<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACTS OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED June 30, 1999
COMMISSION FILE NUMBERS:
ACME Intermediate Holdings, LLC 333-40277
ACME Television, LLC 333-40281
----------------
ACME INTERMEDIATE HOLDINGS, LLC
and
ACME TELEVISION, LLC
- --------------------------------------------------------------------------------
(Exact name of registrants as specified in their charter)
<TABLE>
<S> <C> <C>
Delaware ACME Intermediate Holdings, LLC 52-2050589
Delaware ACME Television, LLC 52-2050588
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
----------------
2101 E. Fourth Street, Suite 202
Santa Ana, California, 92705
(714) 245-9499
- --------------------------------------------------------------------------------
(Address and Telephone number of Principal Executive Offices)
----------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) have been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]
92.14% of the membership units of ACME Intermediate Holdings, LLC are owned
directly or indirectly by ACME Television Holdings, LLC. 100% of the membership
units of ACME Television, LLC are owned directly or indirectly by ACME
Intermediate Holdings, LLC. Such membership units are not publicly traded.
As of August 16, 1999, ACME Intermediate Holdings, LLC had 910,986 common
membership units outstanding.
As of August 16, 1999, ACME Television, LLC had 200 common membership units
outstanding.
================================================================================
<PAGE> 2
ACME INTERMEDIATE HOLDINGS, LLC
And
ACME TELEVISION, LLC
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
------ ----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ACME INTERMEDIATE HOLDINGS, LLC and Subsidiaries and
ACME TELEVISION, LLC and Subsidiaries
Consolidated Balance Sheets as of
June 30, 1999 and December 31, 1998.................................. 3
Consolidated Statements of Operations
for the Three Months Ended June 30, 1999 and June 30, 1998........... 4
Consolidated Statements of Operations
for the Six Months Ended June 30, 1999 and June 30, 1998............. 5
Consolidated Statements of Members' Capital.......................... 6
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1999 and June 30, 1998................................ 7
Notes to Consolidated Financial Statements........................... 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.................................................. 11
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................. 14
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS........................................................... 14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K............................................ 15
</TABLE>
2
<PAGE> 3
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
------------------------- --------------------------
1998 1999
------------------------- --------------------------
ACME ACME
INTERMEDIATE ACME INTERMEDIATE ACME
HOLDINGS TELEVISION HOLDINGS TELEVISION
------------ ---------- ------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 953 $ 953 $ 1,617 $ 1,617
Accounts receivable, net 10,609 10,609 13,151 13,151
Due from affiliates 4 131 5 5
Current portion of programming rights 6,357 6,357 6,508 6,508
Prepaid expenses and other current assets 414 414 767 767
--------- --------- --------- ---------
Total current assets 18,337 18,464 22,048 22,048
Property and equipment, net 16,441 16,441 25,002 25,002
Programming rights, net of current portion 8,046 8,046 5,757 5,757
Deposits 36 36 536 536
Deferred income taxes 3,811 3,811 3,971 3,971
Intangible assets, net 222,987 222,987 261,156 261,156
Other assets 17,187 15,592 10,808 9,237
--------- --------- --------- ---------
Total assets $ 286,845 $ 285,377 $ 329,278 $ 327,707
========= ========= ========= =========
LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Bank borrowings $ 8,000 $ 8,000 $ 39,400 $ 39,400
Accounts payable 4,425 4,425 4,951 4,951
Accrued liabilities 4,210 4,210 7,831 7,831
Due from affiliates -- -- 205 78
Current portion of programming rights
payable 7,649 7,649 6,082 6,082
Current portion of obligations under
lease 1,273 1,273 1,277 1,277
--------- --------- --------- ---------
Total current liabilities 25,557 25,557 59,746 59,619
Programming rights payable, net of
current portion 6,512 6,512 4,964 4,964
Obligations under lease, net of
current portion 4,199 4,199 4,078 4,078
Other liabilities 1,125 1,125 540 541
Deferred income taxes 31,241 31,241 30,439 30,439
10 7/8% Senior discount notes 145,448 145,448 153,357 153,357
12% Senior secured notes 42,051 -- 44,913 --
--------- --------- --------- ---------
Total liabilities 256,133 214,082 298,037 252,998
--------- --------- --------- ---------
Redeemable members' capital -- -- 15,366 --
--------- --------- --------- ---------
Members' capital 58,402 92,563 68,736 118,263
Accumulated deficit (27,690) (21,268) (52,861) (43,554)
--------- --------- --------- ---------
Total members' capital 30,712 71,295 15,875 74,709
--------- --------- --------- ---------
Total liabilities and members' capital $ 286,845 $ 285,377 $ 329,278 $ 327,707
========= ========= ========= =========
</TABLE>
See the notes to the consolidated financial statements
3
<PAGE> 4
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30,
-------------------------------------------------------------------
1998 1999
------------------------------- ---------------------------------
ACME ACME
INTERMEDIATE ACME INTERMEDIATE ACME
HOLDINGS, LLC TELEVISION, LLC HOLDINGS, LLC TELEVISION, LLC
------------- --------------- -------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net revenues $ 11,570 $ 11,570 $ 15,512 $ 15,512
Operating expenses:
Station operating expenses 9,214 9,214 11,560 11,560
Depreciation and amortization 3,332 3,332 4,393 4,393
Corporate 605 605 762 762
Equity-based compensation -- -- 8,200 8,200
-------- -------- -------- --------
Total operating expenses 13,151 13,151 24,915 24,915
-------- -------- -------- --------
Operating income (loss) (1,581) (1,581) (9,403) (9,403)
Other income (expenses):
Interest income 115 115 12 12
Interest expense (5,303) (4,004) (6,600) (5,108)
-------- -------- -------- --------
Net loss before income taxes (6,769) (5,470) (15,991) (14,499)
Income tax benefit 385 385 191 191
-------- -------- -------- --------
Net loss $ (6,384) $ (5,085) $(15,800) $(14,308)
======== ======== ======== ========
</TABLE>
See the notes to the consolidated financial statements
4
<PAGE> 5
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------------
1998 1999
------------------------------- ---------------------------------
ACME ACME
INTERMEDIATE ACME INTERMEDIATE ACME
HOLDINGS, LLC TELEVISION, LLC HOLDINGS, LLC TELEVISION, LLC
------------- --------------- -------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net revenues $ 19,327 $ 19,327 $ 26,635 $ 26,635
Operating expenses:
Station operating expenses 15,165 15,165 19,990 19,990
Depreciation and amortization 4,181 4,181 8,159 8,159
Corporate 1,194 1,194 1,483 1,483
Equity-based compensation -- -- 10,700 10,700
-------- -------- -------- --------
Total operating expenses 20,540 20,540 40,332 40,332
-------- -------- -------- --------
Operating income (loss) (1,213) (1,213) (13,697) (13,697)
Other income (expenses):
Interest income 188 188 20 20
Interest expense (10,194) (7,683) (12,430) (9,545)
-------- -------- -------- --------
Net loss before income taxes (11,219) (8,708) (26,107) (23,222)
Income tax benefit 365 365 936 936
-------- -------- -------- --------
Net loss $(10,854) $ (8,343) $(25,171) $(22,286)
======== ======== ======== ========
</TABLE>
See the notes to the consolidated financial statements
5
<PAGE> 6
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBERS' CAPITAL
<TABLE>
<CAPTION>
ACME INTERMEDIATE HOLDINGS, LLC
--------------------------------
COMMON TOTAL
MEMBERS' ACCUMULATED MEMBERS'
CAPITAL DEFICIT CAPITAL
-------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at December 31, 1998 58,402 (27,690) 30,712
Contribution of Parent 10,700 -- 10,700
Redeemable preferred dividend (366) -- (366)
Net loss -- (25,171) (25,171)
-------- -------- --------
Balance at June 30, 1999 (unaudited) 68,736 (52,861) 15,875
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
ACME TELEVISION, LLC
--------------------------------
TOTAL
MEMBERS' ACCUMULATED MEMBERS'
CAPITAL DEFICIT CAPITAL
-------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at December 31, 1998 92,563 (21,268) 71,295
Equity-based compensation 10,700 -- 10,700
Contribution of Parent 15,000 -- 15,000
Net loss -- (22,286) (22,286)
-------- -------- --------
Balance at June 30, 1999 (unaudited) $118,263 $(43,554) $ 74,709
======== ======== ========
</TABLE>
6
<PAGE> 7
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
------------------------------------------------------------------
JUNE 30, 1998 JUNE 30, 1999
----------------------------- ------------------------------
ACME ACME ACME ACME
INTERMEDIATE TELEVISION, INTERMEDIATE TELEVISION,
HOLDINGS, LLC LLC HOLDINGS, LLC LLC
------------- ----------- ------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(10,854) $ (8,343) $(25,171) $(22,286)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 4,181 4,181 8,159 8,159
Amortization of program rights 2,195 2,195 3,250 3,250
Amortization of debt issuance costs 185 180 285 261
Amortization of discount on senior discount notes 6,934 6,934 7,909 7,909
Amortization of discount on senior secured notes 2,503 -- 2,861 --
Non-cash compensation expense - Management Carry Units -- -- 10,700 10,700
Deferred taxes (345) (345) (962) (962)
Changes in assets and liabilities: -- -- -- --
Increase in accounts receivables, net (4,013) (4,013) (2,542) (2,542)
Increase in prepaid expenses (691) (691) (353) (353)
(Increase) decrease in due from affiliates -- -- 126 126
(Increase) other assets -- -- (2,583) (2,583)
Increase in accounts payable 102 102 526 526
Increase in accrued expenses 4,304 4,304 3,621 3,621
Payments on programming rights payable (2,853) (2,853) (4,227) (4,227)
Decrease in other liabilities (1,727) (1,730) (505) (505)
-------- -------- -------- --------
Net cash provided by (used in) operating activities (79) (79) 1,094 1,094
-------- -------- -------- --------
Cash flows from investing activities:
Purchase of property and equipment (3,934) (3,934) (4,493) (4,493)
Purchase of station interests (17,635) (17,635) (41,265) (41,265)
Cash acquired in acquisition - St. Louis 779 779 -- --
Deposits relating to station acquisitions -- -- (500) (500)
-------- -------- -------- --------
Net cash used in investing activities (20,790) (20,790) (46,258) (46,258)
-------- -------- -------- --------
Cash flows from financing activities:
Increase in notes payable to bank 12,000 12,000 31,400 31,400
Borrowings under (repayments of) capital leases 1,935 1,935 (572) (572)
Issuance of redeemable preferred membership units -- -- 15,000 --
Issuance of membership units -- -- -- 15,000
-------- -------- -------- --------
Net cash provided by financing activities 13,935 13,935 45,828 45,828
-------- -------- -------- --------
Net increase (decrease) in cash (6,934) (6,934) 664 664
Cash at beginning of period 8,820 8,820 953 953
-------- -------- -------- --------
Cash at end of period $ 1,886 $ 1,886 $ 1,617 $ 1,617
======== ======== ======== ========
Cash Payments for:
Interest 121 121 630 630
Taxes 18 18 25 25
======== ======== ======== ========
Non-Cash Transactions:
Purchases of property and equipment in exchange
for capital lease obligations 2,036 2,036 438 438
Exchange of note receivable and option deposit as
purchase consideration for station interest -- -- 7,000 7,000
Contribution of Parent for membership units $ 7,050 $ 7,050 $ -- $ --
======== ======== ======== ========
</TABLE>
See the notes to the consolidated financial statements
7
<PAGE> 8
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 1999 and June 30, 1998
(Unaudited)
(1) DESCRIPTION OF THE BUSINESS AND FORMATION
Presentation/Interim Financial Statements
Financial statements are presented for each of ACME Intermediate Holdings, LLC
and its subsidiary, ACME Television, LLC. Unless the context requires otherwise,
references to the "Company" refers to ACME Intermediate Holdings; LLC and its
consolidated subsidiaries and references to "ACME Television" refer to ACME
Television, LLC and its consolidated subsidiaries. Segment information is not
presented since all of the Company's revenue is attributed to a single
reportable segment. Certain amounts previously reported for 1998 have been
reclassified to conform to the 1999 financial statement presentation.
The accompanying consolidated financial statements for the six months ended June
30, 1999 and 1998 are unaudited and have been prepared in accordance with
generally accepted accounting principles, the instructions to this Form 10-Q and
Article 10 of Regulation S-X. In the opinion of management, such financial
statements include all adjustments (consisting of normal recurring accruals)
considered necessary for the fair presentation of the financial position and the
results of operations, and cash flows for these periods. As permitted under the
applicable rules and regulations of the Securities and Exchange Commission,
these financials statements do not include all disclosures and footnotes
normally included with audited consolidated financial statements, and
accordingly, should be read in conjunction with the consolidated financial
statements, and the notes thereto, included in the integrated Annual Report on
Form 10-K for ACME Television and ACME Intermediate for the year ended December
31, 1998. The results of operations presented in the accompanying financial
statements are not necessarily indicative of the results that may be expected
for the year ending December 31, 1999.
Nature of Business
ACME Intermediate Holdings, LLC is a holding company with no assets or
independent operations other than its wholly-owned subsidiary, ACME Television,
LLC. ACME Television, through its subsidiaries, owns and/or operates the
following nine commercially licensed broadcast television stations (the
"Stations" or "Subsidiaries") located throughout the United States:
<TABLE>
<CAPTION>
Network
Station Market Affiliation Status
------- ------ ----------- ------
<S> <C> <C> <C>
KPLR - 11 St. Louis WB Owned and Operated
KWBP - 32 Portland, OR WB Owned and Operated
KUWB - 30 Salt Lake City WB Operated/Not Owned
KUPX - 16 Salt Lake City PAX Owned/Not Operated
KWBQ - 19 Albuquerque WB Owned and Operated
WBXX - 20 Knoxville WB Owned and Operated
WTVK - 46 Ft. Myers/Naples WB Owned and Operated
WBDT - 26 Dayton WB Owned and Operated
WIWB - 14 Green Bay WB Owned and Operated
WBUI - 23 Champaign-Springfield-Decatur WB Owned and Operated
</TABLE>
(2) ACQUISITIONS
On March 13, 1998, ACME Missouri completed its acquisition of Koplar
Communications, Inc. ("KCI") and acquired all of the outstanding stock of KCI
for a total consideration of approximately $146.3 million. The acquisition was
accounted for using the purchase method. Pursuant to an interim LMA entered into
with KCI in connection with the acquisition, effective October 1, 1997 all
revenues and operating expenses of the station for the period from September 30,
1997 to March 31, 1998 (the effective date of the purchase transaction) are
included in ACME Television's historical operating results. The purchase
transaction was recorded on the consolidated balance sheet of ACME Television
effective March 31, 1998 and beginning on April 1, 1998, ACME Television's
results includes the amortization of all intangible assets related to the
acquisition.
