-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I18yub7ZQiSYZdbPoDMs8OAnbpHweVBxxqcS4xtyEHRidN9NjjKR47Pu3mY9IHHJ PaAAnFuJ+jVTaomJV6zUbA== 0000930661-96-001291.txt : 19961001 0000930661-96-001291.hdr.sgml : 19961001 ACCESSION NUMBER: 0000930661-96-001291 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960930 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960930 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN MEDIA CORP CENTRAL INDEX KEY: 0000894972 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 752247099 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21570 FILM NUMBER: 96637374 BUSINESS ADDRESS: STREET 1: 433 EAST LAS COLINAS BLVD STREET 2: STE 2230 CITY: IRVING STATE: TX ZIP: 75039 BUSINESS PHONE: 2148699020 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): September 30, 1996 ------------------ Evergreen Media Corporation ----------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 75-2247099 --------------- ------------------- (State or Other (IRS Employer Jurisdiction of Identification No.) Incorporation) 433 East Las Colinas Boulevard Suite 1130 Irving, Texas 75039 ---------------------------------- (Address of Principal Executive Offices) (972) 869-9020 -------------------------- (Registrant's telephone number, including area code) ITEM 5. Other Events. ------------- Financial Information for WDAS AM/FM (station owned and operated by ------------------------------------------------------------------- Beasley FM Acquisition Corp. ---------------------------- On September 19, 1996, Evergreen Media Corporation (the "Company") entered into an agreement to purchase from Beasley-FM Acquisition Corp. the assets used in the operation of WDAS AM/FM (station owned and operated by Beasley FM Acquisition Corp.), 1480 KHz and 105.3 MHz, Philadelphia, Pennsylvania, for a purchase price of $103 million. The Company hereby provides the following financial information, not otherwise called for by this form but of importance to securityholders, in regard to WDAS AM/FM (station owned and operated by Beasley FM Acquisition Corp.): (a) Independent Auditors' Report, included on page A-1 of this report and incorporated by reference herein; (b) Balance Sheets of WDAS AM/FM (station owned and operated by Beasley FM Acquisition Corp.) at December 31, 1995 and at June 30, 1996 (unaudited), included on page A-2 of this report and incorporated by reference herein; (c) Statements of Earnings and Station Equity of WDAS AM/FM (station owned and operated by Beasley FM Acquisition Corp.) for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited), included on page A-3 of this report and incorporated by reference herein; (d) Statements of Cash Flows of WDAS AM/FM (station owned and operated by Beasley FM Acquisition Corp.) for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited), included on page A-4 of this report and incorporated by reference herein; and (e) Notes to Financial Statements included on pages A-5 to A-8 of this report and incorporated by reference herein. The Company's Current Report on Form 8K dated September 20, 1996, contains certain pro forma financial information with respect to this acquisition and certain other pending transactions. Financial Information for KKSF FM/KDFC-FM and AM (A Division of the ------------------------------------------------------------------- Brown Organization) ------------------- On September 19, 1996, the Company entered into an agreement to purchase from the Brown Organization the assets used in the operation of KKSF- FM, 103.7 MHz and KDFC AM/FM, 1220 KHz and 102.1 MHz, San Francisco, California, for a purchase price of $115 million. The Company hereby provides the following financial information, not otherwise called for by this form but of importance to securityholders, in regard to KKSF FM/KDFC-FM and AM (A Division of the Brown Organization): (a) Independent Auditors' Report, included on page B-1 of this report and incorporated by reference herein; (b) Balance Sheets of KKSF FM/KDFC- FM and AM (A Division of the Brown Organization) at December 31, 1995 and at June 30, 1996 (unaudited), included on page B-2 of this report and incorporated by reference herein; (c) Statements of Operations and Division Equity of KKSF FM/KDFC-FM and AM (A Division of the Brown Organization) for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited), included on page B-3 of this report and incorporated by reference herein; (d) Statements of Cash Flows of KKSF FM/KDFC-FM and AM (A Division of the Brown Organization) for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited), included on page B-4 of this report and incorporated by reference herein; and (e) Notes to Financial Statements included on pages B-5 to B-9 of this report and incorporated by reference herein. The Company's Current Report on Form 8K dated September 20, 1996, contains certain pro forma financial information with respect to this acquisition and certain other pending transactions. ITEM 7. Financial Statements Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------- 7(a) Financial Statements of Business to Be Acquired ----------------------------------------------- The following information called for by Item 7(a) is included on pages A-1 through A-8 of this report and is incorporated herein by reference: (1) Independent Auditors' Report; (2) Balance Sheet of WDAS AM/FM (station owned and operated by Beasley FM Acquisition Corp.) at December 31, 1995 and at June 30, 1996 (unaudited); (3) Statements of Earnings and Station Equity of WDAS AM/FM (station owned and operated by Beasley FM Acquisition Corp.) for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited); and (4) Statements of Cash Flows of WDAS AM/FM (station owned and operated by Beasley FM Acquisition Corp.) for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited); (5) Notes to Financial Statements. 7(a) Financial Statements of Business to Be Acquired ----------------------------------------------- The following information called for by Item 7(a) is included on pages B-1 through B-9 of this report and is incorporated herein by reference: (1) Independent Auditors' Report; (2) Balance Sheet of KKSF FM/KDFC-FM and AM (A Division of the Brown Organization) at December 31, 1995 and at June 30, 1996 (unaudited); (3) Statements of Operations and Division Equity of KKSF FM/KDFC-FM and AM (A Division of the Brown Organization) for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited); and (4) Statements of Cash Flows of KKSF FM/KDFC-FM and AM (A Division of the Brown Organization) for (i) the year ended December 31, 1995 and (ii) the six months ended June 30, 1995 and 1996 (unaudited); (5) Notes to Financial Statements. 7(c) Exhibits -------- **(2.26) Asset Purchase Agreement dated September 19, 1996 between Beasley-FM Acquisition Corp., WDAS License Limited Partnership and Evergreen Media Corporation of Los Angeles (See table of contents for list of omitted schedules and exhibits). **(2.27) Asset Purchase Agreement dated September 19, 1996 between The Brown Organization and Evergreen Media Corporation of Los Angeles (See List of Exhibits and Schedules for a list of omitted schedules and exhibits). **(23.1) Consent of KPMG Peat Marwick LLP, independent accountants. **(23.2) Consent of KPMG Peat Marwick LLP, independent accountants. ________________________________ ** Filed herewith. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Evergreen Media Corporation By: /s/ Matthew E. Devine ----------------------------- Matthew E. Devine Chief Financial Officer Date: September 30, 1996 3 INDEPENDENT AUDITORS' REPORT ---------------------------- The Board of Directors Beasley FM Acquisition Corp.: We have audited the accompanying balance sheet of WDAS-AM/FM (station owned and operated by Beasley FM Acquisition Corp.) as of December 31, 1995, and the related statements of earnings and station equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WDAS-AM/FM as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Saint Petersburg, Florida March 29, 1996 A-1 WDAS-AM/FM (STATION OWNED AND OPERATED BY BEASLEY FM ACQUISITION CORP.) Balance Sheets (In thousands)
DECEMBER 31, JUNE 30, ASSETS 1995 1996 ------ ------------ ---------- (Unaudited) Current assets: Cash $ 428 1,021 Accounts receivable, less allowance for doubtful accounts of $158 in 1995 3,455 3,386 Trade sales receivable 207 207 Prepaid expense and other 54 251 ------- ------ Total current assets 4,144 4,865 Property and equipment, net (note 2) 2,815 3,370 Notes receivable from related parties 994 1,866 Intangibles, less accumulated amortization 20,202 18,978 ------- ------ $28,155 29,079 ======= ====== LIABILITIES AND STATION EQUITY - ------------------------------ Current liabilities: Current installments of long-term debt $ 500 1,176 Note payable to related party (note 5) 638 252 Accounts payable 536 174 Accrued expenses 406 210 Trade sales payable 38 37 ------- ------ Total current liabilities 2,118 1,849 Long-term debt, less current installments (note 3) 670 676 ------- ------ Total liabilities 2,788 2,525 Station equity 25,367 26,554 Commitments and related party transactions (notes 4 and 5) ------- ------ $28,155 29,079 ======= ======
See accompanying notes to financial statements. A-2 WDAS-AM/FM (Station owned and operated by Beasley FM Acquisition Corp.) Statement of Earnings and Station Equity (In thousands)
Six months ended Year ended ------------------ December 31, June 30, June 30, 1995 1995 1996 ------------ -------- -------- (Unaudited) Net revenues $12,613 5,222 6,208 ------- ----- ------ Costs and expenses: Program and production 1,596 796 870 Technical 324 158 110 Sales and advertising 3,813 1,203 1,386 General and administrative 2,107 947 936 ------- ----- ------ 7,840 3,104 3,302 ------- ----- ------ Operating income, excluding items shown separately below 4,773 2,118 2,906 Management fees (note 5) 445 222 310 Depreciation and amortization 2,640 1,270 1,308 Interest expense, net of interest income 52 78 25 Other expense 25 - 56 ------- ----- ------ Net income 1,611 548 1,207 Station equity, beginning of period 388 388 25,367 Forgiveness of related party note payable (note 5) 23,800 - - Distributions (432) - (20) ------- ----- ------ Station equity, end of period $25,367 936 26,554 ======= ===== ======
See accompanying notes to financial statements. A-3 WDAS-AM/FM (Station owned and operated by Beasley FM Acquisition Corp.) Statement of Cash Flows (In thousands)
Six months ended Year ended ------------------ December 31, June 30, June 30, 1995 1995 1996 ------------ -------- -------- (Unaudited) Cash flows from operating activities: Net income $ 1,611 548 1,207 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,737 1,270 1,308 Allowance for doubtful accounts 108 (380) (1) (Increase) decrease in receivables (1,396) (605) 69 Increase in prepaid expense and other assets (20) 349 (203) Increase (decrease) in accounts payable and accrued expenses 110 50 (558) -------- ------ ------ Net cash provided by operating activities 3,150 1,232 1,822 -------- ------ ------ Cash flows from investing activities - Capital expenditures for property and equipment (1,072) (155) (633) -------- ------ ------ Net cash used in investing activities (1,072) (155) (633) -------- ------ ------ Cash flows from financing activities: Proceeds from issuance of indebtedness 670 - 676 Principal payments on indebtedness (8) (1,851) (670) Payment of loan fees (11) - - Net change in borrowings to/from affiliates (2,289) 439 (582) Capital distributions (432) - (20) -------- ------ ------ Net cash used in financing activities (2,070) (1,412) (596) -------- ------ ------ Net increase (decrease) in cash 8 (335) 593 Cash at beginning of period 420 420 428 -------- ------ ------ Cash at end of period $ 428 85 1,021 ======== ====== ====== Noncash transaction: Debt relieved through forgiveness of related party note payable $(23,800) - - ======== ====== ======
See accompanying notes to financial statements. A-4 WDAS-AM/FM (Station owned and operated by Beasley FM Acquisition Corp.) Notes to Financial Statements December 31, 1995 (In thousands) (1) Organization and Summary of Significant Accounting Policies (a) Organization WDAS-AM/FM is a radio station operating in Philadelphia, Pennsylvania. The assets, liabilities and operations of WDAS-AM/FM are part of Beasley FM Acquisition Corp. (BFMA). These financial statements reflect only the assets, liabilities and operations relating to radio station WDAS-AM/FM and are not representative of the financial statements of BFMA. (b) Property and Equipment Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated lives of the assets, which range from 5 to 31 years. (c) Intangibles Intangibles consist primarily of FCC licenses, which are amortized straight-line over ten years. Other intangibles are amortized straight-line over 5 to 10 years. (d) Barter Transactions Trade sales are recorded at the fair value of the products or services received. Products and services received and expensed totaled approximately $825 for the year ended December 31, 1995. (e) Income Taxes BFMA has elected to be treated as an "S" Corporation under provisions of the Internal Revenue Code. Under this corporate status, the stockholders of BFMA are individually responsible for reporting their share of taxable income or loss. Accordingly, no provision for federal or state income taxes has been reflected in the accompanying financial statements. (f) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. To the extent management's estimates prove to be incorrect, financial results for future periods may be adversely affected. (Continued) A-5 2 WDAS-AM/FM (Station owned and operated by Beasley FM Acquisition Corp.) Notes to Financial Statements (g) Interim Financial Statements In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations, and cash flows of the Company as of June 30, 1996 and for the six month periods ended June 30, 1995 and 1996. (2) Property and Equipment Property and equipment, at cost, is comprised of the following at December 31, 1995:
Land, buildings, and improvements $1,941 Broadcast equipment 960 Office equipment and other 231 Transportation equipment 53 ------ 3,185 Less accumulated depreciation (370) ------ $2,815 ======
(3) Long-Term Debt Current installments of long-term debt consist of a $500 non-interest bearing note payable, which is due upon seller's perfection of an easement relating to the Company's purchase of WDAS-AM/FM. BFMA and six affiliates (the Group) refinanced their existing note payable agreement, which included a $27,600 term loan and a $26,000 revolving credit loan, on December 21, 1995. Under terms of the new agreement, the Group was provided a revolving credit loan with an initial maximum commitment of $70,000. (The maximum commitment may be subsequently increased to $100,000 subject to additional lenders becoming party to the agreement.) The Group's borrowings under the revolving credit loan totaled $58,477 at December 31, 1995, of which $670 was allocated to WDAS-AM/FM. The loan bears interest at either the base rate or LIBOR plus a margin which is determined by the Group's debt to cash flow ratio. The base rate is equal to the higher of the prime rate or the overnight federal funds effective rate plus 0.5%. At December 31, 1995, the revolving credit loan carried interest at 7.625%. Interest is generally payable quarterly. The Group has entered into interest rate hedge agreements as discussed in note 6. (Continued) A-6 3 WDAS-AM/FM (Station owned and operated by Beasley FM Acquisition Corp.) Notes to Financial Statements The amount available under the Group's revolving credit loan will be reduced quarterly beginning September 30, 1997 through its maturity on December 31, 2003. Reductions in the maximum availability on the revolving credit loan total $9,450 in each of the years 1997 through 2001 and $10,850 in 2002. The loan agreement includes restrictive covenants and requires the Group to maintain certain financial ratios. The loans are secured by the common stock and substantially all assets of the Group. Annual maturities on the Group's revolving credit loan for the next five years are as follows:
Debt maturities ---------- 1996 $ - 1997 - 1998 7,377 1999 9,450 2000 9,450 Thereafter 32,200 ------- Total $58,477 =======
WDAS-AM/FM paid interest of approximately $52 in 1995. (4) Commitments WDAS-AM/FM leases facilities under a 10-year operating lease which expires in July 2004. WDAS-AM/FM also leases a tower under an operating lease which expires January 1997, and certain other office equipment on a month-to- month basis. Lease expense for 1995 was approximately $135. Future minimum lease payments by year are summarized as follows:
1996 $196 1997 158 ---- $354 ====
(5) Related Party Transactions The Company has a management agreement with Beasley Management Company, an affiliate of the Company's principal stockholder. For the year ended December 31, 1995, management fee expense under the agreement was $445. (Continued) A-7 4 WDAS-AM/FM (Station owned and operated by Beasley FM Acquisition Corp.) Notes to Financial Statements The notes receivable (payable) from (to) related parties are non-interest bearing and are due on demand. A note payable to related party of $23,800 was forgiven in 1995. (6) Financial Instruments WDAS-AM/FM's significant financial instruments and the methods used to estimate their fair values are as follows: Revolving credit loan - The fair value approximates carrying value due to the loan being refinanced on December 21, 1995 and the interest rate being based on current market rates. Interest rate swap and cap agreements - The Group entered into an interest rate swap agreement with a notional amount of $10,000 and two interest rate cap agreements with notional amounts totaling $20,000 to act as a hedge by reducing the potential impact of increases in interest rates on the revolving credit loan. These agreements expire in October 1996. The Group is exposed to credit loss in the event of nonperformance by the other parties to the agreements. The Group, however, does not anticipate nonperformance by the counterparties. The fair value of the Group's interest rate swap agreement is estimated using the difference between the present value of discounted cash flows using the base rate stated in the swap agreement (6.945%) and the present value of discounted cash flows using the LIBOR rate at December 31, 1995. The fair value of the Group's interest rate cap agreements, which establish a maximum base rate of 7%, is estimated based on amounts the Group would expect to receive or pay to terminate the agreements. The carrying amounts and fair values of the Group's interest rate swap and cap agreements at December 31, 1995 are as follows:
Carrying Fair value amount (a liability) ________ ------------- Interest rate swap agreement - $(86) Interest rate cap agreements - -
(7) Events (Unaudited) Subsequent to the Date of the Independent Auditors' Report On August 20, 1996, a settlement was signed with regard to the responsibility for obtaining the easement related to WDAS-AM/FM (see note 3). The settlement reduces the Company's obligation on the note payable to the seller from $500 to $150 and releases the seller from all obligations to perfect such easement. The $150 was paid by WDAS-AM/FM in August 1996. The Group refinanced its long-term debt (note see note 3) on June 24, 1996. The terms of the new agreement alter the total available credit line to the Group and the mandatory repayment requirements. However, the refinancing did not have a significant impact on the amount allocated to WDAS-AM/FM. A-8 INDEPENDENT AUDITORS' REPORT ---------------------------- The Board of Directors The Brown Organization: We have audited the accompanying balance sheet of KKSF-FM/KDFC-FM and AM (A Division of The Brown Organization) as of December 31, 1995, and the related statements of operations and division equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of KKSF-FM/KDFC-FM and AM (A Division of The Brown Organization) as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Dallas, Texas September 24, 1996 B-1 KKSF-FM/KDFC-FM AND AM (A Division Of The Brown Organization) Balance Sheets (Dollars in thousands)
December 31, June 30, Assets 1995 1996 ------ ------------- ----------- (unaudited) Current assets: Cash $ 131 -- Accounts receivable, less allowance for doubtful accounts of $92 in 1995 3,110 3,207 Prepaid expenses and other 77 125 ------- ------ Total current assets 3,318 3,332 ------- ------ Property and equipment, net (note 2) 2,434 2,212 Intangible assets, net (note 3) 14,448 13,534 Other assets 106 102 ------- ------ Total assets $20,306 19,180 ======= ====== Liabilities and Division Equity ------------------------------- Current liabilities: Accounts payable $ 57 112 Accrued expenses 963 1,261 ------- ------ Total current liabilities 1,020 1,373 Intercompany payable to parent (note 4) 7,700 5,600 Other long-term liability (note 5) 198 198 Division equity: Advances from parent 11,746 11,973 Accumulated deficit (358) 36 ------- ------ Total division equity 11,388 12,009 Commitments and contingencies (note 5) ------- ------ Total liabilities and division equity $20,306 19,180 ======= ======
See accompanying notes to financial statements. B-2 KKSF-FM/KDFC-FM AND AM (A Division Of The Brown Organization) Statements of Operations and Division Equity (Dollars in thousands)
Six months ended Year ended June 30, December 31, --------------- 1995 1995 1996 ------------- ------ ------- (unaudited) Operating income: Gross revenues $13,739 6,290 7,741 Less agency commissions 1,773 835 979 ------- ----- ------ Net revenues 11,966 5,455 6,762 ------- ----- ------ Operating expenses: Station operating expenses, excluding depreciation and 7,088 3,462 3,593 amortization Participation agreement expense 1,405 628 1,364 Depreciation and amortization 2,283 1,112 1,177 ------- ----- ------ Total operating expenses 10,776 5,202 6,134 ------- ----- ------ Operating income 1,190 253 628 Non-operating income (expenses): Intercompany interest expense (796) (462) (238) (note 4) Other, net 54 72 4 ------- ----- ------ Non-operating expense, net (742) (390) (234) ------- ----- ------ Net income (loss) 448 (137) 394 Division equity, beginning of period 8,025 8,025 11,388 Net investment by parent 2,915 1,450 227 ------- ----- ------ Division equity, end of period $11,388 9,338 12,009 ======= ===== ======
See accompanying notes to financial statements. B-3 KKSF-FM/KDFC-FM AND AM (A Division Of The Brown Organization) Statements of Cash Flows (Dollars in thousands)
Six months ended Year ended June 30, December 31, ---------------- 1995 1995 1996 ------------- ------- ------- (unaudited) Cash flows from operating activities: Net income (loss) $ 448 (137) 394 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 2,283 1,112 1,177 Gain on sale of assets (38) (38) -- Deferred compensation 60 -- -- Accrued intercompany interest 796 462 238 Participation agreement 1,405 628 1,364 expense (note 5) Changes in assets and liabilities: Accounts receivable (684) (256) (97) Prepaid expenses and other 16 (88) (48) Accounts payable and accrued expenses 51 406 494 Other -- 42 -- ------- ------ ------ Net cash provided by operating activities 4,337 2,131 3,522 ------- ------ ------ Cash flows used in investing activities: Acquisition of property and (1,239) (1,086) (37) equipment Proceeds from sale of equipment 5 5 -- ------- ------ ------ Net cash used in investing activities (1,234) (1,081) (37) ------- ------ ------ Cash flows used in financing activities: Advances to parent (3,300) (1,300) (3,475) Bank overdraft -- -- (141) ------- ------ ------ Net cash used in financing activities (3,300) (1,300) (3,616) Decrease in cash (197) (250) (131) Cash at beginning of period 328 328 131 ------- ------ ------ Cash at end of period $ 131 78 -- ======= ====== ====== Noncash financing activities - intercompany note payable $ 5,543 2,893 2,338 ======= ====== ======
See accompanying notes to financial statements. B-4 KKSF-FM/KDFC-FM AND AM (A Division Of The Brown Organization) Notes to Financial Statements (1) Summary of Significant Accounting Policies ------------------------------------------ (a) Description of Business ----------------------- KKSF-FM/KDFC-FM and AM (the "Division") is a division of The Brown Organization (the "Company"). The Division is the operator of radio stations KKSF-FM and KDFC-FM and AM. The accompanying financial statements reflect the assets and liabilities related to the Division's operations and do not include corporate management and administrative expenses. (b) Property and Equipment ---------------------- Property and equipment are stated at cost. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are charged to expense when incurred. (c) Intangible Assets ----------------- The excess of the purchase price of the acquired radio stations over the fair value of the net tangible assets acquired is reflected in the accompanying financial statements as intangible assets. Intangible assets are amortized over the estimated useful lives ranging from 3 to 40 years. The Division 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 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. At this time, the Division believes that no significant impairment of goodwill and other intangible assets has occurred and that no reduction of the estimated useful lives is warranted. (d) Barter Transactions ------------------- The Division trades commercial air time for goods and services used principally for promotional sales and other business activities. Barter revenue is recognized when the commercials are broadcast. Barter expense is recognized when goods or services are received or used. Barter revenues and expenses were approximately $166,000 during the year ended December 31, 1995. (Continued) B-5 2 KKSF-FM/KDFC-FM AND AM (A Division Of The Brown Organization) Notes to Financial Statements (e) Revenue Recognition ------------------- Revenue is derived primarily from the sale of commercial announcements to local and national advertisers. Revenue is recognized as commercials are broadcast. (f) Disclosure of Certain Significant Risks and Uncertainties --------------------------------------------------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that reflect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, credit risk with respect to trade receivables is limited due to the large number of diversified customers and the geographic diversification of the Division's national revenue customer base. The Division performs ongoing credit evaluations of its customers and believes that adequate allowances for any uncollectible trade receivables are maintained. At December 31, 1995, no receivable from any customer exceeded 5% of Division equity and no customer accounted for more than 10% of net revenues in 1995. (g) Fair Value of Financial Instruments ----------------------------------- The carrying amount of cash, accounts receivable and accounts payable approximates fair value due to the short maturity of these instruments. As borrowings bear interest at current market rates, the carrying amount of the intercompany note payable approximates estimated fair value. (h) Income Taxes ------------ As the Company is an "S" Corporation, income taxes are the responsibility of its individual stockholders. Accordingly, no income tax expense or deferred income tax assets or liabilities are recognized in the accompanying financial statements. (i) Interim Financial Information ----------------------------- In the opinion of management, the unaudited interim financial information of the Division reflects all adjustments, consisting only of normal recurring accruals, necessary to present fairly the Division's financial position as of June 30, 1996 and the results of its operations and changes in division equity and its cash flows for the six month periods ended June 30, 1995 and 1996. The results of operations for the six month period ended June 30, 1996 is not necessarily indicative of the results to be expected for the full year. The unaudited financial information does not include all adjustments required by generally accepted accounting principles. (Continued) B-6 3 KKSF-FM/KDFC-FM AND AM (A Division Of The Brown Organization) Notes to Financial Statements (2) Property and Equipment ---------------------- Property and equipment is comprised of the following at December 31, 1995 (thousands of dollars):
