should be aware that
certain directors, officers, stockholders and
affiliates of Chancellor have interests in the
Merger that are different from, or in addition to,
the interests of Chancellor's stockholders
generally. Among other things, (i) the Hicks
Stockholders have entered into the Stockholders
Agreement, (ii) Hicks, Muse & Co. Partners, L.P.
("Hicks Muse Partners"), an affiliate of Hicks Muse
that provides certain services to Chancellor, has
entered into an amendment to its Financial
Monitoring and Oversight Agreement with Chancellor
that would increase the annual fee to be paid to
Hicks Muse Partners upon consummation of the Merger
and (iii) HM2/Management Partners, L.P.
("HM2/Management"), an affiliate of Hicks Muse that
provides financial advisory services to Chancellor,
agreed to terminate its financial advisory
agreement with Chancellor upon consummation of the
Merger in return for a fee of $10.0 million to be
paid upon consummation of the Merger. See "The
Special Meeting of Chancellor -- Record Dates and
Voting Rights" and "The Merger -- Interests of
Certain Persons in the Merger."
THE MERGER
General.................... Pursuant to the Merger Agreement, Chancellor will
merge with and into EMHC, a direct wholly owned
subsidiary of Evergreen, and thereafter CRBC will
merge with and into EMCLA, a direct, wholly owned
subsidiary of EMHC. Upon consummation of the
Merger, Evergreen will be renamed Chancellor Media
Corporation, EMHC will be renamed Chancellor
Mezzanine Holdings Corporation, and EMCLA will be
renamed Chancellor Media Corporation of Los
Angeles.
Recommendation of the
Evergreen Board of
Directors................ The Evergreen Board believes that the Merger is in
the best interests of Evergreen and its
stockholders, has by a unanimous vote approved the
Merger Agreement and the transactions contemplated
thereby and has recommended that stockholders vote
in favor of the Evergreen Merger Proposal. For a
description of interests of certain directors of
Evergreen in the Merger that are different than, or
in addition to, the interests of the Evergreen
stockholders generally, see "The
Merger -- Interests of Certain Persons in the
Merger."
Recommendation of the
Chancellor Board of
Directors................ The Chancellor Board believes that the Merger is in
the best interests of the stockholders of
Chancellor, has by a unanimous vote approved the
Merger Agreement and the transactions contemplated
thereby and has recommended that stockholders vote
in favor of approval and adoption of the Merger
Agreement. For a description of interests of
certain directors of Chancellor in the Merger that
are different than, or in addition to, the
interests of the Chancellor stockholders generally,
see "The Merger -- Interests of Certain Persons in
the Merger."
8
<PAGE> 18
Opinion of Financial
Advisor to the Evergreen
Board.................... Wasserstein Perella & Co., Inc. ("Wasserstein
Perella") rendered its oral opinion on February 18,
1997 to the Evergreen Board, which was confirmed by
its written opinion dated February 19, 1997 to the
Evergreen Board, to the effect that, based upon and
subject to certain matters stated therein, as of
the date of such opinion, the Exchange Ratio is
fair to Evergreen from a financial point of view. A
copy of Wasserstein Perella's written opinion,
dated February 19, 1997, is attached hereto as
Annex B-1. On August 1, 1997, Wasserstein Perella
confirmed its opinion in a letter dated August 1,
1997, a copy of which is attached hereto as Annex
B-2. See "The Merger -- Opinion of Financial
Advisor to the Evergreen Board," Annex B-1 and
Annex B-2.
Opinion of Financial
Advisors to the Chancellor
Board.................... Greenhill & Co., LLC ("Greenhill") rendered its
oral opinion to the Chancellor Board on February
19, 1997, which it confirmed in writing that same
day, to the effect that, as of the date of its
opinion, the Exchange Ratio is fair to the holders
of the Chancellor Common Stock from a financial
point of view. A copy of Greenhill's written
opinion, dated February 19, 1997, is attached
hereto as Annex C. See "The Merger -- Opinion of
Financial Advisor to the Chancellor Board" and
Annex C.
Anticipated Accounting
Treatment................ The Merger will be accounted for as a purchase of
Chancellor by Evergreen in accordance with
generally accepted accounting principles. After the
Effective Time of the Merger, the results of
operations of Chancellor and Evergreen will be
included in the consolidated financial statements
of the Surviving Corporation.
Certain Federal Income Tax
Consequences to Holders
of Chancellor Common
Stock and the Chancellor
Parent Convertible
Preferred Stock.......... The Parent Merger and the Subsidiary Merger are
each intended to qualify as a reorganization within
the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). The
obligation of each of Evergreen, EMHC, EMCLA
Chancellor and CRBC to consummate the Merger is
subject to the condition that it shall have
received an opinion of its counsel, dated the
closing date of the Merger, to the effect that the
Parent Merger and the Subsidiary Merger will each
be treated for tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
Assuming that each of the Parent Merger and the
Subsidiary Merger is so treated, for Federal income
tax purposes, neither the Parent Merger nor the
Subsidiary Merger will result in the recognition of
gain or loss to Evergreen, EMHC, EMCLA, Chancellor,
CRBC, the holders of the Evergreen Common Stock or
the holders of the Chancellor Common Stock or
Chancellor Parent Convertible Preferred Stock,
except with respect to cash received by holders of
the Chancellor Common Stock in lieu of fractional
shares or cash received in respect of shares of
Chancellor Parent Convertible Preferred Stock as to
which appraisal rights are perfected. See "The
Merger -- Certain Federal Income Tax Consequences."
9
<PAGE> 19
Appraisal Rights........... Holders of Evergreen Common Stock and Chancellor
Common Stock will not be entitled to exercise any
appraisal rights under Section 262 ("Section 262")
of the General Corporation Law of the State of
Delaware (the "DGCL") or otherwise in connection
with the Merger. Under the certificate of
designation governing the Chancellor Parent
Convertible Preferred Stock, holders of Chancellor
Parent Convertible Preferred Stock are not entitled
to vote on the Parent Merger, the Subsidiary Merger
or any other transactions contemplated by the
Merger Agreement. The sole investment decision
arising from the Merger for holders of Chancellor
Parent Convertible Preferred Stock is whether to
exercise appraisal rights under Section 262 of the
DGCL. Under Section 262, holders of Chancellor
Parent Convertible Preferred Stock who (i) hold
shares of Chancellor Parent Convertible Preferred
Stock on the date of making a demand for appraisal,
(ii) continuously hold such shares through the
Effective Time, (iii) deliver a properly executed
written demand for appraisal to Chancellor prior to
the Chancellor Special Meeting, (iv) do not vote in
favor of the Merger or consent thereto in writing,
(v) file any necessary petition in the Delaware
Court of Chancery within 120 days after the
Effective Time and (vi) otherwise satisfy all
procedural requirements set forth in Section 262,
are entitled, if the Merger is consummated, to
receive payment of the fair value of their shares
of Chancellor Parent Convertible Preferred Stock,
as appraised by the Delaware Court of Chancery.
Holders of CRBC Series A Preferred Stock and CRBC
Junior Preferred Stock will have similar appraisal
rights. See "The Merger -- Appraisal and
Dissenters' Rights."
Resale of Surviving
Corporation Common Stock
and Surviving Corporation
7% Convertible Preferred
Stock.................... The shares of Surviving Corporation Common Stock
and the Surviving Corporation 7% Convertible
Preferred Stock issued in the Merger will be
registered under the Securities Act pursuant to the
Registration Statement, of which this Joint Proxy
Statement/Prospectus is a part, except shares of
Surviving Corporation Common Stock received by
persons deemed to be "affiliates" (as defined in
the Securities Act) of Chancellor at the Effective
Time may be resold only in certain permitted
circumstances set forth in Rules 144 and 145 under
the Securities Act or pursuant to an effective
registration statement under the Securities Act
covering such shares. The Surviving Corporation
Common Stock issued in the Merger will be listed on
The Nasdaq Stock Market.
Regulatory
Considerations............. Consummation of the Merger Agreement is subject to
certain regulatory approvals, including: (i) FCC
consent to the transfer of control of the FCC
licenses and authorizations held by Evergreen and
Chancellor and their respective subsidiaries (the
"FCC Consent") and (ii) expiration or termination
of the applicable waiting period under the HSR Act.
The applicable waiting period under the HSR Act was
terminated on May 21, 1997. As of July 30, 1997,
the FCC has not yet granted its consent to the
transfer of control of the FCC licenses and
authorizations held by Evergreen and its licensee
subsidiaries and Chancellor and its licensee
subsidiaries to the public stockholders of the
Surviving Corporation as a group. Although there
can be no assurances, Evergreen and Chancellor
expect that the FCC will grant its consent to the
transfer of control prior to the Evergreen Annual
Meeting and the Chancellor Special Meeting.
10
<PAGE> 20
Assuming that such consent is received prior to
such time, Evergreen and Chancellor expect that
they will waive the condition to consummate the
Merger that such consent be a final, nonappealable
order. See "Risk Factors -- FCC Consent for Merger"
and "The Merger -- Regulatory Concerns."
THE MERGER AGREEMENT
General.................... Pursuant to the Merger Agreement, (i) Chancellor
will merge with and into EMHC, a direct, wholly
owned subsidiary of Evergreen, with EMHC remaining
as the surviving corporation and (ii) thereafter,
CRBC will merge with and into EMCLA, with EMCLA
remaining as the surviving corporation. Following
the Merger, Evergreen will be renamed Chancellor
Media Corporation, EMHC will be renamed Chancellor
Mezzanine Holdings Corporation and EMCLA will be
renamed Chancellor Media Corporation of Los
Angeles.
Conversion of Shares....... If the Merger is consummated, (i) each share of
Evergreen Class A Common Stock and Evergreen Class
B Common Stock outstanding immediately prior to the
Effective Time will be reclassified, changed and
converted into one share of Surviving Corporation
Common Stock, (ii) each share of Evergreen $3.00
Convertible Exchangeable Preferred Stock
outstanding immediately prior to the Effective Time
will remain outstanding as one share of $3.00
Convertible Exchangeable Preferred Stock of the
Surviving Corporation, (iii) each share (other than
treasury shares, which will be cancelled as a
result of the Merger) of Chancellor Common Stock
outstanding immediately prior to the Effective Time
will be converted into the right to receive 0.9091
shares of Surviving Corporation Common Stock, (iv)
each share of Chancellor Parent Convertible
Preferred Stock, other than shares of Chancellor
Parent Convertible Preferred Stock for which
appraisal rights have been exercised pursuant to
Section 262, will be converted into the right to
receive one share of Surviving Corporation 7%
Convertible Preferred Stock, (v) each share of EMHC
Common Stock outstanding immediately prior to the
Effective Time shall remain outstanding as one
share of Common Stock of the Surviving Mezzanine
Corporation, (vi) each share of EMCLA Common Stock
outstanding immediately prior to the Subsidiary
Merger Effective Time will remain outstanding as
one share of Common Stock of the Surviving
Subsidiary Corporation, (vii) each share of CRBC
Common Stock outstanding immediately prior to the
Subsidiary Merger Effective Time will be cancelled,
(viii) each share of CRBC Series A Preferred Stock
outstanding immediately prior to the Subsidiary
Merger Effective Time, other than shares of CRBC
Series A Preferred Stock for which appraisal rights
have been exercised pursuant to Section 262, will
be converted into the right to receive one share of
Surviving Subsidiary Series A Preferred Stock and
(ix) each share of CRBC Junior Preferred Stock
outstanding immediately prior to the Subsidiary
Merger Effective Time, other than shares of CRBC
Junior Preferred Stock for which appraisal rights
have been exercised pursuant to Section 262, will
be converted into the right to receive one share of
Surviving Subsidiary Junior Preferred Stock. Based
on the number of primary shares of Evergreen Class
A Common Stock, Evergreen Class B Common Stock,
Chancellor Class A Common Stock and Chancellor
Class B Common Stock outstanding on July 1, 1997,
holders of Ever-
11
<PAGE> 21
green Common Stock as a group and Chancellor Common
Stock as a group would own approximately 71% and
29%, respectively, of outstanding primary shares of
Surviving Corporation Common Stock immediately
following consummation of the Merger.
Holders of outstanding shares of Evergreen Class A
Common Stock are currently entitled to one vote per
share on all matters presented for a vote of
stockholders, while holders of outstanding shares
of Evergreen Class B Common Stock are, subject to
certain limited exceptions, entitled to ten votes
per share on all matters presented for a vote of
Evergreen stockholders. Holders of outstanding
shares of Chancellor Class A Common Stock are
currently entitled to one vote per share on all
matters presented for a vote of stockholders, while
holders of outstanding shares of Chancellor Class B
Common Stock are, subject to certain limited
exceptions, currently entitled to ten votes per
share on all matters presented for a vote of
Chancellor stockholders. If the Merger is
consummated, holders of outstanding shares of
Surviving Corporation Common Stock will be entitled
to one vote per share on all matters presented for
a vote of Surviving Corporation shareholders. No
fractional shares of Surviving Corporation Common
Stock will be issued in the Merger. All fractional
shares of Surviving Corporation Common Stock that a
holder of Chancellor Common Stock would otherwise
be entitled to receive as a result of the Merger
will be aggregated, and, if a fractional share
results from such aggregation, such holder will be
entitled to receive, in lieu thereof, an amount in
cash determined by multiplying the closing price
per share of Evergreen Class A Common Stock on The
Nasdaq Stock Market on the trading day immediately
prior to the Effective Time by the fraction of a
share of Surviving Corporation Common Stock to
which such holder would otherwise have been
entitled.
Effective Time of the
Merger..................... Each of the Parent Merger and the Subsidiary Merger
will become effective upon the filing of an
appropriate certificate of merger for the Parent
Merger and the Subsidiary Merger, respectively,
with the Secretary of State of the State of
Delaware upon the satisfaction or waiver of the
conditions to the Merger (the "Effective Time" and
the "Subsidiary Merger Effective Time,"
respectively). The Parent Merger will be
consummated prior to, but on the same day, as the
Subsidiary Merger.
Treatment of Stock
Options.................... At the Effective Time, each currently outstanding
option to purchase shares of Chancellor Class A
Common Stock held by directors, officers, employees
and consultants of Chancellor and its subsidiaries
will be deemed to have been assumed by Evergreen,
without further action by Evergreen, and will
thereafter be deemed an option to acquire, on the
same terms and conditions as were applicable under
such option, the number of shares of Surviving
Corporation Common Stock that would have been
received in respect of such option if it had been
exercised immediately prior to the Effective Time.
Representations and
Warranties............... The Merger Agreement contains various customary
representations and warranties made by each of the
parties relating to, among other things: (i) the
organization, standing and similar corporate
matters of each party; (ii) the capital structure
of each party; (iii) the authorization, execution,
delivery, performance and enforceability of the
Merger
12
<PAGE> 22
Agreement with respect to each party; (iv)
documents filed by Evergreen, Chancellor and their
respective subsidiaries with the Commission and the
accuracy of information contained therein; (v) the
absence of conflicts with the organizational and
certain other documents of the parties as a result
of the execution and delivery of the Merger
Agreement or the consummation of the transactions
contemplated by the Merger Agreement; (vi) the
absence of violation of any law, rule or regulation
or any order, writ, judgment, injunction, decree,
determination or award currently in effect
applicable to the parties as a result of the
execution and delivery of the Merger Agreement or
the consummation of the transactions contemplated
by the Merger Agreement; (vii) the absence of
material changes since the date of the most recent
audited financial statements filed with the
Commission by Evergreen, Chancellor or their
respective subsidiaries with respect to the
business of Evergreen, Chancellor or any of their
respective subsidiaries, except as otherwise
provided in the Merger Agreement; (viii) the
validity of all authorizations issued by the FCC
for the operation of radio stations ("FCC
Licenses") held by Evergreen, Chancellor and their
respective subsidiaries; (ix) the compliance in all
material respects with the terms of the FCC
Licenses issued to Evergreen, Chancellor and their
respective subsidiaries and the timely filing with
the FCC of all applications, reports and other
disclosures with the FCC required to be made by
Evergreen, Chancellor and their respective
subsidiaries; (x) overall compliance in all
material respects with all applicable laws; and
(xi) the absence of undisclosed liabilities.
Certain Covenants.......... The Merger Agreement contains various customary
covenants, including covenants of each of Evergreen
and Chancellor that, during the period from the
date of the Merger Agreement until the Effective
Time, except as permitted by or contemplated in the
Merger Agreement, each of Evergreen and Chancellor
(and each of their respective subsidiaries), will,
among other things, (i) conduct its operations in
the ordinary course of business and (ii) use its
reasonable best efforts to preserve intact its
business organizations and goodwill in all material
respects and keep available the services of its
respective officers and employees as a group.
Further, each of Evergreen and Chancellor has
agreed that, among other things and subject to
certain conditions and exceptions, it will not (and
will cause its subsidiaries not to), without the
prior consent of the other, (i) declare, set aside
or pay any dividends on or make other distributions
in respect of its or its subsidiaries outstanding
capital stock; (ii) split, combine or reclassify
any of its outstanding capital stock or issue or
authorize the issuance of any securities in lieu of
or in substitution for its outstanding capital
stock; (iii) purchase, redeem or otherwise acquire
any shares of outstanding capital stock or any
rights, warrants or options to acquire any such
shares; (iv) issue, sell, grant, pledge or
otherwise encumber any shares of its capital stock,
any other equity securities or any securities
convertible into, or any rights, warrants or
options to acquire any such shares, equity
securities or convertible securities; (v) amend its
certificate of incorporation, bylaws or other such
documents; (vi) acquire any business or any
corporation, partnership, joint venture,
association or other business organization; (vii)
sell, mortgage or otherwise encumber or subject to
any lien or encumbrance or otherwise dispose of any
of its properties or assets that are material to
13
<PAGE> 23
Evergreen or Chancellor and their respective
subsidiaries, (viii) other than working capital
borrowing in the ordinary course of business and
consistent with past practice, incur any
indebtedness for borrowed money or guarantee any
such indebtedness of another person; and (ix) make
any tax election or settle or compromise any income
tax liability that could reasonably be expected to
be material to Chancellor or Evergreen and their
respective subsidiaries.
Conditions to the Merger... The respective obligations of Evergreen,
Chancellor, EMHC, EMCLA and CRBC to consummate the
Merger are subject to the satisfaction or waiver at
or prior to the Effective Time of a number of
conditions, including: (i) the Merger Agreement
shall have been duly approved and adopted by the
stockholders of Evergreen and Chancellor in
accordance with applicable law; (ii) any applicable
waiting periods under the HSR Act, relating to the
Merger shall have expired or been terminated; (iii)
the consent of the FCC to the transfer of control
of the FCC licenses and authorization held by
Evergreen and Chancellor and their respective
subsidiaries shall have been received and such
consent shall have become final and nonappealable;
(iv) the absence of any injunction prohibiting
consummation of the Merger; (v) the Registration
Statement shall have been declared effective by the
Commission and shall not be subject to any stop
order; and (vi) the shares of Surviving Corporation
Common Stock to be issued pursuant to the Merger
Agreement shall have been approved for quotation on
The Nasdaq Stock Market, subject to official notice
of issuance. Evergreen and Chancellor currently
expect that they will waive the condition that the
consent of the FCC to the transfer of control of
the FCC licenses and authorizations held by
Evergreen and Chancellor and their respective
subsidiaries, once received, shall have become
final and nonappealable.
Additional Agreements...... Each of Evergreen and Chancellor has also agreed
to, among other things and subject to certain
conditions and exceptions: (i) as soon as
practicable following the date of the Merger
Agreement, prepare and file with the Commission the
Joint Proxy Statement/Prospectus and the
Registration Statement and to use its best efforts
to have the Registration Statement declared
effective under the Securities Act of 1933, as
amended (the "Securities Act"), as promptly as
practicable after such filing; (ii) take all action
necessary to convene a meeting of its stockholders
to submit the Merger Agreement for approval and to
use its best efforts to hold such stockholders'
meeting as soon as practicable after the date of
the Merger Agreement; and (iii) make, and cause its
respective subsidiaries and its other affiliates to
make, all necessary filings as soon as practicable,
including, without limitation, those required under
the HSR Act, the Securities Act, the Exchange Act
and the Communications Act (including filing an
application with the FCC for the transfer of
control of Chancellor's FCC Licenses and
Evergreen's FCC Licenses), in order to facilitate
prompt consummation of the Merger and the other
transactions contemplated by the Merger Agreement.
Evergreen and Chancellor have also further agreed
not to, and not to permit their subsidiaries to,
permit any of their or their respective
subsidiaries' officers, directors or employees,
investment bankers, attorneys or other advisors or
representatives to, directly or indirectly, (i)
solicit, initiate or encourage the submission of
any Acquisition
14
<PAGE> 24
Proposal (as defined in the Merger Agreement) or
(ii) participate in any discussions or negotiations
regarding, or furnish to any person any information
with respect to, or take any other action to
facilitate any inquiries or the making of any
proposals that constitutes, or may be reasonably be
expected to lead to, any Acquisition Proposal.
Termination................ The Merger Agreement may be terminated at any time
prior to the Effective Time by, among other things:
(i) the mutual written consent of Evergreen and
Chancellor; (ii) by either Evergreen or Chancellor
if, upon a vote at a duly held meeting of the
stockholders of Chancellor or Evergreen, the
required approval of the stockholders of Evergreen
or Chancellor has not been obtained; or (iii) by
either Evergreen or Chancellor if the Merger
Agreement has not been consummated on or before
February 19, 1998.
15
<PAGE> 25
MARKET PRICES
The Evergreen Class A Common Stock and Chancellor Class A Common Stock are
both listed and traded on The Nasdaq Stock Market. The following table sets
forth the high and low closing prices per share of the Evergreen Class A Common
Stock and the Chancellor Class A Common Stock as reported by published financial
sources for the periods indicated.
<TABLE>
<CAPTION>
EVERGREEN CLASS A CHANCELLOR CLASS A
COMMON STOCK COMMON STOCK(1)
----------------- -------------------
HIGH LOW HIGH LOW
------- ------- -------- --------
<S> <C> <C> <C> <C>
1995
First Quarter............................................ $12.00 $ 9.33 -- --
Second Quarter........................................... 18.00 10.67 -- --
Third Quarter............................................ 23.75 17.17 -- --
Fourth Quarter........................................... 21.33 15.92 -- --
1996
First Quarter............................................ 24.50 16.83 $24.50 $20.00
Second Quarter........................................... 29.50 21.83 31.75 22.00
Third Quarter............................................ 33.25 25.74 44.00 28.25
Fourth Quarter........................................... 32.25 23.50 42.00 21.88
1997
First Quarter............................................ 34.00 23.75 30.00 23.88
Second Quarter........................................... 44.63 28.63 40.00 25.00
Third Quarter (through July 30, 1997).................... 48.00 41.25 43.75 37.25
</TABLE>
- ---------------
(1) Chancellor Class A Common Stock has been listed and traded on The Nasdaq
Stock Market since February 9, 1996.
On February 14, 1997, the last trading day before public announcement of
the execution of the Memorandum of Understanding between Evergreen, Chancellor,
EMCLA and CRBC (pursuant to which the parties agreed as to the principal terms
of the Merger), the closing prices of Evergreen Class A Common Stock and
Chancellor Class A Common Stock as reported by published financial sources were
$32.75 per share and $27.94 per share, respectively.
On July 31, 1997, the closing prices of Evergreen Class A Common Stock and
Chancellor Class A Common Stock as reported by Dow Jones Tradeline were $46.00
per share and $41.25 per share, respectively.
Evergreen and Chancellor stockholders are urged to obtain current market
quotations for the Evergreen Class A Common Stock and the Chancellor Class A
Common Stock in connection with voting their shares.
16
<PAGE> 26
SUMMARY PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial statements, a complete
set of which are included on pages P-1 through P-27 of this Joint Proxy
Statement/Prospectus, are presented using the purchase method of accounting for
all acquisitions and reflect (i) the combination of consolidated historical
financial data of Evergreen, Chancellor, each of the stations acquired in the
Completed Evergreen Transactions and the Completed Chancellor Transactions and
each of the stations to be acquired by Evergreen in the Pending Evergreen
Acquisitions and by Chancellor in the Pending Chancellor Acquisitions and (ii)
the elimination of the consolidated historical data of the stations sold by
Evergreen and Chancellor in the Completed Evergreen Transactions and the
Completed Chancellor Transactions and stations to be sold or swapped by
Evergreen or Chancellor, as the case may be, in the Pending Evergreen
Dispositions and the Pending Chancellor Dispositions.
The summary pro forma financial information set forth below under Company
Pro Forma Combined presents adjustments for (i) in the case of the Operating
Data and Other Data, the Completed Transactions, the 1996 Evergreen Equity
Offering, the 1996 Evergreen Preferred Stock Conversion, the Chancellor
Offerings, all of the Pending Transactions (including the Merger and the Pending
Chancellor Transactions) and the Financing Transactions as if such transactions
had occurred on January 1, 1996 and (ii) in the case of the Balance Sheet Data,
for the Completed Transactions consummated after March 31, 1997, the Pending
Transactions and the Financing Transactions as if such transactions had occurred
on March 31, 1997. No adjustments are presented to the unaudited pro forma
condensed combined balance sheet data or the unaudited pro forma condensed
combined statement of operations data in respect of (i) the Bonneville
Acquisition, the Katz Acquisition and the Denver Acquisition, because such
transactions have not yet been completed and do not constitute the acquisition
of a significant business, either individually or in the aggregate, and are
unrelated for purposes of Rule 3-05 and Rule 11-01 of Regulation S-X of the
Commission's rules and (ii) the Douglas AM Dispositions, because such
transaction does not constitute the disposition of a significant business for
purposes of Rule 11-01 of Regulation S-X of the Commission's rules. In addition,
certain transactions identified as "Pending Transactions" in the pro forma
financial statements have been completed since the preparation of such pro forma
financial statements. Finally, the pro forma financial information reflects a
transaction previously proposed by Chancellor to exchange its two Jacksonville
stations for four stations in Nassau/Suffolk (Long Island) (the "SFX Exchange");
however, there is substantial uncertainty as to whether the SFX Exchange will be
consummated. See "The Companies -- Chancellor -- Pending Chancellor
Transactions -- SFX Exchange." In the opinion of Evergreen's and Chancellor's
management, any differences in the pro forma financial statements that would
result from the completion of such previously pending transactions or from the
non-consummation of the SFX Exchange are not material to such presentations
either individually or in the aggregate.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
1996 MARCH 31, 1997
----------------------- ------------------------
COMPANY COMPANY
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL COMBINED
---------- --------- ---------- ----------
(IN THOUSANDS EXCEPT MARGIN AND PER SHARE DATA)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net revenues............................ $ 293,850 $ 703,373 $ 81,897 $ 170,014
Station operating expenses excluding
depreciation and amortization......... 174,344 402,284 52,984 104,550
Operating income (loss)................. 17,960 (46,669) 568 (21,120)
Interest expense........................ 37,527 159,912 8,053 39,978
Dividends and accretion on preferred
stock of subsidiary................... -- 38,400 -- 9,639
Net loss................................ (16,194) (186,185) (6,011) (51,648)
Preferred stock dividends............... 3,820 25,670 -- 6,418
Net loss attributable to common
stockholders.......................... (20,014) (211,855) (6,011) (58,066)
Net loss per common share............... $ (0.66) $ (3.57) $ (0.14) $ (0.98)
Weighted average common shares
outstanding........................... 30,207 59,414 42,188 59,447
OTHER DATA:
Broadcast cash flow(1).................. $ 119,506 $ 301,089 $ 28,913 $ 65,464
Broadcast cash flow margin.............. 41% 43% 35% 39%
EBITDA(1)............................... $ 111,709 $ 287,919 $ 26,583 $ 61,532
Ratio of earnings to combined fixed
charges and preferred stock
dividends(2).......................... -- -- -- --
BALANCE SHEET DATA (END OF PERIOD):
Working capital, excluding current
portion of long-term debt............. $ 67,921 N/A $ 68,183 $ 122,217
Intangible assets, net.................. 853,643 N/A 928,440 4,132,358
Total assets............................ 1,020,959 N/A 1,186,655 4,482,774
Long-term debt (including current
portion).............................. 358,000 N/A 535,375 2,166,600
Stockholders' equity.................... 549,411 N/A 543,524 1,446,290
</TABLE>
17
<PAGE> 27
- ---------------
(1) Broadcast cash flow consists of station operating income excluding
depreciation and amortization, and corporate general and administrative
expense and non-cash stock option compensation expense. EBITDA consists of
operating income before depreciation, amortization and non-cash stock option
compensation expense. Although broadcast cash flow and EBITDA are not
calculated in accordance with generally accepted accounting principles,
Evergreen believes that broadcast cash flow and EBITDA are widely used in
the broadcast industry as a measure of a station group's operating
performance. Nevertheless, these measures should not be considered in
isolation or as a substitute for operating income, cash flows from operating
activities or any other measure for determining Evergreen's operating
performance or liquidity that is calculated in accordance with generally
accepted accounting principles. Broadcast cash flow and EBITDA do not take
into account Evergreen's debt service requirements and other commitments
and, accordingly, broadcast cash flow and EBITDA are not necessary
indications of amounts that may be available for reinvestment in Evergreen's
business or other discretionary uses.
(2) For purposes of this calculation, "earnings" consist of income (loss) before
income taxes and fixed charges, adjusted, in the case of pro forma data, to
exclude preferred stock dividend requirements of subsidiaries. "Fixed
charges" consist of interest, amortization of debt issuance costs, the
component of rental expense believed by management to be representative of
the interest factor thereon and, in the case of pro forma data, preferred
stock dividend requirements of subsidiaries. Earnings were insufficient to
cover fixed charges and preferred stock dividends by $24,967 for the year
ended December 31, 1996, and by $7,320 for the three months ended March 31,
1997. On a pro forma basis after giving effect to the Completed
Transactions, the 1996 Evergreen Equity Offering, the 1996 Evergreen
Preferred Stock Conversion, the Chancellor Offerings, the Pending
Transactions (other than the Bonneville Acquisition, the Katz Acquisition,
the Denver Acquisition and the Douglas AM Dispositions, but including the
SFX Exchange which, as described above, may not be consummated) and the
Financing Transactions, earnings were insufficient to cover fixed charges
and preferred stock dividends by $304,843 and $84,061 for the year ended
December 31, 1996 and the three months ended March 31, 1997, respectively.
18
<PAGE> 28
COMPARATIVE PER SHARE DATA
The following table sets forth the historical per share data, the unaudited
pro forma per share data giving effect to the Merger using the purchase method
of accounting and the equivalent unaudited pro forma combined per share amounts
for each of Evergreen and Chancellor. The pro forma combined data are not
necessarily indicative of actual financial position or future operating results
or that which would have occurred or will occur upon consummation of the Merger.
The information shown below should be read in conjunction with (i) the
consolidated financial statements and notes thereto of Evergreen incorporated
herein by reference, (ii) the consolidated financial statements and notes
thereto of Chancellor incorporated herein by reference and (iii) the pro forma
condensed combined financial statements, including the notes thereto, which are
contained in this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
--------------------------------------- ---------------------------------------
PRO EVERGREEN PRO EVERGREEN
HISTORICAL FORMA(1) EQUIVALENT(2) HISTORICAL FORMA(1) EQUIVALENT(2)
---------- --------- -------------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) per share
Evergreen.................... (0.66) (3.57) -- (0.14) (0.98) --
Chancellor................... (2.10) -- (3.25) (0.90) -- (0.89)
Book value per share(3)
Evergreen.................... 13.03 -- -- 12.87 24.32 --
Chancellor................... 10.91 -- -- 10.54 -- 22.11
Cash dividends per share
Evergreen.................... -- -- -- -- -- --
Chancellor................... -- -- -- -- -- --
</TABLE>
- ---------------
(1) The pro forma combined per share data for Evergreen and Chancellor for the
year ended December 31, 1996 and the three months ended March 31, 1997 have
been prepared as if the following transactions had occurred on January 1,
1996: (i) the Completed Transactions, (ii) the 1996 Equity Offering, (iii)
the 1996 Preferred Stock Conversion, (iv) the Chancellor Offerings, (v) the
Pending Transactions (other than the Bonneville Acquisition, the Katz
Acquisition, the Denver Acquisition and the Douglas AM Dispositions, but
including the SFX Exchange which, as described above, may not be
consummated) and (vi) the Financing Transactions.
(2) The equivalent pro forma combined per share amounts of Chancellor are
calculated by multiplying pro forma income (loss) per share of Evergreen and
pro forma book value per share of Evergreen Stock by a relative value ratio
of existing Chancellor Common Stock to Evergreen Common Stock of 0.9091 to
1.
(3) Book value per share was calculated using stockholders' equity as reflected
in the historical and pro forma financial statements of Evergreen and
Chancellor, respectively, divided by the number of shares outstanding.
19
<PAGE> 29
EVERGREEN MEDIA CORPORATION
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The selected consolidated historical financial data presented below as of
and for each of the five years in the period ended December 31, 1996 have been
derived from the annual audited consolidated financial statements of Evergreen,
which consolidated financial statements have been audited by KPMG Peat Marwick
LLP, independent certified public accountants. The selected consolidated
historical financial data as of March 31, 1996 and 1997 and for the three months
ended March 31, 1996 and 1997 have been derived from the unaudited historical
consolidated financial statements of Evergreen. In the opinion of management of
Evergreen, the unaudited consolidated financial data reflect all adjustments,
which are of a normal recurring nature, necessary for a fair presentation of the
financial position and results of operations for the unaudited periods. The
historical results of operations for the three months ended March 31, 1997, are
not necessarily indicative of the results to be expected for the full year. The
consolidated historical financial results of Evergreen are not comparable from
period to period because of the acquisition and disposition of various radio
stations by Evergreen during the periods covered (See "Pro Forma Financial
Statements"). The following data should be read in conjunction with the
historical consolidated financial statements of Evergreen and the related notes
thereto, the unaudited pro forma condensed consolidated financial statements of
Evergreen and the related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included in
Evergreen's Form 10-K for the fiscal year ended December 31, 1996 and in
Evergreen's Form 10-Q for the three months ended March 31, 1997, each of which
is incorporated by reference herein.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
--------- -------- -------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT RATIO, MARGIN AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross Revenues.......................... $ 61,935 $106,813 $125,478 $ 186,365 $ 337,405 $ 60,782 $ 93,812
Net Revenues............................ 53,969 93,504 109,516 162,931 293,850 53,371 81,897
Station operating expenses excluding
depreciation and amortization......... 34,968 60,656 68,852 97,674 174,344 37,426 52,984
Depreciation and amortization........... 11,596 33,524 30,596 47,005 93,749 22,676 26,015
Corporate general and administrative
expenses.............................. 1,717 2,378 2,672 4,475 7,797 1,492 2,330
Other nonrecurring costs(1)............. -- 7,002 -- -- -- -- --
--------- -------- -------- --------- --------- --------- ---------
Operating income (loss)................. 5,688 (10,056) 7,396 13,777 17,960 (8,223) 568
Interest expense........................ 10,112 13,878 13,809 19,199 37,527 8,973 8,053
Other (income) expense, net(2).......... 565 (3,185) (6,452) 236 (477) -- (165)
--------- -------- -------- --------- --------- --------- ---------
Income (loss) before income taxes and
extraordinary income.................. (4,989) (20,749) 39 (5,658) (19,090) (17,196) (7,320)
Income tax expense (benefit)............ -- -- -- 192 (2,896) (2,923) (1,309)
--------- -------- -------- --------- --------- --------- ---------
Income (loss) before extraordinary
item.................................. (4,989) (20,749) 39 (5,850) (16,194) (14,273) (6,011)
Extraordinary loss on early
extinguishment of debt(3)............. 1,798 -- 3,585 -- -- -- --
--------- -------- -------- --------- --------- --------- ---------
Net loss................................ (6,787) (20,749) (3,546) (5,850) (16,194) (14,273) (6,011)
Preferred stock dividends............... 741 4,756 4,830 4,830 3,820 1,208 --
Accretion of redeemable preferred stock
to mandatory redemption value,
including $17,506 related to early
redemption(4)......................... 276 18,823 -- -- -- -- --
--------- -------- -------- --------- --------- --------- ---------
Net loss attributable to common
stockholders.......................... $ (7,804) $(44,328) $ (8,376) $ (10,680) $ (20,014) $ (15,481) $ (6,011)
========= ======== ======== ========= ========= ========= =========
Net loss per common share............... $ (0.96) $ (4.48) $ (0.64) $ (0.52) $ (0.66) $ (0.55) $ (0.14)
========= ======== ======== ========= ========= ========= =========
Weighted average common shares
outstanding........................... 8,153 9,890 13,002 20,721 30,207 28,056 42,188
</TABLE>
20
<PAGE> 30
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
--------- -------- -------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT RATIO, MARGIN AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Broadcast cash flow(5).................. $ 19,001 $ 32,848 $ 40,664 $ 65,257 $ 119,506 $ 15,945 $ 28,913
Broadcast cash flow margin.............. 35% 35% 37% 40% 41% 30% 35%
EBITDA(5)............................... $ 17,284 $ 23,468 $ 37,992 $ 60,782 $ 111,709 $ 14,453 $ 26,583
Capital expenditures.................... 867 1,735 5,227 2,642 6,543 344 672
Ratio of earnings to combined fixed
charges and preferred stock
dividends(6).......................... -- -- -- -- -- -- --
BALANCE SHEET DATA (END OF PERIOD):
Working capital, excluding current
portion of long-term debt............. $ 13,456 $ 18,498 $ 19,952 $ 34,556 $ 67,921 $ 39,871 $ 68,183
Intangible assets, net.................. 181,022 212,517 233,494 458,787 853,643 762,874 928,440
Total assets............................ 234,852 283,505 297,990 552,347 1,020,959 908,900 1,186,655
Long-term debt (including current
portion).............................. 165,000 152,000 174,000 201,000 358,000 510,000 535,375
Stockholders' equity.................... 2,905 120,968 112,353 304,577 549,411 289,416 543,524
CASH FLOW DATA:
Net cash provided by operating
activities............................ $ 5,379 $ 14,959 $ 19,880 $ 40,387 $ 48,050 $ 14,860 $ 19,241
Net cash used in investing activities... (101,248) (76,163) (32,928) (192,112) (461,938) (315,506) (194,383)
Net cash provided by financing
activities............................ 97,329 62,043 11,683 153,939 413,518 304,432 177,351
</TABLE>
- ---------------
(1) Consists of a non-cash charge resulting from the grant of employee stock
options prior to Evergreen's initial public offering.
(2) Includes gain on dispositions of assets of $3,392 and $6,991 in 1993 and
1994, respectively.
(3) In connection with its debt refinancing in 1992 and 1994, Evergreen wrote
off the unamortized balance of deferred debt issuance costs of $1,798 and
$3,585, respectively, as an extraordinary charge.
(4) Due to the early redemption of Evergreen's Series A Junior Exchangeable
Redeemable Preferred Stock in October 1993, a one-time accretion charge of
approximately $17,506 was incurred which increased loss per share for 1993
by $1.77.
(5) Broadcast cash flow consists of station operating income excluding
depreciation and amortization, and corporate general and administrative
expense and non-cash stock option compensation expense. EBITDA consists of
operating income before depreciation, amortization and non-cash stock option
compensation expense. Although broadcast cash flow and EBITDA are not
calculated in accordance with generally accepted accounting principles,
Evergreen believes that broadcast cash flow and EBITDA are widely used in
the broadcast industry as a measure of a station group's operating
performance. Nevertheless, these measures should not be considered in
isolation or as a substitute for operating income, cash flows from operating
activities or any other measure for determining Evergreen's operating
performance or liquidity that is calculated in accordance with generally
accepted accounting principles. Broadcast cash flow and EBITDA do not take
into account Evergreen's debt service requirements and other commitments
and, accordingly, broadcast cash flow and EBITDA are not necessary
indications of amounts that may be available for reinvestment in Evergreen's
business or other discretionary uses.
(6) For purposes of this calculation, "earnings" consist of income (loss) before
income taxes and fixed charges. "Fixed charges" consist of interest,
amortization of debt issuance costs and the component of rental expense
believed by management to be representative of the interest factor thereon.
Earnings were insufficient to cover fixed charges and preferred stock
dividends by $6,129, $28,066, $7,392, $13,089 and $24,967 for the years
ended December 31, 1992, 1993, 1994, 1995, and 1996, respectively and by
$19,054 and $7,320 for the three months ended March 31, 1996 and 1997,
respectively.
21
<PAGE> 31
CHANCELLOR BROADCASTING COMPANY
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The selected consolidated historical financial data presented below as of
and for each of the five years in the period ended December 31, 1996 have been
derived from the annual audited consolidated financial statements of Chancellor,
which consolidated financial statements have been audited by Coopers & Lybrand
LLP, independent certified public accountants. The selected consolidated
historical financial data as of March 31, 1996 and 1997 and for the three months
ended March 31, 1996 and 1997 have been derived from the unaudited historical
consolidated financial statements of Chancellor. The selected consolidated
financial data for Chancellor in the following table reflects (i) the results of
Old Chancellor Communications for the years ended December 31, 1992 and 1993 and
(ii) the results of operations of Chancellor from January 10, 1994. In the
opinion of management of Chancellor, the unaudited consolidated financial data
reflect all adjustments, which are of a normal recurring nature, necessary for a
fair presentation of the financial position and results of operations for the
unaudited periods. The historical results of operations for the three months
ended March 31, 1997, are not necessarily indicative of the results to be
expected for the full year. The consolidated historical financial results of
Chancellor are not comparable from period to period because of the acquisition
and disposition of various radio stations by Chancellor during the periods
covered (See "Pro Forma Financial Statements"). The following data should be
read in conjunction with the historical consolidated financial statements of
Chancellor and the related notes thereto, the unaudited pro forma condensed
consolidated financial statements of Chancellor and the related notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations," included in Chancellor's Form 10-K for the fiscal year ended
December 31, 1996, as amended on Form 10-K/A, and in Chancellor's Form 10-Q for
the three months ended March 31, 1997, each of which is incorporated by
reference herein.
<TABLE>
<CAPTION>
OLD CHANCELLOR CHANCELLOR BROADCASTING COMPANY
COMMUNICATIONS ---------------------------------------------------------
----------------- THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- -------- -------- -------- --------- -----------
(IN THOUSANDS EXCEPT MARGIN AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues................. $14,310 $17,478 $ 30,080 $ 73,279 $203,188 $ 29,089 $ 63,477
Net revenues................... 12,121 14,717 26,317 64,322 178,401 25,642 55,854
Station operating expenses
excluding depreciation and
amortization................. 8,738 9,738 15,660 37,464 111,210 16,492 38,187
Depreciation and
amortization................. 1,102 1,014 2,954 8,256 20,877 4,525 8,109
Corporate general and
administrative expenses...... 544 568 600 1,816 4,845 1,008 1,712
Merger expense(1).............. -- -- -- -- -- -- 2,056
Stock option compensation(2)... -- -- -- 6,360 3,800 950 950
------- ------- -------- -------- -------- --------- -----------
Operating income (loss)........ 1,737 3,397 7,103 10,426 37,669 2,667 4,840
Interest expense............... 724 700 5,247 18,115 35,704 7,647 11,420
Other (income) expense(3)...... 93 (2) (20) 42 68 6 (1,632)
------- ------- -------- -------- -------- --------- -----------
Income (loss) before income
taxes and extraordinary
item......................... 920 2,699 1,876 (7,731) 1,897 (4,986) (4,948)
Income tax expense (benefit)... 521 1,235 1,164 3,800 4,612 939 (400)
Dividends and accretion on
preferred stock of
subsidiary................... -- -- -- -- 11,557 1,660 8,135
------- ------- -------- -------- -------- --------- -----------
Income (loss) before
extraordinary item........... 399 1,464 712 (11,531) (14,272) (7,585) (12,683)
Extraordinary loss on early
extinguishment
of debt...................... -- -- 818 -- 4,177 4,646 2,749
------- ------- -------- -------- -------- --------- -----------
Net income (loss).............. 399 1,464 (106) (11,531) (18,449) (12,231) (15,432)
Loss on repurchase of preferred
stock........................ -- -- -- -- 16,570 16,570 --
Preferred stock dividends...... -- -- -- -- -- -- 1,454
------- ------- -------- -------- -------- --------- -----------
Net income (loss) attributable
to common stockholders....... 399 1,464 (106) (11,531) (35,019) (28,801) (16,886)
======= ======= ======== ======== ======== ========= ===========
Net loss per common share...... -- -- (0.02) (1.30) (2.10) (2.18) (0.90)
======= ======= ======== ======== ======== ========= ===========
Weighted average common shares
outstanding(4)............... -- -- 5,166 8,850 16,704 13,192 18,720
</TABLE>
22
<PAGE> 32
<TABLE>
<CAPTION>
OLD CHANCELLOR CHANCELLOR BROADCASTING COMPANY
COMMUNICATIONS ---------------------------------------------------------
----------------- THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- -------- -------- -------- --------- -----------
(IN THOUSANDS EXCEPT MARGIN AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Broadcast cash flow(5)......... $ 3,383 $ 4,979 $ 10,657 $ 26,858 $ 67,191 $ 9,150 $ 17,667
Broadcast cash flow margin..... 28% 34% 41% 42% 38% 36% 32%
EBITDA(5)...................... $ 2,839 $ 4,411 $ 10,057 $ 25,042 $ 62,346 $ 8,142 $ 13,899
Capital expenditures........... 86 8 239 1,710 3,209 820 1,564
Ratio of earnings to combined
fixed charges and preferred
stock dividends(6)........... 2.17x 4.51x 1.35x -- -- -- --
BALANCE SHEET DATA (END OF
PERIOD):
Working capital, excluding
current portion of long-term
debt......................... $ 2,304 $ 1,739 $ 6,178 $ 5,826 $ 29,319 $ 14,169 $ 37,586
Intangibles and other, net and
deferred financing costs,
net.......................... 13,056 12,679 189,982 208,093 568,129 573,716 992,514
Total assets................... 20,542 19,275 219,576 241,123 690,743 673,287 1,175,723
Long-term debt (including
current portion)............. -- -- 151,664 172,170 355,313 357,128 536,621
Stockholders' equity........... 19,084 17,145 59,894 54,723 200,991 181,719 200,075
CASH FLOW DATA:
Net cash provided by operating
activities................... $ 2,022 $ 3,606 $ 691 $ 5,471 $ 24,047 $ 8,785 $ 6,045
Net cash used in investing
activities................... (86) (8) (204,748) (26,061) (442,742) (406,386) (480,632)
Net cash provided by (used in)
financing activities......... (2,018) (3,402) 205,574 20,388 421,169 398,802 475,780
</TABLE>
- ---------------
(1) Consists of costs incurred by Chancellor during the three months ended March
31, 1997 in connection with the Merger.
(2) Consists of a non-cash charge resulting from the grant of employee stock
options.
(3) Includes gain on disposition of assets of $1,513 during the three months
ended March 31, 1997.
(4) Reflects the effect of the recapitalization of the number of shares
outstanding which occurred in February 1996 in connection with the Company's
initial public offering of its Class A Common Stock.
(5) Broadcast cash flow consists of station operating income excluding
depreciation and amortization, and corporate general and administrative
expense, merger expense and non-cash stock option compensation expense.
EBITDA consists of operating income before depreciation, amortization and
non-cash stock option compensation expense. Although broadcast cash flow and
EBITDA are not calculated in accordance with generally accepted accounting
principles, Chancellor believes that broadcast cash flow and EBITDA are
widely used in the broadcast industry as a measure of a stations group's
operating performance. Nevertheless, these measures should not be considered
in isolation or as a substitute for operating income, cash flows from
operating activities or any other measure for determining Chancellor's
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. Broadcast cash flow and EBITDA do
not take into account Chancellor's debt service requirements and other
commitments and, accordingly, broadcast cash flow and EBITDA are not
necessary indications of amounts that may be available for reinvestment in
Chancellor's business or other discretionary uses.
(6) For purposes of this calculation, "earnings" consist of income (loss) before
income taxes and fixed charges, adjusted to exclude preferred stock dividend
requirements of subsidiaries, where applicable. "Fixed charges" consist of
interest, amortization of debt issuance costs, the component of rental
expense believed by management to be representative of the interest factor
thereon and, preferred stock dividend requirements of subsidiaries, where
applicable. Earnings were insufficient to cover fixed charges and preferred
stock dividends by $7,731 and $17,365 for the years ended December 31, 1995
and 1996, respectively and by $7,753 and $18,506 for the three months ended
March 31, 1996 and 1997, respectively.
23
<PAGE> 33
RISK FACTORS
In considering whether to approve the Evergreen Merger Proposal and the
Chancellor Merger Proposal, the stockholders of Evergreen and Chancellor, as
applicable, should carefully consider the following factors.
SUBSTANTIAL LEVERAGE; HISTORY OF NET LOSSES AND INSUFFICIENCY OF EARNINGS TO
COVER FIXED CHARGES
Each of Evergreen and Chancellor has, and following the Merger the
Surviving Corporation will continue to have, consolidated indebtedness that is
substantial in relation to its stockholder's equity. Upon consummation of the
Merger, the Surviving Corporation will be subject to the terms of the EMCLA
Senior Credit Facility, the indenture (the "CRBC 9 3/8% Indenture") governing
the $200.0 million principal amount of 9 3/8% Senior Subordinated Notes due 2004
of CRBC (the "CRBC 9 3/8% Notes") being assumed by EMCLA in connection with the
Merger, the indenture (the "CRBC 8 3/4% Indenture") governing the $200.0 million
principal amount of 8 3/4% Senior Subordinated Notes due 2007 of CRBC (the "CRBC
8 3/4% Notes") being assumed by EMCLA in connection with the Merger and the
certificates of designation for the Surviving Subsidiary Series A Preferred
Stock and the Surviving Subsidiary Junior Preferred Stock, each of which will
limit the incurrence of additional indebtedness by the Surviving Corporation.
The indebtedness being assumed in the Katz Acquisition will also contain similar
limitations. As of March 31, 1997, Evergreen's outstanding long-term
indebtedness (including current portion) was approximately $535.4 million, and
Chancellor's long-term indebtedness (including current portion) was
approximately $536.6 million. Consummation of the Pending Transactions and the
Financing Transactions will cause the Surviving Corporation's indebtedness to
significantly exceed the amount of Evergreen's or Chancellor's individual and
combined outstanding indebtedness. As of March 31, 1997, on a pro forma basis
after giving effect to those Completed Transactions consummated after such date,
the Pending Transactions (including the SFX Exchange which, as described above,
may not be consummated) and the Financing Transactions, but without giving
effect to the Bonneville Acquisition, the Katz Acquisition, the Denver
Acquisition or the Douglas AM Dispositions, the Surviving Corporation would have
had outstanding long-term indebtedness (including current portion) of
approximately $2.17 billion, redeemable preferred stock with an aggregate
liquidation preference of $319.2 million, an accumulated deficit of $77.5
million and stockholders' equity of $1.45 billion. It is expected that the
Surviving Corporation will finance the Bonneville Acquisition, the Katz
Acquisition and the Denver Acquisition through the incurrence of approximately
$482.5 million in additional long-term indebtedness.
The degree to which the Surviving Corporation will be leveraged could have
material consequences, including, but not limited to, the following: (i) the
Surviving Corporation's ability to obtain additional financing in the future for
acquisitions, working capital, capital expenditures, and general corporate or
other purposes may be impaired; (ii) a substantial portion of the Surviving
Corporation's cash flow will be required for debt service under the EMCLA Senior
Credit Facility, the CRBC 9 3/8% Notes, the CRBC 8 3/4% Notes and the
indebtedness being assumed in the Katz Acquisition, and payment of cash
dividends on the Surviving Corporation 7% Convertible Preferred Stock and the
Evergreen $3.00 Convertible Preferred Stock; (iii) commencing in February 2001,
the Surviving Corporation will have substantial cash dividend requirements on
the Surviving Subsidiary Series A Preferred Stock and, commencing in January
2002, on the Surviving Subsidiary Junior Preferred Stock; (iv) the Surviving
Subsidiary Corporation's ability to declare cash dividends to the Surviving
Mezzanine Corporation, which will, in turn, distribute dividends paid to it to
the Surviving Corporation in an amount sufficient to enable the Surviving
Corporation to pay dividends on Surviving Corporation 7% Convertible Preferred
Stock and the Evergreen $3.00 Convertible Preferred Stock, will be limited by
the terms of the EMCLA Senior Credit Facility, the CRBC 9 3/8% Indenture, the
CRBC 8 3/4% Indenture and the certificates of designation governing the
Surviving Subsidiary Series A Preferred Stock and Surviving Subsidiary Junior
Preferred Stock; (v) the terms of the indebtedness being assumed in the Katz
Acquisition will limit the ability of Katz to pay dividends to the Surviving
Corporation; (vi) the Surviving Corporation's level of indebtedness could make
it more vulnerable to economic downturns, limit its ability to withstand
competitive pressures and reduce its flexibility in responding to changing
business and economic conditions; and (vii) the agreements governing the
Surviving Corporation's consolidated long term debt (and, to a lesser extent,
the certificates of designation for the Surviving Subsidiary Series A Preferred
Stock and the Surviving Subsidiary Junior Preferred Stock) contain numerous
restrictive operating and financial covenants with which the Surviving
Corporation must comply, and the failure by the Surviving
24
<PAGE> 34
Corporation to comply with such covenants in such instruments could result in an
event of default, which could permit acceleration of the debt under such
instruments and in some cases acceleration of debt under other instruments that
contain cross-default or cross-acceleration provisions.
The ability of the Surviving Corporation to pay interest and principal on
its debt obligations and to pay cash dividends on the preferred stock of the
Surviving Corporation and its subsidiaries will depend upon its future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond its control.
The Surviving Corporation anticipates that its operating cash flow, together
with borrowings under the EMCLA Senior Credit Facility, will be sufficient to
meet its operating expenses, to service its debt requirements and to pay cash
dividends on the preferred stock of the Surviving Corporation and its
subsidiaries as they become due. However, if the Surviving Corporation is unable
to meet such requirements, it will be forced to pursue one or more alternative
strategies such as selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all,
or that the approval of the FCC could be obtained on a timely basis or at all,
for the transfer of any of the stations' licenses in connection with a proposed
sale of assets.
Each of Evergreen and Chancellor has historically experienced, on a
consolidated basis, net losses, as a result of various factors, including
significant interest charges, certain non-recurring expenses and depreciation
and amortization charges relating to the acquisition of radio broadcasting
stations. Evergreen's net loss attributable to common stock for the years ended
December 31, 1994, 1995 and 1996 and for the three months ended March 31, 1997
was $8.4 million, $10.7 million, $20.0 million and $6.0 million, respectively.
Chancellor's net loss attributable to Common Stock for the years ended December
31, 1994, 1995 and 1996 and for the three months ended March 31, 1997 was $0.1
million, $11.5 million, $35.0 million and $16.9 million respectively. On a pro
forma basis, after giving effect to the Completed Transactions, the Pending
Transactions (including the SFX Exchange which, as described above, may not be
consummated), the Financing Transactions, the 1996 Evergreen Equity Offerings,
the 1996 Preferred Stock Conversion and the Chancellor Offerings as though such
transactions had occurred on January 1, 1996, but without giving effect to the
Bonneville Acquisition, the Katz Acquisition, the Denver Acquisition or the
Douglas AM Dispositions, the Surviving Corporation would have had a net loss
attributable to common stockholders of $211.9 million and $58.1 million for the
year ended December 31, 1996 and for the three months ended March 31, 1997,
respectively. Consequently, on that pro forma basis, the Surviving Corporation's
earnings would have been insufficient to cover combined fixed charges and
preferred stock dividends by $304.8 million and $84.1 million for the year ended
December 31, 1996 and the three months ended March 31, 1997, respectively. The
acquisition of radio broadcasting stations has been and will continue to be an
important part of the Surviving Corporation's operating strategy, and the
Surviving Corporation has recently announced the Katz Acquisition, through which
the Surviving Corporation will enter the media representation business.
Evergreen and Chancellor expect that amortization charges and interest expenses
relating to past and possible future acquisitions will continue to have a
significant adverse effect on the Surviving Corporation's reported results.
NECESSITY OF GOVERNMENTAL REVIEWS AND APPROVALS PRIOR TO CONSUMMATION OF THE
PENDING TRANSACTIONS; REQUIRED DISPOSITIONS
Approval of the FCC is required for the issuance, renewal or transfer of
radio broadcast station operating licenses. In addition, the consummation of
each of the Pending Transactions is conditioned upon the expiration or
termination of the applicable waiting period under the HSR Act. To date, (i) the
FCC has approved the Gannett Acquisition, the Secret/Philadelphia Acquisition,
the Greater Media Disposition, the Douglas Chicago Disposition and the Douglas
AM Dispositions, (ii) the waiting periods required under the HSR Act for the
Merger, the Gannett Acquisition, the Secret/Philadelphia Acquisition, the
Greater Media Disposition, the ABC/Detroit Disposition and the Bonneville
Acquisition have expired or been terminated, and (iii) no waiting period under
the HSR Act was required for the Douglas Chicago Disposition or the Douglas AM
Dispositions. Evergreen and Chancellor will be required to divest certain radio
stations, including stations in the San Francisco, Washington, D.C. and Detroit
markets, in order to obtain the necessary FCC authorizations and approvals of
the Merger. In order to comply with the FCC's ownership limitations,
25
<PAGE> 35
Evergreen or Chancellor has each entered into one or more contracts to sell
stations and/or FCC authorizations in the San Francisco, Washington, D.C. and
Detroit markets. There can be no assurance that the necessary dispositions will
be consummated and, if any such dispositions are not consummated, there can be
no assurance that other buyers for the stations required to be disposed of will
be found or that any such dispositions could be effected acceptable prices. If
any of these dispositions are not consummated on a timely basis, it is possible
that the consummation of the Merger or other Pending Transactions would be
delayed. There can be no assurance that any governmental agency will approve or
take any other required action with respect to the Pending Transactions, and, if
approvals are received or actions are taken, that such approvals or actions will
not require further divestitures or be conditioned upon matters that would cause
Evergreen or Chancellor to abandon one or more of the Pending Transactions or
that no action will be brought challenging such approvals or actions, or, if
such challenge is made, as to the result thereof. See "The Merger -- Regulatory
Concerns." The nonconsummation of any of the Pending Dispositions could have a
material adverse effect on Evergreen's or Chancellor's ability to consummate the
Merger.
FCC CONSENT FOR MERGER
Consummation of the Merger is subject to the conditions that the FCC grant
its consent to the transfer of control of the FCC licenses and authorizations
held by Evergreen and Chancellor and their respective subsidiaries to the public
stockholders of the Surviving Corporation as a group (the "FCC Consent"), and
that the FCC Consent become a final and nonappealable order. See "The Merger
Agreement -- Conditions to the Merger" and "The Merger -- Regulatory Concerns."
As of July 30, 1997, the FCC had not yet granted the FCC Consent. Evergreen and
Chancellor expect that the FCC will grant the FCC Consent prior to the Evergreen
Annual Meeting and the Chancellor Special Meeting, although it is not possible
to predict the timing, or even the outcome, of such expected actions with
certainty. No petitions to deny or similar applications opposing Evergreen's and
Chancellor's applications requesting the FCC Consent are pending as of July 30,
1997. Upon grant of the FCC Consent, interested parties would have until 30 days
after such consent is released to seek review thereof by filing a petition for
reconsideration, or application for review, with the full FCC, or to file an
appeal in federal court. Moreover, within 40 days of release of such consent,
the FCC could, on its own motion, reconsider its consent. Should the FCC Consent
be granted prior to the Evergreen Annual Meeting and the Chancellor Special
Meeting, Evergreen and Chancellor expect that they will waive the condition to
consummate the Merger that such consent be a final, nonappealable order. Prior
to the expiration of such 30- or 40-day reconsideration period, there can be no
assurance that any consent granted would become a final and nonappealable order,
and if the consent were to be subsequently reversed or otherwise vacated, there
could be a material adverse effect on the Surviving Corporation.
CONDITIONS TO CONSUMMATION OF MERGER
Consummation of the Merger is subject to a number of conditions, including
approval by the stockholders of each of Evergreen and Chancellor, various
governmental approvals, the prior or simultaneous consummation of the Required
Dispositions (as defined) and the increase in the commitments under the EMCLA
Senior Credit Facility from $1.75 billion to $2.50 billion. Furthermore, under
the terms of the CRBC 9 3/8% Indenture, the CRBC 8 3/4% Indenture and the
certificates of designation for the CRBC Series A Preferred Stock and CRBC
Junior Preferred Stock, the Merger may not be consummated unless, after giving
effect thereto, leverage is less than a specified multiple of the EBITDA of
Chancellor and Evergreen on a combined basis. There can be no assurance that any
of these conditions will be satisfied.
INTEGRATION OF ACQUISITIONS; OPERATION OF KATZ
Upon consummation of the Pending Transactions, the Surviving Corporation
will hold a significantly larger portfolio of radio stations than either
Evergreen or Chancellor has held in the past. In addition, management of both
Evergreen and Chancellor are regularly involved in discussions with third
parties regarding potential acquisitions, and the Surviving Corporation may
pursue an active acquisition strategy that could result in significant
additional expansion in the future. Assuming the consummation of all Pending
Transactions, the Surviving Corporation's future operations and earnings will be
largely dependent on the
26
<PAGE> 36
Surviving Corporation's ability to integrate the stations proposed to be
acquired thereunder. The Surviving Corporation must, among other things,
integrate management and employee personnel and combine certain administrative
procedures. The integration of the stations proposed to be acquired involve
numerous other risks, including the potential loss of key employees of acquired
stations. There can be no assurance that the Surviving Corporation will
successfully integrate the stations proposed to be acquired, and the failure to
do so could have a material adverse effect on its results of operations and
financial condition. In addition, the need to focus management's attention on
the integration of these stations may limit the ability of the Surviving
Corporation to successfully pursue other opportunities for a period of time.
Upon consummation of the Katz Acquisition, Evergreen and Chancellor will
enter into a line of business not previously undertaken by either such party on
a national basis. Although the media representation business is related to the
radio broadcasting business and Evergreen and Chancellor have experience in
certain aspects of the media representation business at the local radio station
level, consummation of the Katz Acquisition will require Evergreen and
Chancellor and, upon consummation of the Merger, the Surviving Corporation, to
operate the business of Katz and manage a significantly larger base of
management and employee personnel performing national media representation
functions. There can be no assurance that Evergreen or Chancellor or, following
consummation of the Merger, the Surviving Corporation, will successfully operate
the business proposed to be acquired as a result of the Katz Acquisition. In
addition, the need to focus management's attention on the operation of this
business may limit the ability of Evergreen or Chancellor or, following
consummation of the Merger, the Surviving Corporation, to successfully pursue
other opportunities for a period of time.
The acquisition strategy of Evergreen, Chancellor and, following the
consummation of the Merger, the Surviving Corporation, involves numerous other
risks, including increasing leverage and debt service requirements, the
diversion of management's attention from other business concerns and the
potential loss of key employees of acquired stations. The availability of
additional acquisition financing cannot be assured, and depending on the terms
of the proposed acquisitions and financings, could be restricted by the terms of
the EMCLA Senior Credit Facility, the CRBC 9 3/8% Indenture, the CRBC 8 3/4%
Indenture or the certificates of designation for the Surviving Corporation 7%
Convertible Preferred Stock, the Evergreen $3.00 Convertible Preferred Stock,
the Surviving Subsidiary Series A Preferred Stock and the Surviving Subsidiary
Junior Preferred Stock and the indebtedness being assumed in the Katz
Acquisition. There can be no assurance that or any future acquisitions will not
have a material adverse effect on the financial condition and results of
operations of the Surviving Corporation.
FIXED EXCHANGE RATIO DESPITE POSSIBLE CHANGE IN STOCK PRICES
The Exchange Ratio is expressed in the Merger Agreement as a fixed ratio.
Accordingly, the Exchange Ratio will not be adjusted in the event of any
increase or decrease in the price of either Evergreen Class A Common Stock or
Chancellor Class A Common Stock. Additionally, neither Evergreen nor Chancellor
has the right to terminate the Merger Agreement in the event of any increase or
decrease in the price of either Evergreen Class A Common Stock or Chancellor
Class A Common Stock. The price of Evergreen Class A Common Stock at the
Effective Time may vary from its price at the date of this Joint Proxy
Statement/ Prospectus and the dates of the Evergreen Annual Meeting and
Chancellor Special Meeting, possibly by a material amount. Such variations may
be the result of changes in the business, operations or prospects of Evergreen
or Chancellor, market assessments of the likelihood that the Merger and the
Pending Transactions will be consummated and the timing thereof, regulatory
considerations, general market and economic conditions and other factors, many
of which will be beyond the control of Evergreen or Chancellor. Because the
Effective Time may occur at a date later than the date of the Evergreen Annual
Meeting and Chancellor Special Meeting, there can be no assurance that the price
of Evergreen Class A Common Stock on such date will be indicative of its price
at the Effective Time. Evergreen and Chancellor presently have no intention of
resoliciting stockholder approval should the market prices of Evergreen Class A
Common Stock or Chancellor Class A Common Stock change materially after the date
of the Evergreen Annual Meeting or the Chancellor Special Meeting, as the case
may be. The Effective Time will occur as soon as practicable following the
Evergreen Annual Meeting and Chancellor Special Meeting and the satisfaction or
waiver of the conditions
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set forth in the Merger Agreement. Stockholders of Evergreen and Chancellor are
urged to obtain current market quotations for Evergreen Class A Common Stock and
Chancellor Class A Common Stock. See "Summary -- Market Prices."
UNCERTAINTY AS TO MARKET PRICE OF SURVIVING CORPORATION COMMON STOCK
The market value of the shares of Surviving Corporation Common Stock to be
issued in the Merger may increase or decrease following the Merger. There can be
no assurance that at or after the Effective Time the shares of Surviving
Corporation Common Stock will trade at the prices at which shares of Evergreen
Class A Common Stock have traded in the past. The price at which Surviving
Corporation Common Stock trades after the Merger may be influenced by many
factors, including the liquidity of and the market for the Surviving Corporation
Common Stock, investor perceptions of the Surviving Corporation and the radio
broadcasting industry, the operating results of the Surviving Corporation, the
Surviving Corporation's dividend policy, possible future changes in regulation
of the radio broadcasting industry and general economic and market conditions.
COMPETITIVE NATURE OF RADIO BROADCASTING
The radio broadcasting industry is a highly competitive business. The
success of each of the Surviving Corporation's stations will be dependent, to a
significant degree, upon its audience ratings and share of the overall
advertising revenue within its market. The Surviving Corporation's stations will
compete for listeners and advertising revenue directly with other radio
stations, as well as with other media, within their respective markets. The
Surviving Corporation will also compete with other broadcasting operators for
acquisition opportunities, and prices for radio stations in major markets have
increased significantly in recent periods. To the extent the rapid pace of
consolidation in the radio broadcasting industry continues, certain competitors
may emerge with larger portfolios of major market radio stations, greater
ability to deliver large audiences to advertisers and more access to capital
resources than the Surviving Corporation. The Surviving Corporation's audience
ratings and market share will be subject to change and any adverse change in a
particular market could have a material and adverse effect on the revenue of the
Surviving Corporation's stations located in that market. There can be no
assurance that any one of the Surviving Corporation's stations will be able to
maintain or increase its current audience ratings or advertising revenue market
share.
The radio broadcasting industry is also subject to competition from new
media technologies that are being developed or introduced, such as the delivery
of audio programming by cable television systems, direct broadcast satellite
("DBS") systems and other digital audio broadcasting formats to local and
national audiences. In addition, the FCC has auctioned spectrum for a new
satellite-delivered Digital Audio Radio Service ("DARS"). These actions may
result in the introduction of several new national or regional multi-channel and
multi-format satellite radio services with sound quality equivalent to compact
discs. Another possible competitor to traditional radio is In Band On Channel
("IBOC") digital radio. IBOC could provide multi-channel, multi-format digital
radio services in the same band width currently occupied by traditional AM and
FM radio services. Evergreen and Chancellor cannot predict at this time the
effect, if any, that any such new technologies may have on the radio
broadcasting industry.
ANTITRUST MATTERS
As a result of the recent consolidation of ownership in the radio broadcast
industry, the Antitrust Division of the United States Department of Justice
("DOJ") has been giving closer scrutiny to acquisitions in the industry,
including certain transactions involving Evergreen and Chancellor. The
consummation of certain Pending Transactions is subject to notification filing
requirements, applicable waiting periods and possible review by the DOJ or the
United States Federal Trade Commission (the "FTC") under the HSR Act and to
date, the waiting periods for only certain of the Pending Transactions has
expired or been terminated. See "-- Necessity of Governmental Reviews and
Approvals Prior to Consummation of the Pending Transactions; Required
Dispositions" and "The Merger -- Regulatory Concerns." DOJ review of certain
transactions has caused, and may continue to cause, delays in anticipated
consummations of certain transactions and, in some cases, may result in attempts
by DOJ to enjoin such transactions or negotiated modifications of the proposed
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transactions. Such delays, injunctions and modifications could have an adverse
effect on Evergreen, Chancellor and the Surviving Corporation and, although
unlikely, may result in the abandonment of some of these otherwise attractive
transactions.
The DOJ has stated publicly that it has established certain revenue and
audience share concentration benchmarks with respect to radio station
acquisitions, above which a transaction may receive additional antitrust
scrutiny. However, to date, the DOJ has also investigated transactions that do
not meet or exceed these benchmarks and has cleared transactions that do exceed
the benchmarks. Although each of Evergreen and Chancellor do not believe that
the acquisition strategy of the Surviving Corporation as a whole will be
adversely affected in any material respect by antitrust review (including review
under the HSR Act) or by additional divestitures that may have to occur as a
result of the antitrust review, there can be no assurance that this will be the
case.
RADIO BROADCASTING INDUSTRY SUBJECT TO FEDERAL REGULATION
The radio broadcasting industry is subject to extensive regulation by the
FCC under the Communications Act of 1934, as amended (as amended by the 1996
Act, the "Communications Act"). Approval of the FCC is required for the
issuance, renewal or transfer of radio broadcast station operating licenses. See
"-- Necessity of Governmental Reviews and Approvals Prior to Consummation of the
Pending Transaction; Required Dispositions." In particular, the Surviving
Corporation's business will be dependent upon its continuing to hold radio
broadcasting licenses from the FCC that are issued for terms of up to eight
years. While in the vast majority of cases such licenses are renewed by the FCC,
there can be no assurance that any of the stations' licenses will be renewed at
their expiration dates, or that renewals, if granted, will not include
conditions or qualifications that could adversely affect the Surviving
Corporation's operations. In addition, the Communications Act and the FCC rules
restrict alien ownership and voting of capital stock of, and participation in
affairs of, Chancellor and Evergreen and, following the Merger, the Surviving
Corporation. Moreover, laws, regulations and policies may be changed
significantly over time and there can be no assurance that such changes will not
have a material adverse affect on the Surviving Corporation's business,
financial condition and results of operations.
The 1996 Act, which amended the Communications Act in a number of important
respects, has created significant new opportunities for radio broadcasters, but
also has created uncertainties as to how the FCC and the courts will enforce and
interpret the 1996 Act. Although the 1996 Act eliminated the national ownership
ceiling previously applicable to radio broadcasters and also loosened
restrictions previously applicable to ownership within single markets,
significant restrictions remain on permitted levels of local ownership. In
markets with 45 or more stations, ownership is limited to eight stations, no
more than five of which can be FM or AM; in markets with 30-44 stations,
ownership is limited to seven stations, no more than four of which can be FM or
AM; in markets with 15-29 stations, ownership is limited to six stations, no
more than four of which can be FM or AM; and in markets with 14 or fewer
stations, ownership is limited to no more than 50.0% of the market's total and
no more than three AM or FM. In order to comply with these limitations,
Evergreen has sold three FM stations in the Chicago market, one FM station in
the Washington, D.C. market and two FM stations in the San Francisco market, has
additionally agreed to sell one AM radio station in the Chicago market, one AM
station in the San Francisco market, two AM stations in the Washington, D.C.
market and one FM station in the Philadelphia market, and Chancellor has agreed
to sell one FM station in the Detroit market. The consummation of those
transactions are subject to the same contingencies applicable to the other
Pending Transaction. See "-- Necessity of Governmental Reviews and Approvals
Prior to Consummation of the Pending Transactions; Required Dispositions."
Compliance with the FCC's multiple ownership rules is expected to cause the
Surviving Corporation and other radio broadcasters to forego acquisition
opportunities that they might otherwise wish to pursue. Compliance with these
rules by third parties may also have a significant impact on the Surviving
Corporation as, for example, in precluding the consummation of swap transactions
that would cause such third parties to violate multiple ownership rules.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Merger by the Evergreen Board and
Chancellor Board, the stockholders of Evergreen and Chancellor, as applicable,
should be aware that certain directors and executive officers of Evergreen and
Chancellor have certain interests in the Merger that are different from, or in
addition to, the interests of stockholders of Evergreen and Chancellor
generally; such interests, together with other relevant factors, were considered
by the Evergreen Board and Chancellor Board in making their recommendation and
approving the Merger Agreement. See "The Merger -- Interests of Certain Persons
in the Merger."
DEPENDENCE ON KEY PERSONNEL
The Surviving Corporation's business will be dependent upon the performance
of certain key individuals, including Thomas O. Hicks, its Chairman of the
Board; Scott K. Ginsburg, its President and Chief Executive Officer; James de
Castro, its Co-Chief Operating Officer; Steven Dinetz, its Co-Chief Operating
Officer; and Matthew E. Devine, its Chief Financial Officer. The loss of the
services of Mr. Hicks, Mr. Ginsburg, Mr. de Castro, Mr. Dinetz or Mr. Devine
could have a material and adverse effect on the Surviving Corporation.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS AND PREFERRED STOCK
The EMCLA Senior Credit Facility, the CRBC 9 3/8% Indenture and the CRBC
8 3/4% Indenture contain certain covenants that restrict, among other things,
the ability of Evergreen and Chancellor and, upon consummation of the Merger,
will restrict the ability of the Surviving Corporation, to incur additional
indebtedness, incur liens, pay dividends or make certain other restricted
payments, consummate certain asset sales, enter into certain transactions with
affiliates, impose restrictions on the ability of a subsidiary to pay dividends
or make certain payments, enter into sale and leaseback transactions, conduct
business other than the ownership and operation of radio broadcast stations,
merge or consolidate with any other person or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of the assets. The
indebtedness being assumed in the Katz Acquisition will also contain similar
limitations. The certificates of designation for the Surviving Subsidiary Series
A Preferred Stock and the Surviving Subsidiary Junior Preferred Stock will
contain certain similar covenants. In addition, the EMCLA Senior Credit Facility
contains other restrictive covenants and prohibits Evergreen from prepaying its
indebtedness. The EMCLA Senior Credit Facility also requires Evergreen to
maintain specified financial ratios and to satisfy certain financial condition
tests. Evergreen's or, following the consummation of the Merger, the Surviving
Corporation's, ability to meet those financial ratios and financial condition
tests can be affected by events beyond its control, and there can be no
assurance that Evergreen or, following the consummation of the Merger, the
Surviving Corporation, will meet those tests. A breach of any of these covenants
could result in a default under the EMCLA Senior Credit Facility, the CRBC
9 3/8% Indenture or the CRBC 8 3/4% Indenture. In the event of an event of
default under the EMCLA Senior Credit Facility, the CRBC 9 3/8% Indenture or the
CRBC 8 3/4% Indenture, the lenders thereunder could elect to declare all amounts
outstanding thereunder, together with accrued interest, to be immediately due
and payable. In the case of the EMCLA Senior Credit Facility, if Evergreen were
unable to repay these amounts, the lenders thereunder could, subject to
compliance with the FCC's rules, seek to foreclose on the stock of EMCLA and its
subsidiaries, which has been pledged to secure that indebtedness.
LIMITATIONS ON ABILITY TO PAY DIVIDENDS
Evergreen is a holding company with no significant assets other than the
common stock of EMHC, and, following consummation of the Katz Acquisition, of
Katz. EMHC is also a holding company with no significant assets other than the
common stock of EMCLA. Consequently, Evergreen is and, upon consummation of the
Merger, the Surviving Corporation will ultimately be dependent on dividends and
other funds from EMCLA and Katz to meet its obligations, including with respect
to dividends on the Surviving Corporation 7% Convertible Preferred Stock and the
Evergreen $3.00 Convertible Preferred Stock. The EMCLA Senior Credit Facility
limits, and upon the consummation of the Merger, the CRBC 9 3/8% Indenture, the
CRBC 8 3/4% Indenture and the certificates of designation governing the
Surviving Subsidiary Series A Preferred Stock and the Surviving Subsidiary
Junior Preferred Stock will limit, but do not prohibit, the
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payment of dividends by EMCLA. The indebtedness being assumed in the Katz
Acquisition will contain similar limitations.
In addition to these restrictions, under Delaware law the Surviving
Corporation will be permitted to pay dividends on its capital stock, including
the Surviving Corporation 7% Convertible Preferred Stock and the Evergreen $3.00
Convertible Preferred Stock, only out of its surplus or, in the event that it
has no surplus, out of its net profits for the year in which a dividend is
declared or for the immediately preceding fiscal year. Surplus is defined as the
excess of a company's total assets over the sum of its total liabilities plus
the par value of its outstanding capital stock. In order to pay dividends in
cash, the Surviving Corporation must have surplus or net profits equal to the
full amount of the cash dividend at the time such dividend is declared. In
determining the Surviving Corporation's ability to pay dividends, Delaware law
permits the board of directors of the Surviving Corporation to revalue the
Surviving Corporation's assets and liabilities from time to time to their fair
market values in order to create surplus. The Surviving Corporation cannot
predict what the value of its assets or the amount of its liabilities will be in
the future and, accordingly, there can be no assurance that the Surviving
Corporation will be able to pay dividends on the Surviving Corporation 7%
Convertible Preferred Stock and the Evergreen $3.00 Convertible Preferred Stock.
CONTROL OF EVERGREEN AND THE SURVIVING CORPORATION
As of the date of this Joint Proxy Statement/Prospectus, Scott K. Ginsburg,
as beneficial owner of all Evergreen Class B Common Stock, holds approximately
44.3% of the outstanding combined voting power of all classes of Evergreen
Common Stock (assuming exercise of all presently outstanding options and options
exercisable within 60 days after July 25, 1997). Each share of the Evergreen
Class A Common Stock has one vote on all matters submitted to a vote of the
holders of the Evergreen Common Stock, whereas each share of the Evergreen Class
B Common Stock generally has ten votes. As a result of his voting power, Mr.
Ginsburg will have substantial influence on all matters submitted to a vote of
the holders of the Evergreen Common Stock, including the Evergreen Merger
Proposal and the Additional Evergreen Proposal.
Upon the consummation of the Merger, Mr. Ginsburg will hold approximately
5% of the outstanding primary shares of Surviving Corporation Common Stock.
Affiliates of Hicks Muse will hold approximately 15% of the outstanding primary
shares of Surviving Corporation Common Stock. As the largest shareholder of the
Surviving Corporation, Hicks Muse will have substantial influence on all matters
submitted to a vote of the holders of Surviving Corporation Common Stock, and
the combined voting power of Hicks Muse and Mr. Ginsburg may have the effect of
discouraging certain types of transactions involving an actual or potential
change of control of the Surviving Corporation, including transactions in which
the holders of the Surviving Corporation Common Stock might otherwise receive a
premium for their shares over then-current market prices.
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THE COMPANIES
EVERGREEN
GENERAL
Evergreen owns and operates radio stations across the United States,
including stations in 11 of the nation's 12 largest radio markets (Los Angeles,
New York, Chicago, Dallas, San Francisco, Washington, D.C., Philadelphia,
Houston, Boston, Detroit and Miami). Evergreen currently owns and operates 41
radio stations (27 FM and 14 AM) including superduopolies in six of the nation's
12 largest radio revenue markets (New York, Chicago, San Francisco,
Philadelphia, Washington, D.C. and Detroit). Consummation of the Pending
Transactions (including the Merger and the Gannett Acquisition) will add 19
stations (15 FM and 4 AM) in Evergreen's current markets and 40 stations in 10
markets not currently served by Evergreen.
Evergreen's portfolio is geographically diversified and employs a wide
variety of programming formats, including adult contemporary, contemporary hit
radio, urban, jazz, country, oldies, news/talk, rock and sports. Each of
Evergreen's stations targets a specific demographic audience within a market,
with the majority of the stations appealing primarily to 18 to 34 or 25 to 54
year old men and/or women, the demographic groups most sought after by
advertisers. Management believes that, because of the size and diversity of its
station portfolio, Evergreen is not unduly reliant on the performance of any one
station or market.
Strategy
Evergreen's senior management team, led by Scott K. Ginsburg and James de
Castro, has extensive experience in acquiring and operating large market radio
station groups. Evergreen's radio business strategy is to assemble and operate
radio station clusters in order to maximize broadcast cash flow generated in
each market. This strategy relies on the following six key elements:
Create Large Market Superduopolies. Evergreen seeks to be the owner and
operator of the leading superduopoly in the largest markets in the United
States. Management believes that the large revenue base in these markets, in
conjunction with operating synergies achievable through the operation of
multiple stations, will enable it to appeal to a wider universe of national and
local advertisers and to achieve a greater degree of profitability than that of
operators and broadcasters in smaller markets. The stations to be acquired in
the Pending Transactions (including the Merger and the Gannett Acquisition) will
complement Evergreen's existing stations in the Los Angeles, New York, Chicago,
San Francisco, Dallas, Houston and Washington, D.C. markets and will increase
the number of Evergreen's superduopolies in the 12 largest United States markets
from six to eight. These transactions will also create new superduopolies for
Evergreen in five additional large markets. Evergreen expects to continue to
selectively pursue acquisition opportunities in the major markets in which it
will compete as well as in other markets.
Maximize Superduopoly Revenue and Expense Synergies. Evergreen seeks to
capitalize on the revenue and expense opportunities created by the recently
assembled superduopolies and those which will be created as a result of the
Merger, the Gannett Acquisition and the Bonneville Acquisition. Superduopolies
have only been permissible since the passage of the 1996 Act. Management
believes that substantial benefits can be derived from the successful
integration of the station cluster groups. Management also believes that radio
station clusters can attract increased revenues in a market by delivering larger
combined audiences to advertisers and by engaging in joint marketing and
promotional activities. In addition, management expects to realize significant
expense savings through the consolidation of facilities and through the
economies of scale created in areas such as national representation commissions,
employee benefits, insurance premiums and other operating costs.
Establish Strong Listener Loyalty. Management believe that strong listener
familiarity with a given radio station produces listener loyalty. Management
seeks to establish this familiarity through a variety of programming and
marketing techniques, including the development of high-profile on-air
personalities and creative station-sponsored promotional events, all of which
are designed to secure heightened listener awareness. Evergreen also conducts
extensive market research to help identify programming format opportunities and
attract new listeners, as has been the case with WKTU-FM in New York. After
operating
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WKTU-FM for nine months under the call letters and country music format
inherited from a prior operator, in February 1996 Evergreen began to operate
WKTU-FM as a rhythmic contemporary hits station. According to Arbitron, WKTU-FM
was ranked eleventh in its target demographic group as a country station, and
was ranked first in several key demographic groups (including its target
demographic group) in the first full ranking period after the station changed
its format. The station has continued to rank among the top five stations in its
demographic group in subsequent periods. Management believes that the
institutionalization of its radio stations through programming, marketing and
research ensures steady long-term audience share ratings.
Maintain Strict Cost Controls. Management maintains a company-wide focus on
cost controls in an effort to maximize broadcast cash flow margins. Management
reviews station spending on a monthly basis. In addition, corporate level
employees maintain weekly sales reporting systems designed to enable management
to evaluate station performance on a current basis. Evergreen's focus on
maximizing superduopoly revenues and maintaining cost controls is reflected by
the fact that, for the last two years, Evergreen has achieved broadcast cash
flow margins of 40% or more. Evergreen also carefully monitors capital
expenditures.
Develop Experienced, Incentivized Management Team. Evergreen believes that
management depth is critical to achieving superior operating performance in a
portfolio as large as Evergreen's. Evergreen's senior management team of Scott
Ginsburg and James de Castro are or will be supported by an experienced team of
veteran group operators and station general managers who are currently working
for Evergreen or for stations being acquired or who will be hired from
Chancellor, Viacom and Gannett. At the station level, Evergreen seeks to
incentivize its individual radio station managers and sales forces to outperform
revenue and broadcast cash flow budget expectations by granting quarterly and
annual performance measurement-based bonuses. Evergreen believes that the
incentives it offers to its employees, as well as its stature in the radio
industry, will enable it to continue to be successful in recruiting top industry
employees.
Maximize Free Cash Flow. By emphasizing the revenue and expense synergies
achievable through the assembly and operation of superduopolies and by carefully
monitoring operating costs and capital expenditures, Evergreen seeks to maximize
broadcast cash flow and, ultimately, free cash flow (broadcast cash flow less
corporate general and administrative expenses, debt service, tax payments,
dividend requirements and capital expenditures). This focus on free cash flow
should facilitate reduction of leverage without undue dependence on capital
markets, and position Evergreen to pursue attractive acquisitions.
COMPLETED EVERGREEN TRANSACTIONS
Since January 1, 1997, Evergreen has completed (i) the acquisition of 17
radio stations for a net purchase price of approximately $1.13 billion, (ii) the
exchange of five stations for two stations and $9.5 million in cash and (iii)
the sale or other disposition of seven radio stations for $341.8 million.
On January 31, 1997, Evergreen acquired WWWW-FM and WDFN-AM in Detroit from
Chancellor for $30.0 million in cash plus various other direct acquisition costs
(the "WWWW/WDFN Acquisition"). Evergreen had previously provided certain sales
and promotional functions to WWWW-FM and WDFN-AM under a joint sales agreement
since February 14, 1996 and subsequently operated the stations under a time
brokerage agreement since April 1, 1996. The acquisition of WWWW-FM created an
FM superduopoly of three FM stations for Evergreen in the Detroit market.
On January 31, 1997, Evergreen acquired KKSF-FM and KDFC-FM/AM in San
Francisco from affiliates of The Brown Organization for $115.0 million in cash
plus various other direct acquisition costs (the "KKSF/KDFC Acquisition").
Evergreen had previously been operating KKSF-FM and KDFC-FM/AM under a time
brokerage agreement since November 1, 1996. The acquisition of KKSF-FM and
KDFC-FM created an FM superduopoly of five FM stations for Evergreen in the San
Francisco market.
On April 1, 1997, Evergreen acquired WJLB-FM and WMXD-FM in Detroit from
Secret for $168.0 million in cash plus various other direct acquisition costs
(the "Secret/Detroit Acquisition"). Evergreen had previously been operating
WJLB-FM and WMXD-FM under time brokerage agreements
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since September 1, 1996. The Secret/Detroit Acquisition created an FM
superduopoly of five FM stations for Evergreen in the Detroit market.
On April 3, 1997, Evergreen exchanged WQRS-FM in Detroit (which Evergreen
acquired on April 3, 1997 from Secret for $32.0 million in cash plus various
other direct acquisition costs) to affiliates of Greater Media Radio, Inc.
("Greater Media") in return for WWRC-AM in Washington, D.C. and $9.5 million in
cash (the "Greater Media Exchange"). Evergreen had previously been operating
WWRC-AM under a time brokerage agreement since June 17, 1996.
On May 1, 1997, Evergreen acquired WDAS-FM/AM in Philadelphia from
affiliates of Beasley FM Acquisition Corp. ("Beasley") for $103.0 million in
cash plus various other direct acquisition costs (the "Beasley Acquisition").
The Beasley Acquisition created an FM superduopoly of three FM stations for
Evergreen in the Philadelphia market.
On May 15, 1997, Evergreen exchanged its five of its six stations in
Charlotte, North Carolina (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM) for two FM
stations (WIOQ-FM and WUSL-FM) owned by EZ Communications, Inc. ("EZ") in
Philadelphia, (the "EZ Exchange"), and also sold Evergreen's sixth radio station
in Charlotte, WNKS-FM, to EZ for $10.0 million in cash (the "EZ Sale" and,
collectively with the EZ Exchange, the "EZ Transaction").
On May 30, 1997, Evergreen acquired WPNT-FM in Chicago from affiliates of
Century Broadcasting Company ("Century") for $73.8 million in cash plus various
other direct acquisition costs (the "Century Acquisition").
On June 3, 1997, Evergreen sold WEJM-FM in Chicago to Crawford Broadcasting
("Crawford") for $14.8 million in cash (the "Crawford Disposition").
On June 19, 1997, Evergreen sold WPNT-FM in Chicago to Bonneville
International Corporation ("Bonneville") for $75.0 million in cash (the
"Bonneville/WPNT Disposition").
On July 2, 1997, Evergreen acquired WLTW-FM and WAXQ-FM in New York and
WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in Washington, D.C. from Viacom
International, Inc. ("Viacom") for approximately $607.7 million plus various
other direct acquisition costs (the "Evergreen Viacom Acquisition").
On July 7, 1997, Evergreen sold WJZW-FM in Washington, D.C. to affiliates
of Capital Cities/ABC Radio ("ABC") for $68.0 million in cash (the
"ABC/Washington Disposition").
On July 7, 1997, Evergreen sold the FCC authorizations and certain
transmission equipment previously used in the operation of KYLD-FM in San
Francisco to Susquehanna Radio Corp. ("Susquehanna") for $44.0 million in cash
(the "San Francisco Frequency Disposition"). Simultaneously therewith,
Chancellor sold the call letters "KSAN-FM" (which Chancellor previously used in
San Francisco) to Susquehanna. On July 7, 1997, Evergreen and Chancellor entered
a time brokerage agreement to enable Evergreen to operate KYLD-FM on the
frequency previously assigned to KSAN-FM, which has an improved broadcast signal
in the San Francisco market, and upon consummation of the Merger, the Surviving
Corporation will continue to operate KYLD-FM on that frequency.
On July 14, 1997, Evergreen completed the disposition of WLUP-FM in Chicago
to Bonneville (the "Bonneville/WLUP Disposition") and it is expected that this
transaction will result in a deferred exchange for one or more radio stations
within 180 days after July 14, 1997. In the event that such exchange does not
take place, Evergreen will receive gross proceeds from the disposition of
WLUP-FM of $80.0 million in cash.
On July 21, 1997, Evergreen sold KDFC-FM in San Francisco to Bonneville for
$50.0 million in cash (the "Bonneville/FDFC Disposition") and, collectively with
the Bonneville/WPNT Disposition and the Bonneville/WLUP Disposition, the
"Bonneville Dispositions").
The foregoing transactions, together with (i) the acquisition by Evergreen
on January 17, 1996 of Pyramid Communications, Inc. for approximately $316.3
million; (ii) the acquisition by Evergreen on May 3, 1996 of WKLB-FM in Boston
for $34.0 million in cash; (iii) the acquisition by Evergreen on August 14, 1996
34
<PAGE> 44
of KYLD-FM in San Francisco for $44.0 million in cash; (iv) the acquisition by
Evergreen on October 18, 1996 of WEDR-FM in Miami for $65.0 million in cash; (v)
the exchange by Evergreen on November 26, 1996 of WKLB-FM in Boston for WGAY-FM
in Washington, D.C.; and (vi) the dispositions on July 19, 1996 and August 1,
1996 of WHTT-FM/AM and WSJZ-FM in Buffalo for $32.0 million are referred to as
the "Completed Evergreen Transactions."
PENDING EVERGREEN TRANSACTIONS
Gannett Acquisition
On April 4, 1997, Evergreen entered into the Gannett Agreements with P&S,
pursuant to which Evergreen will acquire WGCI-AM and WGCI-FM in Chicago, KKBQ-AM
and KKBQ-FM in Houston, and KHKS-FM in Dallas for an aggregate purchase price of
$340.0 million in cash (allocated $140.0 million for WGCI-AM and WGCI-FM, $110.0
million for KKBQ-AM and KKBQ-FM and $90.0 million for KHKS-FM), subject to an
upward adjustment of up to $10.0 million depending on the timing of the
closings. The Gannett Agreements are independent with respect to each market and
may be consummated at different times. Each of the Gannett Agreements contained
a condition precedent to its effectiveness that Evergreen present to P&S
satisfactory evidence of its ability to finance the acquisitions. Evergreen
satisfied these conditions, and each of the Gannett Agreements became effective
as of April 10, 1997. On April 10, 1997, Evergreen issued letters of credit for
the benefit of P&S in the aggregate amount of $34.0 million to secure
Evergreen's obligations under the Gannett Agreements.
Evergreen expects that it will ultimately borrow the funds necessary to
complete the Gannett Acquisition from the EMCLA Senior Credit Facility. However,
if Evergreen does not have sufficient borrowing capacity under the EMCLA Senior
Credit Facility or otherwise to consummate the Gannett Acquisition within the
time period specified in the Gannett Agreements, Evergreen has agreed, pursuant
to an alternative financing facility with certain lenders, to issue common
equity securities for the account of those lenders if the alternative facility
is drawn. Evergreen presently expects that it will be able to consummate the
Gannett Acquisition by drawing on the EMCLA Senior Credit Facility and that, as
a result, Evergreen will not be required to make any draw under an alternative
facility.
Although there can be no assurances, Evergreen expects that the Gannett
Acquisition will be completed in the third or fourth quarter of 1997. See "Risk
Factors -- Necessity of Governmental Reviews and Approvals Prior to Consummation
of the Pending Transactions; Required Dispositions."
Secret/Philadelphia Acquisition
On August 12, 1996, Evergreen entered into an agreement to acquire WFLN-FM
in Philadelphia from Secret Communications, L.P. ("Secret") for $37.8 million in
cash (the "Secret/Philadelphia Acquisition"). Evergreen also entered into an
agreement to operate WFLN-FM under a time brokerage agreement effective
September 1, 1996. Evergreen has also entered into an agreement to sell this
station to Greater Media for $41.8 million. See "-- Pending Evergreen
Dispositions -- Greater Media Disposition." Evergreen has received a
communication from Secret purporting to terminate the Secret/Philadelphia
Acquisition. Evergreen believes that this purported termination is without
merit, and is pursuing legal remedies in order to consummate the transaction.
Any inability to consummate the Secret/Philadelphia Acquisition is not expected
to have a material adverse effect on Evergreen or the Surviving Corporation. See
"Risk Factors -- Necessity of Governmental Reviews and Approvals Prior to
Consummation of the Pending Transactions; Required Dispositions."
Bonneville Acquisition
On June 24, 1997, Evergreen entered into an agreement to acquire KZPS-FM
and KDGE-FM in Dallas from Bonneville for $83.5 million in cash (the "Bonneville
Acquisition"). Evergreen also entered into an agreement to operate KZPS-FM and
KDGE-FM under a time brokerage agreement to be effective after receipt of
necessary HSR Act approval. Although there can be no assurance, Evergreen
expects that the Bonneville Acquisition will be completed in the third or fourth
quarter of 1997. See "Risk Factors --
35
<PAGE> 45
Necessity of Governmental Reviews and Approvals Prior to Consummation of the
Pending Transactions; Required Dispositions."
The Gannett Acquisition, the Secret/Philadelphia Acquisition and the
Bonneville Acquisition are referred to collectively herein as the "Pending
Evergreen Acquisitions."
Required Dispositions
The following describes the transactions contemplated by the Pending
Evergreen Dispositions (as defined) which, together with the ABC/Detroit
Disposition (as defined) to be effected by Chancellor, are collectively referred
to herein as the "Required Dispositions".
Under currently applicable rules of the FCC, Evergreen, like other radio
broadcasters, may not own or control more than eight stations, of which no more
than five may be FM or AM, in a single large market. As a result of the
consummation of the Merger, the Gannett Acquisition and the Secret/Philadelphia
Acquisition, the Surviving Corporation would own stations in excess of the
maximum number of FM stations under common ownership permitted by the FCC's
multiple ownership rules in Chicago, San Francisco/Sacramento, Washington, D.C.,
Philadelphia and Detroit. Accordingly, Evergreen has sold certain stations
and/or FCC authorizations in the Crawford Disposition, the ABC/Washington
Disposition, the San Francisco Frequency Disposition and the Bonneville
Dispositions, and has entered into agreements to divest additional stations in
the markets where it would have stations in excess of the FCC's multiple
ownership limitations. Moreover, Chancellor has entered into an agreement to
divest a station in Detroit. There can be no assurance that Evergreen or
Chancellor will be able to consummate the foregoing dispositions. See "Risk
Factors -- Necessity of Governmental Reviews and Approvals Prior to Consummation
of Pending Transactions; Required Divestitures."
Douglas Chicago Disposition. On March 19, 1997, Evergreen entered into an
agreement to sell WEJM-AM in Chicago to Douglas Broadcasting ("Douglas") for
$7.5 million in cash (including $0.5 million paid by Douglas in escrow) (the
"Douglas Chicago Disposition"). Evergreen expects that the Douglas Chicago
Disposition will be completed in the third quarter of 1997.
Greater Media Disposition. On April 4, 1997, Evergreen entered into an
agreement to sell WFLN-FM in Philadelphia, which Evergreen will acquire in the
Secret/Philadelphia Acquisition, to Greater Media for $41.8 million in cash (the
"Greater Media Disposition").Consummation of the Greater Media Disposition is
subject to the prior or concurrent consummation of the Secret/Philadelphia
Acquisition, as to which no assurances can be given. See "--Pending Evergreen
Acquisitions -- Secret/Philadelphia Acquisition" above. Any inability to
consummate the Greater Media Disposition is not expected to have a material
adverse effect on Evergreen or the Surviving Corporation.
Douglas AM Dispositions. On May 14, 1997, Evergreen entered into an
agreement to sell KDFC-AM in San Francisco and WBZS-AM and WZHF-AM in
Washington, D.C. to Douglas for $18.0 million in the form of a promissory note
to be delivered at closing (the "Douglas AM Dispositions"). The promissory note
will bear interest at 7 3/4%, with a balloon principal payment due four years
after closing. At closing, Douglas will be required to post a $1.0 million
letter of credit for the benefit of Evergreen that will remain outstanding until
all amounts due under the promissory note are paid. Although there can be no
assurance, Evergreen expects that the Douglas AM Dispositions will be completed
during the third quarter of 1997.
The Douglas Chicago Disposition, the Greater Media Disposition and the
Douglas AM Dispositions are referred to collectively herein as the "Pending
Evergreen Dispositions." The Pending Evergreen Acquisitions and the Pending
Evergreen Dispositions are referred to collectively herein as the "Pending
Evergreen Transactions."
The Required Dispositions reflect the number of stations that must be
disposed of by Evergreen and Chancellor in order to comply with the FCC's
multiple ownership limits if the Pending Evergreen Acquisitions and the Merger
are to be consummated. The Surviving Corporation may also be required to dispose
of one or more of its stations as a result of federal or state antitrust laws.
See "Risk Factors -- Antitrust Matters".
36
<PAGE> 46
EVERGREEN FINANCING TRANSACTIONS
To finance the Pending Evergreen Acquisitions, Evergreen's portion of the
Katz Acquisition and the Evergreen Viacom Acquisition, on April 25, 1997, EMCLA
entered into the EMCLA Senior Credit Facility with certain lenders and Toronto
Dominion (Texas), Inc. as Administrative Agent for such lenders. Pursuant to the
EMCLA Senior Credit Facility, EMCLA's credit facility was increased to a total
commitment of $1.75 billion and, upon consummation of the Merger, such total
commitment is expected to be increased to at least $2.50 billion.
On June 16, 1997 Evergreen completed its private offering of 5,500,000
shares of Evergreen $3.00 Convertible Preferred Stock for aggregate gross
proceeds of $275.0 million and on June 20, 1997, the initial purchasers of the
Evergreen $3.00 Convertible Preferred Stock exercised an over-allotment option
granted by Evergreen to acquire an additional 490,000 shares of the Evergreen
$3.00 Convertible Preferred Stock for additional gross proceeds of $24.5
million, (collectively, the "Evergreen Convertible Preferred Stock Offering").
The proceeds of the Evergreen Convertible Preferred Stock Offering were used to
repay borrowings under the EMCLA Senior Credit Facility and subsequently were
reborrowed as part of the financing of the Evergreen Viacom Acquisition.
In addition to the foregoing, Evergreen expects to borrow up to $144.0
million under the EMCLA Senior Credit Facility to be used as equity capital
required to finance Evergreen's share of the Katz Acquisition.
CHANCELLOR
GENERAL
Chancellor is one of the largest companies in the United States exclusively
devoted to radio broadcasting. Chancellor focuses on owning and operating radio
stations in the top 40 U.S. markets, which account for a disproportionately
large percentage of radio advertising revenue. Chancellor believes that the
large revenue base in these markets generally enables operators to achieve a
greater degree of profitability than operators in smaller markets. Chancellor
employs a variety of programming formats, including country, oldies, news/talk,
adult contemporary, progressive album rock, contemporary hit radio, sports and
classical, which Chancellor believes makes it less susceptible to changes in
listening preferences and reduces its dependence upon any local economy or
advertiser category.
Strategy
Chancellor's senior management team, led by Steven Dinetz, its President
and Chief Executive Officer, has extensive experience in acquiring radio
stations and enhancing their broadcast cash flow. Chancellor's radio business
strategy relies upon five key elements:
Revenue Maximization through Large Local Sales Forces and Effective
Inventory Management. Chancellor seeks to maximize its share of local
advertising revenue in each of its markets by developing large, well-trained
sales forces that can be employed to efficiently target available advertising
sources. Management believes that large sales forces enable it to compete
effectively against other radio station operators and position it to obtain
additional advertising dollars that otherwise would be spent on other local
media, such as television and newspapers. In addition, Chancellor aggressively
manages its stations' inventory position to ensure that revenue is maximized.
Emphasis on Margin Enhancement Through Strict Cost Controls. Management
maintains tight control of operating expenses to ensure a focus on profitability
throughout Chancellor. Management requires each station to prepare daily reports
that track station-level revenues, collections and expenses. These reports
enable management to monitor station performance on a real-time basis and
promote greater accountability on the part of station management.
Targeted Programming and Marketing Efforts. Management focuses on
increasing both audience share and audience time spent listening by researching
each station's core audience and targeting its programming
37
<PAGE> 47
format to that audience's preferences. Chancellor reinforces its programming
efforts through active marketing and promotional activities that target the same
core audiences.
Decentralized Management Structure. Chancellor emphasizes the development
of skilled local management and staff with support from the Company's regional
managers. Chancellor seeks to decentralize decision-making so that local
managers have the flexibility to develop policies that they consider to be the
most effective in improving station performance in their respective markets. To
further motivate senior management, Chancellor has established incentive plans
that link compensation directly to station operating performance.
Optimize Station Portfolio. Chancellor seeks to acquire radio stations or
radio station groups operating in top 40 markets that possess programming,
demographic, technical and operating attributes that management believes it can
exploit. Chancellor's goal is to be a leading radio station operator in each of
its markets. However, in markets where management does not believe that it will
be able to achieve this goal, Chancellor may explore the exchange of its
stations for radio stations in other markets where Chancellor can increase its
presence or will consider the sale of stations to raise funds for future
acquisitions.
COMPLETED CHANCELLOR TRANSACTIONS
Since January 1, 1997, Chancellor has completed (i) the acquisition of 24
radio stations for a net purchase price of approximately $1.05 billion, (ii) the
exchange of three stations for one station and $33.0 million in cash and (iii)
the sale of four stations for $71.3 million.
On January 23, 1997, Chancellor acquired Colfax Communications, a radio
broadcasting company with eight FM stations and four AM stations located in four
markets (Minneapolis/St. Paul, Phoenix, Washington, D.C. and Milwaukee) (the
"Colfax Acquisition") for $383.7 million in cash (including acquisition costs).
On January 31, 1997, Chancellor sold WWWW-FM and WDFN-AM in Detroit to
Evergreen for $30.0 million in cash plus various other direct transaction costs
(the "WWWW/WDFN Disposition").
On February 13, 1997, Chancellor acquired three FM stations in Orlando, two
FM stations and one AM station in West Palm Beach and two FM stations in
Jacksonville from OmniAmerica Group for $166.0 million in cash (including
acquisition costs) and common stock of Chancellor valued at $15.0 million (the
"Omni Acquisition"). Chancellor had previously been operating the Orlando
stations acquired in the Omni Acquisition pursuant to a time brokerage agreement
since July 1, 1996.
On March 24, 1997, Chancellor exchanged WEAT-FM/AM and WOLL-FM in West Palm
Beach, which were acquired as part of the Omni Acquisition, for KSTE-FM in
Sacramento and $33.0 million in cash (the "West Palm Beach Exchange").
Chancellor had previously been operating KSTE-FM under a time brokerage
agreement since August 1, 1996. Prior to consummating the West Palm Beach
Exchange, Chancellor had sold all of the broadcast time on WEAT-FM/AM and
WOLL-FM pursuant to a time brokerage agreement since July 1, 1996.
On March 31, 1997, Chancellor sold WMIL-FM and WOKY-AM in Milwaukee, which
were acquired as part of the Colfax Acquisition, for $41.3 million in cash (the
"Milwaukee Disposition").
On July 2, 1997, Chancellor acquired KIBB-FM and KYSR-FM in Los Angeles,
WLIT-FM in Chicago and WDRQ-FM in Detroit from Viacom for approximately $489.8
million plus various other direct acquisition costs (the "Chancellor Viacom
Acquisition").
In addition, on February 14, 1996, Chancellor acquired Trefoil
Communications, Inc. and its wholly owned subsidiary, Shamrock Broadcasting,
Inc. (collectively, "Shamrock Broadcasting"), a radio broadcasting company with
11 FM stations and 8 AM stations in 10 markets for $408.0 million in cash
(including acquisition costs) (the "Shamrock Acquisition"), on July 31, 1996
Chancellor exchanged KTBZ-FM in Houston (which was acquired as part of the
Shamrock Acquisition) and $5.6 million in cash for KIMN-FM and KALC-FM in Denver
(the "Houston/Denver Exchange") and on November 22, 1996 acquired WKYN-AM in
Cincinnati for $1.4 million in cash.
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<PAGE> 48
The foregoing transactions are referred to as the "Completed Chancellor
Transactions." The Completed Evergreen Transactions and the Completed Chancellor
Transactions are collectively referred to as the "Completed Transactions."
PENDING CHANCELLOR TRANSACTIONS
The following transactions (other than the SFX Exchange) are collectively
referred to herein as the "Pending Chancellor Transactions":
ABC/Detroit Disposition. In connection with Evergreen's ABC/Washington
Disposition, on April 11, 1997, Chancellor entered into an agreement to sell
WDRQ-FM in Detroit to ABC for $37.0 million in cash (including $3.7 million paid
by ABC in escrow) (the "ABC/Detroit Disposition" and, together with the
ABC/Washington Disposition, the "ABC Dispositions"). Chancellor expects that the
ABC/Detroit Disposition will be completed in the third quarter of 1997.
Denver Acquisition. On July 30, 1997, Chancellor entered into an agreement
to acquire KXPK-FM in Denver from Ever Green Wireless LLC (which is unrelated to
Evergreen) for $26.0 million in cash (including $1.7 million paid by Chancellor
in escrow) (the "Denver Acquisition"). Chancellor also entered into an agreement
to operate KXPK-FM under a time brokerage agreement to be effective upon receipt
of HSR Act approval. Although there can be no assurance, Chancellor expects that
the Denver Acquisition will be completed in the first quarter of 1998, after
completion of the Merger. See "Risk Factors -- Necessity of Governmental Reviews
and Approvals Prior to Consummation of the Pending Transactions; Required
Dispositions."
SFX Exchange. On July 1, 1996, Chancellor entered into an agreement with
SFX pursuant to which Chancellor agreed to exchange WAPE-FM and WFYV-FM in
Jacksonville and $11.0 million in cash in return for WBAB-FM, WBLI-FM, WHFM-FM
and WGBB-AM in Nassau/Suffolk (Long Island). Chancellor has been operating
WBAB-FM, WBLI-FM, WHFM-FM and WGBB-FM pursuant to a time brokerage agreement
effective July 1, 1996 and SFX has been operating WAPE-FM and WFYV-FM pursuant
to time brokerage agreements each effective July 1, 1996. Chancellor is unable
to predict whether or when it will consummate the SFX Exchange, as it is pending
review by the DOJ under the HSR Act. Chancellor and SFX have entered into an
amendment to the agreement extending the time for which the transactions are to
be consummated to July 31, 1997, after which either party may terminate the
agreement. Chancellor cannot currently predict whether the agreement will be
further extended, whether the SFX Exchange will be consummated as previously
planned or whether the terms thereof will be modified. In light of the
uncertainty as to the terms, if any, on which the SFX Exchange may ultimately be
consummated, the information set forth under "-- The Combined Companies" and
under "Summary -- The Companies -- Combined Companies" does not give effect to
the SFX Exchange, and the term "Pending Chancellor Transactions" does not
include the SFX Exchange.
The Pending Evergreen Dispositions and the ABC/Detroit Disposition are
referred to collectively herein as the "Pending Dispositions".
For a discussion of certain factors that could affect the consummation of
the Pending Transactions, see "Risk Factors -- Necessity of Governmental Reviews
and Approvals Prior to Consummation of the Pending Transactions; Required
Divestitures."
CHANCELLOR FINANCING TRANSACTIONS
On June 24, 1997, CRBC completed its private offering of the CRBC 8 3/4%
Notes (the "CRBC 8 3/4% Notes Offering"). The proceeds of the CRBC 8 3/4% Notes
were used to repay borrowings under CRBC's previous senior credit agreement.
On July 2, 1997, CRBC entered into the CRBC Restated Credit Agreement with
certain lenders and Bankers Trust Company as Managing Agent for such lenders.
Pursuant to the CRBC Restated Credit Agreement, CRBC's credit facility was
refinanced and increased to a total commitment of $750.0 million. Additionally,
on July 2, 1997 Chancellor received an interim loan of $170.0 million (the
"Chancellor Interim Financing"). These financing transactions were used to
finance the Chancellor Viacom Acquisition and will be
39
<PAGE> 49
used to finance Chancellor's portion of the Katz Acquisition. Upon consummation
of the Merger, all borrowings under the CRBC Restated Credit Agreement and the
Chancellor Interim Financing will be repaid by Evergreen, which is expected to
borrow funds under the EMCLA Senior Credit Facility for such purpose.
In addition to the foregoing, Chancellor expects to borrow up to $36.0
million under the CRBC Restated Credit Agreement to be used as equity capital
required to finance Chancellor's share of the Katz Acquisition.
KATZ ACQUISITION
On July 14, 1997, Evergreen, Chancellor and Katz entered into an agreement
pursuant to which a jointly-owned affiliate of Evergreen and Chancellor
(referred to herein as "Morris Acquisition Corporation") would acquire Katz, a
full-service media representation firm, in a tender offer transaction valued at
approximately $373 million.
Under the terms of the Katz Acquisition, shareholders of Katz would be
offered in a tender offer $11.00 in cash per share for each share of common
stock held. Shares not purchased in the tender offer would be converted in a
second-step merger into the right to receive $11.00 in cash per share, subject
to applicable statutory appraisal and dissenters' rights. Assuming completion of
the Katz Acquisition, debt of Katz of approximately $218 million will also be
assumed in the transaction. Shareholders representing approximately 51.6% of
Katz's outstanding common stock have agreed to tender their shares in the offer
and vote in favor of the transaction.
It is currently anticipated that Evergreen and Chancellor would own 80% and
20% of the outstanding stock of Morris Acquisition Corporation, respectively.
Assuming the consummation of the Merger, by virtue of the Parent Merger, EMHC
would acquire 20% of the outstanding stock of Morris Acquisition Corporation
previously owned by Chancellor. It is currently anticipated that, following
consummation of the Merger, EMHC would distribute its stock interest in Morris
Acquisition Corporation to the Surviving Corporation, with the result that
Morris Acquisition Corporation would become a wholly-owned, direct subsidiary of
the Surviving Corporation.
Consummation of the Katz Acquisition is subject to the tender of a majority
of the shares of common stock of Katz on a fully diluted basis, approval of the
Katz shareholders and receipt of necessary regulatory approvals, including the
expiration or termination of the required waiting period under the HSR Act.
Although there can be no assurances, Evergreen and Chancellor expect that the
Katz Acquisition will be completed in the third quarter of 1997, prior to the
consummation of the Merger.
THE COMBINED COMPANIES
After giving effect to the Pending Transactions, the Surviving Corporation
will own and operate 97 radio stations (69 FM and 28 AM) in 22 markets,
including 58 stations serving the 12 largest radio markets in the United States.
The Surviving Corporation's station portfolio will include a total of 12
superduopolies, with eight in the 12 largest radio markets -- Los Angeles, New
York, Chicago, San Francisco, Dallas, Philadelphia, Washington, D.C. and
Detroit -- and four in other large markets -- Denver, Minneapolis/St. Paul,
Phoenix and Orlando. Assuming consummation of the Katz Acquisition, the
Surviving Corporation will also own and operate Katz, a full service media
representation firm serving multiple types of electronic media with leading
market shares in the representation of radio and television stations and cable
television systems. The following tables set forth certain information about
Evergreen's and Chancellor's radio stations and their markets:
40
<PAGE> 50
Evergreen Stations. The following table sets forth selected information
with respect to the portfolio of radio stations owned by Evergreen at July 28,
1997, without giving effect to the Pending Transactions.
<TABLE>
<CAPTION>
RANKING OF
STATION'S STATION RANKING
MARKET BY AUDIENCE TARGET IN TARGET
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHIC DEMOGRAPHIC(4)
--------- ---------- ------- ----------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles, CA 1 KKBT-FM 4.5 Urban Contemporary Women 18-34 2
New York, NY 2 WKTU-FM 4.7 Rhythmic Contemporary Hits Persons 25-54 5
WLTW-FM 6.0 Soft Adult Contemporary Persons 25-54 1
WAXQ-FM 2.0 Classic Rock Persons 25-54 12
Chicago, IL 3 WMVP-AM 1.4 Personality/Sports Men 25-54 18
WRCX-FM 3.2 Mainstream Rock Men 18-34 1
WVAZ-FM 4.2 Black Adult Women 25-54 3
WEJM-AM+ N/M Hip Hop Persons 18-34 N/M
WNUA-FM 3.9 Contemporary Jazz Persons 25-54 5
San Francisco, CA 4 KIOI-FM 3.2 Adult Contemporary Women 25-54 2
KMEL-FM 3.9 Contemporary Hits Persons 18-34 1
KKSF-FM 3.6 Contemporary Jazz Persons 25-54 4
KDFC-AM(5)+ N/M Classical Persons 35-64 N/M
Dallas, TX 5 KSKY-AM 0.1 Inspirational N/M N/M
Philadelphia, PA 6 WYXR-FM 3.5 Adult Contemporary Women 18-49 3
WJJZ-FM 3.9 Contemporary Jazz Persons 35-54 4
WDAS-FM 4.9 Urban Contemporary Persons 25-54 2
WDAS-AM 1.2 Gospel N/M N/M
WUSL-FM 5.0 Urban Contemporary Women 18-34 1
WIOQ-FM 3.6 Contemporary Hit Radio/Dance Women 18-34 3
Houston, TX 7 KTRH-AM 4.5 News/Sports Men 25-54 3
KLOL-FM 3.2 Album Rock Men 18-34 2
Washington, D.C. 8 WTOP-AM 2.9 News/Sports Men 25-54 10
WASH-FM 4.6 Adult Contemporary Women 25-54 2
WGAY-FM 3.9 Adult Contemporary Persons 35-64 6
WWRC-AM 0.9 News/Talk Persons 35-64 24
WMZQ-FM 5.0 Country Persons 25-54 5
WBZS-AM+ N/M Business News N/M N/M
WZHF-AM+ N/M Health and Fitness N/M N/M
Boston, MA 9 WJMN-FM 6.3 Contemporary Hits Women 18-24 2
WXKS-FM 6.2 Contemporary Hits Women 25-34 1
WXKS-AM 1.7 Nostalgia Women 45-54 12
Detroit, MI 11 WKQI-FM 4.7 Adult Contemporary Women 25-54 4
WNIC-FM 7.2 Adult Contemporary Women 25-54 1
WDOZ-AM(6) N/M Adult Contemporary Women 25-54 N/M
WWWW-FM 3.6 Country Women 25-54 9
WDFN-AM 1.3 Sports/Talk Men 25-49 11
WJLB-FM 8.1 Urban Contemporary Persons 18-34 1
WMXD-FM 4.3 Black Adult Persons 25-54 4
Miami/Ft Lauderdale, 12 WVCG-AM 0.6 Brokered(7) N/M N/M
FL WEDR-FM 4.9 Urban Contemporary Persons 25-54 6
</TABLE>
- ---------------
+ Indicates station to be disposed in a Pending Evergreen Disposition.
(1) Actual city of license may differ from metropolitan market served in certain
cases.
(2) Ranking of principal radio market served by the station among all U.S. radio
broadcast markets by aggregate 1996 gross radio broadcasting revenue as
reported by James H. Duncan, Duncan's Radio Market Guide (1997 ed.).
(3) Information derived from The Arbitron Company, Spring 1997, Local Market
Reports in the specified markets for listeners age 12+, Monday to Sunday,
6:00 a.m. to Midnight. Copyright, The Arbitron Company.
(4) Information derived from The Arbitron Company, Spring 1997. Local Market
Reports in the specified markets for the Target Demographics specified for
listening Monday to Sunday, 6:00 a.m. to Midnight. Copyright, The Arbitron
Company.
(5) Evergreen has historically brokered KDFC-AM to third parties.
(6) Evergreen has historically brokered WDOZ-AM to third parties.
(7) Evergreen sells airtime to third parties for broadcast of programming on a
variety of topics.
N/M: Not meaningful
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<PAGE> 51
Chancellor Stations. The following table sets forth selected information
with respect to the portfolio of stations owned by Chancellor at July 28, 1997,
without giving effect to the Pending Chancellor Transactions:
<TABLE>
<CAPTION>
RANKING OF
STATION'S STATION RANKING
MARKET BY AUDIENCE TARGET IN TARGET
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
--------- ---------- ------- ----------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles, CA 1 KLAC-AM 2.2 Adult Standards/Sports Persons 35-64 21
KZLA-FM 2.5 Country Persons 25-54 14
KYSR-FM 2.8 Hot Adult Contemporary Persons 25-54 10
KIBB-FM 1.6 Rhythmic Adult Persons 25-54 18
Contemporary
New York, NY 2 WHTZ-FM 3.5 Contemporary Hit Radio Persons 18-34 6
Chicago, IL 3 WLIT-FM 4.8 Soft Adult Contemporary Persons 25-54 1
San Francisco, CA 4 KNEW-AM 1.0 Country/Sports Persons 25-54 34
KYLD-FM 4.2 Brokered(5) Persons 25-54 13
KABL-AM 2.5 Adult Standards Persons 35-64 13
KBGG-FM 2.7 70's Oldies Persons 25-54 8
Washington, D.C. 8 WBIG-FM 4.7 Oldies Persons 25-54 2
WGMS-FM 4.1 Classical Persons 35-64 3
WTEM-AM 1.0 Sports/Talk Men 18-49 18
Atlanta, GA 10 WFOX-FM 4.3 Oldies Persons 25-54 10
Detroit, MI 11 WDRQ-FM+ 3.8 Rhythmic Hit Radio Persons 18-34 4
Denver, CO 15 KRRF-AM 0.6 Talk Men 25-54 18
KXKL-FM 4.2 Oldies Persons 25-54 7
KVOD-FM 1.8 Classical Persons 25-54 19
KIMN-FM 2.7 70's Oldies Persons 25-54 13
KALC-FM 4.8 Hot Adult Contemporary Persons 18-34 1
Minneapolis/
St. Paul, MN 16 KTCZ-FM 4.4 Progressive Album Rock Men 25-49 2
KTCJ-AM(6) 0.2 Progressive Album Rock Men 25-49 20
KDWB-FM 6.9 Contemporary Hit Radio Persons 18-34 2
KFAN-AM 1.8 Sports Men 18-49 11
KEEY-FM 6.9 Country Persons 25-54 3
KQQL-FM 5.0 Oldies Persons 25-54 4
WBOB-FM(7) 4.5 Young Country Persons 18-49 7
Phoenix, AZ 17 KMLE-FM 6.0 Country Persons 25-54 3
KISO-AM 0.8 Urban Adult Contemporary Persons 25-54 25
KOOL-FM 6.0 Oldies Persons 25-54 2
KOY-AM 5.1 Adult Standards Persons 35-64 10
KYOT-FM 3.1 Contemporary Jazz Persons 25-54 13
KZON-FM 3.7 Alternative Rock Persons 18-34 4
Cincinnati, OH 20 WUBE-FM(8) 8.6 Country Persons 25-54 1
WUBE-AM 0.4 Nostalgia Persons 35-64 24
WYGY-FM(8) 3.3 Young Country Men 18-34 8
WKYN-AM 0.7 Sports/Talk Men 18-49 15
Pittsburgh, PA 24 WWSW-AM(9) 0.3 Oldies Persons 25-54 24
WWSW-FM 5.6 Oldies Persons 25-54 4
Sacramento, CA 25 KGBY-FM 3.8 Adult Contemporary Women 25-54 2
KHYL-FM 4.1 Oldies Persons 25-54 6
KFBK-AM 10.5 News/Talk Persons 25-54 2
KSTE-AM 2.9 Talk Persons 25-54 15
Orlando, FL 26 WOCL-FM 4.4 Oldies Persons 25-54 10
WOMX-FM 7.2 Adult Contemporary Persons 25-54 1
WJHM-FM 8.2 Urban Contemporary Persons 18-34 1
WXXL-FM 6.9 Contemporary Hit Radio Persons 18-34 2
Nassau/Suffolk (Long
Island), NY(10) 44 WALK-FM 6.2 Adult Contemporary Persons 25-54 1
WALK-AM 0.3 Adult Contemporary Persons 35-64 38
Jacksonville, FL 47 WAPE-FM 8.1 Contemporary Hit Radio Women 18-34 1
WFYV-FM 8.6 Album Oriented Rock Men 25-54 1
</TABLE>
42
<PAGE> 52
<TABLE>
<CAPTION>
RANKING OF
STATION'S STATION RANKING
MARKET BY AUDIENCE TARGET IN TARGET
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
--------- ---------- ------- ----------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Riverside/San
Bernardino, CA 64 KGGI-FM 6.1 Contemporary Hit Radio Persons 18-34 1
KMEN-AM 0.4 Oldies Men 25-54 32
<CAPTION>
TARGET
DEMOGRAPHICS
AUDIENCE
MARKET(1) SHARE(%)(4)
--------- ------------
<S> <C>
Riverside/San
Bernardino, CA 9.4
0.6
</TABLE>
- ---------------
+ Includes station to be disposed in the ABC/Detroit Disposition.
(1) Actual city of license may differ from metropolitan market served in
certain cases.
(2) Ranking of principal radio market served by the station among all U.S.
radio broadcast markets by aggregate 1996 gross radio broadcasting revenue
as reported by James H. Duncan, Duncan's Radio Market Guide (1997 ed.).
(3) Information derived from The Arbitron Company, Spring 1997, Local Market
Reports in the specified markets for listeners age 12+, Monday to Sunday,
6:00 a.m. to Midnight. Copyright, The Arbitron Company.
(4) Information derived from The Arbitron Company, Spring 1997, Local Market
Reports in the specified markets for the Target Demographics specified for
listening Monday to Sunday, 6:00 a.m. to Midnight. Copyright, The Arbitron
Company.
(5) In the San Francisco Frequency Disposition, Evergreen sold the FCC
authorizations related to the frequency previously utilized in the
operation of KYLD-FM. Upon consummation of this disposition, Evergreen
began operating KYLD-FM and its Contemporary Hits format, which was ranked
first in its Target Demographics according to Arbitron for the most recent
period, on the frequency previously used by Chancellor in the operation of
KSAN-FM pursuant to a time brokerage agreement. On July 8, 1997, Chancellor
changed the call letters of this frequency to "KYLD-FM."
(6) Programming provided to KTCJ-AM via simulcast of programming broadcast on
KTCZ-FM. The format of KTCJ-AM was changed to Classic Country with a target
demographic of Persons 35-64 effective April 25, 1997.
(7) The format of WBOB-FM was changed to Album Rock with a target demographic
of Men 18-34 effective April 15, 1997.
(8) WUBE-FM and WYGY-FM are sold in combination.
(9) Programming provided to WWSW-AM via simulcast of programming broadcast on
WWSW-FM.
(10) Nassau/Suffolk (Long Island) may also be considered part of the greater New
York market, although it is reported separately as a matter of convention.
N/M: Not meaningful.
Gannett Stations. The following table sets forth selected information with
respect to the stations to be acquired following consummation of the Gannett
Acquisition:
<TABLE>
<CAPTION>
RANKING OF STATION TARGET
STATION'S RANKING DEMOGRAPHICS
MARKET BY AUDIENCE TARGET IN TARGET AUDIENCE
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4) SHARE(%)(4)
--------- ---------- ------- ----------- -------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Persons
Chicago, IL 3 WGCI-AM 1.4 Urban/R&B 18-34 25 0.7
Persons
WGCI-FM 5.6 Urban Oldies 25-54 2 5.6
Dallas, TX 5 KHKS-FM 7.0 Contemporary Hits Women 18-34 1 14.4
Persons
Houston, TX 7 KKBQ-AM 0.2 Country 25-54 34 0.2
Persons
KKBQ-FM 4.3 Fresh Country 25-54 6 5.0
</TABLE>
- ---------------
(1) Actual city of license may differ from metropolitan market served in certain
cases.
(2) Ranking of principal radio market served by the station among all U.S. radio
broadcast markets by aggregate 1996 gross radio broadcasting revenue as
reported by James H. Duncan, Duncan's Radio Market Guide (1997 ed.).
43
<PAGE> 53
(3) Information derived from The Arbitron Company, Spring 1997, Local Market
Reports in the specified markets for listeners age 12+, Monday to Sunday,
6:00 a.m. to Midnight. Copyright, The Arbitron Company.
(4) Information derived from The Arbitron Company, Spring 1997, Local Market
Reports for the Target Demographics in the specified markets specified for
listening Monday to Sunday, 6:00 a.m. to Midnight. Copyright, The Arbitron
Company.
Other Pending Evergreen and Chancellor Acquisitions. The following table
sets forth selected information with respect to the stations to be acquired by
Evergreen following consummation of the Secret/ Philadelphia Acquisition and the
Bonneville Acquisition, and by Chancellor following consummation of the Denver
Acquisition:
<TABLE>
<CAPTION>
RANKING OF
STATION'S STATION RANKING TARGET
MARKET BY AUDIENCE TARGET IN TARGET DEMOGRAPHICS
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4) AUDIENCE SHARE(4)
- ------------------ ---------- --------- ----------- ---------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dallas, TX 5 KZPS-FM 3.8 Classic Rock Persons 25-54 4 5.2
KDGE-FM 3.0 Alternative Rock Persons 18-34 5 5.3
Philadelphia, PA 6 WFLN-FM+ 2.6 Classical Persons 35-74 10 3.8
Denver, CO 15 KXPK-FM 3.1 Alternative Persons 18-49 11 4.1
</TABLE>
- ---------------
+ Indicates station to be disposed in a Pending Disposition.
(1) Actual city of license may differ from metropolitan market served in certain
cases.
(2) Ranking of principal radio market served by the station among all U.S. radio
broadcast markets by aggregate 1996 gross radio broadcasting revenue as
reported by James H. Duncan, Duncan's Radio Market Guide (1997 ed.).
(3) Information derived from The Arbitron Company, Spring 1997, Local Market
Reports in the specified markets for listeners age 12+, Monday to Sunday,
6:00 a.m. to Midnight. Copyright, The Arbitron Company.
(4) Information derived from The Arbitron Company, Spring 1997, Local Market
Reports for the Target Demographics in the specified markets specified for
listening Monday to Sunday, 6:00 a.m. to Midnight. Copyright, The Arbitron
Company.
44
<PAGE> 54
THE MEETINGS
THE ANNUAL MEETING OF EVERGREEN
Purpose of the Meeting. This Joint Proxy Statement/Prospectus is being
furnished to the holders of shares of Evergreen Common Stock in connection with
the solicitation of proxies by the Evergreen Board for use at the Evergreen
Annual Meeting and at any adjournment thereof. The purpose of the Evergreen
Annual Meeting is to consider and vote upon two proposals: (1)(i) to approve the
Merger Agreement and the Merger; (ii) to approve the issuance of 0.9091 shares
of Surviving Corporation Common Stock to holders of Chancellor Common Stock for
each share of Chancellor Common Stock outstanding immediately prior to the
consummation of the Merger; (iii) to approve the assumption by Evergreen of
currently outstanding options to purchase shares of Chancellor Class A Common
Stock held by certain officers, directors, employees and consultants of
Chancellor and its subsidiaries and (iv) to approve the amendment and
restatement of the Evergreen Certificate; and (2) to elect eight directors to
the Evergreen Board. The Evergreen Annual Meeting will be held on September 3,
1997 at The Omni Mandalay Hotel, 221 East Las Colinas Boulevard, Irving, Texas
75039, at 10:00 a.m., C.D.T.
Proposal 1 above is referred to herein as the Evergreen Merger Proposal,
and proposal 2 above is referred to herein as the Additional Evergreen Proposal.
A proxy card has been enclosed with this Joint Proxy Statement/Prospectus
for use by Evergreen stockholders.
THE EVERGREEN BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS APPROVE THE
EVERGREEN MERGER PROPOSAL AND THE ADDITIONAL EVERGREEN PROPOSAL BY VOTING FOR
THE ABOVE PROPOSALS.
For a description of the interests of certain directors of Evergreen in the
Merger that may be different from, or in addition to, the interests of the
Evergreen stockholders generally, see "The Merger -- Interest of Certain Persons
in the Merger."
Wasserstein Perella has acted as financial advisor to the Evergreen Board
in connection with the Merger, and Wasserstein Perella has advised the Evergreen
Board that, in the opinion of Wasserstein Perella, the Exchange Ratio is fair to
Evergreen from a financial point of view.
Record Dates and Voting Rights. The close of business on July 25, 1997 (the
"Evergreen Record Date") has been fixed as the record date for determining
holders of shares of Evergreen Common Stock entitled to notice of and to vote at
the Evergreen Annual Meeting. Accordingly, only holders of record of Evergreen
Common Stock on the Evergreen Record Date will be entitled to receive notice of
and vote at the Evergreen Annual Meeting. At the close of business on July 25,
1997, 39,135,235 shares of Evergreen Class A Common Stock, and 3,114,066 shares
of Evergreen Class B Common Stock were issued and outstanding and entitled to
notice of and to vote at the Evergreen Annual Meeting.
The presence in person or by proxy of the holders of a majority of the
Evergreen Common Stock issued and outstanding and entitled to vote shall
constitute a quorum. A quorum, once established, will not be broken by the
withdrawal from the Evergreen Annual Meeting of enough votes to leave less than
a quorum, and the votes present at the Evergreen Annual Meeting after the
establishment of a quorum will be sufficient to transact all business at the
Evergreen Annual Meeting. Under Evergreen's Restated Bylaws (the "Evergreen
Bylaws") and Delaware law, shares represented by proxies that reflect
abstentions or "broker non-votes" (i.e., shares held by a broker or nominee
which are represented at the meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal) will be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum.
Assuming the presence of a quorum, the approval of the issuance of
Surviving Corporation Common Stock to holders of Chancellor Common Stock
pursuant to the Merger Agreement and the assumption of outstanding options to
purchase shares of Chancellor Class A Common Stock pursuant to the Merger
Agreement each requires, under rules applicable to companies whose securities
are traded on The Nasdaq
45
<PAGE> 55
Stock Market, the affirmative vote of a majority of the votes cast in respect of
the shares of Evergreen Common Stock present and entitled to vote, in person or
by proxy, at the Evergreen Annual Meeting. Assuming the presence of a quorum,
under Section 242(b) of the DGCL, the approval of the amendment and restatement
of the Evergreen Certificate pursuant to the Merger Agreement requires (i) the
affirmative vote of a majority of the total number of votes entitled to be cast
by all holders of shares of Evergreen Common Stock entitled to vote at the
Evergreen Annual Meeting, voting as a single class and (ii) the affirmative vote
of a majority of the total number of votes entitled to be cast by holders of
Evergreen Class B Common Stock entitled to vote at the Evergreen Annual Meeting,
voting separately as a class. Accordingly, approval of the Evergreen Merger
Proposal will require the affirmative vote of a majority of the total number of
votes entitled to be cast by all holders of shares of Evergreen Common Stock
entitled to vote at the Evergreen Annual Meeting, voting as a single class, and
the affirmative vote of a majority of the total number of votes entitled to be
cast by holders of Evergreen Class B Common Stock entitled to vote at the
Evergreen Annual Meeting, votes separately as a class. Abstentions will have the
effect of votes against the Evergreen Merger Proposal. Broker non-votes,
however, will be treated as un-voted for purposes of determining approval of
such proposal and will not be counted as votes against such proposal.