8
<PAGE> 9
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Six Months Ended June 30, 1999 and June 30, 1998
(Unaudited)
On June 30, 1998, ACME Television acquired substantially all the assets and
assumed certain liabilities of WTVK-Channel 46 serving the Fort Myers/Naples,
Florida marketplace for approximately $14.5 million in cash and 1,047 membership
units in ACME Intermediate's parent, ACME Television Holdings, LLC ("ACME
Parent"), (valued at approximately $1.0 million). The acquisition was accounted
for using the purchase method and the value of the Parent membership units
issued was treated as a contribution from ACME Parent to ACME Intermediate and
then from ACME Intermediate to ACME Television. The excess of the purchase price
over the fair value of the net assets assumed of approximately $15.5 million was
recorded as an intangible asset and is being amortized over a period of 20
years. In connection with the acquisition, ACME Television entered into an LMA
agreement with WTVK wherein ACME Television, effective March 3, 1998, retained
all revenues generated by the station, bore all operating expenses of the
station and had the right to program the station (subject to WTVK's ultimate
authority for programming) and the station's existing ACME programming
commitments. The LMA terminated upon the consummation of the acquisition.
Consequently, under the LMA the revenues and operating expenses of the station
are included in the Company's results of operations from March 3, 1998 to June
30, 1998. The purchase transaction was recorded on the consolidated balance
sheet of the Company on June 30, 1998 and the Company's results of operations
includes revenues and expenses (including amortization of intangible assets)
beginning July 1, 1998.
On February 16, 1999, ACME Television acquired the remaining 51% interest in
Station KUPX in exchange for the payment of $7.0 million (consisting of (i) $3.0
million paid in December 1997 for an option to acquire the remaining 51% of
Station KUPX and (ii) $4.0 million in repayment of a loan from ACME Parent to
the sellers of this station) plus approximately $1.0 million in cash. In March
1999, the FCC approved the swap of station KUPX for station KUWB, which ACME
Television has been operating under an LMA since April 1998. Station KUPX has
been operated by the current owner of Station KUWB since May 1998 under a
reciprocal LMA agreement. The station swap is expected to close during the third
quarter of 1999, at which time the LMAs will terminate. ACME Television intends
to account for the swap as a non-monetary transaction using its historical cost
and believes that the fair value of station KUWB approximates the historical
cost of station KUPX.
On February 19, 1999, ACME Television entered into an agreement in principle
with Ramar Communications ("Ramar") to acquire the assets of Ramar's station,
KASY TV-50, serving the Albuquerque, NM, market for approximately $27 million.
In a related transaction, ACME Television will concurrently sell to Ramar the
broadcast license to operate station KWBQ, also serving the Albuquerque market.
ACME Television will also enter into a 10-year LMA agreement with Ramar to
operate KWBQ. This transaction has been approved by the FCC and is expected to
close in the fourth quarter of 1999. At the closing, Ramar will grant an
affiliate of the Company an option to repurchase KWBQ for $100,000 which we
expect will be assigned to us immediately after the closing of the sale of KWBQ
to Ramar.
On April 23, 1999, ACME Television through its newly created subsidiaries ACME
Television of Ohio, LLC ("ACME Ohio"), ACME Television of Illinois, LLC ("ACME
Illinois") and ACME Television of Wisconsin, LLC ("ACME Wisconsin"), acquired
all of the property and equipment of three wholly-owned subsidiaries of Paxson
Communications Corporation ("Paxson"): Paxson Communications of Dayton-26, Inc.
(Station WBDT, Channel 26, which is licensed to broadcast in the Dayton, Ohio
market), Paxson Communications of Green Bay-14, Inc. (Station WIWB, Channel 14,
which is licensed to broadcast in the Green Bay, Wisconsin market) and Paxson
Communications of Decatur-23, Inc. (Station WBUI, Channel 23, which is licensed
to broadcast in the Champaign-Decatur, Illinois market) (collectively, the
"Acquired Stations") for an aggregate purchase price of $32 million. Following
FCC approval of the transfer of the broadcast licenses and pursuant to the same
Asset Purchase Agreement , ACME acquired the licenses of the Acquired Stations
(the "Licenses Acquisition") for an additional aggregate consideration of $8
million on June 23, 1999. ACME Television operated the three stations under an
interim LMA agreement beginning June 2, 1999 and the operating results of the
three stations from the commencement of the LMA until the closing of the license
acquisition are included in the Company's results of operation for the second
quarter.
9
<PAGE> 10
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Six Months Ended June 30, 1999 and June 30, 1998
(Unaudited)
(3) ISSUANCE OF REDEEMABLE PREFERRED MEMBERSHIP UNITS
On April 23, 1999, in connection with the acquisition of the property and
equipment assets of the Paxson Acquired Stations, ACME Intermediate issued 7,000
units of a newly created class of mandatory redeemable preferred membership
units to ACME Parent in exchange for a $7 million cash contribution. On June 23,
1999, an additional $8 million contribution was received by ACME Intermediate
from ACME Parent in exchange for 8,000 preferred units. ACME Intermediate, on
the same days of receipt from ACME Parent, contributed to ACME Television the
aggregate $15 million.
The terms of the ACME Intermediate preferred units provide for dividend accruals
at the rate of 22.5% per annum for the first six months following issuance.
Thereafter, the dividend rate increases 2.5% every three months until it reaches
a 35% cap. All dividends along with the par value of the preferred units are
mandatorily redeemable to ACME Parent on the earlier of (a) the completion of
new permanent financing, including an initial public offering or a debt offering
or (b) October 1, 2005. ACME Intermediate may redeem, in whole or in part, the
preferred units earlier than the mandatory redemption date, without penalty, if
either by that date its Senior Secured Notes have been redeemed, or if approved
by a majority of those noteholders.
(4) RELATED PARTY TRANSACTIONS
In February 1999, ACME Parent acquired a 25% membership interest in Sylvan
Tower, LLC - an entity formed for the sole purpose of building digital
transmission facilities to service the Portland, Oregon marketplace - for
approximately $2.5 million. ACME Parent subsequently entered into an agreement
to enter into a long-term lease with ACME Television of Oregon, LLC (a
subsidiary of ACME Television ("ACME Oregon") which allows station KWBP to
install and operate a digital television antenna and transmitter at the site. In
connection with the acquisition of this lease, ACME Oregon paid to ACME Parent
approximately $2.5 million, which has been treated as deferred tower rent and is
included in other non-current assets as of June 30, 1999.
Also in February 1999, ACME Oregon exercised its option to purchase the property
where KWBP's corporate and studio facilities are located for $1.5 million from a
member of ACME Parent. Before this purchase, the same facility was leased from
an affiliate of this same member.
(5) CERTAIN COMPENSATION ARRANGEMENTS
ACME Parent has issued Management Carry Units ("MCUs") to certain founding
members of management. These units entitle the holders to certain distribution
rights, payable by ACME Parent, upon achievement of certain returns by
non-management investors and are subject to partial forfeiture or repurchase by
ACME Parent in the event of termination of each individual's employment by ACME
Parent under certain specified circumstances. These MCUs are accounted for as a
variable compensation plan, resulting in an expense when it is probable that any
such distributions will be made. Inasmuch as these MCUs represent a non-cash
expense to the Company, any expense incurred by the Company shall be deemed to
have been funded by a capital contribution from ACME Parent. For the six months
ended June 30, 1999 the Company has recorded compensation expense and a
corresponding capital contribution of $10.7 million related to the MCUs. For the
six months ended June 30, 1998, no expense or related capital contribution was
recorded.
(6) SUBSEQUENT EVENTS
On August 2, 1999, ACME Parent announced its plan to reorganize as ACME
Communications, Inc. in connection with a proposed initial public offering filed
by ACME Communications on Form S-1 with the Securities and Exchange Commission
on July 30, 1999. There is no guarantee that ACME Communications will be able to
complete its initial public offering.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We derive our revenues primarily from the sale of advertising time to local,
regional and national advertisers. Our revenues depend on our ability to provide
popular programming that attracts audiences in the demographic groups targeted
by advertisers, thereby allowing us to sell advertising time at satisfactory
rates. Our revenues also depend significantly on factors such as the national
and local economy and the level of local competition.
Our revenues are generally highest during the fourth quarter of each year,
primarily due to increased expenditures by advertisers in anticipation of
holiday season consumer spending and an increase in viewership during this
period. We generally pay commissions to advertising agencies on local, regional
and national advertising and to national sales representatives on national
advertising. Our revenues reflect deductions from gross revenues for commissions
payable to advertising agencies and national sales representatives.
Our primary operating expenses are programming costs, employee compensation,
advertising and promotion expenditures and depreciation and amortization.
Programming expense consists primarily of amortization of broadcast rights
relating to syndicated programs as well as news production and sports rights
fees. Changes in employee compensation expense result primarily from increases
in total staffing levels, from adjustments to fixed salaries based on individual
performance and inflation and from changes in sales commissions paid to our
sales staff based on levels of advertising revenues. Advertising and promotion
expenses consist primarily of media and related production costs resulting from
the promotion of our stations and programs. This amount is net of any
reimbursement received or due for such advertisement and promotion from any
network, including The WB Network, or other program provider.
RESULTS OF OPERATIONS
The following table sets forth certain historical financial data for the periods
indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- -----------------------
1999 1998 1999 1998
-------- ------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net revenues $ 15,512 $11,570 $ 26,635 $ 19,327
Operating income (loss) (9,403) (1,581) (13,697) (1,213)
Net loss - ACME Television (14,308) (5,085) (22,286) (8,343)
Net loss - ACME Intermediate (15,800) (6,384) (25,171) (10,854)
Statement of Cash Flow Data:
Net cash provided by (used in)
operating activities N/A N/A 1,094 (79)
Net cash used in investing
activities N/A N/A (46,258) (20,790)
Net cash provided by (used in)
financing activities N/A N/A 45,828 13,935
Certain Other Financial Data:
Broadcast cash flow (1)(3) 3,883 2,712 6,516 4,433
Broadcast cash flow margin(1) 25.0% 23.4% 24.5% 22.9%
EBITDA(2)(3) 3,122 2,107 5,033 3,239
EBITDA margin(2)(3) 20.1% 18.2% 18.9% 16.8%
LMA fees -- 171 -- 228
Amortization of program rights 1,668 1,186 3,250 2,195
Adjusted program payments (1) 1,736 1,001 3,379 2,152
</TABLE>
- ----------
(1) "Broadcast cash flow" is defined as operating income, plus depreciation and
amortization, program amortization, non-cash equity based compensation, LMA
fees and corporate overhead, less program payments - the latter as adjusted
to reflect reductions for impaired or expired rights in connection with
acquisitions. We define broadcast cash flow margin as broadcast cash flow
as a percentage of net revenues.
11
<PAGE> 12
(2) We define "EBITDA" as broadcast cash flow less corporate expenses. EBITDA
margin is EBITDA as a percentage of net revenues.
(3) We have included broadcast cash flow and EBITDA data because we believe
such data is a useful measure for evaluating the operating performance of
our station group. Broadcast cash flow eliminates the effect of
depreciation and amortization which relate to acquisitions under the
purchase method of accounting, the impact of accelerated program
amortization and the impact of corporate expenses, and allows for an
evaluation of the operating performance of the our stations relative to
that of the our competitors which may not have similar depreciation,
amortization or corporate structures. EBITDA is used to pay principal and
interest on long-term debt and to fund capital expenditures. Our
definitions of broadcast cash flow and EBITDA may not be comparable to
similarly titled measures presented by other companies. Broadcast cash flow
and EBITDA are not, and should not be used as indicators or alternatives to
operating income, net loss or cash flow as reflected in the consolidated
financial statements, are not measures of financial performance under
generally accepted accounting principles and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
Net revenues increased 34% to $15.512 million for the second quarter and
increased 38% to $26.635 million for the first half of 1999 compared to the same
periods a year ago. These gains reflect solid growth at our flagship station
KPLR and significant increases in net revenues at our stations in Portland,
Oregon (KWBP), Salt Lake City (KUWB) and Knoxville (WBXX). The revenue gains in
these markets have been driven by improved audience ratings at these stations.
Station operating expenses increased 28% to $11.560 million for the second
quarter and increased 33% to $19.990 million for the first half of 1999 compared
to the same periods a year ago. These increases are primarily related to
increased programming and staffing related costs at our developing stations in
Portland, Oregon, Salt Lake City, Albuquerque, Knoxville and Ft. Myers.
Depreciation and amortization increased 32% to $4.393 million in the second
quarter and increased 95% to $8.159 million during the first half of 1999
compared to the corresponding periods a year ago. The second quarter increase
relates primarily to the increased depreciation of property, plant and equipment
additions since June 1998 and to the amortization of intangibles related to our
WTVK - Ft. Myers acquisition in June 1998. The significant increase for the
first half primarily relates to the March 1998 acquisition of KPLR - St. Louis
and the resulting amortization of intangibles for that station.
Corporate expenses increased 7% to $762,000 for the second quarter and increased
14% to $1.483 million for the first half of 1999. These increases in corporate
overhead relate primarily to increased staffing to support the growing
operations of our station group.
Equity-based compensation expense during the quarter was $8.2 million and for
the first half of 1999 totaled $10.7 million. There was no corresponding expense
in 1998. This expense, which is related to the June 1997 grant by ACME Parent of
Management Carry Units (MCU's) to the Company's founding executives, reflects
the significant increase in estimated value of ACME Parent during the past six
months and the resulting value of the MCU's. The increase in ACME Parent's value
has been driven primarily by the success of The WB Network, the recent results
of the Company and the increased number of the stations under ownership and
management.
Interest expense for ACME Television for the second quarter was $5.108 million,
an increase of 27% over the prior year second quarter. First half interest
expense increased 24% to $9.545 million. These increases in interest expense
relate primarily to the continued increased principal balance of ACME
Television's 10 7/8% senior discount notes and the April 1999 borrowings on the
Company's revolving credit facility in connection with the acquisition of the
Paxson Stations.
Interest expense for ACME Intermediate for the second quarter was $6.600
million, an increase of 24% over the prior year second quarter. First half
interest expense increased 22% to $12.430 million. These increases in interest
expense relate primarily to the increased ACME Television interest expense and
the continued increased principal balance of ACME Intermediate's 12% senior
secured notes.
The Company recorded a net income tax benefit of $191,000 during the second
quarter compared to a benefit of $385,000 in the corresponding quarter of 1998.
This decrease relates to a decrease in the tax loss generated by Station KPLR.
For the first half of 1999, the Company recorded a tax benefit of $936,000
compared to a benefit of $365 for the first half of 1998. This increase in the
deferred tax benefits relates primarily to the fact that Station KPLR was not
acquired until March 1999 and accordingly, there was no tax benefit for the
first quarter of 1998.
