<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1999
REGISTRATION NO. 333-84191
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ACME COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4833 33-0866283
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
2101 E. FOURTH STREET, SUITE 202, SANTA ANA, CALIFORNIA 92705, (714) 245-9499
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMIE KELLNER
CHIEF EXECUTIVE OFFICER
ACME COMMUNICATIONS, INC.
2101 E. FOURTH STREET, SUITE 202
SANTA ANA, CALIFORNIA 92705
(714) 245-9499
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
DAVID A. KRINSKY, ESQ. ALVIN G. SEGEL, ESQ.
ALLISON M. KELLER, ESQ. IAN C. WIENER, ESQ.
O'MELVENY & MYERS LLP IRELL & MANELLA LLP
610 NEWPORT CENTER DRIVE, SUITE 1700 1800 AVENUE OF THE STARS, SUITE 900
NEWPORT BEACH, CALIFORNIA 92660-6429 LOS ANGELES, CALIFORNIA 90067-4276
(949) 760-9600 (310) 277-1010
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
Subject to Completion, Dated September 29, 1999
[ACME Communications Logo]
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ACME Communications, Inc.
5,000,000 Shares
Common Stock
- --------------------------------------------------------------------------------
This is an initial public offering of common stock of ACME Communications, Inc.
We anticipate that the initial public offering price will be between $19.00 and
$21.00 per share.
We have applied to list our common stock on the Nasdaq National Market under the
symbol "ACME."
Investing in our common stock involves risks. See "Risk Factors" beginning on
page 8.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined or
passed upon the adequacy or accuracy of this prospectus. Any representation to
the contrary is a criminal offense.
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
PUBLIC OFFERING PRICE $ $
UNDERWRITING DISCOUNTS AND COMMISSIONS $ $
PROCEEDS, BEFORE EXPENSES, TO ACME $ $
</TABLE>
The selling stockholders have granted the underwriters the right to purchase up
to an additional 750,000 shares at the public offering price within 30 days from
the date of this prospectus to cover over-allotments.
Deutsche Banc Alex. Brown
Merrill Lynch & Co.
Morgan Stanley Dean Witter
CIBC World Markets
The date of this prospectus is , 1999.
<PAGE> 3
INSIDE FRONT COVER
[ACME COMMUNICATIONS LOGO]
[COLLAGE OF ACTORS ON THE WB NETWORK AND SYNDICATED PROGRAMS]
FRONT GATEFOLD
[A MAP OF THE UNITED STATES IDENTIFYING THE LOCATION OF EACH OF OUR STATIONS AND
THE CALL LETTERS AND CHANNEL OF EACH OF OUR STATIONS]
<PAGE> 4
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding our company and the common stock we are selling in this
offering, including the risk factors and our financial statements and related
notes, included elsewhere in this prospectus.
THE COMPANY
We currently own and operate nine broadcast television stations in
medium-sized markets. Our stations cover in the aggregate approximately 5.4% of
total U.S. television households. Each of our stations is a network affiliate of
The WB Television Network, making us the third largest WB Network affiliated
station group in the country. Jamie Kellner, our Chairman and Chief Executive
Officer, is also a founder, Chief Executive Officer and partner of The WB
Network. Mr. Kellner and our other founders formed our company to capitalize on
the opportunity to affiliate with The WB Network.
Since our formation in 1997, we have focused primarily on acquiring
independently-owned stations, under-performing stations and construction permits
for new stations in markets that we believe have the growth potential and
demographic profile to support the successful launch of a new WB Network
affiliate. We believe that medium-sized markets provide advantages such as fewer
competitors and lower operating costs compared to large markets. Because many of
our stations are newly launched, we have experienced losses of $28.4 million for
the six months ended June 30, 1999 as compared to an $11.3 million loss for the
six months ended June 30, 1998. However, we have experienced significant revenue
and broadcast cash flow growth and anticipate further growth. For the six months
ended June 30, 1999, we generated $26.6 million in revenues and $6.5 million in
broadcast cash flow, representing an increase of 37.8% in revenues and 47.0% in
broadcast cash flow over the six months ended June 30, 1998.
Like The WB Network, we target our programming to younger audiences, in
particular, young adults, teens and kids. We believe that these younger
audiences are a growing and increasingly important demographic target for
advertisers, and that our affiliation with The WB Network affords us a
significant competitive advantage over other network affiliated television
broadcasters in attracting these younger audiences. To build and retain our
audience share during non-network hours, we also acquire the broadcast rights to
popular syndicated programming that we believe complements The WB Network
programming. In addition, we broadcast local programming such as news in St.