Assuming the presence of a quorum, directors will be elected by a favorable
vote of a plurality of the votes cast in respect of the shares of Evergreen
Common Stock present and entitled to vote, in person or by proxy, at the
Evergreen Annual Meeting. Accordingly, abstentions or broker non-votes as to the
election of directors will not affect the election of the candidates receiving
the plurality of votes.
Under Evergreen's Certificate, as currently in effect, the holders of
Evergreen Common Stock vote as a single class, with each share of Evergreen
Class A Common Stock entitled to one vote and each share of Evergreen Class B
Common Stock entitled to ten votes, with respect to the Evergreen Merger
Proposal and the Evergreen Additional Evergreen Proposal. Holders of Evergreen
Common Stock are not entitled to cumulative votes in the election of directors.
Under Section 242(b) of the DGCL, the holders of Evergreen Class B Common Stock
are also entitled to vote as a separate class with respect to the Evergreen
Merger Proposal as a result of the proposed amendment to the Evergreen
Certificate. Shares of each class of Evergreen Common Stock are entitled to one
vote with respect to any proposed "going private" transaction between Evergreen
and Scott K. Ginsburg, as holder of all of the Evergreen Class B Common Stock or
any affiliate of Mr. Ginsburg and as otherwise provided by law. These provisions
relating to "going private" transactions do not apply to any matter that will
come before the Evergreen Annual Meeting.
As of the close of business on July 25, 1997, directors and executive
officers of Evergreen and their affiliates were the beneficial owners of 818,063
shares of Evergreen Class A Common Stock (including all currently exercisable
stock options and options exercisable within 60 days of July 25, 1997 owned by
certain executive officers of Evergreen) and 3,114,066 shares of Evergreen Class
B Common Stock (all of which are owned by Mr. Ginsburg). Mr. Ginsburg has
entered into the Stockholders Agreement, pursuant to which Mr. Ginsburg has
agreed, subject to certain conditions, to vote his shares of Evergreen Class B
Common Stock in favor of approval and adoption of the Evergreen Merger Proposal.
Mr. Ginsburg's shares of Evergreen Class B Common Stock represent approximately
44.3% of the combined voting power of the outstanding Evergreen Common Stock
(assuming exercise of all presently outstanding options and options exercisable
within 60 days after July 25, 1997). See "The Stockholders Agreement." In
addition, directors and executive officers of Evergreen who have not executed
the Stockholders Agreement have indicated that they intend to vote their shares
of Evergreen Common Stock in favor of approval and adoption of the Evergreen
Merger Proposal.
Voting and Revocation of Proxies. Shares of Evergreen Common Stock, the
holders of which are entitled to vote at the Evergreen Annual Meeting and which
are represented by properly executed proxies, will, unless such proxies have
been revoked, be voted, and they will be voted in accordance with the
instructions indicated on such proxies. If no instructions are indicated, shares
of Evergreen Common Stock will be voted and they will be voted FOR adoption and
approval of the Evergreen Merger Proposal and the Additional Evergreen Proposal
and in the discretion of the proxy holder as to any other matter incidental to
the Evergreen Merger Proposal and the Additional Evergreen Proposal which may
properly come before the Evergreen Annual Meeting and as to which such shares
are entitled to vote.
46
<PAGE> 56
A stockholder who gives a proxy may revoke it at any time before it is
exercised by (i) filing with the Bank of New York in its capacity as transfer
agent for the Evergreen Class A Common Stock (the "Evergreen Transfer Agent"),
at or before the Evergreen Annual Meeting, a written notice of revocation
bearing a later date than the proxy, (ii) duly executing a subsequent proxy
relating to the same shares of Evergreen Class A Common Stock and delivering it
to the Evergreen Transfer Agent at or before the Evergreen Annual Meeting, or
(iii) attending the Evergreen Annual Meeting and voting in person (although
attendance at the Evergreen Annual Meeting will not in and of itself constitute
a revocation of a proxy). Any written notice revoking a proxy should be sent to
the Bank of New York, 101 Barclay Street, New York, New York 10286, Attn: Proxy
Department.
Evergreen will bear the cost of soliciting proxies from its stockholders.
In addition to the use of the mails, proxies may be solicited by the directors,
officers and certain employees of Evergreen by personal interview, telephone or
telegram. Such directors, officers and employees will not be additionally
compensated for such solicitation but may be reimbursed for reasonable
out-of-pocket expenses incurred in connection therewith. In addition, Evergreen
has retained Georgeson & Company, Inc. to assist in certain distribution
services related to this Joint Proxy Statement/Prospectus for a fee not to
exceed $8,500 plus out-of-pocket expenses. Arrangements will also be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of Evergreen Common
Stock. Evergreen may reimburse such custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred in connection therewith.
THE SPECIAL MEETING OF CHANCELLOR
Purpose of the Meeting. This Joint Proxy Statement/Prospectus is being
furnished to the holders of shares of Chancellor Common Stock in connection with
the solicitation of proxies by the Chancellor Board for use at the Chancellor
Special Meeting and at any adjournment thereof. The purpose of the Chancellor
Special Meeting is to consider and vote upon a proposal to approve the Merger
Agreement (the "Chancellor Merger Proposal"). Chancellor stockholders will also
transact such other business incidental to the foregoing as may properly come
before the Chancellor Special Meeting or any adjournments thereof. The
Chancellor Special Meeting will be held on September 3, 1997, at The Hotel
Crescent Court, 400 Crescent Court, Dallas, Texas 75201, commencing at 10:00
a.m., C.D.T.
A proxy card has been enclosed with this Joint Proxy Statement/Prospectus
for use by Chancellor stockholders.
THE CHANCELLOR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS APPROVE THE
CHANCELLOR MERGER PROPOSAL BY VOTING FOR SUCH PROPOSAL.
For a description of the interest of certain stockholders and directors of
Chancellor in the Merger that may be different from, or in addition to, the
interests of Chancellor stockholders generally, see "The Merger -- Interest of
Certain Persons in the Merger."
Greenhill has acted as financial advisor to the Chancellor Board in
connection with the Merger, and Greenhill has advised the Chancellor Board that,
in its opinion, the Exchange Ratio is fair to the holders of the Chancellor
Common Stock from a financial point of view.
Record Date and Voting Rights. The Chancellor Board has fixed the close of
business on July 30, 1997 as the record date for determination of stockholders
entitled to notice of and to vote at the Chancellor Special Meeting. As of July
28, 1997, 10,443,719 shares of Chancellor Class A Common Stock and 8,547,910
shares of Chancellor Class B Common Stock, were issued and outstanding and
entitled to notice of and to vote at the Chancellor Special Meeting.
The presence in person or by proxy of the holders of a majority of the
Chancellor Common Stock issued and outstanding and entitled to vote shall
constitute a quorum. A quorum, once established, will not be broken by the
withdrawal from the Chancellor Special Meeting of enough votes to leave less
than a quorum, and the votes present at the Chancellor Special Meeting after the
establishment of a quorum will be sufficient to
47
<PAGE> 57
transact all business at the Chancellor Special Meeting. Under Delaware law,
shares represented by proxies that reflect abstentions or broker non-votes will
be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum.
Assuming the presence of a quorum, the affirmative vote of the majority of
the total number of votes entitled to be cast by all holders of all shares of
Chancellor Common Stock at the Chancellor Special Meeting is required to adopt
and approve the Chancellor Merger Proposal. Abstentions will have the effect of
votes against the Chancellor Merger Proposal. Broker non-votes, however, will be
treated as un-voted for purposes of determining approval of such proposal and
will not be counted as votes against such proposal.
Under Chancellor's Certificate, as currently in effect, the holders of
Chancellor Common Stock will vote as a single class on the Chancellor Merger
Proposal, with each share of Chancellor Class A Common Stock entitled to one
vote and each share of Chancellor Class B Common Stock entitled to ten votes.
As of July 28, 1997, directors and executive officers of Chancellor and
their affiliates were the beneficial owners of 2,445,468 shares of Chancellor
Class A Common Stock (including all currently exercisable stock options and
options exercisable within 60 days of July 28, 1997 owned by certain directors
and executive officers of Chancellor) and 8,547,910 shares of Chancellor Class B
Common Stock. The 1,815,365 shares of Chancellor Class A Common Stock and
8,484,410 shares of Chancellor Class B Common Stock beneficially owned by the
Hicks Stockholders represent 54.2% of all outstanding shares of Chancellor
Common Stock and 90.3% of all voting power. The Hicks Stockholders have entered
into the Stockholders Agreement, pursuant to which the Hicks Stockholders have
agreed, subject to certain conditions, to vote their shares of Chancellor Common
Stock in favor of approval and adoption of the Chancellor Merger Proposal. See
"The Stockholders Agreement." The affirmative vote of the Hicks Stockholders is
sufficient to ensure adoption of the Chancellor Merger Proposal. In addition,
directors and executive officers of Chancellor who have not executed the
Stockholders Agreement have indicated that they intend to vote their shares of
Chancellor Common Stock in favor of approval and adoption of the Chancellor
Merger Proposal.
Voting and Revocation of Proxies. Shares of Chancellor Common Stock, the
holders of which are entitled to vote at the Chancellor Special Meeting and
which are represented by properly executed proxies, will, unless such proxies
have been revoked, be voted, and they will be voted in accordance with the
instructions indicated on such proxies. If no instructions are indicated, shares
of Chancellor Common Stock will be voted and they will be voted FOR adoption and
approval of the Chancellor Merger Proposal and in the discretion of the proxy
holder as to any other matter incidental to the Chancellor Merger Proposal which
may properly come before the Chancellor Special Meeting and as to which such
shares are entitled to vote.
A stockholder who gives a proxy may revoke it at any time before it is
exercised by (i) filing with Harris Trust and Savings Bank in its capacity as
transfer agent for the Chancellor Class A Common Stock (the "Chancellor Transfer
Agent"), at or before the Chancellor Special Meeting, a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a subsequent
proxy relating to the same shares of Chancellor Class A Common Stock and
delivering it to the Chancellor Transfer Agent at or before the Chancellor
Special Meeting, or (iii) attending the Chancellor Special Meeting and voting in
person (although attendance at the Chancellor Special Meeting will not in and of
itself constitute a revocation of a proxy). Any written notice revoking a proxy
should be sent to Harris Trust and Savings Bank, 1601 Elm Street, Suite 2320,
Dallas, Texas 75201, Attn: Proxy Department.
Chancellor will bear the cost of soliciting proxies from its stockholders.
In addition to the use of the mails, proxies may be solicited by the directors,
officers and certain employees of Chancellor by personal interview, telephone or
telegram. Such directors, officers and employees will not be additionally
compensated for such solicitation but may be reimbursed for reasonable
out-of-pocket expenses incurred in connection therewith. Arrangements will also
be made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of Chancellor
Common Stock. Chancellor may reimburse such custodians, nominees and fiduciaries
for reasonable out-of-pocket expenses incurred in connection therewith.
48
<PAGE> 58
THE MERGER
BACKGROUND AND REASONS FOR THE MERGER: EVERGREEN
Evergreen was incorporated in 1988. It initially owned and operated six
radio stations. From its formation through 1994, Evergreen expanded principally
through internal growth and through the acquisition of individual radio stations
or pairs of stations.
In 1994, the Evergreen Board conducted a broad-ranging review of
Evergreen's strategic alternatives in light of the ongoing consolidation in the
radio broadcasting industry. As a result of Evergreen's review of its strategic
alternatives, the Evergreen Board determined to pursue a strategy of substantial
expansion of Evergreen's ownership of major market radio stations through
acquisitions of, or mergers with, other radio station groups and, to a lesser
extent, through opportunistic acquisitions of individual major market stations
where appropriate. In 1995 and 1996, Evergreen aggressively pursued this
acquisition strategy, acquiring, on a net basis, 11 radio stations in 1995
(seven FM and four AM) and 12 radio stations in 1996 (ten FM and two AM),
including the acquisition of seven FM and four AM stations through Evergreen's
May 1995 acquisition of Broadcasting Partners Inc. and the acquisition of nine
FM and three AM radio stations through Evergreen's January 1996 acquisition of
Pyramid Communications, Inc.
Following the enactment of the 1996 Act, which eliminated the aggregate
limit on the total number of stations that any broadcaster could own and relaxed
restrictions previously applicable to the ownership of stations within a single
market, Evergreen determined to accelerate implementation of its acquisition
strategy, focusing particularly on major markets where Evergreen had the
opportunity to develop superduopolies, or clusters of between three and five FM
radio stations.
In furtherance of Evergreen's expansion strategy, Evergreen's management
routinely analyzes the potential acquisition of broadcast properties and holds
discussions with other broadcasters concerning potential business combinations
or the potential acquisition of individual stations or groups of stations, and
in this connection, has consummated, on a net basis, the acquisition of 17 radio
stations (eleven FM and six AM) to date in 1997. See "The
Companies -- Evergreen." In 1996 and early 1997, Evergreen's senior management
and advisors held preliminary discussions with a number of major market radio
operators, including Chancellor and Viacom, concerning possible acquisitions of
radio groups by Evergreen and other potential transactions. During the fourth
quarter of 1996, Evergreen was informed that Chancellor's management and
principal stockholder were considering a potential sale of Chancellor, and
Evergreen held preliminary discussions with Chancellor concerning the possible
acquisition of Chancellor by Evergreen for cash. After brief preliminary
discussions, however, the parties determined that it was unlikely that they
would be able to reach an agreement concerning the fundamental economic terms of
such a transaction in light of numerous factors, including the then current
market valuations of Evergreen and Chancellor.
In late October of 1996, Evergreen retained Wasserstein Perella & Co., Inc.
("Wasserstein Perella") to act as its financial advisor in connection with the
possible acquisition of the Viacom Stations and in December 1996 and early
January 1997, Evergreen's management engaged in preliminary discussions with
Viacom concerning such a transaction. Although Evergreen's management considered
the Viacom Stations to be attractive acquisition candidates given such stations'
presence in key major markets, the preliminary discussions between Evergreen and
Viacom concerning such a potential transaction were terminated in early January
1997 due to the inability of Evergreen and Viacom to reach an agreement
concerning the purchase price to be paid by Evergreen for the entire Viacom
radio portfolio. Early in January 1997, subsequent to the termination of these
discussions with Viacom, Evergreen was informed that Viacom had retained Credit
Suisse First Boston Corporation ("Credit Suisse First Boston") to solicit offers
to purchase the Viacom Stations and to conduct an auction for the sale of such
properties.
Also in January 1997, Evergreen's management contacted Chancellor's
representative, William Steding of Star Media Group, Inc., to inquire whether
Mr. Steding believed that it was an appropriate time to pursue possible merger
discussions with Chancellor. Mr. Steding agreed to contact Thomas O. Hicks,
Chairman of the Chancellor Board and Chairman of the Board and Chief Executive
Officer of Hicks, Muse, Tate & Furst Incorporated, an affiliate of Chancellor's
principal stockholders ("Hicks Muse"), to initiate discussions. On
49
<PAGE> 59
January 15, 1997 and January 21, 1997, Scott Ginsburg, Chairman of the Evergreen
Board and Chief Executive Officer of Evergreen, Mr. Hicks and Mr. Steding held
preliminary discussions to determine whether the parties would be interested in
pursuing a potential business combination. After a detailed discussion
concerning the possibility of such a transaction, Messrs. Ginsburg and Hicks
determined that they should arrange further meetings of members of the senior
management of Chancellor and Evergreen to discuss the matter in more detail.
During the next several weeks, Evergreen consulted with its legal counsel
concerning matters relating to such a potential transaction and held several
discussions with members of Chancellor's senior management. Mr. Ginsburg met
with Steven Dinetz, President and Chief Executive Officer of Chancellor, on
January 24, 1997 to discuss the potential for such a transaction, and on January
30, 1997, Messrs. Ginsburg, Hicks and Steding, as well as Eric C. Neuman, Senior
Vice President of Hicks Muse, met and discussed the potential terms of such a
transaction in more detail. On February 3, 1997, Messrs. Ginsburg, Steding,
Neuman, Dinetz, Jacques Kerrest, Chief Financial Officer of Chancellor, Matthew
Devine, Chief Financial Officer of Evergreen, and Eric W. Neumann, Senior Vice
President-Finance of Chancellor, met to discuss the historical and prospective
financial performance of Evergreen and Chancellor, certain recent and pending
acquisitions and dispositions of broadcast properties by Evergreen and
Chancellor and certain potential synergies that could result from a business
combination involving Evergreen and Chancellor. At that meeting, Evergreen and
Chancellor exchanged certain non-public financial information and other
information concerning recent acquisitions and future financial performance.
During the weeks of February 2 and February 9 representatives of Evergreen
also held discussions with Viacom and Credit Suisse First Boston, financial
advisor to Viacom, concerning the auction of the Viacom Stations being conducted
by Viacom and Credit Suisse First Boston. During this period, Evergreen learned
that Viacom intended to solicit offers to purchase the individual Viacom
Stations, as well as offers to purchase all of the Viacom Stations as a group.
As a result of Evergreen's discussions with Credit Suisse First Boston,
Evergreen's management determined that, notwithstanding the failure of Evergreen
and Viacom to come to terms concerning a possible acquisition of the Viacom
Stations during the discussions that had taken place directly between the
parties in December of 1996 and early January of 1997, Evergreen remained
interested in acquiring all of the Viacom Stations or certain individual Viacom
Stations and was willing to submit an acquisition proposal in connection with
Viacom's auction process. Accordingly, during this period, Evergreen conducted
confirmatory due diligence and financial analysis concerning the Viacom Stations
and, in consultation with its legal advisors, prepared to submit a proposal to
acquire the Viacom Stations.
On February 12, 1997, Scott Ginsburg, Steven Dinetz and James de Castro,
Evergreen's President and Chief Operating Officer, met to further discuss the
terms of the possible transaction involving Chancellor and Evergreen, the
financial performance of Chancellor and Evergreen broadcast properties and
certain other matters concerning the operations of Evergreen's and Chancellor's
respective stations. At that time, management of Evergreen and Chancellor
determined that it would be appropriate for Chancellor's and Evergreen's legal
advisors to commence discussions concerning the terms of a written merger
agreement, so that the parties would be in a position to proceed quickly in the
event that they reached an understanding concerning the basic terms of such a
transaction. On February 15, 1997, Chancellor's legal advisors provided to
Evergreen and its outside legal counsel an initial draft of a form of agreement
and plan of merger.
On February 13, 1997, the Evergreen Board met to discuss and consider the
submission of a proposal to acquire the Viacom Stations and the status of the
discussions between Evergreen and Chancellor concerning a potential business
combination. At that meeting, the Evergreen Board discussed in detail the timing
of the sale process being conducted by Viacom and Credit Suisse First Boston and
the terms on which Evergreen would be willing to acquire some or all of the
Viacom Stations. After further discussion, the Evergreen Board determined that
Evergreen should submit a proposal to purchase all of the Viacom Stations, as
well as an alternative proposal to acquire the Viacom Stations located in the
Los Angeles, New York and Washington, D.C. markets. Mr. Ginsburg then reported
to the Evergreen Board concerning the status of discussions with Chancellor.
After a detailed discussion of the possible terms of such a transaction, the
Evergreen Board authorized Mr. Ginsburg and the other members of Evergreen's
senior management to continue discussions with Chancellor concerning the terms
of a potential merger.
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On February 14, Evergreen submitted to Viacom a written proposal to acquire
all of the Viacom Stations, as well as an alternative proposal to acquire the
Viacom Stations located in the Los Angeles, New York and Washington, D.C.
markets, and from February 14 to February 16 Evergreen and its legal advisors
held discussions with representatives of Viacom concerning the terms of a stock
purchase agreement that would govern the terms of such a transaction if
Evergreen's acquisition proposal were accepted by Viacom.
Messrs. Ginsburg and Hicks met on February 14, 1997 to continue discussions
concerning the terms of the proposed Evergreen/Chancellor transaction and met
again on February 15 in the company of Mr. Steding. At these meetings, Mr.
Ginsburg and Mr. Hicks continued negotiations concerning the principal terms of
the proposed business combination involving Chancellor and Evergreen and also
discussed the fact that each of Chancellor and Evergreen was separately pursuing
an acquisition of Viacom Stations and the fact that Viacom had informed the
participants in Viacom's auction process that it desired to conclude the process
on February 16, 1997. In the course of these discussion, Mr. Ginsburg and Mr.
Hicks considered the possibility that a public announcement that either
Chancellor or Evergreen had signed a definitive agreement to acquire the Viacom
Stations could significantly complicate their discussions concerning a merger of
Chancellor and Evergreen due to the potential impact of such an announcement on
the market price of the common stock of Chancellor or Evergreen, as relevant.
Accordingly, the parties determined that, if possible, it would be desirable to
reach an understanding concerning the principle economic terms of the proposed
Evergreen/ Chancellor transaction prior to any public announcement regarding the
sale of the Viacom Stations.
Following the meeting on February 15, Mr. Ginsburg consulted with
Evergreen's legal advisors concerning matters relating to discussions with
Chancellor and the status of negotiations with Viacom concerning Evergreen's
proposal to acquire the Viacom Stations.
Messrs. Ginsburg and Hicks met again on February 16, and, following further
discussions, Mr. Ginsburg and Mr. Hicks reached a tentative understanding as to
the principal terms of a merger between Chancellor and Evergreen that they would
be willing to present and recommend to their respective boards of directors.
This preliminary understanding contemplated (i) the merger of Chancellor and
CRBC with and into Evergreen, with Evergreen continuing as the surviving
corporation following the merger, (ii) the conversion of each share of
Chancellor Class A Common Stock and Chancellor Class B Common Stock into 0.9091
shares of the Surviving Corporation Common Stock, (iii) the conversion of each
share of Evergreen Class A Common Stock and Class B Common Stock into one share
of Surviving Corporation Common Stock, (iv) that each share of the Surviving
Corporation Common Stock would entitle the holder thereof to one vote, (v) that
following the merger, Mr. Hicks would serve as Chairman of the Board of
Directors of the Surviving Corporation and Mr. Ginsburg would serve as the Chief
Executive Officer of the Surviving Corporation and (vi) that the board of
directors of the Surviving Corporation would consist of eleven directors, three
of whom (including Mr. Hicks) would be designated by Chancellor's principal
stockholders, three of whom (including Mr. Ginsburg) would be members of the
Surviving Corporation's senior management team and five of whom would be
independent directors. Evergreen and Chancellor also concluded that Chancellor
should withdraw its proposal to acquire the Viacom Stations and that Evergreen
would submit a revised proposal to acquire the entire Viacom radio portfolio.
The parties determined that, if the Evergreen proposal to acquire the Viacom
Stations were accepted by Viacom, the parties would reach an agreement to
provide for (i) the acquisition of certain of the Viacom Stations by Chancellor
and certain of the Viacom Stations by Evergreen, such that the Viacom
Acquisition could be consummated jointly by Evergreen and Chancellor prior to a
merger of Chancellor and Evergreen and (ii) the allocation, as between
Chancellor and Evergreen, of the benefits and liabilities under the purchase
agreement entered into in connection with the proposal to purchase the Viacom
Stations in the event that the parties failed to reach an agreement concerning
the proposed merger of Chancellor and Evergreen or in the event that any such
agreement failed to be consummated.
Following these discussions and communication to Viacom of Evergreen's
revised acquisition proposal, Viacom indicated that it was willing to accept
Evergreen's acquisition proposal, subject to immediate completion of
negotiations concerning the definitive stock purchase agreement that had been
negotiated by the parties. Accordingly, on the evening of February 16, the
Evergreen Board met to consider the revised proposal for the acquisition of the
Viacom Stations and the terms of the stock purchase agreement providing for the
acquisition of the Viacom Stations. At that meeting, Mr. Ginsburg also reported
to the Evergreen Board
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concerning the proposed terms of a merger with Chancellor that had been
discussed with Chancellor's management. Following a detailed discussion by the
Evergreen Board concerning the terms of the Viacom Transaction, the Evergreen
Board approved the Viacom Acquisition and authorized management to complete and
enter into a definitive stock purchase agreement on the terms considered by the
Evergreen Board. The Evergreen Board then discussed at length the proposed terms
of the merger with Chancellor and determined that Evergreen should continue
negotiations with Chancellor concerning such a transaction, with the goal of
completing such negotiations promptly. The Evergreen Board also considered the
retention of Wasserstein Perella as financial advisor to Evergreen in connection
with the potential transaction with Chancellor. Although not officially retained
by Evergreen in connection with the Chancellor Merger prior to this meeting,
Wasserstein Perella had been advising Evergreen's management concerning the
potential transaction, and, after deliberation, the Evergreen Board determined
to retain Wasserstein Perella to act as financial advisor to Evergreen in
connection with the potential transaction and, if necessary, to render an
opinion to Evergreen concerning the fairness, from a financial point of view, of
such a transaction. The Evergreen Board also determined to reconvene on Monday,
February 17 to discuss the status of negotiations with Chancellor and the
proposed terms of the transaction in more detail.
Following the February 16 meeting of the Evergreen Board, EMCLA and Viacom
entered into the Viacom Stock Purchase Agreement, and Evergreen and Chancellor
and their respective legal advisors continued negotiations concerning the terms
of an agreement and plan of merger and certain related agreements providing for
the merger of Chancellor and Evergreen.
Following further negotiations between the parties and their respective
legal advisors concerning the terms of the draft agreement and plan of merger,
the Evergreen Board reconvened on the evening of February 17 to discuss the
progress of negotiations with Chancellor concerning the potential transaction.
Evergreen's management reported on the status of the negotiations, and
Evergreen's legal advisors described the terms of the draft agreement and plan
of merger which had been distributed to the members of the Evergreen Board.
Evergreen's legal advisors also described the terms of the draft stockholders
agreement proposed to be entered into by Mr. Ginsburg and the Hicks
Stockholders, pursuant to which the parties would agree to vote their shares of
Evergreen Class B Common Stock and Chancellor Common Stock, respectively, in
favor of the merger, and the terms of the joint purchase agreement providing for
(i) the acquisition of certain of the Viacom Stations by Chancellor and certain
of the Viacom Stations by Evergreen, such that the Viacom Acquisition could be
consummated jointly by Evergreen and Chancellor prior to the consummation of a
merger of Chancellor and Evergreen and (ii) the allocation between Chancellor
and Evergreen of the benefits and liabilities under the Viacom Stock Purchase
Agreement in the event that Chancellor and Evergreen failed to reach agreement
concerning the proposed merger or in the event that any such agreement failed to
be consummated. At that meeting, the Evergreen Board also discussed the
anticipated continued participation of current management of Evergreen in the
management of the Surviving Corporation in the event that the proposed
transaction were consummated, as well as the potential terms of an employment
agreement that would be entered into with Mr. Ginsburg if the transaction were
to proceed in order to provide for Mr. Ginsburg's continued participation in the
management of the Surviving Corporation following the Merger. After detailed
discussion, the Evergreen Board determined that, although the parties had not
completed negotiation of all of the terms of a definitive agreement and plan of
merger and the related documents, the parties had reached tentative agreement on
the fundamental economic and legal terms of the transaction and would likely be
in a position to complete negotiations concerning a definitive agreement and
plan of merger within the next several days. Following further deliberation, the
Evergreen Board determined that, based on the progress of negotiations, it would
be appropriate for Evergreen and Chancellor to enter into a non-binding
memorandum of understanding (the "Memorandum of Understanding") providing for
the merger of Chancellor with Evergreen, subject to, among other things,
completion of negotiations concerning a definitive agreement and plan of merger
and approval of the transaction by the Evergreen Board, and to publicly announce
the terms of the Memorandum of Understanding.
On the morning of February 18, the parties entered into the Memorandum of
Understanding and publicly announced the terms of the proposed
Evergreen/Chancellor transaction simultaneously with the public announcement of
the Viacom Transaction by Evergreen and Viacom. Following that public
announcement,
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Chancellor, Evergreen and their respective legal advisors continued negotiations
concerning the form of agreement and plan of merger and the related agreements.
The Evergreen Board met again on the evening of February 18. At that
meeting, Evergreen's management reported that the parties had completed
negotiation of all material terms of the agreement and plan of merger and
related agreements, and legal counsel reviewed the terms of the agreement and
plan of merger and the related agreements in detail for the Evergreen Board. The
Evergreen Board also discussed the terms of a memorandum of understanding that
would be entered into by Evergreen and Mr. Ginsburg which would set forth the
general terms of an employment agreement relating to Mr. Ginsburg's employment
by the Surviving Corporation following the Merger that would be entered into by
Evergreen and Mr. Ginsburg contingent upon consummation of the proposed
transaction. The meeting of the Evergreen Board was adjourned at this time so
that the members of the Compensation Committee of the Evergreen Board, Perry
Lewis, Thomas Hodson and Joseph Sitrick, together with Eric Bernthal, the
remaining outside director on the Evergreen Board, could discuss the terms of
the memorandum of agreement for the employment of Mr. Ginsburg following
consummation of the Merger. After the meeting of the Compensation Committee, the
meeting of the Evergreen Board was reconvened, and the Compensation Committee
reported that it had reached an agreement concerning the basic terms of a new
employment agreement for Mr. Ginsburg following consummation of the Merger, to
be embodied in a memorandum of agreement between Evergreen, Chancellor, CRBC and
Mr. Ginsburg. The Compensation Committee recommended that the Evergreen Board
approve the terms of the memorandum of agreement, and the Evergreen Board voted
unanimously (other than Mr. Ginsburg, who abstained from such vote) to approve
the memorandum of agreement.
Following these developments, Wasserstein Perella made a presentation to
the Evergreen Board and delivered its oral opinion, subsequently confirmed by
delivery of a written opinion dated February 19, 1997, to the effect that, as of
the date of such opinion and based upon the assumptions specified in such
opinion, the Exchange Ratio is fair, from a financial point of view, to
Evergreen. Following further deliberation, the Evergreen Board, by unanimous
vote of all directors, determined that the Merger was in the best interests of
Evergreen and its stockholders, authorized the execution of the Merger
Agreement, the Stockholders Agreement and the Viacom Joint Purchase Agreement
and determined to recommend that the stockholders of Evergreen approve and adopt
the Merger Agreement and the Merger. Following that meeting, the Merger
Agreement and related documents were finalized, and the parties entered into the
Merger Agreement and the related documents on February 19, 1997.
On July 31, 1997, the Merger Agreement was amended and restated for the
purpose of modifying the legal structure of the transaction in order to, among
other things, enhance flexibility in connection with future debt or equity
financings by the Surviving Corporation. The amended and restated merger
agreement provides for the merger of Chancellor with and into EMHC and the
merger of CRBC with and into EMCLA, as opposed to the merger of Chancellor and
CRBC with and into Evergreen, but did not otherwise modify the material terms of
the Merger, as approved by the Evergreen Board on February 18, 1997.
Recommendation of the Evergreen Board of Directors; Evergreen's Reasons for
the Merger
THE EVERGREEN BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF
EVERGREEN AND ITS STOCKHOLDERS, HAS BY UNANIMOUS VOTE APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAS RECOMMENDED THAT THE
STOCKHOLDERS OF EVERGREEN VOTE IN FAVOR OF APPROVAL OF THE EVERGREEN MERGER
PROPOSAL.
In approving the Merger Agreement and the transactions contemplated
thereby, the Evergreen Board considered a number of factors, including, among
other things:
1. the judgment, advice and analyses of Evergreen's management;
2. the fact that the Merger and the consummation of the Viacom
Acquisition would significantly advance Evergreen's strategy of building a
larger portfolio of major market radio stations that would provide the
Surviving Corporation with wide geographic and format diversity;
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3. the fact that Chancellor's stations in the Los Angeles, New York
City, San Francisco and Washington, D.C. radio markets would expand
Evergreen's presence in certain top ten markets of critical importance to
management's expansion strategy and that the Merger would provide Evergreen
an entry into the Atlanta radio market, the only top ten market in which
Evergreen did not own a station;
4. Chancellor's ownership of a significant number of broadcast
stations located in top 30 radio markets in which Evergreen did not own
stations and the likelihood that such markets would become increasingly
important to Evergreen's expansion strategy, as Evergreen's ownership of
stations in many of the top ten radio markets, after giving effect to the
Viacom Acquisition and the Merger, would approach the limits imposed on the
number of stations that any single operator may own in any one market;
5. the increasing consolidation in the radio broadcast industry and
the increasingly competitive nature of acquisitions in the radio broadcast
industry;
6. the presentation of Wasserstein Perella to the Evergreen Board,
including Wasserstein Perella's opinion dated February 19, 1997 to the
effect that, as of the date of such opinion, the Exchange Ratio in the
Merger is fair, from a financial point of view, to Evergreen (see
" -- Opinion of Financial Adviser to the Evergreen Board");
7. the fact that each of Mr. Ginsburg, Mr. de Castro and Mr. Devine
were expected to continue to play active roles in the management of the
Surviving Corporation following the Merger (see "-- Interests of Certain
Persons in the Merger -- Evergreen -- Employment Agreement");
8. the historical financial condition, results of operations and cash
flows of Evergreen and Chancellor, respectively;
9. the terms and conditions of the Merger Agreement, including the
Exchange Ratio;
10. historical market prices and trading information with respect to
the Evergreen Common Stock and Chancellor Common Stock;
11. the tax effects of the Merger on Evergreen; and
12. the probability of obtaining the regulatory approvals necessary
for the consummation of the Merger and the Viacom Acquisition, including,
without limitation, the expiration or termination of the applicable waiting
periods under the HSR Act and the consent of the FCC, and the necessity of
divesting certain radio stations (including stations in the Chicago, San
Francisco/Sacramento, Washington, DC, Philadelphia and Detroit markets) in
order to obtain the requisite FCC consent.
In view of the number and disparate nature of the factors considered by the
Evergreen Board, the Evergreen Board did not assign relative weight to the
factors considered in reaching its conclusions. Rather, the Evergreen Board
viewed its conclusions and recommendations as being based on the totality of the
information being presented to and considered by it.
BACKGROUND AND REASONS FOR THE MERGER: CHANCELLOR
Chancellor was incorporated in late 1994 to acquire 11 radio stations from
affiliates of American Media, Inc. and to acquire Chancellor Communications
Corporation, which owned and operated two radio stations in Sacramento,
California. Since its formation, Chancellor has grown largely through
acquisitions of radio station groups. The pace of Chancellor's acquisitions
accelerated in 1996 after the passage of the 1996 Act.
As part of its growth strategy, Chancellor routinely analyzes acquisition
opportunities. In addition, in late 1996, the Chancellor Board of Directors
briefly considered the possible sale of Chancellor in light of the intensifying
consolidation among large radio station groups. Chancellor's management met with
Evergreen during that process to discuss a possible sale of Chancellor to
Evergreen, but the parties concluded after brief preliminary discussions that
they would be unlikely to reach an agreement on mutually acceptable valuations.
After further preliminary conversations with other radio station operators, the
Chancellor Board determined that it would be in the best interests of
Chancellor's stockholders for Chancellor to continue to pursue its strategy of
growth through strategic acquisitions.
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In late 1996 and early 1997, Chancellor's management engaged in preliminary
discussions with Viacom concerning a possible acquisition of the Viacom Stations
and engaged in a preliminary due diligence review of the performance of the
Viacom Stations. Although Chancellor's management considered the Viacom Stations
to be attractive properties, Chancellor and Viacom were unable to reach
agreement on a mutually acceptable purchase price for the Viacom Stations.
Subsequently, Credit Suisse First Boston advised Chancellor that it had been
engaged to conduct an auction for the Viacom Stations and invited Chancellor to
participate in that process.
In January 1997, William Steding of Star Media contacted Thomas O. Hicks,
the Chairman of Chancellor's Board of Directors, to inform him of Evergreen's
interest in discussing a possible stock-for-stock business combination between
Chancellor and Evergreen. Messrs. Hicks, Ginsburg and Steding held preliminary
discussions on January 15, 1997 and January 21, 1997 to gauge the interest of
the parties in pursuing a possible transaction. After these meetings, Messrs.
Hicks and Ginsburg agreed that they should arrange meetings between the
respective members of their senior management teams. Subsequent meetings were
held on January 24, 1997 between Mr. Ginsburg and Steven Dinetz, Chancellor's
President and Chief Executive Officer, and on January 30, 1997 among Messrs.
Hicks, Ginsburg, Steding and Eric C. Neuman, a director of Chancellor and a
Senior Vice President of Hicks Muse.
On January 31, 1997 Mr. Hicks advised the Chancellor Board of Directors
that he had held preliminary meetings with Mr. Ginsburg to discuss a potential
business combination including Chancellor and Evergreen. Mr. Dinetz also
reported to the directors about his initial meeting with Mr. Ginsburg. The
Chancellor directors encouraged Mr. Hicks to continue the dialogue with
Evergreen. Mr. Hicks advised the Chancellor Board that he expected further
discussions between Chancellor's and Evergreen's respective senior management
groups to take place during the following week. At the same meeting of the
Chancellor Board, Messrs. Dinetz and Neuman reported to the directors that
Chancellor had been invited to participate in the auction for the Viacom
Stations. The directors discussed the various markets in which the Viacom
Stations are located and reviewed with Mr. Dinetz and Jacques Kerrest,
Chancellor's Chief Financial Officer, management's analyses of these stations.
After discussion, the directors authorized management to prepare a bid for all
or a part of the Viacom Stations.
During the next two weeks, Chancellor's management conducted further due
diligence relating to the Viacom Stations and worked with Hicks Muse and
Chancellor's legal advisors to formulate a bid for those properties. In
addition, on February 6, 1997, Messrs. Dinetz, Kerrest, Neuman, Steding and
Matthew Devine, Evergreen's Chief Financial Officer, met to discuss the
respective companies' 1997 budgets and related matters and, on February 12,
1997, Messrs. Ginsburg, Dinetz and James E. de Castro, Evergreen's President and
Chief Operating Officer, met to continue their discussions about a possible
transaction between the two companies. Subsequent to that meeting, Chancellor
authorized its legal counsel to prepare a draft merger agreement to facilitate
further discussions and negotiations, if the parties elected to proceed with a
transaction.
At a special meeting of the Chancellor Board held on February 14, 1997, the
Chancellor directors authorized management to submit a bid for all the Viacom
Stations as a whole, and an alternative bid for the Viacom Stations serving Los
Angeles, New York, Chicago and Washington, D.C., after having discussed in
detail the structure and timing of the auction process being conducted by Credit
Suisse First Boston and reviewing with Chancellor its analysis of the financial
implications of, and the anticipated sources of financing for, the proposed
acquisition. In addition, Mr. Hicks informed the Chancellor directors that he
expected to meet with Mr. Ginsburg that afternoon to resume their discussions
about a possible Chancellor/Evergreen combination.
Chancellor submitted its initial bid for the Viacom Stations during the
early afternoon of February 14, 1997. Shortly thereafter, Credit Suisse First
Boston contacted Chancellor to advise it that several other bids had been
submitted that were comparable or better than the bid initially submitted by
Chancellor. Chancellor and Credit Suisse First Boston exchanged several
telephone calls, during the course of which Chancellor increased its offer for
the Viacom Stations. That evening, Viacom's negotiating team contacted
Chancellor to begin discussing Chancellor's initial comments to the form of
stock purchase agreement circulated by Credit Suisse First Boston to prospective
bidders in the auction process. Chancellor submitted revised comments to
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the purchase agreement to Viacom during the morning of February 15, 1997 and
continued negotiations with Viacom later that day and into the evening of
February 15.
On February 14, 1997, Messrs. Hicks and Ginsburg met to continue their
discussions about the possible merger. Because of the progress made between
Messrs. Hicks and Ginsburg in defining the outlines of a possible transaction,
Chancellor instructed its legal counsel to deliver a draft merger agreement to
Evergreen's counsel on the morning of February 15. On February 15, 1997, Messrs.
Hicks and Ginsburg, joined by Mr. Steding, reconvened their discussions.
Messrs. Hicks and Ginsburg met again on February 16, 1997. Those meetings
led to a tentative understanding of the principal terms of a merger between
Chancellor and Evergreen, which generally is as described under "Background and
Reasons for the Merger: Evergreen" (although the Chancellor Board anticipated
that the Surviving Corporation's board would consist of eight directors
nominated by Chancellor, Messrs. Ginsburg and de Castro from the Evergreen
Board, and one other director mutually acceptable to Chancellor and Evergreen).
That evening, the Chancellor Board convened a special meeting at which
management reported to the directors on the history of Chancellor's bid for the
Viacom Stations, the proposed terms of the Chancellor/Evergreen merger,
including anticipated sources of financing and the financial implications of the
transaction, and Chancellor's agreement to withdraw from the bidding for the
Viacom Stations, subject to the agreement of Evergreen to negotiate a legally
binding understanding of the allocation between Chancellor and Evergreen of the
benefits and burdens of the Viacom stock purchase agreement if Evergreen's bid
for the Viacom Stations were to be accepted by Viacom. The Chancellor Board also
discussed the proposed composition of the Surviving Corporation's senior
management team, which they agreed should include Mr. Hicks as Chairman of the
Board, Mr. Ginsburg as President and Chief Executive Officer, and Messrs. Dinetz
and de Castro as Co-Chief Operating Officers, and related employment matters.
After discussion, the Chancellor Board authorized management to pursue further
negotiations with Evergreen to finalize the terms of the merger on substantially
the terms described to it. In addition, the Chancellor Board authorized
management to engage Greenhill & Co. LLC ("Greenhill") to render an opinion as
to the fairness of the proposed exchange ratio to Chancellor's stockholders. The
Chancellor Board agreed to reconvene on February 17, 1997 to consider the status
of the negotiations with Evergreen on the terms of the merger.
On February 17, 1997, Chancellor, Evergreen and their representatives
continued their negotiations of the terms of the draft merger agreement and of
the definitive joint purchase agreement relating to the allocation of the Viacom
Stations between the parties in the event that Chancellor and Evergreen failed
to reach an agreement concerning the proposed merger or in the event that any
such agreement failed to be consummated. The Chancellor Board met telephonically
during the evening of February 17, 1997 and discussed the status of the merger
negotiations and reviewed the terms of the draft joint purchase agreement for
the Viacom Stations, the draft merger agreement and the draft stockholders
agreement circulated to it. In addition, representatives of Greenhill reviewed
their initial analyses of the Evergreen transaction and delivered a preliminary
oral opinion to the Chancellor Board as to the fairness of the Exchange Ratio to
Chancellor's stockholders. After the presentation by Greenhill, Mr. Hicks
invited Mr. Ginsburg, who had been meeting with Mr. Hicks at Mr. Hicks'
residence, to join the Chancellor Board's meeting to answer questions about the
status of deliberations by the Evergreen Board and to state his personal views
about the proposed transactions. Mr. Ginsburg explained that the Evergreen Board
anticipated that the Surviving Corporation's board would consist of three
members of the Surviving Corporation's senior management, three representatives
of Hicks Muse and five other directors mutually acceptable to Chancellor and
Evergreen. Based on the outcome of this meeting, the Chancellor Board authorized
Chancellor to enter into the non-binding Memorandum of Understanding described
under "Background and Reason for the Merger: Evergreen."
On the morning of February 18, 1997, the parties entered into the
Memorandum of Understanding and publicly announced the terms of the proposed
merger and of Evergreen's purchase of the Viacom Stations. Following the
announcement, the parties continued their negotiations on the terms of the
definitive merger agreement and related documents.
The Chancellor Board met again on the morning of February 19, 1997 to
discuss the final terms of the merger agreement and the terms of Mr. Ginsburg's
proposed employment agreement with the Surviving
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Corporation. Mr. Hicks advised the Chancellor Board of the composition of the
Surviving Corporation's board of directors, which the Chancellor Board concurred
was an appropriate resolution of this point of discussion in the completion of
the terms of the Merger. At that meeting, Greenhill delivered its oral fairness
opinion to the Chancellor Board, subsequently confirmed in writing that same
day, as to the fairness (from a financial point of view) of the Exchange Ratio
to Chancellor's stockholders. Greenhill also confirmed that its opinion took
into account the acquisition of the Viacom Stations and the terms of the Viacom
Joint Purchase Agreement. At the conclusion of the meeting, the Chancellor Board
(other than John Massey, who was not present at the meeting) unanimously
approved the Merger and the Merger Agreement and authorized the execution and
delivery of the Merger Agreement and related documents, which the parties
subsequently signed that day.
Recommendation of the Chancellor Board of Directors; Chancellor's Reasons
for the Merger
THE CHANCELLOR BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF
THE STOCKHOLDERS OF CHANCELLOR, HAS BY UNANIMOUS VOTE APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAS RECOMMENDED THAT THE
STOCKHOLDERS OF CHANCELLOR VOTE IN FAVOR OF THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
In approving the Merger Agreement and the related transactions, the
Chancellor Board took into account a number of factors, including the following:
1. the judgment, advice and analysis of Chancellor's management and
financial advisors, including Hicks Muse and Greenhill;
2. the fact that the radio broadcasting industry has been undergoing a
period of intense consolidation and that a merger with Evergreen
represented a unique opportunity to combine radio station groups of the
relative size of Chancellor and Evergreen;
3. the fact that Evergreen's stations in the Los Angeles, New York
City, San Francisco and Washington, D.C. markets would complement the
Company's stations in these top 10 markets;
4. the fact that Thomas O. Hicks would be chairman of the Board of the
Surviving Corporation and that Steven Dinetz would serve as Co-Chief
Operating Officer of the Surviving Corporation;
5. the fact that Chancellor's directors would comprise seven of the 11
members of the Surviving Corporation's board of directors;
6. the presentation of Greenhill to the Chancellor Board, including
its opinion dated February 19, 1997 to the effect that, as of that date,
the Exchange Ratio in the Merger was fair to Chancellor's stockholders from
a financial point of view;
7. the historical financial condition, results of operations and cash
flows of Chancellor and Evergreen;
8. the terms and conditions of the Merger Agreement, including the
Exchange Ratio;
9. the requirement that Chancellor be provided with an opinion of
counsel as to the tax-free nature of the Merger to Chancellor's
stockholders and as to the absence of adverse tax consequences to
Chancellor and the Surviving Corporation; and
10. the probability that the Merger and the acquisition of the Viacom
Stations would receive all necessary regulatory approvals, subject to
certain anticipated divestitures to comply with the FCC's local ownership
limits.
In addition to and together with the enumerated factors above, the
Chancellor Board also considered the effect the Merger would have on certain
existing contractual arrangements of Chancellor with certain third parties and
affiliates. With respect to such agreements, the Chancellor Board approved
certain modifications and payments in satisfaction thereof in connection with
the Merger and the Chancellor Viacom Acquisition. See "-- Interests of Certain
Persons in the Merger -- Chancellor."
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In view of the number of factors considered by the Chancellor Board, the
Chancellor Board did not assign relative weights to the factors considered by it
in reaching its conclusions. Rather, the Chancellor Board viewed its conclusions
and recommendations as being based on the totality of the information being
presented to and considered by it. In addition, it may be the case that
individual directors of Chancellor assigned different weights to the various
factors considered by them in voting to approve the Merger.
OPINION OF FINANCIAL ADVISOR TO THE EVERGREEN BOARD
The Evergreen Board retained Wasserstein Perella to provide certain
investment banking advice and services in connection with a possible business
combination among Evergreen and Chancellor, including rendering its opinion as
to the fairness from a financial point of view to Evergreen of the Exchange
Ratio. Wasserstein Perella was not requested to recommend the amount of
consideration to be paid; it was requested to evaluate, among other things, the
fairness of the consideration as determined by negotiation between Evergreen and
Chancellor.
On February 18, 1997, Wasserstein Perella delivered its oral opinion to the
Evergreen Board, which opinion was subsequently confirmed by Wasserstein
Perella's written opinion, dated February 19, 1997 (the "Wasserstein Perella
Opinion"), to the effect that, as of the date of such opinion and based upon the
assumptions specified in the Wasserstein Perella Opinion, the Exchange Ratio in
the merger of Chancellor with and into Evergreen is fair, from a financial point
of view, to Evergreen. Wasserstein Perella also presented to the Evergreen Board
the analyses described below.
A COPY OF THE WASSERSTEIN PERELLA OPINION IS ATTACHED AS ANNEX B-1 TO THIS
JOINT PROXY STATEMENT/ PROSPECTUS. STOCKHOLDERS ARE URGED TO READ THE
WASSERSTEIN PERELLA OPINION IN ITS ENTIRETY FOR INFORMATION WITH RESPECT TO THE
PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF THE
REVIEW BY WASSERSTEIN PERELLA IN RENDERING THE WASSERSTEIN PERELLA OPINION.
REFERENCES TO THE WASSERSTEIN PERELLA OPINION HEREIN AND THE SUMMARY OF THE
WASSERSTEIN PERELLA OPINION SET FORTH BELOW ARE QUALIFIED BY REFERENCE TO THE
FULL TEXT OF THE WASSERSTEIN PERELLA OPINION, WHICH IS INCORPORATED HEREIN BY
REFERENCE. THE WASSERSTEIN PERELLA OPINION IS DIRECTED ONLY TO THE FAIRNESS FROM
A FINANCIAL POINT OF VIEW TO EVERGREEN OF THE EXCHANGE RATIO AND IT DOES NOT
ADDRESS ANY OTHER ASPECT OF THE MERGER. THE WASSERSTEIN PERELLA OPINION DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER WITH RESPECT TO WHETHER TO VOTE
IN FAVOR OF THE MERGER AND SHOULD NOT BE RELIED UPON BY ANY STOCKHOLDER AS SUCH.
On August 1, 1997, Wasserstein Perella confirmed the Wasserstein Perella
Opinion in a letter dated August 1, 1997. A COPY OF THE WASSERSTEIN PERELLA
LETTER, DATED AUGUST 1, 1997 (THE "AUGUST LETTER") IS ATTACHED AS ANNEX B-2 TO
THIS JOINT PROXY STATEMENT/PROSPECTUS. STOCKHOLDERS ARE URGED TO READ THE AUGUST
LETTER IN ITS ENTIRETY FOR INFORMATION WITH RESPECT TO THE PROCEDURES FOLLOWED,
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF THE REVIEW BY WASSERSTEIN
PERELLA IN DELIVERING THE AUGUST LETTER. REFERENCES TO THE AUGUST LETTER AND THE
SUMMARY OF THE AUGUST LETTER HEREIN ARE QUALIFIED BY REFERENCE TO THE FULL TEXT
OF THE AUGUST LETTER, WHICH IS INCORPORATED HEREIN BY REFERENCE. THE AUGUST
LETTER IS DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW TO
EVERGREEN OF THE EXCHANGE RATIO AND IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE
MERGER. THE AUGUST LETTER DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
STOCKHOLDER WITH RESPECT TO WHETHER TO VOTE IN FAVOR OF THE MERGER AND SHOULD
NOT BE RELIED UPON BY ANY STOCKHOLDER AS SUCH.
In connection with arriving at the Wasserstein Perella Opinion, Wasserstein
Perella reviewed, among other things, (i) the Merger Agreement; (ii) the
Stockholders Agreement; (iii) certain publicly available business and financial
information relating to Evergreen and Chancellor, in each case, for recent years
and interim periods that were available as of the date of the Wasserstein
Perella Opinion; (iv) certain internal non-public financial and operating
information, including certain budgeted cashflow information and analyses
prepared by or on behalf of Evergreen and Chancellor and provided orally or in
writing by or on behalf of the managements of Evergreen and Chancellor to
Wasserstein Perella for purposes of its analysis; (v) certain financial and
stock market data relating to Evergreen and Chancellor, and compared such data
with similar data for certain other companies, the securities of which are
publicly traded, that Wasserstein Perella believed to be relevant or comparable
in certain respects to Evergreen or Chancellor or both or one or more of their
businesses or assets; (vi) the financial terms of certain recent acquisitions
and business combination transactions in the radio broadcasting industry
specifically, and in other industries generally, which Wasserstein Perella
believed to be
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relevant to its inquiry; and (vii) the effect of certain consolidation trends in
the radio broadcasting industry on the future prospects of Evergreen and
Chancellor.
Wasserstein Perella had discussions with the managements of Evergreen and
Chancellor and their representatives concerning the respective businesses,
operations, assets, financial condition and future prospects of Evergreen and
Chancellor. Wasserstein Perella also performed such studies, analyses and
investigations and reviewed such other information as it considered appropriate
for purposes of arriving at and preparing the Wasserstein Perella Opinion.
In conducting its analysis and arriving at its opinion, Wasserstein Perella
assumed and relied upon the accuracy and completeness of all financial and other
information that was provided to or discussed with it or was publicly available,
and did not assume any responsibility for independent verification of such
information. Wasserstein Perella also relied upon the reasonableness and
accuracy of the financial information and analyses provided to them and assumed
that all financial information and analyses provided by Evergreen and Chancellor
were prepared in good faith and on bases reflecting the best currently available
judgments and estimates of the respective managements of Evergreen and
Chancellor. Wasserstein Perella did not express any opinion with respect to such
financial information and analyses or the assumptions upon which they are based.
In addition, Wasserstein Perella did not review any of the books and records of
Evergreen or Chancellor, except as described above, or assume any responsibility
for conducting a physical inspection of the properties or facilities of
Evergreen or Chancellor, or for making or obtaining an independent valuation or
appraisal of the assets or liabilities of Evergreen or Chancellor, and
Wasserstein Perella was not provided with any such independent valuation or
appraisal. Wasserstein Perella noted that the Merger is intended to qualify as a
reorganization within Section 368(a) of the Code (a "Reorganization"), and
Wasserstein Perella assumed that the Merger will qualify as a Reorganization.
Wasserstein Perella also assumed that the transactions described in the Merger
Agreement would be consummated on the terms set forth therein, without material
waiver or modification.
Wasserstein Perella's Opinion was necessarily based on economic and market
conditions and other circumstances as they existed and could be evaluated by
Wasserstein Perella on the date thereof. In addition, Wasserstein Perella did
not express any opinion as to the price or trading range at which Surviving
Corporation Common Stock will trade following the Merger.
Summary and Analysis of the Merger
At the February 18, 1997 meeting of the Evergreen Board, Wasserstein
Perella reviewed with the members of the Evergreen Board certain financial,
industry and market information with respect to Evergreen and Chancellor, and
the procedures used in arriving at, and the analyses underlying, the Wasserstein
Perella Opinion. The summary set forth below does not purport to be a complete
description of the Wasserstein Perella Opinion or of Wasserstein Perella's
analyses relating thereto. The preparation of a fairness opinion is a complex
process that is not purely mathematical and is not necessarily susceptible to
partial analyses or summary description. Stockholders are encouraged to review
the Wasserstein Perella Opinion in its entirety.
Wasserstein Perella presented a summary of the material terms of the
Merger, including: (i) the fact that the Merger was a stock-for-stock
transaction intended to be on a tax-free basis; (ii) the Exchange Ratio; (iii)
the assumption of Chancellor debt by Evergreen; (iv) the issuance of three new
series of preferred stock by Evergreen and EMCLA to replace existing preferred
stock of Chancellor and CRBC; (v) the designation by each of Evergreen and
Chancellor of three members of the Evergreen Board, with an additional five
independent directors; and (vi) customary conditions to closing.
Evergreen and Chancellor Historical Stock Price Ratios and Trading Analysis
Wasserstein Perella reviewed the ratio of the closing price per share of
Chancellor Class A Common Stock to the closing price per share of Evergreen
Class A Common Stock since February 9, 1996 (the date of the Chancellor initial
public offering), over the 90 day period and the 30 day period prior to February
14, 1997. Wasserstein Perella noted that the mean of the ratios of the closing
price per share of Chancellor Class A Common Stock to the closing price per
share of Evergreen Class A Common Stock for such periods were
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1.05x, 1.00x and 0.91x, respectively. Wasserstein Perella also noted that the
ratio of the closing price per share of Chancellor Class A Common Stock to the
closing price per share of Evergreen Class A Common Stock for February 14, 1997
was 0.85x.
Wasserstein Perella also performed an analysis of the market trading
multiples as of June 30, 1996, September 30, 1996, December 31, 1996 and
February 14, 1997 for Evergreen and Chancellor based on their enterprise values
as a multiple of broadcast cashflow ("BCF") for the latest twelve months of
information available as of the evaluation date ("LTM"), 1996 estimated BCF and
1997 estimated BCF.
Based on such calculations, Wasserstein Perella noted that the enterprise
value market multiples for Evergreen were (i) 14.4x for LTM BCF, 13.6x for 1996
estimated BCF and 12.1x for estimated 1997 BCF as of June 30, 1996; (ii) 15.3x
for LTM BCF, 14.4x for 1996 estimated BCF and 12.8x for 1997 estimated BCF as of
September 30, 1996; (iii) 13.8x for LTM BCF, 13.3x for 1996 estimated BCF and
11.6x for 1997 estimated BCF as of December 31, 1997; and (iv) 16.0x for LTM
BCF, 15.3x for 1996 estimated BCF and 13.0x for 1997 estimated BCF as of
February 14, 1997. The enterprise value market multiples for Chancellor were (i)
15.5x for LTM BCF, 14.0x for 1996 estimated BCF and 12.3x for estimated 1997 BCF
as of June 30, 1996; (ii) 15.6x for LTM BCF, 14.6x for 1996 estimated BCF and
12.8x for 1997 estimated BCF as of September 30, 1996; (iii) 12.5x for LTM BCF,
12.1x for 1996 estimated BCF and 10.3x for 1997 estimated BCF as of December 31,
1997; and (iv) 16.5x for LTM BCF, 15.4x for 1996 estimated BCF and 11.6x for
1997 estimated BCF as of February 14, 1997.
Wasserstein Perella analyzed the historical daily ratios and market trading
multiples of Evergreen and Chancellor as part of its analysis of the fairness of
the Exchange Ratio from a financial point of view to Evergreen. Wasserstein
Perella did not determine a range of implied public market equity values for
either Evergreen or Chancellor based on these analyses.
Analysis of the Exchange Ratio
Wasserstein Perella noted that calculation of the Exchange Ratio (based on
the closing price of Evergreen Common Stock on February 14, 1997) implied a
consideration of $29.77 per share of Chancellor Common Stock, a premium of 6.6%
to the closing price of Chancellor Class A Common Stock on February 14, 1997, a
market equity value of $578.4 million and an enterprise value of $1.47 billion
and would result in a pro forma direct ownership of Evergreen following the
completion of the Merger by the current stockholders of Evergreen of 71.2%.
Wasserstein Perella reviewed with the Evergreen Board the structure of the
Exchange Ratio. Wasserstein Perella also noted that increases or decreases in
the price of Evergreen Class A Common Stock prior to the completion of the
Merger would not affect the pro forma percentage ownership of Evergreen
following the completion of the Merger by the current stockholders of Evergreen.
Based on the Exchange Ratio and the implied consideration of $29.77 per
share of Chancellor Class A Common Stock, Wasserstein Perella calculated
Chancellor's enterprise value as a multiple of LTM revenue, 1996 estimated
revenue, 1997 estimated revenue, LTM BCF, 1996 estimated BCF, 1997 estimated
BCF, LTM operating cashflow ("OCF"), 1996 estimated OCF and 1997 estimated OCF.
Wasserstein Perella noted that the enterprise value market multiples were 6.3x
for LTM revenue, 6.0x for 1996 estimated revenue, 5.1x for 1997 estimated
revenue, 16.9x for LTM BCF, 15.8x for 1996 estimated BCF, 11.9x for 1997
estimated BCF, 17.8x for LTM OCF, 16.5x for 1996 estimated OCF and 12.4x for
1997 estimated OCF.
Contribution Analysis
Wasserstein Perella performed a contribution analysis to determine the
relative contributions by Evergreen and Chancellor to the combined entity based
on market equity value, enterprise value, net debt and net debt plus preferred
stock and noted that Evergreen's contributions were 72.2%, 60.8%, 62.8% and
47.9%, respectively. Wasserstein Perella also applied the Exchange Ratio on a
pro forma basis to compare the relative contributions of Evergreen and
Chancellor to the combined entity based on market equity value, enterprise
value, net debt and net debt plus preferred stock and noted that Evergreen's
contributions were 70.9%, 60.2%, 62.8% and 47.9%, respectively. In addition,
Wasserstein Perella compared the relative contributions of Evergreen and
Chancellor to the combined entity based on 1996 and 1997 estimated net revenue,
BCF and
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OCF. Based on 1996 estimated financial data, Evergreen's relative contributions
were 59.4%, 60.9% and 60.7%, respectively, and based on 1997 estimated financial
data, Evergreen's relative contributions were 57.8%, 58.2% and 57.8%,
respectively.
Pro Forma Merger Analysis
Wasserstein Perella analyzed estimated 1996 and 1997 pro forma financial
data for the combined entity based on 1996 and 1997 estimated net revenue, BCF,
OCF, earnings before interest and taxes ("EBIT"), net debt and net debt plus
preferred stock. Wasserstein Perella noted that, based on 1996 estimated pro
forma financial data, net revenue, BCF, OCF, EBIT, net debt and net debt plus
preferred stock were $603.1 million, $238.8 million, $226.8 million, $81.2
million, $1.3 billion and $1.7 billion, respectively. Based on 1997 estimated
pro forma financial data, net revenue, BCF, OCF, EBIT, net debt and net debt
plus preferred stock were $681.3 million, $295.7 million, $282.4 million, $118.0
million, $1.2 billion and $1.6 billion, respectively. In performing its
analysis, Wasserstein Perella did not take into account any divestitures that
may be required as part of the Merger or any subsequent transaction.
Pro Forma Analysis of the Evergreen-Chancellor-Viacom Stations Combined Entity
At the request of the Evergreen Board, Wasserstein Perella calculated pro
forma 1997 estimated revenue, BCF, OCF, net debt and net debt plus preferred
stock for a combined entity consisting of Evergreen, Chancellor and certain
radio stations acquired from Viacom. Wasserstein Perella noted that pro forma
1997 estimated revenue, BCF, OCF, net debt and net debt plus preferred stock for
this combined entity were $781.4 million, $354.4 million, $341.1 million, $1.9
billion and $2.5 billion, respectively. In performing its analysis, Wasserstein
Perella took into account certain divestitures that may be required in
connection with the Merger or the Viacom Acquisition.
Selected Radio Broadcasting Company Trading Analysis
In order to analyze the relative public market valuations of certain
selected comparable radio broadcasting companies, Wasserstein Perella performed
an analysis of stock price performance and operating performance of Evergreen,
Chancellor, American Radio Systems Corporation, Cox Radio, Emmis, Heftel, Jacor,
Saga Communications and SFX Broadcasting, Inc. Wasserstein Perella calculated
certain market trading multiples for each of such companies based on their (i)
enterprise values as a multiple of LTM revenue, 1996 estimated revenue, 1997
estimated revenue, LTM BCF, 1996 estimated BCF, 1997 estimated BCF, LTM OCF,
1996 estimated OCF and 1997 estimated OCF and (ii) net debt plus preferred stock
as a multiple of 1996 and 1997 estimated OCF.
Based on such calculations, Wasserstein Perella noted that the range of
enterprise value market multiples was 4.2x to 8.7x for LTM revenue, 4.3x to 8.5x
for 1996 estimated revenue, 3.9x to 7.7x for 1997 estimated revenue, 10.5x to
28.3x for LTM BCF, 10.2x to 26.2x for 1996 estimated BCF, 9.3x to 19.1x for 1997
estimated BCF, 11.8x to 32.2x for LTM OCF, 11.4x to 29.6x for 1996 estimated OCF
and 10.3x to 21.0x for 1997 estimated OCF. The range of net debt plus preferred
stock was 3.5x to 10.0x for 1996 estimated OCF and 2.6x to 8.2x for 1997
estimated OCF.
Wasserstein Perella analyzed the enterprise value market multiples for
these companies solely to provide background information to the Evergreen Board.
Wasserstein Perella did not determine a range of implied public market equity
values for either Evergreen or Chancellor based on this analysis.
Review of Selected Radio Broadcasting Company Acquisitions
Wasserstein Perella reviewed certain publicly available financial and other
information relating to the following announced business combination
transactions (the "Recent Transactions") in the radio broadcasting business:
Colfax Communications -- Chancellor, EZ Communications, Inc. -- American Radio
Systems Corporation, Granum Holdings -- Infinity Broadcasting,
Citicasters -- Jacor, Shamrock Broadcasting -- Chancellor, Infinity Broadcasting
Corporation -- Westinghouse Electric Corporation and Pyramid Communications,
Inc. -- Evergreen.
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In conducting its review, Wasserstein Perella calculated the aggregate
purchase price transaction multiple (i.e., total shares of common stock
outstanding times the purchase price per share plus net debt) as a multiple of
BCF for the calendar year in which the applicable transaction was announced and
for the following calendar year for each Recent Transaction based on the latest
publicly available information as of the date of each such transaction.
Based on such calculations, Wasserstein Perella noted that the range of
implied multiples of the aggregate purchase price for the Recent Transactions
was 12.0x to 17.8x of BCF for the calendar year in which the applicable
transaction was announced and 10.0x to 16.4x for the following calendar year.
Wasserstein Perella analyzed the aggregate purchase price transaction
multiples for the Recent Transactions solely to provide background information
to the Evergreen Board. Wasserstein Perella did not determine a range of implied
public market equity values for either Evergreen or Chancellor based on the
Recent Transactions.
Summary
The summary set forth above does not purport to be a complete description
of the analyses performed by Wasserstein Perella or Wasserstein Perella's
presentations to the Evergreen Board. Wasserstein Perella believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all factors and
analyses, could create a misleading view of the process underlying its analyses
set forth in its opinion. In performing its analyses, Wasserstein Perella made
numerous macroeconomic, operating and financial assumptions with respect to
industry performance, general business, regulatory and economic conditions and
other matters, many of which are beyond the control of Evergreen and Chancellor.
Any estimates incorporated in the analyses performed by Wasserstein Perella are
not necessarily indicative of actual past or future results or values, which may
be significantly more or less favorable than such estimates. Estimated values do
not purport to be appraisals and do not necessarily reflect the prices at which
radio stations may be sold. Since such estimates are inherently subject to
uncertainty, Wasserstein Perella does not assume any responsibility for their
accuracy. No company analyzed for comparative purposes is identical to Evergreen
or Chancellor. Accordingly, an analysis of comparative companies and comparative
business combinations is not simply mathematical but rather involves complex
considerations and judgments concerning financial and operating characteristics
of the companies involved and other factors that affect value.
In addition to the analyses outlined above, Wasserstein Perella performed
such other valuation analyses as it deemed appropriate in determining the
fairness of the Exchange Ratio from a financial point of view to Evergreen.
Wasserstein Perella concluded that, in its judgment, including the full range of
its analyses described above, the Exchange Ratio is fair, from a financial point
of view, to Evergreen.
Wasserstein Perella is an investment banking firm engaged in, among other
things, the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. The Evergreen Board selected
Wasserstein Perella as its financial advisor because Wasserstein Perella is an
internationally recognized investment banking firm and members of Wasserstein
Perella have substantial experience in transactions such as the Merger and in
the valuation of companies.
Pursuant to the terms of an engagement letter, dated October 29, 1996, as
amended and supplemented by a letter, dated February 17, 1997, Evergreen agreed
to pay Wasserstein Perella a transaction fee of $4.0 million contingent upon the
consummation of the Viacom Acquisition. Evergreen also agreed to pay Wasserstein
Perella a fee of $1.0 million on the date Wasserstein Perella rendered an
opinion with respect to the fairness of the Exchange Ratio from a financial
point of view to Evergreen, such $1.0 million fee to reduce the amount of any
transaction fee to be paid in connection with the Viacom Acquisition. Evergreen
also has agreed to reimburse Wasserstein Perella, whether or not the Merger is
consummated, for its reasonable out-of-pocket expenses, including all reasonable
fees, disbursements and other charges of counsel, and to indemnify
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Wasserstein Perella and certain related persons against certain liabilities
relating to or arising out of its engagement, including certain liabilities
under the Federal securities laws.
In the ordinary course of its business, Wasserstein Perella may actively
trade the securities of Evergreen and, prior to completion of the Merger,
Chancellor for the accounts of Wasserstein Perella and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities.
OPINION OF FINANCIAL ADVISOR TO THE CHANCELLOR BOARD
Greenhill has delivered to the Chancellor Board its written opinion (the
"Greenhill Opinion") dated February 19, 1997 that, on the date of such opinion,
and based on assumptions made, procedures followed, matters considered and
limits of review, as set forth in the Greenhill Opinion, the Exchange Ratio is
fair from a financial point of view to the holders of shares of Chancellor
Common Stock.
THE FULL TEXT OF THE GREENHILL OPINION, WHICH SETS FORTH, AMONG OTHER
THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX C TO THIS JOINT PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF SHARES
OF CHANCELLOR COMMON STOCK ARE URGED TO, AND SHOULD, READ THE GREENHILL OPINION
CAREFULLY AND IN ITS ENTIRETY. THE GREENHILL OPINION IS DIRECTED TO THE
CHANCELLOR BOARD AND THE FAIRNESS OF THE EXCHANGE RATIO FROM A FINANCIAL POINT
OF VIEW TO HOLDERS OF SHARES OF CHANCELLOR COMMON STOCK AND IT DOES NOT ADDRESS
ANY OTHER ASPECT OF THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
HOLDER OF SHARES OF CHANCELLOR COMMON STOCK AS TO HOW TO VOTE AT THE CHANCELLOR
SPECIAL MEETING. THE SUMMARY OF THE GREENHILL OPINION SET FORTH HEREIN IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with rendering its opinion, Greenhill, among other things,
(i) reviewed certain publicly available financial statements and certain other
historical financial information of Chancellor, CRBC and Evergreen; (ii)
reviewed certain non-public financial statements and certain other financial and
operating data concerning Chancellor, CRBC, Evergreen and the Viacom Stations;
(iii) analyzed certain financial forecasts for Chancellor and Evergreen prepared
by the management of Chancellor, certain 1997 financial forecasts for Evergreen
prepared by the management of Evergreen, and certain financial forecasts for the
Viacom Stations furnished to it by Chancellor; (iv) discussed the strategic,
financial and operational benefits anticipated from the Merger and the sale of
the Viacom Stations with the managements of Chancellor and Evergreen,
respectively; (v) discussed the past and current operations and financial
condition and the prospects of Chancellor, Evergreen and the Viacom Stations
with senior executives of Chancellor and discussed the past and current
operations and financial condition and prospects of Evergreen with senior
executives of Evergreen; (vi) undertook a discounted cash flow analysis of
Chancellor giving effect to the Chancellor Viacom Acquisition and of the
Surviving Corporation giving effect to the Merger and the Viacom Acquisition;
(vii) reviewed the pro forma impact of the Merger and the Viacom Acquisition on
the Surviving Corporation's cash flow, consolidated capitalization and financial
ratios; (viii) reviewed the reported prices and trading activity for Chancellor
Common Stock and Evergreen Common Stock; (ix) compared the financial performance
of Chancellor and Evergreen and the prices and trading activity of Chancellor
Common Stock and Evergreen Common Stock with that of certain other publicly
traded companies comparable with Chancellor and Evergreen, respectively, and
their securities; (x) reviewed the financial terms, to the extent publicly
available, of certain acquisition transactions that Greenhill deemed reasonably
comparable to the Merger; (xi) reviewed the Merger Agreement, the Viacom Joint
Purchase Agreement and the Viacom Stock Purchase Agreement; (xii) considered the
shared control of the Surviving Corporation; and (xiii) considered such other
factors as Greenhill deemed appropriate.
In rendering its opinion, Greenhill assumed and relied upon without
independent verification the accuracy and completeness of the information
supplied or otherwise made available to it by Chancellor and Evergreen for the
purpose of its opinion. With respect to the financial forecasts, Greenhill
assumed that they had been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial performance
of Chancellor, Evergreen and the Viacom Stations. In addition, Greenhill assumed
that the Merger would be consummated in accordance with the terms set forth in
the Merger Agreement, including, among other things, that the Merger would be
treated as a tax-free reorganization
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and/or exchange, each pursuant to the Internal Revenue Code of 1986, and that
the Chancellor Viacom Acquisition and the Viacom Acquisition, if consummated,
would be consummated in accordance with the terms of the Viacom Joint Purchase
Agreement and the Viacom Stock Purchase Agreement, respectively. Greenhill did
not make any independent valuation or appraisal of the assets or liabilities of
Chancellor, nor was it furnished with any such appraisals. The Greenhill Opinion
is necessarily based on financial, economic, market and other conditions as in
effect on, and the information made available to Greenhill as of, February 19,
1997.
In arriving at its opinion, Greenhill was not authorized to solicit, and
did not solicit, interest from any party with respect to the acquisition,
business combination or other extraordinary transaction, involving Chancellor.
Greenhill has not discussed any of the historical financial information or
financial forecasts of the Viacom Stations or the past and current operations
and financial condition and prospects of the Viacom Stations with any
representatives of Viacom. Greenhill does not express any opinion with respect
to the transactions contemplated by the Viacom Joint Purchase Agreement.
Greenhill has, however, considered the impact on Chancellor of the consummation
of the Chancellor Viacom Acquisition and the impact on the Surviving Corporation
of the consummation of the Viacom Acquisition.
The following is a brief summary of the analyses performed by Greenhill in
preparation of the Greenhill Opinion to the Chancellor Board:
Combination Analysis. Greenhill reviewed certain financial information (net
revenues, broadcast cash flow ("BCF") and EBITDA) for Chancellor, Evergreen and
the Viacom Stations based on estimated future results. The estimated future
results of Chancellor and Evergreen were prepared by Chancellor and Evergreen
managements, respectively, and the estimated future results of the Viacom
Stations were derived from Chancellor management. Based on such review,
Greenhill analyzed the contribution of each of Chancellor, Evergreen and the
Viacom Stations to the combined entity resulting from the Merger and the Viacom
Acquisition and compared it to the approximately 30% pro forma equity ownership
that holders of Chancellor Common Stock would have in the combined entity. Such
analysis indicated that each of Chancellor, Evergreen and the Viacom Stations
would, respectively, contribute to the combined entity resulting from the Merger
(i) for fiscal 1996, 34.6%, 51.1% and 14.4% of net revenues, 33.5%, 48.6% and
17.9% of BCF and 33.5%, 48.3% and 18.2% of EBITDA; and (ii) for fiscal 1997,
36.2%, 48.9% and 14.9% of net revenues, 35.4%, 46.9% and 17.7% of BCF and 35.5%,
46.6% and 18.0% of EBITDA. The combination analysis for both years was based on
estimated results.
Implied Exchange Ratios Based on Market Prices. Greenhill compared the
Exchange Ratio of 0.9091 to the relative market prices of the Chancellor Common
Stock and the Evergreen Common Stock (i) on February 14, 1997, (ii) for the 30
day period preceding such date, and (iii) for the 52 week period preceding such
date. The ratio of the price of Chancellor Common Stock over the price of
Evergreen Common Stock was: 0.85 at February 14, 1997; 1.013 and 1.403 for the
high exchange ratios during the 30 day and 52 week periods, respectively; 0.907
and 1.054 for the average exchange ratios during the 30 day and 52 week periods,
respectively; 0.921 and 1.026 for the median exchange ratios during the 30 day
and 52 week periods, respectively; and 0.783 and 0.783 for the low exchange
ratios during the 30 day and 52 week periods, respectively.
Analysis of Selected Comparable Publicly Traded Companies. Greenhill
compared certain financial information of Chancellor and Evergreen with the
corresponding publicly available financial information of certain other
companies which Greenhill deemed to be reasonably similar. In this portion of
its analysis, Greenhill compared certain financial information for five radio
broadcasting companies: American Radio, Clear Channel Communications, Emmis
Broadcasting, Jacor Communications and SFX Broadcasting (the "Comparable
Companies").
Greenhill determined the enterprise values of the Comparable Companies by
adding net debt to market value. Greenhill then calculated enterprise value as a
multiple of BCF and, utilizing these multiples, derived a low, mid and high
multiple of 9.0, 12.4 and 14.8, respectively, to use in valuing Chancellor,
Evergreen and the Surviving Corporation. Applying these multiples to the
estimated 1997 BCF of Chancellor, Evergreen and the Surviving Corporation,
Greenhill computed enterprise values for each, subtracted total debt, and
arrived at
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low, mid and high per share equity values of (i) $7.99, $25.68 and $38.17 for
Chancellor, (ii) $8.36, $24.10 and $35.20 for Evergreen and (iii) $10.23, $32.18
and $47.68 for the Surviving Corporation. The valuation of the Surviving
Corporation reflects the consummation of the Viacom Acquisition and all
synergies resulting from the Merger and the Viacom Acquisition. The valuations
of Chancellor and Evergreen reflect the pro forma effect on each of the
Chancellor Viacom Acquisition and the Evergreen Viacom Acquisition,
respectively.
Analysis of Selected Comparable Acquisition Transactions. Greenhill
reviewed certain publicly available information regarding ten selected business
combinations announced since February 1996 in the radio broadcasting industry
(the "Acquisition Comparables"). The Acquisition Comparables and the dates the
transactions were announced are as follows: Chancellor's acquisition of Colfax
(August 1996); Evergreen's acquisition of certain radio stations from Secret
Communications (August 1996); American Radio Systems' acquisition of EZ
Communications (August 1996); Westinghouse's acquisition of Infinity
Broadcasting (June 1996); Cox Broadcasting's acquisition of NewCity
Communications (May 1996); Chancellor's acquisition of OmniAmerica (May 1996);
Clear Channel's acquisition of Radio Equity Partners (May 1996); Chancellor's
acquisition of Shamrock Broadcasting (February 1996); Infinity's acquisition of
Granum (February 1996); and Jacor's acquisition of Citicasters (February 1996).
Greenhill calculated for each Acquisition Comparable the value of the
transaction as a multiple of 1996 and projected 1997 BCF and, utilizing these
multiples, derived a low, mid and high multiple of 9.7x, 12.1x and 16.5x,
respectively, to use in valuing Chancellor, Evergreen and the Surviving
Corporation. Applying these multiples to the estimated 1997 BCF of Chancellor,
Evergreen and the Surviving Corporation, Greenhill computed implied enterprise
values for each, subtracted total debt, and arrived at low, mid and high per
share values of (i) $11.64, $24.12 and $47.01 for Chancellor, (ii) $11.60,
$22.71 and $43.07 for Evergreen and (iii) $14.75, $30.24 and $58.65 for the
Surviving Corporation. The valuation of the Surviving Corporation reflects the
consummation of the Viacom Acquisition and all synergies resulting from the
Merger and the Viacom Acquisition. The valuations of Chancellor and Evergreen
reflect the pro forma effect on each of the Chancellor Viacom Acquisition and
the Evergreen Viacom Acquisition, respectively.
Discounted Cash Flow Analysis. Greenhill calculated ranges of per share
equity value for Chancellor, Evergreen and the Surviving Corporation based upon
the value of their five-year stream of projected unlevered free cash flows and
their projected fiscal year 2001 terminal values, discounted to January 1, 1997,
based on BCF multiples ranging from 11.0x to 13.0x and discount rates ranging
from 11.0% to 13.0%. For purposes of its per share equity value analysis,
preferred stock and total debt were subtracted from, and cash was added to,
aggregate value (the sum of discounted cash flows in years 1997 through 2001 and
terminal value). Based on such analysis, the implied per share equity value of
(i) Chancellor ranged from $24.22 to $39.35, (ii) Evergreen ranged from $28.58
to $42.00 and (iii) the Surviving Corporation ranged from $32.91 to $50.89. The
valuation of the Surviving Corporation reflects the consummation of the Viacom
Acquisition and all synergies resulting from the Merger and the Viacom
Acquisition. The valuations of Chancellor and Evergreen reflect the pro forma
effect on each of the Chancellor Viacom Acquisition and the Evergreen Viacom
Acquisition, respectively.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In arriving
at its opinion, Greenhill considered the results of all its analyses as a whole
and did not attribute any particular weight to any analysis or factor considered
by it. Furthermore, selecting any portion of its analyses, without considering
all analyses, would create an incomplete view of the process underlying its
opinion. In addition, Greenhill may have given various analyses and factors more
or less weight than other analyses and factors, and may have deemed various
assumptions more or less probable than other assumptions, so that the ranges of
valuations resulting from any particular analysis described above should not be
taken to be Greenhill's view of the actual value of Chancellor.
In performing its analyses, Greenhill made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Chancellor or Evergreen.
The analyses performed by Greenhill are not necessarily indicative of actual
value, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were
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prepared solely as a part of Greenhill's analysis of the fairness from a
financial point of view of the Exchange Ratio pursuant to the Merger Agreement
to the holders of shares of Chancellor Common Stock and were provided to the
Chancellor Board in connection with the delivery of the Greenhill Opinion. The
analyses do not purport to be appraisals or to reflect the prices at which
Chancellor might actually be sold. In addition, the Greenhill Opinion and
presentation to the Chancellor Board was one of many factors taken into
consideration by the Chancellor Board in making its determination to approve the
Merger. The consideration to be received by the holders of shares of Chancellor
Common Stock pursuant to the Merger was determined through arms'-length
negotiations between Chancellor and Evergreen and was approved by the Chancellor
Board. Greenhill provided advice to Chancellor during the course of such
negotiations; however, the decision to enter into the Merger Agreement and to
accept the Exchange Ratio was solely that of the Chancellor Board.
Greenhill Fees. Chancellor agreed to pay Greenhill for its services in
connection with the acquisition of certain radio stations from Viacom and the
Merger fees payable as follows: (i) a transaction fee equal to $3,000,000,
payable upon consummation of the acquisition of certain radio stations from
Viacom; and (ii) a fee of $1,000,000, payable for the delivery by Greenhill of
the Greenhill Opinion. Chancellor also has agreed to reimburse Greenhill for
reasonable travel and other out-of-pocket expenses, including the reasonable
fees and expenses of Shearman & Sterling, Greenhill's legal counsel, and to
indemnify Greenhill and certain related persons against certain liabilities,
including liabilities under the federal securities laws.
Chancellor retained Greenhill because of its experience and expertise. The
investment bankers at Greenhill are internationally recognized for their
investment banking and advisory expertise. Greenhill, as part of its investment
banking business, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
EVERGREEN
In considering the recommendation of the Board of Directors of Evergreen
with respect to the approval of and adoption of the Merger Agreement and the
transactions contemplated thereby, stockholders of Evergreen should be aware
that certain members of management of Evergreen and the Evergreen Board of
Directors have interests in the Merger that are different from, or in addition
to, the interests of stockholders of Evergreen generally.
Stockholders Agreement. On February 19, 1997, Chancellor, Evergreen, the
Hicks Stockholders and Scott K. Ginsburg entered into the Stockholders
Agreement, pursuant to the which the Hicks Stockholders and Mr. Ginsburg agreed,
among other things, to vote all shares of capital stock of Chancellor and
Evergreen held by such parties at any meeting of the stockholders of the
respective companies in favor of the transactions contemplated by the Merger
Agreement. In order to effect the intention of the parties in entering into the
Stockholders Agreement, the Hicks Stockholders appointed certain officers of
Evergreen as their proxy and attorney-in-fact to vote any and all shares of the
Chancellor Common Stock held by the Hicks Stockholders at the Chancellor Special
Meeting, and Mr. Ginsburg appointed certain officers of Chancellor as his proxy
and attorney-in-fact to vote any and all shares of Evergreen Common Stock held
by Mr. Ginsburg at the Evergreen Annual Meeting. The Hicks Stockholders control
approximately 90.3% of the combined voting power of the Chancellor Common Stock
(assuming exercise of all presently outstanding options and options exercisable
within 60 days after July 1, 1997). Mr. Ginsburg controls approximately 44.3% of
the combined voting power of the outstanding Evergreen Common Stock (assuming
exercise of all presently outstanding options and options exercisable within 60
days after July 1, 1997). See "The Stockholders Agreement."
Indemnification; Directors' and Officers' Liability Insurance. Under the
Merger Agreement, all rights to indemnification and exculpation from liabilities
for acts or omissions occurring at or prior to the Effective Time existing as of
the Effective Time of the Merger Agreement in favor of the current or former
directors and officers of Evergreen and its subsidiaries provided in the
Certificate of Incorporation and Bylaws of the Surviving Corporation, each as
amended and restated in connection with the Merger, will survive the Merger and
continue in full force and effect in accordance with their terms for not less
than six years from the Effective Time. In addition, subject to certain
conditions, for six years after the Effective Time, Evergreen has
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agreed to maintain Chancellor's current directors' and officers' insurance and
indemnification policy, to the extent that such policy provides coverage for
events occurring prior to the Effective Time, for all persons who were directors
and officers of Chancellor or Evergreen on the date of the Merger Agreement.
Legal Counsel. Eric L. Bernthal, a director of Evergreen, is a senior
partner in the law firm of Latham & Watkins, Washington, D.C., regular counsel
to Evergreen. Latham & Watkins has represented Evergreen in connection with the
Merger, the Merger Agreement and certain transactions contemplated thereby.
Employment Agreement. Evergreen has entered into a memorandum of agreement
(the "Memorandum of Agreement") with Mr. Ginsburg in connection with Evergreen's
entering into the Merger Agreement. The Memorandum of Agreement was entered in
connection with the execution of the Merger Agreement because Evergreen and
Chancellor concluded that it was desirable to extend Mr. Ginsburg's term of
employment with Evergreen in order to provide for continuity and stability of
management of Evergreen following consummation of the Merger. The Memorandum of
Agreement is intended to be replaced by a definitive employment contract prior
to consummation of the Merger; should the Merger not be consummated, the
employment agreement contemplated by the Memorandum of Agreement will not be
entered into. The Memorandum of Agreement provides that the term of Mr.
Ginsburg's employment with Evergreen will be extended through the fifth
anniversary of the consummation of the Merger, which Mr. Ginsburg may extend for
an additional five years, and provides for an initial base salary of $1,000,000
in the first year following the consummation of the Merger, to be increased each
year by a percentage equal to the percentage change in the consumer price index
during the preceding year. In addition, the Memorandum of Agreement provides for
an annual bonus of up to $3,000,000 based upon a percentage of the amount by
which Evergreen exceeds certain annual performance targets which are defined in
the Memorandum of Agreement. The Memorandum of Agreement also provides that Mr.
Ginsburg is eligible to receive options to purchase 100,000 shares per year of
the Surviving Corporation Common Stock. The Memorandum of Agreement provides
that if Mr. Ginsburg's employment is terminated prior to the fifth annual
anniversary of the consummation of the Merger, except termination for "cause" or
termination by Mr. Ginsburg for other than "good reason," Mr. Ginsburg will
receive on such termination date options to purchase the number of shares of
Surviving Corporation Common Stock that is equal to 500,000 minus the number of
shares of Surviving Corporation Common Stock subject to options received by Mr.
Ginsburg pursuant to the Memorandum of Agreement (or any definitive agreement
executed by Mr. Ginsburg and Evergreen) prior to such date. The Memorandum of
Agreement provides that all options granted to Mr. Ginsburg will be exercisable
for ten years from the date of grant of the option, at a price equal to the
market price for Evergreen's common stock on the date of grant of the option.
The Memorandum of Agreement provides that, in the event of termination of Mr.
Ginsburg's employment following the Merger, except termination for "cause" or
termination by Mr. Ginsburg for other than "good reason," Mr. Ginsburg will be
entitled to a one-time cash payment in an amount (after payment by the Surviving
Corporation of any excise tax imposed by Section 4999 of the Code) equal to
$20,000,000. The Memorandum of Agreement provides that Mr. Ginsburg will have
registration rights with respect to all Evergreen Common Stock owned by Mr.
Ginsburg upon the consummation of the Merger and any such stock acquired
thereafter. The Memorandum of Agreement provides that Evergreen, Chancellor and
Mr. Ginsburg will work together in good faith to prepare and execute a
definitive employment agreement containing the terms of the Memorandum of
Agreement, including definitions of "cause" and "good reason", at or prior to
consummation of the Merger. As of July 30, 1997, a definitive employment
agreement had not been executed.
CHANCELLOR
In considering the recommendation of the Board of Directors of Chancellor
with respect to the approval of and adoption of the Merger Agreement and the
transactions contemplated thereby, stockholders of Chancellor should be aware
that certain stockholders, members of management of Chancellor and the
Chancellor Board have interests in the Merger that are different from, or in
addition to, the interests of stockholders of Chancellor generally.
Indemnification; Directors' and Officers' Liability Insurance. Under the
Merger Agreement, all rights to indemnification and exculpation from liabilities
for acts or omissions occurring at or prior to the Effective Time existing as of
the Effective Time in favor of the current or former directors and officers of
Chancellor
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and its subsidiaries provided in the Surviving Corporation Certificate and
Surviving Corporation Bylaws, each and amended and restated in connection with
the Merger, will survive the Merger and continue in full force and effect in
accordance with their terms for not less than six years from the Effective Time.
In addition, subject to certain conditions, for six years after the Effective
Time, Evergreen has agreed to maintain Chancellor's current directors' and
officers' insurance and indemnification policy, to the extent that such policy
provides coverage for events occurring prior to the Effective Time, for all
persons who were directors and officers of Chancellor or Evergreen on the date
of the Merger Agreement.
Financial Monitoring and Oversight Agreement. Chancellor and CRBC are
parties to a financial monitoring and oversight agreement (the "Financial
Monitoring and Oversight Agreement") with Hicks, Muse & Co. Partners, L.P.
("Hicks Muse Partners"), an affiliate of Hicks Muse. Pursuant thereto,
Chancellor and CRBC pay to Hicks Muse Partners an annual fee adjustable upward
or downward at the end of each fiscal year to a fee equal to 0.25% of the
budgeted consolidated annual net sales of Chancellor, provided that such fee
shall at no time be less than $500,000 per year. In the event that Chancellor or
any of its subsidiaries acquires another entity or business during the term of
the Financial Monitoring and Oversight Agreement, the annual fee for the
calendar year in which such acquisition occurs shall be adjusted prospectively
as of the closing of such acquisition to an annual amount equal to 0.25% of the
pro forma combined budgeted consolidated annual net sales of Chancellor
(including the sales of the acquired entity or business for such entire fiscal
year on a pro forma basis). Hicks Muse Partners is also entitled to
reimbursement for any out-of-pocket expenses incurred by it in connection with
rendering services under the Financial Monitoring and Oversight Agreement. In
addition, Chancellor and CRBC have agreed to indemnify Hicks Muse Partners, its
affiliates and shareholders, and their respective directors, officers, agents,
employees and affiliates from and against all claims, actions, proceedings,
demands, liabilities, damages, judgments, assessments, losses and costs,
including fees and expenses, arising out of or in connection with the services
rendered by Hicks Muse Partners in connection with the Financial Monitoring and
Oversight Agreement.
On February 17, 1997, in connection with the transactions contemplated by
the Merger Agreement, the Chancellor Board authorized an amendment to the
Financial Monitoring and Oversight Agreement to provide that, upon the
consummation of the Merger, the annual fee to be paid by the Surviving
Corporation shall be increased to an amount not less than $1 million, subject to
increase, but not decrease, based upon changes in the Consumer Price Index. The
amended Financial Monitoring and Oversight Agreement will provide that the
agreement will terminate at such time as Thomas O. Hicks and his affiliates
collectively cease to beneficially own at least two-thirds of the number of
shares of Surviving Corporation Common Stock beneficially owned by them,
collectively, immediately following the Effective Time.
Registration Rights. Chancellor is a party to that certain Amended and
Restated Stockholders Agreement, dated as of February 14, 1996 (the "Chancellor
Stockholders Agreement"), among Chancellor and certain holders of the Chancellor
Common Stock, which provides for certain registration rights for the shares of
Chancellor Common Stock held by such holders. In addition, Chancellor is also
party to two additional registration rights agreements relating to the
Chancellor Common Stock (collectively with the Chancellor Stockholders
Agreement, the "Registration Rights Agreements"). Each of the Registration
Rights Agreements relates to shares of Chancellor Common Stock held by certain
affiliates of Hicks Muse.
In connection with Merger, Chancellor is amending the Registration Rights
Agreements as of the Effective Time in order to clarify that such Registration
Rights Agreements shall be assumed by and apply to the Surviving Corporation and
shares of Surviving Corporation Common Stock received by the parties to such
Registration Rights Agreements in the Merger.
Termination of Financial Advisory Agreement. Chancellor and CRBC are
parties to an agreement (the "Financial Advisory Agreement") with HM2/Management
Partners, L.P. ("HM2/Management"), an affiliate of Hicks Muse. Pursuant to the
Financial Advisory Agreement. HM2/Management is entitled to receive a fee equal
to 1.5% of the transaction value (as defined) for each add-on transaction (as
defined) in which Chancellor, CRBC or any of their respective subsidiaries is
involved. The term "transaction value" means the total value of any add-on
transaction, including without limitation, the aggregate amount of the funds
required to complete the add-on transaction (excluding any fees payable pursuant
to the Financial
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Advisory Agreement, but including the amount of any indebtedness, preferred
stock or similar items assumed or remaining outstanding). The term "add-on
transaction" means any future proposal for a tender offer, acquisition, sale,
merger, exchange offer, recapitalization, restructuring or similar transaction
directly or indirectly involving Chancellor, CRBC or any of their respective
subsidiaries and any other person or entity. In addition, Chancellor and CRBC
have agreed to indemnify HM2/Management, its affiliates and shareholders, and
their respective directors, officers, agents employees and affiliates from and
against all claims, actions, proceedings, demands, liabilities, damages,
judgments, assessments, losses and costs, including fees and expenses, arising
out of or in connection with the services rendered by HM2/Management in
connection with the Financial Advisory Agreement.
In connection with the execution and delivery of the Merger Agreement,
HM2/Management agreed to terminate the Financial Advisory Agreement upon the
consummation of the Merger (subject to the right to receive the fee related to
the Viacom Acquisition in the event that the Viacom Acquisition were to occur
after the consummation of the Merger), and in consideration thereof, in lieu of
any payments required to be made under the Financial Advisory Agreement in
respect of the transactions contemplated by the Merger Agreement, the Chancellor
Board authorized the payment of a fee to HM2/Management in the amount of $5.0
million upon consummation for the Viacom Acquisition and a fee of $10.0 million
upon consummation of the Merger.
Brokerage Fees. CRBC is a party to a brokerage agreement (the "Brokerage
Agreement") with Star Media, pursuant to which Star Media may have been entitled
to a fee equal to 1.0% of the transaction value of the transactions contemplated
by the Merger. In lieu of any payments otherwise required to be made pursuant to
the Brokerage Agreement, Star Media has agreed to accept, and on February 17,
1997 the Chancellor Board agreed to pay to Star Media, a fee in the amount of
$7.0 million upon the consummation of the Merger. In addition, Chancellor and
Star Media have agreed to enter into an agreement (which shall become an
obligation of the Surviving Corporation following the Merger) pursuant to which
Star Media will be engaged to act as broker with respect to the sale of certain
radio stations in Chicago and San Francisco for a fee equal to 1.0% of the
transaction value achieved in any such dispositions.
Other Financial Advisory Fees. In connection with the merger, Goldman,
Sachs & Co. ("Goldman Sachs") also provided Chancellor with certain financial
advisory services. In consideration for such services, Chancellor agreed to pay
Goldman Sachs a fee of $1,000,000.
APPRAISAL AND DISSENTERS' RIGHTS
Holders of Evergreen Common Stock and Chancellor Common Stock will not be
entitled to exercise any appraisal rights under Section 262. Under the
certificate of designation governing the Chancellor Parent Convertible Preferred
Stock, holders of Chancellor Parent Convertible Preferred Stock are not entitled
to vote on the Parent Merger, the Subsidiary Merger, or any other transactions
contemplated by the Merger Agreement. The sole investment decision arising from
the Merger for holders of Chancellor Parent Convertible Preferred Stock is
whether to exercise appraisal rights under Section 262 of the DGCL.
Although holders of shares of Chancellor Parent Convertible Preferred Stock
are not entitled to vote on the approval and adoption of the Merger Agreement or
the transactions contemplated thereby, such holders are entitled to appraisal
rights under Section 262 of the DGCL ("Section 262"), provided that they comply
with the conditions established by Section 262. Section 262 is reprinted in its
entirety as Annex D to this Joint Proxy Statement/Prospectus. The following
discussion does not purport to be a complete statement of the law relating to
appraisal rights and is qualified in its entirety by reference to Annex D. This
discussion and Annex D should be reviewed carefully by any holder of Chancellor
Parent Convertible Preferred Stock who wishes to exercise statutory appraisal
rights or who wishes to preserve the right to do so, as failure to comply with
the procedures set forth herein or therein may result in the loss of appraisal
rights. A holder of record of shares of Chancellor Parent Convertible Preferred
Stock who desires to exercise appraisal rights must: (i) hold shares of
Chancellor Parent Convertible Preferred Stock on the date of the making of a
demand for appraisal; (ii) continuously hold such shares through the Effective
Time, (iii) deliver a properly executed written demand for appraisal to
Chancellor prior to the vote by the stockholders of Chancellor on the Merger;
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(iv) file any necessary petition in the Delaware Court of Chancery (the
"Delaware Court"), as more fully described below, within 120 days after the
Effective Time; and (v) otherwise satisfy all of the conditions described more
fully below and in Annex D.
A record holder of shares of Chancellor Parent Convertible Preferred Stock
who makes the demand described below with respect to such shares, who
continuously is the record holder of such shares through the Effective Time and
who otherwise complies with the statutory requirements of Section 262 will be
entitled, if the Merger is consummated, to receive payment of the fair value of
his shares of Chancellor Parent Convertible Preferred Stock as appraised by the
Delaware Court. All references in Section 262 and in this summary of appraisal
rights to a "stockholder" or "holders of shares of Chancellor Parent Convertible
Preferred Stock" are to the record holder or holders of shares of Chancellor
Parent Convertible Preferred Stock.
Under Section 262, not less than 20 days prior to the Chancellor Special
Meeting, Chancellor is required to notify its stockholders eligible for
appraisal rights of the availability of such appraisal rights. This Joint Proxy
Statement/Prospectus constitutes notice to holders of Chancellor Parent
Convertible Preferred Stock that appraisal rights are available to them.
Stockholders of record who desire to exercise their appraisal rights must
satisfy all of the conditions set forth herein. Each Chancellor stockholder
electing to demand the appraisal of his or her shares must file with Chancellor
a written demand for appraisal of any shares of Chancellor Parent Convertible
Preferred Stock before the taking of the vote on the Merger. Such written demand
must reasonably inform Chancellor of the identity of the stockholder of record
and of such stockholder's intention to demand appraisal of the Chancellor Parent
Convertible Preferred Stock held by such stockholder.
STOCKHOLDERS WHO DESIRE TO EXERCISE APPRAISAL RIGHTS MUST TIMELY SUBMIT A
WRITTEN DEMAND FOR APPRAISAL AND OTHERWISE COMPLY WITH SECTION 262. FAILURE TO
DO SO MAY CONSTITUTE A WAIVER OF THE STOCKHOLDER'S RIGHT OF APPRAISAL.
A demand for appraisal must be executed by or on behalf of the stockholder
of record, fully and correctly, as such stockholder's name appears on the
certificate or certificates representing the shares of Chancellor Parent
Convertible Preferred Stock. A person having a beneficial interest in shares of
Chancellor Parent Convertible Preferred Stock that are held of record in the
name of another person, such as a broker, fiduciary or other nominee, must act
promptly to cause the record holder to follow the steps summarized herein
properly and in a timely manner to perfect any appraisal rights. If the shares
of Chancellor Parent Convertible Preferred Stock are owned of record by a person
other than the beneficial owner, including a broker, fiduciary (such as a
trustee, guardian or custodian) or other nominee, such demand must be executed
by or for the record owner. If the shares of Chancellor Parent Convertible
Preferred Stock are owned of record by more than one person, as in a joint
tenancy or tenancy in common, such demand must be executed by or for all such
joint owners. An authorized agent, including an agent for two or more joint
owners, may execute the demand for appraisal for a stockholder of record;
however, the agent must identify the record owner and expressly disclose the
fact that, in exercising the demand, such person is acting as agent for the
record owner. A record owner, such as a broker, fiduciary or other nominee, who
holds shares of Chancellor Parent Convertible Preferred Stock as a nominee for
others, may exercise appraisal rights with respect to the shares held for all or
less than all beneficial owners of shares as to which such person is the record
owner. In such case, the written demand must set forth the number of shares
covered by such demand. Where the number of shares is not expressly stated, the
demand will be presumed to cover all shares of Chancellor Parent Convertible
Preferred Stock outstanding in the name of such record owner. A stockholder who
elects to exercise appraisal rights should mail or deliver his or her written
demand to: Chancellor Broadcasting Company, 12655 N. Central Expressway, Suite
405, Dallas, Texas 75243, Attention: Corporate Secretary, with a copy to Weil,
Gotshal & Manges LLP, 100 Crescent Court, Suite 1300, Dallas, Texas 75201,
Attention: Jeremy W. Dickens, Esq. The written demand for appraisal should
specify the stockholder's name and mailing address, the number of shares of
Chancellor Parent Convertible Preferred Stock owned, and that the stockholder is
thereby demanding appraisal of his or her shares.
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Within ten days after the Effective Time, the Surviving Corporation must
provide notice of the Effective Time to each of its stockholders who have
complied with Section 262. Within 120 days after the Effective Time, the
Surviving Corporation or any stockholder who has complied with the required
conditions of Section 262 may file a petition in the Delaware Court, with a copy
served on the Surviving Corporation in the case of a petition filed by a
stockholder, demanding a determination of the fair value of the shares of the
dissenting stockholders of the Surviving Corporation. The Surviving Corporation
does not currently intend to file an appraisal petition and stockholders seeking
to exercise appraisal rights should not assume that the Surviving Corporation
will file such a petition or that the Surviving Corporation will initiate any
negotiations with respect to the fair value of such shares. Accordingly,
stockholders who desire to have their shares appraised should initiate any
petitions necessary for the perfection of their appraisal rights within the time
periods and in the manner prescribed in Section 262. Within 120 days after the
Effective Time, any stockholder who has theretofore complied with the applicable
provisions of Section 262 will be entitled, upon written request, to receive
from the Surviving Corporation a statement setting forth the aggregate number of
shares of Chancellor Common Stock not voted in favor of the Merger and the
aggregate number of shares of Chancellor Parent Convertible Preferred Stock with
respect to which demands for appraisal were received by Chancellor and the
number of holders of such shares. Such written statement must be mailed within
10 days after the written request therefor has been received by the Surviving
Corporation or within 10 days after expiration of the time for delivery of
demands for appraisal under Section 262, whichever is later.
If a petition for an appraisal is timely filed, at the hearing on such
petition, the Delaware Court will determine which stockholders are entitled to
appraisal rights and will appraise the shares of Chancellor Parent Convertible
Preferred Stock owned by such stockholders, determining the fair value of such
shares exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. In determining fair value,
the Delaware Court is to take into account all relevant factors. In Weinberger
v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be
considered in determining fair value in an appraisal proceeding, stating that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered, and that "fair price obviously requires consideration of all
relevant factors involving the value of a company." The Delaware Supreme Court
stated that in making this determination of fair value the court must consider
market value, asset value, dividends, earnings prospects, the nature of the
enterprise and any other facts which are known or which can be ascertained as of
the date of the merger and which throw any light on future prospects of the
merged corporation. In Weinberger, the Delaware Supreme Court stated that
"elements of future value, including the nature of the enterprise, which are
known or susceptible of proof as of the date of the merger and not the product
of speculation, may be considered." Section 262, however, provides that fair
value is to be "exclusive of any element of value arising from the
accomplishment or expectation of the merger."
Stockholders considering seeking appraisal should recognize that the fair
value of their shares as determined under Section 262 could be more than, the
same as or less than the shares of Surviving Corporation 7% Convertible
Preferred Stock to be issued pursuant to the Merger to holders of Chancellor
Parent Convertible Preferred Stock if they do not seek appraisal of their
shares. The cost of the appraisal proceeding may be determined by the Delaware
Court and taxed against the parties as the Delaware Court deems equitable in the
circumstances. Upon application of a dissenting stockholder of Chancellor, the
Delaware Court may order that all or a portion of the expenses incurred by any
dissenting stockholder in connection with the appraisal proceeding, including
without limitation, reasonable attorney's fees and the fees and expenses of
experts, be charged pro rata against the value of all shares of stock entitled
to appraisal.
Any holder of shares of Chancellor Parent Convertible Preferred Stock who
has duly demanded appraisal in compliance with Section 262 will not, after the
Effective Time, be entitled to vote for any purpose any shares subject to such
demand or to receive payment of dividends or other distributions on such shares,
except for dividends or distributions payable to stockholders of record at a
date prior to the Effective Time.
At any time within 60 days after the Effective Time, any holder of
Chancellor Parent Convertible Preferred Stock will have the right to withdraw
such demand for appraisal and to accept the terms offered in the Merger; after
this period, such holder may withdraw such demand for appraisal only with the
written
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consent of the Surviving Corporation. If no petition for appraisal is filed with
the Delaware Court within 120 days after the Effective Time, stockholders'
rights to appraisal will cease, and all holders of shares of Chancellor Parent
Convertible Preferred Stock will be entitled to receive the Merger
Consideration. Inasmuch as the Surviving Corporation has no obligation to file
such a petition, and has no present intention to do so, any holder of shares of
Chancellor Parent Preferred Stock who desires such a petition to be filed is
advised to file it on a timely basis.
FAILURE TO TAKE ANY REQUIRED STEP IN CONNECTION WITH THE EXERCISE OF
APPRAISAL RIGHTS MAY RESULT IN TERMINATION OF SUCH RIGHTS. IN VIEW OF THE
COMPLEXITY OF THESE PROVISIONS OF THE DGCL, STOCKHOLDERS WHO ARE CONSIDERING
EXERCISING THEIR RIGHTS UNDER SECTION 262 OF THE DGCL SHOULD CONSULT WITH THEIR
LEGAL ADVISORS.
RESALE OF SURVIVING CORPORATION COMMON STOCK AND SURVIVING CORPORATION 7%
CONVERTIBLE PREFERRED STOCK
All shares of Surviving Corporation Common Stock and shares of Surviving
Corporation 7% Convertible Preferred Stock issued to stockholders of Chancellor
in connection with the Merger will be registered under the Securities Act. The
Chancellor Parent Convertible Preferred Stock for which the Surviving
Corporation 7% Convertible Preferred Stock will be issued is subject to a
Registration Rights Agreement, dated January 23, 1997, among Chancellor
Broadcasting Company and the initial purchasers of the Chancellor Parent
Convertible Preferred Stock (the "Chancellor 7% Registration Rights Agreement").
Pursuant to the Chancellor 7% Registration Rights Agreement, Chancellor agreed
to file within 90 days after the issue date of the Chancellor Parent Convertible
Preferred Stock, and have declared effective within 180 days of such date, a
shelf registration statement (the "Chancellor 7% Shelf Registration Statement")
with the Commission. As of the date hereof, Chancellor has not timely fulfilled
its obligations under the Chancellor 7% Registration Rights Agreement, and
accordingly has accrued and will continue to accrue liquidated damages at a rate
per annum of $2.50 per $1,000 liquidation preference of Chancellor Parent
Convertible Preferred Stock for the first 90 days of such default, and $5.00 per
$1,000 liquidation preference of Chancellor Parent Convertible Preferred Stock
thereafter, until its registration obligations have been satisfied. Chancellor
does not currently intend to file the Chancellor 7% Shelf Registration Statement
with the Commission. In lieu thereof, Evergreen and Chancellor have decided to
register the Surviving Corporation 7% Convertible Preferred Stock that will be
issued to holders of Chancellor Parent Convertible Preferred Stock under the
Securities Act on this Registration Statement. Such registration will allow for
the free transfer of shares of Surviving Corporation 7% Convertible Preferred
Stock by holders of such shares (other than those shares held by holders deemed
to be affiliates of Chancellor, as described below). Accordingly, upon the
declaration by the Commission of the effectiveness of this Registration
Statement and the issuance of the Surviving Corporation 7% Convertible Preferred
Stock at the Effective Time, Chancellor believes that its obligations under the
Chancellor 7% Registration Rights Agreement, other than Chancellor's obligation
to pay appropriate holders of the Chancellor Parent Convertible Preferred Stock
amounts owing as liquidated damages through the Effective Time, will be
satisfied.
All shares of Surviving Corporation Common Stock and Surviving Corporation
7% Convertible Preferred Stock issued to stockholders of Chancellor in the
Merger will be freely transferable, except the shares of Surviving Corporation
Common Stock received by persons deemed to be "affiliates" (as defined under the
Securities Act) of Chancellor at the Effective Time may be resold only in
certain permitted circumstances set forth in Rules 144 and 145 under the
Securities Act or pursuant to an effective registration statement under the
Securities Act covering such shares. This Joint Proxy Statement/Prospectus does
not cover resales of Surviving Corporation Common Stock and Surviving
Corporation 7% Convertible Preferred Stock received by any person who may be
deemed an affiliate of Chancellor at the time of the Chancellor Special Meeting.
Persons who may be deemed to be affiliates of Chancellor generally include
individuals or entities that control, are controlled by, or are under common
control with, Chancellor and may include certain officers and directors of
Chancellor, as well as principal stockholders of Chancellor.
The Merger Agreement requires Chancellor to use its best efforts to cause
each of its affiliates to execute a written agreement in the form attached as an
exhibit to the Merger Agreement, to the effect that such person will not sell,
transfer or otherwise dispose of any shares of Surviving Corporation Common
Stock other than in compliance with the Securities Act, including Rule 145
promulgated thereunder.
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Pursuant to the terms of the Registration Rights Agreements, as amended at
the Effective Time, certain directors, officers and affiliates of Chancellor as
of the Effective Time of the Merger will be entitled to certain registration
rights with respect to the shares of Surviving Corporation Common Stock received
by such persons in the Merger. See "The Merger -- Interests of Certain Persons
in the Merger -- Chancellor -- Registration Rights."
ANTICIPATED ACCOUNTING TREATMENT
The Merger will be accounted for as a purchase in accordance with generally
accepted accounting principles, with Evergreen considered the acquiror. The
results of operations of the Surviving Corporation will consist of the results
of operations of Evergreen combined with the results of operations of Chancellor
from and after the Effective Time of the Merger. The cost of Chancellor to the
Surviving Corporation shall be based upon (i) the value of the Surviving
Corporation Common Stock issued for Chancellor Common Stock and the value of
Chancellor stock options assumed by the Surviving Corporation, (ii) the value of
the Surviving Corporation 7% Convertible Preferred Stock issued for Chancellor
Parent Convertible Preferred Stock, (iii) the value of the Surviving Subsidiary
Series A Preferred Stock issued for CRBC Series A Preferred Stock, (iv) the
value of Surviving Subsidiary Junior Preferred Stock issued for CRBC Junior
Preferred Stock, and (v) direct costs of the Merger. The aggregate cost of
Chancellor, as determined, shall be allocated to the assets acquired and
liabilities assumed by the Surviving Corporation based upon their respective
fair values.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material United States
Federal income tax consequences of the Merger. This discussion is based upon the
Code, regulations, proposed or promulgated thereunder, judicial precedent
relating thereto, and current rulings and administrative practice of the
Internal Revenue Service (the "Service"), in each case as in effect as of the
date hereof and all of which are subject to change at any time, possibly with
retroactive effect. It is assumed that shares of Chancellor Common Stock,
Chancellor Parent Convertible Preferred Stock and Evergreen Common Stock are
held as "capital assets" within the meaning of Section 1221 of the Code (i.e.,
property held for investment). This discussion does not address all aspects of
Federal income taxation that might be relevant to particular holders of
Chancellor Common Stock, Chancellor Parent Convertible Preferred Stock or
Evergreen Common Stock in light of their status or personal investment
circumstances; nor does it discuss the consequences to such holders who are
subject to special treatment under the Federal income tax laws, such as foreign
persons, dealers in securities, regulated investment companies, life insurance
companies, other financial institutions, tax-exempt organizations, pass-through
entities, taxpayers who hold Chancellor Common Stock, Chancellor Parent
Convertible Preferred Stock or Evergreen Common Stock as part of a "straddle,"
"hedge" or "conversion transaction" or who have a "functional currency" other
than the United States dollar. In addition, this discussion does not address the
tax consequences to holders of options under the Chancellor stock option plans
or other persons who have received their Chancellor Common Stock as compensation
or to holders who exercise appraisal rights pursuant to Section 262 of the DGCL.
Neither Evergreen nor Chancellor has requested or will receive a ruling from the
Service as to the tax consequences of the Merger.
HOLDERS OF CHANCELLOR COMMON STOCK, CHANCELLOR PARENT CONVERTIBLE PREFERRED
STOCK AND EVERGREEN COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY
AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
The Parent Merger and the Subsidiary Merger are each intended to quality as
a reorganization under Section 368(a) of the Code. It is a condition to the
obligation of Evergreen, EMHC and EMCLA to consummate the Merger that Evergreen
shall have received an opinion from Latham & Watkins, dated as of the same date
as the Effective Time and the Subsidiary Merger Effective Time, to the effect
that (i) the Parent Merger and the Subsidiary Merger will each be treated as a
reorganization within the meaning of Section 368(a) of the Code, (ii) no gain or
loss will be recognized by Evergreen, EMHC or Chancellor as a result of the
Parent Merger, (iii) no gain or loss will be recognized by EMCLA or CRBC as a
result of the
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Subsidiary Merger, (iv) each of Chancellor, Evergreen and EMHC will be a party
to the Parent Merger within the meaning of Section 368(b) of the Code, (v) each
of CRBC and EMCLA will be a party to the Subsidiary Merger within the meaning of
Section 386(b) of the Code, (vi) no gain or loss will be recognized by the
holders of the Evergreen Common Stock on the reclassification, change and
conversion of such shares into shares of Surviving Corporation Common Stock
pursuant to the Merger Agreement and (vii) no gain or loss will be recognized by
holders of Evergreen $3.00 Convertible Preferred Stock as a result of the
Merger. It is a condition to the obligation of Chancellor and CRBC to consummate
the Merger that Chancellor shall have received an opinion from Weil, Gotshal &
Manges LLP, dated as of the same date as the Effective Time and the Subsidiary
Merger Effective Time, to the effect that, except with respect to cash received
in lieu of fractional shares and except with respect to cash received by holders
exercising appraisal rights pursuant to Section 262 of the DGCL, (i) the Parent
Merger and the Subsidiary Merger will each be treated as a reorganization within
the meaning of Section 368(a) of the Code; (ii) no gain or loss will be
recognized by a holder of Chancellor Common Stock or Chancellor Parent
Convertible Preferred Stock as a result of the Parent Merger, and (iii) no gain
or loss will be recognized by any holders of the CRBC Series A Preferred Stock
and CRBC Junior Preferred Stock as a result of the Subsidiary Merger. In
rendering such opinions, counsel to each of Chancellor and Evergreen will rely
upon certain representations made by Chancellor, CRBC, Evergreen, EMHC, EMCLA,
and certain stockholders of Chancellor and of CRBC.
Evergreen, EMCLA and EMHC do not presently intend to waive the condition to
consummate the Merger that each of them receive the opinion of Latham & Watkins
substantially to the effect described above, and Chancellor and CRBC do not
presently intend to waive the condition to consummate the Merger that either of
them receive the opinion of Weil, Gotshal & Manges LLP substantially to the
effect described above. In the event that Latham & Watkins or Weil, Gotshal &
Manges LLP does not deliver either such opinion, Evergreen or Chancellor, as the
case may be, would make appropriate disclosure of the relevant facts to its
stockholders and would resolicit their proxies regarding the Merger prior to
consummation thereof.
Assuming the Merger is treated as a reorganization within the meaning of
Section 368(a) of the Code, no gain or loss will be recognized for Federal
income tax purposes by Evergreen, EMHC, EMCLA, Chancellor or CRBC as a result of
the Merger. Except as described below with respect to cash received in lieu of
fractional shares of Chancellor Common Stock, (i) a holder of Evergreen Common
Stock will not recognize gain or loss on the reclassification, change and
conversion of such shares into Surviving Corporation Common Stock pursuant to
the Merger Agreement, (ii) a holder of Chancellor Common Stock will not
recognize gain or loss on the exchange of such shares for Surviving Corporation
Common Stock and (iii) a holder of Chancellor Parent Convertible Preferred Stock
(other than such holders exercising appraisal rights pursuant to Section 262 of
the DGCL) will not recognize any gain or loss on the exchange of such shares for
shares of Surviving Corporation 7% Convertible Preferred Stock. The aggregate
tax basis of the Surviving Corporation Common Stock received by holders of
Chancellor Common Stock will be the same as the aggregate tax basis of the
Chancellor Common Stock surrendered therefor (reduced by the amount of such tax
basis allocable to fractional shares for which cash is received), the aggregate
tax basis of the Surviving Corporation 7% Convertible Preferred Stock received
by holders of Chancellor Parent Convertible Preferred Stock will be the same as
the aggregate tax basis of the Chancellor Parent Preferred Stock surrendered
therefor and the aggregate tax basis of the Surviving Corporation Common Stock
received by holders of Evergreen Common Stock will be the same as the aggregate
tax basis of the Evergreen Common Stock reclassified, changed and converted
therefor. The holding period of the Surviving Corporation Common Stock will
include the holding period of the Chancellor Common Stock surrendered therefor,
the holding period of the Surviving Corporation 7% Convertible Preferred Stock
will include the holding period of the Chancellor Parent Convertible Preferred
Stock surrendered therefor and the holding period of the Surviving Corporation
Common Stock will include the holding period of the Evergreen Common Stock
surrendered therefor.
Cash In Lieu of a Fractional Share
Cash received by a holder of Chancellor Common Stock in lieu of a
fractional share interest in Surviving Corporation Common Stock will be treated
as received in exchange for such fractional share interest, and gain or loss
will be recognized for Federal income tax purposes, measured by the difference
between the amount of
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cash received and the portion of the holder's tax basis in the Chancellor Common
Stock allocable to such fractional share interest. Such gain or loss will be a
capital gain or loss and will be long-term if such share of Chancellor Common
Stock has been held for more than one year at the Effective Time.
REGULATORY CONCERNS
Federal Communications Commission
Approval Process. The ownership, operation and sale of radio broadcast
stations (including those licensed to Evergreen and Chancellor) are subject to
the jurisdiction of the FCC, which acts under authority granted by the
Communications Act. The Communications Act prohibits the assignment of an FCC
license, and the transfer of control of an FCC licensee, without the prior
consent of the FCC. For purposes of the Communications Act, Chancellor is
controlled by HM2/Chancellor, L.P. ("HM2/Chancellor"), an affiliate of Hicks
Muse, as a result of the ownership by HM2/Chancellor of shares of Chancellor
Common Stock that, in the aggregate, represent approximately 90.3% of the
combined voting power of Chancellor's outstanding voting stock. Additionally,
for purposes of the Communications Act, Evergreen is controlled by Scott K.
Ginsburg, as a result of the ownership by Mr. Ginsburg of shares of Evergreen
Common Stock that, in the aggregate, represent approximately 44.3% of the
combined voting power of Evergreen's outstanding voting stock. As a result of
the Merger and the conversion of Chancellor Common Stock and Evergreen Common
Stock into Surviving Corporation Common Stock, no individual shareholder will
control a block of voting stock sufficient to "control" the Surviving
Corporation for purposes of the Communications Act, and control, for the
purposes of the Communications Act, of Evergreen and Chancellor after the Merger
will pass to the public stockholders of the Surviving Corporation as a group.
Accordingly, the Merger will result in the transfer of control of (i) the radio
stations owned and operated by Chancellor and its subsidiaries from
HM2/Chancellor to the public stockholders of the Surviving Corporation (the
"Chancellor Transfer") and (ii) the radio stations owned and operated by
Evergreen from Mr. Ginsburg to the public stockholders of the Surviving
Corporation (the "Evergreen Transfer"). Because of these transfers of control,
the prior approval of the FCC is necessary before the Merger may be consummated.
Upon the filing of an application for consent to the transfer of control of
a broadcast station licensee, the FCC will issue an official public notice of
the filing of the application. Interested parties have a period of 30 days
following issuance of the public notice in which to petition to deny such
application. Applications for FCC consent to the Chancellor Transfer and the
Evergreen Transfer were filed with the FCC on April 30, 1997. Public notice of
the filing was released on May 8, 1997. Accordingly, any petitions to deny the
applications were required to be filed on or before June 9, 1997. Although one
such petition was filed, it has been settled and withdrawn. As of July 30, 1997,
the consent of the FCC to the Evergreen Transfer and the Chancellor Transfer has
not yet been granted. Although there can be no assurance, Evergreen and
Chancellor expect that such consent will be granted prior to the Evergreen
Annual Meeting and the Chancellor Special Meeting. See "Risk Factors -- FCC
Consent for Merger."
Within thirty days following FCC public notice of any grant of consent to
the Chancellor Transfer and the Evergreen Transfer, parties in interest may file
a petition for reconsideration requesting that the FCC reconsider its action.
Alternatively, in the case of a staff grant, parties in interest may within the
same thirty-day period file an "Application for Review" requesting that the FCC
review and set aside the staff grant. In the event of a staff grant, a party in
interest could take both actions, by first filing a petition for reconsideration
with the staff and later, within thirty days following public notice of denial
of that petition, filing an Application for Review. In the case of a staff
grant, the FCC may also review the staff action on its own motion within forty
days following public notice of the staff's action. The FCC may review any of
its own actions on its own motion within thirty days following public notice of
the action.
If the FCC does not, on its own motion, or upon a request by an interested
party for reconsideration or review, review a staff grant or its own action
within the time periods set forth above, any action by the FCC or its staff
granting the Chancellor Transfer and the Evergreen Transfer would become final.
The Merger Agreement provides that the parties are not obligated to consummate
the Merger upon the issuance of an FCC grant of consent to the Chancellor
Transfer and the Evergreen Transfer until such grants have become
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final. However, Evergreen and Chancellor presently expect that they will waive
the condition to consummation of the Merger that such grants have become final.
See "Risk Factors -- FCC Consent for Merger."
In determining whether to grant requests for consent to such transfers, the
FCC considers a number of factors pertaining to the licensee (and proposed
licensee), including: limitations on alien ownership and the common ownership of
television broadcast, radio broadcast and daily newspaper properties, the
"character" of the licensee (and proposed licensee) and those persons or
entities that have "attributable" interests, and compliance with the Anti-Drug
Abuse Act of 1988.
Although the Merger is considered to constitute a "transfer of control" of
Chancellor from HM2/Chancellor to the public stockholders of the Surviving
Corporation as a group for the purposes of the Communications Act, the Surviving
Corporation will be deemed, as of the date of the Merger, to be an affiliate of
Hicks Muse and certain affiliated entities for the purposes of certain contracts
applicable to Chancellor and the Surviving Corporation and its subsidiaries and
for the purposes of the federal securities laws, and these entities will be
deemed to "control" the Surviving Corporation for such purposes. This
distinction arises from the use of definitions of "control" that vary from the
definition of "control" established by the FCC.
Ownership Restrictions. Pursuant to its authority under the Communications
Act, the FCC has promulgated rules that limit the ability of individuals or
entities to own or have "attributable" ownership interests in broadcast
stations, as well as in certain other mass media entities. The 1996 Act
eliminated national ownership caps on ownership of AM and FM radio stations.
Additionally, the 1996 Act increased local ownership limits. Prior to the
enactment of the 1996 Act, a single owner was limited to owning two FM and two
AM radio stations in a single large radio market with common ownership of three
stations, including two in the same service, permitted in smaller markets. After
the enactment of the 1996 Act, local ownership limits were increased as follows:
in markets with 45 or more stations, ownership is limited to eight stations, no
more than five of which can be FM or AM; in markets with 30-44 stations,
ownership is limited to seven stations, no more than four of which can be FM or
AM; in markets with 15-29 stations, ownership is limited to six stations, no
more than four of which can be FM or AM; and in markets with 14 or fewer
stations, ownership is limited to no more than 50% of the market's total and no
more than three AM or FM.
Planned Station Dispositions and Requests for Waivers of Multiple Ownership
Rules. If an acquisition will result in an acquiror having media holdings that
conflict with applicable ownership limits, the FCC may, in certain cases, grant
a permanent waiver of the relevant rule. Alternatively, the FCC may grant
temporary waivers in order to afford the acquiror a reasonable period of time
following the consummation of the transaction to come into compliance with
applicable law and regulations through the disposition of certain properties or
otherwise.
Because Evergreen owns or controls a number of radio stations in the same
markets as radio stations owned by Chancellor, Evergreen and Chancellor have
advised the FCC in the application for FCC approval of the Evergreen Transfer
and the Chancellor Transfer of the parties' intention to dispose of radio
properties in certain markets to achieve compliance with the multiple ownership
limits. In this connection, Evergreen has recently completed the sale of three
FM stations in the Chicago market, one FM station in the Washington, D.C. market
and two FM stations in the San Francisco market. See "The
Companies -- Evergreen -- Completed Evergreen Transactions." Furthermore,
assuming completion of each of the Merger, the Pending Chancellor Acquisitions
and the Pending Evergreen Acquisitions, the Surviving Corporation would own: (i)
seven stations in the Philadelphia market, of which six would be FM and one
would be AM; (ii) ten stations in the Washington, D.C. market, of which five
would be FM and five would be AM; and (iii) eight stations in the Detroit
market, of which six would be FM and two would be AM. In addition, the overlap
of certain of the Surviving Corporation's stations in the San Francisco and
Sacramento markets would be such that one AM station considered by the Surviving
Corporation to be located in the Sacramento market would, for the purpose of the
FCC rules, be considered to broadcast in the San Francisco market. As a result
solely of the FCC's multiple ownership rules (see "-- Antitrust" below), the
Surviving Corporation will be required to dispose of the following additional
stations in order to comply with the FCC's multiple ownership rules: (i) one AM
station in the San Francisco or Sacramento market; (ii) one FM station in the
Philadelphia market; (iii) two AM stations in the Washington, D.C. market; and
(iv) one FM station in the Detroit
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market. Although binding agreements have been entered into by Evergreen and
Chancellor to dispose of such stations, there can be no assurances that such
transactions will be consummated. The nonconsummation of any of such
transactions could have a material adverse effect on Evergreen's or Chancellor's
ability to consummate the Merger.
License and Renewals. Radio broadcast licenses are granted for maximum
terms of up to eight years. At the time an application is made for renewal of a
radio station license, parties in interest may file petitions to deny the
application, and such parties, including members of the public, may comment upon
the service the station has provided during the preceding license term. Under
the Telecommunications Act, broadcast licenses are required to be renewed by the
FCC if it finds that: (i) the station has served the public interest,
convenience and necessity; (ii) there have been no serious violations of either
the Communications Act or the FCC's rules and regulations by the licensee; and
(iii) there have been no other violations which, taken together, constitute a
pattern of abuse. If a station's application for license renewal is denied,
other parties may thereafter file applications for FCC authorization to operate
a new station on the same frequency.
Applications for renewal of the license to operate WRCX(FM), Chicago,
Illinois, and KLOL-FM, Houston, Texas, each currently owned and operated by
Evergreen, are pending before the FCC. Applications for renewal of the licenses
to operate KALC-FM, Denver, Colorado, KFAN-AM, Minneapolis/St. Paul, Minnesota,
and KEEY-FM, Minneapolis/St. Paul, Minnesota, each currently owned and operated
by Chancellor, are pending before the FCC. An application for renewal of the
license to operate KZPS-FM, Dallas, Texas, which is proposed to be acquired by
Evergreen in the Bonneville Acquisition, is pending before the FCC.
Under normal procedures, the FCC will not grant its consent to the transfer
of control of a licensee that is in the process of obtaining a renewal of its
license. However, under certain circumstances, the FCC may permit a
multi-station transaction, such as the proposed Merger, to proceed while a
renewal application remains pending, provided the parties agree to accept the
consequences of any action the FCC may take on the renewal application.
Evergreen and Chancellor have requested, in the application for FCC approval of
the Evergreen Transfer and the Chancellor Transfer, that the proposed
transaction be approved on this basis, notwithstanding the pendency of one or
more applications for renewal of licenses held by Evergreen and Chancellor
subsidiaries.
Antitrust Matters
The FTC and the Antitrust Division of the DOJ, which evaluate transactions
requiring a pre-acquisition filing under the HSR Act to determine whether those
transactions should be challenged under the federal antitrust laws, have been
increasingly active recently in their review of radio station acquisitions where
an operator proposes to acquire new stations in its existing markets.
Under the HSR Act and the rules promulgated thereunder, the Merger may not
be consummated until notifications have been given and certain information has
been furnished to the DOJ and the FTC and specified waiting period requirements
have been satisfied. Evergreen and Chancellor each filed with the DOJ and the
FTC a Notification and Report Form with respect to the Merger on April 29, 1997,
and the waiting period applicable to the Merger expired on May 21, 1997.
At any time before or after the consummation of the Merger, the DOJ or the
FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the Merger or
seeking the divestiture of substantial assets of Evergreen or Chancellor.
In addition, state antitrust authorities may also bring legal action under
the antitrust laws. Such action could include seeking to enjoin the consummation
of the Merger or seeking divestiture of certain assets of Evergreen or
Chancellor. No state authorities have indicated that they will undertake an
investigation of the Merger. Private parties may also seek to take legal action
under the antitrust laws under certain circumstances. There can be no assurance
that a challenge to the Merger on antitrust grounds will not be made or, if such
a challenge is made, what the result of such challenge may be.
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THE MERGER AGREEMENT
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN PROVISIONS OF THE MERGER
AGREEMENT, WHICH IS ATTACHED AS ANNEX A TO THIS JOINT PROXY STATEMENT/PROSPECTUS
AND INCORPORATED HEREIN BY REFERENCE. SUCH SUMMARY IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE MERGER AGREEMENT. ALL STOCKHOLDERS ARE URGED TO READ THE
MERGER AGREEMENT IN ITS ENTIRETY.
GENERAL
The Merger Agreement provides that, following the approval and adoption of
the Merger Agreement by the stockholders of Evergreen and Chancellor and the
satisfaction or waiver of the other conditions to the Merger, (i) Chancellor
will merge with and into EMHC, and EMHC shall continue as the surviving
corporation following such merger and (ii) CRBC will merge with and into EMCLA,
and EMCLA shall continue as the surviving corporation following such merger. As
a result of the Merger, as of the Effective Time (as defined), Chancellor shall
cease to exist, and the Surviving Mezzanine Corporation shall succeed to and
assume all rights and obligations of Chancellor, and as of the Subsidiary Merger
Effective Time (as defined), CRBC shall cease to exist, and the Surviving
Subsidiary Corporation shall succeed to and assume all rights and obligations of
CRBC, in each case, in accordance with the DGCL.
EFFECTIVE TIME
The Merger Agreement provides that, subject to the requisite approval of
the stockholders of Chancellor and Evergreen, and subject to the satisfaction or
waiver of certain other conditions, each of the Parent Merger and the Subsidiary
Merger will be consummated by the filing of an appropriate certificate of merger
for the Parent Merger and the Subsidiary Merger, respectively, in accordance
with the relevant provisions of the DGCL, with the Secretary of State of the
State of Delaware. The filing of the certificate of merger for the Parent Merger
is referred to as the Effective Time, and the filing of the certificate of
merger for the Subsidiary Merger as referred to as the Subsidiary Merger
Effective Time. The Parent Merger will be consummated prior to, but on the same
day as, the Subsidiary Merger. From and after the Effective Time, the name of
the Surviving Corporation will be "Chancellor Media Corporation" and the name of
the Surviving Mezzanine Corporation will be "Chancellor Mezzanine Holdings
Corporation." From and after the Subsidiary Merger Effective Time, the name of
the Surviving Subsidiary Corporation will be "Chancellor Media Corporation of
Los Angeles."
CONVERSION OF SHARES
Upon the consummation of the Parent Merger or the Subsidiary Merger, as
applicable:
(i) Each share of Evergreen Class A Common Stock and Evergreen Class B
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares of Evergreen Common Stock held as treasury shares by
Evergreen) will be reclassified, changed and converted into one (1) share
of Surviving Corporation Common Stock;
(ii) Each share of Evergreen $3.00 Convertible Exchangeable Preferred
Stock issued and outstanding immediately prior to the Effective Time will
remain outstanding as one (1) share of $3.00 Convertible Exchangeable
Preferred Stock of the Surviving Corporation;
(iii) Each share of the Chancellor Class A Common Stock and Chancellor
Class B Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares of Chancellor Common Stock held as
treasury shares by Chancellor) will be converted into the right to receive
0.9091 shares of Surviving Corporation Common Stock;
(iv) Each share of Chancellor Parent Convertible Preferred Stock
issued and outstanding immediately prior to the Effective Time will be
converted into the right to receive one (1) share of the Surviving
Corporation 7% Convertible Preferred Stock;
(v) Each share of EMHC will remain outstanding as one (1) share of the
Common Stock of the Surviving Mezzanine Corporation;
(vi) Each share of EMCLA Common Stock outstanding will remain
outstanding as one (1) share of the Common Stock of the Surviving
Subsidiary Corporation;
(vii) Each share of common stock of CRBC issued and outstanding
immediately prior to the Subsidiary Merger Effective Time will be cancelled
and no consideration will be delivered in exchange therefor;
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(viii) Each share of CRBC Series A Preferred Stock issued and
outstanding immediately prior to the Subsidiary Merger Effective Time will
be converted into the right to receive one (1) share of the Surviving
Subsidiary Series A Preferred Stock; and
(ix) Each share of CRBC Junior Preferred Stock issued and outstanding
immediately prior to the Subsidiary Merger Effective Time will be converted
into the right to receive one (1) share of the Surviving Subsidiary Junior
Preferred Stock.
