<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K/A
--------------
AMENDMENT NO. 2 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 30, 1997
-----------------------
FAIRCOM INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-15392 87-0394057
- ---------------------------- ----------- -------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
333 Glen Head Road, Old Brookville, New York 11545
-------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 676-2644
---------------------------
Not Applicable
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
This amended Report on Form 8-K/A is being filed to further amend a
Report on Form 8-K dated June 30, 1997 filed with the Commission on July 14,
1997, as amended by a Report on Form 8-K/A filed with the Commission on July
15, 1997. This Amendment No. 2 is filed to provide audited financial statements
of the business acquired and the pro forma financial information of the Company
reflecting the acquisition of the Stations. All defined terms used herein
shall have the meanings given to them in such previously filed reports.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
A. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
1. The audited balance sheets of Treasure Radio as of November 30,
1996 and 1995, and the related statements of income, partners' deficit and cash
flows for the years then ended, respectively, are included herein.
2. The unaudited balance sheets of Treasure Radio as of June 30, 1997
and 1996 and the related statements of income and cash flows for the six months
ended May 31, 1997 and 1996, are included herein.
B. PRO FORMA FINANCIAL INFORMATION.
The unaudited pro forma condensed consolidated statements of
operations of the Company, which assume the acquisition took place on January
1, 1996, for the year ended December 31, 1996 and the six months ended June 30,
1997, and the notes thereto, are included herein. The condensed consolidated
balance sheet of the Company as of June 30, 1997, which reflected the
acquisition of the Stations, has been previously filed as part of the Company's
Quarterly Report on Form 10-Q for the period then ended.
C. EXHIBITS.
2 Asset Purchase Agreement, dated May 20, 1997, by and between
Faircom Mansfield Inc. and Treasure Radio.
4.1 Form of Class A Convertible Subordinated Promissory Note.*
4.2 Form of Class B Convertible Subordinated Promissory Note.*
23 Consent of Kopperman & Wolf Co.
27 Financial Data Schedule.**
- --------------
* Exhibit previously filed as part of Form 8-K dated June 30, 1997 and filed
with the Commission on July 14, 1997.
** Exhibit previously filed as part of Quarterly Report on Form 10-Q for the
period ended June 30, 1997.
2
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES
LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1996 AND 1995
(See Independent Auditors' Report)
3
<PAGE>
K&W LOGO
INDEPENDENT AUDITORS' REPORT
Partners
Treasure Radio Associates
Limited Partnership
Cleveland, Ohio
We have audited the accompanying balance sheets of Treasure Radio
Associates Limited Partnership as of November 30, 1996 and 1995 and the
related statements of income, partners' deficit, and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits 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 audits provide 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 Treasure Radio Associates
Limited Partnership as of November 30, 1996 and 1995, and the results of its
operations and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ Kopperman & Wolf Co.
January 9, 1997
4
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET
NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS (Note 5)
Cash and cash equivalents............................................. $ 233,827 $ 332,174
Accounts receivable, net of allowance for doubtful accounts of
$15,000 for 1996 and 1995............................................ 265,353 257,909
Investments........................................................... 345,308 0
Prepaid expenses...................................................... 13,234 6,943
------------ -----------
TOTAL CURRENT ASSETS............................................... 857,722 597,026
PROPERTY AND EQUIPMENT--AT COST (Notes 3 and 5)
Land.................................................................. 160,713 160,713
Office furniture and equipment........................................ 316,017 303,441
Technical equipment................................................... 917,926 914,096
Buildings and antenna systems......................................... 1,265,008 1,246,781
Music, records and tapes.............................................. 295,116 295,116
Vehicles.............................................................. 15,421 15,421
------------ -----------
2,970,201 2,935,568
Less accumulated depreciation......................................... 2,020,508 1,855,542
------------ -----------
949,693 1,080,026
OTHER ASSETS (Note 5)
Radio station licenses, call letters and goodwill..................... 323,336 354,175
Loan fees............................................................. 48,981 29,845
------------ -----------
372,317 384,020
------------ -----------
$2,179,732 $2,061,072
============ ===========
</TABLE>
See Notes to the Financial Statements
5
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET (CONTINUED)
NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITES
Accounts payable--trade......................................... $ 11,409 $ 27,240
Accrued payroll and related taxes............................... 85,673 65,689
Current portion of long-term liabilities (Note 5)............... 343,822 241,495
Accrued interest................................................ 40,530 60,421
Advance payable--Interstate Management Consultants, Inc.
(Note 8)....................................................... 15,670 15,670
Accrued management fee (Note 8)................................. 39,900 39,900
Other accrued expenses.......................................... 29,078 13,183
------------- -------------
TOTAL CURRENT LIABILITIES.................................... 566,082 463,598
LONG-TERM LIABILITIES, Net of Current Portion (Note 5) .......... 2,816,463 3,151,566
COMMITMENTS AND CONTINGENCIES (Notes 3, 4, 5, 6 and 10)
PARTNERS' DEFICIT................................................ (1,202,813) (1,554,092)
------------- -------------
$ 2,179,732 $ 2,061,072
============= =============
</TABLE>
See Notes to the Financial Statements
6
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' DEFICIT
YEARS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Balance, Beginning $(1,554,092) $(1,689,791)
Net Income 351,279 135,699
-------------- --------------
Balance, Ending $(1,202,813) $(1,554,092)
============== ==============
</TABLE>
See Notes to the Financial Statements
7
<PAGE>
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TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF INCOME
YEARS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
BROADCAST REVENUES, NET OF AGENCY COMMISSIONS $2,256,075 $1,934,983
OPERATING EXPENSES
Administrative 450,466 395,120
Program 425,053 409,925
Sales 468,572 388,660
Technical 53,734 58,403
------------ ------------
Total Operating Expenses 1,397,825 1,252,108
------------ ------------
Operating Income 858,250 682,875
OTHER INCOME
Rental (note 6) 4,968 3,196
Miscellaneous 10,810 7,403
------------ ------------
15,778 10,599
OTHER EXPENSES
Interest 261,222 304,363
Depreciation 164,966 165,688
Amortization 66,561 57,724
Management fee (note 8) 30,000 30,000
------------ ------------
522,749 557,775
------------ ------------
NET INCOME $ 351,279 $ 135,699
============ ============
</TABLE>
See Notes to the Financial Statements
8
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $2,158,769 $1,839,543
Cash paid to employees (771,953) (688,963)
Cash paid for services and supplies (552,253) (502,524)
Interest paid (280,914) (275,995)
Rent and interest received 15,579 5,974
------------ ------------
Net Cash Provided by Operating Activities 569,228 378,035
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of investments (455,308) 0
Proceeds from redemption of investments 110,000 0
Payments for purchases of property and equipment (24,370) (13,426)
------------ ------------
Net Cash Used by Investing Activities (369,678) (13,426)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term liabilities - net (243,039) (179,467)
Payments for loan refinancing (54,858) 0
------------ ------------
Net Cash Used by Financing Activities (297,897) (179,467)
------------ ------------
(Decrease) Increase in Cash (98,347) 185,142
Cash and Cash Equivalents, Beginning 332,174 147,032
------------ ------------
Cash and Cash Equivalents, Ending $ 233,827 $ 332,174
============ ============
</TABLE>
(Continued)
See Notes to the Financial Statements
9
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $351,279 $135,699
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 164,966 165,688
Amortization 66,561 57,724
Barter transactions (595) 2,419
Changes in assets and liabilities:
Increase in accounts receivable (6,849) (36,548)
(Increase) decrease in prepaid expenses (6,291) 5,551
(Decrease) increase in accounts payable (15,831) 1,744
Increase in accrued payroll and related
taxes 19,984 18,366
(Decrease) increase in accrued interest (19,891) 28,368
Increase (decrease) in other accrued
expenses 15,895 (976)
---------- ----------
Net Cash Provided by Operations $569,228 $378,035
========== ==========
OTHER TRANSACTIONS NOT AFFECTING CASH:
Revenues recognized from barter activities $ 90,457 $ 64,697
========== ==========
Expenses recognized from barter activities $ 89,862 $ 67,116
========== ==========
Assets acquired from barter activity $ 0 $ 5,448
========== ==========
Decrease in barter receivables $ (595) $ (2,419)
========== ==========
Assets acquired under capital lease $ 10,263 $ 0
========== ==========
</TABLE>
See Notes to the Financial Statements
10
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 1--NATURE OF OPERATIONS
Treasure Radio Associates Limited Partnership (the Partnership) was
organized as an Ohio limited partnership on January 5, 1987, with Treasure
Radio, Inc. as its general partner. The Partnership operates both an AM radio
station, WMAN, and an FM radio station, WYHT, in Mansfield, Ohio.
WYHT-FM and WMAN-AM are currently operating under licenses from the
Federal Communications Commission that must be renewed prior to October 1,
2003.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Partnership are as follows:
Cash and Cash Equivalents--Included in cash and cash equivalents in 1995
is a certificate of deposit with a maturity of less than three months. In
1996, a highly liquid money market fund is also included in cash and cash
equivalents.
Accounts Receivable and Bad Debts--Provisions for bad debts on accounts
receivable are made in amounts required to maintain an adequate allowance to
cover potential losses. Accounts determined to be uncollectible during the
year are charged against this allowance or directly to bad debt expense in a
manner to maintain an adequate allowance. Bad debt expense was $23,932 and
$9,814 for the years ended November 30, 1996 and 1995, respectively.
Investments--Investments consist of three United States Treasury Notes
maturing in February, April and August 1997. Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Debt and Equity
Securities," requires that these investments be recorded at market value;
however, the difference between the cost and market value of these
investments is immaterial.
Depreciation--Depreciation of property and equipment is computed on the
straight-line method at rates based on the expected useful lives of the
assets, as follows:
<TABLE>
<CAPTION>
ASSETS LIFE
- ---------------------------------- ------------
<S> <C>
Office furniture and equipment 5 years
Technical equipment 10 years
Buildings and antenna systems 20 years
Music, records and tapes 5 years
Vehicles 3 years
</TABLE>
11
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Amortization--Amortization of other assets is computed on the
straight-line method at appropriate rates, based on the stated or expected
lives of the related assets, as follows:
<TABLE>
<CAPTION>
OTHER ASSETS LIFE
- ------------------------------------------------ ------------
<S> <C>
Radio station licenses, call letters and goodwill 20 years
Loan fees 7 years
</TABLE>
Barter Contracts--The Partnership provides commercial air time in exchange
for goods and services. All transactions are recorded based on the fair
market value of the goods and services received. Revenue is recognized when
the advertising is broadcast and the value of the goods and services is
recorded when they are received or used.
Taxes on Income--The individual partners are required to report their
share of the Partnership's taxable income or loss on their respective tax
returns. Therefore, no provision for taxes on income is made in the
accompanying financial statements (Note 7).
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 disclosures of contingent 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.
NOTE 3--ASSETS ACQUIRED BY CAPITAL LEASE
The Partnership leases various assets that have been capitalized in
accordance with Financial Accounting Standards Board Statement No. 13 (Note
5). Following is a schedule of the assets acquired under capital leases which
are included under property and equipment on the balance sheet.
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Office equipment $ 19,995 $ 9,732
Technical equipment 19,096 19,096
Buildings and antennas 384,465 384,465
---------- ---------
423,556 413,293
Less accumulated depreciation 192,435 168,330
---------- ---------
$231,121 $244,963
========== =========
</TABLE>
12
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 4--COVENANTS NOT TO COMPETE
As part of the purchase agreements for the radio stations, the Partnership
agreed to make specified future payments to the sellers in return for their
covenants not to compete. These payments were discounted at the Partnership's
incremental borrowing rate to determine the values of the intangible assets
and the related liabilities (Note 5) that were recorded on the balance sheet.
Both of the covenants were restructured during the year ended November 30,
1993. One of the covenants not to compete had an original term of five years
which expired May 8, 1992. The remaining unpaid obligation under this
non-compete agreement has been amended to postpone the quarterly installments
for a period of four years. The quarterly payments will resume on July 1,
1997 and continue through July, 2001 (Note 5). The other covenant not to
compete had a term of seven years which expired June 16, 1994. As discussed
in Note 5, modifications have been made to extend installment payments. The
monthly payments for the period June 20, 1993 through May 20, 1997 were
reduced to $1,667 and the final payment, due June 16, 1994, was replaced by
48 monthly installments of $3,092.
13
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 5--LONG-TERM LIABILITIES
Long term debt consists of a note payable to Star Bank, capital leases,
covenants and management fees (Note 9). The note payable to Star Bank is the
result of a refinancing of the Partnership's previous loan agreement with
Bank of America during the year ended November 30, 1996. Following is a
description of the Star Bank note payable, in accordance with the terms of
the agreement dated May 13, 1996:
The Star Bank note payable, initially amounting to $2,350,000, is an
eighty-four month term loan with payments commencing July 1, 1996 and ending
June 1, 2003. Monthly principal payments are due in the amount of $25,000
from July 1, 1996 through June 1, 1999, $29,167 from July 1, 1999 through
June 1, 2002 and $33,333 from July 1, 2002 through May 1, 2003. All remaining
principal, along with any accrued interest, is due June 1, 2003.
Interest is payable monthly on the outstanding loan balance at a rate of
9.05% per annum until May, 2000. At that time, the Partnership will be able
to select either the bank's "Prime Based Rate" or "Cost of Funds Based Rate"
on which the remaining interest payments will be based.
The Star Bank loan agreement contains various loan covenants including
assurance of the maintenance and continuance of the business, maintenance of
various financial ratios, reporting requirements and limitations on loans,
investments, partner distributions, capital expenditures, lease obligations
and management fees. The loan is collateralized by essentially all assets of
the Partnership and each limited partner's interest in the Partnership and is
guaranteed by the general partner of the Partnership (Note 8).
If prepaid, this loan is subject to a fee equal to the difference between
the net present value of the prepaid amount, including interest, and the
principal amount of the prepayment on the date of payment.
Following is a schedule of long-term debt:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Star Bank $2,225,000 $ 0
Bank of America--paid in full in May,
1996 with proceeds from Star Bank loan 0 2,418,314
Richland, Inc.--payments due under
covenant not to compete (Note 4);
effective interest rate 2.41%; per
modified agreement, monthly payments
of $1,667 beginning June 20, 1993
through May 20, 1997, and for the
period June 20, 1997 through May 20,
2001, monthly payments $3,092;
subordinated to the Star Bank debt 150,936 167,087
Capital Lease Obligation--Madison
Leasing--incurred in connection with
the acquisition of equipment;
effective interest rate at November
30, 1996 was 16.33%; payable in
monthly payments of $251, including
interest through February, 2001;
collateral, equipment 9,177 0
------------ -----------
Balance Carried Forward $2,385,113 $2,585,401
</TABLE>
14
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 5--LONG-TERM LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Balance Brought Forward $2,385,113 $2,585,401
Greater Mansfield Broadcasting Company--payments under covenant not
to compete (Note 4); effective interest rate, 3.18%; per modified
agreement, payments deferred until July 1, 1997 at which time
quarterly payments of $6,250 will be due for a period of four
years; secured by property and equipment; subordinated to the Star
Bank debt 91,362 88,507
Capital Lease Obligation--payments due under a capital lease of
transmitter sites; discounted at the Partnership's incremental
borrowing rate at date of acquisition, yielding an effective
interest rate of 7.045%; payable in monthly payments of $2,500
through May, 1997, monthly payments of $2,782 from June 7, 1997
through May 7, 2001 when a final payment of $265,000 is due 319,948 327,130
Capital Lease Obligation--Fuerst & Co.--incurred in connection with
the acquisition of equipment; effective interest rate at November
30, 1996 and 1995 was 14.18%; payable in monthly payments of $141,
including interest through June of 1997; collateral, equipment 942 2,387
Loan Facility Fee Payable--Bank of America--$75,000 fee payable at
maturity on the Bank of America loan (September 30, 1997); if loan
were prepaid by December 31, 1995, the fee due was $25,000; if loan
were prepaid by December 31, 1996, the fee due was $50,000; this
loan was prepaid in May, 1996, at which time the Partnership paid a
negotiated fee of $25,000 0 25,000
Interstate Management Consultants, Inc. (Note 8)--payments due under
a promissory note; interest rate, 10%; interest is due annually on
February 1st beginning in 1989; subordinated to the Star Bank debt 50,000 50,000
Capital Lease Obligation--Reserve Management, Inc.--incurred in
connection with the acquisition of equipment; effective interest
rate at November 30, 1996 and 1995 was 14.9%; payable in monthly
payments of $189, including interest through March, 1998;
collateral, equipment 2,720 4,436
------------ ------------
Balance Carried Forward $2,850,085 $3,082,861
</TABLE>
15
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 5--LONG-TERM LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Balance Brought Forward $2,850,085 $3,082,861
Interstate Management Consultants, Inc. (Note 8)--payments due
for unpaid management fees, reclassified to non-current since
debt is subordinated to the Star Bank debt; non-interest
bearing; unsecured 310,200 310,200
------------ ------------
Total Long-Term Liabilities 3,160,285 3,393,061
Less Current Portion 343,822 241,495
------------ ------------
Long-Term Liabilities, Net of Current Portion $2,816,463 $3,151,566
============ ============
</TABLE>
Following is a schedule of the maturities of long-term liabilities,
including capital lease obligations as of November 30, 1996:
<TABLE>
<CAPTION>
PRINCIPAL
YEARS ENDING PAYMENTS FUTURE MINIMUM MANAGEMENT
NOVEMBER 30, ON NOTES LEASE PAYMENTS FEES
- -------------------------------------- ------------ -------------- ------------
<S> <C> <C> <C>
1997 $ 327,000 $ 37,910 $ 0
1998 356,870 37,154 0
1999 379,268 36,401 0
2000 410,044 36,401 0
2001 389,959 280,018 0
Thereafter 654,157 0 310,200
------------ -------------- ------------
427,884
Less amounts representing interest and
maintenance fees 95,097
--------------
Total notes payable $2,517,298
============
Present value of net lease payments $332,787
==============
Accrued management fees $310,200
============
Total Long-Term Liabilities $3,160,285
============
</TABLE>
16
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 6--COMMITMENTS AND CONTINGENCIES
As part of the original purchase on May 8, 1987, the Partnership also
acquired the leases of two houses. As of November 30, 1996, both of these
houses are being subleased under month-to-month leases. The net rental income
for 1996 and 1995 under these leases amounted to $4,967 and $3,196,
respectively. There are no future minimum rents due under these arrangements.