Louis, local weather updates and local and regional sports programming in
selected markets. We believe this programming enhances our ability to sell
advertising time to local and regional advertisers and increases audience
awareness of our newly launched stations.
The WB Network was created in 1995 and is a more demographically focused
network than ABC, CBS, NBC and Fox. The WB Network provides popular, targeted
prime time programming each season such as 7th Heaven, Dawson's Creek, Buffy the
Vampire Slayer, Felicity and Charmed. In addition to its prime time programming,
The WB Network provides popular animated weekday, and Saturday morning
programming through Kids'WB, including the number one rated kids' show, Pokemon.
Mr. Kellner believes that the future of broadcast television, much like radio,
requires that programming be targeted more directly to specific audiences rather
than attempting to appeal to all demographic groups.
3
<PAGE> 5
THE OFFERING(1)
COMMON STOCK OFFERED BY ACME.... 5,000,000 shares
COMMON STOCK TO BE
OUTSTANDING AFTER
THE OFFERING(2)............... 16,750,000 shares
USE OF PROCEEDS................. We intend to use the net proceeds of this
offering to:
- repay all indebtedness under our
revolving credit facility;
- fund the acquisition of KASY;
- repay debt incurred in connection with
the acquisition of WBDT, WIWB and WBUI;
and
- provide funds for general corporate
purposes, including working capital and
future acquisitions.
RISK FACTORS.................... See "Risk Factors" beginning on page 8 for a
discussion of factors you should carefully
consider before deciding to invest in our
common stock.
NASDAQ NATIONAL MARKET SYMBOL... "ACME"
- -------------------------
(1) Does not include 750,000 shares of common stock subject to a 30-day
over-allotment option granted to the underwriters by the selling
stockholders.
(2) Based on the number of shares that will be outstanding after our
reorganization. Excludes approximately 4,200,000 shares of common stock
reserved for issuance pursuant to our 1999 Stock Incentive Plan, 2,708,341
of which are subject to options that will be outstanding before the
consummation of this offering.
Our principal executive offices are located at 2101 E. Fourth Street, Suite
202, Santa Ana, California 92705. Our telephone number is (714) 245-9499.
4
<PAGE> 6
OUR SUMMARY CONSOLIDATED AND PRO FORMA FINANCIAL DATA
The following table summarizes our historical and pro forma financial data.
The pro forma financial data gives effect to the acquisition of Koplar
Communications, Inc. and the reorganization of our business from a limited
liability company into a C corporation, as if the acquisition and reorganization
had occurred at the beginning of each period indicated. The data presented in
this table are derived from the "Selected Consolidated and Pro Forma Financial
Data" and the financial statements and notes which are included elsewhere in
this prospectus. You should read those sections for a further explanation of the
financial data summarized here.
<TABLE>
<CAPTION>
PRO FORMA
ACME
PRO FORMA COMMUNICATIONS,
ACME TELEVISION ACME ACME TELEVISION INC.(1)
HOLDINGS, LLC COMMUNICATIONS, HOLDINGS, LLC ---------------
------------------- INC.(1) -------------------
YEARS ENDED --------------- SIX MONTHS ENDED SIX MONTHS
DECEMBER 31, YEAR ENDED JUNE 30, ENDED
------------------- DECEMBER 31, ------------------- JUNE 30,
1997 1998 1998 1998 1999 1999
-------- -------- --------------- -------- -------- ---------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.................. $ 11,347 $ 43,928 $ 43,928 $ 19,327 $ 26,635 $ 26,635
Operating expenses:
Station operating
expenses.................. 10,158 32,973 32,973 15,165 19,990 19,990
Depreciation and
amortization.............. 1,215 11,355 14,579 4,181 8,159 8,565
Corporate................... 1,415 2,627 2,627 1,194 1,483 1,483
Equity-based compensation... -- -- -- -- 10,700 10,700
-------- -------- ----------- -------- -------- -----------
Operating loss................ (1,441) (3,027) (6,251) (1,213) (13,697) (14,103)
Other income (expenses):
Interest income............. 287 231 231 188 27 27
Interest expense............ (6,562) (23,953) (21,478) (11,472) (14,068) (12,840)
Gain on sale of asset....... -- 1,112 1,112 -- -- --