Holders of outstanding shares of Evergreen Class A Common Stock are
currently entitled to one vote per share on matters presented for a vote of
stockholders, while holders of outstanding shares of Evergreen Class B Common
Stock are, subject to certain limited exceptions, entitled to ten votes per
share on matters presented for a vote of stockholders. Holders of outstanding
shares of Chancellor Class A Common Stock are currently entitled to one vote per
share on matters presented for a vote of stockholders, while holders of
outstanding shares of Chancellor Class B Common Stock are , subject to certain
limited exceptions, currently entitled to ten votes per share on matters
presented for a vote of stockholders. If the Merger is consummated, holders of
outstanding shares of Surviving Corporation Common Stock will be entitled to one
vote per share on all matters presented for a vote of shareholders.
Based on information available as of July 28, 1997, Evergreen and
Chancellor anticipate that up to 22,113,527 shares of Surviving Corporation
Common Stock may be issued to holders of outstanding shares of Chancellor Common
Stock pursuant to the Merger. This figure is calculated by taking into account
that, as of the close of business on July 28, 1997, there were (i) 18,991,629
shares of Chancellor Common Stock issued and outstanding; (ii) 1,989,543 shares
of Chancellor Common Stock reserved for issuance pursuant to outstanding options
or warrants to purchase shares of Chancellor Class A Common Stock which have
been granted to directors, officers, employees and consultants of Chancellor and
its subsidiaries and others ("Chancellor Stock Options"); and (iii) 3,343,465
shares of Chancellor Common Stock reserved for issuance upon conversion of the
Chancellor Parent Convertible Preferred Stock. In the event that holders of
Chancellor Parent Convertible Preferred Stock convert their shares into
Chancellor Common Stock prior to the Merger, the number of shares of Surviving
Corporation 7% Convertible Preferred Stock issued in the Merger will decrease
and the number of shares of Surviving Corporation Common Stock issued in the
Merger will increase based on a conversion ratio of approximately 1.520 shares
of Chancellor Common Stock for each share of Chancellor Parent Convertible
Preferred Stock.
TREATMENT OF STOCK OPTIONS
At the Effective Time, subject to certain conditions and limitations, each
currently outstanding Chancellor Stock Option will be deemed to have been
assumed by Evergreen, without further action by Evergreen, and will thereafter
be deemed an option to acquire, on the same terms and conditions as were
applicable under such option, the number of shares of Surviving Corporation
Common Stock that would have been received in respect of such Chancellor Stock
Option if such Chancellor Stock Option had been exercised immediately prior to
the Effective Time.
EXCHANGE PROCEDURES
Promptly after the Effective Time, a form of letter of transmittal and
instructions will be mailed to each holder of record of certificates that,
immediately prior to the Effective Time, represented shares of Chancellor Common
Stock or Chancellor Parent Convertible Preferred Stock. After receipt of such
transmittal form, each holder of such certificates should surrender the
certificates to the Bank of New York (the "Exchange Agent"), together with such
letter of transmittal duly executed and completed in accordance with the
instructions thereto. By executing such letter of transmittal, holders of
Chancellor Parent Convertible Preferred Stock will be deemed to have
acknowledged that, upon issuance of all shares of Surviving Corporation 7%
Convertible Preferred Stock and payment by the Surviving Corporation of amounts
owing as liquidated damages under the Chancellor 7% Registration Rights
Agreement to appropriate holders of Chancellor Parent Convertible Preferred
Stock, Chancellor's obligations under the Chancellor 7% Registration Rights
Agreement will have been satisfied. Upon surrender of such certificates to and
acceptance thereof by the Exchange Agent, each such holder will be entitled to
receive: (i) certificates of Surviving Corporation Common Stock or Surviving
Corporation 7% Convertible Preferred Stock, evidencing the whole number of
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shares of Surviving Corporation Common Stock or Surviving Corporation 7%
Convertible Preferred Stock to which such holder is entitled and (ii) with
respect to Chancellor Common Stock, cash in lieu of fractional shares (together,
the "Merger Consideration").
If any shares of Surviving Corporation Common Stock or Surviving
Corporation 7% Convertible Preferred Stock are to be issued in a name other than
that in which the certificate(s) representing Chancellor Common Stock or
Chancellor Parent Convertible Preferred Stock surrendered in exchange therefor
is registered, the certificates so surrendered must be properly endorsed or
otherwise be in proper form for transfer and the person requesting such exchange
must pay to the Exchange Agent any applicable stock transfer taxes or must
establish to the satisfaction of the Exchange Agent that such taxes have been
paid or are not applicable. No interest will be paid on the Merger
Consideration.
After the Effective Time, no holder of a certificate which, immediately
prior to the Effective Time, represented shares of Chancellor Common Stock or
Chancellor Parent Convertible Preferred Stock will be entitled to receive any
dividend or other distribution from the Surviving Corporation until the holder
surrenders the certificate for a certificate representing shares of Surviving
Corporation Common Stock or Surviving Corporation 7% Convertible Preferred
Stock. Upon such surrender, there will be paid to the holder the amount of any
dividends or other distributions which after the Effective Time theretofore
became payable with respect to the number of whole shares of Surviving
Corporation Common Stock or Surviving Corporation 7% Convertible Preferred Stock
into which such shares of Chancellor Common Stock or Chancellor Parent
Convertible Preferred Stock are converted. Until such surrender, the
certificates shall be deemed to evidence only the right to receive the
appropriate Merger Consideration. No interest will be paid on such dividends or
other distributions.
No fractional shares of Surviving Corporation Common Stock will be issued
in the Merger. A holder of Chancellor Common Stock who would otherwise be
entitled to receive fractional shares of Surviving Corporation Common Stock as a
result of the Merger shall receive, in lieu thereof, cash (without interest), in
an amount equal to such fractional part of a share of Surviving Corporation
Common Stock multiplied by the closing price per share of Evergreen Class A
Common Stock on The Nasdaq Stock Market on the trading day immediately prior to
the closing of the Merger.
Any portion of the Merger Consideration or any dividends or distributions
with respect to shares of Surviving Corporation Common Stock or Surviving
Corporation 7% Convertible Preferred Stock that has not been distributed to the
holders of the certificates representing shares of Chancellor Common Stock or
Chancellor Parent Convertible Preferred Stock within 120 days after the
Effective Time will be delivered to the Surviving Corporation. Any such holders
who have not theretofore surrendered their certificates pursuant to the relevant
provisions of the Merger Agreement may look to the Surviving Corporation only as
a general creditor thereof for payment of their claims for any Merger
Consideration and any dividends or distributions with respect to shares of
Surviving Corporation Common Stock or Surviving Corporation 7% Convertible
Preferred Stock.
None of Evergreen, Chancellor, CRBC, the Surviving Corporation, the
Surviving Mezzanine Corporation, the Surviving Subsidiary Corporation or the
Exchange Agent will be liable in respect of any cash, shares, dividends or
distributions payable from the Merger Consideration or any dividends or
distributions with respect to shares of Chancellor Common Stock or Chancellor
Parent Convertible Preferred Stock, delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any certificate or
certificates representing shares of Chancellor Common Stock or Chancellor Parent
Convertible Preferred Stock are not surrendered prior to five (5) years after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such certificate would otherwise escheat to
or become the property of any governmental agency or regulatory authority (a
"Governmental Entity")), any such cash, shares, dividends or distributions
payable in respect of such certificate or certificates will become the property
of the Surviving Corporation.
CHANCELLOR STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES REPRESENTING
CHANCELLOR COMMON STOCK OR CHANCELLOR PARENT CONVERTIBLE PREFERRED STOCK WITH
THEIR PROXIES. CERTIFICATES FOR SHARES OF CHANCELLOR COMMON STOCK OR CHANCELLOR
PARENT CONVERTIBLE PREFERRED STOCK WILL BE
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EXCHANGED FOR CERTIFICATES FOR SHARES OF SURVIVING CORPORATION COMMON STOCK OR
SURVIVING CORPORATION 7% CONVERTIBLE PREFERRED STOCK FOLLOWING CONSUMMATION OF
THE MERGER IN ACCORDANCE WITH INSTRUCTIONS WHICH THE SURVIVING CORPORATION WILL
SEND TO HOLDERS OF CHANCELLOR COMMON STOCK OR CHANCELLOR PARENT CONVERTIBLE
PREFERRED STOCK AFTER THE MERGER.
Shares of Chancellor Parent Convertible Preferred Stock, outstanding
immediately prior to the Effective Time and held by a holder who properly
demands in writing appraisal of such shares of Chancellor Parent Convertible
Preferred Stock, in accordance with Section 262 and who shall not have withdrawn
such demand or otherwise have forfeited appraisal rights, shall not be converted
into or represent the right to receive the Merger Consideration therefor
("Dissenting Shares"). Such stockholders shall be entitled to receive payment of
the appraised value of such shares of Chancellor Parent Convertible Preferred
Stock, held by them in accordance with the provisions of Section 262, except
that all Dissenting Shares held by stockholders who shall have failed to perfect
or who effectively shall have withdrawn or lost their rights to appraisal of
such securities under Section 262 shall thereupon be deemed to have been
converted into, as of the Effective Time, the right to receive, without any
interest thereon, the applicable Merger Consideration, upon surrender, as
provided by the Merger Agreement, of the certificate or certificates that
formerly represented such securities. See "The Merger -- Appraisal Rights."
DIRECTORS AND OFFICERS
The Merger Agreement provides that the Board of Directors of the Surviving
Corporation immediately after the Effective Time will consist of three classes
of directors. Class I Directors will hold their respective office from the
Effective Time until the 1998 annual meeting of the Surviving Corporation. Class
II Directors will hold their respective offices from the Effective Time until
the 1999 annual meeting of the Surviving Corporation. Class III Directors will
hold their respective offices from the Effective Time until the 2000 annual
meeting of the Surviving Corporation. Immediately after the Effective Time, the
Merger Agreement provides that the Board of Directors of the Surviving
Corporation will consist of the following individuals:
<TABLE>
<S> <C>
Class I Directors: ..................... Eric C. Neuman
Perry J. Lewis
Class II Directors: .................... Lawrence D. Stuart, Jr.
Steven Dinetz
Jeffrey A. Marcus
James E. de Castro
Class III Directors: ................... Thomas O. Hicks
Scott K. Ginsburg
John E. Massey
Thomas J. Hodson
</TABLE>
It is anticipated that one additional Class I director mutually acceptable
to Evergreen and Chancellor will serve on the Board of Directors of the
Surviving Corporation.
The Merger Agreement further provides that the following individuals will
become officers of the Surviving Corporation at the Effective Time:
<TABLE>
<S> <C>
Thomas O. Hicks......................... Chairman of the Board
Scott K. Ginsburg....................... President and Chief Executive Officer
Steven Dinetz........................... Co-Chief Operating Officer
James E. de Castro...................... Co-Chief Operating Officer
Matthew E. Devine....................... Chief Financial Officer
</TABLE>
Each such officer will hold office from the Effective Time until his
respective successor is duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation or Bylaws of the Surviving
Corporation, or as otherwise provided by applicable law. The names, titles and
officerships of other individuals who will initially hold other officerships in
the Surviving Corporation will be determined by Evergreen and Chancellor prior
to the Effective Time, and election of these persons will be considered by the
Board of Directors of the Surviving Corporation immediately after the Effective
Time.
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CERTIFICATE OF INCORPORATION AND BYLAWS
The Merger Agreement provides that (i) the Evergreen Board will submit for
approval of the stockholders at the Evergreen Annual Meeting an amended and
restated certificate of incorporation in the form attached to the Merger
Agreement (the "Surviving Corporation Certificate") to be effective, assuming
the approval of the stockholders of Evergreen, at the Effective Time and (ii)
the Bylaws of Evergreen will be amended and restated in their entirety in the
form attached to the Merger Agreement.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties relating to, among other things: (i) the organization, standing and
similar corporate matters of Evergreen, Chancellor, EMHC, EMCLA and CRBC; (ii)
the capital structure of Evergreen, Chancellor, EMHC, EMCLA and CRBC; (iii) the
authorization, execution, delivery, performance and enforceability of the Merger
Agreement with respect to Evergreen, Chancellor, EMHC, EMCLA and CRBC; (iv)
documents filed by Evergreen, Chancellor and their respective subsidiaries with
the Commission and the accuracy of information contained therein; (v) the
absence of conflicts with the organizational and certain other documents of
Evergreen, Chancellor and their respective subsidiaries as a result of the
execution and delivery of the Merger Agreement or the consummation of the
transactions contemplated by the Merger Agreement; (vi) except as otherwise
provided in the Merger Agreement, the absence of violation of any law, rule or
regulation of any state or of the United States or any order, writ, judgment,
injunction, decree, determination or award currently in effect applicable to
Evergreen, Chancellor or their respective subsidiaries, in each case, as a
result of the execution and delivery of the Merger Agreement or the consummation
of the transactions contemplated by the Merger Agreement; (vii) that, except as
otherwise provided in the Merger Agreement, no consent of or filing with any
governmental agency or regulatory authority is required by Evergreen,
Chancellor, EMHC, EMCLA or CRBC in connection with the execution or delivery of
the Merger Agreement or the consummation of the transactions contemplated
thereby; (viii) the absence of material changes since the date of the most
recent audited financial statements filed with the Commission by Evergreen,
Chancellor or their respective subsidiaries with respect to the business of
Evergreen, Chancellor or any of their respective subsidiaries, except as
otherwise provided in the Merger Agreement; (ix) the validity of all
authorizations issued by the FCC for the operation of radio stations ("FCC
Licenses") held by Evergreen, Chancellor and their respective subsidiaries; (x)
the compliance in all material respects with the terms of the FCC Licenses
issued to Evergreen, Chancellor and their respective subsidiaries and the timely
filing with the FCC of all applications, reports and other disclosures with the
FCC required to be made by Evergreen, Chancellor and their respective
subsidiaries; (xi) overall compliance in all material respects with all
applicable laws; (xii) the absence of any material indebtedness, obligations or
liabilities of any kind, required by GAAP to be reflected in a consolidated
balance sheet or that would have a Material Adverse Effect (as defined in the
Merger Agreement), except as otherwise provided in the Merger Agreement; and
(xii) the absence of any pending or threatened litigation against Evergreen,
Chancellor or any of the respective subsidiaries, except as otherwise disclosed
pursuant to the Merger Agreement, that would have a Material Adverse Effect or
prevent or significantly delay the consummation of the transactions contemplated
by the Merger Agreement.
CERTAIN COVENANTS
The Merger Agreement contains various customary covenants, including
covenants of each of Evergreen and Chancellor that, during the period from the
date of the Merger Agreement until the Effective Time, except as permitted by or
contemplated in the Merger Agreement, each of Evergreen and Chancellor (and each
of their respective subsidiaries), will, among other things: (i) conduct its
operations in the ordinary course of business and (ii) use its reasonable best
efforts to preserve intact its business organizations and goodwill in all
material respects and keep available the services of its respective officers and
employees as a group.
Further, each of Evergreen and Chancellor has agreed that, among other
things and subject to certain conditions and exceptions, it will not (and will
cause its subsidiaries not to), without the prior consent of the other, (i)
declare, set aside or pay any dividends on or make other distributions in
respect of its or its subsidiaries outstanding capital stock, other than as
provided in the Merger Agreement; (ii) split, combine or reclassify any of its
outstanding capital stock or issue or authorize the issuance of any securities
in lieu of or in
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substitution for its outstanding capital stock; (iii) purchase, redeem or
otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares, other than as provided in the
Merger Agreement; (iv) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other equity securities or any securities
convertible into, or any rights, warrants or options to acquire any such shares,
equity securities or convertible securities, other than as provided in the
Merger Agreement; (v) amend its certificate of incorporation, bylaws or other
such documents other than as provided in the Merger Agreement; (vi) acquire any
business or any corporation, partnership, joint venture, association or other
business organization; (vii) sell, mortgage or otherwise encumber or subject to
any lien or encumbrance or otherwise dispose of any of its properties or assets
that are material to Evergreen or Chancellor and their respective subsidiaries
taken as a whole; (viii) other than working capital borrowing in the ordinary
course of business and consistent with past practice, incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, other than
as provided in the Merger Agreement, or make any material loans or advances to
any other person, other than Chancellor or Evergreen or any of their respective
direct or indirect wholly owned subsidiaries and other than routine advances to
employees; (ix) make any tax election or settle or compromise any income tax
liability that could reasonably be expected to be material to Chancellor or
Evergreen and their respective subsidiaries taken as a whole; (x) pay,
discharge, settle or satisfy any material claims, liabilities or obligations
other than the payment, discharge or satisfaction of certain liabilities as
provided in the Merger Agreement; (xi) make any material commitments or
agreements for capital expenditures or capital additions or betterments except
as materially consistent with the budget for capital expenditures as of the date
of the Merger Agreement and consistent with past practices; (xii) except as may
be required by law (a) other than in the ordinary course of business and
consistent with past practice, make any representation or promise to any
employee or former director, officer or employee of Evergreen, Chancellor or any
of their respective subsidiaries which is inconsistent with the terms of any
agreement relating to employment, severance, change of control, termination,
stock options, stock purchases, compensation, fringe benefits or other employee
benefits of Evergreen or Chancellor (each, an "Evergreen Benefit Plan" and
"Chancellor Benefit Plan," respectively); (b) other than in the ordinary course
of business and consistent with past practice, make any change to, or amend in
any way, the contracts, salaries, wages, or other compensation of any director,
employee or any agent or consultant of Evergreen, Chancellor or any of their
respective subsidiaries other than routine changes or amendments that are
required under existing contracts; (c) adopt, enter into, amend, alter or
terminate, partially or completely, any Evergreen Benefit Plan or Chancellor
Benefit Plan or any election made pursuant to the provisions of any Evergreen
Benefit Plan or Chancellor Benefit Plan, to accelerate any payments, obligations
or vesting schedules thereunder; (d) other than in the ordinary course of
business and consistent with past practice, approve any general or company-wide
pay increases for employees; (xiii) except in the ordinary course of business,
modify, amend or terminate any material agreement, permit, concession,
franchise, license or similar instrument to which Chancellor, Evergreen or any
of their respective subsidiaries is a party or waive, release or assign any
material rights or claims thereunder; or (xiv) authorize any of, or commit or
agree to take any of the foregoing actions.
Evergreen and Chancellor have further agreed not to, and not to permit any
of their respective subsidiaries to, take any action that would or could
reasonably be expected to result in any of the conditions to the Merger as
provided in the Merger Agreement not being satisfied.
Notwithstanding the foregoing, the Merger Agreement provides that nothing
therein will prevent Evergreen or Chancellor from selling or acquiring (or
agreeing to sell or acquire) all or substantially all of the assets of one or
more radio broadcast stations and entering into financing transactions in
connection therewith, provided that the value of the consideration to be paid or
received in such transactions does not exceed $100.0 million in the aggregate
for all such radio stations. On April 9, Chancellor consented to the proposed
acquisition by Evergreen of certain stations from a subsidiary of Gannett
Company, Inc. for an aggregate purchase price of approximately $340.0 million in
cash. On April 24, Chancellor consented to the EMCLA Senior Credit Facility. On
May 1, Evergreen consented to the Chancellor Debt Tender Offer. On June 10,
Chancellor consented to the Evergreen Convertible Preferred Stock Offering. On
June 18, Evergreen consented to the CRBC 8 3/4% Notes Offering. On July 1,
Evergreen consented to the CRBC Restated Credit Facility. On July 14, Evergreen
and Chancellor each consented to the Katz Acquisition.
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CONDITIONS TO THE MERGER
The respective obligations of Evergreen, Chancellor, EMHC, EMCLA and CRBC
to consummate the Merger are subject to the satisfaction or waiver of certain
conditions, including that: (i) the Merger Agreement shall have been approved by
the stockholders of Evergreen and Chancellor; (ii) the FCC shall have issued an
order, which order has not been reversed, stayed, enjoined, set aside or
suspended and with respect to which no timely request for stay, motion for
reconsideration or appeal has been filed, approving the transfer of Chancellor's
FCC Licenses without any material conditions or restrictions (see "Risk
Factors -- FCC Consent for Merger" and "The Merger -- Regulatory
Considerations -- Federal Communication Commission" above); (iii) all required
consents, approvals, permits and authorizations to the consummation of the
transactions contemplated by the Merger Agreement by Evergreen, Chancellor,
EMHC, EMCLA and CRBC shall have been obtained from any Governmental Entity
(other than the FCC) whose consent, approval, permission or authorization is
required by reason of a change in law after the date of the Merger Agreement,
except as provided in the Merger Agreement; (iv) any applicable waiting period
under the HSR Act shall have been terminated or shall have otherwise expired;
(v) there shall be in effect no temporary restraining order, preliminary or
permanent injunction or other order of any court or other legal restraint or
prohibition preventing the consummation of the Merger; (vi) the Registration
Statement shall have been declared effective by the Commission and shall not be
the subject of a stop order or proceeding seeking a stop order; and (vii) the
shares of Surviving Corporation Common Stock to be issued pursuant to the Merger
Agreement shall have been approved for quotation on The Nasdaq Stock Market.
The obligations of Evergreen to effect the Merger are further subject to
satisfaction of the following conditions: (i) the representations and warranties
of Chancellor and of CRBC shall have been true and correct on the date that the
Merger Agreement was entered, except as provided in the Merger Agreement; (ii)
Chancellor and CRBC shall have performed, in all material respects, all
requisite obligations required to be performed by them at or prior to the
Closing Date; and (iii) Evergreen shall have received an opinion from Latham &
Watkins on the Closing Date to the effect that, among other things and subject
to certain conditions, each of the Parent Merger and the Subsidiary Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of Code.
The obligations of Chancellor and CRBC to effect the Merger are further
subject to satisfaction of the following conditions: (i) the representations and
warranties of Evergreen, EMHC and EMCLA shall have been true and correct on the
date that the Merger Agreement was entered, except as provided in the Merger
Agreement; (ii) Evergreen, EMHC and EMCLA shall have performed, in all material
respects, all requisite obligations required to be performed by it at or prior
to the Closing Date; and (iii) Chancellor shall have received an opinion from
Weil, Gotshal & Manges LLP on the Closing Date to the effect that, among other
things and subject to certain conditions, each of the Parent Merger and the
Subsidiary Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
ADDITIONAL AGREEMENTS
Each of Evergreen and Chancellor has also agreed to, among other things,
and subject to certain conditions and exceptions: (i) as soon as practicable
following the date of the Merger Agreement, prepare and file with the Commission
the Joint Proxy Statement/Prospectus and the Registration Statement, as well as
a registration statement on Form S-4 regarding the Subsidiary Merger, (the
"Subsidiary Registration Statement") and to use its best efforts to have the
Registration Statement and the Subsidiary Registration Statement declared
effective under the Securities Act of 1933, as amended (the "Securities Act"),
as promptly as practicable after such filing; (ii) take all action necessary to
convene a meeting of its stockholders to submit the Merger Agreement for
approval and to use its best efforts to hold such stockholders' meeting as soon
as practicable after the date of the Merger Agreement; (iii) make, and cause its
respective subsidiaries and its other affiliates to make, all necessary filings
as soon as practicable, including, without limitation, those required under the
HSR Act, the Securities Act, the Exchange Act, and the Communications Act
(including filing an application with the FCC for the transfer of control of
Chancellor's FCC Licenses and Evergreen's FCC Licenses, which the parties must
file as soon as practicable after the date of the Merger Agreement), in order to
facilitate prompt consummation of the Merger and the other transactions
contemplated by the
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Merger Agreement; and (iv) give the other party the opportunity to participate
in the defense or settlement of any stockholder litigation against it and its
directors relating to the transactions contemplated by the Merger Agreement.
Evergreen and Chancellor have also further agreed not to, and not to permit
their subsidiaries to, permit any of their or their respective subsidiaries'
officers, directors or employees, investment bankers, attorneys or other
advisors or representatives to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any Acquisition Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may be
reasonably be expected to lead to, any Acquisition Proposal.
"Acquisition Proposal" is defined in the Merger Agreement to include any
proposal with respect to a merger, consolidation, share exchange or similar
transaction involving Evergreen or Chancellor or any "Significant Subsidiary"
(as defined in Regulation S-X of the Commission's rules) of Evergreen or
Chancellor, or any purchase of all or any significant portion of the assets of
Evergreen or Chancellor or any Significant Subsidiary of Evergreen or
Chancellor, or any equity interest in Evergreen or Chancellor or any Significant
Subsidiary of Evergreen or Chancellor, other than the transactions contemplated
by the Merger Agreement, provided, however, that any currently planned
acquisition or disposition of broadcast properties disclosed in writing prior to
execution and delivery of the Merger Agreement by either Evergreen or Chancellor
to the other shall not constitute an Acquisition Proposal.
Evergreen has also agreed to, among other things, and subject to certain
exceptions and conditions: (i) prepare and file with the Commission the
Registration Statement of which this Joint Proxy Statement/ Prospectus is a part
and the Subsidiary Registration Statement and take certain actions required to
be taken under applicable state securities laws in connection with the issuance
of Surviving Corporation Common Stock in the Merger; and (ii) use its best
efforts to cause the shares of Surviving Corporation Common Stock to be issued
in the Merger to be approved for quotation on The Nasdaq Stock Market, subject
to official notice of issuance, prior to the Closing Date.
Chancellor has also agreed to, among other things, and subject to certain
exceptions and conditions, deliver to Evergreen a letter identifying all persons
who may be, at the time the Merger is submitted for approval to the stockholders
of Chancellor, "affiliates" of Chancellor for purposes of Rule 145 under the
Securities Act, and to use its best efforts to cause each such person to deliver
to Evergreen on or prior to the Closing Date a written agreement in the form
attached to the Merger Agreement.
INDEMNIFICATION AND INSURANCE
The Certificate of Incorporation and Bylaws of the Surviving Corporation,
the Surviving Mezzanine Corporation and the Surviving Subsidiary Corporation,
will each contain provisions indemnifying any person who was or is threatened to
be made a party to a proceeding by reason of the fact that he or she (i) is or
was a director, officer, employee or agent of the Surviving Corporation, the
Surviving Mezzanine Corporation or the Surviving Subsidiary Corporation,
respectively, or (ii) is or was serving at the request of the Surviving
Corporation, the Surviving Mezzanine Corporation or the Surviving Subsidiary
Corporation, respectively, as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise, to the fullest extent permitted
under the DGCL, and such provisions shall not be amended, repeated or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at any time
prior to the Effective Time were directors or officers of Evergreen or
Chancellor or any of their respective subsidiaries in respect of actions or
omissions occurring at or prior to the Effective Time unless such modification
is required by law.
For a period of at least six (6) years after the Effective Time, the
Surviving Corporation will maintain Chancellor's current directors' and
officers' insurance and indemnification policies (the "D&O Insurance") to the
extent that such policies provide coverage for events occurring prior to the
Effective Time, so long as the annual premium therefor would not be in excess of
250% of the last annual premium paid prior to the date of
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the Merger Agreement; provided, however, that the Surviving Corporation, the
Surviving Mezzanine Corporation and the Surviving Subsidiary Corporation, may,
in lieu of maintaining such existing D&O Insurance, cause coverage to be
provided under any policy maintained for the benefit of the Surviving
Corporation or its subsidiaries so long as the terms thereof are not less
advantageous to the beneficiaries thereof than the existing D&O Insurance.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time: (i) by mutual written consent of Evergreen and Chancellor or (ii) by
either Evergreen or Chancellor if (a) any required approval of the stockholders
of Evergreen or Chancellor has not been obtained; (b) the Merger has not been
consummated on or before February 19, 1998 (other than as the result of the
willful and material breach of the Merger Agreement by the party seeking to
terminate it); (c) any Governmental Entity shall have issued an order, decree or
ruling or take any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such action has become final and non-appealable; or
(d) the other party has breached the requirements of the Merger Agreement
regarding stockholder approvals or Acquisition Proposals, unless the party
seeking to terminate is in material breach of the Merger Agreement.
AMENDMENT AND MODIFICATION
Subject to the applicable provisions of the DGCL, at any time prior to the
Effective Time, the parties may modify or amend the Merger Agreement by written
agreement; provided, however, that after the approval of the stockholders of
both Evergreen and Chancellor has been obtained, no amendment may reduce the
Merger Consideration or adversely affect the rights of the Evergreen or
Chancellor stockholders without their approval.
FEES AND EXPENSES
The Merger Agreement provides that, whether or not the Merger is
consummated, each of Evergreen and Chancellor will pay its own costs and
expenses incurred by it in connection with the Merger Agreement and the
consummation of the transactions contemplated thereby; provided, however, that
all fees and expenses incurred in connection with filings pursuant to the HSR
Act, filings with the FCC under the Communications Act, and the printing,
mailing and distribution of the Joint Proxy Statement/Prospectus and the
preparation and filing of the Registration Statement of which this Joint Proxy
Statement/Prospectus is a part will be split equally between Evergreen and
Chancellor.
THE STOCKHOLDERS AGREEMENT
On February 19, 1997, the Hicks Stockholders and Scott K. Ginsburg entered
into the Stockholders Agreement, pursuant to which, the Hicks Stockholders and
Mr. Ginsburg agreed, among other things, to vote all shares of capital stock of
Chancellor and Evergreen held by such parties at any meeting of the stockholders
of the respective companies in favor of the transactions contemplated by the
Merger Agreement. In order to effect the intention of the parties in entering
into the Stockholders Agreement, the Hicks Stockholders appointed certain
officers of Evergreen as their proxy and attorney-in-fact to vote any and all
shares of Chancellor Common Stock held by the Hicks Stockholders at the
Chancellor Special Meeting, and Scott K. Ginsburg appointed certain officers of
Chancellor as his proxy and attorney-in-fact to vote any and all shares of
Evergreen Chancellor Common Stock held by Mr. Ginsburg at the Evergreen Annual
Meeting. The Hicks Stockholders control approximately 90.3% of the combined
voting power of the Chancellor Common Stock (assuming exercise of all presently
outstanding options and options exercisable within 60 days after July 28, 1997).
Mr. Ginsburg controls approximately 44.3% of the combined voting power of the
outstanding Evergreen Common Stock (assuming exercise of all presently
outstanding options and options exercisable within 60 days after July 25, 1997).
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DESCRIPTION OF SURVIVING CORPORATION CAPITAL STOCK
GENERAL
Assuming approval of the Merger Agreement and the Surviving Corporation
Certificate, at the Effective Time, the Certificate of Incorporation of the
Surviving Corporation will be the Surviving Corporation Certificate and the
Bylaws of the Surviving Corporation will be amended and restated in the form
attached to the Merger Agreement (the "Surviving Corporation Bylaws"). Pursuant
to the Surviving Corporation Certificate, the authorized capital stock of the
Surviving Corporation at the Effective Time will consist of 200,000,000 shares
of Surviving Corporation Common Stock, 75,000,000 shares of Class A Common
Stock, per value $0.01 per share ("Surviving Corporation Class A Common Stock")
and 50,000,000 shares of preferred stock, par value $0.01 per share, of the
Surviving Corporation, of which (i) 5,990,000 shares will be designated
Evergreen $3.00 Convertible Preferred Stock and (ii) 2,200,000 shares will be
designated Surviving Corporation 7% Convertible Preferred Stock. No shares of
Surviving Corporation Class A Common Stock will be issued as of the Effective
Time, and it is not contemplated by Evergreen and Chancellor that any such
shares will be issued at any time following consummation of the Merger. The
Surviving Corporation Certificate provides that the issuance of any shares of
Surviving Corporation Class A Common Stock will require the unanimous
affirmative vote of the Board of Directors of the Surviving Corporation.
Evergreen and Chancellor presently expect that the Board of Directors of the
Surviving Corporation will submit a proposal at the 1998 annual meeting of
stockholders in order to eliminate the authorized shares of Surviving
Corporation Class A Common Stock.
COMMON STOCK
Holders of the Surviving Corporation Common Stock and Surviving Corporation
Class A Common Stock, voting as separate classes, will be entitled to one vote
per share on all matters to be voted upon by the stockholders. Holders of
Surviving Corporation Common Stock and Surviving Corporation Class A Common
Stock will not have cumulative voting rights, and because no shares of Surviving
Corporation Class A Common Stock will be issued and outstanding, holders of a
majority of the shares of Surviving Corporation Common Stock voting for the
election of directors can elect all of the directors standing for election.
Subject to any of the preferential rights of holders of any preferred stock
that at any time may be outstanding, holders of the Surviving Corporation Common
Stock and Surviving Corporation Class A Common Stock will be entitled to receive
such dividends as may be declared from time to time by the Board of Directors of
the Surviving Corporation out of funds legally available therefor. Because the
Surviving Corporation will be a holding company with no significant assets other
than the common stock of the Surviving Mezzanine Corporation and, following
consummation of the Katz Acquisition, of Katz, and the Surviving Mezzanine
Corporation will also be a holding company with no significant assets other than
the common stock of the Surviving Subsidiary Corporation, the Surviving
Corporation's ability to pay cash dividends will be effectively restricted by
the EMCLA Senior Credit Facility, the CRBC 9 3/8% Indenture, the CRBC 8 3/4%
Indenture and the indebtedness being assumed in the Katz Acquisition.
Accordingly, the Surviving Corporation does not anticipate paying cash dividends
in the foreseeable future. See "Risk Factors -- Substantial Leverage; History of
Net Losses and Insufficiency of Earnings to Cover Fixed Charges." In the event
of the liquidation, dissolution or winding up of the Surviving Corporation, the
holders of Surviving Corporation Common Stock and Surviving Corporation Class A
Common Stock will be entitled to share ratably in all assets remaining after
payment of liabilities and after satisfaction of the liquidation preference, if
any, of any preferred stock that may at such time be outstanding.
Holders of the Surviving Corporation Common Stock and Surviving Corporation
Class A Common Stock will have no preemptive, conversion or redemption rights
and will not be subject to further calls or assessments by the Surviving
Corporation. All of the outstanding shares of Surviving Corporation Common Stock
immediately after the Effective Time will be validly issued, fully paid and
nonassessable.
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PREFERRED STOCK
The Surviving Corporation Certificate will provide that preferred stock of
the Surviving Corporation may be issued from time to time in one or more series.
The Board of Directors of the Surviving Corporation has authority to fix or
alter the dividend rights, dividend rates, conversion rights, voting rights and
terms of redemption (including sinking fund provisions), redemption prices and
liquidation preferences of any wholly unissued series of preferred stock of the
Surviving Corporation, as well as the number of shares constituting any such
unissued series and the designation thereof, and to increase or decrease the
number of shares of any outstanding series (but not below the number of shares
of such series then outstanding), without any further vote or action by
stockholders of the Surviving Corporation.
DELAWARE GENERAL CORPORATION LAW SECTION 203
As a corporation organized under the laws of the State of Delaware, the
Surviving Corporation will be subject to Section 203 of the DGCL, which
restricts certain business combinations between the Surviving Corporation and an
"interested stockholder" (in general, a stockholder owning 15% or more of the
outstanding voting stock of the Surviving Corporation) or such stockholder's
affiliates or associates for a period of three years following the date on which
the stockholder becomes an "interested stockholder." The restrictions do not
apply if: (i) prior to an interested stockholder becoming such, the Board of
Directors of the Surviving Corporation approves either the business combination
or the transaction in which the stockholder becomes an interested stockholder;
(ii) upon consummation of the transaction in which such stockholder becomes an
interested stockholder, such interested stockholder owns at least 85% of the
voting stock of the Surviving Corporation outstanding at the time the
transactions commenced (excluding shares owned by certain employee stock
ownership plans and persons who are both directors and officers of the Surviving
Corporation); or (iii) on or subsequent to the date an interested stockholder
becomes such, the business combination is both approved by the Board of
Directors of the Surviving Corporation and authorized at an annual or special
meeting of stockholders of the Surviving Corporation (and not by written
consent) by the affirmative vote of at least 66 2/3% of the outstanding voting
stock of the Surviving Corporation not owned by the interested stockholder.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
Upon consummation of the Merger and the transactions contemplated thereby,
it is estimated there will be approximately 126,070,381 shares of Surviving
Corporation Common Stock authorized but unissued or not reserved for issuance
(assuming the issuance of approximately 17,265,289 shares of Surviving
Corporation Common Stock in the Merger and the reservation of (i) 4,848,237
shares of Surviving Corporation Common Stock for the purpose of satisfying the
exercise of options issued by Chancellor that will be assumed by the Surviving
Corporation in the Merger and for the conversion of the Surviving Corporation 7%
Convertible Preferred Stock that will be issued in the Merger and (ii) 9,566,792
shares of Surviving Corporation Common Stock for the purpose of satisfying the
exercise of options under Evergreen's various stock option plans and for the
conversion of the $3.00 Convertible Exchangeable Preferred Stock), and
41,810,000 shares of preferred stock of the Surviving Corporation authorized but
unissued, for future issuance without additional stockholder approval. These
additional shares may be utilized for a variety of corporate purposes, including
future offerings to raise additional capital or to facilitate corporate
acquisitions. Additionally, upon consummation of the Merger, there will be
75,000,000 shares of Surviving Corporation Class A Common Stock authorized but
unissued; however, it is not expected that any shares of Surviving Corporation
Class A Common Stock will be issued at any time following the Merger, and any
such issuance would require the unanimous affirmative vote of the Board of
Directors of the Surviving Corporation.
One of the effects of the existence of unissued Surviving Corporation
Common Stock or preferred stock of the Surviving Corporation may be to enable
the Board of Directors of the Surviving Corporation to issue shares to persons
friendly to current management which could render more difficult or discourage
an attempt to obtain control of the Surviving Corporation by means of a merger,
tender offer, proxy contest or otherwise, and thereby protect the continuity of
management. Such additional shares also could be used to dilute the stock
ownership of persons seeking to obtain control of the Surviving Corporation.
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TRANSFER AGENT
The Bank of New York will serve as the Exchange Agent and Registrar for the
Surviving Corporation Common Stock, the Evergreen $3.00 Convertible Preferred
Stock and the Surviving Corporation 7% Convertible Preferred Stock.
GENERAL COMPARISON OF STOCKHOLDERS RIGHTS
At the Effective Time, (i) holders of Chancellor Class A Common Stock,
Chancellor Class B Common Stock, Evergreen Class A Common Stock and Evergreen
Class B Common Stock will become holders of Surviving Corporation Common Stock
and (ii) holders of Chancellor Parent Convertible Preferred Stock will become
holders of Surviving Corporation 7% Convertible Preferred Stock. Assuming
approval of the stockholders of Evergreen, at the Effective Time, the Evergreen
Certificate will be amended and restated in the form attached to the Merger
Agreement, and the Evergreen Bylaws will be amended and restated in the form
attached to the Merger Agreement. The rights of the Surviving Corporation
stockholders will be governed by applicable Delaware law, including the DGCL,
and by the Surviving Corporation Certificate and the Surviving Corporation
Bylaws.
The following is a summary of the material differences of the rights of the
holders of the Chancellor Common Stock and Evergreen Common Stock prior to the
Merger as compared with the rights of holders of the Surviving Corporation
Common Stock following the Merger. Because each of Chancellor and Evergreen is a
Delaware corporation, these differences arise principally from differences in
the provisions of the Amended Certificate of Incorporation of Chancellor (the
"Chancellor Certificate"), the Evergreen Certificate and the Surviving
Corporation Certificate and the differences among the Restated Bylaws of
Chancellor (the "Chancellor Bylaws"), the Evergreen Bylaws and the Surviving
Corporation Bylaws.
The following summaries do not purport to be complete statements of the
rights of Chancellor stockholders under the Chancellor Certificate and the
Chancellor Bylaws and Evergreen stockholders under the Evergreen Certificate and
the Evergreen Bylaws as compared with the rights of Surviving Corporation
stockholders under the Surviving Corporation Certificate and Surviving
Corporation Bylaws and does not purport to be a complete description of the
specific provisions referred to herein. The identification of specific
differences is not meant to indicate that other equally or more significant
differences do not exist. These summaries are qualified in their entirety by
reference to Delaware law and the governing corporate instruments of Chancellor,
Evergreen and the Surviving Corporation, to which stockholders are referred. The
terms of Surviving Corporation Common Stock are described under "Description of
Surviving Corporation Capital Stock."
AUTHORIZED CAPITAL STOCK
Pre-Merger: The authorized capital stock of Chancellor as of the date
hereof consists of 40,000,000 shares of Chancellor Class A Common Stock,
10,000,000 shares of Chancellor Class B Common Stock, 10,000,000 shares of
Chancellor Class C Common Stock and 10,000,000 shares of Chancellor Parent
Preferred Stock.
The authorized capital stock of Evergreen as of the date hereof consists of
75,000,000 shares of Evergreen Class A Common Stock, 4,500,000 shares of
Evergreen Class B Common Stock, and 6,000,000 shares of preferred stock.
Post-Merger: At the Effective Time, the authorized capital stock of the
Surviving Corporation will consist of 200,000,000 shares of Surviving
Corporation Common Stock, 75,000,000 shares of Surviving Corporation Class A
Common Stock and 50,000,000 shares of preferred stock.
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DELISTING AND DEREGISTRATION OF CHANCELLOR CLASS A COMMON STOCK; LISTING OF
SURVIVING CORPORATION COMMON STOCK
Pre-Merger: The Chancellor Class A Common Stock currently is quoted on The
Nasdaq Stock Market under the symbol "CBCA." Upon consummation of the Merger,
the Chancellor Class A Common Stock will no longer be quoted on The Nasdaq Stock
Market and will be deregistered under the Exchange Act. Chancellor stockholders
will be asked to exchange their stock certificates following the Merger. See
"The Merger Agreement -- Exchange of Certificates."
Evergreen Class A Common Stock currently is quoted on The Nasdaq Stock
Market under the symbol "EVGM."
Post-Merger: The Surviving Corporation Common Stock will be quoted on The
Nasdaq Stock Market, under a symbol to be determined.
PRE-EMPTIVE RIGHTS
Pre-Merger: The Chancellor Certificate does not grant any pre-emptive
rights to stockholders.
The Evergreen Certificate does not grant any pre-emptive rights to
stockholders.
Post-Merger: The Surviving Corporation Certificate does not grant any
pre-emptive rights to stockholders.
DIVIDENDS AND OTHER DISTRIBUTIONS
Pre-Merger: The Chancellor Certificate provides that, subject to the rights
of the holders of preferred stock of Chancellor, holders of Chancellor Common
Stock are entitled to receive such dividends as may be declared by Chancellor's
Board of Directors out of funds legally available for such purpose. No dividend
may be declared or paid in cash or property on any share of any class of
Chancellor Common Stock unless simultaneously the same dividend is declared or
paid on each share of the other classes of Chancellor Common Stock, provided
that, in the event of stock dividends, holders of a specific class of Chancellor
Common Stock shall be entitled to receive only additional shares of such class.
The Evergreen Certificate has a similar provision, except that no provision
is made for stock dividends.
Under the terms of the CRBC Restated Credit Facility, the certificates of
designation governing the Chancellor Parent Convertible Preferred Stock, the
CRBC Series A Preferred Stock and the CRBC Junior Preferred Stock, the CRBC
9 3/8% Indenture and the CRBC 8 3/4% Indenture, Chancellor is directly and
indirectly subject to restrictions that limit Chancellor's ability to pay cash
dividends on the Chancellor Common Stock. Chancellor has never declared or paid
any dividends with respect to the Chancellor Common Stock.
Under the terms of the EMCLA Senior Credit Facility and the certificate of
designation for the Evergreen $3.00 Convertible Preferred Stock, Evergreen is
directly and indirectly subject to restrictions that limit Evergreen's ability
to pay cash dividends on the Evergreen Common Stock. Evergreen has never
declared or paid any dividends with respect to the Evergreen Common Stock.
The Merger Agreement provides that each of Chancellor and Evergreen is
prohibited from declaring or paying any dividends in respect of the Chancellor
Common Stock or the Evergreen Common Stock, respectively, except as otherwise
provided in the Merger Agreement, pending consummation of the Merger.
Post-Merger: The Surviving Corporation Certificate provides that, subject
to the rights and preferences of holders of preferred stock, if any, of the
Surviving Corporation at any time outstanding, holders of Surviving Corporation
Common Stock and Surviving Corporation Class A Common Stock are entitled to
receive such dividends, payable in cash, stock or otherwise, as may be declared
by the Surviving Corporation Board of Directors out of funds legally available
therefor.
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Because the Surviving Corporation will be a holding company with no
significant assets other than the common stock of the Surviving Mezzanine
Corporation and, following consummation of the Katz Acquisition, of Katz, and
the Surviving Mezzanine Corporation will also be a holding company with no
significant assets other than the common stock of the Surviving Subsidiary
Corporation, the Surviving Corporation will be able to pay cash dividends on its
Common Stock in the future only if certain financial tests set forth in the
EMCLA Senior Credit Facility, the CRBC 9 3/8% Indenture, the CRBC 8 3/4%
Indenture and the certificates of designation governing the Surviving Subsidiary
Series A Preferred Stock and the Surviving Subsidiary Junior Preferred Stock are
met. The indebtedness being assumed in the Katz Acquisition will also contain
similar limitations. Accordingly, it is not anticipated that the Surviving
Corporation will pay any dividends on the Surviving Corporation Common Stock in
the foreseeable future following the Merger.
LIQUIDATION RIGHTS
Pre-Merger: The Chancellor Certificate provides that upon liquidation,
dissolution, or winding-up of Chancellor, the holders of all classes of
Chancellor Common Stock are entitled to share ratably in all assets available
for distribution after payment in full of creditors and holders of preferred
stock of Chancellor.
The Evergreen Certificate has a similar provision.
Post-Merger: The Surviving Corporation Certificate has a similar provision.
CONVERSION OF CLASS B COMMON STOCK
Pre-Merger: The Chancellor Certificate provides that upon the sale or other
transfer of any share or shares of Chancellor Class B Common Stock to any person
other than Thomas O. Hicks or Hicks Muse and its affiliates, each share so sold
or transferred shall automatically be converted into one share of Chancellor
Class A Common Stock and thereby lose its special voting rights.
The Evergreen Certificate provides that each share of Evergreen Class B
Common Stock is convertible at any time, at the option of its holder, into one
share of Evergreen Class A Common Stock. The Evergreen Certificate further
provides that each share of Evergreen Class B Common Stock converts
automatically into one share of Evergreen Class A Common Stock, and thereby
loses its special voting rights, if such Evergreen Class B Common Stock is sold
or otherwise transferred to any person or entity other than certain specified
affiliates of Mr. Ginsburg.
Post-Merger: The Surviving Corporation Certificate has no comparable
provisions regarding conversion.
VOTING RIGHTS GENERALLY
Pre-Merger: The Chancellor Bylaws provide that, except as otherwise
required by Delaware law or the Chancellor Certificate, the holders of a
majority of the outstanding shares entitled to vote on a matter shall constitute
a quorum for the transaction of business. If a quorum exists, action on a matter
is approved by the vote of a majority of the votes entitled to be cast by the
holders of all shares of Common Stock, which are present, in person or by proxy
that are present in person at the meeting, except as otherwise required by
Delaware law or the Chancellor Certificate.
The Evergreen Bylaws provide that, except as otherwise required by Delaware
law or the Evergreen Certificate, a majority of the stock issued and outstanding
entitled to vote at any meeting of stockholders, the holders of which are
present in person or represented by proxy, shall constitute a quorum for the
transaction of business. If a quorum exists, action on a matter is approved by
the vote of a majority of the votes entitled to be cast by the holders of all
shares of Common Stock, which are present, in person or by proxy at the meeting,
except as otherwise required by Delaware law or the Evergreen Certificate.
The Chancellor Certificate provides that holders of shares of Chancellor
Class A Common Stock and Chancellor Class B Common Stock generally vote as a
single class on matters submitted to a vote of the stockholders except that
holders of Chancellor Class A Common Stock, voting as a separate class, are
entitled to elect two directors to the Chancellor Board. Each share of
Chancellor Class A Common Stock is entitled to
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one vote. Each share of Chancellor Class B Common Stock is entitled to ten
votes, except with respect to any proposed "Going Private" transaction, as
defined in the Chancellor Certificate, in which case each share of Chancellor
Class B Common Stock is entitled to one vote.
The Evergreen Certificate has similar provisions with respect to Evergreen
Class A Common Stock and Evergreen Class B Common Stock.
Post-Merger: The Surviving Corporation Bylaws provide that, except as
required by Delaware law or the Surviving Corporation Certificate, a majority of
the outstanding shares entitled to vote on a matter shall constitute a quorum
for the transaction of business. If a quorum exists, action on a matter is
approved by the vote of a majority of the shares entitled to vote that are
present, in person or by proxy, at the meeting, except as otherwise required by
Delaware law or the Surviving Corporation Certificate.
The Surviving Corporation Certificate provides that holders of shares of
Surviving Corporation Common Stock and Surviving Corporation Series A Common
Stock, each voting as a separate class, shall be entitled to vote on all matters
submitted to a vote of the stockholders of the Surviving Corporation and shall
be entitled to one vote for each share of Surviving Corporation Common Stock or
Surviving Corporation Class A Common Stock held.
AMENDMENT OF CERTIFICATE OF INCORPORATION; AMENDMENT OF BYLAWS
Pre-Merger: Under Delaware law, an amendment to the Chancellor Certificate
and the Evergreen Certificate requires the approval of the board of directors
and the approval of a majority of the outstanding stock entitled to vote thereon
and a majority of the outstanding stock of each class entitled to vote thereon.
Under Delaware law, the holders of the outstanding shares of a class of either
Chancellor or Evergreen are entitled to vote as a separate class on a proposed
amendment that would increase or decrease the aggregate number of authorized
shares of such class, increase or decrease the par value of the shares of such
class or alter or change the powers, preferences or special rights of the shares
of such class so as to affect them adversely.
Under Delaware law, an amendment to a corporation's bylaws requires the
approval of the stockholders, unless the certificate of incorporation confers
the power to amend the bylaws upon the board of directors.
The Chancellor Certificate does not grant the Board of Directors the power
to adopt, amend or repeal the Chancellor Bylaws.
The Evergreen Certificate grants the Board of Directors the power to adopt,
amend or repeal the Evergreen Bylaws.
Post-Merger: The provisions of Delaware law applicable to the amendment to
the Chancellor Certificate and the Evergreen Certificate are applicable to the
Surviving Corporation Certificate.
ACTION BY WRITTEN CONSENT
Pre-Merger: The Chancellor Bylaws provide that, subject to the requirements
of the Chancellor Certificate, any action that may be taken at any annual or
special meeting of stockholders may be taken without a meeting and without prior
notice, if a consent in writing, setting forth the action so taken, is signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted. The Chancellor
Bylaws also provide that, subject to the requirements of the Chancellor
Certificate, any action required or permitted to be taken at a meeting of the
Chancellor Board of Directors or any committee thereof may be taken without a
meeting if a consent or consents in writing, setting forth the action so taken,
shall be signed by all the directors or all committee members, as applicable.
The Evergreen Bylaws have similar provisions with respect to actions to be
taken at any annual or special meeting of stockholders and with respect to any
action required or permitted to be taken at a meeting of the Evergreen Board of
Directors or any committee thereof.
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Post-Merger: The Surviving Corporation Bylaws have provisions similar to
those contained in the Chancellor Bylaws with respect to actions to be taken at
any annual or special meeting of stockholders or actions to be taken by the
Surviving Corporation Board of Directors or any committee thereof.
SPECIAL MEETINGS OF STOCKHOLDERS
Pre-Merger: The Chancellor Bylaws provide that annual meetings of
stockholders may be called by the holders of a majority of outstanding shares of
the capital stock of Chancellor, whether or not such stock has voting rights,
taken as a single class, or by the Board of Directors of Chancellor pursuant to
resolution adopted by a majority of the Board of Directors.
The Evergreen Bylaws provide that, unless otherwise prescribed by Delaware
law or the Evergreen Certificate, special meetings of stockholders may be called
by the President and shall be called by the President or the Secretary at the
request in writing of a majority of the Board of Directors, or at the request in
writing of stockholders owning a majority in amount of the entire capital stock
of the corporation issued and outstanding, and entitled to vote.
Post-Merger: The Surviving Corporation Bylaws provide that special meetings
of stockholders may be called by the Chairman of the Board, the President, or
the Board of Directors and shall be called by the President or the Secretary at
the request in writing of the stockholders of record of not less than 10% of all
shares entitled to vote at such meeting or as otherwise provided in the
Surviving Corporation Certificate.
VOTING FOR THE ELECTION OF DIRECTORS
Pre-Merger: The Chancellor Certificate provides that, in the election of
directors, the holders of Chancellor Class A Common Stock, voting separately,
are entitled to elect two persons to Chancellor's Board of Directors, each of
whom must be an "independent director." For this purpose, an "independent
director" means a person who is not an officer or employee of Chancellor or its
subsidiaries, and who does not have a relationship which, in the opinion of the
Board of Directors of Chancellor, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a Director. The
holders of Chancellor Class A Common Stock and Chancellor Class B Common Stock,
voting as a single class, are entitled to elect the remaining directors.
The Evergreen Certificate provides that the holders of the Evergreen Common
Stock shall vote as a single class on the election of all directors.
Neither of the Chancellor Certificate nor the Evergreen Certificate permit
cumulative voting for the election of directors. The Chancellor Certificate and
the Evergreen Certificate provide that the election of directors need not be by
written ballot.
The Chancellor Bylaws provide that, unless otherwise required by Delaware
law or the Chancellor Certificate, at each annual meeting of stockholders at
which a quorum is present the persons elected as directors shall be those
persons receiving a plurality of the votes of the shares entitled to vote that
are present in person or represented by proxy at the meeting.
The Evergreen Bylaws provide that at each meeting of stockholders at which
a quorum is present, the persons elected as directors shall be those persons
receiving a plurality of the votes of shares that are present in person or
represented by proxy at the meeting.
Post-Merger: The Surviving Corporation Certificate provides that holders of
the Surviving Corporation Common Stock and the Surviving Corporation Class A
Common Stock shall vote as separate classes on the election of all directors.
The Surviving Corporation Certificate does not permit cumulative voting for
the election of directors. The Surviving Corporation Certificate provides that
the election of directors need not be by written ballot.
The Surviving Corporation Bylaws provides that, unless otherwise required
by Delaware law or the Surviving Corporation Certificate, at each annual meeting
of stockholders at which a quorum is present the persons elected as directors
shall be those persons receiving a plurality of the votes of shares that are
present in person or represented by proxy at the meeting.
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NUMBER AND QUALIFICATION OF DIRECTORS
Pre-Merger: The Chancellor Certificate provides for not less than five and
not greater than nine directors, plus such number of directors as may be elected
from time to time by the holders of any class or series of preferred stock of
Chancellor. The Chancellor Bylaws further provide that, in order to be eligible
for election to the Chancellor Board of Directors, the individual must be
nominated in accordance with certain procedures, including (i) that the
individual be nominated by written notice to Chancellor and Hicks Muse not less
than 120 days prior to the date of election, and (ii) that nominations may be
made by or at the direction of the Chancellor Board of Directors or by any
Chancellor stockholder entitled to vote for the election of directors at the
meeting.
The Evergreen Bylaws provide for not less than one nor more than thirteen
directors, none of whom need be a stockholder of Evergreen.
Post-Merger: The Surviving Corporation Bylaws provide for not less than
five nor more than thirteen directors, plus such number of directors as may be
elected from time to time by the holders of any class or series of preferred
stock of the Surviving Corporation. None of the directors of the Surviving
Corporation need be a stockholder of the Surviving Corporation or a resident of
the State of Delaware.
CLASSIFICATION OF BOARD
Pre-Merger: Delaware law permits, but does not require, a classified board
of directors, with staggered terms under which one-half to one-third of the
directors are elected for terms of two or three years, respectively.
The Chancellor Certificate provides that the Board of Directors of
Chancellor, other than those directors elected by holders of Chancellor Class A
Common Stock (the "Chancellor Class A Directors"), consists of three classes of
directors. Class I directors hold their respective offices until the 1997 annual
meeting of Chancellor. Class II directors hold their respective offices until
the 1998 annual meeting of Chancellor. Class III directors hold their respective
offices until the 1999 annual meeting of Chancellor. Chancellor Class A
Directors have a term that expires annually.
The Evergreen Certificate does not provide for a classified board of
directors.
Post-Merger: The Surviving Corporation Certificate provides that the Board
of Directors of the Surviving Corporation will consist of three classes of
directors. Class I directors will hold their respective offices from the
Effective Time until the 1998 annual meeting of the Surviving Corporation. Class
II directors will hold their respective offices from the Effective Time until
the 1999 annual meeting of the Surviving Corporation. Class III directors will
hold their respective offices from the Effective Time until the 2000 Annual
meeting of the Surviving Corporation.
TRANSACTIONS INVOLVING OFFICERS OR DIRECTORS
Pre-Merger: Under Delaware law, no contract or transaction between a
corporation and one or more of its directors or officers, or between a
corporation and any other entity in which one or more of its directors or
officers are directors or officers, or have a financial interest, is void or
voidable if (i) the material facts as to the director's or officer's
relationship or interest and as to the contract or transaction are disclosed or
known to the board of directors or committee which authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors; (ii) the material facts as to the director's or officer's
relationship or interest and as to the contract or transaction are disclosed or
known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved by the stockholders; or (iii) the contract
or transaction is fair as to the corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee thereof, or the
stockholders. A corporation may make loans to, guarantee the obligations of or
otherwise assist its officers or other employees and those of its subsidiaries,
including directors who are also officers or employees, when such action, in the
judgment of the directors, may reasonably be expected to benefit the
corporation.
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The Chancellor Certificate provides that no contract or transaction between
Chancellor and one or more of its directors, officers, or stockholders or
between Chancellor and any person or entity in which one or more of its
directors, officers, or stockholders are directors, officers, or stockholders,
or have a financial interest, shall be void or voidable solely for this reason,
or solely because the director or officer is present at or participates in the
meeting of the Board or committee which authorizes the contract or transaction,
or solely because his, her, or their votes are counted for such purpose, if: (i)
the material facts as to his or her relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors of
Chancellor or the committee, and the Board of Directors of Chancellor or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders of Chancellor entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders of Chancellor; or (iii) the contract or transaction
is fair as to Chancellor as of the time it is authorized, approved, or ratified
by the Board of Directors of Chancellor, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors of Chancellor or of
a committee which authorizes the contract or transaction.
The Evergreen Certificate does not contain any specific provisions with
respect to contracts, loans, or other transactions between Evergreen and its
directors or officers.
Post-Merger: The Surviving Corporation Certificate provides that no
contract or transaction between the Surviving Corporation and one or more of its
directors, officers, or stockholders or between the Surviving Corporation and
any person or entity in which one or more of its directors, officers, or
stockholders are directors, officers, or stockholders, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the Board of Directors of the
Surviving Corporation or the committee, and the Board of Directors of the
Surviving Corporation or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(ii) the material facts as to his or her relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders of the
Surviving Corporation entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders of the
Surviving Corporation; or (iii) the contract or transaction is fair as to the
Surviving Corporation as of the time it is authorized, approved, or ratified by
the Board of Directors of the Surviving Corporation, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors of the Surviving
Corporation or of a committee which authorizes the contract or transaction.
INDEMNIFICATION OF DIRECTORS AND OFFICERS AND LIMITATION OF LIABILITY
Pre-Merger: The Chancellor Certificate contains provisions indemnifying any
person who was or is threatened to be made a party to a proceeding by reason of
the fact that he or she (i) is or was a director, officer, employee or agent of
Chancellor or (ii) is or was serving at the request of Chancellor as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise,
to the fullest extent permitted under the DGCL.
The Chancellor Certificate provides that no director shall be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability for: (i) breaches of the director's
duty of loyalty to the corporation or its stockholders; (ii) acts or omissions
not in good faith or involving intentional misconduct or knowing violations of
laws; (iii) the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or (iv) transactions in which the director received an improper
personal benefit.
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The Evergreen Bylaws provide that any person who was or is a director,
officer, employee or agent of Evergreen shall be indemnified against expenses,
judgments, fines and settlements incurred in a proceeding, other than an action
by or in the right of Evergreen, if the person acted in good faith and in a
manner that the person reasonably believed to be in the best interests of the
corporation or not opposed to the best interests of the corporation, and, in the
case of a criminal proceeding, had no reason to believe the conduct of the
person was unlawful.
The Evergreen Bylaws provide that in the case of an action by or in the
right of Evergreen against a person who was or is a director, officer, employee
or agent of Evergreen, such person is indemnified against expenses incurred in
defending or settling the action if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of Evergreen; provided, however, that no indemnification shall be made
when such person is adjudged liable to Evergreen, unless a court determines such
person is entitled to indemnity for expenses, and then such indemnification may
be made only to the extent that such court shall determine.
The Evergreen Bylaws provide that to the extent a director or officer is
successful on the merits or otherwise in defense of any third-party or
derivative proceeding, or in defense of any claim, issue or matter therein, the
corporation must indemnify such director or officer against expenses incurred in
connection therewith.
The Evergreen Certificate provides that no director shall be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability for: (i) breaches of the director's
duty of loyalty to the corporation or its stockholders; (ii) acts or omissions
not in good faith or involving intentional misconduct or knowing violations of
laws; (iii) the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or (iv) transactions in which the director received an improper
personal benefit.
Post-Merger: The Surviving Corporation Certificate contains provisions
indemnifying any person who was or is threatened to be made a party to a
proceeding by reason of the fact that he or she (i) is or was a director,
officer, employee or agent of the Surviving Corporation or (ii) is or was
serving at the request of the Surviving Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar functionary
of another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the DGCL.
The Surviving Corporation Certificate provides that no director shall be
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability for: (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of laws; (iii) the payment of unlawful dividends or unlawful stock
repurchases or redemptions; or (iv) transactions in which the director received
an improper personal benefit.
RESTRICTIONS ON FOREIGN OWNERSHIP
Pre-Merger: The Chancellor Certificate restricts the ownership, voting and
transfer of Chancellor's capital stock, including the Chancellor Common Stock,
in accordance with the Communications Act and the rules of the FCC, which
prohibit ownership of more than 25% of Chancellor's outstanding capital stock
(or more than 25% of the voting rights it represents) by or for the account of
non-United States citizens ("Aliens") or corporations otherwise subject to
domination or control by Aliens. The Chancellor Certificate also prohibits any
transfer of Chancellor's capital stock that would cause a violation of this
prohibition. In addition, the certificate authorizes the Board of Directors of
Chancellor to adopt such provisions as it deems necessary to enforce these
prohibitions, including the inclusion of a legend regarding restrictions on
foreign ownership of such stock on the certificates representing the Common
Stock.
The Evergreen Certificate provides that, in accordance with the
Communications Act, (i) not more than 25% of the capital stock of the
corporation may be owned of record by Aliens; (ii) no Alien shall be entitled to
vote or direct or control the vote of more than 25% of the total number of
shares of capital stock of the corporation outstanding and entitled to vote at
any time or more than 25% of the total voting power of all
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shares of capital stock of the corporation outstanding and entitled to vote at
any time; (iii) no Alien shall be qualified to act as an officer of the
corporation; and (iv) no more than 25% of the total number of directors of the
corporation may be Aliens.
Post-Merger: The Surviving Corporation Certificate provides that, in
accordance with the Communications Act; (i) not more than 25% of the capital
stock of the corporation may be owned of record by Aliens; (ii) no Alien shall
be entitled to vote or direct or control the vote of more than 25% of the total
number of shares of capital stock of the corporation outstanding and entitled to
vote at any time or more than 25% of the total voting power of all shares of
capital stock of the corporation outstanding and entitled to vote at any time;
(iii) no Alien shall be qualified to act as an officer of the corporation; and
(iv) no more than 25% of the total number of directors of the corporation may be
Aliens.
DESCRIPTION OF SURVIVING CORPORATION 7% CONVERTIBLE PREFERRED STOCK
The following summary description of the Surviving Corporation 7%
Convertible Preferred Stock to be issued in the Merger does not purport to be
complete and is subject to, and is qualified in its entirety by reference to the
Certificate of Designation that will govern the Surviving Corporation 7%
Convertible Preferred Stock, a copy of which has been filed as an exhibit to
this Registration Statement of which this Joint Proxy Statement/Prospectus is a
part.
GENERAL
The Surviving Corporation's Certificate of Incorporation authorizes the
Surviving Corporation to issue an aggregate of 50,000,000 shares of preferred
stock, $.01 par value. The Surviving Corporation's Board of Directors has
authority to divide the preferred stock of the Surviving Corporation into one or
more series and has broad authority to determine the relative rights and
preferences of the shares within each series, including voting rights. At the
Effective Time, the Surviving Corporation will have authorized the issuance of
up to 2,200,000 shares of Surviving Corporation 7% Convertible Preferred Stock
with a stated liquidation value of $50.00 per share and will have issued
5,990,000 shares of Evergreen $3.00 Convertible Preferred Stock with a stated
liquidation value of $50.00 per share.
DIVIDENDS
Holders of Surviving Corporation 7% Convertible Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors of out
of legally available funds, cash dividends at an annual rate equal to 7% of the
liquidation preference per share, payable quarterly in arrears on January 15,
April 15, July 15 and October 15 of each year (each a "Dividend Payment Date"),
beginning July 15, 1997. If that date is a Saturday, Sunday or legal holiday,
however, the dividend will be payable on the next business day. Dividends will
accrue and be cumulative from the most recent date to which dividends have been
paid or, if none have been paid, from the most recent date to which dividends on
the Chancellor Parent Convertible Preferred Stock have been paid and will be
payable to holders of record on the January 1, April 1, July 1 and October 1
immediately preceding the relevant Dividend Payment Date.
The Surviving Corporation 7% Convertible Preferred Stock will have priority
as to dividends over the Surviving Corporation Common Stock and any other series
or class of the Surviving Corporation's stock that ranks junior to the Surviving
Corporation 7% Convertible Preferred Stock as to dividends ("Junior Dividend
Stock"). Notwithstanding the foregoing, the Surviving Corporation 7% Convertible
Preferred Stock shall rank junior as to dividends and rights upon a liquidation,
dissolution or winding-up of the Surviving Corporation to any and all classes or
series of capital stock (other than Surviving Corporation Common Stock) of the
Surviving Corporation, whether currently issued or issued in the future, that
does not by its terms expressly provide that it ranks on a parity with or junior
to the Surviving Corporation 7% Convertible Preferred Stock as to dividends and
rights upon a liquidation, dissolution or winding-up of the Surviving
Corporation. For purposes of the foregoing, the term "Surviving Corporation"
includes any entity with which the Surviving Corporation may be merged or
consolidated or to which all or substantially all the assets of the Surviving
Corporation may be transferred.
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No dividend (other than dividends payable solely in Surviving Corporation
Common Stock, any Junior Dividend Stock or warrants or other rights to acquire
such Surviving Corporation Common Stock or Junior Dividend Stock) may be paid or
set apart for payment on, and no purchase, redemption or other acquisition shall
be made by the Surviving Corporation 7% Convertible Preferred Stock of, the
Surviving Corporation Common Stock or Junior Dividend Stock unless all accrued
and unpaid dividends on the Surviving Corporation 7% Convertible Preferred
Stock, including the full dividend for the then-current quarterly dividend
period, shall have been paid or declared and set apart for payment without
interest.
Except as provided below, the Surviving Corporation may not pay dividends
on any class or series of stock, if hereafter issued, having parity with the
Surviving Corporation 7% Convertible Preferred Stock as to dividends ("Parity
Dividend Stock") unless it has paid or declared and set apart for payment or
contemporaneously pays or declares and sets apart for payment all accrued and
unpaid dividends for all prior dividend payment periods on the Surviving
Corporation 7% Convertible Preferred Stock. In addition, except as provided
below, the Surviving Corporation may not pay dividends on the Surviving
Corporation 7% Convertible Preferred Stock unless it has paid or declared and
set apart for payment or contemporaneously pays or declares and sets apart for
payment all accrued and unpaid dividends for all prior dividend payment periods
on the Parity Dividend Stock. Whenever all accrued dividends in respect of prior
dividend payment periods are not paid in full on Surviving Corporation 7%
Convertible Preferred Stock and on any Parity Dividend Stock, all dividends
declared on the Surviving Corporation 7% Convertible Preferred Stock and the
Parity Dividend Stock will be declared and made pro rata so that the amount of
dividends declared on the Surviving Corporation Convertible Preferred Stock and
the Parity Dividend Stock will bear the same ratio that accrued and unpaid
dividends in respect of prior dividend payment periods on the Surviving
Corporation 7% Convertible Preferred Stock and the Parity Dividend Stock bear to
each other. Immediately after the Effective Time, the Evergreen $3.00
Convertible Preferred Stock will constitute Parity Dividend Stock and,
accordingly, will rank pari passu with the Surviving Corporation 7% Convertible
Preferred Stock with respect to payment of dividends.
The Surviving Corporation may not purchase any shares of the Surviving
Corporation 7% Convertible Preferred Stock or any Parity Dividend Stock (except
for consideration payable in Surviving Corporation Common Stock or Junior
Dividend Stock) or redeem fewer than all the shares of the Surviving Corporation
7% Convertible Preferred Stock and Parity Dividend Stock then outstanding if the
Surviving Corporation has failed to pay any accrued dividend on the Surviving
Corporation 7% Convertible Preferred Stock or any Parity Dividend Stock on a
stated payment date. Notwithstanding the foregoing, in such event, the Surviving
Corporation may purchase or redeem fewer than all the shares of the Surviving
Corporation 7% Convertible Preferred Stock and Parity Dividend Stock if such
repurchase or redemption is made pro rata so that the amounts purchased or
redeemed bear to each other the same ratio that the required redemption payments
on the shares of the Surviving Corporation 7% Convertible Preferred Stock and
any Parity Dividend Stock then outstanding bear to each other.
If the Surviving Corporation hereafter issues any series or class of stock
that ranks senior as to dividends to the Surviving Corporation 7% Convertible
Preferred Stock ("Senior Dividend Stock") and fails to pay or declare and set
apart for payment accrued and unpaid dividends on any Senior Dividend Stock
(except to the extent allowed by the terms of the Senior Dividend Stock), the
Surviving Corporation may not pay or declare and set apart for payment any
dividend on the Surviving Corporation 7% Convertible Preferred Stock unless and
until all accrued and unpaid dividends on the Senior Dividend Stock, including
the full dividends for the then current dividend periods, have been paid or
declared and set apart for payment without interest.
The dividend payable on Surviving Corporation 7% Convertible Preferred
Stock for each quarterly dividend period will be computed by dividing the annual
dividend amount by four. The amount of dividends payable for the initial
dividend period and for any period shorter than a full dividend period will be
computed on the basis of a 360-day year of twelve 30-day months. No interest
will be payable on Surviving Corporation 7% Convertible Preferred Stock dividend
that may be in arrears.
Under Delaware law, the Surviving Corporation may declare and pay dividends
or make other distributions on its capital stock only out of surplus, as defined
in the DGCL, or if no surplus is available, out
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of its net profits for the fiscal year in which the dividend or distribution is
declared and the preceding fiscal year. No dividends or distributions may be
declared or paid if the Surviving Corporation is or would be rendered insolvent
by virtue of the dividend or distribution, or if the declaration, payment or
distribution would contravene the Surviving Corporation Certificate. See
"General Comparison of Stockholders Rights -- Dividends and Other
Distributions."
LIQUIDATION RIGHTS
In the case of the voluntary or involuntary liquidation, dissolution or
winding up of the Surviving Corporation, subject to the payment in full, or
until provision has been made for the payment in full, of all claims of
creditors of the Surviving Corporation, holders of Surviving Corporation 7%
Convertible Preferred Stock are entitled to receive the liquidation preference
of $50.00 per share, plus an amount equal to any accrued and unpaid dividends,
whether or not declared, to the payment date, before any payment or distribution
is made to the holders of Surviving Corporation Common Stock or any other series
or class of stock hereafter issued that ranks junior as to liquidation rights to
the Surviving Corporation 7% Convertible Preferred Stock ("Junior Liquidation
Stock"). Holders of Surviving Corporation 7% Convertible Preferred Stock will
not be entitled to receive the liquidation preference of their shares until the
liquidation preference of any other series or class of stock hereafter issued
that ranks senior as to liquidation rights to the Surviving Corporation 7%
Convertible Preferred Stock ("Senior Liquidation Stock"), if any, has been paid
in full. The holders of Surviving Corporation 7% Convertible Preferred Stock and
any series or class of stock hereafter issued that ranks on a parity as to
liquidation rights with the Surviving Corporation 7% Convertible Preferred Stock
("Parity Liquidation Stock") are entitled to share ratably, in accordance with
the respective preferential amounts payable on their stock, in any distribution
(after payment of the liquidation preference on any Senior Liquidation Stock)
that is not sufficient to pay in full the aggregate liquidation preference on
both the Surviving Corporation 7% Convertible Preferred Stock and any Parity
Liquidation Stock. Immediately after the Effective Time, the Evergreen $3.00
Convertible Preferred Stock will constitute Parity Dividend Stock and,
accordingly, will rank pari passu with the Surviving Corporation 7% Convertible
Preferred Stock with respect to amounts payable upon liquidation, dissolution or
winding up of the Surviving Corporation.
After payment in full of the liquidation preference plus any accrued and
unpaid dividends on the Surviving Corporation 7% Convertible Preferred Stock,
the holders will not be entitled to any further participation in any
distribution of assets by the Surviving Corporation. Neither a consolidation or
merger of the Surviving Corporation with another entity nor a sale or transfer
of all or part of the Surviving Corporation's assets for cash, securities or
other property will be considered a liquidation, dissolution or winding up of
the Surviving Corporation.
VOTING RIGHTS
The holders of Surviving Corporation 7% Convertible Preferred Stock will
have no voting rights except as described below or as required by law. In
exercising any voting rights, each outstanding share of Surviving Corporation 7%
Convertible Preferred Stock will be entitled to one vote, although shares held
by the Surviving Corporation or any entity controlled by the Surviving
Corporation will have no voting rights.
Whenever dividends on the Surviving Corporation 7% Convertible Preferred
Stock are in arrears in an aggregate amount equal to at least six quarterly
dividends (whether or not consecutive), the size of the Surviving Corporation's
Board of Directors will be increased by two, and the holders of Surviving
Corporation 7% Convertible Preferred Stock, voting separately as a class
together with holders of any Parity Dividend Stock then having voting rights,
will be entitled to elect two additional directors of the Board of Directors at,
subject to certain limitations, any annual meeting of stockholders at which
directors are to be elected held during the period when the dividends remain in
arrears or, under certain circumstances, at a special meeting of stockholders.
These voting rights will terminate when all dividends in arrears and for the
current quarterly period have been paid in full or declared and set apart for
payment. The term of office of the additional directors so elected will
terminate immediately upon that payment or provision for payment.
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In addition, so long as any Surviving Corporation 7% Convertible Preferred
Stock is outstanding, the Surviving Corporation may not, without the affirmative
vote or consent of the holders of at least 66 2/3% of all outstanding shares of
Surviving Corporation 7% Convertible Preferred Stock and outstanding Parity
Dividend Stock, voting as a single class (i) amend, alter or repeal (by merger
or otherwise) any provision of the Surviving Corporation Certificate or
Surviving Corporation Bylaws so as to affect adversely the relative rights,
preferences, qualifications, limitations or restrictions of the Surviving
Corporation 7% Convertible Preferred Stock or (ii) effect any reclassification
of the Surviving Corporation 7% Convertible Preferred Stock.
CHANGE OF CONTROL
The certificate of designation for the Surviving Corporation 7% Convertible
Preferred Stock will provide that, upon the occurrence of a Change of Control
(as defined below), each holder will have the right to require that the
Surviving Corporation purchase all or a portion of such holder's Surviving
Corporation 7% Convertible Preferred Stock in cash pursuant to the offer
described below (the "Change of Control Offer"), at a purchase price equal to
101% of the liquidation preference thereof, plus, without duplication, all
accumulated and unpaid dividends per share to the date of repurchase.
Within 30 days following the date on which the Surviving Corporation
becomes aware that a Change of Control has occurred, the Surviving Corporation
must send, by first class mail postage prepaid, a notice to each holder of
Surviving Corporation 7% Convertible Preferred Stock, which notice shall govern
the terms of the Change of Control Offer. Such notice shall state, among other
things, the purchase date, which must be no earlier than 30 days nor later than
45 days from the date such notice is mailed, other than as may be required by
law (the "Change of Control Payment Date"). Holders electing to have any shares
of Surviving Corporation 7% Convertible Preferred Stock purchased pursuant to a
Change of Control Offer will be required to surrender such shares of Surviving
Corporation 7% Convertible Preferred Stock, properly endorsed for transfer
together with such other customary documents as the Surviving Corporation and
the transfer agent may reasonably request, to the transfer agent and registrar
for the Surviving Corporation 7% Convertible Preferred Stock at the address
specified in the notice prior to the close of business on the business day prior
to the Change of Control Payment Date.
The Surviving Corporation will comply with the requirements of the Exchange
Act to the extent applicable in connection with the purchase of shares of
Surviving Corporation 7% Convertible Preferred Stock pursuant to a Change of
Control Offer.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or
series of related transactions) of all or substantially all of the assets of the
Surviving Corporation to any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act (a "Group"), other than to Hicks Muse or any
of its affiliates, officers and directors or to Steven Dinetz (the "Permitted
Holders"); or (ii) a majority of the Board of Directors of the Surviving
Corporation shall consist of Persons who are not Continuing Directors (as
defined below); or (iii) the acquisition by any Person or Group (other than the
Permitted Holders) of the power, directly or indirectly, to vote or direct the
voting of securities having more than 50% of the ordinary voting power for the
election of directors of the Surviving Corporation.
"Continuing Director" means, as of the date of determination, any Person
who (i) was a member of the Board of Directors of Chancellor on January 23,
1997, the date of original issuance of the Chancellor Parent Convertible
Preferred Stock, (ii) was nominated for election or elected to the Board of
Directors of the Surviving Corporation with the affirmative vote of a majority
of the Continuing Directors who were members of such Board of Directors at the
time of such nomination or election, or (iii) is a representative of a Permitted
Holder.
The "Change of Control" covenant will not apply in the event of (a) changes
in a majority of the Board of Directors of the Surviving Corporation so long as
a majority of such Board of Directors continues to consist of Continuing
Directors and (b) certain transactions with Permitted Holders. In addition, this
covenant is not intended to afford holders of shares of Surviving Corporation 7%
Convertible Preferred Stock protection in the event of certain highly leveraged
transactions, reorganizations, restructurings, mergers and other similar
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transactions that might adversely affect the holders of shares of Surviving
Corporation 7% Convertible Preferred Stock, but would not constitute a Change of
Control. The Surviving Corporation could, in the future, enter into certain
transactions including certain recapitalizations of the Surviving Corporation,
that would not constitute a Change of Control with respect to the Change of
Control purchase feature of the Surviving Corporation 7% Convertible Preferred
Stock, but would increase the amount of indebtedness outstanding at such time.
If a Change of Control were to occur, there can be no assurance that the
Surviving Corporation would have sufficient funds to pay the purchase price for
all shares of Surviving Corporation 7% Convertible Preferred Stock that the
Surviving Corporation might be required to purchase. Moreover, as of the
Effective Time, the Surviving Corporation would not have sufficient funds
available to purchase all of the outstanding shares of Surviving Corporation 7%
Convertible Preferred Stock pursuant to a Change of Control Offer. In the event
that the Surviving Corporation were required to purchase outstanding shares of
Surviving Corporation 7% Convertible Preferred Stock pursuant to a Change of
Control Offer, the Surviving Corporation expects that it would require
third-party financing to the extent it does not have available funds to meet its
purchase obligations. However, there can be no assurance that the Surviving
Corporation would be able to obtain such financing on favorable terms, if at
all. In addition, the EMCLA Senior Credit Facility, the CRBC 9 3/8% Notes and
the CRBC 8 3/4% Notes will restrict the Surviving Corporation's ability to
purchase the Surviving Corporation 7% Convertible Preferred Stock, including
pursuant to a Change of Control Offer. In an offer by the Surviving Corporation
to repurchase the Surviving Corporation 7% Convertible Preferred Stock at the
holder's option upon a change of control, the Surviving Corporation will comply
with Section 14(e) of the Exchange Act and the rules and regulations promulgated
thereunder, as then in effect.
With respect to the sale of "all or substantially all" of the assets of the
Surviving Corporation, which would constitute a Change of Control for purposes
of the certificate of designation for the Surviving Corporation 7% Convertible
Preferred Stock, the meaning of the phrase "all or substantially all" varies
according to the facts and circumstances of the subject transaction, has no
clearly established meaning under relevant law and is subject to judicial
interpretation. Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the assets of the Surviving
Corporation and, therefore, it may be unclear whether a Change of Control has
occurred and whether the Surviving Corporation 7% Convertible Preferred Stock is
subject to a Change of Control Offer.
None of the provisions in the certificate of designation for the Surviving
Corporation 7% Convertible Preferred Stock relating to a purchase of Surviving
Corporation 7% Convertible Preferred Stock upon a Change of Control are waivable
by the Board of Directors of the Surviving Corporation. Without the consent of
each holder of the Surviving Corporation 7% Convertible Preferred Stock affected
thereby, after the mailing of the notice of a Change of Control Offer, no
amendment to the certificate of designation for the Surviving Corporation 7%
Convertible Preferred Stock may, directly or indirectly, affect the Surviving
Corporation's obligation to purchase the outstanding Surviving Corporation 7%
Convertible Preferred Stock or amend, modify or change the obligation to
purchase the outstanding Surviving Corporation 7% Convertible Preferred Stock or
amend, modify or change the obligation of the Surviving Corporation to
consummate a Change of Control or waive any default in the performance thereof
or modify any of the provisions of the definitions with respect to any such
offer.
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REDEMPTION AT OPTION OF THE SURVIVING CORPORATION
The Surviving Corporation 7% Convertible Preferred Stock may not be
redeemed prior to January 19, 2000. Thereafter, the Surviving Corporation 7%
Convertible Preferred Stock may be redeemed by the Surviving Corporation, at its
option (subject to contractual and other restrictions with respect thereto,
including limitations under the EMCLA Senior Credit Facility, the CRBC 9 3/8%
Indenture and the CRBC 8 3/4% Indenture, and to the legal availability of funds
therefor), in whole or in part at any time if redeemed during the 12-month
period beginning January 15 (January 19 in the case of 2000), of any year
specified below, at the following redemption prices (expressed as percentages of
the liquidation preference thereof):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000........................................................ 104.90%
2001........................................................ 104.20%
2002........................................................ 103.50%
2003........................................................ 102.80%
2004........................................................ 102.10%
2005........................................................ 101.40%
2006........................................................ 100.70%
2007 and thereafter......................................... 100.00%
</TABLE>
plus in each case accrued and unpaid dividends, whether or not declared, to the
redemption date.
If fewer than all of the outstanding shares of Surviving Corporation 7%
Convertible Preferred Stock are to be redeemed, the Surviving Corporation will
select those shares to be redeemed pro rata or in such other manner as the Board
of Directors may determine. There is not a mandatory redemption or sinking fund
obligation for the Surviving Corporation 7% Convertible Preferred Stock. In the
event that the Surviving Corporation has failed to pay accrued and unpaid
dividends on the Surviving Corporation 7% Convertible Preferred Stock, it may
not redeem less than all of the outstanding shares of the Surviving Corporation
7% Convertible Preferred Stock until all accrued and unpaid dividends have been
paid in full.
Notice of redemption will be mailed at least 15 days but not more than 60
days before the redemption date to each holder of record of Surviving
Corporation 7% Convertible Preferred Stock to be redeemed at the address shown
on the stock transfer books. After the redemption date, dividends will cease to
accrue on the shares of Surviving Corporation 7% Convertible Preferred Stock
called for redemption, and all rights of the holders of those shares will
terminate, except the conversion rights to the extent described below and the
right to receive the redemption price plus accrued and unpaid dividends, whether
or not declared, to the redemption date, without interest.
CONVERSION RIGHTS
Each holder of Surviving Corporation 7% Convertible Preferred Stock will
have the right, at the holder's option, to convert any or all shares of
Surviving Corporation 7% Convertible Preferred Stock into Surviving Corporation
Common Stock at any time at a conversion price (subject to adjustment as
described below) of $36.19 per share of underlying Surviving Corporation Common
Stock (reflecting the conversion price after adjustment for the Exchange Ratio).
The number of shares of Surviving Corporation Common Stock into which the
Surviving Corporation 7% Convertible Preferred Stock shall be convertible
(calculated to the nearest 1/100th of a share) shall be determined by dividing
$50.00 by the conversion price then in effect. If the Surviving Corporation 7%
Convertible Preferred Stock is called for redemption, the conversion right will
terminate at the close of business on the redemption date fixed by the Board of
Directors.
If shares of Surviving Corporation 7% Convertible Preferred Stock not
called for redemption are surrendered for conversion during the period between
the close of business on any dividend record date and the opening of business on
any corresponding Dividend Payment Date such shares so surrendered must be
accompanied by payment of an amount equal to the dividend payable on such shares
on such Dividend Payment Date. No such payment will be required to accompany
shares of Surviving Corporation 7%
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<PAGE> 112
Convertible Preferred Stock called for redemption and surrendered during such
period. A holder of shares of Surviving Corporation 7% Convertible Preferred
Stock on a dividend record date who (or whose transferee) tenders any such
shares for conversion into shares of Surviving Corporation Common Stock on such
dividend payment date will received the dividend payable by the Surviving
Corporation on such shares of Surviving Corporation 7% Convertible Preferred
Stock on such date, and the converting holder need not include payment of the
amount of such dividend upon surrender of shares of Surviving Corporation 7%
Convertible Preferred Stock for conversion. Except for shares of Surviving
Corporation 7% Convertible Preferred Stock surrendered for conversion on a
dividend payment date, the Surviving Corporation will make no payment or
allowance for accrued and unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of Surviving Corporation Common
Stock issued upon such conversion. No fractional shares of Surviving Corporation
Common Stock, will be issued upon conversions, but, in lieu thereof, an
appropriate amount will be paid in cash, based on the last reported sale price
for the Surviving Corporation Common Stock on the day of the conversion.
The conversion price will be subject to adjustment in certain events,
including (i) the payment of a dividend on any class of the Surviving
Corporation's capital stock in shares of Surviving Corporation Common Stock;
(ii) subdivisions or combinations of Surviving Corporation Common Stock; (iii)
the issuance to all holders of Surviving Corporation Common Stock of certain
rights or warrants (expiring within 45 days after the record date for
determining stockholders entitled to received them) to subscribe for or purchase
Surviving Corporation Common Stock at less than current market price; (iv) the
payment of a dividend to all holders of Surviving Corporation Common Stock of
any shares of capital stock of the Surviving Corporation or its subsidiaries
(other than Surviving Corporation Common Stock) or evidence of indebtedness,
cash (excluding cash dividends payable solely in cash that may from time to time
be fixed by the Board of Directors, or dividends payable solely in cash that may
from time to time be fixed by the Board of Directors, or dividends or
distributions in connection with liquidation, dissolution or winding up of the
Surviving Corporation), other assets or rights or warrants to subscribe for or
purchase any securities (other than those referred to above); or (v) the
issuance to all holders of Surviving Corporation Common Stock of securities
convertible into or exchangeable for Surviving Corporation Common Stock (other
than pursuant to transactions described above) for a consideration per share of
Surviving Corporation Common Stock deliverable upon a conversion or exchange of
the securities less than the current market price per share on the date of
issuance of the securities. No adjustment of the conversion price will be
required to be made until cumulative adjustments amount to 1% or more of the
conversion price as last adjusted, and any adjustment below 1% will be carried
forward.
The Surviving Corporation from time to time may reduce the conversion price
for the Surviving Company 7% Convertible Preferred Stock by any amount for any
period of time if the period is at least 20 days and if the reduction is
irrevocable during the period. Whenever the conversion price is so reduced, the
Surviving Corporation shall mail to holders of record of the Surviving
Corporation 7% Convertible Preferred Stock a notice of the reduction at least 15
days before the date of the reduced conversion price takes effect, stating the
reduced conversion price and the period it will be in effect.
In case of any reclassification of the Surviving Corporation Common Stock,
any consolidation of the Surviving Corporation with, or merger of the Surviving
Corporation into, any other entity, any merger of any entity into the Surviving
Corporation (other than a merger that does not result in a reclassification,
conversion, exchange or cancellation of the outstanding shares of Surviving
Corporation Common Stock), any sale or transfer of all or substantially all of
the assets of the Surviving Corporation or any compulsory share exchange whereby
the Surviving Corporation Common Stock is converted into other certain
securities, cash or other property, then the holder of each share of Surviving
Corporation 7% Convertible Preferred Stock then outstanding shall have the right
thereafter, during the period that the Surviving Corporation 7% Convertible
Preferred Stock shall be convertible, to convert that share only into the kind
and amount of securities, cash and other property receivable upon the
reclassification, consolidation, merger, sale, transfer or share exchange by a
holder of the number of shares of Surviving Corporation Common Stock into which
one share of Surviving Corporation 7% Convertible Preferred Stock would have
been convertible immediately prior to the reclassification, consolidation,
merger, sale, transfer or share exchange.
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<PAGE> 113
MANAGEMENT AFTER THE MERGER
BOARD OF DIRECTORS
At the Effective Time, the Board of Directors of the Surviving Corporation
shall comprise eleven directors which will be divided into three classes, each
to consist as nearly as practicable of an equal number of directors. Assuming
re-election of the eight nominees for election to the Board of Directors of
Evergreen identified in "Other Proposals Relating to the Annual
Meeting -- Evergreen Additional Proposals -- Evergreen Proposal 2: Election of
Directors," four Evergreen directors (Messrs. Devine, Sitrick, O'Keefe and
Bernthal) will resign from the Evergreen Board effective the Effective Time.
Assuming re-election to the Evergreen Board, the other four current Evergreen
directors (Messrs. Ginsburg, de Castro, Hodson and Lewis) will remain directors
of the Surviving Corporation and, at the Effective Time, six current directors
of Chancellor (Messrs. Hicks, Dinetz, Neuman, Stuart, Massey and Marcus) and one
other person mutually acceptable to Evergreen and Chancellor shall become
directors of the Surviving Corporation. Each Surviving Corporation director will
hold office from the Effective Time until the annual meeting of shareholders of
the Surviving Corporation in the year set forth in the Merger Agreement. See
"Evergreen Proposals -- Evergreen Proposal 2: Election of Directors -- Surviving
Corporation Board of Directors."
EXECUTIVE OFFICERS
The initial executive officers of the Surviving Corporation at the
Effective Time will be as set forth above in "-- The Merger
Agreement -- Directors and Officers."
EVERGREEN PROPOSALS
EVERGREEN PROPOSAL 1: APPROVAL OF THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY
At the Evergreen Annual Meeting, Evergreen's stockholders will be asked to
approve (i) the Merger Agreement and the transactions contemplated thereby, (ii)
the issuance of 0.9091 shares of Surviving Corporation Common Stock to
Chancellor stockholders for each share of Chancellor Common Stock outstanding
immediately prior to the consummation of the Merger, (iii) the assumption by
Evergreen of currently outstanding options to purchase shares of Chancellor
Class A Common Stock held by certain officers, directors, employees and
consultants of Chancellor and its subsidiaries and (iv) the amendment and
restatement of Evergreen's Amended and Restated Certificate of Incorporation.
See "The Merger" and "The Merger Agreement." Based on the number of shares of
Chancellor Common Stock and options to purchase shares of Chancellor Class A
Common Stock outstanding on July 28, 1997, Evergreen currently expects to issue
17,265,289 shares of Surviving Corporation Common Stock to holders of Chancellor
Common Stock and to assume options to purchase 1,989,543 shares of Chancellor
Class A Common Stock.
Approval of Evergreen Proposal No. 1 requires the affirmative vote of the
holders of a majority of the votes entitled to be cast in respect of the shares
of Evergreen Common Stock entitled to vote at the Evergreen Annual Meeting.
THE BOARD OF DIRECTORS OF EVERGREEN BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF EVERGREEN AND ITS STOCKHOLDERS, HAS BY UNANIMOUS VOTE APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAS RECOMMENDED
THAT STOCKHOLDERS VOTE IN FAVOR OF APPROVAL OF THE EVERGREEN MERGER PROPOSAL.
104
<PAGE> 114
EVERGREEN PROPOSAL 2: ELECTION OF DIRECTORS
EVERGREEN BOARD OF DIRECTORS
<TABLE>
<S> <C>
Scott K. Ginsburg Mr. Ginsburg has been Chairman of the Board of
Chairman of the Board and Evergreen since 1990. He has been Chief Executive
Chief Executive Officer Officer and a director of Evergreen since 1988. Mr.
Director since 1988 Ginsburg was President of Evergreen from 1988 to 1993
Member of the Executive and Nominating and held various positions with H&G Communications,
Committees of the Board of Directors. Inc. from 1987 to 1988. Mr. Ginsburg entered the
Age: 44 radio broadcasting business in 1983.
James E. de Castro Mr. de Castro has been President of Evergreen since
President and Chief Operating Officer 1993 and Chief Operating Officer and a director since
Director since 1989 1989. From 1987 to 1988, Mr. de Castro held various
Member of the Executive Committee positions with H&G Communications, Inc. and
of the Board of Directors. predecessor entities. From 1981 to 1989 Mr. de Castro
Age: 44 was general manager of radio stations WLUP-FM and
WLUP-AM (now known as WMVP-AM) in Chicago, and from
1989 to 1992 Mr. de Castro was general manager of
radio station KKBT-FM in Los Angeles.
Matthew E. Devine Mr. Devine has been an Executive Vice President of
Executive Vice President, Evergreen since 1993, Chief Financial Officer and
Chief Financial Officer and Treasurer Treasurer of Evergreen since 1988 and a director
Director since 1989 since 1989.
Member of the Executive Committee
of the Board of Directors.
Age: 48
Kenneth J. O'Keefe Mr. O'Keefe has been Executive Vice President of
Executive Vice President of Operations Operations of Evergreen since February of 1996 and a
Director since 1996 director since May of 1996. Prior to joining the
Age: 42 Company in 1996, Mr. O'Keefe was a director, Chief
Financial Officer and Executive Vice President of
Pyramid Communication, Inc. ("Pyramid") from March
1994 until Evergreen's acquisition of Pyramid on
January 17, 1996. Mr. O'Keefe served in various
capacities with Pyramid or predecessor entities
during the five-year period prior to his joining
Evergreen in 1996.
Joseph M. Sitrick Mr. Sitrick has served as a director of Evergreen
Director since 1988 since 1988. Mr. Sitrick is a Vice President with
Member of the Audit and Compensation Blackburn & Company, Incorporated, a media brokerage
Committees of the Board of Directors. firm, which he joined in 1958.
Age: 75
Thomas J. Hodson In 1994, Mr. Hodson became President of Columbia
Director since 1992 Falls Aluminum Company. He had been a Vice President
Member of the Audit, Nominating and of Stephens Inc. from 1986 through 1993. Mr. Hodson
Compensation Committees of the Board of has been a director of Evergreen since 1992.
Directors.
Age: 53
</TABLE>
105
<PAGE> 115
<TABLE>
<CAPTION>
<S> <C>
Perry J. Lewis Mr. Lewis was the Chairman of Broadcasting Partners,
Director since 1995 Inc. ("BPI") from its inception in 1988 until its
Member of the Nominating and Compensation merger with Evergreen in 1995 and was Chief Executive
Committees of the Board of Directors. Officer of BPI from 1993 to 1995. Mr. Lewis has been
Age: 59 a director of Evergreen since Evergreen acquired BPI
in 1995. Mr. Lewis is a founder of Morgan, Lewis,
Githens & Ahn ("MLG&A"), an investment banking and
leveraged buyout firm which was established in 1982.
Mr. Lewis serves as a director of Aon Corporation,
ITI Technologies, Inc., Gradall Industries, Inc. and
Stuart Entertainment, Inc.
Eric L. Bernthal Mr. Bernthal has been a director of Evergreen since
Director since 1996 1996. Mr. Bernthal has been a partner with the law
Age: 50 firm of Latham & Watkins, Washington, D.C., regular
counsel to Evergreen, since 1986.
</TABLE>
Nominees
The Evergreen Board of Directors presently comprises eight directors. The
Evergreen Board of Directors has nominated for re-election as directors at the
Evergreen Annual Meeting the eight incumbent directors listed above in
"Evergreen Board of Directors." Unless otherwise instructed, the proxy holders
will vote the proxies received by them for Messrs. Ginsburg, de Castro, Devine,
O'Keefe, Sitrick, Hodson, Lewis and Bernthal as directors of Evergreen. If
elected, Messrs. Ginsburg, de Castro, Devine, O'Keefe, Sitrick, Hodson, Lewis
and Bernthal have each consented to serve as a director for a term expiring at
Evergreen's 1998 Annual meeting of stockholders and until their respective
successors are elected and qualified, provided, however, that four directors,
Messrs. Devine, Sitrick, O'Keefe and Bernthal, have each advised Evergreen that
they will resign upon consummation of the Merger as contemplated in the Merger
Agreement. See "-- Surviving Corporation Board of Directors."
If any of the nominees should not be available for election, shares
represented by proxies in the accompanying form will be voted for such other
person as the management of Evergreen may select. The Evergreen Board of
Directors has no reason to believe that any nominee named above will be
unavailable for election.
Further information with respect to each nominee is set forth under the
preceding section entitled "Evergreen Board of Directors."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL OF THE
NOMINEES NAMED HEREIN.
SURVIVING CORPORATION BOARD OF DIRECTORS
Four Evergreen directors (Messrs. Devine, O'Keefe, Sitrick and Bernthal)
have advised Evergreen that, assuming such director's re-election as a director
at the Evergreen Annual Meeting, each such director will resign as a director of
Evergreen effective upon the Effective Time. Additionally, effective upon the
Effective Time, six current directors of Chancellor will become directors of the
Surviving Corporation. It is anticipated that one additional person mutually
acceptable to Evergreen and Chancellor will serve on the Board of Directors of
the Surviving Corporation. Upon consummation of the Merger, the Board of
Directors of the Surviving Corporation will comprise eleven directors who will
serve for terms which are staggered to provide for the election of approximately
one third of the Surviving Corporation Board members each year. "See "The Merger
Agreement -- Directors and Officers" and "Description of Surviving Corporation
Capital Stock."
106
<PAGE> 116
The following table sets forth the names of each person who will be a
director of Surviving Corporation immediately following the Effective Time,
their current position with Evergreen or Chancellor, as appropriate, and their
contemplated term as a director of Surviving Corporation. For further
biographical information with respect to persons who are presently directors of
Chancellor and who will become directors of Surviving Corporation, see
Chancellor's Annual Report on Form 10-K, as amended on Form 10-K/A, incorporated
herein by reference. As indicated above, it is anticipated that one additional
person mutually acceptable to Evergreen and Chancellor will serve on the Board
of Directors of the Surviving Corporation.
<TABLE>
<CAPTION>
NAME CURRENT POSITION TERM TO EXPIRE
---- ---------------- --------------
<S> <C> <C>
PRESENT EVERGREEN DIRECTORS:
Scott K. Ginsburg Chairman of the Board and Chief Executive Officer 2000
James E. de Castro Director, President and Chief Operating Officer 1999
Perry J. Lewis Director 1998
Thomas J. Hodson Director 2000
PRESENT CHANCELLOR DIRECTORS:
Thomas O. Hicks Chairman of the Board 2000
Steven Dinetz Director, President and Chief Executive Officer 1999
Eric C. Neuman Director 1998
John H. Massey Director 2000
Jeffrey A. Marcus Director 1999
Lawrence D. Stuart, Jr. Director 1999
</TABLE>
EVERGREEN BOARD OF DIRECTORS AND COMMITTEES
The Evergreen Board of Directors comprises eight directors, four of whom
are not officers or employees of Evergreen. The Evergreen Board of Directors met
eight times in 1996. Each of the current directors who was then in office
attended at least 75% of the aggregate number of meetings of the Evergreen Board
of Directors and all committees of the Evergreen Board of Directors on which
such director served in 1996.
The Evergreen Board of Directors currently has a Compensation Committee, an
Audit Committee, an Executive Committee and a Nominating Committee.
The Compensation Committee comprises three directors, Messrs. Hodson, Lewis
and Sitrick. The Compensation Committee is charged with reviewing certain of
Evergreen's compensation programs, making recommendations to the Evergreen Board
of Directors with respect to compensation, and administering Evergreen's stock
option plans. The Compensation Committee met three times in 1996.
The Audit Committee comprises three directors who are not officers or
employees of Evergreen, Messrs. Sitrick, Hodson and Lewis, and is charged with
reviewing Evergreen's internal auditing procedures and accounting controls, and
considering the selection and independence of Evergreen's outside auditors. The
Audit Committee met one time in 1996.
The Executive Committee comprises three directors, Messrs. Ginsburg, de
Castro and Devine, and is charged with reviewing certain of Evergreen's policies
and strategies and making appropriate recommendations to the Board of Directors.
The Executive Committee did not meet formally in 1996.
The Nominating Committee comprises three directors, Messrs. Ginsburg,
Hodson and Lewis. The Nominating Committee is charged with making
recommendations to the Board of Director with respect to the nomination of
directors. The Nominating Committee met one time in 1996.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires Evergreen's directors, executive
officers and holders of more than 10% of the Evergreen Class A Common Stock or
Evergreen's formerly outstanding $3.00 convertible exchangeable preferred stock
to file with the Commission initial reports of ownership and reports of changes
in ownership of any equity securities of Evergreen. To Evergreen's knowledge,
for the year ended December 31, 1996, all Section 16(a) filing requirements
applicable to its executive officers, directors and holders of more
107
<PAGE> 117
than 10% of the Evergreen Class A Common Stock or Evergreen's formerly
outstanding $3.00 convertible exchangeable preferred stock were satisfied.
COMPENSATION OF DIRECTORS
Directors who are also officers of Evergreen receive no additional
compensation for their services as directors. Effective for the 1997 fiscal
year, directors of Evergreen who are not officers will receive (i) a fee of
$12,000 per annum, (ii) a $1,000 fee for attendance at meetings or, if
applicable, a $500 fee for attendance at meetings by telephone, (iii) a $500 fee
for attendance at a committee meeting held on the same day as a regularly
scheduled meeting and (iv) a $750 fee for attendance at a committee meeting held
on a day other than a regularly scheduled meeting day. Directors of Evergreen
are also reimbursed for travel expenses and other out-of-pocket costs incurred
in connection with such meetings. Additionally, all non-employee directors of
Evergreen in office on the day of Evergreen's Annual Meeting are entitled to an
award of options to purchase 7,500 shares of Evergreen Class A Common Stock at
an exercise price equal to the fair market value of such shares on the date of
grant.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth all compensation, including bonuses, stock
option awards and other payments, paid or accrued by Evergreen for the three
fiscal years ending December 31, 1996, to the individuals serving as Evergreen's
Chief Executive Officer and each of Evergreen's other executive officers serving
in such capacity at the end of the last completed fiscal year whose total annual
salary and bonus exceeded $100,000 during the fiscal year ended December 31,
1996. Each of these individuals has been and continues to be an employee of
Evergreen, and the compensation amounts in the following tables represent all
compensation paid to each such individual in connection with his or her position
with Evergreen and its subsidiaries taken as a whole.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION --------------------------------------
-------------------------------------- SECURITIES
NAME AND OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) STOCK AWARDS OPTIONS PAYOUTS COMPENSATION
------------------ ---- -------- -------- --------------- ------------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Scott K. Ginsburg.... 1996 $750,000 $956,000 -- -- 187,500 -- $9,776(2)
Chairman and Chief 1995 650,000 -- -- -- -- -- 7,663(2)
Executive Officer 1994 574,000 50,000 -- -- -- 11,020(2)
James E. de Castro... 1996 $750,000 $704,000 -- -- 37,500 -- $2,455(2)
President and Chief 1995 650,000 125,000 -- -- 150,000 -- 2,455(2)
Operating Officer 1994 500,000 50,000 -- -- 75,000 -- 27,455(3)
Matthew E. Devine.... 1996 $300,000 $352,000 -- -- 18,750 -- --
Executive Vice 1995 275,000 63,000 -- -- 75,000 -- --
President, Chief 1994 194,000 25,000 -- -- 75,000 -- --
Financial Officer,
and
Treasurer
Kenneth J. O'Keefe... 1996 $250,000(4) $210,000 -- -- 150,000 -- --
Executive Vice 1995 -- -- -- -- -- -- --
President Operations 1994 -- -- -- -- -- -- --
</TABLE>
- ---------------
(1) The aggregate annual amount of prerequisites and other personal benefits,
securities or property does not exceed $50,000 or 10% of the total of the
annual salary and bonus for the named officer.
(2) Payment of term life insurance policy.
(3) Includes payment of a term life insurance policy and payments to Mr. de
Castro as compensation to offset increased costs and other expenses
associated with Mr. de Castro's temporary relocation to Los Angeles,
California, undertaken at the request of Evergreen. These amounts were
$2,455 and $25,000, respectively.
(4) Represents compensation for the period beginning March 1, 1996, when Mr.
O'Keefe joined Evergreen.
108
<PAGE> 118
Option Grants in Last Fiscal Year. The following table sets forth
information regarding options to purchase Evergreen Class A Common Stock granted
by Evergreen to its Chief Executive Officer and the other executive officers
named in the Summary Compensation Table during the 1996 fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
---------------------------------------------- --------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO GRANT DATE
GRANTED EMPLOYEES IN EXERCISE OR BASE PRESENT VALUE
NAME (#)(1)(2) FISCAL YEAR PRICE ($/SHARE) EXPIRATION DATE ($)(4)
---- ---------- ------------ ---------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Scott K. Ginsburg........ 150,000 25.5% $21.33(2) 12/31/05 $1,792,500
37,500 6.4% 24.50(3) 12/31/05 478,125
James E. de Castro....... 37,500 6.4% 24.50(3) 12/31/04 436,875
Matthew E. Devine........ 18,750 3.2% 24.50(3) 12/31/04 218,438
Kenneth J. O'Keefe....... 150,000 25.5% 21.33(2) 03/01/06 1,545,000
</TABLE>
- ---------------
(1) Represents options to purchase shares of Evergreen Class A Common Stock
granted under Evergreen's 1995 Stock Option Plan for Executive Officers and
Key Employees (the "1995 Stock Option Plan"). The options awarded to Mr.
Ginsburg are exercisable in whole or part beginning on January 1, 2001, and
expire on December 31, 2005. The options awarded to Mr. de Castro and Mr.
Devine are exercisable in whole or part beginning January 1, 2000, and
expire on December 31, 2004. The options awarded to Mr. O'Keefe are
exercisable in whole or part beginning February 28, 1999, and expire on
March 1, 2006. The Compensation Committee of Evergreen under certain
circumstances has the discretion to accelerate the exercisability of the
options in connection with the occurrence of a change in control of
Evergreen. The options may expire earlier upon the occurrence of certain
merger or consolidation transactions involving Evergreen. Evergreen is not
required to issue and deliver any certificate for shares of Evergreen Class
A Common Stock purchased upon exercise of the option or any portion thereof
prior to fulfillment of certain conditions, including the completion of
registration or qualification of such shares of Evergreen Class A Common
Stock under federal or state securities laws and the payment to Evergreen of
all amounts required to be withheld upon exercise of the options under any
federal, state or local tax law. The holder of an option has no rights or
privileges of a stockholder in respect of any shares of Evergreen Class A
Common Stock purchasable upon exercise of the options unless and until
certificates representing such shares shall have been issued by Evergreen to
such holder. Once exercisable, the options are exercisable by the holder or,
upon the death of such holder, by his personal representatives or by any
person empowered to do so under such holder's will or under the applicable
laws of descent and distribution. The options are not transferable except by
will or by the applicable laws of descent and distribution.
(2) Represents the estimated fair value of Evergreen Class A Common Stock on
December 29, 1995, the last trading day before December 31, 1995, the date
of the grant.
(3) Represents the estimated fair value of Evergreen Class A Common Stock on
December 30, 1996, the last trading day before December 31, 1996, the date
of the grant.
(4) The present value of each grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: dividend yield of 0% for all years; expected volatility of
44.5%; risk-free interest rate of 6.0% and expected life of seven years.
109
<PAGE> 119
Aggregated Option Exercises in Last Fiscal Year and Year-End Values The
following table sets forth information concerning option exercises in the year
ended December 31, 1996 by Evergreen's Chief Executive Officer and the other
executive officers named in the Summary Compensation Table, and the value of
each such executive officer's unexercised options at December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Scott K. Ginsburg.......... -- -- -- 187,500 -- 475,500
James E. de Castro......... 15,000 418,050 547,500 187,500 12,608,775 475,500
Matthew E. Devine.......... -- -- 150,000 93,750 2,874,000 237,750
Kenneth J. O'Keefe......... -- -- -- 150,000 -- 475,500
</TABLE>
- ---------------
(1) Based upon a per share price for Evergreen Class A Common Stock of $24.50.
This price represents the closing price for the Evergreen Class A Common
Stock on the Nasdaq National Market System on December 30, 1996.
EMPLOYMENT AGREEMENTS
On November 27, 1995, Evergreen entered into a new employment agreement
with Mr. de Castro that has a term through December 31, 1999 and provides for an
annual base salary beginning at $650,000 in 1995 and increasing incrementally to
$900,000 in 1999. In addition, the agreement provides for Mr. de Castro to
receive an annual incentive bonus based upon a percentage of the amount by which
Evergreen exceeds certain annual performance targets as defined in the
agreement. The agreement also provides that Mr. de Castro is eligible for
certain options to purchase Class A Common Stock. Upon execution of the
agreement, Mr. de Castro was awarded options to purchase 150,000 shares of Class
A Common Stock. Mr. de Castro is eligible to receive over the term of the
agreement options to purchase up to an additional 150,000 shares of Class A
Common Stock, subject to continued employment and satisfaction of other
conditions. The agreement terminates upon the death of Mr. de Castro and may be
terminated by Evergreen upon the disability of Mr. de Castro, for or without
"cause" or upon a "change in control" of Evergreen (as defined in the
agreement). The agreement may be terminated by Mr. de Castro in the event of a
change in control of Evergreen, in which event Mr. de Castro is entitled to
receive (i) an accelerated grant of all options to which he otherwise would have
been entitled over the term of the agreement, (ii) immediate payment of the base
salary which he otherwise would have earned over the term of the agreement,
(iii) a pro-rated annual incentive bonus and (iv) $1,250,000. During the term of
the agreement, Mr. de Castro is prohibited from engaging in certain activities
competitive with the business of Evergreen. However, with the approval of
Evergreen, Mr. de Castro may engage in activities not directly competitive with
the business of Evergreen as long as such activities do not unreasonably
interfere with Mr. de Castro's employment obligations.
On November 28, 1995, Evergreen entered into a new employment agreement
with Mr. Devine that has a term through December 31, 1999 and provides for an
annual base salary beginning at $275,000 in 1995 and increasing incrementally to
$375,000 in 1999. In addition, the agreement provides for Mr. Devine to receive
an annual incentive bonus based upon a percentage of the amount by which
Evergreen exceeds certain annual performance targets as defined in the
agreement. The agreement also provides that Mr. Devine is eligible for certain
options to purchase Class A Common Stock. Upon execution of the agreement, Mr.
Devine was awarded options to purchase 75,000 shares of Class A Common Stock.
Mr. Devine is eligible to receive over the term of the agreement options to
purchase up to an additional 75,000 shares of Class A Common Stock, subject to
continued employment and satisfaction of other conditions. The agreement
terminates upon the death of Mr. Devine and may be terminated by Evergreen upon
the disability of Mr. Devine, for or without "cause" or upon a "change in
control" of Evergreen (as defined in the agreement). The agreement may be
terminated by Mr. Devine in the event of a change in control of Evergreen, in
which event Mr. Devine is entitled to receive (i) an accelerated grant of all
options to which he otherwise would have been entitled over the term of the
agreement, (ii) immediate payment of the base salary which he otherwise would
have earned
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over the term of the agreement, (iii) a pro-rated annual incentive bonus and
(iv) $750,000. During the term of the agreement, Mr. Devine is prohibited from
engaging in certain activities competitive with the business of Evergreen.
However, with the approval of Evergreen, Mr. Devine may engage in activities not
directly competitive with the business of Evergreen as long as such activities
do not unreasonably interfere with Mr. Devine's employment obligations.
In February of 1996, Evergreen entered into an employment agreement with
Mr. O'Keefe that has a term through February 28, 1999 and provides for an annual
base salary beginning at $300,000 in 1996 and increasing incrementally to
$350,000 in 1998. Mr. O'Keefe was nominated for election to the Board of
Directors of Evergreen pursuant to the terms of his employment agreement. In
addition, the agreement provides for Mr. O'Keefe to receive an annual incentive
bonus based upon a percentage of the amount by which Evergreen exceeds certain
annual performance targets as defined in the agreement. The agreement also
provides that Mr. O'Keefe is eligible for certain options to purchase Class A
Common Stock. Pursuant to the agreement, Mr. O'Keefe was awarded options to
purchase 150,000 shares of Class A Common Stock. The stock options vest and
become exercisable subject to Mr. O'Keefe's continued employment by Evergreen
through February 28, 1999. However, Mr. O'Keefe may be eligible to exercise the
options on a pro rata basis in the event he is terminated prior to February 28,
1999 upon certain events specified in his employment agreement, including Mr.
O'Keefe's death or disability, a change in control of Evergreen, termination
without cause and a material breach of the employment agreement by Evergreen
leading to the resignation of Mr. O'Keefe. The agreement terminates upon the
death of Mr. O'Keefe and may be terminated by Evergreen upon the disability of
Mr. O'Keefe or for or without "cause" (as defined in the agreement). During the
term of the agreement, Mr. O'Keefe is prohibited from engaging in certain
activities competitive with the business of Evergreen. However, with the
approval of Evergreen, Mr. O'Keefe may engage in activities not directly
competitive with the business of Evergreen as long as such activities do not
materially interfere with Mr. O'Keefe's employment obligations. On January 29,
1997, the Compensation Committee of the Board of Directors of Evergreen
authorized the negotiation, execution and delivery of an amended employment
agreement for Mr. O'Keefe in order to make certain provisions of Mr. O'Keefe's
employment agreement comparable to those of Mr. de Castro and Mr. Devine, and
this amendment is currently being finalized.
On April 15, 1996, Evergreen entered into a new employment agreement with
Mr. Ginsburg, Chairman of the Board and Chief Executive Officer of Evergreen,
that has a term that extends through December 31, 2000 and provides for an
initial annual base salary of $750,000 in 1996 which increases incrementally
each year to $950,000 in 2000. In addition, the agreement provides for Mr.
Ginsburg to receive an annual incentive bonus based upon a percentage of the
amount by which Evergreen exceeds certain annual performance targets which are
defined in the agreement. The agreement also provides that Mr. Ginsburg is
eligible to receive options to purchase Class A Common Stock. Upon execution of
the Agreement, Mr. Ginsburg was awarded an option to purchase 150,000 shares of
Class A Common Stock at an exercise price of $21.33 per share (representing the
last sale price of the Class A Common Stock on the Nasdaq National Market on
December 29, 1995). Mr. Ginsburg is eligible to receive, over the term of the
agreement, options to purchase up to an additional 187,500 shares of Class A
Common Stock, subject to continued employment and satisfaction of other
conditions specified in the agreement. Upon execution of the agreement, Mr.
Ginsburg also received a one time bonus in the amount of $1,000,000 in
consideration of his extraordinary services to Evergreen including Evergreen's
strong operating performance, broadcast properties acquisition program and Mr.
Ginsburg's other activities on behalf of Evergreen. Under the agreement,
Evergreen also agreed to make to Mr. Ginsburg a ten-year unsecured loan in the
amount of $3,500,000 bearing interest at a fixed rate equal to the applicable
Federal long-term rate in effect on the date on which the loan is made. The
terms of the loan will require Mr. Ginsburg to repay principal of the loan in
five equal annual installments, commencing on the sixth anniversary of the date
on which the loan is made. As of March 1, 1997, Mr. Ginsburg has borrowed
approximately $824,000 under the loan. The agreement may be terminated by Mr.
Ginsburg in the event of a "change in control" of Evergreen, in which event Mr.
Ginsburg is entitled to receive (i) an accelerated grant of all options to which
he otherwise would have been entitled over the term of the agreement, (ii)
immediate payment of the base salary which he otherwise would have earned over
the term of the agreement and (iii) a pro-rated annual incentive bonus. The
agreement may be terminated by Evergreen upon the permanent disability of Mr.
Ginsburg, in which event, Mr. Ginsburg shall receive (i) base salary for one
year (payable in
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installments) from the date of termination at the level in effect on the date of
termination and (ii) a pro-rated annual incentive bonus. The agreement may also
be terminated by Evergreen for or without cause, provided that, in the event
such termination is without cause, Mr. Ginsburg shall receive (i) grants of
options on the same schedule and under the same terms as if such termination had
occurred on December 31, 2000, (ii) base salary, payable in installments through
December 31, 2000, in the amounts to which Mr. Ginsburg would have been entitled
if such termination had occurred on December 31, 2000, and (iii) a pro-rated
annual incentive bonus. The agreement terminates upon the death of Mr. Ginsburg,
in which event, Mr. Ginsburg's estate or legal representative shall receive the
amounts that would have been payable to Mr. Ginsburg in the event of termination
for reason of his permanent disability (set forth above). During the term of
this agreement, Mr. Ginsburg is prohibited from engaging in certain activities
competitive with the business of Evergreen.
On February 19, 1997, Evergreen entered into a memorandum of agreement with
Mr. Ginsburg in connection with Evergreen's entering into the Chancellor Merger
Agreement. For a description of the terms of the Memorandum of Agreement, see
"The Merger -- Interests of Certain Persons in the Merger --
Evergreen -- Employment Agreement."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Compensation Committee comprises Messrs. Sitrick, Lewis and Hodson. No
director serving as a member of the Compensation Committee is a current or
former officer or employee of Evergreen or its subsidiaries.
THE FOLLOWING COMPENSATION COMMITTEE REPORT AND THE PERFORMANCE GRAPH THAT
APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING
MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENT SO FILED.
REPORT OF THE COMPENSATION COMMITTEE OF THE EVERGREEN
BOARD OF DIRECTORS
The Compensation Committee is responsible for reviewing the compensation
paid to Evergreen's executive officers and making recommendations to the
Evergreen Board of Directors with respect to such compensation. The Evergreen
Board of Directors approves all compensation paid to executive officers, with
the exception of grants of stock options which are made by the Compensation
Committee discharging the functions of the Stock Option Committee as provided in
Evergreen's 1993 Stock Option Plan for Executive Officers and Key Employees and
1995 Stock Option Plan for Executive Officers and Key Employees.
OVERALL COMPENSATION OBJECTIVES
Evergreen is one of the largest owners and operators of radio stations in
the United States. Evergreen's overall strategy is to acquire and operate radio
stations in the nation's largest radio markets. In furtherance of this strategy,
Evergreen's compensation strategies are designed to attract and to retain the
best possible executive talent. Compensation packages to executive officers
include a base salary that recognizes individual performance and cash and
equity-based incentives designed to align the financial interests of executives
with those of the stockholders. During the past two years, Evergreen has entered
into long-term employment agreements with Messrs. Ginsburg, de Castro, Devine
and O'Keefe. Each agreement provides for a base salary, annual cash incentive
bonus and the award of options to purchase Evergreen Class A Common Stock. In
connection with the Merger, Evergreen has entered into a Memorandum of Agreement
with Mr. Ginsburg with respect to certain modifications to Mr. Ginsburg's
employment agreement which would take effect upon consummation of the Merger.
See "The Merger -- Interests of Certain Persons In the
Merger -- Evergreen -- Employment Agreement."
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<PAGE> 122
PRINCIPAL COMPONENTS OF EXECUTIVE COMPENSATION
In 1996, Evergreen entered into long-term employment agreements with
Messrs. Ginsburg and O'Keefe. In setting the terms of Mr. Ginsburg's employment
agreement, the Compensation Committee considered Mr. Ginsburg's extraordinary
leadership of Evergreen for nearly ten years and his overall contribution to the
growth of Evergreen into one of the largest owners and operators of radio
stations in the United States. The Compensation Committee considered such
factors as Mr. Ginsburg's role in identifying and completing the acquisition of
attractive broadcast properties on favorable terms to Evergreen, Evergreen's
strong operating performance, and the increase in shareholder value to
Evergreen's shareholders during Mr. Ginsburg's term as Chairman of the Board and
Chief Executive Officer. Evergreen also provides to its executive officers
medical, pension and other fringe benefits generally available to Evergreen
employees.
Base salary for Evergreen executive officers under their respective
agreements was determined by evaluating the responsibilities of the position
held by, and the personal experience level of, the specific individual. In
determining levels of base salary, the Compensation Committee also decided to
set an appropriate level of base compensation to motivate and retain Evergreen's
executive officers in light of Evergreen's relative position to its competition
in the radio broadcast industry and the performance standards established for
such individuals. Under the terms of their employment agreements in effect for
1996, Evergreen's executive officers (including Mr. Ginsburg) were each eligible
for an annual cash incentive bonus based on Evergreen's performance during the
year as measured by broadcast cash flow targets being met or exceeded.
Additionally, each of Evergreen's executive officers (including Mr. Ginsburg)
are eligible for annual awards of stock options pursuant to the terms of their
employment agreements. In determining the level of stock option award for
Evergreen's executive officers, the Committee had available the compensation
history of the executive officers, the level of stock awards held by individuals
performing similar functions for Evergreen's competitors and the long-term goals
of Evergreen. The Compensation Committee's objective in setting the terms of
stock option awards was to incentivize the continued employment of those
executive officers deemed key to Evergreen and its long-term objectives.
The decisions of the Board of Directors and the Compensation Committee with
respect to compensation paid to Evergreen's executive officers (including Mr.
Ginsburg) in 1996 were based primarily on contractual commitments, including
with respect to payment of annual incentive bonus payments. Mr. Ginsburg's base
compensation for 1996, as provided for in Mr. Ginsburg's employment agreement,
was $750,000. Mr. Ginsburg received an annual incentive bonus for 1996 in the
amount of $756,000, which was determined based upon the extent to which
Evergreen's 1996 broadcast cash flow exceeded the previously determined target
amount for such period. Mr. Ginsburg also received in 1996 two separate grants
of options to purchase Evergreen Class A Common Stock as provided for in Mr.
Ginsburg's employment agreement -- options to purchase 150,000 shares of
Evergreen Class A Common Stock granted upon execution of Mr. Ginsburg's
employment agreement and options to purchase 37,500 shares of Evergreen Class A
Common Stock granted on December 31, 1996. None of the options granted to Mr.
Ginsburg in 1996 are exercisable prior to January 1, 2001.
Section 162(m) of the Internal Revenue Code. Section 162(m) of the Code
limits deductions for certain executive compensation in excess of $1 million.
Certain types of compensation in excess of $1 million are deductible only if
performance goals are specified in detail by a compensation committee comprised
solely of two or more outside directors, payments are approved by a majority
vote of the stockholders prior to payment of such compensation and after the
material terms of the compensation are disclosed to the stockholders, and the
compensation committee certifies that the performance goals were in fact
satisfied. During 1995, the Compensation Committee considered the compensation
arrangements of Evergreen's executive officers in light of the requirements of
Section 162(m).
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While the Compensation Committee will continue to give due consideration to
the deductibility of compensation payments on compensation arrangements with
Evergreen's executive officers, the Compensation Committee will make its
compensation decision based upon an overall determination of what it believes to
be in the best interests of Evergreen and its stockholders, and deductibility
will be only one among a number of factors used by the Compensation Committee in
making its compensation decisions. Accordingly, Evergreen may enter into
compensation arrangements in the future under which payments are not deductible
under Section 162(m).
COMPENSATION COMMITTEE
Thomas J. Hodson
Perry J. Lewis
Joseph M. Sitrick
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists information concerning the beneficial ownership
of Evergreen's Common Stock on March 1, 1997 by (i) each person known to
Evergreen to own beneficially more than 5% of any class of the Evergreen Common
Stock, (ii) each director and executive officer of Evergreen and (iii) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------ ------------------------ PERCENT OF TOTAL
PERCENT PERCENT VOTING POWER AS
NAME OF STOCKHOLDER SHARES(1) OF CLASS(1) SHARES(1) OF CLASS(1) ADJUSTED(1)
------------------- --------- ----------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Scott K. Ginsburg(2)(3)....... -- --% 3,114,066 100.0% 44.3%
James E. de Castro(2)......... 497,500(4) 1.3% -- -- *
Matthew E. Devine(2).......... 150,000(4) * -- -- *
Joseph M. Sitrick(5).......... 99,289(6) * -- -- *
Perry J. Lewis(7)............. 59,274(8) * -- -- *
Thomas J. Hodson(9)........... 7,500(4) * -- -- *
Kenneth J. O'Keefe(10)........ 2,000 * -- -- *
Eric L. Bernthal(11).......... 2,500(4) * -- -- *
J. & W. Seligman & Co.,
Incorporated(12)............ 2,655,449 6.8% -- -- 3.8%
FMR Corp.(13)................. 2,581,012 6.6% -- -- 3.7%
American Century
Companies(14)............... 2,102,500 5.4% -- -- 3.0%
Putnam Investments,
Inc.(15).................... 5,159,251 13.2% -- -- 7.3%
The Equitable Companies,
Incorporated(16)............ 3,769,800 9.6% -- -- 5.4%
All directors and executive
officers as a group (8
persons).................... 818,063 2.1% 3,114,066 100.0% 45.5%
</TABLE>
- ---------------
* Less than one percent (1%).
(1) The information as to beneficial ownership is based on statements furnished
to the Company by the beneficial owners. As used in this table, "beneficial
ownership" means the sole or shared power to vote, or direct the voting of
a security, or the sole or shared investment power with respect to a
security (i.e., the power to dispose of, or direct the disposition of). A
person is deemed as of any date to have "beneficial ownership" of any
security that such person has the right to acquire within 60 days after
such date. "Beneficial ownership" does not include the number of shares of
Evergreen Class A Common Stock issuable upon conversion of shares of
Evergreen Class B Common Stock, although shares of Evergreen Class B Common
Stock are freely convertible into shares of Evergreen Class A Common Stock.
For purposes of computing the percentage of outstanding shares held by each
person named above, any security that such person has the right to acquire
within 60 days of the date of calculation is
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deemed to be outstanding, but is not deemed to be outstanding for purposes
of computing the percentage ownership of any other person.
(2) The address of Mr. Ginsburg, Mr. Devine and Mr. de Castro is Evergreen
Media Corporation, 433 E. Las Colinas Boulevard, Irving, Texas 75039.
(3) The 3,114,065 shares of Evergreen Class B Common Stock held by Mr. Ginsburg
includes 7,220 shares of Evergreen Class B Common Stock held by Mr.
Ginsburg as custodian for his children.
(4) Consists of outstanding options to purchase Evergreen Class A Common Stock
awarded pursuant to Evergreen's various stock option plans.
(5) The address of Mr. Sitrick is Blackburn & Company, Incorporated, 201 N.
Union Street, Suite 340, Alexandria, Virginia, 22314.
(6) Includes 91,789 shares of Evergreen Class A Common Stock owned by Mr.
Sitrick and 7,500 options to purchase Evergreen Class A Common Stock
awarded pursuant to Evergreen's Non-Employee Director Stock Option Plan.
(7) The address of Mr. Lewis is MLGAL Partners, L.P., Two Greenwich Plaza,
Greenwich, Connecticut, 06830.
(8) Includes 51,774 shares of Evergreen Class A Common Stock owned by Mr. Lewis
and 7,500 options to purchase Evergreen Class A Common Stock awarded
pursuant to Evergreen's Non-Employee Director Stock Option Plan.
(9) The address of Mr. Hodson is Columbia Falls Aluminum Company, 12115 Hinson
Road, Little Rock, Arkansas, 72212.
(10) The address of Mr. O'Keefe is Evergreen Media Corporation, 99 Revere Beach
Parkway, Medford, Massachusetts, 02155.
(11) The address of Mr. Bernthal is Latham & Watkins, 1001 Pennsylvania Avenue,
N.W., Washington, D.C., 20004.
(12) The address of J. & W. Seligman & Co., Incorporated is 100 Park Avenue, New
York, New York, 10017. Share ownership for J. & W. Seligman & Co.,
Incorporated is based on the Schedule 13D filed by such person with the
Securities and Exchange Commission on February 12, 1997.
(13) The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts,
02109. Share ownership for FMR Corp. is based on the Schedule 13G filed by
such person with the Securities and Exchange Commission on February 11,
1997.
(14) The address of American Century Companies is 4500 Main Street, P.O. Box
418210, Kansas City, Missouri, 64141-9210. Share ownership for American
Century Companies, Inc. is based on the Schedule 13G filed by such person
with the Securities and Exchange Commission on February 5, 1997.
(15) The address of Putnam Investments, Inc. is One Post Office Square, Boston,
Massachusetts, 02109. Share ownership for Putnam Investments, Inc. is based
on the Schedule 13G, Amendment No. 1, filed by such person with the
Securities and Exchange Commission on January 29, 1997.
(16) The address of The Equitable Companies, Incorporated is 787 Seventh Avenue,
New York, New York 10019. Share ownership for The Equitable Companies,
Incorporated is based on the Schedule 13G, Amendment No. 1, filed by such
person with the Securities and Exchange Commission on January 10, 1997.
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<PAGE> 125
The following table lists information regarding anticipated beneficial
ownership of Surviving Corporation Common Stock immediately following
consummation of the Merger by directors and executive officers of the Surviving
Corporation and their affiliates, as well as all directors and executive
officers as a group.
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER SHARES PERCENT(1)
------------------- ------ ----------
<S> <C> <C>
Scott K. Ginsburg.......................................... 3,114,066(2) 5.2%
James E. de Castro......................................... 497,500(3) *
Steven Dinetz.............................................. 432,493(4) *
Matthew E. Devine.......................................... 150,000(5) *
Thomas O. Hicks............................................ 9,363,525(6) 15.7%
Perry J. Lewis............................................. 59,274(7) *
Thomas J. Hodson........................................... 7,500(8) *
Eric C. Neuman............................................. 909 *
John H. Massey............................................. 21,212(9) *
Jeffrey A. Marcus.......................................... 43,939(10) *
Lawrence D. Stuart, Jr. ................................... 4,955 *
Hicks Muse Affiliates...................................... 9,363,525(11) 15.7%
All directors and executive officers as a group............ 13,695,373(12) 22.6%
</TABLE>
- ---------------
* Less than one percent.
(1) Assumes that 59,507,371 primary shares of Surviving Corporation Common
Stock would be issued and outstanding immediately after consummation of the
Merger.
(2) Includes 7,200 shares that would be held by Mr. Ginsburg as custodian for
his children.
(3) Consists of options to purchase 497,500 shares.
(4) Includes (i) options to purchase 424,175 shares, (ii) 545 shares to be held
by an individual retirement account for the benefit of Mr. Dinetz and (iii)
500 shares to be held by Mr. Dinetz's daughter. Mr. Dinetz intends to
disclaim beneficial ownership of the shares of Surviving Corporation Common
Stock that would not be owned by him of record.
(5) Consists of options to purchase 150,000 shares.
(6) Includes 312,423 shares to be owned of record by Mr. Hicks, 173,376 shares
to be owned of record by Mr. Hicks as trustee for certain trusts of which
his children are beneficiaries and 3,050 shares to be owned of record by
Mr. Hicks as co-trustee of a trust for the benefit of unrelated parties.
Also includes 1,224,376 shares to be owned of record by the Chancellor
Business Trust and 7,650,289 shares to be owned by five limited
partnerships of which the ultimate general partners are entities controlled
by Mr. Hicks or Hicks Muse. Mr. Hicks is the controlling stockholder of
Hicks Muse and serves as Chairman of the Board, President, Chief Executive
Officer, Chief Operating Officer and Secretary of Hicks Muse. Accordingly,
Mr. Hicks may be deemed to be the beneficial owner of all or a portion of
the stock owned of record by such limited partnerships. Mr. Hicks intends
to disclaim beneficial ownership of shares of stock that will not be owned
of record by him.
(7) Consists of 51,774 shares to be owned of record by Mr. Lewis and options to
purchase 7,500 shares.
(8) Consists of options to purchase 7,500 shares.
(9) Consists of options to purchase 12,121 shares and 9,091 shares to be held
by Mr. Massey's wife as her separate property.
(10) Includes options to purchase 12,121 shares.
(11) Includes 312,423 shares to be owned of record by Thomas O. Hicks, 173,376
shares to be owned by Mr. Hicks as trustee for certain trusts of which his
children are beneficiaries, 3,050 shares to be owned of record by Mr. Hicks
as co-trustee of a trust for the benefit of unrelated parties, 1,224,376
shares to be owned of record by the Chancellor Business Trust and 7,650,289
shares to be owned of record by five limited partnerships of which the
ultimate general partners are entities controlled by Mr. Hicks or Hicks
Muse. Mr. Hicks is the controlling stockholder of Hicks Muse and serves as
Chairman of the Board,
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<PAGE> 126
President, Chief Executive Officer, Chief Operating Officer and Secretary
of Hicks Muse. Accordingly, Mr. Hicks may be deemed to be the beneficial
owner of all or a portion of the stock owned of record by such limited
partnerships. John R. Muse, Charles W. Tate, Jack D. Furst, Lawrence D.