NOTE 7--TAXABLE INCOME
The individual partners are required to report their share of the
Partnership's taxable income on their respective tax returns. Following is a
reconciliation of the Partnership's net income for financial reporting
purposes to its taxable income for 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Net Income for Financial Reporting $351,279 $135,699
Permanent Differences:
Non-deductible amortization 30,838 30,838
Other 3,777 2,878
---------- ----------
34,615 33,716
Timing Differences:
Depreciation differences 84,910 81,575
Real estate taxes accrued but not paid 200 100
Accrued vacation pay 1,704 (1,471)
Allowance for doubtful accounts 0 2,000
Accrued compensation 0 (7,360)
Accrued interest 5,000 5,000
Accrued commissions 1,184 (471)
Capital lease differences (895) 0
---------- ----------
92,103 79,373
---------- ----------
Taxable Income $477,997 $248,788
========== ==========
</TABLE>
17
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 8--RELATED PARTY TRANSACTIONS
Treasure Radio, Inc. is the sole general partner of the Partnership, and
has a 60.5% interest in the Partnership. Treasure Radio, Inc. is a
wholly-owned subsidiary of Interstate Management Consultants, Inc.
(Interstate).
Interstate provides management services to the Partnership. In return, the
Partnership has agreed to pay a management fee to Interstate equal to 15% of
the Partnership's net income before the management fee, depreciation,
amortization, interest expense and income taxes. The parties, in order to
comply with stipulations of the bank agreements, agreed to a reduced
management fee of $30,000 for 1996 and 1995 which was paid in each of those
years.
Interstate also paid organization and start-up costs amounting to $57,835
on behalf of the Partnership. During 1987, the Partnership repaid $42,165
leaving a balance due to Interstate of $15,670.
The sole shareholder of Interstate is an attorney who is associated with a
law firm that provides legal services to the Partnership. Amounts incurred
for services provided by attorneys of this law firm, other than the sole
shareholder (for whose services no charge was made), for 1996 and 1995
totaled $17,688 and $4,361, respectively. Of the $17,688 incurred in 1996,
$13,182 was capitalized and is being amortized in connection with the
refinancing of the Partnership's loan agreement (Note 5).
The sole shareholder of Interstate is also the owner of another company
with which the Partnership has a capital lease agreement. This lease
agreement has a term of five years, and expires in 1997 (Note 5).
During the year ended November 30, 1988, Interstate loaned the Partnership
an additional $50,000 (Note 5).
NOTE 9--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value under Statement of Financial Accounting Standards No.
107, Disclosures about Fair Value of Financial Instruments.
CASH, ACCOUNTS RECEIVABLE, INVESTMENTS AND PREPAID EXPENSES--The carrying
amount approximates fair value because of the short maturity of those
instruments.
ADVANCE PAYABLE, ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES--The carrying
amount approximates fair value because of the short maturity of those
instruments.
LOAN PAYABLE, BANK--the carrying amount approximates fair value because
the interest rate charged approximates current market rates.
NOTE PAYABLE INTERSTATE MANAGEMENT CONSULTANTS, INC.--The carrying amount
approximates fair value because the interest rate being charged approximates
the Partnership's incremental borrowing rate.
18
<PAGE>
K&W LOGO
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 9--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
COVENANTS NOT TO COMPETE--The carrying amounts of the Richland
Incorporated and Greater Mansfield Broadcasting Company covenants not to
compete do not approximate fair value because the interest rates implicit in
these agreements are 2.41% and 3.18%, respectively (Note 5). In order to
estimate the fair value of these covenants, the expected future cash flows
have been discounted at the Partnership's incremental borrowing rate.
The fair values of the covenants not to compete which do not approximate
carrying value are as follows:
<TABLE>
<CAPTION>
NOVEMBER 30,
1996
---------------------
CARRYING FAIR
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Payments due under covenants not to compete:
Richland, Inc. $150,936 $129,080
Greater Mansfield Broadcasting Company 91,362 81,722
---------- ----------
$242,298 $210,802
========== ==========
</TABLE>
It is not practicable to estimate the fair value of a liability
representing unpaid management fees in the amount of $310,200. This
liability, as discussed in Note 5, is non-interest bearing and unsecured. The
liability is also subordinate to the Star Bank loan agreement and would
probably be subordinate to any future senior debt. Because of this
subordination, it is impracticable to estimate a future repayment schedule
and therefore a term over which future cash flows can be discounted.
NOTE 10--SALE OF BUSINESS
On January 23, 1997, the Partnership entered into an Asset Purchase
Agreement to sell substantially all of the assets of the radio stations,
excluding cash and accounts receivable. The sales price is $7,350,000,
subject to customary contingencies and post closing adjustments. An escrow
deposit of $400,000 was made by the buyer upon execution of the Agreement.
Closing of the sale is contingent upon Federal Communications Commission
approval. The balance of the purchase price is due at closing, except for a
$200,000 eighteen month holdback.
Concurrent with the closing, non-compete agreements will be executed by
Treasure Radio, Inc. (general partner) and the sole shareholder of Interstate
Management, Inc. (the owner of Treasure Radio, Inc.).
19
<PAGE>
Treasure Radio Associates Limited Partnership
Condensed Balance Sheets
May 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 200,765 $ 387,986
Accounts receivable, net of allowance for doubtful accounts 287,735 316,410
Investments 490,529 --
Prepaid expenses and other current assets 3,348 7,468
----------- -----------
Total current assets 982,377 711,864
----------- -----------
Property and equipment 868,321 1,010,401
----------- -----------
Other assets:
Radio station, licenses, call letters and goodwill 307,918 338,755
Loan fees 45,050 35,499
----------- -----------
352,968 374,254
----------- -----------
$ 2,203,666 $ 2,096,519
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Accounts payable - trade $ 13,252 $ 43,570
Accrued payroll and related taxes 82,587 68,997
Current portion of long-term liabilities 300,000 300,000
Accrued interest 26,250 33,485
Other current liabilities 43,259 56,219
----------- -----------
Total current liabilities 465,348 502,271
Long-term liabilities, net of current portion 2,695,636 2,993,887
Partners' deficit (957,318) (1,399,639)
----------- -----------
$ 2,203,666 $ 2,096,519
=========== ===========
</TABLE>
20
<PAGE>
Treasure Radio Associates Limited Partnership
Condensed Statements of Operations
Six Months Ended May 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net broadcasting revenues $ 1,160,579 $ 1,059,546
----------- -----------
Operating expenses:
Programming and technical expenses 263,868 251,212
Selling, general and administrative expenses 450,148 398,075
Depreciation and amortization 102,449 111,061
Corporate expenses 15,000 15,000
----------- -----------
Total operating expenses 831,465 775,348
----------- -----------
Income from operations 329,114 284,198
Interest expense (98,096) (135,698)
Other income 14,477 5,953
----------- -----------
Income before taxes on income 245,495 154,453
Taxes on income -- --
----------- -----------
Net income $ 245,495 $ 154,453
=========== ===========
</TABLE>
21
<PAGE>
Treasure Radio Associates Limited Partnership
Condensed Statements of Cash Flows
Six Months Ended May 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 245,495 $ 154,453
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 102,449 111,061
Changes in assets and liabilities:
Increase in accounts receivable (22,382) (58,501)
Decrease (increase) in prepaid expenses 9,886 (525)
Increase in accounts payable 1,843 16,330
(Decrease) increase in accrued payroll and related taxes (3,086) 3,308
Decrease in accrued interest (14,280) (26,936)
Decrease in other current liabilities (41,389) (12,534)
--------- ---------
Net cash provided by operating activities 278,536 186,656
--------- ---------
Cash flows from investing activities:
Payments for purchases of investments (380,583) --
Proceeds from redemption of investments 235,362 --
Payments for purchases of property and equipment (1,728) (12,575)
--------- ---------
Net cash used in investing activities (146,949) (12,575)
--------- ---------
Cash flows from financing activities:
Principal payments on long-term liabilities (164,649) (99,174)
Payments for loan refinancing -- (19,095)
--------- ---------
Net cash used in financing activities (164,649) (118,269)
--------- ---------
(Decrease) increase in cash and cash equivalents (33,062) 55,812
Cash and cash equivalents, beginning 233,827 332,174
--------- ---------
Cash and cash equivalents, ending $ 200,765 $ 387,986
========= =========
</TABLE>
22
<PAGE>
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTE TO INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for completed financial
statements. In the opinion of management, the statements include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results for the interim periods. The results of
operations for any interim period are not necessarily indicative of the results
for a full year.
It is suggested that these interim financial statements be read in
conjunction with the financial statements and notes thereto included in the
Treasure Radio Associates Limited Partnership's audited financial statements
for the fiscal years ended November 30, 1996 and 1995.
23
<PAGE>
FAIRCOM INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
INTRODUCTION
As of June 30, 1997, Faircom Inc. (the "Company"), through a
wholly-owned subsidiary, Faircom Mansfield Inc. ("Faircom Mansfield"), acquired
the assets and operations of two commercial radio stations, WMAN-AM and
WYHT-FM, both located in Mansfield, Ohio (the "Stations"), from Treasure Radio
Associates Limited Partnership ("Treasure Radio") and its principals. The
acquisition was consummated pursuant to the terms of an Asset Purchase
Agreement, made as of May 20, 1997 (the "Agreement"), by and among the Company,
Treasure Radio and Harrison M. Fuerst, a principal of Treasure Radio. Under the
terms of the Agreement, Treasure Radio received aggregate consideration of
$7,350,000 in cash. In addition, the Company paid $300,000 in cash to Mr.
Fuerst in consideration of a five year non-compete agreement. The Stations were
acquired using a portion of the funds provided by the financing activities of
the Company described below.
As of June 30, 1997, the Company completed the sale of $10,000,000
aggregate principal amount of its convertible subordinated promissory notes due
July 1, 2002 (the "Notes"). The Notes consist of Class A and Class B
convertible subordinated promissory notes, each in the aggregate principal
amount of $5,000,000. The Class A Notes are convertible into 11,242,500 shares
of the Company's common stock, $.01 par value (the "Common Stock"), and the
Class B Notes into 7,769,500 shares of Common Stock. The aggregate 19,012,000
of such shares on full conversion of the Notes would represent 67.1% of the
Company's outstanding Common Stock on a fully diluted and adjusted basis. The
Notes bear interest at 7% per annum, compounded quarterly, payable at the
maturity of the Notes. The Notes have not been registered under the Securities
Act of 1933, as amended, and may not be offered or sold in the United States
absent registration under the Act or an applicable exemption from registration.
The proceeds from the sale of the Notes were used (i) to purchase for
$6,400,000 from Citicorp Venture Capital, Ltd. ("Citicorp") the Company's 8.65%
Senior Convertible Note ("Convertible Note") in the principal amount of
$181,630 due December 1, 2004 and the Company's 10% Senior Exchangeable Note
("Exchangeable Note") in the principal amount of $500,000 due December 1, 2004,
representing all of Citicorp's interests in the Company, and (ii) to pay a
portion of the purchase price for the acquisition of the Stations and the legal
and other fees and expenses of such acquisition and related financing.
The Company also refinanced its existing senior secured term loan
credit facility with AT&T Commercial Finance Corporation ("AT&T"). As part of
the refinancing, the Company increased its outstanding debt to AT&T from
$7,371,000 to $12,500,000. The additional borrowing was used for the
acquisition of the Stations and related expenses. The term loan matures July 1,
2002 with optional renewal by the Company under certain circumstances for an
additional five years. Interest on the term loan initially is at the rate of
4.50% over 30 day commercial paper rates.
The acquisition, which was accounted for as a purchase whereby the
assets acquired were recorded at fair values, was previously reported in the
balance sheet included in the Company's Form 10-Q filed for the quarterly
period ended June 30, 1997. Accordingly, no pro forma balance sheet is included
in this Form 8-K filing.
The accompanying condensed consolidated statements of operations
illustrate the effects of the acquisition ("Pro Forma") on the Company's
results of operations, and are based on the historical statements of operations
of the Company and Treasure Radio for the year ended December 31, 1996 and
November 30, 1996, respectively, and the six months ended June 30, 1997 and May
31, 1997, respectively. The pro forma condensed consolidated statements of
operations assume the acquisition took place on January 1, 1996.
The pro forma condensed consolidated statements of operations may not
be indicative of the actual results of the acquisition, and should be read in
connection with the historical financial statements of the Company and Treasure
Radio.
24
<PAGE>
Faircom Inc.
Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Faircom Treasure Radio
Year Ended Year Ended
December 31, 1996 November 30, 1996 Adjustments Pro Forma
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net broadcasting revenues $ 4,873,954 $ 2,256,075 $ 7,130,029
--------------------------------- -------------
Operating expenses:
Programming and technical expenses 1,218,160 478,787 1,696,947
Selling, general and administrative expenses 1,775,059 919,038 2,694,097
Depreciation and amortization 321,263 231,527 510,473 (1) 1,063,263
Corporate expenses 336,643 30,000 366,643
--------------------------------- -------------
Total operating expenses 3,651,125 1,659,352 5,820,950
--------------------------------- -------------
Income from operations 1,222,829 596,723 1,309,079
Interest expense (698,643) (261,222) (446,250)(2) (1,406,115)
Other income 7,346 15,778 23,124
Provision for appraisal right (215,000) - (215,000)
--------------------------------- -------------
Income (loss) before taxes on income and extraordinary items 316,532 351,279 (288,912)
Taxes on income 37,692 - - (3) 37,692
--------------------------------- -------------
Income (loss) before extraordinary items $ 278,840 $ 351,279 $ (326,604)
================================= =============
Income (loss) before extraordinary items per common share $ 0.04 $ (0.04)
============= =============
Weighted average number of shares outstanding 7,378,199 7,378,199
============= =============
</TABLE>
25
<PAGE>
Faircom Inc.
Pro Forma Condensed Consolidated Statement of Operations
Six Months Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Faircom Treasure Radio
Six Months Ended Six Months Ended
June 30, 1997 May 31, 1997 Adjustments Pro Forma
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net broadcasting revenues $ 2,158,259 $ 1,160,579 $ 3,318,838
---------------------------------- -------------
Operating expenses:
Programming and technical expenses 616,961 263,868 880,829
Selling, general and administrative expenses 864,459 450,148 1,314,607
Depreciation and amortization 157,248 102,449 268,551 (1) 528,248
Corporate expenses 210,214 15,000 225,214
---------------------------------- -------------
Total operating expenses 1,848,882 831,465 2,948,898
---------------------------------- -------------
Income from operations 309,377 329,114 369,940
Interest expense (350,275) (98,096) (255,640)(2) (704,011)
Other income 1,964 14,477 16,441
---------------------------------- -------------
Income (loss) before taxes on income and extraordinary items (38,934) 245,495 (317,630)
Taxes on income 33,542 - - (3) 33,542
---------------------------------- -------------
Income (loss) before extraordinary items $ (72,476) $ 245,495 $ (351,172)
================================== =============
Income (loss) before extraordinary items per common share $ (0.01) $ (0.05)
============= =============
Weighted average number of shares outstanding 7,378,199 7,378,199
============= =============
</TABLE>
26
<PAGE>
Faircom Inc.
Notes to Pro Forma Condensed Consolidated Statements of Operations
(Unaudited)
Note A - Basis of Presentation
Reference is made to the "Introduction" at page 24.
Note B - Pro Forma Adjustments
<TABLE>
<CAPTION>
Range of
Estimated Year Ended Six Months Ended
Useful Lives December 31, 1996 June 30, 1997
-------------- ----------------- ----------------
<S> <C> <C> <C>
(1) Adjustments to depreciation and amortization
attributable to the excess of the cost of assets
acquired over their historical carrying values:
Property and equipment 3-12 years $ 220,034 $ 109,400
Intangible assets 5-15 years 269,439 148,651
Deferred financing costs 5 years 21,000 10,500
---------- ----------
$ 510,473 $ 268,551
========== ==========
(2) Adjustments to interest expense attributable to
financing of acquisition of radio stations:
Interest on $5,306,653 senior secured term
notes at 10.1% $ 535,972 $ 267,986
Interest on $2,450,000 convertible subordinated
promissory notes at 7% 171,500 85,750
Eliminate Treasure Radio historical interest (261,222) (98,096)
---------- ----------
$ 446,250 $ 255,640
========== ==========
The impact of a 1/8% change in interest rates would
be to reduce income before taxes on income by
approximately $9,700 for the year ended December 31,
1996 and $4,800 for the six months ended June 30,
1997. The above adjustments to interest expense do
not reflect interest on the portion of the proceeds
from the convertible subordinated promissory notes,
described in the "Introduction" at page 24, which
were not used to finance the acquisition of the radio
stations. In addition, the extraordinary loss arising
from the purchase of the Citicorp notes, previously
reported in the Company's Form 10-Q filed for the
quarterly period ended June 30, 1997, is not
reflected in the accompanying pro forma condensed
consolidated statements of operations.