Other....................... -- (380) (380) 10 -- --
-------- -------- ----------- -------- -------- -----------
Loss before taxes and minority
interest.................... (7,716) (26,017) (26,766) (12,487) (27,738) (26,916)
Income tax benefit
(expense)................... -- 2,393 10,702 365 (2,064) 10,748
-------- -------- ----------- -------- -------- -----------
Loss before minority
interest.................... (7,716) (23,624) (16,064) (12,122) (29,802) (16,168)
Minority interest............. 237 1,684 -- 868 1,403 --
-------- -------- ----------- -------- -------- -----------
Net loss...................... $ (7,479) $(21,940) $ (16,064) $(11,254) $(28,399) $ (16,168)
======== ======== =========== ======== ======== ===========
Pro forma basic and diluted
net loss per share.......... n/a n/a $ (1.37) n/a n/a $ (1.38)
Basic and diluted weighted
average shares
outstanding(1).............. n/a n/a 11,750,000 n/a n/a 11,750,000
BALANCE SHEET DATA:
Total assets.................. $220,475 $288,082 n/a $290,439 $330,282 $ 347,931
Long-term debt(2)............. 192,452 220,256 n/a 214,074 277,426 252,670
Total members' capital........ 16,306 1,413 n/a 12,488 (16,286) n/a
Total shareholders' equity.... n/a n/a n/a n/a n/a 31,700
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
ACME TELEVISION HOLDINGS, LLC
---------------------------------------------
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
--------------------- --------------------
1997 1998 1998 1999
--------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SUPPLEMENTAL FINANCIAL DATA:
Broadcast cash flow and adjusted EBITDA(3):
Operating loss......................................... $ (1,441) $ (3,027) $ (1,213) $(13,697)
Add back:
Equity-based compensation............................ -- -- -- 10,700
Depreciation and amortization........................ 1,215 11,355 4,181 8,159
Time brokerage fees.................................. -- 228 228 --
Amortization of program rights....................... 1,433 5,321 2,195 3,250
Corporate expenses................................... 1,415 2,627 1,194 1,483
Adjusted program payments(3)......................... (1,598) (5,124) (2,152) (3,379)
--------- -------- -------- --------
Broadcast cash flow................................ $ 1,024 $ 11,380 $ 4,433 $ 6,516
Less:
Corporate expenses................................... 1,415 2,627 1,194 1,483
--------- -------- -------- --------
Adjusted EBITDA.................................... $ (391) $ 8,753 $ 3,239 $ 5,033
Broadcast cash flow margin(3)............................ 9.0% 25.9% 22.9% 24.5%
Adjusted EBITDA margin(3)................................ n/m 19.9% 16.8% 18.9%
Cash flows provided by (used in) operations:
Operating activities................................... $ (599) $ 319 $ (89) $ 3,731
Investing activities................................... (191,730) (15,504) (20,790) (48,841)
Financing activities................................... 201,153 7,362 13,949 45,778
Deficiency of earnings to fixed charges(4)............... $ 7,716 $ 23,624 $ 12,122 $ 29,802
</TABLE>
- -------------------------
(1) Reflects our acquisition of Koplar Communications, Inc. and our
reorganization as explained in the pro forma financial information included
elsewhere in this prospectus.
(2) Includes amounts outstanding under our bridge loan, convertible debentures,
10 7/8% senior discount notes and 12% senior secured notes.
(3) We define:
- broadcast cash flow as operating income, plus equity-based compensation,
depreciation and amortization, time brokerage fees, amortization of
program rights, and corporate expenses, less program payments -- the
latter as adjusted to reflect reductions for liabilities relating to
expired rights or rights which have been written-off in connection with
acquisitions;
- adjusted EBITDA as broadcast cash flow less corporate expenses;
- broadcast cash flow margin as broadcast cash flow as a percentage of net
revenues; and
- adjusted EBITDA margin as adjusted EBITDA as a percentage of net
revenues.
We have included broadcast cash flow, broadcast cash flow margin, adjusted
EBITDA and adjusted EBITDA margin data because management believes that
these measures are useful to an investor to evaluate our ability to service
debt and to assess the earning ability of our stations' operations.
