<PAGE>
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)
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
WDAS-AM/FM
(STATION OWNED AND OPERATED BY
BEASLEY FM ACQUISITION CORP.)
Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1995 1996
------ ------------ ----------
(Unaudited)
<S> <C> <C>
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
======= ======
</TABLE>
See accompanying notes to financial statements.
A-2
<PAGE>
WDAS-AM/FM
(Station owned and operated by
Beasley FM Acquisition Corp.)
Statement of Earnings and Station Equity
(In thousands)
<TABLE>
<CAPTION>
Six months ended
Year ended ------------------
December 31, June 30, June 30,
1995 1995 1996
------------ -------- --------
(Unaudited)
<S> <C> <C> <C>
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
======= ===== ======
</TABLE>
See accompanying notes to financial statements.
A-3
<PAGE>
WDAS-AM/FM
(Station owned and operated by
Beasley FM Acquisition Corp.)
Statement of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Six months ended
Year ended ------------------
December 31, June 30, June 30,
1995 1995 1996
------------ -------- --------
(Unaudited)
<S> <C> <C> <C>
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) - -
======== ====== ======
</TABLE>
See accompanying notes to financial statements.
A-4
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
<S> <C>
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
======
</TABLE>
(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
<PAGE>
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:
<TABLE>
<CAPTION>
Debt
maturities
----------
<S> <C>
1996 $ -
1997 -
1998 7,377
1999 9,450
2000 9,450
Thereafter 32,200
-------
Total $58,477
=======
</TABLE>
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:
<TABLE>
<CAPTION>
<S> <C>
1996 $196
1997 158
----
$354
====
</TABLE>
(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
<PAGE>
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:
<TABLE>
<CAPTION>
Carrying Fair value
amount (a liability)
________ -------------
<S> <C> <C>
Interest rate swap agreement - $(86)
Interest rate cap agreements - -
</TABLE>
(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
<PAGE>
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
<PAGE>
KKSF-FM/KDFC-FM AND AM
(A Division Of The Brown Organization)
Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
Assets 1995 1996
------ ------------- -----------
(unaudited)
<S> <C> <C>
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
======= ======
</TABLE>
See accompanying notes to financial statements.
B-2
<PAGE>
KKSF-FM/KDFC-FM AND AM
(A Division Of The Brown Organization)
Statements of Operations and Division Equity
(Dollars in thousands)
<TABLE>
<CAPTION>
Six months
ended
Year ended June 30,
December 31, ---------------
1995 1995 1996
------------- ------ -------
<S> <C> <C> <C>
(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
======= ===== ======
</TABLE>
See accompanying notes to financial statements.
B-3
<PAGE>
KKSF-FM/KDFC-FM AND AM
(A Division Of The Brown Organization)
Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Six months
ended
Year ended June 30,
December 31, ----------------
1995 1995 1996
------------- ------- -------
(unaudited)
<S> <C> <C> <C>
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
======= ====== ======
</TABLE>
See accompanying notes to financial statements.
B-4
<PAGE>
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
<PAGE>
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
<PAGE>
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):
<TABLE>
<CAPTION>
<S> <C> <C>
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
=======
</TABLE>
(3) Intangible Assets
-----------------
Intangible assets is comprised of the following at December 31, 1995
(thousands of dollars):
<TABLE>
<CAPTION>
Net
Accumulated unamortized
KKSF-FM Acquisition Cost amortization portion
- ------------------- ------- ------------ -----------
<S> <C> <C> <C>
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
======= ===== =======
</TABLE>
(Continued)
B-7
<PAGE>
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
<PAGE>
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):
<TABLE>
<CAPTION>
<S> <C>
1996 $ 341
1997 353
1998 309
1999 367
2000 230
------
Total $1,600
======
</TABLE>
B-9
<PAGE>
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
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
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
</TABLE>
-iii-
<PAGE>
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-
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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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
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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.
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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
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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
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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.
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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
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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
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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.
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(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
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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.
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<PAGE>
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:
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(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.
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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
<PAGE>
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.
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(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;
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(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
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(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.
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(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
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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
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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
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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
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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
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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