(3) Adjustments to taxes on income:
Taxes on Treasure Radio historical income,
at Faircom's effective rate $ 41,830 $ 29,233
Tax effects of pro forma adjustments, at
Faircom's effective rate (113,925) (62,420)
Increase in valuation allowance against net
operating loss carryforwards 72,095 33,187
---------- ----------
$ - $ -
========== ==========
Treasure Radio was a partnership and, accordingly,
taxes on income were paid by the individual partners.
The state in which Treasure Radio operates does not
permit the carryback of net operating losses. Due to
the uncertainty as to future recoverability, a 100%
valuation allowance has been provided against all
deferred tax assets. State minimum taxes have not
been provided for due to immateriality.
</TABLE>
27
<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.
FAIRCOM, INC.
Date: September 12, 1997 By: /s/ Joel M. Fairman
--------------------------
Name: Joel M. Fairman
Title: President
28
<PAGE>
ASSET PURCHASE AGREEMENT
This AGREEMENT for the sale and purchase of assets is made as of May
20, 1997, by and between TREASURE RADIO ASSOCIATES L.P. ("Seller"), an Ohio
limited partnership, and FAIRCOM MANSFIELD INC. ("Buyer"), a Delaware
corporation.
W-I-T-N-E-S-S-E-T-H:
WHEREAS, Seller is the owner, operator and licensee of commercial
radio stations WMAN(AM) and WYHT(FM), licensed to Mansfield, Ohio ("Stations"),
pursuant to proper authorizations issued by the Federal Communications
Commission, and
WHEREAS, Seller and Buyer have negotiated for the sale and purchase of
certain property, assets and rights used in the business and operation of the
Stations pursuant to the terms and conditions hereof; and
WHEREAS, the Commission has granted its consent to the terms and
conditions hereof, and assignment of the Licenses contemplated herein;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and understandings contained herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1. ACCOUNTS RECEIVABLE. The term "Accounts Receivable" means the
rights of Seller to payment for services performed by Seller for advertising
and commercial clientele of the Stations prior to the Closing Date as reflected
on the billing records of Seller.
1.2. ACQUISITION. The term "Acquisition" shall mean any merger,
acquisition, consolidation or similar transaction involving, or any purchase
of, all or any portion of the Property to be Sold or any securities of Seller.
1.3. ACQUISITION PROPOSAL. The term "Acquisition Proposal" shall mean
any inquiries, or the making or implementation of any proposal or offer with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any portion of, the Property to be Sold or
any securities of Seller.
<PAGE>
1.4. ACT. The terms "Act" or "the Act" shall mean and refer to the
Communications Act of 1934, as amended.
1.5. BEST KNOWLEDGE. The term "Best Knowledge," e.g. "to the Best of
Seller's Knowledge," shall mean with respect to the subject matter to which
Best Knowledge is asserted and with respect to Seller, the actual knowledge of
either Harrison M. Fuerst, Robert A. Fuerst, William H. Albers, Diana L. Coon
or the General Sales Manager for the Stations; and with respect to Buyer the
actual knowledge of any of Buyer's principals.
1.6. BROADCAST CASH FLOW. The term "Broadcast Cash Flow" shall mean
Net Broadcast Revenues less Operating Expenses, before provision for interest
expense, depreciation and amortization and management fees, using accrual
accounting and prepared in accordance with generally accepted accounting
principles.
1.7. BROKER. The term "Broker" shall mean Blackburn & Co., Inc., 201
North Union Street, Suite 340, Alexandria, VA 22314.
1.8. BUSINESS DAY. The term "Business Day" shall mean any calendar
day, excluding Saturdays and Sundays, on which federally chartered banks in the
city of Mansfield, Ohio, are regularly open for business.
1.9. CLAIMANT. Whether the Seller or Buyer, the term "Claimant" shall
mean the Party to this Agreement against which any claim or liability may be
asserted by a third party which would give rise to a claim for indemnification
under the provisions of this Agreement by a Party to this Agreement.
1.10. CLOSING. "Closing" means the meeting of the Seller and Buyer,
and their attorneys and agents, as may be necessary, on the Closing Date, as
herein defined, at which the Seller and Buyer consummate and effectuate this
Agreement and the transactions, conveyances, assignments, covenants and other
matters contemplated by this Agreement.
1.10.1. CLOSE. "Close" means the act and actions by Seller and/or
Buyer in ultimate consummation and completion of the transactions contemplated
by this Agreement.
1.11. CLOSING DATE. "Closing Date" means Thursday, May 29, 1997, with
a pre-closing meeting to occur on Wednesday, May 28, 1997, the Commission's
consent to the assignment of Licenses to Buyer having become a Final Order.
Buyer shall have the option, upon providing written notice to Seller not later
than 2:00 PM (Eastern Time) on May 23, 1997, to postpone the Closing Date, but
in no event later than July 1, 1997. In the event that the Closing Date is
re-scheduled for a Business Day other than May 29, 1997, then a pre-closing
shall occur on the Business Day immediately preceding the Closing Date. In the
event the Closing Date is re-scheduled, as provided here, then Buyer shall give
Seller written notice of the Closing Date at least five (5) Business Days prior
to the re-scheduled Closing Date. For the purposes of this Agreement, the
Closing shall be construed to have occurred as of 12:01 AM, Eastern Daylight
Time, on the Closing Date.
<PAGE>
1.12. CLOSING PLACE. "Closing Place" shall mean the offices of Kohrman
Jackson & Krantz P.L.L., 20th Floor, One Cleveland Center, 1375 East Ninth
Street, Cleveland, Ohio, or such other place as shall be mutually agreed upon
in writing by Seller and Buyer. At the election of Buyer and Seller, mutually
agreed in writing, the Closing may be performed by mail and/or courier service.
1.13. CODE. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.14. COLLECTION PERIOD. The term "Collection Period" shall mean a
period of one hundred twenty (120) days following the Closing Date during which
Buyer shall act as agent for Seller for the collection of accounts receivable
owing to Seller, as provided in ARTICLE V of this Agreement.
1.15. COMMISSION. The term "Commission" shall mean the Federal
Communications Commission.
1.16. COMMITMENTS. The term "Commitments" shall mean title insurance
policy commitments to ensure Buyer's interest in the Real Property.
1.17. ENVIRONMENTAL INVESTIGATION DEMAND. The term "Environmental
Investigation Demand" shall mean a determination and written demand to Seller
by Buyer, based upon Buyer's Phase I environmental assessment, that Buyer has
conditioned any obligation of Buyer with respect to Closing upon Seller
conducting a Phase II or Phase III environmental assessment. If reasonably
available to Buyer, Buyer shall include in the Environmental Investigation
Demand any cost estimates that Buyer has received for the Phase II or Phase III
environmental assessments.
1.18. ENVIRONMENTAL LAWS. The term "Environmental Laws" shall mean the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9801 et seq., the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Section 6901 et seq., the Clean Water Act, 22 U.S.C.
Section 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.,
and any other applicable federal, state and local laws, statutes, rules or
regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials
(hereinafter defined).
1.19. ESCROW AGENT. The term "Escrow Agent" shall mean Blackburn &
Co., Inc., 201 North Union Street, Suite 340, Alexandria, VA 22314.
1.20. ESCROW STAKE. The term "Escrow Stake" shall mean the sum of FOUR
HUNDRED THOUSAND and NO/100 DOLLARS ($400,000.00) to be delivered by Buyer to
Escrow Agent, plus the Supplemental Escrow Stake, as well as any interest
earned thereon during the period the Escrow Stake is held in escrow by the
Escrow Agent.
1.21. FCC. The term "FCC" shall mean the Federal Communications
Commission.
<PAGE>
1.22. FCC APPLICATION. The term "FCC Application" shall mean that
(those) certain application(s) (FCC Form(s) 314) submitted to the FCC upon and
by which Buyer and Seller have obtained consent of the FCC to the assignment of
the Licenses for the Stations from Seller to Buyer.
1.23. FINAL ORDER. For the purposes of this Agreement, "Final Order"
means the action of the Commission granting its consent to the FCC Application,
said action being no longer subject to administrative or judicial review,
reconsideration or appeal. The Final Order occurred as of April 29, 1997.
1.24. HAZARDOUS MATERIALS. The term "Hazardous Materials" shall mean
toxic materials, hazardous wastes, hazardous substances, pollutants or
contaminants, asbestos or asbestos-related products, PCB's, petroleum, crude
oil or any fraction or distillate thereof (as such terms are defined in any
applicable federal, state or local laws, ordinances, rules and regulations, and
including any other terms which are or may be used in any applicable
environmental laws to define prohibited or regulated substances).
1.25. INDEMNITOR. The term "Indemnitor" shall mean the Party to this
Agreement, not the Claimant, that in the event of a claim or liability asserted
by a third party against the Claimant, which would give rise to a claim for
indemnification under the provisions of this Agreement, that may, at its own
expense and upon written notice to the Claimant, compromise or defend such
claim.
1.26. IMMEDIATELY AVAILABLE FUNDS. "Immediately Available Funds" means
cash, a certified bank cashier's check, or funds immediately available by wire
transfer, all in, or payable in, the valid currency and legal tender of the
United States.
1.27. LIABILITIES. The term "Liabilities" shall mean all obligations,
debts, or liabilities of, or claims against, Seller.
1.28. LEASED PREMISES. The term "Leased Premises" shall mean the Real
Property leased by Seller under the leases listed in EXHIBIT A.
1.29. LICENSES. "Licenses" mean the licenses and permits issued by the
Commission for the Stations and all associated auxiliary broadcast stations,
all as listed in EXHIBIT B, attached hereto.
1.30. MATERIAL ADVERSE. The terms "Material Adverse," "Materially
Adverse," "Materially Adversely" or "Material" shall mean or refer to any event
or occurrence that remains uncured as of the Closing Date and that
necessitates, calls for, requires or otherwise causes (i) the expenditure of
TEN THOUSAND and NO/100 DOLLARS ($10,000.00) or more to meet, satisfy or cure
an obligation, liability, debt, claim, fine or forfeiture involving the
Property to be Sold, or (ii) a restriction, imposition upon, or cessation of
the operating authority or Licenses of the Stations. A "Material Adverse
Change" in the Stations' Business shall mean a decrease in the Stations'
cumulative monthly Net Broadcast Revenues of more than fifteen percent (15%)
for the period after November 30, 1996 to the Closing Date, as compared to the
comparable cumulative monthly period for the fiscal year ended November
<PAGE>
30, 1996, or, as disclosed by the audited financial statements for the fiscal
year ended November 30, 1996 Net Broadcast Revenues of less than TWO MILLION
ONE HUNDRED FIFTY THOUSAND and NO/100 DOLLARS ($2,150,000.00) or Broadcast Cash
Flow of less than EIGHT HUNDRED FIFTY THOUSAND and NO/100 DOLLARS
($850,000.00).
1.31. MCPHERSON STREET BUILDINGS. The term "McPherson Street
Buildings" shall mean only the (i) two (2) houses that are used as rental
properties and (ii) the former WCLW studio building, all located on the Real
Property that is used by Seller as the transmitter site for the Stations.
1.32. NOTICE OF INTENTION. The term "Notice of Intention" shall mean a
determination by Seller, after receipt from Buyer of Buyer's Environmental
Investigation Demand, that Seller does not wish to accept the condition of
performing a Phase II or Phase III environmental assessment as a condition of
Closing, and accordingly that Seller intends to elect to terminate this
Agreement.
1.33. OWNED PROPERTY. The term "Owned Property" shall mean the Real
Property described on EXHIBIT A to which Seller has fee simple title and which
is owned by Seller, as well as Leased Premises that will be conveyed in fee by
Seller, or which Seller will cause to be conveyed, to Buyer at the Closing.
1.34. OPERATING EXPENSES AND NET BROADCAST REVENUES. The terms
"Operating Expenses" and "Net Broadcast Revenues" shall mean the expenses and
revenues, net of agency commissions, solely arising from Seller's broadcasting
operations, defined in accordance with generally accepted accounting principles
and excluding any expenses or revenues from any Trade-Out Agreement.
1.35. PARTY. The term "Party" or "Parties" shall mean and refer to the
Buyer and Seller.
1.36. PERMITTED ENCUMBRANCES. The term "Permitted Encumbrances" shall
mean any encumbrances reflected in EXHIBIT F, hereto, or any reports or surveys
ordered respecting any of the Real Property, to which Buyer does not object.
Easements in favor of public utilities shall be Permitted Encumbrances.
1.37. PROPERTY TO BE SOLD. "Property to be Sold" means the following
tangible and intangible assets, agreements, contracts, leases, Licenses, and
business property of Seller, including such acquired between the date hereof
and the Closing Date:
1.37.1. AUTHORIZATIONS. All of Seller's rights in and to (i)
the call letters WMAN(AM) and WYHT(FM), and (ii) all licenses, permits
or authorizations for or used in connection with the operation of the
Stations, including the licenses and any easements and rights of way;
1.37.2. CONTRACTS. The contracts, agreements and leases and
legally binding contractual rights, written or oral (including any
option to purchase, upon no less favorable terms than are presently
extended to Seller, which accompanies any lease)
<PAGE>
relating to the operation of the Stations which are described in
EXHIBIT C, attached hereto;
1.37.3. EXPERIENCE RATING. The experience rating of Seller
under the laws of the State of Ohio with reference to unemployment
compensation, to the extent that such can be transferred;
1.37.4. FILES. Such of the files, records and logs of Seller
relating to the business and operation of the Stations, including all
engineering data and files relating to the Stations, as Buyer may
reasonably require, including all contracts to be assigned hereunder
(but all of the foregoing shall thereafter for a period of three [3]
years following the Closing Date be available for inspection and
duplication by Seller at its expense, upon request, during normal
business hours);
1.37.5. FRANCHISES. Any and all franchises, materials,
supplies, easements, rights-of-way, permits and consents, if any,
relating to, used or useful in, or intended to be used in the business
and operation of the Stations, either now owned, possessed, or in
effect or hereafter acquired prior to Closing Date;
1.37.6. GOOD WILL. The good will of the Stations;
1.37.7. INTELLECTUAL PROPERTIES; MARKET RESEARCH;
MEMORABILIA. All radio programming and programming material of
whatever form or nature (whether recorded on tape or any other
substance or intended for live performance, whether intended for radio
broadcast or any other medium and whether completed or in production),
technical information and engineering data, news and advertising
studies and consultants' reports, music libraries, jingles and
promotional material used in or relating to the Stations, public
inspection files, logs, engineering records, machinery and equipment
warranties, maps, computer disks and tapes, plans, diagrams,
blueprints, schematics, Commission applications and filings, all
records pertaining to the Stations and maintained by Seller pursuant
to the Rules and Regulations of the FCC, all research and marketing
materials pertaining to Stations' Business, including, but not limited
to books, reports, presentations, audience surveys or research, client
lists, analyses, consultant reports, marketing presentations, relevant
correspondence, records, and ledgers memorabilia and awards, sales
books and records of the Stations, including mailing lists and
customer lists, trade secrets, know-how and other proprietary or
confidential information used or useful in or relating to the
Stations' Business;
1.37.8. MISCELLANEOUS ASSETS. Any other tangible or
intangible assets, rights or properties of any kind or nature not
otherwise described or provided for, and now or hereafter owned or
used by Seller in the Stations' Business;
1.37.9. PREPAID ITEMS. All pre-paid items on the Closing
Date which relate to the Stations;
1.37.10. REAL PROPERTY. All of the existing real property,
including all improvements, structures and appurtenances thereto used
or useful in the operation of
<PAGE>
the Stations including, without limitation, Owned Property and Leased
Premises, all as described and identified in EXHIBIT A, hereto, it
being agreed that Seller shall acquire the Leased Premises prior to
the Closing Date or shall cause the Leased Premises to be conveyed
directly to Buyer on the Closing Date, solely at Seller's expense,
for conveyance to Buyer free and clear of all Liabilities;
1.37.11. TANGIBLE PERSONAL PROPERTY. All Tangible Personal
Property, assets and equipment used or useful in the operation of the
Stations including, without limitation, the tangible property listed
in the Inventory identified as EXHIBIT D, and attached hereto;
1.37.12. TIME SALES CONTRACTS. All contracts for the sale
for cash of broadcast time on the Stations on or after the Closing
Date, provided that said contracts shall have been entered into in the
normal course of business;
1.37.13. TRADEMARKS. All of the right, title and interest of
Seller in and to all trademarks, trade names, service marks,
franchises, copyrights, including registrations and applications for
registrations, jingles, slogans, logos, permits, property rights and
interests, computer programs and program rights or other materials
owned by Seller and used or useful in the operation of the Stations;
1.37.14. MANUFACTURERS' WARRANTIES. All of Seller's rights
under manufacturers' and vendors' warranties relating to items
included in the Property to be Sold and all similar rights against
third parties relating to items included in the Property to be Sold;
and
1.37.15. OTHER PROPERTY. Such other assets, properties,
interests and rights owned by Seller that are used or useful in
connection with the operation of the Stations or that are located as
of the Closing Date on the Real Property described in EXHIBIT A.