Stuart, Jr., Michael J. Levitt and Alan B. Menkes are officers, directors
and minority stockholders of Hicks Muse and as such may be deemed to share
with Mr. Hicks the power to vote or dispose of shares of stock to be held
by such partnerships. Messrs. Hicks, Muse, Tate, Furst, Stuart, Levitt and
Menkes disclaim the existence of a group and each of them intend to
disclaim beneficial ownership of shares of stock that will not be owned of
record by him.
(12) Includes options to purchase 1,110,917 shares.
PERFORMANCE GRAPH
The following graph shows a comparison since Evergreen's initial public
offering on May 10, 1993, of the cumulative total stockholder return on (i)
Evergreen's Class A Common Stock; (ii) an index including all securities listed
on The Nasdaq Stock Market and (iii) a peer group of companies, measuring the
changes in common stock prices from May 11, 1993 through December 31, 1996. The
graph assumes an investment of $100 on May 11, 1993, and as required by the
Commission, all values shown assume the reinvestment of all dividends, if any,
and, in the case of the peer group, are weighed to reflect the market
capitalization of the component companies. The peer group consists of Clear
Channel Communications, Inc., EZ Communications, Inc., Emmis Broadcasting
Corporation, Infinity Broadcasting Corporation, Jacor Communications, Inc., Saga
Communications, Inc. and SFX Broadcasting, Inc.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD EVERGREEN MEDIA NASDAQ STOCK SELF-DETERMINED
(FISCAL YEAR COVERED) CORPORATION MARKET PEER GROUP
<S> <C> <C> <C>
12/31/91 85.3 40.2
12/31/92 99.2 66.1
12/31/93 102.2 113.9 170.1
12/30/94 100.7 111.4 188.5
12/29/95 184.2 157.5 321.8
12/31/96 215.8 193.7 464.7
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Eric L. Bernthal, who serves on the Board of Directors of Evergreen, is a
partner in the law firm of Latham & Watkins, regular legal counsel to Evergreen.
Under the terms of Evergreen's employment agreement with Mr. Ginsburg,
dated April 15, 1996, Evergreen has agreed to make to Mr. Ginsburg a ten-year
unsecured loan. For a discussion of the terms of the loan, see "Evergreen
Proposal 2: Election of Directors -- Employment Agreements."
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<PAGE> 127
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP served as the independent public accountants for
Evergreen for the year ended December 31, 1996, and the firm is a member of the
SEC Practice Section of the American Institute of Certified Public Accountants.
Representatives of KPMG Peat Marwick LLP will attend the Evergreen Annual
Meeting and will have an opportunity to make a statement if they so desire and
to respond to appropriate questions from stockholders.
In light of the pendency of the Merger and certain other considerations, to
date the Audit Committee of Evergreen has not made any selection or
recommendation as to the appointment of independent public accountants for the
year ending December 31, 1997.
EVERGREEN STOCKHOLDER PROPOSALS FOR 1998
Under the rules of the Commission, any stockholder proposal intended for
inclusion in the proxy material for the annual meeting of stockholders to be
held in 1998 must be received by Evergreen by May 1, 1998 to be eligible for
inclusion in such proxy material. Proposals should be addressed to Evergreen
Media Corporation (Chancellor Media Corporation, in the event that the Merger is
consummated), 433 East Las Colinas Boulevard, Suite 1130, Irving, Texas 75039,
Attention: Corporate Secretary. Proposals must comply with the proxy rules of
the Commission relating to stockholder proposals in order to be included in the
proxy materials.
Any stockholder who meets the requirements of the proxy rules under the
Exchange Act may nominate a candidate for director of Evergreen. Any such
nomination should be submitted in writing by notice delivered or mailed by
first-class United States mail, postage prepaid, to Evergreen Media Corporation
(Chancellor Media Corporation, in the event that the Merger is consummated), 433
E. Las Colinas Boulevard, Suite 1130, Irving, Texas 75039, Attention: Corporate
Secretary, and must be received by May 1, 1998. Any such notice shall set forth:
(a) the name and address of the stockholder who intends to make the nomination
and of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of common stock entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (c) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Commission, had the nominee been nominated, or intended to be nominated, by the
Evergreen Board; and (d) the consent of each nominee to serve as director of
Evergreen if so elected. The chairman of the meeting may refuse to acknowledge
the nomination of any person not made in compliance with the foregoing
procedure.
GENERAL
Evergreen's Annual Report for 1996, including consolidated financial
statements and other information, accompanies this Joint Proxy
Statement/Prospectus but does not form a part of the proxy soliciting material.
A complete list of the stockholders of record entitled to vote at the Evergreen
Annual Meeting will be open and available for examination by any stockholder,
for any purpose germane to the Evergreen Annual Meeting, between 9:00 a.m. and
5:00 p.m. at Evergreen's offices at 433 East Las Colinas Boulevard, Suite 1130,
Irving, Texas 75039, from August 22, 1997 through September 2, 1997 and at the
time and the place of the Evergreen Annual Meeting.
EVERGREEN WILL PROVIDE EACH OF ITS STOCKHOLDERS, WITHOUT CHARGE, UPON THE
WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF EVERGREEN'S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 (THE "1996 EVERGREEN FORM
10-K"), INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES
REQUIRED TO BE FILED WITH THE COMMISSION PURSUANT TO THE RULES PROMULGATED UNDER
THE EXCHANGE ACT. EXHIBITS TO THE 1996 EVERGREEN FORM 10-K WILL NOT BE SUPPLIED
UNLESS SPECIFICALLY REQUESTED, FOR WHICH THERE MAY BE A REASONABLE CHARGE. THOSE
STOCKHOLDERS WISHING TO OBTAIN A COPY OF THE 1996 EVERGREEN FORM 10-K
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SHOULD SUBMIT A WRITTEN REQUEST TO MATTHEW E. DEVINE, SECRETARY, EVERGREEN MEDIA
CORPORATION, 433 EAST LAS COLINAS BOULEVARD, SUITE 1130, IRVING, TEXAS 75039.
In addition to solicitation by mail, proxies may be solicited in person, or
by telephone or telegraph, by directors and by officers and other regular
employees of Evergreen. Evergreen has also retained Georgeson & Company, Inc.,
to assist in certain distribution services related to this Joint Proxy
Statement/Prospectus for a fee not to exceed $8,500 plus out-of-pocket expenses.
All expenses in connection with the preparation of proxy material and the
solicitation of proxies will be borne by Evergreen.
CHANCELLOR MERGER PROPOSAL
At the Chancellor Special Meeting, Chancellor's stockholders will be asked
to approve the Chancellor Merger Proposal. See "The Merger" and "The Merger
Agreement."
Approval of the Chancellor Merger Proposal requires the affirmative vote,
in person or by proxy, of the holders of a majority of all votes entitled to be
cast by all holders of the shares of Chancellor Common Stock outstanding on the
record date for the Chancellor Special Meeting.
THE BOARD OF DIRECTORS OF CHANCELLOR BELIEVES THAT THE MERGER IS IN THE
BEST INTERESTS OF THE STOCKHOLDERS OF CHANCELLOR, HAS BY UNANIMOUS VOTE APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND HAS
RECOMMENDED THAT THE STOCKHOLDERS VOTE IN FAVOR OF APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
EXPERTS
The consolidated financial statements of Evergreen Media Corporation and
subsidiaries, the combined financial statements of WMZQ Inc. and Viacom
Broadcasting East Inc., the financial statements of WDRQ Inc., the combined
financial statements of Riverside Broadcasting Co., Inc. and WAXQ Inc., the
financial statements of WLIT Inc., the combined financial statements of KYSR
Inc. and KIBB Inc., the financial statements of WDAS-AM/FM (station owned and
operated by Beasley FM Acquisition Corp.), and the financial statements of
KKSF-FM/KDFC-FM and AM (stations owned and operated by The Brown Organization)
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants, to the extent and for the periods indicated in their reports
thereon, which reports are incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon the authority
of said firm as experts in accounting and auditing.
The financial statements of Century Chicago Broadcasting, L.P. as of and
for the year ended December 31, 1996, incorporated in this Joint Proxy
Statement/Prospectus by reference to the Current Report on Form 8-K of Evergreen
Media Corporation dated May 30, 1997 have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The combined balance sheet of WJLB/WMXD, Detroit as of December 31, 1996
and the related combined statements of operations and cash flows for the year
then ended, incorporated by reference in this Joint Proxy Statement/Prospectus,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein by
reference in reliance upon the authority of said firm as experts in giving said
report.
The consolidated financial statements of Chancellor Broadcasting Company
and Subsidiaries and Chancellor Radio Broadcasting Company and Subsidiaries at
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996, incorporated by reference in this Joint Proxy
Statement/Prospectus, have been incorporated herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
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The consolidated financial statements of Trefoil Communications, Inc. and
Subsidiaries for the period January 1, 1996 through February 13, 1996,
incorporated by reference in this Joint Proxy Statement/Prospectus, have been
incorporated herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The financial statements of Trefoil Communications, Inc. as of and for the
years ended December 31, 1995 and 1994 incorporated in this Joint Proxy
Statement/Prospectus by reference to the Annual Report on Form 10-K of
Chancellor Broadcasting Company for the year ended December 31, 1996 have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The combined financial statements of Colfax Communications, Inc. Radio
Group as of December 31, 1993, 1994 and 1995 and for the years ended December
31, 1993, 1994 and 1995, incorporated by reference, have been examined by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report.
LEGAL MATTERS
The validity of the shares of Surviving Corporation Common Stock and
Surviving Corporation 7% Convertible Preferred Stock to be issued in the Merger
will be passed upon by, and an opinion with respect to certain tax consequences
of the Merger to Evergreen, EMHC and EMCLA will be rendered to Evergreen, EMHC
and EMCLA by Latham & Watkins, Washington, D.C. Eric L. Bernthal, a director of
Evergreen, is a partner of Latham & Watkins and owns options to purchase 7,500
shares of Evergreen Class A Common Stock.
An opinion with respect to certain tax consequences of the Merger to
Chancellor and CRBC will be rendered to Chancellor and CRBC by Weil, Gotshal &
Manges LLP, Dallas, Texas and New York, New York. A partner of Weil, Gotshal &
Manges LLP owns 2,166 shares of Chancellor Class A Common Stock.
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GLOSSARY OF CERTAIN TERMS AND MARKET AND INDUSTRY DATA
"1996 Evergreen Equity Offering" refers to the sale on October 17, 1996 of
9,000,000 shares of Evergreen Class A Common Stock in a public offering.
"1996 Evergreen Preferred Stock Conversion" refers to the conversion of
1,608,297 shares of formerly outstanding Evergreen $3.00 convertible
exchangeable preferred stock into 5,025,916 shares of Evergreen Class A Common
Stock and the redemption of the remaining 1,703 shares of formerly outstanding
$3.00 convertible exchangeable preferred stock.
"ABC" refers to affiliates of Capital Cities/ABC Radio.
"ABC/Detroit Disposition" refers to the pending sale by Chancellor of
WDRQ-FM in Detroit to ABC for $37.0 million in cash.
"ABC/Washington Disposition" refers to the sale by Evergreen on July 7,
1997 of WJZW-FM in Washington, D.C. to ABC for $68.0 million in cash.
"BCF" or "Broadcast Cash Flow" consists of station operating income
excluding depreciation and amortization, corporate general and administrative
expense. Although not calculated in accordance with generally accepted
accounting principles, broadcast cash flow is widely used in the broadcast
industry as a measure of a company's operating performance. Nevertheless, this
measure should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities or any other measure for
determining operating performance or liquidity that is calculated in accordance
with generally accepted accounting principles. Broadcast cash flow does not take
into account debt service requirements and other commitments and, accordingly,
broadcast cash flow is not necessarily indicative of amounts that may be
available for reinvestment in business or other discretionary uses.
"Beasley" refers to Beasley FM Acquisition Corp.
"Beasley Acquisition" refers to the acquisition by Evergreen on May 1, 1997
from Beasley of WDAS-FM/AM in Philadelphia for $103.0 million in cash.
"Bonneville" refers to Bonneville International Corporation and its
affiliates.
"Bonneville Acquisition" refers to the pending acquisition by Evergreen of
KZPS-FM and KDGE-FM in Dallas from Bonneville for $83.5 million in cash.
"Bonneville Dispositions" refers to the Bonneville/WPNT Disposition, the
Bonneville/WLUP Disposition and the Bonneville/KDFC Disposition.
"Bonneville/KDFC Disposition" refers to the sale by Evergreen on July 21,
1997 of KDFC-FM in San Francisco to Bonneville for $50.0 million in cash.
"Bonneville/WLUP Disposition" refers to the disposition by Evergreen on
July 14, 1997 of WLUP-FM in Chicago to Bonneville that is expected to result in
a deferred exchange for one or more radio stations within 180 days after July
14, 1997. In the event that such exchange does not take place, Evergreen will
receive gross proceeds from the disposition of WLUP-FM of $80.0 million in cash.
"Bonneville/WPNT Disposition" refers to the sale by Evergreen on June 19,
1997 to Bonneville of WPNT-FM in Chicago for $75.0 million in cash.
"Century Acquisition" refers to the acquisition by Evergreen on May 30,
1997 from Century of WPNT-FM in Chicago for $73.75 million.
"Chancellor" refers to Chancellor Broadcasting Company and its
subsidiaries.
"Chancellor Special Meeting" refers to the 1997 Special Meeting of
stockholders of Chancellor.
"Chancellor Board" refers to the Board of Directors of Chancellor.
"Chancellor Bylaws" refers to the Restated Bylaws of Chancellor.
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"Chancellor Certificate" refers to the Amended Certificate of Incorporation
of Chancellor.
"Chancellor Class A Directors" refers to those Directors elected by holders
of Chancellor Class A Common Stock.
"Chancellor Common Stock" refers to Chancellor Class A Common Stock and
Chancellor Class B Common Stock, collectively.
"Chancellor Interim Financing" refers to the $170.0 million interim loan
that Chancellor received on July 2, 1997 in connection with the Chancellor
Viacom Acquisition.
"Chancellor Media Corporation" refers to the name of the Surviving
Corporation and the new name of Evergreen following the Merger.
"Chancellor Mezzanine Holdings Corporation" refers to the name of the
Surviving Mezzanine Corporation following the Merger.
"Chancellor Offerings" refers to various equity offerings of Chancellor and
CRBC during 1996 and 1997.
"Chancellor Parent Convertible Preferred Stock" refers to the 7%
Convertible Preferred Stock of Chancellor, which will be converted into
Surviving Corporation Convertible Preferred Stock with substantially identical
rights and preferences upon consummation of the Merger.
"Chancellor Record Date" refers to the close of business on July 30, 1997,
the date fixed as the Record Date for determining holders of shares of
Chancellor Common Stock entitled to notices of and to vote at the Chancellor
Special Meeting.
"Chancellor Transfer" refers to the transfer of control of the radio
stations owned and operated by Chancellor and its subsidiaries from
HM2/Chancellor to the public stockholders of the Surviving Corporation.
"Chancellor Viacom Acquisition" refers to the acquisition by Chancellor on
July 2, 1997 from Viacom of the subsidiaries of Viacom that own and operate
KYSR-FM and KIBB-FM in Los Angeles, WLIT-FM in Chicago and WDRQ-FM in Detroit
for approximately $489.8 million plus various other direct acquisition costs.
"Colfax Acquisition" refers to the acquisition by Chancellor on January 23,
1997 of Colfax Communications for approximately $383.7 million.
"Completed Chancellor Transactions" refers to (i) the Shamrock Acquisition,
(ii) the Houston/Denver Exchange, (iii) the Colfax Acquisition, (iv) the Omni
Acquisition, (v) the WWWW/WDFN Disposition, (vi) the Milwaukee Disposition,
(vii) the West Palm Beach Exchange and (viii) the Chancellor Viacom Acquisition.
"Completed Evergreen Transactions" refers to (i) the acquisition by EMCLA
on January 17, 1996 of Pyramid Communications, Inc. for approximately $316.3
million, (ii) the acquisition by EMCLA on August 14, 1996 of KYLD-FM in San
Francisco for $44.0 million in cash, (iii) the exchange by EMCLA on November 26,
1996 of WKLB-FM for WGAY-FM, (iv) the acquisition by EMCLA on October 18, 1996
of WEDR-FM in Miami for $65.0 million in cash, (v) the dispositions on July 19,
1996 and August 1, 1996 of WHTT-FM/AM and WSJZ-FM in Buffalo, respectively, (vi)
the WWWW/WDFN Acquisition, (vii) the KKSF/KDFC Acquisition, (viii) the
Secret/Detroit Acquisition, (ix) the Greater Media Exchange, (x) the Beasley
Acquisition, (xi) the EZ Transaction, (xii) the Century Acquisition, (xiii) the
Crawford Disposition, (xiv) the Evergreen Viacom Acquisition, (xv) the San
Francisco Frequency Disposition, (xvi) the ABC/Washington Disposition and
(xviii) the Bonneville Dispositions.
"Completed Transactions" refers to the Completed Evergreen Transactions and
the Completed Chancellor Transactions.
"Crawford Disposition" refers to the sale on June 3, 1997 by Evergreen of
WEJM-FM in Chicago to affiliates of Crawford Broadcasting for $14.75 million in
cash.
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"CRBC" refers to Chancellor Radio Broadcasting Company, a direct subsidiary
of Chancellor.
"CRBC 8 3/4% Indenture" refers to the indenture governing the $200.0
million principal amount of 8 3/4% Senior Subordinated Notes due 2007 of CRBC.
"CRBC 8 3/4% Notes" refers to the 8 3/4% Senior Subordinated Notes due 2007
of CRBC, which will be assumed by the Surviving Subsidiary Corporation upon
consummation of the Merger.
"CRBC 8 3/4% Notes Offering" refers to the private offering and resale
pursuant to Rule 144A under the Securities Act of 1933, as amended, of CRBC's
8 3/4% Senior Subordinated Notes due 2007, which generated gross proceeds of
$200 million.
"CRBC 9 3/8% Indenture" refers to the indenture governing the $200.0
million principal amount of 9 3/8% Senior Subordinated Notes due 2004 of CRBC.
"CRBC 9 3/8% Notes" refers to the 9 3/8% Senior Subordinated Notes due 2004
of CRBC, which will be assumed by the Surviving Subsidiary Corporation upon
consummation of the Merger.
"CRBC Junior Preferred Stock" refers to the 12% Exchangeable Preferred
Stock of CRBC, which will be converted into preferred stock of the Surviving
Subsidiary Corporation with substantially identical rights and preferences upon
consummation of the Merger.
"CRBC Restated Credit Agreement" refers to the senior credit facility among
CRBC and certain lenders and Bankers Trust Company, as Managing Agent for such
lenders, dated as of July 2, 1997, pursuant to which CRBC's credit facility was
increased to a total commitment of $750.0 million.
"CRBC Series A Preferred Stock" refers to the 12 1/4% Senior Cumulative
Exchangeable Preferred Stock of CRBC, which will be converted into preferred
stock of the Surviving Subsidiary Corporation with substantially identical
rights and preferences upon consummation of the Merger.
"Denver Acquisition" refers to the pending acquisition by Chancellor of
KXPK-FM in Denver from Ever Green Wireless LLC for $26.0 million in cash.
"Dissenting Shares" refers to those shares held by a holder of Chancellor
Parent Convertible Preferred Stock, who properly demands appraisal in accordance
with Section 262 of the Delaware General Corporate Law.
"Douglas" refers to affiliates of Douglas Broadcasting.
"Douglas Chicago Disposition" refers to the pending sale by Evergreen of
WEJM-AM in Chicago to Douglas for $7.5 million in cash.
"Douglas AM Dispositions" refers to the pending sale by Evergreen of
KDFC-AM in San Francisco and WBZS-AM and WZHF-AM in Washington, D.C. to Douglas
for $18.0 million, payable in the form of a promissory note.
"Effective Time" refers to the time at which the Parent Merger will become
effective. As defined in the Merger Agreement, the Parent Merger will become
effective at the time of filing of the Certificate of Merger for the Merger, or
at such time thereafter as is provided in the Certificate of Merger for the
Parent Merger.
"EMCLA" refers to Evergreen Media Corporation of Los Angeles, a direct,
wholly owned subsidiary of EMHC.
"EMCLA Senior Credit Facility" refers to the senior credit facility among
EMCLA and certain lenders and Toronto Dominion (Texas), Inc., as Administrative
Agent for such lenders, dated as of April 25, 1997, as amended on June 26, 1997,
pursuant to which EMCLA's credit facility was increased to a total commitment of
$1.75 billion and which, upon consummation of the Merger, shall increase to at
least $2.50 billion.
"EMHC" refers to Evergreen Mezzanine Holdings Corporation, a direct, wholly
owned subsidiary of Evergreen.
"Evergreen Annual Meeting" refers to the 1997 Annual Meeting of
stockholders of Evergreen.
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"Evergreen" refers to Evergreen Media Corporation.
"Evergreen Board" refers to the Board of Directors of Evergreen.
"Evergreen Bylaws" refers to Evergreen's Restated Bylaws.
"Evergreen Certificate" refers to the Amended and Restated Certificate of
Incorporation of Evergreen.
"Evergreen Common Stock" refers to Evergreen Class A Common Stock and
Evergreen Class B Common Stock, collectively
"Evergreen Convertible Preferred Stock Offering" refers to the offering
pursuant to Rule 144A under the Securities Act of 1933, as amended, of
Evergreen's $3.00 convertible exchangeable preferred stock, which generated
aggregate gross proceeds of $299.5 million.
"Evergreen Record Date" refers to the close of business on July 25, 1997,
the date fixed as the Record Date for determining holders of shares of Evergreen
Common Stock entitled to notices of and to vote at the Evergreen Annual Meeting.
"Evergreen Transfer" refers to the transfer of the radio stations owned and
operated by Evergreen from Mr. Ginsburg to the public stockholders of the
Surviving Corporation.
"Evergreen Viacom Acquisition" refers to the acquisition by Evergreen on
July 2, 1997 from Viacom of the subsidiaries of Viacom that own and operate
WLTW-FM and WAXQ-FM in New York and WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in
Washington, D.C. for approximately $607.7 million plus various other direct
acquisition costs.
"Exchange Agent" refers to the Bank of New York.
"Exchange Ratio" refers to the number of shares of the Surviving
Corporation Common Stock to be received upon conversion of one share of
Chancellor Class A Common Stock or Chancellor Class B Common Stock.
"EZ" refers to EZ Communications, Inc.
"EZ Exchange" refers to the exchange on May 15, 1997 by Evergreen of
WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM in Charlotte to EZ in return for
WIOQ-FM and WUSL-FM in Philadelphia.
"EZ Sale" refers to the sale on May 15, 1997 by Evergreen of WNKS-FM in
Charlotte to EZ for $10.0 million in cash.
"EZ Transaction" refers to the EZ Sale and EZ Exchange.
"FCC Consent" refers to FCC approval for the transfer of control from
Evergreen and Chancellor to the Surviving Corporation of the FCC licenses and
authorizations held by Evergreen and its licensee subsidiaries and by Chancellor
and its licensee subsidiaries.
"Financing Transactions" refers to the Evergreen Convertible Preferred
Stock Offering and borrowings by EMCLA under the EMCLA Senior Credit Facility.
"Gannett" refers to Gannett Co., Inc.
"Gannett Agreements" refers to the three separate Asset Purchase Agreements
dated April 4, 1997 between Evergreen and Pacific and Southern Company, Inc., a
subsidiary of Gannett.
"Gannett Acquisition" refers to the pending acquisition by Evergreen from a
subsidiary of Gannett of WGCI-FM/AM in Chicago, KKBQ-FM/AM in Houston and
KHKS-FM in Dallas, for an aggregate purchase price of $340.0 million in cash.
"Greater Media" refers to affiliates of Greater Media Radio, Inc.
"Greater Media Exchange" refers to the exchange on April 3, 1997 by
Evergreen of WQRS-FM in Detroit to Greater Media in return for WWRC-AM in
Washington, D.C. and $9.5 million in cash.
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"Greater Media Disposition" refers to the pending sale by Evergreen of
WFLN-FM in Philadelphia to Greater Media for $41.8 million in cash.
"Greenhill" refers to Greenhill & Co., LLC.
"Greenhill Opinion" refers to the oral opinion delivered by Greenhill to
the Chancellor Board on February 19, 1997, which was subsequently confirmed in a
written opinion of Greenhill dated February 19, 1997.
"Hicks Muse" refers to Hicks, Muse, Tate & Furst Incorporated.
"Hicks Stockholders" refers to Thomas O. Hicks and certain stockholders of
Chancellor that are affiliated with Hicks that are party to the Stockholders
Agreement.
"HM2/Chancellor" refers to HM2/Chancellor, L.P. an affiliate of Hicks Muse.
"Houston/Denver Exchange" refers to the exchange by Chancellor on July 31,
1996 of KTBZ-FM and $5.6 million in cash for KIMN-FM and KALC-FM in Denver.
"Katz Acquisition" refers to the pending acquisition of Katz Media Group,
Inc., a full-service media representation firm, by a jointly-owned affiliate of
Evergreen and Chancellor in a tender offer transaction valued at approximately
$373 million.
"KKSF/KDFC Acquisition" refers to the acquisition by Evergreen on January
31, 1997 of KKSF-FM and KDFC-FM/AM in San Francisco from The Brown Organization
for $115.0 million in cash.
"LTM" refers to the latest twelve months of information available as of the
evaluation date of the Wasserstein Perella Opinion.
"Memorandum of Agreement" refers to the memorandum of agreement dated
February 19, 1997, between Evergreen and Scott K. Ginsburg, as agreed and
acknowledged by Chancellor and CRBC.
"Merger" refers to the Parent Merger and the Subsidiary Merger.
"Merger Agreement" refers to the Agreement and Plan of Merger dated as of
February 19, 1997, as amended and restated, among Chancellor, CRBC, Evergreen,
EMHC and EMCLA.
"Milwaukee Disposition" refers to the disposition on March 31, 1997 by
Chancellor of WMIL-FM and WOKY-AM in Milwaukee for $41.3 million in cash.
"OCF" refers to operating cash flow.
"Old Chancellor Communications" refers to KFBK-AM/KGBY-FM, a division of
Group W Radio, Inc. (Cal.), which Chancellor Communications acquired in January
1994.
"Omni Acquisition" refers to the acquisition by Chancellor on February 13,
1997 of three FM stations in Orlando, two FM stations and one AM station in West
Palm Beach and two FM stations in Jacksonville from OmniAmerica Group for $166.0
million in cash and common stock of Chancellor valued at $15.0 million.
"Parent Merger" refers to the merger of Chancellor with and into EMHC
"Pending Chancellor Acquisitions" refers to the Denver Acquisition.
"Pending Chancellor Transactions" refers to the Pending Chancellor
Acquisitions and the ABC/Detroit Disposition.
"Pending Dispositions" refers to the Pending Evergreen Dispositions and the
ABC/Detroit Disposition.
"Pending Evergreen Acquisitions" refers to the Gannett Acquisition, the
Secret/Philadelphia Acquisition and the Bonneville Acquisition.
"Pending Evergreen Dispositions" refers to the Douglas Chicago Disposition,
the Greater Media Disposition and the Douglas AM Dispositions.
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"Pending Evergreen Transactions" refers to the Pending Evergreen
Dispositions and the Pending Evergreen Acquisitions.
"Pending Transactions" refers to the Pending Evergreen Transactions, the
Pending Chancellor Transactions and the Merger.
"Required Dispositions" refers to the Douglas Chicago Disposition, the
Greater Media Disposition and the Douglas AM Dispositions.
"San Francisco Frequency Disposition" refers to the sale by Evergreen on
July 7, 1997 to Susquehanna Radio Corp. of the FCC authorizations and certain
transmission equipment currently used in the operation of KYLD-FM for $44.0
million in cash.
"Secret" refers to Secret Communications, L.P.
"Secret/Detroit Acquisition" refers to the acquisition by Evergreen on
April 1, 1997 of WMXD-FM and WJLB-FM in Detroit from Secret for $168.0 million
in cash.
"Secret/Philadelphia Acquisition" refers to the pending acquisition by
Evergreen of WFLN-FM in Philadelphia from Secret for $37.75 million in cash.
"SFX" refers to SFX Broadcasting Inc.
"SFX Exchange" refers to the exchange agreement, which by its terms has
expired and consummation of which is uncertain, pursuant to which Chancellor
would exchange WAPE-FM and WFYV-FM in Jacksonville and $11.0 million to SFX for
WBAB-FM, WBLI-FM, WHFM-FM and WGBB-AM in Nassau/Suffolk (Long Island).
"Shamrock Acquisition" refers to the acquisition by Chancellor on February
14, 1996 of Trefoil Communications, Inc. and its wholly owned subsidiary,
Shamrock Broadcasting, Inc., for approximately $408.0 million.
"Subsidiary Merger" refers to the merger of CRBC into EMCLA.
"Subsidiary Merger Effective Time" refers to the time at which the
Subsidiary Merger will become effective. As defined in the Merger Agreement, the
Subsidiary Merger will become effective at the time of filing of the Certificate
of Merger for the Subsidiary Merger, or at such time thereafter as is provided
in the Certificate of Merger for the Subsidiary Merger.
"Surviving Corporation" refers to Chancellor Media Corporation, the new
name of Evergreen, following the Merger.
"Surviving Corporation 7% Convertible Preferred Stock" refers to the 7%
Convertible Preferred Stock of the Surviving Corporation to be issued in the
Parent Merger, which will have substantially identical powers, preferences and
relative rights as the Chancellor Parent Convertible Preferred Stock.
"Surviving Corporation Bylaws" refers to the amended and restated Bylaws
attached to the Merger Agreement.
"Surviving Corporation Certificate" refers to the amended and restated
Certificate of Incorporation attached to the Merger Agreement.
"Surviving Corporation Common Stock" refers to the Common Stock, par value
$.01 per share, of the Surviving Corporation to be issued in the Merger.
"Surviving Mezzanine Corporation" refers to the corporation which will
survive the merger of Chancellor with and into EMHC.
"Surviving Subsidiary Corporation" refers to the corporation which will
survive the merger of CRBC with and into EMCLA.
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"Surviving Subsidiary Series A Preferred Stock" refers to the 12 1/4%
Senior Cumulative Exchangeable Preferred Stock of the Surviving Subsidiary
Corporation to be issued in the Subsidiary Merger, which will have substantially
identical powers, preferences and relative rights as the CRBC Series A Preferred
Stock.
"Surviving Subsidiary Junior Preferred Stock" refers to the 12%
Exchangeable Preferred Stock of the Surviving Subsidiary Corporation to be
issued in the Subsidiary Merger, which will have substantially identical powers,
preferences and relative rights as the CRBC Junior Preferred Stock.
"Stockholders Agreement" refers to the Agreement, dated February 19, 1997,
among Scott K. Ginsburg and the Hicks Stockholders pursuant to which Mr.
Ginsburg and the Hicks Stockholders have agreed to vote the shares of capital
stock of Evergreen and Chancellor, respectively, in favor of the Merger
Agreement and the transactions contemplated thereby.
"Viacom" refers to Viacom International, Inc.
"Viacom Acquisition" refers to the acquisition by Evergreen and Chancellor
on July 2, 1997 of the Viacom Subsidiaries pursuant to the Viacom Stock Purchase
Agreement and the Viacom Joint Purchase Agreement.
"Viacom Joint Purchase Agreement" refers to the Agreement dated February
19, 1997 among Evergreen, EMCLA, Chancellor and CRBC and which governed certain
aspects of the Viacom Acquisition as among those parties.
"Viacom Stock Purchase Agreement" refers to the Agreement dated February
16, 1997 between Evergreen and Viacom International, Inc. pursuant to which
Evergreen agreed to acquire from Viacom all of the issued and outstanding
capital stock of certain subsidiaries of Viacom.
"Viacom Stations" refers to radio stations WLTW-FM and WAXQ-FM in New York,
KYSR-FM and KIBB-FM in Los Angeles, WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in
Washington, D.C., WLIT-AM in Chicago and WDRQ-FM in Detroit.
"Wasserstein Perella" refers to Wasserstein Perella & Company, Inc.,
financial advisor to Evergreen.
"Wasserstein Perella Opinion" refers to the oral opinion delivered by
Wasserstein Perella to the Evergreen Board on February 18, 1997, which was
subsequently confirmed in a written opinion of Wasserstein Perella dated
February 19, 1997.
"West Palm Beach Exchange" refers to the exchange by Chancellor on March
28, 1997 of WEAT-FM/AM and WOLL-FM in West Palm Beach for KSTE-FM in Sacramento
and $33.0 million in cash.
"WWWW/WDFN Acquisition" refers to the acquisition by Evergreen on January
31, 1997 from Chancellor of WWWW-FM and WDFN-AM in Detroit for $30.0 million in
cash.
"WWWW/WDFN Disposition" refers to the sale by Chancellor on January 31,
1997 of WWWW-FM and WDFN-AM in Detroit for $30.0 million in cash.
Unless otherwise indicated herein, (i) market ranking by radio advertising
revenue and market radio advertising revenue have been obtained from Duncan's
Radio Market Guide (1997 ed.) and (ii) all audience share data and audience
rankings, except where specifically stated to the contrary, have been derived
from Arbitron Radio Market Reports, Metro Audience Trends, Spring 1997. The
Arbitron Company (Copyright 1997).
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PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial statements are
presented using the purchase method of accounting for all acquisitions and
reflect (i) the combination of consolidated historical financial data of
Evergreen, Chancellor, each of the stations acquired in the Completed Evergreen
Transactions and the Completed Chancellor Transactions and each of the stations
to be acquired by Evergreen in the Pending Evergreen Acquisitions or Chancellor
in the Pending Chancellor Acquisitions and (ii) the elimination of the
consolidated historical data of the stations sold by Evergreen and Chancellor in
the Completed Evergreen Dispositions and the Completed Chancellor Dispositions
and stations to be sold or swapped by Evergreen or Chancellor in the Pending
Evergreen Dispositions and the Pending Chancellor Dispositions. The unaudited
pro forma condensed combined balance sheet data at March 31, 1997 presents
adjustments for those Completed Transactions consummated since such date, the
Pending Transactions and the Financing Transactions as if each such transaction
had occurred at March 31, 1997. The unaudited pro forma condensed combined
statement of operations data for the twelve months ended December 31, 1996 and
the three months ended March 31, 1997 present adjustments for the following
transactions as if each had occurred on January 1, 1996: (i) the Completed
Transactions, (ii) the 1996 Equity Offering, (iii) the 1996 Preferred Stock
Conversion (as defined), (iv) the Chancellor Offerings, (v) the Pending
Transactions and (vi) the Financing Transactions. No adjustments are presented
to the unaudited pro forma condensed combined balance sheet data or the
unaudited pro forma condensed combined statement of operations data in respect
of (i) the Bonneville Acquisition, the Katz Acquisition and the Denver
Acquisition, because such transactions have not yet been completed and do not
constitute the acquisition of a significant business, either individually or in
the aggregate, and are unrelated for purposes of Rule 3-05 and Rule 11-01 of
Regulation S-X of the Commission's rules and (ii) the Douglas AM Dispositions,
because such transaction does not constitute the disposition of a significant
business for purposes of Rule 11-01 of Regulation S-X of the Commission's rules.
In addition, the following transactions, which were completed after the
preparation of the pro forma financial statements, are identified herein as
"Pending Transactions": (i) the Crawford Disposition; (ii) the Bonneville/WPNT
Disposition; (iii) the Evergreen Viacom Acquisition; (iv) the Chancellor Viacom
Acquisition; (v) the ABC/ Washington Disposition; (vi) the San Francisco
Frequency Disposition; (vii) the Bonneville/WLUP Disposition and (viii) the
Bonneville/KDFC Disposition. Finally, the pro forma financial information
reflects Chancellor's previously pending SFX Exchange; however, there is
substantial uncertainty as to whether the SFX Exchange will be consummated. See
"The Companies -- Chancellor -- Pending Chancellor Transactions -- SFX
Exchange." In the opinion of Evergreen's and Chancellor's management, any
differences in the pro forma financial statements that would result from the
completion of such previously pending transaction or from the non-consummation
of the SFX Exchange are not material to such presentations either individually
or in the aggregate.
The purchase method of accounting has been used in the preparation of the
unaudited pro forma condensed combined financial statements. Under this method
of accounting, the aggregate purchase price is allocated to assets acquired and
liabilities assumed based on their estimated fair values. For purposes of the
unaudited pro forma condensed combined financial statements, the purchase prices
of the stations acquired and to be acquired in the Completed Transactions and
the Pending Transactions have been allocated based primarily on information
furnished by management of the acquired stations. The final allocation of the
respective purchase prices of the stations acquired and to be acquired in the
Completed Transactions and the Merger are determined a reasonable time after
consummation of such transactions and are based on a complete evaluation of the
assets acquired and liabilities assumed. Accordingly, the information presented
herein may differ from the final purchase price allocation.
In the opinion of Evergreen's management, all adjustments have been made
that are necessary to present fairly the pro forma data.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the respective financial statements and related notes
thereto of Chancellor and Evergreen which are incorporated by reference in this
Joint Proxy Statement/Prospectus. The unaudited pro forma condensed combined
financial statements are presented for illustrative purposes only and are not
necessarily indicative of the results of operations or financial position that
would have been achieved had the transactions reflected therein been consummated
as of the dates indicated, or of the results of operations or financial
positions for any future periods or dates.
P-1
<PAGE> 138
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AT MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA COMPANY PRO PRO FORMA
COMPANY AS ADJUSTMENTS FORMA AS ADJUSTMENTS CHANCELLOR AS
ADJUSTED FOR FOR THE ADJUSTED FOR FOR THE ADJUSTED FOR
1997 COMPLETED PENDING THE PENDING PENDING THE PENDING
EVERGREEN EVERGREEN EVERGREEN CHANCELLOR CHANCELLOR CHANCELLOR
TRANSACTIONS(1) TRANSACTIONS TRANSACTIONS HISTORICAL TRANSACTIONS TRANSACTIONS
--------------- ------------ ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Current assets................... $ 90,327 $ 12,841(2) $ 103,168 $ 61,279 $ 11,412(3) $ 72,691
Property and equipment, net...... 61,493 8,720(2) 70,213 68,180 6,030(3) 74,210
Assets held for sale............. 50,000 (50,000)(2) -- -- -- --
Intangible assets, net........... 1,275,952 710,449(2) 1,986,401 978,094 461,290(3) 1,439,384
Other assets..................... 64,241 (53,750)(2) 10,491 68,170 (53,750)(3) 19,643
(777)(6)
6,000(7)
---------- -------- ---------- ---------- -------- ----------
Total assets................... $1,542,013 $628,260 $2,170,273 $1,175,723 $430,205 $1,605,928
========== ======== ========== ========== ======== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Liabilities
Current portion of long-term
debt........................... $ -- $ -- $ -- $ 12,500 $(12,500)(4) $ --
Other current liabilities........ 22,144 3,620(2) 25,764 23,693 4,185(3) 27,878
---------- -------- ---------- ---------- -------- ----------
Total current liabilities...... 22,144 3,620 25,764 36,193 (8,315) 27,878
Long-term debt, excluding current
portion........................ 882,375 280,307(2) 1,162,682 524,121 420,797(3) 975,918
12,500(4)
69,000(5)
(60,000)(5)
3,500(6)
200,000(7)
(194,000)(7)
Deferred tax liabilities
(assets)....................... 87,714 19,710(2) 107,424 373 (3,600)(5) (4,938)
(1,711)(6)
Other liabilities................ 823 -- 823 786 -- 786
---------- -------- ---------- ---------- -------- ----------
Total liabilities.......... 993,056 303,637 1,296,693 561,473 438,171 999,644
Redeemable preferred stock....... -- -- -- 414,175 -- 414,175
STOCKHOLDERS' EQUITY:
Preferred stock.................. -- 288,018(2) 288,018 -- -- --
Common stock..................... 422 -- 422 189 -- 189
Additional paid in capital....... 662,625 -- 662,625 246,442 -- 246,442
Accumulated deficit.............. (114,090) 36,605(2) (77,485) (45,518) (5,400)(5) (53,484)
(2,566)(6)
Treasury stock................... -- -- -- (1,038) -- (1,038)
---------- -------- ---------- ---------- -------- ----------
Total stockholders' equity..... 548,957 324,623 873,580 200,075 (7,966) 192,109
---------- -------- ---------- ---------- -------- ----------
Total liabilities and
stockholders' equity......... $1,542,013 $628,260 $2,170,273 $1,175,723 $430,205 $1,605,928
========== ======== ========== ========== ======== ==========
<CAPTION>
PRO FORMA
ADJUSTMENTS COMPANY
FOR THE PRO FORMA
MERGER COMBINED
----------- ----------
<S> <C> <C>
ASSETS:
Current assets................... $ -- $ 175,859
Property and equipment, net...... -- 144,423
Assets held for sale............. -- --
Intangible assets, net........... 425,083(8) 4,132,358(10)
281,490(9)
Other assets..................... -- 30,134
-------- ----------
Total assets................... $706,573 $4,482,774
======== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Liabilities
Current portion of long-term
debt........................... $ -- $ --
Other current liabilities........ -- 53,642
-------- ----------
Total current liabilities...... -- 53,642
Long-term debt, excluding current
portion........................ 28,000(8) 2,166,600
Deferred tax liabilities
(assets)....................... 281,490(9) 383,976
Other liabilities................ -- 1,609
-------- ----------
Total liabilities.......... 309,490 2,605,827
Redeemable preferred stock....... 16,482(8) 430,657
STOCKHOLDERS' EQUITY:
Preferred stock.................. -- 288,018
Common stock..................... (16)(8) 595
Additional paid in capital....... 326,095(8) 1,235,162
Accumulated deficit.............. 53,484(8) (77,485)
Treasury stock................... 1,038(8) --
-------- ----------
Total stockholders' equity..... 380,601 1,446,290
-------- ----------
Total liabilities and
stockholders' equity......... $706,573 $4,482,774
======== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
P-2
<PAGE> 139
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY AS PRO FORMA CHANCELLOR AS
ADJUSTED FOR PENDING ADJUSTMENTS FOR ADJUSTED FOR
COMPLETED EVERGREEN PENDING COMPANY COMPLETED
EVERGREEN TRANSACTIONS EVERGREEN PRO FORMA CHANCELLOR
YEAR ENDED DECEMBER 31, 1996 TRANSACTIONS(11) HISTORICAL(12) TRANSACTIONS AS ADJUSTED TRANSACTIONS(18)
- ----------------------------------- ---------------- -------------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Gross revenues..................... $393,904 $84,351 $ -- $478,255 $276,459
Less: agency commissions........... (50,574) (12,421) -- (62,995) (35,020)
-------- ------- -------- -------- --------
Net revenues....................... 343,330 71,930 -- 415,260 241,439
Station operating expenses
excluding depreciation and
amortization..................... 200,794 29,085 -- 229,879 151,843
Depreciation and amortization...... 127,659 (142) 50,620(13) 178,137 35,432
Corporate general and
administrative expenses.......... 7,797 1,411 (1,100)(14) 8,108 5,354
Stock option compensation.......... -- -- -- -- 3,800
-------- ------- -------- -------- --------
Operating income (loss)............ 7,080 41,576 (49,520) (864) 45,010
Interest expense................... 64,120 -- 23,384(15) 87,504 47,159
Other (income) expense............. (618) 459 -- (159) (148)
-------- ------- -------- -------- --------
Income (loss) before income
taxes............................ (56,422) 41,117 (72,904) (88,209) (2,001)
Income tax expense (benefit)....... (14,142) 9,699 (19,825)(16) (24,268) 3,200
Dividends and accretion on
preferred stock of subsidiary.... -- -- -- -- 38,400
-------- ------- -------- -------- --------
Net income (loss).................. (42,280) 31,418 (53,079) (63,941) (43,601)
Preferred stock dividends.......... -- -- 17,970(17) 17,970 7,700
-------- ------- -------- -------- --------
Income (loss) attributable to
common stockholders.............. $(42,280) $31,418 $(71,049) $(81,911) $(51,301)
======== ======= ======== ======== ========
Loss per common share.............. ($ 1.00) ($ 1.94)
======== ========
Weighted average common shares
outstanding...................... 42,155 42,155
OTHER FINANCIAL DATA:
Broadcast cash flow................ $142,536 $42,845 $ -- $185,381 $ 89,596
<CAPTION>
PRO FORMA
PENDING ADJUSTMENTS FOR
CHANCELLOR PENDING CHANCELLOR PRO FORMA COMPANY
TRANSACTIONS CHANCELLOR PRO FORMA ADJUSTMENTS FOR PRO FORMA
YEAR ENDED DECEMBER 31, 1996 HISTORICAL(19) TRANSACTIONS AS ADJUSTED THE MERGER COMBINED
- ----------------------------------- -------------- --------------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Gross revenues..................... $57,789 $ (1,963)(20) $332,285 $ -- $ 810,540
Less: agency commissions........... (9,152) -- (44,172) -- (107,167)
------- -------- -------- --------- ---------
Net revenues....................... 48,637 (1,963) 288,113 -- 703,373
Station operating expenses
excluding depreciation and
amortization..................... 24,562 (4,000)(20) 172,405 -- 402,284
Depreciation and amortization...... 6,427 5,803(21) 47,662 104,989(25) 330,788
Corporate general and
administrative expenses.......... 2,347 (1,807)(22) 5,894 (832)(26) 13,170
Stock option compensation.......... -- -- 3,800 -- 3,800
------- -------- -------- --------- ---------
Operating income (loss)............ 15,301 (1,959) 58,352 (104,157) (46,669)
Interest expense................... 6,374 30,105(23) 83,638 (11,230)(28) 159,912
Other (income) expense............. -- -- (148) -- (307)
------- -------- -------- --------- ---------
Income (loss) before income
taxes............................ 8,927 (32,064) (25,138) (92,927) (206,274)
Income tax expense (benefit)....... 4,422 (13,677)(24) (6,055) (28,166)(29) (58,489)
Dividends and accretion on
preferred stock of subsidiary.... -- -- 38,400 -- 38,400
------- -------- -------- --------- ---------
Net income (loss).................. 4,505 (18,387) (57,483) (64,761) (186,185)
Preferred stock dividends.......... -- -- 7,700 -- 25,670
------- -------- -------- --------- ---------
Income (loss) attributable to
common stockholders.............. $ 4,505 $(18,387) $(65,183) $ (64,761) $(211,855)
======= ======== ======== ========= =========
Loss per common share.............. $ (3.57)
=========
Weighted average common shares
outstanding...................... 17,259(8) 59,414
OTHER FINANCIAL DATA:
Broadcast cash flow................ $24,075 $ 2,037 $115,708 $ -- $ 301,089
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
P-3
<PAGE> 140
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY AS PRO FORMA CHANCELLOR AS
ADJUSTED FOR PENDING ADJUSTMENTS ADJUSTED FOR PENDING
COMPLETED EVERGREEN FOR COMPANY COMPLETED CHANCELLOR
EVERGREEN TRANSACTIONS THE PENDING PRO FORMA CHANCELLOR TRANSACTIONS
TRANSACTIONS(11) HISTORICAL(12) TRANSACTIONS AS ADJUSTED TRANSACTIONS(18) HISTORICAL(19)
---------------- -------------- ------------ ----------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1997
Gross revenues................ $ 95,520 $22,998 $ -- $118,518 $ 65,832 $11,867
Less: agency commissions...... (12,155) (3,011) -- (15,166) (8,007) (1,960)
-------- ------- -------- -------- -------- -------
Net revenues.................. 83,365 19,987 -- 103,352 57,825 9,907
Station operating expenses
excluding depreciation and
amortization................ 53,935 8,217 -- 62,152 38,828 5,111
Depreciation and
amortization................ 30,958 (606) 13,266(13) 43,618 8,862 1,078
Corporate general and
administrative expenses..... 2,330 306 (232)(14) 2,404 1,712 239
Merger expense................ -- -- -- -- 2,056 --
Stock option compensation..... -- -- -- -- 950 --
-------- ------- -------- -------- -------- -------
Operating income (loss)....... (3,858) 12,070 (13,034) (4,822) 5,417 3,479
Interest expense, net......... 14,905 -- 5,417(15) 20,322 11,740 1,594
Other (income) expense........ (108) -- -- (108) (1,632) --
-------- ------- -------- -------- -------- -------
Income (loss) before income
taxes....................... (18,655) 12,070 (18,451) (25,036) (4,691) 1,885
Income tax expense
(benefit)................... (5,128) 2,816 (4,799)(16) (7,111) (876) 788
Dividends and accretion on
preferred stock of
subsidiary.................. -- -- -- -- 9,639 --
-------- ------- -------- -------- -------- -------
Net income (loss)............. (13,527) 9,254 (13,652) (17,925) (13,454) 1,097
Preferred stock dividends..... -- -- 4,493(17) 4,493 1,925 --
-------- ------- -------- -------- -------- -------
Income (loss) attributable to
common stockholders......... $(13,527) $ 9,254 $(18,145) $(22,418) $(15,379) $ 1,097
======== ======= ======== ======== ======== =======
Loss per common share......... $ (0.32) $ (0.53)
======== ========
Weighted average common shares
outstanding................. 42,188 42,188
======== ========
OTHER FINANCIAL DATA:
Broadcast cash flow........... $ 29,430 $11,770 $ -- $ 41,200 $ 18,997 $ 4,796
<CAPTION>
PRO FORMA
ADJUSTMENTS FOR
PENDING CHANCELLOR PRO FORMA COMPANY
CHANCELLOR PRO FORMA ADJUSTMENTS FOR PRO FORMA
TRANSACTIONS AS ADJUSTED THE MERGER COMBINED
--------------- ----------- --------------- ---------
<S> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1
Gross revenues................ $ (1,070)(20) $ 76,629 $ -- $195,147
Less: agency commissions...... -- (9,967) -- (25,133)
-------- -------- -------- --------
Net revenues.................. (1,070) 66,662 -- 170,014
Station operating expenses
excluding depreciation and
amortization................ (1,541)(20) 42,398 -- 104,550
Depreciation and
amortization................ 1,526(21) 11,466 26,618(25) 81,702
Corporate general and
administrative expenses..... (176)(22) 1,775 (247)(26) 3,932
Merger expense................ -- 2,056 (2,056)(27) --
Stock option compensation..... -- 950 -- 950
-------- -------- -------- --------
Operating income (loss)....... (879) 8,017 (24,315) (21,120)
Interest expense, net......... 7,525(23) 20,859 (1,203)(28) 39,978
Other (income) expense........ -- (1,632) -- (1,740)
-------- -------- -------- --------
Income (loss) before income
taxes....................... (8,404) (11,210) (23,112) (59,358)
Income tax expense
(benefit)................... (3,396)(24) (3,484) (6,754)(29) (17,349)
Dividends and accretion on
preferred stock of
subsidiary.................. -- 9,639 -- 9,639
-------- -------- -------- --------
Net income (loss)............. (5,008) (17,365) (16,358) (51,648)
Preferred stock dividends..... -- 1,925 -- 6,418
-------- -------- -------- --------
Income (loss) attributable to
common stockholders......... $ (5,008) $(19,290) $(16,358) $(58,066)
======== ======== ======== ========
Loss per common share......... $ (0.98)
========
Weighted average common shares
outstanding................. 17,259(8) 59,447
======== ========
OTHER FINANCIAL DATA:
Broadcast cash flow........... $ 471 $ 24,264 $ -- $ 65,464
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
P-4
<PAGE> 141
ADJUSTMENTS TO EVERGREEN'S HISTORICAL CONDENSED COMBINED BALANCE SHEET RELATED
TO THE 1997 COMPLETED EVERGREEN TRANSACTIONS COMPLETED AFTER MARCH 31, 1997
(1) The historical balance sheet of Evergreen at March 31, 1997 and the pro
forma adjustments related to the 1997 Completed Evergreen Transactions that
were completed after March 31, 1997 is summarized below:
<TABLE>
<CAPTION>
ADJUSTMENTS COMPANY AS
FOR ADJUSTED FOR
COMPANY 1997 COMPLETED 1997 COMPLETED
HISTORICAL EVERGREEN EVERGREEN
AT 3/31/97 TRANSACTIONS TRANSACTIONS
---------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Current assets............................... $ 90,327 $ -- $ 90,327
Property and equipment, net.................. 51,356 10,137(a) 61,493
Assets held for sale......................... 50,000 50,000
Intangible assets, net....................... 928,440 347,512(a) 1,275,952
Other assets................................. 66,532 (5,500)(a) 64,241
3,209(b)
---------- -------- -----------
Total assets.............................. $1,186,655 $355,358 $ 1,542,013
========== ======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Current portion of long-term debt............ $ -- $ -- $ --
Other current liabilities.................... 22,144 -- 22,144
---------- -------- -----------
Total current liabilities................. 22,144 -- 22,144
Long-term debt, excluding current portion...... 535,375 337,000(a) 882,375
10,000(b)
Deferred tax liabilities....................... 84,789 5,302(a) 87,714
(2,377)(b)
Other liabilities.............................. 823 -- 823
---------- -------- -----------
Total liabilities......................... 643,131 349,925 993,056
Stockholders' equity:
Common stock................................. 422 -- 422
Additional paid-in capital................... 662,625 -- 662,625
Accumulated deficit.......................... (119,523) 9,847(a) (114,090)
(4,414)(b)
---------- -------- -----------
Total stockholders' equity................ 543,524 5,433 548,957
---------- -------- -----------
Total liabilities and stockholders'
equity.................................. $1,186,655 $355,358 $ 1,542,013
========== ======== ===========
</TABLE>
(a) Reflects the 1997 Completed Evergreen Transactions that were completed
after March 31, 1997 as follows:
<TABLE>
<CAPTION>
PROPERTY AND DEFERRED (INCREASE) INCREASE IN
1997 COMPLETED PURCHASE EQUIPMENT, INTANGIBLE TAX ACCUMULATED DECREASE IN LONG-TERM
EVERGREEN TRANSACTIONS PRICE NET(I) ASSETS, NET(I) LIABILITIES DEFICIT OTHER ASSETS DEBT
---------------------- -------- ------------ -------------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
WJLB-FM/WMXD-FM(ii)... $168,000 $ 2,441 $165,559 $ -- $ -- -- $168,000
WWRC-AM(iii).......... 22,500 5,692 16,808 -- -- -- 22,500
WDAS-FM/AM(iv)........ 103,000 3,000 100,000 -- -- -- 103,000
WNKS-FM(v)............ (10,000) (694) (4,488) (1,686) (3,132) -- (10,000)
WUSL-FM/WIOQ-FM(vi)... -- -- -- -- -- -- --
WPNT-FM(vii).......... 73,750 626 73,124 -- -- 5,500 68,250
WEJM-FM(viii)......... (14,750) (928) (3,491) (3,616) (6,715) -- (14,750)
-------- ------- -------- ------- ------- -------- --------
Total $342,500 $10,137 $347,512 $(5,302) $(9,847) $ 5,500 $337,000
======== ======= ======== ======= ======= ======== ========
</TABLE>
- ---------------
(i) The amounts allocated to net property and equipment and net
intangible assets (consisting of broadcast licenses, goodwill and
other identifiable intangible assets) are based upon preliminary
appraisals of the assets acquired.
P-5
<PAGE> 142
(ii) On April 1, 1997, Evergreen acquired, in the Secret/Detroit
Acquisition, WJLB-FM and WMXD-FM in Detroit for $168,000 in cash.
(iii) On April 3, 1997, Evergreen swapped, in the Greater Media
Exchange, WQRS-FM in Detroit (which Evergreen acquired on April 3,
1997 for $32,000 in cash) in exchange for WWRC-AM in Washington,
D.C. and $9,500 in cash. The net purchase price to Evergreen of
WWRC-AM was therefore $22,500.
(iv) On May 1, 1997, Evergreen acquired, in the Beasley Acquisition,
WDAS-FM/AM in Philadelphia for $103,000 in cash.
(v) On May 15, 1997, Evergreen sold, in the EZ Sale, WNKS-FM in
Charlotte for $10,000 in cash and recognized a gain of $3,132, net
of taxes of $1,686.
(vi) On May 15, 1997, Evergreen exchanged, in the EZ Exchange, 5 of its
6 stations in the Charlotte market (WPEG-FM, WBAV-FM/AM, WRFX-FM
and WFNZ-AM) for WUSL-FM and WIOQ-FM in Philadelphia.
(vii) On May 30, 1997, Evergreen acquired, in the Century Acquisition,
WPNT-FM in Chicago for $73,750 in cash. The $5,500 decrease in
other assets represents $5,000 in funds paid to the seller in
exchange for the option to purchase the station and $500 in escrow
funds which were classified as other assets at March 31, 1997.
(viii) On June 3, 1997, Evergreen sold, in the Crawford Disposition,
WEJM-FM in Chicago for $14,750 in cash.
(b) On April 25, 1997, EMCLA entered into the EMCLA Senior Credit
Facility, which amended and restated its prior senior credit
facility. The EMCLA Senior Credit Facility provides for a $500,000
term loan facility and a revolving loan facility of up to
$1,250,000. Reflects (i) the adjustment to write-off the
unamortized balance of deferred loan fees of $4,414 (net of a tax
benefit of $2,377) at March 31, 1997 as an extraordinary item and
(ii) the adjustment to record estimated new loan fees of $10,000 to
be incurred in connection with the refinancing of EMCLA's prior
senior credit facility and financed through additional bank
borrowings under the EMCLA Senior Credit Facility. The deferred
loan fees will be amortized ratably over the term of the EMCLA
Senior Credit Facility.
P-6
<PAGE> 143
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE PENDING EVERGREEN TRANSACTIONS
(2) Reflects the Pending Evergreen Transactions as follows:
<TABLE>
<CAPTION>
PROPERTY
PURCHASE/ AND ASSETS
PENDING EVERGREEN TRANSACTIONS (SALES) CURRENT EQUIPMENT, HELD INTANGIBLE CURRENT DEFERRED TAX
AT MARCH 31, 1997 PRICE ASSETS NET(A) FOR SALE ASSETS, NET(A) LIABILITIES LIABILITIES(B)
- ------------------------------ --------- ------- ---------- -------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
WFLN-FM(d).................... $ 37,750 $ -- $ 660 $ -- $ 37,090 $ -- $ --
WFLN-FM(d).................... (41,800) -- (660) -- (37,090) -- (1,417)
WEJM-AM(e).................... (7,500) -- (759) -- (2,857) -- (1,359)
WPNT-FM(f).................... (75,000) -- (626) -- (73,124) -- (438)
WLUP-FM(g).................... (80,000) -- (483) -- (33,597) -- (16,072)
KDFC-FM(h).................... (50,000) -- -- (50,000) -- -- --
San Francisco Frequency(i).... (44,000) -- (989) -- (41,800) -- (424)
Evergreen Viacom
Acquisition(j).............. 610,625 12,841 6,092 68,000 527,312 (3,620) --
WJZW-FM(k).................... (68,000) -- -- (68,000) -- -- --
Gannett(l).................... 340,000 -- 5,485 -- 334,515 -- --
-------- ------- ------- -------- -------- ------- --------
$622,075 $12,841 $ 8,720 $(50,000) $710,449 $(3,620) $(19,710)
======== ======= ======= ======== ======== ======= ========
<CAPTION>
(INCREASE) INCREASE
DECREASE (DECREASE) IN INCREASE IN
PENDING EVERGREEN TRANSACTIONS ACCUMULATED IN OTHER LONG-TERM PREFERRED
AT MARCH 31, 1997 DEFICIT(C) ASSETS DEBT STOCK
- ------------------------------ ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
WFLN-FM(d).................... $ -- $ -- $ 37,750 $ --
WFLN-FM(d).................... (2,633) -- (41,800) --
WEJM-AM(e).................... (2,525) -- (7,500) --
WPNT-FM(f).................... (812) -- (75,000) --
WLUP-FM(g).................... (29,848) -- (80,000) --
KDFC-FM(h).................... -- -- (50,000) --
San Francisco Frequency(i).... (787) -- (44,000) --
Evergreen Viacom
Acquisition(j).............. -- 53,750 268,857 288,018
WJZW-FM(k).................... -- -- (68,000) --
Gannett(l).................... -- -- 340,000 --
-------- ------- -------- --------
$(36,605) $53,750 $280,307 $288,018
======== ======= ======== ========
</TABLE>
P-7
<PAGE> 144
(a) Evergreen has assumed that historical balances of net property and equipment
to be acquired approximate fair value for the preliminary allocation of the
purchase price. Such amounts are based primarily on information provided by
management of the respective stations to be acquired in the Pending
Evergreen Transactions. Evergreen, on a preliminary basis, has allocated the
$527,312 of intangible assets related to the Evergreen Viacom Acquisition
and $334,515 of intangible assets related to the Gannett Acquisition to
broadcast licenses, goodwill and other identifiable intangible assets. This
preliminary allocation is based on historical information from prior
acquisitions.
(b) Represents the tax effect upon consummation of the transaction.
(c) Represents the gain on sale, net of tax, upon consummation of the
transaction.
(d) On August 12, 1996, Evergreen entered into an agreement to acquire, in the
Secret/Philadelphia Acquisition, WFLN-FM in Philadelphia for $37,750 in
cash. On April 4, 1997, Evergreen entered into an agreement to sell, in the
Greater Media Disposition, WFLN-FM in Philadelphia for $41,800 in cash.
(e) On March 19, 1997, Evergreen entered into an agreement to sell, in the
Douglas Chicago Disposition, WEJM-AM in Chicago for $7,500 in cash.
(f) On April 10, 1997, Evergreen entered into an agreement to sell, in the
Bonneville Dispositions, WPNT-FM in Chicago for $75,000 in cash.
(g)On April 10, 1997, Evergreen entered into an agreement to sell, in the
Bonneville Dispositions, WLUP-FM in Chicago for $80,000 in cash.
(h) On April 10, 1997, Evergreen entered into an agreement to sell, in the
Bonneville Dispositions, KDFC-FM in San Francisco for $50,000 in cash. The
assets of KDFC-FM are classified as assets held for sale at March 31, 1997
in connection with the purchase price allocation of the acquisition of
KKSF-FM/KDFC-FM/AM on January 31, 1997 and no gain or loss will be
recognized by Evergreen upon consummation of the KDFC-FM sale.
(i) On April 8, 1997, Evergreen entered into an agreement to sell, in the San
Francisco Frequency Disposition, the San Francisco 107.7 MHz FM dial
position and transmission facility and the call letters from Chancellor's
KSAN-FM in San Francisco for $44,000 in cash.
(j) On February 19, 1997, Evergreen and Chancellor entered into the Viacom Joint
Purchase Agreement whereby in the event the Viacom Acquisition occurs prior
to the consummation of the Chancellor Merger, Evergreen will purchase 6 of
the 10 Viacom stations in the Evergreen Viacom Acquisition for $595,000 plus
working capital ($10,125 at March 31, 1997) and estimated acquisition costs
of $5,500 for an aggregate purchase price of $610,625. The stations to be
acquired by Evergreen in the Evergreen Viacom Acquisition include WAXQ-FM
and WLTW-FM in New York and WMZQ-FM, WZHF-AM, WJZW-FM and WBZS-AM in
Washington, D.C. The assets of WJZW-FM in Washington, D.C. are classified as
assets held for sale in connection with the purchase price allocation of the
Evergreen Viacom Acquisition (see (k) below). The Evergreen Viacom
Acquisition will be financed with (i) a private placement of $299,500
liquidation amount of Evergreen $3.00 Convertible Preferred Stock for
estimated net proceeds of $288,018; (ii) additional bank borrowings under
the EMCLA Senior Credit Facility of $268,857 and (iii) $53,750 in escrow
funds paid by Evergreen on February 19, 1997 and classified as other assets
at March 31, 1997.
(k) On April 11, 1997, Evergreen entered into an agreement to sell, in the
ABC/Washington Disposition, WJZW-FM in Washington (to be acquired as part of
the Evergreen Viacom Acquisition) for $68,000 in cash. The assets of WJZW-FM
are classified as assets held for sale in connection with the purchase price
allocation of the Evergreen Viacom Acquisition and no gain or loss will be
recognized by Evergreen upon consummation of the sale.
(l) On April 4, 1997, Evergreen entered into an agreement to acquire, in the
Gannett Acquisition, 5 radio stations in 3 major markets from P&S, including
WGCI-FM/AM in Chicago, KHKS-FM in Dallas, and KKBQ-FM/AM in Houston for
$340,000. The pro forma combined financial statements assume that the
transaction will close by December 26, 1997 and that no upward adjustment in
the purchase price will occur.
P-8
<PAGE> 145
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE PENDING CHANCELLOR TRANSACTIONS
(3) Reflects the Pending Chancellor Transactions as follows:
<TABLE>
<CAPTION>
DECREASE INCREASE
PURCHASE/ PROPERTY AND ASSETS IN (DECREASE) IN
(SALES) CURRENT EQUIPMENT, HELD INTANGIBLE CURRENT OTHER LONG-TERM
PENDING CHANCELLOR TRANSACTIONS PRICE ASSETS NET FOR SALE ASSETS, NET LIABILITIES ASSETS DEBT
------------------------------- --------- -------- ------------ -------- ----------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBAB-FM, WBLI-FM, WBGG-AM,
WHFM-FM(a)..................... $11,000 $ -- $1,494 $ -- $ 9,506 $ -- $ -- $ 11,000
Chancellor Viacom
Acquisition(b)................. 500,547 11,412 4,536 37,000 451,784 (4,185) 53,750 446,797
WDRQ-FM(c)....................... (37,000) -- -- (37,000) -- -- -- (37,000)
-------- -------- -------- -------- -------- -------- -------- --------
Total.................... $474,547 $11,412 $6,030 $ -- $461,290 $(4,185) $53,750 $420,797
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
- ---------------
(a) On July 1, 1996, Chancellor entered into an agreement to exchange, in the
SFX Exchange, WAPE-FM and WFYV-FM in Jacksonville, Florida (which were
acquired as part of the Omni Acquisition on February 13, 1997, see 16(e)
below), and $11,000 in cash for WBAB-FM, WBLI-FM, WGBB-AM, and WHFM-FM in
Long Island. See "Risk Factors -- Antitrust Matters." The amounts allocated
to net property and equipment and net intangible assets (consisting of
broadcast licenses, goodwill and other identifiable intangibles) are based
upon preliminary appraisals of the assets to be acquired.
(b) On February 19, 1997, Chancellor and Evergreen entered into the Viacom Joint
Purchase Agreement whereby in the event the Viacom Acquisition occurs prior
to the consummation of the Merger, Chancellor will be required to purchase 4
of the 10 Viacom stations in the Chancellor Viacom Acquisition for $480,000
plus working capital ($7,547 at March 31, 1997) and estimated acquisition
costs of $13,000 for an aggregate purchase price of $500,547. The stations
to be acquired by Chancellor include KYSR-FM and KIBB-FM in Los Angeles,
WLIT-FM in Chicago and WDRQ-FM in Detroit. The assets of WDRQ-FM are
classified as assets held for sale in connection with the purchase price
allocation of the Chancellor Viacom Acquisition (see (c) below). The
Chancellor Viacom Acquisition will be financed through (i) additional bank
borrowings of $276,797 under the CRBC Restated Credit Agreement (see (4)
below); (ii) escrow funds of $53,750 paid by Chancellor on February 19, 1997
and classified as other assets at March 31, 1997 and (iii) Chancellor's
borrowings under the Chancellor Interim Financing for estimated net proceeds
of $170,000 (estimated costs of $1,700 related to the Chancellor Interim
Financing will be financed through working capital). Chancellor has assumed
that historical balances of net property and equipment approximate fair
value for the preliminary allocation of the purchase price. Such amounts are
based primarily on information provided by the management of Viacom. The
intangible assets of $451,784 have been allocated to broadcast licenses,
goodwill and other identifiable intangibles on a preliminary basis. This
preliminary allocation is based on historical information from prior
acquisitions.
(c) On April 11, 1997, Chancellor entered into an agreement to sell, in the
ABC/Detroit Disposition, WDRQ-FM in Detroit (to be acquired as part of the
Chancellor Viacom Acquisition) for $37,000 in cash. The assets of WDRQ-FM
are classified as assets held for sale in connection with the purchase price
allocation of the Chancellor Viacom Acquisition and no gain or loss will be
recognized by Chancellor upon consummation of the sale.
(4) In connection with the Chancellor Viacom Acquisition, Chancellor will
refinance its senior credit agreement (when and as amended, the "CRBC
Restated Credit Agreement"). The CRBC Restated Credit Agreement is expected
to provide for a $400,000 term loan facility and a $350,000 revolving loan
facility. Reflects the $12,500 adjustment to decrease current maturities of
long-term debt under the CRBC Restated Credit Agreement to $0.
(5) Reflects an extraordinary charge of $5,400 for estimated early call premiums
and fees of $9,000 (less a tax benefit of $3,600) to be incurred in
connection with the redemption of CRBC's 12.5% Senior Subordinated Notes
($60,000 principal amount). The redemption will be financed through
additional borrowings of $69,000 under CRBC's senior credit agreement.
P-9
<PAGE> 146
(6) Reflects (i) the adjustment to write-off the unamortized balance of deferred
loan fees of $2,566 (net of a tax benefit of $1,711) at March 31, 1997
related to the CRBC 12.5% Senior Subordinated Notes and the CRBC's previous
senior credit agreement as an extraordinary item and (ii) the adjustment to
record estimated new loan fees of $3,500 to be incurred in connection with
the CRBC Restated Credit Agreement and financed through additional bank
borrowings under such agreement.
(7) Reflects the estimated net proceeds of $194,000 from CRBC's issuance of
$200,000 of the CRBC 8 3/4% Notes. The net proceeds will be used to reduce
bank borrowings under the CRBC Restated Credit Agreement.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE CHANCELLOR MERGER
(8) Merger Purchase Price Information. In connection with the Merger, each
outstanding share of Chancellor Common Stock will be converted into the
right to receive 0.9091 shares of Surviving Corporation Common Stock. For
purposes of the unaudited pro forma condensed combined financial statements,
the fair market value of Common Stock is calculated by using $31.00 per
share which is based on the market price of the Evergreen Class A Common
Stock on and around the announcement date of the Merger on February 19,
1997. The aggregate purchase price is summarized below:
<TABLE>
<S> <C>
EXCHANGE OF CHANCELLOR COMMON STOCK:
Shares of Chancellor Common Stock outstanding............... 18,985,122
Exchange ratio.............................................. .9091
----------
Shares of Surviving Corporation Common Stock to be issued in
connection with the Merger................................ 17,259,374
==========
AGGREGATE PURCHASE PRICE:
Estimated fair value of Surviving Corporation Common Stock
to be issued in connection with the Merger (17,259,374
shares @ $31.00 per share)................................ $ 535,041
Chancellor debt and equity assumed at fair values:
Long-term debt outstanding:
Revolving Loan......................................... 5,918
Term Loan.............................................. 400,000
CRBC 9 3/8% Notes...................................... 200,000
CRBC 8 3/4% Notes...................................... 200,000
Chancellor Interim Financing........................... 170,000
-------
Total long-term debt outstanding.......................... 975,918
CRBC Series A Preferred Stock............................. 114,670
CRBC Junior Preferred Stock............................... 204,533
Chancellor Parent Convertible Preferred Stock............. 111,454
Stock options issued by Chancellor........................ 37,669
Financial advisors, legal, accounting and other professional
fees...................................................... 28,000
----------
Aggregate purchase price.................................... $2,007,285
==========
</TABLE>
P-10
<PAGE> 147
To record the aggregate purchase price of the Merger and eliminate certain
Chancellor historical balances as follows:
<TABLE>
<CAPTION>
ELIMINATION
OF CHANCELLOR
PURCHASE HISTORICAL
PRICE BALANCES MERGER NET
ALLOCATION AS ADJUSTED FINANCING ADJUSTMENT
---------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Current assets........................ $ 72,691 $ (72,691) $ -- $ --
Property and equipment, net(a)........ 74,210 (74,210) -- --
Intangible assets(a).................. 1,864,467 (1,439,384) -- 425,083
Other assets.......................... 19,643 (19,643) -- --
Current liabilities................... (27,878) 27,878 -- --
Long-term debt........................ -- 975,918 (1,003,918)(b) (28,000)
Deferred tax liabilities (assets)..... 4,938 (4,938) -- --
Other liabilities..................... (786) 786 -- --
Redeemable preferred stock............ -- 414,175 (430,657)(c) (16,482)
Common stock.......................... -- 189 (173)(d) 16
Additional paid-in capital............ -- 246,442 (572,537)(e) (326,095)
Accumulated deficit................... -- (53,484) -- (53,484)
Treasury stock........................ -- (1,038)(f) -- (1,038)
---------- ----------- ----------- ---------
Aggregate Purchase Price.............. $2,007,285 $ -- $(2,007,285) $ --
========== =========== =========== =========
</TABLE>
- ---------------
(a) Evergreen has assumed that historical balances of net property and equipment
to be acquired approximate fair value for the preliminary allocation of the
purchase price. Evergreen, on a preliminary basis, has allocated the
$1,864,467 of intangible assets to broadcast licenses, goodwill and other
intangible assets. This preliminary allocation is based upon historical
information from prior acquisitions and appraisals provided by the
management of Chancellor.
(b) Reflects the adjustment to record debt assumed or incurred by the Surviving
Corporation including (i) Chancellor's long-term debt of $975,918 and (ii)
additional bank borrowings of $28,000 required to finance estimated
financial advisors, legal, accounting and other professional fees.
(c) Reflects the adjustment to record the estimated fair value of redeemable
preferred stock to be issued (a) by EMCLA in exchange for (i) the CRBC
Series A Preferred Stock of $114,670 (including accrued and unpaid dividends
of $14,670) and (ii) the CRBC Junior Preferred Stock of $204,533 (including
accrued and unpaid dividends of $4,533) and (b) by the Surviving Corporation
in exchange for the Chancellor Parent Convertible Preferred Stock of
$111,454 (including accrued and unpaid dividends of $1,454).
(d) Reflects 17,259,374 shares of the Surviving Corporation Common Stock at a
par value of $0.01 to be issued in connection with the Merger.
(e) Reflects additional paid-in capital of $534,868 related to 17,259,374 shares
of the Surviving Corporation Common Stock to be issued in connection with
the Merger and the fair value of stock options assumed by the Surviving
Corporation of $37,669. The $37,669 fair value of the Chancellor Stock
Options was estimated using the Black-Scholes option pricing model and the
Merger exchange ratio of .9091 applied to Chancellor's outstanding options
and exercise prices. At March 31, 1997, Chancellor had 1,928,900 options
outstanding with exercise prices ranging from $7.50 to $36.75.
(f) Reflects the elimination of Chancellor's treasury stock which will be
cancelled and retired upon consummation of the Merger.
(9) To record a $281,490 deferred tax liability related to the difference
between the financial statement carrying amount and the tax basis of
Chancellor acquired assets.
P-11
<PAGE> 148
(10) The Company Pro Forma Combined intangible assets of $4,132,358 consists of
the following at March 31, 1997:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE
-----------
<S> <C> <C>
Broadcast licenses......................................... 15-40 $3,427,991
Goodwill................................................... 15-40 513,186
Other intangibles.......................................... 1-40 399,556
----------
$4,340,733
Less: accumulated amortization............................. (208,375)
----------
Net intangible assets...................................... $4,132,358
==========
</TABLE>
Evergreen discloses broadcast license value separately from goodwill and
amortizes such intangible assets over an estimated average life of 15 years,
whereas, Chancellor groups all broadcast license value with goodwill and
amortizes such intangibles assets over an estimated average life of 40 years. In
connection with the application of purchase accounting for the Merger, broadcast
license value and goodwill have been separately identified and disclosed and
amortized over an estimated average life of 15 years in accordance with
Evergreen's policies and procedures. The intangible assets have been treated in
a consistent manner for the Combined Company in the Unaudited Combined Condensed
Pro Forma Financial Statements and, following the consummation of the Merger,
will be accounted for similarly in the Surviving Corporation's financial
statements.
Evergreen amortizes such intangible assets using the straight-line method
over estimated useful lives ranging from 1 to 40 years. Evergreen continually
evaluates the propriety of the carrying amount of goodwill and other intangible
assets as well as the amortization period to determine whether current events or
circumstances warrant adjustments to the carrying value and/or revised estimates
of useful lives. This evaluation consists of the projection of undiscounted
operating income before depreciation, amortization, nonrecurring charges and
interest for each of Evergreen's radio stations over the remaining amortization
periods of the related intangible assets. The projections are based on a
historical trend line of actual results since the acquisitions of the respective
stations adjusted for expected changes in operating results. To the extent such
projections indicate that undiscounted operating income is not expected to be
adequate to recover the carrying amounts of the related intangible assets, such
carrying amounts are written down by charges to expense.
P-12
<PAGE> 149
EVERGREEN'S HISTORICAL CONDENSED COMBINED STATEMENTS OF OPERATIONS AND
ADJUSTMENTS RELATED TO THE COMPLETED EVERGREEN TRANSACTIONS
(11) Evergreen's historical condensed combined statement of operations for the
year ended December 31, 1996 and the three months ended March 31, 1997 and
pro forma adjustments related to the Completed Evergreen Transactions are
summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS
--------------------------------------------------------------------
WWRC-AM WWWW-FM/
PYRAMID KYLD-FM WGAY-FM WEDR-FM WDFN-AM
COMPANY HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
COMPLETED EVERGREEN TRANSACTIONS(A) HISTORICAL 1-1/1-17(B) 1/1-4/30(C) 1/1-6/17(D) 1/1-10/18(E) 1/1-2/14(F)
- ----------------------------------- ---------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues..................... $337,405 $2,144 $ 2,308 $ 3,264 $ 7,933 $ 839
Less: agency commissions........... (43,555) (216) (363) (409) (1,066) (102)
-------- ------ ------- ------- ------- -----
Net revenues....................... 293,850 1,928 1,945 2,855 6,867 737
Station operating expenses
excluding depreciation and
amortization..................... 174,344 1,489 1,885 3,493 2,933 815
Depreciation and amortization...... 93,749 502 749 314 29 45
Corporate general and
administrative expenses.......... 7,797 123 256 477 1,401 --
-------- ------ ------- ------- ------- -----
Operating income (loss)............ 17,960 (186) (945) (1,429) 2,504 (123)
Interest expense................... 37,527 343 1,094 -- -- --
Other (income) expense............. (477) (5) (97) 5 (15) --
-------- ------ ------- ------- ------- -----
Income (loss) before income taxes.. (19,090) (524) (1,942) (1,434) 2,519 (123)
Income tax expense (benefit)....... (2,896) -- -- (453) -- --
-------- ------ ------- ------- ------- -----
Net income (loss).................. (16,194) (524) (1,942) (981) 2,519 (123)
Preferred stock dividends.......... 3,820 -- -- -- -- --
-------- ------ ------- ------- ------- -----
Income (loss) attributable to
common stockholders.............. $(20,014) $ (524) $(1,942) $ (981) $ 2,519 $(123)
======== ====== ======= ======= ======= =====
Income (loss) per common share..... $ (0.66)
========
Weighted average common shares
outstanding(r)................... 30,207
OTHER FINANCIAL DATA:
Broadcast Cash Flow................ $119,506 $ 439 $ 60 $ (638) $ 3,934 $ (78)
<CAPTION>
ACQUISITIONS
--------------------------------------------------------
KKSF-FM/ WJLB-FM/ WUSL-FM
KDFC-FM/AM WMXD-FM WDAS-FM/AM WIOQ-FM
HISTORICAL HISTORICAL HISTORICAL HISTORICAL
COMPLETED EVERGREEN TRANSACTIONS(A) 1/1-10/31(G) 1/1-8/31(H) 1/1-12/31(I) 1/1-12/31(J)
- ----------------------------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues..................... $13,646 $15,408 $16,809 $20,152
Less: agency commissions........... (1,746) (1,881) (2,142) (2,369)
------- ------- ------- -------
Net revenues....................... 11,900 13,527 14,667 17,783
Station operating expenses
excluding depreciation and
amortization..................... 6,358 5,721 7,759 9,519
Depreciation and amortization...... 2,351 2,415 2,763 --
Corporate general and
administrative expenses.......... -- 1,005 620 533
------- ------- ------- -------
Operating income (loss)............ 3,191 4,386 3,525 7,731
Interest expense................... 429 1,406 79 3,001
Other (income) expense............. (48) -- (39) 58
------- ------- ------- -------
Income (loss) before income taxes.. 2,810 2,980 3,485 4,672
Income tax expense (benefit)....... -- 180 -- --
------- ------- ------- -------
Net income (loss).................. 2,810 2,800 3,485 4,672
Preferred stock dividends.......... -- -- -- --
------- ------- ------- -------
Income (loss) attributable to
common stockholders.............. $ 2,810 $2,800 $ 3,485 $ 4,672
======= ======= ======= =======
Income (loss) per common share.....
Weighted average common shares
outstanding(r)...................
OTHER FINANCIAL DATA:
Broadcast Cash Flow................ $ 5,542 $7,806 $ 6,908 $ 8,264
<CAPTION>
DISPOSITIONS
------------------------------------------
WPEG-FM
WBAV-FM/AM COMPANY AS
WRFX-FM ADJUSTED FOR
WFNZ-FM WNKS-FM WEJM-FM COMPLETED
HISTORICAL HISTORICAL HISTORICAL PRO FORMA EVERGREEN
COMPLETED EVERGREEN TRANSACTIONS(A) 1/1-12/31(J) 1/1-12/31(K) 1/1-12/31(L) ADJUSTMENTS TRANSACTIONS
- ----------------------------------- ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues..................... $(20,818) $ (3,303) $(1,883) $ -- $393,904
Less: agency commissions........... 2,733 337 205 -- (50,574)
-------- -------- ------- -------- --------
Net revenues....................... (18,085) (2,966) (1,678) -- 343,330
Station operating expenses
excluding depreciation and
amortization..................... (9,509) (2,461) (1,552) -- 200,794
Depreciation and amortization...... -- (548) (1,203) 26,493(m) 127,659
Corporate general and
administrative expenses.......... -- -- -- (4,415)(n) 7,797
-------- -------- ------- -------- --------
Operating income (loss)............ (8,576) 43 1,077 (22,078) 7,080
Interest expense................... -- -- -- 20,241(o) 64,120
Other (income) expense............. -- -- -- -- (618)
-------- -------- ------- -------- --------
Income (loss) before income taxes.. (8,576) 43 1,077 (42,319) (56,422)
Income tax expense (benefit)....... -- -- -- (10,973)(p) (14,142)
-------- -------- ------- -------- --------
Net income (loss).................. (8,576) 43 1,077 (31,346) (42,280)
Preferred stock dividends.......... -- -- -- (3,820)(q) --
-------- -------- ------- -------- --------
Income (loss) attributable to
common stockholders.............. $ (8,576) $ 43 $ 1,077 $(27,526) $(42,280)
======== ======== ======= ======== ========
Income (loss) per common share..... $ (1.00)
========
Weighted average common shares
outstanding(r)................... 11,948 42,155
OTHER FINANCIAL DATA:
Broadcast Cash Flow................ $ (8,576) $ (505) $ (126) $ -- $142,536
</TABLE>
P-13
<PAGE> 150
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------- ---------------------------------------
WPEG-FM
WUSL-FM WBAV-FM/AM
WIOQ-FM WRFX-FM WNKS-FM
WDAS-FM/AM HISTORICAL WFNZ-FM HISTORICAL WEJM-FM
COMPANY HISTORICAL 1/1- HISTORICAL 1/1- HISTORICAL
COMPLETED EVERGREEN TRANSACTIONS(A) HISTORICAL 1/1-3/31(I) 3/31(J) 1/1-3/31(J) 3/31(K) 1/1-3/31(L)
----------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1997
Gross revenues....................... $93,812 $3,471 $4,376 $(4,932) $(807) $(400)
Less: agency commissions............. (11,915) (471) (530) 638 83 40
------- ------ ------ ------- ----- -----
Net revenues......................... 81,897 3,000 3,846 (4,294) (724) (360)
Station operating expenses excluding
depreciation and amortization...... 52,984 1,931 2,367 (2,346) (634) (367)
Depreciation and amortization........ 26,015 657 -- -- (141) (165)
Corporate general and administrative
expenses........................... 2,330 128 94 -- -- --
------- ------ ------ ------- ----- -----
Operating income (loss).............. 568 284 1,385 (1,948) 51 172
Interest expense..................... 8,053 14 660 -- -- --
Other (income) expense............... (165) 57 -- -- -- --
------- ------ ------ ------- ----- -----
Income (loss) before income taxes.... (7,320) 213 725 (1,948) 51 172
Income tax expense (benefit)......... (1,309) -- -- -- -- --
------- ------ ------ ------- ----- -----
Income (loss) attributable to common
stock.............................. $(6,011) $ 213 $ 725 $(1,948) $ 51 $ 172
======= ====== ====== ======= ===== =====
Income (loss) per common share..... $ (0.14)
=======
Weighted average common shares
outstanding(r)................... 42,188
=======
OTHER FINANCIAL DATA:
Broadcast cash flow.................. $28,913 $1,069 $1,479 $(1,948) $ (90) $ 7
======= ====== ====== ======= ===== =====
<CAPTION>
COMPANY AS
ADJUSTED FOR
COMPLETED
PRO FORMA EVERGREEN
COMPLETED EVERGREEN TRANSACTIONS(A) ADJUSTMENTS TRANSACTIONS
----------------------------------- ----------- ------------
<S> <C> <C>
THREE MONTHS ENDED MARCH 31, 1997
Gross revenues....................... $ -- $ 95,520
Less: agency commissions............. -- (12,155)
------- --------
Net revenues......................... -- 83,365
Station operating expenses excluding
depreciation and amortization...... -- 53,935
Depreciation and amortization........ 4,592(m) 30,958
Corporate general and administrative
expenses........................... (222)(n) 2,330
------- --------
Operating income (loss).............. (4,370) (3,858)
Interest expense..................... 6,178(o) 14,905
Other (income) expense............... -- (108)
------- --------
Income (loss) before income taxes.... (10,548) (18,655)
Income tax expense (benefit)......... (3,819)(p) (5,128)
------- --------
Income (loss) attributable to common
stock.............................. $(6,729) $(13,527)
======= ========
Income (loss) per common share..... $ (0.32)
========
Weighted average common shares
outstanding(r)................... 42,188
========
OTHER FINANCIAL DATA:
Broadcast cash flow.................. $ -- $ 29,430
======= ========
</TABLE>
- ---------------
(a) On May 30, 1997, Evergreen acquired, in the Century Acquisition, WPNT-FM in
Chicago for $73,750 in cash of which $5,500 was paid as escrow funds in July
1996. On April 10, 1997, Evergreen entered into an agreement to sell, in the
Bonneville Dispositions, WPNT-FM in Chicago for $75,000 in cash. The results
of operations of WPNT are excluded as the acquisition and disposition is
deemed to have occurred on January 1, 1996.
(b) On January 17, 1996, Evergreen acquired Pyramid Communications, Inc.
("Pyramid"), a radio broadcasting company with 12 radio stations (9 FM and 3
AM) in five markets (Chicago, Philadelphia, Boston, Charlotte, and Buffalo)
(the "Pyramid Acquisition"). The total purchase price, including acquisition
costs, allocated to net assets acquired was approximately $316,343 of which
$315,000 was financed through additional borrowings under Evergreen's prior
senior credit facility. The historical financial data of Pyramid for the
period of January 1, 1996 to January 17, 1996 excludes the combined net
losses of approximately $60 for WHTT-FM, WHTT-AM and WSJZ-FM in Buffalo (the
"Buffalo Transactions") which were sold in 1996 for $32,000 in cash.
(c) On August 14, 1996, Evergreen acquired KYLD-FM in San Francisco for $44,000
in cash. Evergreen had previously been operating KYLD-FM under a time
brokerage agreement since May 1, 1996.
(d) On November 26, 1996, Evergreen exchanged WKLB-FM in Boston (which Evergreen
acquired on May 3, 1996 for $34,000 in cash) for WGAY-FM in Washington, D.C.
On April 3, 1997, the Company exchanged, in the Greater Media Exchange,
WQRS-FM in Detroit (which Evergreen acquired on April 3, 1997 for $32,000 in
cash) for WWRC-AM in Washington, D.C. and $9,500 in cash. Evergreen had
previously been operating WGAY-FM and WWRC-AM under time brokerage
agreements since June 17, 1996.
(e) On October 18, 1996, Evergreen acquired WEDR-FM in Miami for $65,000 in
cash.
(f) On January 31, 1997, Evergreen acquired, in the WWWW/WDFN Acquisition,
WWWW-FM and WDFN-AM in Detroit from Chancellor for $30,000 in cash (of which
$1,500 was paid as escrow funds in January 1996). Evergreen had previously
provided certain sales and promotional functions to WWWW-FM and WDFN-AM
under a joint sales agreement since February 14, 1996 and subsequently
operated the stations under a time brokerage agreement since April 1, 1996.
(g) On January 31, 1997, Evergreen acquired, in the KKSF/KDFC Acquisition,
KKSF-FM and KDFC-FM/AM in San Francisco for $115,000 in cash (of which
$10,000 was paid as escrow funds in November 1996). Evergreen had previously
been operating the stations under a time brokerage agreement since November
1, 1996.
(h) On April 1, 1997, Evergreen acquired, in the Secret/Detroit Acquisition,
WJLB-FM and WMXD-FM in Detroit for $168,000 in cash. Evergreen had
previously been operating the stations under a time brokerage agreement
since September 1, 1996.
P-14
<PAGE> 151
(i) On May 1, 1997, Evergreen acquired, in the Beasley Acquisition, WDAS-FM/AM
in Philadelphia for $103,000 in cash.
(j) On May 15, 1997, Evergreen exchanged, in the EZ Exchange, 5 of its 6
stations in the Charlotte market (WPEG-FM, WBAV-FM/AM, WRFX-FM and
WFNZ-AM) for WUSL-FM and WIOQ-FM in Philadelphia.
(k) On May 15, 1997, Evergreen sold, in the EZ Sale, WNKS-FM in Charlotte for
$10,000 in cash.
(l) On June 3, 1997, Evergreen sold, in the Crawford Disposition, WEJM-FM in
Chicago for $14,750 in cash.
(m) Reflects incremental amortization related to the Completed Evergreen
Transactions and is based on the following allocation to intangible
assets:
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
COMPLETED EVERGREEN TRANSACTIONS AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1996 PERIOD(I) NET EXPENSE(I) EXPENSE INCREASE
-------------------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Pyramid Acquisition (ii)......... 1/1-1/17 $325,871 $ 1,026 $ 409 $ 617
KYLD-FM.......................... 1/1-8/14 43,659 1,811 640 1,171
WEDR-FM.......................... 1/1-10/18 63,757 3,400 -- 3,400
WGAY-FM.......................... 1/1-11/26 32,538 1,964 -- 1,964
WWWW-FM/WDFN-AM.................. 1/1-12/31 26,590 1,773 7 1,766
KKSF-FM/KDFC-AM (iii)............ 1/1-12/31 63,500 4,233 868 3,365
WJLB-FM/WMXD-FM.................. 1/1-12/31 165,559 11,037 2,145 8,892
WWRC-AM.......................... 1/1-12/31 16,808 1,121 -- 1,121
WDAS-FM/AM....................... 1/1-12/31 100,000 6,667 2,470 4,197
-------- ------- ------ -------
Total.................. $838,282 $33,032 $6,539 $26,493
======== ======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
COMPLETED EVERGREEN TRANSACTIONS AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
THREE MONTHS ENDED MARCH 31, 1997 PERIOD(I) NET EXPENSE(I) EXPENSE INCREASE
--------------------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
WWWW-FM/WDFN-AM.................. 1/1-1/31 $ 26,590 $ 148 $ -- $ 148
KKSF-FM/KDFC-AM (iii)............ 1/1-1/31 63,500 353 -- 353
WJLB-FM/WMXD-FM.................. 1/1-3/31 165,559 2,759 -- 2,759
WWRC-AM.......................... 1/1-3/31 16,808 280 -- 280
WDAS-FM/AM....................... 1/1-3/31 100,000 1,667 615 1,052
-------- ------- ------ -------
Total.................. $372,457 $ 5,207 $ 615 $ 4,592
======== ======= ====== =======
</TABLE>
(i) Intangible assets are amortized on a straight-line basis over an
estimated average 15 year life. The incremental amortization period
represents the period of the year that the station was not owned by
Evergreen.
(ii) Intangible assets for the Pyramid Acquisition of $325,871 includes
$61,218 resulting from the recognition of deferred tax liabilities and
excludes approximately $29,915 of the purchase price allocated to the
Buffalo Stations which were sold during the year ended December 31,
1996.
(iii) Intangible assets for KKSF-FM and KDFC-AM excludes approximately
$50,000 of the purchase price allocated to KDFC-FM which has been
classified as assets held for sale.
Historical depreciation expense of the Completed Evergreen Transactions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation and amortization may differ based upon final purchase price
allocations.
(n) Reflects the elimination of duplicate corporate expenses of $4,415 for the
year ended December 31, 1996 and $222 for the three months ended March 31,
1997 related to the Completed Evergreen Transactions.
P-15
<PAGE> 152
(o) Reflects the adjustment to interest expense in connection with the
consummation of the Completed Evergreen Transactions, the 1996 Equity
Offering and the amendment and restatement of Evergreen's senior credit
agreement:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions............................ $969,250 $495,250
Completed Dispositions............................ (56,750) (24,750)
New Loan Fees..................................... 10,000 10,000
-------- --------
Total additional bank borrowings.................... $922,500 $480,500
======== ========
Interest expense at 7.0%............................ $ 41,596 $ 6,852
Less: historical interest expense................... (6,352) (674)
-------- --------
Net increase in interest expense.................... 35,244 6,178
Reduction in interest expense on bank debt related
to the application of net proceeds of the 1996
Equity Offering of $264,236 at 7.0% for the period
January 1, 1996 to October 22, 1996............... (15,003) --
-------- --------
Total adjustment for net increase in interest
expense........................................... $ 20,241 $ 6,178
======== ========
</TABLE>
(p) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
(q) Reflects the elimination of historical preferred stock dividends of $3,820
for the year ended December 31, 1996 assuming the conversion of 1,608,297
shares of Evergreen's formerly outstanding $3.00 convertible preferred
stock into 5,025,916 shares of Evergreen's Class A Common Stock (the "1996
Preferred Stock Conversion") and the redemption of the remaining 1,703
shares of formerly outstanding $3.00 convertible preferred stock occurred
January 1, 1996.
(r) The pro forma combined loss per common share data is computed by dividing
pro forma loss attributable to common stockholders by the weighted average
common shares assumed to be outstanding. A summary of shares used in the
pro forma combined loss per common share calculation follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Historical weighted average shares outstanding...... 30,207 42,188
Incremental weighted average shares relating to:
Issuance of 9,000,000 shares of Class A Common
Stock on October 17, 1996...................... 7,325 --
1996 Preferred Stock Conversion................... 4,623 --
------- ------
Total incremental weighted average shares........... 11,948 --
------- ------
Shares used in the pro forma combined earnings per
share calculation................................. 42,155 42,188
======= ======
</TABLE>
P-16
<PAGE> 153
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
Related to the Pending Evergreen Transactions
(12) The detail of the historical financial data of the stations to be
acquired or disposed of in the Pending Evergreen Transactions for the
year ended December 31, 1996 and the three months ended March 31, 1997
has been obtained from the historical financial statements of the
respective stations and is summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------- ---------------------------------------------------------
EVERGREEN
VIACOM
ACQUISITION GANNETT WFLN-FM WEJM-AM WLUP-FM KDFC-FM
EVERGREEN PENDING TRANSACTIONS HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
YEAR ENDED DECEMBER 31, 1996(A) 1/1-12/31(B) 1/1-12/31(C) 9/1-12/31(D) 1/1-12/31(E) 1/1-12/31(F) 1/1-12/31(G)
------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues........................ $ 67,926 $52,028 $(1,455) $(807) $(17,024) $(5,138)
Less: agency commissions.............. (10,493) (6,819) 159 88 2,332 643
-------- ------- ------- ----- -------- -------
Net revenues.......................... 57,433 45,209 (1,296) (719) (14,692) (4,495)
Station operating expenses excluding
depreciation and amortization....... 26,598 25,031 (725) (665) (11,697) (2,300)
Depreciation and amortization......... 6,267 1,760 (800) (516) (1,585) (853)
Corporate general and administrative
expenses............................ 1,617 -- -- -- -- --
-------- ------- ------- ----- -------- -------
Operating income (loss)............... 22,951 18,418 229 462 (1,410) (1,342)
Interest expense...................... -- -- -- -- -- --
Other (income) expense................ 459....... -- -- -- -- --
-------- ------- ------- ----- -------- -------
Income (loss) before income taxes..... 22,492 18,418 229 462 (1,410) (1,342)
Income tax expense (benefit).......... 10,612.... -- -- -- -- --
-------- ------- ------- ----- -------- -------
Net income (loss)..................... $ 11,880 $18,418 $ 229 $ 462 $ (1,410) $(1,342)
======== ======= ======= ===== ======== =======
OTHER FINANCIAL DATA:
Broadcast Cash Flow................... $ 30,835 $20,178 $ (571) $ (54) $ (2,995) $(2,195)
<CAPTION>
DISPOSITIONS
-------------------------------------------
TOTAL
SAN FRANCISCO PENDING
FREQUENCY WJZW-FM EVERGREEN
EVERGREEN PENDING TRANSACTIONS HISTORICAL HISTORICAL TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996(A) 1/1-12/31(H) 1/1-12/31(I) HISTORICAL
------------------------------- ------------- ------------ ------------
<S> <C> <C> <C>
Gross revenues........................ $(2,736) $(8,443) $ 84,351
Less: agency commissions.............. 358 1,311 (12,421)
------- ------- --------
Net revenues.......................... (2,378) (7,132) 71,930
Station operating expenses excluding
depreciation and amortization....... (3,159) (3,998) 29,085
Depreciation and amortization......... (3,826) (589) (142)
Corporate general and administrative
expenses............................ -- (206) 1,411
------- ------- --------
Operating income (loss)............... 4,607 (2,339) 41,576
Interest expense...................... -- -- --
Other (income) expense................ -- -- 459
------- ------- --------
Income (loss) before income taxes..... 4,607 (2,339) 41,117
Income tax expense (benefit).......... -- (913) 9,699
------- ------- --------
Net income (loss)..................... $ 4,607 $(1,426) $ 31,418
======= ======= ========
OTHER FINANCIAL DATA:
Broadcast Cash Flow................... $ 781 $(3,134) $ 42,845
</TABLE>
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------- -----------------------------------------------------
EVERGREEN
VIACOM
ACQUISITION GANNETT WFLN-FM WEJM-AM WLUP-FM KDFC-FM
EVERGREEN PENDING TRANSACTIONS HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
THREE MONTHS ENDED MARCH 31, 1997(A) 1/1-3/31(B) 1/1-3/31(C) 1/1-3/31(D) 1/1-3/31(E) 1/1-3/31(F) 1/1-3/31(G)
------------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues......................... $ 17,027 $ 12,392 $ (908) $(172) $(2,762) $(278)
Less: agency commissions............... (2,788) (1,082) 93 17 355 26
-------- -------- ------ ----- ------- -----
Net revenues........................... 14,239 11,310 (815) (155) (2,407) (252)
Station operating expenses excluding
depreciation and amortization........ 6,917 6,908 (539) (157) (2,894) (224)
Depreciation and amortization.......... 1,101 435 (600) (70) (385) --
Corporate general and administrative
expenses............................. 341 -- -- -- -- --
-------- -------- ------ ----- ------- -----
Operating income (loss)................ 5,880 3,967 324 72 872 (28)
Interest expense....................... -- -- -- -- -- --
Other (income) expense................. -- -- -- -- -- --
-------- -------- ------ ----- ------- -----
Net income (loss)...................... 5,880 3,967 324 72 872 (28)
Income tax expense..................... 2,946 -- -- -- -- --
-------- -------- ------ ----- ------- -----
Net income (loss)...................... $ 2,934 $ 3,967 $ 324 $ 72 $ 872 $ (28)
======== ======== ====== ===== ======= =====
OTHER FINANCIAL DATA
Broadcast Cash Flow.................... $ 7,322 $ 4,402 $ (276) $ 2 $ 487 $ (28)
<CAPTION>
DISPOSITIONS
---------------------------
TOTAL
SAN FRANCISCO PENDING
FREQUENCY WJZW-FM EVERGREEN
EVERGREEN PENDING TRANSACTIONS HISTORICAL HISTORICAL TRANSACTIONS
THREE MONTHS ENDED MARCH 31, 1997(A) 1/1-3/31(H) 1/1-3/31(I) HISTORICAL
------------------------------------ ------------- ----------- ------------
<S> <C> <C> <C>
Gross revenues......................... $ (574) ($1,727) $22,998
Less: agency commissions............... 72 296 (3,011)
------ ------- -------
Net revenues........................... (502) (1,431) 19,987
Station operating expenses excluding
depreciation and amortization........ (868) (926) 8,217
Depreciation and amortization.......... (949) (138) (606)
Corporate general and administrative
expenses............................. -- (35) 306
------ ------- -------
Operating income (loss)................ 1,315 (332) 12,070
Interest expense....................... -- -- --
Other (income) expense................. -- -- --
------ ------- -------
Net income (loss)...................... 1,315 (332) 12,070
Income tax expense..................... -- (130) 2,816
------ ------- -------
Net income (loss)...................... $1,315 $(202) $ 9,254
====== ======= =======
OTHER FINANCIAL DATA
Broadcast Cash Flow.................... $ 366 $(505) $11,770
</TABLE>
P-17
<PAGE> 154
- ---------------
(a) On May 30, 1997, Evergreen acquired, in the Century Acquisition, WPNT-FM in
Chicago for $73,750 in cash of which $5,500 was paid as escrow funds in July
1996. On April 10, 1997, Evergreen entered into an agreement to sell, in the
Bonneville Dispositions, WPNT-FM in Chicago for $75,000 in cash. The results
of operations of WPNT are excluded as the acquisition and disposition is
deemed to have occurred on January 1, 1996.
(b) On February 19, 1997, Evergreen and Chancellor entered into the Viacom Joint
Purchase Agreement whereby in the event the Viacom Acquisition occurs prior
to the consummation of the Merger, Evergreen will purchase 6 of the 10
Viacom stations in the Evergreen Viacom Acquisition for $595,000 plus
working capital ($10,125 at March 31, 1997) and estimated acquisition costs
of $5,500 for an aggregate purchase price of $610,625. The stations to be
acquired by Evergreen in the Evergreen Viacom Acquisition include WAXQ-FM
and WLTW-FM in New York and WMZQ-FM, WZHF-AM, WJZW-FM and WBZS-AM in
Washington, D.C. The Viacom results of operations reflect the financial
performance of WAXQ-FM for six months of the year that the station was
operated by Viacom (July 1, 1996 to December 31, 1996) combined with net
income of $851 for the first half of the year when the station was under
prior ownership.
(c) On April 4, 1997, Evergreen entered into an agreement to acquire, in the
Gannett Acquisition, 5 radio stations in 3 major markets from P&S including
WGCI-FM/AM in Chicago, KHKS-FM in Dallas, and KKBQ-FM/AM in Houston
("Gannett") for $340,000 in cash.
(d) On August 12, 1996, Evergreen entered into an agreement to acquire, in the
Secret/Philadelphia Acquisition, WFLN-FM in Philadelphia for $37,750 in
cash. On April 8, 1997, Evergreen entered into an agreement to sell, in the
Greater Media Disposition, WFLN-FM in Philadelphia for $41,800 in cash.
Evergreen has been operating WFLN-FM under a time brokerage agreement since
September 1, 1996.
(e) On March 19, 1997, Evergreen entered into an agreement to sell, in the
Douglas Chicago Disposition, WEJM-AM in Chicago for $7,500 in cash.
(f) On April 10, 1997, Evergreen entered into an agreement to sell, in the
Bonneville Dispositions, WLUP-FM in Chicago for $80,000 in cash.
(g) On January 31, 1997, Evergreen acquired, in the KKSF/KDFC Acquisition,
KKSF-FM and KDFC-FM/AM in San Francisco for $115,000 in cash. Evergreen had
previously been operating KKSF-FM and KDFC-FM/AM under a time brokerage
agreement since November 1, 1996. On April 10, 1997, Evergreen entered into
an agreement to sell KDFC-FM in San Francisco for $50,000 in cash. The
assets of KDFC-FM are classified as assets held for sale in connection with
the purchase price allocation of the acquisition of KKSF-FM/KDFC-FM/AM.
Accordingly, KDFC-FM net income of approximately $304 for the period
February 1, 1997 through March 31, 1997 has been excluded from Evergreen's
historical condensed statement of operations. Therefore, the KDFC-FM
condensed statement of operations includes results of operations for January
1, 1997 through January 31, 1997 (the time brokerage agreement holding
period in 1997) for the three months ended March 31, 1997.
(h) On April 8,1997, Evergreen entered into an agreement to sell, in the San
Francisco Frequency Disposition, the San Francisco 107.7 MHz FM dial
position and transmission facility and the call letters from Chancellor's
KSAN-FM in San Francisco for $44,000 in cash.
(i) On April 11, 1997, Evergreen entered into an agreement to sell, in the
ABC/Washington Disposition, WJZW-FM in Washington (to be acquired as part of
the Evergreen Viacom Acquisition) for $68,000 in cash.
P-18
<PAGE> 155
(13) Reflects incremental amortization related to the assets acquired in the
Pending Evergreen Transactions (see notes 2(j) and 2(l)) and is based on
the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Amortization expense on $861,827 additional
intangible assets amortized on a straight-line
basis over a 15 year period........................ $57,455 $14,364
Less: historical amortization expense................ (6,835) (1,098)
------- -------
Adjustment for net increase in amortization
expense............................................ $50,620 $13,266
======= =======
</TABLE>
Historical depreciation expense of the Pending Evergreen Transactions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation and amortization may differ based upon final purchase price
allocations.
(14) Reflects the elimination of duplicate corporate expenses of $1,100 for the
year ended December 31, 1996 and $232 for the three months ended March 31,
1997 related to the Pending Evergreen Transactions.
(15) Reflects the adjustment to interest expense in connection with the
consummation of the Pending Evergreen Transactions:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Additional bank borrowings related to:
Pending Acquisitions............................... $ 700,357 $ 700,357
Pending Dispositions............................... (366,300) (366,300)
--------- ---------
Total additional bank borrowings..................... $ 334,057 $ 334,057
========= =========
Interest expense on additional bank borrowings at
7.0%............................................... $ 23,384 $ 5,417
========= =========
</TABLE>
(16) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
(17) Reflects assumed dividends on the Evergreen $3.00 Convertible Preferred
Stock of $17,970 for the year ended December 31, 1996 and $4,493 for the
three months ended March 31, 1997.
P-19
<PAGE> 156
ADJUSTMENTS TO CHANCELLOR'S HISTORICAL CONDENSED COMBINED STATEMENT OF
OPERATIONS RELATED TO THE COMPLETED CHANCELLOR TRANSACTIONS
(18) Chancellor's historical condensed combined statement of operations for the
year ended December 31, 1996 and the three months ended March 31, 1997 and
pro forma adjustments related to the Completed Chancellor Transactions is
summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS
-----------------------------------------------------------------------------------
KIMN-
FM/ KOOL-FM
SHAMROCK KALC-FM COLFAX HISTORICAL SUNDANCE
COMPLETED CHANCELLOR TRANSACTIONS CHANCELLOR HISTORICAL HISTORICAL HISTORICAL 1/1- HISTORICAL
YEAR ENDED DECEMBER 31, 1996 HISTORICAL(A) 1/1-2/14(B) 1/1-3/31(C) 1/1-12/31(D) 3/31(D) 1/1-9/12(D)
- --------------------------------- ------------- ----------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues................... $203,188 $ 9,698 $2,010 $51,745 $1,665 $13,844
Less: agency commissions......... (24,787) (1,234) (259) (6,626) (234) (1,740)
-------- ------- ------ ------- ------- -------
Net revenues..................... 178,401 8,464 1,751 45,119 1,431 12,104
Station operating expenses
excluding depreciation and
amortization................... 111,210 7,762 1,523 28,584 852 7,678
Depreciation and amortization.... 20,877 595 511 4,494 229 1,242
Corporate general and
administrative expenses........ 4,845 2,215 -- -- -- --
Stock option compensation........ 3,800 -- -- -- -- --
-------- ------- ------ ------- ------- -------
Operating income (loss).......... 37,669 (2,108) (283) 12,041 350 3,184
Interest expense................. 35,704 1,380 -- 4,369 299 --
Other (income) expense........... 68 49 312 (179) -- 25
-------- ------- ------ ------- ------- -------
Income (loss) before income
taxes.......................... 1,897 (3,537) (595) 7,851 51 3,159
Income tax expense (benefit)..... 4,612 -- -- -- -- --
Dividends and accretion on
preferred stock of
subsidiary..................... 11,557 -- -- -- -- --
-------- ------- ------ ------- ------- -------
Net income (loss)................ (14,272) (3,537) (595) 7,851 51 3,159
Preferred stock dividends........ -- -- -- -- -- --
-------- ------- ------ ------- ------- -------
Income (loss) attributable to
common stockholders............ $(14,272) $(3,537) $ (595) $ 7,851 $ 51 $ 3,159
======== ======= ====== ======= ======= =======
OTHER FINANCIAL DATA:
Broadcast Cash Flow.............. $ 67,191 $ 702 $ 228 $16,535 $ 579 $ 4,426
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------ ---------------------------------------- PRO FORMA
WMIL-FM/ ADJUSTMENTS
KSTE-FM WWWW-FM/ KTBZ-FM WOKY-AM FOR THE
OMNI HISTORICAL WDFN-AM HISTORICAL HISTORICAL COMPLETED
COMPLETED CHANCELLOR TRANSACTION HISTORICAL 1/1- HISTORICAL 1/1- 1/1- CHANCELLOR
YEAR ENDED DECEMBER 31, 1996 1/1-6/30(E) 7/31(F) 1/1-2/14(G) 2/14(C) 12/31(H) TRANSACTIONS
- -------------------------------- ----------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.................. $8,710 $1,411 $(839) $ (399) $(9,552) $ (5,022)(i)
Less: agency commissions........ (1,211) (149) 102 48 1,070 --
------ ------ ----- ------- ------- --------
Net revenues.................... 7,499 1,262 (737) (351) (8,482) (5,022)
Station operating expenses
excluding depreciation and
amortization.................. 4,985 1,244 (815) (521) (4,896) (5,763)(i)
Depreciation and amortization... 1,458 375 (45) (42) (539) 7,831(j)
(1,554)(k)
Corporate general and
administrative expenses....... -- -- -- -- -- (1,706)(l)
Stock option compensation....... -- -- -- -- -- --
------ ------ ----- ------- ------- --------
Operating income (loss)......... 1,056 (357) 123 212 (3,047) (3,830)
Interest expense................ -- -- -- -- -- 5,407(m)
Other (income) expense.......... (404) -- -- -- (19) --
------ ------ ----- ------- ------- --------
Income (loss) before income
taxes......................... 1,460 (357) 123 212 (3,028) (9,237)
Income tax expense (benefit).... -- -- -- -- -- (1,412)(n)
Dividends and accretion on
preferred stock of
subsidiary.................... -- -- -- -- -- 26,843(o)
------ ------ ----- ------- ------- --------
Net income (loss)............... 1,460 (357) 123 212 (3,028) (34,668)
Preferred stock dividends....... -- -- -- -- -- 7,700(p)
------ ------ ----- ------- ------- --------
Income (loss) attributable to
common stockholders........... $1,460 $ (357) $ 123 $ 212 $(3,028) $(42,368)
====== ====== ===== ======= ======= ========
OTHER FINANCIAL DATA:
Broadcast Cash Flow............. $2,514 $ 18 $ 78 $ 170 $(3,586) $ 741
<CAPTION>
CHANCELLOR AS
ADJUSTED FOR
COMPLETED
COMPLETED CHANCELLOR TRANSACTION CHANCELLOR
YEAR ENDED DECEMBER 31, 1996 TRANSACTIONS
- -------------------------------- -------------
<S> <C>
Gross revenues.................. $276,459
Less: agency commissions........ (35,020)
--------
Net revenues.................... 241,439
Station operating expenses
excluding depreciation and
amortization.................. 151,843
Depreciation and amortization... 35,432
Corporate general and
administrative expenses....... 5,354
Stock option compensation....... 3,800
--------
Operating income (loss)......... 45,010
Interest expense................ 47,159
Other (income) expense.......... (148)
--------
Income (loss) before income
taxes......................... (2,001)
Income tax expense (benefit).... 3,200
Dividends and accretion on
preferred stock of
subsidiary.................... 38,400
--------
Net income (loss)............... (43,601)
Preferred stock dividends....... 7,700
--------
Income (loss) attributable to
common stockholders........... $(51,301)
========
OTHER FINANCIAL DATA:
Broadcast Cash Flow............. $ 89,596
</TABLE>
P-20
<PAGE> 157
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS CHANCELLOR AS
FOR THE ADJUSTED FOR
COLFAX COMPLETED COMPLETED
COMPLETED CHANCELLOR TRANSACTIONS CHANCELLOR HISTORICAL CHANCELLOR CHANCELLOR
THREE MONTHS ENDED MARCH 31, 1997(A) HISTORICAL 1/1 - 1/23(D) TRANSACTIONS TRANSACTIONS
------------------------------------ ---------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Gross revenues............................ $ 63,477 $3,183 $ (828)(i) $ 65,832
Less: agency commissions.................. (7,623) (384) -- (8,007)
-------- ------ ------- --------
Net revenues.............................. 55,854 2,799 (828) 57,825
Station operating expenses excluding
depreciation and amortization........... 38,187 1,872 (1,231)(i) 38,828
Depreciation and amortization............. 8,109 -- 835(j) 8,862
(82)(k)
Corporate general and administrative
expenses................................ 1,712 -- -- 1,712
Merger expense............................ 2,056 -- 2,056
Stock option compensation................. 950 -- -- 950
-------- ------ ------- --------
Operating income (loss)................... 4,840 927 (350) 5,417
Interest expense.......................... 11,420 320(m) 11,740
Other (income) expense.................... (1,632) -- (1,632)
-------- ------ ------- --------
Income (loss) before income taxes......... (4,948) 927 (670) (4,691)
Income tax expense (benefit).............. (400) (476)(n) (876)
Dividends and accretion on preferred stock
of subsidiary........................... 8,135 -- 1,504(o) 9,639
-------- ------ ------- --------
Net income (loss)......................... (12,683) 927 (1,698) (13,454)
Preferred stock dividends................. 1,454 -- 471(p) 1,925
-------- ------ ------- --------
Income (loss) attributable to common
stockholders............................ $(14,137) $ 927 $(2,169) $(15,379)
======== ====== ======= ========
OTHER FINANCIAL DATA:
Broadcast Cash Flow....................... $ 17,667 $ 927 $ 403 $ 18,997
</TABLE>
- ---------------
(a) On November 22, 1996, Chancellor acquired WKYN-AM in Cincinnati for $1,400
in cash. Chancellor had been previously operating WKYN-AM under a time
brokerage agreement since January 1, 1996. Therefore, Chancellor's
historical results of operations for the year ended December 31, 1996 and
the three months ended March 31, 1997 include the results of operations of
WKYN-AM.
(b) On February 14, 1996, Chancellor acquired Shamrock Broadcasting, Inc., a
radio broadcasting company with 19 radio stations (11 FM and 8 AM) located
in 10 markets (Los Angeles, New York, San Francisco, Houston, Atlanta,
Detroit, Denver, Minneapolis-St. Paul, Phoenix and Pittsburgh). The total
purchase price, including acquisition costs, allocated to net assets
acquired was approximately $408,000.
(c) On July 31, 1996, Chancellor exchanged KTBZ-FM in Houston (which was
acquired on February 14, 1996 as part of the Shamrock Acquisition) and
$5,600 in cash for KIMN-FM and KALC-FM in Denver. Chancellor had previously
entered into a time brokerage agreement to sell substantially all of the
broadcast time of KTBZ-FM effective February 14, 1996. In addition,
Chancellor had been previously operating KIMN-FM and KALC-FM under a time
brokerage agreement since April 1, 1996.
(d) On January 23, 1997, Chancellor acquired Colfax Communications, a radio
broadcasting company, with 12 radio stations (8 FM and 4 AM) located in 4
markets (Minneapolis-St. Paul, Phoenix, Washington, D.C. and Milwaukee
markets). The total purchase price, including acquisition costs, allocated
to net assets acquired was approximately $383,700. The Colfax Acquisition
was financed through (i) a private placement by CRBC of the CRBC Series A
Preferred Stock for net proceeds of $191,817; (ii) a private placement by
Chancellor of $110,000 of Chancellor Parent Convertible Preferred Stock for
net proceeds of $105,546; (iii) additional bank borrowings under CRBC's
previous senior credit agreement of $65,937 and (iv) $20,400 in escrow
funds. The historical financial data of Colfax for the year ended December
31, 1996 excludes the combined net income of approximately $224 for KLTB-FM,
KARO-FM and
P-21
<PAGE> 158
KIDO-AM in Boise, Idaho which Chancellor did not acquire as part of the
Colfax Acquisition. The Colfax historical condensed statement of operations
for the year ended December 31, 1996, does not include the results of
operations of the following: (i) KOOL-FM for the period January 1, 1996 to
March 31, 1996 and (ii) WMIL-FM and WOKY-AM in Milwaukee and KZON-FM,
KISO-AM, KYOT-FM and KOY-AM in Phoenix which were owned and operated by
Sundance Broadcasting, Inc. ("Sundance") for the period January 1, 1996 to
September 12, 1996. On March 31, 1997, Chancellor sold WMIL-FM and WOKY-AM
in Milwaukee for $41,253 in cash. The assets of WMIL-FM and WOKY-AM are
classified as assets held for sale in connection with the purchase price
allocation of the Colfax Acquisition. Accordingly, WMIL-FM and WOKY-AM net
income of approximately $41 for the period January 23, 1997 through March
31, 1997 has been excluded from the Colfax historical condensed statement of
operations for the three months ended March 31, 1997.
(e) On February 13, 1997, Chancellor acquired substantially all of the assets
and assumed certain liabilities of the OmniAmerica Group including 8 radio
stations (7 FM and 1 AM) located in 3 markets (Orlando, West Palm Beach and
Jacksonville). The total purchase price, including acquisition costs,
allocated to net assets acquired was approximately $181,046. The Omni
Acquisition was financed through (i) additional bank borrowings under CRBC's
previous senior credit agreement of $166,046 and (ii) the issuance of
555,556 shares of the Chancellor Class A Common Stock valued at $15,000 or
$27.00 per share. Prior to the consummation of the Omni Acquisition,
Chancellor had entered into an agreement to operate the stations under a
time brokerage agreement effective July 1, 1996. Additionally, prior to
consummation of the West Palm Beach Exchange (see (f) below) on March 28,
1997 and the SFX Exchange (see note 17(a)), Chancellor entered into time
brokerage agreements to sell substantially all of the broadcast time of
WEAT-FM/AM and WOLL-FM in West Palm Beach and WAPE-FM and WFYV-FM in
Jacksonville effective July 1, 1996. The historical financial data of Omni
for the period January 1, 1996 to June 30, 1996 represents the results of
operations for the Orlando stations (WOMX-FM, WXXL-FM and WJHM-FM). The
results of operations for WEAT-FM/AM and WOLL-FM in West Palm Beach and
WAPE-FM and WFYV-FM in Jacksonville are not included as the acquisition and
disposition of these stations is deemed to have occurred on January 1, 1996.
(f) On March 28, 1997, Chancellor exchanged, in the West Palm Beach Exchange,
WEAT-FM/AM and WOLL-FM in West Palm Beach, Florida, which were acquired as
part of the Omni Acquisition, for KSTE-FM in Sacramento and $33,000 in cash.
Chancellor had previously been operating KSTE-FM under a time brokerage
agreement since August 1, 1996.
(g) On January 31, 1997, Chancellor sold, in the WWWW/WDFN Disposition, WWWW-FM
and WDFN-AM in Detroit, which were acquired on February 14, 1996 as part of
the Shamrock Acquisition, to Evergreen for $30,000 in cash. Prior to the
completion of the sale, Chancellor had entered into a joint sales agreement
effective February 14, 1996 and a time brokerage agreement effective April
1, 1996 to sell substantially all of the broadcast time of WWWW-FM and
WDFN-AM to Evergreen pending the completion of the sale.
(h) On March 31, 1997, Chancellor sold, in the Milwaukee Disposition, WMIL-FM
and WOKY-AM in Milwaukee, which were acquired as part of the Colfax
Acquisition on January 23, 1997, for $41,253 in cash.
(i) Reflects the elimination of time brokerage agreement fees received and paid
by Chancellor as follows:
<TABLE>
<CAPTION>
COMPLETED CHANCELLOR TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996 MARKET PERIOD REVENUE EXPENSE
--------------------------------- --------------- ---------- ------- -------
<S> <C> <C> <C> <C>
WWWW-FM/WDFN-AM........................... Detroit 2/14-12/31 $(2,937) $ (598)
KTBZ-FM................................... Houston 2/14-7/31 (1,113) (265)
WOMX-FM, WXXL-FM, WJHM-FM................. Orlando 7/1-12/31 -- (3,900)
WEAT-FM/AM, WOLL-FM....................... West Palm Beach 7/1-12/31 (972) (1,000)
------- -------
Total adjustment for decrease in gross revenues and expenses........... $(5,022) $(5,763)
======= =======
</TABLE>
P-22
<PAGE> 159
<TABLE>
<CAPTION>
COMPLETED CHANCELLOR TRANSACTIONS
THREE MONTHS ENDED MARCH 31, 1997 MARKET PERIOD REVENUE EXPENSE
--------------------------------- --------------- -------- ------- -------
<S> <C> <C> <C> <C>
WWWW-FM/WDFN-AM.............................. Detroit 1/1-1/31 $(235) $ (16)
WOMX-FM, WXXL-FM, WJHM-FM.................... Orlando 1/1-2/13 -- (911)
WEAT-FM/AM, WOLL-FM.......................... West Palm Beach 1/1-3/28 (593) (304)
----- -------
Total adjustment for decrease in gross revenues and expenses............ $(828) $(1,231)
===== =======
</TABLE>
Gross revenues of the Completed Chancellor Transactions exclude any time
brokerage agreement payments received from Chancellor.
(j) Reflects incremental amortization related to the Completed Chancellor
Transactions and is based on the following allocation to intangible assets:
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED CHANCELLOR TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1996 PERIOD ASSETS, NET EXPENSE(I) EXPENSE INCREASE
--------------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Shamrock............................ 1/1-2/14 $361,425 $ 1,104 $ 393 $ 711
KIMN-FM/KALC-FM..................... 1/1-3/31 8,285 52 341 (289)
Omni................................ 1/1-12/31 171,837 4,296 161 4,135
Colfax.............................. 1/1-12/31 317,894 7,947 3,861 4,086
KSTE-FM............................. 1/1-12/31 (32,475) (812) -- (812)
-------- ------- ------ ------
Total............................................. $826,966 $12,587 $4,756 $7,831
======== ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED CHANCELLOR TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
THREE MONTHS ENDED MARCH 31, 1997 PERIOD ASSETS, NET EXPENSE(I) EXPENSE INCREASE
--------------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Omni................................ 1/1-2/13 $171,837 $ 525 $ -- $ 525
Colfax.............................. 1/1-1/23 317,894 508 -- 508
KSTE-FM............................. 1/1-3/28 (32,475) (198) -- (198)
-------- ----- ------ -----
Total............................... $457,256 $ 835 $ -- $ 835
======== ===== ====== =====
</TABLE>
- ---------------
(i) Intangible assets are amortized on a straight-line basis over an
estimated average 40 year life by Chancellor. In connection with
purchase accounting for the Merger, intangible assets will be amortized
over an estimated average life of 15 years in accordance with
Evergreen's accounting policies and procedures.
Historical depreciation expense of the Completed Chancellor Transactions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation and amortization may differ based upon final purchase price
allocations.
(k) Reflects the elimination of disposed stations' historical depreciation and
amortization expense of $1,554 for the year ended December 31, 1996 (KTBZ-FM
of $642 and WWWW-FM/WDFN-AM of $912 for the period of February 14, 1996 to
December 31, 1996) and $82 for the three months ended March 31, 1997
(WWWW-FM/WDFN-AM for the period of January 1, 1997 to January 31, 1997)
recognized by Chancellor during the time brokerage agreement holding period.
(l) Reflects the elimination of duplicate corporate expenses of $1,706 for the
year ended December 31, 1996 related to the Completed Chancellor
Transactions.
(m) Reflects the adjustment to interest expense in connection with the
consummation of the Completed Chancellor Transactions, the February 1996 and
August 1996 equity offerings of Chancellor, the issuance
P-23
<PAGE> 160
of the CRBC Series A Preferred Stock, and the refinancing of CRBC's previous
senior credit agreement on January 23, 1997:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions.............................. $ 667,383 $ 231,983
Completed Dispositions.............................. (104,253) (104,253)
New Loan Fees....................................... 2,874 2,874
--------- ---------
Total additional bank borrowings...................... $ 566,004 $ 130,604
========= =========
Interest expense at 7.5%.............................. $ 14,834 $ 320
Less: historical interest expense..................... (6,048) --
--------- ---------
Net increase in interest expense...................... 8,786 320
Reduction in interest expense on bank debt related to
the application of net proceeds of the following:
February 1996 Offering proceeds of $155,475 for the
period January 1, 1996 to February 14, 1996 at
7.5%............................................. (1,425) --
August 1996 Offering proceeds of $23,050 for the
period January 1, 1996 to August 9, 1996 at
7.5%............................................. (1,052) --
CRBC Series A Preferred Stock proceeds of $96,171
for the period January 1, 1996 to February 14,
1996 at 7.5%..................................... (902) --
--------- ---------
Total decrease in interest expense.................... (3,379) --
--------- ---------
Total adjustment for net increase in interest
expense............................................. $ 5,407 $ 320
========= =========
</TABLE>
(n) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income taxes
for historical and pro forma adjustment amounts.
(o) Reflects incremental dividends and accretion on preferred stock of
subsidiaries as follows:
<TABLE>
<CAPTION>
THREE MONTHS
DATE OF YEAR ENDED ENDED
ISSUANCE DECEMBER 31, 1996 MARCH 31, 1997
----------------- ----------------- --------------
<S> <C> <C> <C>
CRBC Series A Preferred Stock........... February 26, 1996 $ 1,441 $ --
CRBC Junior Preferred Stock............. January 23, 1997 25,402 1,504
------- ------
Total dividends and accretion........... $26,843 $1,504
======= ======
</TABLE>
(p) Reflects incremental dividends on Chancellor Parent Convertible Preferred
Stock (issued on January 23, 1997) of $7,700 for the year ended December 31,
1996 and $471 for the three months ended March 31, 1997.
P-24
<PAGE> 161
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
RELATED TO THE PENDING CHANCELLOR TRANSACTIONS
(19) The detail of the historical financial data of the stations to be acquired
in the Pending Chancellor Transactions for the year ended December 31, 1996
and the three months ended March 31, 1997 has been obtained from the
historical financial statements of the respective companies and is
summarized below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 THREE MONTHS ENDED
----------------------------------------- MARCH 31, 1997
WBAB-FM ------------------
WBLI-FM CHANCELLOR CHANCELLOR
WGBB-AM VIACOM PENDING VIACOM
WHFM-FM ACQUISITION CHANCELLOR ACQUISITION
HISTORICAL HISTORICAL TRANSACTIONS HISTORICAL
PENDING CHANCELLOR TRANSACTIONS 1/1-6/30(A) 1/1-12/31(B) HISTORICAL 1/1-3/31(B)
- --------------------------------------- ----------- ------------ ------------ ------------------
<S> <C> <C> <C> <C>
Gross revenues......................... $5,726 $52,063 $57,789 $11,867
Less: agency commissions............... (619) (8,533) (9,152) (1,960)
------- ------- ------- -------
Net revenues........................... 5,107 43,530 48,637 9,907
Station operating expenses excluding
depreciation and amortization........ 3,676 20,886 24,562 5,111
Depreciation and amortization.......... 2,141 4,286 6,427 1,078
Corporate general and administrative
expenses............................. 1,024 1,323 2,347 239
------- ------- ------- -------
Operating income (loss)................ (1,734) 17,035 15,301 3,479
Interest expense....................... -- 6,374 6,374 1,594
------- ------- ------- -------
Net income (loss)...................... (1,734) 10,661 8,927 1,885
Income tax expense..................... -- 4,422 4,422 788
------- ------- ------- -------
Net income (loss)...................... $(1,734) $ 6,239 $ 4,505 $ 1,097
======= ======= ======= =======
OTHER FINANCIAL DATA:..................
Broadcast Cash Flow.................... $1,431 $22,644 $24,075 $ 4,796
</TABLE>
- ---------------
(a) On July 1, 1996, Chancellor entered into an agreement to exchange, in the
SFX Exchange, WAPE-FM and WFYV-FM in Jacksonville, Florida (which were
acquired as part of the Omni Acquisition) (see note 16(e)), and $11,000 in
cash for WBAB-FM, WBLI-FM, WGBB-AM, and WHFM-FM in Long Island.
(b) On February 19, 1997, Chancellor and Evergreen entered into the Viacom Joint
Purchase Agreement whereby in the event the Viacom Acquisition occurs prior
to the consummation of the Chancellor Merger, Chancellor will be required to
purchase 4 of the 10 Viacom stations in the Chancellor Viacom Acquisition
for $480,000 plus working capital ($7,547 at March 31, 1997) and estimated
acquisition costs of $13,000 for an aggregate purchase price of $500,547.
The stations to be acquired by Chancellor in the Chancellor Viacom
Acquisition include KYSR-FM and KIBB-FM in Los Angeles, WLIT-FM in Chicago
and WDRQ-FM in Detroit. On April 14, 1997, Chancellor entered into an
agreement to sell WDRQ-FM in Detroit (to be acquired as part of the
Chancellor Viacom Acquisition) for $37,000 in cash; consequently, only the
results of operations of the Viacom Stations in Los Angeles and Chicago have
been given effect in the Pro Forma Financial Statements.
(20) Reflects the elimination of time brokerage agreement fees received and paid
by Chancellor as follows:
<TABLE>
<CAPTION>
PENDING CHANCELLOR TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996 MARKET PERIOD REVENUE EXPENSE
------------------------------- ----------- --------- ------- -------
<S> <C> <C> <C> <C>
WAPE-FM, WFYV-FM............................................ Jacksonville 7/1-12/31 $(1,963) $(2,000)
WBAB-FM, WBLI-FM, WGBB-AM, WHFM-FM.......................... Long Island 7/1-12/31 -- (2,000)
------- -------
Total adjustment for decrease in gross revenues and expenses........................ $(1,963) $(4,000)
======= =======
</TABLE>
P-25
<PAGE> 162
<TABLE>
<CAPTION>
PENDING CHANCELLOR TRANSACTIONS
THREE MONTHS ENDED MARCH 31, 1997 MARKET PERIOD REVENUE EXPENSE
--------------------------------- ----------- --------- ------- -------
<S> <C> <C> <C> <C>
WAPE-FM, WFYV-FM............................................ Jacksonville 1/1-3/31 $(1,070) $ (541)
WBAB-FM, WBLI-FM, WGBB-AM, WHFM-FM.......................... Long Island 1/1-3/31 -- (1,000)
------- -------
Total adjustment for decrease in gross revenues and expenses........................ $(1,070) $(1,541)
======= =======
</TABLE>
(21) Reflects incremental amortization related to the Pending Chancellor
Transactions (see note 3) and is based on the allocation of the total
consideration as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- ------------------
<S> <C> <C>
Amortization expense on $461,290
additional intangible assets amortized
on a straight-line basis over a period
of 40 years........................... $11,533 $ 2,883
Less: Historical amortization expense... (5,730) (1,357)
------- -------
Adjustment for net increase in
amortization expense.................. $ 5,803 $ 1,526
======= =======
</TABLE>
Historical depreciation expense, of the Pending Chancellor Transactions,
is assumed to approximate depreciation expense on a pro forma basis.
Actual depreciation and amortization may differ based upon final
purchase price allocations.
(22) Reflects the elimination of duplicate corporate expenses of $1,807 for
the year ended December 31, 1996 and $176 for the three months ended
March 31, 1997 related to the Pending Chancellor Transactions.