Leasehold Improvements 10 years $ 709 Broadcast equipment 5-10 years 2,299 Furniture, fixtures and office equipment 3-10 years 746 Record library 7 years 148 Automobile 3 years 42 ------- 3,944 Less accumulated depreciation 1,510 ------- $ 2,434 =======
(3) Intangible Assets ----------------- Intangible assets is comprised of the following at December 31, 1995 (thousands of dollars):
Net Accumulated unamortized KKSF-FM Acquisition Cost amortization portion - ------------------- ------- ------------ ----------- FCC license (40 year life) $ 4,500 961 3,539 Residual value (40 year life) 533 117 416 Lease costs (approximately 12-3/4 year life) 900 611 289 Format and music research (approximately 9-1/4 year life) 6,320 5,471 849 ------- ----- ------- Total 12,253 7,160 5,093 ------- ----- ------- KDFC Acquisition - ---------------- Covenant not to compete (5 year life) 3,000 1,250 1,750 Goodwill and going concern value (40 year life) 2,245 117 2,128 Customer list (5 year life) 1,226 511 715 FCC license (40 y ear life) 5,000 260 4,740 Contracts (3 year life) 72 50 22 ------- ----- ------- Total 11,543 2,188 9,355 ------- ----- ------- Total intangibles $23,796 9,348 $14,448 ======= ===== =======
(Continued) B-7 4 KKSF-FM/KDFC-FM AND AM (A Division Of The Brown Organization) Notes to Financial Statements (4) Related Party Transactions -------------------------- The Division is provided management and administrative services by personnel at the Company's headquarter's office located in Los Angeles, California and by the president of the Company's radio station operations. The cost of these services has not been charged to the Division's operations. The Division maintains an intercompany note payable with the Company that bears interest at a rate equivalent to the Company's rate on its bank borrowings (7.6% at December 31, 1995). (5) Commitments and Contingencies ----------------------------- The Company, on behalf of the Division, entered into a time brokerage agreement whereby substantially all of the broadcast time of radio station KDFC-AM was sold to another broadcaster (the "Broadcaster") for a monthly fee of $41,667. The agreement is for a period of three years commencing October 5, 1995. The Broadcaster may extend the agreement an additional two years. The agreement may be terminated in the event the station is sold. The Broadcaster must be notified of the Company's intentions to sell and the price and terms of the proposed sale. The Broadcaster has the right to negotiate exclusively with the Company for sixty days following receipt of said notification. The Company has entered into an agreement with a key employee whereby said employee participates in the Division's appreciation of net assets through participation percentages. The key employee's percentage of participation is greater if he is employed by the Company at the time that the station is sold than if his employment is terminated prior to sale for reasons other than the employee's death or disability. The balance due to this employee is payable only upon the earlier of the termination of employment or sale of the radio station. The Company recognized approximately $1,405,000 in compensation expense related to this agreement during 1995. During 1989 the Company adopted a deferred compensation plan for the benefit of the radio stations' general managers. Compensation expense of $60,000 was recognized in 1995. The Company, on behalf of the Division, was lessee under noncancelable operating leases for studio space and transmitter sites. Rental expense was approximately $298,000 during 1995. (Continued) B-8 5 KKSF-FM/KDFC-FM AND AM (A Division Of The Brown Organization) Notes to Financial Statements Future minimum lease payments under noncancelable operating leases as of December 31, 1995 are as follows (in thousands):
1996 $ 341 1997 353 1998 309 1999 367 2000 230 ------ Total $1,600 ======
B-9 EX-2.26 2 ASSET PUR. AGMT. BEASLEY FM ACQUISITION CORP. EXHIBIT 2.26 ================================================================================ ASSET PURCHASE AGREEMENT by and between BEASLEY FM ACQUISITION CORP., WDAS LICENSE LIMITED PARTNERSHIP, and EVERGREEN MEDIA CORPORATION OF LOS ANGELES Dated as of September 19, 1996 ================================================================================ TABLE OF CONTENTS -----------------
Page ---- 1. Sale and Purchase................................................... 1 1.1 Assets to be Conveyed.......................................... 1 1.2 Absence of Liens............................................... 3 1.3 Excluded Assets................................................ 3 1.4 Assumption of Liabilities...................................... 3 1.5 Like-Kind Exchange............................................. 3 2. Purchase Price...................................................... 4 2.1. Payment........................................................ 4 2.2. Allocation..................................................... 4 3. Escrow Arrangements................................................. 4 3.1 Letter of Credit............................................... 4 3.2 Liquidated Damages............................................. 4 3.3. Return of Letter of Credit..................................... 5 4. Closing............................................................. 5 4.1 Closing Deliveries............................................. 5 4.2 Accounts Receivable............................................ 6 4.3 Prorations..................................................... 7 4.4 Further Assurances............................................. 8 5. Representations and Warranties of Beasley........................... 8 5.1 Organization; Good Standing.................................... 9 5.2 Authority...................................................... 9 5.3 No Breach or Violation......................................... 9 5.4 Approvals...................................................... 10 5.5 No Litigation.................................................. 10 5.6 Brokerage...................................................... 10 5.7 Title to and Condition of Tangible Personal Property........... 10 5.8 Title to and Condition of Real Property........................ 11 5.9 Environmental Matters.......................................... 11 5.10 Assumed Contracts.............................................. 12 5.11 Personnel...................................................... 12 5.12 Labor Relations................................................ 14 5.13 Licenses....................................................... 14 5.14 Intangible Assets.............................................. 14 5.15 Compliance with Law............................................ 14
5.16 FCC Compliance; Pending Applications........................... 15 5.17 Financial Statement............................................ 15 5.18 Conduct of Business in Ordinary Course......................... 15 5.19 Taxes.......................................................... 16 5.20 Insurance...................................................... 16 5.21 Bulk Sales..................................................... 16 5.22 Accuracy of Information Furnished.............................. 16 5.23 Definition of Knowledge........................................ 16 6. Representations and Warranties of Evergreen......................... 16 6.1 Organization; Good Standing.................................... 16 6.2 Authority...................................................... 17 6.3 No Breach or Violation......................................... 17 6.4 Approvals...................................................... 17 6.5 No Litigation.................................................. 17 6.6 Brokerage...................................................... 18 6.7 FCC Qualifications............................................. 18 6.8 Accuracy of Information Furnished.............................. 18 6.9 Definition of Knowledge........................................ 18 7. Covenants of the Parties............................................ 18 7.1 FCC Application; Divestiture Commitment........................ 18 7.2 Conduct of Business............................................ 19 7.3 No Solicitation Of Third Parties or Employees.................. 21 7.4 Access; Confidentiality; Publicity............................. 21 7.5 Inconsistent Actions........................................... 22 7.7 Control of the Stations........................................ 22 7.8 Risk of Loss................................................... 22 7.9 Third Party Consents........................................... 23 7.10 Title Insurance and Surveys.................................... 23 7.11 Employee Matters............................................... 25 7.12 Compliance With HSR Act........................................ 26 8. Conditions to Evergreen's Obligations............................... 26 8.1 Representations, Warranties and Covenants...................... 26 8.2 FCC Consent.................................................... 27 8.3 HSR Act........................................................ 27 8.4 Injunctions.................................................... 27 8.5 No Material Adverse Change..................................... 27 8.6 Consents....................................................... 27
-ii- 8.7 Resolutions.................................................... 27 8.8 Closing Documents.............................................. 27 8.9 Opinion of Counsel to Beasley.................................. 28 9. Conditions to Beasley's Obligations................................. 28 9.1 Representations, Warranties and Covenants...................... 28 9.2 FCC Consent.................................................... 28 9.3 HSR Act........................................................ 28 9.4 Injunctions.................................................... 28 9.5 Resolutions.................................................... 28 9.6 Closing Documents.............................................. 28 9.7 Opinion of Counsel to Evergreen................................ 28 9.8 Payment........................................................ 29 10. Termination; Opportunity to Cure.................................... 29 10.1 Termination.................................................... 29 10.2 Opportunity to Cure............................................ 29 11. Survival of Representations and Warranties; Indemnification; and Remedies....................................... 29 11.1 Survival....................................................... 29 11.2 Indemnification by Beasley..................................... 30 11.3 lndemnification by Evergreen................................... 30 11.4 Procedure for Indemnification.................................. 31 11.5 Liquidated Damages............................................. 32 11.6 Specific Performance........................................... 32 12. Expenses............................................................ 32 13. Sales Taxes......................................................... 33 14. Benefit of Agreement; Assignment.................................... 33 15. Notices............................................................. 33 16. Entire Agreement.................................................... 34 17. Exhibit............................................................. 34 18. Amendment; Waiver................................................... 34 19. Governing Law....................................................... 34 20. Severability........................................................ 34 21. Attorney's Fees..................................................... 34 22. Counterparts........................................................ 34
-iii- EXHIBITS Exhibit I Form of Letter of Credit Exhibit II Form of Escrow Agreement Exhibit III Form of Opinion of Leventhal, Senter & Lerman Exhibit IV Form of Opinion of Latham & Watkins DISCLOSURE SCHEDULES BEASLEY'S SCHEDULES Schedule 1.1 Tangible Personal Property Schedule 1.2 Real Property Schedule 1.3 Assumed Contracts Schedule 1.4 Licenses Schedule 1.5 Intangible Assets Schedule 1.7 Excluded Assets Schedule 5.3 Beasley Consents Schedule 5.5 Litigation Schedule 5.7 Title to and Condition of Tangible Personal Property Schedule 5.8 Title to and Condition of Real Property Schedule 5.9 Environmental Matters Schedule 5.11 Personnel, Employee Plans and Compensation Arrangements Schedule 5.16 FCC Compliance; Pending Applications Schedule 5.17 Financial Statements Schedule 7.2 Pending and Permitted Additional Contracts EVERGREEN'S SCHEDULES Schedule 6.3 Evergreen Consents Schedule 6.5 Litigation Schedule 6.7 FCC Qualifications SCHEDULES APPLICABLE TO BOTH PARTIES Schedule 7.3 Solicitation of Employees Schedule 7.11 Employee Matters -iv- ASSET PURCHASE AGREEMENT ------------------------ This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of this 19th day of September 1996, by and between BEASLEY FM ACQUISITION CORP., a Delaware corporation ("BFAC"), WDAS LICENSE LIMITED PARTNERSHIP, a Delaware limited partnership ("Beasley License Co.," together with BFAC, "Beasley"), and EVERGREEN MEDIA CORPORATION OF LOS ANGELES, a Delaware corporation ("Evergreen"). Beasley is the owner, operator and licensee of radio stations WDAS(AM), 1480 KHz, and WDAS-FM, 105.3 MHz, Philadelphia, Pennsylvania (the "Stations"), pursuant to certain licenses and authorizations issued by the Federal Communications Commission (the "FCC"). Beasley desires to sell and Evergreen desires to purchase certain property and assets used in the operations of the Stations. The prior consent of the FCC to the assignment of the licenses and authorizations issued by the FCC for the Stations is required. It is intended that if such consent is obtained, the transactions contemplated by this Agreement will be consummated subject to all of the other terms and conditions of this Agreement. Accordingly, in consideration of the mutual promises herein set forth and subject to the terms and conditions hereof, the parties agree as follows: 1. SALE AND PURCHASE. 1.1 ASSETS TO BE CONVEYED. At the Closing (as defined in SECTION 4), Beasley shall transfer, assign, convey and deliver to Evergreen (or in the case of certain Real Property described in Schedule 1.2, cause George G. Beasley to transfer, assign, convey ------------ and deliver), and Evergreen shall accept and acquire from Beasley, all of Beasley's right, title and interest in and to the following: (a) all of the tangible personal property used or held for use by Beasley in the operation of the Stations, including the tangible personal property listed on Schedule 1.1, together with any replacements thereof or ------------ additions thereto made between the date of this Agreement and the Closing Date (the "Tangible Personal Property"); (b) all files (excluding personnel files for employees, confidential correspondence files of station management, the general ledger, tax records, books and records related solely to internal corporate matters and copies of all books and records that Beasley is required by law to retain (provided, that Evergreen shall be permitted to retain such copies of the files for any Transferred Employee as necessary to comply with the provisions of SECTION 7.11 and of the general ledger and tax records as necessary)), technical records, logs, program materials, programs, lists, music libraries, public inspection files that relate to the Stations and all proprietary information and data, maps, plans, diagrams, blueprints, schematics and technical drawings, engineering records, and FCC applications and filings maintained with respect to the Stations pursuant to the rules and regulations of the FCC (the "Records"); (c) the real property and interests in real property, including fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon, used in the business or operations of the Stations, as listed on Schedule 1.2, together with any replacements thereof and any additions thereto made between the date of this Agreement and the Closing Date (the "Real Property"); (d) the following contracts, leases, employment contracts and other agreements that relate to the Assets (as defined below) or the operation of the Stations (collectively, the "Assumed Contracts"): (i) the contracts, leases, employment and other agreements listed on Schedule 1.3 (as updated pursuant to SECTION 7.13; (ii) all contracts or commitments for the sale of time on the Stations for cash at prevailing rates entered into in the ordinary course of business; (iii) additional contracts or commitments neither listed on Schedule 1.3 nor otherwise described in this SECTION 1.1(D) that have been entered into in the ordinary course of business and involve less than $25,000 per year in any individual instance and less than $300,000 in the aggregate; and (iv) contracts or commitments for the sale of advertising time on the Stations in exchange for goods and services ("Trade Agreements") not listed on Schedule 1.3 that involve commitments to provide air time having a value of lessthan $25,000 in any individual instance and $100,000 in the aggregate; (e) the licenses, permits, authorizations and call letters, qualifications, orders, franchises, certificates, consents and approvals issued to Beasley by any governmental or regulatory agency or authority, whether Federal, state or local, and used in connection with the operation of the Stations, including the licenses and authorizations issued by the FCC for the Stations (the "FCC Licenses"), and all applications for such licenses and authorizations to the extent assignable (the "Applications"), all of which are set forth on Schedule 1.4 (collectively, the "Licenses"); ------------ and (f) the patents, patent applications, trademarks, trade names, service marks, and copyright registrations or copyright applications and any other intangible assets used in connection with the Stations, including but not limited to those set forth on Schedule 1.5 (the "Intangible Assets", and ------------ together with the Tangible Personal Property, the Records, the Real Property, the Assumed Contracts, and the Licenses, the "Assets"). 2 1.2 ABSENCE OF LIENS. The Assets shall be delivered free and clear of all liens, mortgages, pledges, covenants, security interests, charges, claims or encumbrances of any kind whatsoever ("Liens"), except for (i) Liens for current taxes not yet due or payable or the validity of which are being contested in good faith in and appropriate proceedings not to exceed $150,000 in the aggregate, (ii) Liens which constitute valid leases or subleases to third parties with respect to property not used in the operation of the Stations, which such lease or sublease is included in the Assets, (iii) Liens and defects in title that are not material to the owner or the lessee, as the case may be, and (iv) Liens under Assumed Contracts listed on Schedule 1.3 to be assumed by ------------ Evergreen at the Closing, and (v) Liens disclosed on Schedule 5.8. Liens ------------ disclosed in clauses (i) - (iv) above, together with Liens securing indebtedness that will be removed prior to or at the Closing, are hereafter referred to as "Permitted Liens." 1.3 EXCLUDED ASSETS. The Assets shall include all assets used or held for use in the operation of the Stations by Beasley or any affiliated entity, except the parties agree and acknowledge that the Assets shall not include the (a) accounts receivable for cash for services performed or provided by Beasley prior to the Closing Date (the "Accounts Receivable") and (b) the assets set forth on Schedule 1.7. ------------ 1.4 ASSUMPTION OF LIABILITIES. Evergreen shall assume all of Beasley's obligations under the Assumed Contracts accruing or coming due on or after the Closing Date. Except as otherwise expressly provided in this Agreement, Evergreen shall not assume or become obligated to perform any debt, liability or obligation of Beasley whatsoever, including (a) any obligations or liabilities under any contract, lease or agreement other than the Assumed Contracts as provided above; (b) any obligations coming due on or prior to the Closing Date; (c) any claims or pending litigation or proceedings relating to the operation of the Stations prior to the Closing Date; (d) any insurance policies of Beasley; (e) any obligations or liabilities arising under capitalized leases or other financing agreements, except as set forth on Schedule 1.3; (f) any obligations or liabilities of Beasley under any employee - ------------ pension, retirement, health and welfare or other benefit plans or collective bargaining agreements, except as provided in SECTION 7.11; (g) any obligation to any employee of the Stations for severance benefits, vacation time, or sick leave, except as provided in SECTION 7.11; (h) any liability for any taxes attributable to the Assets or the operations of the Stations prior to the Closing Date; or (i) any obligations or liabilities caused by, arising out of, or resulting from any action or omission of Beasley prior to the Closing. All such obligations and liabilities shall remain and be the obligations and liabilities solely of Beasley. 1.5 LIKE-KIND EXCHANGE. Beasley may at any time at or prior to Closing assign its rights under this Agreement to a "qualified intermediary" as defined in Treas. Reg. (S) 1.1031(k) - 1(g)(4), subject to all of Evergreen's rights and obligations hereunder, in which event Beasley shall promptly provide written notice of such assignment to Evergreen. Evergreen shall cooperate with all reasonable requests of Beasley and such qualified intermediary in arranging and effecting the exchange as one which qualifies under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"). Without limiting the generality of the foregoing, 3 Evergreen shall promptly provide Beasley with written acknowledgment of receipt of such notice of assignment to the qualified intermediary. 2. PURCHASE PRICE. 2.1. PAYMENT. At the Closing, Evergreen shall pay Beasley, or as provided in SECTION 1.5, the qualified intermediary, by federal wire transfer of immediately available funds pursuant to wire transfer instructions to be delivered by Beasley to Evergreen at least two (2) days prior to the Closing, the sum of One Hundred Three Million Dollars ($103,000,000), subject to adjustment pursuant to SECTION 4.3 (the "Purchase Price"). 2.2. ALLOCATION. Of the Purchase Price, $3,000,000 shall be allocated to the Real Property to be conveyed by George G. Beasley. As to the allocation of the balance of the Purchase Price, Evergreen and Beasley agree that they shall cause the aggregate fair market value of the Stations to be appraised by the appraisal firm of Bond & Pecaro, the expenses of which shall be borne equally by Buyer and Seller. Each of Beasley and Evergreen shall deliver to the other a draft of IRS Form 8594 reflecting the information required by Section 1060 of the Code and the regulations thereunder (excluding any information required to be excluded by Treas. Reg. (S) 1.1060 - 1T(b)(4)) for review and approval, which approval shall not be unreasonably withheld, by the date which is the earlier of 60 days after Closing or 60 days prior to the earlier of the dates by which either Evergreen or Beasley must file its federal income tax return for the taxable year in which the Closing occurs (taking into account permissible extensions). Buyer and Seller shall each file with their respective federal income tax returns for the tax year in which the Closing occurs, IRS Form 8594 containing the information agreed upon under the procedure outlined above. Except as otherwise required by law or any taxing authority, each of Buyer and Seller shall report, or cause to be reported, the transactions contemplated hereby for income tax purposes (including but not limited to, on their respective income tax returns, before any governmental agency charged with the collection of income tax in a manner consistent with the information agreed upon pursuant to this section and contained in the relevant IRS Form 8594. Notwithstanding any other provision of this Agreement, the provisions of this SECTION 2.2 shall survive the Closing without limitation. 3. ESCROW ARRANGEMENTS. 3.1 LETTER OF CREDIT. Simultaneous with the execution of this Agreement, Evergreen is delivering to Star Media Group, Inc. (the "Escrow Agent") an irrevocable letter of credit substantially in the form of Exhibit I --------- in the amount of $5,000,000 (the "Letter of Credit"). The Letter of Credit shall be held by the Escrow Agent pursuant to an escrow agreement in the form of Exhibit II (the "Escrow Agreement"), which is being executed simultaneously with - ---------- the execution of this Agreement, and subject to the provisions of SECTIONS 3.2 and 3.3. 3.2 LIQUIDATED DAMAGES. If the sale and purchase provided for in this Agreement is not consummated as a result of a material breach by Evergreen of any of its 4 obligations under this Agreement and Beasley shall not be in breach of any of its material obligations under this Agreement, Beasley shall be entitled to cause the Escrow Agent to deliver the Escrow Deposit as defined in the Escrow Agreement and to draw upon the Letter of Credit and to retain the proceeds thereof as liquidated damages for such material breach by Evergreen, in full settlement of any damages of any nature or kind that Beasley may suffer or allege to have suffered as a result of any such breach by Evergreen. The receipt by Beasley of the proceeds of the Letter of Credit shall be Beasley's sole and exclusive remedy in the event of any such breach by Evergreen. 3.3. RETURN OF LETTER OF CREDIT. If the sale and purchase provided for in this Agreement is either (a) consummated or (b) not consummated for any reason other than as set forth in SECTION 3.2, Beasley shall not be entitled to the proceeds of the Letter of Credit and, either at the Closing or promptly after the termination of this Agreement (as the case may be), the Letter of Credit or the proceeds of the Letter of Credit shall be returned by the Escrow Agent to Evergreen as provided in the Escrow Agreement. 4. CLOSING. The closing of the transactions contemplated hereby (the "Closing") will take place at 10:00 a.m., local time, at the offices of Latham & Watkins, 1001 Pennsylvania Avenue, N.W., Suite 1300, Washington, D.C. 20004, on the fifth (5th) business day following the date that the conditions set forth in SECTION 8.2 and 9.2 (FCC Consent) and SECTIONS 8.3 and 9.3 (HSR Act) are satisfied or waived by the party entitled to waive such condition, or at such other time (in either event, the "Closing Date") as shall be agreed upon in writing by Beasley and Evergreen. 