1.37.16. EXCLUSIONS. It is understood that the Property to
be Sold does not include any other assets of Seller, including but not
limited to:
1.37.16.1. CASH. The Property to be Sold does not
include Seller's cash, cash equivalents, bank accounts,
prepaid deposits, certificates of deposit, Treasury Bills,
stocks, bonds or similar investments in existence on the
Closing Date;
1.37.16.2. ACCOUNTS RECEIVABLE. All Accounts
Receivable;
1.37.16.3. EMPLOYEE BENEFIT PLANS. All employee
benefit plans and assets thereof;
1.37.16.4. EXPIRED CONTRACTS. All contracts that
are terminated in accordance with the terms and provisions
of this Agreement or have expired prior to the Closing Date
in the ordinary course of business;
1.37.16.5. LOANS. All loans and loan agreements;
<PAGE>
1.37.16.6. CONSUMED PROPERTY. All Tangible
Personal Property disposed of or consumed in the ordinary
course of business between the date of this Agreement and
the Closing Date;
1.37.16.7. CONTRACTS NOT ASSUMED. The leases,
purchase orders, agreements and contracts related to the
operation of the Stations which are not among the Contracts
to be assumed by Buyer hereunder;
1.37.16.8. SELLER'S CAUSES OF ACTION. Seller's
rights, claims or causes of action against third parties
related to the assets, properties, or Stations' Business
which may arise in connection with the discharge by Seller
of the liabilities and obligations of the Stations which are
not expressly assumed by Buyer hereunder; and
1.37.16.9. SELLER'S CORPORATE RECORDS. Any
"corporate" minutes, seals, records, stock books or books of
account of Seller, it being understood that said books of
account shall be available to Buyer for inspection and
duplication at Buyer's expense during normal business hours.
1.38. PROPRIETARY INFORMATION. The term "Proprietary Information"
shall mean, but shall not be limited to, any data (including financial data),
lists of actual or potential customers or suppliers, business, marketing,
sales, pricing or advertising plans, policies, practices or information,
directly or indirectly relating to the Stations, the Buyer or Seller, or the
Buyer's or Seller's respective officers, directors, stockholders and
affiliates, which is not generally known to the public through legitimate
origins.
1.39. PURCHASE PRICE. The term "Purchase Price" shall have the meaning
ascribed to it in SECTION 4.1 and its subparts.
1.40. RULES AND REGULATIONS. The term "Rules and Regulations" shall
mean the rules of the FCC as set forth in Volume 47 of the Code of Federal
Regulations, as well as such other policies of the Commission, as required or
permitted by the Act, whether contained in the Code of Federal Regulations, or
not, that apply to the Stations.
1.41. STATIONS. The term "Stations" shall mean commercial stations
WMAN(AM) and WYHT(FM), licensed to Mansfield, Ohio.
1.42. STATIONS' BUSINESS. The term "Stations' Business" shall mean the
day-to-day business, sales and general and broadcast operations of the
Stations, as well as any activities of the Seller, the Stations or the
Stations' employees or agents, that, directly or indirectly, are designed,
intended or planned to (i) promote the Stations or (ii) generate or stimulate
revenues, income and/or audience for the Stations.
1.43. SUPPLEMENTAL ESCROW DEPOSIT. The term "Supplemental Escrow
Deposit shall have the meaning ascribed to it in SECTION 4.1.1.1.
1.44. SURVEYOR'S CERTIFICATE. The term "Surveyor's Certificate" shall
mean such certification or other document as may be required from a
professional surveyor in order for
<PAGE>
a title company to issue the title insurance policy required to be delivered
to Buyer at the Closing.
1.45. TITLES AND THE SURVEYS. The term "Titles and the Surveys" as
used in SECTION 9.9 shall mean (i) the commitments for ALTA title insurance
policies with respect to the Real Property; and (ii) such ground boundary
surveys of the Real Property, as may be required in order for a title company
to issue the title insurance policy required to be delivered to Buyer at the
Closing.
1.46. TRADE-OUT AGREEMENT. The term "Trade-Out Agreement" shall mean
any agreement or arrangement for the sale of broadcast time for which payment
is to be made in whole or in part other than in cash.
ARTICLE II
REQUIREMENT OF PRIOR COMMISSION
APPROVAL; CONTROL OF THE STATIONS
2.1. COMMISSION CONSENT. Notwithstanding anything to the contrary, the
assignment of the Licenses to Buyer is subject to the prior written consent and
approval of the Commission, which has been obtained.
2.2. CONTROL OF STATIONS. Between the date of this Agreement and the
Closing Date, Buyer will not directly or indirectly control, supervise, or
direct, or attempt to control, supervise, or direct the operation of the
Stations, but such operation, including complete control and supervision of all
programs, employees and Stations' policies, shall be the sole responsibility of
Seller.
ARTICLE III
TRANSFER OF PROPERTY TO BE SOLD
3.1. CONVEYANCES. On the terms and subject to the conditions set forth
in this Agreement, the Seller agrees to sell, assign, transfer and convey to
Buyer and Buyer agrees to purchase on the Closing Date the Property to be Sold,
free and clear of all debts, liens, security interests, claims, encumbrances or
other liabilities, except as may be otherwise provided for in this Agreement.
3.2. LIABILITIES; EXPRESS ASSUMPTION ONLY. Buyer shall assume only
those obligations under such contracts, leases, and agreements listed and
described in EXHIBITS A or C or those specifically consented to by Buyer in
writing. The Buyer and Seller further agree that all Liabilities of Seller
shall remain the Liabilities of the Seller and the Buyer will not assume, nor
be required to assume, any Liabilities of the Seller.
3.3. ASSUMPTION. Subject to the proration provisions of ARTICLE XIV
hereof, Buyer shall assume and undertake to pay, satisfy or discharge only the
obligations and commitments of Seller arising after the Closing Date under the
contracts included in the Property to be Sold.
<PAGE>
ARTICLE IV
PURCHASE PRICE; ESCROW AGENT AND CONDITIONS; HOLDBACK AGREEMENT
4.1. PURCHASE PRICE. The Purchase Price for the Property to be Sold,
in the following amounts and times under the stated conditions, shall be as
follows: SEVEN MILLION THREE HUNDRED FIFTY THOUSAND and NO/100 DOLLARS
($7,350,000.00). The Purchase Price shall be paid as follows:
4.1.1. ESCROW STAKE UPON EXECUTION OF AGREEMENT. FOUR
HUNDRED THOUSAND and NO/100 DOLLARS ($400,000.00) delivered by Buyer
to Escrow Agent simultaneously with the execution of this Agreement
and paid in the form of Immediately Available Funds. The Escrow Stake
forthwith shall be deposited by Escrow Agent in an interest-bearing
account, and on the Closing Date the Escrow Stake, less any accrued
and unpaid interest through the Closing Date, shall be applied toward
the Purchase Price for the Stations;
4.1.1.1. SUPPLEMENTAL ESCROW STAKE. In the event
that Buyer, at Buyer's election, extends the Closing Date to
a date later than May 29, 1997, then on May 23, 1997, Buyer
shall cause a wire transfer, with confirmation to occur by
4:00 PM (Eastern Time) on May 23, 1997, of Immediately
Available Funds for deposit with Escrow Agent of an
additional ONE HUNDRED THOUSAND and NO/100 DOLLARS
($100,000.00) (the "Supplemental Escrow Stake), that shall
be added by Escrow Agent to the Escrow Stake.
4.1.2. PAYMENT AT CLOSING. On Closing Date Buyer shall pay
to Seller, in addition to the Escrow Stake (less all accrued interest)
to be delivered by Escrow Agent, Immediately Available Funds in an
amount that when added to the Escrow Stake will equal SEVEN MILLION
THREE HUNDRED FIFTY THOUSAND and NO/100 DOLLARS ($7,350,000.00), plus
or minus any adjustment to be made pursuant to SECTION 5.1 and ARTICLE
XIV, hereof, as the balance of the Purchase Price.
4.2. ADJUSTMENT TO PURCHASE PRICE. In the event that the Broadcast
Cash Flow, as determined by Seller's audited financial statements for the
fiscal year ended November 30, 1996, shall be less than EIGHT HUNDRED FIFTY
THOUSAND and NO/100 DOLLARS ($850,000.00), then the Purchase Price shall be
reduced by an aggregate amount equal to the product of (i) the amount that the
Broadcast Cash Flow is less than EIGHT HUNDRED FIFTY THOUSAND and NO/100
DOLLARS ($850,000.00) multiplied by (ii) Nine (9.0).
4.3. ALLOCATION OF PAYMENTS. Buyer and, Seller and Harrison M. Fuerst
each agree to allocate the Purchase Price in accordance with the respective
fair market values of the Property to be Sold, the goodwill being purchased and
sold and the Non-Compete Agreements provided for herein, in accordance with the
requirements of Section 1060 of the Code. Buyer and Seller and Harrison M.
Fuerst, each further agrees to file its federal income tax returns and its
other tax returns reflecting such allocation. The payments described in
SECTION 4.1, and its subparts, shall be allocated among the assets as specified
in EXHIBIT K.
<PAGE>
4.3.1. TAX IMPLICATIONS OF ALLOCATION. The parties will use
their best efforts to agree upon an allocation of the Purchase Price
among the Property to be Sold in accordance with Section 1060 of the
Code, and the Treasury Regulations thereunder, in any event, prior to
the Closing Date. Should the parties be unable to agree to the
allocation by the Closing Date, Buyer, at Buyer's sole expense, shall
cause an independent nationally recognized accounting firm or
appraiser selected by Buyer to prepare a schedule allocating the
Purchase Price among the Property to be Sold. The allocation shall be
reasonably satisfactory to Seller, Buyer and Harrison M. Fuerst.
Seller, Buyer and Harrison M. Fuerst agree that, after such allocation
shall be agreed upon, (i) Seller, Buyer and Harrison M. Fuerst shall
use such allocation for all purposes related to the valuation of the
Property to be Sold, including, without limitation, in connection with
any federal, state, county or local tax returns filed after such
allocation shall be agreed upon, and (ii) unless required to do so in
accordance with a "determination" as defined in Section 1313(a) (1) of
the Code, neither Seller, Buyer nor Harrison M. Fuerst shall take any
position in any tax return, tax proceeding, tax audit or otherwise
that is inconsistent with such allocation.
4.4. ESCROW CONDITIONS. The Escrow Stake, deposited with the Escrow
Agent pursuant to the terms and conditions hereof, shall be paid on Closing
Date by the Escrow Agent to the Seller, and when paid to the Seller shall be
credited against the Purchase Price. Any accrued and unpaid interest thereon
through the Closing Date shall be paid at Closing to Buyer. In the event of
termination under SECTIONS 6.4.2, 15.1.3, 21.2 or 21.3 hereof, the Escrow Agent
will repay to Buyer the entire deposited sum plus unpaid interest accrued to
date of such dispersal.
4.5. ESCROW AGENT. It is mutually agreed and understood that Escrow
Agent is acting solely and only as escrow agent at the request of Buyer and
Seller, pursuant to the terms and conditions of that certain Escrow Agreement
appended hereto as EXHIBIT E.
4.6. HOLDBACK AGREEMENT. A Holdback Agreement substantially in the
form attached as EXHIBIT G shall be executed at Closing which will provide
that, at Closing, the sum of TWO HUNDRED THOUSAND and NO/100 DOLLARS
($200,000.00) (the "Holdback Amount") shall remain in Escrow following the
Closing Date for the term of the survival of warranties as specified in ARTICLE
XVI. The Holdback Agreement shall, in general, provide that if no claims by
Buyer for indemnification from Seller pursuant to the indemnification
provisions contained in this Agreement and the Holdback Agreement are made by
Buyer during that period, the Holdback Amount and all accrued interest shall be
released and delivered to Seller; if claims are made against the Holdback
Amount by Buyer, the Escrow Agent shall not release or disburse any funds from
the Holdback Amount unless directed to do so by a joint written directive from
Buyer and Seller, or by order of a court of competent jurisdiction.
4.7. OTHER CONSIDERATION. On Closing Date Buyer shall pay to (i)
Seller, in addition to the Purchase Price, the sum of ONE and NO/100 DOLLARS
($1.00) in consideration of the Non-Compete Agreement to be undertaken and
performed by Seller and Treasure Radio, Inc., the General Partner of the
Seller, as referred to in ARTICLE XVII; and to (ii) Harrison
<PAGE>
M. Fuerst the sum of THREE HUNDRED THOUSAND and NO/100 DOLLARS ($300,000.00) in
consideration of the Non-Compete Agreement to be undertaken and performed by
Harrison M. Fuerst, also as referred to in ARTICLE XVII.
ARTICLE V
ACCOUNTS RECEIVABLE
5.1. ACCOUNTS RECEIVABLE. All accounts receivable from broadcasts of
the Stations which occurred prior to and on the Closing Date to 11:59 PM shall
belong to Seller, and from broadcasts which occur thereafter shall belong to
Buyer. In the event that Seller shall have received prior to Closing any
payments under contracts to be assumed by Buyer at Closing, whether as an
advance, deposit or otherwise, which relate to the operation of the Stations
after the Closing Date, such payments shall be deemed a part of the Property to
be Sold and an amount equal to the aggregate of such payments shall be paid
over by Seller to Buyer on the Closing Date.
5.2. BUYER'S COLLECTION OF ACCOUNTS RECEIVABLE. Buyer agrees for the
Collection Period to act as agent for Seller for the collection of Accounts
Receivable owing to Seller on account of broadcasts on or prior to the Closing
Date. Seller shall furnish to Buyer at Closing a list of said Accounts
Receivable, the amounts due and the applicable sales and agency commissions.
Buyer shall collect such Accounts Receivable without commission or
compensation, and Buyer shall forward to Seller the balance of such Accounts
Receivable, after providing for applicable sales and agency commissions, every
thirty (30) days during the Collection Period. Buyer shall not, without consent
of Seller, compromise or settle for less than full value any such Accounts
Receivable. Buyer shall not incur any liability as the result of failure to
collect said Accounts Receivable and shall not be required to institute suit to
collect, but will exercise its best efforts to collect said Accounts
Receivable. Seller will not, without the written consent and approval of Buyer,
make any direct solicitation for the payment of said receivables until the
Collection Period has ended. Any Accounts Receivable owing to Seller which are
not collected within the Collection Period shall be delivered back to Seller.
It is understood and agreed that during the Collection Period all moneys
collected from advertisers indebted to Seller shall first be applied, as
provided herein, toward the payment of the Accounts Receivable owing to Seller.
If any such advertiser shall, in good faith, dispute the amount Seller claims
is owed to it, Buyer shall promptly so notify Seller in writing and return such
Accounts Receivable to Seller who without further permission from Buyer may
collect such account. Upon notification and return to Seller of any account as
herein provided, Buyer thereafter may deal with such advertiser as if it were
not indebted to Seller and without the obligation of applying funds
subsequently received from such advertiser to the account of Seller; provided,
however, that any payments of Accounts Receivable received by Buyer after the
Collection Period shall be promptly remitted to Seller. All payments made to
Seller hereunder shall be net of applicable sales and agency commissions.
<PAGE>
ARTICLE VI
SELLER'S REPRESENTATIONS AND WARRANTIES
6.0. PREAMBLE. Seller represents, warrants, covenants and agrees as
follows:
6.1. ORGANIZATION AND STANDING. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Ohio and has full power and authority to carry on the business now being
conducted by it.
6.2. AUTHORIZATION. Seller has full power and authority to enter into
this Agreement, including all supporting documentation, and the execution,
delivery and consummation of this Agreement have been duly authorized by all
necessary actions on its part. This Agreement constitutes a valid and binding
obligation of Seller enforceable against it in accordance with its terms,
except as limited by laws affecting creditors' rights or equitable principles
generally.
6.3. FINANCIAL INFORMATION. Concurrently delivered to Buyer by Seller
and initialed by the parties are independently audited balance sheets and
income statements of the Seller as of and for each of the three fiscal years
beginning December 1, 1992, and ended November 30, 1995. Additionally, Buyer
shall deliver to Seller no later than March 10, 1997, independently audited
accrual financial statements for the fiscal year ended November 30, 1996. All
such financial statements shall consist of the operations of the Stations
during each of such fiscal years. Each of such audited financial statements,
balance sheets and/or income statements will have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, will be correct and fairly present the
financial condition and results of operations of the Stations as of the date
and for the period indicated.