However, you should not consider these items in isolation or as substitutes
for net income, cash flows from operating activities or other statement of
operations or cash flows data prepared in accordance with generally
accepted accounting principles. These measures are not necessarily
comparable to similarly titled measures employed by other companies.
(4) Earnings are defined as earnings or loss before minority interest and fixed
charges. Fixed charges are the sum of:
- interest costs, including estimated interest within rental expense; and
- amortization of deferred financing costs
We have disclosed the deficiency of earnings to fixed charges, as earnings
were not adequate to cover fixed charges in each of the periods presented.
6
<PAGE> 8
OUR PREDECESSOR'S SUMMARY CONSOLIDATED FINANCIAL DATA
The following table summarizes the financial data of our predecessor,
Channel 32, Incorporated. The data presented in this table are derived from the
financial statements and notes which are included elsewhere in this prospectus.
You should read those sections for a further explanation of the financial data
summarized here.
<TABLE>
<CAPTION>
CHANNEL 32, INCORPORATED (PREDECESSOR)
--------------------------------------------------------
PERIOD FROM
DECEMBER 16, PERIOD FROM
1993 (INCEPTION) YEARS ENDED JUNE 30, JULY 1, 1996
TO JUNE 30, -------------------- TO JUNE 17,
1994 1995 1996 1997
---------------- -------- -------- ------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues..................... $ -- $ 288 $ 2,729 $ 1,306
Operating expenses:
Station operating expenses..... 17,626 896 4,736 2,364
Depreciation and
amortization................ -- 234 542 346
-------- ------- ------- -------
Operating loss................... (17,626) (842) (2,549) (1,404)
Other income (expenses):
Interest income................ -- -- 45 --
Interest expense............... (4,691) (200) (3,252) (2,222)
Other.......................... -- -- (259) (10)
-------- ------- ------- -------
Net loss......................... $(22,317) $(1,042) $(6,015) $(3,636)
======== ======= ======= =======
</TABLE>
7
<PAGE> 9
RISK FACTORS
You should carefully consider the risks described below before making a
decision to buy our common stock. You should also refer to the other information
in this prospectus, including our financial statements and the related notes.
BECAUSE WE ARE HIGHLY LEVERAGED OUR FUTURE CASH FLOWS MIGHT NOT BE SUFFICIENT TO
MEET OUR OBLIGATIONS AND WE MIGHT HAVE MORE DIFFICULTY OBTAINING FINANCING.
Our highly leveraged financial position poses the following risks to
stockholders:
- a substantial portion of our cash flow from operations will be required
to service our indebtedness;
- our ability to obtain financing in the future for working capital,
capital expenditures and general corporate purposes, including
acquisitions might be impeded; and
- we are more vulnerable to economic downturns and our ability to withstand
competitive pressures is limited.
Our future cash flow might not be sufficient to meet our obligations and
commitments. If we do not meet our interest obligations under our credit
agreement or indentures or if we otherwise default under these instruments, our
debt may be accelerated under these instruments as well as other debt
instruments we have. In addition, because we are highly leveraged, it could
limit our ability to respond to market conditions or meet extraordinary capital
needs. If we are unable to generate sufficient cash flow from operations to meet
our obligations and commitments, we will be required to refinance or restructure
our indebtedness or raise additional debt or equity capital. Additionally, we
may be required to sell material assets or operations or delay or forego
acquisitions. These alternative strategies might not be effected on satisfactory
terms, if at all.
THE TERMS OF OUR DEBT LIMIT OUR FINANCIAL FLEXIBILITY AND COULD LIMIT OUR GROWTH
OPPORTUNITIES.
Our credit agreement and our subsidiaries' indentures contain restrictive
covenants that may limit our ability to:
- incur additional debt;
- pay dividends;
- merge, consolidate or sell assets;
- make acquisitions or investments; or
- change the nature of our business.
Our credit agreement and indentures also require us to maintain certain
financial covenants, including specified financial tests. Without lender
consents, or if we do not meet these tests, we may not be able to make
acquisitions as planned or meet general or extraordinary capital needs.
8
<PAGE> 10
IF THERE IS A CHANGE OF CONTROL WE MAY BE REQUIRED TO REPAY OUR OUTSTANDING
INDEBTEDNESS.
If we experience a change of control, either with respect to the credit
agreement or either indenture, we might not have sufficient funds to repay all
amounts outstanding under our revolving credit facility and to repurchase the
notes, as may be required. Alternatively, if we are able to satisfy the change
of control provisions, it would require a substantial diversion of cash flow
from our operations and our acquisition plans and could have a material adverse
effect on our economic viability.