12
<PAGE> 13
ACME Intermediate's and ACME Television's net losses for the second quarter were
$15.8 million and $14.308 million, respectively, compared to net losses for the
second quarter of 1998 of $6.384 million and $5.085 million, respectively. These
increased net losses of approximately $9.4 million for ACME Intermediate and
$9.2 million for ACME Television are attributable primarily to the $8.2 million
equity-based compensation charge in the second quarter, increased interest
expense and increased depreciation and amortization, net of improved operating
results (exclusive of depreciation and amortization) at the stations. For the
first half, ACME Intermediate's net loss was $25.2 million compared to a $10.9
million net loss in the prior year period and ACME Television's net loss was
$22.3 million compared to $8.3 million net loss in the prior year period. These
increased losses were primarily attributable to the $10.2 million equity-based
compensation charge for the first half of 1999, the increased amortization
relating to the March 1998 acquisition of KPLR and increased interest expense,
offset somewhat by improved operating results (exclusive of depreciation and
amortization) at the stations.
Broadcast cash flow for the second quarter increased 48% to $3.883 million and
for the first half increased 47% to $6.516 million. These increases were driven
by significant revenue gains and improved operating margins at all of our
stations. EBITDA increased 48% to $3.122 million for the second quarter and
increased 55% for the first half due to increased broadcast cash flow and a
lower growth of corporate expenses compared to our broadcast cash flow growth.
Liquidity and Capital Resources
Cash flows provided by operating activities for ACME Television and ACME
Intermediate were $1.1 million for the six months ended June 30 1999 compared to
cash flows used by operating activities of $79,000 for the first half of 1998.
This increase is related primarily to the Company's improved broadcast cash flow
for the period, offset by increased working capital needs.
Cash flows used by the Company in investing activities during the first half of
1999 were $46.3 million compared to $20.8 million used for investing activities
during the first six months of 1998. This increase relates primarily to the
acquisition of the Paxson Stations as described in note 2.
Cash flows provided by financing activities for the Company of $45.8 million for
the first half of 1999 related primarily to increased borrowings and the
issuance of membership units in connection with the second quarter 1999
acquisition of the Paxson Stations.
At June 30 1999, ACME Television's existing credit agreement allows for
revolving credit borrowings of up to a maximum of $40 million, dependent upon
its meeting certain financial ratio tests as set forth in the credit agreement.
The revolving credit facility can be used to fund future acquisitions of
broadcast stations and for general corporate purposes. At June 30 1999, $39.4
million was outstanding and $600,000 was available under the facility. The
interest rate on this outstanding principal amount was 8.00% per annum at June
30 1999.
ACME Television's 10 7/8% Senior Discount Notes, issued in September 1997, do
not accrue cash interest until October 1, 2000 with the first semi-annual
payment of interest due on June 30 2001. ACME Intermediate's 12% Senior Secured
Notes, also issued in September 1997, do not accrue cash interest until October
1, 2002 with the first semi-annual payment of interest due on June 30 2003.
The Company believes that internally generated funds from operations and
borrowings under its credit agreement, if necessary, will be sufficient to
satisfy the Company's cash requirements for its existing operations for at least
the next twelve months. The Company expects that any future acquisitions of
television stations would be financed through funds generated from operations,
through borrowings under the existing credit agreement and through additional
debt and equity financings. However there is no guarantee that such additional
debt and/or equity financing and/or equity contributions by ACME Parent will be
available or available at rates acceptable to the Company.
Year 2000
The Year 2000 ("Y2K") issues are a result of computer software applications
using a two-digit format, as opposed to a four-digit format, to indicate the
year. Some computer software applications might be unable to uniquely
distinguish dates beyond the year 1999, which could cause a system failure, or
miscalculations at our broadcast and corporate locations which could cause
disruption of operations, including a temporary inability to produce broadcast
signals or engage in normal business activities.
ACME Television is in the process of evaluating potential Year 2000 (Y2K) issues
for both its information technology (IT) and non-IT systems such as
13
<PAGE> 14
telephone/PBX systems, fax machines, editing equipment, cameras, microphones,
etc). All internal software and hardware is purchased, leased or licensed from
third party vendors. Most of the Company's station facilities are new or have
been recently upgraded and the Company has polled all of its significant
software vendors and has been advised by them that their software is Y2K
compliant.
The Company has completed its assessment, planning and testing phases, and has
commenced the final phase of its Y2K project-implementation. During this phase,
the Company will fix, retest and implement critical applications that were
discovered to be Y2K deficient during the preceding phases.
At this point in time, the Company is not aware of any additional significant
upgrades or changes that will need to be made to its internal software and
hardware to become Y2K ready, nor is it aware of any material supplier with Y2K
readiness problem, but this is subject to change as the compliance testing
process continues. The Company expects to be able to implement the systems and
programming changes necessary to address Y2K IT and non-IT readiness issues and,
based on preliminary estimates, does not believe that the costs associated with
such actions will have a material effect on the Company's results of operations
or financial condition. There can be no assurance, however, that there will not
be a delay in, or increased costs associated with the implementation of such
changes.
Adoption of Accounting Standard
The Company has adopted FASB (Financial Accounting Standards Board) statement
No. 133 "Accounting for Derivative Instruments and Hedging Activities". This
pronouncement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, (collectively referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. This pronouncement is not expected to impact the Company's
financial statements as the Company has no derivative instruments at June 30,
1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ACME Television's revolving credit facility has a variable interest rate.
Accordingly, the Company's interest expense can be materially affected by future
fluctuations in the applicable interest rate. Based on our June 30, 1999 loan
balance under the facility, a 100 basis point increase in the underlying rates
would result in additional interest expense of $3.9 million on an annualized
basis.
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
The Company currently and from time to time is involved in litigation incidental
to the conduct of its business. The Company maintains comprehensive general
liability and other insurance, which it believes to be adequate for the purpose.
The Company is not currently a party to any lawsuit or proceeding that
management believes would have a material adverse affect on its financial
condition or results of operations.
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
3.1 Certificate of Formation of ACME Intermediate Holdings, LLC,
incorporated by reference to Exhibit 3.1 of ACME Intermediate
Holdings, LLC's Registration Statement on Form S-4, File No.
333-40277 filed on November 14, 1997 (the "Intermediate Registration
Statement").
3.2 Amended and Restated Limited Liability Company Agreement of ACME
Intermediate Holdings, LLC dated September 24, 1997, incorporated by
reference to Exhibit 3.2 of the Intermediate Registration Statement.
3.3* Amendment to Amended and Restated Limited Liability Company
Agreement of ACME Intermediate Holdings, LLC, dated August 25, 1998.
3.4* Second Amended and Restated Limited Liability Company Agreement of
ACME Intermediate Holdings, LLC dated April 23, 1999.
3.5 Certificate of Formation of ACME Television, LLC, incorporated by
reference to Exhibit 3.1 of ACME Television, LLC's Registration
Statement on Form S-4, File No. 333-40281, filed on November 14,
1997 (the "Television Registration Statement").
3.6 Limited Liability Company Agreement of ACME Television, LLC,
incorporated by reference to Exhibit 3.2 of the Television
Registration Statement.
4.1 Indenture, dated September 30, 1997, by and among ACME Intermediate
Holdings, LLC and ACME Intermediate Finance, Inc., as Issuers, and
Wilmington Trust Company, incorporated by reference to Exhibit 4.2
of the Intermediate Registration Statement.
4.2 Form of Securities of ACME Intermediate Holdings, LLC, incorporated
by reference to Exhibit 4.3 of the Intermediate Registration
Statement.
4.3 Indenture, dated September 30, 1997, by and among ACME Television,
LLC and ACME Finance Corporation, as Issuers, the Guarantors named
therein, and Wilmington Trust Company, incorporated by reference to
Exhibit 4.1 of the Television Registration Statement.
4.5 First Supplemental Indenture, dated February 11, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company, incorporated by
reference to Registrant's Quarterly Report on Form 10-Q for the
period ending June 30 1998.
4.6 Second Supplemental Indenture, dated March 13, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company, incorporated by
reference to Registrant's Quarterly Report on Form 10-Q for the
period ending March 31, 1998.
4.7 Third Supplemental Indenture, dated August 21, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, as issuers, the
Guarantors named therein, and Wilmington Trust Company, incorporated
by reference to Registrant's Quarterly Report on Form 10-Q for the
period ending September 30, 1998.
15
<PAGE> 16
10.1 Asset Purchase Agreement, dated April 23, 1999, by and among Paxson
Communications Corporation, Paxson Communications License Company,
LLC, Paxson Communications, of Green Bau-14, Inc., Paxson
Communications of Dayton-26, Inc., Paxson Dayton License, Inc.,
Paxson Communications of Decatur-23, Inc., Paxson Decatur License,
Inc., ACME Television of Ohio, LLC, ACME Television Licenses of
Ohio, LLC, ACME Television of Wisconsin, LLC, ACME Television
Licenses of Wisconsin, LLC, ACME Television of Illinois, LLC and
ACME Television Licenses of Illinois, LLC for WDPX(TV), Springfield,
Ohio, WPXG(TV), Suring WI and WPXU(TV), Decatur, IL. Incorporated by
reference to Registrant's Current Report on Form 8-K filed on May 7,
1999.
10.2 Time Brokerage Agreement, Dated April 23, 1999, by and among Paxson
Communications Licenses Company, LLC, Paxson Communications of Green
bay-14, Inc., and ACME Television of Wisconsin, LLC for Station
WPXG-TV, Suring, Wisconsin. Incorporated by reference to the
Registrant's report on Form 8-K filed May 7, 1999
10.3 Time Brokerage Agreement, Dated April 23, 1999, by and among Paxson
Dayton Licenses Inc., Paxson Communications of Decatur-23, Inc., and
ACME Television of Illinois, LLC for Station WPXU-TV, Decatur,
Illinois. Incorporated by reference to the Registrant's report on
Form 8-K filed May 7, 1999.
10.4 Time Brokerage Agreement, Dated April 23, 1999, by and among Paxson
Decatur Licenses Inc., Paxson Communications of Dayton-26, Inc., and
ACME Television of Ohio, LLC for Station WDPX-TV, Springfield, Ohio.
Incorporated by reference to the Registrant's report on Form 8-K
filed May 7, 1999.
10.5 Joint Sales Agreement by and between ACME Television Holdings, LlC
and DP Media, Inc., dated April 23, 1999. Incorporated by reference
to the Registration Statement for ACME Communications, Inc. on Form
S-1 No. 333-84191, filed on July 30, 1999.
10.6 Option Agreement dated April 23, 1999 by and between ACME Television
Holdings, LLC and DP Media, Inc. Incorporated by reference to the
Registration Statement for ACME Communications, Inc. on Form S-1 No.
333-84191, filed on July 30, 1999.
10.7 Amendment No. 1 to First Amended and Restated Credit Agreement,
dated June 30, 1998. Incorporated by reference to the Registration
Statement for ACME Communications, Inc. on Form S-1 No. 333-84191,
filed on July 30, 1999.
10.8 Amendment No. 2 to First Amended and Restated Credit Agreement,
dated June 30, 1998. Incorporated by reference to the Registration
Statement for ACME Communications, Inc. on Form S-1 No. 333-84191,
filed on July 30, 1999.
10.9 Third amendment to First Amended and Restated Credit Agreement,
dated March 1, 1999. Incorporated by reference to the Registration
Statement for ACME Communications, Inc. on Form S-1 No. 333-84191,
filed on July 30, 1999.
10.10 Fourth Amendment to First Amended and Restated Credit Agreement,
dated April 23, 1999. Incorporated by reference to the Registration
Statement for ACME Communications, Inc. on Form S-1 No. 333-84191,
filed on July 30, 1999.
27.1* Financial Data Schedule for ACME Intermediate Holdings, LLC,
available in electronic format as filed by the Registrant.
27.2* Financial Data Schedule for ACME Television, LLC, available in
electronic format as filed by the Registrant.
- ------------
* Filed herewith
b) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K on July 7, 1999, for the Asset
Purchase Agreement dated April 23, 1999, described in the notes to the financial
statements, as filed herewith, under the caption "Acquisitions".
16
<PAGE> 17
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 thereunto duly authorized.
ACME TELEVISION, LLC.
Date: August 16, 1999 By: /s/ Doug Gealy
---------------------------------
Doug Gealy, President
Date: August 16, 1999 By: /s/ Thomas D. Allen
---------------------------------
Thomas D. Allen
Executive Vice President/CFO
(principal financial officer)
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 thereunto duly authorized.
ACME INTERMEDIATE HOLDINGS, LLC.
Date: August 16, 1999 By: /s/ Doug Gealy
--------------------------------
Doug Gealy, President
Date: August 16, 1999 By: /s/ Thomas D. Allen
--------------------------------
Thomas D. Allen
Executive Vice President/CFO
(principal financial officer)
17
<PAGE> 18
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
3.1 Certificate of Formation of ACME Intermediate Holdings, LLC,
incorporated by reference to Exhibit 3.1 of ACME Intermediate
Holdings, LLC's Registration Statement on Form S-4, File No.
333-40277 filed on November 14, 1997 (the "Intermediate Registration
Statement").
3.2 Amended and Restated Limited Liability Company Agreement of ACME
Intermediate Holdings, LLC dated September 24, 1997, incorporated by
reference to Exhibit 3.2 of the Intermediate Registration Statement.
3.3* Amendment to Amended and Restated Limited Liability Company
Agreement of ACME Intermediate Holdings, LLC, dated August 25, 1998.
3.4* Second Amended and Restated Limited Liability Company Agreement of
ACME Intermediate Holdings, LLC dated April 23, 1999.
3.5 Certificate of Formation of ACME Television, LLC, incorporated by
reference to Exhibit 3.1 of ACME Television, LLC's Registration
Statement on Form S-4, File No. 333-40281, filed on November 14,
1997 (the "Television Registration Statement").
3.6 Limited Liability Company Agreement of ACME Television, LLC,
incorporated by reference to Exhibit 3.2 of the Television
Registration Statement.
4.1 Indenture, dated September 30, 1997, by and among ACME Intermediate
Holdings, LLC and ACME Intermediate Finance, Inc., as Issuers, and
Wilmington Trust Company, incorporated by reference to Exhibit 4.2
of the Intermediate Registration Statement.
4.2 Form of Securities of ACME Intermediate Holdings, LLC, incorporated
by reference to Exhibit 4.3 of the Intermediate Registration
Statement.
4.3 Indenture, dated September 30, 1997, by and among ACME Television,
LLC and ACME Finance Corporation, as Issuers, the Guarantors named
therein, and Wilmington Trust Company, incorporated by reference to
Exhibit 4.1 of the Television Registration Statement.