4.1 CLOSING DELIVERIES. At the Closing: (a) Beasley shall execute and deliver to Evergreen a Bill of Sale in form and substance reasonably acceptable to Evergreen, pursuant to which Beasley shall convey to Evergreen good and marketable title to the Tangible Personal Property; (b) Beasley shall execute and deliver, and shall cause George G. Beasley to execute and deliver, to Evergreen deeds and such other transfer documents in form and substance reasonably acceptable to Evergreen pursuant to which Beasley and George G. Beasley shall convey to Evergreen good and marketable title to the Real Property; (c) The parties shall execute and deliver to each other an Assignment and Assumption of Assumed Contracts in form and substance reasonably acceptable to the parties, pursuant to which Beasley shall assign to Evergreen, and Evergreen shall accept assignment of, all of Beasley's rights and privileges and assume all obligations of Beasley under the Assumed Contracts, insofar as they accrue or come due on or after the Closing Date; (d) The parties shall execute and deliver to each other an Assignment of Licenses and Permits in form and substance reasonably acceptable to the parties pursuant to 5 which Beasley shall assign to Evergreen, and Evergreen shall accept assignment of, all of Beasley's right, title and interest in and to the Licenses; (e) Beasley shall execute and deliver to Evergreen an Assignment of Intangibles in form and substance reasonably acceptable to Evergreen, pursuant to which Beasley shall assign to Evergreen all of Beasley's right, title and interest in and to the Intangible Assets; and (f) Beasley shall deliver to Evergreen Uniform Commercial Code ("UCC") lien searches from Montgomery and Philadelphia Counties, Pennsylvania, and the Pennsylvania Secretary of State dated as of a date not more than fifteen (15) days prior to the Closing Date and showing no UCC, judgment, tax or other lien filings against the Assets, other than security interests or other filings which will be released at Closing and other Permitted Liens. 4.2 ACCOUNTS RECEIVABLE. (a) At the Closing, Beasley will assign the Accounts Receivable to Evergreen for purposes of collection only. Within ten (10) business days after the Closing Date, Beasley shall deliver to Evergreen a complete and detailed statement of each Accounts Receivable (the "Receivable Statement"). The Receivable Statement will show all commissions owing with respect to such receivables, if any. (b) For a period of 120 days following the Closing Date (the "Collection Period"), Evergreen will collect the Accounts Receivable, in the same manner and with the same diligence Evergreen uses to collect its own accounts receivable; provided, however, that Evergreen shall not be obligated to institute litigation, employ any collection agency, legal counsel or other third party, or take any other extraordinary means of collection. In its collection efforts, Evergreen shall not be liable to Beasley except for willful malfeasance or gross negligence. During the Collection Period, Beasley will not solicit or institute litigation for the collection of the Accounts Receivable, except with respect to Accounts Receivable reassigned to Beasley for collection as set forth below. (c) Evergreen shall promptly deposit (but in no event more than three (3) business days after receipt) all collections received by Evergreen on account of the Accounts Receivable into a bank account designated by Beasley, and Evergreen shall each deliver a weekly accounting of such collections and deposits to Beasley. Evergreen may deduct from such collections any commission which may be due with respect to the collected receivable (as indicated on the Receivable Statement) and, if so, shall promptly notify Beasley of the deduction and remit such commission to the appropriate person. In the event that Beasley is entitled to a refund of any commission paid with respect to the Accounts Receivable, Evergreen shall use its reasonable efforts (consistent with the practices of Beasley at the Stations prior to the Closing) to obtain and promptly remit such refund. All amounts received by Evergreen from account debtors included among the Accounts Receivable shall be applied first to such Accounts 6 Receivable, unless the account debtor specifically and in good faith disputes an Account Receivable and instructs that the payment be otherwise applied. If during the Collection Period an account debtor disputes an account included among the Accounts Receivable, Beasley may request Evergreen to reassign that account to Beasley for collection. At the conclusion of the Collection Period, Evergreen shall reassign to Beasley any remaining uncollected Accounts Receivable, and thereafter Evergreen shall have no further obligation to the other with respect to such Accounts Receivable. 4.3 PRORATIONS. (a) Except as otherwise provided herein, all income and expenses arising from the conduct of the business and operations of the Stations shall be prorated between Beasley and Evergreen in accordance with generally accepted accounting principles as of 12:01 a.m. on the Closing Date. Such prorations shall include, without limitation, music and other license fees, wages, salaries and accrued but unused vacation of Transferred Employees in accordance with SECTION 7.11 (including accruals up to the Closing Date for bonuses, commissions and related payroll taxes), deposits, liabilities and obligations under the Assumed Contracts, all ad valorem and applicable property taxes (but excluding sales taxes covered by SECTION 13 of this Agreement), business and license fees, annual FCC regulatory fees, power and utility expenses, rents (excluding amounts paid as capital expenditures in connection with real property, whether leased or owned), and similar prepaid and deferred items attributable to the ownership and operation of the Stations. Trade Agreements shall be prorated to the extent provided in SECTION 4.3(E). (b) Beasley shall provide Evergreen with a list of all known proratable items and payables for the Stations at least five (5) days before the Closing Date, and, to the extent practicable, the Purchase Price shall be adjusted at the Closing to reflect the prorations contemplated by this Section. To the extent not made at the Closing, such prorations shall be made in accordance with the procedures set forth in SECTION 4.3(C). (c) Within ninety (90) days of the Closing Date, Evergreen shall deliver to Beasley a schedule of its proposed prorations (which shall set forth in reasonable detail the basis for those determinations) (the "Proration Schedule"). The Proration Schedule shall be conclusive and binding upon Beasley unless Beasley provides Evergreen with a written notice of objection (the "Notice of Disagreement") within thirty (30) days after Beasley's receipt of the Proration Schedule, which notice shall state the prorations proposed by Beasley ("Beasley's Proration Amount"). Evergreen shall have fifteen (15) days from receipt of a Notice of Disagreement to accept or reject Beasley's Proration Amount. If Evergreen rejects Beasley's Proration Amount, and the amount in dispute exceeds Five Thousand Dollars ($5,000), the dispute shall be submitted within ten (10) days to the Philadelphia office of KPMG Peat Marwick (the "Referee") for resolution, such resolution to be made within thirty (30) days after submission to the Referee and to be final, conclusive and binding on Evergreen and Beasley. Beasley and Evergreen agree to share equally the costs and expenses of the Referee, but each 7 party shall bear its own legal and other expenses, if any. If the amount in dispute is equal to or less than Five Thousand Dollars ($5,000), such amount shall be divided equally between Beasley and Evergreen. Payment by Beasley or Evergreen, as the case may be, of the proration amounts determined pursuant to this SECTION 4.3(D) shall be due fifteen (15) days after the last to occur of (i) Beasley's acceptance of the Proration Schedule or failure to give Evergreen a timely Notice of Disagreement; (ii) Evergreen's acceptance of Beasley's Proration Amount or failure to reject Beasley's Proration Amount within fifteen (15) days of receipt of a Notice of Disagreement; (iii) Evergreen's rejection of Beasley's Proration Amount in the event the amount in dispute equals or is less than Five Thousand Dollars ($5,000); and (iv) notice to Evergreen and Beasley of the resolution of the disputed amount by the Referee in the event that the amount in dispute exceeds Five Thousand Dollars ($5,000). (d) Any payment required by Beasley to Evergreen or by Evergreen to Beasley, as the case may be, under SECTION 4.3(C) shall be paid by wire transfer of immediately available funds to the account of the payee with a financial institution in the United States as designated by Evergreen in the Proration Schedule or by Beasley in the Notice of Disagreement (or by separate notice in the event a Notice of Disagreement is not sent). If either Beasley or Evergreen fails to pay when due any amount under SECTION 4.2(C) or SECTION 4.3(C), interest on such amount will accrue from the date payment was due to the date such payment is made at a per annum rate equal to the "prime rate" as published daily in the Money Rates column of the Wall Street Journal (or the average of ------------------- such rates if more than one rate is indicated) plus two percent (2%), and such ---- interest shall be payable upon demand. (e) Liabilities and obligations under Trade Agreements shall be prorated in favor of Evergreen only to the extent that the aggregate net liability (determined in accordance with generally accepted accounting principles) for air time under all such agreements as of 12:01 a.m. on the Closing Date exceeds by One Hundred Thousand Dollars ($100,000) the fair market value of the property to be received by Evergreen with respect to the Stations after 12:01 a.m. on the Closing Date under all such agreements. There shall be no proration in favor of Beasley with respect to the Trade Agreements, notwithstanding that the fair market value of the property to be received under such agreements after 12:01 a.m. on the Closing Date exceeds the liability for unperformed time. 4.4 FURTHER ASSURANCES. At the Closing, and from time to time after the Closing, Beasley will execute and deliver such other instruments of conveyance, assignment, transfer and delivery and will take such other actions as Evergreen reasonably may request in order to more effectively transfer, convey, assign, and deliver to Evergreen, and place Evergreen in possession and control of, any of the Assets. 5. REPRESENTATIONS AND WARRANTIES OF BEASLEY. Beasley hereby represents and warrants to Evergreen as follows. 8 5.1 ORGANIZATION; GOOD STANDING. (a) BFAC (i) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware; (ii) is qualified to do business as a foreign corporation and is in good standing under the laws of the State of Pennsylvania; and (iii) has all requisite corporate power and authority to own and operate the Stations, to carry on its business as now being conducted, to enter into this Agreement and to perform its obligations hereunder. (b) Beasley License Co. (i) is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware, and (ii) is qualified to do business and is in good standing under the laws of the State of Pennsylvania. 5.2 AUTHORITY. Each of BFAC and Beasley License Co. has the full right and authority to execute and deliver this Agreement, to perform their obligations hereunder, and to consummate the transactions provided for herein. All required corporate or partnership action with respect to BFAC and Beasley License Co. has been taken to approve this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by BFAC and Beasley License Co. and constitutes the valid and binding obligation of BFAC and Beasley License Co., enforceable against them in accordance with its terms, except as such enforceability may be limited by bankruptcy and similar laws affecting the rights of creditors generally and general principles of equity. Except as expressly provided in this Agreement or any Schedule hereto, the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the performance by BFAC and Beasley License Co. of this Agreement in accordance with its terms will not require the approval or consent of or notice to any foreign, federal, state, county, local or other governmental or regulatory body. 5.3 NO BREACH OR VIOLATION. Except as set forth on Schedule 5.3, the ------------ execution and delivery by BFAC and Beasley License Co. of this Agreement, the consummation by BFAC and Beasley License Co. of the transactions contemplated hereby, and compliance by BFAC and Beasley License Co. with the terms hereof, do not and will not: (a) violate or result in the breach of or contravene any of the terms, conditions or provisions of, or constitute a default under, BFAC's Certificate of Incorporation or Bylaws or Beasley License Co.'s partnership agreement, or any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to them or their assets and properties; or (b) except for those consents listed in Schedule 5.3, result in ------------ prohibited action under any term or provision of, the material breach of any term or provision of, the termination of, or the acceleration or permitting the acceleration of the performance required by the terms of, or constitute a default under or require the consent of any party to, any loan agreement, indenture, mortgage, deed of trust or other contract, agreement or 9 instrument, to which BFAC and Beasley License Co. is a party or by which either is bound; or (c) cause the suspension or revocation of any of the Licenses. 5.4 APPROVALS. Except for the consent of the FCC and the expiration or early termination of the waiting period under the HSR Act (as defined in SECTION 7.12), no authorizations, approvals or consents from any governmental or regulatory authorities or agencies are necessary to permit Beasley to execute and deliver this Agreement and to perform its obligations hereunder. 5.5 NO LITIGATION. Except as set forth on Schedule 5.5, there are no ------------ actions, suits, investigations or proceedings pending or, to the best of Beasley's knowledge, threatened against or affecting the Assets, in any court or before any arbitrator, or before or by any governmental department, commission, bureau, board, agency or instrumentality, domestic or foreign, which, if adversely determined, would impair or hinder the ability of Beasley to perform its obligations hereunder or would impair the ability or right of Evergreen to operate the Stations after the Closing in the manner heretofore operated by Beasley. 5.6 BROKERAGE. Beasley has not dealt with any broker or finder in connection with any of the transactions contemplated by this Agreement, and to the best of Beasley's knowledge, no person is entitled to any commission or finder's fee in connection with any of these transactions, except as set forth in SECTION 6.6. 5.7 TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY. Schedule -------- 1.1 contains a list of all material items of Tangible Personal Property. Except - --- as specified on Schedule 5.7: ------------ (a) Beasley has good title to the Tangible Personal Property free and clear of all Liens, except for Permitted Liens; (b) all of the Tangible Personal Property is in a good state of repair and operating condition subject to normal repair, maintenance and replacement; (c) all of the technical equipment included in the Tangible Personal Property complies in all material respects with all applicable FCC rules and regulations, the Communications Act of 1934, as amended (the "Act"), and all other applicable laws, rules, regulations, and ordinances; and (d) Beasley owns, directly or indirectly, all assets, properties, rights, franchises, claims and agreements of every kind and description used to conduct the business and operations of the Stations as they are presently conducted. 10 5.8 TITLE TO AND CONDITION OF REAL PROPERTY. Schedule 1.2 lists all ------------ of the Real Property used in the operation of the Stations and indicates whether such property is owned or leased. Beasley (or, as indicated on Schedule 1.2, ------------ George G. Beasley) has good and marketable title, or valid and subsisting leasehold interests, in and to the Real Property free and clear of all Liens except for Permitted Liens or except as disclosed on Schedule 5.8. Except as ------------ disclosed on Schedule 5.8, with respect to each leasehold or subleasehold ------------ interest included in the Real Property, so long as Beasley fulfills its obligations under the lease therefor, Beasley has enforceable rights to nondisturbance and quiet enjoyment, and no third party holds any interest in the leased premises with the right to foreclose upon Beasley's leasehold or subleasehold interest. Except as disclosed on Schedule 5.8, all improvements on ------------ the Real Property are in compliance with applicable zoning and land use laws, ordinances and regulations in all respects necessary to conduct the operation of the Stations operating thereon as presently conducted, except for any instances of noncompliance which do not and will not in the aggregate have a material adverse effect on the owner or lessee, as the case may be, of such Real Property. Except as disclosed on Schedule 5.8, all such improvements are in ------------ good working condition and repair (ordinary wear and tear excepted), are insurable at standard rates, and comply in all material respects with FCC rules and regulations and all other applicable Federal, state and local statutes, ordinances and regulations. Except as disclosed on Schedule 5.8, all of the ------------ transmitting towers, ground radials, guy anchors, transmitter buildings and related improvements located on the Real Property are located entirely on the Real Property. Beasley has no knowledge of any pending, threatened or contemplated action to take by eminent domain or otherwise to condemn any part of the Real Property. 5.9 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule 5.9, to ------------ the best of Beasley's knowledge, all of the Real Property and assets conveyed in this transaction, and any formerly owned or leased real property, is free of any (a) waste or debris other than routine office waste; (b) reportable quantities under Environmental Laws ("Reportable Quantities") of "hazardous waste" or "hazardous substance" as defined by any currently applicable federal, state or local environmental law (the "Environmental Laws"), including but not limited to the Resource Conservation and Recovery Act as amended from time to time ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time ("CERCLA"), and regulations promulgated thereunder; (c) substances the presence of which is prohibited by any Environmental Law; and (d) Reportable Quantities of materials which, under the Environmental Laws require special handling in collection, storage, treatment or disposal. Except as disclosed on Schedule 5.9, to the best of ------------ Beasley's knowledge, prior to the Closing Date there has been no release, threatened release, disposal or arrangement for disposal or treatment of any hazardous substance, hazardous waste or material that is regulated under any Environmental Law, as a result of which Beasley has or may become liable to any person, or by reason of which the Real Property and assets conveyed in this transaction, and any formerly owned or leased real property, may suffer or be subjected to any lien. Except as disclosed on Schedule 5.9, to the best of ------------ Beasley's knowledge, Beasley has not received any notice of alleged actual or potential responsibility for, or any inquiry or investigation regarding, any actual or threatened injury or damage to any person, property, natural resource or the 11 environment arising from or relating to any release, threatened release, disposal or arrangement for disposal or treatment of any hazardous substance, hazardous waste or material that is regulated under any Environmental Laws. Without limiting the generality of the foregoing, except as disclosed on Schedule 5.9, to the best of Beasley's knowledge, no equipment or installations - ------------ on the Real Property contain PCBs or asbestos in quantities sufficient to mandate the removal of such PCBs or asbestos in accordance with federal, state or local government environmental standards or to warrant the imposition of any penalty, civil or criminal, against Beasley. True, complete and correct copies of Phase I environmental audits or assessments previously obtained by Beasley with respect to the Real Property have been delivered to Evergreen. Notwithstanding anything in this Agreement to the contrary, Beasley shall have no liability under this Agreement to Evergreen for any matter arising under the Environmental Laws except for breach of the representations set forth in this Section. 5.10 ASSUMED CONTRACTS. Schedule 1.3 lists all of the Assumed ------------ Contracts (including Trade Agreements) in effect as of the date of this Agreement, except for (a) Assumed Contracts for the sale of advertising time for cash at prevailing rates, (b) Assumed Contracts entered into in the ordinary course of business involving less than $25,000 per year in any individual instance and less than $300,000 in the aggregate, and (c) Trade Agreements involving commitments to provide air time having a value of less than $25,000 in any individual instance and $100,000 in the aggregate. Each Assumed Contract is valid and binding (except to the extent that the invalidity or nonbinding nature of any Assumed Contract would not have a material adverse effect on Beasley) and is in full force and effect in accordance with its terms. Beasley has not granted any material waivers of or forebearances under the Assumed Contracts, and, to the best of Beasley's knowledge, no third party is in material default in the performance of any of its obligations under any such Assumed Contract, and no event or circumstance has occurred, which, with the giving of notice or the lapse of time or both, would constitute a material default by Beasley under any Assumed Contract. Except for those consents listed on Schedule 5.3, no ------------ consents of any third party are necessary to permit the assignment by Beasley of the Assumed Contracts to Evergreen and such assignment will not affect the validity or enforceability of any such Assumed Contract or cause any material change in the substantive terms thereof. 5.11 PERSONNEL. (a) Schedule 5.11 contains a true and complete list of all employees ------------- of the Stations, their job descriptions, dates of hire and salary as of the date of this Agreement. All Employee Plans and Compensation Arrangements (as defined below) are listed in Schedule 5.11, and complete and accurate copies of any such ------------- written Employee Plans and Compensation Arrangements (or related insurance policies) have been furnished to Evergreen, along with copies of any employee handbooks or similar documents describing such Employee Plans and Compensation Arrangements. Schedule 5.11 also includes a description of any unwritten ------------- Employee Plans or Compensation Arrangements. 12 (b) Each Employee Plan and Compensation Arrangement has been administered in compliance with its own terms and in material compliance with the provisions of the Employee Retirement Income Security Act of 1974, as amended, any successor thereto and any regulations promulgated thereunder ("ERISA"), the Code, the Age Discrimination in Employment Act and any other applicable Federal or state laws. Beasley is not aware of any pending governmental audit or examination of any Employee Plan or Compensation Arrangement or of any facts which would lead it to believe that any such audit or examination is threatened. There exists no action, suit or claim (other than routine claims for benefits) with respect to any Employee Plan or Compensation Arrangement pending or, to the best of Beasley's knowledge, threatened against any of such plans or arrangements, and Beasley possesses no knowledge of any facts which could give rise to any such action, suit or claim. (c) Beasley does not contribute to and is not required to contribute to any Multi-Employer Plan with respect to the employees of the Stations, and neither Beasley nor any other trade or business under common control with Beasley (within the meaning of Sections 414(b), (c), (m) or (o) of the Code) has incurred or reasonably expects to incur any "withdrawal liability," as defined under Section 4201 et seq. of ERISA. -- --- (d) Except as described in Schedule 5.11, neither Beasley nor any ------------- other trade or business under common control with Beasley (within the meaning of Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or contributes to any Employee Plan or Compensation Arrangement that provides retiree medical or retiree life insurance coverage to employees of Beasley at the Stations upon their retirement. (e) Except as described in Schedule 5.11, with respect to each ------------- Employee Plan and, to the extent applicable, each Compensation Arrangement: (i) each Employee Plan that is intended to be tax-qualified, and each amendment thereto, is the subject of a favorable determination letter, and no plan amendment that is not the subject of a favorable determination letter would affect the validity of an Employee Plan's letter and no event has occurred since the date of such letter which would adversely affect the qualified status of such plan; (ii) no prohibited transaction, within the definition of section 4975 of the Code or Title 1, Part 4 of ERISA, has occurred which would subject Beasley to any liability that could become a liability of Evergreen; and (iii) all contributions, premiums or payments accrued, in whole or in part, under each Employee Plan or Compensation Arrangement or with respect thereto as of the Closing will be paid by Beasley prior to the Closing. (f) For purposes of this Section, the following terms shall have the meaning indicated: (i) "Employee Plan" shall mean any pension, profit-sharing, deferred compensation, vacation, bonus, incentive, medical, vision, dental, disability, life insurance or any other employee benefit plan as defined in Section 3(3) of ERISA to which Beasley or any entity related to Beasley (under the terms of Section 414(b), (c), (m) or (o) of the Code) contributes or which Beasley or any entity related to Beasley (under the terms of Section 414(b), (c), (m) or (o) of the Code) sponsors, maintains or otherwise is bound which provides benefits to persons employed or 13 previously employed at the Stations; (ii) "Compensation Arrangement" shall mean any plan or compensation arrangement other than an Employee Plan, whether written or unwritten, which provides to persons employed or previously employed at the Stations any compensation or other benefits, whether deferred or not, in excess of base salary or wages, including, but not limited to, any bonus or incentive plan, stock rights plan, deferred compensation arrangement, life insurance, stock purchase plan, severance pay plan and any other employee fringe benefit plan; and (iii) "Multi-employer Plan" means a plan, as defined in ERISA Section 3(37), to which Beasley or any entity related to Beasley (under the terms of Section 414(b), (c), (m) or (o) of the Code) now or at any time contributes or is or was required to contribute. 