6.4. TITLE TO PROPERTIES. Seller has, or will have, good and
marketable title to all of the Real Property, including Owned Property and
Leased Premises, listed in EXHIBIT A, none of which is, or will be, subject to
any security interest, mortgage, pledge, lien, conditional sales agreement or
other encumbrance or charge of any nature whatsoever, except as listed in
EXHIBIT F. Without material omission, all of the Tangible Personal Property
contained in the Property to be Sold, used or useful in the operation of the
Stations, as of the date hereof, are listed in EXHIBIT D. Except as listed in
EXHIBIT F, Seller has good title to all the Tangible Personal Property, none of
which, as of the Closing Date, shall be subject to any security interest,
pledge, lien, conditional sales agreement or other encumbrance or charge of any
nature whatsoever. All Tangible Personal Property used in the operation of the
Stations, without material exception, is now and on the Closing Date will be in
good operating condition and repair, reasonable wear and tear excepted. Except
as set forth in EXHIBIT F, all items of transmitting and studio equipment
included in the Tangible Personal Property have been maintained in a manner
consistent with generally accepted standards of good engineering practice, and
will permit the Stations and any of their auxiliary broadcast stations to
operate in all material respects in accordance with the terms of the FCC
Licenses, the Rules and Regulations, and all other applicable federal, state,
and local statues, ordinances, rules and regulations.
<PAGE>
6.4.1. REAL PROPERTY. EXHIBIT A contains descriptions of all
Owned Property or Leased Premises owned or held by Seller and used or
held for use in connection with the Stations' Business and operations
of the Stations and leases or licenses or other rights to possession
of any Real Property so used or held. The leases listed in EXHIBIT A,
hereto, constitute all the Real Property leases to which Seller is a
party (either as lessor or lessee) which are material and required or
useful in the conduct of the Stations' Business as it is presently
being conducted. True and complete copies of such leases and all
amendments thereto and modifications thereof are included with or
appended to EXHIBIT A. Seller has, or will convey, good and marketable
title to all the Owned Property listed in EXHIBIT A, free and clear of
all liens, claims, and encumbrances, except for liens to be released
at Closing. With respect to each lease for Leased Premises, except as
otherwise disclosed in EXHIBIT F, hereto, (i) the leases are in full
force and effect, and are valid, binding and enforceable in accordance
with their respective terms, (ii) all accrued and currently payable
rents and other payments required by such leases have been paid, (iii)
neither Seller nor any other party is in default in any respect under
any such leases and no notice of default or termination has been given
or received, nor are there any present disputes or claims with respect
to offsets or defenses, and (iv) neither Seller nor any other party
has violated any term or condition under any such lease in any
material respect. Except as set forth in EXHIBIT F, hereto, no
third-party consent or approval is required for the assignment of any
such lease to Buyer, or for the consummation of the transactions
contemplated herein. To the extent that any third-party consent or
approval is required, such consent or approval shall be provided by
Seller to Buyer prior to the Closing Date.
6.4.2. ENCUMBRANCES. Seller shall convey to Buyer at Closing
valid, marketable and insurable fee interest in the Owned Property,
subject only to Permitted Encumbrances. EXHIBIT F includes a listing
of all encumbrances and exceptions to title either (i) known to Seller
relating to the Owned Property or (ii) which are expected to be
included as exceptions in any title policy issued to Buyer. Within
fifteen (15) Business Days after the execution of this Agreement,
Buyer shall order a title report and such survey(s) as the title
reporting company may require to issue its policy on each item of
Owned Property. Within ten (10) days after receipt of each such report
or survey by Buyer, Buyer shall deliver a copy to Seller and, to the
extent any exception other than those shown on EXHIBIT F are
referenced, Buyer shall notify Seller in writing of all such new
exceptions (other than such items as relate to Buyer or are in Buyer's
control), to which Buyer objects. With respect to the items listed in
EXHIBIT F, such items shall not be considered as Permitted
Encumbrances until Buyer has had the opportunity to review and approve
the content of any recorded easements, covenants, restrictions or
agreements covering any portion of the Real Property, which approval
shall not be unreasonably withheld. It is specifically understood that
it shall be reasonable for the Buyer to object to such recorded
instruments if it is determined that such instruments have been
violated or if the same prevent the Real Property from being used for
its present uses, and that otherwise said exceptions shall be
approved. Upon receipt of such notice, Seller shall take reasonable
action to remove, correct, cure or satisfy any exception other than a
Permitted Encumbrance. Seller shall not be obligated to bring any
action or proceeding or otherwise incur any
<PAGE>
cost to render title deliverable in accordance with this Agreement,
except Seller shall be required to cure title objections which can be
cured by the payment of liquidated sums and represent existing
monetary obligations (such as a judgment against Seller) and shall be
required to satisfy any mortgages encumbering the Owned Property. In
the event that Seller determines that it is unable to remove, correct,
or cure any of the unacceptable encumbrances upon the exercise of
reasonable efforts, which determination shall be made within thirty
(30) days of the receipt of Buyer's objection(s), Seller shall notify
Buyer of such in writing, and Buyer shall have the right at its sole
option either (i) to terminate this Agreement, or (ii) to accept such
encumbrances as Permitted Encumbrances, thereby waiving any rights
against Seller with respect thereto. Said election shall be made by
Buyer within ten (10) days following Buyer's receipt of Seller's
written notice. Should Buyer fail to notify Seller within the ten (10)
day period provided by the preceding sentence, then the absence of
such notice shall be deemed and construed as Buyer's election to
accept any such encumbrances, pursuant to this clause numbered (ii) in
the second sentence immediately preceding this sentence.
6.4.3. REAL PROPERTY ASSURANCE. Except as set forth in
EXHIBIT F, there are no pending or, to the Best of Seller's Knowledge,
contemplated condemnation or eminent domain proceedings that may
affect the Real Property. To Seller's Best Knowledge, Seller's use and
occupancy of the Real Property comply in all material respects with
all regulations, codes, ordinances, and statutes of all applicable
governmental authorities, including without limitation all
Environmental Laws and sanitary regulations, occupational safety and
health regulations, and electrical codes. To the Best of Seller's
Knowledge, except with respect to the McPherson Street Buildings,
there are no Material structural defects in the buildings, structures,
and improvements located on the Owned Property or Leased Premises nor
are there any encroachments upon any of the Real Property by any
buildings, structures, or improvements located upon adjoining real
estate which interfere with the operation of the Stations or which
Materially Adversely affect the value or marketability of Seller's
interest therein. None of the buildings, structures, or improvements
(including but not limited to all guy wires and anchors) constructed
on the Real Property encroach upon adjoining real estate and all such
buildings, structures, and improvements are constructed in confor-
mance in all Material respects with all applicable "setback" lines,
easements, and other restrictions or rights of record, or that have
been established by any applicable building or safety code or zoning
ordinance. The Surveyor's Certificate and the Commitments shall be
obtained by Buyer and delivered at the Closing. The Commitments shall
be for the amounts reasonably determined by Buyer. The costs of
securing and delivering the Surveyor's Certificate shall be borne by
Buyer. The costs of securing and delivering the Commitments, including
without limitation, all title insurance premiums associated therewith,
shall be equally shared by Buyer and Seller. The Owned Property and
Leased Premises are all the interests in land now used in or necessary
for the operation of the Stations. At Closing, Seller shall deliver to
Buyer all architectural, structural, mechanical and electronic plans
and specifications in its possession for such buildings, structures
and improvements.
<PAGE>
6.5. REAL PROPERTY CONDITION. To Seller's Best Knowledge, except for
the McPherson Street Buildings or as disclosed in EXHIBIT F, all buildings and
other improvements on the Real Property (including all roads, parking areas,
curbs, sidewalks, sewers and other utilities) have been completed and installed
in accordance with the plans and specifications approved by the governmental
authorities having jurisdiction. To Seller's Best Knowledge, certificates of
occupancy and all other licenses, permits, authorizations and approvals
required by all governmental authorities having jurisdiction and the requisite
certificates of the local board of fire underwriters (or other body exercising
similar functions) have been issued for the buildings and other improvements on
the Real Property, have been paid for, and are in full force and effect.
6.5.1. ASSESSMENT STATUS. Except as disclosed in EXHIBIT F,
to Seller's Best Knowledge there is no proceeding pending relating to
the assessed or reassessed valuation of any parcel of the Real
Property.
6.5.2. SINGLE PARCELS. Except as disclosed in EXHIBIT F, the
Real Property listed on EXHIBIT A is adjacent to and has direct access
to each abutting street. All the Real Property parcels listed on
EXHIBIT A consist of independent tracts that are not part, parcel,
annexed to or subsumed within a subdivision or other realty division.
All streets adjoining or traversing the Real Property have been
dedicated and accepted by the local municipal authorities.
6.5.3. NO PUBLIC IMPROVEMENT ASSESSMENTS. Except as
disclosed in EXHIBIT F, no assessments for public improvements have
been made or to Seller's Best Knowledge, are proposed to be made,
against any parcel of the Real Property which remain unpaid. If any
public improvements are ordered after the date hereof and prior to
Closing Date, assessments therefor due on or prior to the Closing Date
shall be paid by Seller and assessments due after the Closing Date
shall be payable by Buyer.
6.5.4. PUBLIC UTILITIES. Except as disclosed in EXHIBIT F,
all public utilities required for the operation of any parcel of the
Real Property either enter that parcel of the Real Property through
adjoining public streets, or if they pass through adjoining private
land do so in accordance with valid public or private easements which
will be acquired by Buyer at the Closing Date.
6.5.5. MCPHERSON STREET BUILDINGS. Seller makes no
representations or warranties of any kind with respect to the
McPherson Street Buildings, which are being purchased by Buyer "AS
IS;" provided, however, that to Seller's Best Knowledge there are no
violations or claims asserted or threatened with respect to the
McPherson Street Buildings, by any party except as disclosed in
EXHIBIT F hereto.
6.6. LICENSES. Seller validly holds all licenses, permits and
authorizations from governmental or regulatory authorities, including the
Commission, which are required for the lawful conduct of its business and the
operation of the Stations, and Seller has filed or will timely file any
application for renewal of the Stations' License(s) when required. EXHIBIT B is
a true and complete list of all Licenses currently held by Seller for the
Stations and such Licenses are not subject to any restriction or condition not
shown on the face of the Licenses
<PAGE>
which would limit the full operation of the Stations as presently authorized,
other than restrictions or conditions of general applicability imposed by the
law or governmental regulation. The Licenses are in full force and effect, and
the conduct of the Stations' Business is in accordance therewith in all
material respects. Seller has no reason to believe that any of the Licenses
would not be renewed for a full term with no materially adverse conditions by
the FCC or other granting authority in the ordinary course. Except as may be
provided in EXHIBIT F, Seller has no knowledge of any applications or any
Material Adverse complaints or proceedings pending or threatened as of the date
hereof before the Commission relating to the business or operations of the
Stations other than proceedings which generally affect the broadcasting
industry. Further, on the Closing Date, Stations will, unless otherwise
provided, be on the air with full operating authority (consistent with the
Rules and Regulations, the Act, and Environmental Laws and regulations
promulgated thereunder) under their present License(s), that all Commission
requirements for such authority will have been met in all material respects,
and that there will be no uncorrected Commission violations, notices or
unsatisfied Commission inquiries known to Seller. The "Public Inspection File"
of the Stations will be complete and in material compliance with Section
73.3526 of the Commission's Rules and Regulations on the Closing Date. All
ownership reports and documents required to be filed with the Commission with
respect to the Stations have been duly and timely filed and are true, correct
and complete. Seller has in all material respects maintained all other records
and files required by the Rules and Regulations. Without limiting the
generality of the foregoing, the Licenses are valid for full terms and are
subject to no material restrictions or conditions not shown on their face or
imposed by law or governmental regulation of general applicability; all
transmitters now operate in a manner such that any Commission action for which
environmental factors must be considered would not constitute a major action as
defined in 47 C.F.R. 1.1305 or any subsequent radio frequency radiation
limitation provisions; and all required proofs of performance or measurements
have been, or will be, timely completed and filed at the Stations or
Commission, as required.
6.7. GOVERNMENTAL COMPLIANCE. The Seller is and will, until the
Closing Date, be in compliance in all material respects, with all laws and
governmental regulations and orders applicable to its business.
6.8. ABSENCE OF LITIGATION OR PROCEEDINGS. That, except as disclosed
on EXHIBIT F, there are no actions, suits or proceedings pending or, to the
Best Knowledge of Seller, threatened against or involving it before any court
or any local or federal governmental body or administrative agency. Except as
disclosed on EXHIBIT F, Seller does not know or have reasonable grounds to know
of any factors or circumstances which might be the basis of any claim, action,
suit or proceeding; and Seller has complied in all material respects with all
applicable statutes and regulations of all governmental authorities and
agencies having jurisdiction over Seller.
6.9. INSURANCE. That Seller now has or will have in force and effect
sufficient fire and other insurance on the Property to be Sold, and sufficient
liability and other casualty insurance (subject to deductibles which Seller has
sufficient resources to fund), and will continue so to have through Closing
Date, to prevent the occurrence of a Material Adverse
<PAGE>
effect in the operation of the Stations. Attached hereto as EXHIBIT H is a
schedule of insurance in effect on the date hereof with respect to the
properties of Seller used and useful in the operation of the Stations.
6.10. NORMAL BUSINESS CONDUCT. That Seller, between the date hereof
and the Closing Date, will conduct the business of the Stations in the usual
manner, in good faith and with due diligence, and will keep in a normal state
of repair and operating efficiency the Property to be Sold hereunder, and will
maintain at normal levels the equipment, supplies, and other Tangible Personal
Property used or to be used or usable in the operation and business of the
Stations. Seller will continue its usual expenditures for programming and
promotional purposes. The business and operations of the Stations are conducted
and will continue until the Closing Date to be conducted by Seller only.
6.11. FILING OF TAX RETURNS. That, except as set forth in EXHIBIT F,
Seller has filed all Federal, State and local tax returns which are required to
be filed, and has paid all taxes and all assessments to the extent that such
taxes and assessments have become due.
6.12. LABOR RELATIONS. That, except as disclosed in EXHIBIT F, Seller
is not, and on the Closing Date will not be, a party to (i) any labor contract,
(ii) any vacation pay, severance pay or other so-called fringe benefit
arrangement with its employees, or (iii) any employment contract or agreement
which is not terminable upon termination notice of thirty (30) days. No
employee of Seller is represented by a union or other collective bargaining
unit, no application for recognition as a collective bargaining unit has been
filed with the National Labor Relations Board; and to the Best Knowledge of
Seller, there has been no concerted effort to unionize Seller's employees.
Except as listed and described in EXHIBIT F, all employees of the Stations are
subject to termination without cause subject to and in accordance with
applicable state and federal laws. There are no Material controversies pending
or, to the Best Knowledge of Seller, threatened between the Seller and any of
its employees, and Seller is not aware of any facts which could reasonably
result in any such controversy.
6.13. PERSONNEL DATA. Concurrent with the execution of this Agreement,
and subject to strict confidentiality, delivered by Seller and initialed by or
on behalf of each Party, is an accurate statement showing, as of the date
thereof:
6.13.1. PRESENT EMPLOYEES. The names and positions of all
persons currently employed by Seller in connection with the
maintenance and operation of the Stations, together with a statement
of the amount paid or payable to each such person for such services
and the basis thereof, their respective dates of hiring, and any
accrued sick, personal or vacation days for each (or pay in lieu
thereof);
6.13.2. COMPENSATION POLICIES. Seller's policies, procedures
and practices as to payment of salaries and commissions, sick pay,
personal days and vacation time; and
6.13.3. OTHER BENEFITS. A description of any other Material
compensation or personnel benefits in effect for Seller's employees.
<PAGE>
6.14. EMPLOYEE BENEFIT AND PENSION PLANS. Seller has not maintained or
contributed to any "multiemployer pension benefit plans" or any single employer
retirement or pension plans.
6.15. EMPLOYEE COMPENSATION. That from the date of this Agreement
through Closing Date Seller will not increase, or agree to increase, the
compensation or rate of compensation of any agent or employee of the Stations
more than ten percent (10%) or TWENTY-FIVE and NO/100 DOLLARS ($25.00) per
week, whichever is greater.
6.16. NON-DISPOSAL OF PROPERTY. That from the date of this Agreement
through the Closing Date, Seller will not sell, transfer or otherwise dispose
of any of the Property to be Sold, unless property of like or similar value is
substituted therefor.
6.17. SUPPLIES. That on the Closing Date usable supplies and supply
parts shall be at the quantity historically maintained by the Stations.
6.18. CONTRACTS. That all contracts and agreements are identified and
listed on attachments hereto which are enumerated as EXHIBIT C. (The foregoing
provisions in this Section shall not apply to any contracts for the sale of
time for money on Stations.) Such contracts are to be assigned to Buyer and are
now, and on the Closing Date, unless expired by their own terms, will be in
full force and effect, shall be unimpaired by any acts or omissions of the
Seller, and are assignable. Seller shall use commercially reasonable efforts to
obtain and deliver to Buyer prior to Closing any and all necessary consents to
the assignments thereof to Buyer for all such contracts designated on EXHIBIT C
as material by Buyer.
6.19. ABSENCE OF CHANGES AND CONDITIONS OF ANTENNA AND TRANSMISSION
SYSTEM. That the Property to be Sold hereunder will be in substantially the
same condition on the Closing Date as of the date of this Agreement, subject
only to ordinary wear; that, except for the McPherson Street Buildings or as
disclosed in EXHIBIT F, all Real Property will be in material conformity with
applicable building, zoning, Environmental Laws, and other laws, ordinances and
regulations and that, except for the McPherson Street Buildings, to Seller's
Best Knowledge there are no Material defects therein; and that all of the
ground radials, if any, and guy anchors used by and associated with the
operation of the Stations are or will be located on the Real Property which is
the subject hereof.