OUR HOLDING COMPANY STRUCTURE COULD LIMIT OUR ABILITY TO PAY DIVIDENDS OR MAKE
DEBT PAYMENTS.
We are a holding company with no operations of our own. Therefore, if our
subsidiaries are unable to pay dividends or make distributions to us, we would
be unable to make dividend payments to our stockholders or pay any future
indebtedness. Our subsidiaries' ability to pay dividends and distributions to us
is limited by the terms of our subsidiaries' credit agreement and indentures.
WE EXPECT TO CONTINUE TO EXPERIENCE NET LOSSES FROM OUR OPERATIONS IN THE
FUTURE.
We have incurred losses from continuing operations in each of our fiscal
years since inception and expect to continue to experience net losses in the
foreseeable future. These net losses, which may be greater than our net losses
in the past, are principally a result of interest expense on our outstanding
debt and non-cash charges for depreciation and amortization expense related to
fixed assets and goodwill related to acquisitions.
OUR GROWTH COULD BE LIMITED IF WE ARE UNABLE TO SUCCESSFULLY ACQUIRE ADDITIONAL
TELEVISION STATIONS.
Our growth could be limited if we are unable to successfully implement our
acquisition plans. Our ability to acquire additional television stations is
affected by the following:
- many competing acquirers have greater resources available to make such
acquisitions than we have;
- desired stations might not be available for purchase;
- we might be unable to obtain The WB Network affiliation for all of the
stations we acquire;
- we might not have the financial resources necessary to acquire additional
stations;
- we might be unable to obtain FCC approval of the assignments or transfers
of control of FCC licenses; and
- the law limits the number and location of broadcasting properties that
any one person or entity, including its affiliates, may own and could
limit our ability to pursue desired stations.
Generally when we sign acquisition agreements, we enter into interim local
marketing agreements with the seller under which we receive all station revenues
and pay all station expenses. Because the seller retains ultimate programming
control, we bear the economic risks of paying station expenses until closing the
acquisition.
9
<PAGE> 11
IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE ACQUIRED STATIONS, OUR OPERATING
RESULTS WILL BE NEGATIVELY AFFECTED.
Once we acquire a station, we might not be successful in integrating it
into our group or might be required to divert our limited management resources.
As a result, acquisitions could harm our operating results in the short term as
a result of increased capital requirements.
FAILURE OF NEW STATIONS TO PRODUCE PROJECTED REVENUES COULD HARM OUR FINANCIAL
RESULTS AND EXPECTED GROWTH.
If our new stations do not generate operating cash flow within the expected
time periods, it could harm our financial results and our expected growth.
Generally, it takes a few years for our newly acquired or built stations to
generate operating cash flow. Additionally, in most cases, in the first few
years after we acquire or build a station, we have incurred, and expect to
continue incurring losses, resulting in part from significant expenses related
to:
- acquiring syndicated programming;
- improving technical facilities;
- increasing and improving cable distribution;
- hiring new personnel; and
- marketing the station to viewers.
Additionally, there may be a period before we start generating revenues
because it requires time to gain viewer awareness of new station programming and
to attract advertisers.
OUR BUSINESS OPERATIONS COULD BE SIGNIFICANTLY DISRUPTED IF WE LOSE MEMBERS OF
OUR MANAGEMENT TEAM.
Our success is largely dependent on the continued services of our senior
management team, which includes Mr. Kellner, Doug Gealy, our President and Chief
Operating Officer, and Tom Allen, our Executive Vice President and Chief
Financial Officer. Although we have employment and consulting agreements with
these executives, we might not be able to retain them. The loss of the services
of key personnel could harm our business. Our success will also be dependent in
part on our ability to attract and retain quality general managers and other
management personnel for our stations.
OUR CHIEF EXECUTIVE OFFICER MIGHT HAVE CONFLICTS OF INTEREST WITH OUR BUSINESS.
Mr. Kellner's consulting agreement provides that he may perform services
for other businesses unaffiliated with ours that, in certain limited
circumstances, may be competitive. Because of Mr. Kellner's experience in the
television broadcast industry, if Mr. Kellner provides services to a competing
business, it could materially affect our operations.