5.12 LABOR RELATIONS. Beasley is not a party to or subject to any collective bargaining agreements with respect to the Stations, except as disclosed on Schedule 1.3. Beasley has no written or oral contracts of ------------ employment with any employee of the Stations, other than those listed in Schedule 1.3. Beasley has complied in all material respects with all laws, - ------------ rules, and regulations relating to the employment of labor, including those related to wages, hours, collective bargaining, occupational safety, discrimination, and the payment of social security and other payroll related taxes, and it has not received any written notice alleging that it has failed to comply in any material respect with any such laws, rules, or regulations. No controversies, disputes, or proceedings are pending or, to the best of Beasley's knowledge, threatened, between it and any employee (singly or collectively) of the Stations. No labor union or other collective bargaining unit represents or claims to represent any of the employees of the Stations. There is no union campaign being conducted to represent employees of the Stations or to solicit cards from employees to authorize a union to request a National Labor Relations Board certification election with respect to any employees at the Stations. 5.13 LICENSES. Schedule 1.4 accurately and completely lists all ------------ material authorizations, licenses, permits and franchises of any private entity or public or governmental body granted or assigned to Beasley with respect to the Stations. All of the Licenses are validly issued and in full force and effect and Beasley has full power and authority to operate the Stations thereunder. Beasley holds all authorizations, licenses, permits and franchises necessary to enable it to conduct its business of operating the Stations in all material respects as presently conducted. 5.14 INTANGIBLE ASSETS. Other than as set forth on Schedule 1.5, ------------ there are no material patents, patent applications, trademarks, trade names, service marks, copyright registrations or copyright applications licensed or used by or registered in the name of Beasley which apply to the Stations. To the best of its knowledge, Beasley owns all right and interest in, and right and authority to use in connection with the conduct of the business of the Stations as presently conducted, free and clear of all Liens and without infringing on the rights of any party, all of the Intangible Assets. To the best of Beasley's knowledge, there are no outstanding or threatened judicial or adversary proceedings with respect to the Intangible Assets. 14 5.15 COMPLIANCE WITH LAWS. Beasley has all licenses, permits or other authorizations of governmental, regulatory or administrative agencies required to conduct its business with respect to the Stations in all material respects as currently conducted. No judgment, decree, order or notice of violation has been issued by any agency or authority which permits, or would permit, revocation, modification or termination of any governmental permit, license or authorization or which results or could result in any material impairment of any rights thereunder. With respect to the Stations, Beasley is in material compliance with all applicable federal, state, local or foreign laws, regulations, statutes, rules, ordinances, directives and orders and any other requirements of any governmental, regulatory or administrative agency or authority or court or other tribunal applicable to it. 5.16 FCC COMPLIANCE; PENDING APPLICATIONS. Except as shown on Schedule 5.16, the Stations have been operated at all times by Beasley in - ------------- material accordance with the terms of the FCC Licenses, the Act and all applicable rules, regulations and policies of the FCC. Beasley has timely filed or made all applications, reports, and other disclosures required by the FCC to be filed or made with respect to the Stations. The FCC Licenses are valid and in full force and effect. Except as shown on Schedule 5.16, no application, ------------- action or proceeding is pending for the renewal or modification of any of the FCC Licenses and, to the best of Beasley's knowledge, there is not now issued or outstanding any investigation or material complaint against Beasley at the FCC as of the date of this Agreement relating to the Stations. Except as disclosed on Schedule 5.16, there is no proceeding pending at the FCC, and there is no ------------- outstanding notice of violation from the FCC, as of the date of this Agreement relating to the Stations. All fees payable to governmental authorities pursuant to the FCC Licenses, including FCC annual regulatory fees, have been paid and no event has occurred which, individually or in the aggregate, and with or without the giving of notice or the lapse of time or both, would constitute grounds for revocation thereof or would have a material adverse effect on the business or financial condition of the Stations. 5.17 FINANCIAL STATEMENTS. Schedule 5.17 contains true and complete ------------- copies of the unaudited month-to-month statements of income and expenses of the Stations for May through December 1994, January through December 1995, and January through July 1996 (the "Financial Statements"). The Financial Statements were prepared in accordance with the books and records of Beasley in conformity with generally accepted accounting principles consistent with past practices (except for normal year-end adjustments and the absence of footnotes, provided that no such footnote would disclose facts or circumstances that, individually or in the aggregate, would materially alter the results reported in such Financial Statements) and fairly present the results of operations of the Stations for the respective periods covered thereby. 5.18 CONDUCT OF BUSINESS IN ORDINARY COURSE. Between December 31, 1995 and the date hereof, Beasley has conducted the business and operations of the Stations only in the ordinary course and substantially consistent with past practice and has not: 15 (a) suffered any material adverse change in the business, assets, properties, financial condition or prospects of Beasley pertaining to the Stations, including any damage, destruction or loss affecting the Assets; or (b) made any sale, assignment, lease or other transfer of any of Beasley's properties used in connection with the Stations other than in the ordinary course of business and consistent with past practices. 5.19 TAXES. Beasley has filed or caused to be filed all federal income tax or informational returns and all other federal, state, county, local, or city tax or informational returns which are required to be filed, and Beasley has paid or caused to be paid all taxes as shown on those returns or on any tax assessment received by Beasley to the extent that such taxes have become due, or has set aside on its books adequate reserves (segregated to the extent required by generally accepted accounting principles) with respect thereto. There are no governmental investigations or other legal, administrative, or tax proceedings pending, or to the best of Beasley's knowledge, threatened pursuant to which Beasley is or could be made liable for any taxes, penalties, interest, or other charges, the liability for which could extend to Evergreen as transferee of the business of the Stations, and no event has occurred that could impose on Evergreen any transferee liability for any taxes, penalties, or interest due or to become due from Beasley. 5.20 INSURANCE. The insurable properties relating to the business of the Stations and the conduct of the business of the Stations are, and will be until the Closing Date, in the reasonable judgment of Beasley, adequately insured. 5.21 BULK SALES. The provisions of the Bulk Sales laws of the State of Pennsylvania do not apply to the transfer of the Assets in accordance with the terms of this Agreement. 5.22 ACCURACY OF INFORMATION FURNISHED. No statement by Beasley contained in this Agreement or in any Schedule or Exhibit hereto contains any material untrue statement of a material fact. 5.23 DEFINITION OF KNOWLEDGE. For the purposes of this Agreement, "to the best of Beasley's knowledge" or any similar formulation thereof means to the actual knowledge of George G. Beasley, B. Caroline Beasley, Bruce G. Beasley and Brian E. Beasley after due inquiry in the respective areas of their responsibility. 6. REPRESENTATIONS AND WARRANTIES OF EVERGREEN. Evergreen hereby represents and warrants to Beasley as follows. 6.1 ORGANIZATION; GOOD STANDING. Evergreen (a) is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Delaware; and (b) on or prior to the Closing Date will be qualified to do business as a foreign corporation under the laws of the State of Pennsylvania. 16 6.2 AUTHORITY. Evergreen has the full right and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions provided for herein. All required corporate action with respect to Evergreen has been taken to approve this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by Evergreen and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy and similar laws affecting the rights of creditors generally and general principles of equity. Except as expressly provided in this Agreement or any Schedule hereto, the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the performance by Evergreen of this Agreement in accordance with its terms will not require the approval or consent of or notice to any foreign, federal, state, county, local or other governmental or regulatory body. 6.3 NO BREACH OR VIOLATION. Except as set forth on Schedule 6.3, ------------ Evergreen's execution and delivery of this Agreement, its consummation of the transactions contemplated hereby, and its compliance with the terms hereof, do not and will not: (a) violate or result in the breach of or contravene any of the terms, conditions or provisions of, or constitute a default under, its Certificate of Incorporation or Bylaws, or any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to it or its assets and properties; or (b) except for those consents listed in Schedule 6.3, result in ------------ prohibited action under any term or provision of, the material breach of any term or provision of, the termination of, or the acceleration or permitting the acceleration of the performance required by the terms of, or constitute a default under or require the consent of any party to, any loan agreement, indenture, mortgage, deed of trust or other contract, agreement or instrument, to which Evergreen is a party or by which it is bound. 6.4 APPROVALS. Except for the consent of the FCC and the expiration or early termination of the waiting period under the HSR Act (as defined in SECTION 7.12), no authorizations, approvals or consents from any governmental or regulatory authorities or agencies are necessary to permit Evergreen to execute and deliver this Agreement and to perform its obligations hereunder. 6.5 NO LITIGATION. Except as set forth on Schedule 6.5, there are no ------------ actions, suits, investigations or proceedings pending or, to the best of Evergreen's knowledge, threatened against Evergreen, in any court or before any arbitrator, or before or by any governmental department, commission, bureau, board, agency or instrumentality, domestic or foreign, which, if 17 adversely determined, would impair or hinder the ability of Evergreen to perform its obligations hereunder. 6.6 BROKERAGE. Evergreen has not dealt with any broker or finder in connection with any of the transactions contemplated by this Agreement other than Star Media Group, Inc., and, to the best of Evergreen's knowledge, no other person is entitled to any commission or finder's fee in connection with any of these transactions. Evergreen shall be solely responsible for all amounts due to Star Media Group, Inc., as a result of the transactions contemplated by this Agreement. 6.7 FCC QUALIFICATIONS. To the best of its knowledge, Evergreen is qualified legally, financially and otherwise to become the assignee of the FCC Licenses, under the Act and the rules and regulations of the FCC as in effect on the date of this Agreement except as set forth on Schedule 6.7. ------------ 6.8 ACCURACY OF INFORMATION FURNISHED. No statement by Evergreen contained in this Agreement or in any Schedule or Exhibit hereto contains any material untrue statement of a material fact. 6.9 DEFINITION OF KNOWLEDGE. For the purposes of this Agreement, "to the best of Evergreen's knowledge" or any similar formulation thereof means to the actual knowledge of Scott K. Ginsburg and Matthew Devine after due inquiry in the respective areas of their responsibility. 7. COVENANTS OF THE PARTIES. The parties hereby covenant to each other as follows. 7.1 FCC APPLICATION; DIVESTITURE COMMITMENT. (a) The parties acknowledge that affiliates of Evergreen have entered into agreements to acquire a number of radio stations serving the Philadelphia area that, when combined with the radio stations now licensed to affiliates of Evergreen and the Station, would cause Evergreen to be in violation of Section 73.3555 of the FCC's rules (absent a waiver of those rules). The parties further acknowledge that the FCC's consent to the FCC Application (as defined below) may contain a condition requiring Evergreen to divest its interest in an FM radio station in the Philadelphia market (the "6th FM") prior to the Closing and that Evergreen's obligation to close shall be conditioned on the satisfaction of such a divestiture condition. In order to ensure that Evergreen can meet such a condition, prior to the filing of the FCC Application Evergreen shall agree to assign the 6th FM to a trustee (the "Trustee") pursuant to a trust agreement that satisfies the FCC's multiple ownership rules and policies, including the cross-interest policy, then in effect. In the event that Evergreen's acquisition of the Stations would not comply with the FCC's multiple ownership rules and policies, including the cross-interest policy, by the Closing Date, Evergreen shall assign, subject to receipt of the FCC's grant of the Trustee Application (as defined below), the 6th FM to the Trustee on the Closing Date in order to effectuate the Closing under this Agreement. 18 (b) Within fifteen (15) business days after the date of this Agreement, the parties shall file an application with the FCC requesting consent to the assignment of the FCC Licenses to Evergreen (the "FCC Application") and Evergreen shall file an application with the FCC requesting the consent to the assignment of the FCC authorizations for the 6th FM to the Trustee (the "Trustee Application," and together with the FCC Application, the "Applications"). Beasley and Evergreen shall cooperate with each other in the preparation and filing of the FCC Application, and the parties shall prosecute the Applications in good faith and with due diligence. Should Beasley or Evergreen become aware of facts which could reasonably be expected to affect or delay in a material and adverse manner, the FCC's grant of its consent to the Applications, such party shall promptly notify the other party in writing and in accordance with the notice provisions set forth in SECTION 15. If the Closing shall not have occurred for any reason within the original effective period of the consent of the FCC to the FCC Application, and neither party shall have terminated this Agreement under SECTION 10, the parties shall jointly request extensions of the effective period of such FCC consent. Beasley and Evergreen shall each pay one- half of the FCC filing fees required to be submitted with the FCC Application. Evergreen shall pay all FCC filing fees required to be submitted with the Trustee Application. 7.2 CONDUCT OF BUSINESS. Prior to the Closing, Beasley shall conduct the business and operations of the Stations in the ordinary course of business, consistent with current practice. Without limiting the generality of the foregoing, Beasley agrees that, except as required or contemplated by this Agreement or otherwise consented to or approved by the other party in writing, during the period commencing on the date of this Agreement and ending on the Closing Date, Beasley will: (a) maintain the records relating to the business of the Stations in the usual, regular and ordinary manner, comply in all material respects with all laws and contractual obligations applicable to such Stations or to the conduct of the business of such Stations and perform all material obligations relating to the business of such Stations; (b) operate the Stations in conformity with the FCC Licenses, any special temporary authority or program test authority, the Act and the rules and regulations of any other governmental entity with jurisdiction over such Stations, and take all actions necessary to maintain the FCC Licenses for such Stations; (c) refrain from changing the frequency or format of the Stations except to the extent required by the rules and regulations of the FCC; (d) refrain from making any material changes in studios or other structures of the Stations except as required under this Agreement; (e) refrain from making any material changes in the broadcast hours or in the percentage or types of programming broadcast by the Stations, or any other material changes in such Station's programming policies, except such changes as in the good faith judgment of such party are required by the public interest; 19 (f) notify Evergreen promptly if any Station's normal broadcast transmissions are interrupted or impaired for a period of two (2) hours or more for a period of five (5) consecutive days or for seven (7) days within any thirty (30) day period (except for normal maintenance) or for a period of six (6) continuous hours or more; (g) not dispose of any of the Assets (other than for the disposition in the ordinary course of business, consistent with past practice, of immaterial assets or of assets that are of no further use to such Stations); (h) maintain all of the Assets in good condition (ordinary wear and tear excepted); (i) maintain inventories of spare parts and expendable supplies at levels consistent with past practices; (j) not create, assume or permit to exist any Lien upon the Assets, except for Permitted Liens; (k) not waive any material right relating to the Stations or any of the Assets; (l) maintain the existing insurance policies or comparable insurance policies on the Stations and the Assets; (m) consistent with past personnel practices, use its reasonable efforts to maintain the employment at the Stations and renew the existing employment contracts of the current employees of such Stations; (n) not modify or change in any material respect any contract listed or required be listed on Schedule 1.3; ------------ (o) not renew or enter into any contract required to be or that would be required to be listed on Schedule 1.3, other than (i) contracts involving payments of less than $25,000 in any one instance (but no more than $100,000 in the aggregate for all such contracts) and having a term of less than one year, (ii) contracts that are terminable at will without penalty to Evergreen on or after the Closing, or (iii) the pending contracts listed on Schedule 7.2; ------------ (p) not increase or agree to increase the compensation, bonuses or other benefits for any employee of the Stations by more than five percent, except (i) as provided in Schedule 7.2 or (ii) in the ordinary course of ------------ business consistent with past practices at such Stations or as may be required under the Assumed Contracts disclosed as of the date of this Agreement; and 20 (q) timely make all required payments under any contract to be assumed pursuant to this Agreement and otherwise pay all liabilities and satisfy all obligations in accordance with past practice. If Beasley requests consent to modify, change, renew or enter into a contract in accordance with the notice provisions of SECTION 15 hereof, Evergreen shall respond within 5 business days of receipt of such request or be deemed to have granted the requested consent. 7.3 NO SOLICITATION OF THIRD PARTIES OR EMPLOYEES. (a) Between the date of this Agreement and the Closing, neither Beasley nor any of its subsidiaries, directors, officers, employees, representatives or agents shall, directly or indirectly, solicit or initiate inquiries or proposals from, or enter into any agreement with respect to, or provide any confidential information to or participate in any discussions or negotiations with, any corporation, partnership, person or other entity or group concerning any sale to such party of all or substantially all of the assets of the Stations (whether directly or through a merger or sale of stock of Beasley). Beasley will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any third parties conducted heretofore with respect to any of the foregoing. (b) For a period of one (1) year from the Closing Date, and except for the individuals listed on Schedule 7.3, neither Beasley nor any of its ------------ subsidiaries, directors, officers, employees, representatives or agents, shall directly or indirectly solicit for hire or hire any person who was employee of the Stations between the date hereof and the Closing Date. 7.4 ACCESS; CONFIDENTIALITY; PUBLICITY. (a) Prior to the Closing, Beasley shall give to Evergreen and its representatives full and reasonable access during normal business hours to all of Beasley's properties, books, contracts, drafts of Phase I environmental audits or assessments in Beasley's possession or under its control (any disclosure of which shall not alter Beasley's representation under SECTION 5.9), reports and records, including financial information and accountants' workpapers (to which Evergreen shall also have reasonable access after the Closing), relating to the Stations, in order that Evergreen may have full opportunity to make such investigation as it desires of the Stations, and Beasley shall furnish Evergreen with such information as Evergreen may reasonably request in connection therewith. The rights of Evergreen under this Section shall not be exercised in such a manner as to interfere unreasonably with the business of Beasley or the Stations. Evergreen will not communicate with any employee of Beasley without the prior approval of Beasley, which approval shall not be unreasonably withheld. Such communication will only concern the events or matters of which Beasley has approved and will occur only in the presence of one (1) or more management employees of Beasley or one (1) or more of Beasley's delegates, unless Beasley approves in writing otherwise. 21 (b) Evergreen shall keep, and cause its agents, attorneys, employees and representatives to keep, confidential all information obtained by it with respect to the Stations in accordance with the Confidentiality Agreement dated April 29, 1996, between Evergreen Media Corporation and Beasley Broadcast Group, which agreement is hereby incorporated by reference. The obligations of the parties under this SECTION 7.4(B) shall survive either the Closing or the termination of this Agreement. (c) Prior to the Closing, no news release or other public announcement pertaining to the transactions contemplated by this Agreement will be made by or on behalf of any party hereto without the prior written approval of the other parties (such consent not to be unreasonably withheld or delayed) unless otherwise required by law or any regulation or rule of any stock exchange binding upon such party. Where any announcement, communication or circular concerning the transactions contemplated by this Agreement is required by law or any regulation or rule of any stock exchange, it shall be made by the relevant party after consultation, where reasonably practicable, with the other parties and taking into account the reasonable requirements (as to timing, contents and manner of making or dispatch of the announcement, communication or circular) of the other party. 7.5 INCONSISTENT ACTIONS. Prior to the Closing, neither Beasley nor Evergreen shall take any action which is materially inconsistent with its obligations under this Agreement, or that could hinder or delay the consummation of the transactions contemplated by this Agreement. 7.6 COOPERATION. Each party shall cooperate fully with each other and their respective counsel and accountants in connection with any actions required to be taken as part of their obligations under this Agreement, and each party will use its best efforts to consummate the transactions contemplated hereby and to fulfill its obligations hereunder, including without limitation, the manner in which the Purchase Price is to be paid and the assets are transferred through a qualified intermediary under applicable Treasury Regulations. 7.7 CONTROL OF THE STATIONS. Prior to Closing, Evergreen shall not directly or indirectly, control, supervise, or direct, or attempt to control, supervise or direct the operations of the Stations. Those operations, including complete control and supervision of all Station programs, employees, and policies, shall be the sole responsibility of Beasley. 7.8 RISK OF LOSS. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the Assets from any cause whatsoever shall be borne by Beasley at all times prior to the Closing. If any loss, damage, impairment, confiscation, or condemnation of or to any of the Assets occurs, Beasley shall repair or replace such assets (the "Damaged Assets") to their prior condition as represented in this Agreement as soon thereafter as possible; provided, however, that Beasley shall have no obligation to repair or replace any immaterial or obsolete asset no longer necessary or useful for the continued operation of a Station consistent with past practice. If Beasley is unable to repair or replace the Damaged Assets by the date on which the Closing would otherwise occur under this Agreement, then Evergreen may elect either (a) to 22 consummate the transactions contemplated by this Agreement on such date, in which event Beasley shall reimburse all reasonable costs incurred by Evergreen in repairing or replacing the Damaged Assets after the Closing, or (b) to delay the Closing until a date within fifteen (15) days after Beasley gives written notice to Evergreen of the completion of the repair or replacement of the Damaged Assets, but in no event beyond the Upset Date (as defined in SECTION 10.1). 7.9 THIRD PARTY CONSENTS. Between the date of this Agreement and the Closing, Beasley and Evergreen shall use their respective reasonable efforts to obtain the consent of any third party necessary for the assignment of any contract or agreement to be assigned hereunder. In the event a consent or waiver required with respect to the assignment of a contract has not been obtained before the Closing, Beasley shall use its reasonable best efforts to provide Evergreen with the benefits of any such contract, including without limitation, permitting Evergreen to enforce any rights of Beasley under such contract. 