4.5 First Supplemental Indenture, dated February 11, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company, incorporated by
reference to Registrant's Quarterly Report on Form 10-Q for the
period ending June 30 1998.
4.6 Second Supplemental Indenture, dated March 13, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company, incorporated by
reference to Registrant's Quarterly Report on Form 10-Q for the
period ending March 31, 1998.
4.7 Third Supplemental Indenture, dated August 21, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, as issuers, the
Guarantors named therein, and Wilmington Trust Company, incorporated
by reference to Registrant's Quarterly Report on Form 10-Q for the
period ending September 30, 1998.
10.1 Asset Purchase Agreement, dated April 23, 1999, by and among Paxson
Communications Corporation, Paxson Communications License Company,
LLC, Paxson Communications, of Green Bau-14, Inc., Paxson
Communications of Dayton-26, Inc., Paxson Dayton License, Inc.,
Paxson Communications of Decatur-23, Inc., Paxson Decatur License,
Inc., ACME Television of Ohio, LLC, ACME Television Licenses of
Ohio, LLC, ACME Television of Wisconsin, LLC, ACME Television
Licenses of Wisconsin, LLC, ACME Television of Illinois, LLC and
ACME Television Licenses of Illinois, LLC for WDPX(TV), Springfield,
Ohio, WPXG(TV), Suring WI and WPXU(TV), Decatur, IL. Incorporated by
reference to Registrant's Current Report on Form 8-K filed on May 7,
1999.
<PAGE> 19
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
10.2 Time Brokerage Agreement, Dated April 23, 1999, by and among Paxson
Communications Licenses Company, LLC, Paxson Communications of Green
bay-14, Inc., and ACME Television of Wisconsin, LLC for Station
WPXG-TV, Suring, Wisconsin. Incorporated by reference to the
Registrant's report on Form 8-K filed May 7, 1999
10.3 Time Brokerage Agreement, Dated April 23, 1999, by and among Paxson
Dayton Licenses Inc., Paxson Communications of Decatur-23, Inc., and
ACME Television of Illinois, LLC for Station WPXU-TV, Decatur,
Illinois. Incorporated by reference to the Registrant's report on
Form 8-K filed May 7, 1999.
10.4 Time Brokerage Agreement, Dated April 23, 1999, by and among Paxson
Decatur Licenses Inc., Paxson Communications of Dayton-26, Inc., and
ACME Television of Ohio, LLC for Station WDPX-TV, Springfield, Ohio.
Incorporated by reference to the Registrant's report on Form 8-K
filed May 7, 1999.
10.5 Joint Sales Agreement by and between ACME Television Holdings, LlC
and DP Media, Inc., dated April 23, 1999. Incorporated by reference
to the Registration Statement for ACME Communications, Inc. on Form
S-1 No. 333-84191, filed on July 30, 1999.
10.6 Option Agreement dated April 23, 1999 by and between ACME Television
Holdings, LLC and DP Media, Inc. Incorporated by reference to the
Registration Statement for ACME Communications, Inc. on Form S-1 No.
333-84191, filed on July 30, 1999.
10.7 Amendment No. 1 to First Amended and Restated Credit Agreement,
dated June 30, 1998. Incorporated by reference to the Registration
Statement for ACME Communications, Inc. on Form S-1 No. 333-84191,
filed on July 30, 1999.
10.8 Amendment No. 2 to First Amended and Restated Credit Agreement,
dated June 30, 1998. Incorporated by reference to the Registration
Statement for ACME Communications, Inc. on Form S-1 No. 333-84191,
filed on July 30, 1999.
10.9 Third amendment to First Amended and Restated Credit Agreement,
dated March 1, 1999. Incorporated by reference to the Registration
Statement for ACME Communications, Inc. on Form S-1 No. 333-84191,
filed on July 30, 1999.
10.10 Fourth Amendment to First Amended and Restated Credit Agreement,
dated April 23, 1999. Incorporated by reference to the Registration
Statement for ACME Communications, Inc. on Form S-1 No. 333-84191,
filed on July 30, 1999.
27.1* Financial Data Schedule for ACME Intermediate Holdings, LLC,
available in electronic format as filed by the Registrant.
27.2* Financial Data Schedule for ACME Television, LLC, available in
electronic format as filed by the Registrant.
- ------------
* Filed herewith
<PAGE> 1
AMENDMENT
TO
AMENDED AND RESTATED
LIMITED LIABILITY Company AGREEMENT
OF
ACME INTERMEDIATE HOLDINGS, LLC
This Amendment is made as of August 25, 1998 by and among, ACME
Intermediate Holdings, LLC (the "Company") and each of its members, ACME
Television Holdings, LLC ("ACME Parent"), ACME Subsidiary Holdings, LLC and
ACME Subsidiary Holdings IV, LLC, for the purpose of amending the Amended and
Restated Limited Liability Company Agreement of the Company dated as of
September 24, 1997 (the "LLC Agreement"). All capitalized terms used herein and
not defined shall have the respective meanings ascribed to them in the LLC
Agreement.
WHEREAS, in connection with the Asset Purchase Agreement, dated March
2, 1998, relating to the acquisition of Station WTVK in Naples, Florida, ACME
Parent sold 1,046.5 Seller Units of ACME Parent to the sellers of Station WTVK;
WHEREAS, ACME Parent contributed to the Company the entire cash
proceeds received from the sale of these 1,046.5 Seller Units;
WHEREAS, in exchange for such contribution from ACME Parent, the
Company desires to issue Common Units to ACME Parent;
WHEREAS, in connection with Section 4.3(b) of the Membership
Unitholders Agreement, dated September 30, 1997, by and among the Company, ACME
Parent and CIBC Wood Gundy Securities Corp., the Majority Member of the Company
has determined in good faith that the contribution received by the Company from
ACME Parent from the sale of 1,046.5 Seller Units is at least equal to the fair
market value of 15,561 Common Units;
WHEREAS, since the current number of Common Units authorized for
issuance is 895,425, all of which have been previously issued, the parties
hereto desire to amend the LLC Agreement to increase the number of Common Units
authorized for issuance in order to issue such 15,561 Common Units to ACME
Parent;
WHEREAS, Section 10.04 of the LLC Agreement provides that amendments
to the LLC Agreement may be made in writing by all of the members of the
Company; and
WHEREAS, the undersigned, constituting all of the members of the
Company, desire to amend the LLC Agreement pursuant to this Amendment.
1
<PAGE> 2
NOW, THEREFORE, the parties hereto agree as follows:
1. AMENDMENT. The second paragraph of Section 3.01 of the LLC Agreement is
hereby amended and restated to read as follows:
"The Company hereby authorizes for issuance 1,000,000 Common Units. As of
August 25, 1998, the Company shall have issued 910,986 Common Units to the
Members as set forth on Schedule A hereto."
2. EFFECT. Except as amended hereby, the LLC Agreement shall remain in full
force and effect in accordance with its terms.
3. GOVERNING LAW. This Amendment and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with the laws of
the State of Delaware.
4. COUNTERPARTS. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
[Remainder of page intentionally left blank]
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
ACME Intermediate Holdings, LLC
By: /s/ DOUGLAS GEALY
-------------------------------
Douglas Gealy
President and Chief Operating
Officer
ACME Television Holdings, LLC
By: /s/ DOUGLAS GEALY
-------------------------------
Douglas Gealy
President and Chief Operating
Officer
ACME Subsidiary Holdings, LLC
By: /s/ DOUGLAS GEALY
-------------------------------
Douglas Gealy
President and Chief Operating
Officer
ACME Subsidiary Holdings IV, LLC
By: /s/ DOUGLAS GEALY
-------------------------------
Douglas Gealy
President and Chief Operating
Officer
3
<PAGE> 1
ACME INTERMEDIATE HOLDINGS, LLC
a Delaware limited liability company
SECOND
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
Effective as of April 23, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
ARTICLE I - DEFINED TERMS 1
ARTICLE II - ORGANIZATION AND POWERS 5
2.01 Organization 5
2.02 Purposes and Powers 5
2.03 Principal Place of Business 6
2.04 Qualification in Other Jurisdictions 6
2.05 Fiscal Year 6
ARTICLE III - MEMBERS 6
3.01 Membership Units 6
3.02 Issuance of Membership Units; Admission of New Members 7
3.03 Certificated Common Units 7
3.04 Voting Rights 10
3.05 Restrictions 10
3.06 Limitation on Liability of Members 11
3.07 Authority 11
3.08 Withdrawals; Termination 11
3.09 No Appraisal Rights 12
3.10 Compliance with Securities Laws and Other Laws and Obligations 12
3.11 Member Insulation 12
ARTICLE IV - MANAGEMENT 13
4.01 Management 13
4.02 Reliance by Third Parties 14
4.03 Officers 14
ARTICLE V - CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS AND
ALLOCATIONS AND DISTRIBUTIONS 15
5.01 Capital Contributions 15
5.02 Capital Accounts and Allocations 15
5.03 Distributions 16
5.04 Distributions Upon Dissolution 17
5.05 Distribution Upon Withdrawal 18
5.06 Tax Matters Partner 18
ARTICLE VI - TRANSFERS OF INTERESTS 19
6.01 Restrictions on Transfers 19
6.02 Substitute Members 20
6.03 Allocation of Distributions Between Assignor and Assignee 20
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VII - INDEMNIFICATION 20
7.01 Right to Indemnification 20
7.02 Award of Indemnification 21
7.03 Successful Defense 21
7.04 Advance Payments 22
7.05 Insurance 22
7.06 Heirs and Personal Representatives 22
7.07 Non-Exclusivity 22
7.08 Amendment 22
ARTICLE VIII - CONFLICTS OF INTEREST 22
8.01 Transactions with Interested Persons; Conflicts 22
8.02 Business Opportunities 23
ARTICLE IX - DISSOLUTION, LIQUIDATION, AND TERMINATION 23
9.01 No Dissolution 23
9.02 Events Causing Dissolution 23
9.03 Notice of Dissolution 24
9.04 Liquidation 24
9.05 Certificate of Cancellation 24
ARTICLE XI - GENERAL PROVISIONS 24
10.01 Offset 24
10.02 Notices 25
10.03 Entire Agreement 25
10.04 Amendment or Modification; Terms 25
10.05 Binding Effect 25
10.06 Governing Law; Severability 25
10.07 Further Assurances 25
10.08 Waiver of Certain Rights 26
10.09 Third-Party Beneficiaries 26
10.10 Failure to Pursue Remedies 26
10.11 Cumulative Remedies 26
10.12 Notice of Members of Provisions of this Agreement 26
10.13 Interpretation 26
10.14 Counterparts 27
</TABLE>
Schedule A - Membership Units
Exhibit A - Form of Common Unit
Annex A - Form of Private Placement Legend
ii
<PAGE> 4
ACME INTERMEDIATE HOLDINGS, LLC
Second
Amended and Restated
LIMITED LIABILITY COMPANY AGREEMENT
This Second Amended and Restated Limited Liability Company Agreement is
made as of April 23, 1999 by and among ACME Intermediate Holdings, LLC (the
"Company") and each of the Members listed on Schedule A hereto, and those
Persons who become Members of the Company in accordance with the provisions
hereof and whose names are set forth as such in the record books of the Company.
WHEREAS, the Company has been formed as a limited liability company
under the Delaware Limited Liability Company Act, Del. Code Ann. tit. 6, Section
18.101 et seq. (as am time to time, the "Act"), by filing a Certificate of
Formation of the Company with the office of the Secretary of State of the State
of Delaware on August 8, 1997;
WHEREAS, certain of the Members are parties to the Amended and Restated
Limited Liability Company Agreement dated as of September 24, 1997 as amended by
the Amended and Restated Limited Liability Company Agreement dated as of
September 24, 1997 (the "Existing Agreement"); and
WHEREAS, the Members desire to amend and restate the Existing Agreement
to provide for the authorization and issuance of Preferred Units as set forth
herein.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Members hereby
agree as follows:
ARTICLE I - DEFINED TERMS
Unless the context otherwise requires, the terms defined in this Article
I shall, for the purposes of this Agreement, have the meanings herein specified
(each such meaning to be equally applicable to both the singular and plural
forms of the respective terms so defined). Defined terms which are not defined
in this Article I or elsewhere in this Agreement shall have the meaning ascribed
to them in the Investment Agreement.
"Affiliate" shall mean, with respect to a specified Person, any Person
that directly or indirectly controls, is controlled by or is under common
control with, the specified Person. As used in this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Second Amended and Restated Limited
Liability Company Agreement, as amended, modified, supplemented or restated from
time to time.
"Bankruptcy" means, with respect to a Person, that either (i) an
involuntary petition under any bankruptcy or insolvency or other debtor relief
law or under the reorganization
<PAGE> 5
provisions of any such law has been filed with respect to such Person or a
receiver of or for the property of such Person has been appointed without the
acquiescence of such Person, which petition or appointment remains undischarged
or unstayed for an aggregate period of sixty (60) days (whether or not
consecutive) or (ii) a voluntary petition under any bankruptcy or insolvency or
other debtor relief law or under the reorganization provisions of any such law
has been filed by such Person, a voluntary assignment of such Person's property
for the benefit of creditors has been made, a written admission by such Person
of its inability to pay its debts as they mature has been made, a receiver of or
for the property of such Person has been appointed with the acquiescence of such
Person or such Person has done any similar act of like import.
"Capital Contribution" shall mean with respect to any Member the total
amount of cash or property contributed to the Company by each Member pursuant to
the terms of this Agreement or any Subscription Agreement.
"Certificate" shall mean the Certificate of Formation and any and all
amendments thereto and restatements thereof filed on behalf of the Company with
the Secretary of State of the State of Delaware pursuant to the Act.
"Common Members" shall mean those persons listed on Schedule A hereto as
Common Members.
"Common Units" shall mean those Membership Units designated as Common
Units, as described in Section 3.01 hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section of the Code refers not only to such
specific section but also to any corresponding provision of any federal tax
statute enacted after the date of this Agreement, as such specific section or
corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
"Distribution Percentage" shall mean a percentage determined for each
holder of Preferred Units or Common Units by dividing the aggregate Preferred
Units or Common Units of such holder, as applicable by the aggregate Units of
all holders of Preferred Units or Common Units entitled to distributions at the
time of such determination.
"FCC" means the Federal Communications Commission.
"Indemnified Parties" shall mean the Members , any Affiliate of the
Members and each Person serving as an Officer, employee or other agent of the
Company (including Persons who serve at the Company's request as directors,
managers, officers, employees, agents or trustees of another organization in
which the Company has any interest as a shareholder, creditor or otherwise) and
their respective successors and assigns.