6.20. HOLD HARMLESS. That Seller will hold Buyer harmless for debts,
obligations, and Liabilities of whatever kind or nature incurred by Seller or
arising on or before the Closing Date.
6.21. MAINTENANCE AND OPERATION OF EQUIPMENT. That all transmission
equipment and other broadcast equipment to be transferred to the Buyer
hereunder is and will be operable in accordance with good engineering practice,
and will comply with the provisions of Environmental Laws and regulations
promulgated thereunder.
6.22. ABSENCE OF INSOLVENCY. That no insolvency proceedings of any
character including without limitation, bankruptcy, receivership,
reorganization, composition or
<PAGE>
arrangement with creditors, voluntary or involuntary, affecting the Seller or
any of the Property to be Sold, are pending or, to the Knowledge of Seller,
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.
6.23. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. That
except as disclosed in EXHIBIT F, the execution of this Agreement and the
performance of the covenants herein contemplated do not, and will not as of the
Closing Date, result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any of the Property to be Sold or assets of
Seller pursuant to any provision of law, or any indenture, agreement or other
instrument to which Seller is a party or by which it may be bound or affected.
6.24. COMPLIANCE WITH ORDINANCES AND LAWS. That, except for the
McPherson Street Buildings or as disclosed in EXHIBIT F, to the Best of
Seller's Knowledge, the use of the Stations' premises and any structure or
structures thereon will not be, as of the Closing Date, in Material violation
of any electrical, building, health or zoning regulations, ordinances, orders
or requirements of any federal, state or local governmental authority, and no
notice of any violation or infringement relating to the Property to be Sold has
been received by Seller.
6.25. ENVIRONMENTAL COMPLIANCE. To Seller's Best Knowledge, Seller,
the Property to be Sold, including without limitation the Stations, the Real
Property and the Tangible Personal Property are in full compliance with
Environmental Laws. To Seller's Best Knowledge, except for lubricants, cleaners
or other consumer products that are maintained in limited quantities for
routine maintenance purposes, there are no Hazardous Materials located at or
upon the Property to be Sold, including without limitation the Stations, the
Real Property or the Tangible Personal Property, nor, to Seller's Best
Knowledge, have any Hazardous Materials been stored or deposited thereat at any
time in the past. Seller has not received, nor has any knowledge of, any
complaint, notice, or order from any person or any agency of the federal, state
or local government, with regard to air emissions, water discharges, noise
emissions or Hazardous Materials affecting the Property to be Sold, including
without limitation the Stations, the Tangible Personal Property, or the Real
Property or any portion thereof. Seller shall be, as of the Closing Date and
thereafter, solely responsible for all environmental liabilities, of whatsoever
kind and nature, arising out of or attributable to the operation or ownership
of the Property to be Sold prior to the Closing Date.
6.26. SELLER'S DOCUMENTATION. Seller shall provide such other
documents as may be reasonably necessary for the implementation and
consummation of this Agreement.
6.27. SPECIAL ARRANGEMENTS. Seller has disclosed to Buyer any and all
arrangements with ASCAP, BMI, radio representatives, vendors of goods and
services and all other entities under which Seller enjoys a discount or other
benefit.
6.28. UNDISCLOSED LIABILITIES. Except as otherwise disclosed by Seller
to Buyer, no liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, relating to Seller, the Stations or the Property to be
Sold exists which could, after the
<PAGE>
Closing result in any form of transferee liability against Buyer or subject the
Property to be Sold to any lien, encumbrance, claim, charge, security interest
or imposition whatsoever or otherwise affect the full, free and unencumbered
use of the Property to be Sold by Buyer.
6.29. FULL DISCLOSURE. No representation or warranty made by Seller
contained in this Agreement nor any certificate, document or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading. Seller is not aware of any impending or contemplated event or
occurrence that would cause any of the foregoing representations not to be true
and complete on the date of such event or occurrence as if made on that date.
6.30. COMPLETENESS OF ASSETS. The Property to be Sold which shall be
delivered to Buyer pursuant to this Agreement constitutes all assets of the
Stations and the Stations' business as an ongoing concern. EXHIBITS A through D
are true and accurate listings of all the Property to be Sold owned by Seller
and useful or used by Seller in the operation of the Stations. Except as
provided in SECTION 1.37.16, and its subparts, there is no material asset used
or required by Seller in the normal conduct of the Stations which is not owned
or leased by Seller and which is not listed on EXHIBIT A through EXHIBIT D,
inclusive.
ARTICLE VII
BUYER'S REPRESENTATIONS AND WARRANTIES
7.0. PREAMBLE. Buyer represents, warrants, covenants and agrees as
follows:
7.1. QUALIFICATION. The Buyer is, or its assigns, if any, will be,
legally and financially qualified to become a Commission licensee as herein
contemplated.
7.2. AUTHORIZATION AND STANDING. The Buyer is a corporation that on
the Closing Date will be duly authorized to do business in the State of Ohio,
and will be in good standing under the laws of that state as well as the laws
of its state of incorporation; that it has full power and authority to enter
into this Agreement; that the execution, delivery and consummation of this
Agreement has been duly and validly authorized by its Board of Directors and
its stockholders; that the execution, delivery and performance of this
Agreement does not violate any provision of its Certificate of Incorporation,
its Bylaws, or result in any breach of, or constitute a default under, the
provisions of any agreement or other instrument to which the corporation is a
party or by which it or its property is bound or affected; and that its
stockholders are fully qualified legally and financially as such to hold the
Licenses herein sought.
7.3. PERFORMANCE OF OBLIGATIONS. That Buyer will on the Closing Date
and thereafter perform all obligations assumed under the executory contracts to
be assigned and transferred to Buyer under this Agreement; that Buyer will
collect the receivables for Seller as herein provided and will fully and
faithfully discharge all pertinent obligations hereunder.
7.4. ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
consummation
<PAGE>
of this Agreement by Buyer will not conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under any provision
of law, or any indenture, agreement, decree, judgment or other instrument to
which it is now subject.
7.5. HOLD HARMLESS. That Buyer will hold Seller harmless for debts,
obligations, and liabilities of whatever kind or nature incurred by Buyer
subsequent to the Closing Date, other than those debts, obligations or
liabilities due to the action or inaction of Seller prior to the Closing Date.
7.6. ABSENCE OF INSOLVENCY. That no insolvency proceedings of any
character including without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary, affecting the Buyer are pending or, to the Best Knowledge of
Buyer, threatened, and Buyer 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.
7.7. FULL DISCLOSURE. No representation or warranty made by Buyer
contained in this Agreement nor any certificate, document or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement contained herein or therein not
misleading. Buyer is not aware of any impending or contemplated event or
occurrence that would cause any of the foregoing representations not to be true
and complete on the date of such event or occurrence as if made on that date.
7.8. DOCUMENTATION. That Buyer shall provide such other documents as
may be necessary for the implementation and consummation of this Agreement.
7.9. ABSENCE OF BREACH. At the Closing, Buyer shall certify to Seller
that as of the Closing Date, to Buyer's Best Knowledge, there has been no
breach by Seller of any of Seller's representations, warranties or covenants
hereunder that Buyer has not disclosed to Seller. Such certification shall be
delivered by Buyer at the Closing, pursuant to SECTION 10.4. Such
representation at Closing shall in no way limit any remedies of Buyer with
respect to any breach of Seller's representations, warranties or covenants
hereunder discovered by Buyer subsequent to the Closing Date.
ARTICLE VIII
COVENANTS
8.1. SELLER'S NEGATIVE COVENANTS. Between the date hereof and the
Closing Date, Seller will not without the prior written consent of Buyer:
8.1.1. ENGAGE IN CONTRACTS. Enter into any contracts or
commitments or engage in any transaction relating to Stations or
Stations' Business, except in the normal and usual course of business;
8.1.2. CANCEL CONTRACTS. Except with Buyer's consent,
cancel, modify or in
<PAGE>
any way impair any of the contracts, leases or other agreements
relating to Stations or Stations' Business which are included in the
Property to be Sold;
8.1.3. CREATE ENCUMBRANCES. Create any mortgage, pledge,
lien or encumbrance affecting any of the Property to be Sold whether
now or hereafter acquired that is not fully discharged by Seller on or
before the Closing Date;
8.1.4. DISPOSE OF ASSETS. Sell, assign, lease or otherwise
transfer or dispose of any of the assets or properties included or to
be included in the Property to be Sold, except in the normal and usual
course of business; and
8.1.5. MERGE OR CONSOLIDATE. Enter into any agreement for
the merger or consolidation of Seller into or with any other
corporation or entity.
8.1.6. EMPLOYMENT TERMS. Except for changes in the ordinary
course or changes permitted by SECTION 6.15, absent Buyer's prior
written consent, change or agree to change any terms of employment,
including without limitation, salary or wage rates of, or any pension
or bonus plan affecting, any officer or employee of the Seller.
8.1.7. CHANGED BENEFITS. Undertake or accrue any bonus,
profit sharing, retirement, insurance, death or other fringe benefit
or other extraordinary compensation or set aside, to be paid to any
officer or employee of Seller; or undertake, adopt or agree to any new
retirement, pension, profit-sharing, bonus, stock option, termination
pay, hospitalization, vacation, or other similar employee benefit
plan, formal or informal, that provides or will provide any fringe
benefit of any kind other than regular wages to one or more employees
or former employees.
8.1.8. UNIONS. Contract with any labor union.
8.1.9. CONSISTENT ACCOUNTING METHODS. Make any change in any
method of accounting or accounting practice.
8.1.10. EXCLUSIVITY. Seller agrees that, commencing on the
date hereof through the Closing or earlier termination of this
Agreement, Buyer shall have the exclusive right to consummate the
transactions contemplated herein, and during such exclusive period,
Seller agrees that neither Seller, nor any shareholder, director,
officer, employee or other representative of Seller: (i) will
initiate, solicit or encourage, directly or indirectly, any
Acquisition Proposal; (ii) will engage in any negotiations concerning,
or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; or (iii) will continue any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any Acquisition Proposal and will take the necessary steps
to inform the individuals or entities referred to above of the
obligations undertaken by them in this Section.
8.2. SELLER'S AFFIRMATIVE COVENANTS. Between the date hereof and the
Closing Date Seller will:
<PAGE>
8.2.1. ALLOW ACCESS. Upon reasonable advance notice, give
Buyer and its authorized representatives full access during normal
business hours to all properties, books, facilities, records,
contracts and documents and furnish or cause to be furnished to Buyer
or its authorized representatives all information with respect to the
affairs and business of the Stations as Buyer may reasonably request
(it being understood that the rights of Buyer under this subparagraph
shall not be exercised in such a manner as to interfere unreasonably
with the operation of the Stations); provided, however, that Buyer
will indemnify, defend and hold Seller harmless from any actual
liability resulting from Buyer's access to and use of the foregoing
properties, books, etc., from the date of this Agreement through the
Closing Date;
8.2.2. FURNISH FINANCIAL DATA. Furnish to Buyer such
unaudited balance sheets, income statements or other information
concerning the financial condition of Seller and Stations as Buyer may
reasonably request, including, but not limited to, monthly income,
expense and collection reports;
8.2.3. PRESERVE BUSINESS. Diligently carry on the Stations'
Business, and use commercially reasonable efforts to preserve the
business organization of the Stations intact, to keep its employees
available to Stations, and to maintain the Stations' Business;
8.2.4. COMPLY WITH LAWS. Use commercially reasonable efforts
to (i) comply with all applicable laws and regulations to which Seller
is subject with respect to the operation and maintenance of the
Stations, and (ii) remove any Hazardous Materials from the Property to
be Sold;
8.2.5. MAINTAIN INSURANCE. Seller will maintain in force and
effect through the Closing Date sufficient fire, liability, casualty
and other insurance on the Property to be Sold, to reasonably and
prudently cover the risk of a Material Adverse change in the Property
to be Sold.
8.2.6. PROVIDE NOTICE. Notify Buyer of any Material
litigation pending or threatened against Stations or Seller or any
Material damage to or destruction of any assets included or to be
included in the Property to be Sold.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
9.0. PREAMBLE. The obligations of Buyer hereunder are, at the option
of Buyer, subject to compliance, at or prior to the Closing Date, with each of
the following conditions:
9.1. COMMISSION CONSENT. The Commission's consent to the assignment of
the Licenses to Buyer has been obtained without any conditions Materially
Adverse to Buyer, and such consent, at the election of Buyer, has become a
Final Order. FCC consent to the FCC Application was granted on March 17, 1997,
and became a Final Order on April 29, 1997.
<PAGE>
9.2. REPRESENTATIONS AND WARRANTIES. Representations and warranties of
Seller contained in this Agreement shall be true and correct on and as of the
Closing Date and the time of Closing hereunder and each and all of the
agreements of Seller to be performed on or prior to Closing hereunder pursuant
to the terms of this Agreement shall have been duly performed, and Seller shall
have delivered to Buyer its certificate as to such representations and
warranties, dated as of the Closing Date, signed by Seller's President that
such is the case.
9.3. LITIGATION OR ADVERSE CHANGE. No litigation, investigation or
proceeding of any kind shall have been instituted or threatened which would
Materially Adversely affect the Stations' Business, nor since the effective
date of this Agreement, has any Material Adverse change occurred in respect of
the Stations' Business, or any of the Property to be Sold hereunder, and, to
the Best of Seller's Knowledge, no fact or condition exists or is contemplated
or threatened which might cause such a Material Adverse change in the future.
9.4. OPINION OF COUNSEL. The Buyer shall have received a written
opinion of counsel for Seller, dated as of the Closing Date, in customary form
and substance as follows:
9.4.1. GOOD STANDING. Seller is duly organized, validly
existing, authorized and qualified to conduct business and in good
standing under the laws of the State of Ohio; and has full power and
authority to enter into and perform all obligations under this
Agreement;
9.4.2. AUTHORIZATION FOR AGREEMENT. This Agreement has been
duly authorized, executed and delivered by the Seller;
9.4.3. AUTHORIZATION FOR ASSIGNMENT. The sale and assignment
of all of the Property to be Sold and the business to be transferred
to the Buyer hereunder have been duly authorized by all necessary
action, and deeds of conveyance, bills of sale and all other
instruments delivered to the Buyer hereunder have been duly
authorized, executed and delivered to conform with all legal
requirements to vest in the Buyer good and valid title to all such
Property to be Sold and the business to be transferred;
9.4.4. ABSENCE OF ENCUMBRANCES. That except as provided in
EXHIBIT F, said counsel has no knowledge of any defects, liens,
encumbrances, or rights of third parties with respect to any of the
Property to be Sold other than liens or encumbrances which,
simultaneously with the Closing of the purchase by Buyer of the
Property to be Sold, will be fully discharged by application, in whole
or in part, of the amount to be paid to Seller by Buyer at the time of
Closing;
9.4.5. ABSENCE OF BREACH. So far as is known to said
counsel, the execution, delivery and performance of this Agreement by
Seller will not violate, result in a breach of, or constitute a
default under any agreement or order to which Seller is a party or to
which it is subject; and
9.4.6. ABSENCE OF SUIT. Except as may be specified in its
opinion, such counsel does not know of any action, suit, proceeding,
investigation or claim, pending
<PAGE>
or threatened, against Seller.
9.4.7. FCC OPINION. That FCC counsel opines as follows:
9.4.7.1. VALID AND FULL FORCE LICENSES. To the
best of counsel's knowledge: (i) Seller has been authorized
by the FCC to hold each of the Licenses as identified in
EXHIBIT B; (ii) the Licenses are in full force and effect
and none of the Licenses are subject to any material adverse
condition, other than conditions that appear on the face of
the Licenses or pertain to the Licenses under the Rules and
Regulations; (iii) the main station licenses for the
Stations are scheduled to expire as set forth in the
opinion; and (iv) the Licenses constitute all of the main
station licenses, permits, consents and other authorizations
required in order to operate a radio broadcast station on
the frequency and in the community in which the Stations
operate.
9.4.7.2. FCC CONSENT WITHOUT MATERIALLY ADVERSE
CONDITIONS. The FCC's Mass Media Bureau, pursuant to
delegated authority, has granted all consents required for
the assignment of each of the Licenses from Seller to Buyer
as provided in the Agreement, without any Materially Adverse
conditions, other than standard conditions contained on the
printed FCC Form 732, existing as of the date of the
Agreement, or pertaining to the Licenses under generally
applicable rules or policies of the FCC. All applicable
administrative and judicial appeal, review and
reconsideration periods with respect to such consents have
expired and to the best of counsel's knowledge no appeal,
review or reconsideration has been taken or instituted by
any party or by the FCC on its own motion. To counsel's
knowledge, the Seller has filed with the FCC in connection
with the Stations all reports and other filings required to
be filed as of the Closing Date by Seller under the Act and
Rules and Regulations, except for reports or filings that if
not so filed would not reasonably be expected to have a
Material Adverse effect on the Seller with respect to the
Stations.
9.4.7.3. NO IMPAIRMENTS OR ADVERSE CLAIMS. Except
for rule making proceedings, similar proceedings, or order
of general applicability to entities such as the Seller or
to facilities such as the Stations, to FCC counsel's
knowledge there are (i) no FCC judgments, decrees or orders
that have been issued against the Seller with respect to the
Stations or any of the Licenses that would reasonably be
expected to impair materially the operation of the Stations,
and (ii) no proceedings, claims, complaints, investigations
or other actions by or before the FCC pending or threatened
against or in respect of the Stations or any of the
Licenses, including without limitation, any notice of
violation, notice of apparent liability, order to show cause
or order of forfeiture.