7.10 TITLE INSURANCE AND SURVEYS. (a) Title Insurance on Fee Property. Within sixty (60) days of the ------------------------------- date of this Agreement, Beasley shall obtain and deliver to Evergreen, at Evergreen's expense, with respect to the Real Property a commitment for an ALTA Owners's Policy of Title Insurance Form B-1987 (or equivalent) (the "Title Commitment"), issued by a title insurer reasonably satisfactory to Evergreen in an amount equal to the fair market value of the Real Property and any improvements thereon (as reasonably determined by Evergreen), insuring title to Real Property in the name of Evergreen as of the Closing. (b) Surveys. With respect to each parcel of Real Property as to which ------- a Title Commitment is procured pursuant to this Agreement, Beasley shall also procure and deliver to Evergreen, at Beasley's expense, a current survey of the Real Property, prepared by a licensed surveyor, reasonably satisfactory to Evergreen, and conforming to current ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location of all improvements, easements, party walls, sidewalks, roadways, utility lines, and other matters customarily shown on such surveys, and showing access affirmatively to public streets and roads (the "Survey"). (c) General Requirements as to Title Insurance Policies. Each Title --------------------------------------------------- Commitment obtained by Beasley pursuant to this Agreement shall (1) insure title to the Real Property described in the policy and all recorded easements benefiting the Real Property, (2) contain an "extended coverage endorsement' insuring over the general exceptions customarily contained in title policies, (3) contain an endorsement insuring that the Real Property described in the policy is the same real estate shown in the Survey delivered with respect to such property, (4) contain a "contiguity" endorsement with respect to the Real Property consisting of more than one record parcel, and (5) not subject to any survey exception except as disclosed on the Survey. (d) Objectionable Exceptions. Within 15 business days of receipt of ------------------------ the Title Commitment and Survey from Beasley, Evergreen shall give Beasley notice of any exceptions to title in the Title Commitment or matters revealed by the Survey that Evergreen finds 23 objectionable (the "Objectionable Exceptions"). If Evergreen fails to give such notice in a timely manner, Evergreen shall be deemed to have accepted all title exceptions reported in the Title Commitment or matters revealed by the Survey other than the Objectionable Exceptions expressly set forth in the notice. (e) Removal of Objectionable Exceptions. Beasley shall cure or remove ----------------------------------- any Objectionable Exception within 45 days from the date of Evergreen's notice; provided, however, that if Beasley reasonably determines that the cost of - -------- ------- removing such Objectionable Exception would exceed $100,000 or that Beasley will be unable to cure or remove an Objectionable Exception within such 45-day period, then Beasley shall notify Evergreen within 15 days after such determination, whereupon Evergreen shall have the right, exercisable by written notice given to Beasley within 15 business days after receipt of Beasley's notice, to elect (i) to agree to accept the real property covered by such Title Commitment, subject to such of the Objectionable Exceptions, together with a payment of $100,000, or (ii) to terminate this Agreement. If Evergreen fails to elect option (i) or (ii) above, then Evergreen shall be deemed to have elected option (i). (f) Exclusions from Objectionable Exceptions. Notwithstanding the ---------------------------------------- foregoing, none of the following shall constitute an Objectionable Exception: (i) the preprinted or standard exceptions on the current ALTA owner's form; (ii) Permitted Liens; (iii) any matters disclosed in Schedule 5.8; and (iv) Liens ------------ that do not materially adversely affect the continued use of such real property as now used; provided, however, that any Lien securing a monetary obligation -------- ------- (other than such Lien arising under a contract assumed pursuant to SECTION 1.4) shall be deemed an Objectionable Exception whether or not Evergreen gives written notice of such, and shall be removed by Beasley at or before the Closing. (g) Phase I Environmental Audit. Within sixty (60) days after the --------------------------- date of this Agreement, Evergreen may cause a Phase I environmental audit of the Real Property (the "Environmental Audit") to be completed. (h) Environmental Remediation. Evergreen shall provide Beasley with ------------------------- a copy of the Environmental Audit within fifteen (15) business days of its receipt by Evergreen and at the same time shall give Beasley notice of any matter disclosed by such environmental audit that requires remediation under the Environmental Laws. Beasley shall be required to complete such remediation within a period of forty-five (45) days from the date of Evergreen's notice; provided, however, that if Beasley reasonably determines the cost of such required remediation (including post-remediation monitoring and reporting) would exceed $100,000 or that Beasley will be unable to complete the remediation within such 45-day period, Beasley may give notice to Evergreen within fifteen (15) business days after such determination. Within 15 business days after receipt of such notice from Beasley, Evergreen shall give Beasley notice of Evergreen's election of one of the following: (i) to accept the Real Property, subject to the matters disclosed in the Environmental Audit, together with a payment from Beasley of $100,000; (ii) to terminate this Agreement. If Evergreen fails to elect option (i) or (ii) above, then Evergreen shall be deemed to have elected option (i). Notwithstanding the foregoing, none 24 of the matters disclosed in Schedule 5.9 shall constitute matters that require ------------ remediation under the Environmental Laws. (i) Nothing in this SECTION 7.10 shall be deemed to extend the Closing Date. 7.11 EMPLOYEE MATTERS. (a) At the Closing, Evergreen shall offer employment to all of the employees of the Stations except for those employees listed on Schedule 7.11 ------------- (which shall be completed and delivered at least 30 days prior to the Closing). Employees who continue employment with Evergreen on or after the Closing Date are referred to herein as the "Transferred Employees". The initial terms and conditions of the employment of the Transferred Employees shall be at-will employment in at least the same positions, for at least the same direct cash compensation, as prior to the Closing; provided, however, that Evergreen shall -------- ------- comply with the terms of any Assumed Contract relating to any Transferred Employee that is expressly assumed or required to be assumed hereunder. Evergreen shall provide the Transferred Employees with employee benefit plans substantially comparable to those currently provided to Evergreen's other employees; provided, however, that Evergreen shall have no obligation to provide -------- ------- immediate medical coverage for pre-existing conditions, except as otherwise provided by law. (b) Evergreen will assume responsibility for any accrued but unused vacation of all Transferred Employees and shall allow such employee to use such accrued vacation; provided, however, that Evergreen may disallow such employee -------- ------- from taking such accrued vacation in accordance with Evergreen's policies provided that, in such event, Evergreen shall pay in cash to each such employee an amount equal to such vacation time in accordance with the applicable vacation policy. As part of the proration process described in SECTION 4.3, Beasley shall make a payment to Evergreen equal to the value of the accrued but unused vacation entitlements of all Transferred Employees. Evergreen shall not assume any obligations under any sick leave or severance policy of Beasley, except for obligations set forth in the Assumed Contracts assumed or required to be assumed hereunder. (c) Beasley and Evergreen agree that, pursuant to the "Alternative Procedure" provided in Section 5 of the Revenue Procedure 87-77, 1984-2 C.B. 753, (i) Evergreen shall report on a predecessor/successor basis as set forth therein, (ii) Beasley shall be relieved from filing a Form W-2 with respect to any employee who becomes employed by Evergreen, and (iii) Evergreen shall undertake to file a W-2 for Beasley for the year that includes the Closing Date (including the portion of such year that such employee was employed by Beasley. Beasley agrees to provide Evergreen with all payroll and employment related information with respect to each employee who becomes employed by Evergreen pursuant to this Agreement. (d) Evergreen agrees to prepare for Beasley and, where permitted, to file on Beasley's behalf any federal, state or local employment-related tax reports or information reports (including Internal Revenue Service Forms W-2, W- 3, 940, 941, 1042, 1042S, 1096 and 1099) that Beasley may be required to file following the Closing Date (but that were not due to be filed 25 on or prior to the Closing Date) for each employee of Beasley who becomes employed by Evergreen pursuant to this Agreement with respect to any employment period on or before the Closing Date. (e) No provisions of this Agreement shall create any third party beneficiary rights of any employee or former employee (including any beneficiary or dependent thereof) of Beasley in respect of continued employment (or resumed employment) with Evergreen or with Beasley or in respect of any other matter. 7.12 COMPLIANCE WITH HSR ACT. If the transactions contemplated by this Agreement are subject to the filing requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or the approval by the U.S. Federal Trade Commission (the "FTC") and the Antitrust Division of the U.S. Department of Justice (the "DOJ"), Beasley and Evergreen will (a) each make such filings as are required under Title II of the HSR Act as soon as practicable but in no event later than fifteen (15) business days following the date hereof, (b) otherwise promptly comply with the applicable requirements under the HSR Act, including furnishing all information and filing all documents required thereunder, (c) furnish to each other copies of those portions of the documents filed which are not confidential, and (d) cooperate fully and use their best efforts to expedite compliance with the HSR Act. Beasley and Evergreen shall each pay one-half of any filing fees with respect to any HSR filings required under this Section. 7.13. AMENDMENTS TO SCHEDULES. Prior to the Closing, Beasley shall deliver amended and updated Schedules 1.3 and 5.11 to reflect changes in ------------- ---- accordance with SECTION 7.2 during the period commencing on the date hereof and ending immediately prior to the Closing; provided, that the delivery of such amended Schedules shall not alter or affect in any way any party's rights or obligations hereunder. 8. CONDITIONS TO EVERGREEN'S OBLIGATIONS. Unless waived by Evergreen in writing, all obligations of Evergreen under this Agreement are subject to the fulfillment, prior to or at the Closing, of each of the following conditions. 8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and warranties of Beasley contained in SECTION 5 of this Agreement shall be true at and as of the Closing Date, as if made at and as of such date; Beasley shall have performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by it at or prior to the Closing; and Evergreen shall have received from Beasley a certificate or certificates in such reasonable detail as Evergreen may reasonably request, signed by an officer of Beasley and dated the Closing Date, to the foregoing effect. 8.2 FCC CONSENT. The FCC shall have given its consent to the FCC Application and to the transactions contemplated hereby, and such grant shall not have been reversed, stayed, enjoined, set aside, annulled or suspended, and there shall be no petition for stay, reconsideration or administrative or judicial appeal or sua sponte action of the FCC --- ------ 26 with comparable effect pending, and the time for filing any such petition or appeal (administrative or judicial) or for the taking of any such sua sponte --- ------ action of the FCC with respect to such grant shall have expired (a "Final Order"). 8.3 HSR ACT. If legally required, all filings with the FTC and the DOJ pursuant to the HSR Act shall have been made and all applicable waiting periods with respect to such filings (including any extensions thereof) shall have expired or been terminated and no actions shall have been instituted which are pending on the Closing Date by the FTC or DOJ challenging or seeking to enjoin the consummation of this transaction. 8.4 INJUNCTIONS. No order shall have been issued by any court or governmental agency of competent jurisdiction restraining or prohibiting any of the transactions contemplated by this Agreement; provided, however, that this -------- ------- condition may not be invoked by Evergreen if such order was solicited, encouraged by, or instituted as a result of any act or omission of Evergreen. 8.5 NO MATERIAL ADVERSE CHANGE. (a) Since the date hereof, there shall not have occurred (i) any failure of the Stations for any reason whatsoever to transmit using their licensed facilities at full power for a consecutive period of forty-eight (48) hours or more (unless any other station in the Philadelphia, Pennsylvania, Arbitron metro survey area is not broadcasting for the same reason); (ii) the filing of a petition in bankruptcy by or against Beasley; or (iii) the termination, expiration, revocation or imposition of a materially adverse condition on any of the FCC Licenses. (b) Between the date hereof and January 1, 1997, there shall have been no material adverse change in the business of the Stations taken as a whole. 8.6 CONSENTS. The consents marked by an asterisk on Schedule 5.3 shall ------------ have been obtained. 8.7 RESOLUTIONS. Beasley shall have delivered to Evergreen resolutions adopted by the Board of Directors and, if required, the stockholders of Beasley, authorizing and approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, certified by the Secretary of Beasley as being true and complete as of the Closing Date. 8.8 CLOSING DOCUMENTS. Beasley shall have executed and delivered to Evergreen the documents required to be executed and delivered by it pursuant to SECTION 4. 8.9 OPINION OF COUNSEL TO BEASLEY. Beasley shall have delivered to Evergreen an opinion of its counsel, Leventhal, Senter & Lerman, dated the Closing Date, in the form attached as Exhibit III. ----------- 27 9. CONDITIONS TO BEASLEY'S OBLIGATIONS. Unless waived by Beasley in writing in its sole discretion, all obligations of Beasley under this Agreement are subject to the fulfillment, prior to or at the Closing, of each of the following conditions. 9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and warranties of Evergreen contained in SECTION 6 of this Agreement shall be true at and as of the Closing Date, as if made at and as of such date; Evergreen shall have performed all obligations and complied with all covenants required by this Agreement to be performed or complied with by it at or prior to the Closing; and Beasley shall have received from Evergreen a certificate or certificates in such reasonable detail as Beasley may reasonably request, signed by an officer of Evergreen and dated the Closing Date, to the foregoing effect. 9.2 FCC CONSENT. The FCC shall have given its consent to the FCC Application and the transactions contemplated hereby. 9.3 HSR ACT. If legally required, all filings with the FTC and the DOJ pursuant to the HSR Act shall have been made and all applicable waiting periods with respect to such filings (including any extensions thereof) shall have expired or been terminated and no actions shall have been instituted which are pending on the Closing Date by the FTC or DOJ challenging or seeking to enjoin the consummation of this transaction. 9.4 INJUNCTIONS. No order shall have been issued by any court or governmental agency of competent jurisdiction restraining or prohibiting any of the transactions contemplated by this Agreement; provided, however, that this -------- ------- condition may not be invoked by Beasley if such order was solicited, encouraged by or instituted as a result of any act or omission of Beasley. 9.5 RESOLUTIONS. Evergreen shall have delivered to Beasley resolutions adopted by the Board of Directors of Evergreen and, if required, the stockholder of Evergreen, authorizing and approving the execution and delivery of the transactions contemplated hereby, certified by the Secretary of Evergreen as being true and complete as of the Closing Date. 9.6 CLOSING DOCUMENTS. Evergreen shall have executed and delivered to Beasley the documents required to be executed and delivered by it pursuant to SECTION 4. 9.7 OPINION OF COUNSEL TO EVERGREEN. Evergreen shall have delivered to Beasley an opinion of its counsel, Latham & Watkins, dated the Closing Date, substantially in the form attached as Exhibit IV. ---------- 9.8 PAYMENT. Evergreen shall have delivered or caused to have been delivered to Beasley or to the qualified intermediary the Purchase Price as provided in SECTION 2 by no later than 5 p.m. local Washington, D.C. time on the Closing Date. 10. TERMINATION; OPPORTUNITY TO CURE. 28 10.1 TERMINATION. This Agreement may be terminated by either Beasley or Evergreen, if the terminating party is not then in material default, upon written notice to the other party, upon the occurrence of any of the following: (a) Conditions. If on the Closing Date any of the conditions ---------- precedent to the obligations of the terminating party set forth in this Agreement have not been satisfied or waived in writing by the terminating party. (b) Judgments. If there shall be in effect on the Closing Date any --------- final judgment, decree, or order that would prevent or make unlawful the Closing of this Agreement. (c) Upset Date. If the Closing shall not have occurred on or before July 1, 1997 (the "Upset Date"). (d) Breach. If the other party is in material breach of this ------ Agreement and the breach remains uncured after the expiration of any cure period under SECTION 10.2 hereof. (e) Real Estate Matters. As provided in SECTION 7.10 ------------------- 10.2 OPPORTUNITY TO CURE. Neither party shall have the right to terminate this Agreement as a result of the other party's default unless the terminating party shall have given the defaulting party written notice specifying in reasonable detail the nature of the default and shall have afforded the defaulting party thirty (30) business days to cure the default; provided, however, that such cure period shall not extend the Closing Date or - -------- ------- the Upset Date. 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; AND REMEDIES. 11.1 SURVIVAL. Except as otherwise specifically set forth herein, all representations, warranties and covenants contained in this Agreement shall survive the Closing for a period of twelve (12) months. Any investigations by or on behalf of any party hereto shall not constitute waiver as to enforcement of any representation, warranty, or covenant contained in this Agreement. No notice or information delivered by either party shall affect the other party's right to rely on any representation or warranty made by the party providing such notice or information or relieve such party of any obligations under this Agreement as the result of a breach of any of its representations and warranties. 11.2 INDEMNIFICATION BY BEASLEY. Notwithstanding the Closing, Beasley hereby agrees, subject to SECTION 11.4(E), to indemnify and hold Evergreen harmless against and with respect to, and shall reimburse Evergreen for: (a) Breach. Any and all losses, liabilities, or damages resulting ------ from any untrue representation or breach of warranty or nonfulfillment of any covenant by Beasley 29 contained herein or in any certificate, document, or instrument delivered to Evergreen hereunder to the extent such representation or warranty or covenant survives the Closing. (b) Obligations. Any and all obligations of Beasley not assumed by ----------- Evergreen pursuant to the terms of this Agreement. (c) Ownership. Any and all losses, liabilities, or damages resulting --------- from the operation or ownership of the Stations prior to the Closing Date, including any and all liabilities arising under the Licenses or the Assumed Contracts which relate to events occurring prior to the Closing Date. (d) Legal Matters. Any and all actions, suits, proceedings, claims, ------------- demands, assessments, judgments, costs, and expenses, including reasonable legal fees and expenses, incident to any of the foregoing matters (a) through (c) or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 11.3 INDEMNIFICATION BY EVERGREEN. Notwithstanding the Closing, subject to SECTION 11.4(e), Evergreen hereby agrees to indemnify and hold Beasley harmless against and with respect to, and shall reimburse Beasley for: (a) Breach. Any and all losses, liabilities, or damages resulting ------ from any untrue representation or breach of warranty or nonfulfillment of any covenant by Evergreen contained herein or in any certificate, document, or instrument delivered to Beasley hereunder to the extent such representation or warranty or covenant survives the Closing. (b) Obligations. Any and all obligations of Beasley assumed by Evergreen pursuant to the terms of this Agreement. (c) Ownership. Any and all losses, liabilities, or damages resulting --------- from the operation or ownership of the Stations on and after the Closing Date, including any and all liabilities arising under the Licenses or the Assumed Contracts which relate to events occurring after the Closing Date. (d) Legal Matters. Any and all actions, suits, proceedings, claims, ------------- demands, assessments, judgments, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing matters (a) through (c) or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 11.4 PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification shall be as follows: 30 (a) Notice. The party seeking indemnification (the "Claimant") shall ------ promptly give notice to the indemnifying party (the "Indemnitor") of any claim, whether solely between the parties or brought by a third party, specifying (i) the factual basis for the claim, and (ii) the amount of the claim. (b) Investigation. With respect to claims between the parties, ------------- following receipt of notice from the Claimant of a claim, the Indemnitor shall have thirty (30) business days to make any investigation of the claim that the Indemnitor deems necessary or desirable. For the purposes of this investigation, the Claimant agrees to make available to the Indemnitor and/or its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnitor cannot agree as to the validity and amount of the claim within said 30-day period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate legal remedy. (c) Control. With respect to any claim by a third party as to which ------- the Claimant is entitled to indemnification hereunder, the Indemnitor shall have the right at its own expense to participate in or assume control of the defense of the Claim, and the Claimant shall cooperate fully with the Indemnitor, subject to reimbursement for actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnitor. If the Indemnitor elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of the claim at its own expense. If the Indemnitor does not elect to assume control or otherwise participate in the defense of any third party claim, it shall be bound by the results obtained by the Claimant with respect to the claim. (d) Immediate Action. If a claim, whether between the parties or by ---------------- a third party, requires immediate action, the parties will make every effort to reach a decision with respect thereto as expeditiously as possible. (e) Limitations on Indemnification. ------------------------------ (i) Any indemnity payment hereunder shall be limited to the extent of the actual loss or damage suffered by the Claimant and shall be reduced by the amount of any recovery by the Claimant from any third party, including any insurer, and by the amount of any tax benefits received. (ii) Neither party shall be entitled to indemnification hereunder for non-third party claims unless and until the amount for which indemnification is owing exceeds One Hundred Fifty Thousand Dollars ($150,000) in the aggregate for all such matters; provided, however, that if such amount exceeds One Hundred Fifty Thousand Dollars ($150,000), such party shall be liable to the other for the entirety of the amount and not 31 just that portion in excess of One Hundred Fifty Thousand Dollars ($150,000). (iii) No party shall be entitled to indemnification hereunder for any claim arising from the breach by the other party of its representations, warranties or covenants which is not asserted against the Indemnitor within twelve (12) months after the Closing Date. (iv) The limitations in SECTION 11.4(E)(II) shall not apply to any claim for indemnification for any liability of the Claimant to any third party or to the adjustments and prorations to be made pursuant to SECTION 4.3. 11.5 LIQUIDATED DAMAGES. If this Agreement is terminated by Beasley due to a breach by Evergreen of its representations, warranties, and covenants under this Agreement, then liquidated damages shall be paid to Beasley as provided in SECTION 3.2, it being agreed that such amount shall constitute full payment for any and all damages suffered by the terminating party by reason of Evergreen's failure to close this Agreement. Beasley and Evergreen agree in advance that actual damages resulting from a breach of their respective obligations hereunder would be difficult to ascertain and that the amount to be paid pursuant to SECTION 3.2 is a fair and equitable amount to reimburse Beasley for damages sustained from the termination of this Agreement for the reason stated in the first sentence of this SECTION 11.5. 11.6 SPECIFIC PERFORMANCE. The parties recognize that if Beasley refuses to close as and when required under the provisions of this Agreement, monetary damages will not be adequate to compensate Evergreen for its injury. Evergreen shall therefore be entitled, in addition to a right to collect money damages, to obtain specific performance of the terms of this Agreement. If any action is brought by either Evergreen to enforce this Agreement, Beasley shall waive the defense that there is an adequate remedy at law. Evergreen shall have the right to obtain specific performance of the terms of this Agreement without being required to prove actual damages, post bond or furnish other security. 12. EXPENSES. Except as otherwise expressly provided in this Agreement, each party shall bear its own legal, accounting and other expenses in connection with the negotiation, preparation and consummation of this Agreement and the transactions contemplated hereby. 13. SALES TAXES. Beasley and Evergreen shall each pay one-half of any and all taxes that may be imposed by any taxing authority in the nature of sales, use or real estate transfer tax as a result of the transfer of the Assets from Beasley to Evergreen. 14. BENEFIT OF AGREEMENT; ASSIGNMENT. The terms of this Agreement shall be enforceable and binding upon, and inure to the benefit of the parties hereto, their heirs, successors and assigns. No party shall assign its interest under this Agreement, by operation of law or otherwise, without the prior written consent of the other party, such consent not to be 32 unreasonably withheld; provided, that Beasley may assign all or part of its rights hereunder to a qualified intermediary as provided in SECTION 1.5, and Evergreen may assign part or all of its rights to acquire the Assets hereunder to any direct or indirect wholly owned subsidiary or subsidiaries of Evergreen, but no such assignment shall relieve such party of it obligations hereunder. 