"Initial Capital Contribution" shall mean with respect to any Initial
Member the amount set forth opposite its name on Schedule A.
"Initial Members" shall mean ACME Television Holdings, LLC, ACME
Subsidiary Holdings, LLC and ACME Subsidiary Holdings IV, LLC.
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"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, together with any successor statute, and the rules
and regulations promulgated thereunder.
"Losses" shall mean all liabilities, judgments, obligations, losses,
damages, taxes and interest and penalties thereon (other than (i) income taxes
due on income allocated to Membership Units; and (ii) taxes based on fees,
compensation or commissions received by an Indemnified Party in connection with
the administration of the Company or the Company's property), claims, actions,
suits or other proceedings (whether civil or criminal, pending or threatened,
before any-court or administrative or legislative body, and as the same are
accrued, in which an Indemnified Party may be or may have been involved as a
party or otherwise or with which he or she may be or may have been threatened,
while in office or thereafter), costs, expenses and disbursements (including,
without limitation, legal and accounting fees and expenses) of any kind and
nature whatsoever.
"Member" shall mean the Common Members, the Preferred Members and any
Person admitted as a Member in accordance with the terms of this Agreement and
named as a Member in the record books of the Company, and includes any Person
admitted pursuant to the provisions of this Agreement when acting in his, her or
its capacity as a Member of the Company, and "Members" shall mean two (2) or
more of such Persons when acting in their capacities as Members of the Company.
"New Member" shall mean any Member who is not an Initial Member.
"Person" shall mean an individual, corporation, association, partnership
(general or limited), joint venture, trust, unincorporated organization, limited
liability company, any other entity or organization of any kind or a government
or any department, agency, authority, instrumentality or political subdivision
thereof.
"Preferred Members" shall mean those Persons listed on Schedule A hereto
as Preferred Members.
"Preferred Units" shall mean those Membership Units designated as
Preferred Units, as described in Section 3.01 hereof.
"Preferred Distribution Amount" shall mean the sum of (a) $1000 per
Preferred Unit (the "Per Unit Preferred Capital Contribution"), plus (b)
dividends on the unpaid Per Unit Preferred Capital Contribution from the date
made as set forth on Schedule A hereto at the rate of 22.5% per annum,
increasing by 2.5% every six months, up to a maximum rate of 35% (the "Priority
Return").
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, together with any successor statute, and the rules and regulations
promulgated thereunder.
"Subscription Agreement" shall mean a subscription agreement for the
purchase of a Membership Unit in the Company, in a form acceptable to the
Members or the Majority Members, as applicable.
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<PAGE> 7
"Tax Rate" means, for any taxable year of a Member, the sum of the
Federal Rate and the State Rate, with (a) the "Federal Rate" defined to mean the
highest effective federal income tax rate applicable to any individual for such
year and (b) the "State Rate" defined as the product of (i) the highest
effective state income tax rate applicable to an individual Member for such year
multiplied by (ii) a percentage equal to the difference between one hundred
percent (100%) and the Federal Rate.
"Taxable Income" and "Taxable Loss" mean, for any taxable year, the
taxable income or loss attributable to such Member's distributive share of
taxable income or loss of the Company, as determined for federal income tax
purposes; provided that in making such determination all separately stated items
of income, gain, loss and deduction (other than tax-exempt income) shall be
included; and provided further, that in calculating Taxable Income and Taxable
Loss, items of income, gain, loss and deduction attributable to the sale or
exchange of all or substantially all of the assets of the Company shall be
excluded from such calculation.
"Transfer" shall mean any sale, assignment, transfer, exchange, charge,
pledge, gift, hypothecation, conveyance or encumbrance (such meaning to be
equally applicable to verb forms of such term).
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
The following terms shall have the meanings set forth in the indicated
Sections hereof:
<TABLE>
<CAPTION>
Defined Term Section Number
------------ --------------
"Act" Preamble
<S> <C>
"Capital Account" 5.02
"Certificate Register" 3.03(f)
"Company" Preamble
"Consolidated Group Securities" 3.04(a)
"Holdings" 5.03(a)
"Liquidating Trustee" 9.03
"Majority Member" 4.01(b)
"Membership Unit" 3.01
"Private Placement Legend" 3.03(c)
"Senior Executive Offices" 4.06
"Tax Distributions" 5.03
"Tax Matters Partner" 5.06
</TABLE>
4
<PAGE> 8
ARTICLE II - ORGANIZATION AND POWERS
2.01 Organization. The name of the Company is ACME Intermediate
Holdings, LLC. The Company has been formed by the filing of its Certificate with
the Delaware Secretary of State pursuant to the Act. The Certificate may be
restated or amended by the Members or the Majority Member, as applicable, from
time to time in accordance with the Act and subject to the terms of this
Agreement. The Company shall deliver a copy of the Certificate and any amendment
thereto to any Member who so requests.
2.02 Purposes and Powers. The principal business activity and purposes
of the Company shall initially be to acquire, develop, own and operate
television broadcast stations and to conduct any business related thereto or
useful in connection therewith. However, the business and purposes of the
Company shall not be limited to its initial principal business activity, and the
Company shall, subject to the terms of this Agreement, have authority to engage
in any other lawful business, purpose or activity permitted by the Act. Except
as otherwise provided in this Agreement, the Company, and the Members or the
Majority Member acting on behalf of the Company in accordance with this
Agreement, shall possess and may exercise all of the powers and privileges
granted by the Act or which may be exercised by any Person, together with any
powers incidental thereto, so far as such powers or privileges are necessary,
appropriate, proper, advisable, incidental or convenient to the conduct,
promotion or attainment of the business purposes or activities of the Company,
including without limitation the following powers:
(a) to conduct its business and operations in any state,
territory or possession of the United States or in any foreign country or
jurisdiction;
(b) to purchase, receive, take, lease or otherwise acquire, own,
hold, improve, maintain, use or otherwise deal in and with, sell, convey, lease,
exchange, transfer or otherwise dispose of, mortgage, pledge, encumber or create
a security interest in all or any of its real or personal property, or any
interest therein, wherever situated;
(c) to borrow or lend money or obtain or extend credit and other
financial accommodations, to invest and reinvest its funds in any type of
security or obligation of or interest in any public, private or governmental
entity, and to give and receive interests in real and personal property as
security for the payment of funds so borrowed, loaned or invested;
(d) to make and modify contracts, including contracts of
insurance, incur liabilities and give guaranties, whether or not such guaranties
are in furtherance of the business and purposes of the Company, including
without limitation, guaranties of obligations of other Persons who are
interested in the Company or in whom the Company has an interest;
(e) to employ and terminate Officers, employees, agents and
other Persons, to organize committees of the Company, to delegate to such
Persons and/or committees such power and authority, the performance of such
duties and the execution of such instruments in the name of the Company, to fix
the compensation and define the duties and obligations of such personnel, to
establish and carry out retirement, incentive and benefit plans for such
personnel, and to indemnify such personnel to the extent permitted by this
Agreement and the Act;
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(f) to form and maintain subsidiaries and to merge with, or
consolidate into, another Delaware limited liability company or other business
entity (as defined in Section 18-209 of the Act); and
(g) to institute, prosecute, and defend any legal action or
arbitration proceeding involving the Company, and to pay, adjust, compromise,
settle, or refer to arbitration any claim by or against the Company or any of
its assets.
2.03 Principal Place of Business. The principal office and place of
business of the Company is 2101 East Fourth Street, Suite 202 Santa Ana,
California 92705. The Members or the Majority Member, as applicable, may change
the principal office or place of business of the Company at any time and may
cause the Company to establish other offices or places of business in various
jurisdictions and appoint agents for service of process in such jurisdictions.
2.04 Qualification in Other Jurisdictions. The Members or the Majority
Member, as applicable, shall cause the Company to be qualified or registered
under applicable laws of any jurisdiction in which the Company transacts
business and shall be authorized to execute, deliver and file any certificates
and documents necessary to effect such qualification or registration.
2.05 Fiscal Year. The fiscal year of the Company shall end on December
31 of each year.
ARTICLE III - MEMBERS
3.01 Membership Units. The Members shall have no rights or powers in
respect of the Company (including, without limitation, any rights in respect of
allocations of profit and loss or distributions) other than the rights conferred
by this Agreement represented by issued and outstanding units of membership
interest (the "Membership Units"), which shall be deemed to be personal property
giving only the rights provided in this Agreement and which shall consist of two
classes, Common Units and Preferred Units, which shall have rights and
privileges, including voting rights as expressly set forth in this Agreement.
Every Member by virtue of having become a Member shall be held to have expressly
assented and agreed to the terms hereof and to have become a party hereto.
Ownership of a Membership Unit shall not entitle a Member to any title in or to
the whole or any part of the property of the Company or right to call for a
partition or division of the same or for an accounting. The Initial Members of
the Company, the addresses, and the respective classes and denominations of
Membership Units held by them shall be as set forth on Schedule A hereto, and
said schedule shall be amended from time to time by the Members or the Majority
Member, as applicable, in accordance with the terms hereof to reflect the
withdrawal of Members or the admission of additional Members pursuant to this
Agreement.
The Company hereby authorizes for issuance 1,000,000 Common Units and
15,000 Preferred Units. As of the date hereof, the Company shall have issued
910,986 Common Units and 15,000 Preferred Units to the Members as set forth on
Schedule A hereto.
The Preferred Units: (i) shall have no voting or other consensual or
approval rights; (ii) may be redeemed at any time, at the option of the Company,
in whole or in part, at a redemption price equal to the Preferred Distribution
Amount as of the date fixed for redemption, and any distributions pursuant to
Section 5.02(c) shall be deemed to effect the redemption of a number of
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Preferred Units equal to the sum of such distribution divided by the Per Unit
Preferred Capital Contribution; (iii) will be subject to mandatory redemption on
October 1, 2005 to the extent not previously redeemed at a redemption price
equal to the unpaid Per Unit Preferred Capital Contribution for all Preferred
Units then outstanding plus an amount equal to the Priority Return thereon.
3.02 Issuance of Membership Units; Admission of New Members.
(a) The Company is not authorized to offer and sell, or cause to
be offered and sold, additional Membership Units or to admit additional Persons
as Members except with the approval of the Members holding more than fifty
percent (50%) in interest of the Common Units.
(b) The Members or the Majority Member, as applicable, may
establish eligibility requirements for admission of a subscriber as a New Member
after the date hereof and may refuse to admit any subscriber that fails to
satisfy such eligibility requirements. The Members or the Majority Member, as
applicable, shall have the responsibility for determining whether a person or
entity is eligible for admission as a New Member. Each Person who first
subscribes for a Membership Unit in the Company after the date hereof shall be
admitted as a New Member of the Company at the time (i) such Person executes a
Subscription Agreement agreeing to be bound by the provisions hereof, (ii) the
Members or the Majority Member, as applicable, at their sole discretion, accept
such Subscription Agreement on behalf of the Company and (iii) the subscriber
makes the Capital Contribution(s) required pursuant to the terms of this
Agreement and its Subscription Agreement. None of the existing Members shall
have any preemptive or similar right to subscribe to the issuance of new
Membership Units in the Company, and each of the Members acknowledges that its
membership interest is subject to adjustment (downward and upward) in the event
of the admission of New Members to the Company pursuant hereto or the withdrawal
of any Member from the Company.
3.03 Certificated Common Units
(a) All Common Units at any time and from time to time
outstanding shall be evidenced by certificates in the form attached as Exhibit A
hereto (a "Unit Certificate") and shall bear the following legend: "These Common
Units are subject to repurchase pursuant to the terms and conditions of the
Membership Unitholders Agreement, dated September 30, 1997, by and among the
Company, ACME Television Holdings, LLC and CIBC Wood Gundy Securities Corp. and
subject to the restrictions which prohibit the transfer of Common Units pursuant
to the terms and conditions of the Amended and Restated Limited Liability
Company Agreement, dated September 24, 1997, by and among the Company and its
Members, as amended." Each Member by accepting a Unit Certificate representing
Common Units or other indicia of ownership thereof shall be deemed to have
expressly assented and agreed to, and shall be bound by, this Agreement and the
terms and conditions of the Membership Unitholders Agreement.
(b) Registration of Transfers or Exchanges. When Unit
Certificates are presented to the Company with a request from the holder: (i) to
register the transfer of the certificates; or (ii) to exchange such certificates
for certificates of other denominations representing an aggregate equal number
of Common Units, the Company shall register the transfer or make the exchange as
requested if the requirements under this Agreement as set forth
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in this Section 3.03 and Section 6.01 for such transactions and transfers are
met; provided, however, that the certificates presented or surrendered by a
holder for registration of transfer or exchange: (i) shall be duly endorsed or
accompanied by a written instruction of transfer or exchange in form
satisfaction to the Company duly executed by such holder or by his attorney,
duly authorized in writing; and (ii) shall be accompanied by such certifications
and opinions as may be required by the Company pursuant to Section 6.01, and the
following additional information and documents, as applicable:
1. if such Common Units are being delivered to the
Company by a holder for registration in the name of such holder, without
transfer, a certification from such holder to that effect; or
2. if such Common Units are being transferred in
reliance on an exemption from the registration requirements of the Securities
Act, a certification from the transferor to that effect and an opinion of
counsel reasonably satisfactory to the Company, to the effect that such transfer
is in compliance with the Securities Act.
(c) Upon the registration of transfer, exchange or replacement
of Unit Certificates not bearing the legend set forth in the first paragraph of
Annex A attached hereto (the "Private Placement Legend"), the Company shall
deliver Unit Certificates that do not bear the Private Placement Legend. Upon
the registration of transfer, exchange or replacement of Unit Certificates
bearing the Private Placement Legend, the Company shall deliver Unit
Certificates that bear the Private Placement Legend unless, and the Company is
hereby authorized to deliver Unit Certificates without the Private Placement
Legend (except for any part of the legend that relates to contractual
restrictions and the restrictions set forth in the second paragraph of Section
3.03(b) above) if (i) there is delivered to the Company an opinion of counsel
reasonably satisfactory to the Company to the effect that neither such legend
nor the related restrictions on transfer set forth in such legend or Section
6.01 of this Agreement are required in order to maintain compliance with the
provisions of the Securities Act or (ii) the Common Units to be transferred or
exchanged represented by such Unit Certificates are being transferred or
exchanged pursuant to an effective registration statement under the Securities
Act. Unit Certificates shall also bear appropriate legends with respect to the
restrictions on transfer set forth in Section 6.01. Notwithstanding the
foregoing, the terms and conditions set forth in Section 6.01 of this Agreement
restrict the transfer of Membership Units.