9.5. COVENANTS. All of the terms, covenants and conditions to be
complied with and performed by Buyer on or prior to the Closing Date shall have
been duly complied with or performed in all material respects.
<PAGE>
9.6. CERTIFICATION. Seller shall have delivered to Buyer a certificate
dated the Closing Date and signed by its President to the effect that the
representations and warranties contained in ARTICLE VI hereof are true and
correct in all substantial respects, and that between the date hereof and the
Closing Date, Seller has complied in all substantial respects with the
covenants provided in ARTICLE VIII hereof.
9.7. CONSENTS OF THIRD PARTIES. On the Closing Date, each person,
firm, association or corporation, the consent or approval of which is required
respecting the sale, conveyance, transfer and assignment of the Property to be
Sold, including the contracts to be assigned to Buyer, and designated by Buyer
on EXHIBIT C as material, as herein provided, shall have duly consented to or
approved such sale, conveyance, transfer and assignment except insofar as such
consent or approval shall have been waived by Buyer. Buyer shall have received
the Surveyor's Certificate.
9.8. -- INTENTIONALLY LEFT BLANK.
9.9. TITLES AND THE SURVEYS. Subject to SECTION 6.4.3, Buyer shall
have received the Titles and Surveys. The costs and expenses of obtaining the
Titles and the Surveys shall be borne as provided in SECTION 6.4.3. The Titles
and the Surveys shall in all reasonable respects be acceptable to Buyer. The
Surveys shall be made and prepared in accordance with the Minimum Standard
Detail requirements for ALTA/ACSM Land Title Surveys, jointly established and
adopted by ALTA and ACSM in 1986.
9.10. NO CHANGE. No Material Adverse change in the Stations' Business,
prospects, or conditions (financial or otherwise), the Stations, or the
Property to be Sold shall have occurred, be threatened or be reasonably likely
to occur.
9.11. OPERATION OF THE STATIONS. WMAN shall be operating at a nominal
power of 0.92 kilowatts day and nighttime, and WYHT shall be operating at a
power of fifty thousand watts (horizontal and vertical), each pursuant to valid
FCC operating authority, and in accordance with the Rules and Regulations.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
10.0. PREAMBLE. The obligations of Seller hereunder are, at the option
of the Seller, subject to compliance, at or prior to the Closing Date, with
each of the following conditions:
10.1. COMMISSION CONSENT. The Commission's consent to the assignment
of the Licenses to Buyer has been obtained without any conditions Materially
Adverse to Seller, and such consent has become a Final Order. FCC consent to
the FCC Application was granted on March 17, 1997, and became a Final Order on
April 29, 1997.
10.2. PERFORMANCE BY BUYER. Buyer shall have performed in all material
respects the undertakings and agreements of Buyer to be performed hereunder on
or before the Closing Date.
<PAGE>
10.3. OPINION OF COUNSEL. The Seller shall have received a written
opinion of counsel for Buyer, dated as of the Closing Date, in customary form
and substance as follows:
10.3.1. ORGANIZATION AND AUTHORITY. Buyer, or its assigns,
is duly organized, validly existing and in good standing under the
laws of its state of incorporation, and is authorized and qualified to
conduct business in and under the laws of the State of Ohio; and has
full power and authority to enter into and perform all obligations
under this Agreement;
10.3.2. VALID OBLIGATION. This Agreement has been duly
authorized, executed and delivered by the Buyer, or its assigns, and
constitutes the valid and binding obligation, enforceable in
accordance with its terms, of Buyer;
10.3.3. ABSENCE OF BREACH. So far as is known to said
counsel, the execution, delivery and performance of this Agreement by
Seller will not violate, result in a breach of, or constitute a
default under any agreement or order to which Buyer is a party or to
which it is subject; and
10.3.4. ABSENCE OF SUIT. Except as may be specified in its
opinion, such counsel does not know of any action, suit, proceeding,
investigation or claim, pending or threatened, against Buyer that
would interfere with, obstruct or foreclose (i) Buyer from Closing or
(ii) Buyer's duties and obligations under this Agreement.
10.4. REPRESENTATIONS AND WARRANTIES. Representations and warranties
of Buyer contained in this Agreement shall be true and correct on and as of the
Closing Date and the time of Closing hereunder and each and all of the
agreements of Buyer to be performed on or after the Closing hereunder pursuant
to the terms of this Agreement shall be duly performed, and Buyer shall have
delivered to Seller its certificate, dated as of the Closing Date, signed by
Buyer's President that such is the case. Buyer shall deliver the certificate
provided for in SECTION 7.9.
ARTICLE XI
BULK SALES LAW
11.1. WAIVER AND INDEMNIFICATION. Buyer hereby waives compliance by
Seller with bulk sales laws application to the transactions contemplated by
this Agreement. Seller shall indemnify and hold Buyer harmless from any and all
failure by Seller to comply with any applicable bulk sales law.
ARTICLE XII
SALES AND TRANSFER TAXES
12.1. PAYMENT. Seller shall pay all sales, transfer and documentary
taxes, if any, payable in connection with the sale, transfer and delivery to
Buyer of the Property to be Sold.
<PAGE>
ARTICLE XIII
BROKERAGE
13.1. BROKER AND FEE. Buyer and Seller each represents to the other
that no broker, except Blackburn & Co., Inc., is involved with respect to this
transaction, and each will indemnify the other and hold the other harmless for
any other broker claiming through it. Seller solely shall be responsible for
the payment of the Broker's fee.
ARTICLE XIV
PRORATED EXPENSES
14.0. PREAMBLE. Any prorations not agreed on at Closing will be agreed
on and adjusted by the parties within sixty (60) days after the Closing Date.
At Closing, the expenses shall be prorated in accordance with generally
accepted accounting principles and shall include, but not be limited to, the
following:
14.1. UTILITIES. If Seller shall not have paid through Closing Date
all utility charges such as telephone, electricity and gas, Buyer shall be
entitled to a credit therefor based upon the last paid bills for similar
charges.
14.2. PREPAID OBLIGATIONS. Seller shall be entitled to a credit for
the unearned portion of any prepaid obligation of Seller which Buyer may elect
to assume.
14.3. EMPLOYEE'S SALARIES. All wages and salaries of Seller's
employees shall be paid and discharged by Seller to and including 11:59 P.M. on
the Closing Date, but to the extent, for reasons beyond Seller's control,
Seller shall be unable to discharge its obligations in full as to any employee
or employees, Buyer shall be allowed a credit therefor to permit payment
thereof by Buyer.
14.4. EMPLOYEE AND EMPLOYEE BENEFITS.
14.4.1. SELLER'S OBLIGATION RESPECTING TERMINATED EMPLOYEES.
The parties acknowledge and agree that Buyer shall have the right to
elect which of the Stations' employees it shall hire. At least forty
(40) days prior to the Closing Date with respect to contract employees
and fifteen (15) days prior to the Closing Date with respect to
non-contract employees, Buyer shall provide Seller with a list of all
the Stations' employees that Buyer will employ, and it shall be the
obligation of the Seller to terminate any employees not on said list
on or before the Closing Date. Seller shall be responsible for payment
of all compensation, liabilities and obligations (including accrued
vacation and sick pay and severance pay) accrued or payable to all
employees through the Closing Date. Seller shall indemnify, defend and
hold Buyer harmless from and against all direct or indirect costs,
expenses and liabilities arising from or relating to claims made by
the Stations' employees in respect of termination of employment by
Seller with the Stations by reason of the transactions contemplated by
this Agreement. Buyer shall indemnify, defend and hold Seller harmless
from and against all direct or indirect costs, expenses and
liabilities arising from or relating to
<PAGE>
claims after the Closing Date made by the Stations' post-Closing Date
employees in respect of severance payments claimed by such employees
as the result of post-Closing Date terminations by Buyer.
14.4.2. SELLER'S OBLIGATION RESPECTING RETAINED EMPLOYEES.
All wages, salaries and benefits due the Stations' employees through
the Closing Date shall be paid and discharged by Seller as of and
including 11:59 P.M. on the Closing Date, all in accordance with
Seller's personnel policies, plans and benefits. Subsequent to the
Closing Date, Buyer shall be responsible for all wages, salaries and
benefits due the Stations' employees hired by Buyer, in accordance
with Buyer's personnel policies, plans and benefits. As of the Closing
Date there shall be a pro forma termination by Seller of all the
Stations' non-contract employees not otherwise terminated in the
ordinary course of business, or in accordance with this Agreement. For
the purposes of this Section, pro forma termination shall pertain to
those employees who will be retained and hired by Buyer, and such
termination by Seller shall be for the clarifying purpose of removing
said employees from Seller's payroll and enrolling them on Buyer's
payroll so as to avoid and eliminate, except as otherwise provided by
this Agreement, concomitant payroll obligations to said employees by
both Buyer and Seller.
14.5. VACATION AND SICK PAY ALLOWANCES. Buyer shall be allowed a
credit for accrued vacation and sick pay allowances due employees.
14.6. TAXES. Buyer shall prorate with Seller for accrued personal
property, real estate and any other taxes based upon the last ascertainable tax
bill.
14.7. BUYER'S SERVICES. Buyer shall be allowed credit as to any
prepayment received by Seller for services to be rendered by Buyer after
Closing. Seller shall be allowed credit for services rendered by it for which
payment will be received by Buyer after Closing.
14.8. FEES AND OUT-OF-POCKET EXPENSES. Seller and Buyer each shall pay
one-half (1/2) of the Commission's fee respecting the FCC Application, and the
newspaper publication costs for the required Commission Public Notice. Each
shall be solely responsible for its respective fees and out-of-pocket expenses
paid to its respective agents, counsel and advisors, whether or not the
transaction is consummated.
14.9. FEE REFUNDS. Should the Commission refund all or any portion of
fees paid to the Commission by Seller as licensee of the Stations, Seller at
Closing or thereafter shall be entitled to such refund(s) pertaining to the
period during which the Seller was the licensee of the Stations.
14.10. ESCROW FEES. Seller and Buyer shall each pay one-half (1/2) of
the fee, if any, charged by Escrow Agent to act hereunder.
14.11. TRADE-OUT AGREEMENTS. To the extent the aggregate value of the
Stations' future performance obligations under all Trade-Out Agreements exceeds
or is less than the aggregate value of the goods, services or other items to be
received thereunder by an amount
<PAGE>
greater than FIVE THOUSAND and NO/100 DOLLARS ($5,000.00), then Seller shall
pay to Buyer, or Buyer shall pay to Seller, as the case may be, the amount of
such difference. No adjustment shall be made if the trade surplus or deficit is
less than FIVE THOUSAND and NO/100 DOLLARS ($5,000.00).
14.12. POST CLOSING DATE OPERATING REVENUES AND EXPENSES.
Notwithstanding the foregoing to the contrary, in the event that the Closing
Date is May 29, 1997, then Buyer shall assume all of the operating expenses for
the Stations as of the Closing Date, and Seller shall be entitled to receive
and keep all of the Accounts Receivable, income and revenues from the operation
of the Stations through 11:59 PM (Eastern Time) on May 31, 1997. In such event,
as of 12:01 AM (Eastern Time) on June 1, 1997, and thereafter, Buyer shall be
entitled to receive and keep all of the income and revenues from the operations
of the Stations.
ARTICLE XV
RISK OF LOSS
15.1. BURDEN OF RISK; BUYER'S OPTION. The risk of loss, damage or
destruction of the Property to be Sold from fire or other casualty or cause
shall be borne by the Seller at any time prior to the Closing hereunder. Upon
the occurrence of any loss or damage of any of the Property to be Sold as the
result of fire, casualty or other causes prior to Closing, Seller shall
immediately notify Buyer of the same in writing stating with particularity the
extent of the loss or damage incurred, the cause thereof, if known, and the
extent to which restoration, replacement and repair of the Property to be Sold,
or portion thereof, that is lost, damaged or destroyed will be reimbursed under
any insurance policy with respect thereto. Subject to the provisions hereof,
Buyer shall have the option (but not the obligation) exercisable within fifteen
(15) Business Days after the receipt of such notice from Seller to:
15.1.1. POSTPONEMENT. Postpone Closing until such time as
the Property to be Sold, or portion thereof that has been lost,
damaged or destroyed, has been completely repaired, replaced or
restored; or
15.1.2. ELECT CONSUMMATION. Consummate the Closing and
accept the Property to be Sold in its "then" condition. In the event
the Buyer shall elect to consummate the Closing before the Property to
be Sold has been fully and completely repaired, replaced or restored,
Seller shall assign to Buyer all rights it may have under any
insurance claim covering the loss and pay over to Buyer any proceeds
under any such insurance policy theretofore received by Seller with
respect thereto; or
15.1.3. TERMINATE. Terminate this Agreement if the repair,
replacement or restoration provided for in SECTION 15.1.1 has not been
completed within sixty (60) days after such loss, damage or
destruction or by the date of the postponed Closing under SECTION
15.1.1, whichever occurs later.
<PAGE>
ARTICLE XVI
SURVIVAL
16.1. SURVIVAL OF WARRANTIES. All warranties, representations and
covenants contained herein shall survive Closing hereunder for eighteen (18)
months after the Closing Date. The acceptance of delivery of property or the
delivery thereof hereunder shall not constitute a waiver of any warranty,
representation, covenant or condition herein contained; and Seller and Buyer
shall remain liable each to the other for damages resulting from the breach,
nonperformance, failure or nonfulfillment of any warranties, representations or
covenants.
ARTICLE XVII
NON-COMPETE AGREEMENT
17.1. DELIVERY AND CONSIDERATION. Seller and Harrison M. Fuerst agree
that at the time and place of Closing they will execute, or cause to be
executed, and deliver to Buyer Non-Compete Agreements, in a form reasonably
satisfactory to counsel for Seller, Harrison M. Fuerst and Buyer, and
substantially as set forth in EXHIBIT I, hereto.
ARTICLE XVIII
TRADE-OUT AGREEMENTS
18.1. LIMITED ASSUMPTION. It is understood and agreed that Seller
shall employ commercially reasonable efforts in the time prior to Closing to
conclude all obligations of the Stations and of Seller, and any affiliate,
subsidiary or other party in interest, with reference to Trade-Out Agreements,
so that at Closing Buyer shall have no obligation with reference to such
arrangements, except as provided in SECTION 14.11. It is further understood and
agreed that Stations may enter into Trade-Out Agreements in the time prior to
Closing Date for the benefit of the Stations' promotion, advancement or
improvement. As to such arrangements Buyer shall discharge Stations'
obligations after Closing, subject to adjustments to the Purchase Price as
provided in SECTION 14.11.
ARTICLE XIX
INDEMNIFICATION
19.1. SELLER'S INDEMNIFICATION. Seller hereby agrees to indemnify and
hold Buyer harmless from and against any and all losses, damages, costs,
liabilities and expenses (including, without limitation, reasonable attorney's
fees and disbursements) resulting from or arising out of:
19.1.1. LIABILITIES. Any and all liabilities, obligations,
commitments or actions of Seller, of any nature at the time of
Closing, whether absolute or contingent, matured or unmatured, known
or unknown (including, but not limited to, all liabilities,
obligations or commitments of Seller) which first accrued, occurred,
or were to be performed, prior to the time of Closing, (i) under the
contracts included in the Property to be Sold, or (ii) as a result of
the business of the Seller or operation of
<PAGE>
the Stations, or (iii) under all contracts, agreements and leases to
which Seller is a party and which are not included in the Property to
be Sold, except liabilities, obligations or commitments of Seller
which first accrue or are to be performed following the time of
Closing under the contracts included in the Property to be Sold;
19.1.2. BREACHES. The breach of any of the representations,
warranties, covenants or agreements of the Seller set forth in the
Agreement.
19.2. BUYER'S INDEMNIFICATION. Buyer hereby agrees to indemnify and
hold Seller harmless from and against any and all losses, damages, costs,
liabilities and expenses (including, without limitation, reasonable attorney's
fees and disbursements) resulting from or arising out of:
19.2.1. LIABILITIES. Any and all liabilities, obligations,
commitments or actions of Buyer, of any nature at or after the time of
Closing, whether absolute or contingent, matured or unmatured, known
or unknown (including, but not limited to, all liabilities,
obligations or commitments of Buyer) which first accrued, occurred, or
are to be performed, after the time of Closing, (i) under the
Contracts included in the Property to be Sold, or (ii) as a result of
the business of the Buyer or the operation of the Stations, or (iii)
after the Closing, under all contracts, agreements and leases to which
Buyer becomes a party.
19.2.2. BREACHES. The breach of any of the representations,
warranties, covenants or agreements of the Buyer set forth in the
Agreement.
19.3. RIGHT TO DEFEND. Should any claim or liability be asserted by a
third party against either Seller or Buyer which would give rise to a claim for
indemnification under the provisions of this Article by a Party to this
Agreement, then the Claimant shall promptly notify, in writing, the other Party
to this Agreement, the Indemnitor, and the Indemnitor shall be entitled, at its
own expense, and upon written notice to the Claimant, to compromise or defend
such claim. The Claimant may not settle any claim without the consent of the
Indemnitor, except upon terms and conditions offered or consented to by the
Indemnitor.