Mr. Kellner's ownership and position at The WB Network could create
conflicts with his position with us if our interests differ from those of The WB
Network. Because Mr. Kellner is both our Chief Executive Officer and The WB
Network's Chief Executive Officer, The WB Network requires that he recuse
himself from any material transaction between The WB Network and us.
Additionally, due to his responsibilities with The WB Network, Mr. Kellner might
have limited time available to devote to us.
10
<PAGE> 12
OUR RELATIONSHIP WITH THE WB NETWORK COULD BE ADVERSELY AFFECTED IF MR. KELLNER
LEAVES THE WB NETWORK.
Mr. Kellner is an owner and the Chief Executive Officer of The WB Network
but he does not have a written employment contract with The WB Network. If Mr.
Kellner leaves The WB Network, our relationship with The WB Network could be
adversely affected.
OUR RATINGS AND REVENUES COULD DECLINE SIGNIFICANTLY IF OUR RELATIONSHIP WITH
THE WB NETWORK, OR THE WB NETWORK'S SUCCESS, CHANGES IN AN ADVERSE MANNER.
If our relationship with The WB Network changes in an adverse manner, or if
The WB Network's success diminishes, it might have a material adverse effect on
our ability to generate advertising revenue on which our business is dependent.
The WB Network's relationships with Time Warner and Tribune Broadcasting are
important to The WB Network's continued success but those relationships might
not continue to exist. Similarly, The WB Network might not renew, or might
adversely change any one of our station affiliation agreements. Additionally,
the ratings of The WB Network programming might not continue to improve or The
WB Network might not continue to provide programming, marketing and other
support to its affiliates on the same basis as currently provided. Finally, by
aligning ourselves closely with The WB Network, we might forego other
opportunities that could provide diversity of our network affiliation and avoid
dependence on any one network.
IF OUR BROADCAST CASH FLOW FROM KPLR DECLINES SIGNIFICANTLY, WE WILL BE UNABLE
TO MEET OUR OBLIGATIONS.
If we experience a significant decline in broadcast cash flow from KPLR we
will not have any positive cash flow and will not be able to fulfill our current
and future obligations and commitments. Due to negative net cash flow at our
start-up stations, broadcast cash flow from KPLR accounted for more than 100% of
our total broadcast cash flow in 1998 and for the six months ended June 30,
1999.
IF OUR SYNDICATED PROGRAMMING COSTS INCREASE OR WE CANNOT OBTAIN POPULAR
PROGRAMS, OUR OPERATING COSTS COULD INCREASE OR OUR RATINGS AND REVENUES COULD
DECLINE.
If we are unable to acquire popular syndicated programming, our ratings and
revenues could decline. One of our most significant operating costs is
syndicated programming. We may be exposed in the future to increased syndicated
programming costs that could adversely affect our operating results. In
addition, syndicated programs that meet our criteria might not be available in
the future or might not be available at prices that are acceptable to us. We
believe that the prices of the most sought after syndicated programming will
continue to increase. Syndicated programming rights are often acquired several
years in advance and may require multi-year commitments, making it difficult to
accurately predict how a program will perform. In some instances, programs must
be replaced before their costs have been fully amortized, resulting in
write-offs that increase station operating costs.
IF WE DO NOT MAINTAIN FAVORABLE AUDIENCE RATINGS IT COULD HARM OUR ABILITY TO
PRODUCE ADVERTISING REVENUE.
If our ratings declined, it could harm our ability to produce advertising
revenue. The broadcast television industry is highly competitive, and cable
television and formerly independent stations now affiliated with new networks
have captured increasing market
11
<PAGE> 13
share and overall viewership from general broadcast network television. We also
face increasing competition from home satellite delivery, direct broadcast
satellite television systems and video delivery systems utilizing telephone
lines. Rating declines resulting from these competitors, it could harm our
ability to attract advertisers.
THE REQUIRED CONVERSION TO DIGITAL TELEVISION WILL IMPOSE SIGNIFICANT COSTS ON
US WHICH MAY NOT BE BALANCED BY CONSUMER DEMAND.
The required conversion of the broadcast industry to provide digitally
transmitted television signals will require us to make significant capital
expenditures which may not be balanced by consumer demand for digital
television. The FCC requires us to provide a digitally transmitted signal by
2002 for all of our stations and, generally, to stop using analog signals on the
stations by 2006. Although we have begun preparations to make the transition to
digital television by entering into lease agreements to install digital
television antennas and transmitters, we are unable to predict how much the
entire transition will cost and how long it will take. Because digital
television is generally available only in some of the top-ten viewing markets,
we are unable to predict what the consumer demand for digital division will be
or when the demand will arise.