(d) All Unit Certificates issued upon any registration, transfer
or exchange of Unit Certificates shall be entitled to the same benefits under
this Agreement as the Unit Certificates surrendered upon the registration of
transfer or exchange. Prior to due presentment for registration of transfer of
any Common Units, the Company may deem and treat the person in whose name any
Common Units are registered as the absolute owner of such Common Units, and the
Company shall not be required to recognize any equitable or other claim to or
interest in such certificate, or be affected by notice to the contrary.
(e) Other than following the applicable terms and requirements
of this Agreement, the Company shall have no additional duty to monitor
compliance with federal, state or other securities laws.
(f) The Company will keep at its offices a register (the
"Certificate Register"). Each Unit Certificate issued by the Company shall be
numbered and shall be
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<PAGE> 12
registered in the Certificate Register as it is issued and transferred, together
with the name and address of the holder thereof.
(g) Any Transfer made in violation of this Agreement by a Member
of any of its Affiliates shall be deemed null and void and shall not be recorded
as a transfer upon the transfer books of the Company. Each Unit Certificate held
by a holder and each of its Affiliates shall contain a conspicuous notation
indicating that the transfer of the Common Units evidenced thereby is subject to
the terms and restrictions of this Agreement, and each of the Members hereby
consents to the placement of such legend on the certificate or certificates
representing the Common Units beneficially owned by such party.
(h) Subject to compliance with Sections 3.03 and 6.01 and the
terms and conditions of this Agreement, any Unit Certificate and all rights
hereunder are transferable in whole or in part, without charge to the Members,
upon surrender of such Unit Certificate in accordance with this Section 3.03, at
the office of the Company. Upon any partial transfer, the Company shall, at the
Member's expense, issue and deliver to the Member a new Unit Certificate of like
tenor, in the name of the Member, with respect to the Common Units which were
not so transferred.
(i) On receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Unit Certificate and, in the case of any such loss, theft or destruction of any
Unit Certificate, on delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company or, in the case of any such mutilation, on
surrender of such Unit Certificate to the Company and cancellation thereof, the
Company, at the Member's expense, shall execute and deliver, in lieu thereof, a
new Unit Certificate of like tenor.
(j) The Preferred Units shall not be certificated.
3.04 Voting Rights. Except as otherwise provided in this Agreement, no
Member or holder of a Membership Unit shall have the right to amend or terminate
this Agreement.
3.05 Restrictions. Notwithstanding anything in this Agreement to the
contrary, the following matters shall require the prior written consent of
holders of more than fifty percent (50%) in interest of the Common Units:
(a) the redemption, purchase or other acquisition for value (or
payment into or set aside for a sinking fund for such purpose) of any Membership
Unit, or other type of equity interest of the Company or any of its
Subsidiaries, or security convertible into or exchangeable or exercisable for
such Membership Units or equity interests (which are hereinafter reflected to as
"Consolidated Group Securities"), other than redemption of the Preferred Units
at any time at a redemption price no greater than the Preferred Distribution
Amount as of the date of redemption;
(b) the authorization or issuance (or the incurrence of any
obligation to authorize or issue) of any additional Membership Units or other
Consolidated Group Securities;
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(c) the increase or decrease of the total number of authorized
Membership Units or other Consolidated Group Securities;
(d) the payment or declaration of any dividend or distribution
(other than Tax Distributions pursuant to Section 5.03) with respect to any
Membership Units or other Consolidated Group Securities other than dividends and
distributions in respect of the Preferred Units not to exceed in the aggregate
the Preferred Distribution Amount;
(e) the authorization of any merger or consolidation of the
Company or any of its Subsidiaries with or into any other entity (except for
mergers among wholly-owned Subsidiaries);
(f) the authorization of the reorganization or sale of the
Company or any of its Subsidiaries or the sale of any material assets of the
Company or any of its Subsidiaries;
(g) the authorization of any reclassification or
recapitalization of the outstanding Membership Units of the Company or any other
Consolidated Group Securities;
(h) engagement by the Company or any of its Subsidiaries in any
business other than the business now conducted or contemplated by the Company or
a business or businesses similar thereto or reasonably compatible therewith;
(i) the alteration, modification or amendment of this Agreement;
or
(j) the application by the Company for or consent by it to the
appointment of a receiver, trustee, custodian or liquidator of it or any of its
property, (ii) the admission in writing by the Company of its inability to pay
its debts as they mature, (iii) the making by the Company of a general
assignment for the benefit of creditors, or (iv) the filing by the Company of a
voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors, or any other action by the
Company to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation laws or statutes, or an answer
from the Company admitting the material allegations of a petition filed against
it in any proceeding under any such law.
3.06 Limitation on Liability of Members. Except as otherwise provided in
the Act, no Member of the Company shall be obligated personally for any debt,
obligation or liability of the Company or of any other Member or otherwise have
any personal recourse hereunder, whether arising in contract, tort or otherwise,
solely by reason of being a Member. Except as expressly set forth in this
Agreement, no Member shall have any fiduciary or other duty to another Member
with respect to the business and affairs of the Company, and no Member shall be
liable to the Company or any other Member for acting in good faith reliance upon
the provisions of this Agreement. No Member shall have any responsibility to
restore any negative balance in its Capital Account or to contribute to or in
respect of the liabilities or obligations of the Company or return distributions
made by the Company except as required by this Agreement, the Act or other
applicable law; provided, however, that Members are responsible for their
failure to make required Capital Contributions in accordance with Section 5.01.
3.07 Authority. Except as otherwise expressly provided herein, in all
matters relating to or arising out of the conduct or the operation of the
Company, the decision of the
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Members (acting by vote of holders of more than fifty percent (50%) in interest
of the Common Units) or the Majority Member, as applicable, shall be the
decision of the Company. The Company may employ one or more Persons from time to
time, and such Persons, in their capacity as Officers or employees of the
Company, may take part in the control and management of the business of the
Company to the extent such authority and power to act for or on behalf of the
Company has been delegated to them by the Members or the Majority Member, as
applicable.
3.08 Withdrawals; Termination. No Member shall have any right to resign
or withdraw from the Company without the consent of the Members or the Majority
Member, as applicable, or to receive any distribution on its Membership Units or
the repayment of its Capital Contributions except as provided in Article V
hereof.
3.09 No Appraisal Rights. No Member shall have any right to have its
interest in the Company appraised and paid out under the circumstances provided
in Section 18-210 of the Act or any other circumstances.
3.10 Compliance with Securities Laws and Other Laws and Obligations.
Each Member hereby represents and warrants to the Company and acknowledges that
(a) it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of an investment in the Company
and making an informed investment decision with respect thereto, (b) it is able
to bear the economic and financial risk of an investment in the Company for an
indefinite period of time and understands that it has no right to withdraw and
have its interest repurchased by the Company, (c) it is acquiring an interest in
the Company for investment only and not with a view to, or for resale in
connection with, any distribution to the public or public offering thereof, and
(d) it understands that the interests in the Company have not been registered
under the securities laws of any jurisdiction and cannot be disposed of unless
they are subsequently registered and/or qualified under applicable securities
laws or pursuant to valid exemptions from such registration/qualification
requirements and the provisions of this Agreement have been complied with.
3.11 Member Insulation.
(a) For so long as, and only during periods from time to time in
which the Company shall directly or indirectly hold (or otherwise be attributed
with) an ownership or other interest in a Media Enterprise that is "attributed"
to the Company under the FCC rules relating to the particular FCC service in
which the Media Enterprise operates, no provision of this Agreement shall be
construed to permit any Member (other than an Excluded Member), or any person or
entity that is a director, officer, partner, employee, or 5% or greater
shareholder or other owner of a Member (an "Insulated Member Affiliate"), to do
any of the following:
(i) act as an employee of the Company if such Members or
Member Affiliate's functions, directly or indirectly,
relate to such Media Enterprise;
(ii) serve, in any material capacity, as an independent
contractor or agent of the Company with respect to such
Media Enterprise;
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(iii) communicate with the Media Enterprise on matters
pertaining to the day-to-day operations of such Media
Enterprise;
(iv) vote to admit any additional Member to the Company;
(v) vote to amend or modify this section of the LLC
Agreement;
(vi) perform any services for the Company materially relating
to such Media Enterprise, with the exception of making
loans to, or acting as a surety for, such Media
Enterprise or the Company; or
(vii) become actively involved in the management or operation
of such Media Enterprise.
(b) Notwithstanding any other provision of this LLC Agreement to
the contrary, a Member that would otherwise be subject to the restrictions set
forth in Section 3.11(a) may elect to the treated as an Excluded Member for
purposes of this Section 3.11 by giving notice thereof in writing to the other
Members.
For purposes of this Section 3.11, (i) "Media Enterprise" shall mean any
Person that, directly or indirectly, owns, controls, or operates a broadcast
radio or television station, cable or wireless cable television system, daily
newspaper or any communications facility operated pursuant to a license granted
by the FCC, and (ii) "Excluded Member" shall mean any Member that is an
Affiliate of the Majority Member.
ARTICLE IV - MANAGEMENT
4.01 Management.
(a) Except as provided in Section 4.01(b) hereof, the Company
shall be managed by the Members. No action may be taken by any Member to bind
the Company without the prior consent of Members holding more than fifty percent
(50%) in interest of the Common Units.
(b) If any Member shall own more than fifty percent (50%) in
interest of the Common Units of the Company (the "Majority Member"), management
and control of the business of the Company shall be vested exclusively in the
Majority Member for so long as such Member holds more than fifty percent (50%)
in interest of the Common Units, and such Majority Member shall have exclusive
power and authority, in the name of and on behalf of the Company, to perform all
acts and do all things which, in its sole discretion, it deems necessary or
desirable to conduct the business of the Company.
The Majority Member shall, subject to all applicable provisions of this
Agreement, be authorized in the name and on behalf of the Company: (i) to enter
into, execute, amend, supplement, acknowledge and deliver any and all contracts,
agreements, leases or other instruments for the operation of the Company's
business; and (ii) in general to do all things and
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execute all documents determined by it to be necessary or appropriate to conduct
the business of the Company as more fully set forth in Section 2.02 hereof or as
provided by law, or to protect and preserve the Company's assets. The Majority
Member may delegate any or all of the foregoing powers. The Majority Member is
an agent of the Company for the purpose of the Company's business. Any action
taken by the Majority Member, and the signature of the Majority Member on any
agreement, contract, instrument or other document on behalf of the Company,
shall be sufficient to bind the Company and shall conclusively evidence the
authority of the Majority Member and the Company with respect thereto.
(c) The Members acting pursuant to Section 4.01(a) or the
Majority Member, as applicable, shall be the "manager" (within the meaning of
the Act) of the Company, and each shall have the benefits and protections
accorded "managers" under the Act. The Members acting pursuant to Section
4.01(a) or the Majority Member shall devote such time to the business and
affairs of the Company as is reasonably necessary for the performance of their
duties, but shall not be required to devote full time to the performance of such
duties and may delegate their responsibilities as provided in this Agreement.
The Majority Member shall not be personally liable to the Company or to its
other Members for breach of any duty that does not involve: (i) a breach of the
duty of loyalty to the Company or its other Members; (ii) an act or omission not
in good faith or which involves intentional misconduct or a knowing violation of
law; or (iii) a transaction from which the Majority Member derived an improper
personal benefit.
4.02 Reliance by Third Parties. Any person dealing with the Company or
any Member may rely upon a certificate signed by the Majority Member or any
Officer as to (i) the identity of any other Member; (ii) any factual matters
relevant to the affairs of the Company; (iii) the persons who are authorized to
execute and deliver any document on behalf of the Company; or (iv) any action
taken or omitted by the Company, or any Member.
4.03 Officers. The Members or the Majority Member, as applicable, may
designate employees of the Company as officers of the Company (the "Officers")
as they deem necessary or desirable to carry on the business of the Company and
the Members or the Majority Member, as applicable, may delegate to such Officers
such power and authority as the Members or the Majority Member, as applicable,
deem advisable. Any Officer may hold two or more offices of the Company. The
initial Officers of the Company shall be Jamie Kellner (Chairman and Chief
Executive Officer), Douglas Gealy (President and Chief Operating Officer) and
Thomas Allen (Executive Vice President and Chief Financial Officer). New offices
may be created and filled by the Members or the Majority Member, as applicable.
Each Officer shall hold office until his or her successor is designated by the
Members or the Majority Member, as applicable, or until his or her earlier
death, resignation or removal. Any Officer may resign at any time upon written
notice to the Members or the Majority Member, as applicable. Any Officer may be
removed by the Members or the Majority Member, as applicable, (acting by
majority vote of the Members or the Majority Member, as applicable, other than
the Officer being considered for removal, as applicable) with or without cause
at any time. A vacancy in any office occurring because of death, resignation,
removal or otherwise, may, but need not, be filled by the Members or the
Majority Member, as applicable. The Officers are not "managers" (within the
meaning of the Act) of the Company.
ARTICLE V - CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS AND
ALLOCATIONS AND DISTRIBUTIONS
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5.01 Capital Contributions. The Initial Members and the Preferred Member
will have made as of June 23, 1999 the Capital Contributions to the Company
specified on Schedule A attached hereto. The remaining existing Members have
made, and each New Member shall make, the Capital Contribution to the Company
specified in such Member's Subscription Agreement as of the date of admission of
such Person as a Member of the Company. Except as approved by the Members or the
Majority Member, as applicable, or as set forth on Schedule A or in a Member's
Subscription Agreement, no Member shall be entitled or required to make any
Capital Contribution or loan or advance to the Company; provided, however, that
the Company may, subject to the other terms of this Agreement, borrow from its
Members as well as from banks or other lending institutions to finance its
working capital or the acquisition of assets upon such terms and conditions as
shall be approved by the Members or the Majority Member, as applicable, and any
such loans by Members shall not be considered Capital Contributions or reflected
in their Capital Accounts. The agreed value of all non-cash Capital
Contributions made by Members shall be set forth on Schedule A or in such
Member's Subscription Agreement. No Member shall be entitled to any interest or
compensation with respect to its Capital Contributions or any services rendered
on behalf of the Company except as specifically provided in this Agreement. No
Member shall have any liability for the repayment of the Capital Contributions
of any other Member and shall look only to the assets to the Company for return
of its Capital Contributions.
5.02 Capital Accounts and Allocations.
(a) Capital Accounts. A separate capital account (a "Capital
Account") shall be established and maintained for each Member, which shall
initially be equal to the Capital Contribution of such Member as set forth on
Schedule A hereto. Such Capital Accounts shall be maintained in accordance with
Section 1.704-1(b)(2)(iv) of the Treasury Regulations, and this Section 5.02
shall be interpreted and applied in a manner consistent with said Section of the
Treasury Regulations. The Capital Accounts shall be maintained for the sole
purpose of allocating items of income, gain, loss and deduction among the
Members and shall have no effect on the amount of any distributions to any
Members in liquidation or otherwise. The amount of all distributions to Members
shall be determined pursuant to Sections 5.03, 5.04 and 5.05.