ARTICLE XX
COVENANT OF FURTHER ASSURANCES
20.1. ACTION AND DELIVERY. After the Closing, each of the Parties,
upon the reasonable request of the other, will take such other action and
execute and deliver such further instruments of assignments, conveyance and
transfer as may be reasonably necessary to assure, complete and evidence the
full and effective transfer and conveyance of the Property to be Sold pursuant
to this Agreement.
<PAGE>
ARTICLE XXI
APPLICATION PROSECUTION; REMEDIES; TERMINATION; BROADCAST FAILURE
21.1. APPLICATION PROSECUTION. In the event that either Party fails to
exercise good faith and fails through its fault to supply to the Commission a
substantially complete and acceptable FCC Application as such portion thereof
applies to each respectively within the time limit hereinafter set forth, or
either Party fails to exercise good faith and fails through its own fault to
supply appropriate amendments pertaining to the FCC Application within
twenty-five (25) days (or such longer period as shall be fixed by the
Commission for response) of the date upon which such data is requested in
writing by Commission personnel, or if either Party, after the Commission grant
of the FCC Application fails through its own fault or refuses in bad faith to
close as herein provided, such fault or failure will be considered to be a
willful and material breach of this Agreement.
21.2. REMEDIES ON BREACH. The Parties acknowledge that the Stations
are of a special, unique and extraordinary character and that damages are
inadequate to compensate for any breach of this Agreement. Accordingly, in the
event of a material breach by Seller of its representations, warranties,
covenants or obligations under this Agreement, Buyer may sue at law for damages
or, at Buyer's sole election in lieu of other remedies available to it, and
subject to obtaining any requisite approval of the FCC, Buyer may seek a decree
of specific performance requiring Seller to fulfill its obligations under this
Agreement, and Seller agrees to waive its defense that an adequate remedy at
law exists. In the event of a material breach by Buyer of its representations,
warranties, covenants or obligations under this Agreement, Seller shall have
the option of having paid over to it the Escrow Stake as liquidated damages as
its sole and exclusive remedy, or pursuing as its alternative sole and
exclusive remedy a decree of specific performance requiring Buyer to fulfill
its obligations under this Agreement, and Buyer agrees to waive its defense
that an adequate remedy at law exists. The foregoing remedies shall be
available only to a Party not in material breach of this Agreement at the time
any such remedy is asserted by it by written notice to the other Party. The
prevailing Party shall be entitled to recover its reasonable legal expenses,
including attorneys' fees (at trial and on appeal) from the losing Party.
21.2.1. OPPORTUNITY TO CURE. If Seller or Buyer believes the
other to be in default hereunder, as provided above in SECTION 21.2,
the party believing a default has occurred shall provide the other
with written notice specifying in reasonable detail the nature of such
default. If the default has not been cured by the earlier of: (i) the
Closing Date, or (ii) within ten (10) Business Days after delivery of
that notice, then, subject to the provisions of this Agreement, the
party giving such notice may terminate this Agreement and/or exercise
the remedies available to such party pursuant to this Agreement;
provided, however, that if Buyer fails to Close by the Closing Date,
as provided above, and Buyer has not furnished Seller with
notification of a re-scheduled Closing Date as permitted by SECTION
1.11, or if Buyer has provided notice of a re-scheduled Closing Date
and fails to Close on said re-scheduled Closing Date, then Seller, so
long as Seller is not in default under this Agreement, shall not be
required or obligated to provide ten (10) Business Days advance notice
of such failure by Buyer to Close, and immediately may terminate this
Agreement upon
<PAGE>
written notice to Buyer, and exercise its remedies hereunder.
21.3. TERMINATION. This Agreement may be terminated, by written notice
given by either party (provided such party is not in material breach of any of
its obligations, representations, warranties or duties hereunder) to the other
party hereto, at any time prior to the Closing Date as follows:
21.3.1. WRITTEN CONSENT. By mutual written consent of the
Parties;
21.3.2. ORDER OR DECREE. By either party, if a court of
competent jurisdiction or governmental, regulatory or administrative
agency or commission having jurisdiction over the Parties and the
Agreement shall have issued a valid order, decree or ruling or taken
any other valid action, in each case permanently restraining,
enjoining or otherwise prohibiting the transaction contemplated by
this Agreement and such valid order, decree, ruling or other action
shall have become final and nonappealable;
21.3.3. BREACH BY SELLER. By Buyer if Seller fails to
materially perform, or materially breaches, any of its obligations,
representations, warranties or duties under this Agreement and Seller
has not reasonably cured such failure to materially perform, or such
material breach, in accordance with SECTION 21.2;
21.3.4. BREACH BY BUYER. By Seller if Buyer fails to
materially perform, or materially breaches, any of its obligations,
representations, warranties or duties under this Agreement and Buyer
has not reasonably cured such failure to materially perform, or such
material breach, in accordance with SECTION 21.2.1, above;
21.3.5. FCC DENIAL. By either party, if the FCC denies the
FCC Application and such denial becomes final and nonappealable;
21.3.6. LAPSE OF TIME. By either party, if the Closing has
not occurred within two hundred ten (210) days after the date on which
the FCC Application is accepted for filing, unless such period is
extended or postponed by either of the Parties as provided in this
Agreement; or
21.3.7. SERVICE INTERRUPTION. By Buyer, if either of the
Stations is off the air, other than for scheduled interruptions or
maintenance, for more than seven (7) aggregate hours per day for any
six (6) consecutive day period, or for a total of sixty six (66) hours
or more in any thirty (30) day period or is operating at less than
seventy percent (70%) of full power for twelve (12) consecutive days.
21.4. NON EXCLUSIVE TERMINATION RIGHTS. The termination rights
provided in SECTION 21.3, and its subparts, are in addition to, and do not
preclude, any other termination rights of the Parties provided in this
Agreement.
<PAGE>
ARTICLE XXII
PERFORMANCE AT CLOSING
22.1. SELLER'S PERFORMANCE. At the Closing hereunder the Seller will:
22.1.1. LICENSE ASSIGNMENTS. Deliver to Buyer assignments of
the Licenses set forth in EXHIBIT B, hereto, transferring the same to
Buyer in customary form and substance;
22.1.2. BILL OF SALE. Deliver to Buyer a bill of sale and
all other appropriate documents and instruments in a form and
substance reasonably acceptable to counsel for Buyer, assigning good
and marketable title to the Property to be Sold, free and clear of any
mortgages, liens, attachments, conditional sales, contracts, claims or
encumbrances of any kind whatsoever, and such assignments and further
instruments as may be necessary to transfer to Buyer all work in
process generated in connection with the operation of the Stations;
22.1.3. LAND DOCUMENTS. Assign to Buyer, in recordable form,
all of Seller's rights to and under any ground lease(s), free and
clear of all encumbrances and any other adverse claims, and convey, by
lawful limited warranty deed, or by other documents of transfer
reasonably acceptable to counsel for Buyer, Seller's right, title and
interest in and to the Real Property described and identified in
EXHIBIT A, hereto, free of any encumbrances and adverse claims;
22.1.4. TRANSFER INSTRUMENTS. Deliver to Buyer such
assignments and further instruments of transfer as Buyer may
reasonably require to effectuate the assignment to it of those
contracts, leases and agreements to be assumed by Buyer pursuant to
this Agreement;
22.1.5. SELLER'S CERTIFICATE. Deliver to Buyer the
certificate of Seller as of the Closing Date in accordance with
SECTIONS 9.2 and 9.6 of this Agreement;
22.1.6. CORPORATE RESOLUTION. Deliver to Buyer a certified
copy of a resolution of the Board of Directors of Seller's General
Partner, Treasure Radio, Inc., authorizing the execution of this
Agreement and the consummation of the transactions described herein,
together with all other corporate, shareholder and partnership
consents and approvals which counsel for Buyer may reasonably request;
22.1.7. OPINION OF SELLER'S COUNSEL. Deliver to Buyer the
written opinion of Seller's counsel, dated as of the Closing Date,
pursuant to the provisions of ARTICLE X of this Agreement;
22.1.8. ADDITIONAL DOCUMENTS. Deliver to Buyer such other
documents as counsel for Buyer may reasonably request for the purpose
of consummating the transactions described herein.
22.2. BUYER'S PERFORMANCE. At the Closing hereunder the Buyer will:
<PAGE>
22.2.1. PURCHASE PRICE. Deliver to Seller, in accordance
with the provisions of this Agreement, the moneys payable at the
Closing as set forth in ARTICLE IV of this Agreement;
22.2.2. OPINION OF BUYER'S COUNSEL. Deliver to Seller the
written opinion of Buyer's counsel, dated as of the Closing Date,
pursuant to the provisions of ARTICLE X of this Agreement;
22.2.3. ASSUMPTION AGREEMENT. Deliver to Seller an
assumption agreement in a form reasonably satisfactory to Seller; and
22.2.4. ADDITIONAL DOCUMENTS. Deliver to Seller such other
documents as counsel for Seller may reasonably request for the purpose
of consummating the transactions described herein.
ARTICLE XXIII
MISCELLANEOUS PROVISIONS
23.1. BENEFIT. This Agreement shall be binding upon the heirs,
executors, administrators, assigns, successors, and legal representatives of
the parties hereto. Buyer may assign this Agreement, without the prior written
consent of Seller, to a corporation in which Buyer, or Buyer's controlling
principals, shall hold a controlling voting interest; such corporation to be
legally, financially and otherwise qualified to be the licensee of the
Stations. Except as provided herein, this Agreement may not be assigned by
Buyer without Seller's prior written consent.
23.2. HEADINGS. The headings of the paragraphs of this Agreement are
for the convenience of reference only, and do not form a part hereof, and in no
way define, limit, describe, modify, interpret or construe the meanings of the
parties, the scope of this Agreement or the intent of any paragraph hereof.
23.3. COUNTERPART SIGNATURES. This Agreement may be signed in one or
more counterparts, each of which shall be deemed a duplicate original, binding
on the parties hereto; notwithstanding that the parties are not signatory to
the original or the same counterpart. This Agreement shall be effective as of
the date first set forth above.
23.4. NOTICE. Any notice required hereunder shall be in writing and
any payment, notice or other communications shall be delivered personally, or
mailed by certified mail, postage prepaid, with return receipt requested, or
delivered to FedEx (Federal Express) or any other nationally recognized
overnight delivery service, in each case addressed to the persons, parties or
entities identified on EXHIBIT J, hereto.
23.4.1. ALTERNATE ADDRESSEES. Notice, as provided by this
Section, may be given to any other person or party, as any Party
hereto may in the future designate in writing, upon due notice to the
other Party(ies).
<PAGE>
23.4.2. DATE OF NOTICE, ACTION. The date of personal
delivery or the delivery date (or date of attempted delivery and
refusal by the addressee) specified on any receipt from the U.S. Mail
or courier service specified herein shall establish the date of such
notification or communication. If any notification, communication or
action is required or permitted to be given or taken within a certain
period of time and the last date for doing so falls on a Saturday,
Sunday, a federal legal holiday or legal holiday by law in the State
of Ohio, the last day for such notification, communication or action
shall be extended to the first day thereafter which is not a Saturday,
Sunday or such legal holiday.
23.5. INTERPRETATION. This Agreement shall be construed and
interpreted under the laws of the State of Ohio, without reference to or
application of any conflicts of law, and by the applicable rules and
regulations of the FCC. Venue for any action brought under this Agreement may
be either Mansfield, Ohio, or for matters pertaining to the FCC, Washington,
D.C. Venue for citizenship diversity matters shall be any legally suitable
forum.
23.6. ENTIRE AGREEMENT. This Agreement, the Escrow Agreement, the
Holdback Agreement, and the Non-Compete Agreement embody the entire
understanding between the parties and there are no other agreements,
representations, warranties, or understandings, oral or written, between them
with respect to the subject matter hereof. No alteration, modification or
change of this Agreement shall be valid unless by like written instrument.
23.7. SEVERABILITY. It is the intent of the Parties that the
transactions contemplated by this Agreement be consummated. The event that any
of the provisions contained in this Agreement are held to be invalid, illegal
or unenforceable shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had not been contained herein and in a manner to fulfill the intent
of the Parties to the maximum extent possible.
23.8. NUMBER AND GENDER. Whenever required by the context, the
singular number shall include the plural and the masculine or neuter gender
shall include all genders.
23.9. ANNOUNCEMENTS/PRESS RELEASES. Subject to the requirements of
applicable law, all announcements and press releases, and their contents,
concerning this Agreement and the transactions contemplated herein shall be
mutually consented to by the Buyer and Seller prior to their release and such
consent shall not be unreasonably withheld or delayed. Buyer and Seller agree
that there shall be no public announcement or press release issued concerning
this Agreement and the transactions contemplated herein until the filing of the
FCC Application.
23.10. CONFIDENTIALITY. Subject to the requirements of applicable law,
Buyer and Seller shall each keep confidential all information obtained by it
with respect to the other Party hereto in connection with this Agreement and
the negotiations preceding this Agreement, and will use such information solely
in connection with the transactions contemplated by this Agreement, and if the
transactions contemplated hereby are not consummated for any reason, each shall
return to each other Party hereto, without retaining a copy thereof, any
schedules, documents or other written information obtained from such
<PAGE>
other Party in connection with this Agreement and the transactions contemplated
hereby. Notwithstanding the foregoing, no Party shall be required to keep
confidential or return any information which: (i) is known or available through
other lawful sources, not bound by a confidentiality agreement with the
disclosing Party; (ii) is or becomes publicly known through no fault of the
receiving Party or its agents; (iii) is required to be disclosed pursuant to an
order or request of a judicial or governmental authority (provided the
disclosing Party is given reasonable prior notice of the order or request and
the purpose of the disclosure); or (iv) is developed by the receiving Party
independently of the disclosure by the disclosing Party.
23.10.1. NON-DISCLOSURE OF PROPRIETARY INFORMATION. Except
with the written permission of the other Party, Buyer and Seller,
their respective officers, directors, stockholders, and affiliates,
jointly and severally, agree that for the term specified in SECTION
16.1, they shall not, directly or indirectly, disclose or divulge to
any unauthorized person or entity or in any way whatsoever use for
their commercial advantage, or to the other Party's commercial
disadvantage, any Proprietary Information. Neither Party, or their
respective officers, directors, stockholders and affiliates shall be
deemed to have violated this confidentiality covenant should a
disclosure be made as required by, but only to the extent such
disclosure is required by, the valid and legal order of any court or
governmental authority or agency and provided that the disclosing
Party shall have given prior notice to the other Party of any such
order. The provisions of this Section shall be specifically
enforceable against either Party in a court of law, and such
enforcement shall not bar the pursuit of other remedies.
23.11. ESSENCE OF TIME. Buyer and Seller agree that time is of the
essence respecting this Agreement.
23.12. SECTION 73.1150 STATEMENT. Both the Seller and the Buyer agree
that Seller has retained no rights of reversion of the Licenses for the
Stations, no right to the reassignment of the Licenses for the Stations in the
future, and has not reserved the right to use the facilities of the Stations in
the future for any reason whatsoever.
23.13. WAIVER. Unless otherwise specifically agreed by the Parties in
writing to the contrary, (i) the failure of either Party at any time to require
performance by the other of any provision of this Agreement shall not affect
such Party's right thereafter to enforce the same; (ii) no waiver by either
Party of any default by the other shall be taken or held to be a waiver by such
Party of any preceding or subsequent default; (iii) no extension of time
granted by either Party for the performance of any obligation or act by the
other Party shall be deemed to be an extension of time for the performance of
any other obligation or act hereunder; and (iv) no waiver shall be effective
against any Party unless it is in writing signed by that Party.
23.14. SCHEDULES AND EXHIBITS. All schedules, exhibits and riders
attached to this Agreement shall be deemed part of this Agreement and
incorporated herein, where applicable, as if set forth in full herein.
<PAGE>
23.15. LISTING OF EXHIBITS AND SCHEDULES.
Exhibit A Listing of real property;
Exhibit B Listing of licenses, permits and authorizations ;
Exhibit C Listing of contracts, agreements and leases;
Exhibit D Inventory of tangible personal property;
Exhibit E Escrow Agreement;
Exhibit F Schedule of encumbrances and conflicts;
Exhibit G Holdback Agreement;
Exhibit H Schedule of insurance policies;
Exhibit I Non-Compete Agreements;
Exhibit J Listing of individuals and entities to receive notices; and
Exhibit K Allocation of Payments
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date and year first above written.
TREASURE RADIO ASSOCIATES L.P.
BY: TREASURE RADIO, INC.,
GENERAL PARTNER
By: /s/ Harrison M. Fuerst
--------------------------------
Harrison M. Fuerst, President
FAIRCOM MANSFIELD INC.
By: /s/ Joel M. Fairman
--------------------------------
Joel M. Fairman, Chairman
HARRISON M. FUERST,
INDIVIDUALLY (For the limited
purpose of the Non-Compete
Agreement and any obligations
specifically provided for in
Section 4.3, and its
subparts, hereof)
By: /s/ Harrison M. Fuerst
-------------------------------
Harrison M. Fuerst
<PAGE>
[KOPPERMAN & WOLF LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference of our report on the financial statements of
Treasure Radio Associates Limited Partnership dated January 9, 1997 included in
the form 8-K/A of Amendment No. 2 of Faircom, Inc.
/s/ Kopperman & Wolf Co.
Cleveland, Ohio
September 11, 1997