FCC REGULATION OF OUR BUSINESS COULD ADVERSELY AFFECT OUR LICENSES AND OUR
ABILITY TO ACQUIRE NEW STATIONS.
Our operations are subject to extensive and changing regulation on an
ongoing basis by Congress, the FCC and the courts. This regulation could limit
our ability to acquire more stations as well as adversely affect our existing
licenses. The prior approval of the FCC is required for the issuance, renewal,
modification, assignment and transfer of control of station permits and
licenses. Our growth is subject to the requirement that the FCC must approve any
acquisitions that require an assignment or transfer of control of an FCC
license. In addition, the FCC licenses we hold are subject to renewal from time
to time. If the FCC finds that we have not complied with certain regulations or
if a party files a complaint, the FCC could refuse to renew one of our FCC
licenses or could issue the FCC license subject to conditions. The non-renewal
or conditional renewal of one or more of our television broadcast licenses could
harm our business.
CHANGES IN FEDERAL LAWS COULD RESULT IN INCREASED COMPETITION FOR OUR STATIONS
Recent and prospective actions by Congress, the FCC and the courts could
cause us to face significant competition in the future. The changes include the:
- relaxation of restrictions on television station ownership;
- relaxation of restrictions on the participation by regional telephone
operating companies in cable television and other direct-to-home video
technologies;
- relaxation of restrictions on the offering of multiple network services
by the existing major television networks; and
- increased restrictions on the use of local marketing agreements.
For example, we own one station and have received FCC approval for the
purchase of another station in Albuquerque. We intend to sell the station we own
in the Albuquerque market at the same time that we purchase the other station.
However, we also intend to operate the station we sell under a local marketing
agreement. Although we have entered into a local marketing agreement for the
station we will sell in Albuquerque, because of the recent FCC rule changes the
FCC could require us to terminate the agreement.
12
<PAGE> 14
NEW FCC REGULATIONS COULD HARM OUR ABILITY TO MAINTAIN CARRIAGE ON CABLE
TELEVISION.
It is possible that new laws or regulations may eliminate, or at least
limit the scope of, our cable carriage rights. Because our television stations
rely on must carry rights and retransmission consent to obtain cable carriage,
either of those results could have a material adverse impact on our operations.
Pursuant to the must carry provisions of the Cable Television Consumer
Protection and Competition Act of 1992, a broadcaster may demand carriage on a
specific channel on cable systems within its market. However, the future of
those must carry rights is uncertain. The current FCC rules relate to only the
carriage of analog television signals. It is not clear what, if any, must carry
rights television stations will have after they make the transition to digital
television.
THE FCC COULD IMPOSE SEVERE PENALTIES ON US IF IT RESCINDS APPROVAL OF OUR
SHORT-FORM CHANGE OF CONTROL APPLICATION, OR IF OUR INTERIM VOTING AGREEMENT
TERMINATES BEFORE FCC FINAL APPROVAL OF OUR LONG-FORM CHANGE OF CONTROL
APPLICATION.
Our reorganization and offering constitute a change of control under FCC
Regulations, for which we have applied for FCC approval. Because approval of our
short-form and long-form FCC change of control applications are subject to
reconsideration or review before our reorganization and this offering, we will
face some risk until the FCC orders granting these applications become final. To
obtain a grant of our short-form application, we have agreed to enter into an
interim voting agreement to prevent a substantial change of control. If the FCC
rescinded its grant of our short-form application, because of an issue with our
interim voting agreement, an appeal or the FCC's reconsideration of its grant
the FCC could force us to pay fines, deny renewal of our licenses, refuse to
approve any of our acquisitions, divest our FCC licenses, restructure our
reorganization or take any other action necessary to come into compliance with
an FCC order.
Until the FCC has issued a final order approving our long-form application,
the interim voting agreement must remain in effect. If our interim voting
agreement terminates before approval of our long-form application, the FCC could
force us to pay fines, deny renewal of our licenses, refuse to approve any of
our acquisitions, divest our FCC licenses, restructure our reorganization or
take any other action necessary to come into compliance with an FCC order. If
the FCC delays a grant or denies this long-form application, we would continue
to be restricted by the provisions of the interim voting agreement.