(23) Reflects the adjustment to interest expense in connection with the
consummation of the Pending Chancellor Transactions and the refinancing
of CRBC's bank borrowings under the CRBC Restated Credit Agreement:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- ------------------
<S> <C> <C>
Additional bank borrowings related to:
Pending Acquisitions.................. $511,547 $511,547
Pending Dispositions.................. (37,000) (37,000)
Loan Fees............................. 3,500 3,500
-------- --------
Total additional bank borrowings........ $478,047 $478,047
======== ========
Interest expense on additional bank
borrowings at 7.5%.................... $ 35,854 $ 8,963
Less: historical interest expense of the
stations being acquired in the Pending
Chancellor Transactions............... (6,374) (1,594)
-------- --------
Net increase in interest expense........ 29,480 7,369
Reduction in interest expense resulting
from the redemption of CRBC's 12.5%
Subordinated Notes of $60,000......... (7,500) (1,875)
Interest expense on $69,000 additional
bank borrowings at 7.5% related to the
redemption of CRBC's 12.5%
Subordinated Notes.................... 5,175 1,294
Interest expense on $200,000 8 3/4%
Senior Subordinated Notes related to
the CRBC 8 3/4% Notes Offering........ 17,500 4,375
Reduction in interest expense resulting
from the $194,000 decrease in bank
borrowings at 7.5% related to the CRBC
8 3/4% Notes Offering................. (14,550) (3,638)
-------- --------
Total adjustment for net increase in
interest expense...................... $ 30,105 $ 7,525
======== ========
</TABLE>
P-26
<PAGE> 163
(24) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
RELATED TO THE MERGER
(25) Reflects incremental amortization related to the Merger and is based on the
allocation of the total consideration as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Amortization expense on $2,145,957 intangible assets
(representing all intangible assets being acquired
in or arising from the Merger), which consists of
$1,864,467 of intangible assets being acquired
from Chancellor (see note 8(a)) and $281,490
resulting from the recognition of deferred tax
liabilities (see note 9), amortized in each case
on a straight-line basis over a period of 15
years............................................. $143,064 $35,766
Less: Historical amortization expense............... (38,075) (9,148)
-------- -------
Adjustment for net increase in amortization
expense........................................... $104,989 $26,618
======== =======
</TABLE>
Historical depreciation expense, of Chancellor, is assumed to approximate
depreciation expense on a pro forma basis. Actual depreciation and
amortization may differ based upon final purchase price allocations.
(26) Reflects the elimination of duplicate corporate expenses of $832 for the
year ended December 31, 1996 and $247 for the three months ended March 31,
1997 related to the Merger.
(27) Reflects the elimination of merger expenses of $2,056 for the three months
ended March 31, 1997 incurred by Chancellor in connection with the Merger.
(28) Reflects the adjustment to interest expense in connection with the
consummation of the Merger:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
<S> <C> <C>
Interest expense on additional bank borrowings
related to estimated financial advisors, legal,
accounting and other professional fees of $28,000
at 7.0%........................................... $ 1,960 $ 490
Reduction in interest expense related to the
application of the 7.0% interest rate to
Evergreen's bank debt prior to the refinancing of
the EMCLA Senior Credit Facility and to CRBC's
bank debt prior to consummation of the
Merger............................................ (13,190) (1,693)
-------- -------
Net decrease in interest expense.................... $(11,230) $(1,203)
======== =======
</TABLE>
(29) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
P-27
<PAGE> 164
ANNEX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
CHANCELLOR BROADCASTING COMPANY,
CHANCELLOR RADIO BROADCASTING COMPANY,
EVERGREEN MEDIA CORPORATION,
EVERGREEN MEZZANINE HOLDINGS CORPORATION
AND
EVERGREEN MEDIA CORPORATION OF LOS ANGELES
DATED AS OF FEBRUARY 19, 1997
AMENDED AND RESTATED AS OF JULY 31, 1997
<PAGE> 165
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
ARTICLE I
THE MERGER AND SUBSIDIARY MERGER
1.1 THE MERGER AND SUBSIDIARY MERGER................................. A-1
1.2 CLOSING.......................................................... A-2
1.3 EFFECTIVE TIME................................................... A-2
1.4 CERTIFICATES OF INCORPORATION.................................... A-2
1.5 CERTIFICATES OF DESIGNATIONS..................................... A-2
1.6 BYLAWS........................................................... A-3
1.7 DIRECTORS........................................................ A-3
1.8 OFFICERS......................................................... A-4
1.9 EFFECT ON EVERGREEN CAPITAL STOCK................................ A-4
(a) Outstanding Evergreen Common Stock.......................... A-4
(b) Exchange of Certificates.................................... A-4
(c) Outstanding Evergreen Convertible Exchangeable Preferred
Stock..................................................... A-4
1.10 EFFECT ON COMPANY CAPITAL STOCK.................................. A-4
(a) Outstanding Shares.......................................... A-4
(b) Treasury Shares............................................. A-5
(c) Outstanding Company Convertible Preferred Stock............. A-5
(d) Impact of Stock Splits, etc................................. A-5
1.11 EFFECT ON RADIO BROADCASTING CAPITAL STOCK....................... A-5
(a) Outstanding Common Stock of Radio Broadcasting.............. A-5
(b) Outstanding 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock........................................... A-5
(c) Outstanding 12% Exchangeable Preferred Stock................ A-5
1.12 EFFECT ON EMHC CAPITAL STOCK..................................... A-5
1.13 EFFECT ON EMCLA COMMON STOCK..................................... A-5
1.14 EXCHANGE OF CERTIFICATES......................................... A-5
(a) Paying Agent................................................ A-5
(b) Exchange Procedures......................................... A-6
(c) Letter of Transmittal....................................... A-6
(d) Distributions with Respect to Unexchanged Shares............ A-6
(e) No Further Ownership Rights in Shares, Company Convertible
Preferred Stock and Radio Broadcasting Preferred Stock.... A-7
(f) No Fractional Shares........................................ A-7
(g) Termination of Payment Fund................................. A-7
(h) No Liability................................................ A-7
1.15 DISSENTING SHARES................................................ A-8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EVERGREEN
2.1 ORGANIZATION, STANDING AND CORPORATE POWER....................... A-8
2.2 EVERGREEN CAPITAL STRUCTURE...................................... A-9
2.3 AUTHORITY; NONCONTRAVENTION...................................... A-9
2.4 SEC DOCUMENTS.................................................... A-11
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS............................. A-11
2.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS.................. A-11
</TABLE>
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2.7 VOTING REQUIREMENTS.............................................. A-12
2.8 STATE TAKEOVER STATUTES.......................................... A-12
2.9 EVERGREEN FCC LICENSES; OPERATIONS OF EVERGREEN LICENSED
FACILITIES..................................................... A-12
2.10 BROKERS.......................................................... A-13
2.11 OPINION OF FINANCIAL ADVISOR..................................... A-13
2.12 FCC QUALIFICATION................................................ A-13
2.13 COMPLIANCE WITH APPLICABLE LAWS.................................. A-13
2.14 ABSENCE OF UNDISCLOSED LIABILITIES............................... A-13
2.15 LITIGATION....................................................... A-13
2.16 TRANSACTIONS WITH AFFILIATES..................................... A-13
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES OF EMHC AND EMCLA
2A.1 ORGANIZATION, STANDING AND CORPORATE POWER....................... A-14
2A.2 EMHC AND EMCLA CAPITAL STRUCTURE................................. A-14
2A.3 AUTHORITY; NONCONTRAVENTION...................................... A-14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND RADIO BROADCASTING
3.1 ORGANIZATION, STANDING AND CORPORATE POWER....................... A-15
3.2 COMPANY AND RADIO BROADCASTING CAPITAL STRUCTURE................. A-16
3.3 AUTHORITY; NONCONTRAVENTION...................................... A-17
3.4 SEC DOCUMENTS.................................................... A-18
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS............................. A-18
3.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS.................. A-18
3.7 VOTING REQUIREMENTS.............................................. A-19
3.8 STATE TAKEOVER STATUTES.......................................... A-19
3.9 COMPANY FCC LICENSES; OPERATIONS OF COMPANY LICENSED
FACILITIES..................................................... A-19
3.10 BROKERS.......................................................... A-19
3.11 OPINION OF FINANCIAL ADVISOR..................................... A-20
3.12 FCC QUALIFICATION................................................ A-20
3.13 COMPLIANCE WITH APPLICABLE LAWS.................................. A-20
3.14 ABSENCE OF UNDISCLOSED LIABILITIES............................... A-20
3.15 LITIGATION....................................................... A-20
3.16 TRANSACTIONS WITH AFFILIATES..................................... A-20
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 PREPARATION OF FORM S-4S AND THE JOINT PROXY STATEMENT;
INFORMATION SUPPLIED........................................... A-21
4.2 MEETINGS OF COMPANY STOCKHOLDERS AND EVERGREEN STOCKHOLDERS....
A-22
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<TABLE>
<S> <C> <C> <C>
4.3 ACCESS TO INFORMATION; CONFIDENTIALITY........................... A-22
4.4 PUBLIC ANNOUNCEMENTS............................................. A-22
4.5 ACQUISITION PROPOSALS............................................ A-23
4.6 CONSENTS, APPROVALS AND FILINGS.................................. A-23
4.7 AFFILIATES LETTERS............................................... A-24
4.8 NASDAQ LISTING................................................... A-24
4.9 STOCKHOLDER LITIGATION........................................... A-24
4.10 INDEMNIFICATION.................................................. A-24
4.11 LETTER OF THE COMPANY'S ACCOUNTANTS.............................. A-24
4.12 LETTER OF EVERGREEN'S ACCOUNTANTS................................ A-24
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
5.1 CONDUCT OF BUSINESS.............................................. A-25
5.2 COMPANY STOCK OPTIONS............................................ A-26
5.3 OTHER ACTIONS.................................................... A-27
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER....... A-27
(a) Stockholder Approval........................................ A-27
(b) FCC Order................................................... A-27
(c) Governmental and Regulatory Consents........................ A-27
(d) HSR Act..................................................... A-28
(e) No Injunctions or Restraints................................ A-28
(f) Nasdaq Listing.............................................. A-28
(g) Form S-4s................................................... A-28
6.2 CONDITIONS TO OBLIGATIONS OF EVERGREEN, EMCLA AND EMHC........... A-28
(a) Representations and Warranties.............................. A-28
(b) Performance of Obligations of the Company and Radio
Broadcasting.............................................. A-28
(c) Tax Opinion................................................. A-28
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY AND RADIO
BROADCASTING..................................................... A-28
(a) Representations and Warranties.............................. A-28
(b) Performance of Obligations of Evergreen, EMCLA and EMHC..... A-29
(c) Tax Opinion................................................. A-29
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION...................................................... A-29
7.2 EFFECT OF TERMINATION............................................ A-29
7.3 AMENDMENT........................................................ A-30
7.4 EXTENSION; WAIVER................................................ A-30
7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER........ A-30
</TABLE>
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ARTICLE VIII
SURVIVAL OF PROVISIONS
8.1 SURVIVAL......................................................... A-30
ARTICLE IX
NOTICES
9.1 NOTICES.......................................................... A-30
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT................................................. A-32
10.2 EXPENSES......................................................... A-32
10.3 COUNTERPARTS..................................................... A-32
10.4 NO THIRD PARTY BENEFICIARY....................................... A-32
10.5 GOVERNING LAW.................................................... A-32
10.6 ASSIGNMENT; BINDING EFFECT....................................... A-32
10.7 HEADINGS, GENDER, ETC............................................ A-32
10.8 INVALID PROVISIONS............................................... A-32
10.9 VIACOM TRANSACTION............................................... A-32
Annex I Form of Amendment to EMHC Certificate of Incorporation
Annex II Form of Amendment to EMCLA Certificate of Incorporation
Annex III Form of Amended and Restated Certificate of Incorporation of Parent
Annex IV Form of Amended and Restated Bylaws of Parent
Exhibit A Form of Affiliate Letter
Exhibit B Form of Certificate of Chancellor Broadcasting Company
Exhibit C Form of Certificate of Chancellor Radio Broadcasting Company
Exhibit D Form of Certificate of 5% Stockholder of Chancellor Broadcasting
Company
Exhibit E Form of Certificate of Evergreen Media Corporation
Exhibit F Form of Certificate of Evergreen Mezzanine Holdings Corporation
Exhibit G Form of Certificate of Evergreen Media Corporation of Los Angeles
Exhibit H Form of Tax Opinion of Latham & Watkins
Exhibit I Form of Tax Opinion of Weil, Gotshal & Manges LLP
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement"),
dated as of February 19, 1997 and amended and restated as of July 31, 1997, by
and among CHANCELLOR BROADCASTING COMPANY, a Delaware corporation (the
"Company"), CHANCELLOR RADIO BROADCASTING COMPANY, a Delaware corporation and a
direct subsidiary of the Company ("Radio Broadcasting"), EVERGREEN MEDIA
CORPORATION, a Delaware corporation ("Evergreen"), EVERGREEN MEDIA CORPORATION
OF LOS ANGELES, a Delaware corporation and a direct subsidiary of Evergreen
("EMCLA"), and EVERGREEN MEZZANINE HOLDINGS CORPORATION, a Delaware corporation
and a direct subsidiary of Evergreen ("EMHC").
RECITALS
WHEREAS, the Company, Radio Broadcasting and Evergreen are parties to that
certain Agreement and Plan of Merger, dated as of February 19, 1997 (the "Old
Agreement");
WHEREAS, Chancellor, Radio Broadcasting and Evergreen desire hereby to
amend and restate the Old Agreement in its entirety and to add EMCLA and EMHC as
parties to the Agreement;
WHEREAS, prior to the Merger and the Subsidiary Merger (each as hereinafter
defined), Evergreen will contribute all of the capital stock of EMCLA to EMHC as
a capital contribution, such that EMCLA shall become a wholly-owned subsidiary
of EMHC;
WHEREAS, in connection with the execution and delivery of the Old
Agreement, the Company and Evergreen entered into that certain Stockholders
Agreement, dated as of February 19, 1997 (the "Stockholders Agreement"), with
(i) certain beneficial and record holders (the "Principal Company Stockholders")
of the Class A Common Stock, $0.01 par value ("Company Class A Common Stock")
and Class B Common Stock, $0.01 par value ("Company Class B Common Stock" and,
collectively with the Company Class A Common Stock, the "Shares"), of the
Company, and (ii) Scott K. Ginsburg, the beneficial and record holder (the
"Principal Evergreen Stockholder") of substantially all of the outstanding Class
B Common Stock, $0.01 par value ("Evergreen Class B Common Stock"), of
Evergreen, which Stockholders Agreement provides for certain matters with
respect to their respective Shares and Evergreen Class B Common Stock, including
among other things, voting such Shares and Evergreen Class B Common Stock in
favor of the adoption of this Agreement; and
WHEREAS, Evergreen, the Company, Radio Broadcasting, EMCLA and EMHC desire
to make certain representations, warranties, covenants and agreements in
connection with such mergers and also to prescribe various conditions to such
mergers;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGER AND SUBSIDIARY MERGER
1.1 The Merger and Subsidiary Merger. Subject to the terms and conditions
of this Agreement, (i) at the Effective Time (as defined in Section 1.3), the
Company shall be merged with and into EMHC (the "Merger"), and thereafter (ii)
at the Subsidiary Merger Effective Time (as defined in Section 1.3) Radio
Broadcasting will be merged with and into EMCLA (the "Subsidiary Merger"), each
in a transaction intended to qualify as a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), in
accordance with the Delaware General Corporation Law (the "Delaware Code"), and
the separate corporate existences of each of the Company and Radio Broadcasting
shall cease and EMHC shall continue as the surviving corporation of the Merger
under the name Chancellor Mezzanine
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Holdings Corporation (as such, the "Surviving Corporation") and EMCLA shall
continue as the surviving corporation of the Subsidiary Merger under the name
Chancellor Media Corporation of Los Angeles (as such, the "Subsidiary Surviving
Corporation"), each under the laws of the State of Delaware with all the rights,
privileges, immunities and powers, and subject to all the duties and
liabilities, of a corporation organized under the Delaware Code. The Merger and
Subsidiary Merger shall have the effects set forth in the Delaware Code.
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") will take place at 10:00
a.m., Dallas, Texas time, on the second business day following the date on which
the last to be fulfilled or waived of the conditions set forth in Article VI
shall be fulfilled or waived in accordance with this Agreement (the "Closing
Date"), at the offices of Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite
1300, Dallas, Texas 75201, unless another date, time or place is agreed to in
writing by the parties hereto. Subject to the consummation of the Merger, the
closing of the Subsidiary Merger (the "Subsidiary Closing") shall take place
(the "Subsidiary Closing Date") at the same location as the Closing but at a
date and time agreed to in writing by the parties hereto.
1.3 Effective Time. The parties hereto will file with the Secretary of
State of the State of Delaware (the "Delaware Secretary of State") on the date
of the Closing and on the date of the Subsidiary Closing (or on such other date
or dates as the parties may agree) certificates of merger or other appropriate
documents, executed in accordance with the relevant provisions of the Delaware
Code, and make all other filings or recordings required under the Delaware Code
in connection with the Merger and the Subsidiary Merger. The Merger and the
Subsidiary Merger shall each become effective upon the filing of the respective
certificate of merger with the Delaware Secretary of State, or at such later
time specified in such certificate of merger (the "Effective Time" and the
"Subsidiary Merger Effective Time" respectively). The Subsidiary Merger shall
not become effective until after the Effective Time.
1.4 Certificates of Incorporation.
(a) The Certificate of Incorporation of EMHC, as amended as set forth in
Annex I hereto, shall be the Certificate of Incorporation of the Surviving
Corporation, and the Certificate of Incorporation of EMCLA, as amended as set
forth in Annex II hereto, shall be the Certificate of Incorporation of the
Subsidiary Surviving Corporation, each until thereafter amended in accordance
with their respective terms and as provided by applicable law. From and after
the Effective Time, the name of the Surviving Corporation shall be Chancellor
Mezzanine Holdings Corporation and after the Subsidiary Merger Effective Time
the name of the Subsidiary Surviving Corporation shall be Chancellor Media
Corporation of Los Angeles.
(b) Concurrently with the execution and delivery of this Agreement, the
Board of Directors of Evergreen has adopted a resolution setting forth and
approving the Amended and Restated Certificate of Incorporation in the form set
forth as Annex III hereto (the "Parent Charter"), and directing that the Parent
Charter be considered by the stockholders of Evergreen at the Evergreen
Stockholders Meeting (as hereinafter defined), all in accordance with the
provisions of the Delaware Code. Prior to the Effective Time of the Merger,
Evergreen shall file with the Delaware Secretary of State a certificate of
amendment to its certificate of incorporation setting forth the Parent Charter,
and from and after the effectiveness of the Parent Charter, the name of
Evergreen shall be changed to Chancellor Media Corporation (as such, the
"Parent").
1.5 Certificates of Designations. At the Subsidiary Merger Effective Time,
the Board of Directors of the Surviving Subsidiary Corporation shall authorize
the designation of two series of preferred stock, $0.01 par value (collectively,
the "Merger Preferred Stock"), of the Subsidiary Surviving Corporation, and at
the Effective Time, the Board of Directors of Parent shall authorize the
designation of a series of preferred stock, $0.01 par value (the "Parent
Convertible Preferred Stock"), so as to permit the Subsidiary Surviving
Corporation and Parent to issue the shares of Merger Preferred Stock and Parent
Convertible Preferred Stock pursuant to Sections 1.10 and 1.11 hereof, and the
Subsidiary Surviving Corporation shall file with the Delaware Secretary of State
immediately following the Subsidiary Merger Effective Time a certificate of
designations with respect to each series of Merger Preferred Stock, and the
Parent shall file with the Delaware
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Secretary of State immediately following the Effective Time a certificate of
designations with respect to the Parent Convertible Preferred Stock, each
pursuant to the Delaware Code.
1.6 Bylaws.
(a) The Bylaws of EMHC in effect immediately prior to the Merger shall be
the Bylaws of the Surviving Corporation, and the Bylaws of EMCLA in effect
immediately prior to the Subsidiary Merger shall be the Bylaws of the Subsidiary
Surviving Corporation, each until thereafter amended in accordance with their
terms and as provided by applicable law.
(b) Concurrently with the execution and delivery of this Agreement, the
Board of Directors of Evergreen has adopted the Amended and Restated Bylaws set
forth in Annex IV, to be effective as of the Effective Time, and such Bylaws
shall be the Bylaws of Parent until thereafter amended in accordance with their
terms and as provided by applicable law.
1.7 Directors. The directors of Parent at the Effective Time shall be as
set forth below:
Class I Directors
Eric C. Neuman
Perry J. Lewis
Class II Directors
Lawrence D. Stuart, Jr.
Steven Dinetz
Jeffrey A. Marcus
James E. de Castro
Class III Directors
Thomas O. Hicks
Scott K. Ginsburg
John H. Massey
Thomas J. Hodson
The directors of the Surviving Corporation and the Subsidiary Surviving
Corporation immediately following the Effective Time and Subsidiary Merger
Effective Time, respectively, shall be the same as the directors of the Parent
set forth in this Section 1.7, except that such directors will not be classified
as to term.
In addition, prior to the Effective Time, the Board of Directors of the
Company shall be entitled to nominate one additional individual reasonably
satisfactory to Evergreen, and such nominee, if any, shall become a Class I
director of Parent at the Effective Time, and a director of the Surviving
Corporation and Subsidiary Surviving Corporation at the Effective Time and
Subsidiary Merger Effective Time, respectively. At or prior to the Effective
Time, the Board of Directors of Evergreen and EMHC shall deliver or cause to be
delivered to the Company (i) the resignations of each of the then current
directors of Evergreen that is not designated to be a director of the Parent and
the Surviving Corporation as set forth in this Section 1.7, to be effective as
of the Effective Time (the "Board Resignations"), and (ii) certified copies of
the resolutions of the remaining members of the Board of Directors of Evergreen
and the sole director of EMHC appointing the Board of Directors of Parent and
EMHC, respectively, as set forth in this Section 1.7, to be effective as of the
Effective Time (the "Parent and EMHC Board Appointments"). In addition, at or
prior to the Subsidiary Merger Effective Time, the sole director of EMCLA shall
deliver or cause to be delivered to the Company certified copies of the
resolutions of the remaining members of the Board of Directors of EMCLA
appointing the Board of Directors of EMCLA as set forth in this Section 1.7, to
be effective as of the Subsidiary Merger Effective Time (the "EMCLA Board
Appointments" and, collectively with the Parent and EMHC Board Appointments, the
"Board Appointments"). Each Class I director, Class II director and Class III
director of Parent will hold office from the Effective Time until the 1998, 1999
and 2000 annual meetings of Parent, respectively, and in all cases, until his or
her respective successor is duly elected or appointed and qualified in
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the manner provided in the Certificate of Incorporation or Bylaws of Parent, or
as otherwise provided by applicable law. Each director of the Surviving
Corporation and the Subsidiary Surviving Corporation will hold office from the
Effective Time and Subsidiary Merger Effective Time, respectively, and until his
or her respective successor is duly elected or appointed and qualified in the
manner provided in the Surviving Corporation's and Subsidiary Surviving
Corporation's respective Certificate of Incorporation and Bylaws or as otherwise
provided by applicable law.
1.8 Officers. The initial senior executive officers of Parent and the
Surviving Corporation at the Effective Time and of the Subsidiary Surviving
Corporation at the Subsidiary Merger Effective Time shall be as set forth below:
<TABLE>
<S> <C>
Thomas O. Hicks.......................... Chairman of the Board
Scott K. Ginsburg........................ President and Chief Executive Officer
Steven Dinetz............................ Co-Chief Operating Officer
James E. de Castro....................... Co-Chief Operating Officer
Matthew E. Devine........................ Chief Financial Officer
</TABLE>
Each such officer of Parent and the Surviving Corporation will hold office
from the Effective Time and each such officer of the Subsidiary Surviving
Corporation will hold office from the Subsidiary Merger Effective Time, and in
each case, until his respective successor is duly elected or appointed and
qualified in the manner provided in the respective Certificate of Incorporation
and Bylaws of each of Parent, the Surviving Corporation and Subsidiary Surviving
Corporation, or as otherwise provided by applicable law. The names, titles and
responsibilities of the other individuals who initially will hold officerships
with Parent, the Surviving Corporation and Subsidiary Surviving Corporation
shall be determined by Evergreen and the Company prior to the Effective Time,
and the election of these persons shall be considered by the Board of Directors
of each of Parent and the Surviving Corporation following the Effective Time and
by the Board of Directors of the Subsidiary Surviving Corporation following the
Subsidiary Merger Effective Time.
1.9 Effect On Evergreen Capital Stock. (a) Outstanding Evergreen Common
Stock. Each of the shares of Evergreen Class B Common Stock and Class A Common
Stock, $0.01 par value, of Evergreen ("Evergreen Class A Common Stock" and
collectively with the Evergreen Class B Common Stock, the "Evergreen Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than shares of Evergreen Common Stock held as treasury shares by Evergreen)
shall, by virtue of the effectiveness of the Parent Charter and without any
action on the part of the holder thereof, be reclassified, changed and converted
into one validly issued, fully paid and nonassessable share of the common stock,
$0.01 par value ("Parent Common Stock"), of Parent.
(b) Exchange of Certificates. Evergreen shall instruct its transfer agent
that from and after the Effective Time, upon the presentation for transfer of
any shares of Evergreen Common Stock or at the request of any holder thereof,
the transfer agent shall issue to the transferee or holder thereof certificates
representing that number of shares of Parent Common Stock into which such shares
of Evergreen Common Stock were reclassified, changed and converted pursuant to
the effectiveness of the Parent Charter.
(c) Outstanding Evergreen Convertible Exchangeable Preferred Stock. Each
share of $3.00 Convertible Exchangeable Preferred Stock, $0.01 par value (the
"Evergreen Convertible Exchangeable Preferred Stock"), of Evergreen outstanding
upon the effectiveness of the Parent Charter shall remain outstanding and shall
become shares of preferred stock of Parent having the powers, preferences and
relative rights set forth in the certificate of designation creating the
Evergreen Convertible Exchangeable Preferred Stock.
1.10 Effect On Company Capital Stock. (a) Outstanding Shares. Each of the
Shares of the Company issued and outstanding immediately prior to the Effective
Time (other than Shares held as treasury shares by the Company) shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into a right to receive 0.9091 validly issued, fully paid and
nonassessable shares of Parent Common Stock (the "Exchange Ratio"). The shares
of Parent Common Stock to be issued to holders of Shares in accordance with this
Section 1.10(a), any cash to be paid in accordance with Section 1.14(f) in lieu
of fractional shares of Parent Common Stock, and the shares of Merger Preferred
Stock and Parent Convertible
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Preferred Stock to be issued to holders of Company Convertible Preferred Stock
(as hereinafter defined) and Radio Broadcasting Preferred Stock (as hereinafter
defined) are referred to collectively as the "Merger Consideration."
(b) Treasury Shares. Each Share issued and outstanding immediately prior to
the Effective Time which is then held as a treasury share by the Company shall,
by virtue of the Merger and without any action on the part of the Company, be
cancelled and retired and cease to exist, without any conversion thereof.
(c) Outstanding Company Convertible Preferred Stock. Each share (other than
a Dissenting Share, as defined in Section 1.15 below) of 7% Convertible
Preferred Stock, par value $0.01 per share ("Company Convertible Preferred
Stock"), of the Company outstanding immediately prior to the Effective Time
shall be converted into a right to receive one share of Parent Convertible
Preferred Stock having substantially identical powers, preferences and relative
rights as the Company Convertible Preferred Stock.
(d) Impact of Stock Splits, etc. In the event of any change in Evergreen
Common Stock and/or Shares between the date of this Agreement and the Effective
Time of the Merger by reason of any stock split, stock dividend, subdivision,
reclassification, recapitalization, combination, exchange of shares or the like,
the number and class of shares of Parent Common Stock to be issued and delivered
in the Merger in exchange for each outstanding Share as provided in this
Agreement shall be proportionately adjusted.
1.11 Effect On Radio Broadcasting Capital Stock. (a) Outstanding Common
Stock of Radio Broadcasting. Each of the shares of common stock, $0.01 par
value, of Radio Broadcasting issued and outstanding immediately prior to the
Subsidiary Merger Effective Time shall, by virtue of the Subsidiary Merger, be
cancelled, and no consideration shall be delivered in exchange therefor.
(b) Outstanding 12 1/4% Series A Senior Cumulative Exchangeable Preferred
Stock. Each share (other than a Dissenting Share) of 12 1/4% Series A Senior
Cumulative Exchangeable Preferred Stock, par value $0.01 per share ("Radio
Broadcasting 12 1/4% Preferred Stock"), of Radio Broadcasting outstanding
immediately prior to the Subsidiary Merger Effective Time shall be converted
into a right to receive one share of preferred stock of the Subsidiary Surviving
Corporation having substantially identical powers, preferences and relative
rights as the Radio Broadcasting 12 1/4% Preferred Stock.
(c) Outstanding 12% Exchangeable Preferred Stock. Each share (other than a
Dissenting Share) of 12% Exchangeable Preferred Stock, par value $0.01 per share
("Radio Broadcasting 12% Preferred Stock" and, collectively with the Radio
Broadcasting 12 1/4% Preferred Stock, the "Radio Broadcasting Preferred Stock"),
of Radio Broadcasting outstanding immediately prior to the Subsidiary Merger
Effective Time shall be converted into a right to receive one share of preferred
stock of the Subsidiary Surviving Corporation having substantially identical
powers, preferences and relative rights as the Radio Broadcasting 12% Preferred
Stock.
1.12 Effect On EMHC Capital Stock. Each of the shares of common stock,
$0.01 par value ("EMHC Common Stock"), of EMHC issued and outstanding
immediately prior to the Effective Time shall remain outstanding and, following
the Merger, shall represent all of the issued and outstanding capital stock of
the Surviving Corporation.
1.13 Effect On EMCLA Common Stock. Each of the shares of common stock,
$0.01 par value ("EMCLA Common Stock"), of EMCLA issued and outstanding
immediately prior to the Subsidiary Merger Effective Time shall remain
outstanding and, following the Subsidiary Merger, shall represent all of the
issued and outstanding common stock of the Subsidiary Surviving Corporation.
1.14 Exchange Of Certificates. (a) Paying Agent. As of the Effective Time,
Parent shall deposit with its transfer agent and registrar (the "Paying Agent"),
for the benefit of the holders of Shares and Company Convertible Preferred Stock
(other than holders of Dissenting Shares), and as of the Subsidiary Merger
Effective Time, the Subsidiary Surviving Corporation shall deposit with the
Paying Agent, for the benefit of the holders of Radio Broadcasting Preferred
Stock (other than holders of Dissenting Shares), certificates representing the
shares of Parent Common Stock, Parent Convertible Preferred Stock and Merger
Preferred Stock to be issued to such holders pursuant to Sections 1.10 and 1.11
(such certificates, together with any
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dividends or distributions with respect to such certificates and any cash paid
in lieu of fractional shares pursuant to Section 1.14(f), being hereinafter
referred to as the "Payment Fund").
(b) Exchange Procedures. As soon as practicable after the Effective Time
and the Subsidiary Merger Effective Time, as applicable, each holder of an
outstanding certificate or certificates which prior thereto represented Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock shall, upon surrender to the Paying Agent of such certificate or
certificates and acceptance thereof by the Paying Agent, be entitled to a
certificate representing that number of whole shares of Parent Common Stock,
Parent Convertible Preferred Stock or Merger Preferred Stock which the aggregate
number of Shares, shares of Company Convertible Preferred Stock or shares of
Radio Broadcasting Preferred Stock previously represented by such certificate or
certificates surrendered shall have been converted into the right to receive
pursuant to Sections 1.10 and 1.11 of this Agreement (with respect to the Parent
Common Stock, including any cash to be received in lieu of fractional shares, as
provided in Section 1.14(f) below). The Paying Agent shall accept such
certificates upon compliance with such reasonable terms and conditions as the
Paying Agent may impose to effect an orderly exchange thereof in accordance with
its normal exchange practices. If the Merger Consideration (or any portion
thereof) is to be delivered to any person other than the person in whose name
the certificate or certificates representing Shares, shares of Company
Convertible Preferred Stock or shares of Radio Broadcasting Preferred Stock
surrendered in exchange therefor is registered, it shall be a condition to such
exchange that the certificate or certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the person
requesting such exchange shall pay to the Paying Agent any transfer or other
taxes required by reason of the payment of such consideration to a person other
than the registered holder of the certificate(s) surrendered, or shall establish
to the satisfaction of the Paying Agent that such tax has been paid or is not
applicable. After the Effective Time, there shall be no further transfer on the
records of the Company, and after the Subsidiary Merger Effective Time, there
shall be no further transfer on the records of Radio Broadcasting or, in each
case, their respective transfer agents, of certificates representing Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock and if such certificates are presented to the Surviving
Corporation or Subsidiary Surviving Corporation for transfer, they shall be
cancelled against delivery of the appropriate Merger Consideration as
hereinabove provided. Until surrendered as contemplated by this Section 1.14(b),
each certificate representing Shares, shares of Company Convertible Preferred
Stock and shares of Radio Broadcasting Preferred Stock (other than certificates
representing treasury Shares to be cancelled in accordance with Section
1.10(b)), shall be deemed at any time after the Effective Time and Subsidiary
Merger Effective Time, as applicable, to represent only the right to receive
upon such surrender the appropriate Merger Consideration, without any interest
thereon, as contemplated by Sections 1.10 and 1.11.
(c) Letter of Transmittal. Promptly after the Effective Time and the
Subsidiary Merger Effective Time, as applicable (but in no event more than five
business days thereafter), Parent and the Subsidiary Surviving Corporation, as
appropriate, shall require the Paying Agent to mail to each record holder of
certificates that immediately prior to the Effective Time represented Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock which have been converted pursuant to Sections 1.10 and 1.11, a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
certificates representing Shares, shares of Company Convertible Preferred Stock
or shares of Radio Broadcasting Preferred Stock to the Paying Agent, and which
shall be in such form and have such provisions as Parent and the Subsidiary
Surviving Corporation reasonably may specify) and instructions for use in
surrendering such certificates and receiving the consideration to which such
holder shall be entitled therefor pursuant to Sections 1.10 and 1.11.
(d) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock or Parent Convertible
Preferred Stock with a record date after the Effective Time, or with respect to
Merger Preferred Stock with a record date after the Subsidiary Merger Effective
Time, shall be paid to the holder of any certificate that immediately prior to
the Effective Time represented Shares or shares of Company Convertible Preferred
Stock or immediately prior to the Subsidiary Merger Effective Time represented
shares of Radio Broadcasting Preferred Stock which have been converted pursuant
to Sections 1.10 or 1.11, until the surrender for exchange of such certificate
in accordance with this Article I.
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Following surrender for exchange of any such certificate, there shall be paid to
the holder of such certificate, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time or Subsidiary Merger Effective Time, as applicable,
theretofore paid with respect to the number of whole shares of Parent Common
Stock, Parent Convertible Preferred Stock or Merger Preferred Stock into which
the Shares, shares of Company Convertible Preferred Stock or shares of Radio
Broadcasting Preferred Stock represented by such certificate immediately prior
to the Effective Time and the Subsidiary Merger Effective Time, as applicable,
were converted pursuant to Sections 1.10 or 1.11, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time or Subsidiary Merger Effective Time, as applicable, but
prior to such surrender, and with a payment date subsequent to such surrender,
payable with respect to such whole shares of Parent Common Stock, Parent
Convertible Preferred Stock or Merger Preferred Stock.
(e) No Further Ownership Rights in Shares, Company Convertible Preferred
Stock and Radio Broadcasting Preferred Stock. The Merger Consideration (or, in
respect of Dissenting Shares, the cash payment therefor) paid upon the surrender
for exchange of certificates representing Shares, shares of Company Convertible
Preferred Stock or shares of Radio Broadcasting Preferred Stock in accordance
with the terms of this Article I shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to the Shares, shares of Company
Convertible Preferred Stock or shares of Radio Broadcasting Preferred Stock
theretofore represented by such certificates, subject, however, to Parent's or
the Subsidiary Surviving Corporation's obligation (if any) to pay any dividends
or make any other distributions with a record date prior to the Effective Time
or Subsidiary Merger Effective Time, as applicable, which may have been declared
by the Company or Radio Broadcasting, as appropriate, on the Shares, shares of
Company Convertible Preferred Stock, or shares of Radio Broadcasting Preferred
Stock in accordance with the terms of this Agreement (or, with respect to the
Company Convertible Preferred Stock and Radio Broadcasting Preferred Stock, in
accordance with their respective terms) or prior to the date of this Agreement
and which remain unpaid at the Effective Time or Subsidiary Merger Effective
Time.
(f) No Fractional Shares. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
certificates that immediately prior to the Effective Time represented Shares
which have been converted pursuant to Section 1.10, and each holder of Shares
who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Parent Common Stock
multiplied by the closing price per share of Evergreen Class A Common Stock on
the Nasdaq National Market on the trading day immediately prior to the Effective
Time.
(g) Termination of Payment Fund. Any portion of the Payment Fund which
remains undistributed to the holders of the certificates representing Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock for 120 days after the Effective Time and Subsidiary Merger
Effective Time, as applicable, shall be delivered to Parent or the Subsidiary
Surviving Corporation, as applicable, upon demand, and any holders of Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock who have not theretofore complied with this Article I shall
thereafter look only to Parent or the Subsidiary Surviving Corporation, as
appropriate, and only as general creditors thereof for payment of their claims
for any Merger Consideration and any dividends or distributions with respect to
Parent Common Stock, Parent Convertible Preferred Stock or Merger Preferred
Stock.
(h) No Liability. None of Evergreen, the Company, Radio Broadcasting, EMHC,
EMCLA or the Paying Agent shall be liable to any person in respect of any cash,
shares, dividends or distributions payable from the Payment Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any certificates representing Shares, shares of Company
Convertible Preferred Stock or shares of Radio Broadcasting Preferred Stock
shall not have been surrendered prior to five years after the Effective Time or
Subsidiary Merger Effective Time, as applicable (or immediately prior to such
earlier date on which any Merger Consideration in respect of such certificate
would otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 2.3)), any such cash, shares, dividends or distributions
payable in respect of such certificate shall, to the extent permitted by
applicable law, become the
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property of Parent or the Subsidiary Surviving Corporation, as appropriate, free
and clear of all claims or interest of any person previously entitled thereto.
1.15 Dissenting Shares. Notwithstanding anything herein to the contrary in
this Agreement, shares of Company Convertible Preferred Stock or Radio
Broadcasting Preferred Stock, as applicable, outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or Subsidiary Merger, as applicable, or consented thereto and who properly
demands in writing appraisal of such shares of Company Convertible Preferred
Stock or Radio Broadcasting Preferred Stock in accordance with Section 262 of
the Delaware Code and who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights, shall not be converted into or represent the right
to receive the appropriate Merger Consideration therefor ("Dissenting Shares").
Such stockholders shall be entitled to receive payment of the appraised value of
such shares of Company Convertible Preferred Stock or Radio Broadcasting
Preferred Stock, as the case may be, held by them in accordance with the
provisions of Section 262 of the Delaware Code, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such securities under
Section 262 shall thereupon be deemed to have been converted into, as of the
Effective Time or Subsidiary Merger Effective Time, as applicable, the right to
receive, without any interest thereon, the applicable Merger Consideration, upon
surrender, in the manner provided in this Article I, of the certificate or
certificates that formerly represented such securities. The Company shall take
all actions required to be taken by it in accordance with Section 262(d)(1) of
the Delaware Code with respect to the holders of Company Convertible Preferred
Stock as of the record date for the Stockholders Meeting (as defined in Section
4.2(a)) and shall otherwise comply with the provisions of Section 262 of the
Delaware Code. Radio Broadcasting and EMCLA or the Subsidiary Surviving
Corporation, as applicable, shall, prior to or within ten days after the
Subsidiary Merger Effective Time, take all actions required to be taken by it
pursuant to Section 262(d)(2) of the Delaware Code with respect to all holders
of record, as of the Subsidiary Merger Effective Time or such earlier record
date as may be declared by the Board of Directors of Radio Broadcasting, of the
Radio Broadcasting Preferred Stock. The Company and Radio Broadcasting shall
give Evergreen and EMCLA prompt written notice of any demands for appraisal
received by the Company or Radio Broadcasting with respect to the Company
Convertible Preferred Stock or the Radio Broadcasting Preferred Stock,
withdrawals of such demands, and any other instruments served pursuant to
Delaware law and received by the Company or Radio Broadcasting, and Evergreen or
EMCLA shall have the right to participate in all negotiations and proceedings
with respect to such demands. Prior to the Effective Time or the Subsidiary
Merger Effective Time, as applicable, the Company and Radio Broadcasting shall
not, except with the prior written consent of Evergreen or EMCLA, make any
payments with respect to any demands for appraisal, or settle or offer to
settle, any such demands.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EVERGREEN
Evergreen represents and warrants to the Company and Radio Broadcasting, as
of February 19, 1997 (except to the extent specifically made as of an earlier
date or the date hereof), as follows:
2.1 Organization, Standing and Corporate Power. Evergreen and each of its
Significant Subsidiaries (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Evergreen and each of its
Significant Subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect on the business, properties, results of
operations, or condition (financial or otherwise) of Evergreen and its
subsidiaries, considered as a whole (an "Evergreen Material Adverse Effect");
provided, however, that for purposes of Sections 2.13, 2.14, 2.15 and 2.16, no
fact, event or circumstance shall be deemed to constitute an Evergreen Material
Adverse Effect unless, in addition to otherwise satisfying the elements of the
definition given above, the relevant fact, event or circumstance not disclosed
pursuant to such representations would be material facts or circumstances, the
omission of which in
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a document filed with the SEC (as hereinafter defined) pursuant to the Exchange
Act would be such as to cause the statements contained in such filings to be
misleading within the meaning of Rule 10b-5 under the Exchange Act. Evergreen
has delivered to the Company and Radio Broadcasting complete and correct copies
of its Certificate of Incorporation and Bylaws, as amended to the date of the
Old Agreement. For purposes of this Agreement, a "Significant Subsidiary" of any
person means any subsidiary of such person that would constitute a "significant
subsidiary" within the meaning of Rule 1-02 of Regulation S-X of the Securities
and Exchange Commission (the "SEC").
2.2 Evergreen Capital Structure. The authorized capital stock of Evergreen
consists of (i) 75,000,000 shares of Evergreen Class A Common Stock, (ii)
4,500,000 shares of Evergreen Class B Common Stock and (iii) 6,000,000 shares of
preferred stock, $0.01 par value (the "Preferred Stock"). At the close of
business on February 18, 1997: (i) 39,100,750 shares of Evergreen Class A Common
Stock were issued and outstanding, 1,720,091 shares of Evergreen Class A Common
Stock were reserved for issuance pursuant to outstanding options or warrants to
purchase Evergreen Class A Common Stock which have been granted to directors,
officers or employees of Evergreen or others ("Evergreen Stock Options"); (ii)
3,114,066 shares of Evergreen Class B Common Stock were issued and outstanding
and no shares of Evergreen Class B Common Stock were reserved for issuance for
any purpose; and (iii) no shares of Preferred Stock were issued and outstanding.
Except as set forth above, at the close of business on February 18, 1997, no
shares of capital stock or other equity securities of Evergreen were authorized,
issued, reserved for issuance or outstanding. All outstanding shares of capital
stock of Evergreen are, and all shares which may be issued pursuant to
Evergreen's stock option plans, as amended to the date hereof (the "Evergreen
Stock Option Plans"), or any outstanding Evergreen Stock Options will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. No bonds, debentures, notes or other indebtedness
of Evergreen or any subsidiary of Evergreen having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which the stockholders of Evergreen or any subsidiary of
Evergreen may vote are issued or outstanding. All the outstanding shares of
capital stock of each subsidiary of Evergreen have been validly issued and are
fully paid and nonassessable and are owned by Evergreen, by one or more
wholly-owned subsidiaries of Evergreen or by Evergreen and one or more such
wholly-owned subsidiaries, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), except for Liens arising out of EMCLA's senior credit
facility and senior notes and those that, individually or in the aggregate,
could not reasonably be expected to have an Evergreen Material Adverse Effect.
Except as set forth above and except for certain provisions of the Certificate
of Incorporation of Evergreen relating to transfers of Evergreen Class B Common
Stock and to "alien ownership", neither Evergreen nor any subsidiary of
Evergreen has any outstanding option, warrant, subscription or other right,
agreement or commitment that either (i) obligates Evergreen or any subsidiary of
Evergreen to issue, sell or transfer, repurchase, redeem or otherwise acquire or
vote any shares of the capital stock of Evergreen or any Significant Subsidiary
of Evergreen or (ii) restricts the transfer of Evergreen Common Stock. No shares
of capital stock of Evergreen are owned of record or beneficially by any
subsidiary of Evergreen. Since the close of business on February 18, 1997 to the
date of the Old Agreement, neither Evergreen nor any subsidiary of Evergreen
issued any capital stock or securities or other rights convertible into or
exercisable or exchangeable for shares of such capital stock other than
securities issued upon the exercise of Evergreen Stock Options outstanding on
February 18, 1997 or other convertible securities outstanding on February 18,
1997.
2.3 Authority; Noncontravention. Evergreen has the requisite corporate
power and authority to enter into this Agreement and, subject to the approval of
its stockholders as set forth in Section 6.1(a) with respect to the consummation
of the Merger and Subsidiary Merger, adoption of the Parent Charter, and the
issuance of shares of Parent Common Stock and assumption of Company Stock
Options (as defined in Section 3.2) in the Merger (the "Evergreen Stockholder
Approval"), to consummate the transactions contemplated by this Agreement. As of
the date hereof, the execution and delivery of this Agreement by Evergreen and
the consummation by Evergreen of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Evergreen,
subject, in the case of the Merger, adoption of the Parent Charter, and the
issuance of Parent Common Stock and assumption of Company Stock Options in the
Merger, to the Evergreen Stockholder Approval. As of the date hereof, this
Agreement has been duly executed and delivered by Evergreen and, assuming this
Agreement constitutes the valid and binding
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agreement of EMHC, EMCLA, the Company and Radio Broadcasting, constitutes a
valid and binding obligation of Evergreen, enforceable against Evergreen in
accordance with its terms except that the enforcement thereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditor's rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not, (i) conflict with any of the
provisions of the Certificate of Incorporation or Bylaws of Evergreen or the
comparable documents of any subsidiary of Evergreen, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
conflict with, result in a breach of or 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 loss of a material benefit under, or require
the consent of any person under, any indenture or other agreement, permit,
concession, franchise, license or similar instrument or undertaking to which
Evergreen or any of its subsidiaries is a party or by which Evergreen or any of
its subsidiaries or any of their assets is bound or affected, (iii) result in an
obligation by Evergreen, Parent or any of their respective subsidiaries to
redeem, repurchase or retire (or offer to redeem, repurchase or retire) any
outstanding debt (other than EMCLA's senior credit facility and senior notes) or
equity security of Evergreen, Parent or any of their respective subsidiaries, or
(iv) subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any order,
writ, judgment, injunction, decree, determination or award currently in effect,
except for (x) conflicts, breaches, defaults or other consequences
(collectively, "breaches") referred to above with respect to EMCLA's senior
credit facility and senior notes, (y) breaches resulting from Parent's ownership
of radio stations in certain markets where such ownership may be in excess of
the numerical limits imposed on local multiple radio station ownership under the
Telecommunications Act of 1996, together with the rules and regulations
thereunder (collectively, the "1996 Telecom Act") or where such ownership
otherwise may be subject to challenge by any Governmental Entity under any
antitrust or similar law, rule or regulation, or (z) breaches that, individually
or in the aggregate, could not reasonably be expected to have an Evergreen
Material Adverse Effect or to materially hinder Evergreen's ability to
consummate the transactions contemplated by this Agreement. No consent, approval
or authorization of, or declaration or filing with, or notice to, any
governmental agency or regulatory authority (a "Governmental Entity") which has
not been received or made, is required by or with respect to Evergreen or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by Evergreen or the consummation by Evergreen of the transactions contemplated
hereby, except for (i) the filing of premerger notification and report forms
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), with respect to the Merger and the Subsidiary Merger and the
termination or earlier expiration of the applicable waiting periods thereunder,
(ii) such filings with and approvals required by the Federal Communications
Commission or any successor entity (the "FCC") under the Communications Act of
1934, as amended, and the rules, regulations and policies of the FCC promulgated
thereunder (collectively, the "Communications Act") including those required in
connection with the transfer of control of FCC Licenses (as defined in Section
3.9) for the operation of the Company Licensed Facilities (as defined in Section
3.9) and the transfer of control of the Evergreen FCC Licenses (as defined in
Section 2.9), (iii) the filing of (x) the registration statements on Form S-4 to
be filed with the SEC by Evergreen and EMCLA in connection with the issuance of
Parent Common Stock and the Convertible Preferred Stock in the Merger (the
"Evergreen Form S-4"), and the issuance of Merger Preferred Stock in the
Subsidiary Merger (the "EMCLA Form S-4" and, collectively with the Evergreen
Form S-4, the "Form S-4s") and the declaration of effectiveness of each of the
Form S-4s by the SEC, (y) a proxy statement to be filed with the SEC by
Evergreen relating to the Evergreen Stockholder Approval (such proxy statement,
together with the proxy statement relating to the approval of this Agreement and
the Merger by the holders of Shares (the "Company Stockholder Approval"), in
each case as amended or supplemented from time to time, the "Joint Proxy
Statement"), and (z) such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, and (iv) the
filing of the certificates of merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company and Radio Broadcasting are qualified to do business.
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2.4 SEC Documents. (i) Evergreen has filed all required reports, schedules,
forms, statements and other documents with the SEC since January 1, 1995 (such
reports, schedules, forms, statements and other documents are hereinafter
referred to as the "SEC Documents"); (ii) as of their respective dates, the SEC
Documents complied with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; and (iii) the
consolidated financial statements of Evergreen included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
as permitted by Rule 10-01 of Regulation S-X) and fairly present, in all
material respects, the consolidated financial position of Evergreen and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (on the basis
stated therein and subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments).
2.5 Absence of Certain Changes or Events. Except as disclosed in the SEC
Documents filed and publicly available prior to the date of this Agreement (the
"Filed SEC Documents") and except as disclosed in writing by Evergreen to the
Company prior to the execution and delivery of the Old Agreement, or as it
relates to the Viacom Transaction (as defined in Section 10.9), since the date
of the most recent audited financial statements included in the Filed SEC
Documents, Evergreen and its subsidiaries have conducted their business only in
the ordinary course, and there has not been (i) any change which could
reasonably be expected to have an Evergreen Material Adverse Effect (including
as a result of the consummation of the transactions contemplated by this
Agreement), (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
Evergreen's currently outstanding capital stock, (iii) any split, combination or
reclassification of any of its outstanding capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its outstanding capital stock, (iv) (x) any
granting by Evergreen or any of its subsidiaries to any director, officer or
other employee or independent contractor of Evergreen or any of its subsidiaries
of any increase in compensation or acceleration of benefits, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents, (y) any granting by
Evergreen or any of its subsidiaries to any director, officer or other employee
or independent contractor of any increase in, or acceleration of benefits in
respect of, severance or termination pay, or pay in connection with any change
of control of Evergreen, except in the ordinary course of business consistent
with prior practice or as was required under any employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents or (z) any entry by
Evergreen or any of its subsidiaries into any employment, severance, change of
control, or termination or similar agreement with any director, executive
officer or other employee or independent contractor, or (v) any change in
accounting methods, principles or practices by Evergreen or any of its
subsidiaries materially affecting its assets, liability or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
2.6 No Extraordinary Payments or Change in Benefits. Except as disclosed in
writing by Evergreen to the Company prior to the execution and delivery of the
Agreement, no current or former director, officer, employee or independent
contractor of Evergreen or any of its subsidiaries is entitled to receive any
payment under any agreement, arrangement or policy (written or oral) relating to
employment, severance, change of control, termination, stock options, stock
purchases, compensation, deferred compensation, fringe benefits or other
employee benefits currently in effect (collectively, the "Evergreen Benefit
Plans"), nor will any benefit received or to be received by any current or
former director, officer, employee or independent contractor of Evergreen or any
of its subsidiaries under any Evergreen Benefit Plan be accelerated or modified,
as a result of
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or in connection with the execution and delivery of, or the consummation of the
transactions contemplated by, this Agreement.
2.7 Voting Requirements. The affirmative vote of the holders of at least a
majority of the votes entitled to be cast by the holders of the outstanding
Evergreen Common Stock, voting as a single class, entitled to vote thereon at
the Evergreen Stockholders Meeting with respect to the approval of this
Agreement, the Merger, the issuance of shares of Parent Common Stock and the
assumption of Company Stock Options in the Merger, and the Parent Charter, and
the affirmative vote of the holders of at least a majority of the votes entitled
to be cast by the holders of the outstanding Evergreen Class B Common Stock,
voting as a separate class, with respect to the adoption of the Parent Charter,
are the only votes of the holders of any class or series of Evergreen's capital
stock necessary to approve this Agreement, the issuance of shares of Parent
Common Stock and the assumption of Company Stock Options in the Merger, the
Parent Charter and the transactions contemplated by this Agreement.
2.8 State Takeover Statutes. The Board of Directors of Evergreen has
approved the terms of this Agreement and the Stockholders Agreement and the
consummation of the transactions contemplated by this Agreement and by the
Stockholders Agreement, and such approval is sufficient to render inapplicable
to the Merger, the Subsidiary Merger and the other transactions contemplated by
this Agreement and by the Stockholders Agreement the provisions of Section 203
of the Delaware Code. To Evergreen's knowledge, no other state takeover statute
or similar statute or regulation applies or purports to apply to the Merger, the
Subsidiary Merger, this Agreement, the Stockholders Agreement or any of the
transactions contemplated by this Agreement or the Stockholders Agreement and no
provision of the Certificate of Incorporation, Bylaws or other governing
instrument of Evergreen or any of its subsidiaries would, directly or
indirectly, restrict or impair the ability of Evergreen or any of its
subsidiaries to consummate the transactions contemplated by this Agreement or
the Stockholders Agreement.
2.9 Evergreen FCC Licenses; Operations of Evergreen Licensed
Facilities. Evergreen and its subsidiaries have operated the radio stations for
which Evergreen and any of its subsidiaries holds licenses from the FCC, in each
case which are owned or operated by Evergreen and its subsidiaries (the
"Evergreen Licensed Facilities",) in material compliance with the terms of the
licenses issued by the FCC to Evergreen and its subsidiaries (the "Evergreen FCC
Licenses") (complete and correct copies of each of which have been made
available to the Company and Radio Broadcasting), and in material compliance
with the Communications Act, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to have an Evergreen
Material Adverse Effect. Evergreen and its subsidiaries have, since acquired by
Evergreen, timely filed or made all applications, reports and other disclosures
required by the FCC to be made with respect to the Evergreen Licensed Facilities
and have timely paid all FCC regulatory fees with respect thereto, except where
the failure to do so could not, individually or in the aggregate, reasonably be
expected to have an Evergreen Material Adverse Effect. Evergreen and each of its
subsidiaries have, and are the authorized legal holders of, all the Evergreen
FCC Licenses necessary or used in the operation of the businesses of the
Evergreen Licensed Facilities as presently operated. All such Evergreen FCC
Licenses are validly held and are in full force and effect, unimpaired by any
act or omission of Evergreen, each of its subsidiaries (or, to Evergreen's
knowledge, their respective predecessors) or their respective officers,
employees or agents, except where such impairments could not, individually or in
the aggregate, reasonably be expected to have an Evergreen Material Adverse
Effect. As of the date hereof, except as disclosed in writing by Evergreen to
the Company prior to the execution and delivery of this Agreement, no
application, action or proceeding is pending for the renewal or material
modification of any of the Evergreen FCC Licenses and, to Evergreen's knowledge,
there is not now before the FCC any material investigation, proceeding, notice
of violation, order of forfeiture or complaint relating to any Evergreen
Licensed Facility that, if adversely determined, could reasonably be expected to
have an Evergreen Material Adverse Effect, and Evergreen is not aware of any
basis that would cause the FCC not to renew any of the Evergreen FCC Licenses.
There is not now pending and, to Evergreen's knowledge, there is not threatened,
any action by or before the FCC to revoke, suspend, cancel, rescind or modify in
any material respect any of the Evergreen FCC Licenses that, if adversely
determined, could reasonably be expected to have an Evergreen Material Adverse
Effect (other than proceedings to amend FCC rules or the Communications Act of
general applicability to the radio industry).
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2.10 Brokers. Except with respect to Wasserstein, Perella & Co.
("Wasserstein"), all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by Evergreen directly
with the Company and Radio Broadcasting, without the intervention of any person
on behalf of Evergreen in such a manner as to give rise to any valid claim by
any person against Evergreen, the Company, the Surviving Corporation or any
subsidiary of any of them for a finder's fee, brokerage commission, or similar
payment. Evergreen has provided the Company with a written summary of the terms
of its agreement with Wasserstein, and Evergreen has no other agreements or
understandings (written or oral) with respect to such services.
2.11 Opinion of Financial Advisor. Evergreen has received the opinion of
Wasserstein, dated the date of the Old Agreement, to the effect that, as of such
date, the Exchange Ratio is fair, from a financial point of view, to Evergreen.
2.12 FCC Qualification. Evergreen and its subsidiaries are fully qualified
under the Communication Act to be the transferees of control of the Company FCC
Licenses (as hereinafter defined); provided, however, that the parties recognize
that the consummation of the Merger could cause the Surviving Corporation to
exceed in certain cases the numerical limits on local multiple radio station
ownership imposed by Section 202(b) of the 1996 Telecom Act and that a waiver of
these limits may be required prior to the grant of such transfer of control of
the Evergreen FCC Licenses and Company FCC Licenses. Each individual or entity
that is an officer, director or attributable stockholder of Evergreen that is
proposed to be an officer, director or attributable stockholder of the Surviving
Corporation is fully qualified under the Communications Act to be an officer,
director or attributable stockholder of the Surviving Corporation.
2.13 Compliance With Applicable Laws. Each of Evergreen and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted other than
such Permits the absence of which would not, individually or in the aggregate,
have an Evergreen Material Adverse Effect, and there has occurred no default
under any such Permit other than such defaults which, individually or in the
aggregate, would not have an Evergreen Material Adverse Effect. Except as
disclosed in the Filed Evergreen SEC Documents, Evergreen and its subsidiaries
are in compliance with all applicable statutes, laws, ordinances, rules orders
and regulations of any Governmental Entity, except for such noncompliance which
individually or in the aggregate would not have a Evergreen Material Adverse
Effect.
2.14 Absence of Undisclosed Liabilities. Except as disclosed in the Filed
Evergreen SEC Documents, and except for (A) liabilities contemplated by this
Agreement or disclosed in writing by Evergreen to the Company prior to the
execution and delivery of the Old Agreement, and (B) EMCLA's obligations with
respect to the Viacom Transaction, Evergreen and its subsidiaries do not have
any material indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise) (i) required by GAAP to be reflected
on a consolidated balance sheet of Evergreen and its consolidated subsidiaries
or in the notes, exhibits or schedules thereto or (ii) which reasonably could be
expected to have an Evergreen Material Adverse Effect.
2.15 Litigation. Except as disclosed in the Filed Evergreen SEC Documents,
there is no litigation, administrative action, arbitration or other proceeding
pending against Evergreen or any of its subsidiaries or, to the knowledge of
Evergreen, threatened that, individually or in the aggregate, could reasonably
be expected to (i) have an Evergreen Material Adverse Effect or (ii) prevent, or
significantly delay the consummation of the transactions contemplated by this
Agreement. Except as set forth in the Filed Evergreen SEC Documents, there is no
judgment, order, injunction or decree of any Governmental Entity outstanding
against Evergreen or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to have any effect referred to in the
foregoing clauses (i) and (ii) of this Section 2.15.
2.16 Transactions With Affiliates. Other than the transactions contemplated
by this Agreement, the Viacom Transaction and except to the extent disclosed in
the Filed Evergreen SEC Documents or disclosed in writing to the Company by
Evergreen prior to the execution and delivery of the Old Agreement, there have
been no transactions, agreements, arrangements or understandings between
Evergreen or its subsidiaries, on
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the one hand, and Evergreen's affiliates (other than subsidiaries of Evergreen)
or any other person, on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act.
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES OF EMHC AND EMCLA
EMHC and EMCLA hereby, jointly and severally, represent and warrant to the
Company and Radio Broadcasting, as of the date hereof, as follows:
2A.1 Organization, Standing and Corporate Power. Each of EMHC and EMCLA is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of EMHC and EMCLA is duly qualified to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure to be so qualified could not reasonably be expected to have an Evergreen
Material Adverse Effect. Each of EMHC and EMCLA has delivered to the Company
complete and correct copies of its Certificate of Incorporation and Bylaws, as
amended to the date of this Agreement.
2A.2 EMHC and EMCLA Capital Structure. The authorized capital stock of EMHC
consists of 1,000 shares of EMHC Common Stock. The authorized capital stock of
EMCLA consists of 1,000 shares of EMCLA Common Stock. At the close of business
on July 30, 1997, 1,000 shares of EMCLA Common Stock were issued and outstanding
and owned of record and beneficially by Evergreen. At the close of business on
July 30, 1997, 1,000 shares of EMHC Common Stock were issued and outstanding and
owned of record and beneficially by Evergreen. Except as set forth above, at the
close of business on July 30, 1997, no shares of capital stock or other equity
securities of EMHC and EMCLA were authorized, issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of EMHC and EMCLA are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. No bonds, debentures, notes or other indebtedness of EMHC or
EMCLA having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which the stockholders of
EMHC or EMCLA may vote are issued or outstanding. Neither EMHC nor EMCLA has any
outstanding option, warrant, subscription or other right, agreement or
commitment that obligates EMHC or EMCLA to issue, sell or transfer, repurchase,
redeem or otherwise acquire or vote any shares of the capital stock of EMHC or
EMCLA or any of their respective Significant Subsidiaries. Since the close of
business on July 30, 1997 to the date hereof, neither EMHC nor EMCLA has issued
any capital stock or securities or other rights convertible into or exercisable
or exchangeable for capital stock.
2A.3 Authority; Noncontravention. Each of EMHC and EMCLA has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by each of EMHC and EMCLA and the consummation by each of them of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of EMHC and EMCLA. Evergreen has executed
a written consent as sole stockholder of EMCLA and EMHC approving the Merger and
the Subsidiary Merger and this Agreement, and such written consent is the only
vote of any stockholders of EMCLA and EMHC required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by EMHC and EMCLA and, assuming this Agreement constitutes the valid
and binding agreement of Evergreen, the Company and Radio Broadcasting,
constitutes a valid and binding obligation of each of EMHC and EMCLA,
enforceable against each of them in accordance with its terms except that the
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditor's rights generally and (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not (i) conflict with any of the provisions of the
Certificate of Incorporation or Bylaws of EMHC or EMCLA, (ii) subject to
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the governmental filings and other matters referred to in the following
sentence, conflict with, result in a breach of or 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 loss of a material benefit
under, or require the consent of any person under, any indenture, or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which EMHC or EMCLA is a party or by which EMHC or EMCLA or any
of their assets is bound or affected, (iii) result in an obligation by EMHC,
EMCLA, the Surviving Corporation, the Subsidiary Surviving Corporation or any of
their respective subsidiaries to redeem, repurchase or retire (or offer to
redeem, repurchase or retire) any outstanding debt (other than EMCLA's senior
credit facility) or equity security of EMHC, EMCLA, the Surviving Corporation,
the Subsidiary Surviving Corporation or any of their respective subsidiaries, or
(iv) subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any order,
writ, judgment, injunction, decree, determination or award currently in effect,
except for (x) breaches with respect to EMCLA's senior credit facility, (y)
breaches resulting from the Surviving Corporation's or Subsidiary Surviving
Corporation's ownership of radio stations in certain markets where such
ownership may be in excess of the numerical limits imposed on local multiple
radio station ownership under the 1996 Telecom Act or where such ownership
otherwise may be subject to challenge by any Governmental Entity under any
antitrust or similar law, rule or regulation, or (z) breaches that, individually
or in the aggregate, could not reasonably be expected to have an Evergreen
Material Adverse Effect or to materially hinder EMHC's or EMCLA's ability to
consummate the transactions contemplated by this Agreement. No consent, approval
or authorization of, or declaration or filing with, or notice to, any
Governmental Entity which has not been received or made is required by or with
respect to EMHC and EMCLA in connection with the execution and delivery of this
Agreement by the EMHC and EMCLA or the consummation by EMHC and EMCLA of any of
the transactions contemplated by this Agreement, except for (i) the filing of
premerger notification and report forms under the HSR Act with respect to the
Merger and Subsidiary Merger, (ii) such filings with and approvals required by
the FCC under the Communications Act including those required in connection with
the transfer of the Evergreen FCC Licenses for the operation of the Evergreen
Licensed Facilities, (iii) the EMCLA Form S-4 relating to the issuance of the
Merger Preferred Stock, and (iv) the filing of the certificates of merger with
the Delaware Secretary of State, and appropriate documents with the relevant
authorities of the other states in which EMHC and EMCLA are qualified to do
business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND RADIO BROADCASTING
The Company and Radio Broadcasting hereby, jointly and severally, represent
and warrant to Evergreen, EMCLA and EMHC, as of February 19, 1997 (except to the
extent specifically made as of an earlier date or the date hereof), as follows:
3.1 Organization, Standing and Corporate Power. The Company and each of
its Significant Subsidiaries (including Radio Broadcasting) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. The Company and
each of its Significant Subsidiaries is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect on the business, properties, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries, considered as a whole (a "Company Material Adverse Effect");
provided, however, that for purposes of Sections 3.13, 3.14, 3.15 and 3.16, no
fact, event or circumstance shall be deemed to constitute a Company Material
Adverse Effect unless in addition to otherwise specifying the elements of the
definition given above, the relevant event, fact or circumstance not disclosed
pursuant to such representations would be a material fact, event or
circumstance, the omission of which in a document filed with the SEC pursuant to
the Exchange Act would be such as to cause the statements contained in such
filing to be misleading within the meaning of Rule 10b-5 under the
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Exchange Act. Each of the Company and Radio Broadcasting have delivered to
Evergreen complete and correct copies of its Certificate of Incorporation and
Bylaws, as amended to the date of this Agreement.
3.2 Company and Radio Broadcasting Capital Structure. The authorized
capital stock of the Company consists of (i) 40,000,000 shares of Company Class
A Common Stock, (ii) 10,000,000 shares of Company Class B Common Stock, (iii)
10,000,000 shares of Class C Common Stock, $0.01 par value ("Company Class C
Common Stock"), of the Company, and (iv) 10,000,000 shares of preferred stock,
$0.01 par value, of which 2,300,000 have been designated as Company Convertible
Preferred Stock. The authorized capital stock of Radio Broadcasting consists of
1,000 shares of common stock, $0.01 par value ("Radio Broadcasting Common
Stock"), and 10,000,000 shares of preferred stock, $0.01 par value, of which
1,000,000 have been designated as Radio Broadcasting 12 1/4% Preferred Stock and
3,600,000 have been designated as Radio Broadcasting 12% Preferred Stock. At the
close of business on February 18, 1997: (i) 10,437,212 shares of Company Class A
Common Stock were issued and outstanding, 1,926,152 shares of Company Class A
Common Stock were reserved for issuance pursuant to outstanding options or
warrants to purchase shares of Company Class A Common Stock which have been
granted to directors, officers or employees of the Company or others ("Company
Stock Options"), 3,343,465 shares of Company Class A Common Stock were reserved
for issuance upon conversion of the Company Convertible Preferred Stock, and
8,547,910 shares of Company Class A Common Stock were reserved for issuance upon
the conversion of the Company Class B Common Stock; (ii) 8,547,910 shares of
Company Class B Common Stock were issued and outstanding and no shares of
Company Class B Common Stock were reserved for issuance for any purpose; (iii)
no shares of Company Class C Common Stock were issued and outstanding and none
may be issued in the future; and (iv) 2,200,000 shares of Company Convertible
Preferred Stock were issued and outstanding, no shares of Company Convertible
Preferred Stock were held in the treasury of the Company and no shares of
Company Convertible Preferred Stock were reserved for issuance for any purpose.
At the close of business on February 18, 1997: (i) 1,000 shares of Radio
Broadcasting Common Stock were issued and outstanding and no shares of Radio
Broadcasting Common Stock were reserved for issuance for any purpose; (ii)
1,000,000 shares of Radio Broadcasting 12 1/4% Preferred Stock were issued and
outstanding, no shares of Radio Broadcasting 12 1/4% Preferred Stock were held
in treasury by Radio Broadcasting and no shares of Radio Broadcasting 12 1/4%
Preferred Stock were reserved for issuance for any purpose; and (iii) 2,000,000
shares of Radio Broadcasting 12% Preferred Stock were issued and outstanding, no
shares of Radio Broadcasting 12% Preferred Stock were held in treasury by Radio
Broadcasting and 1,600,000 shares of Radio Broadcasting 12% Preferred Stock were
reserved for issuance in lieu of cash dividends. Except as set forth above, at
the close of business on February 18, 1997, no shares of capital stock or other
equity securities of the Company and Radio Broadcasting were authorized, issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
the Company and Radio Broadcasting, and all shares which may be issued pursuant
to the Company's stock option plans, as amended to the date of the Old Agreement
(the "Company Stock Option Plans") or any outstanding Company Stock Options will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. No bonds, debentures, notes or other
indebtedness of the Company or any subsidiary of the Company having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the stockholders of the Company or any subsidiary
of the Company may vote are issued or outstanding. All the outstanding shares of
capital stock of each subsidiary of the Company have been validly issued and are
fully paid and nonassessable and, except for the Radio Broadcasting Preferred
Stock, are owned by the Company or its subsidiaries, free and clear of all
Liens, except for Liens arising out of the Radio Broadcasting's senior credit
facility and those that, individually or in the aggregate, could not reasonably
be expected to have a Company Material Adverse Effect. Except as set forth above
and except (i) for certain provisions of the Certificate of Incorporation and
Bylaws of the Company relating to transfers of the Company Class B Common Stock
and "alien ownership", and (ii) as provided in the Exchange and Registration
Rights Agreement entered into by Radio Broadcasting in connection with the sale
of the Radio Broadcasting 12% Preferred Stock, neither the Company nor any
subsidiary of the Company has any outstanding option, warrant, subscription or
other right, agreement or commitment that either (i) obligates the Company or
any subsidiary of the Company to issue, sell or transfer, repurchase, redeem or
otherwise acquire or vote any shares of the capital stock of the Company or any
Significant Subsidiary of the Company or (ii) restricts the transfer of Shares.
No shares of capital stock of the
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Company are owned of record or beneficially by any subsidiary of the Company.
Since the close of business on February 18, 1997 to the date of the Old
Agreement, neither the Company nor any subsidiary of the Company has issued any
capital stock or securities or other rights convertible into or exercisable or
exchangeable for capital stock other than securities issued upon the exercise of
Company Stock Options outstanding on February 18, 1997 or other convertible
securities outstanding on February 18, 1997.
3.3 Authority; Noncontravention. Each of the Company and Radio
Broadcasting has all requisite corporate power and authority to enter into this
Agreement and, subject to the Company Stockholder Approval, to consummate the
transactions contemplated by this Agreement. As of the date hereof, the
execution and delivery of this Agreement by each of the Company and Radio
Broadcasting and the consummation by each of them of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company and Radio Broadcasting, subject, in
the case of the consummation of the Merger, to the Company Stockholder Approval.
The Company has executed a written consent as stockholder of Radio Broadcasting
approving the Subsidiary Merger and this Agreement, and such written consent is
the only vote of any stockholders of Radio Broadcasting required in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. As of the date hereof, this Agreement has been
duly executed and delivered by the Company and Radio Broadcasting and, assuming
this Agreement constitutes the valid and binding agreement of Evergreen, EMCLA
and EMHC, constitutes a valid and binding obligation of each of the Company and
Radio Broadcasting, enforceable against each of them in accordance with its
terms except that the enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditor's rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) conflict with any of the
provisions of the Certificate of Incorporation or Bylaws of the Company or the
comparable documents of any subsidiary of the Company, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
conflict with, result in a breach of or 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 loss of a material benefit under, or require
the consent of any person under, any indenture, or other agreement, permit,
concession, franchise, license or similar instrument or undertaking to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their assets is bound or affected, (iii) except as
may be the case with respect to Dissenting Shares, result in an obligation by
the Company, the Surviving Corporation or any of their respective subsidiaries
to redeem, repurchase or retire (or offer to redeem, repurchase or retire) any
outstanding debt (other than Radio Broadcasting's senior credit facility) or
equity security of the Company, the Surviving Corporation or any of their
respective subsidiaries, or (iv) subject to the governmental filings and other
matters referred to in the following sentence, contravene any law, rule or
regulation of any state or of the United States or any political subdivision
thereof or therein, or any order, writ, judgment, injunction, decree,
determination or award currently in effect, except for (x) breaches with respect
to the Radio Broadcasting's senior credit facility, (y) breaches resulting from
the Surviving Corporation's ownership of radio stations in certain markets where
such ownership may be in excess of the numerical limits imposed on local
multiple radio station ownership under the 1996 Telecom Act or where such
ownership otherwise may be subject to challenge by any Governmental Entity under
any antitrust or similar law, rule or regulation, or (z) breaches that,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect or to materially hinder the Company's and Radio
Broadcasting's ability to consummate the transactions contemplated by this
Agreement. No consent, approval or authorization of, or declaration or filing
with, or notice to, any Governmental Entity which has not been received or made
is required by or with respect to the Company or Radio Broadcasting in
connection with the execution and delivery of this Agreement by the Company and
Radio Broadcasting or the consummation by the Company and Radio Broadcasting of
any of the transactions contemplated by this Agreement, except for (i) the
filing of premerger notification and report forms under the HSR Act with respect
to the Merger, (ii) such filings with and approvals required by the FCC under
the Communications Act including those required in connection with the transfer
of the Company FCC Licenses (as defined in Section 3.9) for the operation of the
Company
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Licensed Facilities (as defined in Section 3.9), (iii) the Joint Proxy Statement
relating to the Company Stockholder Approval and such reports under the Exchange
Act as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, and (iv) the filing of the certificates of
merger with the Delaware Secretary of State, and appropriate documents with the
relevant authorities of the other states in which the Company and Radio
Broadcasting are qualified to do business.
3.4 SEC Documents. The Company and its subsidiaries have filed all
required reports, schedules, forms, statements and other documents with the SEC
since January 1, 1995 (the "Company SEC Documents"). As of their respective
dates, the Company SEC Documents complied with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents as of such dates contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC Documents comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Rule
10-01 of Regulation S-X) and fairly present, in all material respects, the
consolidated or combined financial position of the Company and its subsidiaries
as of the dates thereof and the consolidated or combined results of their
operations and cash flows for the periods then ended (on the basis stated
therein and subject, in the case of unaudited statements, to normal year-end
audit adjustments).
3.5 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Company SEC Documents") and except as it relates to the
Viacom Transaction or as otherwise disclosed in writing by the Company to
Evergreen prior to the execution and delivery of this Agreement, since the date
of the most recent audited financial statements included in the Filed Company
SEC Documents, the Company and its subsidiaries have conducted their business
only in the ordinary course, and there has not been (i) any change which could
reasonably be expected to have a Company Material Adverse Effect (including as a
result of the consummation of the transactions contemplated by this Agreement),
(ii) any declaration, setting aside or payment of any dividend or distribution
(whether in cash, stock or property) with respect to any of the Company's
outstanding capital stock (other than the payment of regular cash dividends on
the Company Convertible Preferred Stock in accordance with usual record and
payment dates), (iii) any split, combination or reclassification of any of its
outstanding capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its capital stock, (iv) (x) any granting by the Company or any of its
subsidiaries to any director, officer or other employee or independent
contractor of the Company or any of its subsidiaries of any increase in
compensation or acceleration of benefits, except in the ordinary course of
business consistent with prior practice or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Filed Company SEC Documents, (y) any granting by the
Company or any of its subsidiaries to any director, officer or other employee or
independent contractor of any increase in, or acceleration of benefits in
respect of, severance or termination pay, or pay in connection with any change
of control of the Company, except in the ordinary course of business consistent
with prior practice or as was required under any employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents or (z) any
entry by the Company or any of its subsidiaries into any employment, severance,
change of control, or termination or similar agreement with any such director,
officer or other employee or independent contractor, or (v) any change in
accounting methods, principles or practices by the Company or any of its
subsidiaries materially affecting its assets, liability or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
3.6 No Extraordinary Payments or Change in Benefits. No current or former
director, officer, employee or independent contractor of the Company or any of
its subsidiaries is entitled to receive any payment under any agreement,
arrangement or policy (written or oral) relating to employment, severance,
change of control,
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termination, stock options, stock purchases, compensation, fringe benefits or
other employee benefits currently in effect (collectively, the "Company Benefit
Plans"), nor will any benefit received or to be received by any current or
former director, officer, employee or independent contractor of the Company or
any of its subsidiaries under any Company Benefit Plan be accelerated or
modified, as a result of or in connection with the execution and delivery of, or
the consummation of the transactions contemplated by, this Agreement.
3.7 Voting Requirements. The affirmative vote of the Principal Company
Stockholders with respect to the approval of this Agreement and the Merger are
the only votes of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement and the transactions contemplated by
this Agreement.
3.8 State Takeover Statutes. The Board of Directors of the Company has
approved the terms of this Agreement and the Stockholders Agreement and the
consummation of the transactions contemplated by this Agreement and by the
Stockholders Agreement, and such approval is sufficient to render inapplicable
to the Merger and the other transactions contemplated by this Agreement and by
the Stockholders Agreement the provisions of Section 203 of the Delaware Code.
To the Company's knowledge, no other state takeover statute or similar statute
or regulation applies or purports to apply to the Merger, this Agreement, the
Stockholders Agreement or any of the transactions contemplated by this Agreement
or the Stockholders Agreement and no provision of the Certificate of
Incorporation, Bylaws or other governing instrument of the Company or any of its
subsidiaries would, directly or indirectly, restrict or impair the ability of
the Company or Evergreen to consummate the transactions contemplated by this
Agreement or the Stockholders Agreement.
3.9 Company FCC Licenses; Operations of Company Licensed Facilities. The
Company and its subsidiaries have operated the radio stations for which the
Company and any of its subsidiaries holds licenses from the FCC, in each case
which are owned or operated by the Company and its subsidiaries (the "Company
Licensed Facilities") in material compliance with the terms of the licenses
issued by the FCC to the Company and its subsidiaries (the "Company FCC
Licenses") (complete and correct copies of each of which have been made
available to Evergreen), and in material compliance with the Communications Act,
except where the failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The Company
and its subsidiaries have, since acquired by the Company, timely filed or made
all applications, reports and other disclosures required by the FCC to be made
with respect to the Company Licensed Facilities and have timely paid all FCC
regulatory fees with respect thereto, except where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. The Company and each of its subsidiaries have, and are
the authorized legal holders of, all the Company FCC Licenses necessary or used
in the operation of the businesses of the Company Licensed Facilities as
presently operated. All such Company FCC Licenses are validly held and are in
full force and effect, unimpaired by any act or omission of the Company, each of
its subsidiaries (or to the Company's and Radio Broadcasting's knowledge, their
respective predecessors) or their respective officers, employees or agents,
except where such impairments could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. As of the date
hereof, except as disclosed in writing by the Company to Evergreen prior to the
execution and delivery of this Agreement, no application, action or proceeding
is pending for the renewal or material modification of any of the Company FCC
Licenses and, to the best of the Company's knowledge, there is not now before
the FCC any material investigation, proceeding, notice of violation, order of
forfeiture or complaint against the Company or any of its subsidiaries relating
to the Company Licensed Facilities that, if adversely determined, would have a
Company Material Adverse Effect, and the Company is not aware of any basis that
would cause the FCC not to renew any of the Company FCC Licenses. There is not
now pending and, to the Company's knowledge, there is not threatened, any action
by or before the FCC to revoke, suspend, cancel rescind or modify in any
material respect any of the Company FCC Licenses that, if adversely determined,
would have a Company Material Adverse Effect (other than proceedings to amend
FCC rules or the Communications Act of general applicability to the radio
industry).
3.10 Brokers. Except with respect to HM2/Management Partners, L.P. ("Hicks
Muse") Star Media, Inc. ("Star Media"), Greenhill & Co., LLC ("Greenhill") and
Goldman Sachs & Co. ("Goldman Sachs"), all negotiations relating to this
Agreement, the transactions contemplated hereby and by the Viacom
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Transaction have been carried out by the Company directly with Evergreen,
without the intervention of any person on behalf of the Company in such a manner
as to give rise to any valid claim by any person against the Company, Evergreen,
the Surviving Corporation or any subsidiary of any of them for a finder's fee,
brokerage commission, or similar payment. The Company has provided Evergreen
with a written summary of the terms of its agreements with Hicks Muse, Star
Media, Greenhill and Goldman Sachs, and the Company has no other agreements or
understandings (written or oral) with respect to such services.
3.11 Opinion of Financial Advisor. The Company has received the opinion of
Greenhill, dated the date of the Old Agreement, to the effect that, as of such
date, the Exchange Ratio is fair, from a financial point of view, to the
Company's stockholders.
3.12 FCC Qualification. The Company and its subsidiaries are fully
qualified under the Communications Act to be the transferors of control of the
Company FCC Licenses; provided, however, that the parties recognize that the
consummation of the Merger could cause the Surviving Corporation and Thomas O.
Hicks to exceed in certain cases the numerical limits on local multiple radio
station ownership imposed by Section 202(b) of the 1996 Telecom Act and that a
waiver of these limits may be required prior to the grant of such transfer of
control of the Evergreen FCC Licenses and Company FCC Licenses. Each individual
or entity that is an officer, director or attributable stockholder of the
Company that is proposed to be an officer, director or attributable stockholder
of the Surviving Corporation is fully qualified under the Communications Act to
be an officer, director or attributable stockholder of the Surviving Corporation
other than with respect to the numerical limits on multiple ownership described
in the preceding sentence.
3.13 Compliance with Applicable Laws. Each of the Company and its
subsidiaries has in effect all Federal, state, local and foreign governmental
Permits necessary for it to own, lease or operate its properties and assets and
to carry on its business as now conducted other than such Permits the absence of
which would not, individually or in the aggregate, have a Company Material
Adverse Effect, and there has occurred no default under any such Permit other
than such defaults which, individually or in the aggregate, would not have a
Company Material Adverse Effect. Except as disclosed in the Filed Company SEC
Documents, the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules orders and regulations of any
Governmental Entity, except for such noncompliance which individually or in the
aggregate would not have a Company Material Adverse Effect.
3.14 Absence of Undisclosed Liabilities. Except as disclosed in the Filed
Company SEC Documents, and except for (A) liabilities contemplated by this
Agreement or disclosed in writing by the Company to Evergreen prior to the
execution and delivery of the Old Agreement, and (B) the Company's and Radio
Broadcasting's obligations with respect to the Viacom Transaction, the Company
and its subsidiaries do not have any material indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise) (i)
required by GAAP to be reflected on a consolidated balance sheet of the Company
and its consolidated subsidiaries or in the notes, exhibits or schedules thereto
or (ii) which reasonably could be expected to have a Company Material Adverse
Effect.
3.15 Litigation. Except as disclosed in the Filed Company SEC Documents,
there is no litigation, administrative action, arbitration or other proceeding
pending against the Company or any of its subsidiaries or, to the knowledge of
the Company, threatened that, individually or in the aggregate, could reasonably
be expected to (i) have a Company Material Adverse Effect or (ii) prevent, or
significantly delay the consummation of the transactions contemplated by this
Agreement. Except as set forth in the Filed Company SEC Documents, there is no
judgment, order, injunction or decree of any Governmental Entity outstanding
against the Company or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to have any effect referred to in the
foregoing clauses (i) and (ii) of this Section 3.15.
3.16 Transactions With Affiliates. Other than the transactions contemplated
by this Agreement, the Viacom Transaction and except to the extent disclosed in
the Filed Company SEC Documents or disclosed in writing by Chancellor to
Evergreen prior to the execution and delivery of the Old Agreement, there have
been no transactions, agreements, arrangements or understandings between the
Company or its subsidiaries, on the one hand, and the Company's affiliates
(other than subsidiaries of the Company) or any other person, on the
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other hand, that would be required to be disclosed under Item 404 of Regulation
S-K under the Securities Act.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Preparation of Form S-4S and the Joint Proxy Statement; Information
Supplied. (a) As soon as practicable following the date of this Agreement, (i)
the Company and Evergreen shall prepare and file with the SEC the Joint Proxy
Statement and Evergreen shall prepare and file with the SEC the Evergreen Form
S-4, in which the Joint Proxy Statement will be included as a prospectus, and
(ii) EMCLA shall prepare and file with the SEC the EMCLA Form S-4. Each of the
Company, Evergreen and EMCLA shall use its best efforts to have the Form S-4s
declared effective under the Securities Act as promptly as practicable after
such filing. The Company will use its best efforts to cause the Joint Proxy
Statement to be mailed to the Company's stockholders, and Evergreen will use its
best efforts to cause the Joint Proxy Statement to be mailed to Evergreen's
stockholders, in each case as promptly as practicable after the Evergreen Form
S-4 is declared effective under the Securities Act. Each of Evergreen and EMCLA
shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or take any action that would
subject it to the service of process in suits, other than as to matters and
transactions relating to the Form S-4s, in any jurisdiction where it is not so
subject) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock and Parent Convertible
Preferred Stock in the Merger and the issuance of Merger Preferred Stock in the
Subsidiary Merger, and the Company and Radio Broadcasting shall furnish all
information concerning the Company, Radio Broadcasting and the holders of the
Shares, Company Convertible Preferred Stock and Radio Broadcasting Preferred
Stock as may be reasonably requested in connection with any such action.
(b) The Company and Radio Broadcasting each agrees that none of the
information supplied or to be supplied by the Company or Radio Broadcasting
specifically for inclusion or incorporation by reference in (i) the Form S-4s
will not, at the time each Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, or (ii) the Joint Proxy Statement will not, at the date it is first
mailed to the Company's stockholders or at the time of the Stockholders Meeting
(as defined in Section 4.2), contain any statement which, at the time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of a proxy for the same meeting or subject matter thereof which has
become false or misleading. The Company agrees that the Joint Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except with respect to
statements made or incorporated by reference therein based on information
supplied by Evergreen specifically for inclusion or incorporated by reference in
the Joint Proxy Statement.
(c) Evergreen and EMCLA each agrees that none of the information supplied
or to be supplied by Evergreen or EMCLA specifically for inclusion or
incorporation by reference in (i) the Form S-4s will not, at the time each Form
S-4 is filed with the SEC, at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, or (ii) the Joint Proxy
Statement will not, at the date the Joint Proxy Statement is first mailed to
Evergreen's stockholders, contain any statement which, at the time and in light
of the circumstances under which it is made, is false or misleading with respect
to any material fact, or omits to state any material fact necessary in order to
make the statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of a
proxy for the same meeting or subject matter thereof which has become false or
misleading. Evergreen
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and EMCLA each agrees that the Form S-4s will comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations promulgated thereunder and Evergreen agrees that the Joint Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder, except
in each case with respect to statements made or incorporated by reference in
either the Form S-4s or the Joint Proxy Statement based on information supplied
by the Company or Radio Broadcasting specifically for inclusion or incorporation
by reference therein.
4.2 Meetings of Company Stockholders and Evergreen Stockholders. (a) The
Company will take all action necessary in accordance with applicable law and its
Certificate of Incorporation and Bylaws to convene a meeting of its stockholders
(the "Stockholders Meeting") to submit this Agreement, together with the
affirmative recommendation of the Company's Board of Directors, to the Company's
stockholders so that they may consider and vote upon the approval of this
Agreement. The Company will use its best efforts to hold the Stockholders
Meeting as soon as practicable after the date hereof and to obtain the favorable
votes of its stockholders. Pursuant to the Stockholders Agreement, the Principal
Company Stockholders have agreed to vote all Shares owned by them or for which
they have the right to vote in favor of the approval of this Agreement and the
Merger, which vote the Company represents and warrants shall be sufficient to
obtain the Company Stockholder Approval.
(b) Evergreen will take all action necessary in accordance with applicable
law and its Certificate of Incorporation and Bylaws to convene a meeting of its
stockholders (the "Evergreen Stockholders Meeting") to submit this Agreement and
the Parent Charter, together with the affirmative recommendation of Evergreen's
Board of Directors, to Evergreen's stockholders so that they may consider and
vote upon the approval of this Agreement, the issuance of Parent Common Stock
and the assumption of Company Stock Options in the Merger, and the Parent
Charter. Evergreen will use its best efforts to hold the Evergreen Stockholders
Meeting as soon as practicable after the date hereof and to obtain the favorable
votes of its stockholders. Pursuant to the Stockholders Agreement, the Principal
Evergreen Stockholder has agreed to vote all shares of Evergreen Common Stock
owned by him or for which he has the right to vote in favor of the approval of
this Agreement, the issuance of Parent Common Stock and the assumption of
Company Stock Options in the Merger, the adoption of the Parent Charter, and the
Merger.
(c) Each of Evergreen and the Company agrees to cooperate and use its
respective best efforts to hold the Evergreen Stockholders Meeting and the
Stockholders Meeting on the same day.
4.3 Access to Information; Confidentiality. Upon reasonable notice, each of
the Company and Evergreen shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers, employees,
counsel, financial advisors and other representatives of such other party
reasonable access during normal business hours during the period prior to the
Effective Time to all its properties, books, contracts, commitments, personnel
and records and, during such period, each of the Company and Evergreen shall,
and shall cause each of its respective subsidiaries to, furnish as promptly as
practicable to the other party such information concerning its business,
properties, financial condition, operations and personnel as such other party
may from time to time reasonably request. Except as required by law, each of the
Company and Evergreen will hold, and will cause its respective directors,
officers, partners, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information obtained
from Evergreen or the Company, respectively, in confidence to the extent
required by and in accordance with the provisions of the letters dated January
27, 1997, each between Evergreen and the Company (collectively, the
"Confidentiality Agreements"), and each of the Company and Evergreen agrees that
prior to the Effective Time neither party will use any of such nonpublic
information to directly or indirectly divert or attempt to divert any business,
customer or employee of the other.
4.4 Public Announcements. Evergreen, on the one hand, and the Company, on
the other hand, will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Merger and the Subsidiary Merger, and shall not issue
any such press release or make any such
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public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to rules of The Nasdaq
Stock Market.
4.5 Acquisition Proposals. (a) The Company shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. The Company will notify Evergreen immediately of any
inquiries or proposals with respect to any Acquisition Proposal that is received
by, or any such negotiations or discussions that are sought to be initiated
with, the Company. For purposes of this Agreement, "Acquisition Proposal" means
any proposal with respect to a merger, consolidation, share exchange or similar
transaction involving the Company or Evergreen or any Significant Subsidiary of
the Company or Evergreen, or any purchase of all or any significant portion of
the assets of the Company or Evergreen or any Significant Subsidiary of the
Company or Evergreen, or any equity interest in the Company or Evergreen or any
Significant Subsidiary of the Company or Evergreen, other than the transactions
contemplated hereby; provided, however, that an Acquisition Proposal shall not
include a currently planned acquisition or disposition of broadcast properties
disclosed in writing prior to execution and delivery of this Agreement by either
the Company or Evergreen to the other.
(b) Evergreen shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, Evergreen or
any of its subsidiaries to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any Acquisition Proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may be reasonably be expected to
lead to, any Acquisition Proposal. Evergreen will notify the Company immediately
of any inquiries or proposals with respect to any Acquisition Proposal that is
received by, or any negotiations or discussions that are sought to be initiated
with, Evergreen.
(c) Nothing contained in this Section 4.5 shall prohibit the respective
Board of Directors of the Company or Evergreen from taking and disclosing to its
stockholders a position in accordance with Rules 14d-9 and 14e-2 under the
Exchange Act with respect to a tender offer or any exchange offer commenced by a
third party.
4.6 Consents, Approvals and Filings. The Company and Evergreen will make
and cause their respective subsidiaries and, to the extent necessary, their
other affiliates to make all necessary filings, as soon as practicable,
including, without limitation, those required under the HSR Act, the Securities
Act, the Exchange Act, and the Communications Act (including filing an
application with the FCC for the transfer of control of the Company FCC Licenses
and the Evergreen FCC Licenses, which the parties shall file as soon as
practicable (and in any event not more than 30 days) after the date of this
Agreement), in order to facilitate prompt consummation of the Merger and the
other transactions contemplated by this Agreement. In addition, the Company and
Evergreen will each use its best efforts, and will cooperate fully and in good
faith with each other, (i) to comply as promptly as practicable with all
governmental requirements applicable to the Merger and the other transactions
contemplated by this Agreement and the Viacom Transaction, and (ii) to obtain as
promptly as practicable all necessary permits, orders or other consents of
Governmental Entities and consents of all third parties necessary for the
consummation of the Merger and the other transactions contemplated by this
Agreement and the Viacom Transaction, including without limitation, the consent
of the FCC to the transfer of control of the Company FCC Licenses and the
Evergreen FCC Licenses, and the transfer of any FCC licenses in connection with
the Viacom Transaction. Each of the Company and Evergreen shall use its best
efforts to promptly provide such information and communications to Governmental
Entities as such Governmental Entities may reasonably request. Each of the
parties shall provide to the other party copies of all applications in advance
of filing or submission of such applications to Governmental Entities in
connection with this Agreement and shall make such revisions thereto as
reasonably requested by such other party. Each
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party shall provide to the other party the opportunity to participate in all
meetings and material conversations with Governmental Entities.
4.7 Affiliates Letters. Prior to the Closing Date, the Company shall
deliver to Evergreen a letter identifying all persons who may be, at the time
the Merger is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each such person to deliver to
Evergreen on or prior to the Closing Date a written agreement substantially in
the form attached as Exhibit A hereto.
4.8 Nasdaq Listing. Evergreen shall use its best efforts to cause the
shares of Parent Common Stock to be issued in the Merger to be approved for
quotation on the Nasdaq National Market, subject to official notice of issuance,
prior to the Closing Date.
4.9 Stockholder Litigation. Each of the Company and Evergreen shall give
the other party the opportunity to participate in the defense or settlement of
any stockholder litigation against it and its directors relating to the
transactions contemplated by this Agreement; provided, however, that no such
settlement shall be agreed to by the Company or Evergreen without the other
party's consent, which consent shall not be unreasonably withheld.
4.10 Indemnification. The Certificate of Incorporation and Bylaws of
Parent, the Surviving Corporation and the Subsidiary Surviving Corporation shall
contain, respectively, the provisions with respect to indemnification set forth
in the Parent Charter and the Bylaws to be adopted by Parent attached hereto as
Annex IV, and such provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at any time
prior to the Effective Time were directors or officers of the Company or
Evergreen or any of their respective subsidiaries (the "Indemnified Parties") in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law. Parent will cause to be
maintained for a period of not less than six years from the Effective Time the
Company's current directors' and officers' insurance and indemnification
policies to the extent that they provide coverage for events occurring prior to
the Effective Time (the "D&O Insurance") for all persons who are directors and
executive officers of the Company or Evergreen on the date of this Agreement, so
long as the annual premium therefor would not be in excess of 250% of the last
annual premium paid prior to the date of this Agreement; provided, however, that
Parent may, in lieu of maintaining such existing D&O Insurance as provided
above, cause coverage to be provided under any policy maintained for the benefit
of Evergreen or any of its subsidiaries so long as the terms thereof are not
less advantageous to the beneficiaries thereof than the existing D&O Insurance.
The provisions of this Section 4.10 are intended to be for the benefit of, and
shall be enforceable by, each Indemnified Party, his heirs and his personal
representatives and shall be binding on all successors and assigns of Evergreen,
the Company and Parent.
4.11 Letter of the Company's Accountants. The Company and Radio
Broadcasting shall each use its reasonable best efforts to cause to be delivered
to Evergreen and EMCLA, as applicable, a letter of Coopers & Lybrand LLP, the
Company's and Radio Broadcasting's independent public accountants, and any other
independent public accountants whose report would be required to be included in
the Form S-4s pursuant to the rules and regulations under the Securities Act,
each dated a date within two business days before the date on which the
Evergreen Form S-4 or EMCLA Form S-4, as the case may be, shall become effective
and an additional letter from each of them dated a date within two business days
before the Closing Date and the Subsidiary Closing Date, as the case may be,
each addressed to Evergreen and EMCLA, as applicable, in form and substance
reasonably satisfactory to Evergreen and EMCLA and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4s.
4.12 Letter of Evergreen's Accountants. Evergreen and EMCLA shall use its
reasonable best efforts to cause to be delivered to the Company and Radio
Broadcasting, as applicable, a letter of KPMG Peat Marwick LLP, Evergreen's and
EMCLA's independent public accountants, and any other independent public
accountants whose report would be required to be included in the Form S-4s
pursuant to the rules and regulations under the Securities Act, each dated a
date within two business days before the date on which the
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Evergreen Form S-4 or EMCLA Form S-4, as the case may be, shall become effective
and an additional letter from each of them dated a date within two business days
before the Closing Date or the Subsidiary Closing Date, as the case may be, each
addressed to the Company or Radio Broadcasting, as applicable, in form and
substance reasonably satisfactory to the Company and Radio Broadcasting and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4s.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
5.1 Conduct of Business. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, the Company
and Evergreen shall, and shall cause their respective subsidiaries to, act and
carry on their respective businesses in the ordinary course of business and, to
the extent consistent therewith, use reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve the goodwill of those engaged in material
business relationships with them. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time and except as set forth in the Filed Company SEC Documents or the Filed
Evergreen SEC Documents (including any pending station acquisitions,
dispositions and/or swaps and the financing thereof described therein), as
applicable, or in connection with the Viacom Transaction or as otherwise
disclosed in writing by one party hereto to the other parties hereto prior to
the execution and delivery of this Agreement, the Company and Evergreen shall
not, and shall not permit any of their respective subsidiaries to, without the
prior consent of the other party hereto:
(i) (w) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of the
Company's or Evergreen's or any of their respective subsidiaries' outstanding
capital stock (other than, with respect to the Company and its subsidiaries, the
payment of regular cash dividends by the Company on the Company Convertible
Preferred Stock and the payment by Radio Broadcasting of dividends on the Radio
Broadcasting 12% Preferred Stock in additional shares of such preferred stock,
in each case in accordance with usual record and payment dates), (x) split,
combine or reclassify any of its outstanding capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its outstanding capital stock, (y) purchase, redeem
or otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares (other than, with respect to the
Company and its subsidiaries, in connection with Radio Broadcasting's offer to
exchange its 12% Series A Exchangeable Preferred Stock for the Radio
Broadcasting 12% Preferred Stock (the "Exchange Offer")), or (z) issue, sell,
grant, pledge or otherwise encumber any shares of its capital stock, any other
equity securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, equity securities or convertible securities
other than (1) upon the exercise of Company Stock Options and Evergreen Stock
Options outstanding on the date of this Agreement, (2) pursuant to employment
agreements or other contractual arrangements in effect on the date of this
Agreement, or (3) with respect to the Company and its subsidiaries, in
connection with the Exchange Offer or upon the conversion of the Company
Convertible Preferred Stock;
(ii) amend its Certificate of Incorporation, Bylaws or other comparable
charter or organizational documents (other than, in the case of Radio
Broadcasting, as necessary to consummate the Exchange Offer);
(iii) acquire any business (including the assets thereof) or any
corporation, partnership, joint venture, association or other business
organization or division thereof;
(iv) sell, mortgage or otherwise encumber or subject to any Lien or
otherwise dispose of any of its properties or assets that are material to the
Company or Evergreen and their respective subsidiaries taken as a whole;
(v) (x) other than working capital borrowings in the ordinary course of
business and consistent with past practices incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, other than
indebtedness owing to or guarantees of indebtedness owing to the Company or
Evergreen or any of
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their respective direct or indirect wholly-owned subsidiaries or (y) make any
material loans or advances to any other person, other than to the Company or
Evergreen, or to any of their respective direct or indirect wholly-owned
subsidiaries and other than routine advances to employees;
(vi) make any tax election or settle or compromise any income tax liability
that could reasonably be expected to be material to the Company or Evergreen and
their respective subsidiaries taken as a whole;
(vii) pay, discharge, settle or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company or Evergreen included in the Filed Company SEC Documents or the Filed
Evergreen SEC Documents, respectively, or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice;
(viii) make any material commitments or agreements for capital expenditures
or capital additions or betterments except as materially consistent with the
budget for capital expenditures as of the date of this Agreement and consistent
with past practices;
(ix) except as may be required by law,
(1) other than in the ordinary course of business and consistent with
past practices, make any representation or promise, oral or written, to any
employee or former director, officer or employee of the Company or
Evergreen or any of their respective subsidiaries which is inconsistent
with the terms of any Company Benefit Plan or Evergreen Benefit Plan,
respectively;
(2) other than in the ordinary course of business and consistent with
past practices, make any change to, or amend in any way, the contracts,
salaries, wages, or other compensation of any director, employee or any
agent or consultant of the Company or Evergreen or any of their respective
subsidiaries other than routine changes or amendments that are required
under existing contracts;
(3) adopt, enter into, amend, alter or terminate, partially or
completely, any Company Benefit Plan or Evergreen Benefit Plan or any
election made pursuant to the provisions of any Company Benefit Plan or
Evergreen Benefit Plan, to accelerate any payments, obligations or vesting
schedules under any Company Benefit Plan or Evergreen Benefit Plan; or
(4) other than in the ordinary course of business consistent with past
practices, approve any general or company-wide pay increases for employees;
(x) except in the ordinary course of business, modify, amend or terminate
any material agreement, permit, concession, franchise, license or similar
instrument to which the Company or Evergreen or any of their respective
subsidiaries is a party or waive, release or assign any material rights or
claims thereunder; or
(xi) authorize any of, or commit or agree to take any of, the foregoing
actions.
Notwithstanding the foregoing, nothing herein shall prevent Evergreen or
the Company from selling or acquiring (or agreeing to sell or acquire) all or
substantially all of the assets (by purchase, stock purchase, merger or
otherwise) of one or more radio broadcast stations and entering into financing
transactions in connection therewith, provided that the value of the
consideration (as determined in good faith by the Board of Directors of the
Company or Evergreen, as the case may be) to be paid or received (as
appropriate) in such transactions does not exceed $100,000,000 in the aggregate
for all such radio stations acquired since the date of the Old Agreement. Each
of Evergreen, on the one hand, and the Company and Radio Broadcasting, on the
other hand, represent and warrant to the other party or parties that no actions
have been taken since February 19, 1997 in violation of the terms of the Old
Agreement.
5.2 Company Stock Options. At the Effective Time, each Company Stock Option
shall be deemed to have been assumed by Evergreen, without further action by
Evergreen, and shall thereafter be deemed an option to acquire, on the same
terms and conditions as were applicable under such Company Stock Option, that
number of shares of Parent Common Stock that would have been received in respect
of such Company
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Stock Option if it had been exercised immediately prior to the Effective Time
(such Company Stock Options assumed by Evergreen, the "Assumed Chancellor Stock
Options"); provided, however, that, for each optionholder, (i) the aggregate
fair market value of Parent Common Stock subject to Assumed Chancellor Stock
Options immediately after the Effective Time shall not exceed the aggregate
exercise price thereof by more than the excess of the aggregate fair market
value of Company Common Stock subject to Company Stock Options immediately
before the Effective Time over the aggregate exercise price thereof and (ii) on
a share-by-share comparison, the ratio of the exercise price of the Assumed
Chancellor Stock Option to the fair market value of the Parent Common Stock
immediately after the Effective Time is no more favorable to the optionholder
than the ratio of the exercise price of the Company Stock Option to the fair
market value of the Company Common Stock immediately before the Effective Time;
and provided, further, that no fractional shares shall be issued on the exercise
of such Assumed Chancellor Stock Option and, in lieu thereof, the holder of such
Assumed Chancellor Stock Option shall only be entitled to a cash payment in the
amount of such fraction multiplied by the closing price per share of Parent
Common Stock on the Nasdaq National Market on the business day immediately prior
to the date of such exercise.
5.3 Other Actions. The Company and Evergreen shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that could reasonably be expected to, result in any of the conditions of the
Merger set forth in Article VI not being satisfied.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger and the Subsidiary
Merger is subject to the satisfaction or waiver on or prior to the Closing Date
and Subsidiary Closing Date, as applicable, of the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval and the
Evergreen Stockholder Approval shall have been obtained.
(b) FCC Order. The FCC shall have issued an order (the "FCC Order")
approving the transfer of the Company FCC Licenses for the operation of the
Company Licensed Facilities and the Evergreen FCC Licenses for the operation of
the Evergreen Licensed Facilities to the public stockholders of Parent pursuant
to the Merger without the imposition of any conditions or restrictions that
would have a material adverse effect on the business, properties, results of
operations, or condition (financial or otherwise) of Parent and its
subsidiaries, considered as a whole (a "Parent Material Adverse Effect"), and
which FCC Order has not been reversed, stayed, enjoined, set aside or suspended
and with respect to which no timely request for stay, petition for
reconsideration or appeal has been filed and as to which the time period for
filing of any such appeal or request for reconsideration or for any sua sponte
action by the FCC with respect to the FCC Order has expired, or, in the event
that such a filing or review sua sponte has occurred, as to which such filing or
review shall have been disposed of favorably to the grant of the FCC Order and
the time period for seeking further relief with respect thereto shall have
expired without any request for such further relief having been filed or review
initiated; provided, however, that notwithstanding anything in this Agreement to
the contrary, that reasonable conditions of divestiture of certain Company
Licensed Facilities or Evergreen Licensed Facilities to comply with the multiple
ownership requirements under the Telecom Act shall not be deemed to result in a
Parent Material Adverse Effect.
(c) Governmental and Regulatory Consents. All required consents, approvals,
permits and authorizations to the consummation of the transactions contemplated
hereby by the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA shall be
obtained from any Governmental Entity (other than the FCC) whose consent,
approval, permission or authorization is required by reason of a change in law
after the date of this Agreement, unless the failure to obtain such consent,
approval, permission or authorization could not reasonably be expected to have a
Parent Material Adverse Effect, or to materially and adversely affect the
validity or enforceability of this Agreement or the Merger.
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(d) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger and the Subsidiary Merger under the HSR Act shall have been
terminated or shall have otherwise expired.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger and the Subsidiary Merger shall be in effect;
provided, however, that the party invoking this condition shall use best
reasonable efforts to have any such order or injunction vacated.
(f) Nasdaq Listing. The shares of Parent Common Stock issuable to the
Company's stockholders pursuant to this Agreement shall have been approved for
quotation on the Nasdaq National Market, subject to official notice of issuance.
(g) Form S-4s. The Evergreen Form S-4 and EMCLA Form S-4 shall each have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
6.2 Conditions to Obligations of Evergreen, EMCLA and EMHC. The obligation
of Evergreen, EMCLA and EMHC to effect the Merger and the Subsidiary Merger are
further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company and Radio Broadcasting contained in this Agreement shall have been
true and correct on the date of the Old Agreement (except to the extent that
they expressly relate only to a different time, in which case they shall have
been true and correct as of such different time), other than such breaches of
representations and warranties which in the aggregate could not reasonably be
expected to have a Company Material Adverse Effect. The Company and Radio
Broadcasting shall have delivered to Evergreen a certificate dated as of the
Closing Date, signed by a senior executive officer of the Company and Radio
Broadcasting, to the effect set forth in this Section 6.2(a).
(b) Performance of Obligations of the Company and Radio Broadcasting. The
Company and Radio Broadcasting shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and Evergreen shall have received a certificate signed on
behalf of the Company and Radio Broadcasting by a senior executive officer of
the Company and Radio Broadcasting to such effect.
(c) Tax Opinion. Evergreen shall have received an opinion of Latham &
Watkins, dated the Closing Date, substantially in the form of Exhibit H, to the
effect that (i) the Merger and the Subsidiary Merger will each be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code; (ii) each of Evergreen, EMHC, and the Company will be a
party to the Merger within the meaning of Section 368(b) of the Code; (iii) each
of EMCLA and Radio Broadcasting will be a party to the Subsidiary Merger within
the meaning of Section 368(b) of the Code; (iv) no gain or loss will be
recognized by the Company, Evergreen or EMHC as a result of the Merger; (v) no
gain or loss will be recognized by EMCLA or Radio Broadcasting as a result of
the Subsidiary Merger; (vi) no gain or loss will be recognized by any holder of
Evergreen Class A Common Stock or Evergreen Class B Common Stock on the exchange
of such stock for shares of Parent Common Stock pursuant to this Agreement; and
(vii) no gain or loss will be recognized by any holder of Evergreen Convertible
Exchangeable Preferred Stock as a result of the Merger. In rendering such
opinion, Latham & Watkins shall receive and may rely upon representations
contained in certificates of Evergreen, EMCLA, EMHC, the Company, Radio
Broadcasting, and certain stockholders of the Company and Radio Broadcasting,
substantially in the form of Exhibits B through G.
6.3 Conditions to Obligation of the Company and Radio Broadcasting. The
obligation of the Company and Radio Broadcasting to effect the Merger and the
Subsidiary Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties of
Evergreen contained in this Agreement shall have been true and correct on the
date of the Old Agreement (except to the extent that they expressly relate only
to a different time, in which case they shall have been true and correct as of
such different time), and the representations and warranties of EMCLA and EMHC
contained in this Agreement shall have been true and correct on the date of this
Agreement (except to the extent that they expressly relate only to an earlier
time, in which case they shall have been true and correct as of such earlier
time), in each case other
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than such breaches of representations and warranties which in the aggregate
could not reasonably be expected to have an Evergreen Material Adverse Effect.
Evergreen, EMCLA and EMHC shall have delivered to the Company and Radio
Broadcasting a certificate dated as of the Closing Date, signed by a senior
executive officer of Evergreen, EMCLA and EMHC, to the effect set forth in this
Section 6.3(a).
(b) Performance of Obligations of Evergreen, EMCLA and EMHC. Evergreen,
EMCLA and EMHC shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, including without limitation, the filing of the Parent Charter with the
Delaware Secretary of State and delivery of the Board Resignations and the Board
Appointments, and the Company shall have received a certificate signed on behalf
of Evergreen, EMCLA and EMHC by a senior executive officer of Evergreen, EMCLA
and EMHC to such effect.
(c) Tax Opinion. The Company and Radio Broadcasting shall have received an
opinion of Weil, Gotshal & Manges LLP, dated as of the Closing Date and
substantially in the form of Exhibit I, to the effect that the Merger and the
Subsidiary Merger will each be treated as a reorganization under Section 368(a)
of the Code and that no gain or loss will be recognized by the stockholders of
the Company and of Radio Broadcasting on the receipt pursuant to the Merger and
the Subsidiary Merger of shares of Parent Common Stock, Parent Convertible
Preferred Stock or Merger Preferred Stock in exchange for Shares, shares of
Company Convertible Preferred Stock and/or shares of Radio Broadcasting
Preferred Stock, except with respect to cash received by dissenters or in lieu
of fractional shares of Parent Common Stock. In rendering such opinion, Weil,
Gotshal & Manges LLP shall receive and may rely upon representations contained
in certificates of Evergreen, EMCLA, EMHC, the Company, Radio Broadcasting, and
certain stockholders of the Company and Radio Broadcasting, substantially in the
form of Exhibits B through G.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and abandoned at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of the Company or
Evergreen:
(a) by mutual written consent of Evergreen and the Company;
(b) by either Evergreen or the Company:
(i) if, upon a vote at a duly held Stockholders Meeting or Evergreen
Stockholders Meeting or any adjournment thereof, any required approval of the
stockholders of the Company or Evergreen, as the case may be, shall not have
been obtained;
(ii) if the Merger and the Subsidiary Merger shall not have been
consummated on or before February 19, 1998, unless the failure to consummate the
Merger or the Subsidiary Merger is the result of a willful and material breach
of this Agreement by the party seeking to terminate this Agreement;
(iii) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger or Subsidiary Merger and such order, decree, ruling or
other action shall have become final and nonappealable; or
(iv) if the other party hereto shall have breached the requirements of
Sections 4.2 or 4.5 hereof, unless the party seeking to invoke this clause (iv)
shall at such time be in material breach of this Agreement.
7.2 Effect of Termination. In the event of termination of this Agreement by
either the Company or Evergreen as provided in Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Evergreen or the Company, other than the last sentence of Section
4.3 and Sections 2.10, 3.10, 7.2 and 10.2. Nothing contained in this Section 7.2
shall relieve any party from any liability resulting from any material breach of
the representations, warranties, covenants or agreements set forth in this
Agreement.
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7.3 Amendment. Subject to the applicable provisions of the Delaware Code,
at any time prior to the Effective Time, the parties hereto may modify or amend
this Agreement, by written agreement executed and delivered by duly authorized
officers of the respective parties; provided, however, that after the Company
Stockholder Approval and Evergreen Stockholder Approval has been obtained, no
amendment shall be made which reduces the consideration payable in the Merger or
Subsidiary Merger or adversely affects the rights of the Company's, Radio
Broadcasting's or Evergreen's stockholders hereunder without the approval of
their respective stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
7.4 Extension; Waiver. At any time prior to the Effective Time, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to Section 7.3, waive
compliance with any of the agreements or conditions of the other parties
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
7.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require in the case of Evergreen or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE VIII
SURVIVAL OF PROVISIONS
8.1 Survival. The representations and warranties respectively required to
be made by the Company and Evergreen in this Agreement, or in any certificate,
respectively, delivered by the Company or Evergreen pursuant to Section 6.2 or
Section 6.3 hereof will not survive the Closing.
ARTICLE IX
NOTICES
9.1 Notices. All notices and other communications under this Agreement must
be in writing and will be deemed to have been duly given if delivered,
telecopied or mailed, by certified mail, return receipt requested, first-class
postage prepaid, to the parties at the following addresses:
If to Evergreen, EMCLA or EMHC, to:
Evergreen Media Corporation
433 East Las Colinas Boulevard
Suite 1130
Irving, Texas 75039
Attention: Scott K. Ginsburg
Telephone: (972) 869-9020
Telecopy: (972) 869-3671
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with copies to:
Latham & Watkins
1001 Pennsylvania Ave., N.W.
Suite 1300
Washington, D.C. 20004
Attention: Eric L. Bernthal, Esq.
Daniel T. Lennon, Esq.
Telephone: (202) 637-2200
Telecopy: (202) 637-2201
If to the Company or Radio Broadcasting, to:
Chancellor Broadcasting Company
12655 N. Central Expressway
Suite 405
Dallas, Texas 75243
Attention: Steven Dinetz
Telephone: (972) 239-6220
Telecopy: (972) 239-0220
With copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Thomas O. Hicks
Lawrence D. Stuart, Jr.
Telephone: (214) 740-7300
Telecopy: (214) 740-7313
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Jeremy W. Dickens, Esq.
Telephone: (214) 746-7720
Telecopy: (214) 746-7777
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Article IX will, if delivered personally,
be deemed given upon delivery, will, if delivered by telecopy, be deemed
delivered when confirmed and will, if delivered by mail in the manner described
above, be deemed given on the third business day after the day it is deposited
in a regular depository of the United States mail. Any party from time to time
may change its address for the purpose of notices to that party by giving a
similar notice specifying a new address, but no such notice will be deemed to
have been given until it is actually received by the party sought to be charged
with the contents thereof.
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ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. Except for documents executed by the Company and
Evergreen pursuant hereto, this Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter of this
Agreement, and this Agreement (including the exhibits hereto and other documents
delivered in connection herewith), the Stockholders Agreement and the
Confidentiality Agreements contain the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
10.2 Expenses. Whether or not the Merger and the Subsidiary Merger are
consummated, each of the Company and Evergreen will pay its own costs and
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby; provided
that the fees and expenses incurred in connection with (i) the filings and
registrations with the Department of Justice and Federal Trade Commission
pursuant to the HSR Act, (ii) the filings with the FCC under the Communications
Act, and (iii) the printing, mailing and distribution of the Joint Proxy
Statement and the preparation and filing of the Form S-4s, shall be borne
equally by Evergreen and the Company.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
10.4 No Third Party Beneficiary. Except as otherwise provided herein, the
terms and provisions of this Agreement are intended solely for the benefit of
the parties hereto, and their respective successors or assigns, and it is not
the intention of the parties to confer third-party beneficiary rights upon any
other person.
10.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
10.6 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment that is
not consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns.
10.7 Headings, Gender, Etc. The headings used in this Agreement have been
inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender are deemed to include each
other gender; (b) words using the singular or plural number also include the
plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby," "hereto," and derivative or similar words refer to this entire
Agreement; (d) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; (e) all references to "dollars" or "$" refer to
currency of the United States of America; and (f) the term "person" shall
include any natural person, corporation, limited liability company, general
partnership, limited partnership, or other entity, enterprise, authority or
business organization.
10.8 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if the
rights or obligations of the Company or Evergreen under this Agreement will not
be materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof; and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid, or unenforceable provision or
by its severance herefrom.
10.9 Viacom Transaction. On February 16, 1997, EMCLA and Viacom
International Inc. ("Viacom") entered into a Stock Purchase Agreement (the
"Viacom Purchase Agreement") whereby EMCLA agreed to purchase all the
outstanding shares of stock of certain subsidiaries of Viacom that own and
operate the radio broadcast stations described in the Viacom Purchase Agreement.
Concurrently with the execution and
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delivery of the Old Agreement, Evergreen, EMCLA, the Company and Radio
Broadcasting entered into an agreement (the "Joint Purchase Agreement") whereby,
as between Evergreen and the Company, the Company agreed to assume certain
obligations under the Viacom Purchase Agreement and Evergreen agreed to grant to
the Company certain rights under the Viacom Purchase Agreement. Notwithstanding
any provision hereof to the contrary, no provision of the Old Agreement or this
Agreement shall be deemed to prohibit any transaction contemplated by the Joint
Purchase Agreement or the Viacom Purchase Agreement. The transactions
contemplated by the Viacom Purchase Agreement and the Joint Purchase Agreement
are referred to collectively as the "Viacom Transaction."
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the Company, Radio Broadcasting, Evergreen,
EMCLA and EMHC effective as of the date first written above.
CHANCELLOR BROADCASTING
COMPANY
By: /s/ THOMAS O. HICKS
----------------------------------
Name: Thomas O. Hicks
Title: Chairman of the Board
CHANCELLOR RADIO BROADCASTING
COMPANY
By: /s/ THOMAS O. HICKS
----------------------------------
Name: Thomas O. Hicks
Title: Chairman of the Board
EVERGREEN MEDIA CORPORATION
By: /s/ SCOTT K. GINSBURG
----------------------------------
Name: Scott K. Ginsburg
Title: Chairman and Chief Executive
Officer
EVERGREEN MEDIA CORPORATION OF LOS
ANGELES
By: /s/ SCOTT K. GINSBURG
----------------------------------
Name: Scott K. Ginsburg
Title: Chairman and Chief Executive
Officer
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EVERGREEN MEZZANINE HOLDINGS
CORPORATION
By: /s/ SCOTT K. GINSBURG
----------------------------------
Name: Scott K. Ginsburg
Title: Chairman and Chief Executive
Officer
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ANNEX I
AMENDMENTS TO CERTIFICATE OF INCORPORATION OF EVERGREEN MEZZANINE HOLDINGS
CORPORATION:
ARTICLE FOURTH SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 10,001,000 shares consisting of
(a) 10,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock") and (b) 1,000 shares of Common Stock, par value $.01 per
share (the "Common Stock").
The designations, powers, preferences, rights, qualifications, limitations,
and restrictions of the Preferred Stock and the Common Stock are as follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations,
powers, preferences and rights and such qualifications, limitations and
restrictions thereof as are stated and expressed herein and in the resolution or
resolutions providing for the issue of such class or series adopted by the Board
of Directors of the Corporation (the "Board of Directors") as hereafter
prescribed.
(b) Authority is hereby expressly granted to and vested in the Board of
Directors to authorize the issuance of the Preferred Stock from time to time in
one or more classes or series, and with respect to each class or series of the
Preferred Stock, to fix and state by the resolution or resolutions from time to
time adopted providing for the issuance thereof the following:
(i) whether or not the class or series is to have voting rights, full,
special or limited, or is to be without voting rights, and whether or not such
class or series is to be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or series and the
designations thereof;
(iii) the preferences and relative, participating, optional or other
special rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be redeemable
at the option of the Corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price or prices (which
may be payable in the form of cash, notes, securities or other property) and the
time or times at which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable in cash, securities
of the Corporation or other property, the conditions upon which and the times
when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative and, if
cumulative, the date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the holders of
any class or series thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
Corporation;
(viii) whether or not the shares of any class or series, at the option of
the Corporation or the holder thereof or upon the happening of any specified
event, shall be convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, securities,
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or other property of the Corporation and the conversion price or prices or ratio
or ratios or the rate or rates at which such exchange may be made, with such
adjustments, if any, as shall be stated and expressed or provided for in such
resolution or resolutions; and
(ix) such other special rights and protective provisions with respect to
any class or series as may to the Board of Directors seem advisable.
(c) The shares of each class or series of the Preferred Stock may vary from
the shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
adding to such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of Directors may
decrease the number of shares of the Preferred Stock designated for any existing
class or series by a resolution subtracting from such class or series authorized
and unissued shares of the Preferred Stock designated for such existing class or
series, and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
(d) The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of a majority of the holders of the Preferred Stock, or of any class or
series thereof, unless a vote of any such holders is required pursuant to the
certificate or certificates establishing such class or series of Preferred
Stock.
2. Provisions Relating to the Common Stock.
(a) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
stockholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.
(b) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the board of directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
(c) In the event of any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of the Preferred
Stock or any series thereof, the holders of shares of the Common Stock shall be
entitled to receive all of the remaining assets of the Corporation available for
distribution to its stockholders, ratably in proportion to the number of shares
of the Common Stock held by them. A liquidation, dissolution, or winding-up of
the Corporation, as such terms are used in this Paragraph (c), shall not be
deemed to be occasioned by or to include any consolidation or merger of the
Corporation with or into any other corporation or corporations or other entity
or a sale, lease, exchange, or conveyance of all or a part of the assets of the
Corporation.
3. General.
(a) Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Common Stock from time to
time for such consideration (not less than the par value thereof) as may be
fixed by the Board of Directors, which is expressly authorized to fix the same
in its absolute and uncontrolled discretion subject to the foregoing conditions.
Shares so issued for which the consideration shall have been paid or delivered
to the Corporation shall be deemed fully paid stock and shall not be liable to
any further call or assessment thereon, and the holders of such shares shall not
be liable for any further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue rights and
options entitling their holders to purchase shares of the Corporation's capital
stock of any class or series or other securities of the Corporation, and such
rights and options shall be evidenced by instrument(s) approved by the Board of
Directors. The Board of Directors shall be empowered to set the exercise price,
duration, times for exercise, and other terms of such options or rights;
provided, however, that the consideration to be received for any shares of
capital stock subject thereto shall not be less than the par value thereof.
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ARTICLE SEVENTH SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS
FOLLOWS:
SEVENTH: The Corporation shall indemnify any Person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director, officer, employee or agent
of the Corporation, or (ii) is or was serving at the request of the Corporation
as a director, officer, partner, venturer, proprietor, trustee, employee, agent,
or similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article Seventh is in effect. Any repeal
or amendment of this Article Seventh shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the services of
such director or officer in any of the foregoing capacities prior to any such
repeal or amendment to this Article Seventh. Such right shall include the right
to be paid by the Corporation expenses incurred in investigating or defending
any such proceeding in advance of its final disposition to the maximum extent
permitted under the General Corporation Law of the State of Delaware, as the
same exists or may hereafter be amended. To the extent that a director, officer,
employee or agent of the corporation shall be successful on the merits or
otherwise in defense of any proceeding, or in defense of any claim, issue, or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. If a claim for indemnification or advancement of expenses hereunder
is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense is not permitted under the General Corporation Law of the State of
Delaware, but the burden of proving such defense shall be on the Corporation.
None of (i) the failure of the Corporation (including its board of directors or
any committee thereof, independent legal counsel, or stockholders) to have made
its determination prior to the commencement of such action that indemnification
of, or advancement of costs of defense to, the claimant is permissible in the
circumstances, (ii) an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible, or
(iii) the termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall be a
defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any Person having a
right of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any Person may have or hereafter acquire under any statute, bylaw,
resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Seventh shall extend to proceedings involving the negligence of such
Person.
The Board of Directors may authorize, by a vote of a majority of a quorum
of the Board of Directors, the Corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this Article Seventh.
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As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding. "Person" as used herein means any corporation, partnership,
association, firm, trust, joint venture, political subdivision or
instrumentality.
A NEW ARTICLE SHALL BE ADDED AS ARTICLE TENTH TO READ AS FOLLOWS:
TENTH: The following provisions are included for the purpose of ensuring
that control and management of the Corporation remains with loyal citizens of
the United States and/or corporations formed under the laws of the United States
or any of the states of the United States, as required by the Communications Act
of 1934, as the same may be amended from time to time:
(a) The Corporation shall not issue to (i) a person who is a citizen of a
country other than the United States; (ii) any entity organized under the laws
of a government other than the government of the United States or any state,
territory, or possession of the United States; (iii) a government other than the
government of the United States or of any state, territory, or possession of the
United States; or (iv) a representative of, or an individual or entity
controlled by, any of the foregoing (individually, an "Alien"; collectively,
"Aliens") in excess of 25% of the total number of shares of capital stock of the
Corporation outstanding at any time and shall not permit the transfer on the
books of the corporation of any capital stock to any Alien that would result in
the total number of shares of such capital stock held by Aliens exceeding such
25% limit.
(b) No Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 25% of (i) the total number of shares of capital stock of the
Corporation outstanding and entitled to vote at any time and from time to time,
or (ii) the total voting power of all shares of capital stock of the Corporation
outstanding and entitled to vote at any time and from time to time.
(c) No Alien shall be qualified to act as an officer of the Corporation,
and no more than one-fourth of the total number of directors of the Corporation
at any time and from time to time may be Aliens.
(d) The Board of Directors of the Corporation shall have all powers
necessary to implement the provisions of this Article Tenth.
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ANNEX II
AMENDMENTS TO CERTIFICATE OF INCORPORATION OF EVERGREEN MEDIA CORPORATION OF LOS
ANGELES:
ARTICLE FOURTH SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 10,001,000 shares consisting of
(a) 10,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock") and (b) 1,000 shares of Common Stock, par value $.01 per
share (the "Common Stock").
The designations, powers, preferences, rights, qualifications, limitations,
and restrictions of the Preferred Stock and the Common Stock are as follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations,
powers, preferences and rights and such qualifications, limitations and
restrictions thereof as are stated and expressed herein and in the resolution or
resolutions providing for the issue of such class or series adopted by the Board
of Directors of the Corporation (the "Board of Directors") as hereafter
prescribed.
(b) Authority is hereby expressly granted to and vested in the Board of
Directors to authorize the issuance of the Preferred Stock from time to time in
one or more classes or series, and with respect to each class or series of the
Preferred Stock, to fix and state by the resolution or resolutions from time to
time adopted providing for the issuance thereof the following:
(i) whether or not the class or series is to have voting rights, full,
special or limited, or is to be without voting rights, and whether or not such
class or series is to be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or series and the
designations thereof;
(iii) the preferences and relative, participating, optional or other
special rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be redeemable
at the option of the Corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price or prices (which
may be payable in the form of cash, notes, securities or other property) and the
time or times at which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable in cash, securities
of the Corporation or other property, the conditions upon which and the times
when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative and, if
cumulative, the date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the holders of
any class or series thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
Corporation;
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(viii) whether or not the shares of any class or series, at the option of
the Corporation or the holder thereof or upon the happening of any specified
event, shall be convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, securities, or other property of the Corporation and the
conversion price or prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall be stated and
expressed or provided for in such resolution or resolutions; and
(ix) such other special rights and protective provisions with respect to
any class or series as may to the Board of Directors seem advisable.
(c) The shares of each class or series of the Preferred Stock may vary from
the shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
adding to such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of Directors may
decrease the number of shares of the Preferred Stock designated for any existing
class or series by a resolution subtracting from such class or series authorized
and unissued shares of the Preferred Stock designated for such existing class or
series, and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
(d) The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of a majority of the holders of the Preferred Stock, or of any class or
series thereof, unless a vote of any such holders is required pursuant to the
certificate or certificates establishing such class or series of Preferred
Stock.
2. Provisions Relating to the Common Stock.
(a) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
stockholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.
(b) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the board of directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
(c) In the event of any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of the Preferred
Stock or any series thereof, the holders of shares of the Common Stock shall be
entitled to receive all of the remaining assets of the Corporation available for
distribution to its stockholders, ratably in proportion to the number of shares
of the Common Stock held by them. A liquidation, dissolution, or winding-up of
the Corporation, as such terms are used in this Paragraph (c), shall not be
deemed to be occasioned by or to include any consolidation or merger of the
Corporation with or into any other corporation or corporations or other entity
or a sale, lease, exchange, or conveyance of all or a part of the assets of the
Corporation.
3. General.
(a) Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Common Stock from time to
time for such consideration (not less than the par value thereof) as may be
fixed by the Board of Directors, which is expressly authorized to fix the same
in its absolute and uncontrolled discretion subject to the foregoing conditions.
Shares so issued for which the consideration shall have been paid or delivered
to the Corporation shall be deemed fully paid stock and shall not be liable to
any further call or assessment thereon, and the holders of such shares shall not
be liable for any further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue rights and
options entitling their holders to purchase shares of the Corporation's capital
stock of any class or series or other securities of the Corporation, and such
rights and options shall be evidenced by instrument(s) approved by the Board of
Directors. The
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Board of Directors shall be empowered to set the exercise price, duration, times
for exercise, and other terms of such options or rights; provided, however, that
the consideration to be received for any shares of capital stock subject thereto
shall not be less than the par value thereof.
ARTICLE SEVENTH SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS
FOLLOWS:
SEVENTH: The Corporation shall indemnify any Person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director, officer, employee or agent
of the Corporation, or (ii) is or was serving at the request of the Corporation
as a director, officer, partner, venturer, proprietor, trustee, employee, agent,
or similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article Seventh is in effect. Any repeal
or amendment of this Article Seventh shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the services of
such director or officer in any of the foregoing capacities prior to any such
repeal or amendment to this Article Seventh. Such right shall include the right
to be paid by the Corporation expenses incurred in investigating or defending
any such proceeding in advance of its final disposition to the maximum extent
permitted under the General Corporation Law of the State of Delaware, as the
same exists or may hereafter be amended. To the extent that a director, officer,
employee or agent of the corporation shall be successful on the merits or
otherwise in defense of any proceeding, or in defense of any claim, issue, or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. If a claim for indemnification or advancement of expenses hereunder
is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense is not permitted under the General Corporation Law of the State of
Delaware, but the burden of proving such defense shall be on the Corporation.
None of (i) the failure of the Corporation (including its board of directors or
any committee thereof, independent legal counsel, or stockholders) to have made
its determination prior to the commencement of such action that indemnification
of, or advancement of costs of defense to, the claimant is permissible in the
circumstances, (ii) an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible, or
(iii) the termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall be a
defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any Person having a
right of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any Person may have or hereafter acquire under any statute, bylaw,
resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Seventh shall extend to proceedings involving the negligence of such
Person.
The Board of Directors may authorize, by a vote of a majority of a quorum
of the Board of Directors, the Corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or
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domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise against any liability asserted
against him or her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the Corporation would have the
power to indemnify him or her against such liability under the provisions of
this Article Seventh.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding. "Person" as used herein means any corporation, partnership,
association, firm, trust, joint venture, political subdivision or
instrumentality.
A NEW ARTICLE SHALL BE ADDED AS ARTICLE TENTH TO READ AS FOLLOWS:
TENTH: The following provisions are included for the purpose of ensuring
that control and management of the Corporation remains with loyal citizens of
the United States and/or corporations formed under the laws of the United States
or any of the states of the United States, as required by the Communications Act
of 1934, as the same may be amended from time to time:
(a) The Corporation shall not issue to (i) a person who is a citizen of a
country other than the United States; (ii) any entity organized under the laws
of a government other than the government of the United States or any state,
territory, or possession of the United States; (iii) a government other than the
government of the United States or of any state, territory, or possession of the
United States; or (iv) a representative of, or an individual or entity
controlled by, any of the foregoing (individually, an "Alien"; collectively,
"Aliens") in excess of 25% of the total number of shares of capital stock of the
Corporation outstanding at any time and shall not permit the transfer on the
books of the corporation of any capital stock to any Alien that would result in
the total number of shares of such capital stock held by Aliens exceeding such
25% limit.
(b) No Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 25% of (i) the total number of shares of capital stock of the
Corporation outstanding and entitled to vote at any time and from time to time,
or (ii) the total voting power of all shares of capital stock of the Corporation
outstanding and entitled to vote at any time and from time to time.
(c) No Alien shall be qualified to act as an officer of the Corporation,
and no more than one-fourth of the total number of directors of the Corporation
at any time and from time to time may be Aliens.