(b) Allocation of Profits and Losses. All items of income, gain,
loss and deduction as determined for book purposes shall be allocated among the
Members and credited or debited to their respective Capital Accounts in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv), so as to ensure
to the maximum extent possible (i) that such allocations satisfy the economic
effect equivalence test of Treasury Regulations Section 1.704-1(b)(2)(ii)(i) (as
provided hereinafter) and (ii) that all allocations of items that cannot have
economic effect (including credits and nonrecourse deductions) are allocated to
the Members in proportion to their membership interests unless otherwise
required by Code Section 704(b) and the Treasury Regulations promulgated
thereunder. To the extent possible, items that can have economic effect shall be
allocated in such a manner that the balance of each Member's Capital Account at
the end of any fiscal year (increased by such Member's "share of partnership
minimum gain" as defined in Treasury Regulations Section 1.704-2) would be
positive to the extent of the amount of cash that such Member would receive (or
would be negative to the extent of the amount of cash that such Member should be
required to contribute to the Company) if the Company sold all of its property
for an amount of cash equal to the book value (as determined pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)) of such property (reduced, but
not below zero, by the amount of nonrecourse debt to which such property is
subject) and all of the cash of the
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Company remaining after payment of all liabilities (other than nonrecourse
liabilities) of the Company were distributed in liquidation immediately
following the end of such fiscal year in accordance with Section 5.03. Except to
the extent otherwise required by the Code, the "traditional method" provided for
in Treasury Regulations Section 1.704-3(b) shall apply to all tax allocations
governed by Code Section 704(c) and all "reverse Section 704(c) allocations."
(c) Other Allocations. The Members or the Majority Member, as
applicable, may adjust the Capital Accounts of its Members to reflect
reevaluations of the Company property whenever the adjustment would be permitted
under Treasury Regulations Section 1.704-1(b)(2)(iv)(f). In the event that the
Capital Accounts of the Members are so adjusted, (i) the Capital Accounts of the
Members shall be adjusted in accordance with Treasury Regulations Section
1.704l(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and
gain or loss, as computed for book purposes, with respect to such property and
(ii) the Members' distributive shares of depreciation, depletion, amortization
and gain or loss, as computed for tax purposes, with respect to such property
shall be determined so as to take account of the variation between the adjusted
tax basis and book value of such property in the same manner as under Section
704(c) of the Code. In the event that Code Section 704(c) applies to Company
property, the Capital Accounts of the Members shall be adjusted in accordance
with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of
depreciation, depletion, amortization and gain and loss, as computed for book
purposes, with respect to such property. In applying clause (ii) of the second
preceding sentence and all of the preceding sentence, the provisions of Code
Section 704(b) shall apply.
5.03 Distributions. Subject to (i) the terms of the Act, (ii) any
agreements of the Company or any of its Affiliates has with respect to
indebtedness for money borrowed to which the Company may from time to time be
subject, and (iii) except in the case of distributions pursuant to subsection
(a) below, the prior written consent of holders of a majority in interest of the
Common Units, all funds of the Company which are available for distribution (as
determined by the Members or the Majority Member, as applicable, in their
discretion) shall be distributed as follows:
(a) First, within one hundred and twenty (120) days after the
end of each taxable year during which ACME Television Holdings, LLC ("Holdings")
shall have any direct or indirect ownership interest in the Company, there shall
be distributed to each Member an amount equal to the product of (i) the Tax Rate
and (ii) the difference between (x) the amount of such Member's Taxable Income
with respect to such taxable year and (y) the cumulative amount of such Member's
Taxable Loss, if any, from all prior taxable years, but only to the extent such
Taxable Loss on a cumulative basis exceeds Taxable Income for all prior taxable
years on a cumulative basis (the "Tax Distributions"); provided however, that
such distribution shall in all events be sufficient to allow Holdings to make
the distributions required under Section 5.03(a) of the Limited Liability
Company Agreement of Holdings;
(b) Second, pro rata to all Preferred Members in accordance with
their respective Distribution Percentages until the aggregate distributions
hereunder plus all distributions to Preferred Members on account of Preferred
Units pursuant to subsection (a) above equals the Priority Return;
(c) Third, pro rata to all Preferred Members in accordance with
their respective Distribution Percentages until the aggregate distributions
hereunder plus any
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distributions pursuant to subsection (a) above in excess of the Tax
Distributions included in determining amounts distributable pursuant to
subsection (b) above equals the aggregate Per Unit Preferred Capital
Contribution; and
(d) Fourth, pro rata to all Common Members in accordance with
their respective Distribution Percentages.
5.04 Distributions Upon Dissolution. Proceeds from a sale of all or
substantially all of the assets of the Company and amounts available upon
dissolution, after payment of, or adequate provision for, the debts and
obligations of the Company, including the expenses of its liquidation and
dissolution, shall be distributed and applied in the following priorities:
(a) First, to fund reserves as deemed reasonably necessary by
the Members or the Majority Member, as applicable, or the Liquidating Trustee
for any contingent, conditional or unmatured liabilities or other obligations of
the Company, which such reserves (i) may be paid to a bank (or other
third-party), to be held in escrow for the purpose of paying any such
contingent, conditional or unmatured liabilities or other obligations, and (ii)
shall at the expiration of such period(s) as the Members or the Majority Member,
as applicable, or Liquidating Trustee may reasonably deem advisable, shall be
distributed to the Members in accordance with Section 5.03; and
(b) Second, in accordance with Section 5.03.
If any assets of the Company are to be distributed in kind in connection
with such liquidation, such assets shall be distributed on the basis of their
fair market value net of any liabilities encumbering such assets and, to the
greatest extent possible, shall be distributed pro-rata in accordance with the
total amounts to be distributed to each Member.
5.05 Distribution Upon Withdrawal. No Member shall be entitled to any
distribution or payment with respect to its Membership Units upon the
resignation or withdrawal of such Member other than the Preferred Members in
connection with redemption of the Preferred Units.
5.06 Tax Matters Partner. ACME Television Holdings, LLC is hereby
designated as the initial "Tax Matters Partner" of the Company for purposes of
Section 6231(a)(7) of the Code, and such Tax Matters Partner shall have the
power to manage and control, on behalf of the Company, any administrative
proceeding at the Company level with the Internal Revenue Service relating to
the determination of any item of Company income, gain, loss, deduction or credit
for federal income tax purposes. The Members or the Majority Member, as
applicable, may at any time hereafter designate a new Tax Matters Partner;
provided, however, that only a Member may be designated as the Tax Matters
Partner of the Company.
(a) Partnership Status. The Company will elect to be treated as
a partnership for purposes of federal and state income tax, and each Member
covenants that it will make no election, declaration or statement on or in any
tax return, tax filing, or any book or record maintained by it which is
inconsistent with or detrimental to the Company's ongoing maintenance of
partnership tax status.
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(b) Income Tax Compliance. The Tax Matters Partner shall prepare
or cause to be prepared and filed on behalf of the Company, when and as required
by applicable law, all federal, state and local income tax information returns
or requests for extensions thereof. Not less than thirty (30) days prior to the
due date (including extensions) for any return (but not later than August 15 of
each year), the Tax Matters Partner shall submit to each Member a copy of the
return as proposed for review and a schedule showing the Member's allocable
share of the Company's tax attributes ("Tax Attributes") sufficient to allow
such Member to include such Tax Attributes in its federal income tax return.
Each Member shall provide to the Tax Matters Partner, when and as requested, all
information concerning the affairs of such Member as may be reasonably required
to permit the filing of such returns.
(c) Tax Elections. The Tax Matters Partner shall make the
following tax elections on behalf of the Company:
(i) Unless required to adopt a different taxable year
pursuant to Section 706(b) of the Code, adopt the
calendar year as the annual accounting period;
(ii) Adopt the accrual method of accounting;
(iii) Deduct interest expense and taxes attributable to the
construction or installation of real and personal
property improvements to the fullest extent permitted by
the Code;
(iv) Compute the allowance for depreciation under the most
accelerated tax depreciation method and using the
shortest life and lowest salvage value authorized by
applicable law, consistent with the election provided
for in the following clause, with respect to all
depreciable assets;
(v) If allowed by the Code, and to the maximum extent
allowable, elect to take available investment tax credit
on the full basis of each asset; and
(vi) Make such other elections as the Tax Matters Partner
shall have been directed in writing by the Members or
the Majority Member, as applicable, to make. The
requirement to make any of the elections set forth above
is predicated upon the assumption that current federal
income tax law will continue in force. If any
legislative change is made in the Code or any other tax
statutes or by the IRS in regulations and other
pronouncements or by the courts in case law affecting
any of such elections so as to materially alter the
economic result of the required election, the Tax
Matters Partner shall make such election in respect of
the item so affected as directed by the Members or the
Majority Member, as applicable; provided, however, that
such election shall be made in a manner consistent with
the best interests of the Members as a group.
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(d) Code Section 754 Election. In connection with any transfer
or assignment of any Membership Units, or any distribution with respect to which
a Member recognizes gain under Code section 731(a), the Members or the Majority
Member, as applicable, shall, upon the written request of any Member, cause the
Company to file an election under Code section 754 and the Treasury Regulations
thereunder to adjust the basis of the Company assets under Code Section 734(b)
or 743(b) and a corresponding election under the applicable sections of state
and local law.
ARTICLE VI - TRANSFERS OF INTERESTS
6.01 Restrictions on Transfers. Other than the Transfer of Membership
Units held by ACME Subsidiary Holdings IV, LLC ("Holdings IV") in exchange for
Preferred Units of Holdings IV in accordance with the Limited Liability Company
Agreement of Holdings IV, no Membership Units of the Company may be Transferred,
nor may any Member offer to Transfer, and no Transfer by a Member shall be
binding upon the Company or any Member unless such Transfer complies with the
provisions of this Article VI and the Company receives an executed copy of the
documents effecting such Transfer.
No Transfer shall be permitted if such Transfer would (i) violate the
registration provisions of the Securities Act or the securities laws of any
applicable jurisdiction, (ii) cause the Company to become subject to regulation
as an "investment company" under the Investment Company Act, and the rules and
regulations promulgated thereunder, (iii) result in the termination of any
material contract to which the Company is a party and which is material, or (iv)
result in the treatment of the Company as an association taxable as a
corporation or as a "publicly traded partnership" for federal income tax
purposes. The Company may require reasonable evidence as to the foregoing,
including, without limitation, a favorable opinion of counsel.
These restrictions on Transfer of the Membership Units will cease to be
in effect upon the effectiveness of a registration statement under the
Securities Act with respect to the Membership Units pursuant to the terms and
conditions of the Membership Unitholders Agreement, dated September 30, 1997,
among the Company, Holdings and CIBC Wood Gundy Securities Corp. (the
"Membership Unitholders Agreement").
Preferred Units may not be Transferred without the prior written consent
of the Majority Member or the holders of more than fifty percent (50%) in
interests of the Common Units.
6.02 Substitute Members. If a Transferee of Membership Units does not
become (and until any such Transferee becomes) a substitute Member in accordance
with the provisions of Section 6.01 hereof, such Person shall not be entitled to
exercise or receive any of the rights, powers or benefits of a Member other than
the right to receive distributions which the assigning Member has Transferred to
such Person. The Company shall admit as a substitute Member any Person that
acquires Membership Units by Transfer from any Member pursuant to Section 6.01
hereof, but only upon the receipt of an executed instrument satisfactory to the
Company whereby such assignee becomes a party to this Agreement as a Member.
6.03 Allocation of Distributions Between Assignor and Assignee. Upon the
Transfer of Membership Units pursuant to this Article and unless the assignor
and assignee
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otherwise agree and so direct the Company in a written statement signed by both
the assignor and assignee (a) distributions pursuant to Article V shall be made
to the Person owning such Membership Units at the date of distribution and (b)
the assignee shall succeed to a pro-rata (based on the percentage of such
assignor's Membership Units Transferred) portion of the assignor's Capital
Account with respect to such Membership Units.
Any Membership Units Transferred shall remain subject to the provisions
of this Agreement and the transferee shall have entered into an enforceable
written agreement providing that all Membership Units so Transferred shall
continue to be subject to all provisions of this Agreement as if such Membership
Units were still held by the transferring Member, and provided further that such
permitted transferee shall not be permitted to make any further Transfer without
complying with the provisions of this Agreement. Anything to the contrary in
this Agreement notwithstanding, transferees permitted hereunder shall take any
Membership Units so Transferred subject to all obligations under this Agreement
as if such Membership Units were still held by the transferring Member whether
or not they so expressly agree.
ARTICLE VII - INDEMNIFICATION
7.01 Right to Indemnification. Except as limited by law and subject to
the provisions of this Article, the Company shall indemnify each Indemnified
Party from and against any and all Losses in any way related to or arising out
of this Agreement, the business of the Company or the action or inaction of such
Person hereunder (including, without limitation, the actions or inactions of the
Members and the other Indemnified Parties pursuant to Article IX hereof upon
dissolution of the Company), which may be imposed on, incurred by or asserted at
any time against any such Indemnified Party, except that no indemnification
shall be provided for any Indemnified Party regarding any matter as to which it
shall be finally determined that such Indemnified Party did not act in good
faith and in the reasonable belief that its action was in the best interests of
the Company, or with respect to a criminal matter, that it had reasonable cause
to believe that its conduct was unlawful. Subject to the foregoing limitations,
such indemnification may be provided by the Company with respect to Losses in
connection with which it is claimed that such Indemnified Party received an
improper personal benefit by reason of its position, regardless of whether the
claim arises out of the Indemnified Party's service in such capacity, except for
matters as to which it is finally determined that an improper personal benefit
was received by such Indemnified Party. The indemnification contained in this
Article VII shall survive termination of this Agreement.
7.02 Award of Indemnification. The determination of whether the Company
is authorized to indemnify any Indemnified Party hereunder and any award of
indemnification shall be made in each. instance by the Members; provided,
however, that as to any matter disposed of by a compromise payment, pursuant to
a consent decree or otherwise, no indemnification, either for said payment or
for any other Losses, shall be provided unless there has been obtained an
opinion in writing of legal counsel to the effect that the Person subject to
indemnification hereunder appears to have acted in good faith and that such
indemnification would not protect such Person against any liability to the
Company or the Members to which he, she or it would otherwise be subject by
reason of gross negligence, willful malfeasance or fraud in the conduct of his,
her or its office or actions not taken in good faith by such Person. The Company
shall be obliged to pay indemnification applied for by any Indemnified Party
unless there is an adverse determination (as provided above) within forty-five
(45) days after the application. If indemnification is denied, the applicant may
seek an independent determination of its right to
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indemnification by a court, and in such event, the Company shall have the burden
of proving that the applicant was ineligible for indemnification under this
Article. Notwithstanding the foregoing, in the case of a proceeding by or in the
right of the Company which an Indemnified Party is adjudged liable to the
Company, indemnification hereunder shall be provided only upon a determination
by a court having jurisdiction that in view of all the circumstances of the
case, the Indemnified Party is fairly and reasonably entitled to indemnification
for such Losses as the court shall deem proper.