15. NOTICES. All notices, requests, demands and other communications which are required or may be given under this Agreement, shall be in writing and shall be deemed to have been duly given upon the hand delivery thereof during business hours, or upon the earlier of receipt or three (3) days after posting by registered mail or certified mail, return receipt requested, or on the next business day following delivery to a reliable or recognized air freight delivery service, in each case addressed as follows. If to Beasley: Beasley FM Acquisition Corp. 3033 Riviera Drive Suite 200 Naples, FL 33940 Attention: George G. Beasley, Chairman with a copy to: Leventhal, Senter & Lerman 2000 K Street, N.W. Suite 600 Washington, D.C. 20006 Attention: Meredith S. Senter, Jr., Esq. If to Evergreen: Evergreen Media Corporation of Los Angeles c/o Evergreen Media Corporation 433 E. Las Colinas Boulevard, Suite 1130 Irving, Texas 75039 Attention: Scott K. Ginsburg, President with a copy to: Latham & Watkins 1001 Pennsylvania Avenue, N.W. Suite 1300 Washington, D.C. 20004 Attention: Eric L. Bernthal, Esq. Any party may, with written notice to the other, change the place for which all further notices to such party shall be sent. All costs and expenses for the delivery of notices hereunder shall be borne and paid for by the delivering party. 16. ENTIRE AGREEMENT. Except as herein expressly provided, this Agreement embodies the entire agreement and understanding between Evergreen and Beasley and supersede all prior agreements and understandings, whether oral or in writing, with respect to the purchase and sale of the Assets. 33 17. EXHIBIT. All Exhibits, Schedules, collateral documents or instruments attached to this Agreement or to be provided at the Closing in the form of an exhibit attached to this Agreement, shall be deemed a part of this Agreement and incorporated herein, where applicable, as if fully set forth herein. 18. AMENDMENT; WAIVER. This Agreement (including the Schedules and Exhibits hereto) may not be amended, supplemented or otherwise modified, nor may any party hereto be relieved of any of its liabilities or obligations hereunder, except by a written instrument duly executed by the parties hereto. Any such written instrument entered into in accordance with the provisions of the preceding sentence shall be valid and enforceable notwithstanding the lack of separate legal consideration therefor. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the party so waiving. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 19. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without reference to the conflict of law principles thereof. 20. SEVERABILITY. All agreements and covenants herein are severable. In the event that any provision of this Agreement should be held to be unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected thereby. 21. ATTORNEY'S FEES. In the event of a dispute between the parties hereto arising out of or related to this Agreement or the interpretation or enforcement of this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees, costs and expenses from the other party. 22. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which when taken together shall have the same effect as if the signature on each counterpart were upon the same instrument. [Signatures immediately following this page.] 34 IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the day and year first above written. BEASLEY FM ACQUISITION CORP. By: -------------------------------- Name: -------------------------- Title: ------------------------- WDAS LICENSE LIMITED PARTNERSHIP By: Beasley FM Acquisition Corp., its general partner By: ---------------------------- Name: -------------------------- Title: ------------------------- EVERGREEN MEDIA CORPORATION OF LOS ANGELES By: -------------------------------- Name: -------------------------- Title: ------------------------- 35 EX-2.27 3 ASSET PURCHASE AGMT. THE BROWN ORGANIZATION EXHIBIT 2.27 ASSET PURCHASE AGREEMENT ------------------------ THIS AGREEMENT, made this 19 day of September, 1996, by and between THE BROWN ORGANIZATION, a California Corporation, with offices at 5700 Wilshire Boulevard, Suite 480, Los Angeles, California 90036 ("Seller") and Evergreen Media Corporation of Los Angeles ("Purchaser"), a Delaware corporation, with offices at 433 East Las Colinas Boulevard, Suite 1140, Irving, Texas 75039. WITNESSETH: ---------- WHEREAS, Seller is the licensee and operator of Radio Broadcast Stations KKSF-FM, KDFC-FM and KDFC-AM, located in San Francisco, California (the "Stations") holding valid authorizations for the operation thereof from the Federal Communications Commission ("FCC"); and WHEREAS, Purchaser desires to acquire and Seller desires to sell the aforesaid authorizations and license rights, together with the assets used and usable in conjunction therewith; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, Seller and Purchaser hereby agree as follows: 1. ASSETS SOLD AND PURCHASED. ------------------------- On the Closing Date (as hereinafter defined), Seller will sell, transfer, assign and convey to Purchaser, by appropriate instruments, and Purchaser will purchase, subject to the terms and conditions hereinafter set forth, the following assets and properties (the "Purchased Assets"), free and clear of all liens, claims, encumbrances and right of others except as otherwise set forth herein: 1 (a) The FCC licenses and authorizations and all other licenses, permits and authorizations issued by any other federal, state or local governmental agency or authority for the operation of the Stations, including but not limited to those listed on EXHIBIT "A" hereto, and all other licenses, permits and authorizations now or hereafter obtained in connection with the operation of the Stations. (b) All fixed, tangible and intangible assets used and usable in the operation of the Stations, including, but not limited to, those assets identified on EXHIBIT "B" hereto, subject to any changes thereto made in the ordinary course of business between the date hereof and the Closing Date. (c) The contracts, leases and agreements listed and described on EXHIBIT "C" attached hereto which are to be in effect on the Closing Date except those which may have been unilaterally canceled by a party other than Seller, provided that legal rights, if any, accruing to Seller by virtue of any such unilateral cancellation by a party other than Seller shall be assigned by Seller to Purchaser. To the extent that the assignment of any contract listed on EXHIBIT "C" may require the consent of a third party, Seller shall exercise its best efforts to secure such consent. In the event that Seller is unable to secure such consent, Purchaser shall not be required to assume performance pursuant to said contract; provided, however, that if Seller fails to secure such consents with respect to the contracts, leases and/or agreements listed on EXHIBIT "C-1" prior to Closing, Purchaser shall have the right to terminate this Agreement. (d) The rights and obligations under the agreements, pursuant to which reimbursement is or was to be made in whole or in part in services, merchandise 2 or other non-cash considerations ("Trade Deals"), listed and described on EXHIBIT "D" attached hereto, subject to any changes thereto made in the ordinary course of business between the date hereof and the Closing Date. (e) The call letters "KKSF" and "KDFC" and all copyrights, trademarks, trade names, logos, jingles, service marks, slogans and promotional materials used in connection with the Stations and any registrations or applications for registration of any of the same, including but not limited to those copyrights, trademarks, trade names and service marks listed and described on EXHIBIT "E" attached hereto. (f) Such files, records and logs pertaining to the operation of the Stations as are required to be maintained by federal, state or local law or regulation and as Purchaser may reasonably require; provided, however, that Purchaser is not purchasing and will not be entitled to receive Seller's corporate charter, corporate minute books, original accounting journals, books of accounts, ledgers, tax returns or other confidential books and records not directly relating to the operation of the Stations. (g) The goodwill and all other intangible assets used in the operation of the Stations. This Agreement is limited to the assets herein described, and Purchaser is not purchasing cash, cash equivalents, accounts receivable or insurance policies, all of which shall be and remain the exclusive property of Seller free and clear of any claim from Purchaser whatsoever. 3 2. PURCHASE PRICE; DEPOSIT; ASSUMPTION OF LIABILITIES. -------------------------------------------------- (a) Purchase Price. -------------- The purchase price for the Purchased Assets shall be One Hundred Fifteen Million Dollars ($115,000,000.00). The purchase price for the Purchased Assets shall be payable in full to Seller by wire transfer of immediately available funds on the Closing Date. The purchase price shall be allocated among the Purchased Assets according to their current fair market values, as agreed to by Seller and Purchaser not later than sixty (60) days after the date hereof, and in the event of a dispute between Seller and Purchaser as to the value of such assets, the parties agree that the purchase price allocation shall be determined by an independent appraisal done by BIA or a comparable firm mutually acceptable to the parties. The cost of such appraisal shall be shared equally by the parties. (b) Deposit. ------- (1) Upon execution of this Agreement, Purchaser shall deposit in escrow with First National Bank of Maryland, acting as escrow agent on the parties' behalf ("Escrow Agent"), a deposit (the "Deposit") in the amount of Ten Million Dollars ($10,000,000), representing Purchaser's security for the consummation of the sale of the properties and assets hereunder. The Deposit shall be held in escrow pursuant to a separate escrow agreement ("Escrow Agreement") entered into between Seller, Purchaser and the Escrow Agent in the form of EXHIBIT "F" hereto. In the event of any conflict between this Agreement and the Escrow Agreement, the terms of the Escrow Agreement shall control. The Deposit shall be invested and disbursed in accordance with the terms of the Escrow Agreement. 4 (2) Subject to Section 19 of this Agreement and the Escrow Agreement, the Deposit, together with any interest earned thereon, shall be credited toward partial payment of the Purchase Price on the Closing Date, disbursed to Seller, or returned to Purchaser upon termination of this Agreement. (c) Assumption of Liabilities. ------------------------- The Purchased Assets shall be sold and conveyed to Purchaser free and clear of all mortgages, liens, deeds of trust, security interests, pledges, restrictions, prior assignments, charges, claims, defects in title and encumbrances of any kind or type whatsoever except the following: (i) liens for taxes not yet due and payable; and (ii) the obligations of Seller for periods from and after the Closing Date under leases and contracts assigned to Purchaser that are described in Sections 1(c) and 1(d) hereof, which, subject to all necessary consents, Purchaser hereby expressly agrees to assume. 3. PAYMENTS OF CERTAIN ITEMS. ------------------------- (a) All FCC filing and grant fees, if any, shall be paid by Seller and Purchaser equally. (b) Subject to any accounting made pursuant to the Time Brokerage Agreement referred to in Section 33 hereof, within ninety (90) days after closing, an accounting shall be made as follows: (i) All prepaid income, prepaid expenses, prepayments on any written contracts assumed by Purchaser hereunder, accrued income and accrued expenses of the Stations as of the end of the day prior to the Closing Date shall, except as otherwise expressly provided herein, be adjusted and allocated between Seller and Purchaser to reflect the principle that all expenses and income arising from the operation of the Stations before 12:01 a.m. 5 on the Closing Date shall be for the account of Seller, and all expenses and income arising from the operation of the Stations from and after 12:01 a.m. on the Closing Date shall be for the account of Purchaser. (ii) As soon as practicable following the Closing Date, and in any event within ninety (90) days thereafter, or at such other time as the parties mutually agree, Purchaser shall deliver to Seller Purchaser's certificate setting forth as of the Closing Date all adjustments to be made as provided in (i) above. Purchaser shall provide Seller or Seller's representatives access to copies of all books and records as Seller may reasonably request for purposes of verifying such adjustments. Purchaser's certificate shall be final and conclusive unless objected to by Seller in writing within thirty (30) days after delivery. Seller and Purchaser shall attempt jointly to reach agreement as to the amount of the adjustments to be made hereunder within sixty (60) days after receipt by Purchaser of such written objection by Seller, which agreement, if achieved, shall be binding upon all parties to this Agreement and not subject to dispute or review. (iii)In the event of a disagreement between Purchaser and Seller with respect to the accounting to be made hereunder, the parties agree that a public accounting firm chosen jointly by Purchaser and Seller shall be the final arbiter of such disagreement. The cost of such accounting firm shall be shared equally by the parties. (iv) Any amounts due Purchaser or Seller for the adjustments provided for herein shall be paid within ten (10) calendar days after final determination. 6 (c) Filing and recordation fees and any other fees incurred in connection with the transfer of title to the property being conveyed hereunder, and any applicable transfer, sales or use taxes, and all expenses incurred in connection with such filing or recordation, shall be borne entirely by Purchaser. 4. SELLER'S REPRESENTATIONS AND WARRANTIES. --------------------------------------- Seller covenants, represents and warrants the following, which representations and warranties, together with all other representations and warranties of Seller in this Agreement and the exhibits and schedules hereto, shall be true and correct as of the Closing Date as if expressly restated on said date. (a) Organization and Authority. -------------------------- THE BROWN ORGANIZATION is a corporation duly organized, validly existing and in good standing and authorized to do business under the laws of the State of California, has full power and authority to own its properties and to carry on the business presently conducted by it, and has full power and authority to enter into this Agreement and to consummate the transactions contemplated herein. All required corporate action with respect to Seller has been taken to approve this Agreement and the transactions contemplated hereby. The making and performance of this Agreement by Seller does not and will not violate any provisions of the organizational documents of Seller, or, subject to Seller obtaining those consents set forth on EXHIBIT "G" hereto, breach or constitute a default under any agreement, instrument, order, judgment or decree to which Seller is a party or by which it is bound or violate any law or regulation applicable to Seller or the Stations. This Agreement has been duly executed and delivered by Seller and constitutes the valid and binding obligation of Seller, enforceable against Seller in accordance with its terms. 7 (b) Compliance with Laws. -------------------- The operation of the Stations is now, and on the Closing Date will be, in compliance in all material respects with all applicable laws, rules and regulations of all federal, state and local authorities or agencies, and there is not now, nor on the Closing Date will there be, any judgment outstanding or litigation or proceeding pending or, to the best of Seller's knowledge, threatened which affects the title or interest of Seller in or to any license or any other property or asset to be sold hereunder, or its power or right to sell, convey, transfer or assign the same to Purchaser as hereinafter provided, or which would prevent or affect the operation and use of the same by Purchaser, as presently operated and used by Seller. Except for the consent of the FCC, the consent contemplated by Section 10 hereof, and any such consent set forth on EXHIBIT "G" hereto, no authorizations, approvals or consents from any governmental or regulatory authorities or agencies are necessary to permit Seller to execute and deliver this Agreement and to perform its obligations hereunder. Without limiting the generality of the foregoing: (i) The Stations' transmitting and studio equipment is operating in material accordance with the terms and conditions of the Station Licenses and all underlying construction permits, and the rules, regulations and policies of the Commission, including without limitation all regulations concerning equipment authorization and human exposure to radio frequency radiation. To the best of Seller's knowledge, (1) the Stations are not causing interference in violation of Commission rules to the transmission of any 8 other broadcast station or communications facility and has not received any complaints with respect thereto and (2) no other broadcast station or communications facility is causing interference in violation of Commission rules to the Stations' transmissions. (ii) Seller has, in the conduct of the Stations' business, complied in all material respects with all applicable laws, rules and regulations relating to the employment of labor, including those concerning wages, hours, equal employment opportunity, collective bargaining, pension and welfare benefit plans, and the payment of Social Security and similar taxes, and Seller is not liable for any arrearages of wages or any tax penalties due to any failure to comply with any of the foregoing. (iii)All material ownership reports, employment reports, tax returns and other documents required to be filed by Seller with the Commission or other governmental authorities have been filed, except for such materials the failure of which to file would not have a material adverse effect on the Stations or any material Asset. Such items are as required to be placed in the Station's local public inspection files have been placed in such files. All proofs of performance and measurements that are required to be made by Seller with respect to the Stations' transmission facilities have been completed and filed at the Stations. All information contained in the foregoing documents is true, complete and accurate in all material respects. (c) Tangible Assets. --------------- EXHIBIT "B" attached hereto represents a true, complete and accurate list of all tangible assets 9 used and usable in the business and/or operation of the Stations. Subject to Seller's right to dispose of any properties, equipment and assets in the ordinary course of business, on the Closing Date Seller will convey to Purchaser good and valid title to such properties, equipment and assets and any other properties, equipment and assets acquired by it subsequent to the date hereof and used or usable in the business or operation of the Stations, free of any and all liens, charges, assessments, taxes, mortgages, pledges, conditional sales agreements, security agreements, encumbrances and rights of third parties of any kind whatsoever. (d) Condition of Equipment. ---------------------- Transmission and studio equipment and other equipment (mechanical and electrical) to be transferred to Purchaser hereunder is, and will be as of the Closing Date, in good repair and working condition with no material defects therein, fit for the purposes for which they are being utilized and in material compliance with all current FCC requirements and all other applicable laws and regulations. (e) FCC Licenses. ------------ The FCC licenses, permits and authorizations to be assigned to Purchaser are, and will be as of the Closing Date, valid and existing authorizations for the purpose of operating the Stations, issued by the FCC under the Communications Act of 1934, as amended, and in accordance with the Rules and Regulations of the FCC, and applications, reports and other disclosures required by the FCC with respect to the Stations have been, and will be as of the Closing Date, duly filed. Seller is an FCC licensee in good standing and, as of the date hereof, there are no proceedings or complaints pending or, to the best of Seller's knowledge, 10 threatened at the FCC or in any Federal court against Seller with respect to the Stations and Seller is not aware of any facts or circumstances that could reasonably provide a basis for any such proceedings or complaints. Seller holds all licenses and governmental authorizations necessary to enable the Seller to conduct its business of operating the Stations as presently conducted. (f) Public Inspection Files. ----------------------- The public inspection files for the Stations are in material compliance with the regulations of the FCC relating thereto. (g) Financial Statements. -------------------- The 1995 and 1996 and June 30, 1995 and June 30, 1996 Balance Sheets, Statement of Financial Condition and Income Statements of the Stations attached as Schedule 1 hereto accurately reflect the financial condition and operations of the Stations for the periods covered and said financial statements are stated in accordance with generally accepted accounting principles consistently applied. There are no material liabilities associated with the Stations that are not accurately reflected in such operating and financial statements. The said financial statements for 1995 have been reviewed by Seller's independent accountant and the June 30, 1996 financial statement has been compiled by said accountant. Should Purchaser require audited operating and financial statements to comply with the requirements of the Securities and Exchange Commission, Seller shall make its books and records available to Purchaser's auditors to the extent necessary to conduct such audit which shall be completed within thirty (30) days from the date hereof at Purchaser's sole cost and expense. Should such audit disclose a material difference in the results of Seller's operations as presented 11 in the operating and financial statements contained in Schedule 1 hereto, Purchaser shall have the right to terminate this Agreement by written notice to Seller at any time within five (5) business days of the receipt of such audit, or within five (5) business days from the expiration of the thirty (30) day period referred to above, whichever shall first occur with a copy of such audit. Failure to give such notice within the time hereinabove specified shall be deemed to be a waiver of the right to terminate this Agreement because of any material difference disclosed by such audit. The disclosure in such audit of the liability under the two participation agreements referred to in Note 5 to Schedule 1 attached hereto as a charge against income shall not be deemed to be a "material difference" hereunder. (h) Contracts. --------- True and complete copies of all contracts, leases, understandings and/or agreements and all modifications, amendments and renewals thereof listed on EXHIBITS "C" AND "D" have been furnished to Purchaser and represent all contracts, leases, understandings and/or agreements of Seller in conjunction with the operation of the Stations except contracts for the sale of air time. All material provisions of the contracts, understandings, leases and agreements listed on said EXHIBITS "C" AND "D" and all other contracts, leases, understandings and agreements which may be effectuated between the date hereof and the Closing Date relating to the operations of the Stations have been complied with, and will have been complied with, in all material respects as of the Closing Date, and no material default in respect to any duties or obligations required according to the terms of such contracts, leases, understandings and agreements are or will have occurred. EXHIBIT "D" specifies the trade balance of all contracts listed thereon as of August 31, 12 1996. All contracts and other agreements listed on EXHIBIT "C" AND EXHIBIT "D" are in full force and effect and are valid and, to the best of Seller's knowledge, enforceable in accordance with their respective terms. The leases of real property described on EXHIBIT "C" (the "Leased Premises") are the sole and complete agreements concerning Seller's use of the Leased Premises. Each lease agreement is legal, valid, binding, enforceable and in full force and effect. Neither Seller nor any other party is in default, violation or breach in any respect under any lease agreement, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute a default, violation or breach thereunder. No amount payable under any lease agreement is past due. Seller has not received any notice of a default, offset or counterclaim under any lease agreement or any other communication asserting non- compliance with any lease agreement. Seller enjoys peaceful and undisturbed possession of the premises leased by Seller under the lease agreements. Seller has delivered to Buyer, true and complete copies of the lease agreements. (i) No Insolvency. ------------- No insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting Seller or any of its respective assets or properties are pending or, to the best of Seller's knowledge, threatened, and Seller has made no assignment for the benefit of creditors, nor taken any action with a view to, or which would constitute the basis for, the institution of any such insolvency proceedings. 13 (j) Employees. --------- Schedule 2 attached hereto sets forth a list of the current employees of the Stations as of August 31, 1996, together with the job titles and annual salaries of such employees as of such date, which list will be updated through the Closing Date. From August 1, 1996 through the date hereof, Seller has not increased the salary of any employee other than in the ordinary course of business and consistent with past practice. Seller has performed, in all material respects, all obligations required to be performed by it under its agreements and plans with or for the benefit of its employees at the Stations, and is not in breach or in default of any of the terms thereof. There is no dispute between Seller and any of its former or current employees at the Stations related to compensation, severance pay, vacation or pension benefits, or discrimination. (k) Employee Complaints. ------------------- Seller knows of no outstanding complaint or charge filed or made to any government civil rights agency or commission by or on behalf of any employee, former employee or applicant for employment concerning any alleged illegal employment practice or alleged discrimination in violation of law with respect to the Stations and Seller is not aware of any fact or circumstance that could reasonably provide a basis for any such charge or complaint. (l) Union Activity. -------------- The employees of Seller are not presently represented by and are not seeking representation through any union or other collective bargaining agent, except for the "on air" announcers of KKSF-FM who are seeking representation through American Federation of Television and Radio Artists (AFTRA). 