(d) The Board of Directors of the Corporation shall have all powers
necessary to implement the provisions of this Article Tenth.
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ANNEX III
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CHANCELLOR MEDIA CORPORATION
FIRST: The name of the corporation is Chancellor Media Corporation (the
"Corporation").
SECOND: The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to engage in
any and all lawful acts and activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 325,000,000 shares consisting
of (a) 50,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"), (b) 200,000,000 shares of Common Stock, par value $.01 per
share (the "Common Stock") and (c) 75,000,000 shares of Class A Common Stock,
par value $.01 per share (the "Class A Common Stock").
The designations, powers, preferences, rights, qualifications, limitations,
and restrictions of the Preferred Stock, the Common Stock and the Class A Common
Stock are as follows:
1. Reclassification of Existing Class A and Class B Common Stock.
(a) Upon the filing of this Amended and Restated Certificate of
Incorporation, each share of Class A Common Stock, par value $.01 per share, of
the Corporation outstanding shall be reclassified, changed and converted into
one share of the Common Stock, and each share of Class B Common Stock, par value
$.01 per share, of the Corporation outstanding shall be reclassified into one
share of Common Stock (such reclassifications collectively being the
"Reclassification").
(b) After the Reclassification, each holder of the shares of capital stock
of the Corporation being reclassified, changed and converted as provided herein
shall be entitled to receive, upon surrender at the office of the Corporation or
the transfer agent for the Common Stock of such holder's certificate or
certificates representing the shares being reclassified, duly endorsed in blank
or accompanied by duly executed proper instruments of transfer, as promptly as
practicable after such surrender one or more certificates evidencing the Common
Stock issuable to such holder in respect of the Reclassification. After the
Reclassification, pending the issuance and delivery of such certificates in
accordance herewith, the certificate or certificates evidencing the shares of
previously outstanding class A and class B common stock being reclassified shall
be deemed to evidence the shares of Common Stock issuable upon the
Reclassification.
2. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations,
powers, preferences and rights and such qualifications, limitations and
restrictions thereof as are stated and expressed herein and in the resolution or
resolutions providing for the issue of such class or series adopted by the Board
of Directors of the Corporation (the "Board of Directors") as hereafter
prescribed.
(b) Authority is hereby expressly granted to and vested in the Board of
Directors to authorize the issuance of the Preferred Stock from time to time in
one or more classes or series, and with respect to each class or series of the
Preferred Stock, to fix and state by the resolution or resolutions from time to
time adopted providing for the issuance thereof the following:
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(i) whether or not the class or series is to have voting rights, full,
special or limited, or is to be without voting rights, and whether or not such
class or series is to be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or series and the
designations thereof;
(iii) the preferences and relative, participating, optional or other
special rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be redeemable
at the option of the Corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price or prices (which
may be payable in the form of cash, notes, securities or other property) and the
time or times at which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable in cash, securities
of the Corporation or other property, the conditions upon which and the times
when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative and, if
cumulative, the date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the holders of
any class or series thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
Corporation;
(viii) whether or not the shares of any class or series, at the option of
the Corporation or the holder thereof or upon the happening of any specified
event, shall be convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, securities, or other property of the Corporation and the
conversion price or prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall be stated and
expressed or provided for in such resolution or resolutions; and
(ix) such other special rights and protective provisions with respect to
any class or series as may to the Board of Directors seem advisable.
(c) The shares of each class or series of the Preferred Stock may vary from
the shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
adding to such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of Directors may
decrease the number of shares of the Preferred Stock designated for any existing
class or series by a resolution subtracting from such class or series authorized
and unissued shares of the Preferred Stock designated for such existing class or
series, and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
(d) The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock and Class A
Common Stock, each voting as a separate class, without a vote of a majority of
the holders of the Preferred Stock, or of any class or series thereof, unless a
vote of any such holders is required pursuant to the certificate or certificates
establishing such class or series of Preferred Stock.
3. Provisions Relating to the Common Stock and Class A Common Stock.
(a) Except as otherwise set forth in this Paragraph 3, each share of Common
Stock and Class A Common Stock of the Corporation shall have identical rights
and privileges in every respect. The holders of
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shares of Common Stock shall be entitled to vote as a class upon all matters
submitted to a vote of the stockholders of the Corporation and shall be entitled
to one vote for each share of Common Stock held, and the holders of shares of
Class A Common Stock shall be entitled to vote upon all matters submitted to a
vote of the stockholders of the Corporation as a separate class and shall be
entitled to one vote for each share of Class A Common Stock held.
(b) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock and Class A Common Stock shall be entitled to receive and
participate ratably in such dividends (payable in cash, stock, or otherwise) as
may be declared thereon by the board of directors at any time and from time to
time out of any funds of the Corporation legally available therefor.
(c) In the event of any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of the Preferred
Stock or any series thereof, the holders of shares of the Common Stock and Class
A Common Stock shall be entitled to receive all of the remaining assets of the
Corporation available for distribution to its stockholders, ratably in
proportion to the number of shares of the Common Stock or Class A Common Stock
held by them.
(d) With respect to any Going Private Transaction (as defined below)
between the Corporation and Scott K. Ginsburg or Affiliates of Scott K. Ginsburg
(as defined below), the holders of the Common Stock and the Class A Common Stock
shall each vote separately as a class. For purposes of this Paragraph 3(d), the
term "Going Private Transaction" shall mean any transaction that is a "Rule
13e-3 Transaction," as such term is defined in Rule 13e-3(a)(3), 17 C.F.R.
sec. 240.13e-3, as amended from time to time, promulgated under the Securities
Exchange Act of 1934, as amended. The term "Affiliate of Scott K. Ginsburg"
shall mean (x) any corporation of which Scott K. Ginsburg is the beneficial
owner of 50% or more of the combined voting power of all classes of equity
securities, (y) any trust or other estate in which Scott K. Ginsburg serves as
trustee or in a similar capacity, or (z) any partnership, joint venture, or
unincorporated organization that is under the direct or indirect control of
Scott K. Ginsburg, such that Scott K. Ginsburg possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such entity whether through the ownership of voting securities, by
contract, or otherwise.
4. General.
(a) Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Common Stock and Class A
Common Stock from time to time for such consideration (not less than the par
value thereof) as may be fixed by the Board of Directors, which is expressly
authorized to fix the same in its absolute and uncontrolled discretion subject
to the foregoing conditions; provided, however, that notwithstanding the
foregoing, the Corporation may not issue shares of Class A Common Stock without
the unanimous vote or written consent of the Board of Directors of the
Corporation. Shares so issued for which the consideration shall have been paid
or delivered to the Corporation shall be deemed fully paid stock and shall not
be liable to any further call or assessment thereon, and the holders of such
shares shall not be liable for any further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue rights and
options entitling their holders to purchase shares of the Corporation's capital
stock of any class or series or other securities of the Corporation, and such
rights and options shall be evidenced by instrument(s) approved by the Board of
Directors. The Board of Directors shall be empowered to set the exercise price,
duration, times for exercise, and other terms of such options or rights;
provided, however, that the consideration to be received for any shares of
capital stock subject thereto shall not be less than the par value thereof.
FIFTH: The number of directors constituting the Board of Directors shall be
no less than five and no more than thirteen, plus such number of directors as
may be elected from time to time by the holders of any class or series of
Preferred Stock. Commencing on the date on which this Amended and Restated
Certificate of Incorporation shall become effective pursuant to the General
Corporation Law of the State of Delaware, the directors of the Corporation shall
be divided into three classes (the "Classified Directors") with the first class
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("Class I"), second class ("Class II") and the third class ("Class III") each to
consist as nearly as practicable of an equal number of directors. The term of
office of the Class I directors shall expire at the 1998 annual meeting of
stockholders, the term of office of the Class II directors shall expire at the
1999 annual meeting of stockholders and the term of office of the Class III
directors shall expire at the 2000 annual meeting of stockholders, with each
director to hold office until his or her successor shall have been duly elected
and qualified. At each annual meeting of stockholders, commencing with the 1998
annual meeting, Classified Directors elected to succeed those Classified
Directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election.
SIXTH: The directors of the Corporation need not be elected by written
ballot unless the bylaws of the Corporation otherwise provide.
SEVENTH: The following provisions are included for the purpose of ensuring
that control and management of the Corporation remains with loyal citizens of
the United States and/or corporations formed under the laws of the United States
or any of the states of the United States, as required by the Communications Act
of 1934, as the same may be amended from time to time:
(a) The Corporation shall not issue to (i) a person who is a citizen of a
country other than the United States; (ii) any entity organized under the laws
of a government other than the government of the United States or any state,
territory, or possession of the United States; (iii) a government other than the
government of the United States or of any state, territory, or possession of the
United States; or (iv) a representative of, or an individual or entity
controlled by, any of the foregoing (individually, an "Alien"; collectively,
"Aliens") in excess of 25% of the total number of shares of capital stock of the
Corporation outstanding at any time and shall not permit the transfer on the
books of the corporation of any capital stock to any Alien that would result in
the total number of shares of such capital stock held by Aliens exceeding such
25% limit.
(b) No Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 25% of (i) the total number of shares of capital stock of the
Corporation outstanding and entitled to vote at any time and from time to time,
or (ii) the total voting power of all shares of capital stock of the Corporation
outstanding and entitled to vote at any time and from time to time.
(c) No Alien shall be qualified to act as an officer of the Corporation,
and no more than one-fourth of the total number of directors of the Corporation
at any time and from time to time may be Aliens.
(d) The Board of Directors of the Corporation shall have all powers
necessary to implement the provisions of this Article Seventh.
EIGHTH: No contract or transaction between the Corporation and one or more
of its directors, officers, or stockholders or between the Corporation and any
Person (as hereinafter defined) in which one or more of its directors, officers,
or stockholders are directors, officers, or stockholders, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved, or ratified by the board of directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction. "Person" as used herein means any
corporation, partnership, association, firm, trust, joint venture, political
subdivision or instrumentality.
NINTH: The Corporation shall indemnify any Person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director, officer,
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employee or agent of the Corporation, or (ii) is or was serving at the request
of the Corporation as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, to the fullest extent permitted under the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended. Such right shall be a contract right and as such shall run
to the benefit of any director or officer who is elected and accepts the
position of director or officer of the Corporation or elects to continue to
serve as a director or officer of the Corporation while this Article Ninth is in
effect. Any repeal or amendment of this Article Ninth shall be prospective only
and shall not limit the rights of any such director or officer or the
obligations of the Corporation with respect to any claim arising from or related
to the services of such director or officer in any of the foregoing capacities
prior to any such repeal or amendment to this Article Ninth. Such right shall
include the right to be paid by the Corporation expenses incurred in
investigating or defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended. To the
extent that a director, officer, employee or agent of the corporation shall be
successful on the merits or otherwise in defense of any proceeding, or in
defense of any claim, issue, or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith. If a claim for indemnification or advancement of
expenses hereunder is not paid in full by the Corporation within sixty (60) days
after a written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim, and if successful in whole or in part, the claimant shall
also be entitled to be paid the expenses of prosecuting such claim. It shall be
a defense to any such action that such indemnification or advancement of costs
of defense is not permitted under the General Corporation Law of the State of
Delaware, but the burden of proving such defense shall be on the Corporation.
None of (i) the failure of the Corporation (including its board of directors or
any committee thereof, independent legal counsel, or stockholders) to have made
its determination prior to the commencement of such action that indemnification
of, or advancement of costs of defense to, the claimant is permissible in the
circumstances, (ii) an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible, or
(iii) the termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall be a
defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any Person having a
right of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any Person may have or hereafter acquire under any statute, bylaw,
resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Ninth shall extend to proceedings involving the negligence of such
Person.
The Board of Directors may authorize, by a vote of a majority of a quorum
of the Board of Directors, the Corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this Article Ninth.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
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TENTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or amendment of this Article Tenth by
the stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation arising from an act or omission occurring prior to the time of such
repeal or amendment. In addition to the circumstances in which a director of the
Corporation is not personally liable as set forth in the foregoing provisions of
this Article Tenth, a director shall not be liable to the Corporation or its
stockholders to such further extent as permitted by any law hereafter enacted,
including without limitation any subsequent amendment to the General Corporation
Law of the State of Delaware.
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ANNEX IV
AMENDED AND RESTATED
BYLAWS
OF
CHANCELLOR MEDIA CORPORATION
A DELAWARE CORPORATION
<PAGE> 218
<TABLE>
<S> <S> <C>
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent................................. A-IV-1
1.2 Other Offices............................................... A-IV-1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting.............................................. A-IV-1
2.2 Special Meeting............................................. A-IV-1
2.3 Place of Meetings........................................... A-IV-1
2.4 Notice...................................................... A-IV-1
2.5 Voting List................................................. A-IV-2
2.6 Quorum...................................................... A-IV-2
2.7 Required Vote; Withdrawal of Quorum......................... A-IV-2
2.8 Method of Voting; Proxies................................... A-IV-2
2.9 Record Date................................................. A-IV-2
2.10 Conduct of Meeting.......................................... A-IV-3
2.11 Inspectors.................................................. A-IV-3
ARTICLE THREE: DIRECTORS
3.1 Management.................................................. A-IV-4
3.2 Number; Qualification; Election; Term....................... A-IV-4
3.3 Change in Number............................................ A-IV-4
3.4 Removal..................................................... A-IV-4
3.5 Vacancies................................................... A-IV-4
3.6 Meetings of Directors....................................... A-IV-4
3.7 First Meeting............................................... A-IV-5
3.8 Election of Officers........................................ A-IV-5
3.9 Regular Meetings............................................ A-IV-5
3.10 Special Meetings............................................ A-IV-5
3.11 Notice...................................................... A-IV-5
3.12 Quorum; Majority Vote....................................... A-IV-5
3.13 Procedure................................................... A-IV-5
3.14 Presumption of Assent....................................... A-IV-5
3.15 Compensation................................................ A-IV-5
ARTICLE FOUR: COMMITTEES
4.1 Designation................................................. A-IV-6
4.2 Number; Qualification; Term................................. A-IV-6
4.3 Authority................................................... A-IV-6
4.4 Committee Changes........................................... A-IV-6
4.5 Alternate Members of Committees............................. A-IV-6
4.6 Regular Meetings............................................ A-IV-6
4.7 Special Meetings............................................ A-IV-6
4.8 Quorum; Majority Vote....................................... A-IV-6
4.9 Minutes..................................................... A-IV-6
4.10 Compensation................................................ A-IV-6
4.11 Responsibility.............................................. A-IV-6
ARTICLE FIVE: NOTICE
5.1 Method...................................................... A-IV-7
5.2 Waiver...................................................... A-IV-7
</TABLE>
A-IV-i
<PAGE> 219
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office.............................. A-IV-7
6.2 Removal..................................................... A-IV-7
6.3 Vacancies................................................... A-IV-7
6.4 Authority................................................... A-IV-7
6.5 Compensation................................................ A-IV-7
6.6 Chairman of the Board....................................... A-IV-7
6.7 President................................................... A-IV-8
6.8 Chief Operating Officer..................................... A-IV-8
6.9 Vice Presidents............................................. A-IV-8
6.10 Treasurer................................................... A-IV-8
6.11 Assistant Treasurers........................................ A-IV-8
6.12 Secretary................................................... A-IV-8
6.13 Assistant Secretaries....................................... A-IV-8
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares..................................... A-IV-8
7.2 Replacement of Lost or Destroyed Certificates............... A-IV-9
7.3 Transfer of Shares.......................................... A-IV-9
7.4 Registered Stockholders..................................... A-IV-9
7.5 Regulations................................................. A-IV-9
7.6 Legends..................................................... A-IV-9
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends................................................... A-IV-9
8.2 Reserves.................................................... A-IV-9
8.3 Books and Records........................................... A-IV-9
8.4 Fiscal Year................................................. A-IV-10
8.5 Seal........................................................ A-IV-10
8.6 Resignations................................................ A-IV-10
8.7 Securities of Other Corporations............................ A-IV-10
8.8 Telephone Meetings.......................................... A-IV-10
8.9 Action Without a Meeting.................................... A-IV-10
8.10 Invalid Provisions.......................................... A-IV-11
8.11 Mortgages, etc.............................................. A-IV-11
8.12 Headings.................................................... A-IV-11
8.13 References.................................................. A-IV-11
8.14 Amendments.................................................. A-IV-11
A-IV-ii
<PAGE> 220
AMENDED AND RESTATED
BYLAWS
OF
CHANCELLOR MEDIA CORPORATION
A DELAWARE CORPORATION
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation Law
of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of Chancellor Media Corporation, a Delaware
corporation (the "Corporation"). In the event of a direct conflict between the
provisions of these bylaws and the mandatory provisions of the Delaware General
Corporation Law or the provisions of the certificate of incorporation of the
Corporation, such provisions of the Delaware General Corporation Law or the
certificate of incorporation of the Corporation, as the case may be, will be
controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such other
places, both within and without the State of Delaware, as the board of directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the Corporation
shall be held each calendar year on such date and at such time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting or in a duly executed waiver of notice of such meeting. At such
meeting, the stockholders shall elect directors and transact such other business
as may properly be brought before the meeting.
2.2 Special Meeting. A special meeting of the stockholders may be called
at any time by the Chairman of the Board, the President, the board of directors,
and shall be called by the President or the Secretary at the request in writing
of the stockholders of record of not less than ten percent of all shares
entitled to vote at such meeting or as otherwise provided by the certificate of
incorporation of the Corporation. A special meeting shall be held on such date
and at such time as shall be designated by the person(s) calling the meeting and
stated in the notice of the meeting or in a duly executed waiver of notice of
such meeting. Only such business shall be transacted at a special meeting as may
be stated or indicated in the notice of such meeting or in a duly executed
waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be held at
any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waiver of notice of such meeting. Meetings of stockholders shall be
held at the principal executive office of the Corporation unless another place
is designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and time of
each meeting of the stockholders and, in case of a special meeting, the purpose
or purposes for which the meeting is called shall be delivered not less than ten
nor more than 60 days before the date of the meeting, either personally or by
mail, by or at the direction of the President, the Secretary, or the officer or
person(s) calling the meeting, to each stockholder of record entitled to vote at
such meeting. If such notice is to be sent by mail, it shall be directed
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to such stockholder at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices to him be mailed to some other address, in which
case it shall be directed to him at such other address. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy and shall not, at the beginning of
such meeting, object to the transaction of any business because the meeting is
not lawfully called or convened, or who shall, either before or after the
meeting, submit a signed waiver of notice, in person or by proxy.
2.5 Voting List. At least ten days before each meeting of stockholders,
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer appointed
by him or through a transfer agent appointed by the board of directors, shall
prepare a complete list of stockholders entitled to vote thereat, arranged in
alphabetical order and showing the address of each stockholder and number of
shares registered in the name of each stockholder. For a period of ten days
prior to such meeting, such list shall be kept on file at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of meeting or a duly executed waiver of notice of such meeting or, if not
so specified, at the place where the meeting is to be held and shall be open to
examination by any stockholder during ordinary business hours. Such list shall
be produced at such meeting and kept at the meeting at all times during such
meeting and may be inspected by any stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares entitled
to vote on a matter, present in person or by proxy, shall constitute a quorum at
any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these by-laws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders, the
stockholders entitled to vote thereat who are present, in person or by proxy,
or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other than
announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum is present at any
meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are present, in person or by proxy, shall decide any
question brought before such meeting, unless the question is one on which, by
express provision of statute, the certificate of incorporation of the
Corporation, or these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. The
stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise provided in the
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each such
proxy shall be filed with the Secretary of the Corporation before or at the time
of the meeting. No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the proxy. If no date is stated in a
proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to be voted. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power or unless otherwise made
irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders entitled
to notice of or to vote at any meeting of stockholders, or any adjournment
thereof, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion, or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix a record date,
A-IV-2
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which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the board of directors, for any such determination
of stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(ii) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by law or these bylaws, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
in the State of Delaware, principal place of business, or such officer or agent
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the board of directors and prior action by
the board of directors is required by law or these bylaws, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
2.10 Conduct of Meeting. The Chairman of the Board, if such office has been
filled, and, if not or if the Chairman of the Board is absent or otherwise
unable to act, the President shall preside at all meetings of stockholders. The
Secretary shall keep the records of each meeting of stockholders. In the absence
or inability to act of any such officer, such officer's duties shall be
performed by the officer given the authority to act for such absent or
non-acting officer under these bylaws or by some person appointed by the
meeting.
2.11 Inspectors. The board of directors may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, and the validity and effect of proxies
and shall receive votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots, or consents, determine the results, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request, or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
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ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation shall be
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of incorporation of the Corporation, or these bylaws, the board
of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Term. The number of directors which
shall constitute the entire board of directors shall be not less than five nor
more than thirteen, plus such number of directors as may be elected from time to
time by the holders of any class or series of preferred stock of the
Corporation. The first board of directors shall consist of the number of
directors named in the certificate of incorporation of the Corporation or, if no
directors are so named, shall consist of the number of directors elected by the
incorporator(s) at an organizational meeting or by unanimous written consent in
lieu thereof. Thereafter, within the limits above specified, the number of
directors which shall constitute the entire board of directors shall be
determined by resolution of the board of directors or by resolution of the
stockholders at the annual meeting thereof or at a special meeting thereof
called for that purpose. Except as otherwise required by law, the certificate of
incorporation of the Corporation, or these bylaws, the directors shall be
elected at an annual meeting of stockholders at which a quorum is present.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of
directors. Except as otherwise required by law, the certificate of incorporation
of the Corporation, or these bylaws, each director so chosen shall hold office
until the first annual meeting of stockholders held after his election and until
his successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. None of the directors need be a stockholder
of the Corporation or a resident of the State of Delaware. Each director must
have attained the age of majority.
3.3 Change in Number. No decrease in the number of directors constituting
the entire board of directors shall have the effect of shortening the term of
any incumbent director.
3.4 Removal. Except as otherwise provided by law or in the certificate of
incorporation of the Corporation or these by-laws, at any meeting of
stockholders called expressly for that purpose, any director or the entire board
of directors may be removed, with or without cause, by a vote of the holders of
a majority of the shares then entitled to vote on the election of directors.
3.5 Vacancies. Vacancies and newly-created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by the sole
remaining director, provided, however, that if pursuant to a provision of the
certificate of incorporation a class of capital stock of the Corporation shall
have the right to vote as a class to elect a director, then the vacancy as to a
director so elected shall be filled by a vote of the holders of such class. Each
director so chosen shall hold office until the first annual meeting of
stockholders held after his election and until his successor is elected and
qualified or, if earlier, until his death, resignation, or removal from office.
If there are no directors in office, an election of directors may be held in the
manner provided by statute. If, at the time of filling any vacancy or any
newly-created directorship, the directors then in office shall constitute less
than a majority of the whole board of directors (as constituted immediately
prior to any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or
newly-created directorships or to replace the directors chosen by the directors
then in office. Except as otherwise provided in these bylaws, when one or more
directors shall resign from the board of directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have the power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in these
bylaws with respect to the filling of other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings and may
have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
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3.7 First Meeting. Each newly elected board of directors may hold its
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of stockholders, and no notice of such meeting shall be necessary.
3.8 Election of Officers. At the first meeting of the board of directors
after each annual meeting of stockholders at which a quorum shall be present,
the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors shall be
held at such times and places as shall be designated from time to time by
resolution of the board of directors. Notice of such regular meetings shall not
be required.
3.10 Special Meetings. Special meetings of the board of directors shall be
held whenever called by the Chairman of the Board, the President, or any
director.
3.11 Notice. The Secretary shall give notice of each special meeting to
each director at least 24 hours before the meeting. Notice of any such meeting
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to him. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting.
3.12 Quorum; Majority Vote. At all meetings of the board of directors, a
majority of the directors fixed in the manner provided in these bylaws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the certificate of incorporation of the Corporation, or these bylaws, the act of
a majority of the directors present at a meeting at which a quorum is in
attendance shall be the act of the board of directors. At any time that the
certificate of incorporation of the Corporation provides that directors elected
by the holders of a class or series of stock shall have more or less than one
vote per director on any matter, every reference in these bylaws to a majority
or other proportion of directors shall refer to a majority or other proportion
of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business shall be
transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of the
Corporation shall act as the secretary of each meeting of the board of directors
unless the board of directors appoints another person to act as secretary of the
meeting. The board of directors shall keep regular minutes of its proceedings
which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is present
at the meeting of the board of directors at which action on any corporate matter
is taken shall be presumed to have assented to the action unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward any dissent by certified
or registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.15 Compensation. The board of directors shall have the authority to fix
the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
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ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution adopted by a
majority of the entire board of directors, designate one or more committees.
4.2 Number; Qualification; Term. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased from
time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 Authority. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these bylaws.
4.4 Committee Changes. The board of directors shall have the power at any
time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 Alternate Members of Committees. The board of directors may designate
one or more directors as alternate members of any committee. Any such alternate
member may replace any absent or disqualified member at any meeting of the
committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee member is absent or disqualified, the
member or members of such committee present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in the
place of any such absent or disqualified member.
4.6 Regular Meetings. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a majority of the
number of members designated by the board of directors shall constitute a quorum
for the transaction of business. If a quorum is not present at a meeting of any
committee, a majority of the members present may adjourn the meeting from time
to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its proceedings to be
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the Secretary of the Corporation for placement in the minute
books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the delegation
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.
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ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation of the
Corporation, or these bylaws, notice is required to be given to any committee
member, director, or stockholder and no provision is made as to how such notice
shall be given, personal notice shall not be required and any such notice may be
given (a) in writing, by mail, postage prepaid, addressed to such committee
member, director, or stockholder at his address as it appears on the books or
(in the case of a stockholder) the stock transfer records of the Corporation, or
(b) by any other method permitted by law (including but not limited to overnight
courier service, telegram, telex, or telefax). Any notice required or permitted
to be given by mail shall be deemed to be delivered and given at the time when
the same is deposited in the United States mail as aforesaid. Any notice
required or permitted to be given by overnight courier service shall be deemed
to be delivered and given at the time delivered to such service with all charges
prepaid and addressed as aforesaid. Any notice required or permitted to be given
by telegram, telex, or telefax shall be deemed to be delivered and given at the
time transmitted with all charges prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the Corporation shall
be a President, one or more Chief Operating Officers, a Secretary, and such
other officers as the board of directors may from time to time elect or appoint,
including a Chairman of the Board, one or more Vice Presidents (with each Vice
President to have such descriptive title, if any, as the board of directors
shall determine), and a Treasurer. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified, until his
death, or until he shall resign or shall have been removed in the manner
hereinafter provided. Any two or more offices may be held by the same person.
None of the officers need be a stockholder or a director of the Corporation or a
resident of the State of Delaware.
6.2 Removal. Any officer or agent elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interest of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the Corporation (by
death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 Authority. Officers shall have such authority and perform such duties
in the management of the Corporation as are provided in these bylaws or as may
be determined by resolution of the board of directors not inconsistent with
these bylaws.
6.5 Compensation. The compensation, if any, of officers and agents shall
be fixed from time to time by the board of directors; provided, however, that
the board of directors may delegate the power to determine the compensation of
any officer and agent (other than the officer to whom such power is delegated)
to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board, if elected by the
board of directors, shall have such powers and duties as may be prescribed by
the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
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6.7 President. The President shall be the chief executive officer of the
Corporation and, subject to the board of directors, he shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident to
such responsibilities. If the board of directors has not elected a Chairman of
the Board or in the absence or inability to act of the Chairman of the Board,
the President shall exercise all of the powers and discharge all of the duties
of the Chairman of the Board. As between the Corporation and third parties, any
action taken by the President in the performance of the duties of the Chairman
of the Board shall be conclusive evidence that there is no Chairman of the Board
or that the Chairman of the Board is absent or unable to act.
6.8 Chief Operating Officer. The Chief Operating Officer(s) shall have the
day to day responsibility for the business operations of the Corporation,
reporting to the President and subject to the control of the board of directors.
6.9 Vice Presidents. Each Vice President shall have such powers and duties
as may be assigned to him by the board of directors, the Chairman of the Board,
or the President, and (in order of their seniority as determined by the board of
directors or, in the absence of such determination, as determined by the length
of time they have held the office of Vice President) shall exercise the powers
of the President during that officer's absence or inability to act. As between
the Corporation and third parties, any action taken by a Vice President in the
performance of the duties of the President shall be conclusive evidence of the
absence or inability to act of the President at the time such action was taken.
6.10 Treasurer. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and to
the credit of the Corporation in such depository or depositories as may be
designated by the board of directors, and shall perform such other duties as may
be prescribed by the board of directors, the Chairman of the Board, or the
President.
6.11 Assistant Treasurers. Each Assistant Treasurer shall have such powers
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President. The Assistant Treasurers (in the order of their
seniority as determined by the board of directors or, in the absence of such a
determination, as determined by the length of time they have held the office of
Assistant Treasurer) shall exercise the powers of the Treasurer during that
officer's absence or inability to act.
6.12 Secretary. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board or the President, in the name of the Corporation, all contracts of the
Corporation and affix the seal of the Corporation thereto. He may sign with the
Chairman of the Board or the President all certificates for shares of stock of
the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which shall
at all reasonable times be open to inspection by any director upon application
at the office of the Corporation during business hours. He shall in general
perform all duties incident to the office of the Secretary, subject to the
control of the board of directors, the Chairman of the Board, and the President.
6.13 Assistant Secretaries. Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the order
of their seniority as determined by the board of directors or, in the absence of
such a determination, as determined by the length of time they have held the
office of Assistant Secretary) shall exercise the powers of the Secretary during
that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or the
President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an
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Assistant Treasurer. Any and all signatures on the certificate may be a
facsimile and may be sealed with the seal of the Corporation or a facsimile
thereof. If any officer, transfer agent, or registrar who has signed, or whose
facsimile signature has been placed upon, a certificate has ceased to be such
officer, transfer agent, or registrar before such certificate is issued, such
certificate may be issued by the Corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue. The
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued and shall exhibit the holder's name and
the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of directors
may direct a new certificate or certificates to be issued in place of a
certificate or certificates theretofore issued by the Corporation and alleged to
have been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate or certificates representing shares to be lost
or destroyed. When authorizing such issue of a new certificate or certificates
the board of directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond with a surety or
sureties satisfactory to the Corporation in such sum as it may direct as
indemnity against any claim, or expense resulting from a claim, that may be made
against the Corporation with respect to the certificate or certificates alleged
to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and authority
to make all such rules and regulations as they may deem expedient concerning the
issue, transfer, and registration or the replacement of certificates for shares
of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and authority to
provide that certificates representing shares of stock bear such legends as the
board of directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and payment
shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out of funds
of the Corporation legally available therefor such reserve or reserves as the
directors from time to time, in their discretion, consider proper to provide for
contingencies, to equalize dividends, or to repair or maintain any property of
the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 Books and Records. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
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8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by the
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the selection of the fiscal year is not expressly deferred by
the board of directors, the fiscal year shall be the calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time to time
may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may resign by
so stating at any meeting of the board of directors or by giving written notice
to the board of directors, the Chairman of the Board, the President, or the
Secretary. Such resignation shall take effect at the time specified therein or,
if no time is specified therein, immediately upon its receipt. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board, the
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or through a
proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and participation in a meeting pursuant to this section
shall constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which the holders of all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in the
manner required by this Section 8.9(a) to the Corporation, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office, principal place
of business, or such officer or agent shall be by hand or by certified or
registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation of the
Corporation or by these bylaws, any action required or permitted to be taken at
a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the directors or all
the committee members, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a vote of such directors or committee members, as the case may be, and may be
stated as such in any certificate or document filed with the Secretary of State
of the State of Delaware or in any certificate delivered to any person. Such
consent or consents shall be filed with the minutes of proceedings of the board
or committee, as the case may be.
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8.10 Invalid Provisions. If any part of these bylaws shall be held invalid
or inoperative for any reason, the remaining parts, so far as it is possible and
reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust, mortgage, or
other instrument executed by the Corporation through its duly authorized officer
or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 Headings. The headings used in these bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 References. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 Amendments. These bylaws may be altered, amended, or repealed or new
bylaws may be adopted by the stockholders or by the board of directors at any
regular meeting of the stockholders or the board of directors or at any special
meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws be contained in the
notice of such special meeting.
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EXHIBIT A
, 1997
Evergreen Media Corporation
433 East Las Colinas Boulevard, Suite 1130
Irving, Texas 75039
Ladies and Gentlemen:
I have been advised that I have been identified as a possible "affiliate"
of Chancellor Broadcasting Company, a Delaware corporation (the "Company"), as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
General Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933 (the
"Securities Act"), although nothing contained herein should be construed as an
admission of such fact.
Pursuant to the terms of an Agreement and Plan of Merger dated as of
February 19, 1997, as Amended and Restated as of July 31, 1997 (the "Merger
Agreement"), by and among the Company, Chancellor Radio Broadcasting Company, a
Delaware corporation ("Radio Broadcasting"), Evergreen Media Corporation, a
Delaware corporation ("Evergreen"), Evergreen Mezzanine Holdings Corporation, a
Delaware corporation ("EMHC") and Evergreen Media Corporation of Los Angeles, a
Delaware corporation ("EMCLA"), the Company will be merged with and into EMHC
(the "Parent Merger"), with EMHC continuing as the surviving corporation in the
Parent Merger, and thereafter Radio Broadcasting will be merged with and into
EMCLA (the "Subsidiary Merger" and, collectively with the Parent Merger, the
"Merger"), with EMCLA continuing as the surviving corporation in the Subsidiary
Merger. In addition, in connection with the Merger, Evergreen will file an
amendment to its certificate of incorporation (the "Charter Amendment") whereby
the Class A Common Stock, $0.01 par value, and Class B Common Stock of Evergreen
outstanding immediately prior to the effectiveness of the Charter Amendment will
be reclassified into shares of Common Stock, $0.01 par value ("Parent Common
Stock"), and the name of the corporation will be changed to Chancellor Media
Corporation (as such, the "Parent"). As a result of the Merger, I will receive
Merger Consideration (as defined in the Merger Agreement), including shares of
Parent Common Stock in exchange for shares of Class A Common Stock, $.01 par
value, and/or shares of Class B Common Stock, $0.01 par value, of the Company
(collectively, the "Shares") owned by me at the effective time of the Merger as
determined pursuant to the Merger Agreement.
A. In connection therewith, I represent, warrant and agree that:
1. I shall not make any sale, transfer or other disposition of the Parent
Common Stock I receive as a result of the Merger in violation of the Securities
Act or the Rules and Regulations.
2. I have been advised that the issuance of Parent Common Stock to me as a
result of the Merger has been registered with the Commission under the
Securities Act on a Registration Statement on Form S-4. However, I have also
been advised that, if at the time the Merger was submitted for a vote of the
stockholders of the Company I am determined to have been an "affiliate" of the
Company, any sale by me of the shares of Parent Common Stock I receive as a
result of the Merger must be (i) registered under the Securities Act, (ii) made
in conformity with the provisions of Rule 145 promulgated by the Commission
under the Securities Act or (iii) made pursuant to a transaction which, in the
opinion of counsel reasonably satisfactory to Parent or as described in a "no
action" or interpretive letter from the staff of the Commission, is not required
to be registered under the Securities Act.
3. I have carefully read this letter and the Merger Agreement and have
discussed the requirements of the Merger Agreement and other limitations upon
the sale, transfer or other disposition of the shares of Parent Common Stock to
be received by me, to the extent I have felt necessary, with my counsel or with
counsel for the Company.
A-A-1
<PAGE> 232
B. Furthermore, in connection with the matters set forth herein, I
understand and agree that:
1. I understand that Parent will give stop transfer instructions to its
transfer agents with respect to the Parent Common Stock and that the
certificates for the Parent Common Stock issued to the undersigned, or any
substitutions therefor, will bear a legend substantially to the following
effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, MAY APPLY. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
1997, BETWEEN THE REGISTERED HOLDER HEREOF AND CHANCELLOR MEDIA
CORPORATION (FORMERLY KNOWN AS EVERGREEN MEDIA CORPORATION), A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF CHANCELLOR MEDIA
CORPORATION."
2. I also understand that unless the transfer by the undersigned of any
Parent Common Stock has been registered under the Securities Act or is a sale
made in conformity with the provisions of Rule 145, Parent reserves the right to
place the following legend on the certificates issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY APPLY. THE SECURITIES
HAVE NOT BEEN ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF SUCH ACT
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
It is understood and agreed that the legends set forth in paragraphs (B) 1
and 2 above shall be removed by delivery of new certificates without such legend
if Parent receives an opinion of counsel reasonably satisfactory to Parent to
the effect that such legend is not required for purposes of the Securities Act.
It is understood and agreed that such legends and the stop orders referred to
above will be removed if (i) one year shall have elapsed from the date the
undersigned acquired Parent Common Stock received in the Merger and the
provisions of Rule 145(d)(2) under the Securities Act are then available to the
undersigned, (ii) two years shall have elapsed from the date the undersigned
acquired Parent Common Stock received in the Merger and the provisions of Rule
145(d)(3) under the Securities Act are then available to the undersigned, or
(iii) Parent has received under the Securities Act an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to Parent, to the effect
that the restrictions imposed by Rule 145 under the Securities Act no longer
apply to the undersigned.
Parent shall be under no further obligation to register the sale, transfer
or other disposition of the shares of Parent Common Stock received by me as a
result of the Merger or to take any other action necessary in order to make
compliance with an exemption from registration available.
Very truly yours,
A-A-2
<PAGE> 233
EXHIBIT B
CHANCELLOR BROADCASTING COMPANY
CERTIFICATE
In connection with your tax opinion dated , 1997 regarding
certain federal income tax consequences of the merger (the "Merger") of
Chancellor Broadcasting Company, a Delaware corporation ("the Company"), with
and into Evergreen Mezzanine Holdings Corporation, a Delaware corporation
("EMHC") and a direct wholly-owned subsidiary of Evergreen Media Corporation, a
Delaware corporation ("Evergreen"), pursuant to the Amended and Restated
Agreement and Plan of Merger dated as of July 31, 1997 (the "Merger Agreement"),
and recognizing that you will rely on this Certificate in delivering said
opinion, the Company hereby represents that the facts relating to the Merger, as
such facts are described in the Registration Statement of Evergreen filed with
the Securities and Exchange Commission (the "Commission") on , 1997
(and all amendments thereto), are, insofar as such facts pertain to the Company,
true, correct, and complete in all material respects in accordance with
applicable rules of the Commission.
The Company further represents the following:
1. The fair market value of the Evergreen stock, cash (if any) and any
cash in lieu of fractional shares to be received by each Company
shareholder will be approximately equal to the fair market value of the
Company stock surrendered in the exchange.
2. There is no plan or intention by the shareholders of the Company
who own 5 percent or more of the Company stock as of the date hereof, and
to the best of the knowledge of the management of the Company, there is no
plan or intention on the part of the remaining shareholders of the Company,
to sell, exchange, or otherwise dispose of a number of shares of Evergreen
stock to be received in the transaction that would reduce the Company
shareholders' ownership of Evergreen stock to a number of shares having a
value on the date of the Merger of less than 50 percent of the value of all
of the formerly outstanding stock of the Company as of the same date. For
purposes of this representation, shares of the Company stock surrendered by
dissenters or exchanged for cash in lieu of fractional shares of Evergreen
stock will be treated as outstanding Company stock on the date of the
Merger. Moreover, shares of the Company stock and shares of Evergreen stock
held by the Company shareholders and otherwise sold, redeemed, or disposed
of prior or subsequent to the Merger will be considered in making this
representation.
3. The liabilities of the Company to be assumed by EMHC or Evergreen,
if any, and the liabilities to which the transferred assets of the Company
are subject were incurred by the Company in the ordinary course of its
business.
4. The fair market value of the assets of the Company to be
transferred to EMHC in the Merger will equal or exceed the sum of the
liabilities to be assumed by EMHC or Evergreen plus the amount of
liabilities, if any, to which the transferred assets are subject.
5. Evergreen, EMHC, the Company and the shareholders of the Company
will pay their respective expenses, if any, incurred in connection with the
Merger.
6. There is no intercorporate indebtedness existing between the
Company and EMHC or Evergreen that was issued, acquired, or will be settled
at a discount.
7. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
8. The Company is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
9. None of the compensation to be received by any shareholder-employee
of the Company will be separate consideration for, or allocable to, any of
their shares of the Company stock; none of the shares of Evergreen stock to
be received by any such shareholder-employee will be separate consideration
for, or
A-B-1
<PAGE> 234
allocable to, any employment agreement; and the compensation to be paid to
any such shareholder-employee will be for services actually rendered and
will be commensurate with amounts paid to third parties bargaining at
arm's-length for similar services.
10. No EMHC stock will be issued pursuant to the Merger.
11. At least 90 percent of the fair market value of the net assets and
at least 70 percent of the fair market value of the gross assets held by
the Company immediately prior to the Merger will be acquired by EMHC in the
Merger. For purposes of determining the percentage of the Company's net and
gross assets to be acquired by EMHC pursuant to the Merger, the following
assets will be treated as held by the Company immediately prior to, but not
acquired by EMHC pursuant to, the Merger: (i) assets disposed of by the
Company prior to the Merger and in contemplation thereof (including,
without limitation, any asset disposed of by the Company, other than in the
ordinary course of business, pursuant to a plan or intention existing
during the period ending on the date of the Merger and beginning with the
commencement of negotiations (whether formal or informal) with Evergreen
regarding the Merger), (ii) assets used by the Company to pay Company
shareholders, if any, who perfect dissenters' rights, (iii) assets used by
the Company to pay reorganization expenses or other liabilities incurred in
connection with the Merger, (iv) assets used to make distributions,
redemptions or other payments (except for regular, normal distributions) in
respect of the Company's Class A or Class B common stock or the Company's
convertible preferred stock (including payments treated as such for tax
purposes) that are made prior to the Merger and are part of the plan of the
Merger, and (v) any direct or indirect stock interest in Katz Acquisition
Corp. or any successor held by the Company and distributed by EMHC to
Evergreen immediately following the Merger.
12. The Merger Agreement represents the full and complete agreement
between Evergreen, EMHC and the Company regarding the Merger, and there are
no other written or oral agreements regarding the Merger other than those
expressly referred to in the Merger Agreement.
IN WITNESS WHEREOF, the Company has executed this Certificate on this
day of , 1997.
CHANCELLOR BROADCASTING COMPANY
By:
------------------------------------
A-B-2
<PAGE> 235
EXHIBIT C
CHANCELLOR RADIO BROADCASTING COMPANY
CERTIFICATE
In connection with your tax opinion dated , 1997 regarding
certain federal income tax consequences of the merger (the "Subsidiary Merger")
of Chancellor Radio Broadcasting Company, a Delaware corporation ("Radio
Broadcasting"), with and into Evergreen Media Corporation of Los Angeles, a
Delaware corporation ("EMCLA"), pursuant to the Amended and Restated Agreement
and Plan of Merger dated as of July 31, 1997( the "Merger Agreement"), and
recognizing that you will rely on this Certificate in delivering said opinion,
Radio Broadcasting hereby represents that the facts relating to the Subsidiary
Merger, as such facts are described in the Registration Statement of Evergreen
filed with the Securities and Exchange Commission (the "Commission") on
, 1997 (and all amendments thereto), are, insofar as such facts
pertain to Radio Broadcasting, true, correct, and complete in all material
respects in accordance with applicable rules of the Commission.
Radio Broadcasting further represents the following:
1. The fair market value of the EMCLA stock, cash (if any) and any
cash in lieu of fractional shares to be received (actually or
constructively) by each Radio Broadcasting shareholder will be
approximately equal to the fair market value of the Radio
Broadcasting stock surrendered in the exchange.
2. The common stock of Radio Broadcasting on the date of the
Subsidiary Merger will have a fair market value in excess of 50
percent of the fair market value of all of the outstanding stock
of Radio Broadcasting as of the same date.
3. To the best of the knowledge of the management of Radio
Broadcasting, there is no plan or intention on the part of the
holders of Radio Broadcasting preferred stock, to sell, exchange,
or otherwise dispose of the shares of EMCLA preferred stock to be
received in the Subsidiary Merger.
4. The liabilities of Radio Broadcasting to be assumed by EMCLA and
the liabilities to which the transferred assets of Radio
Broadcasting are subject were incurred by Radio Broadcasting in
the ordinary course of its business.
5. The fair market value of the assets of Radio Broadcasting to be
transferred to EMCLA in the Subsidiary Merger will equal or exceed
the sum of the liabilities to be assumed by EMCLA plus the amount
of liabilities, if any, to which the transferred assets are
subject.
6. The total adjusted basis of the assets of Radio Broadcasting to be
transferred to EMCLA will equal or exceed the sum of the
liabilities to be assumed by EMCLA, plus the amount of
liabilities, if any, to which the transferred assets are subject.
7. EMCLA, Radio Broadcasting and the shareholders of Radio
Broadcasting will pay their respective expenses, if any, incurred
in connection with the Subsidiary Merger.
8. There is no intercorporate indebtedness existing between Radio
Broadcasting and EMCLA that was issued, acquired, or will be
settled at a discount.
9. Radio Broadcasting is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of
1986, as amended (the "Code").
10. Radio Broadcasting is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
11. None of the compensation to be received by any
shareholder-employee of Radio Broadcasting will be separate
consideration for, or allocable to, any of their shares of Radio
Broadcasting
A-C-1
<PAGE> 236
stock; none of the shares of Evergreen stock to be received by any
such shareholder-employee will be separate consideration for, or
allocable to, any employment agreement; and the compensation to be
paid to any such shareholder-employees will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
12. The Merger Agreement represents the full and complete agreement
between EMCLA and Radio Broadcasting regarding the Subsidiary
Merger, and there are no other written or oral agreements
regarding the Subsidiary Merger other than those expressly
referred to in the Merger Agreement.
IN WITNESS WHEREOF, Radio Broadcasting has executed this Certificate on
this day of , 1997.
CHANCELLOR RADIO BROADCASTING
COMPANY
By:
------------------------------------
A-C-2
<PAGE> 237
EXHIBIT D
CERTIFICATE
In connection with the merger (the "Merger") of Chancellor Broadcasting
Company, a Delaware corporation, with and into Evergreen Mezzanine Holdings
Corporation, a Delaware corporation ("EMHC"), and a direct wholly-owned
subsidiary of Evergreen Media Corporation, a Delaware corporation ("Evergreen"),
pursuant to the Amended and Restated Agreement and Plan of Merger dated as of
July 31, 1997 (the "Merger Agreement"), the undersigned hereby represents that
he (it) has no plan or intention to sell, exchange, or otherwise dispose of,
reduce the risk of loss by short sale or otherwise, enter into any contract or
arrangement with respect to, or consent to the sale, exchange or other
disposition of any interest in any stock received in the Merger by him (it).
IN WITNESS WHEREOF, I have signed this Certificate on this day of
, 1997.
[Name of 5% shareholder of
Chancellor Broadcasting Company]
------------------------------------
A-D-1
<PAGE> 238
EXHIBIT E
EVERGREEN MEDIA CORPORATION
CERTIFICATE
In connection with your tax opinion dated , 1997, regarding
certain federal income tax consequences of: (i) the merger (the "Merger") of
Chancellor Broadcasting Company, a Delaware corporation ("the Company"), with
and into Evergreen Mezzanine Holdings Corporation, a Delaware corporation
("EMHC") and a direct wholly-owned subsidiary of Evergreen Media Corporation, a
Delaware corporation ("Evergreen"); and (ii) the merger (the "Subsidiary
Merger") of Chancellor Radio Broadcasting Company, a Delaware corporation
("Radio Broadcasting"), with and into Evergreen Media Corporation of Los
Angeles, a Delaware corporation ("EMCLA") and a direct wholly-owned subsidiary
of EMHC, each pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of July 31, 1997 (the "Merger Agreement"), and recognizing that you
will rely on this Certificate in delivering said opinion, Evergreen hereby
represents that the facts relating to the Merger and the Subsidiary Merger, as
such facts are described in the Registration Statement of Evergreen filed with
the Securities and Exchange Commission (the "Commission") on , 1997
(and all amendments thereto) are, insofar as such facts pertain to Evergreen,
true, correct, and complete in all material respects in accordance with
applicable rules of the Commission.
Evergreen further represents the following:
1. The fair market value of the Evergreen stock, cash (if any) and any
cash in lieu of fractional shares to be received by each Company
shareholder will be approximately equal to the fair market value of the
Company stock surrendered in the exchange.
2. Evergreen has no plan or intention to redeem or otherwise reacquire
any Evergreen stock issued in the Merger.
3. Evergreen has no plan or intention to cause EMHC to sell or
otherwise dispose of any of the assets to be acquired from the Company in
the Merger, except for EMHC's interest in Katz Acquisition Corp. which will
be distributed to Evergreen or dispositions made in the ordinary course of
business.(1)
4. Evergreen has no plan or intention to cause EMCLA to sell or
otherwise dispose of any of the assets to be acquired from Radio
Broadcasting in the Subsidiary Merger, except for dispositions made in the
ordinary course of business or transfers to a direct wholly-owned
subsidiary of EMCLA.(2)
5. Following the Merger and the Subsidiary Merger, each of EMHC and
EMCLA will continue the historic business of each of the Company and Radio
Broadcasting, respectively, or use a significant portion of the Company's
and Radio Broadcasting's historic business assets, respectively, in their
business.
6. Evergreen, EMHC, the Company and the shareholders of the Company
will pay their respective expenses, if any, incurred in connection with the
Merger.
7. There is no intercorporate indebtedness existing between the
Company and EMHC or Evergreen that was issued, acquired, or will be settled
at a discount.
- ---------------
1 May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition does
not prevent counsel for Evergreen, EMHC and the Company from delivering the
opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
2 May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition does
not prevent counsel for EMCLA and Radio Broadcasting from delivering the
opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
A-E-1
<PAGE> 239
8. None of the compensation to be received by any
shareholder-employee of the Company will be separate consideration for, or
allocable to, any of their shares of the Company stock; none of the shares
of Evergreen stock to be received by any such shareholder-employee will be
separate consideration for, or allocable to, any employment agreement; and
the compensation to be paid to any such shareholder-employee will be for
services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
9. Evergreen does not own, nor has Evergreen owned during the past
five years, more than a de minimis number of shares of stock of the
Company.
10. Evergreen is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
11. Evergreen is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
12. The payment of cash in lieu of fractional shares of Evergreen
stock merely represents a mechanical rounding-off of fractional share
interests as a result of the Merger and does not represent separately
bargained for consideration. The total cash consideration that will be paid
in the Merger in lieu of fractional shares of Evergreen stock to the
Company stockholders will not exceed one percent of the total consideration
that will be issued in the Merger to the Company stockholders.
13. The fair market value of the assets of the Company to be
transferred to EMHC in the Merger will equal or exceed the sum of the
liabilities assumed by EMHC and Evergreen, if any, plus the amount of
liabilities, if any, to which the transferred assets are subject.
14. Evergreen will be in Control (as defined below) of EMHC
immediately prior to the Merger, and Evergreen has no plan or intention to
cause EMHC to issue additional shares of capital stock after the Merger
that would result in Evergreen losing Control of EMHC. As used herein,
"Control" means the ownership of stock possessing at least 80 percent of
the total combined voting power of all classes of stock entitled to vote of
EMHC and at least 80 percent of the total number of shares of all other
classes of stock of EMHC. For purposes of determining Control, a person
shall not be considered to own voting stock if rights to vote such stock
(or to restrict or otherwise control the voting of such stock) are held by
a third party (including a voting trust) other than an agent of such
person.
15. At the time of the Merger, EMHC will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in EMHC that, if exercised
or converted, would affect Evergreen's retention of Control of EMHC.
16. Evergreen has no plan or intention: (i) to liquidate EMHC; (ii) to
merge EMHC with and into another corporation (including Evergreen) or (iii)
to sell or otherwise dispose of the stock of EMHC.
17. Evergreen will not cause EMHC to issue any stock pursuant to the
Merger.
18. Evergreen will issue the Evergreen stock that is to be received by
each Company shareholder in the Merger.
19. The Merger Agreement represents the full and complete agreement
among Evergreen, EMHC, EMCLA, the Company and Radio Broadcasting regarding
the Merger and the Subsidiary Merger, and there are no other written or
oral agreements regarding the Merger or the Subsidiary Merger other than
those expressly referred to in the Merger Agreement.
IN WITNESS WHEREOF, Evergreen has executed this Certificate on this
day of , 1997.
EVERGREEN MEDIA CORPORATION
By:
------------------------------------
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<PAGE> 240
EXHIBIT F
EVERGREEN MEZZANINE HOLDINGS CORPORATION
CERTIFICATE
In connection with your tax opinion dated , 1997, regarding
certain federal income tax consequences of: (i) the merger (the "Merger") of
Chancellor Broadcasting Company, a Delaware corporation ("the Company"), with
and into Evergreen Mezzanine Holdings Corporation, a Delaware corporation
("EMHC") and a direct wholly-owned subsidiary of Evergreen Media Corporation, a
Delaware corporation ("Evergreen"); and (ii) the merger (the "Subsidiary
Merger") of Chancellor Radio Broadcasting Company, a Delaware corporation
("Radio Broadcasting"), with and into Evergreen Media Corporation of Los
Angeles, a Delaware corporation ("EMCLA") and a direct wholly-owned subsidiary
of EMHC, each pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of July 31, 1997 (the "Merger Agreement"), and recognizing that you
will rely on this Certificate in delivering said opinion, EMHC hereby represents
that the facts relating to the Merger and the Subsidiary Merger, as such facts
are described in the Registration Statement of Evergreen filed with the
Securities and Exchange Commission (the "Commission") on , 1997 (and
all amendments thereto), are, insofar as such facts pertain to EMHC, true,
correct, and complete in all material respects in accordance with applicable
rules of the Commission.
EMHC further represents the following:
1. EMHC has no plan or intention to sell or otherwise dispose of any
of the assets to be acquired from the Company in the Merger, except for the
transfer of the stock of Katz Acquisition Corp. which will be distributed
to Evergreen and dispositions made in the ordinary course of business.(1)
2. EMHC has no plan or intention to cause EMCLA to sell or otherwise
dispose of any of the assets to be acquired from Radio Broadcasting in the
Subsidiary Merger, except for dispositions made in the ordinary course of
business or to a direct wholly-owned subsidiary of EMCLA.(2)
3. Evergreen, EMHC, the Company and the shareholders of the Company
will pay their respective expenses, if any, incurred in connection with the
Merger.
4. Following the Merger, EMHC will continue the historic business of
the Company or use a significant portion of the Company's historic business
assets in EMHC's business.
5. There is no intercorporate indebtedness existing between the
Company and EMHC that was issued, acquired, or will be settled at a
discount.
6. EMHC does not own, nor has EMHC owned during the past five years,
more than a de minimis number of shares of stock of the Company.
7. EMHC is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
8. EMHC is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
- ---------------
(1) May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition
does not prevent counsel for Evergreen, EMHC and the Company from delivering
the opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
(2) May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition
does not prevent counsel for EMCLA and Radio Broadcasting from delivering
the opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
A-F-1
<PAGE> 241
9. The fair market value of the assets of the Company to be
transferred to EMHC in the Merger will equal or exceed the sum of the
liabilities to be assumed by EMHC and Evergreen, if any, plus the amount of
liabilities, if any, to which the transferred assets are subject.
10. Evergreen will be in Control (as defined below) of EMHC
immediately prior to the Merger, and EMHC has no plan or intention to issue
additional shares of capital stock after the Merger that would result in
Evergreen losing Control of EMHC. As used herein, "Control" means the
ownership of stock possessing at least 80 percent of the total combined
voting power of all classes of stock entitled to vote of EMHC and at least
80 percent of the total number of shares of all other classes of stock of
EMHC. For purposes of determining Control, a person shall not be considered
to own voting stock if rights to vote such stock (or to restrict or
otherwise control the voting of such stock) are held by a third party
(including a voting trust) other than an agent of such person.
11. At the time of the Merger, EMHC will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in EMHC that, if exercised
or converted, would affect Evergreen's Control of EMHC.
12. EMHC has no plan or intention to liquidate or to merge with and
into another corporation after the Merger.
13. EMHC will not issue any stock pursuant to the Merger.
14. EMHC has no plan or intention: (i) to liquidate EMCLA; (ii) to
merge EMCLA with and into another corporation (including EMHC) after the
Subsidiary Merger; (iii) to cause EMCLA to redeem or otherwise acquire any
EMCLA stock issued in the Subsidiary Merger or (iv) to sell or otherwise
dispose of the stock of EMCLA.
15. Evergreen will issue the Evergreen stock that is to be received by
each Company shareholder in the Merger.
16. The Merger Agreement represents the full and complete agreement
among Evergreen, EMHC, EMCLA, the Company and Radio Broadcasting regarding
the Merger and the Subsidiary Merger, and there are no other written or
oral agreements regarding the Merger or the Subsidiary Merger other than
those expressly referred to in the Merger Agreement.
IN WITNESS WHEREOF, EMHC has executed this Certificate on this day of
, 1997.
EVERGREEN MEZZANINE HOLDINGS
CORPORATION
By:
------------------------------------
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<PAGE> 242
EXHIBIT G
EVERGREEN MEDIA CORPORATION OF LOS ANGELES
CERTIFICATE
In connection with your tax opinion dated , 1997, regarding
certain federal income tax consequences of the merger (the "Subsidiary Merger")
of Chancellor Radio Broadcasting Company, a Delaware corporation ("Radio
Broadcasting"), with and into Evergreen Media Corporation of Los Angeles, a
Delaware corporation ("EMCLA"), pursuant to the Amended and Restated Agreement
and Plan of Merger dated as of July 31, 1997 (the "Merger Agreement"), and
recognizing that you will rely on this Certificate in delivering said opinion,
EMCLA hereby represents that the facts relating to the Subsidiary Merger, as
such facts are described in the Registration Statement of Evergreen filed with
the Securities and Exchange Commission (the "Commission") on , 1997
(and all amendments thereto), are, insofar as such facts pertain to EMCLA, true,
correct, and complete in all material respects in accordance with applicable
rules of the Commission.
EMCLA further represents the following:
1. The fair market value of the EMCLA stock and cash, if any, to be
received (actually or constructively) by each Radio Broadcasting
shareholder will be approximately equal to the fair market value of the
Radio Broadcasting stock surrendered in the exchange.
2. EMCLA has no plan or intention to redeem or otherwise reacquire any
EMCLA stock issued in the Merger.
3. EMCLA has no plan or intention to sell or otherwise dispose of any
of the assets of Radio Broadcasting to be acquired in the Subsidiary
Merger, except for dispositions made in the ordinary course of business or
transfers to a direct wholly-owned subsidiary of EMCLA.(1)
4. Following the Subsidiary Merger, EMCLA will continue the historic
business of Radio Broadcasting or use a significant portion of Radio
Broadcasting's historic business assets in EMCLA's business.
5. EMCLA, Radio Broadcasting and the shareholders of Radio
Broadcasting will pay their respective expenses, if any, incurred in
connection with the Subsidiary Merger.
6. There is no intercorporate indebtedness existing between Radio
Broadcasting and EMCLA that was issued, acquired, or will be settled at a
discount.
7. None of the compensation to be received by any shareholder-employee
of Radio Broadcasting will be separate consideration for, or allocable to,
any of their shares of Radio Broadcasting stock; none of the shares of
EMCLA stock to be received by any such shareholder-employee will be
separate consideration for, or allocable to, any employment agreement; and
the compensation to be paid to any such shareholder-employee will be for
services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
8. EMCLA does not own, nor has EMCLA owned during the past five years,
more than a de minimis number of shares of stock of Radio Broadcasting.
9. EMCLA is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
10. EMCLA is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
- ---------------
1 May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition does
not prevent counsel for EMCLA and Radio Broadcasting from delivering the
opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
A-G-1
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11. The fair market value of the assets of Radio Broadcasting to be
transferred to EMCLA will equal or exceed the sum of the liabilities to be
assumed by EMCLA plus the amount of liabilities, if any, to which the
transferred assets are subject.
12. The Merger Agreement represents the full and complete agreement
among EMCLA and Radio Broadcasting regarding the Subsidiary Merger, and
there are no other written or oral agreements regarding the Subsidiary
Merger other than those expressly referred to in the Merger Agreement.
IN WITNESS WHEREOF, EMCLA has executed this Certificate on this day of
, 1997.
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
By:
------------------------------------
A-G-2
<PAGE> 244
EXHIBIT H
, 1997
Evergreen Media Corporation
413 East Las Colinas Boulevard
Suite 1130
Irving, Texas 75039
Ladies & Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of (i) the merger (the "Merger") of Chancellor Broadcasting
Company, a Delaware corporation (the "Company"), with and into Evergreen
Mezzanine Holdings Corporation, a Delaware corporation ("EMHC"), and a direct
wholly-owned subsidiary of Evergreen Media Corporation, a Delaware corporation
("Evergreen"), and (ii) the merger (the "Subsidiary Merger") of Chancellor Radio
Broadcasting Company, a Delaware corporation ("Radio Broadcasting"), with and
into Evergreen Media Corporation of Los Angeles, a Delaware corporation
("EMCLA").
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Amended and Restated Agreement and Plan of Merger
among the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA dated as of
July 31, 1997 (the "Merger Agreement"), the Joint Proxy Statement/Prospectus
filed by the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA on
, 1997 (the "Joint Proxy Statement"), and the Registration Statement
on Form S-4, as filed by Evergreen with the SEC on , 1997, in which
the Joint Proxy Statement/Prospectus is included as a prospectus (with all
amendments thereto, the "Registration Statement"). In addition, we have obtained
such additional information as we deemed relevant and necessary through
consultation with various officers and representatives of the Company, Radio
Broadcasting, Evergreen, EMHC and EMCLA.
Our opinion set forth below assumes (1) the accuracy of the statements and
facts concerning the Merger and the Subsidiary Merger set forth in the Merger
Agreement, the Joint Proxy Statement, and the Registration Statement, (2) the
consummation of the Merger and the Subsidiary Merger in the manner contemplated
by, and in accordance with the terms set forth in, the Merger Agreement, the
Joint Proxy Statement and the Registration Statement and (3) the accuracy of (i)
the representations made by the Company and by Radio Broadcasting, which are set
forth in the Certificates delivered to us by the Company and Radio Broadcasting,
dated the date hereof, (ii) the representations made by Evergreen, EMHC and by
EMCLA which are set forth in the Certificate delivered to us by Evergreen, EMHC
and EMCLA, dated the date hereof and (iii) the representations made by certain
shareholders of the Company and of Radio Broadcasting in Certificates delivered
to us by such persons, dated the date hereof.
Based upon the facts and statements set forth above, our examination and
review of the documents referred to above and subject to the assumptions set
forth herein, we are of the opinion that for federal income tax purposes:
1. The Merger and the Subsidiary Merger will each constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Each of the Company, Evergreen and EMHC will be a party to the
Merger within the meaning of Section 368(b) of the Code.
3. Each of Radio Broadcasting and EMCLA will be a party to the
Subsidiary Merger within the meaning of Section 368(b) of the Code.
4. No gain or loss will be recognized by the Company, Evergreen or
EMHC as a result of the Merger.
5. No gain or loss will be recognized by Radio Broadcasting or EMCLA
as a result of the Subsidiary Merger.
A-H-1
<PAGE> 245
6. No gain or loss will be recognized by holders of Evergreen Class A
Common Stock or holders of Evergreen Class B Common Stock on the exchange
of such shares for shares of Evergreen Common Stock pursuant to the Merger
Agreement.
7. No gain or loss will be recognized by holders of Evergreen
Convertible Exchangeable Preferred Stock as a result of the Merger.
We express no opinion concerning any tax consequences of the Merger or the
Subsidiary Merger other than those specifically set forth herein.
Our opinion is based on current provisions of the Code, the Treasury
Regulations promulgated thereunder, published pronouncements of the Internal
Revenue Service and case law, any of which may be changed at any time with
retroactive effect. Any change in applicable laws or facts and circumstances
surrounding the Merger or the Subsidiary Merger, or any inaccuracy in the
statements, facts, assumptions and representations on which we have relied, may
affect the continuing validity of the opinions set forth herein. We assume no
responsibility to inform you of any such change or inaccuracy that may occur or
come to our attention.
Very truly yours,
A-H-2
<PAGE> 246
EXHIBIT I
, 1997
Chancellor Broadcasting Company
12655 N. Central Expressway
Suite 405
Dallas, Texas 75243
Ladies & Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of (i) the merger (the "Merger") of Chancellor Broadcasting
Company, a Delaware corporation (the "Company"), with and into Evergreen
Mezzanine Holdings Corporation, a Delaware corporation ("EMHC"), and a direct
wholly-owned subsidiary of Evergreen Media Corporation, a Delaware corporation
("Evergreen"), and (ii) the merger (the "Subsidiary Merger") of Chancellor Radio
Broadcasting Company, a Delaware corporation ("Radio Broadcasting"), with and
into Evergreen Media Corporation of Los Angeles, a Delaware corporation
("EMCLA").
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Amended and Restated Agreement and Plan of Merger
among the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA dated as of
July 31, 1997 (the "Merger Agreement"), the Joint Proxy Statement and Prospectus
(the "Joint Proxy Statement") included in the Registration Statement on Form
S-4, as filed by Evergreen with the Securities and Exchange Commission on
, 1997, in which the Joint Proxy Statement is included as a prospectus
(with all amendments thereto, the "Registration Statement"). In addition, we
have obtained such additional information as we have deemed relevant and
necessary through consultation with various officers and representatives of the
Company, Radio Broadcasting, Evergreen, EMHC and EMCLA.
Our opinion set forth below assumes (1) the accuracy of the statements and
facts concerning the Merger and the Subsidiary Merger set forth in the Merger
Agreement, the Joint Proxy Statement, and the Registration Statement, (2) the
consummation of the Merger and the Subsidiary Merger in the manner contemplated
by, and in accordance with the terms set forth in, the Merger Agreement, the
Joint Proxy Statement and the Registration Statement and (3) the accuracy of (i)
the representations made by the Company and by Radio Broadcasting, which are set
forth in the Certificates delivered to us by the Company and Radio Broadcasting,
dated the date hereof, (ii) the representations made by Evergreen, EMHC and
EMCLA which are set forth in the Certificate delivered to us by Evergreen, EMHC
and EMCLA dated the date hereof, and (iii) the representations made by certain
shareholders of the Company and of Radio Broadcasting in Certificates delivered
to us by such persons, dated the date hereof.
Based on the facts and statements set forth above, our examination and
review of the documents referred to above and subject to the assumptions set
forth above, we are of the opinion that for federal income tax purposes:
1. The Merger and the Subsidiary Merger will each constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. No gain or loss will be recognized by stockholders of the Company
with respect to shares of common stock of Evergreen received in the Merger
in exchange for shares of common stock of the Company, or with respect to
shares of Evergreen convertible preferred stock received in the Merger in
exchange for shares of Company convertible preferred stock, except with
respect to cash received by dissenters or in lieu of fractional shares of
Evergreen common stock.
3. No gain or loss will be recognized by stockholders of Radio
Broadcasting with respect to shares of EMCLA preferred stock received in
the Subsidiary Merger in exchange for shares of Radio Broadcasting
preferred stock, except with respect to cash received by dissenters.
We express no opinion concerning any tax consequences of the Merger or the
Subsidiary Merger other than those specifically set forth herein.
A-I-1
<PAGE> 247
Our opinion is based on current provisions of the Code, the Treasury
Regulations promulgated thereunder, published pronouncements of the Internal
Revenue Service and case law, any of which may be changed at any time with
retroactive effect. Any change in applicable laws or in the facts and
circumstances surrounding the Merger or the Subsidiary Merger, or any inaccuracy
in the statements, facts, assumptions and representations on which we have
relied, may affect the continuing validity of the opinions set forth herein. We
assume no responsibility to inform you of any such change or inaccuracy that may
occur or come to our attention.
Very truly yours,
A-I-2
<PAGE> 248
ANNEX B-1
[WASSERSTEIN PERELLA & CO., INC. LETTERHEAD]
February 19, 1997
Board of Directors
Evergreen Media Corporation
433 East Las Colinas Blvd., Suite 1130
Irving, Texas 75039
Members of the Board:
You have asked us for our opinion as to the fairness, from a financial
point of view, to Evergreen Media Corporation (the "Company") of the Exchange
Ratio (as defined below) pursuant to the terms of the Agreement and Plan of
Merger, dated as of February 19, 1997 (the "Merger Agreement"), among Chancellor
Broadcasting Company ("Chancellor Broadcasting") and Chancellor Radio
Broadcasting Company ("Radio Broadcasting") and the Company. (Chancellor
Broadcasting and Radio Broadcasting are sometimes referred to below as
"Chancellor.") The Merger Agreement provides for, among other things, a merger
(the "Merger") of Chancellor Broadcasting and Radio Broadcasting with and into
the Company pursuant to which:
(i) each outstanding share of (a) Class A Common Stock, par value
$0.01 per share, of the Company and (b) Class B Common Stock, par value
$0.01 per share, of the Company (together, the "Company Common Stock") will
be converted into a right to receive one share of common stock, par value
$0.01 per share ("Surviving Corporation Stock"), of the Company which
pursuant to the Merger Agreement is the corporation surviving the Merger
(the "Surviving Corporation");
(ii) each outstanding share of (a) Class A Common Stock, par value
$0.01 per share, of Chancellor Broadcasting and (b) Class B Common Stock,
par value $0.01 per share, of Chancellor Broadcasting (together, the
"Chancellor Common Stock") will be converted into a right to receive 0.9091
share of Surviving Corporation Common Stock; and
(iii) each outstanding share of common stock of Radio Broadcasting,
par value $0.01 per share, shall be cancelled, and no consideration shall
be delivered in exchange therefore. As used herein, the ratio of 0.9091
share of Surviving Corporation Common Stock for each share of Chancellor
Broadcasting Common Stock and the cancellation of the Radio Broadcasting
common stock are referred to as the "Exchange Ratio." The terms and
conditions of the Merger are set forth in more detail in the Merger
Agreement.
In connection with rendering our opinion, we have reviewed the form
presented to us on or prior to the date hereof of the Merger Agreement and the
Stockholders Agreement dated as of February 19, 1997 among the Company,
Chancellor Broadcasting, and certain stockholders of each of the Company and
Chancellor
B-1-1
<PAGE> 249
Broadcasting. We have also reviewed and analyzed certain publicly available
business and financial information relating to the Company and Chancellor
Broadcasting for recent years and interim periods to date, as well as certain
internal non-public financial and operating information, including certain
budgeted cash flow information and analyses prepared by or on behalf of the
Company and Chancellor and provided to us for purposes of our analysis. We have
discussed with senior management of the Company and senior management of
Chancellor such information and, among other matters, the respective businesses,
operations, assets, financial conditions and future prospects of the Company and
Chancellor.
We have reviewed and considered certain financial and stock market data
relating to the Company and Chancellor Broadcasting, and we have compared that
data with similar data for certain other companies, the securities of which are
publicly traded, that we believe may be relevant or comparable in certain
respects to the Company or Chancellor or both or one or more of their businesses
or assets, and we have reviewed and considered the financial terms of certain
recent acquisitions and business combination transactions in the radio
broadcasting industry specifically, and in other industries generally, which we
believe to be relevant to our inquiry. We have also reviewed and considered the
effect of certain consolidation trends in the radio broadcasting industry on the
future prospects of the Company and Chancellor. We have also performed such
other studies, analyses, and investigations and reviewed such other information
as we considered appropriate.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all the financial and other
information provided to or discussed with us or publicly available, and we have
not assumed any responsibility for independent verification of any of such
information. We have also relied upon the reasonableness and accuracy of the
financial information and analyses provided to us and we have assumed that the
financial information and analyses provided to us were reasonably prepared in
good faith and on bases reflecting the best currently available judgments and
estimates of the Company's management and Chancellor's management, as
appropriate. We express no opinion with respect to such financial information
and analyses or the assumptions upon which they are based. In addition, we have
not reviewed any of the books and records of the Company or Chancellor, except
as described above, or assumed any responsibility for conducting a physical
inspection of the properties or facilities of the Company or Chancellor, or for
making or obtaining an independent valuation or appraisal of the assets or
liabilities of the Company or Chancellor, and no such independent valuation or
appraisal was provided to us. We note that the Merger is intended to qualify as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and we have assumed that the Merger will so qualify.
We have assumed that the transactions described in the Merger Agreement will be
consummated on the terms set forth therein, without material waiver or
modification. Our opinion is necessarily based on economic and market conditions
and other circumstances as they exist and can be evaluated by us as of the date
hereof. In rendering this opinion, we are not expressing any opinion as to the
price at which the shares of Surviving Corporation Common Stock or Company
Common Stock will actually trade at any time.
In the context of our current engagement by the Company, we have not been
authorized to and have not solicited or investigated any other alternative
transactions which may be available to the Company, other than a proposed
acquisition of assets from Viacom International Inc.
We have acted as financial advisor to the Company in connection with the
Company's proposed acquisition of certain assets from Viacom International Inc.
and we will be paid a fee for our services upon consummation of that proposed
transaction as well as a fee for the rendering of this opinion. In the ordinary
course of our business, we may actively trade the debt and equity securities of
the Company and Chancellor for our own account and for the accounts of customers
and, accordingly, may at any time hold a long or short position in such
securities.
It is understood that this letter is for the benefit and use of the Board
of Directors of the Company in its consideration of the Merger and, except for
inclusion in its entirety in a registration statement or proxy statement or both
relating to the Merger, may not be quoted, used or reproduced for any other
purpose without our prior written consent. This opinion does not constitute a
recommendation to any stockholder with respect to how such holder should vote
with respect to the Merger.
B-1-2
<PAGE> 250
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that as of the date hereof,
the Exchange Ratio is fair to the Company from a financial point of view.
Very truly yours,
/s/ WASSERSTEIN PERELLA & CO.,
INC.
------------------------------------
WASSERSTEIN PERELLA & CO., INC.
B-1-3
<PAGE> 251
ANNEX B-2
[WASSERSTEIN PERELLA & CO., INC. LETTERHEAD]
August 1, 1997
Board of Directors
Evergreen Media Corporation
433 East Las Colinas Blvd., Suite 1130
Irving, Texas 75039
Members of the Board:
On February 19, 1997, we delivered to you our opinion (the "February
Opinion") as to the fairness, from a financial point of view, to Evergreen Media
Corporation (the "Company") of the Exchange Ratio (as defined in the February
Opinion) pursuant to the terms of the Agreement and Plan of Merger, dated as of
February 19, 1997 (the "Merger Agreement"), among Chancellor Broadcasting
Company ("Chancellor Broadcasting"), Chancellor Radio Broadcasting Company
("Radio Broadcasting"), and the Company. (Chancellor Broadcasting and Radio
Broadcasting are sometimes referred to below as "Chancellor.") You have asked us
to confirm that the opinion expressed in the February Opinion remains our
opinion on the date hereof.
On July 31, 1997, the Merger Agreement was amended and restated in its
entirety (as amended and restated, the "Amended Merger Agreement") to provide
for, among other things:
(i) the inclusion of Evergreen Media Corporation Los Angeles, a
Delaware corporation and a direct subsidiary of the Company ("EMCLA"), and
Evergreen Mezzanine Holdings Corporation, a Delaware corporation and a
direct subsidiary of the Company ("EMHC"), as parties to the Amended Merger
Agreement;
(ii) the merger (the "Broadcasting Merger") of Chancellor Broadcasting
with and into EMHC; and
(iii) the related merger (the "Radio Merger" and, together with the
Broadcasting Merger, the "Merger") of Chancellor Radio with and into EMCLA.
B-2-1
<PAGE> 252
Pursuant to the Amended Merger Agreement:
(i) each outstanding share of (a) Class A Common Stock, par value
$0.01 per share, of the Company and (b) Class B Common Stock, par value
$0.01 per share, of the Company will be reclassified, changed and converted
into one share of common stock, par value $0.01 per share, of the Company
(the "Company Common Stock");
(ii) each outstanding share of (a) Class A Common Stock, par value
$0.01 per share, of Chancellor Broadcasting and (b) Class B Common Stock,
par value $0.01 per share, of Chancellor Broadcasting (together, the
"Chancellor Common Stock") will be converted into a right to receive 0.9091
shares of Company Common Stock in the Broadcasting Merger; and
(iii) each outstanding share of common stock of Radio Broadcasting,
par value $0.01 per share, shall be cancelled, and no consideration shall
be delivered in exchange therefore in the Radio Merger.
As used herein, the ratio of 0.9091 shares of Company Common Stock for each
share of Chancellor Common Stock and the cancellation of the Radio Broadcasting
common stock are referred to as the "Exchange Ratio." The terms and conditions
of the Merger are set forth in more detail in the Amended Merger Agreement.
Subsequent to the date of the February Opinion, we have reviewed the form
presented to us as an execution copy of the Amended Merger Agreement. We have
also reviewed the Registration Statement on Form S-4 of the Company and the
related Joint Proxy Statement/Prospectus of the Company and Chancellor
Broadcasting, dated August 1, 1997. We have also discussed with senior
management of the Company such information and, among other matters, the
business, operations, assets, financial conditions and future prospects of the
Company and Chancellor.
We have reviewed and considered certain financial and stock market data
relating to the Company and Chancellor Broadcasting, and we have compared that
data with similar data for certain other companies, the securities of which are
publicly traded, that we believe may be relevant or comparable in certain
respects to the Company or Chancellor or both or one or more of their businesses
or assets, and we have reviewed and considered the financial terms of certain
recent acquisitions and business combination transactions in the radio
broadcasting industry specifically, and in other industries generally, which we
believe to be relevant to our inquiry. We have also reviewed and considered the
effect of certain consolidation trends in the radio broadcasting industry on the
future prospects of the Company and Chancellor. We have also performed such
other studies, analyses, and investigations and reviewed such other information
as we considered appropriate.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all the financial and other
information provided to or discussed with us or publicly available, and we have
not assumed any responsibility for independent verification of any of such
information. We have also relied upon the reasonableness and accuracy of the
financial information and analyses provided to us and we have assumed that the
financial information and analyses provided to us were reasonably prepared in
good faith and on bases reflecting the best currently available judgments and
estimates of the Company's management and Chancellor's management, as
appropriate. We express no opinion with respect to such financial information
and analyses or the assumptions upon which they are based. In addition, we have
not reviewed any of the books and records of the Company or Chancellor, except
as described above, or assumed any responsibility for conducting a physical
inspection of the properties or facilities of the Company or Chancellor, or for
making or obtaining an independent valuation or appraisal of the assets or
liabilities of the Company or Chancellor, and no such independent valuation or
appraisal was provided to us. We note that the Merger is intended to qualify as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and we have assumed that the Merger will so qualify.
We have assumed that the transactions described in the Amended Merger Agreement
will be consummated on the terms set forth therein, without material waiver or
modification. Our opinion is necessarily based on economic and market conditions
and other circumstances as they exist and can be evaluated by us as of the date
hereof. In rendering this opinion, we are not expressing any opinion as to the
price at which the shares of Company Common Stock will actually trade at any
time.
B-2-2
<PAGE> 253
In the context of our current engagement by the Company and subsequent to
the date of the February Opinion, we have not been authorized to and have not
solicited or investigated any other alternative transactions which may be
available to the Company.
We have acted as financial advisor to the Company in connection with the
Company's acquisition of certain assets from Viacom International Inc. and we
were paid a fee for our services upon consummation of that transaction as well
as a fee for the rendering of this opinion and the February Opinion. In the
ordinary course of our business, we may actively trade the debt and equity
securities of the Company and Chancellor for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
It is understood that this letter is for the benefit and use of the Board
of Directors of the Company in its consideration of the Merger and, except for
inclusion in its entirety in a registration statement or proxy statement or both
relating to the Merger, may not be quoted, used or reproduced for any other
purpose without our prior written consent. This opinion does not constitute a
recommendation to any stockholder with respect to how such stockholder should
vote with respect to the Merger and should not be relied upon as such.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, and subject to all of the conditions and
assumptions contained in the February Opinion, we reaffirm that the opinion
expressed in the last paragraph of the February Opinion remains our opinion on
the date hereof.
Very truly yours,
/s/ WASSERSTEIN PERELLA & CO.,
INC.
------------------------------------
WASSERSTEIN PERELLA & CO., INC.
B-2-3
<PAGE> 254
[GREENHILL & CO. LETTERHEAD]
ANNEX C
February 19, 1997
Board of Directors
Chancellor Broadcasting Company
12655 N. Central Expressway
Suite 405
Dallas, Texas 75243
Members of the Board:
We understand that Chancellor Broadcasting Company (the "Company"),
Chancellor Radio Broadcasting Company ("Radio Broadcasting"), of which the
Company is the sole common stockholder, and Evergreen Media Corporation
("Evergreen") propose to enter into an Agreement and Plan of Merger dated as of
February 19, 1997 (the "Merger Agreement") pursuant to which the Company and
Radio Broadcasting will be merged (the "Merger") into Evergreen (the surviving
corporation of such Merger being the "Surviving Corporation") and each
outstanding share of the Company's Class A Common Stock, par value $0.01 per
share, and Class B Common Stock, par value $0.01 per share (collectively,
"Company Common Stock"), will be converted into the right to receive 0.9091
shares (the "Exchange Ratio") of the common stock, par value $0.01 per share, of
the Surviving Corporation ("Surviving Corporation Common Stock"). We further
understand that each outstanding share of 7% Convertible Preferred Stock of the
Company and 12 1/4% Series A Cumulative Redeemable Exchangeable Preferred Stock
and 12% Exchangeable Preferred Stock of Radio Broadcasting will be converted in
the Merger into substantially identical series of preferred stock of the
Surviving Corporation.
We understand that a subsidiary of Evergreen ("Evergreen of Los Angeles")
and Viacom International, Inc. ("Viacom") have entered into a Stock Purchase
Agreement dated February 16, 1997 (the "Viacom Agreement") pursuant to which
Evergreen will purchase all of the outstanding capital stock of certain
subsidiaries of Viacom (the "Viacom Subsidiaries"), which Viacom Subsidiaries
own all of Viacom's radio stations (the "Viacom Stations") for an aggregate cash
purchase price of $1.075 billion, subject to certain adjustments related to
working capital (the "Viacom Transaction"). You have also advised us that the
Company, Radio Broadcasting, Evergreen and Evergreen of Los Angeles have entered
into a Joint Purchase Agreement dated as of February 19, 1997 (the "Joint
Purchase Agreement") pursuant to which, if the Merger shall not have previously
occurred, Radio Broadcasting will buy (the "Split-up Transaction") at the
closing of the Viacom Transactions the Los Angeles, Chicago and Detroit Viacom
Stations for an aggregate price of $485 million in cash, subject to certain
adjustments
You have asked for our opinion as to whether the Exchange Ratio is fair
from a financial point of view to the holders of shares of the Company Common
Stock.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
certain other historical financial information of the Company, Radio
Broadcasting and Evergreen;
(ii) reviewed certain non-public financial statements and certain
other financial and operating data concerning the Company, Radio
Broadcasting, Evergreen and the Viacom Subsidiaries;
C-1
<PAGE> 255
(iii) analyzed certain financial forecasts for the Company and
Evergreen prepared by the managements of the Company and Evergreen,
respectively, and certain financial forecasts for the Viacom Subsidiaries
furnished to us by the Company;
(iv) discussed the strategic, financial and operational benefits
anticipated from the Merger and the Viacom Transaction with the managements
of the Company and Evergreen, respectively;
(v) discussed the past and current operations and financial condition
and the prospects of the Company, Evergreen and the Viacom Subsidiaries
with senior executives of the Company and discussed the past and current
operations and financial condition and prospects of Evergreen with senior
executives of Evergreen;
(vi) undertook a discounted cash flow analysis of the Company giving
effect to the Split-up Transactions and the Surviving Corporation giving
effect to the Merger and the Viacom Transaction;
(vii) reviewed the pro forma impact of the Merger and the Viacom
Transaction on the Surviving Corporation's cash flow, consolidated
capitalization and financial ratios;
(viii) reviewed the reported prices and trading activity for the
Company Common Stock and the common stock, par value $.01 per share of
Evergreen (the "Evergreen Common Stock");
(ix) compared the financial performance of the Company and Evergreen
and the prices and trading activity of the Company Common Stock and
Evergreen Common Stock with that of certain other publicly traded companies
comparable with the Company and Evergreen, respectively, and their
securities;
(x) reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions that we deemed reasonably comparable to
the Merger;
(xi) reviewed the Merger Agreement, the Joint Purchase Agreement and
the Viacom Agreement; and
(xii) considered such other factors as we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information supplied or otherwise made
available to us by the Company and Evergreen for the purposes of this opinion.
With respect to the financial forecasts, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of die Company, Evergreen and
the Viacom Subsidiaries. In addition, we have assumed that the Merger will be
consummated in accordance with the terms set forth in the Merger Agreement,
including, among other things, that the Merger will be treated as a tax-free
reorganization and/or exchange, each pursuant to the Internal Revenue Code of
1986, and that the Split-up Transaction and the Viacom Transaction, if
consummated, will be consummated in accordance with the terms of the Joint
Purchase Agreement and the Viacom Agreement, respectively. We have not made any
independent valuation or appraisal of the assets or liabilities of the Company,
nor have we been furnished with any such appraisals. Our opinion is necessarily
based on financial, economic, market and other conditions as in effect on, and
the information made available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition, business
combination or other extraordinary transaction, involving the Company. We note
that we have not discussed any of the historical financial information or
financial forecasts of the Viacom Stations or the past and current operations
and financial condition and prospects of the Viacom Stations with any
representatives of Viacom. You have not asked us to express any opinion with
respect to the transactions contemplated by the Joint Purchase Agreement. We
have, however, considered the impact on the Company of the consummation of the
Split-up Transaction and the impact on the Surviving Corporation of the
consummation of the Viacom Transaction.
C-2
<PAGE> 256
We have acted as financial advisor to the Board of Directors of the Company
in connection with the Viacom Transaction and the Merger and will receive a fee
for our services, including a fee which is contingent upon the delivery of this
opinion and a fee which is contingent upon the consummation of the Merger.
It is understood that this letter is for the information of the Board of
Directors of the Company, except that this opinion may be included in its
entirety and our name may be referred to in any filing made by the Company in
respect of the Merger with the Securities and Exchange Commission. In addition,
this opinion does not in any manner address the prices at which the Surviving
Corporation's Common Stock will trade following consummation of the Merger, and
we express no opinion or recommendation as to how the shareholders of the
Company should vote at the shareholders' meeting held in connection with the
Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio is fair from a financial point of view to the
holders of shares of the Company Common Stock.
Very truly yours,
GREENHILL & CO., LLC
By: /s/ ROBERT F. GREENHILL
----------------------------------
Robert F. Greenhill
Chairman
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ANNEX D
SECTION 262 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation or consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation: and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more share, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a nation market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a and b of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a, b and c of this paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidated has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the
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date the notice is given; provided that, if the notice is given on or after
the effective date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of business
on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall by borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial up on the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporate pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
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(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holder of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify any person who is, or is threatened to be made, a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of such corporation) by reason of the fact that such person is or was
an officer or director of such corporation, or is or was serving at the request
of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided that he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. A Delaware corporation may indemnify officers
and directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation. Where an officer
or director is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the
expenses which he actually and reasonably incurred in connection therewith.
Evergreen's Amended and Restated Certificate of Incorporation provides that
no director of Evergreen shall be liable to Evergreen or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to Evergreen or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
Evergreen's Restated Bylaws provide that Evergreen shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of Evergreen) by reason of the fact that he is or was a director, officer,
employee or agent of Evergreen, or is or was serving at the request of Evergreen
as a director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of Evergreen, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of Evergreen, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
The Restated Bylaws also provide that Evergreen shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of Evergreen to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of Evergreen, or is or was serving at the request of
Evergreen as a director, officer, employee or agent of another company,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of Evergreen and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to Evergreen unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the
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case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem proper.
To the extent that a director, officer, employee or agent of Evergreen
shall be successful on the merits or otherwise in defense of any action, suit or
proceeding referred to above, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
The Restated Bylaws further provide that any indemnification (unless
ordered by a court) shall be made by Evergreen only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in the bylaws. Such determination shall
be made (1) by the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by Evergreen in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
Evergreen as authorized in the bylaws. Such expenses incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the Board
of Directors deems appropriate.
The Board of Directors may authorize, by a vote of a majority of a quorum
of the Board of Directors, Evergreen to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
Evergreen, or is or was serving at the request of Evergreen as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
Evergreen would have the power to indemnify him against such liability under the
provisions of the bylaws.
The Restated Bylaws also provide that the indemnification and advancement
of expenses provided by, or granted pursuant to the bylaws shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.9(f) -- Plan of Reorganization and Merger by and between
Evergreen Media Corporation and Broadcasting Partners,
Inc., dated as of January 31, 1995, as amended, including
the Form of Registration Rights Agreement among MLGA Fund
I, L.P., MLGA Fund II, L.P., MLGA/BPI Partners I, L.P.,
MLGAL Partners, Limited Partnership and Evergreen Media
Corporation (see table of contents for a list of omitted
schedules).
2.9A(g) -- Agreement dated as of January 31, 1995 among Evergreen
Media Corporation, Broadcasting Partners, Inc., the
holders of the shares of capital stock of Broadcasting
Partners, Inc. and Scott K. Ginsburg, holder of shares of
capital stock of Evergreen Media Corporation.
2.10(f) -- Plan and Agreement of Merger among Evergreen Media
Partners Corporation, Evergreen Media Corporation and
Broadcasting Partners, Inc., dated as of April 12, 1995.
</TABLE>
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<PAGE> 263
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.11(h) -- Agreement and Plan of Merger by and among Pyramid
Communications, Inc., Evergreen Media Corporation and
Evergreen Media/Pyramid Corporation dated as of July 14,
1995 (see table of contents for list of omitted exhibits
and schedules).
2.11A(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated September
7, 1995.
2.11B(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated January 11,
1996.
2.12(j) -- Purchase Agreement between Fairbanks Communications, Inc.
and Evergreen Media Corporation dated October 12, 1995
(see table of contents for list of omitted exhibits and
schedules).
2.13(n) -- Option Agreement dated as of January 9, 1996 between
Chancellor Broadcasting Company and Evergreen Media
Corporation (including Form of Advertising Brokerage
Agreement and Form of Asset Purchase Agreement).
2.14(o) -- Asset Purchase Agreement dated April 4, 1996 between
American Radio Systems Corporation and Evergreen Media
Corporation of Buffalo (see table of contents for list of
omitted exhibits and schedules).
2.15(o) -- Asset Purchase Agreement dated April 11, 1996 between
Mercury Radio Communications, L.P. and Evergreen Media
Corporation of Los Angeles, Evergreen Media/Pyramid
Holdings Corporation, WHTT (AM) License Corp. and WHTT
(FM) License Corp. (see table of contents for list of
omitted exhibits and schedules).
2.16(o) -- Asset Purchase Agreement dated April 19, 1996 between
Crescent Communications L.P. and Evergreen Media
Corporation of Los Angeles (see table of contents for
list of omitted exhibits and schedules).
2.17(p) -- Asset Purchase Agreement dated June 13, 1996 between
Evergreen Media Corporation of Los Angeles and Greater
Washington Radio, Inc. (see table of contents for list of
omitted exhibits and schedules).
2.18(p) -- Asset Exchange Agreement dated June 13, 1996 among
Evergreen Media Corporation of Los Angeles, Evergreen
Media Corporation of the Bay State, WKLB License Corp.,
Greater Media Radio, Inc. and Greater Washington Radio,
Inc. (see table of contents for list of omitted exhibits
and schedules).
2.19(p) -- Purchase Agreement dated June 27, 1996 between WEDR,
Inc., Seller and Evergreen Media Corporation of Los
Angeles, Buyer. (See table of contents for list of
omitted schedules)
2.20(p) -- Time Brokerage Agreement dated July 10, 1996 by and
between Evergreen Media Corporation of Detroit, as
Licensee, and Kidstar Interactive Media Incorporated, as
Time Broker.
2.21(p) -- Asset Purchase Agreement dated July 15, 1996 by and among
Century Chicago Broadcasting L.P., an Illinois limited
partnership, ("Seller"), Century Broadcasting
Corporation, a Delaware Corporation ("Century"),
Evergreen Media Corporation of Los Angeles, a Delaware
Corporation ("Parent"), and Evergreen Media Corporation
of Chicago, a Delaware Corporation ("Buyer").
2.22(p) -- Asset Purchase Agreement dated August 12, 1996 by and
among Chancellor Broadcasting Company, Shamrock
Broadcasting, Inc. and Evergreen Media Corporation of the
Great Lakes.
</TABLE>
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<PAGE> 264
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.23(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles (WQRS-FM).
(See table of contents for list of omitted exhibits and
schedules)
2.24(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles. (See table of
contents for list of omitted schedules)
2.25(q) -- Letter of intent dated August 27, 1996 between EZ
Communications, Inc. and Evergreen Media Corporation.
2.26(q) -- Asset Purchase Agreement dated September 19, 1996 between
Beasley-FM Acquisition Corp., WDAS License Limited
Partnership and Evergreen Media Corporation of Los
Angeles.
2.27(q) -- Asset Purchase Agreement dated September 19, 1996 between
The Brown Organization and Evergreen Media Corporation of
Los Angeles.
2.28(r) -- Stock Purchase Agreement by and between Viacom
International Inc. and Evergreen Media Corporation of Los
Angeles, dated February 16, 1997 (See table of contents
for omitted schedules and exhibits).
2.29(r) -- Agreement and Plan of Merger, by and among Evergreen
Media Corporation, Chancellor Broadcasting Company and
Chancellor Radio Broadcasting Company, dated as of
February 19, 1997.
2.30(r) -- Stockholders Agreement, by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Scott
K. Ginsburg (individually and as custodian for certain
shares held by his children), HM2/Chancellor, L.P.,
Hicks, Muse, Tate & First Equity Fund II, L.P., HM2/HMW,
L.P., The Chancellor Business Trust, HM2/HMD Sacramento
GP, L.P., Thomas O. Hicks, as Trustee of the William Cree
Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as Trustee
of the Catherine Forgave Hicks 1993 Irrevocable Trust,
Thomas O. Hicks, as Trustee of the John Alexander Hicks
1984 Trust, Thomas O. Hicks, as Trustee of the Mack
Hardin Hicks 1984 Trust, Thomas O. Hicks, as Trustee of
Robert Bradley Hicks 1984 Trust, Thomas O. Hicks, as
Trustee of the Thomas O. Hicks, Jr. 1984 Trust, Thomas O.
Hicks and H. Rand Reynolds, as Trustees for the Muse
Children's GS Trust, and Thomas O. Hicks, dated as of
February 19, 1997.
2.31(r) -- Joint Purchase Agreement, by and among Chancellor Radio
Broadcasting Company, Chancellor Broadcasting Company,
Evergreen Media Corporation of Los Angeles, and Evergreen
Media Corporation, dated as of February 19, 1997.
2.32(s) -- Asset Exchange Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Philadelphia, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of Charlotte,
Evergreen Media Corporation of the East, Evergreen Media
Corporation of Carolinaland, WBAV/WBAV-FM/WPEG License
Corp. and WRFX License Corp., dated as of December 5,
1996 (See table of contents for list of omitted
schedules).
2.33(s) -- Asset Purchase Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Charlotte, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of the East and
Evergreen Media Corporation of Carolinaland, dated as of
December 5, 1996 (See table of contents for list of
omitted schedules).
</TABLE>
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<PAGE> 265
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.34(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: WGCI-AM and WGCI-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.35(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KKBQ-AM and KKBQ-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits)
2.36(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KHKS-FM), dated as of April 4, 1997 (see
table of contents for list of omitted schedules and
exhibits).
2.37(u) -- Merger Agreement by and among Chancellor Broadcasting
Company, Evergreen Media Corporation, Morris Acquisition
Corporation and Katz Media Group, Inc., dated as of July
14, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.38(v) -- Stockholder Tender Agreement by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Morris
Acquisition Corporation and certain stockholders of Katz
Media Group, Inc., dated as of July 14, 1997.
2.39(w) -- Management Tender Agreement by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Morris
Acquisition Corporation and certain stockholders of Katz
Media Group, Inc., dated as of July 14, 1997.
2.40(x) -- Joint Bidding Agreement between Evergreen Media
Corporation, Chancellor Broadcasting Company, Morris
Acquisition Corporation and HM2/Chancellor, L.P., dated
as of July 14, 1997.
2.41+ -- Amended and Restated Agreement and Plan of Merger among
Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company, Evergreen Media Corporation,
Evergreen Media Corporation of Los Angeles and Evergreen
Mezzanine Holdings Corporation, dated as of February 19,
1997, as amended and restated on July 31, 1997.
4.10(y) -- Second Amended and Restated Loan Agreement dated as of
April 25, 1997 among Evergreen Media Corporation of Los
Angeles, the financial institutions whose names appear as
Lenders on the signature pages thereof (the "Lenders"),
Toronto Dominion Securities, Inc., as Arranging Agent,
The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, NationsBank of Texas, N.A. and
Union Bank of California, as Co-Documentation Agents, and
Toronto Dominion (Texas), Inc., as Administrative Agent
for the Lenders, together with certain collateral
documents attached thereto as exhibits, including
Assignment of Partnership Interests, Assignment of Trust
Interests, Borrower's Pledge Agreement, Parent Company
Guaranty, Stock Pledge Agreement, Subsidiary.
4.11(z) -- First Amendment to Second Amended and Restated Loan
Agreement, dated June 26, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.12+ -- Specimen Common Stock certificate of Chancellor Media
Corporation.
4.13+ -- Specimen 7% Convertible Preferred Stock certificate of
Chancellor Media Corporation.
4.14+ -- Form of Certificate of Designation for 7% Convertible
Preferred Stock of Chancellor Media Corporation
</TABLE>
II-5
<PAGE> 266
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.15(aa) -- Indenture, dated as of February 14, 1996, governing the
9 3/8% Senior Subordinated Notes due 2004 of Chancellor
Radio Broadcasting Company.
4.16(bb) -- First Supplemental Indenture, dated as of February 14,
1996, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of
Chancellor Radio Broadcasting Company.
4.17(cc) -- Indenture, dated as of February 26, 1996, governing the
12 1/4% Subordinated Exchange Debentures due 2008 of
Chancellor Radio Broadcasting Company.
4.18(dd) -- Indenture, dated as of January 23, 1997, governing the
12% Subordinated Exchange Debentures due 2009 of
Chancellor Radio Broadcasting Company.
4.19(ee) -- Indenture, dated as of June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of Chancellor
Radio Broadcasting Company.
5.1+ -- Opinion of Latham & Watkins.
8.1+ -- Form of Tax Matters Opinion of Latham & Watkins.
8.2+ -- Form of Tax Matters Opinion of Weil, Gotshal & Manges
LLP.
10.23(f) -- Evergreen Media Corporation Stock Option Plan for
Non-employee Directors.
10.24(n) -- Employment Agreement dated November 28, 1995 by and
between Evergreen Media Corporation and Matthew E.
Devine.
10.25(n) -- Employment Agreement dated November 28, 1995 by and
between Evergreen Media Corporation and James de Castro.
10.26(n) -- Employment Agreement dated February 9, 1996 by and
between Evergreen Media Corporation and Kenneth J.
O'Keefe.
10.27(o) -- Employment Agreement dated April 15, 1996 by and between
Evergreen Media Corporation and Scott K. Ginsburg, as
amended.
10.28(o) -- 1995 Stock Option Plan for executive officers and key
employees of Evergreen Media Corporation.
10.29(s) -- Memorandum of Agreement, dated February 19, 1997, between
Evergreen Media Corporation and Scott K. Ginsburg, as
agreed and acknowledged by Chancellor Broadcasting
Company and Chancellor Radio Broadcasting Company.
12.1+ -- Evergreen Media Corporation Computation of Ratio of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
12.2+ -- Chancellor Broadcasting Company Computation of Ratio of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
21.1+ -- Subsidiaries of Evergreen Media Corporation.
23.1+ -- Consent of Latham & Watkins (included as part of their
opinion listed as Exhibit 5.1).
23.2+ -- Consent of KPMG Peat Marwick LLP, independent
accountants.
23.3+ -- Consent of KPMG Peat Marwick LLP, independent
accountants.
23.4+ -- Consent of Price Waterhouse LLP, independent accountants.
23.5+ -- Consent of Arthur Andersen, LLP, independent accountants.
23.6+ -- Consent of Coopers & Lybrand LLP, independent
accountants.
23.7+ -- Consent of Coopers & Lybrand LLP, independent
accountants.
</TABLE>
II-6
<PAGE> 267
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
23.8+ -- Consent of Coopers & Lybrand LLP, independent
accountants.
23.9+ -- Consent of Price Waterhouse LLP, independent accountants.
23.10+ -- Consent of Arthur Andersen LLP, independent accountants.
23.11+ -- Consent of Wasserstein Perella & Co., Inc.
23.12+ -- Consent of Greenhill & Co. L.L.C.
23.13+ -- Consent of Latham & Watkins.
23.14+ -- Consent of Weil, Gotshal & Manges LLP.
24.1 -- Powers of Attorney (included on signature page).
</TABLE>
B. Financial Statements
1. Consolidated Financial Statements of Evergreen Media Corporation and
Subsidiaries as of December 31, 1995 and 1996 and for the years
ended December 31, 1994, 1995 and 1996 (incorporated by reference to
Evergreen's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
2. Financial Statements of KKSF-FM/KDFC-FM and AM (A Division of the
Brown Organization) as of December 31, 1995 and 1996 and for the
years ended December 31, 1995 and 1996 (incorporated by reference to
Evergreen's Current Report on Form 8-K dated May 30, 1997 and filed
June 4, 1997).
3. Combined Financial Statements of WJLB/WMXD, DETROIT as of December
31, 1996 and March 31, 1997 and for the year ended December 31, 1996
and the three months ended March 31, 1996 and 1997 (incorporated by
reference to Evergreen's Current Report on Form 8-K dated May 30,
1997 and filed June 4, 1997).
4. Financial Statements of WDAS-AM/FM (Station owned and operated by
Beasley FM Acquisition Corp.) as of December 31, 1996 and March 31,
1997 and for the year ended December 31, 1996 and the three months
ended March 31, 1996 and 1997 (incorporated by reference to
Evergreen's Current Report on Form 8-K dated May 30, 1997 and filed
June 4, 1997).
5. Financial Statements of Century Chicago Broadcasting, L.P. as of
December 31, 1996 and March 31, 1997 and for the year ended December
31, 1996 and the three months ended March 31, 1996 and 1997
(incorporated by reference to Evergreen's Current Report on Form 8-K
dated May 30, 1997 and filed June 4, 1997).
6. Combined Financial Statements of Riverside Broadcasting Co., Inc.
and WAXQ Inc. as of December 31, 1995 and 1996 and March 31, 1997
and for the years ended December 31, 1994, 1995 and 1996 and the
three months ended March 31, 1996 and 1997 (incorporated by
reference to Evergreen's Current Report on Form 8-K dated May 30,
1997 and filed June 4, 1997).
7. Combined Financial Statements of WMZQ Inc. and Viacom Broadcasting
East, Inc. as of December 31, 1995 and 1996 and March 31, 1997 and
for the years ended December 31, 1994, 1995 and 1996 and the three
months ended March 31, 1996 and 1997 (incorporated by reference to
Evergreen's Current Report on Form 8-K dated May 30, 1997 and filed
June 4, 1997).
8. Consolidated Financial Statements of Evergreen Media Corporation and
Subsidiaries as of December 31, 1996 and March 31, 1997 and for the
three months ended March 31, 1996 and 1997 (incorporated by
reference to Evergreen's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997).
II-7
<PAGE> 268
9. Consolidated Financial Statements of Chancellor Broadcasting Company
and Subsidiaries as of December 31, 1995 and 1996 and for the years
ended December 31, 1994, 1995 and 1996 (incorporated by reference to
Chancellor's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended on Form 10-K/A).
10. Combined Financial Statements of Colfax Communications, Inc. Radio
Group as of December 31, 1996, 1995 and 1994 and for the years ended
December 1996, 1995 and 1994 (incorporated by reference to
Chancellor's Current Report on Form 8-K dated June 3, 1997 and filed
June 4, 1997).
11. Combined Financial Statements of KYSR Inc. and KIBB Inc. as of
December 31, 1995 and 1996 and March 31, 1997 and for the years
ended December 31, 1994, 1995 and 1996 and the three months ended
March 31, 1996 and 1997 (incorporated by reference to Chancellor's
Current Report on Form 8-K dated June 3, 1997 and filed June 4,
1997).
12. Financial Statements of WLIT, Inc. as of December 31, 1995 and 1996
and March 31, 1997 and for the years ended December 31, 1994, 1995
and 1996 and the three months ended March 31, 1996 and 1997
(incorporated by reference to Chancellor's Current Report on Form
8-K dated June 3, 1997 and filed June 4, 1997).
13. Financial Statements of WDRQ, Inc. as of December 31, 1995 and 1996
and March 31, 1997 and for the years ended December 31, 1994, 1995
and 1996 and the three months ended March 31, 1996 and 1997
(incorporated by reference to Chancellor's Current Report on Form
8-K dated June 3, 1997 and filed June 4, 1997).
14. Combined Financial Statements of Colfax Communications, Inc. Radio
Group as of December 31, 1993, 1994 and 1995 and for the years ended
December 31, 1993, 1994 and 1995 (incorporated by reference to
Chancellor's Current Report on Form 8-K dated January 23, 1997 and
filed on February 6, 1997 as amended on Form 8-K/A dated April 29,
1997).
15. Consolidated Financial Statements of Chancellor Broadcasting Company
and Subsidiaries as of December 31, 1996 and March 31, 1997 and for
the three months ended March 31, 1996 and 1997 (incorporated by
reference to Chancellor's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997).
C. Opinions of Financial Advisors
1. Opinion of Wasserstein, Perella & Co., Inc. (see Annex B to Joint
Proxy Statement/Prospectus included herein).
2. Opinion of Greenhill & Co. LLC (see Annex C to Joint Proxy
Statement/Prospectus included herein).
- ---------------
+ Filed herewith.
(a) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-60036).
(f) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-4, as amended (Reg. No.
33-89838).
(g) Incorporated by reference to Exhibit No. 4.8 to Evergreen's Registration
Statement on Form S-4, as amended (Reg. No. 33-89838).
(h) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 14, 1995.
(i) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated January 17, 1996.
(j) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
September 30, 1995.
II-8
<PAGE> 269
(k) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-69752).
(n) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(o) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
March 31, 1996.
(p) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996.
(q) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-3, as amended (Reg. No.
333-12453).
(r) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated February 16, 1997 and filed
March 9, 1997.
(s) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(t) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated April 1, 1997 and filed May 9,
1997.
(u) Incorporated by reference to Exhibit (c)(1) of the Schedule 14D-1 filed by
Chancellor Broadcasting Company, Evergreen Media Corporation and Morris
Acquisition Corporation, dated July 18, 1997.
(v) Incorporated by reference to Exhibit (c)(2) of the Schedule 14D-1 filed by
Chancellor Broadcasting Company, Evergreen Media Corporation and Morris
Acquisition Corporation, dated July 18, 1997.
(w) Incorporated by reference to Exhibit (c)(3) of the Schedule 14D-1 filed by
Chancellor Broadcasting Company, Evergreen Media Corporation and Morris
Acquisition Corporation, dated July 18, 1997.
(x) Incorporated by reference to Exhibit (c)(4) of the Schedule 14D-1 filed by
Chancellor Broadcasting Company, Evergreen Media Corporation and Morris
Acquisition Corporation, dated July 18, 1997.
(z) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 7, 1997 and filed July
31, 1997.
(aa) Incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.
(bb) Incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K
of Chancellor Broadcasting Company, Chancellor Radio Broadcasting Company
and Chancellor Broadcasting Licensee Company for the fiscal year ended
December 31, 1995.
(cc) Incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.
(dd) Incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K
of Chancellor Radio Broadcasting Company, as filed on February 6, 1997.
(ee) Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K
of Chancellor Broadcasting Company, dated July 2, 1997 and filed July 17,
1997.
Evergreen hereby agrees to furnish supplementarily a copy of any omitted
schedule or exhibit to the Commission upon request.
ITEM 22. UNDERTAKINGS.
A. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expense incurred or paid by a director, officer or controlling
person of the registrant in the
II-9
<PAGE> 270
successful defense of any action, suit or proceeding) is asserted against the
registrant by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's Annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's Annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
D. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
E. (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145, the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-10
<PAGE> 271
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irving, State of Texas,
on August 1, 1997.
EVERGREEN MEDIA CORPORATION
By: /s/ MATTHEW E. DEVINE
----------------------------------
Matthew E. Devine
Executive Vice President
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and appoints Matthew
E. Devine as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for such person and in his name, place and
stead, in any and all capacities, to sign any or all further amendment
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1933, AS
AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ SCOTT K. GINSBURG Chairman of the Board and Chief August 1, 1997
- ----------------------------------------------------- Executive Officer (Principal
Scott K. Ginsburg Executive Officer)
/s/ JAMES E. DE CASTRO President, Chief Operating Officer August 1, 1997
- ----------------------------------------------------- and Director
James E. de Castro
/s/ MATTHEW E. DEVINE Executive Vice President (Principal August 1, 1997
- ----------------------------------------------------- Financial Officer and Principal
Matthew E. Devine Accounting Officer) and Director
/s/ KENNETH J. O'KEEFE Executive Vice President and Director August 1, 1997
- -----------------------------------------------------
Kenneth J. O'Keefe
/s/ JOSEPH M. SITRICK Director August 1 , 1997
- -----------------------------------------------------
Joseph M. Sitrick
/s/ THOMAS J. HODSON Director August 1, 1997
- -----------------------------------------------------
Thomas J. Hodson
/s/ PERRY J. LEWIS Director August 1, 1997
- -----------------------------------------------------
Perry J. Lewis
/s/ ERIC L. BERNTHAL Director August 1, 1997
- -----------------------------------------------------
Eric L. Bernthal
</TABLE>
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<PAGE> 272
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.9(f) -- Plan of Reorganization and Merger by and between
Evergreen Media Corporation and Broadcasting Partners,
Inc., dated as of January 31, 1995, as amended, including
the Form of Registration Rights Agreement among MLGA Fund
I, L.P., MLGA Fund II, L.P., MLGA/BPI Partners I, L.P.,
MLGAL Partners, Limited Partnership and Evergreen Media
Corporation (see table of contents for a list of omitted
schedules).
2.9A(g) -- Agreement dated as of January 31, 1995 among Evergreen
Media Corporation, Broadcasting Partners, Inc., the
holders of the shares of capital stock of Broadcasting
Partners, Inc. and Scott K. Ginsburg, holder of shares of
capital stock of Evergreen Media Corporation.
2.10(f) -- Plan and Agreement of Merger among Evergreen Media
Partners Corporation, Evergreen Media Corporation and
Broadcasting Partners, Inc., dated as of April 12, 1995.
2.11(h) -- Agreement and Plan of Merger by and among Pyramid
Communications, Inc., Evergreen Media Corporation and
Evergreen Media/Pyramid Corporation dated as of July 14,
1995 (see table of contents for list of omitted exhibits
and schedules).
2.11A(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated September
7, 1995.
2.11B(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated January 11,
1996.
2.12(j) -- Purchase Agreement between Fairbanks Communications, Inc.
and Evergreen Media Corporation dated October 12, 1995
(see table of contents for list of omitted exhibits and
schedules).
2.13(n) -- Option Agreement dated as of January 9, 1996 between
Chancellor Broadcasting Company and Evergreen Media
Corporation (including Form of Advertising Brokerage
Agreement and Form of Asset Purchase Agreement).
2.14(o) -- Asset Purchase Agreement dated April 4, 1996 between
American Radio Systems Corporation and Evergreen Media
Corporation of Buffalo (see table of contents for list of
omitted exhibits and schedules).
2.15(o) -- Asset Purchase Agreement dated April 11, 1996 between
Mercury Radio Communications, L.P. and Evergreen Media
Corporation of Los Angeles, Evergreen Media/Pyramid
Holdings Corporation, WHTT (AM) License Corp. and WHTT
(FM) License Corp. (see table of contents for list of
omitted exhibits and schedules).
2.16(o) -- Asset Purchase Agreement dated April 19, 1996 between
Crescent Communications L.P. and Evergreen Media
Corporation of Los Angeles (see table of contents for
list of omitted exhibits and schedules).
2.17(p) -- Asset Purchase Agreement dated June 13, 1996 between
Evergreen Media Corporation of Los Angeles and Greater
Washington Radio, Inc. (see table of contents for list of
omitted exhibits and schedules).
</TABLE>
<PAGE> 273
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.18(p) -- Asset Exchange Agreement dated June 13, 1996 among
Evergreen Media Corporation of Los Angeles, Evergreen
Media Corporation of the Bay State, WKLB License Corp.,
Greater Media Radio, Inc. and Greater Washington Radio,
Inc. (see table of contents for list of omitted exhibits
and schedules).
2.19(p) -- Purchase Agreement dated June 27, 1996 between WEDR,
Inc., Seller and Evergreen Media Corporation of Los
Angeles, Buyer. (See table of contents for list of
omitted schedules)
2.20(p) -- Time Brokerage Agreement dated July 10, 1996 by and
between Evergreen Media Corporation of Detroit, as
Licensee, and Kidstar Interactive Media Incorporated, as
Time Broker.
2.21(p) -- Asset Purchase Agreement dated July 15, 1996 by and among
Century Chicago Broadcasting L.P., an Illinois limited
partnership, ("Seller"), Century Broadcasting
Corporation, a Delaware Corporation ("Century"),
Evergreen Media Corporation of Los Angeles, a Delaware
Corporation ("Parent"), and Evergreen Media Corporation
of Chicago, a Delaware Corporation ("Buyer").
2.22(p) -- Asset Purchase Agreement dated August 12, 1996 by and
among Chancellor Broadcasting Company, Shamrock
Broadcasting, Inc. and Evergreen Media Corporation of the
Great Lakes.
2.23(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles (WQRS-FM).
(See table of contents for list of omitted exhibits and
schedules)
2.24(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles. (See table of
contents for list of omitted schedules)
2.25(q) -- Letter of intent dated August 27, 1996 between EZ
Communications, Inc. and Evergreen Media Corporation.
2.26(q) -- Asset Purchase Agreement dated September 19, 1996 between
Beasley-FM Acquisition Corp., WDAS License Limited
Partnership and Evergreen Media Corporation of Los
Angeles.
2.27(q) -- Asset Purchase Agreement dated September 19, 1996 between
The Brown Organization and Evergreen Media Corporation of
Los Angeles.
2.28(r) -- Stock Purchase Agreement by and between Viacom
International Inc. and Evergreen Media Corporation of Los
Angeles, dated February 16, 1997 (See table of contents
for omitted schedules and exhibits).
2.29(r) -- Agreement and Plan of Merger, by and among Evergreen
Media Corporation, Chancellor Broadcasting Company and
Chancellor Radio Broadcasting Company, dated as of
February 19, 1997.
</TABLE>
<PAGE> 274
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.30(r) -- Stockholders Agreement, by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Scott
K. Ginsburg (individually and as custodian for certain
shares held by his children), HM2/Chancellor, L.P.,
Hicks, Muse, Tate & First Equity Fund II, L.P., HM2/HMW,
L.P., The Chancellor Business Trust, HM2/HMD Sacramento
GP, L.P., Thomas O. Hicks, as Trustee of the William Cree
Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as Trustee
of the Catherine Forgave Hicks 1993 Irrevocable Trust,
Thomas O. Hicks, as Trustee of the John Alexander Hicks
1984 Trust, Thomas O. Hicks, as Trustee of the Mack
Hardin Hicks 1984 Trust, Thomas O. Hicks, as Trustee of
Robert Bradley Hicks 1984 Trust, Thomas O. Hicks, as
Trustee of the Thomas O. Hicks, Jr. 1984 Trust, Thomas O.
Hicks and H. Rand Reynolds, as Trustees for the Muse
Children's GS Trust, and Thomas O. Hicks, dated as of
February 19, 1997.
2.31(r) -- Joint Purchase Agreement, by and among Chancellor Radio
Broadcasting Company, Chancellor Broadcasting Company,
Evergreen Media Corporation of Los Angeles, and Evergreen
Media Corporation, dated as of February 19, 1997.
2.32(s) -- Asset Exchange Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Philadelphia, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of Charlotte,
Evergreen Media Corporation of the East, Evergreen Media
Corporation of Carolinaland, WBAV/WBAV-FM/WPEG License
Corp. and WRFX License Corp., dated as of December 5,
1996 (See table of contents for list of omitted
schedules).
2.33(s) -- Asset Purchase Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Charlotte, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of the East and
Evergreen Media Corporation of Carolinaland, dated as of
December 5, 1996 (See table of contents for list of
omitted schedules).
2.34(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: WGCI-AM and WGCI-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.35(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KKBQ-AM and KKBQ-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits)
2.36(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KHKS-FM), dated as of April 4, 1997 (see
table of contents for list of omitted schedules and
exhibits).
2.37(u) -- Merger Agreement by and among Chancellor Broadcasting
Company, Evergreen Media Corporation, Morris Acquisition
Corporation and Katz Media Group, Inc., dated as of July
14, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.38(v) -- Stockholder Tender Agreement by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Morris
Acquisition Corporation and certain stockholders of Katz
Media Group, Inc., dated as of July 14, 1997.
2.39(w) -- Management Tender Agreement by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Morris
Acquisition Corporation and certain stockholders of Katz
Media Group, Inc., dated as of July 14, 1997.
</TABLE>
<PAGE> 275
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.40(x) -- Joint Bidding Agreement between Evergreen Media
Corporation, Chancellor Broadcasting Company, Morris
Acquisition Corporation and HM2/Chancellor, L.P., dated
as of July 14, 1997.
2.41+ -- Amended and Restated Agreement and Plan of Merger among
Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company, Evergreen Media Corporation,
Evergreen Media Corporation of Los Angeles and Evergreen
Mezzanine Holdings Corporation, dated as of February 19,
1997, as amended and restated on July 31, 1997.
4.10(y) -- Second Amended and Restated Loan Agreement dated as of
April 25, 1997 among Evergreen Media Corporation of Los
Angeles, the financial institutions whose names appear as
Lenders on the signature pages thereof (the "Lenders"),
Toronto Dominion Securities, Inc., as Arranging Agent,
The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, NationsBank of Texas, N.A. and
Union Bank of California, as Co-Documentation Agents, and
Toronto Dominion (Texas), Inc., as Administrative Agent
for the Lenders, together with certain collateral
documents attached thereto as exhibits, including
Assignment of Partnership Interests, Assignment of Trust
Interests, Borrower's Pledge Agreement, Parent Company
Guaranty, Stock Pledge Agreement, Subsidiary.
4.11(z) -- First Amendment to Second Amended and Restated Loan
Agreement, dated June 26, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.12+ -- Specimen Common Stock certificate of Chancellor Media
Corporation.
4.13+ -- Specimen 7% Convertible Preferred Stock certificate of
Chancellor Media Corporation.
4.14+ -- Form of Certificate of Designation for 7% Convertible
Preferred Stock of Chancellor Media Corporation
4.15(aa) -- Indenture, dated as of February 14, 1996, governing the
9 3/8% Senior Subordinated Notes due 2004 of Chancellor
Radio Broadcasting Company.
4.16(bb) -- First Supplemental Indenture, dated as of February 14,
1996, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of
Chancellor Radio Broadcasting Company.
4.17(cc) -- Indenture, dated as of February 26, 1996, governing the
12 1/4% Subordinated Exchange Debentures due 2008 of
Chancellor Radio Broadcasting Company.
4.18(dd) -- Indenture, dated as of January 23, 1997, governing the
12% Subordinated Exchange Debentures due 2009 of
Chancellor Radio Broadcasting Company.
4.19(ee) -- Indenture, dated as of June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of Chancellor
Radio Broadcasting Company.
5.1+ -- Opinion of Latham & Watkins.
8.1+ -- Form of Tax Matters Opinion of Latham & Watkins.
8.2+ -- Form of Tax Matters Opinion of Weil, Gotshal & Manges
LLP.
10.23(f) -- Evergreen Media Corporation Stock Option Plan for
Non-employee Directors.
10.24(n) -- Employment Agreement dated November 28, 1995 by and
between Evergreen Media Corporation and Matthew E.
Devine.
10.25(n) -- Employment Agreement dated November 28, 1995 by and
between Evergreen Media Corporation and James de Castro.
</TABLE>
<PAGE> 276
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.26(n) -- Employment Agreement dated February 9, 1996 by and
between Evergreen Media Corporation and Kenneth J.
O'Keefe.
10.27(o) -- Employment Agreement dated April 15, 1996 by and between
Evergreen Media Corporation and Scott K. Ginsburg, as
amended.
10.28(o) -- 1995 Stock Option Plan for executive officers and key
employees of Evergreen Media Corporation.
10.29(s) -- Memorandum of Agreement, dated February 19, 1997, between
Evergreen Media Corporation and Scott K. Ginsburg, as
agreed and acknowledged by Chancellor Broadcasting
Company and Chancellor Radio Broadcasting Company.
12.1+ -- Evergreen Media Corporation Computation of Ratio of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
12.2+ -- Chancellor Broadcasting Company Computation of Ratio of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
21.1+ -- Subsidiaries of Evergreen Media Corporation.
23.1+ -- Consent of Latham & Watkins (included as part of their
opinion listed as Exhibit 5.1).
23.2+ -- Consent of KPMG Peat Marwick LLP, independent
accountants.
23.3+ -- Consent of KPMG Peat Marwick LLP, independent
accountants.
23.4+ -- Consent of Price Waterhouse LLP, independent accountants.
23.5+ -- Consent of Arthur Andersen, LLP, independent accountants.
23.6+ -- Consent of Coopers & Lybrand LLP, independent
accountants.
23.7+ -- Consent of Coopers & Lybrand LLP, independent
accountants.
23.8+ -- Consent of Coopers & Lybrand LLP, independent
accountants.
23.9+ -- Consent of Price Waterhouse LLP, independent accountants.
23.10+ -- Consent of Arthur Andersen LLP, independent accountants.
23.11+ -- Consent of Wasserstein Perella & Co., Inc.
23.12+ -- Consent of Greenhill & Co. L.L.C.
23.13+ -- Consent of Latham & Watkins.
23.14+ -- Consent of Weil, Gotshal & Manges LLP.
24.1 -- Powers of Attorney (included on signature page).
</TABLE>
- ---------------
+ Filed herewith.
(a) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-60036).
(f) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-4, as amended (Reg. No.
33-89838).
(g) Incorporated by reference to Exhibit No. 4.8 to Evergreen's Registration
Statement on Form S-4, as amended (Reg. No. 33-89838).
(h) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 14, 1995.
(i) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated January 17, 1996.
(j) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
September 30, 1995.
<PAGE> 277
(k) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-69752).
(n) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(o) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
March 31, 1996.
(p) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996.
(q) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-3, as amended (Reg. No.
333-12453).
(r) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated February 16, 1997 and filed
March 9, 1997.
(s) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(t) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated April 1, 1997 and filed May 9,
1997.
(u) Incorporated by reference to Exhibit (c)(1) of the Schedule 14D-1 filed by
Chancellor Broadcasting Company, Evergreen Media Corporation and Morris
Acquisition Corporation, dated July 18, 1997.
(v) Incorporated by reference to Exhibit (c)(2) of the Schedule 14D-1 filed by
Chancellor Broadcasting Company, Evergreen Media Corporation and Morris
Acquisition Corporation, dated July 18, 1997.
(w) Incorporated by reference to Exhibit (c)(3) of the Schedule 14D-1 filed by
Chancellor Broadcasting Company, Evergreen Media Corporation and Morris
Acquisition Corporation, dated July 18, 1997.
(x) Incorporated by reference to Exhibit (c)(4) of the Schedule 14D-1 filed by
Chancellor Broadcasting Company, Evergreen Media Corporation and Morris
Acquisition Corporation, dated July 18, 1997.
(z) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 7, 1997 and filed July
31, 1997.
(aa) Incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.
(bb) Incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K
of Chancellor Broadcasting Company, Chancellor Radio Broadcasting Company
and Chancellor Broadcasting Licensee Company for the fiscal year ended
December 31, 1995.
(cc) Incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.
(dd) Incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K
of Chancellor Radio Broadcasting Company, as filed on February 6, 1997.
(ee) Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K
of Chancellor Broadcasting Company, dated July 2, 1997 and filed July 17,
1997.
<PAGE> 1
ANNEX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
CHANCELLOR BROADCASTING COMPANY,
CHANCELLOR RADIO BROADCASTING COMPANY,
EVERGREEN MEDIA CORPORATION,
EVERGREEN MEZZANINE HOLDINGS CORPORATION
AND
EVERGREEN MEDIA CORPORATION OF LOS ANGELES
DATED AS OF FEBRUARY 19, 1997
AMENDED AND RESTATED AS OF JULY 31, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
ARTICLE I
THE MERGER AND SUBSIDIARY MERGER
1.1 THE MERGER AND SUBSIDIARY MERGER................................. A-1
1.2 CLOSING.......................................................... A-2
1.3 EFFECTIVE TIME................................................... A-2
1.4 CERTIFICATES OF INCORPORATION.................................... A-2
1.5 CERTIFICATES OF DESIGNATIONS..................................... A-2
1.6 BYLAWS........................................................... A-3
1.7 DIRECTORS........................................................ A-3
1.8 OFFICERS......................................................... A-4
1.9 EFFECT ON EVERGREEN CAPITAL STOCK................................ A-4
(a) Outstanding Evergreen Common Stock.......................... A-4
(b) Exchange of Certificates.................................... A-4
(c) Outstanding Evergreen Convertible Exchangeable Preferred
Stock..................................................... A-4
1.10 EFFECT ON COMPANY CAPITAL STOCK.................................. A-4
(a) Outstanding Shares.......................................... A-4
(b) Treasury Shares............................................. A-5
(c) Outstanding Company Convertible Preferred Stock............. A-5
(d) Impact of Stock Splits, etc................................. A-5
1.11 EFFECT ON RADIO BROADCASTING CAPITAL STOCK....................... A-5
(a) Outstanding Common Stock of Radio Broadcasting.............. A-5
(b) Outstanding 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock........................................... A-5
(c) Outstanding 12% Exchangeable Preferred Stock................ A-5
1.12 EFFECT ON EMHC CAPITAL STOCK..................................... A-5
1.13 EFFECT ON EMCLA COMMON STOCK..................................... A-5
1.14 EXCHANGE OF CERTIFICATES......................................... A-5
(a) Paying Agent................................................ A-5
(b) Exchange Procedures......................................... A-6
(c) Letter of Transmittal....................................... A-6
(d) Distributions with Respect to Unexchanged Shares............ A-6
(e) No Further Ownership Rights in Shares, Company Convertible
Preferred Stock and Radio Broadcasting Preferred Stock.... A-7
(f) No Fractional Shares........................................ A-7
(g) Termination of Payment Fund................................. A-7
(h) No Liability................................................ A-7
1.15 DISSENTING SHARES................................................ A-8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EVERGREEN
2.1 ORGANIZATION, STANDING AND CORPORATE POWER....................... A-8
2.2 EVERGREEN CAPITAL STRUCTURE...................................... A-9
2.3 AUTHORITY; NONCONTRAVENTION...................................... A-9
2.4 SEC DOCUMENTS.................................................... A-11
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS............................. A-11
2.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS.................. A-11
</TABLE>
A-i
<PAGE> 3
2.7 VOTING REQUIREMENTS.............................................. A-12
2.8 STATE TAKEOVER STATUTES.......................................... A-12
2.9 EVERGREEN FCC LICENSES; OPERATIONS OF EVERGREEN LICENSED
FACILITIES..................................................... A-12
2.10 BROKERS.......................................................... A-13
2.11 OPINION OF FINANCIAL ADVISOR..................................... A-13
2.12 FCC QUALIFICATION................................................ A-13
2.13 COMPLIANCE WITH APPLICABLE LAWS.................................. A-13
2.14 ABSENCE OF UNDISCLOSED LIABILITIES............................... A-13
2.15 LITIGATION....................................................... A-13
2.16 TRANSACTIONS WITH AFFILIATES..................................... A-13
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES OF EMHC AND EMCLA
2A.1 ORGANIZATION, STANDING AND CORPORATE POWER....................... A-14
2A.2 EMHC AND EMCLA CAPITAL STRUCTURE................................. A-14
2A.3 AUTHORITY; NONCONTRAVENTION...................................... A-14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND RADIO BROADCASTING
3.1 ORGANIZATION, STANDING AND CORPORATE POWER....................... A-15
3.2 COMPANY AND RADIO BROADCASTING CAPITAL STRUCTURE................. A-16
3.3 AUTHORITY; NONCONTRAVENTION...................................... A-17
3.4 SEC DOCUMENTS.................................................... A-18
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS............................. A-18
3.6 NO EXTRAORDINARY PAYMENTS OR CHANGE IN BENEFITS.................. A-18
3.7 VOTING REQUIREMENTS.............................................. A-19
3.8 STATE TAKEOVER STATUTES.......................................... A-19
3.9 COMPANY FCC LICENSES; OPERATIONS OF COMPANY LICENSED
FACILITIES..................................................... A-19
3.10 BROKERS.......................................................... A-19
3.11 OPINION OF FINANCIAL ADVISOR..................................... A-20
3.12 FCC QUALIFICATION................................................ A-20
3.13 COMPLIANCE WITH APPLICABLE LAWS.................................. A-20
3.14 ABSENCE OF UNDISCLOSED LIABILITIES............................... A-20
3.15 LITIGATION....................................................... A-20
3.16 TRANSACTIONS WITH AFFILIATES..................................... A-20
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 PREPARATION OF FORM S-4S AND THE JOINT PROXY STATEMENT;
INFORMATION SUPPLIED........................................... A-21
4.2 MEETINGS OF COMPANY STOCKHOLDERS AND EVERGREEN STOCKHOLDERS....
A-22
A-ii
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
4.3 ACCESS TO INFORMATION; CONFIDENTIALITY........................... A-22
4.4 PUBLIC ANNOUNCEMENTS............................................. A-22
4.5 ACQUISITION PROPOSALS............................................ A-23
4.6 CONSENTS, APPROVALS AND FILINGS.................................. A-23
4.7 AFFILIATES LETTERS............................................... A-24
4.8 NASDAQ LISTING................................................... A-24
4.9 STOCKHOLDER LITIGATION........................................... A-24
4.10 INDEMNIFICATION.................................................. A-24
4.11 LETTER OF THE COMPANY'S ACCOUNTANTS.............................. A-24
4.12 LETTER OF EVERGREEN'S ACCOUNTANTS................................ A-24
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
5.1 CONDUCT OF BUSINESS.............................................. A-25
5.2 COMPANY STOCK OPTIONS............................................ A-26
5.3 OTHER ACTIONS.................................................... A-27
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER....... A-27
(a) Stockholder Approval........................................ A-27
(b) FCC Order................................................... A-27
(c) Governmental and Regulatory Consents........................ A-27
(d) HSR Act..................................................... A-28
(e) No Injunctions or Restraints................................ A-28
(f) Nasdaq Listing.............................................. A-28
(g) Form S-4s................................................... A-28
6.2 CONDITIONS TO OBLIGATIONS OF EVERGREEN, EMCLA AND EMHC........... A-28
(a) Representations and Warranties.............................. A-28
(b) Performance of Obligations of the Company and Radio
Broadcasting.............................................. A-28
(c) Tax Opinion................................................. A-28
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY AND RADIO
BROADCASTING..................................................... A-28
(a) Representations and Warranties.............................. A-28
(b) Performance of Obligations of Evergreen, EMCLA and EMHC..... A-29
(c) Tax Opinion................................................. A-29
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION...................................................... A-29
7.2 EFFECT OF TERMINATION............................................ A-29
7.3 AMENDMENT........................................................ A-30
7.4 EXTENSION; WAIVER................................................ A-30
7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER........ A-30
</TABLE>
A-iii
<PAGE> 5
ARTICLE VIII
SURVIVAL OF PROVISIONS
8.1 SURVIVAL......................................................... A-30
ARTICLE IX
NOTICES
9.1 NOTICES.......................................................... A-30
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT................................................. A-32
10.2 EXPENSES......................................................... A-32
10.3 COUNTERPARTS..................................................... A-32
10.4 NO THIRD PARTY BENEFICIARY....................................... A-32
10.5 GOVERNING LAW.................................................... A-32
10.6 ASSIGNMENT; BINDING EFFECT....................................... A-32
10.7 HEADINGS, GENDER, ETC............................................ A-32
10.8 INVALID PROVISIONS............................................... A-32
10.9 VIACOM TRANSACTION............................................... A-32
Annex I Form of Amendment to EMHC Certificate of Incorporation
Annex II Form of Amendment to EMCLA Certificate of Incorporation
Annex III Form of Amended and Restated Certificate of Incorporation of Parent
Annex IV Form of Amended and Restated Bylaws of Parent
Exhibit A Form of Affiliate Letter
Exhibit B Form of Certificate of Chancellor Broadcasting Company
Exhibit C Form of Certificate of Chancellor Radio Broadcasting Company
Exhibit D Form of Certificate of 5% Stockholder of Chancellor Broadcasting
Company
Exhibit E Form of Certificate of Evergreen Media Corporation
Exhibit F Form of Certificate of Evergreen Mezzanine Holdings Corporation
Exhibit G Form of Certificate of Evergreen Media Corporation of Los Angeles
Exhibit H Form of Tax Opinion of Latham & Watkins
Exhibit I Form of Tax Opinion of Weil, Gotshal & Manges LLP
A-iv
<PAGE> 6
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement"),
dated as of February 19, 1997 and amended and restated as of July 31, 1997, by
and among CHANCELLOR BROADCASTING COMPANY, a Delaware corporation (the
"Company"), CHANCELLOR RADIO BROADCASTING COMPANY, a Delaware corporation and a
direct subsidiary of the Company ("Radio Broadcasting"), EVERGREEN MEDIA
CORPORATION, a Delaware corporation ("Evergreen"), EVERGREEN MEDIA CORPORATION
OF LOS ANGELES, a Delaware corporation and a direct subsidiary of Evergreen
("EMCLA"), and EVERGREEN MEZZANINE HOLDINGS CORPORATION, a Delaware corporation
and a direct subsidiary of Evergreen ("EMHC").