7.03 Successful Defense. Notwithstanding any contrary provisions of this
Article, if any Indemnified Party has been wholly successful on the merits in
the defense of any action, suit or proceeding in which it was involved by reason
of its position with the Company or as a result of serving in such capacity
(including termination of investigative or other proceedings without a finding
of fault on the part of such Indemnified Party), such Indemnified Party shall be
indemnified by the Company against all Losses incurred by such Indemnified Party
in connection therewith.
7.04 Advance Payments. Except as limited by law, Losses incurred by an
Indemnified Party in defending any action, suit or proceeding, including a
proceeding by or in the right of the Company, shall be paid by the Company to
such Indemnified Party in advance of final disposition of the proceeding upon
receipt of its written undertaking to repay such amount if such Indemnified
Party is determined pursuant to this Article VII or adjudicated to be ineligible
for indemnification, which undertaking shall be an unlimited general obligation
but need not be secured and may be accepted without regard to the financial
ability of such Indemnified Party to make repayment; provided, however, that no
such advance payment of issues shall be made if it is determined pursuant to
Section 7.02 of this Article on the basis of the circumstances known at the time
(without further investigation) that such Indemnified Party is ineligible for
indemnification.
7.05 Insurance. The Company shall have power to purchase and maintain
insurance on behalf of any Indemnified Party against any liability or cost
incurred by such Person in any such capacity or arising out of its status as
such, whether or not the Company would have power to indemnify against such
liability or cost.
7.06 Heirs and Personal Representatives. The indemnification provided by
this Article shall inure to the benefit of the heirs and personal
representatives of the Indemnified Parties.
7.07 Non-Exclusivity. The provisions of this Article shall not be
construed to limit the power of the Company to indemnify the Members, Officers,
employees or agents to the fullest extent permitted by law or to enter into
specific agreements, commitments or arrangements for indemnification permitted
by law. The absence of any express provision for indemnification herein shall
not limit any right of indemnification existing independently of this Article.
7.08 Amendment. The provisions of this Article may be amended or
repealed in accordance with Section 10.05; provided, however, that no amendment
or repeal of such provisions that adversely affects the rights of the Members
under this Article with respect to acts or omissions occurring at any time prior
to such amendment or repeal, shall apply to any Member without such Member's
consent.
20
<PAGE> 24
ARTICLE VIII - CONFLICTS OF INTEREST
8.01 Transactions with Interested Persons; Conflicts.
(a) Unless entered into in bad faith, no contract or transaction
between the Company and one or more of its Members or any other Indemnified
Party, or between the Company and any other Person in which one or more of its
Members or any other Indemnified Party has a financial interest or is a
director, manager or officer, shall be voidable solely for this reason if such
contract or transaction is fair and reasonable to the Company; and no Member or
other Indemnified Party interested in such contract or transaction, because of
such interest, shall be liable to the Company or to any other Person or
organization for any loss or expense incurred by reason of such contract or
transaction or shall be accountable for any gain or profit realized from such
contract or transaction.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between the Company, its Members and/or
the other Indemnified Parties or (ii) whenever this Agreement provides that any
such Person shall act in a manner that is, or provide terms that are, fair and
reasonable to the Company or any Member, such Person shall resolve such conflict
of interest, taking such action or providing such terms, considering in each
case the relative interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interests, any customary or acceptable industry practices, and
any applicable generally acceptable accounting practices or principles. In the
absence of bad faith by the Member or other Indemnified Party, as the case may
be, the resolution, action or term so made, taken or provided by such Person
shall not constitute a breach of this Agreement or any other agreement
contemplated herein or of any duty or obligation of such Person at law or in
equity or otherwise.
8.02 Business Opportunities. Members may engage in or possess an
interest in other business ventures of any nature, and neither the Company nor
any other Member shall have any rights by virtue of this Agreement in or to any
such venture or the income or profits derived therefrom, and the pursuit of any
such venture, even if competitive with the activities of the Company, shall not
be deemed improper or wrongful. No Member shall be obligated to present any
particular investment or business opportunity to the Company even if such
opportunity is of a nature which could be taken by the Company.
ARTICLE IX - DISSOLUTION, LIQUIDATION, AND TERMINATION
9.01 No Dissolution. The Company shall not be dissolved by the admission
of additional Members, the withdrawal of a Member or the written consent of all
Members, but shall continue to exist in perpetuity, except in accordance with
the terms of this Agreement. Upon the death, retirement, resignation, expulsion,
Bankruptcy or dissolution of any Member the Company shall not dissolve and its
affairs shall not be wound up except as set forth in Section 9.02 below.
9.02 Events Causing Dissolution. The Company shall be dissolved and its
affairs wound up upon the occurrence of any of the following events:
21
<PAGE> 25
(a) if a Majority Member shall be acting as a Manager under
Section 6.02 hereof, the Bankruptcy, dissolution, death, retirement, or
resignation of the Majority Member; unless the Company is continued upon the
written consent of a majority of the remaining Members, such consent to be given
within ninety (90) days following the occurrence of such event;
(b) if there shall be no Majority Member acting as a Manager
under Section 6.02 hereof, the Bankruptcy, dissolution, death, retirement, or
resignation of any Member; unless the Company is continued upon the written
consent of a majority of the remaining Members, such consent to be given within
ninety (90) days following the occurrence of such event;
(c) the entry of a decree of judicial dissolution under Section
18-802 of the Act.
9.03 Notice of Dissolution. Upon the dissolution of the Company, the
Member or the other Person or Persons (the "Liquidating Trustee") appointed by
the Members or the Majority Member, as applicable, to carry out the winding up
of the Company, shall promptly notify the Members of such dissolution.
9.04 Liquidation. Upon dissolution of the Company, the Liquidating
Trustee shall proceed diligently to liquidate the Company and wind up its
affairs and to make final distributions as provided in Section 5.04 hereof and
in the Act. The costs of dissolution and liquidation shall be borne as an
expense of the Company. Until final distribution, the Liquidating Trustee shall
continue to operate the Company properties with all of the power and authority
of the Members or the Majority Member, as applicable. As promptly as possible
after dissolution and again after final liquidation, the Liquidating Trustee
shall cause an accounting to be made by a firm of independent public accountants
of the Company's assets, liabilities and operations.
9.05 Certificate of Cancellation. On completion of the distribution of
Company assets as provided herein, the Company shall be terminated, and the
Members or the Majority Member, as applicable, (or such other Person or Persons
as the Act may require or permit) shall file a Certificate of Cancellation with
the Secretary of State of the State of Delaware under the Act, cancel any other
filings made pursuant to Sections 2.01, 2.02 and 2.04, and take such other
actions as may be necessary to terminate the existence of the Company.
ARTICLE X - GENERAL PROVISIONS
10.01 Offset. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment. All amounts so deducted shall nevertheless be treated as distributions
for purposes of Sections 5.03, 5.04 and 5.05 hereof.
10.02 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests, or consents provided for or permitted to be
given under this Agreement must be in writing and shall be given either by
registered or certified mail, addressed to the recipient, with return receipt
requested, or by delivering the writing to the recipient in Person, by courier,
or by facsimile transmission; and a notice, request, or consent given under this
Agreement is effective upon receipt or three days after the date mailed,
whichever is sooner. All
22
<PAGE> 26
notices, requests, and consents to be given to a Member must be sent to or
delivered at the addresses given for that Member on Schedule A, or such other
address as that Member may specify by written notice to the other Members and
the Company. Any notice, request, or consent to be given to the Company must be
given to the Members or the Majority Member, as applicable, at the address of
the principal office of Company specified in Section 2.03. Whenever any notice
is required to be given by law, the Certificate or this Agreement, a written
waiver thereof, signed by the Person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.
10.03 Entire Agreement. This Agreement, together with each Member's
Subscription Agreement, constitutes the entire agreement of the Members relating
to the Company and supersedes all prior contracts or agreements with respect to
the Company, whether oral or written.
10.04 Amendment or Modification; Terms. This Agreement, including any
Schedule hereto, may be amended from time to time, in whole or in part, by an
instrument in writing signed in accordance with Section 3.04 hereof. Copies of
each such amendment shall be delivered to each Member at least thirty (30) days
prior to the effective date of such amendment; provided, however, in the case of
any amendment that the Members or the Majority Member, as applicable, determines
is necessary or appropriate to prevent the Company from being treated as a
publicly traded partnership taxed as a corporation under section 7704 of the
Code, the amendment shall be effective on the date provided in the instrument
containing the terms of such amendment. Nothing contained in this Agreement
shall permit the amendment of this Agreement to impair the exemption from
personal liability of the officers, employees and agents of the Company or
Members or to permit assessments upon the Members.
10.05 Binding Effect. Subject to the restrictions on Transfers set forth
in this Agreement, this Agreement is binding on and inures to the benefit of the
parties and their respective heirs, legal representatives, successors and
assigns.
10.06 Governing Law; Severability. This Agreement is governed by and
shall be construed in accordance with the law of the State of Delaware,
exclusive of its conflict-of-laws principles. In the event of a direct conflict
between the provisions of this Agreement and any provision of the Certificate,
or any mandatory provision of the Act, the applicable provision of the
Certificate or the Act shall control. If any provision of this Agreement or the
application thereof to any Person or circumstance is held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of that provision shall be enforced to the fullest extent permitted by law.
10.07 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions, as requested by the Members or the Majority
Member, as applicable.
10.08 Waiver of Certain Rights. Each Member irrevocably waives any right
it may have to maintain any action for dissolution of the Company or for
partition of the property of the Company.
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<PAGE> 27
10.09 Third-Party Beneficiaries. Except with respect to the Lenders, who
are expressly intended to be third-party beneficiaries of this Agreement, there
shall be no third-party beneficiaries of this Agreement.
10.10 Failure to Pursue Remedies. The failure of any party to seek
redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of any original
violation.
10.11 Cumulative Remedies. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other right the parties may
have by law, statute, ordinance or otherwise.
10.12 Notice to Members of Provisions of this Agreement. By executing
this Agreement, each Member acknowledges that such Member has actual notice of
(a) all of the provisions of this Agreement, including, without limitation, the
restrictions on the Transfer of Membership Units set forth in Articles III and
VI, and (b) all of the provisions of the Certificate. Each Member hereby agrees
that this Agreement constitutes adequate notice of all such provisions, and each
Member hereby waives any requirement that any further notice thereunder be
given.
10.13 Interpretation. For the purposes of this Agreement, terms not
defined in this Agreement shall be defined as provided in the Act; and all
nouns, pronouns and verbs used in this Agreement shall be construed as
masculine, feminine, neuter, singular, or plural, whichever shall be applicable.
Titles or captions of Articles and Sections contained in this Agreement are
inserted as a matter of convenience and for reference, and in no way define,
limit, extend or describe the scope of this Agreement or the intent of any
provision hereof.
10.14 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document, and all counterparts shall be construed together and shall constitute
the same instrument.
[END OF TEXT]
24
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto executed this Agreement under
seal as of the date set forth above.
ACME INTERMEDIATE HOLDINGS, LLC
By /s/ THOMAS D. ALLEN
---------------------------------
Name: Thomas D. Allen
Title: Executive Vice President
& Chief Financial Officer
ACME TELEVISION HOLDINGS, LLC
By /s/ THOMAS D. ALLEN
---------------------------------
Name: Thomas D. Allen
Title: Executive Vice President
& Chief Financial Officer
ACME SUBSIDIARY HOLDINGS, LLC
By /s/ THOMAS D. ALLEN
---------------------------------
Name: Thomas D. Allen
Title: Executive Vice President
& Chief Financial Officer
ACME SUBSIDIARY HOLDINGS IV, LLC
By /s/ THOMAS D. ALLEN
---------------------------------
Name: Thomas D. Allen
Title: Executive Vice President
& Chief Financial Officer
25
<PAGE> 29
ACME INTERMEDIATE HOLDINGS, LLC
Schedule A
<TABLE>
<CAPTION>
Common Member No. of Common Units Capital Contribution
------------- ------------------- --------------------
<S> <C> <C>
ACME Television Holdings, LLC 834,874.88 $56,136,997
ACME Subsidiary Holdings, LLC 4,477.125 $ 309,503
ACME Subsidiary Holdings IV, LLC 18,132.0 $ 1,101,093
</TABLE>
<TABLE>
No. of Preferred
Preferred Member Units
---------------- ----------------
<S> <C> <C>
ACME Television Holdings, LLC 15,000 $15,000,000(1)
</TABLE>
- --------
1 For purposes of determining accrued dividends on the Preferred Units,
$7,000,000 of the Preferred Capital Contribution was made on April 23, 1999 and
$8,000,000 of the Preferred Capital Contribution will be made on June 23, 1999.
26
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001049530
<NAME> ACME INTERMEDIATE HOLDINGS, LLC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,617
<SECURITIES> 0
<RECEIVABLES> 13,151
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,048
<PP&E> 28,874
<DEPRECIATION> 3,872
<TOTAL-ASSETS> 329,278
<CURRENT-LIABILITIES> 59,746
<BONDS> 198,271
15,366
0
<COMMON> 0
<OTHER-SE> 15,875
<TOTAL-LIABILITY-AND-EQUITY> 329,278
<SALES> 0
<TOTAL-REVENUES> 26,635
<CGS> 0
<TOTAL-COSTS> 40,332
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,430
<INCOME-PRETAX> (26,107)
<INCOME-TAX> 936
<INCOME-CONTINUING> (25,171)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,171)
<EPS-BASIC> 0.0
<EPS-DILUTED> 0.0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001049510
<NAME> ACME TELEVISION, LLC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,617
<SECURITIES> 0
<RECEIVABLES> 13,151
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,048
<PP&E> 28,874
<DEPRECIATION> 3,872
<TOTAL-ASSETS> 327,707
<CURRENT-LIABILITIES> 59,619
<BONDS> 153,357
0
0
<COMMON> 0
<OTHER-SE> 118,263
<TOTAL-LIABILITY-AND-EQUITY> 327,707
<SALES> 0
<TOTAL-REVENUES> 26,635
<CGS> 0
<TOTAL-COSTS> 40,332
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,545
<INCOME-PRETAX> (23,222)
<INCOME-TAX> 936
<INCOME-CONTINUING> (22,286)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,286)
<EPS-BASIC> 0.0
<EPS-DILUTED> 0.0
</TABLE>