14 (m) Employee Benefits. ----------------- Purchaser will have no obligation or liability due to or because of any past service liability, vested benefits, retirement plan insolvencies or other obligation under local, state or federal law (including the Employee Retirement Income Security Act of 1974) resulting from the purchase of the Stations or from former employees of Seller becoming employees of Purchaser. Nothing contained in this Agreement shall confer upon any employee of Seller any right with respect to continued employment by Purchaser, nor shall anything herein interfere with any right Purchaser may have after the Closing Date to (i) terminate the employment of any of the employees at any time, with or without cause, or (ii) establish or modify any of the terms or conditions of employment of the employees in the exercise of Purchaser's independent business judgment. (n) Adverse Conditions. ------------------ Seller does not know of any condition, including, but not limited to, pending or threatened litigation, which may materially and adversely affect the Stations' business prospects, other than changes in the ordinary course of business. (o) Environmental Matters. --------------------- For the purposes of this paragraph the following terms shall have the following meanings: (i) the term "Hazardous Material" shall mean any material, substance or item that, whether by its nature or use, is subject to regulation as of the date of this Agreement under any Environmental Requirement, including but not limited to Polychlorinated Biphenyls, petroleum, pesticides, herbicides, asbestos and underground storage tanks; (ii) the term "Environmental Requirements" shall collectively mean the Comprehensive 15 Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Sec. 9601 et seq.), Super Fund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act (49 U.S.C. Sec. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sec. 6901 et seq.), the Toxic Substances Control Act (15 U.S.C. Sec. 2601 et seq.), the Clean Air Act (42 U.S.C. Sec. 7401 et seq.) and the Federal Water Pollution Control Act (33 U.S.C. Sec. 1251 et seq.), all as presently in effect, any regulation pursuant thereto presently in effect, or any other law, ordinance, rule, regulation, order or directive in effect as of the date of this Agreement addressing environmental, health or safety issues of or by any Governmental Authority, and (iii) the term "Governmental Authority" shall mean the federal government, any state or other political subdivision thereof, exercising executive, legislative, judicial, regulatory or administrative functions. Seller hereby represents and warrants to Purchaser that, to the best of the knowledge of Philip A. Melrose, the President of the Radio Division of Seller, David Kendrick, General Manager of the Stations, and Doug Irwin, Seller's Chief Engineer, (i) no Hazardous Material in reportable quantities are currently located at, on, in or under the Stations or the Purchased Assets, (ii) no Hazardous Material in reportable quantities have been or are currently located at, in, on or under the Stations or the Purchased Assets in a manner which violates any Environmental Requirement, (iii) no releasing, emitting, discharging, leaching, dumping or disposing of any Hazardous Material from the Stations or the Purchased Assets onto or into any other property or from any other property onto or into the Stations or the Purchased Assets has occurred or is occurring in reportable quantities; and (iv) Seller has received no notice of violation, lien, complaint, suit, order or other notice with respect to the environmental condition 16 of any of the Stations or the Purchased Assets, nor has any such notice been issued during Seller's ownership of the Stations or the Purchased Assets which has not been fully satisfied and complied with in a timely fashion as to bring the Stations and the Purchased Assets into full compliance with all Environmental Requirements. Purchaser acknowledges that prior to the execution of this Agreement, Purchaser has obtained at Purchaser's expense a Phase I Environmental Survey. (p) Taxes. ----- Seller has, and as of the Closing Date will have, paid and discharged all taxes, assessments, excises and other levies which are due, including any such taxes, assessments, excises and levies which, if due and not paid, would interfere with Purchaser's enjoyment or use of the Purchased Assets, excepting such taxes, assessments and other levies which will not be due until or after the Closing Date and which are to be prorated between Seller and Purchaser pursuant to the provisions of Section 3(b) hereof. (q) Insurance. --------- Seller now has in force adequate fire and other risk insurance covering the full replacement value of the tangible personal property to be transferred herein and shall cause such insurance to be maintained in full force until the Closing Date. Seller also shall maintain in full force until the Closing Date adequate general public liability insurance in amounts consistent with broadcasting industry standards for similar stations. None of the assets to be conveyed herein has been adversely affected in any way as a result of fire, explosion, earthquake, accident, fraud, rain, storm, drought, riot, Act of God or public enemy or any other casualty, whether or not covered by insurance. 17 (r) All Necessary Assets. -------------------- The Purchased Assets described in Section 1 and set forth in the Exhibits hereto, constitute all of the assets, property and business owned, used or needed by Seller or in which Seller has any interest (other than the Excluded Assets) in carrying on the business and operation of the Stations as presently conducted. Other than the Excluded Assets, there are no other rights, assets or property owned, used or needed by Seller in connection with the Stations or needed in the operation thereof. (s) Copyrights and Service Marks. ---------------------------- Except as set forth on EXHIBIT "E" hereto, Seller does not own nor is possessed of or is licensed under any copyrights, patents, patent applications, service marks, trademarks, trade names, logos, emblems or slogans used in the conduct of the business of the Stations as now operated. To the best of Seller's knowledge, there is no claim pending or threatened against Seller with respect to the alleged infringement of any such copyright, patent, patent application, service mark, trademark, trade name, logo, emblem or slogan owned by another, and to the best of Seller's knowledge, there is not any basis for any such claim. (t) FCC Filings. ----------- None of the information contained in the representations and warranties of Seller set forth in any filing made by it with the FCC with respect to the transfer of the Stations or the assignment of the licenses therefor contains or will contain any untrue statement of a material fact or omits or will omit any material fact. 18 (u) Conduct of Business. ------------------- Since August 1, 1996, Seller has conducted the business of the Stations in the ordinary course. (v) Representations and Warranties. ------------------------------ The representations and warranties made by Seller in this Agreement are not, and will not be on the Closing Date, false or misleading individually or in the aggregate with respect to any material fact and will not omit to state a material fact required to be stated therein when necessary in order to make the statements contained therein not materially false or misleading. 5. PURCHASER'S REPRESENTATIONS AND WARRANTIES. ------------------------------------------ Purchaser represents and warrants the following, which representations and warranties shall be true and correct as of the Closing Date as if expressly restated on said date. (a) Organization. ------------ Purchaser is now, and will be as of the Closing Date, a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, and qualified to do business in the State of California. (b) Due Authorization. ----------------- The execution, delivery and consummation of this Agreement has been duly authorized by the Board of Directors of Purchaser and no further corporate authorization, approval or consent is required. 19 (c) Binding Agreement. ----------------- This Agreement constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with and subject to its terms. (d) No Conflicts. ------------ Subject to the FCC's approval of this transaction, the execution, delivery and consummation of this Agreement do not and will not conflict with any of the provisions of Purchaser's organizational documents or violate any provisions of law. (e) FCC Approval. ------------ Purchaser knows of no reason why the FCC (i) would not approve an application for the assignment of licenses to it or (ii) would require any type of waiver before approving an application for the assignment of the licenses to it. (f) No Conflicting Agreements. ------------------------- There will not be as of the Closing Date any agreements, contracts, understandings or commitments which will restrain or inhibit the right of Purchaser to enter into this Agreement, make any representations or warranties herein and/or consummate any of the transactions contemplated herein. (g) No Litigation. ------------- There are no suits, legal proceedings or investigations of any nature pending or, to Purchaser's knowledge, threatened against or affecting it that would affect Purchaser's ability to carry out the transactions contemplated by this Agreement. 20 (h) Representations and Warranties. ------------------------------ The representations and warranties made by Purchaser in this Agreement are true and correct and are not, and will not be on the Closing Date, false or misleading individually or in the aggregate with respect to any material fact and do not and will not omit to state a material fact required to be stated therein when necessary in order to make the statements contained herein not materially false or misleading. 6. OPERATIONS PENDING CLOSING. -------------------------- Pending the closing hereunder and subject to the Time Brokerage Agreement referred to in Section 33 hereof, Seller shall: (a) Access to Stations. ------------------ Give or cause to be given to Purchaser and its authorized representatives access during normal business hours to the properties, books and records of the Stations and the Purchased Assets, and furnish Purchaser with such information concerning the same as Purchaser may reasonably request; provided, however, that Purchaser may not visit the Stations without the consent of Seller, nor may Purchaser contact any current employee of Seller without the consent of Seller. (b) Compliance with Laws. -------------------- Comply with all material and applicable federal, state and local laws, ordinances and regulations, including, but not limited to, the Communications Act of 1934 and the Rules and Regulations of the FCC. (c) Maintenance of Purchased Assets. ------------------------------- Keep at its own expense in a normal state of repair and operating efficiency the Purchased 21 Assets. On the Closing Date, the operation of the Stations and the technical equipment shall be in compliance with the FCC licenses and the FCC's Rules and Regulations and all other applicable laws and regulations and no citations, complaints or petitions shall be pending or, to Seller's knowledge, threatened against Seller. (d) Conduct of Business. ------------------- Make all reasonable efforts to maintain the business reputation and financial condition of the Stations and preserve their customers, employees and suppliers. During the period from the date of this Agreement to the Closing Date, the business of Seller shall be operated in ordinary course and in the same manner as operated prior to the execution hereof. On the Closing Date, there shall be outstanding no liability, judgment or litigation that could result in an encumbrance of, or otherwise substantially adversely affect, the assets, licenses and property being sold, assigned and transferred hereunder or the operation of the Stations. (e) Salary Increases. ---------------- Grant no salary increase to any officer or employee of the Stations, except normal merit, promotional and similar increases granted in the ordinary course of business and consistent with prior practice. (f) Required Consents. ----------------- Use its best efforts to obtain all of the consents noted on EXHIBIT "G" hereto, and in connection therewith promptly to commence and thereafter diligently prosecute application for all such consents, waivers and approvals required herein, and to keep Purchaser currently informed of the status thereof and of any difficulties encountered 22 in obtaining same and promptly to advise Purchaser of all communications relevant to the transactions provided for in this Agreement received by Seller from the FCC subsequent to the date hereof, and to furnish the Purchaser copies of all written communications and documents filed with the FCC by Seller and received by Seller from the FCC subsequent to the date hereof. (g) Books and Records. ----------------- Maintain the books of accounts and records of the Stations in the usual, regular and ordinary manner, in accordance with Seller's standard accounting practices. (h) Contracts. --------- Not enter into or terminate any contract in an amount greater than $10,000 or for a term exceeding one year and to be assumed by Purchaser, or amend any provision of any contract in an amount greater than $10,000 or for a term exceeding one year and to be assumed by Purchaser, whether or not in the ordinary course of business, without the prior written consent of Purchaser, which consent will not be unreasonably withheld. Seller shall not enter into any trade deal after execution of this Agreement which shall obligate Purchaser without Purchaser's prior written consent. (i) Confidentiality. --------------- Not afford a right of access to confidential information and documents relating to the Stations to anyone other than Purchaser, its representatives and/or any other person having legal right to such information, nor discuss nor negotiate with or solicit a bid from anyone else involving the sale of the Purchased Assets and the Stations. 23 7. PURCHASER'S PERFORMANCE. ----------------------- The obligations of Purchaser hereunder are subject at its election to the conditions that on the Closing Date: (a) The representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects and the covenants and agreements of Seller to be performed on or prior to the Closing Date pursuant to the terms of this Agreement shall have been duly performed, and Seller shall have delivered to Purchaser a certificate, dated as of the Closing Date, signed by a duly authorized officer of Seller to that effect. (b) The FCC authorizations, including those set forth on EXHIBIT "A," shall be assigned and transferred to Purchaser and shall contain no adverse modifications of the terms of such authorizations as they presently exist. Any and all governmental approvals necessary to consummate the transactions contemplated by this Agreement shall have been received. (c) Purchaser shall have received a written opinion of Sandler & Rosen, Counsel for Seller, dated as of the Closing Date, in customary form and substance that: (i) THE BROWN ORGANIZATION is a corporation duly organized and validly existing under the laws of California, has full power and authority to own its properties and to carry on the business presently conducted by it and has full power and authority to enter into this Agreement and to consummate the transactions contemplated herein. (ii) This Agreement has been duly authorized, executed and delivered by Seller, and is a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms. 24 (iii)The sale of all of the Purchased Assets to Purchaser hereunder has been duly authorized by all necessary action of Seller, and deed(s) of conveyance, bill(s) of sale and any and all other instruments delivered to Purchaser hereunder have been duly authorized, executed and delivered, and conform with all legal requirements to vest in Purchaser good and valid title to all the Purchased Assets. (iv) The execution, delivery and performance of this Agreement and all of the documents executed in conjunction therewith by Seller do not violate any provisions of Seller's organizational documents or, to the best of counsel's knowledge, any provision of any material note, mortgage, agreement, franchise, order, arbitration award, judgment, law, ordinance or decree to which Seller is a party or by which Seller is bound. (v) To the best of the knowledge of such counsel, no action, claim, suit or proceeding or any investigation of any governmental authority is pending or threatened against or affecting Seller or the Stations or the Purchased Assets which would affect such Purchased Assets or the transactions contemplated by this Agreement. (d) Purchaser shall have received a written opinion of Reed Smith Shaw & McClay, FCC Counsel for Seller, dated as of the Closing Date, substantially in the form of EXHIBIT "H" hereto. 25 (e) No suit, action or other proceeding against Seller shall be pending before any court or governmental agency of competent jurisdiction in which it is sought to restrain or prohibit any of the transactions contemplated by this Agreement or to obtain damages or other relief in connection with this Agreement or the transactions contemplated hereby. (f) Seller shall have executed and delivered to Purchaser the documents required herein to be executed and delivered by it. (g) Seller shall have obtained the consents to assign to Purchaser the leases and contracts listed on EXHIBIT "C-1". 8. SELLER'S PERFORMANCE. -------------------- Seller's performance is subject at its election to the conditions that, at the Closing Date: (a) All payments hereunder which are due and payable by Purchaser on the Closing Date shall have been paid in accordance with the terms of this Agreement, and Purchaser shall have executed all of the documents required of it herein. (b) The representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects, and the covenants and agreements of Purchaser to be performed on or prior to the Closing Date pursuant to the terms of this Agreement shall have been duly performed, and Purchaser shall have delivered to Seller a certificate, dated as of the Closing Date, signed by a duly authorized officer of Purchaser to that effect. (c) No litigation, investigation or proceeding of any kind shall have been instituted which would adversely affect the ability of Purchaser to comply with the provisions of this Agreement. 26 (d) Seller shall have received an opinion of Latham & Watkins, Counsel for Purchaser, dated as of the Closing Date, in customary form and substance that: (i) Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and Purchaser is authorized to do business in the State of California. (ii) Each of the documents executed and/or ratified by Purchaser in accordance with the terms of this Agreement has been duly authorized and/or ratified by all necessary corporate action. (iii)This Agreement has been duly authorized, executed and delivered by Purchaser and is a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms. (iv) The execution, delivery and performance of this Agreement and all of the documents to be executed in conjunction therewith by Purchaser do not violate any provisions of Purchaser's organizational documents or, to the best of Counsel's knowledge, after reasonable investigation, any provision of any material note, mortgage, agreement, franchise, order, arbitration award, judgment, law, ordinance or decree to which Purchaser is a party or by which Purchaser is bound. 27 9. FCC APPROVAL AND APPLICATION. ---------------------------- (a) Consummation of the transactions contemplated hereunder is conditioned upon the FCC having given its prior consent in writing to the assignment to Purchaser of the FCC licenses and other authorizations set forth in EXHIBIT "A" hereto and such consent having become a Final Order. For purposes of this agreement, such consent shall be deemed a Final Order when it is no longer subject to timely review by the FCC or by any court or, in the event of reconsideration upon its own motion or otherwise by the FCC or an appeal by any person to the court, upon the decision of such body becoming no longer subject to review. The condition of finality may be waived jointly by Seller and Purchaser. (b) The parties agree to proceed, as expeditiously as possible, but in no event later than ten business days after the date of this Agreement, to file or cause to be filed an application requesting FCC consent or consents to the transactions herein involved. (c) If the FCC has failed or refused to grant its Final written consent to the assignment of the aforesaid licenses and other authorizations and/or any other transactions contemplated to be consummated hereunder on or before December 31, 1997 (the "Termination Date"), Purchaser or Seller, at their respective options, may terminate this Agreement upon ten (10) days' prior written notice to the other, in which event this Agreement shall have no further force or effect; or if the delay in the FCC's action is due to the refusal or failure of either party to supply the FCC with information which the FCC has requested, only the party not at fault shall have the option of terminating this Agreement. 28 10. HART-SCOTT-RODINO FILING. ------------------------ Consummation of the transactions contemplated hereunder is further conditioned on Purchaser and Seller filing with the United States Department of Justice ("DOJ") and Federal Trade Commission ("FTC") all notifications and reports required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and the expiration or termination of the waiting period thereunder. The parties hereto each agree to supply to the other upon request all information needed to complete such notifications and reports and to proceed as expeditiously as possible (but in no event later than ten (10) business days after the date hereof) to make the filing. Each party shall promptly apprise the other of the status of any inquiries made by the DOJ, FTC or any other governmental agency with respect to this Agreement or the transactions contemplated herein. All filing fees payable to the DOJ and the FTC with respect to such notifications and reports shall be split equally by the parties. The parties agree to jointly request an early termination of the waiting period under the HSR Act. 11. DATE, NOTICE AND PLACE OF CLOSING. --------------------------------- The date and time of closing (herein referred to as the "Closing Date") shall be mutually agreed upon by Seller and Purchaser, but, in the absence of such agreement, shall not be more than ten (10) business days after all of the conditions to closing set forth in Sections 7, 8, 9 and 10 hereof are satisfied or waived. In the event of the inability of the parties to agree on the Closing Date, Seller or Purchaser shall have the right to fix the same on ten (10) days' prior written notice to the other, the first such notice given being binding. Notwithstanding anything in this Section 11 to the contrary, the Closing Date shall not be prior to January 1, 1997, unless Seller agrees to close prior to such date. The closing shall be held at a mutually agreeable location in San Francisco, California, or at such other location as shall be mutually agreed upon by Seller and Purchaser. 29 12. CONTROL OF STATIONS. ------------------- Until the Closing Date, Seller shall have complete control of the Stations, their equipment and operation. Purchaser shall be entitled, however, to notice of any significant problems or developments with the purpose that an uninterrupted and efficient transfer to Purchaser of the Stations and assets and all other assets and properties to be transferred hereunder may be accomplished. 