RECITALS
WHEREAS, the Company, Radio Broadcasting and Evergreen are parties to that
certain Agreement and Plan of Merger, dated as of February 19, 1997 (the "Old
Agreement");
WHEREAS, Chancellor, Radio Broadcasting and Evergreen desire hereby to
amend and restate the Old Agreement in its entirety and to add EMCLA and EMHC as
parties to the Agreement;
WHEREAS, prior to the Merger and the Subsidiary Merger (each as hereinafter
defined), Evergreen will contribute all of the capital stock of EMCLA to EMHC as
a capital contribution, such that EMCLA shall become a wholly-owned subsidiary
of EMHC;
WHEREAS, in connection with the execution and delivery of the Old
Agreement, the Company and Evergreen entered into that certain Stockholders
Agreement, dated as of February 19, 1997 (the "Stockholders Agreement"), with
(i) certain beneficial and record holders (the "Principal Company Stockholders")
of the Class A Common Stock, $0.01 par value ("Company Class A Common Stock")
and Class B Common Stock, $0.01 par value ("Company Class B Common Stock" and,
collectively with the Company Class A Common Stock, the "Shares"), of the
Company, and (ii) Scott K. Ginsburg, the beneficial and record holder (the
"Principal Evergreen Stockholder") of substantially all of the outstanding Class
B Common Stock, $0.01 par value ("Evergreen Class B Common Stock"), of
Evergreen, which Stockholders Agreement provides for certain matters with
respect to their respective Shares and Evergreen Class B Common Stock, including
among other things, voting such Shares and Evergreen Class B Common Stock in
favor of the adoption of this Agreement; and
WHEREAS, Evergreen, the Company, Radio Broadcasting, EMCLA and EMHC desire
to make certain representations, warranties, covenants and agreements in
connection with such mergers and also to prescribe various conditions to such
mergers;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGER AND SUBSIDIARY MERGER
1.1 The Merger and Subsidiary Merger. Subject to the terms and conditions
of this Agreement, (i) at the Effective Time (as defined in Section 1.3), the
Company shall be merged with and into EMHC (the "Merger"), and thereafter (ii)
at the Subsidiary Merger Effective Time (as defined in Section 1.3) Radio
Broadcasting will be merged with and into EMCLA (the "Subsidiary Merger"), each
in a transaction intended to qualify as a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), in
accordance with the Delaware General Corporation Law (the "Delaware Code"), and
the separate corporate existences of each of the Company and Radio Broadcasting
shall cease and EMHC shall continue as the surviving corporation of the Merger
under the name Chancellor Mezzanine
A-1
<PAGE> 7
Holdings Corporation (as such, the "Surviving Corporation") and EMCLA shall
continue as the surviving corporation of the Subsidiary Merger under the name
Chancellor Media Corporation of Los Angeles (as such, the "Subsidiary Surviving
Corporation"), each under the laws of the State of Delaware with all the rights,
privileges, immunities and powers, and subject to all the duties and
liabilities, of a corporation organized under the Delaware Code. The Merger and
Subsidiary Merger shall have the effects set forth in the Delaware Code.
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") will take place at 10:00
a.m., Dallas, Texas time, on the second business day following the date on which
the last to be fulfilled or waived of the conditions set forth in Article VI
shall be fulfilled or waived in accordance with this Agreement (the "Closing
Date"), at the offices of Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite
1300, Dallas, Texas 75201, unless another date, time or place is agreed to in
writing by the parties hereto. Subject to the consummation of the Merger, the
closing of the Subsidiary Merger (the "Subsidiary Closing") shall take place
(the "Subsidiary Closing Date") at the same location as the Closing but at a
date and time agreed to in writing by the parties hereto.
1.3 Effective Time. The parties hereto will file with the Secretary of
State of the State of Delaware (the "Delaware Secretary of State") on the date
of the Closing and on the date of the Subsidiary Closing (or on such other date
or dates as the parties may agree) certificates of merger or other appropriate
documents, executed in accordance with the relevant provisions of the Delaware
Code, and make all other filings or recordings required under the Delaware Code
in connection with the Merger and the Subsidiary Merger. The Merger and the
Subsidiary Merger shall each become effective upon the filing of the respective
certificate of merger with the Delaware Secretary of State, or at such later
time specified in such certificate of merger (the "Effective Time" and the
"Subsidiary Merger Effective Time" respectively). The Subsidiary Merger shall
not become effective until after the Effective Time.
1.4 Certificates of Incorporation.
(a) The Certificate of Incorporation of EMHC, as amended as set forth in
Annex I hereto, shall be the Certificate of Incorporation of the Surviving
Corporation, and the Certificate of Incorporation of EMCLA, as amended as set
forth in Annex II hereto, shall be the Certificate of Incorporation of the
Subsidiary Surviving Corporation, each until thereafter amended in accordance
with their respective terms and as provided by applicable law. From and after
the Effective Time, the name of the Surviving Corporation shall be Chancellor
Mezzanine Holdings Corporation and after the Subsidiary Merger Effective Time
the name of the Subsidiary Surviving Corporation shall be Chancellor Media
Corporation of Los Angeles.
(b) Concurrently with the execution and delivery of this Agreement, the
Board of Directors of Evergreen has adopted a resolution setting forth and
approving the Amended and Restated Certificate of Incorporation in the form set
forth as Annex III hereto (the "Parent Charter"), and directing that the Parent
Charter be considered by the stockholders of Evergreen at the Evergreen
Stockholders Meeting (as hereinafter defined), all in accordance with the
provisions of the Delaware Code. Prior to the Effective Time of the Merger,
Evergreen shall file with the Delaware Secretary of State a certificate of
amendment to its certificate of incorporation setting forth the Parent Charter,
and from and after the effectiveness of the Parent Charter, the name of
Evergreen shall be changed to Chancellor Media Corporation (as such, the
"Parent").
1.5 Certificates of Designations. At the Subsidiary Merger Effective Time,
the Board of Directors of the Surviving Subsidiary Corporation shall authorize
the designation of two series of preferred stock, $0.01 par value (collectively,
the "Merger Preferred Stock"), of the Subsidiary Surviving Corporation, and at
the Effective Time, the Board of Directors of Parent shall authorize the
designation of a series of preferred stock, $0.01 par value (the "Parent
Convertible Preferred Stock"), so as to permit the Subsidiary Surviving
Corporation and Parent to issue the shares of Merger Preferred Stock and Parent
Convertible Preferred Stock pursuant to Sections 1.10 and 1.11 hereof, and the
Subsidiary Surviving Corporation shall file with the Delaware Secretary of State
immediately following the Subsidiary Merger Effective Time a certificate of
designations with respect to each series of Merger Preferred Stock, and the
Parent shall file with the Delaware
A-2
<PAGE> 8
Secretary of State immediately following the Effective Time a certificate of
designations with respect to the Parent Convertible Preferred Stock, each
pursuant to the Delaware Code.
1.6 Bylaws.
(a) The Bylaws of EMHC in effect immediately prior to the Merger shall be
the Bylaws of the Surviving Corporation, and the Bylaws of EMCLA in effect
immediately prior to the Subsidiary Merger shall be the Bylaws of the Subsidiary
Surviving Corporation, each until thereafter amended in accordance with their
terms and as provided by applicable law.
(b) Concurrently with the execution and delivery of this Agreement, the
Board of Directors of Evergreen has adopted the Amended and Restated Bylaws set
forth in Annex IV, to be effective as of the Effective Time, and such Bylaws
shall be the Bylaws of Parent until thereafter amended in accordance with their
terms and as provided by applicable law.
1.7 Directors. The directors of Parent at the Effective Time shall be as
set forth below:
Class I Directors
Eric C. Neuman
Perry J. Lewis
Class II Directors
Lawrence D. Stuart, Jr.
Steven Dinetz
Jeffrey A. Marcus
James E. de Castro
Class III Directors
Thomas O. Hicks
Scott K. Ginsburg
John H. Massey
Thomas J. Hodson
The directors of the Surviving Corporation and the Subsidiary Surviving
Corporation immediately following the Effective Time and Subsidiary Merger
Effective Time, respectively, shall be the same as the directors of the Parent
set forth in this Section 1.7, except that such directors will not be classified
as to term.
In addition, prior to the Effective Time, the Board of Directors of the
Company shall be entitled to nominate one additional individual reasonably
satisfactory to Evergreen, and such nominee, if any, shall become a Class I
director of Parent at the Effective Time, and a director of the Surviving
Corporation and Subsidiary Surviving Corporation at the Effective Time and
Subsidiary Merger Effective Time, respectively. At or prior to the Effective
Time, the Board of Directors of Evergreen and EMHC shall deliver or cause to be
delivered to the Company (i) the resignations of each of the then current
directors of Evergreen that is not designated to be a director of the Parent and
the Surviving Corporation as set forth in this Section 1.7, to be effective as
of the Effective Time (the "Board Resignations"), and (ii) certified copies of
the resolutions of the remaining members of the Board of Directors of Evergreen
and the sole director of EMHC appointing the Board of Directors of Parent and
EMHC, respectively, as set forth in this Section 1.7, to be effective as of the
Effective Time (the "Parent and EMHC Board Appointments"). In addition, at or
prior to the Subsidiary Merger Effective Time, the sole director of EMCLA shall
deliver or cause to be delivered to the Company certified copies of the
resolutions of the remaining members of the Board of Directors of EMCLA
appointing the Board of Directors of EMCLA as set forth in this Section 1.7, to
be effective as of the Subsidiary Merger Effective Time (the "EMCLA Board
Appointments" and, collectively with the Parent and EMHC Board Appointments, the
"Board Appointments"). Each Class I director, Class II director and Class III
director of Parent will hold office from the Effective Time until the 1998, 1999
and 2000 annual meetings of Parent, respectively, and in all cases, until his or
her respective successor is duly elected or appointed and qualified in
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the manner provided in the Certificate of Incorporation or Bylaws of Parent, or
as otherwise provided by applicable law. Each director of the Surviving
Corporation and the Subsidiary Surviving Corporation will hold office from the
Effective Time and Subsidiary Merger Effective Time, respectively, and until his
or her respective successor is duly elected or appointed and qualified in the
manner provided in the Surviving Corporation's and Subsidiary Surviving
Corporation's respective Certificate of Incorporation and Bylaws or as otherwise
provided by applicable law.
1.8 Officers. The initial senior executive officers of Parent and the
Surviving Corporation at the Effective Time and of the Subsidiary Surviving
Corporation at the Subsidiary Merger Effective Time shall be as set forth below:
<TABLE>
<S> <C>
Thomas O. Hicks.......................... Chairman of the Board
Scott K. Ginsburg........................ President and Chief Executive Officer
Steven Dinetz............................ Co-Chief Operating Officer
James E. de Castro....................... Co-Chief Operating Officer
Matthew E. Devine........................ Chief Financial Officer
</TABLE>
Each such officer of Parent and the Surviving Corporation will hold office
from the Effective Time and each such officer of the Subsidiary Surviving
Corporation will hold office from the Subsidiary Merger Effective Time, and in
each case, until his respective successor is duly elected or appointed and
qualified in the manner provided in the respective Certificate of Incorporation
and Bylaws of each of Parent, the Surviving Corporation and Subsidiary Surviving
Corporation, or as otherwise provided by applicable law. The names, titles and
responsibilities of the other individuals who initially will hold officerships
with Parent, the Surviving Corporation and Subsidiary Surviving Corporation
shall be determined by Evergreen and the Company prior to the Effective Time,
and the election of these persons shall be considered by the Board of Directors
of each of Parent and the Surviving Corporation following the Effective Time and
by the Board of Directors of the Subsidiary Surviving Corporation following the
Subsidiary Merger Effective Time.
1.9 Effect On Evergreen Capital Stock. (a) Outstanding Evergreen Common
Stock. Each of the shares of Evergreen Class B Common Stock and Class A Common
Stock, $0.01 par value, of Evergreen ("Evergreen Class A Common Stock" and
collectively with the Evergreen Class B Common Stock, the "Evergreen Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than shares of Evergreen Common Stock held as treasury shares by Evergreen)
shall, by virtue of the effectiveness of the Parent Charter and without any
action on the part of the holder thereof, be reclassified, changed and converted
into one validly issued, fully paid and nonassessable share of the common stock,
$0.01 par value ("Parent Common Stock"), of Parent.
(b) Exchange of Certificates. Evergreen shall instruct its transfer agent
that from and after the Effective Time, upon the presentation for transfer of
any shares of Evergreen Common Stock or at the request of any holder thereof,
the transfer agent shall issue to the transferee or holder thereof certificates
representing that number of shares of Parent Common Stock into which such shares
of Evergreen Common Stock were reclassified, changed and converted pursuant to
the effectiveness of the Parent Charter.
(c) Outstanding Evergreen Convertible Exchangeable Preferred Stock. Each
share of $3.00 Convertible Exchangeable Preferred Stock, $0.01 par value (the
"Evergreen Convertible Exchangeable Preferred Stock"), of Evergreen outstanding
upon the effectiveness of the Parent Charter shall remain outstanding and shall
become shares of preferred stock of Parent having the powers, preferences and
relative rights set forth in the certificate of designation creating the
Evergreen Convertible Exchangeable Preferred Stock.
1.10 Effect On Company Capital Stock. (a) Outstanding Shares. Each of the
Shares of the Company issued and outstanding immediately prior to the Effective
Time (other than Shares held as treasury shares by the Company) shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into a right to receive 0.9091 validly issued, fully paid and
nonassessable shares of Parent Common Stock (the "Exchange Ratio"). The shares
of Parent Common Stock to be issued to holders of Shares in accordance with this
Section 1.10(a), any cash to be paid in accordance with Section 1.14(f) in lieu
of fractional shares of Parent Common Stock, and the shares of Merger Preferred
Stock and Parent Convertible
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Preferred Stock to be issued to holders of Company Convertible Preferred Stock
(as hereinafter defined) and Radio Broadcasting Preferred Stock (as hereinafter
defined) are referred to collectively as the "Merger Consideration."
(b) Treasury Shares. Each Share issued and outstanding immediately prior to
the Effective Time which is then held as a treasury share by the Company shall,
by virtue of the Merger and without any action on the part of the Company, be
cancelled and retired and cease to exist, without any conversion thereof.
(c) Outstanding Company Convertible Preferred Stock. Each share (other than
a Dissenting Share, as defined in Section 1.15 below) of 7% Convertible
Preferred Stock, par value $0.01 per share ("Company Convertible Preferred
Stock"), of the Company outstanding immediately prior to the Effective Time
shall be converted into a right to receive one share of Parent Convertible
Preferred Stock having substantially identical powers, preferences and relative
rights as the Company Convertible Preferred Stock.
(d) Impact of Stock Splits, etc. In the event of any change in Evergreen
Common Stock and/or Shares between the date of this Agreement and the Effective
Time of the Merger by reason of any stock split, stock dividend, subdivision,
reclassification, recapitalization, combination, exchange of shares or the like,
the number and class of shares of Parent Common Stock to be issued and delivered
in the Merger in exchange for each outstanding Share as provided in this
Agreement shall be proportionately adjusted.
1.11 Effect On Radio Broadcasting Capital Stock. (a) Outstanding Common
Stock of Radio Broadcasting. Each of the shares of common stock, $0.01 par
value, of Radio Broadcasting issued and outstanding immediately prior to the
Subsidiary Merger Effective Time shall, by virtue of the Subsidiary Merger, be
cancelled, and no consideration shall be delivered in exchange therefor.
(b) Outstanding 12 1/4% Series A Senior Cumulative Exchangeable Preferred
Stock. Each share (other than a Dissenting Share) of 12 1/4% Series A Senior
Cumulative Exchangeable Preferred Stock, par value $0.01 per share ("Radio
Broadcasting 12 1/4% Preferred Stock"), of Radio Broadcasting outstanding
immediately prior to the Subsidiary Merger Effective Time shall be converted
into a right to receive one share of preferred stock of the Subsidiary Surviving
Corporation having substantially identical powers, preferences and relative
rights as the Radio Broadcasting 12 1/4% Preferred Stock.
(c) Outstanding 12% Exchangeable Preferred Stock. Each share (other than a
Dissenting Share) of 12% Exchangeable Preferred Stock, par value $0.01 per share
("Radio Broadcasting 12% Preferred Stock" and, collectively with the Radio
Broadcasting 12 1/4% Preferred Stock, the "Radio Broadcasting Preferred Stock"),
of Radio Broadcasting outstanding immediately prior to the Subsidiary Merger
Effective Time shall be converted into a right to receive one share of preferred
stock of the Subsidiary Surviving Corporation having substantially identical
powers, preferences and relative rights as the Radio Broadcasting 12% Preferred
Stock.
1.12 Effect On EMHC Capital Stock. Each of the shares of common stock,
$0.01 par value ("EMHC Common Stock"), of EMHC issued and outstanding
immediately prior to the Effective Time shall remain outstanding and, following
the Merger, shall represent all of the issued and outstanding capital stock of
the Surviving Corporation.
1.13 Effect On EMCLA Common Stock. Each of the shares of common stock,
$0.01 par value ("EMCLA Common Stock"), of EMCLA issued and outstanding
immediately prior to the Subsidiary Merger Effective Time shall remain
outstanding and, following the Subsidiary Merger, shall represent all of the
issued and outstanding common stock of the Subsidiary Surviving Corporation.
1.14 Exchange Of Certificates. (a) Paying Agent. As of the Effective Time,
Parent shall deposit with its transfer agent and registrar (the "Paying Agent"),
for the benefit of the holders of Shares and Company Convertible Preferred Stock
(other than holders of Dissenting Shares), and as of the Subsidiary Merger
Effective Time, the Subsidiary Surviving Corporation shall deposit with the
Paying Agent, for the benefit of the holders of Radio Broadcasting Preferred
Stock (other than holders of Dissenting Shares), certificates representing the
shares of Parent Common Stock, Parent Convertible Preferred Stock and Merger
Preferred Stock to be issued to such holders pursuant to Sections 1.10 and 1.11
(such certificates, together with any
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dividends or distributions with respect to such certificates and any cash paid
in lieu of fractional shares pursuant to Section 1.14(f), being hereinafter
referred to as the "Payment Fund").
(b) Exchange Procedures. As soon as practicable after the Effective Time
and the Subsidiary Merger Effective Time, as applicable, each holder of an
outstanding certificate or certificates which prior thereto represented Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock shall, upon surrender to the Paying Agent of such certificate or
certificates and acceptance thereof by the Paying Agent, be entitled to a
certificate representing that number of whole shares of Parent Common Stock,
Parent Convertible Preferred Stock or Merger Preferred Stock which the aggregate
number of Shares, shares of Company Convertible Preferred Stock or shares of
Radio Broadcasting Preferred Stock previously represented by such certificate or
certificates surrendered shall have been converted into the right to receive
pursuant to Sections 1.10 and 1.11 of this Agreement (with respect to the Parent
Common Stock, including any cash to be received in lieu of fractional shares, as
provided in Section 1.14(f) below). The Paying Agent shall accept such
certificates upon compliance with such reasonable terms and conditions as the
Paying Agent may impose to effect an orderly exchange thereof in accordance with
its normal exchange practices. If the Merger Consideration (or any portion
thereof) is to be delivered to any person other than the person in whose name
the certificate or certificates representing Shares, shares of Company
Convertible Preferred Stock or shares of Radio Broadcasting Preferred Stock
surrendered in exchange therefor is registered, it shall be a condition to such
exchange that the certificate or certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the person
requesting such exchange shall pay to the Paying Agent any transfer or other
taxes required by reason of the payment of such consideration to a person other
than the registered holder of the certificate(s) surrendered, or shall establish
to the satisfaction of the Paying Agent that such tax has been paid or is not
applicable. After the Effective Time, there shall be no further transfer on the
records of the Company, and after the Subsidiary Merger Effective Time, there
shall be no further transfer on the records of Radio Broadcasting or, in each
case, their respective transfer agents, of certificates representing Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock and if such certificates are presented to the Surviving
Corporation or Subsidiary Surviving Corporation for transfer, they shall be
cancelled against delivery of the appropriate Merger Consideration as
hereinabove provided. Until surrendered as contemplated by this Section 1.14(b),
each certificate representing Shares, shares of Company Convertible Preferred
Stock and shares of Radio Broadcasting Preferred Stock (other than certificates
representing treasury Shares to be cancelled in accordance with Section
1.10(b)), shall be deemed at any time after the Effective Time and Subsidiary
Merger Effective Time, as applicable, to represent only the right to receive
upon such surrender the appropriate Merger Consideration, without any interest
thereon, as contemplated by Sections 1.10 and 1.11.
(c) Letter of Transmittal. Promptly after the Effective Time and the
Subsidiary Merger Effective Time, as applicable (but in no event more than five
business days thereafter), Parent and the Subsidiary Surviving Corporation, as
appropriate, shall require the Paying Agent to mail to each record holder of
certificates that immediately prior to the Effective Time represented Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock which have been converted pursuant to Sections 1.10 and 1.11, a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
certificates representing Shares, shares of Company Convertible Preferred Stock
or shares of Radio Broadcasting Preferred Stock to the Paying Agent, and which
shall be in such form and have such provisions as Parent and the Subsidiary
Surviving Corporation reasonably may specify) and instructions for use in
surrendering such certificates and receiving the consideration to which such
holder shall be entitled therefor pursuant to Sections 1.10 and 1.11.
(d) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock or Parent Convertible
Preferred Stock with a record date after the Effective Time, or with respect to
Merger Preferred Stock with a record date after the Subsidiary Merger Effective
Time, shall be paid to the holder of any certificate that immediately prior to
the Effective Time represented Shares or shares of Company Convertible Preferred
Stock or immediately prior to the Subsidiary Merger Effective Time represented
shares of Radio Broadcasting Preferred Stock which have been converted pursuant
to Sections 1.10 or 1.11, until the surrender for exchange of such certificate
in accordance with this Article I.
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Following surrender for exchange of any such certificate, there shall be paid to
the holder of such certificate, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time or Subsidiary Merger Effective Time, as applicable,
theretofore paid with respect to the number of whole shares of Parent Common
Stock, Parent Convertible Preferred Stock or Merger Preferred Stock into which
the Shares, shares of Company Convertible Preferred Stock or shares of Radio
Broadcasting Preferred Stock represented by such certificate immediately prior
to the Effective Time and the Subsidiary Merger Effective Time, as applicable,
were converted pursuant to Sections 1.10 or 1.11, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time or Subsidiary Merger Effective Time, as applicable, but
prior to such surrender, and with a payment date subsequent to such surrender,
payable with respect to such whole shares of Parent Common Stock, Parent
Convertible Preferred Stock or Merger Preferred Stock.
(e) No Further Ownership Rights in Shares, Company Convertible Preferred
Stock and Radio Broadcasting Preferred Stock. The Merger Consideration (or, in
respect of Dissenting Shares, the cash payment therefor) paid upon the surrender
for exchange of certificates representing Shares, shares of Company Convertible
Preferred Stock or shares of Radio Broadcasting Preferred Stock in accordance
with the terms of this Article I shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to the Shares, shares of Company
Convertible Preferred Stock or shares of Radio Broadcasting Preferred Stock
theretofore represented by such certificates, subject, however, to Parent's or
the Subsidiary Surviving Corporation's obligation (if any) to pay any dividends
or make any other distributions with a record date prior to the Effective Time
or Subsidiary Merger Effective Time, as applicable, which may have been declared
by the Company or Radio Broadcasting, as appropriate, on the Shares, shares of
Company Convertible Preferred Stock, or shares of Radio Broadcasting Preferred
Stock in accordance with the terms of this Agreement (or, with respect to the
Company Convertible Preferred Stock and Radio Broadcasting Preferred Stock, in
accordance with their respective terms) or prior to the date of this Agreement
and which remain unpaid at the Effective Time or Subsidiary Merger Effective
Time.
(f) No Fractional Shares. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
certificates that immediately prior to the Effective Time represented Shares
which have been converted pursuant to Section 1.10, and each holder of Shares
who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Parent Common Stock
multiplied by the closing price per share of Evergreen Class A Common Stock on
the Nasdaq National Market on the trading day immediately prior to the Effective
Time.
(g) Termination of Payment Fund. Any portion of the Payment Fund which
remains undistributed to the holders of the certificates representing Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock for 120 days after the Effective Time and Subsidiary Merger
Effective Time, as applicable, shall be delivered to Parent or the Subsidiary
Surviving Corporation, as applicable, upon demand, and any holders of Shares,
shares of Company Convertible Preferred Stock or shares of Radio Broadcasting
Preferred Stock who have not theretofore complied with this Article I shall
thereafter look only to Parent or the Subsidiary Surviving Corporation, as
appropriate, and only as general creditors thereof for payment of their claims
for any Merger Consideration and any dividends or distributions with respect to
Parent Common Stock, Parent Convertible Preferred Stock or Merger Preferred
Stock.
(h) No Liability. None of Evergreen, the Company, Radio Broadcasting, EMHC,
EMCLA or the Paying Agent shall be liable to any person in respect of any cash,
shares, dividends or distributions payable from the Payment Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any certificates representing Shares, shares of Company
Convertible Preferred Stock or shares of Radio Broadcasting Preferred Stock
shall not have been surrendered prior to five years after the Effective Time or
Subsidiary Merger Effective Time, as applicable (or immediately prior to such
earlier date on which any Merger Consideration in respect of such certificate
would otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 2.3)), any such cash, shares, dividends or distributions
payable in respect of such certificate shall, to the extent permitted by
applicable law, become the
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property of Parent or the Subsidiary Surviving Corporation, as appropriate, free
and clear of all claims or interest of any person previously entitled thereto.
1.15 Dissenting Shares. Notwithstanding anything herein to the contrary in
this Agreement, shares of Company Convertible Preferred Stock or Radio
Broadcasting Preferred Stock, as applicable, outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or Subsidiary Merger, as applicable, or consented thereto and who properly
demands in writing appraisal of such shares of Company Convertible Preferred
Stock or Radio Broadcasting Preferred Stock in accordance with Section 262 of
the Delaware Code and who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights, shall not be converted into or represent the right
to receive the appropriate Merger Consideration therefor ("Dissenting Shares").
Such stockholders shall be entitled to receive payment of the appraised value of
such shares of Company Convertible Preferred Stock or Radio Broadcasting
Preferred Stock, as the case may be, held by them in accordance with the
provisions of Section 262 of the Delaware Code, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such securities under
Section 262 shall thereupon be deemed to have been converted into, as of the
Effective Time or Subsidiary Merger Effective Time, as applicable, the right to
receive, without any interest thereon, the applicable Merger Consideration, upon
surrender, in the manner provided in this Article I, of the certificate or
certificates that formerly represented such securities. The Company shall take
all actions required to be taken by it in accordance with Section 262(d)(1) of
the Delaware Code with respect to the holders of Company Convertible Preferred
Stock as of the record date for the Stockholders Meeting (as defined in Section
4.2(a)) and shall otherwise comply with the provisions of Section 262 of the
Delaware Code. Radio Broadcasting and EMCLA or the Subsidiary Surviving
Corporation, as applicable, shall, prior to or within ten days after the
Subsidiary Merger Effective Time, take all actions required to be taken by it
pursuant to Section 262(d)(2) of the Delaware Code with respect to all holders
of record, as of the Subsidiary Merger Effective Time or such earlier record
date as may be declared by the Board of Directors of Radio Broadcasting, of the
Radio Broadcasting Preferred Stock. The Company and Radio Broadcasting shall
give Evergreen and EMCLA prompt written notice of any demands for appraisal
received by the Company or Radio Broadcasting with respect to the Company
Convertible Preferred Stock or the Radio Broadcasting Preferred Stock,
withdrawals of such demands, and any other instruments served pursuant to
Delaware law and received by the Company or Radio Broadcasting, and Evergreen or
EMCLA shall have the right to participate in all negotiations and proceedings
with respect to such demands. Prior to the Effective Time or the Subsidiary
Merger Effective Time, as applicable, the Company and Radio Broadcasting shall
not, except with the prior written consent of Evergreen or EMCLA, make any
payments with respect to any demands for appraisal, or settle or offer to
settle, any such demands.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EVERGREEN
Evergreen represents and warrants to the Company and Radio Broadcasting, as
of February 19, 1997 (except to the extent specifically made as of an earlier
date or the date hereof), as follows:
2.1 Organization, Standing and Corporate Power. Evergreen and each of its
Significant Subsidiaries (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Evergreen and each of its
Significant Subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect on the business, properties, results of
operations, or condition (financial or otherwise) of Evergreen and its
subsidiaries, considered as a whole (an "Evergreen Material Adverse Effect");
provided, however, that for purposes of Sections 2.13, 2.14, 2.15 and 2.16, no
fact, event or circumstance shall be deemed to constitute an Evergreen Material
Adverse Effect unless, in addition to otherwise satisfying the elements of the
definition given above, the relevant fact, event or circumstance not disclosed
pursuant to such representations would be material facts or circumstances, the
omission of which in
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a document filed with the SEC (as hereinafter defined) pursuant to the Exchange
Act would be such as to cause the statements contained in such filings to be
misleading within the meaning of Rule 10b-5 under the Exchange Act. Evergreen
has delivered to the Company and Radio Broadcasting complete and correct copies
of its Certificate of Incorporation and Bylaws, as amended to the date of the
Old Agreement. For purposes of this Agreement, a "Significant Subsidiary" of any
person means any subsidiary of such person that would constitute a "significant
subsidiary" within the meaning of Rule 1-02 of Regulation S-X of the Securities
and Exchange Commission (the "SEC").
2.2 Evergreen Capital Structure. The authorized capital stock of Evergreen
consists of (i) 75,000,000 shares of Evergreen Class A Common Stock, (ii)
4,500,000 shares of Evergreen Class B Common Stock and (iii) 6,000,000 shares of
preferred stock, $0.01 par value (the "Preferred Stock"). At the close of
business on February 18, 1997: (i) 39,100,750 shares of Evergreen Class A Common
Stock were issued and outstanding, 1,720,091 shares of Evergreen Class A Common
Stock were reserved for issuance pursuant to outstanding options or warrants to
purchase Evergreen Class A Common Stock which have been granted to directors,
officers or employees of Evergreen or others ("Evergreen Stock Options"); (ii)
3,114,066 shares of Evergreen Class B Common Stock were issued and outstanding
and no shares of Evergreen Class B Common Stock were reserved for issuance for
any purpose; and (iii) no shares of Preferred Stock were issued and outstanding.
Except as set forth above, at the close of business on February 18, 1997, no
shares of capital stock or other equity securities of Evergreen were authorized,
issued, reserved for issuance or outstanding. All outstanding shares of capital
stock of Evergreen are, and all shares which may be issued pursuant to
Evergreen's stock option plans, as amended to the date hereof (the "Evergreen
Stock Option Plans"), or any outstanding Evergreen Stock Options will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. No bonds, debentures, notes or other indebtedness
of Evergreen or any subsidiary of Evergreen having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which the stockholders of Evergreen or any subsidiary of
Evergreen may vote are issued or outstanding. All the outstanding shares of
capital stock of each subsidiary of Evergreen have been validly issued and are
fully paid and nonassessable and are owned by Evergreen, by one or more
wholly-owned subsidiaries of Evergreen or by Evergreen and one or more such
wholly-owned subsidiaries, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), except for Liens arising out of EMCLA's senior credit
facility and senior notes and those that, individually or in the aggregate,
could not reasonably be expected to have an Evergreen Material Adverse Effect.
Except as set forth above and except for certain provisions of the Certificate
of Incorporation of Evergreen relating to transfers of Evergreen Class B Common
Stock and to "alien ownership", neither Evergreen nor any subsidiary of
Evergreen has any outstanding option, warrant, subscription or other right,
agreement or commitment that either (i) obligates Evergreen or any subsidiary of
Evergreen to issue, sell or transfer, repurchase, redeem or otherwise acquire or
vote any shares of the capital stock of Evergreen or any Significant Subsidiary
of Evergreen or (ii) restricts the transfer of Evergreen Common Stock. No shares
of capital stock of Evergreen are owned of record or beneficially by any
subsidiary of Evergreen. Since the close of business on February 18, 1997 to the
date of the Old Agreement, neither Evergreen nor any subsidiary of Evergreen
issued any capital stock or securities or other rights convertible into or
exercisable or exchangeable for shares of such capital stock other than
securities issued upon the exercise of Evergreen Stock Options outstanding on
February 18, 1997 or other convertible securities outstanding on February 18,
1997.
2.3 Authority; Noncontravention. Evergreen has the requisite corporate
power and authority to enter into this Agreement and, subject to the approval of
its stockholders as set forth in Section 6.1(a) with respect to the consummation
of the Merger and Subsidiary Merger, adoption of the Parent Charter, and the
issuance of shares of Parent Common Stock and assumption of Company Stock
Options (as defined in Section 3.2) in the Merger (the "Evergreen Stockholder
Approval"), to consummate the transactions contemplated by this Agreement. As of
the date hereof, the execution and delivery of this Agreement by Evergreen and
the consummation by Evergreen of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Evergreen,
subject, in the case of the Merger, adoption of the Parent Charter, and the
issuance of Parent Common Stock and assumption of Company Stock Options in the
Merger, to the Evergreen Stockholder Approval. As of the date hereof, this
Agreement has been duly executed and delivered by Evergreen and, assuming this
Agreement constitutes the valid and binding
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agreement of EMHC, EMCLA, the Company and Radio Broadcasting, constitutes a
valid and binding obligation of Evergreen, enforceable against Evergreen in
accordance with its terms except that the enforcement thereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditor's rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not, (i) conflict with any of the
provisions of the Certificate of Incorporation or Bylaws of Evergreen or the
comparable documents of any subsidiary of Evergreen, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
conflict with, result in a breach of or 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 loss of a material benefit under, or require
the consent of any person under, any indenture or other agreement, permit,
concession, franchise, license or similar instrument or undertaking to which
Evergreen or any of its subsidiaries is a party or by which Evergreen or any of
its subsidiaries or any of their assets is bound or affected, (iii) result in an
obligation by Evergreen, Parent or any of their respective subsidiaries to
redeem, repurchase or retire (or offer to redeem, repurchase or retire) any
outstanding debt (other than EMCLA's senior credit facility and senior notes) or
equity security of Evergreen, Parent or any of their respective subsidiaries, or
(iv) subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any order,
writ, judgment, injunction, decree, determination or award currently in effect,
except for (x) conflicts, breaches, defaults or other consequences
(collectively, "breaches") referred to above with respect to EMCLA's senior
credit facility and senior notes, (y) breaches resulting from Parent's ownership
of radio stations in certain markets where such ownership may be in excess of
the numerical limits imposed on local multiple radio station ownership under the
Telecommunications Act of 1996, together with the rules and regulations
thereunder (collectively, the "1996 Telecom Act") or where such ownership
otherwise may be subject to challenge by any Governmental Entity under any
antitrust or similar law, rule or regulation, or (z) breaches that, individually
or in the aggregate, could not reasonably be expected to have an Evergreen
Material Adverse Effect or to materially hinder Evergreen's ability to
consummate the transactions contemplated by this Agreement. No consent, approval
or authorization of, or declaration or filing with, or notice to, any
governmental agency or regulatory authority (a "Governmental Entity") which has
not been received or made, is required by or with respect to Evergreen or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by Evergreen or the consummation by Evergreen of the transactions contemplated
hereby, except for (i) the filing of premerger notification and report forms
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), with respect to the Merger and the Subsidiary Merger and the
termination or earlier expiration of the applicable waiting periods thereunder,
(ii) such filings with and approvals required by the Federal Communications
Commission or any successor entity (the "FCC") under the Communications Act of
1934, as amended, and the rules, regulations and policies of the FCC promulgated
thereunder (collectively, the "Communications Act") including those required in
connection with the transfer of control of FCC Licenses (as defined in Section
3.9) for the operation of the Company Licensed Facilities (as defined in Section
3.9) and the transfer of control of the Evergreen FCC Licenses (as defined in
Section 2.9), (iii) the filing of (x) the registration statements on Form S-4 to
be filed with the SEC by Evergreen and EMCLA in connection with the issuance of
Parent Common Stock and the Convertible Preferred Stock in the Merger (the
"Evergreen Form S-4"), and the issuance of Merger Preferred Stock in the
Subsidiary Merger (the "EMCLA Form S-4" and, collectively with the Evergreen
Form S-4, the "Form S-4s") and the declaration of effectiveness of each of the
Form S-4s by the SEC, (y) a proxy statement to be filed with the SEC by
Evergreen relating to the Evergreen Stockholder Approval (such proxy statement,
together with the proxy statement relating to the approval of this Agreement and
the Merger by the holders of Shares (the "Company Stockholder Approval"), in
each case as amended or supplemented from time to time, the "Joint Proxy
Statement"), and (z) such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, and (iv) the
filing of the certificates of merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company and Radio Broadcasting are qualified to do business.
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2.4 SEC Documents. (i) Evergreen has filed all required reports, schedules,
forms, statements and other documents with the SEC since January 1, 1995 (such
reports, schedules, forms, statements and other documents are hereinafter
referred to as the "SEC Documents"); (ii) as of their respective dates, the SEC
Documents complied with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; and (iii) the
consolidated financial statements of Evergreen included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
as permitted by Rule 10-01 of Regulation S-X) and fairly present, in all
material respects, the consolidated financial position of Evergreen and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (on the basis
stated therein and subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments).
2.5 Absence of Certain Changes or Events. Except as disclosed in the SEC
Documents filed and publicly available prior to the date of this Agreement (the
"Filed SEC Documents") and except as disclosed in writing by Evergreen to the
Company prior to the execution and delivery of the Old Agreement, or as it
relates to the Viacom Transaction (as defined in Section 10.9), since the date
of the most recent audited financial statements included in the Filed SEC
Documents, Evergreen and its subsidiaries have conducted their business only in
the ordinary course, and there has not been (i) any change which could
reasonably be expected to have an Evergreen Material Adverse Effect (including
as a result of the consummation of the transactions contemplated by this
Agreement), (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
Evergreen's currently outstanding capital stock, (iii) any split, combination or
reclassification of any of its outstanding capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its outstanding capital stock, (iv) (x) any
granting by Evergreen or any of its subsidiaries to any director, officer or
other employee or independent contractor of Evergreen or any of its subsidiaries
of any increase in compensation or acceleration of benefits, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents, (y) any granting by
Evergreen or any of its subsidiaries to any director, officer or other employee
or independent contractor of any increase in, or acceleration of benefits in
respect of, severance or termination pay, or pay in connection with any change
of control of Evergreen, except in the ordinary course of business consistent
with prior practice or as was required under any employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents or (z) any entry by
Evergreen or any of its subsidiaries into any employment, severance, change of
control, or termination or similar agreement with any director, executive
officer or other employee or independent contractor, or (v) any change in
accounting methods, principles or practices by Evergreen or any of its
subsidiaries materially affecting its assets, liability or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
2.6 No Extraordinary Payments or Change in Benefits. Except as disclosed in
writing by Evergreen to the Company prior to the execution and delivery of the
Agreement, no current or former director, officer, employee or independent
contractor of Evergreen or any of its subsidiaries is entitled to receive any
payment under any agreement, arrangement or policy (written or oral) relating to
employment, severance, change of control, termination, stock options, stock
purchases, compensation, deferred compensation, fringe benefits or other
employee benefits currently in effect (collectively, the "Evergreen Benefit
Plans"), nor will any benefit received or to be received by any current or
former director, officer, employee or independent contractor of Evergreen or any
of its subsidiaries under any Evergreen Benefit Plan be accelerated or modified,
as a result of
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or in connection with the execution and delivery of, or the consummation of the
transactions contemplated by, this Agreement.
2.7 Voting Requirements. The affirmative vote of the holders of at least a
majority of the votes entitled to be cast by the holders of the outstanding
Evergreen Common Stock, voting as a single class, entitled to vote thereon at
the Evergreen Stockholders Meeting with respect to the approval of this
Agreement, the Merger, the issuance of shares of Parent Common Stock and the
assumption of Company Stock Options in the Merger, and the Parent Charter, and
the affirmative vote of the holders of at least a majority of the votes entitled
to be cast by the holders of the outstanding Evergreen Class B Common Stock,
voting as a separate class, with respect to the adoption of the Parent Charter,
are the only votes of the holders of any class or series of Evergreen's capital
stock necessary to approve this Agreement, the issuance of shares of Parent
Common Stock and the assumption of Company Stock Options in the Merger, the
Parent Charter and the transactions contemplated by this Agreement.
2.8 State Takeover Statutes. The Board of Directors of Evergreen has
approved the terms of this Agreement and the Stockholders Agreement and the
consummation of the transactions contemplated by this Agreement and by the
Stockholders Agreement, and such approval is sufficient to render inapplicable
to the Merger, the Subsidiary Merger and the other transactions contemplated by
this Agreement and by the Stockholders Agreement the provisions of Section 203
of the Delaware Code. To Evergreen's knowledge, no other state takeover statute
or similar statute or regulation applies or purports to apply to the Merger, the
Subsidiary Merger, this Agreement, the Stockholders Agreement or any of the
transactions contemplated by this Agreement or the Stockholders Agreement and no
provision of the Certificate of Incorporation, Bylaws or other governing
instrument of Evergreen or any of its subsidiaries would, directly or
indirectly, restrict or impair the ability of Evergreen or any of its
subsidiaries to consummate the transactions contemplated by this Agreement or
the Stockholders Agreement.
2.9 Evergreen FCC Licenses; Operations of Evergreen Licensed
Facilities. Evergreen and its subsidiaries have operated the radio stations for
which Evergreen and any of its subsidiaries holds licenses from the FCC, in each
case which are owned or operated by Evergreen and its subsidiaries (the
"Evergreen Licensed Facilities",) in material compliance with the terms of the
licenses issued by the FCC to Evergreen and its subsidiaries (the "Evergreen FCC
Licenses") (complete and correct copies of each of which have been made
available to the Company and Radio Broadcasting), and in material compliance
with the Communications Act, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to have an Evergreen
Material Adverse Effect. Evergreen and its subsidiaries have, since acquired by
Evergreen, timely filed or made all applications, reports and other disclosures
required by the FCC to be made with respect to the Evergreen Licensed Facilities
and have timely paid all FCC regulatory fees with respect thereto, except where
the failure to do so could not, individually or in the aggregate, reasonably be
expected to have an Evergreen Material Adverse Effect. Evergreen and each of its
subsidiaries have, and are the authorized legal holders of, all the Evergreen
FCC Licenses necessary or used in the operation of the businesses of the
Evergreen Licensed Facilities as presently operated. All such Evergreen FCC
Licenses are validly held and are in full force and effect, unimpaired by any
act or omission of Evergreen, each of its subsidiaries (or, to Evergreen's
knowledge, their respective predecessors) or their respective officers,
employees or agents, except where such impairments could not, individually or in
the aggregate, reasonably be expected to have an Evergreen Material Adverse
Effect. As of the date hereof, except as disclosed in writing by Evergreen to
the Company prior to the execution and delivery of this Agreement, no
application, action or proceeding is pending for the renewal or material
modification of any of the Evergreen FCC Licenses and, to Evergreen's knowledge,
there is not now before the FCC any material investigation, proceeding, notice
of violation, order of forfeiture or complaint relating to any Evergreen
Licensed Facility that, if adversely determined, could reasonably be expected to
have an Evergreen Material Adverse Effect, and Evergreen is not aware of any
basis that would cause the FCC not to renew any of the Evergreen FCC Licenses.
There is not now pending and, to Evergreen's knowledge, there is not threatened,
any action by or before the FCC to revoke, suspend, cancel, rescind or modify in
any material respect any of the Evergreen FCC Licenses that, if adversely
determined, could reasonably be expected to have an Evergreen Material Adverse
Effect (other than proceedings to amend FCC rules or the Communications Act of
general applicability to the radio industry).
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2.10 Brokers. Except with respect to Wasserstein, Perella & Co.
("Wasserstein"), all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by Evergreen directly
with the Company and Radio Broadcasting, without the intervention of any person
on behalf of Evergreen in such a manner as to give rise to any valid claim by
any person against Evergreen, the Company, the Surviving Corporation or any
subsidiary of any of them for a finder's fee, brokerage commission, or similar
payment. Evergreen has provided the Company with a written summary of the terms
of its agreement with Wasserstein, and Evergreen has no other agreements or
understandings (written or oral) with respect to such services.
2.11 Opinion of Financial Advisor. Evergreen has received the opinion of
Wasserstein, dated the date of the Old Agreement, to the effect that, as of such
date, the Exchange Ratio is fair, from a financial point of view, to Evergreen.
2.12 FCC Qualification. Evergreen and its subsidiaries are fully qualified
under the Communication Act to be the transferees of control of the Company FCC
Licenses (as hereinafter defined); provided, however, that the parties recognize
that the consummation of the Merger could cause the Surviving Corporation to
exceed in certain cases the numerical limits on local multiple radio station
ownership imposed by Section 202(b) of the 1996 Telecom Act and that a waiver of
these limits may be required prior to the grant of such transfer of control of
the Evergreen FCC Licenses and Company FCC Licenses. Each individual or entity
that is an officer, director or attributable stockholder of Evergreen that is
proposed to be an officer, director or attributable stockholder of the Surviving
Corporation is fully qualified under the Communications Act to be an officer,
director or attributable stockholder of the Surviving Corporation.
2.13 Compliance With Applicable Laws. Each of Evergreen and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted other than
such Permits the absence of which would not, individually or in the aggregate,
have an Evergreen Material Adverse Effect, and there has occurred no default
under any such Permit other than such defaults which, individually or in the
aggregate, would not have an Evergreen Material Adverse Effect. Except as
disclosed in the Filed Evergreen SEC Documents, Evergreen and its subsidiaries
are in compliance with all applicable statutes, laws, ordinances, rules orders
and regulations of any Governmental Entity, except for such noncompliance which
individually or in the aggregate would not have a Evergreen Material Adverse
Effect.
2.14 Absence of Undisclosed Liabilities. Except as disclosed in the Filed
Evergreen SEC Documents, and except for (A) liabilities contemplated by this
Agreement or disclosed in writing by Evergreen to the Company prior to the
execution and delivery of the Old Agreement, and (B) EMCLA's obligations with
respect to the Viacom Transaction, Evergreen and its subsidiaries do not have
any material indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise) (i) required by GAAP to be reflected
on a consolidated balance sheet of Evergreen and its consolidated subsidiaries
or in the notes, exhibits or schedules thereto or (ii) which reasonably could be
expected to have an Evergreen Material Adverse Effect.
2.15 Litigation. Except as disclosed in the Filed Evergreen SEC Documents,
there is no litigation, administrative action, arbitration or other proceeding
pending against Evergreen or any of its subsidiaries or, to the knowledge of
Evergreen, threatened that, individually or in the aggregate, could reasonably
be expected to (i) have an Evergreen Material Adverse Effect or (ii) prevent, or
significantly delay the consummation of the transactions contemplated by this
Agreement. Except as set forth in the Filed Evergreen SEC Documents, there is no
judgment, order, injunction or decree of any Governmental Entity outstanding
against Evergreen or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to have any effect referred to in the
foregoing clauses (i) and (ii) of this Section 2.15.
2.16 Transactions With Affiliates. Other than the transactions contemplated
by this Agreement, the Viacom Transaction and except to the extent disclosed in
the Filed Evergreen SEC Documents or disclosed in writing to the Company by
Evergreen prior to the execution and delivery of the Old Agreement, there have
been no transactions, agreements, arrangements or understandings between
Evergreen or its subsidiaries, on
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<PAGE> 19
the one hand, and Evergreen's affiliates (other than subsidiaries of Evergreen)
or any other person, on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act.
ARTICLE IIA
REPRESENTATIONS AND WARRANTIES OF EMHC AND EMCLA
EMHC and EMCLA hereby, jointly and severally, represent and warrant to the
Company and Radio Broadcasting, as of the date hereof, as follows:
2A.1 Organization, Standing and Corporate Power. Each of EMHC and EMCLA is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of EMHC and EMCLA is duly qualified to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure to be so qualified could not reasonably be expected to have an Evergreen
Material Adverse Effect. Each of EMHC and EMCLA has delivered to the Company
complete and correct copies of its Certificate of Incorporation and Bylaws, as
amended to the date of this Agreement.
2A.2 EMHC and EMCLA Capital Structure. The authorized capital stock of EMHC
consists of 1,000 shares of EMHC Common Stock. The authorized capital stock of
EMCLA consists of 1,000 shares of EMCLA Common Stock. At the close of business
on July 30, 1997, 1,000 shares of EMCLA Common Stock were issued and outstanding
and owned of record and beneficially by Evergreen. At the close of business on
July 30, 1997, 1,000 shares of EMHC Common Stock were issued and outstanding and
owned of record and beneficially by Evergreen. Except as set forth above, at the
close of business on July 30, 1997, no shares of capital stock or other equity
securities of EMHC and EMCLA were authorized, issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of EMHC and EMCLA are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. No bonds, debentures, notes or other indebtedness of EMHC or
EMCLA having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which the stockholders of
EMHC or EMCLA may vote are issued or outstanding. Neither EMHC nor EMCLA has any
outstanding option, warrant, subscription or other right, agreement or
commitment that obligates EMHC or EMCLA to issue, sell or transfer, repurchase,
redeem or otherwise acquire or vote any shares of the capital stock of EMHC or
EMCLA or any of their respective Significant Subsidiaries. Since the close of
business on July 30, 1997 to the date hereof, neither EMHC nor EMCLA has issued
any capital stock or securities or other rights convertible into or exercisable
or exchangeable for capital stock.
2A.3 Authority; Noncontravention. Each of EMHC and EMCLA has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by each of EMHC and EMCLA and the consummation by each of them of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of EMHC and EMCLA. Evergreen has executed
a written consent as sole stockholder of EMCLA and EMHC approving the Merger and
the Subsidiary Merger and this Agreement, and such written consent is the only
vote of any stockholders of EMCLA and EMHC required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by EMHC and EMCLA and, assuming this Agreement constitutes the valid
and binding agreement of Evergreen, the Company and Radio Broadcasting,
constitutes a valid and binding obligation of each of EMHC and EMCLA,
enforceable against each of them in accordance with its terms except that the
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditor's rights generally and (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not (i) conflict with any of the provisions of the
Certificate of Incorporation or Bylaws of EMHC or EMCLA, (ii) subject to
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<PAGE> 20
the governmental filings and other matters referred to in the following
sentence, conflict with, result in a breach of or 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 loss of a material benefit
under, or require the consent of any person under, any indenture, or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which EMHC or EMCLA is a party or by which EMHC or EMCLA or any
of their assets is bound or affected, (iii) result in an obligation by EMHC,
EMCLA, the Surviving Corporation, the Subsidiary Surviving Corporation or any of
their respective subsidiaries to redeem, repurchase or retire (or offer to
redeem, repurchase or retire) any outstanding debt (other than EMCLA's senior
credit facility) or equity security of EMHC, EMCLA, the Surviving Corporation,
the Subsidiary Surviving Corporation or any of their respective subsidiaries, or
(iv) subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any order,
writ, judgment, injunction, decree, determination or award currently in effect,
except for (x) breaches with respect to EMCLA's senior credit facility, (y)
breaches resulting from the Surviving Corporation's or Subsidiary Surviving
Corporation's ownership of radio stations in certain markets where such
ownership may be in excess of the numerical limits imposed on local multiple
radio station ownership under the 1996 Telecom Act or where such ownership
otherwise may be subject to challenge by any Governmental Entity under any
antitrust or similar law, rule or regulation, or (z) breaches that, individually
or in the aggregate, could not reasonably be expected to have an Evergreen
Material Adverse Effect or to materially hinder EMHC's or EMCLA's ability to
consummate the transactions contemplated by this Agreement. No consent, approval
or authorization of, or declaration or filing with, or notice to, any
Governmental Entity which has not been received or made is required by or with
respect to EMHC and EMCLA in connection with the execution and delivery of this
Agreement by the EMHC and EMCLA or the consummation by EMHC and EMCLA of any of
the transactions contemplated by this Agreement, except for (i) the filing of
premerger notification and report forms under the HSR Act with respect to the
Merger and Subsidiary Merger, (ii) such filings with and approvals required by
the FCC under the Communications Act including those required in connection with
the transfer of the Evergreen FCC Licenses for the operation of the Evergreen
Licensed Facilities, (iii) the EMCLA Form S-4 relating to the issuance of the
Merger Preferred Stock, and (iv) the filing of the certificates of merger with
the Delaware Secretary of State, and appropriate documents with the relevant
authorities of the other states in which EMHC and EMCLA are qualified to do
business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND RADIO BROADCASTING
The Company and Radio Broadcasting hereby, jointly and severally, represent
and warrant to Evergreen, EMCLA and EMHC, as of February 19, 1997 (except to the
extent specifically made as of an earlier date or the date hereof), as follows:
3.1 Organization, Standing and Corporate Power. The Company and each of
its Significant Subsidiaries (including Radio Broadcasting) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. The Company and
each of its Significant Subsidiaries is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so qualified could not reasonably be expected to
have a material adverse effect on the business, properties, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries, considered as a whole (a "Company Material Adverse Effect");
provided, however, that for purposes of Sections 3.13, 3.14, 3.15 and 3.16, no
fact, event or circumstance shall be deemed to constitute a Company Material
Adverse Effect unless in addition to otherwise specifying the elements of the
definition given above, the relevant event, fact or circumstance not disclosed
pursuant to such representations would be a material fact, event or
circumstance, the omission of which in a document filed with the SEC pursuant to
the Exchange Act would be such as to cause the statements contained in such
filing to be misleading within the meaning of Rule 10b-5 under the
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<PAGE> 21
Exchange Act. Each of the Company and Radio Broadcasting have delivered to
Evergreen complete and correct copies of its Certificate of Incorporation and
Bylaws, as amended to the date of this Agreement.
3.2 Company and Radio Broadcasting Capital Structure. The authorized
capital stock of the Company consists of (i) 40,000,000 shares of Company Class
A Common Stock, (ii) 10,000,000 shares of Company Class B Common Stock, (iii)
10,000,000 shares of Class C Common Stock, $0.01 par value ("Company Class C
Common Stock"), of the Company, and (iv) 10,000,000 shares of preferred stock,
$0.01 par value, of which 2,300,000 have been designated as Company Convertible
Preferred Stock. The authorized capital stock of Radio Broadcasting consists of
1,000 shares of common stock, $0.01 par value ("Radio Broadcasting Common
Stock"), and 10,000,000 shares of preferred stock, $0.01 par value, of which
1,000,000 have been designated as Radio Broadcasting 12 1/4% Preferred Stock and
3,600,000 have been designated as Radio Broadcasting 12% Preferred Stock. At the
close of business on February 18, 1997: (i) 10,437,212 shares of Company Class A
Common Stock were issued and outstanding, 1,926,152 shares of Company Class A
Common Stock were reserved for issuance pursuant to outstanding options or
warrants to purchase shares of Company Class A Common Stock which have been
granted to directors, officers or employees of the Company or others ("Company
Stock Options"), 3,343,465 shares of Company Class A Common Stock were reserved
for issuance upon conversion of the Company Convertible Preferred Stock, and
8,547,910 shares of Company Class A Common Stock were reserved for issuance upon
the conversion of the Company Class B Common Stock; (ii) 8,547,910 shares of
Company Class B Common Stock were issued and outstanding and no shares of
Company Class B Common Stock were reserved for issuance for any purpose; (iii)
no shares of Company Class C Common Stock were issued and outstanding and none
may be issued in the future; and (iv) 2,200,000 shares of Company Convertible
Preferred Stock were issued and outstanding, no shares of Company Convertible
Preferred Stock were held in the treasury of the Company and no shares of
Company Convertible Preferred Stock were reserved for issuance for any purpose.
At the close of business on February 18, 1997: (i) 1,000 shares of Radio
Broadcasting Common Stock were issued and outstanding and no shares of Radio
Broadcasting Common Stock were reserved for issuance for any purpose; (ii)
1,000,000 shares of Radio Broadcasting 12 1/4% Preferred Stock were issued and
outstanding, no shares of Radio Broadcasting 12 1/4% Preferred Stock were held
in treasury by Radio Broadcasting and no shares of Radio Broadcasting 12 1/4%
Preferred Stock were reserved for issuance for any purpose; and (iii) 2,000,000
shares of Radio Broadcasting 12% Preferred Stock were issued and outstanding, no
shares of Radio Broadcasting 12% Preferred Stock were held in treasury by Radio
Broadcasting and 1,600,000 shares of Radio Broadcasting 12% Preferred Stock were
reserved for issuance in lieu of cash dividends. Except as set forth above, at
the close of business on February 18, 1997, no shares of capital stock or other
equity securities of the Company and Radio Broadcasting were authorized, issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
the Company and Radio Broadcasting, and all shares which may be issued pursuant
to the Company's stock option plans, as amended to the date of the Old Agreement
(the "Company Stock Option Plans") or any outstanding Company Stock Options will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. No bonds, debentures, notes or other
indebtedness of the Company or any subsidiary of the Company having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the stockholders of the Company or any subsidiary
of the Company may vote are issued or outstanding. All the outstanding shares of
capital stock of each subsidiary of the Company have been validly issued and are
fully paid and nonassessable and, except for the Radio Broadcasting Preferred
Stock, are owned by the Company or its subsidiaries, free and clear of all
Liens, except for Liens arising out of the Radio Broadcasting's senior credit
facility and those that, individually or in the aggregate, could not reasonably
be expected to have a Company Material Adverse Effect. Except as set forth above
and except (i) for certain provisions of the Certificate of Incorporation and
Bylaws of the Company relating to transfers of the Company Class B Common Stock
and "alien ownership", and (ii) as provided in the Exchange and Registration
Rights Agreement entered into by Radio Broadcasting in connection with the sale
of the Radio Broadcasting 12% Preferred Stock, neither the Company nor any
subsidiary of the Company has any outstanding option, warrant, subscription or
other right, agreement or commitment that either (i) obligates the Company or
any subsidiary of the Company to issue, sell or transfer, repurchase, redeem or
otherwise acquire or vote any shares of the capital stock of the Company or any
Significant Subsidiary of the Company or (ii) restricts the transfer of Shares.
No shares of capital stock of the
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Company are owned of record or beneficially by any subsidiary of the Company.
Since the close of business on February 18, 1997 to the date of the Old
Agreement, neither the Company nor any subsidiary of the Company has issued any
capital stock or securities or other rights convertible into or exercisable or
exchangeable for capital stock other than securities issued upon the exercise of
Company Stock Options outstanding on February 18, 1997 or other convertible
securities outstanding on February 18, 1997.
3.3 Authority; Noncontravention. Each of the Company and Radio
Broadcasting has all requisite corporate power and authority to enter into this
Agreement and, subject to the Company Stockholder Approval, to consummate the
transactions contemplated by this Agreement. As of the date hereof, the
execution and delivery of this Agreement by each of the Company and Radio
Broadcasting and the consummation by each of them of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company and Radio Broadcasting, subject, in
the case of the consummation of the Merger, to the Company Stockholder Approval.
The Company has executed a written consent as stockholder of Radio Broadcasting
approving the Subsidiary Merger and this Agreement, and such written consent is
the only vote of any stockholders of Radio Broadcasting required in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. As of the date hereof, this Agreement has been
duly executed and delivered by the Company and Radio Broadcasting and, assuming
this Agreement constitutes the valid and binding agreement of Evergreen, EMCLA
and EMHC, constitutes a valid and binding obligation of each of the Company and
Radio Broadcasting, enforceable against each of them in accordance with its
terms except that the enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditor's rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) conflict with any of the
provisions of the Certificate of Incorporation or Bylaws of the Company or the
comparable documents of any subsidiary of the Company, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
conflict with, result in a breach of or 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 loss of a material benefit under, or require
the consent of any person under, any indenture, or other agreement, permit,
concession, franchise, license or similar instrument or undertaking to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their assets is bound or affected, (iii) except as
may be the case with respect to Dissenting Shares, result in an obligation by
the Company, the Surviving Corporation or any of their respective subsidiaries
to redeem, repurchase or retire (or offer to redeem, repurchase or retire) any
outstanding debt (other than Radio Broadcasting's senior credit facility) or
equity security of the Company, the Surviving Corporation or any of their
respective subsidiaries, or (iv) subject to the governmental filings and other
matters referred to in the following sentence, contravene any law, rule or
regulation of any state or of the United States or any political subdivision
thereof or therein, or any order, writ, judgment, injunction, decree,
determination or award currently in effect, except for (x) breaches with respect
to the Radio Broadcasting's senior credit facility, (y) breaches resulting from
the Surviving Corporation's ownership of radio stations in certain markets where
such ownership may be in excess of the numerical limits imposed on local
multiple radio station ownership under the 1996 Telecom Act or where such
ownership otherwise may be subject to challenge by any Governmental Entity under
any antitrust or similar law, rule or regulation, or (z) breaches that,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect or to materially hinder the Company's and Radio
Broadcasting's ability to consummate the transactions contemplated by this
Agreement. No consent, approval or authorization of, or declaration or filing
with, or notice to, any Governmental Entity which has not been received or made
is required by or with respect to the Company or Radio Broadcasting in
connection with the execution and delivery of this Agreement by the Company and
Radio Broadcasting or the consummation by the Company and Radio Broadcasting of
any of the transactions contemplated by this Agreement, except for (i) the
filing of premerger notification and report forms under the HSR Act with respect
to the Merger, (ii) such filings with and approvals required by the FCC under
the Communications Act including those required in connection with the transfer
of the Company FCC Licenses (as defined in Section 3.9) for the operation of the
Company
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Licensed Facilities (as defined in Section 3.9), (iii) the Joint Proxy Statement
relating to the Company Stockholder Approval and such reports under the Exchange
Act as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, and (iv) the filing of the certificates of
merger with the Delaware Secretary of State, and appropriate documents with the
relevant authorities of the other states in which the Company and Radio
Broadcasting are qualified to do business.
3.4 SEC Documents. The Company and its subsidiaries have filed all
required reports, schedules, forms, statements and other documents with the SEC
since January 1, 1995 (the "Company SEC Documents"). As of their respective
dates, the Company SEC Documents complied with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents as of such dates contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC Documents comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Rule
10-01 of Regulation S-X) and fairly present, in all material respects, the
consolidated or combined financial position of the Company and its subsidiaries
as of the dates thereof and the consolidated or combined results of their
operations and cash flows for the periods then ended (on the basis stated
therein and subject, in the case of unaudited statements, to normal year-end
audit adjustments).
3.5 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Company SEC Documents") and except as it relates to the
Viacom Transaction or as otherwise disclosed in writing by the Company to
Evergreen prior to the execution and delivery of this Agreement, since the date
of the most recent audited financial statements included in the Filed Company
SEC Documents, the Company and its subsidiaries have conducted their business
only in the ordinary course, and there has not been (i) any change which could
reasonably be expected to have a Company Material Adverse Effect (including as a
result of the consummation of the transactions contemplated by this Agreement),
(ii) any declaration, setting aside or payment of any dividend or distribution
(whether in cash, stock or property) with respect to any of the Company's
outstanding capital stock (other than the payment of regular cash dividends on
the Company Convertible Preferred Stock in accordance with usual record and
payment dates), (iii) any split, combination or reclassification of any of its
outstanding capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its capital stock, (iv) (x) any granting by the Company or any of its
subsidiaries to any director, officer or other employee or independent
contractor of the Company or any of its subsidiaries of any increase in
compensation or acceleration of benefits, except in the ordinary course of
business consistent with prior practice or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Filed Company SEC Documents, (y) any granting by the
Company or any of its subsidiaries to any director, officer or other employee or
independent contractor of any increase in, or acceleration of benefits in
respect of, severance or termination pay, or pay in connection with any change
of control of the Company, except in the ordinary course of business consistent
with prior practice or as was required under any employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents or (z) any
entry by the Company or any of its subsidiaries into any employment, severance,
change of control, or termination or similar agreement with any such director,
officer or other employee or independent contractor, or (v) any change in
accounting methods, principles or practices by the Company or any of its
subsidiaries materially affecting its assets, liability or business, except
insofar as may have been required by a change in generally accepted accounting
principles.
3.6 No Extraordinary Payments or Change in Benefits. No current or former
director, officer, employee or independent contractor of the Company or any of
its subsidiaries is entitled to receive any payment under any agreement,
arrangement or policy (written or oral) relating to employment, severance,
change of control,
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termination, stock options, stock purchases, compensation, fringe benefits or
other employee benefits currently in effect (collectively, the "Company Benefit
Plans"), nor will any benefit received or to be received by any current or
former director, officer, employee or independent contractor of the Company or
any of its subsidiaries under any Company Benefit Plan be accelerated or
modified, as a result of or in connection with the execution and delivery of, or
the consummation of the transactions contemplated by, this Agreement.
3.7 Voting Requirements. The affirmative vote of the Principal Company
Stockholders with respect to the approval of this Agreement and the Merger are
the only votes of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement and the transactions contemplated by
this Agreement.
3.8 State Takeover Statutes. The Board of Directors of the Company has
approved the terms of this Agreement and the Stockholders Agreement and the
consummation of the transactions contemplated by this Agreement and by the
Stockholders Agreement, and such approval is sufficient to render inapplicable
to the Merger and the other transactions contemplated by this Agreement and by
the Stockholders Agreement the provisions of Section 203 of the Delaware Code.
To the Company's knowledge, no other state takeover statute or similar statute
or regulation applies or purports to apply to the Merger, this Agreement, the
Stockholders Agreement or any of the transactions contemplated by this Agreement
or the Stockholders Agreement and no provision of the Certificate of
Incorporation, Bylaws or other governing instrument of the Company or any of its
subsidiaries would, directly or indirectly, restrict or impair the ability of
the Company or Evergreen to consummate the transactions contemplated by this
Agreement or the Stockholders Agreement.
3.9 Company FCC Licenses; Operations of Company Licensed Facilities. The
Company and its subsidiaries have operated the radio stations for which the
Company and any of its subsidiaries holds licenses from the FCC, in each case
which are owned or operated by the Company and its subsidiaries (the "Company
Licensed Facilities") in material compliance with the terms of the licenses
issued by the FCC to the Company and its subsidiaries (the "Company FCC
Licenses") (complete and correct copies of each of which have been made
available to Evergreen), and in material compliance with the Communications Act,
except where the failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The Company
and its subsidiaries have, since acquired by the Company, timely filed or made
all applications, reports and other disclosures required by the FCC to be made
with respect to the Company Licensed Facilities and have timely paid all FCC
regulatory fees with respect thereto, except where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. The Company and each of its subsidiaries have, and are
the authorized legal holders of, all the Company FCC Licenses necessary or used
in the operation of the businesses of the Company Licensed Facilities as
presently operated. All such Company FCC Licenses are validly held and are in
full force and effect, unimpaired by any act or omission of the Company, each of
its subsidiaries (or to the Company's and Radio Broadcasting's knowledge, their
respective predecessors) or their respective officers, employees or agents,
except where such impairments could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. As of the date
hereof, except as disclosed in writing by the Company to Evergreen prior to the
execution and delivery of this Agreement, no application, action or proceeding
is pending for the renewal or material modification of any of the Company FCC
Licenses and, to the best of the Company's knowledge, there is not now before
the FCC any material investigation, proceeding, notice of violation, order of
forfeiture or complaint against the Company or any of its subsidiaries relating
to the Company Licensed Facilities that, if adversely determined, would have a
Company Material Adverse Effect, and the Company is not aware of any basis that
would cause the FCC not to renew any of the Company FCC Licenses. There is not
now pending and, to the Company's knowledge, there is not threatened, any action
by or before the FCC to revoke, suspend, cancel rescind or modify in any
material respect any of the Company FCC Licenses that, if adversely determined,
would have a Company Material Adverse Effect (other than proceedings to amend
FCC rules or the Communications Act of general applicability to the radio
industry).
3.10 Brokers. Except with respect to HM2/Management Partners, L.P. ("Hicks
Muse") Star Media, Inc. ("Star Media"), Greenhill & Co., LLC ("Greenhill") and
Goldman Sachs & Co. ("Goldman Sachs"), all negotiations relating to this
Agreement, the transactions contemplated hereby and by the Viacom
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Transaction have been carried out by the Company directly with Evergreen,
without the intervention of any person on behalf of the Company in such a manner
as to give rise to any valid claim by any person against the Company, Evergreen,
the Surviving Corporation or any subsidiary of any of them for a finder's fee,
brokerage commission, or similar payment. The Company has provided Evergreen
with a written summary of the terms of its agreements with Hicks Muse, Star
Media, Greenhill and Goldman Sachs, and the Company has no other agreements or
understandings (written or oral) with respect to such services.
3.11 Opinion of Financial Advisor. The Company has received the opinion of
Greenhill, dated the date of the Old Agreement, to the effect that, as of such
date, the Exchange Ratio is fair, from a financial point of view, to the
Company's stockholders.
3.12 FCC Qualification. The Company and its subsidiaries are fully
qualified under the Communications Act to be the transferors of control of the
Company FCC Licenses; provided, however, that the parties recognize that the
consummation of the Merger could cause the Surviving Corporation and Thomas O.
Hicks to exceed in certain cases the numerical limits on local multiple radio
station ownership imposed by Section 202(b) of the 1996 Telecom Act and that a
waiver of these limits may be required prior to the grant of such transfer of
control of the Evergreen FCC Licenses and Company FCC Licenses. Each individual
or entity that is an officer, director or attributable stockholder of the
Company that is proposed to be an officer, director or attributable stockholder
of the Surviving Corporation is fully qualified under the Communications Act to
be an officer, director or attributable stockholder of the Surviving Corporation
other than with respect to the numerical limits on multiple ownership described
in the preceding sentence.
3.13 Compliance with Applicable Laws. Each of the Company and its
subsidiaries has in effect all Federal, state, local and foreign governmental
Permits necessary for it to own, lease or operate its properties and assets and
to carry on its business as now conducted other than such Permits the absence of
which would not, individually or in the aggregate, have a Company Material
Adverse Effect, and there has occurred no default under any such Permit other
than such defaults which, individually or in the aggregate, would not have a
Company Material Adverse Effect. Except as disclosed in the Filed Company SEC
Documents, the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules orders and regulations of any
Governmental Entity, except for such noncompliance which individually or in the
aggregate would not have a Company Material Adverse Effect.
3.14 Absence of Undisclosed Liabilities. Except as disclosed in the Filed
Company SEC Documents, and except for (A) liabilities contemplated by this
Agreement or disclosed in writing by the Company to Evergreen prior to the
execution and delivery of the Old Agreement, and (B) the Company's and Radio
Broadcasting's obligations with respect to the Viacom Transaction, the Company
and its subsidiaries do not have any material indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise) (i)
required by GAAP to be reflected on a consolidated balance sheet of the Company
and its consolidated subsidiaries or in the notes, exhibits or schedules thereto
or (ii) which reasonably could be expected to have a Company Material Adverse
Effect.
3.15 Litigation. Except as disclosed in the Filed Company SEC Documents,
there is no litigation, administrative action, arbitration or other proceeding
pending against the Company or any of its subsidiaries or, to the knowledge of
the Company, threatened that, individually or in the aggregate, could reasonably
be expected to (i) have a Company Material Adverse Effect or (ii) prevent, or
significantly delay the consummation of the transactions contemplated by this
Agreement. Except as set forth in the Filed Company SEC Documents, there is no
judgment, order, injunction or decree of any Governmental Entity outstanding
against the Company or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to have any effect referred to in the
foregoing clauses (i) and (ii) of this Section 3.15.
3.16 Transactions With Affiliates. Other than the transactions contemplated
by this Agreement, the Viacom Transaction and except to the extent disclosed in
the Filed Company SEC Documents or disclosed in writing by Chancellor to
Evergreen prior to the execution and delivery of the Old Agreement, there have
been no transactions, agreements, arrangements or understandings between the
Company or its subsidiaries, on the one hand, and the Company's affiliates
(other than subsidiaries of the Company) or any other person, on the
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other hand, that would be required to be disclosed under Item 404 of Regulation
S-K under the Securities Act.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Preparation of Form S-4S and the Joint Proxy Statement; Information
Supplied. (a) As soon as practicable following the date of this Agreement, (i)
the Company and Evergreen shall prepare and file with the SEC the Joint Proxy
Statement and Evergreen shall prepare and file with the SEC the Evergreen Form
S-4, in which the Joint Proxy Statement will be included as a prospectus, and
(ii) EMCLA shall prepare and file with the SEC the EMCLA Form S-4. Each of the
Company, Evergreen and EMCLA shall use its best efforts to have the Form S-4s
declared effective under the Securities Act as promptly as practicable after
such filing. The Company will use its best efforts to cause the Joint Proxy
Statement to be mailed to the Company's stockholders, and Evergreen will use its
best efforts to cause the Joint Proxy Statement to be mailed to Evergreen's
stockholders, in each case as promptly as practicable after the Evergreen Form
S-4 is declared effective under the Securities Act. Each of Evergreen and EMCLA
shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or take any action that would
subject it to the service of process in suits, other than as to matters and
transactions relating to the Form S-4s, in any jurisdiction where it is not so
subject) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock and Parent Convertible
Preferred Stock in the Merger and the issuance of Merger Preferred Stock in the
Subsidiary Merger, and the Company and Radio Broadcasting shall furnish all
information concerning the Company, Radio Broadcasting and the holders of the
Shares, Company Convertible Preferred Stock and Radio Broadcasting Preferred
Stock as may be reasonably requested in connection with any such action.
(b) The Company and Radio Broadcasting each agrees that none of the
information supplied or to be supplied by the Company or Radio Broadcasting
specifically for inclusion or incorporation by reference in (i) the Form S-4s
will not, at the time each Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, or (ii) the Joint Proxy Statement will not, at the date it is first
mailed to the Company's stockholders or at the time of the Stockholders Meeting
(as defined in Section 4.2), contain any statement which, at the time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of a proxy for the same meeting or subject matter thereof which has
become false or misleading. The Company agrees that the Joint Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except with respect to
statements made or incorporated by reference therein based on information
supplied by Evergreen specifically for inclusion or incorporated by reference in
the Joint Proxy Statement.
(c) Evergreen and EMCLA each agrees that none of the information supplied
or to be supplied by Evergreen or EMCLA specifically for inclusion or
incorporation by reference in (i) the Form S-4s will not, at the time each Form
S-4 is filed with the SEC, at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, or (ii) the Joint Proxy
Statement will not, at the date the Joint Proxy Statement is first mailed to
Evergreen's stockholders, contain any statement which, at the time and in light
of the circumstances under which it is made, is false or misleading with respect
to any material fact, or omits to state any material fact necessary in order to
make the statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of a
proxy for the same meeting or subject matter thereof which has become false or
misleading. Evergreen
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and EMCLA each agrees that the Form S-4s will comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations promulgated thereunder and Evergreen agrees that the Joint Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder, except
in each case with respect to statements made or incorporated by reference in
either the Form S-4s or the Joint Proxy Statement based on information supplied
by the Company or Radio Broadcasting specifically for inclusion or incorporation
by reference therein.
4.2 Meetings of Company Stockholders and Evergreen Stockholders. (a) The
Company will take all action necessary in accordance with applicable law and its
Certificate of Incorporation and Bylaws to convene a meeting of its stockholders
(the "Stockholders Meeting") to submit this Agreement, together with the
affirmative recommendation of the Company's Board of Directors, to the Company's
stockholders so that they may consider and vote upon the approval of this
Agreement. The Company will use its best efforts to hold the Stockholders
Meeting as soon as practicable after the date hereof and to obtain the favorable
votes of its stockholders. Pursuant to the Stockholders Agreement, the Principal
Company Stockholders have agreed to vote all Shares owned by them or for which
they have the right to vote in favor of the approval of this Agreement and the
Merger, which vote the Company represents and warrants shall be sufficient to
obtain the Company Stockholder Approval.
(b) Evergreen will take all action necessary in accordance with applicable
law and its Certificate of Incorporation and Bylaws to convene a meeting of its
stockholders (the "Evergreen Stockholders Meeting") to submit this Agreement and
the Parent Charter, together with the affirmative recommendation of Evergreen's
Board of Directors, to Evergreen's stockholders so that they may consider and
vote upon the approval of this Agreement, the issuance of Parent Common Stock
and the assumption of Company Stock Options in the Merger, and the Parent
Charter. Evergreen will use its best efforts to hold the Evergreen Stockholders
Meeting as soon as practicable after the date hereof and to obtain the favorable
votes of its stockholders. Pursuant to the Stockholders Agreement, the Principal
Evergreen Stockholder has agreed to vote all shares of Evergreen Common Stock
owned by him or for which he has the right to vote in favor of the approval of
this Agreement, the issuance of Parent Common Stock and the assumption of
Company Stock Options in the Merger, the adoption of the Parent Charter, and the
Merger.
(c) Each of Evergreen and the Company agrees to cooperate and use its
respective best efforts to hold the Evergreen Stockholders Meeting and the
Stockholders Meeting on the same day.
4.3 Access to Information; Confidentiality. Upon reasonable notice, each of
the Company and Evergreen shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers, employees,
counsel, financial advisors and other representatives of such other party
reasonable access during normal business hours during the period prior to the
Effective Time to all its properties, books, contracts, commitments, personnel
and records and, during such period, each of the Company and Evergreen shall,
and shall cause each of its respective subsidiaries to, furnish as promptly as
practicable to the other party such information concerning its business,
properties, financial condition, operations and personnel as such other party
may from time to time reasonably request. Except as required by law, each of the
Company and Evergreen will hold, and will cause its respective directors,
officers, partners, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information obtained
from Evergreen or the Company, respectively, in confidence to the extent
required by and in accordance with the provisions of the letters dated January
27, 1997, each between Evergreen and the Company (collectively, the
"Confidentiality Agreements"), and each of the Company and Evergreen agrees that
prior to the Effective Time neither party will use any of such nonpublic
information to directly or indirectly divert or attempt to divert any business,
customer or employee of the other.
4.4 Public Announcements. Evergreen, on the one hand, and the Company, on
the other hand, will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Merger and the Subsidiary Merger, and shall not issue
any such press release or make any such
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public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to rules of The Nasdaq
Stock Market.
4.5 Acquisition Proposals. (a) The Company shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. The Company will notify Evergreen immediately of any
inquiries or proposals with respect to any Acquisition Proposal that is received
by, or any such negotiations or discussions that are sought to be initiated
with, the Company. For purposes of this Agreement, "Acquisition Proposal" means
any proposal with respect to a merger, consolidation, share exchange or similar
transaction involving the Company or Evergreen or any Significant Subsidiary of
the Company or Evergreen, or any purchase of all or any significant portion of
the assets of the Company or Evergreen or any Significant Subsidiary of the
Company or Evergreen, or any equity interest in the Company or Evergreen or any
Significant Subsidiary of the Company or Evergreen, other than the transactions
contemplated hereby; provided, however, that an Acquisition Proposal shall not
include a currently planned acquisition or disposition of broadcast properties
disclosed in writing prior to execution and delivery of this Agreement by either
the Company or Evergreen to the other.
(b) Evergreen shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, Evergreen or
any of its subsidiaries to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any Acquisition Proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may be reasonably be expected to
lead to, any Acquisition Proposal. Evergreen will notify the Company immediately
of any inquiries or proposals with respect to any Acquisition Proposal that is
received by, or any negotiations or discussions that are sought to be initiated
with, Evergreen.
(c) Nothing contained in this Section 4.5 shall prohibit the respective
Board of Directors of the Company or Evergreen from taking and disclosing to its
stockholders a position in accordance with Rules 14d-9 and 14e-2 under the
Exchange Act with respect to a tender offer or any exchange offer commenced by a
third party.
4.6 Consents, Approvals and Filings. The Company and Evergreen will make
and cause their respective subsidiaries and, to the extent necessary, their
other affiliates to make all necessary filings, as soon as practicable,
including, without limitation, those required under the HSR Act, the Securities
Act, the Exchange Act, and the Communications Act (including filing an
application with the FCC for the transfer of control of the Company FCC Licenses
and the Evergreen FCC Licenses, which the parties shall file as soon as
practicable (and in any event not more than 30 days) after the date of this
Agreement), in order to facilitate prompt consummation of the Merger and the
other transactions contemplated by this Agreement. In addition, the Company and
Evergreen will each use its best efforts, and will cooperate fully and in good
faith with each other, (i) to comply as promptly as practicable with all
governmental requirements applicable to the Merger and the other transactions
contemplated by this Agreement and the Viacom Transaction, and (ii) to obtain as
promptly as practicable all necessary permits, orders or other consents of
Governmental Entities and consents of all third parties necessary for the
consummation of the Merger and the other transactions contemplated by this
Agreement and the Viacom Transaction, including without limitation, the consent
of the FCC to the transfer of control of the Company FCC Licenses and the
Evergreen FCC Licenses, and the transfer of any FCC licenses in connection with
the Viacom Transaction. Each of the Company and Evergreen shall use its best
efforts to promptly provide such information and communications to Governmental
Entities as such Governmental Entities may reasonably request. Each of the
parties shall provide to the other party copies of all applications in advance
of filing or submission of such applications to Governmental Entities in
connection with this Agreement and shall make such revisions thereto as
reasonably requested by such other party. Each
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party shall provide to the other party the opportunity to participate in all
meetings and material conversations with Governmental Entities.
4.7 Affiliates Letters. Prior to the Closing Date, the Company shall
deliver to Evergreen a letter identifying all persons who may be, at the time
the Merger is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each such person to deliver to
Evergreen on or prior to the Closing Date a written agreement substantially in
the form attached as Exhibit A hereto.
4.8 Nasdaq Listing. Evergreen shall use its best efforts to cause the
shares of Parent Common Stock to be issued in the Merger to be approved for
quotation on the Nasdaq National Market, subject to official notice of issuance,
prior to the Closing Date.
4.9 Stockholder Litigation. Each of the Company and Evergreen shall give
the other party the opportunity to participate in the defense or settlement of
any stockholder litigation against it and its directors relating to the
transactions contemplated by this Agreement; provided, however, that no such
settlement shall be agreed to by the Company or Evergreen without the other
party's consent, which consent shall not be unreasonably withheld.
4.10 Indemnification. The Certificate of Incorporation and Bylaws of
Parent, the Surviving Corporation and the Subsidiary Surviving Corporation shall
contain, respectively, the provisions with respect to indemnification set forth
in the Parent Charter and the Bylaws to be adopted by Parent attached hereto as
Annex IV, and such provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at any time
prior to the Effective Time were directors or officers of the Company or
Evergreen or any of their respective subsidiaries (the "Indemnified Parties") in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law. Parent will cause to be
maintained for a period of not less than six years from the Effective Time the
Company's current directors' and officers' insurance and indemnification
policies to the extent that they provide coverage for events occurring prior to
the Effective Time (the "D&O Insurance") for all persons who are directors and
executive officers of the Company or Evergreen on the date of this Agreement, so
long as the annual premium therefor would not be in excess of 250% of the last
annual premium paid prior to the date of this Agreement; provided, however, that
Parent may, in lieu of maintaining such existing D&O Insurance as provided
above, cause coverage to be provided under any policy maintained for the benefit
of Evergreen or any of its subsidiaries so long as the terms thereof are not
less advantageous to the beneficiaries thereof than the existing D&O Insurance.
The provisions of this Section 4.10 are intended to be for the benefit of, and
shall be enforceable by, each Indemnified Party, his heirs and his personal
representatives and shall be binding on all successors and assigns of Evergreen,
the Company and Parent.
4.11 Letter of the Company's Accountants. The Company and Radio
Broadcasting shall each use its reasonable best efforts to cause to be delivered
to Evergreen and EMCLA, as applicable, a letter of Coopers & Lybrand LLP, the
Company's and Radio Broadcasting's independent public accountants, and any other
independent public accountants whose report would be required to be included in
the Form S-4s pursuant to the rules and regulations under the Securities Act,
each dated a date within two business days before the date on which the
Evergreen Form S-4 or EMCLA Form S-4, as the case may be, shall become effective
and an additional letter from each of them dated a date within two business days
before the Closing Date and the Subsidiary Closing Date, as the case may be,
each addressed to Evergreen and EMCLA, as applicable, in form and substance
reasonably satisfactory to Evergreen and EMCLA and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4s.
4.12 Letter of Evergreen's Accountants. Evergreen and EMCLA shall use its
reasonable best efforts to cause to be delivered to the Company and Radio
Broadcasting, as applicable, a letter of KPMG Peat Marwick LLP, Evergreen's and
EMCLA's independent public accountants, and any other independent public
accountants whose report would be required to be included in the Form S-4s
pursuant to the rules and regulations under the Securities Act, each dated a
date within two business days before the date on which the
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Evergreen Form S-4 or EMCLA Form S-4, as the case may be, shall become effective
and an additional letter from each of them dated a date within two business days
before the Closing Date or the Subsidiary Closing Date, as the case may be, each
addressed to the Company or Radio Broadcasting, as applicable, in form and
substance reasonably satisfactory to the Company and Radio Broadcasting and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4s.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
5.1 Conduct of Business. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, the Company
and Evergreen shall, and shall cause their respective subsidiaries to, act and
carry on their respective businesses in the ordinary course of business and, to
the extent consistent therewith, use reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve the goodwill of those engaged in material
business relationships with them. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time and except as set forth in the Filed Company SEC Documents or the Filed
Evergreen SEC Documents (including any pending station acquisitions,
dispositions and/or swaps and the financing thereof described therein), as
applicable, or in connection with the Viacom Transaction or as otherwise
disclosed in writing by one party hereto to the other parties hereto prior to
the execution and delivery of this Agreement, the Company and Evergreen shall
not, and shall not permit any of their respective subsidiaries to, without the
prior consent of the other party hereto:
(i) (w) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of the
Company's or Evergreen's or any of their respective subsidiaries' outstanding
capital stock (other than, with respect to the Company and its subsidiaries, the
payment of regular cash dividends by the Company on the Company Convertible
Preferred Stock and the payment by Radio Broadcasting of dividends on the Radio
Broadcasting 12% Preferred Stock in additional shares of such preferred stock,
in each case in accordance with usual record and payment dates), (x) split,
combine or reclassify any of its outstanding capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its outstanding capital stock, (y) purchase, redeem
or otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares (other than, with respect to the
Company and its subsidiaries, in connection with Radio Broadcasting's offer to
exchange its 12% Series A Exchangeable Preferred Stock for the Radio
Broadcasting 12% Preferred Stock (the "Exchange Offer")), or (z) issue, sell,
grant, pledge or otherwise encumber any shares of its capital stock, any other
equity securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, equity securities or convertible securities
other than (1) upon the exercise of Company Stock Options and Evergreen Stock
Options outstanding on the date of this Agreement, (2) pursuant to employment
agreements or other contractual arrangements in effect on the date of this
Agreement, or (3) with respect to the Company and its subsidiaries, in
connection with the Exchange Offer or upon the conversion of the Company
Convertible Preferred Stock;
(ii) amend its Certificate of Incorporation, Bylaws or other comparable
charter or organizational documents (other than, in the case of Radio
Broadcasting, as necessary to consummate the Exchange Offer);
(iii) acquire any business (including the assets thereof) or any
corporation, partnership, joint venture, association or other business
organization or division thereof;
(iv) sell, mortgage or otherwise encumber or subject to any Lien or
otherwise dispose of any of its properties or assets that are material to the
Company or Evergreen and their respective subsidiaries taken as a whole;
(v) (x) other than working capital borrowings in the ordinary course of
business and consistent with past practices incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, other than
indebtedness owing to or guarantees of indebtedness owing to the Company or
Evergreen or any of
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their respective direct or indirect wholly-owned subsidiaries or (y) make any
material loans or advances to any other person, other than to the Company or
Evergreen, or to any of their respective direct or indirect wholly-owned
subsidiaries and other than routine advances to employees;
(vi) make any tax election or settle or compromise any income tax liability
that could reasonably be expected to be material to the Company or Evergreen and
their respective subsidiaries taken as a whole;
(vii) pay, discharge, settle or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company or Evergreen included in the Filed Company SEC Documents or the Filed
Evergreen SEC Documents, respectively, or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice;
(viii) make any material commitments or agreements for capital expenditures
or capital additions or betterments except as materially consistent with the
budget for capital expenditures as of the date of this Agreement and consistent
with past practices;
(ix) except as may be required by law,
(1) other than in the ordinary course of business and consistent with
past practices, make any representation or promise, oral or written, to any
employee or former director, officer or employee of the Company or
Evergreen or any of their respective subsidiaries which is inconsistent
with the terms of any Company Benefit Plan or Evergreen Benefit Plan,
respectively;
(2) other than in the ordinary course of business and consistent with
past practices, make any change to, or amend in any way, the contracts,
salaries, wages, or other compensation of any director, employee or any
agent or consultant of the Company or Evergreen or any of their respective
subsidiaries other than routine changes or amendments that are required
under existing contracts;
(3) adopt, enter into, amend, alter or terminate, partially or
completely, any Company Benefit Plan or Evergreen Benefit Plan or any
election made pursuant to the provisions of any Company Benefit Plan or
Evergreen Benefit Plan, to accelerate any payments, obligations or vesting
schedules under any Company Benefit Plan or Evergreen Benefit Plan; or
(4) other than in the ordinary course of business consistent with past
practices, approve any general or company-wide pay increases for employees;
(x) except in the ordinary course of business, modify, amend or terminate
any material agreement, permit, concession, franchise, license or similar
instrument to which the Company or Evergreen or any of their respective
subsidiaries is a party or waive, release or assign any material rights or
claims thereunder; or
(xi) authorize any of, or commit or agree to take any of, the foregoing
actions.
Notwithstanding the foregoing, nothing herein shall prevent Evergreen or
the Company from selling or acquiring (or agreeing to sell or acquire) all or
substantially all of the assets (by purchase, stock purchase, merger or
otherwise) of one or more radio broadcast stations and entering into financing
transactions in connection therewith, provided that the value of the
consideration (as determined in good faith by the Board of Directors of the
Company or Evergreen, as the case may be) to be paid or received (as
appropriate) in such transactions does not exceed $100,000,000 in the aggregate
for all such radio stations acquired since the date of the Old Agreement. Each
of Evergreen, on the one hand, and the Company and Radio Broadcasting, on the
other hand, represent and warrant to the other party or parties that no actions
have been taken since February 19, 1997 in violation of the terms of the Old
Agreement.
5.2 Company Stock Options. At the Effective Time, each Company Stock Option
shall be deemed to have been assumed by Evergreen, without further action by
Evergreen, and shall thereafter be deemed an option to acquire, on the same
terms and conditions as were applicable under such Company Stock Option, that
number of shares of Parent Common Stock that would have been received in respect
of such Company
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Stock Option if it had been exercised immediately prior to the Effective Time
(such Company Stock Options assumed by Evergreen, the "Assumed Chancellor Stock
Options"); provided, however, that, for each optionholder, (i) the aggregate
fair market value of Parent Common Stock subject to Assumed Chancellor Stock
Options immediately after the Effective Time shall not exceed the aggregate
exercise price thereof by more than the excess of the aggregate fair market
value of Company Common Stock subject to Company Stock Options immediately
before the Effective Time over the aggregate exercise price thereof and (ii) on
a share-by-share comparison, the ratio of the exercise price of the Assumed
Chancellor Stock Option to the fair market value of the Parent Common Stock
immediately after the Effective Time is no more favorable to the optionholder
than the ratio of the exercise price of the Company Stock Option to the fair
market value of the Company Common Stock immediately before the Effective Time;
and provided, further, that no fractional shares shall be issued on the exercise
of such Assumed Chancellor Stock Option and, in lieu thereof, the holder of such
Assumed Chancellor Stock Option shall only be entitled to a cash payment in the
amount of such fraction multiplied by the closing price per share of Parent
Common Stock on the Nasdaq National Market on the business day immediately prior
to the date of such exercise.
5.3 Other Actions. The Company and Evergreen shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that could reasonably be expected to, result in any of the conditions of the
Merger set forth in Article VI not being satisfied.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger and the Subsidiary
Merger is subject to the satisfaction or waiver on or prior to the Closing Date
and Subsidiary Closing Date, as applicable, of the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval and the
Evergreen Stockholder Approval shall have been obtained.
(b) FCC Order. The FCC shall have issued an order (the "FCC Order")
approving the transfer of the Company FCC Licenses for the operation of the
Company Licensed Facilities and the Evergreen FCC Licenses for the operation of
the Evergreen Licensed Facilities to the public stockholders of Parent pursuant
to the Merger without the imposition of any conditions or restrictions that
would have a material adverse effect on the business, properties, results of
operations, or condition (financial or otherwise) of Parent and its
subsidiaries, considered as a whole (a "Parent Material Adverse Effect"), and
which FCC Order has not been reversed, stayed, enjoined, set aside or suspended
and with respect to which no timely request for stay, petition for
reconsideration or appeal has been filed and as to which the time period for
filing of any such appeal or request for reconsideration or for any sua sponte
action by the FCC with respect to the FCC Order has expired, or, in the event
that such a filing or review sua sponte has occurred, as to which such filing or
review shall have been disposed of favorably to the grant of the FCC Order and
the time period for seeking further relief with respect thereto shall have
expired without any request for such further relief having been filed or review
initiated; provided, however, that notwithstanding anything in this Agreement to
the contrary, that reasonable conditions of divestiture of certain Company
Licensed Facilities or Evergreen Licensed Facilities to comply with the multiple
ownership requirements under the Telecom Act shall not be deemed to result in a
Parent Material Adverse Effect.
(c) Governmental and Regulatory Consents. All required consents, approvals,
permits and authorizations to the consummation of the transactions contemplated
hereby by the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA shall be
obtained from any Governmental Entity (other than the FCC) whose consent,
approval, permission or authorization is required by reason of a change in law
after the date of this Agreement, unless the failure to obtain such consent,
approval, permission or authorization could not reasonably be expected to have a
Parent Material Adverse Effect, or to materially and adversely affect the
validity or enforceability of this Agreement or the Merger.
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(d) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger and the Subsidiary Merger under the HSR Act shall have been
terminated or shall have otherwise expired.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger and the Subsidiary Merger shall be in effect;
provided, however, that the party invoking this condition shall use best
reasonable efforts to have any such order or injunction vacated.
(f) Nasdaq Listing. The shares of Parent Common Stock issuable to the
Company's stockholders pursuant to this Agreement shall have been approved for
quotation on the Nasdaq National Market, subject to official notice of issuance.
(g) Form S-4s. The Evergreen Form S-4 and EMCLA Form S-4 shall each have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
6.2 Conditions to Obligations of Evergreen, EMCLA and EMHC. The obligation
of Evergreen, EMCLA and EMHC to effect the Merger and the Subsidiary Merger are
further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company and Radio Broadcasting contained in this Agreement shall have been
true and correct on the date of the Old Agreement (except to the extent that
they expressly relate only to a different time, in which case they shall have
been true and correct as of such different time), other than such breaches of
representations and warranties which in the aggregate could not reasonably be
expected to have a Company Material Adverse Effect. The Company and Radio
Broadcasting shall have delivered to Evergreen a certificate dated as of the
Closing Date, signed by a senior executive officer of the Company and Radio
Broadcasting, to the effect set forth in this Section 6.2(a).
(b) Performance of Obligations of the Company and Radio Broadcasting. The
Company and Radio Broadcasting shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and Evergreen shall have received a certificate signed on
behalf of the Company and Radio Broadcasting by a senior executive officer of
the Company and Radio Broadcasting to such effect.
(c) Tax Opinion. Evergreen shall have received an opinion of Latham &
Watkins, dated the Closing Date, substantially in the form of Exhibit H, to the
effect that (i) the Merger and the Subsidiary Merger will each be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code; (ii) each of Evergreen, EMHC, and the Company will be a
party to the Merger within the meaning of Section 368(b) of the Code; (iii) each
of EMCLA and Radio Broadcasting will be a party to the Subsidiary Merger within
the meaning of Section 368(b) of the Code; (iv) no gain or loss will be
recognized by the Company, Evergreen or EMHC as a result of the Merger; (v) no
gain or loss will be recognized by EMCLA or Radio Broadcasting as a result of
the Subsidiary Merger; (vi) no gain or loss will be recognized by any holder of
Evergreen Class A Common Stock or Evergreen Class B Common Stock on the exchange
of such stock for shares of Parent Common Stock pursuant to this Agreement; and
(vii) no gain or loss will be recognized by any holder of Evergreen Convertible
Exchangeable Preferred Stock as a result of the Merger. In rendering such
opinion, Latham & Watkins shall receive and may rely upon representations
contained in certificates of Evergreen, EMCLA, EMHC, the Company, Radio
Broadcasting, and certain stockholders of the Company and Radio Broadcasting,
substantially in the form of Exhibits B through G.
6.3 Conditions to Obligation of the Company and Radio Broadcasting. The
obligation of the Company and Radio Broadcasting to effect the Merger and the
Subsidiary Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties of
Evergreen contained in this Agreement shall have been true and correct on the
date of the Old Agreement (except to the extent that they expressly relate only
to a different time, in which case they shall have been true and correct as of
such different time), and the representations and warranties of EMCLA and EMHC
contained in this Agreement shall have been true and correct on the date of this
Agreement (except to the extent that they expressly relate only to an earlier
time, in which case they shall have been true and correct as of such earlier
time), in each case other
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than such breaches of representations and warranties which in the aggregate
could not reasonably be expected to have an Evergreen Material Adverse Effect.
Evergreen, EMCLA and EMHC shall have delivered to the Company and Radio
Broadcasting a certificate dated as of the Closing Date, signed by a senior
executive officer of Evergreen, EMCLA and EMHC, to the effect set forth in this
Section 6.3(a).
(b) Performance of Obligations of Evergreen, EMCLA and EMHC. Evergreen,
EMCLA and EMHC shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, including without limitation, the filing of the Parent Charter with the
Delaware Secretary of State and delivery of the Board Resignations and the Board
Appointments, and the Company shall have received a certificate signed on behalf
of Evergreen, EMCLA and EMHC by a senior executive officer of Evergreen, EMCLA
and EMHC to such effect.
(c) Tax Opinion. The Company and Radio Broadcasting shall have received an
opinion of Weil, Gotshal & Manges LLP, dated as of the Closing Date and
substantially in the form of Exhibit I, to the effect that the Merger and the
Subsidiary Merger will each be treated as a reorganization under Section 368(a)
of the Code and that no gain or loss will be recognized by the stockholders of
the Company and of Radio Broadcasting on the receipt pursuant to the Merger and
the Subsidiary Merger of shares of Parent Common Stock, Parent Convertible
Preferred Stock or Merger Preferred Stock in exchange for Shares, shares of
Company Convertible Preferred Stock and/or shares of Radio Broadcasting
Preferred Stock, except with respect to cash received by dissenters or in lieu
of fractional shares of Parent Common Stock. In rendering such opinion, Weil,
Gotshal & Manges LLP shall receive and may rely upon representations contained
in certificates of Evergreen, EMCLA, EMHC, the Company, Radio Broadcasting, and
certain stockholders of the Company and Radio Broadcasting, substantially in the
form of Exhibits B through G.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and abandoned at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of the Company or
Evergreen:
(a) by mutual written consent of Evergreen and the Company;
(b) by either Evergreen or the Company:
(i) if, upon a vote at a duly held Stockholders Meeting or Evergreen
Stockholders Meeting or any adjournment thereof, any required approval of the
stockholders of the Company or Evergreen, as the case may be, shall not have
been obtained;
(ii) if the Merger and the Subsidiary Merger shall not have been
consummated on or before February 19, 1998, unless the failure to consummate the
Merger or the Subsidiary Merger is the result of a willful and material breach
of this Agreement by the party seeking to terminate this Agreement;
(iii) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger or Subsidiary Merger and such order, decree, ruling or
other action shall have become final and nonappealable; or
(iv) if the other party hereto shall have breached the requirements of
Sections 4.2 or 4.5 hereof, unless the party seeking to invoke this clause (iv)
shall at such time be in material breach of this Agreement.
7.2 Effect of Termination. In the event of termination of this Agreement by
either the Company or Evergreen as provided in Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Evergreen or the Company, other than the last sentence of Section
4.3 and Sections 2.10, 3.10, 7.2 and 10.2. Nothing contained in this Section 7.2
shall relieve any party from any liability resulting from any material breach of
the representations, warranties, covenants or agreements set forth in this
Agreement.
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7.3 Amendment. Subject to the applicable provisions of the Delaware Code,
at any time prior to the Effective Time, the parties hereto may modify or amend
this Agreement, by written agreement executed and delivered by duly authorized
officers of the respective parties; provided, however, that after the Company
Stockholder Approval and Evergreen Stockholder Approval has been obtained, no
amendment shall be made which reduces the consideration payable in the Merger or
Subsidiary Merger or adversely affects the rights of the Company's, Radio
Broadcasting's or Evergreen's stockholders hereunder without the approval of
their respective stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
7.4 Extension; Waiver. At any time prior to the Effective Time, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to Section 7.3, waive
compliance with any of the agreements or conditions of the other parties
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
7.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require in the case of Evergreen or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE VIII
SURVIVAL OF PROVISIONS
8.1 Survival. The representations and warranties respectively required to
be made by the Company and Evergreen in this Agreement, or in any certificate,
respectively, delivered by the Company or Evergreen pursuant to Section 6.2 or
Section 6.3 hereof will not survive the Closing.
ARTICLE IX
NOTICES
9.1 Notices. All notices and other communications under this Agreement must
be in writing and will be deemed to have been duly given if delivered,
telecopied or mailed, by certified mail, return receipt requested, first-class
postage prepaid, to the parties at the following addresses:
If to Evergreen, EMCLA or EMHC, to:
Evergreen Media Corporation
433 East Las Colinas Boulevard
Suite 1130
Irving, Texas 75039
Attention: Scott K. Ginsburg
Telephone: (972) 869-9020
Telecopy: (972) 869-3671
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with copies to:
Latham & Watkins
1001 Pennsylvania Ave., N.W.
Suite 1300
Washington, D.C. 20004
Attention: Eric L. Bernthal, Esq.
Daniel T. Lennon, Esq.
Telephone: (202) 637-2200
Telecopy: (202) 637-2201
If to the Company or Radio Broadcasting, to:
Chancellor Broadcasting Company
12655 N. Central Expressway
Suite 405
Dallas, Texas 75243
Attention: Steven Dinetz
Telephone: (972) 239-6220
Telecopy: (972) 239-0220
With copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Thomas O. Hicks
Lawrence D. Stuart, Jr.
Telephone: (214) 740-7300
Telecopy: (214) 740-7313
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Jeremy W. Dickens, Esq.
Telephone: (214) 746-7720
Telecopy: (214) 746-7777
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Article IX will, if delivered personally,
be deemed given upon delivery, will, if delivered by telecopy, be deemed
delivered when confirmed and will, if delivered by mail in the manner described
above, be deemed given on the third business day after the day it is deposited
in a regular depository of the United States mail. Any party from time to time
may change its address for the purpose of notices to that party by giving a
similar notice specifying a new address, but no such notice will be deemed to
have been given until it is actually received by the party sought to be charged
with the contents thereof.
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ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. Except for documents executed by the Company and
Evergreen pursuant hereto, this Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter of this
Agreement, and this Agreement (including the exhibits hereto and other documents
delivered in connection herewith), the Stockholders Agreement and the
Confidentiality Agreements contain the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
10.2 Expenses. Whether or not the Merger and the Subsidiary Merger are
consummated, each of the Company and Evergreen will pay its own costs and
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby; provided
that the fees and expenses incurred in connection with (i) the filings and
registrations with the Department of Justice and Federal Trade Commission
pursuant to the HSR Act, (ii) the filings with the FCC under the Communications
Act, and (iii) the printing, mailing and distribution of the Joint Proxy
Statement and the preparation and filing of the Form S-4s, shall be borne
equally by Evergreen and the Company.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
10.4 No Third Party Beneficiary. Except as otherwise provided herein, the
terms and provisions of this Agreement are intended solely for the benefit of
the parties hereto, and their respective successors or assigns, and it is not
the intention of the parties to confer third-party beneficiary rights upon any
other person.
10.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
10.6 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment that is
not consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns.
10.7 Headings, Gender, Etc. The headings used in this Agreement have been
inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender are deemed to include each
other gender; (b) words using the singular or plural number also include the
plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby," "hereto," and derivative or similar words refer to this entire
Agreement; (d) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; (e) all references to "dollars" or "$" refer to
currency of the United States of America; and (f) the term "person" shall
include any natural person, corporation, limited liability company, general
partnership, limited partnership, or other entity, enterprise, authority or
business organization.
10.8 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if the
rights or obligations of the Company or Evergreen under this Agreement will not
be materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof; and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid, or unenforceable provision or
by its severance herefrom.
10.9 Viacom Transaction. On February 16, 1997, EMCLA and Viacom
International Inc. ("Viacom") entered into a Stock Purchase Agreement (the
"Viacom Purchase Agreement") whereby EMCLA agreed to purchase all the
outstanding shares of stock of certain subsidiaries of Viacom that own and
operate the radio broadcast stations described in the Viacom Purchase Agreement.
Concurrently with the execution and
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<PAGE> 38
delivery of the Old Agreement, Evergreen, EMCLA, the Company and Radio
Broadcasting entered into an agreement (the "Joint Purchase Agreement") whereby,
as between Evergreen and the Company, the Company agreed to assume certain
obligations under the Viacom Purchase Agreement and Evergreen agreed to grant to
the Company certain rights under the Viacom Purchase Agreement. Notwithstanding
any provision hereof to the contrary, no provision of the Old Agreement or this
Agreement shall be deemed to prohibit any transaction contemplated by the Joint
Purchase Agreement or the Viacom Purchase Agreement. The transactions
contemplated by the Viacom Purchase Agreement and the Joint Purchase Agreement
are referred to collectively as the "Viacom Transaction."
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the Company, Radio Broadcasting, Evergreen,
EMCLA and EMHC effective as of the date first written above.
CHANCELLOR BROADCASTING
COMPANY
By: /s/ THOMAS O. HICKS
----------------------------------
Name: Thomas O. Hicks
Title: Chairman of the Board
CHANCELLOR RADIO BROADCASTING
COMPANY
By: /s/ THOMAS O. HICKS
----------------------------------
Name: Thomas O. Hicks
Title: Chairman of the Board
EVERGREEN MEDIA CORPORATION
By: /s/ SCOTT K. GINSBURG
----------------------------------
Name: Scott K. Ginsburg
Title: Chairman and Chief Executive
Officer
EVERGREEN MEDIA CORPORATION OF LOS
ANGELES
By: /s/ SCOTT K. GINSBURG
----------------------------------
Name: Scott K. Ginsburg
Title: Chairman and Chief Executive
Officer
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<PAGE> 39
EVERGREEN MEZZANINE HOLDINGS
CORPORATION
By: /s/ SCOTT K. GINSBURG
----------------------------------
Name: Scott K. Ginsburg
Title: Chairman and Chief Executive
Officer
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<PAGE> 40
ANNEX I
AMENDMENTS TO CERTIFICATE OF INCORPORATION OF EVERGREEN MEZZANINE HOLDINGS
CORPORATION:
ARTICLE FOURTH SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 10,001,000 shares consisting of
(a) 10,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock") and (b) 1,000 shares of Common Stock, par value $.01 per
share (the "Common Stock").
The designations, powers, preferences, rights, qualifications, limitations,
and restrictions of the Preferred Stock and the Common Stock are as follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations,
powers, preferences and rights and such qualifications, limitations and
restrictions thereof as are stated and expressed herein and in the resolution or
resolutions providing for the issue of such class or series adopted by the Board
of Directors of the Corporation (the "Board of Directors") as hereafter
prescribed.
(b) Authority is hereby expressly granted to and vested in the Board of
Directors to authorize the issuance of the Preferred Stock from time to time in
one or more classes or series, and with respect to each class or series of the
Preferred Stock, to fix and state by the resolution or resolutions from time to
time adopted providing for the issuance thereof the following:
(i) whether or not the class or series is to have voting rights, full,
special or limited, or is to be without voting rights, and whether or not such
class or series is to be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or series and the
designations thereof;
(iii) the preferences and relative, participating, optional or other
special rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be redeemable
at the option of the Corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price or prices (which
may be payable in the form of cash, notes, securities or other property) and the
time or times at which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable in cash, securities
of the Corporation or other property, the conditions upon which and the times
when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative and, if
cumulative, the date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the holders of
any class or series thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
Corporation;
(viii) whether or not the shares of any class or series, at the option of
the Corporation or the holder thereof or upon the happening of any specified
event, shall be convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, securities,
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<PAGE> 41
or other property of the Corporation and the conversion price or prices or ratio
or ratios or the rate or rates at which such exchange may be made, with such
adjustments, if any, as shall be stated and expressed or provided for in such
resolution or resolutions; and
(ix) such other special rights and protective provisions with respect to
any class or series as may to the Board of Directors seem advisable.
(c) The shares of each class or series of the Preferred Stock may vary from
the shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
adding to such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of Directors may
decrease the number of shares of the Preferred Stock designated for any existing
class or series by a resolution subtracting from such class or series authorized
and unissued shares of the Preferred Stock designated for such existing class or
series, and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
(d) The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of a majority of the holders of the Preferred Stock, or of any class or
series thereof, unless a vote of any such holders is required pursuant to the
certificate or certificates establishing such class or series of Preferred
Stock.
2. Provisions Relating to the Common Stock.
(a) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
stockholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.
(b) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the board of directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
(c) In the event of any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of the Preferred
Stock or any series thereof, the holders of shares of the Common Stock shall be
entitled to receive all of the remaining assets of the Corporation available for
distribution to its stockholders, ratably in proportion to the number of shares
of the Common Stock held by them. A liquidation, dissolution, or winding-up of
the Corporation, as such terms are used in this Paragraph (c), shall not be
deemed to be occasioned by or to include any consolidation or merger of the
Corporation with or into any other corporation or corporations or other entity
or a sale, lease, exchange, or conveyance of all or a part of the assets of the
Corporation.
3. General.
(a) Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Common Stock from time to
time for such consideration (not less than the par value thereof) as may be
fixed by the Board of Directors, which is expressly authorized to fix the same
in its absolute and uncontrolled discretion subject to the foregoing conditions.
Shares so issued for which the consideration shall have been paid or delivered
to the Corporation shall be deemed fully paid stock and shall not be liable to
any further call or assessment thereon, and the holders of such shares shall not
be liable for any further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue rights and
options entitling their holders to purchase shares of the Corporation's capital
stock of any class or series or other securities of the Corporation, and such
rights and options shall be evidenced by instrument(s) approved by the Board of
Directors. The Board of Directors shall be empowered to set the exercise price,
duration, times for exercise, and other terms of such options or rights;
provided, however, that the consideration to be received for any shares of
capital stock subject thereto shall not be less than the par value thereof.
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<PAGE> 42
ARTICLE SEVENTH SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS
FOLLOWS:
SEVENTH: The Corporation shall indemnify any Person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director, officer, employee or agent
of the Corporation, or (ii) is or was serving at the request of the Corporation
as a director, officer, partner, venturer, proprietor, trustee, employee, agent,
or similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article Seventh is in effect. Any repeal
or amendment of this Article Seventh shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the services of
such director or officer in any of the foregoing capacities prior to any such
repeal or amendment to this Article Seventh. Such right shall include the right
to be paid by the Corporation expenses incurred in investigating or defending
any such proceeding in advance of its final disposition to the maximum extent
permitted under the General Corporation Law of the State of Delaware, as the
same exists or may hereafter be amended. To the extent that a director, officer,
employee or agent of the corporation shall be successful on the merits or
otherwise in defense of any proceeding, or in defense of any claim, issue, or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. If a claim for indemnification or advancement of expenses hereunder
is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense is not permitted under the General Corporation Law of the State of
Delaware, but the burden of proving such defense shall be on the Corporation.
None of (i) the failure of the Corporation (including its board of directors or
any committee thereof, independent legal counsel, or stockholders) to have made
its determination prior to the commencement of such action that indemnification
of, or advancement of costs of defense to, the claimant is permissible in the
circumstances, (ii) an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible, or
(iii) the termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall be a
defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any Person having a
right of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any Person may have or hereafter acquire under any statute, bylaw,
resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Seventh shall extend to proceedings involving the negligence of such
Person.
The Board of Directors may authorize, by a vote of a majority of a quorum
of the Board of Directors, the Corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this Article Seventh.
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<PAGE> 43
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding. "Person" as used herein means any corporation, partnership,
association, firm, trust, joint venture, political subdivision or
instrumentality.
A NEW ARTICLE SHALL BE ADDED AS ARTICLE TENTH TO READ AS FOLLOWS:
TENTH: The following provisions are included for the purpose of ensuring
that control and management of the Corporation remains with loyal citizens of
the United States and/or corporations formed under the laws of the United States
or any of the states of the United States, as required by the Communications Act
of 1934, as the same may be amended from time to time:
(a) The Corporation shall not issue to (i) a person who is a citizen of a
country other than the United States; (ii) any entity organized under the laws
of a government other than the government of the United States or any state,
territory, or possession of the United States; (iii) a government other than the
government of the United States or of any state, territory, or possession of the
United States; or (iv) a representative of, or an individual or entity
controlled by, any of the foregoing (individually, an "Alien"; collectively,
"Aliens") in excess of 25% of the total number of shares of capital stock of the
Corporation outstanding at any time and shall not permit the transfer on the
books of the corporation of any capital stock to any Alien that would result in
the total number of shares of such capital stock held by Aliens exceeding such
25% limit.
(b) No Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 25% of (i) the total number of shares of capital stock of the
Corporation outstanding and entitled to vote at any time and from time to time,
or (ii) the total voting power of all shares of capital stock of the Corporation
outstanding and entitled to vote at any time and from time to time.
(c) No Alien shall be qualified to act as an officer of the Corporation,
and no more than one-fourth of the total number of directors of the Corporation
at any time and from time to time may be Aliens.
(d) The Board of Directors of the Corporation shall have all powers
necessary to implement the provisions of this Article Tenth.
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<PAGE> 44
ANNEX II
AMENDMENTS TO CERTIFICATE OF INCORPORATION OF EVERGREEN MEDIA CORPORATION OF LOS
ANGELES:
ARTICLE FOURTH SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 10,001,000 shares consisting of
(a) 10,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock") and (b) 1,000 shares of Common Stock, par value $.01 per
share (the "Common Stock").
The designations, powers, preferences, rights, qualifications, limitations,
and restrictions of the Preferred Stock and the Common Stock are as follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations,
powers, preferences and rights and such qualifications, limitations and
restrictions thereof as are stated and expressed herein and in the resolution or
resolutions providing for the issue of such class or series adopted by the Board
of Directors of the Corporation (the "Board of Directors") as hereafter
prescribed.
(b) Authority is hereby expressly granted to and vested in the Board of
Directors to authorize the issuance of the Preferred Stock from time to time in
one or more classes or series, and with respect to each class or series of the
Preferred Stock, to fix and state by the resolution or resolutions from time to
time adopted providing for the issuance thereof the following:
(i) whether or not the class or series is to have voting rights, full,
special or limited, or is to be without voting rights, and whether or not such
class or series is to be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or series and the
designations thereof;
(iii) the preferences and relative, participating, optional or other
special rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be redeemable
at the option of the Corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price or prices (which
may be payable in the form of cash, notes, securities or other property) and the
time or times at which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable in cash, securities
of the Corporation or other property, the conditions upon which and the times
when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative and, if
cumulative, the date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the holders of
any class or series thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
Corporation;
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<PAGE> 45
(viii) whether or not the shares of any class or series, at the option of
the Corporation or the holder thereof or upon the happening of any specified
event, shall be convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, securities, or other property of the Corporation and the
conversion price or prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall be stated and
expressed or provided for in such resolution or resolutions; and
(ix) such other special rights and protective provisions with respect to
any class or series as may to the Board of Directors seem advisable.
(c) The shares of each class or series of the Preferred Stock may vary from
the shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
adding to such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of Directors may
decrease the number of shares of the Preferred Stock designated for any existing
class or series by a resolution subtracting from such class or series authorized
and unissued shares of the Preferred Stock designated for such existing class or
series, and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
(d) The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of a majority of the holders of the Preferred Stock, or of any class or
series thereof, unless a vote of any such holders is required pursuant to the
certificate or certificates establishing such class or series of Preferred
Stock.
2. Provisions Relating to the Common Stock.
(a) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
stockholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.
(b) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the board of directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
(c) In the event of any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of the Preferred
Stock or any series thereof, the holders of shares of the Common Stock shall be
entitled to receive all of the remaining assets of the Corporation available for
distribution to its stockholders, ratably in proportion to the number of shares
of the Common Stock held by them. A liquidation, dissolution, or winding-up of
the Corporation, as such terms are used in this Paragraph (c), shall not be
deemed to be occasioned by or to include any consolidation or merger of the
Corporation with or into any other corporation or corporations or other entity
or a sale, lease, exchange, or conveyance of all or a part of the assets of the
Corporation.
3. General.
(a) Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Common Stock from time to
time for such consideration (not less than the par value thereof) as may be
fixed by the Board of Directors, which is expressly authorized to fix the same
in its absolute and uncontrolled discretion subject to the foregoing conditions.
Shares so issued for which the consideration shall have been paid or delivered
to the Corporation shall be deemed fully paid stock and shall not be liable to
any further call or assessment thereon, and the holders of such shares shall not
be liable for any further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue rights and
options entitling their holders to purchase shares of the Corporation's capital
stock of any class or series or other securities of the Corporation, and such
rights and options shall be evidenced by instrument(s) approved by the Board of
Directors. The
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<PAGE> 46
Board of Directors shall be empowered to set the exercise price, duration, times
for exercise, and other terms of such options or rights; provided, however, that
the consideration to be received for any shares of capital stock subject thereto
shall not be less than the par value thereof.
ARTICLE SEVENTH SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS
FOLLOWS:
SEVENTH: The Corporation shall indemnify any Person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director, officer, employee or agent
of the Corporation, or (ii) is or was serving at the request of the Corporation
as a director, officer, partner, venturer, proprietor, trustee, employee, agent,
or similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article Seventh is in effect. Any repeal
or amendment of this Article Seventh shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the services of
such director or officer in any of the foregoing capacities prior to any such
repeal or amendment to this Article Seventh. Such right shall include the right
to be paid by the Corporation expenses incurred in investigating or defending
any such proceeding in advance of its final disposition to the maximum extent
permitted under the General Corporation Law of the State of Delaware, as the
same exists or may hereafter be amended. To the extent that a director, officer,
employee or agent of the corporation shall be successful on the merits or
otherwise in defense of any proceeding, or in defense of any claim, issue, or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. If a claim for indemnification or advancement of expenses hereunder
is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense is not permitted under the General Corporation Law of the State of
Delaware, but the burden of proving such defense shall be on the Corporation.
None of (i) the failure of the Corporation (including its board of directors or
any committee thereof, independent legal counsel, or stockholders) to have made
its determination prior to the commencement of such action that indemnification
of, or advancement of costs of defense to, the claimant is permissible in the
circumstances, (ii) an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible, or
(iii) the termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall be a
defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any Person having a
right of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any Person may have or hereafter acquire under any statute, bylaw,
resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Seventh shall extend to proceedings involving the negligence of such
Person.
The Board of Directors may authorize, by a vote of a majority of a quorum
of the Board of Directors, the Corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or
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<PAGE> 47
domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise against any liability asserted
against him or her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the Corporation would have the
power to indemnify him or her against such liability under the provisions of
this Article Seventh.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding. "Person" as used herein means any corporation, partnership,
association, firm, trust, joint venture, political subdivision or
instrumentality.
A NEW ARTICLE SHALL BE ADDED AS ARTICLE TENTH TO READ AS FOLLOWS:
TENTH: The following provisions are included for the purpose of ensuring
that control and management of the Corporation remains with loyal citizens of
the United States and/or corporations formed under the laws of the United States
or any of the states of the United States, as required by the Communications Act
of 1934, as the same may be amended from time to time:
(a) The Corporation shall not issue to (i) a person who is a citizen of a
country other than the United States; (ii) any entity organized under the laws
of a government other than the government of the United States or any state,
territory, or possession of the United States; (iii) a government other than the
government of the United States or of any state, territory, or possession of the
United States; or (iv) a representative of, or an individual or entity
controlled by, any of the foregoing (individually, an "Alien"; collectively,
"Aliens") in excess of 25% of the total number of shares of capital stock of the
Corporation outstanding at any time and shall not permit the transfer on the
books of the corporation of any capital stock to any Alien that would result in
the total number of shares of such capital stock held by Aliens exceeding such
25% limit.
(b) No Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 25% of (i) the total number of shares of capital stock of the
Corporation outstanding and entitled to vote at any time and from time to time,
or (ii) the total voting power of all shares of capital stock of the Corporation
outstanding and entitled to vote at any time and from time to time.
(c) No Alien shall be qualified to act as an officer of the Corporation,
and no more than one-fourth of the total number of directors of the Corporation
at any time and from time to time may be Aliens.
(d) The Board of Directors of the Corporation shall have all powers
necessary to implement the provisions of this Article Tenth.
A-II-4
<PAGE> 48
ANNEX III
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CHANCELLOR MEDIA CORPORATION
FIRST: The name of the corporation is Chancellor Media Corporation (the
"Corporation").
SECOND: The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to engage in
any and all lawful acts and activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 325,000,000 shares consisting
of (a) 50,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"), (b) 200,000,000 shares of Common Stock, par value $.01 per
share (the "Common Stock") and (c) 75,000,000 shares of Class A Common Stock,
par value $.01 per share (the "Class A Common Stock").
The designations, powers, preferences, rights, qualifications, limitations,
and restrictions of the Preferred Stock, the Common Stock and the Class A Common
Stock are as follows:
1. Reclassification of Existing Class A and Class B Common Stock.
(a) Upon the filing of this Amended and Restated Certificate of
Incorporation, each share of Class A Common Stock, par value $.01 per share, of
the Corporation outstanding shall be reclassified, changed and converted into
one share of the Common Stock, and each share of Class B Common Stock, par value
$.01 per share, of the Corporation outstanding shall be reclassified into one
share of Common Stock (such reclassifications collectively being the
"Reclassification").
(b) After the Reclassification, each holder of the shares of capital stock
of the Corporation being reclassified, changed and converted as provided herein
shall be entitled to receive, upon surrender at the office of the Corporation or
the transfer agent for the Common Stock of such holder's certificate or
certificates representing the shares being reclassified, duly endorsed in blank
or accompanied by duly executed proper instruments of transfer, as promptly as
practicable after such surrender one or more certificates evidencing the Common
Stock issuable to such holder in respect of the Reclassification. After the
Reclassification, pending the issuance and delivery of such certificates in
accordance herewith, the certificate or certificates evidencing the shares of
previously outstanding class A and class B common stock being reclassified shall
be deemed to evidence the shares of Common Stock issuable upon the
Reclassification.
2. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations,
powers, preferences and rights and such qualifications, limitations and
restrictions thereof as are stated and expressed herein and in the resolution or
resolutions providing for the issue of such class or series adopted by the Board
of Directors of the Corporation (the "Board of Directors") as hereafter
prescribed.
(b) Authority is hereby expressly granted to and vested in the Board of
Directors to authorize the issuance of the Preferred Stock from time to time in
one or more classes or series, and with respect to each class or series of the
Preferred Stock, to fix and state by the resolution or resolutions from time to
time adopted providing for the issuance thereof the following:
A-III-1
<PAGE> 49
(i) whether or not the class or series is to have voting rights, full,
special or limited, or is to be without voting rights, and whether or not such
class or series is to be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or series and the
designations thereof;
(iii) the preferences and relative, participating, optional or other
special rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be redeemable
at the option of the Corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price or prices (which
may be payable in the form of cash, notes, securities or other property) and the
time or times at which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable in cash, securities
of the Corporation or other property, the conditions upon which and the times
when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative and, if
cumulative, the date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the holders of
any class or series thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the assets of, the
Corporation;
(viii) whether or not the shares of any class or series, at the option of
the Corporation or the holder thereof or upon the happening of any specified
event, shall be convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, securities, or other property of the Corporation and the
conversion price or prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall be stated and
expressed or provided for in such resolution or resolutions; and
(ix) such other special rights and protective provisions with respect to
any class or series as may to the Board of Directors seem advisable.
(c) The shares of each class or series of the Preferred Stock may vary from
the shares of any other class or series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
adding to such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of Directors may
decrease the number of shares of the Preferred Stock designated for any existing
class or series by a resolution subtracting from such class or series authorized
and unissued shares of the Preferred Stock designated for such existing class or
series, and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
(d) The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock and Class A
Common Stock, each voting as a separate class, without a vote of a majority of
the holders of the Preferred Stock, or of any class or series thereof, unless a
vote of any such holders is required pursuant to the certificate or certificates
establishing such class or series of Preferred Stock.
3. Provisions Relating to the Common Stock and Class A Common Stock.
(a) Except as otherwise set forth in this Paragraph 3, each share of Common
Stock and Class A Common Stock of the Corporation shall have identical rights
and privileges in every respect. The holders of
A-III-2
<PAGE> 50
shares of Common Stock shall be entitled to vote as a class upon all matters
submitted to a vote of the stockholders of the Corporation and shall be entitled
to one vote for each share of Common Stock held, and the holders of shares of
Class A Common Stock shall be entitled to vote upon all matters submitted to a
vote of the stockholders of the Corporation as a separate class and shall be
entitled to one vote for each share of Class A Common Stock held.
(b) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock and Class A Common Stock shall be entitled to receive and
participate ratably in such dividends (payable in cash, stock, or otherwise) as
may be declared thereon by the board of directors at any time and from time to
time out of any funds of the Corporation legally available therefor.
(c) In the event of any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of the Preferred
Stock or any series thereof, the holders of shares of the Common Stock and Class
A Common Stock shall be entitled to receive all of the remaining assets of the
Corporation available for distribution to its stockholders, ratably in
proportion to the number of shares of the Common Stock or Class A Common Stock
held by them.
(d) With respect to any Going Private Transaction (as defined below)
between the Corporation and Scott K. Ginsburg or Affiliates of Scott K. Ginsburg
(as defined below), the holders of the Common Stock and the Class A Common Stock
shall each vote separately as a class. For purposes of this Paragraph 3(d), the
term "Going Private Transaction" shall mean any transaction that is a "Rule
13e-3 Transaction," as such term is defined in Rule 13e-3(a)(3), 17 C.F.R.
sec. 240.13e-3, as amended from time to time, promulgated under the Securities
Exchange Act of 1934, as amended. The term "Affiliate of Scott K. Ginsburg"
shall mean (x) any corporation of which Scott K. Ginsburg is the beneficial
owner of 50% or more of the combined voting power of all classes of equity
securities, (y) any trust or other estate in which Scott K. Ginsburg serves as
trustee or in a similar capacity, or (z) any partnership, joint venture, or
unincorporated organization that is under the direct or indirect control of
Scott K. Ginsburg, such that Scott K. Ginsburg possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such entity whether through the ownership of voting securities, by
contract, or otherwise.
4. General.
(a) Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Common Stock and Class A
Common Stock from time to time for such consideration (not less than the par
value thereof) as may be fixed by the Board of Directors, which is expressly
authorized to fix the same in its absolute and uncontrolled discretion subject
to the foregoing conditions; provided, however, that notwithstanding the
foregoing, the Corporation may not issue shares of Class A Common Stock without
the unanimous vote or written consent of the Board of Directors of the
Corporation. Shares so issued for which the consideration shall have been paid
or delivered to the Corporation shall be deemed fully paid stock and shall not
be liable to any further call or assessment thereon, and the holders of such
shares shall not be liable for any further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue rights and
options entitling their holders to purchase shares of the Corporation's capital
stock of any class or series or other securities of the Corporation, and such
rights and options shall be evidenced by instrument(s) approved by the Board of
Directors. The Board of Directors shall be empowered to set the exercise price,
duration, times for exercise, and other terms of such options or rights;
provided, however, that the consideration to be received for any shares of
capital stock subject thereto shall not be less than the par value thereof.
FIFTH: The number of directors constituting the Board of Directors shall be
no less than five and no more than thirteen, plus such number of directors as
may be elected from time to time by the holders of any class or series of
Preferred Stock. Commencing on the date on which this Amended and Restated
Certificate of Incorporation shall become effective pursuant to the General
Corporation Law of the State of Delaware, the directors of the Corporation shall
be divided into three classes (the "Classified Directors") with the first class
A-III-3
<PAGE> 51
("Class I"), second class ("Class II") and the third class ("Class III") each to
consist as nearly as practicable of an equal number of directors. The term of
office of the Class I directors shall expire at the 1998 annual meeting of
stockholders, the term of office of the Class II directors shall expire at the
1999 annual meeting of stockholders and the term of office of the Class III
directors shall expire at the 2000 annual meeting of stockholders, with each
director to hold office until his or her successor shall have been duly elected
and qualified. At each annual meeting of stockholders, commencing with the 1998
annual meeting, Classified Directors elected to succeed those Classified
Directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election.
SIXTH: The directors of the Corporation need not be elected by written
ballot unless the bylaws of the Corporation otherwise provide.
SEVENTH: The following provisions are included for the purpose of ensuring
that control and management of the Corporation remains with loyal citizens of
the United States and/or corporations formed under the laws of the United States
or any of the states of the United States, as required by the Communications Act
of 1934, as the same may be amended from time to time:
(a) The Corporation shall not issue to (i) a person who is a citizen of a
country other than the United States; (ii) any entity organized under the laws
of a government other than the government of the United States or any state,
territory, or possession of the United States; (iii) a government other than the
government of the United States or of any state, territory, or possession of the
United States; or (iv) a representative of, or an individual or entity
controlled by, any of the foregoing (individually, an "Alien"; collectively,
"Aliens") in excess of 25% of the total number of shares of capital stock of the
Corporation outstanding at any time and shall not permit the transfer on the
books of the corporation of any capital stock to any Alien that would result in
the total number of shares of such capital stock held by Aliens exceeding such
25% limit.
(b) No Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 25% of (i) the total number of shares of capital stock of the
Corporation outstanding and entitled to vote at any time and from time to time,
or (ii) the total voting power of all shares of capital stock of the Corporation
outstanding and entitled to vote at any time and from time to time.
(c) No Alien shall be qualified to act as an officer of the Corporation,
and no more than one-fourth of the total number of directors of the Corporation
at any time and from time to time may be Aliens.
(d) The Board of Directors of the Corporation shall have all powers
necessary to implement the provisions of this Article Seventh.
EIGHTH: No contract or transaction between the Corporation and one or more
of its directors, officers, or stockholders or between the Corporation and any
Person (as hereinafter defined) in which one or more of its directors, officers,
or stockholders are directors, officers, or stockholders, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved, or ratified by the board of directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction. "Person" as used herein means any
corporation, partnership, association, firm, trust, joint venture, political
subdivision or instrumentality.
NINTH: The Corporation shall indemnify any Person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director, officer,
A-III-4
<PAGE> 52
employee or agent of the Corporation, or (ii) is or was serving at the request
of the Corporation as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, to the fullest extent permitted under the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended. Such right shall be a contract right and as such shall run
to the benefit of any director or officer who is elected and accepts the
position of director or officer of the Corporation or elects to continue to
serve as a director or officer of the Corporation while this Article Ninth is in
effect. Any repeal or amendment of this Article Ninth shall be prospective only
and shall not limit the rights of any such director or officer or the
obligations of the Corporation with respect to any claim arising from or related
to the services of such director or officer in any of the foregoing capacities
prior to any such repeal or amendment to this Article Ninth. Such right shall
include the right to be paid by the Corporation expenses incurred in
investigating or defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended. To the
extent that a director, officer, employee or agent of the corporation shall be
successful on the merits or otherwise in defense of any proceeding, or in
defense of any claim, issue, or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith. If a claim for indemnification or advancement of
expenses hereunder is not paid in full by the Corporation within sixty (60) days
after a written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim, and if successful in whole or in part, the claimant shall
also be entitled to be paid the expenses of prosecuting such claim. It shall be
a defense to any such action that such indemnification or advancement of costs
of defense is not permitted under the General Corporation Law of the State of
Delaware, but the burden of proving such defense shall be on the Corporation.