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. ------------------------------------------ All representations, warranties, covenants and agreements contained in this Agreement shall be true and correct on and as of the Closing Date as though such representations, warranties, covenants and agreements were made on and as of such time, and all such representations, warranties, covenants and agreements shall survive the closing hereunder; provided, however, that Seller shall have no liability for a misrepresentation or breach of warranty unless written notice of claim therefor specifying with particularity the facts upon which such claim is based has been given to Seller by Purchaser within two (2) years from the Closing Date. 14. RIGHTS OF INDEMNIFICATION; DEFAULT. ---------------------------------- (a) It is understood and agreed that Purchaser does not assume, and shall not be obligated to pay, any liabilities of Seller under the terms of this Agreement or otherwise and shall not be obligated to perform any obligations of Seller of any kind or manner except by reason of contracts expressly assigned and assumed by Purchaser hereunder, and, with respect to such contracts, only such obligations which arise subsequent to the Closing Date or as is herein provided. Seller hereby agrees to indemnify and hold Purchaser, its successors and assigns, harmless from and against: 30 (i) Claims, liabilities and obligations arising from the operation of the Stations prior to the Closing Date, including claims arising or required to be performed prior to the Closing Date under any contract or instrument assumed by Purchaser hereunder; and (ii) Any and all damage or deficiency resulting from a material misrepresentation, breach of warranty or nonfulfillment of an agreement on the part of Seller under this Agreement, arising out of events occurring prior to the Closing Date, or from a material misrepresentation in or omission from any certificate or other instrument furnished to Purchaser pursuant to this Agreement, or in connection with any of the transactions contemplated hereby; and (iii)Any and all actions, suits, proceeding, damages, assessments, judgments, costs and expenses, including reasonable attorneys' fees, incurred by Purchaser as a result of Seller's failure or refusal to compromise or defend any claim incident to the foregoing provisions. Notwithstanding the foregoing, Seller shall not be required to indemnify Purchaser under the foregoing clauses (i), (ii) or (iii) as (1) with respect to Seller's obligations assumed by Purchaser pursuant to the terms of the Time Brokerage Agreement referenced in Section 33 hereof (the "TBA"), (2) with respect to any act or omission of Purchaser or its employees in the course of its activities and performance pursuant to terms of the TBA, or (3) with respect to any claim asserted after two (2) years following the Closing Date and unless the aggregate amount owed 31 by Seller to Purchaser pursuant to the foregoing clauses (i), (ii) and (iii) exceeds $100,000, in which event Seller shall be required to indemnify Purchaser for the entire amount owed. (b) If any claim for which Purchaser is entitled to indemnity is asserted against Purchaser by a third party, Purchaser shall promptly give Seller notice thereof and give Seller an opportunity to defend the same with counsel of Seller's choice (subject to the approval of Purchaser, not to be unreasonably withheld or delayed) at Seller's expense. Purchaser, at Seller's expense, shall provide reasonable cooperation in connection with such defense. In the event that Seller desires to compromise or settle any such claim, Purchaser shall have the right to consent to such settlement or compromise; provided, however, that if such compromise or settlement is for money damages only and will include a full release and discharge of Purchaser, and Purchaser withholds its consent to such compromise or settlement, Purchaser and Seller agree that (i) Seller's liability shall be limited to the amount of the proposed settlement and upon payment of such sum to Purchaser Seller shall thereupon be relieved of any further liability with respect to such claim, and (ii) from and after such date, Purchaser will undertake all legal costs and expenses in connection with any such claim. If Seller fails to defend any claim within a reasonable time, Purchaser shall be entitled to assume the defense thereof, and Seller shall be liable to Purchaser for its expenses reasonably incurred, including attorneys' fees and payment of any settlement amount or judgment. (c) As security for the indemnities set out in subparagraphs 14(a) and 14(b), Seller shall deposit in escrow with the Bank of America, NT&SA ("Escrow Agent") at the Closing the sum of One Million Dollars ($1,000,000) to be invested by the Escrow Agent from time to time in accordance with 32 the instructions of the Seller. From time to time, on not less than ten (10) days notice to Seller given at any time prior to two (2) years after the Closing Date, the Escrow Agent, at the application of the Purchaser, will apply all or any part of such sum to pay or provide for the payment of any item due Purchaser pursuant to paragraph 14(a); provided, however, that if, within such ten-day period, the Escrow Agent and the Purchaser shall receive notice from Seller or its representative questioning the propriety of any such proposed obligation, the Escrow Agent shall withhold payment until the claim is settled or adjudicated between Seller and Purchaser. Two (2) years after the Closing Date, such part, if any, of the sums then held by the Escrow Agent under this subparagraph as to which no notice shall have been given by Purchaser, shall be repaid to the Seller. If requested by Purchaser, the Seller will deliver to Purchaser and to Escrow Agent an agreement of indemnity in form satisfactory to Purchaser's counsel and to the Escrow Agent. (d) Purchaser hereby agrees to indemnify and hold Seller and its successors and assigns harmless from and against: (i) Claims, liabilities and obligations arising from the operation of the Stations on or after the Closing Date (or, if applicable, the TBA Date), including claims arising or required to be performed on or after the Closing Date (or, if applicable, the TBA Date) under any contract or instrument assumed by Purchaser hereunder; and (ii) Any and all damage or deficiency resulting from a material misrepresentation, breach of warranty or nonfulfillment of any agreement or obligation, assumed or required to be assumed by Purchaser under this Agreement, or 33 from a material misrepresentation in or omission from any certificate or other instrument furnished to Purchaser pursuant to this Agreement, or in connection with any of the transactions contemplated hereby; and (iii)Any and all actions, suits, proceedings, damages, assessments, judgments, costs and expenses, including reasonable attorneys' fees, incurred by Seller as a result of Purchaser's failure or refusal to defend or compromise any claim incident to the foregoing provisions. (e) Notwithstanding the foregoing, Purchaser shall not be required to indemnify Seller under the foregoing clauses (i), (ii), or (iii) as to any claim asserted after two (2) years following the Closing Date, and unless the aggregate amount owed by Purchaser to Seller pursuant to the foregoing clauses (i), (ii), and (iii) exceeds One Hundred Thousand Dollars ($100,000), in which event Purchaser shall be required to indemnify Seller for the entire amount owed. (f) If any claim covered by the foregoing indemnity is asserted against Seller by a third party, Seller shall notify Purchaser promptly and give Purchaser an opportunity to defend the same with counsel of Purchaser's choice (subject to the approval of Seller, not to be unreasonably withheld or delayed) at Purchaser's expense. Seller, at Purchaser's expense, shall provide reasonable cooperation in connection with such defense. In the event that Purchaser desires to compromise or settle any such claim and such compromise will adversely affect Seller, Seller shall have the right to consent to such settlement or compromise; provided, however, that if such compromise or settlement is for money damages only and will include a full release and discharge of Seller, and Seller withholds its consent to such 34 compromise or settlement, Purchaser and Seller agree that (i) Purchaser's liability shall be limited to the amount of the proposed settlement and upon payment of such sum to Seller Purchaser shall thereupon be relieved of any further liability with respect to such claim, and (ii) from and after such date, Seller will undertake all legal costs and expenses in connection with any such claims. If Purchaser fails to defend any claim within a reasonable time, Seller shall be entitled to assume the defense thereof, and Purchaser shall be liable to Seller for its expenses reasonably incurred, including attorneys' fees and payment of any settlement amount of judgment. (g) In the event either party shall default in its obligations hereunder, such party shall have a period not to exceed fifteen (15) days after notice thereof by the other party in which to cure said default. 15. BROKER'S FEE. ------------ Seller and Purchaser represent that the only broker involved in the transactions contemplated hereby is Star Media Group, Inc. representing Seller. Purchaser and Seller shall be solely liable for all fees, commissions or charges owing to their respective brokers. Except as hereinabove provided, each party represents and warrants to the other that it has not retained, and is not obligated to, any person or entity for brokerage, finder's fees or commissions or other similar charges resulting from or arising out of the transactions contemplated in this Agreement, and each party hereby indemnifies and holds the other party harmless from payment of any such fees, commissions or charges. 35 16. COVENANT NOT TO COMPETE. ----------------------- (a) Seller covenants and agrees that for a period of two (2) years after the Closing Date (or such period as allowed by law if less than two years), it will not, directly or indirectly, own, engage in, manage, operate, control or participate in the ownership, management, operation or control of, or be connected as a stockholder, director, officer, agency, partner, joint venturer, consultant or otherwise with, any radio broadcast station located in the Metro Rating Area for San Francisco, California, as that area is defined by Arbitron Rating Company. Notwithstanding the foregoing, ownership by Seller of not more than five percent (5%) of the stock of a company whose shares are publicly traded shall not constitute a breach of terms of this Section 16. (b) Seller further covenants and agrees that for a period of one year after the Closing Date Seller will not hire without Purchaser's consent, which consent shall not be unreasonably withheld, or solicit for employment any former employee of Seller who was offered employment by Purchaser and who either (i) declined to accept such employment or (ii) became an employee of Purchaser and thereafter voluntarily terminated such employment. (c) Seller and Purchaser agree that in the event Seller commits a breach of any of the provisions of this Section 16, Purchaser shall have the right and remedy to have the provisions of this Section 16 specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any such breach will cause immediate irreparable injury to Purchaser and that money damages will not provide an adequate remedy at law for any such breach or threatened breach. Such right and remedy shall be in addition to, and not in lieu of, any other rights and remedies including damages available to Purchaser or in equity. 36 (d) If any of the provisions of or covenants contained in this Section 16 are hereafter construed to be wholly or to any extent invalid or unenforceable in any jurisdiction, the same shall be deemed automatically modified to the minimum extent necessary to make such provision or covenant enforceable, and the same shall not affect the remainder of the provisions to the extent not invalid or unenforceable in such jurisdiction or the enforceability thereof without limitation in any other jurisdiction. 17. SELLER'S PERFORMANCE AT CLOSING. ------------------------------- At the closing hereunder, Seller shall: (a) Deliver to Purchaser an executed General Conveyance, Bill of Sale, Assignment and Assumption, substantially in the form of EXHIBIT "I" hereto, which General Conveyance, Bill of Sale, Assignment and Assumption shall include, but not be limited to, an assignment to Purchaser of (i) the licenses and all other authorizations listed on EXHIBIT "A," used in the operation of the Stations, transferring the same to Purchaser, (ii) good and marketable title to all tangible personal property described on EXHIBIT "B" hereof (subject to changes in the ordinary course of business since the date hereof), (iii) the contracts, leases and agreements described on EXHIBIT "C" hereof, (iv) the copyrights and service marks listed on EXHIBIT "E" hereof, and (v) all right, title and interest of Seller in and to the intangible assets, free and clear of all mortgages, liens, attachments, conditional sales contracts, claims or encumbrances of any kind except liens for ad valorem taxes not yet due and payable. -- ------- (b) Deliver to Purchaser at the Stations the files, records and logs referred to in Section 1(f) hereof. 37 (c) Deliver to Purchaser a certified copy of the resolutions of the Board of Directors of Seller authorizing the execution of this Agreement and the consummation of the transactions described herein. (d) Deliver to Purchaser the written opinion of Sandler & Rosen, dated as of the Closing Date, pursuant to the provisions of this Agreement. (e) Deliver to Purchaser the written opinion of Reed Smith Shaw & McClay, dated as of the Closing Date, pursuant to the provisions of this Agreement. (f) Deliver to Purchaser a certificate signed by a duly authorized officer of Seller and dated as of the Closing Date to the effect that all representations and warranties set forth in this Agreement shall be true and correct as of and as if made on the Closing Date and that, to Seller's knowledge, no event of default shall have occurred and be continuing on the Closing Date which, with lapse of time or giving of notice, or both, would constitute a default by Seller under this Agreement. (g) Deliver to Purchaser Uniform Commercial Code lien searches from San Francisco County, California and the California Secretary of State dated as of a date not more than five (5) days prior to the Closing Date and showing no Uniform Commercial Code, judgment, tax or other lien filings against the Purchased Assets, other than security interest or other filings which will be released at closing. (h) Deliver to Purchaser such other instruments and documents as may be reasonably requested by Purchaser to effectuate the transactions contemplated hereby. 38 18. PURCHASER'S PERFORMANCE AT CLOSING. ---------------------------------- At the closing hereunder, Purchaser shall: (a) Pay by wiring immediately available funds the monies payable at the closing. (b) Deliver to Seller an executed counterpart or the General Conveyance, Bill of Sale, Assignment and Assumption substantially in the form of EXHIBIT "I" hereto, and such other instruments as Seller may reasonably require evidencing Purchaser's assumption and agreement to perform all of the contracts and agreements assigned to it hereunder and evidencing Purchaser's acceptance and conveyance of title to the personal property and other assets assigned and conveyed to it hereunder. (c) Deliver to Seller a certified copy of the resolutions of Purchaser's Board of Directors authorizing the execution of this Agreement and the consummation of the transactions described herein. (d) Deliver to Seller the written opinion of Latham & Watkins dated as of the Closing Date, pursuant to the provisions of this Agreement. (e) Deliver to Seller a certificate signed by a duly authorized officer of Purchaser and dated as of the Closing Date to the effect that all representations and warranties set forth in this Agreement shall be true as of and as if made on the Closing Date and that, to Purchaser's knowledge, no event of default shall have occurred and be continuing on the Closing Date which, with lapse of time or giving of notice, or both, would constitute a default by Purchaser under this Agreement. 39 (f) Deliver to Seller such other instruments and documents as may be reasonably requested by Seller to effectuate the transactions contemplated hereby. 19. EVENTS OF TERMINATION; DISBURSEMENT OF DEPOSIT. ---------------------------------------------- (a) Failure to Close without Fault. In the event that (i) each of ------------------------------ the parties hereto shall have satisfied in full all of the obligations of such party under this Agreement which were to have been satisfied by such party prior to the Closing Date and shall not have breached any representation, warranty, covenant or agreement of such party contained in this Agreement, but (ii) the closing shall nevertheless fail to take place (without any fault on the part of any party) prior to the Termination Date because one or more conditions to the closing in Sections 7, 8, 9 and 10 hereof shall not have been satisfied or waived, this Agreement shall terminate, and the Deposit, together with any interest earned thereon, shall be returned to Purchaser. (b) RETENTION OF DEPOSIT IN ESCROW IF PURCHASER DEFAULTS. If the ---------------------------------------------------- conditions to closing specified in sections 9(a) and 10 hereof shall have been satisfied and either (i) Purchaser shall default in the performance of any of its material obligations or materially breach any of its representations, warranties, covenants or agreements hereunder and Seller shall have performed all of its material obligations and shall not have materially breached any of its representations, warranties, covenants or agreements hereunder, or (ii) (1) pursuant to the terms of this Agreement, Purchaser shall be obligated to purchase the assets and properties hereunder, (2) SELLER shall have duly satisfied each of the conditions of section 7 above to be satisfied by it (or, in the case of any such condition which is to be satisfied at the Closing, 40 shall have demonstrated a willingness and ability to satisfy such condition in the event the Closing were to take place), except to the extent that any failure to satisfy such condition was caused in any material respect by Purchaser, and (3) Purchaser shall nevertheless fail to purchase the assets and properties in accordance herewith, Seller shall have the right to terminate this Agreement, upon written notice to Purchaser (the "Termination Notice") and assert a claim against Purchaser for damages sustained by reason thereof, (the "Claims") in which event the Deposit, but not the interest earned thereon, shall be retained in escrow until Seller's claim has been adjudicated or resolved between the parties. If a final judgment is entered in favor of Seller in any action brought by Seller based on Purchaser's breach of this Agreement, the Deposit, with interest earned, or so much thereof as may be required to satisfy such judgment, shall be disbursed to Seller to be applied to satisfy such judgment; and the balance, if any, shall be returned to Purchaser. Should Seller fail to file an action to enforce its claim against Purchaser for damages sustained by reason of Purchaser's breach of the Agreement within six (6) months from the date of Seller's notice terminating the Agreement as hereinabove provided, the deposit shall be returned to Purchaser. (c) Return of Deposit to Purchaser. If the conditions to closing ------------------------------ specified in Sections 9(a) and 10 hereof shall have been satisfied and either (i) Seller shall default in the performance of its material obligations or materially breach any of its representations, warranties, covenants or agreements hereunder and Purchaser shall have performed all of its material obligations and shall not have materially breached any of its representations, warranties, covenants or agreements hereunder, or (ii) (1) pursuant to the terms of this Agreement, Seller shall be obligated 41 to sell the assets and properties hereunder to Purchaser, (2) Purchaser shall have duly satisfied each of the conditions of Section 8 above to be satisfied by it (or, in the case of any such condition which is to be satisfied at the closing, shall have demonstrated a willingness and ability to satisfy such condition in the event the closing were to take place), except to the extent that any failure to satisfy such condition was caused in any material respect by Seller, and (3) Seller shall nevertheless fail to sell the assets and properties to Purchaser in accordance herewith, Purchaser shall have the right to terminate this Agreement, upon written notice to Seller, and the Deposit, together with any interest earned thereon, shall forthwith be returned to Purchaser. (d) Mutual Agreement. This Agreement may be terminated at any time ---------------- by mutual agreement of Seller and Purchaser, in writing, and the Deposit, together with any interest earned thereon, shall be delivered in accordance with the mutual agreement of the parties. 20. SPECIFIC PERFORMANCE. -------------------- The parties recognize that if Seller refuses to close as and when required under the provisions of this Agreement, monetary damages will not be adequate to compensate Purchaser for its injury. Purchaser shall therefore be entitled, in addition to a right to collect money damages, to obtain specific performance of the terms of this Agreement. If any action is brought by Purchaser to enforce this Agreement, Seller shall waive the defense that there is an adequate remedy at law. 21. RISK OF LOSS. ------------ The risk of loss or damage to the Assets shall be upon Purchaser at all times prior to Closing. In the event of loss or damage, it shall be Purchaser's duty to 42 repair, replace and restore the lost or damaged property to its former condition; provided, however, that Seller shall turn over to Purchaser the proceeds, if any, of any insurance covering such loss or damage. 22. PROFESSIONAL FEES. ----------------- In the event of the bringing of an action or suit by a party hereto against the other party by reason of any breach of any of the covenants, agreements, or provisions on the part of the other party arising out of this Agreement, then, in that event, the prevailing party shall be entitled to have and recover of and from the other party, all costs and expenses of the action or suit, including actual attorney's fees, accounting and engineering fees, and any other professional fees resulting therefrom. 23. ASSET ACQUISITION STATEMENT. --------------------------- The parties shall each file Internal Revenue Service Form 8594 in a timely manner after the Closing Date and in accordance with the purchase price allocation determined in accordance with Section 2(a) hereof. 24. EXHIBITS AND SCHEDULES. ---------------------- All exhibits and schedules attached to this Agreement shall be deemed part of this Agreement and incorporated herein as if fully set forth herein. 25. ASSIGNMENTS; SUCCESSORS AND ASSIGNS. ----------------------------------- This Agreement shall not be assignable by either party without the consent of the other party. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their successors and permitted assigns. 43 26. CONSTRUCTION. ------------ This Agreement shall be construed and enforced in accordance with the laws of the State of California, excluding the choice of law rules thereof. 27. COUNTERPARTS. ------------ This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 28. NOTICES. ------- All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing (which shall include notice by telex or facsimile transmission) and shall be deemed to have been duly made and received when personally served, or when delivered by Federal Express or a similar overnight courier service, expenses prepaid, or, if sent by telex, graphic scanning or other facsimile communications equipment, delivered by such equipment, addressed as set forth below: (a) If to Purchaser, then to: Evergreen Media Corporation 433 East Las Colinas Boulevard, Suite 1140 Irving, Texas 75039 Attention: Scott K. Ginsburg Telecopier No.: (214) 869-8095 With a copy (which shall not constitute notice) to: Latham and Watkins 1001 Pennsylvania Avenue N.W., Suite 1200 Washington, D.C. 20004-2505 Attention: Eric L. Bernthal Telecopier No.: (202) 637-2201 44 (b) If to Seller, then to: THE BROWN ORGANIZATION 5700 Wilshire Boulevard, Suite 480 Los Angeles, California 90036 Attention: Mr. Michael J. Brown Telecopier No.: (213) 954-8940 With a copy (which shall not constitute notice) to: Sandler & Rosen 1801 Avenue of the Stars Suite 510 Gateway West Los Angeles, California 90067 Attention: Raymond C. Sandler, Esq. Telecopier No.: (310) 277-5954 Any party may alter the address to which communications are to be sent by giving notice of such change of address in conformity with the provisions of this Section providing for the giving of notice. 29. ADDITIONAL DOCUMENTS. -------------------- Prior to, on or subsequent to the Closing Date, each party to this Agreement shall, at the request of the other, furnish, execute and deliver such documents and instruments as the requesting party shall reasonably require as necessary or desirable to implement and consummate the transactions contemplated hereunder. 30. PARAGRAPH HEADINGS. ------------------ Paragraph headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any manner, or be deemed to interpret, in whole or part, any of the terms or provisions of this Agreement. 45 31. ENTIRE AGREEMENT. ---------------- This Agreement, together with the Exhibits and Schedules attached hereto, contains all of the terms agreed upon by the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties and may not be changed or terminated orally. No attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced. 32. EXPENSES. -------- Except as otherwise expressly provided in this Agreement, each party shall bear its own legal, accounting and other expenses in connection with the negotiation, preparation and consummation of this Agreement and the transactions contemplated hereby. 33. ATTORNEYS' FEES. --------------- In the event of a dispute between or among any of the parties hereto arising out of or related to this Agreement or the interpretation or enforcement of this Agreement, the prevailing party or parties shall be entitled to recover reasonable attorneys' fees, costs and expenses from the other party or parties. 34. CONFIDENTIALITY. --------------- Except as necessary for the consummation of the transactions contemplated hereby, each party hereto will keep confidential any information which is obtained from the other party in connection with the transactions contemplated hereby and which is not readily available to members of the general public, and will not use such information for any purpose other than in furtherance of the transactions contemplated hereby. In the event this Agreement is terminated and the purchase and sale contemplated hereby abandoned, each party will return to the other party all documents, work papers and other written material obtained by it in connection with the transactions contemplated hereby. 46 35. TIME BROKERAGE AGREEMENT. ------------------------ Simultaneously with the execution of this Agreement, Seller and Purchaser agree to enter into a Time Brokerage Agreement (the "TBA"), consistent with FCC rules and regulations, effective as of the first day of the month immediately following the termination or expiration of the waiting period under the HSR Act and continuing for the period prior to the Closing Date, providing for the operation of the Stations by Purchaser. If the parties enter into the TBA, neither party shall have any claim or right, including, without limitation, any right to terminate this Agreement, due to the inaccuracy of any representation or warranty, the breach of any covenant, or the failure of any condition resulting from the operation of the Stations by Purchaser under the TBA. IN WITNESS WHEREOF, the parties hereto have hereunto set their respective hands and seals as of the day and year first above written. PURCHASER: EVERGREEN MEDIA CORPORATION OF LOS ANGELES By:___________________________ Title:________________________ SELLER: THE BROWN ORGANIZATION By:___________________________ Title:________________________ 47 LIST OF EXHIBITS AND SCHEDULES ------------------------------ Exhibit A: FCC Licenses and Authorization Exhibit B: Assets Other Than Real Property Exhibit C: Contracts, Leases and Agreements Exhibit C-1: Contracts and Leases for which Consents to Transfer are required per Paragraph 7(g) Exhibit D: Trade Deals Exhibit E: Copyrights and Service Marks Exhibit F: Escrow Agreement Exhibit G: Required Consents Exhibit H: Form of FCC Counsel Opinion Exhibit I: General Conveyance, Bill of Sale, Assignment and Assumption Schedule 1: Financial Statements Schedule 2: Employees EX-23.1 4 INDEPENDENT AUDITORS CONSENT (BEASLEY) EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT ----------------------------- The Board of Directors Evergreen Media Corporation: We consent to incorporation by reference in the Registration Statements on Form S-3 (Nos. 33-93874 and 33-12453) and Form S-8 (Nos. 33-83124 and 333-04379) of Evergreen Media Corporation, Inc. of our report dated June 28, 1996, relating to the balance sheet of WDAS-AM/FM (station owned and operated by Beasley FM Acquisition Corp.) as of December 31, 1995 and the related statements of operations and retained earnings and cash flows for the year then ended, which report appears in the Form 8-K dated September 30, 1996 filed by Evergreen Media Corporation. KPMG Peat Marwick LLP Saint Petersburg, Florda September 30, 1996 EX-23.2 5 INDEPENDENT AUDITORS CONSENT (BROWN) EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT ----------------------------- The Board of Directors Evergreen Media Corporation We consent to incorporation by reference in the Registration Statements on Form S-3 (Nos. 33-93874 and 33-12453) and Form S-8 (Nos. 33-83124 and 333-04379) of Evergreen Media Corporation, Inc. of our report dated June 28, 1996, relating to the balance sheet of KKSF-FM/KDFC-FM and AM (A Division of the Brown Organization) as of December 31, 1995 and the related statements of operations and retained earnings and cash flows for the year then ended, which report appears in the Form 8-K dated September 30, 1996 filed by Evergreen Media Corporation. KPMG Peat Marwick LLP Dallas, Texas September 30, 1996 -----END PRIVACY-ENHANCED MESSAGE-----