None of (i) the failure of the Corporation (including its board of directors or
any committee thereof, independent legal counsel, or stockholders) to have made
its determination prior to the commencement of such action that indemnification
of, or advancement of costs of defense to, the claimant is permissible in the
circumstances, (ii) an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible, or
(iii) the termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall be a
defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any Person having a
right of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any Person may have or hereafter acquire under any statute, bylaw,
resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Ninth shall extend to proceedings involving the negligence of such
Person.
The Board of Directors may authorize, by a vote of a majority of a quorum
of the Board of Directors, the Corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this Article Ninth.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
A-III-5
<PAGE> 53
TENTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or amendment of this Article Tenth by
the stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation arising from an act or omission occurring prior to the time of such
repeal or amendment. In addition to the circumstances in which a director of the
Corporation is not personally liable as set forth in the foregoing provisions of
this Article Tenth, a director shall not be liable to the Corporation or its
stockholders to such further extent as permitted by any law hereafter enacted,
including without limitation any subsequent amendment to the General Corporation
Law of the State of Delaware.
A-III-6
<PAGE> 54
ANNEX IV
AMENDED AND RESTATED
BYLAWS
OF
CHANCELLOR MEDIA CORPORATION
A DELAWARE CORPORATION
<PAGE> 55
<TABLE>
<S> <S> <C>
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent................................. A-IV-1
1.2 Other Offices............................................... A-IV-1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting.............................................. A-IV-1
2.2 Special Meeting............................................. A-IV-1
2.3 Place of Meetings........................................... A-IV-1
2.4 Notice...................................................... A-IV-1
2.5 Voting List................................................. A-IV-2
2.6 Quorum...................................................... A-IV-2
2.7 Required Vote; Withdrawal of Quorum......................... A-IV-2
2.8 Method of Voting; Proxies................................... A-IV-2
2.9 Record Date................................................. A-IV-2
2.10 Conduct of Meeting.......................................... A-IV-3
2.11 Inspectors.................................................. A-IV-3
ARTICLE THREE: DIRECTORS
3.1 Management.................................................. A-IV-4
3.2 Number; Qualification; Election; Term....................... A-IV-4
3.3 Change in Number............................................ A-IV-4
3.4 Removal..................................................... A-IV-4
3.5 Vacancies................................................... A-IV-4
3.6 Meetings of Directors....................................... A-IV-4
3.7 First Meeting............................................... A-IV-5
3.8 Election of Officers........................................ A-IV-5
3.9 Regular Meetings............................................ A-IV-5
3.10 Special Meetings............................................ A-IV-5
3.11 Notice...................................................... A-IV-5
3.12 Quorum; Majority Vote....................................... A-IV-5
3.13 Procedure................................................... A-IV-5
3.14 Presumption of Assent....................................... A-IV-5
3.15 Compensation................................................ A-IV-5
ARTICLE FOUR: COMMITTEES
4.1 Designation................................................. A-IV-6
4.2 Number; Qualification; Term................................. A-IV-6
4.3 Authority................................................... A-IV-6
4.4 Committee Changes........................................... A-IV-6
4.5 Alternate Members of Committees............................. A-IV-6
4.6 Regular Meetings............................................ A-IV-6
4.7 Special Meetings............................................ A-IV-6
4.8 Quorum; Majority Vote....................................... A-IV-6
4.9 Minutes..................................................... A-IV-6
4.10 Compensation................................................ A-IV-6
4.11 Responsibility.............................................. A-IV-6
ARTICLE FIVE: NOTICE
5.1 Method...................................................... A-IV-7
5.2 Waiver...................................................... A-IV-7
</TABLE>
A-IV-i
<PAGE> 56
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office.............................. A-IV-7
6.2 Removal..................................................... A-IV-7
6.3 Vacancies................................................... A-IV-7
6.4 Authority................................................... A-IV-7
6.5 Compensation................................................ A-IV-7
6.6 Chairman of the Board....................................... A-IV-7
6.7 President................................................... A-IV-8
6.8 Chief Operating Officer..................................... A-IV-8
6.9 Vice Presidents............................................. A-IV-8
6.10 Treasurer................................................... A-IV-8
6.11 Assistant Treasurers........................................ A-IV-8
6.12 Secretary................................................... A-IV-8
6.13 Assistant Secretaries....................................... A-IV-8
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares..................................... A-IV-8
7.2 Replacement of Lost or Destroyed Certificates............... A-IV-9
7.3 Transfer of Shares.......................................... A-IV-9
7.4 Registered Stockholders..................................... A-IV-9
7.5 Regulations................................................. A-IV-9
7.6 Legends..................................................... A-IV-9
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends................................................... A-IV-9
8.2 Reserves.................................................... A-IV-9
8.3 Books and Records........................................... A-IV-9
8.4 Fiscal Year................................................. A-IV-10
8.5 Seal........................................................ A-IV-10
8.6 Resignations................................................ A-IV-10
8.7 Securities of Other Corporations............................ A-IV-10
8.8 Telephone Meetings.......................................... A-IV-10
8.9 Action Without a Meeting.................................... A-IV-10
8.10 Invalid Provisions.......................................... A-IV-11
8.11 Mortgages, etc.............................................. A-IV-11
8.12 Headings.................................................... A-IV-11
8.13 References.................................................. A-IV-11
8.14 Amendments.................................................. A-IV-11
A-IV-ii
<PAGE> 57
AMENDED AND RESTATED
BYLAWS
OF
CHANCELLOR MEDIA CORPORATION
A DELAWARE CORPORATION
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation Law
of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of Chancellor Media Corporation, a Delaware
corporation (the "Corporation"). In the event of a direct conflict between the
provisions of these bylaws and the mandatory provisions of the Delaware General
Corporation Law or the provisions of the certificate of incorporation of the
Corporation, such provisions of the Delaware General Corporation Law or the
certificate of incorporation of the Corporation, as the case may be, will be
controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such other
places, both within and without the State of Delaware, as the board of directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the Corporation
shall be held each calendar year on such date and at such time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting or in a duly executed waiver of notice of such meeting. At such
meeting, the stockholders shall elect directors and transact such other business
as may properly be brought before the meeting.
2.2 Special Meeting. A special meeting of the stockholders may be called
at any time by the Chairman of the Board, the President, the board of directors,
and shall be called by the President or the Secretary at the request in writing
of the stockholders of record of not less than ten percent of all shares
entitled to vote at such meeting or as otherwise provided by the certificate of
incorporation of the Corporation. A special meeting shall be held on such date
and at such time as shall be designated by the person(s) calling the meeting and
stated in the notice of the meeting or in a duly executed waiver of notice of
such meeting. Only such business shall be transacted at a special meeting as may
be stated or indicated in the notice of such meeting or in a duly executed
waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be held at
any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waiver of notice of such meeting. Meetings of stockholders shall be
held at the principal executive office of the Corporation unless another place
is designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and time of
each meeting of the stockholders and, in case of a special meeting, the purpose
or purposes for which the meeting is called shall be delivered not less than ten
nor more than 60 days before the date of the meeting, either personally or by
mail, by or at the direction of the President, the Secretary, or the officer or
person(s) calling the meeting, to each stockholder of record entitled to vote at
such meeting. If such notice is to be sent by mail, it shall be directed
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to such stockholder at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices to him be mailed to some other address, in which
case it shall be directed to him at such other address. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy and shall not, at the beginning of
such meeting, object to the transaction of any business because the meeting is
not lawfully called or convened, or who shall, either before or after the
meeting, submit a signed waiver of notice, in person or by proxy.
2.5 Voting List. At least ten days before each meeting of stockholders,
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer appointed
by him or through a transfer agent appointed by the board of directors, shall
prepare a complete list of stockholders entitled to vote thereat, arranged in
alphabetical order and showing the address of each stockholder and number of
shares registered in the name of each stockholder. For a period of ten days
prior to such meeting, such list shall be kept on file at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of meeting or a duly executed waiver of notice of such meeting or, if not
so specified, at the place where the meeting is to be held and shall be open to
examination by any stockholder during ordinary business hours. Such list shall
be produced at such meeting and kept at the meeting at all times during such
meeting and may be inspected by any stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares entitled
to vote on a matter, present in person or by proxy, shall constitute a quorum at
any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these by-laws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders, the
stockholders entitled to vote thereat who are present, in person or by proxy,
or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other than
announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum is present at any
meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are present, in person or by proxy, shall decide any
question brought before such meeting, unless the question is one on which, by
express provision of statute, the certificate of incorporation of the
Corporation, or these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. The
stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise provided in the
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each such
proxy shall be filed with the Secretary of the Corporation before or at the time
of the meeting. No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the proxy. If no date is stated in a
proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to be voted. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power or unless otherwise made
irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders entitled
to notice of or to vote at any meeting of stockholders, or any adjournment
thereof, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion, or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix a record date,
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which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the board of directors, for any such determination
of stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(ii) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by law or these bylaws, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
in the State of Delaware, principal place of business, or such officer or agent
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the board of directors and prior action by
the board of directors is required by law or these bylaws, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
2.10 Conduct of Meeting. The Chairman of the Board, if such office has been
filled, and, if not or if the Chairman of the Board is absent or otherwise
unable to act, the President shall preside at all meetings of stockholders. The
Secretary shall keep the records of each meeting of stockholders. In the absence
or inability to act of any such officer, such officer's duties shall be
performed by the officer given the authority to act for such absent or
non-acting officer under these bylaws or by some person appointed by the
meeting.
2.11 Inspectors. The board of directors may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, and the validity and effect of proxies
and shall receive votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots, or consents, determine the results, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request, or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
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ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation shall be
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of incorporation of the Corporation, or these bylaws, the board
of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Term. The number of directors which
shall constitute the entire board of directors shall be not less than five nor
more than thirteen, plus such number of directors as may be elected from time to
time by the holders of any class or series of preferred stock of the
Corporation. The first board of directors shall consist of the number of
directors named in the certificate of incorporation of the Corporation or, if no
directors are so named, shall consist of the number of directors elected by the
incorporator(s) at an organizational meeting or by unanimous written consent in
lieu thereof. Thereafter, within the limits above specified, the number of
directors which shall constitute the entire board of directors shall be
determined by resolution of the board of directors or by resolution of the
stockholders at the annual meeting thereof or at a special meeting thereof
called for that purpose. Except as otherwise required by law, the certificate of
incorporation of the Corporation, or these bylaws, the directors shall be
elected at an annual meeting of stockholders at which a quorum is present.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of
directors. Except as otherwise required by law, the certificate of incorporation
of the Corporation, or these bylaws, each director so chosen shall hold office
until the first annual meeting of stockholders held after his election and until
his successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. None of the directors need be a stockholder
of the Corporation or a resident of the State of Delaware. Each director must
have attained the age of majority.
3.3 Change in Number. No decrease in the number of directors constituting
the entire board of directors shall have the effect of shortening the term of
any incumbent director.
3.4 Removal. Except as otherwise provided by law or in the certificate of
incorporation of the Corporation or these by-laws, at any meeting of
stockholders called expressly for that purpose, any director or the entire board
of directors may be removed, with or without cause, by a vote of the holders of
a majority of the shares then entitled to vote on the election of directors.
3.5 Vacancies. Vacancies and newly-created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by the sole
remaining director, provided, however, that if pursuant to a provision of the
certificate of incorporation a class of capital stock of the Corporation shall
have the right to vote as a class to elect a director, then the vacancy as to a
director so elected shall be filled by a vote of the holders of such class. Each
director so chosen shall hold office until the first annual meeting of
stockholders held after his election and until his successor is elected and
qualified or, if earlier, until his death, resignation, or removal from office.
If there are no directors in office, an election of directors may be held in the
manner provided by statute. If, at the time of filling any vacancy or any
newly-created directorship, the directors then in office shall constitute less
than a majority of the whole board of directors (as constituted immediately
prior to any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or
newly-created directorships or to replace the directors chosen by the directors
then in office. Except as otherwise provided in these bylaws, when one or more
directors shall resign from the board of directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have the power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in these
bylaws with respect to the filling of other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings and may
have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
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3.7 First Meeting. Each newly elected board of directors may hold its
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of stockholders, and no notice of such meeting shall be necessary.
3.8 Election of Officers. At the first meeting of the board of directors
after each annual meeting of stockholders at which a quorum shall be present,
the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors shall be
held at such times and places as shall be designated from time to time by
resolution of the board of directors. Notice of such regular meetings shall not
be required.
3.10 Special Meetings. Special meetings of the board of directors shall be
held whenever called by the Chairman of the Board, the President, or any
director.
3.11 Notice. The Secretary shall give notice of each special meeting to
each director at least 24 hours before the meeting. Notice of any such meeting
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to him. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting.
3.12 Quorum; Majority Vote. At all meetings of the board of directors, a
majority of the directors fixed in the manner provided in these bylaws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the certificate of incorporation of the Corporation, or these bylaws, the act of
a majority of the directors present at a meeting at which a quorum is in
attendance shall be the act of the board of directors. At any time that the
certificate of incorporation of the Corporation provides that directors elected
by the holders of a class or series of stock shall have more or less than one
vote per director on any matter, every reference in these bylaws to a majority
or other proportion of directors shall refer to a majority or other proportion
of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business shall be
transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of the
Corporation shall act as the secretary of each meeting of the board of directors
unless the board of directors appoints another person to act as secretary of the
meeting. The board of directors shall keep regular minutes of its proceedings
which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is present
at the meeting of the board of directors at which action on any corporate matter
is taken shall be presumed to have assented to the action unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward any dissent by certified
or registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.15 Compensation. The board of directors shall have the authority to fix
the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
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ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution adopted by a
majority of the entire board of directors, designate one or more committees.
4.2 Number; Qualification; Term. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased from
time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 Authority. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these bylaws.
4.4 Committee Changes. The board of directors shall have the power at any
time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 Alternate Members of Committees. The board of directors may designate
one or more directors as alternate members of any committee. Any such alternate
member may replace any absent or disqualified member at any meeting of the
committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee member is absent or disqualified, the
member or members of such committee present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in the
place of any such absent or disqualified member.
4.6 Regular Meetings. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a majority of the
number of members designated by the board of directors shall constitute a quorum
for the transaction of business. If a quorum is not present at a meeting of any
committee, a majority of the members present may adjourn the meeting from time
to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its proceedings to be
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the Secretary of the Corporation for placement in the minute
books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the delegation
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.
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ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation of the
Corporation, or these bylaws, notice is required to be given to any committee
member, director, or stockholder and no provision is made as to how such notice
shall be given, personal notice shall not be required and any such notice may be
given (a) in writing, by mail, postage prepaid, addressed to such committee
member, director, or stockholder at his address as it appears on the books or
(in the case of a stockholder) the stock transfer records of the Corporation, or
(b) by any other method permitted by law (including but not limited to overnight
courier service, telegram, telex, or telefax). Any notice required or permitted
to be given by mail shall be deemed to be delivered and given at the time when
the same is deposited in the United States mail as aforesaid. Any notice
required or permitted to be given by overnight courier service shall be deemed
to be delivered and given at the time delivered to such service with all charges
prepaid and addressed as aforesaid. Any notice required or permitted to be given
by telegram, telex, or telefax shall be deemed to be delivered and given at the
time transmitted with all charges prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the Corporation shall
be a President, one or more Chief Operating Officers, a Secretary, and such
other officers as the board of directors may from time to time elect or appoint,
including a Chairman of the Board, one or more Vice Presidents (with each Vice
President to have such descriptive title, if any, as the board of directors
shall determine), and a Treasurer. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified, until his
death, or until he shall resign or shall have been removed in the manner
hereinafter provided. Any two or more offices may be held by the same person.
None of the officers need be a stockholder or a director of the Corporation or a
resident of the State of Delaware.
6.2 Removal. Any officer or agent elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interest of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the Corporation (by
death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 Authority. Officers shall have such authority and perform such duties
in the management of the Corporation as are provided in these bylaws or as may
be determined by resolution of the board of directors not inconsistent with
these bylaws.
6.5 Compensation. The compensation, if any, of officers and agents shall
be fixed from time to time by the board of directors; provided, however, that
the board of directors may delegate the power to determine the compensation of
any officer and agent (other than the officer to whom such power is delegated)
to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board, if elected by the
board of directors, shall have such powers and duties as may be prescribed by
the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
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6.7 President. The President shall be the chief executive officer of the
Corporation and, subject to the board of directors, he shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident to
such responsibilities. If the board of directors has not elected a Chairman of
the Board or in the absence or inability to act of the Chairman of the Board,
the President shall exercise all of the powers and discharge all of the duties
of the Chairman of the Board. As between the Corporation and third parties, any
action taken by the President in the performance of the duties of the Chairman
of the Board shall be conclusive evidence that there is no Chairman of the Board
or that the Chairman of the Board is absent or unable to act.
6.8 Chief Operating Officer. The Chief Operating Officer(s) shall have the
day to day responsibility for the business operations of the Corporation,
reporting to the President and subject to the control of the board of directors.
6.9 Vice Presidents. Each Vice President shall have such powers and duties
as may be assigned to him by the board of directors, the Chairman of the Board,
or the President, and (in order of their seniority as determined by the board of
directors or, in the absence of such determination, as determined by the length
of time they have held the office of Vice President) shall exercise the powers
of the President during that officer's absence or inability to act. As between
the Corporation and third parties, any action taken by a Vice President in the
performance of the duties of the President shall be conclusive evidence of the
absence or inability to act of the President at the time such action was taken.
6.10 Treasurer. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and to
the credit of the Corporation in such depository or depositories as may be
designated by the board of directors, and shall perform such other duties as may
be prescribed by the board of directors, the Chairman of the Board, or the
President.
6.11 Assistant Treasurers. Each Assistant Treasurer shall have such powers
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President. The Assistant Treasurers (in the order of their
seniority as determined by the board of directors or, in the absence of such a
determination, as determined by the length of time they have held the office of
Assistant Treasurer) shall exercise the powers of the Treasurer during that
officer's absence or inability to act.
6.12 Secretary. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board or the President, in the name of the Corporation, all contracts of the
Corporation and affix the seal of the Corporation thereto. He may sign with the
Chairman of the Board or the President all certificates for shares of stock of
the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which shall
at all reasonable times be open to inspection by any director upon application
at the office of the Corporation during business hours. He shall in general
perform all duties incident to the office of the Secretary, subject to the
control of the board of directors, the Chairman of the Board, and the President.
6.13 Assistant Secretaries. Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the order
of their seniority as determined by the board of directors or, in the absence of
such a determination, as determined by the length of time they have held the
office of Assistant Secretary) shall exercise the powers of the Secretary during
that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or the
President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an
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Assistant Treasurer. Any and all signatures on the certificate may be a
facsimile and may be sealed with the seal of the Corporation or a facsimile
thereof. If any officer, transfer agent, or registrar who has signed, or whose
facsimile signature has been placed upon, a certificate has ceased to be such
officer, transfer agent, or registrar before such certificate is issued, such
certificate may be issued by the Corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue. The
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued and shall exhibit the holder's name and
the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of directors
may direct a new certificate or certificates to be issued in place of a
certificate or certificates theretofore issued by the Corporation and alleged to
have been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate or certificates representing shares to be lost
or destroyed. When authorizing such issue of a new certificate or certificates
the board of directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond with a surety or
sureties satisfactory to the Corporation in such sum as it may direct as
indemnity against any claim, or expense resulting from a claim, that may be made
against the Corporation with respect to the certificate or certificates alleged
to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and authority
to make all such rules and regulations as they may deem expedient concerning the
issue, transfer, and registration or the replacement of certificates for shares
of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and authority to
provide that certificates representing shares of stock bear such legends as the
board of directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and payment
shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out of funds
of the Corporation legally available therefor such reserve or reserves as the
directors from time to time, in their discretion, consider proper to provide for
contingencies, to equalize dividends, or to repair or maintain any property of
the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 Books and Records. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
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8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by the
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the selection of the fiscal year is not expressly deferred by
the board of directors, the fiscal year shall be the calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time to time
may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may resign by
so stating at any meeting of the board of directors or by giving written notice
to the board of directors, the Chairman of the Board, the President, or the
Secretary. Such resignation shall take effect at the time specified therein or,
if no time is specified therein, immediately upon its receipt. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board, the
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or through a
proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and participation in a meeting pursuant to this section
shall constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which the holders of all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in the
manner required by this Section 8.9(a) to the Corporation, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office, principal place
of business, or such officer or agent shall be by hand or by certified or
registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation of the
Corporation or by these bylaws, any action required or permitted to be taken at
a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the directors or all
the committee members, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a vote of such directors or committee members, as the case may be, and may be
stated as such in any certificate or document filed with the Secretary of State
of the State of Delaware or in any certificate delivered to any person. Such
consent or consents shall be filed with the minutes of proceedings of the board
or committee, as the case may be.
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8.10 Invalid Provisions. If any part of these bylaws shall be held invalid
or inoperative for any reason, the remaining parts, so far as it is possible and
reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust, mortgage, or
other instrument executed by the Corporation through its duly authorized officer
or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 Headings. The headings used in these bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 References. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 Amendments. These bylaws may be altered, amended, or repealed or new
bylaws may be adopted by the stockholders or by the board of directors at any
regular meeting of the stockholders or the board of directors or at any special
meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws be contained in the
notice of such special meeting.
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<PAGE> 68
EXHIBIT A
, 1997
Evergreen Media Corporation
433 East Las Colinas Boulevard, Suite 1130
Irving, Texas 75039
Ladies and Gentlemen:
I have been advised that I have been identified as a possible "affiliate"
of Chancellor Broadcasting Company, a Delaware corporation (the "Company"), as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
General Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933 (the
"Securities Act"), although nothing contained herein should be construed as an
admission of such fact.
Pursuant to the terms of an Agreement and Plan of Merger dated as of
February 19, 1997, as Amended and Restated as of July 31, 1997 (the "Merger
Agreement"), by and among the Company, Chancellor Radio Broadcasting Company, a
Delaware corporation ("Radio Broadcasting"), Evergreen Media Corporation, a
Delaware corporation ("Evergreen"), Evergreen Mezzanine Holdings Corporation, a
Delaware corporation ("EMHC") and Evergreen Media Corporation of Los Angeles, a
Delaware corporation ("EMCLA"), the Company will be merged with and into EMHC
(the "Parent Merger"), with EMHC continuing as the surviving corporation in the
Parent Merger, and thereafter Radio Broadcasting will be merged with and into
EMCLA (the "Subsidiary Merger" and, collectively with the Parent Merger, the
"Merger"), with EMCLA continuing as the surviving corporation in the Subsidiary
Merger. In addition, in connection with the Merger, Evergreen will file an
amendment to its certificate of incorporation (the "Charter Amendment") whereby
the Class A Common Stock, $0.01 par value, and Class B Common Stock of Evergreen
outstanding immediately prior to the effectiveness of the Charter Amendment will
be reclassified into shares of Common Stock, $0.01 par value ("Parent Common
Stock"), and the name of the corporation will be changed to Chancellor Media
Corporation (as such, the "Parent"). As a result of the Merger, I will receive
Merger Consideration (as defined in the Merger Agreement), including shares of
Parent Common Stock in exchange for shares of Class A Common Stock, $.01 par
value, and/or shares of Class B Common Stock, $0.01 par value, of the Company
(collectively, the "Shares") owned by me at the effective time of the Merger as
determined pursuant to the Merger Agreement.
A. In connection therewith, I represent, warrant and agree that:
1. I shall not make any sale, transfer or other disposition of the Parent
Common Stock I receive as a result of the Merger in violation of the Securities
Act or the Rules and Regulations.
2. I have been advised that the issuance of Parent Common Stock to me as a
result of the Merger has been registered with the Commission under the
Securities Act on a Registration Statement on Form S-4. However, I have also
been advised that, if at the time the Merger was submitted for a vote of the
stockholders of the Company I am determined to have been an "affiliate" of the
Company, any sale by me of the shares of Parent Common Stock I receive as a
result of the Merger must be (i) registered under the Securities Act, (ii) made
in conformity with the provisions of Rule 145 promulgated by the Commission
under the Securities Act or (iii) made pursuant to a transaction which, in the
opinion of counsel reasonably satisfactory to Parent or as described in a "no
action" or interpretive letter from the staff of the Commission, is not required
to be registered under the Securities Act.
3. I have carefully read this letter and the Merger Agreement and have
discussed the requirements of the Merger Agreement and other limitations upon
the sale, transfer or other disposition of the shares of Parent Common Stock to
be received by me, to the extent I have felt necessary, with my counsel or with
counsel for the Company.
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<PAGE> 69
B. Furthermore, in connection with the matters set forth herein, I
understand and agree that:
1. I understand that Parent will give stop transfer instructions to its
transfer agents with respect to the Parent Common Stock and that the
certificates for the Parent Common Stock issued to the undersigned, or any
substitutions therefor, will bear a legend substantially to the following
effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, MAY APPLY. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
1997, BETWEEN THE REGISTERED HOLDER HEREOF AND CHANCELLOR MEDIA
CORPORATION (FORMERLY KNOWN AS EVERGREEN MEDIA CORPORATION), A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF CHANCELLOR MEDIA
CORPORATION."
2. I also understand that unless the transfer by the undersigned of any
Parent Common Stock has been registered under the Securities Act or is a sale
made in conformity with the provisions of Rule 145, Parent reserves the right to
place the following legend on the certificates issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY APPLY. THE SECURITIES
HAVE NOT BEEN ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF SUCH ACT
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
It is understood and agreed that the legends set forth in paragraphs (B) 1
and 2 above shall be removed by delivery of new certificates without such legend
if Parent receives an opinion of counsel reasonably satisfactory to Parent to
the effect that such legend is not required for purposes of the Securities Act.
It is understood and agreed that such legends and the stop orders referred to
above will be removed if (i) one year shall have elapsed from the date the
undersigned acquired Parent Common Stock received in the Merger and the
provisions of Rule 145(d)(2) under the Securities Act are then available to the
undersigned, (ii) two years shall have elapsed from the date the undersigned
acquired Parent Common Stock received in the Merger and the provisions of Rule
145(d)(3) under the Securities Act are then available to the undersigned, or
(iii) Parent has received under the Securities Act an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to Parent, to the effect
that the restrictions imposed by Rule 145 under the Securities Act no longer
apply to the undersigned.
Parent shall be under no further obligation to register the sale, transfer
or other disposition of the shares of Parent Common Stock received by me as a
result of the Merger or to take any other action necessary in order to make
compliance with an exemption from registration available.
Very truly yours,
A-A-2
<PAGE> 70
EXHIBIT B
CHANCELLOR BROADCASTING COMPANY
CERTIFICATE
In connection with your tax opinion dated , 1997 regarding
certain federal income tax consequences of the merger (the "Merger") of
Chancellor Broadcasting Company, a Delaware corporation ("the Company"), with
and into Evergreen Mezzanine Holdings Corporation, a Delaware corporation
("EMHC") and a direct wholly-owned subsidiary of Evergreen Media Corporation, a
Delaware corporation ("Evergreen"), pursuant to the Amended and Restated
Agreement and Plan of Merger dated as of July 31, 1997 (the "Merger Agreement"),
and recognizing that you will rely on this Certificate in delivering said
opinion, the Company hereby represents that the facts relating to the Merger, as
such facts are described in the Registration Statement of Evergreen filed with
the Securities and Exchange Commission (the "Commission") on , 1997
(and all amendments thereto), are, insofar as such facts pertain to the Company,
true, correct, and complete in all material respects in accordance with
applicable rules of the Commission.
The Company further represents the following:
1. The fair market value of the Evergreen stock, cash (if any) and any
cash in lieu of fractional shares to be received by each Company
shareholder will be approximately equal to the fair market value of the
Company stock surrendered in the exchange.
2. There is no plan or intention by the shareholders of the Company
who own 5 percent or more of the Company stock as of the date hereof, and
to the best of the knowledge of the management of the Company, there is no
plan or intention on the part of the remaining shareholders of the Company,
to sell, exchange, or otherwise dispose of a number of shares of Evergreen
stock to be received in the transaction that would reduce the Company
shareholders' ownership of Evergreen stock to a number of shares having a
value on the date of the Merger of less than 50 percent of the value of all
of the formerly outstanding stock of the Company as of the same date. For
purposes of this representation, shares of the Company stock surrendered by
dissenters or exchanged for cash in lieu of fractional shares of Evergreen
stock will be treated as outstanding Company stock on the date of the
Merger. Moreover, shares of the Company stock and shares of Evergreen stock
held by the Company shareholders and otherwise sold, redeemed, or disposed
of prior or subsequent to the Merger will be considered in making this
representation.
3. The liabilities of the Company to be assumed by EMHC or Evergreen,
if any, and the liabilities to which the transferred assets of the Company
are subject were incurred by the Company in the ordinary course of its
business.
4. The fair market value of the assets of the Company to be
transferred to EMHC in the Merger will equal or exceed the sum of the
liabilities to be assumed by EMHC or Evergreen plus the amount of
liabilities, if any, to which the transferred assets are subject.
5. Evergreen, EMHC, the Company and the shareholders of the Company
will pay their respective expenses, if any, incurred in connection with the
Merger.
6. There is no intercorporate indebtedness existing between the
Company and EMHC or Evergreen that was issued, acquired, or will be settled
at a discount.
7. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
8. The Company is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
9. None of the compensation to be received by any shareholder-employee
of the Company will be separate consideration for, or allocable to, any of
their shares of the Company stock; none of the shares of Evergreen stock to
be received by any such shareholder-employee will be separate consideration
for, or
A-B-1
<PAGE> 71
allocable to, any employment agreement; and the compensation to be paid to
any such shareholder-employee will be for services actually rendered and
will be commensurate with amounts paid to third parties bargaining at
arm's-length for similar services.
10. No EMHC stock will be issued pursuant to the Merger.
11. At least 90 percent of the fair market value of the net assets and
at least 70 percent of the fair market value of the gross assets held by
the Company immediately prior to the Merger will be acquired by EMHC in the
Merger. For purposes of determining the percentage of the Company's net and
gross assets to be acquired by EMHC pursuant to the Merger, the following
assets will be treated as held by the Company immediately prior to, but not
acquired by EMHC pursuant to, the Merger: (i) assets disposed of by the
Company prior to the Merger and in contemplation thereof (including,
without limitation, any asset disposed of by the Company, other than in the
ordinary course of business, pursuant to a plan or intention existing
during the period ending on the date of the Merger and beginning with the
commencement of negotiations (whether formal or informal) with Evergreen
regarding the Merger), (ii) assets used by the Company to pay Company
shareholders, if any, who perfect dissenters' rights, (iii) assets used by
the Company to pay reorganization expenses or other liabilities incurred in
connection with the Merger, (iv) assets used to make distributions,
redemptions or other payments (except for regular, normal distributions) in
respect of the Company's Class A or Class B common stock or the Company's
convertible preferred stock (including payments treated as such for tax
purposes) that are made prior to the Merger and are part of the plan of the
Merger, and (v) any direct or indirect stock interest in Katz Acquisition
Corp. or any successor held by the Company and distributed by EMHC to
Evergreen immediately following the Merger.
12. The Merger Agreement represents the full and complete agreement
between Evergreen, EMHC and the Company regarding the Merger, and there are
no other written or oral agreements regarding the Merger other than those
expressly referred to in the Merger Agreement.
IN WITNESS WHEREOF, the Company has executed this Certificate on this
day of , 1997.
CHANCELLOR BROADCASTING COMPANY
By:
------------------------------------
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<PAGE> 72
EXHIBIT C
CHANCELLOR RADIO BROADCASTING COMPANY
CERTIFICATE
In connection with your tax opinion dated , 1997 regarding
certain federal income tax consequences of the merger (the "Subsidiary Merger")
of Chancellor Radio Broadcasting Company, a Delaware corporation ("Radio
Broadcasting"), with and into Evergreen Media Corporation of Los Angeles, a
Delaware corporation ("EMCLA"), pursuant to the Amended and Restated Agreement
and Plan of Merger dated as of July 31, 1997( the "Merger Agreement"), and
recognizing that you will rely on this Certificate in delivering said opinion,
Radio Broadcasting hereby represents that the facts relating to the Subsidiary
Merger, as such facts are described in the Registration Statement of Evergreen
filed with the Securities and Exchange Commission (the "Commission") on
, 1997 (and all amendments thereto), are, insofar as such facts
pertain to Radio Broadcasting, true, correct, and complete in all material
respects in accordance with applicable rules of the Commission.
Radio Broadcasting further represents the following:
1. The fair market value of the EMCLA stock, cash (if any) and any
cash in lieu of fractional shares to be received (actually or
constructively) by each Radio Broadcasting shareholder will be
approximately equal to the fair market value of the Radio
Broadcasting stock surrendered in the exchange.
2. The common stock of Radio Broadcasting on the date of the
Subsidiary Merger will have a fair market value in excess of 50
percent of the fair market value of all of the outstanding stock
of Radio Broadcasting as of the same date.
3. To the best of the knowledge of the management of Radio
Broadcasting, there is no plan or intention on the part of the
holders of Radio Broadcasting preferred stock, to sell, exchange,
or otherwise dispose of the shares of EMCLA preferred stock to be
received in the Subsidiary Merger.
4. The liabilities of Radio Broadcasting to be assumed by EMCLA and
the liabilities to which the transferred assets of Radio
Broadcasting are subject were incurred by Radio Broadcasting in
the ordinary course of its business.
5. The fair market value of the assets of Radio Broadcasting to be
transferred to EMCLA in the Subsidiary Merger will equal or exceed
the sum of the liabilities to be assumed by EMCLA plus the amount
of liabilities, if any, to which the transferred assets are
subject.
6. The total adjusted basis of the assets of Radio Broadcasting to be
transferred to EMCLA will equal or exceed the sum of the
liabilities to be assumed by EMCLA, plus the amount of
liabilities, if any, to which the transferred assets are subject.
7. EMCLA, Radio Broadcasting and the shareholders of Radio
Broadcasting will pay their respective expenses, if any, incurred
in connection with the Subsidiary Merger.
8. There is no intercorporate indebtedness existing between Radio
Broadcasting and EMCLA that was issued, acquired, or will be
settled at a discount.
9. Radio Broadcasting is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of
1986, as amended (the "Code").
10. Radio Broadcasting is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
11. None of the compensation to be received by any
shareholder-employee of Radio Broadcasting will be separate
consideration for, or allocable to, any of their shares of Radio
Broadcasting
A-C-1
<PAGE> 73
stock; none of the shares of Evergreen stock to be received by any
such shareholder-employee will be separate consideration for, or
allocable to, any employment agreement; and the compensation to be
paid to any such shareholder-employees will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
12. The Merger Agreement represents the full and complete agreement
between EMCLA and Radio Broadcasting regarding the Subsidiary
Merger, and there are no other written or oral agreements
regarding the Subsidiary Merger other than those expressly
referred to in the Merger Agreement.
IN WITNESS WHEREOF, Radio Broadcasting has executed this Certificate on
this day of , 1997.
CHANCELLOR RADIO BROADCASTING
COMPANY
By:
------------------------------------
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<PAGE> 74
EXHIBIT D
CERTIFICATE
In connection with the merger (the "Merger") of Chancellor Broadcasting
Company, a Delaware corporation, with and into Evergreen Mezzanine Holdings
Corporation, a Delaware corporation ("EMHC"), and a direct wholly-owned
subsidiary of Evergreen Media Corporation, a Delaware corporation ("Evergreen"),
pursuant to the Amended and Restated Agreement and Plan of Merger dated as of
July 31, 1997 (the "Merger Agreement"), the undersigned hereby represents that
he (it) has no plan or intention to sell, exchange, or otherwise dispose of,
reduce the risk of loss by short sale or otherwise, enter into any contract or
arrangement with respect to, or consent to the sale, exchange or other
disposition of any interest in any stock received in the Merger by him (it).
IN WITNESS WHEREOF, I have signed this Certificate on this day of
, 1997.
[Name of 5% shareholder of
Chancellor Broadcasting Company]
------------------------------------
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<PAGE> 75
EXHIBIT E
EVERGREEN MEDIA CORPORATION
CERTIFICATE
In connection with your tax opinion dated , 1997, regarding
certain federal income tax consequences of: (i) the merger (the "Merger") of
Chancellor Broadcasting Company, a Delaware corporation ("the Company"), with
and into Evergreen Mezzanine Holdings Corporation, a Delaware corporation
("EMHC") and a direct wholly-owned subsidiary of Evergreen Media Corporation, a
Delaware corporation ("Evergreen"); and (ii) the merger (the "Subsidiary
Merger") of Chancellor Radio Broadcasting Company, a Delaware corporation
("Radio Broadcasting"), with and into Evergreen Media Corporation of Los
Angeles, a Delaware corporation ("EMCLA") and a direct wholly-owned subsidiary
of EMHC, each pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of July 31, 1997 (the "Merger Agreement"), and recognizing that you
will rely on this Certificate in delivering said opinion, Evergreen hereby
represents that the facts relating to the Merger and the Subsidiary Merger, as
such facts are described in the Registration Statement of Evergreen filed with
the Securities and Exchange Commission (the "Commission") on , 1997
(and all amendments thereto) are, insofar as such facts pertain to Evergreen,
true, correct, and complete in all material respects in accordance with
applicable rules of the Commission.
Evergreen further represents the following:
1. The fair market value of the Evergreen stock, cash (if any) and any
cash in lieu of fractional shares to be received by each Company
shareholder will be approximately equal to the fair market value of the
Company stock surrendered in the exchange.
2. Evergreen has no plan or intention to redeem or otherwise reacquire
any Evergreen stock issued in the Merger.
3. Evergreen has no plan or intention to cause EMHC to sell or
otherwise dispose of any of the assets to be acquired from the Company in
the Merger, except for EMHC's interest in Katz Acquisition Corp. which will
be distributed to Evergreen or dispositions made in the ordinary course of
business.(1)
4. Evergreen has no plan or intention to cause EMCLA to sell or
otherwise dispose of any of the assets to be acquired from Radio
Broadcasting in the Subsidiary Merger, except for dispositions made in the
ordinary course of business or transfers to a direct wholly-owned
subsidiary of EMCLA.(2)
5. Following the Merger and the Subsidiary Merger, each of EMHC and
EMCLA will continue the historic business of each of the Company and Radio
Broadcasting, respectively, or use a significant portion of the Company's
and Radio Broadcasting's historic business assets, respectively, in their
business.
6. Evergreen, EMHC, the Company and the shareholders of the Company
will pay their respective expenses, if any, incurred in connection with the
Merger.
7. There is no intercorporate indebtedness existing between the
Company and EMHC or Evergreen that was issued, acquired, or will be settled
at a discount.
- ---------------
1 May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition does
not prevent counsel for Evergreen, EMHC and the Company from delivering the
opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
2 May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition does
not prevent counsel for EMCLA and Radio Broadcasting from delivering the
opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
A-E-1
<PAGE> 76
8. None of the compensation to be received by any
shareholder-employee of the Company will be separate consideration for, or
allocable to, any of their shares of the Company stock; none of the shares
of Evergreen stock to be received by any such shareholder-employee will be
separate consideration for, or allocable to, any employment agreement; and
the compensation to be paid to any such shareholder-employee will be for
services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
9. Evergreen does not own, nor has Evergreen owned during the past
five years, more than a de minimis number of shares of stock of the
Company.
10. Evergreen is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
11. Evergreen is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
12. The payment of cash in lieu of fractional shares of Evergreen
stock merely represents a mechanical rounding-off of fractional share
interests as a result of the Merger and does not represent separately
bargained for consideration. The total cash consideration that will be paid
in the Merger in lieu of fractional shares of Evergreen stock to the
Company stockholders will not exceed one percent of the total consideration
that will be issued in the Merger to the Company stockholders.
13. The fair market value of the assets of the Company to be
transferred to EMHC in the Merger will equal or exceed the sum of the
liabilities assumed by EMHC and Evergreen, if any, plus the amount of
liabilities, if any, to which the transferred assets are subject.
14. Evergreen will be in Control (as defined below) of EMHC
immediately prior to the Merger, and Evergreen has no plan or intention to
cause EMHC to issue additional shares of capital stock after the Merger
that would result in Evergreen losing Control of EMHC. As used herein,
"Control" means the ownership of stock possessing at least 80 percent of
the total combined voting power of all classes of stock entitled to vote of
EMHC and at least 80 percent of the total number of shares of all other
classes of stock of EMHC. For purposes of determining Control, a person
shall not be considered to own voting stock if rights to vote such stock
(or to restrict or otherwise control the voting of such stock) are held by
a third party (including a voting trust) other than an agent of such
person.
15. At the time of the Merger, EMHC will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in EMHC that, if exercised
or converted, would affect Evergreen's retention of Control of EMHC.
16. Evergreen has no plan or intention: (i) to liquidate EMHC; (ii) to
merge EMHC with and into another corporation (including Evergreen) or (iii)
to sell or otherwise dispose of the stock of EMHC.
17. Evergreen will not cause EMHC to issue any stock pursuant to the
Merger.
18. Evergreen will issue the Evergreen stock that is to be received by
each Company shareholder in the Merger.
19. The Merger Agreement represents the full and complete agreement
among Evergreen, EMHC, EMCLA, the Company and Radio Broadcasting regarding
the Merger and the Subsidiary Merger, and there are no other written or
oral agreements regarding the Merger or the Subsidiary Merger other than
those expressly referred to in the Merger Agreement.
IN WITNESS WHEREOF, Evergreen has executed this Certificate on this
day of , 1997.
EVERGREEN MEDIA CORPORATION
By:
------------------------------------
A-E-2
<PAGE> 77
EXHIBIT F
EVERGREEN MEZZANINE HOLDINGS CORPORATION
CERTIFICATE
In connection with your tax opinion dated , 1997, regarding
certain federal income tax consequences of: (i) the merger (the "Merger") of
Chancellor Broadcasting Company, a Delaware corporation ("the Company"), with
and into Evergreen Mezzanine Holdings Corporation, a Delaware corporation
("EMHC") and a direct wholly-owned subsidiary of Evergreen Media Corporation, a
Delaware corporation ("Evergreen"); and (ii) the merger (the "Subsidiary
Merger") of Chancellor Radio Broadcasting Company, a Delaware corporation
("Radio Broadcasting"), with and into Evergreen Media Corporation of Los
Angeles, a Delaware corporation ("EMCLA") and a direct wholly-owned subsidiary
of EMHC, each pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of July 31, 1997 (the "Merger Agreement"), and recognizing that you
will rely on this Certificate in delivering said opinion, EMHC hereby represents
that the facts relating to the Merger and the Subsidiary Merger, as such facts
are described in the Registration Statement of Evergreen filed with the
Securities and Exchange Commission (the "Commission") on , 1997 (and
all amendments thereto), are, insofar as such facts pertain to EMHC, true,
correct, and complete in all material respects in accordance with applicable
rules of the Commission.
EMHC further represents the following:
1. EMHC has no plan or intention to sell or otherwise dispose of any
of the assets to be acquired from the Company in the Merger, except for the
transfer of the stock of Katz Acquisition Corp. which will be distributed
to Evergreen and dispositions made in the ordinary course of business.(1)
2. EMHC has no plan or intention to cause EMCLA to sell or otherwise
dispose of any of the assets to be acquired from Radio Broadcasting in the
Subsidiary Merger, except for dispositions made in the ordinary course of
business or to a direct wholly-owned subsidiary of EMCLA.(2)
3. Evergreen, EMHC, the Company and the shareholders of the Company
will pay their respective expenses, if any, incurred in connection with the
Merger.
4. Following the Merger, EMHC will continue the historic business of
the Company or use a significant portion of the Company's historic business
assets in EMHC's business.
5. There is no intercorporate indebtedness existing between the
Company and EMHC that was issued, acquired, or will be settled at a
discount.
6. EMHC does not own, nor has EMHC owned during the past five years,
more than a de minimis number of shares of stock of the Company.
7. EMHC is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
8. EMHC is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
- ---------------
(1) May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition
does not prevent counsel for Evergreen, EMHC and the Company from delivering
the opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
(2) May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition
does not prevent counsel for EMCLA and Radio Broadcasting from delivering
the opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
A-F-1
<PAGE> 78
9. The fair market value of the assets of the Company to be
transferred to EMHC in the Merger will equal or exceed the sum of the
liabilities to be assumed by EMHC and Evergreen, if any, plus the amount of
liabilities, if any, to which the transferred assets are subject.
10. Evergreen will be in Control (as defined below) of EMHC
immediately prior to the Merger, and EMHC has no plan or intention to issue
additional shares of capital stock after the Merger that would result in
Evergreen losing Control of EMHC. As used herein, "Control" means the
ownership of stock possessing at least 80 percent of the total combined
voting power of all classes of stock entitled to vote of EMHC and at least
80 percent of the total number of shares of all other classes of stock of
EMHC. For purposes of determining Control, a person shall not be considered
to own voting stock if rights to vote such stock (or to restrict or
otherwise control the voting of such stock) are held by a third party
(including a voting trust) other than an agent of such person.
11. At the time of the Merger, EMHC will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in EMHC that, if exercised
or converted, would affect Evergreen's Control of EMHC.
12. EMHC has no plan or intention to liquidate or to merge with and
into another corporation after the Merger.
13. EMHC will not issue any stock pursuant to the Merger.
14. EMHC has no plan or intention: (i) to liquidate EMCLA; (ii) to
merge EMCLA with and into another corporation (including EMHC) after the
Subsidiary Merger; (iii) to cause EMCLA to redeem or otherwise acquire any
EMCLA stock issued in the Subsidiary Merger or (iv) to sell or otherwise
dispose of the stock of EMCLA.
15. Evergreen will issue the Evergreen stock that is to be received by
each Company shareholder in the Merger.
16. The Merger Agreement represents the full and complete agreement
among Evergreen, EMHC, EMCLA, the Company and Radio Broadcasting regarding
the Merger and the Subsidiary Merger, and there are no other written or
oral agreements regarding the Merger or the Subsidiary Merger other than
those expressly referred to in the Merger Agreement.
IN WITNESS WHEREOF, EMHC has executed this Certificate on this day of
, 1997.
EVERGREEN MEZZANINE HOLDINGS
CORPORATION
By:
------------------------------------
A-F-2
<PAGE> 79
EXHIBIT G
EVERGREEN MEDIA CORPORATION OF LOS ANGELES
CERTIFICATE
In connection with your tax opinion dated , 1997, regarding
certain federal income tax consequences of the merger (the "Subsidiary Merger")
of Chancellor Radio Broadcasting Company, a Delaware corporation ("Radio
Broadcasting"), with and into Evergreen Media Corporation of Los Angeles, a
Delaware corporation ("EMCLA"), pursuant to the Amended and Restated Agreement
and Plan of Merger dated as of July 31, 1997 (the "Merger Agreement"), and
recognizing that you will rely on this Certificate in delivering said opinion,
EMCLA hereby represents that the facts relating to the Subsidiary Merger, as
such facts are described in the Registration Statement of Evergreen filed with
the Securities and Exchange Commission (the "Commission") on , 1997
(and all amendments thereto), are, insofar as such facts pertain to EMCLA, true,
correct, and complete in all material respects in accordance with applicable
rules of the Commission.
EMCLA further represents the following:
1. The fair market value of the EMCLA stock and cash, if any, to be
received (actually or constructively) by each Radio Broadcasting
shareholder will be approximately equal to the fair market value of the
Radio Broadcasting stock surrendered in the exchange.
2. EMCLA has no plan or intention to redeem or otherwise reacquire any
EMCLA stock issued in the Merger.
3. EMCLA has no plan or intention to sell or otherwise dispose of any
of the assets of Radio Broadcasting to be acquired in the Subsidiary
Merger, except for dispositions made in the ordinary course of business or
transfers to a direct wholly-owned subsidiary of EMCLA.(1)
4. Following the Subsidiary Merger, EMCLA will continue the historic
business of Radio Broadcasting or use a significant portion of Radio
Broadcasting's historic business assets in EMCLA's business.
5. EMCLA, Radio Broadcasting and the shareholders of Radio
Broadcasting will pay their respective expenses, if any, incurred in
connection with the Subsidiary Merger.
6. There is no intercorporate indebtedness existing between Radio
Broadcasting and EMCLA that was issued, acquired, or will be settled at a
discount.
7. None of the compensation to be received by any shareholder-employee
of Radio Broadcasting will be separate consideration for, or allocable to,
any of their shares of Radio Broadcasting stock; none of the shares of
EMCLA stock to be received by any such shareholder-employee will be
separate consideration for, or allocable to, any employment agreement; and
the compensation to be paid to any such shareholder-employee will be for
services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
8. EMCLA does not own, nor has EMCLA owned during the past five years,
more than a de minimis number of shares of stock of Radio Broadcasting.
9. EMCLA is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
10. EMCLA is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
- ---------------
1 May be modified on delivery of certificate to exclude any asset disposition
not in the ordinary course, provided, however, that any such disposition does
not prevent counsel for EMCLA and Radio Broadcasting from delivering the
opinions required by Sections 6.2(c) and 6.3(c) of the Merger Agreement.
A-G-1
<PAGE> 80
11. The fair market value of the assets of Radio Broadcasting to be
transferred to EMCLA will equal or exceed the sum of the liabilities to be
assumed by EMCLA plus the amount of liabilities, if any, to which the
transferred assets are subject.
12. The Merger Agreement represents the full and complete agreement
among EMCLA and Radio Broadcasting regarding the Subsidiary Merger, and
there are no other written or oral agreements regarding the Subsidiary
Merger other than those expressly referred to in the Merger Agreement.
IN WITNESS WHEREOF, EMCLA has executed this Certificate on this day of
, 1997.
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
By:
------------------------------------
A-G-2
<PAGE> 81
EXHIBIT H
, 1997
Evergreen Media Corporation
413 East Las Colinas Boulevard
Suite 1130
Irving, Texas 75039
Ladies & Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of (i) the merger (the "Merger") of Chancellor Broadcasting
Company, a Delaware corporation (the "Company"), with and into Evergreen
Mezzanine Holdings Corporation, a Delaware corporation ("EMHC"), and a direct
wholly-owned subsidiary of Evergreen Media Corporation, a Delaware corporation
("Evergreen"), and (ii) the merger (the "Subsidiary Merger") of Chancellor Radio
Broadcasting Company, a Delaware corporation ("Radio Broadcasting"), with and
into Evergreen Media Corporation of Los Angeles, a Delaware corporation
("EMCLA").
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Amended and Restated Agreement and Plan of Merger
among the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA dated as of
July 31, 1997 (the "Merger Agreement"), the Joint Proxy Statement/Prospectus
filed by the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA on
, 1997 (the "Joint Proxy Statement"), and the Registration Statement
on Form S-4, as filed by Evergreen with the SEC on , 1997, in which
the Joint Proxy Statement/Prospectus is included as a prospectus (with all
amendments thereto, the "Registration Statement"). In addition, we have obtained
such additional information as we deemed relevant and necessary through
consultation with various officers and representatives of the Company, Radio
Broadcasting, Evergreen, EMHC and EMCLA.
Our opinion set forth below assumes (1) the accuracy of the statements and
facts concerning the Merger and the Subsidiary Merger set forth in the Merger
Agreement, the Joint Proxy Statement, and the Registration Statement, (2) the
consummation of the Merger and the Subsidiary Merger in the manner contemplated
by, and in accordance with the terms set forth in, the Merger Agreement, the
Joint Proxy Statement and the Registration Statement and (3) the accuracy of (i)
the representations made by the Company and by Radio Broadcasting, which are set
forth in the Certificates delivered to us by the Company and Radio Broadcasting,
dated the date hereof, (ii) the representations made by Evergreen, EMHC and by
EMCLA which are set forth in the Certificate delivered to us by Evergreen, EMHC
and EMCLA, dated the date hereof and (iii) the representations made by certain
shareholders of the Company and of Radio Broadcasting in Certificates delivered
to us by such persons, dated the date hereof.
Based upon the facts and statements set forth above, our examination and
review of the documents referred to above and subject to the assumptions set
forth herein, we are of the opinion that for federal income tax purposes:
1. The Merger and the Subsidiary Merger will each constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Each of the Company, Evergreen and EMHC will be a party to the
Merger within the meaning of Section 368(b) of the Code.
3. Each of Radio Broadcasting and EMCLA will be a party to the
Subsidiary Merger within the meaning of Section 368(b) of the Code.
4. No gain or loss will be recognized by the Company, Evergreen or
EMHC as a result of the Merger.
5. No gain or loss will be recognized by Radio Broadcasting or EMCLA
as a result of the Subsidiary Merger.
A-H-1
<PAGE> 82
6. No gain or loss will be recognized by holders of Evergreen Class A
Common Stock or holders of Evergreen Class B Common Stock on the exchange
of such shares for shares of Evergreen Common Stock pursuant to the Merger
Agreement.
7. No gain or loss will be recognized by holders of Evergreen
Convertible Exchangeable Preferred Stock as a result of the Merger.
We express no opinion concerning any tax consequences of the Merger or the
Subsidiary Merger other than those specifically set forth herein.
Our opinion is based on current provisions of the Code, the Treasury
Regulations promulgated thereunder, published pronouncements of the Internal
Revenue Service and case law, any of which may be changed at any time with
retroactive effect. Any change in applicable laws or facts and circumstances
surrounding the Merger or the Subsidiary Merger, or any inaccuracy in the
statements, facts, assumptions and representations on which we have relied, may
affect the continuing validity of the opinions set forth herein. We assume no
responsibility to inform you of any such change or inaccuracy that may occur or
come to our attention.
Very truly yours,
A-H-2
<PAGE> 83
EXHIBIT I
, 1997
Chancellor Broadcasting Company
12655 N. Central Expressway
Suite 405
Dallas, Texas 75243
Ladies & Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of (i) the merger (the "Merger") of Chancellor Broadcasting
Company, a Delaware corporation (the "Company"), with and into Evergreen
Mezzanine Holdings Corporation, a Delaware corporation ("EMHC"), and a direct
wholly-owned subsidiary of Evergreen Media Corporation, a Delaware corporation
("Evergreen"), and (ii) the merger (the "Subsidiary Merger") of Chancellor Radio
Broadcasting Company, a Delaware corporation ("Radio Broadcasting"), with and
into Evergreen Media Corporation of Los Angeles, a Delaware corporation
("EMCLA").
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Amended and Restated Agreement and Plan of Merger
among the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA dated as of
July 31, 1997 (the "Merger Agreement"), the Joint Proxy Statement and Prospectus
(the "Joint Proxy Statement") included in the Registration Statement on Form
S-4, as filed by Evergreen with the Securities and Exchange Commission on
, 1997, in which the Joint Proxy Statement is included as a prospectus
(with all amendments thereto, the "Registration Statement"). In addition, we
have obtained such additional information as we have deemed relevant and
necessary through consultation with various officers and representatives of the
Company, Radio Broadcasting, Evergreen, EMHC and EMCLA.
Our opinion set forth below assumes (1) the accuracy of the statements and
facts concerning the Merger and the Subsidiary Merger set forth in the Merger
Agreement, the Joint Proxy Statement, and the Registration Statement, (2) the
consummation of the Merger and the Subsidiary Merger in the manner contemplated
by, and in accordance with the terms set forth in, the Merger Agreement, the
Joint Proxy Statement and the Registration Statement and (3) the accuracy of (i)
the representations made by the Company and by Radio Broadcasting, which are set
forth in the Certificates delivered to us by the Company and Radio Broadcasting,
dated the date hereof, (ii) the representations made by Evergreen, EMHC and
EMCLA which are set forth in the Certificate delivered to us by Evergreen, EMHC
and EMCLA dated the date hereof, and (iii) the representations made by certain
shareholders of the Company and of Radio Broadcasting in Certificates delivered
to us by such persons, dated the date hereof.
Based on the facts and statements set forth above, our examination and
review of the documents referred to above and subject to the assumptions set
forth above, we are of the opinion that for federal income tax purposes:
1. The Merger and the Subsidiary Merger will each constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. No gain or loss will be recognized by stockholders of the Company
with respect to shares of common stock of Evergreen received in the Merger
in exchange for shares of common stock of the Company, or with respect to
shares of Evergreen convertible preferred stock received in the Merger in
exchange for shares of Company convertible preferred stock, except with
respect to cash received by dissenters or in lieu of fractional shares of
Evergreen common stock.
3. No gain or loss will be recognized by stockholders of Radio
Broadcasting with respect to shares of EMCLA preferred stock received in
the Subsidiary Merger in exchange for shares of Radio Broadcasting
preferred stock, except with respect to cash received by dissenters.
We express no opinion concerning any tax consequences of the Merger or the
Subsidiary Merger other than those specifically set forth herein.
A-I-1
<PAGE> 84
Our opinion is based on current provisions of the Code, the Treasury
Regulations promulgated thereunder, published pronouncements of the Internal
Revenue Service and case law, any of which may be changed at any time with
retroactive effect. Any change in applicable laws or in the facts and
circumstances surrounding the Merger or the Subsidiary Merger, or any inaccuracy
in the statements, facts, assumptions and representations on which we have
relied, may affect the continuing validity of the opinions set forth herein. We
assume no responsibility to inform you of any such change or inaccuracy that may
occur or come to our attention.
Very truly yours,
A-I-2
<PAGE> 1
EXHIBIT 4.12
COMMON STOCK COMMON STOCK
CHANCELLOR MEDIA CORPORATION
NUMBER SHARES
INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP
THIS CERTIFIES THAT
is the registered holder of:
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $0.01 EACH
OF THE COMMON STOCK OF
=========================CHANCELLOR MEDIA CORPORATION===========================
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney upon surrender of this certificate properly
endorsed. This certificate and the shares represented hereby are issued and
shall be held subject to all the provisions of the Certificate of Incorporation
and the By-Laws of the Corporation and all amendments thereto, copies of which
are on file at the office of the Corporation, to which the holder, by acceptance
hereof, assents. This certificate is not valid until countersigned and
registered by the transfer agent and registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
THE FACSIMILE SIGNATURE OF THE FACSIMILE SIGNATURE OF
- -------------------------- --------------------------
TO APPEAR HERE TO APPEAR HERE
PRESIDENT ASSISTANT SECRETARY
CHANCELLOR MEDIA CORPORATION
[CORPORATE SEAL]
DELAWARE
Countersigned and Registered: Transfer Agent and Registrar
THE BANK OF NEW YORK By
(New York) Authorized Signature
<PAGE> 2
CHANCELLOR MEDIA CORPORATION
RESTRICTIONS ON TRANSFER AND VOTING: The Certificate of Incorporation of
the Corporation provides that, to the extent prohibited by law, (i) the
Corporation shall not issue in excess of 25% of its capital stock outstanding
at any time to or for the account of any "Alien" or "Aliens"; (ii) the
Corporation shall not permit the transfer on its books of any of its capital
stock to or for the account of any Alien, if, after giving effect to such
transfer, the capital stock held by or for the account of any Alien or Aliens
would exceed 25% of the Corporation's capital stock outstanding at any time;
and (iii) no Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 25% of the total voting power of all the shares of capital
stock of the Corporation outstanding and entitled to vote at any time and from
time to time. The term "Alien" means any person who is a citizen of a country
other than the United States; any entity organized under the laws of a
government other that the government of the United States or any state,
territory or possession thereof; a government other than the government of the
United States or of any state, territory or possession thereof; or a
representative of, or an individual or entity controlled by, any of the
foregoing.
In addition, a copy of the statement of the rights, preferences,
privileges and restrictions granted to or imposed upon the respective classes
of shares of the Corporation authorized to be issued any upon the holder
thereof as established by the Certificate of Incorporation and all amendments
thereto (or by any certificate of determination of preferences), and the number
of shares constituting each class and the designation thereof, will be
furnished to any shareholder of the Corporation upon request and without charge
at the principal office of the Corporation.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED
THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE
OF A REPLACEMENT CERTIFICATE.
- --------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the ------ --------
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to
right of survivorship Minors
and not as tenants Act
in common ------------------
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell, assign and transfer unto
--------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
----------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shares
----------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
-----------------------------------------
Attorney
--------------------------------------------------------------------
to transfer the said shares on the books of the within named Corporation
with full power of substitution in the premises.
Dated
---------------------------------
X
-------------------------------------------
X
-------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
-------------------------------------------
NOTICE: SIGNATURE(S) SHOULD BE GUARANTEED BY
A QUALIFIED MEDALLION GUARANTEE MEMBER AND
MUST CORRESPOND EXACTLY WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE.
THE FOLLOWING MUST BE EXECUTED BY THE ASSIGNEE OF THIS
CERTIFICATE BEFORE TRANSFER MAY BE MADE ON THE BOOKS OF THE
CORPORATION:
The undersigned hereby certifies that the assignee of the
shares referred to in the foregoing Assignment
is an Alien (as defined above)
-----------
is not an Alien
-----------
and that, if any other person can vote or direct or control
the vote of such shares, or if such shares are held for the
account of any other person, to the best of the undersigned's
knowledge, such other person
is an Alien
-----------
is not an Alien
-----------
Dated
---------------------------------
<PAGE> 1
EXHIBIT 4.13
NUMBER SHARES
CHANCELLOR MEDIA CORPORATION
INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CUSIP
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of:
FULLY PAID AND NON-ASSESSABLE SHARES OF THE 7% CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.01 PER SHARE OF
======================== CHANCELLOR MEDIA CORPORATION ==========================
(the "Corporation"), a Delaware corporation. The shares represented by this
certificate are transferable only on the stock transfer books of the
Corporation by the holder of record hereof, or by his duly authorized attorney
or legal representative, upon the surrender of this certificate properly
endorsed. This certificate is not valid until countersigned and registered by
the Corporation's transfer agent and registrar.
IN WITNESS Whereof, the Corporation has caused this certificate to be
executed by the facsimile signatures of its duly authorized officers and has
caused a facsimile of its corporate seal to be hereunto affixed.
Dated:
THE FACSIMILE SIGNATURE OF THE FACSIMILE SIGNATURE OF
- -------------------------- --------------------------
TO APPEAR HERE TO APPEAR HERE
PRESIDENT ASSISTANT SECRETARY
CHANCELLOR MEDIA CORPORATION
[CORPORATE SEAL]
DELAWARE
Countersigned and Registered: Transfer Agent and Registrar
THE BANK OF NEW YORK By
(New York) Authorized Signature
<PAGE> 2
CHANCELLOR MEDIA CORPORATION
This Certificate and the shares represented hereby are issued and shall be
subject to all the provisions of the Certificate of Incorporation and Bylaws of
the Corporation and the amendments from time to time made thereto, copies of
which are on file at the principal office of the Corporation, to all of which
the holder of this Certificate assents by acceptance hereof.
CHANCELLOR MEDIA CORPORATION IS AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE
CLASS AND/OR TO ISSUE SHARES IN MORE THAN ONE SERIES OF AT LEAST ONE CLASS.
CHANCELLOR MEDIA CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER
WHO SO REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF
STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF
SUCH PREFERENCES AND/OR RIGHTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
UNDER THE COMMUNICATIONS ACT OF 1934, AS AMENDED, RELATING TO OWNERSHIP BY
FOREIGN NATIONALS, FOREIGN ENTITIES, FOREIGN GOVERNMENTS OR REPRESENTATIVES OF
THE FOREGOING.
- --------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the ------ --------
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to
right of survivorship Minors
and not as tenants Act
in common ------------------
(State)
Additional abbreviations may also be used though not in the above list.
For Value received, hereby sell, assign and transfer unto
--------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shares
----------------------------------------------------------------------
of the preferred stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
--------------------------------------------------------------------
to transfer the said shares on the books of the within-named Corporation
with full power of substitution in the premises.
Dated, X
------------------ -------------------------------------------
X
-------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
-------------------------------------------
NOTICE: SIGNATURE(S) SHOULD BE GUARANTEED BY
A QUALIFIED MEDALLION GUARANTEE MEMBER AND
MUST CORRESPOND EXACTLY WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE.
<PAGE> 1
EXHIBIT 4.14
FORM OF CERTIFICATE OF DESIGNATION
OF
7% CONVERTIBLE PREFERRED STOCK OF
CHANCELLOR MEDIA CORPORATION
Pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution
was duly adopted by the Board of Directors of Chancellor Media Corporation, a
Delaware corporation (the "Corporation"):
RESOLVED, that pursuant to the authority conferred on the Board
of Directors of the Corporation by Article Four of the Corporation's
Amended and Restated Certificate of Incorporation (which authorizes
50,000,000 shares of preferred stock, $.01 per share), and pursuant to
Section 151(g) of the General Corporation Law of the State of Delaware,
the Chief Financial Officer of the Corporation be, and hereby is,
authorized and directed to execute and file with the Secretary of State
of the State of Delaware the Certificate of Designation of 7%
Convertible Preferred Stock of the Corporation, pursuant to which the
Board of Directors has fixed the designation, powers and preferences,
and the relative participating, optional and other special rights, and
the qualifications, limitations or restrictions thereof, of a series of
the Corporation's Preferred Stock.
1. Number of Shares; Designation. A total of 2,200,000
shares of Preferred Stock, par value $.01 per share, of the Corporation are
hereby designated as 7% Convertible Preferred Stock (the "Convertible Preferred
Stock"). The number of authorized shares of Convertible Preferred Stock may be
decreased, at any time and from time to time, by resolution of the Board of
Directors of the Corporation; provided, however, that no decrease shall reduce
the authorized number of shares of the Series to a number less than the number
of shares outstanding.
2. Rank. The Convertible Preferred Stock shall, with respect
to payment of dividends, redemption payments and rights upon liquidation,
dissolution or winding up of the affairs of the Corporation, (x) rank senior
and prior to (a) the Common Stock, par value $.01 per share, of the Corporation
(the "Common Stock") and the Class A Common Stock, par value $.01 per share, of
the Corporation (the "Class A Common Stock") and (b) any other class or series
of capital stock of the Corporation that by its terms ranks junior to the
Series as to payment of dividends, redemption payments and rights upon
liquidation, dissolution or winding up of the affairs of the Corporation, (y)
rank on a parity with all Parity Dividend Shares (as defined in Section 3 (c))
and all Parity Liquidation Shares (as defined in Section 5(b)), and (c) rank
junior to all Senior Dividend Shares (as defined in Section 3(a)), all Senior
Liquidation Shares (as defined in Section 5(b)) and, except as provided in the
following sentence, to any class or series of capital stock (other than Common
Stock and Class A Common Stock) of the Corporation,
<PAGE> 2
whether currently issued or issued in the future, that does not by its terms
expressly provide that it ranks on a parity with or junior to the Convertible
Preferred Stock as to dividends and rights upon liquidation, dissolution or
winding-up of the Corporation (which shall include, for purposes of the
foregoing, any entity with which the Corporation may be merged or consolidated
or to which all or substantially all the assets of the Corporation may be
transferred or which transfers all or substantially all of its assets to the
Corporation). The Convertible Preferred Stock ranks on a parity with the
Corporation's 3.00 Convertible Exchangeable Preferred Stock as to dividends and
rights upon liquidation, dissolution or winding-up of the Corporation (which
shall include, for purposes of the foregoing, any entity with which the
Corporation may be merged or consolidated or to which all or substantially all
of the assets of the Corporation may be transferred or which transfers all or
substantially all of its assets to the Corporation).
3. Dividends. (a) The cash dividend rate on shares of the
Convertible Preferred Stock shall be 7% of the liquidation preference per share
per annum. Dividends on shares of Convertible Preferred Stock shall be fully
cumulative, accruing, without interest, from the most recent date to which
dividends have been paid in full on the Convertible Preferred Stock or from
July 16, 1997, and shall be payable quarterly in arrears, when, as and if
declared by the Board of Directors out of funds legally available for the
payment of dividends on January 15, April 15, July 15 and October 15 of each
year (each, a "Dividend Payment Date"), commencing October 15, 1997, except
that if any Dividend Payment Date is not a business day then the Dividend
Payment Date shall be on the first immediately succeeding business day (as used
herein, the term "business day" shall mean any day except a Saturday, Sunday or
day on which banking institutions are legally authorized to close in the City
of New York). Each dividend shall be paid to the holders of record of shares
of the Series as they appear on the stock register of the Corporation at the
close of business on such record dates (each, a "Dividend Payment Record
Date"), which shall be not more than 60 days nor fewer than 10 days preceding
each Dividend Payment Date thereof, as shall be fixed by the Board of Directors
of the Corporation. Dividends payable for each quarterly dividend period shall
be computed by dividing the annual dividend by four. Dividends payable for any
partial dividend period shall be computed on the basis of a 360-day year of
twelve 30-day months. Dividends on account of arrears for any past dividend
periods may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to holders of record on such date, not exceeding 60 days
nor fewer than 10 days preceding the date on which dividends in arrears will be
paid, as may be fixed by the Board of Directors of the Corporation. No
interest shall be payable with respect to any dividend payment that may be in
arrears. Holders of shares of the Convertible Preferred Stock shall be
entitled to receive dividends in preference to and in priority over dividends
upon the Common Shares and any other series or class of the Corporation's
capital stock that ranks junior as to dividends to the Convertible Preferred
Stock ("Junior Dividend Shares") and shall be on a parity as to dividends with
any series or class of the Corporation's capital stock that does not rank
senior or junior as to dividends with the Convertible Preferred Stock ("Parity
Dividend Shares"). The holders of shares of the Convertible Preferred Stock
shall not be entitled to any dividends other than the cash dividends provided
for in this Section 3.
(b) No dividends, other than dividends payable solely in
Common Shares, Junior
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<PAGE> 3
Dividend Shares, or warrants or other rights to acquire such Common Shares or
Junior Dividend Shares, shall be paid or declared and set apart for payment on,
and no purchase, redemption or other acquisition shall be made by the
Corporation of, any Common Shares or Junior Dividend Shares unless and until
all accrued and unpaid dividends on the Convertible Preferred Stock, including
the full dividend for the then current quarterly dividend period, shall have
been paid or declared and set apart for payment without interest.
(c) If at any time the Corporation issues any class or series
of capital stock ranking senior and prior to the Convertible Preferred Stock
with respect to the payment of dividends ("Senior Dividend Shares") and fails
to pay or declare and set apart for payment accrued and unpaid dividends on
such Senior Dividend Shares, in whole or in part, then (except to the extent
allowed by the terms of the Senior Dividend Shares) no dividend shall be paid
or declared and set apart for payment on the Convertible Preferred Stock unless
and until all accrued and unpaid dividends with respect to the Senior Dividend
Shares, including the full dividends for the then-current dividend period,
shall have been paid or declared and set apart for payment, without interest.
Except as provided in Section 3(d) below, no dividends shall be paid or
declared and set apart for payment on any Parity Dividend Shares for any period
unless the Company has paid or declared and set apart for payment, or
contemporaneously pays or declares and sets apart for payment, on the
Convertible Preferred Stock all accrued and unpaid dividends for all dividend
payment periods terminating on or prior to the date of payment of such
dividends. Except as provided in Section 3(d) below, no dividends shall be
paid or declared and set apart for payment on the Convertible Preferred Stock
for any period unless the Company has paid or declared and set apart for
payment, or contemporaneously pays or declares and sets apart for such payment,
on any Parity Dividend Shares all accrued and unpaid dividends for all dividend
payment periods terminating on or prior to the date of payment of such
dividends.
(d) If at any time the Corporation has failed to pay accrued
dividends on any shares of the Convertible Preferred Stock on any Dividend
Payment Date or any Parity Dividend Shares on a stated payment date, as the
case may be, the Corporation shall not:
(i) purchase any shares of the Convertible Preferred
Stock or Parity Dividend Shares (except for a consideration
payable in Common Shares or Junior Dividend Shares) or redeem
fewer than all of the shares of the Convertible Preferred Stock
and Parity Dividend Shares then outstanding except for (x) the
repurchase or redemption of shares of the Convertible Preferred
Stock made pro rata among the holders of the shares of the
Convertible Preferred Stock then outstanding and (y) the
repurchase or redemption made pro rata with respect to all shares
of the Convertible Preferred Stock and Parity Dividend Shares
then outstanding so that the amounts repurchased or redeemed
shall in all cases bear to each other the same ratio that, at the
time of the repurchase or redemption, the required redemption
payments on the shares of the Convertible Preferred Stock and the
other Parity Dividend Shares then outstanding, respectively, bear
to each other, or
(ii) permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase any Common
Shares, Junior Dividend
3
<PAGE> 4
Shares, shares of the Convertible Preferred Stock or Parity
Dividend Shares, except to the same extent that the Corporation
could purchase such shares.
Unless and until all dividends accrued but unpaid in respect of
prior dividend payment periods on shares of the Convertible Preferred Stock and
any Parity Dividend Shares at the time outstanding have been paid in full or a
sum sufficient for such payment is declared and set apart, as provided in the
preceding paragraph, all dividends accrued by the Corporation upon shares of
the Convertible Preferred Stock or Parity Dividend Shares shall be declared
pro rata with respect to all shares of the Convertible Preferred Stock and
Parity Dividend Shares then outstanding, so that the amounts of any dividends
declared on shares of the Convertible Preferred Stock and on the Parity
Dividend Shares shall in all cases bear to each other the same ratio that, at
the time of the declaration, all accrued but unpaid dividends in respect of
prior dividend payment periods on shares of the Convertible Preferred Stock and
the other Parity Dividend Shares, respectively, bear to each other.
4. Optional Redemptions for Cash. (a) Shares of the
Convertible Preferred Stock shall not be redeemable prior to January 19, 2000.
Thereafter, subject to the restrictions in Section 3 above, shares of the
Convertible Preferred Stock may be redeemed by the Corporation, in whole or in
part, at the option of the Corporation at the following redemption prices
(expressed as percentages of the liquidation preference thereof) per share if
redeemed during the 12-month period beginning January 15 (January 19 in the
case of 2000) in the year indicated below:
<TABLE>
<CAPTION>
Year Percentage Year Percentage
---- ---------- ---- ----------
<S> <C> <C> <C>
2000 . . . . . . . . . . 104.90% 2004 . . . . . . . . . . 102.10%
2001 . . . . . . . . . . 104.20% 2005 . . . . . . . . . . 101.40%
2002 . . . . . . . . . . 103.50% 2006 . . . . . . . . . . 100.70%
2003 . . . . . . . . . . 102.80% 2007 and thereafter . . . 100.00%
</TABLE>
plus, in each case, an amount equal to the dividends accrued and unpaid
thereon, whether or not declared, to the redemption date ("Optional Redemption
Price").
(b) Not less than 15 nor more than 60 days (such date as fixed
by the Board of Directors of the Corporation referred to herein as the
"Redemption Record Date") prior to the date fixed for any redemption of shares
of the Convertible Preferred Stock pursuant to this Section 4, a notice
specifying the time and place of the redemption and the number of shares to be
redeemed shall be given by first class mail, postage prepaid, to the holders of
record on the Redemption Record Date of the shares of the Convertible Preferred
Stock to be redeemed at their respective addresses as the same shall appear on
the books of the Corporation, calling upon each holder of record to surrender
to the Corporation on the redemption date at the place designated in the notice
such holder's certificate or certificates representing the number of shares
specified in the notice of redemption. Neither failure to mail such notice,
nor any defect therein or in the mailing thereof, to any particular holder
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice mailed in the
manner herein provided shall be conclusively presumed to have been duly given
whether or not
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<PAGE> 5
the holder receives the notice. On or after the redemption date, each holder
of shares of Convertible Preferred Stock to be redeemed shall present and
surrender such holder's certificate or certificates for such shares to the
Corporation at the place designated in the redemption notice and thereupon the
Optional Redemption Price of the shares shall be paid to or on the order of the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(c) If a notice of redemption has been given pursuant to this
Section 4 and if, on or before the redemption date, the funds necessary for
such redemption (including all dividends on the shares of Convertible Preferred
Stock to be redeemed that will accrue to but not including the redemption date)
shall have been set aside by the Corporation, separate and apart from its other
funds, in trust for the pro rata benefit of the holders of the shares so called
for redemption, then, notwithstanding that any certificates for such shares
have not been surrendered for cancellation, on the redemption date dividends
shall cease to accrue on the shares of the Convertible Preferred Stock to be
redeemed, and at the close of business on the date on which such funds have
been segregated and set aside by the Corporation as provided in this Section
6(c), the holders of such shares shall cease to be stockholders with respect to
those shares, shall have no interest in or claims against the Corporation by
virtue thereof and shall have no voting or other rights with respect thereto,
except the conversion rights provided in Section 6 below and the right to
receive the moneys payable upon such redemption, without interest thereon, upon
surrender (and endorsement, if required by the Corporation) of their
certificates, and the shares evidenced thereby shall no longer be outstanding.
Subject to applicable escheat laws, any moneys so set aside by the Corporation
and unclaimed at the end of two years from the redemption date shall revert to
the general funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Corporation for the payment of the Optional Redemption Price, without interest.
Any interest accrued on funds so deposited shall belong to the Corporation and
be paid thereto from time to time.
(d) If a notice of redemption has been given pursuant to this
Section 4 and any holder of shares of Convertible Preferred Stock shall, prior
to the close of business on the redemption date, give written notice to the
Corporation pursuant to Section 6 below of the conversion of any or all of the
shares to be redeemed held by the holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Corporation, and
any necessary transfer tax payment, as required by Section 6 below), then such
redemption shall not become effective as to such shares to be converted and
such conversion shall become effective as provided in Section 6 below,
whereupon any funds deposited by the Corporation for the redemption of such
shares shall (subject to any right of the holder of such shares to receive the
dividend payable thereon as provided in Section 6 below) immediately upon such
conversion be returned to the Corporation or, if then held in trust by the
Corporation, shall automatically and without further corporate action or notice
be discharged from the trust.
5
<PAGE> 6
(e) In every case of redemption of fewer than all of the
outstanding shares of the Convertible Preferred Stock pursuant to this Section
4, the shares to be redeemed shall be selected pro rata or by lot or in such
other manner as the Board of Directors of the Corporation may determine, as may
be prescribed by resolution of the Board of Directors of the Corporation,
provided that only whole shares shall be selected for redemption.
5. Liquidation. (a) The liquidation value of shares of
Convertible Preferred Stock, in case of the voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, shall be $50.00 per
share, plus an amount equal to the dividends accrued and unpaid thereon,
whether or not declared, to the payment date (the "Liquidation Value").
(b) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, the holders of shares of
Convertible Preferred Stock (i) shall not be entitled to receive the
Liquidation Value of the shares held by them until payment in full or provision
has been made for the payment of all claims of creditors of the Corporation and
the liquidation preference of any class or series of capital stock ranking
senior to the Convertible Preferred Stock with respect to redemption rights and
rights upon liquidation, dissolution or winding up of the affairs of the
Corporation ("Senior Liquidation Shares") shall have been paid in full and (ii)
shall be entitled to receive the Liquidation Value of such shares held by them
in preference to and in priority over any distributions upon the Common Shares
and any other series or class of the Corporation's capital stock that ranks
junior to the Convertible Preferred Stock as to redemption rights and rights
upon liquidation, dissolution or winding up of the affairs of the Corporation
("Junior Liquidation Shares"). Upon payment in full of the Liquidation Value
to which the holders of shares of the Convertible Preferred Stock are entitled,
the holders of shares of the Convertible Preferred Stock will not be entitled
to any further participation in any distribution of assets by the Corporation.
Subject to clause (i) above, if the assets of the Corporation are not
sufficient to pay in full the Liquidation Value payable to the holders of
shares of the Convertible Preferred Stock and the liquidation preference
payable to the holders of any series or class of the Corporation's capital
stock, outstanding on the date hereof or hereafter issued, that ranks on a
parity with the Convertible Preferred Stock as to redemption rights and rights
upon liquidation, dissolution or winding up of the affairs of the Corporation
("Parity Liquidation Shares"), the holders of all such shares shall share
ratably in accordance with the respective preferential amounts payable on such
shares in any distribution.
(c) Neither a consolidation or merger of the Corporation with
or into any other entity, nor a merger of any other entity with or into the
Corporation, nor a sale or transfer of all or any part of the Corporation's
assets for cash, securities or other property shall be considered a
liquidation, dissolution or winding-up of the Corporation within the meaning of
this Section 5.
6. Conversion. (a) Holders of shares of Convertible
Preferred Stock will have the right, exercisable at any time, except in the
case of shares of Convertible Preferred Stock called for redemption (as
described in Section 4(d) above), to convert shares of Convertible Preferred
Stock into shares of Common Stock at the conversion price of $36.19 per share
of Common Stock, subject to adjustment as described below in Section 6(f) (the
6
<PAGE> 7
"Conversion Price"). The number of shares of Common Stock into which a share
of the Convertible Preferred Stock shall be convertible (calculated as to each
conversion to the nearest 1/100th of a share) shall be determined by dividing
$50.00 by the Conversion Price then in effect. In the case of shares of the
Convertible Preferred Stock called for redemption, conversion rights will
expire at the close of business on the redemption date. Certificates
representing shares of the Convertible Preferred Stock surrendered for
conversion during the period between the close of business on any Dividend
Payment Record Date and the opening of business on any corresponding Dividend
Payment Date must be accompanied by payment of an amount equal to the dividend
payable on such shares on such Dividend Payment Date. No such payment will be
required to accompany shares of the Convertible Preferred Stock called for
redemption and surrendered during the period between the close of business on
any Dividend Payment Record Date and the opening of business on any
corresponding Dividend Payment Date (it being the case that, except as provided
in Section 4(a), any shares so redeemed shall not be entitled to receive the
dividend payable by the Company on such Dividend Payment Date).
Notwithstanding the foregoing, a holder of shares of the Convertible Preferred
Stock on a Dividend Payment Record Date who (or whose transferee) tenders any
such shares for conversion into shares of Common Stock on the relevant Dividend
Payment Date shall be entitled to receive the dividend payable by the Company
on such shares of Convertible Preferred Stock on such Dividend Payment Date,
and the converting holder need not include payment of the amount of such
dividend upon surrender of shares of Convertible Preferred Stock for
conversion. Except as provided in the immediately preceding sentence, no
payment or allowance for accrued dividends on the shares of Convertible
Preferred Stock is to be made on conversion.
(b) Any holder of shares of Convertible Preferred Stock
electing to convert the shares or any portion thereof in accordance with
Section 6(a) above shall deliver the certificates therefor and the dividend
payment referred to in Section 6(a) above, if applicable, to the principal
office of any transfer agent for the Common Stock, with a form of conversion
notice fully completed and duly executed and, if required by Section 6(a)
above, accompanied by payment of an amount equal to the dividend payable on
such shares on the applicable Dividend Payment Date. The conversion right with
respect to any shares of Convertible Preferred Stock shall be deemed to have
been exercised at the date upon which the certificates therefor and the
dividend payment referred to in Section 6(a) above, if applicable, with the
conversion notice duly executed (and the payment required by Section 6(d), if
applicable), shall have been so delivered, and the person or persons entitled
to receive the Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Common Stock upon that date.
(c) No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of shares of Convertible
Preferred Stock. If more than one share of Convertible Preferred Stock shall
be surrendered for conversion at one time by the same record holder, the number
of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Convertible
Preferred Stock so surrendered. Instead of any fractional share of Common
Stock otherwise issuable upon conversion of any shares of Convertible Preferred
Stock, the Corporation shall pay a cash adjustment in respect of such fraction
in an amount equal to the same fraction of Sale Price of the Common Stock at
the close of business on the day of conversion. In the absence of a
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<PAGE> 8
Sale Price, the Board of Directors shall in good faith determine the current
market price on such basis as it considers appropriate and such current market
price shall be used to calculate the cash adjustment. As used herein, "Sale
Price" means the closing sales price of the Common Stock (or if no sale price
is reported, the average of the high and low bid prices) as reported by the
principal national or regional stock exchange on which the Common Stock is
listed or, if the Common Stock is not listed on a national or regional stock
exchange, as reported by the Nasdaq Stock Market and if not so reported, then
as reported by the National Quotation Bureau Incorporated.
(d) If a holder converts shares of Convertible Preferred
Stock, the Corporation shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of Common Stock upon the conversion or due upon
the issuance of a new certificate or certificates for any shares of Convertible
Preferred Stock not converted. The holder, however, shall pay any such tax
that is due because any such shares of the Common Stock or of the Convertible
Preferred Stock are issued in a name other than the name of the holder.
(e) The Corporation shall reserve out of its authorized but
unissued Common Stock or its Common Stock held in treasury enough shares of
Common Stock to permit the conversion of all of the then-outstanding shares of
Convertible Preferred Stock. For the purposes of this Section 6(e), the full
number of shares of Common Stock then issuable upon the conversion of all then-
outstanding shares of Convertible Preferred Stock shall be computed as if at
the time of computation all outstanding shares of Convertible Preferred Stock
were held by a single holder. The Corporation shall from time to time, in
accordance with the laws of the State of Delaware and its certificate of
incorporation, increase the authorized amount of its Common Stock if at any
time the authorized amount of its Common Stock remaining unissued shall not be
sufficient to permit the conversion of all shares of Convertible Preferred
Stock at the time outstanding. If any shares of Common Stock required to be
reserved for issuance upon conversion of shares of Convertible Preferred Stock
hereunder require registration with or approval of any governmental authority
under any federal or state law before the shares may be issued upon conversion,
the Corporation will in good faith and as expeditiously as possible endeavor to
cause the shares to be so registered or approved. All shares of Common Stock
issued upon conversion of the shares of Convertible Preferred Stock shall be
validly issued, fully paid and nonassessable.
(f) The Conversion Price shall be subject to adjustment as
follows:
(i) In case the Corporation shall (A) pay a dividend on
any class of its capital stock in shares of its Common Stock, (B)
subdivided its outstanding shares of Common Stock into a greater
number of shares or (C) combine its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Conversion Price thereafter shall
be determined by multiplying the Conversion Price at which the
shares of Convertible Preferred Stock were theretofore
convertible by a fraction of which the denominator shall be the
number of shares of Common Stock outstanding immediately
following such
8
<PAGE> 9
action and of which the numerator shall be the number of shares
of Common Stock outstanding immediately prior thereto. Such
adjustment shall be made whenever any event listed above shall
occur and shall become effective retroactively immediately after
the record date in the case of a dividend and immediately after
the effective date in the case of a subdivision or combination.
(ii) In case the Corporation shall issue rights or
warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the record date for
determining stockholders entitled to receive such rights or
warrants) to subscribe for or purchase shares of Common Stock at
a price per share less than the current market price per share of
Common Stock (as determined in accordance with the provisions of
Section 6(f)(iv) below) at the record date therefor (the "Current
Market Price"), or in case the Corporation shall issue to all
holders of its Common Stock other securities convertible into or
exchangeable for Common Stock for a consideration per share of
Common Stock deliverable upon conversion or exchange thereof less
than the Current Market Price, then the Conversion Price in
effect immediately prior thereto shall be adjusted as provided
below so that the Conversion Price therefor shall be equal to the
price determined by multiplying (A) the Conversion Price at which
shares of Convertible Preferred Stock were theretofore
convertible by (B) a fraction of which the denominator shall be
the sum of (1) the number of shares of Common Stock outstanding
on the date of issuance of the convertible or exchangeable
securities, rights or warrants and (2) the number of additional
shares of Common Stock offered for subscription or purchase, or
issuable upon such conversion or exchange, and of which the
numerator shall be the sum of (1) the number of shares of Common
Stock outstanding on the date of issuance of such convertible or
exchangeable securities, rights or warrants and (2) the number of
additional shares of Common Stock which the aggregate offering
price of the number of shares of Common Stock so offered would
purchase at the Current Market Price per share of Common Stock
(as determined in accordance with the provisions of Section
6(f)(iv) below). Such adjustment shall be made whenever such
convertible or exchangeable securities, rights or warrants are
issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive
such securities. However, upon the expiration of any right or
warrant to purchase Common Stock, the issuance of which resulted
in an adjustment in the Conversion Price pursuant to this Section
6(f)(ii), if any such right or warrant shall expire and shall not
have been exercised, the Conversion Price shall be recomputed
immediately upon such expiration and effective immediately upon
such expiration shall be increased to the price it would have
been (but reflecting any other adjustments to the Conversion
Price made pursuant to the provisions of this Section 6(f) after
the issuance of such rights or warrants) had the adjustment of
the Conversion Price made upon the issuance of such rights or
warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights or warrants. No
further adjustment shall be made upon exercise of any
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<PAGE> 10
right, warrant, convertible security or exchangeable security if
any adjustment shall have been made upon issuance of such
security.
(iii) In case the Corporation shall pay a dividend to all
holders of its Common Stock (including any dividend paid in
connection with a consolidation or merger in which the
Corporation is the continuing corporation) of any shares of
capital stock of the Corporation or its subsidiaries (other than
Common Stock) or evidences of its indebtedness or assets
(excluding cash dividends payable solely in cash that may from
time to time be fixed by the Board of Directors, or dividends or
distributions in connection with the liquidation, dissolution or
winding up of the Corporation) or rights or warrants to subscribe
for or purchase any of its securities or those of its
subsidiaries or securities convertible or exchangeable for Common
Stock (excluding those securities referred to in Section 6(f)(ii)
above), then in each such case the Conversion Price in effect
immediately prior thereto shall be adjusted as provided below so
that the Conversion Price thereafter shall be equal to the price
determined by multiplying (A) the Conversion Price in effect on
the record date mentioned below by (B) a fraction, the numerator
of which shall be the Current Market Price per share of Common
Stock on the record date mentioned below less the then fair
market value (as determined by the Board of Directors, whose good
faith determination shall be conclusive) as of such record date
of the assets, evidences of indebtedness or securities so paid
with respect to one share of Common Stock, and the denominator of
which shall be the Current Market Price per share of Common Stock
on such record date; provided, however, that in the event the
then fair market value (as so determined) so paid with respect to
one share of Common Stock is equal to or greater than the Current
Market Price per share of Common Stock on the record date
mentioned above, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of shares of the
Convertible Preferred Stock shall have the right to receive the
amount and kind of assets, evidences of indebtedness, or
securities such holder would have received had such holder
converted each such share of Convertible Preferred Stock
immediately prior to the record date for such dividend. Such
adjustment shall be made whenever any such payment is made, and
shall become effective retroactively immediately after the record
date for the determination of stockholders entitled to receive
the payment.
(iv) For the purpose of any computation under Sections
6(f)(ii) and 6(f)(iii) above, the Current Market Price per share
of Common Stock at any date shall be deemed to be the average
Sale Price for the 30 consecutive trading days commencing 45
trading days before the day in question.
(v) No adjustment in the Conversion Price shall be
required unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Price then in effect;
provided, however, that any adjustments that by reason of this
Section 6(f)(v) are not required to be made shall be carried
forward and taken into
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<PAGE> 11
account in any subsequent adjustment. All calculations under
this Section 6(f) shall be made to the nearest cent.
(vi) In the event that, at any time as a result of an
adjustment made pursuant to Section 6(f)(i) or 6(f)(iii) above,
the holder of any share of Convertible Preferred Stock thereafter
surrendered for conversion shall become entitled to receive any
shares of the Corporation other than shares of the Common Stock,
thereafter the number of such other shares so receivable upon
conversion of any share of Convertible Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Section 6(f)(i) through
6(f)(v) above, and the other provisions of this Section 6 with
respect to the Common Stock shall apply on like terms to any such
other shares.
(vii) Whenever the Conversion Price is adjusted, as
herein provided, the Corporation shall promptly file with the
transfer agent for Convertible Preferred Stock a certificate of
an officer of the Corporation setting forth the Conversion Price
after the adjustment and setting forth a brief statement of the
facts requiring such adjustment and a computation thereof. The
certificate shall be conclusive evidence of the correctness of
the adjustment. The Corporation shall promptly cause a notice of
the adjusted Conversion Price to be mailed to each registered
holder of shares of Convertible Preferred Stock.
(viii) In case of any reclassification of the Common
Stock, any consolidation of the Corporation with, or merger of
the Corporation into, any other entity, any merger of another
entity into the Corporation (other than a merger that does not
result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the
Corporation), any sale or transfer of all or substantially all of
the assets of the Corporation or any compulsory share exchange
pursuant to which share exchange the Common Stock is converted
into other securities, cash or other property, then lawful
provision shall be made as part of the terms of such transaction
whereby the holder of each share of Convertible Preferred Stock
then outstanding shall have the right thereafter, during the
period such share shall be convertible, to convert such share
only into the kind and amount of securities, cash and other
property receivable upon the reclassification, consolidation,
merger, sale, transfer or share exchange by a holder of the
number of shares of Common Stock of the Corporation into which a
share of Convertible Preferred Stock would have been convertible
immediately prior to the reclassification, consolidation, merger,
sale, transfer or share exchange. The Corporation, the person
formed by the consolidation or resulting from the merger or which
acquires such assets or which acquires the Corporation's shares,
as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent document to
establish such rights. The certificate or articles of
incorporation or other constituent document shall provide for
adjustments, which, for events subsequent to the effective date
of the
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<PAGE> 12
certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 6.
The provisions of this Section 6(f)(viii) shall similarly apply
to successive reclassifications, consolidations, mergers, sales,
transfers or share exchanges.
(g) The Corporation from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at least
20 days and if the reduction is irrevocable during the period. Whenever the
Conversion Price is so reduced, the Corporation shall mail to holders of record
of the Convertible Preferred Stock a notice of the reduction at least 15 days
before the date the reduced Conversion Price takes effect, stating the reduced
Conversion Price and the period it will be in effect. A voluntary reduction of
the Conversion Price does not change or adjust the Conversion Price otherwise
in effect for purposes of paragraph 6(f) above.
7. Status of Shares. All shares of the Convertible Preferred
Stock that are at any time redeemed pursuant to Section 4 above or converted
pursuant to Section 6 above and all shares of the Convertible Preferred Stock
that are otherwise reacquired by the Corporation and subsequently canceled by
the Board of Directors of the Corporation shall have the status of authorized
but unissued shares of Preferred Stock, without designation as to series,
subject to reissuance by the Board of Directors of the Corporation as shares of
any one or more other series.
8. Voting Rights. Except as set forth below or otherwise
required by law, holders of shares of the Convertible Preferred Stock shall
have no voting rights. In connection with any right to vote, each holder of
shares of Convertible Preferred Stock will have one vote for each share held.
(a) Dividend Defaults.
(i) Whenever, at any time or times, dividends payable
on the shares of Convertible Preferred Stock at the time
outstanding shall be in arrears in an aggregate amount equal to
at least six quarterly dividend payments (whether or not
consecutive), the holders of shares of Convertible Preferred
Stock shall have the right, voting separately as a class with
holders of Parity Dividend Shares to the extent such Parity
Dividend Shares have such voting rights (the shares of
Convertible Preferred Stock and any such other Parity Dividend
Shares, collectively for purposes of this Section 8, the
"Defaulted Preferred Stock"), to elect two directors of the
Corporation at the Corporation's next annual meeting of
stockholders and at each subsequent annual meeting of
stockholders; provided, however, that if such voting rights shall
become vested more than 90 days or less than 20 days before the
date prescribed for the annual meeting of stockholders, the
holders of the shares of Defaulted Preferred Stock shall be
entitled to exercise their voting rights at a special meeting of
the holders of shares of Defaulted Preferred Stock as set forth
in Section 8(a)(ii) hereof. At elections for such directors,
each holder of shares of Convertible Preferred Stock shall be
entitled to
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<PAGE> 13
on vote for each share held (the holders of any Parity Preferred
Stock being entitled to such number of votes, if any, for each
share of stock held as may be granted to them). Upon the vesting
of such voting rights, the maximum authorized number of members
of the Board of Directors of the Corporation shall automatically
be increased by two and the two vacancies so created shall be
filled by vote of the holders of outstanding Defaulted Preferred
Stock as hereinafter set forth. The right of holders of
Defaulted Preferred Stock, voting separately as a class without
regard to series, to elect members of the Board of Directors of
the Corporation as aforesaid shall continue until such time as
all dividends accumulated on Defaulted Preferred Stock shall have
been paid in full or declared and set aside for payment in full,
at which time such right immediately shall terminate subject to
revesting in the event of each and every subsequent default of
the character above mentioned.
(ii) At any time when such voting right shall have
vested in the holders of shares of Defaulted Preferred Stock
entitled to vote thereon, and if such right shall not already
have been initially exercised, an officer of the Corporation
shall, upon the written request of holders of record of 10% of
the voting power represented by the shares of such Defaulted
Preferred Stock then outstanding, addressed to the Secretary of
the Corporation, call a special meeting of holders of shares of
such Defaulted Preferred Stock. Such meeting shall be held at
the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings
of stockholders of the Corporation or, if none, at a place
designated by the Secretary of the Corporation. If such meeting
shall not be called by the proper officers of the Corporation
within 30 days after the personal service of such written request
upon the Secretary of the Corporation, or within 30 days after
mailing the same within the United States, by registered mail,
addressed to the Secretary of the Corporation at its principal
office (such mailing to be evidenced by the registry receipt
issued by the postal authorities), then the holders of record of
10% of the voting power represented by the shares of Defaulted
Preferred Stock then outstanding may designate in writing any
person to call such meeting at the expense of the Corporation,
and such meeting may be called by such person so designated upon
the notice required for annual meetings of stockholders and shall
be held at the same place as is elsewhere provided in this
Section. Any holder of shares of Defaulted Preferred Stock then
outstanding that would be entitled to vote at such meeting shall
have access to the stock books of the Corporation for the purpose
of causing a meeting of stockholders to be called pursuant to the
provisions of this Section. Notwithstanding the provisions of
this Section, however, no such special meeting shall be called or
held during a period within 45 days immediately preceding the
date fixed for the next annual meeting of stockholders.
(iii) So long as any shares of Convertible Preferred
Stock are outstanding, the By-laws shall contain no provisions
that would restrict the
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<PAGE> 14
exercise, by the holders of Defaulted Preferred Stock, of the
right to elect directors under the circumstances provided in
Section 8(a)(i) above.
(iv) Directors elected pursuant to Section 8(a)(i) shall
serve until the earlier of (A) the next annual meeting of the
stockholders of the Corporation and the election (by the holders
of Defaulted Preferred Stock) and qualification of their
respective successors or (B) the date upon which all dividends in
default on the Defaulted Preferred Stock shall have been paid in
full or declared and set apart for payment. If, prior to the end
of the term of any director elected as aforesaid, a vacancy in
the office of that director shall occur during the continuation
of a default in dividends on the shares of the Convertible
Preferred Stock or such Parity Dividend Shares by reason of
death, resignation or disability, the vacancy shall be filled for
the unexpired term by the appointment by the remaining director
elected as aforesaid of a new director for the unexpired term of
the former director.
(b) Miscellaneous. Without the affirmative vote of the
holders of at least 66 2/3% of the outstanding shares of the Convertible
Preferred Stock and outstanding Parity Dividend Shares, voting as a single
class (or, if less than all shares of the Convertible Preferred Stock of Parity
Dividend Shares then outstanding would be adversely affected thereby, without
the affirmative vote of the holders of at least 66 2/3% of the outstanding
shares of each series so affected, voting as a separate class), the Corporation
may not:
(i) amend, alter or repeal (by merger or otherwise) any
provision of the Corporation's Certificate of Incorporation or
this Certificate or the By-laws of the Corporation so as to
adversely affect the relative rights, preferences,
qualifications, limitations or restrictions of the shares of the
Convertible Preferred Stock; or
(ii) effect any reclassification of the shares of the
Convertible Preferred Stock.
The above notwithstanding, the Corporation's Certificate of
Incorporation may be amended (i) to increase or decrease the number of
authorized shares of Preferred Stock (but not below the number of shares
thereof then outstanding) by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon or (ii) to authorize
any other class or series of capital stock of the Corporation, regardless of
the relative rights, preferences, qualifications, limitations or restrictions
thereof, including an amendment to increase the authorized number of shares of
Common Stock or Preferred Stock of the Corporation without the vote of the
holders of shares of the Convertible Preferred Stock.
9. Change of Control.
(a) In the event of a Change of Control (the date of
such occurrence being the "Change of Control Date"), the Corporation shall
notify the holders of the Convertible Preferred Stock in writing of such
occurrence and shall make an offer to purchase (the "Change
14
<PAGE> 15
of Control Offer") all then outstanding shares of Convertible Preferred Stock
at a purchase price of 101% of the liquidation preference thereof plus an
amount in cash equal to all accumulated and unpaid dividends per share
(including an amount in cash equal to a prorated dividend for the period from
the Dividend Payment Date immediately prior to the Change of Control Payment
Date to the Change of Control Payment Date).
(b) Within 30 days following the Change of Control
Date, the Corporation shall send, by first class mail, postage prepaid, a
notice to each holder of Convertible Preferred Stock at such holder's address
as it appears on the stock books of the Corporation, which notice shall govern
the terms of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such holders to
tender Convertible Preferred Stock pursuant to the Change of Control Offer.
Such notice shall state:
(i) that a Change of Control has occurred, that
the Change of Control Offer is being made pursuant to this
Section 9 and that all Convertible Preferred Stock validly
tendered and not withdrawn will be accepted for payment;
(ii) the purchase price (including the amount of
accrued dividends, if any) and the purchase date (which shall be
no earlier than 30 days nor later than 45 days from the date such
notice is mailed, other than as may be required by law) (the
"Change of Control Payment Date");
(iii) that any shares of Convertible Preferred
Stock not tendered will continue to accrue dividends;
(iv) that, unless the Corporation defaults in
making payment therefor, any share of Convertible Preferred Stock
accepted for payment pursuant to the Change of Control Offer
shall cease to accrue dividends after the Change of Control
Payment Date;
(v) that holders electing to have any shares of
Convertible Preferred Stock purchased pursuant to a Change of
Control Offer will be required to surrender the certificate or
certificates representing such shares, properly endorsed for
transfer together with such customary documents as the
Corporation and the transfer agent may reasonably require, in the
manner and at the place specified in the notice prior to the
close of business on the business day prior to the Change of
Control Payment Date;
(vi) that holders will be entitled to withdraw
their election if the Corporation receives, not later than five
business days prior to the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth
the name of the holder, the number of shares of Convertible
Preferred Stock the holder delivered for purchase and a
statement that such holder is withdrawing his election to have
such shares of Convertible Preferred Stock purchased;
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<PAGE> 16
(vii) that holders whose shares of Convertible
Preferred Stock are purchased only in part will be issued a new
certificate representing the unpurchased shares of Convertible
Preferred Stock; and
(viii)the circumstances and relevant facts
regarding such Change of Control.
(c) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of the Convertible Preferred Stock in connection with a Change of
Control Offer.
(d) On the Change of Control Payment Date the Corporation
shall (x) accept for payment the shares of Convertible Preferred Stock validly
tendered pursuant to the Change of Control Offer, (y) pay to the holders of
shares so accepted the purchase price therefor in cash and (z) cancel and
retire each surrendered certificate. Unless the Corporate defaults in the
payment for the shares of Convertible Preferred Stock tendered pursuant to the
Change of Control Offer, dividends will cease to accrue with respect to the
shares of Convertible preferred Stock tendered and all rights of holders of
such tendered shares will terminate, except for the right to receive payment
therefor, on the Change of Control Payment Date.
(e) If the purchase of the Convertible Preferred Stock would
violate or constitute a default under indebtedness of the Corporation, then,
notwithstanding anything to the contrary contained above, prior to complying
with the foregoing provisions, but in any event within 30 days following the
Change of Control Date, the Corporation shall either (A) repay in full all such
indebtedness or (B) obtain the requisite consents, if any under such
indebtedness required to permit the repurchase of Convertible Preferred Stock
required by this paragraph (9). Until the requirements of the immediately
preceding sentence are satisfied, the Corporation shall not make, and shall
not be obligated to make, any Change of Control Offer.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Corporation to any person or group of related Persons for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (a
"Group"), other than to Hicks, Muse, Tate & Furst Incorporated or any of its
affiliates, officers and directors or to Steven Dinetz (the "Permitted
Holders"); or (ii) a majority of the Board of Directors of the Corporation
shall consist of Persons who are not Continuing Directors; or (iii) the
acquisition by any Person or Group (other than the Permitted Holders) of the
power, directly or indirectly, to vote or direct the voting of securities
having more than 50% of the ordinary voting power for the election of directors
of the Corporation.
"Continuing Director" means, as of the date of determination, any
Person who (i) was a member of the Board of Directors of Chancellor
Broadcasting Company on January 23, 1997, (ii) was nominated for election or
elected to the Board of Directors of the Corporation with the affirmative vote
of a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election, or (iii) is a
representative of a Permitted Holder.
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<PAGE> 17
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
10. Mandatory Redemption. The shares of the Convertible
Preferred Stock are not subject to mandatory redemption or sinking fund
requirements.
11. Certain Definitions. As used in this Certificate, the
following terms shall have the following terms shall have the following
respective meanings:
"Common Shares" shall mean any stock of the Corporation which has
no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation and which is not subject to redemption by the Corporation. Unless
the context otherwise specifies or requires, all references in this certificate
to "Common Shares" include the Common Stock and the Class A Common Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be duly executed on its behalf by its undersigned duly authorized officer
this _____ day of September, 1997.
CHANCELLOR MEDIA CORPORATION
By:
----------------------------------
Name: Matthew E. Devine
Title: Chief Financial Officer
17
<PAGE> 1
EXHIBIT 5.1
[LATHAM & WATKINS LETTERHEAD]
July 31, 1997
Evergreen Media Corporation
433 East Las Colinas Boulevard
Irving, Texas 75039
Re: Evergreen Media Corporation (the "Company")
Registration Statement on Form S-4
Ladies and Gentlemen:
In connection with the registration of the issuance of shares (the "Common
Shares") of Common Stock of the Company, par value $0.01 per share (the "Common
Stock") and the shares (the "Preferred Shares") of 7% Convertible Preferred
Stock of the Company, par value $0.01 per share (the "7% Convertible Preferred
Stock"), under the Securities Act of 1933, as amended (the "Act"), by Evergreen
Media Corporation, a Delaware corporation (the "Company"), on Form S-4 filed
with the Securities and Exchange Commission (the "Commission") on July 31, 1997
(the "Registration Statement"), you have requested our opinion with respect to
the matters set forth below.
In our capacity as your counsel in connection with such registration, we
are familiar with the proceedings taken and proposed to be taken by the Company
in connection with the authorization and issuance of the Common Shares and the
Preferred Shares by the Company pursuant to the Agreement and Plan of Merger,
dated February 19, 1997, as amended and restated (the "Merger Agreement"), among
the Company, Evergreen Media Corporation of Los Angeles, Evergreen Mezzanine
Holdings Corporation, Chancellor Broadcasting Company and Chancellor Radio
Broadcasting Company, and for the purposes of this opinion, have assumed such
proceedings will be timely completed in the manner presently proposed. In
addition, we have made such legal and factual examinations and inquiries,
including an examination of originals or copies certified or otherwise
identified to our satisfaction of such documents, corporate records and
instruments, as we have deemed necessary or appropriate for purposes of this
opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic documents of all documents submitted to us as copies. We assume for
purposes of this opinion that the Company's Amended and Restated Certificate of
Incorporation will be amended and restated in the form attached as Annex III to
the Merger Agreement (the "Restated Charter"), and that the Restated Charter
will be effective at the Effective Time (as defined in the Merger Agreement) and
that the merger of Chancellor Broadcasting Company with and into Evergreen
Mezzanine Holdings Corporation will take place at the Effective Time in the
manner contemplated by the Merger Agreement.
We are opining herein as to the effect on the subject transaction only of
the General Corporation Law of the State of Delaware, and we express no opinion
with respect to the applicability thereto, or the effect thereon, of any other
laws or as to any matters of municipal law or the laws of any other local
agencies within the state.
Subject to the foregoing, it is our opinion that the Common Shares and
Preferred Shares have been duly authorized and, upon issuance thereof in the
manner contemplated by the Registration Statement and the Merger Agreement, will
be validly issued, fully paid and nonassessable.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading "Legal
Matters."
Very truly yours,
/s/ LATHAM & WATKINS
------------------------------------
<PAGE> 1
EXHIBIT 8.1
[Latham & Watkins Letterhead]
__________ ___, 1997
Evergreen Media Corporation
413 East Las Colinas Boulevard
Suite 1130
Irving, Texas 75039
Ladies & Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of (i) the merger (the "Merger") of Chancellor Broadcasting
Company, a Delaware corporation (the "Company"), with and into Evergreen
Mezzanine Holdings Corporation, a Delaware corporation ("EMHC"), and a direct
wholly-owned subsidiary of Evergreen Media Corporation, a Delaware corporation
("Evergreen"), and (ii) the merger (the "Subsidiary Merger") of Chancellor
Radio Broadcasting Company, a Delaware corporation ("Radio Broadcasting"), with
and into Evergreen Media Corporation of Los Angeles, a Delaware corporation
("EMCLA").
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Amended and Restated Agreement and Plan of Merger
among the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA dated as of
July ____, 1997 (the "Merger Agreement"), the Joint Proxy Statement/Prospectus
filed by the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA on ________
__, 1997 (the "Joint Proxy Statement"), and the Registration Statement on Form
S-4, as filed by Evergreen with the SEC on ____________ __, 1997, in which the
Joint Proxy Statement/Prospectus is included as a prospectus (with all
amendments thereto, the "Registration Statement"). In addition, we have
obtained such additional information as we deemed relevant and necessary
through consultation with various officers and representatives of the Company,
Radio Broadcasting, Evergreen, EMHC and EMCLA.
Our opinion set forth below assumes (1) the accuracy of the statements and
facts concerning the Merger and the Subsidiary Merger set forth in the Merger
Agreement, the Joint Proxy Statement, and the Registration Statement, (2) the
consummation of the Merger and the Subsidiary Merger in the manner contemplated
by, and in accordance with the terms set forth in, the Merger Agreement, the
Joint Proxy Statement and the Registration Statement and (3) the accuracy of
(i) the representations made by the Company and by Radio Broadcasting, which
are set forth in the Certificates delivered to us by the Company and Radio
Broadcasting, dated the date hereof, (ii) the representations made by
Evergreen, EMHC and by EMCLA which are set forth in the Certificate delivered
to us by Evergreen, EMHC and EMCLA, dated the date hereof and (iii) the
representations made by certain shareholders of the Company and of Radio
Broadcasting in Certificates delivered to us by such persons, dated the date
hereof.
<PAGE> 2
Evergreen Media Corporation
Page 2
Based upon the facts and statements set forth above, our examination and
review of the documents referred to above and subject to the assumptions set
forth herein, we are of the opinion that for federal income tax purposes:
1. The Merger and the Subsidiary Merger will each constitute a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Each of the Company, Evergreen and EMHC will be a party to the Merger
within the meaning of Section 368(b) of the Code.
3. Each of Radio Broadcasting and EMCLA will be a party to the
Subsidiary Merger within the meaning of Section 368(b) of the Code.
4. No gain or loss will be recognized by the Company, Evergreen or EMHC
as a result of the Merger.
5. No gain or loss will be recognized by Radio Broadcasting or EMCLA as
a result of the Subsidiary Merger.
6. No gain or loss will be recognized by holders of Evergreen Class A
Common Stock or holders of Evergreen Class B Common Stock on the
exchange of such shares for shares of Evergreen Common Stock pursuant
to the Merger Agreement.
7. No gain or loss will be recognized by holders of Evergreen
Convertible Exchangeable Preferred Stock as a result of the Merger.
We express no opinion concerning any tax consequences of the Merger or the
Subsidiary Merger other than those specifically set forth herein.
Our opinion is based on current provisions of the Code, the Treasury
Regulations promulgated thereunder, published pronouncements of the Internal
Revenue Service and case law, any of which may be changed at any time with
retroactive effect. Any change in applicable laws or facts and circumstances
surrounding the Merger or the Subsidiary Merger, or any inaccuracy in the
statements, facts, assumptions and representations on which we have relied, may
affect the continuing validity of the opinions set forth herein. We assume no
responsibility to inform you of any such change or inaccuracy that may occur or
come to our attention.
Very truly yours,
<PAGE> 1
EXHIBIT 8.2
[Weil, Gotshal & Manges LLP Letterhead]
___________, 1997
Chancellor Broadcasting Company
12655 N. Central Expressway
Suite 405
Dallas, Texas 75243
Ladies & Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of (i) the merger (the "Merger") of Chancellor Broadcasting
Company, a Delaware corporation (the "Company"), with and into Evergreen
Mezzanine Holdings Corporation, a Delaware corporation ("EMHC"), and a direct
wholly-owned subsidiary of Evergreen Media Corporation, a Delaware corporation
("Evergreen"), and (ii) the merger (the "Subsidiary Merger") of Chancellor
Radio Broadcasting Company, a Delaware corporation ("Radio Broadcasting"), with
and into Evergreen Media Corporation of Los Angeles, a Delaware corporation
("EMCLA").
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Amended and Restated Agreement and Plan of Merger
among the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA dated as of
July __, 1997 (the "Merger Agreement"), the Joint Proxy Statement and
Prospectus (the "Joint Proxy Statement") included in the Registration Statement
on Form S-4, as filed by Evergreen with the Securities and Exchange Commission
on ______ __, 1997, in which the Joint Proxy Statement is included as a
prospectus (with all amendments thereto, the "Registration Statement"). In
addition, we have obtained such additional information as we have deemed
relevant and necessary through consultation with various officers and
representatives of the Company, Radio Broadcasting, Evergreen, EMHC and EMCLA.
Our opinion set forth below assumes (1) the accuracy of the
statements and facts concerning the Merger and the Subsidiary Merger set forth
in the Merger Agreement, the Joint Proxy Statement, and the Registration
Statement, (2) the consummation of the Merger and the Subsidiary Merger in the
manner contemplated by, and in accordance with the terms set forth in, the
Merger Agreement, the Joint Proxy Statement and the Registration Statement and
(3) the accuracy of (i) the representations made by the Company and by Radio
Broadcasting, which are
<PAGE> 2
Chancellor Broadcasting Company
_______________, 1997
Page 2
set forth in the Certificates delivered to us by the Company and Radio
Broadcasting, dated the date hereof, (ii) the representations made by
Evergreen, EMHC and EMCLA which are set forth in the Certificate delivered to
us by Evergreen, EMHC and EMCLA dated the date hereof, and (iii) the
representations made by certain shareholders of the Company and of Radio
Broadcasting in Certificates delivered to us by such persons, dated the date
hereof.
Based on the facts and statements set forth above, our examination and
review of the documents referred to above and subject to the assumptions set
forth above, we are of the opinion that for federal income tax purposes:
1. The Merger and the Subsidiary Merger will each constitute a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. No gain or loss will be recognized by stockholders of the Company
with respect to shares of common stock of Evergreen received in the
Merger in exchange for shares of common stock of the Company, or with
respect to shares of Evergreen convertible preferred stock received
in the Merger in exchange for shares of Company convertible preferred
stock, except with respect to cash received by dissenters or in lieu
of fractional shares of Evergreen common stock.
3. No gain or loss will be recognized by stockholders of Radio
Broadcasting with respect to shares of EMCLA preferred stock received
in the Subsidiary Merger in exchange for shares of Radio Broadcasting
preferred stock, except with respect to cash received by dissenters.
We express no opinion concerning any tax consequences of the Merger or the
Subsidiary Merger other than those specifically set forth herein.
Our opinion is based on current provisions of the Code, the Treasury
Regulations promulgated thereunder, published pronouncements of the Internal
Revenue Service and case law, any of which may be changed at any time with
retroactive effect. Any change in applicable laws or in the facts and
circumstances surrounding the Merger or the Subsidiary Merger, or any
inaccuracy in the statements, facts, assumptions and representations on which
we have relied, may affect the continuing validity of the opinions set forth
herein. We assume no responsibility to inform you of any such change or
inaccuracy that may occur or come to our attention.
Very truly yours,
<PAGE> 1
EXHIBIT 12.1
EVERGREEN MEDIA CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO
FORMA
ACTUAL ACTUAL PRO FORMA COMBINED
QUARTER QUARTER COMBINED QUARTER
YEAR ENDED DECEMBER 31, ENDED ENDED YEAR ENDED ENDED
------------------------------------------------- MARCH 31, MARCH 31, DECEMBER 31, MARCH 31,
1992 1993 1994 1995 1996 1996 1997 1996 1997
------- -------- ------- ------- -------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before income
taxes.................... $(4,989) $(20,749) $ 39 $(5,658) $(19,090) $(17,196) $(7,320) $(206,274) $(59,358)
Fixed charges.............. 11,030 15,086 15,252 20,854 40,461 9,515 8,889 224,092 56,126
Less: Dividends on
preferred stock of
subsidiary............... -- -- -- -- -- -- -- (59,077) (14,829)
------- -------- ------- ------- -------- -------- ------- --------- --------
Earnings as adjusted (A)... 6,041 (5,663) 15,291 15,196 21,371 (7,681) 1,569 (41,259) (18,061)
======= ======== ======= ======= ======== ======== ======= ========= ========
Fixed Charges:
Interest expense......... 10,112 13,878 13,809 19,199 37,527 8,973 8,053 159,912 39,978
Amortization of deferred
financing costs........ 398 728 712 631 1,113 158 295 1,113 279
Dividends on preferred
stock of
subsidiary(1).......... -- -- -- -- -- -- -- 59,077 14,829
Rents under leases
representative of an
interest factor(2)..... 520 480 731 1,024 1,821 384 541 3,990 1,040
------- -------- ------- ------- -------- -------- ------- --------- --------
Fixed charges as
adjusted................. 11,030 15,086 15,252 20,854 40,461 9,515 8,889 224,092 56,126
Preferred stock
dividends(1)............. 1,140 7,317 7,431 7,431 5,877 1,858 -- 39,492 9,874
------- -------- ------- ------- -------- -------- ------- --------- --------
Total fixed charges and
preferred stock dividends
(B)...................... 12,170 22,403 22,683 28,285 46,338 11,373 8,889 263,584 66,000
======= ======== ======= ======= ======== ======== ======= ========= ========
Deficiency of earnings to
combined fixed charges
and preferred stock
dividends (B) minus
(A)...................... $ 6,129 $ 28,066 $ 7,392 $13,089 $ 24,967 $ 19,054 $ 7,320 $ 304,843 $ 84,061
</TABLE>
- ---------------
(1) Represents pretax earnings required to cover preferred stock dividends.
(2) Management of Evergreen Media Corporation believes approximately one-third
of rental and lease expense is representative of the interest component of
rent expense.
<PAGE> 1
EXHIBIT 12.2
CHANCELLOR BROADCASTING COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL ACTUAL
QUARTER QUARTER
YEAR ENDED DECEMBER 31, ENDED ENDED
--------------------------------------------- MARCH 31, MARCH 31,
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before income taxes.............. 920 2,699 1,876 (7,731) 1,897 (4,986) (4,948)
Fixed charges.................................. 789 768 5,323 18,391 56,066 10,689 25,253
Less: Dividends and accretion on preferred
stock of subsidiary.......................... -- -- -- -- (19,262) (2,767) (13,558)
------ ------ ------ ------- -------- ------- --------
Earnings as adjusted (A)....................... 1,709 3,467 7,199 10,660 38,701 2,936 6,747
====== ====== ====== ======= ======== ======= ========
Fixed Charges:
Interest expense............................. 724 700 5,247 18,115 35,704 7,647 11,420
Amortization of deferred financing costs..... -- -- -- -- -- -- --
Dividends and accretion on preferred stock of
subsidiary(1).............................. -- -- -- -- 19,262 2,767 13,558
Rents under leases representative of an
interest factor(2)......................... 65 68 76 276 1,100 275 275
------ ------ ------ ------- -------- ------- --------
Fixed charges as adjusted (B).................. 789 768 5,323 18,391 56,066 10,689 25,253
====== ====== ====== ======= ========
Preferred Stock dividends(1)................... -- 2,423
------- --------
Total fixed charges and preferred stock
dividends (B)................................ $10,689 $ 27,676
======= ========
Ratio of earnings to combined fixed charges and
preferred stock dividends (A) divided by
(B).......................................... 2.17x 4.51x 1.35x -- --
Deficiency of earnings to combined fixed
charges and preferred stock dividends (B)
minus (A).................................... $ -- $ -- $ -- $ 7,731 $ 17,365 $ 7,753 $ 20,929
</TABLE>
- ---------------
(1) Represents pretax earnings required to cover preferred stock dividends.
(2) Management of Chancellor believes approximately one-third of rental and
lease expense is representative of the interest component of rent expense.
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF EVERGREEN MEDIA CORPORATION
<TABLE>
<CAPTION>
NAME JURISDICTION OF FORMATION
---- -------------------------
<S> <C>
Evergreen Media Corporation of Los Angeles.................. DE
Evergreen Media Corporation of the Bay Area................. DE
Evergreen Media Corporation of Chicago AM................... DE
Evergreen Media Corporation of Chicago FM................... DE
Evergreen Media Corporation of Dade County.................. DE
Evergreen Media Corporation of Houston...................... DE
Evergreen Media Corporation of Illinois..................... DE
Evergreen Media Corporation of San Francisco................ DE
Evergreen Media Corporation of Washington, D.C.............. DE
Evergreen Media of Houston Limited Partnership.............. DE
KIOI License Corp........................................... DE
KKBT License Corp........................................... DE
KLOL License Limited Partnership............................ DE
KMEL License Corp........................................... DE
KTRH License Limited Partnership............................ DE
WASH License Limited Partnership............................ DE
WMVP-AM License Corp........................................ DE
WLUP-FM License Corp........................................ DE
WTOP License Limited Partnership............................ DE
WVCG License Corp........................................... DE
WRCX License Corp........................................... DE
Evergreen Media Corporation of St. Louis.................... DE
Evergreen Media Partners Corporation........................ DE
Evergreen Media Corporation of Dallas....................... DE
KSKY License Corp........................................... DE
Evergreen Media Corporation of Chicagoland.................. DE
WEJM/WEJM-FM/WVAZ License Corp.............................. DE
Evergreen Media Corporation of Charlotte.................... DE
WIOQ License Corp........................................... DE
Evergreen Media Corporation of Detroit...................... DE
WKQI/WDOZ/WNIC License Corp................................. DE
Evergreen Media Corporation of New York..................... DE
WYNY License Corp........................................... DE
Evergreen Media Corporation of Gotham....................... DE
Evergreen Media/Pyramid Corporation......................... DE
Evergreen Media/Pyramid Holdings Corporation................ DE
Broadcast Architecture Inc.................................. MA
Evergreen Media Corporation of Rochester.................... DE
Evergreen Media Corporation of Massachusetts................ DE
WJMN License Corporation.................................... DE
Evergreen Media Corporation of Pennsylvania................. DE
WJJZ License Corp........................................... DE
Evergreen Media Corporation of Miami........................ DE
WEDR License Corp........................................... DE
Evergreen Media Corporation of Boston....................... DE
WXKS(AM) License Corp....................................... DE
WXKS(FM) License Corp....................................... DE
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
NAME JURISDICTION OF FORMATION
---- -------------------------
<S> <C>
Evergreen Media Corporation of the Windy City............... DE
WNUA License Corp........................................... DE
KYLD License Corp........................................... DE
Evergreen Media Corporation of Philadelphia................. DE
WYXR License Corp........................................... DE
WUSL License Corp........................................... DE
Evergreen Media Corporation of the Capital City............. DE
WGAY License Corp........................................... DE
Evergreen Media Corporation of the Great Lakes.............. DE
WWWW/WDFN License Corp...................................... DE
Evergreen Media Corporation of Tiburon...................... DE
KKSF License Corp........................................... DE
KDFC(AM) License Corp....................................... DE
KDFC(FM) License Corp....................................... DE
Evergreen Media Corporation of the Liberty City............. DE
WDAS(FM) License Corp....................................... DE
Evergreen Media Corporation of the Keystone State........... DE
WDAS(AM) License Corp....................................... DE
Evergreen Media Corporation of Michigan..................... DE
WMXD License Corp........................................... DE
Evergreen Media Corporation of the Motor City............... DE
WJLB License Corp........................................... DE
Evergreen Media Corporation of the Nation's Capital......... DE
WWRC License Corp........................................... DE
Evergreen Media Corporation of Chicago...................... DE
WPNT License Corp........................................... DE
Evergreen Media Corporation of the Prairie State............ DE
Evergreen Media Corporation of Brotherly Love............... DE
WFLN License Corp........................................... DE
Evergreen Media Corporation of Texas........................ DE
Evergreen Mezzanine Holdings Corporation.................... DE
WAXQ License Corp........................................... DE
WLTW License Corp........................................... DE
WMZQ License Corp........................................... DE
WAXQ Inc.................................................... DE
WMZQ Inc.................................................... DE
Riverside Broadcasting Co., Inc............................. DE
VBE, Inc.................................................... DE
</TABLE>
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Evergreen Media Corporation:
We consent to the incorporation by reference herein of our reports on the
following financial statements: 1) the consolidated balance sheets of Evergreen
Media Corporation as of December 31, 1995 and 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1996; 2) the combined balance
sheets of WMZQ Inc. and Viacom Broadcasting East, Inc. as of December 31, 1995
and 1996 and the related combined statements of earnings and cash flows for each
of the years in the three-year period ended December 31, 1996; 3) the combined
balance sheets of Riverside Broadcasting Co., Inc. and WAXQ Inc. as of December
31, 1995 and 1996 and the related combined statements of earnings and cash flows
for each of the years in the three-year period ended December 31, 1996; 4) the
balance sheets of WLIT Inc. as of December 31, 1995 and 1996 and the related
statements of earnings and cash flows for each of the years in the three-year
period ended December 31, 1996; 5) the combined balance sheets of KYSR Inc. and
KIBB Inc. as of December 31, 1995 and 1996 and the related combined statements
of operations and cash flows for each of the years in the three-year period
ended December 31, 1996; and 6) the balance sheets of KKSF-FM/KDFC-FM and AM (A
Division of the Brown Organization) as of December 31, 1995 and 1996 and the
related statements of earnings and division equity and cash flows for the years
then ended. We also consent to the reference of our firm under the headings
"Experts" and "Evergreen Media Corporation Selected Consolidated Historical
Financial Data" in the Registration Statement.
KPMG PEAT MARWICK LLP
Dallas, Texas
July 31, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Evergreen Media Corporation:
We consent to incorporation by reference herein of our report dated March 28,
1997, relating to the consolidated balance sheets of WDAS-AM/FM (station owned
and operated by Beasley FM Acquisition Corp.) as of December 31, 1996 and the
related combined statements of earnings and station equity and cash flows for
the year ended December 31, 1996, which report appears in the Form 8-K dated May
30, 1997 and filed June 4, 1997 by Evergreen Media Corporation.
KPMG PEAT MARWICK LLP
St. Petersburg, Florida
July 31, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 (No. 333- ) of
Evergreen Media Corporation of our report dated May 2, 1997, relating to the
financial statements of Century Chicago Broadcasting, L.P., which appears in the
Current Report on Form 8-K of Evergreen Media Corporation dated May 30, 1997 and
filed June 4, 1997. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Chicago, Illinois
July 31, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of Evergreen Media
Corporation of our report dated May 8, 1997 (and to all references to our Firm)
included in Evergreen Media Corporation's previously filed Form 8-K dated May
30, 1997 and filed June 4, 1997.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 31, 1997
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Evergreen Media Corporation:
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Evergreen Media Corporation of our reports dated February 13, 1997,
except for Note 15 as to which the date is February 19, 1997, on our audits of
the consolidated financial statements and financial statement schedules of
Chancellor Broadcasting Company and Subsidiaries as of December 31, 1995 and
1996 and for each of the three years in the period ended December 31, 1996,
which reports appear in the Form 10-K dated March 28, 1997 filed by Chancellor
Broadcasting Company. We also consent to the reference to our firm under the
caption "Experts".
COOPERS & LYBRAND L.L.P.
Dallas, Texas
July 31, 1997
<PAGE> 1
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Evergreen Media Corporation:
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Evergreen Media Corporation of our reports dated February 13, 1997,
except for Note 15 as to which the date is February 19, 1997, on our audits of
the consolidated financial statements and financial statement schedules of
Chancellor Radio Broadcasting Company and Subsidiaries as of December 31, 1995
and 1996 and for each of the three years in the period ended December 31, 1996,
which reports appear in the Form 10-K dated March 28, 1997 filed by Chancellor
Radio Broadcasting Company.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
July 31, 1997
<PAGE> 1
EXHIBIT 23.8
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Evergreen Media Corporation:
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Evergreen Media Corporation of our report dated March 24, 1997, on
our audit of the consolidated financial statements of Trefoil Communications,
Inc. and Subsidiaries for the period January 1, 1996 through February 13, 1996,
which report appears in the Form 10-K dated March 28, 1997 filed by Chancellor
Broadcasting Company.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
July 31, 1997
<PAGE> 1
EXHIBIT 23.9
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Evergreen Media
Corporation of our report dated February 14, 1996 relating to the consolidated
financial statements of Trefoil Communications, Inc., which appears on page F-41
of the 1996 Annual Report on Form 10-K of Chancellor Broadcasting Company. We
also consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page S-10 of such Annual Report on Form
10-K. We also consent to the reference to us under the heading "Experts" in such
Prospectus.
PRICE WATERHOUSE LLP
Los Angeles, California
July 31, 1997
<PAGE> 1
EXHIBIT 23.10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Evergreen Media Corporation:
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of Evergreen Media
Corporation of our report dated March 31, 1997 (and to all references to our
Firm) included in Chancellor Broadcasting Company's previously filed Form 8-K
dated May 30, 1997 and filed June 4, 1997.
ARTHUR ANDERSEN LLP
Washington, D.C.
July 31, 1997
<PAGE> 1
EXHIBIT 23.11
CONSENT OF WASSERSTEIN PERELLA & CO., INC.
We hereby consent to the use in the Registration Statement on Form S-4 of
Evergreen Media Corporation ("Evergreen") and in the related Joint Proxy
Statement/Prospectus of Evergreen and Chancellor Broadcasting Company
("Chancellor") of our opinion, dated February 19, 1997, and letter, dated August
1, 1997, appearing as Annex B-1 and Annex B-2, respectively, of the Joint Proxy
Statement/Prospectus, to the description therein of such opinion and letter and
to the description therein of our presentation to the Board of Directors of
Evergreen on February 18, 1997; and to the references therein to us under the
headings "Summary -- The Merger -- Opinion of Financial Advisor to the Evergreen
Board," "The Merger -- Background and Reasons for the Merger: Evergreen" and
"The Merger -- Opinion of Financial Advisor to the Evergreen Board." In giving
the foregoing consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
/s/ WASSERSTEIN PERELLA & CO.,
INC.
------------------------------------
WASSERSTEIN PERELLA & CO., INC.
New York, New York
August 1, 1997
<PAGE> 1
EXHIBIT 23.12
CONSENT OF GREENHILL & CO., LLC
The Board of Directors
Chancellor Broadcasting Company
We hereby consent to the use in the Registration Statement on Form S-4 of
Evergreen Media Corporation ("Evergreen") and in the related Joint Proxy
Statement/Prospectus of Evergreen and Chancellor Broadcasting Company
("Chancellor") of our opinion, dated February 19, 1997, appearing as Annex C to
the Joint Proxy Statement/Prospectus, to the description therein of such opinion
and of our presentation to the Board of Directors of Chancellor on February 19,
1997, and to the references therein to us under the headings "Summary -- The
Merger -- Opinions of Financial Advisor to the Chancellor Board," "The Merger --
Background and Reasons for the Merger: Chancellor" and "The Merger -- Opinion of
Financial Advisor to the Chancellor Board." In giving the foregoing consent, we
do not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder nor do we admit that we are
"experts" for the purposes of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
GREENHILL & CO., LLC
New York, New York
July 31, 1997
<PAGE> 1
EXHIBIT 23.13
CONSENT OF LATHAM & WATKINS
The Board of Directors
Evergreen Media Corporation
We hereby consent to the use in the Registration Statement on Form S-4 of
Evergreen Media Corporation ("Evergreen") and in the related Joint Proxy
Statement/Prospectus of Evergreen and Chancellor Broadcasting Company of our
form of opinion related to tax matters, appearing as Exhibit 8.1 to the
Registration Statement, to the description therein of such form of opinion, and
to the references therein to us under the headings "The Merger -- Certain
Federal Income Tax Consequences."
LATHAM & WATKINS
Washington, D.C.
July 31, 1997
<PAGE> 1
EXHIBIT 23.14
CONSENT OF WEIL, GOTSHAL & MANGES LLP
The Board of Directors
Chancellor Broadcasting Company
We hereby consent to the use in the Registration Statement on Form S-4 of
Evergreen Media Corporation ("Evergreen") and in the related Joint Proxy
Statement/Prospectus of Evergreen and Chancellor Broadcasting Company of our
form of opinion related to tax matters, appearing as Exhibit 8.2 to the
Registration Statement, to the description therein of such form of opinion, and
to the references therein to us under the headings "The Merger -- Certain
Federal Income Tax Consequences."
WEIL, GOTSHAL & MANGES LLP
Dallas, Texas
July 31, 1997