DURING THE PERIOD THAT THE INTERIM-VOTING AGREEMENT AND THE LONG-TERM VOTING
AGREEMENT ARE IN EFFECT, STOCKHOLDERS WHO PURCHASE STOCK IN THIS OFFERING WILL
NOT INFLUENCE THE ELECTION OF THE BOARD.
Stockholders holding more than 50% of our common stock after this offering
will enter into an interim voting agreement until we receive the FCC final order
approving our long-form change of control application. The same stockholders
will also enter into a separate, long-term voting agreement that will take
effect following that approval. Under the interim voting agreement, Messrs.
Kellner, Gealy and Allen can elect all members of our board of directors. Under
the long-term voting agreement, Messrs. Kellner, Gealy, Allen, Embrescia and
Roberts and investment funds managed by or affiliated with Alta Communications,
BancBoston, CEA Capital and TCW Asset Management Company will be able to elect
at least a majority of our board. While these agreements are in effect our
current senior management, either alone during the period the interim voting
agreement is in effect, or with these stockholders if the long-term agreement
becomes effective, will effectively control
13
<PAGE> 15
ACME. The long-term agreement will terminate, in any event, two years from the
closing of this offering. However, the interim agreement could remain in effect
longer than two years if our long-form application is not approved by the FCC,
or even if approved, it does not become final. As a result, those parties who
purchase stock in this offering will not have influence over the election of our
board during that period.
OUR BOARD'S POWER IS LIMITED BY OUR INTERIM VOTING AGREEMENT.
Under the interim agreement, our management will be prohibited from taking
actions that might not otherwise need approval outside our board. At least 60%
in interest of certain investment funds managed by or affiliated with Alta
Communications, BancBoston, CEA Capital and TCW Asset Management Company must
approve:
- redemption of our shares;
- authorization or issuance of additional shares of our common stock;
- payment or declaration of dividends;
- our merger or consolidation;
- the reorganization or sale of us, our subsidiaries, or any of our
material assets;
- entry into new businesses;
- our consent to enter into bankruptcy;
- incurrence of substantial debt;
- significant capital expenditures;
- any change of control requiring FCC approval;
- significant acquisitions; and
- changes in senior management or senior management compensation.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS COULD HINDER ACQUISITION OF OUR
COMPANY.
Delaware corporate law and our certificate of incorporation and bylaws
contain provisions that could delay, defer or prevent a change of control of our
company or a change in our management. These provisions could also discourage
proxy contests and make it more difficult for you and other stockholders to
elect directors and take other corporate actions. As a result, these provisions
could limit the price that investors are willing to pay in the future for shares
of our common stock.
WE COULD BE ADVERSELY AFFECTED BY YEAR 2000 ISSUES.
Year 2000 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 distinguish between dates
beyond the year 1999, which could cause system failures or miscalculations in
our broadcast and corporate locations that could cause disruptions of
operations, including a temporary inability to produce broadcast signals or
engage in normal business activities. Additionally, year 2000 disruptions at our
suppliers and business partners, including The WB Network, syndicated
programmers, advertisers, communications service providers, utilities and
financial institutions could cause a loss of power and communications links that
are crucial to our operations, but largely beyond our control.
14
<PAGE> 16
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "intend," "should," "expect," "plan,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue" or the
negative of such terms or other comparable terminology.
Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our and the television broadcast industry's
actual results, levels of activity, performance, achievements and prospects to
be materially different from those expressed or implied by such forward-looking
statements. These risks, uncertainties and other factors include those
identified under "Risk Factors" in this prospectus.
We are under no duty to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
after the date of this prospectus. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this prospectus might not
occur.
15
<PAGE> 17
USE OF PROCEEDS
We will receive estimated net proceeds of approximately $92 million from
the sale of shares of common stock in this offering, based on an assumed initial
public offering price of $20.00 per share, the midpoint of the range set forth
on the cover page of this prospectus, and after deducting underwriting discounts
and estimated offering expenses. We expect to use the net proceeds of this
offering to:
- repay all indebtedness outstanding under our revolving credit facility
($39.4 million);
- fund the acquisition of KASY ($24.0 million due at closing);
- repay debt incurred in connection with the acquisition of WBDT, WIWB and
WBUI ($15.0 million); and
- provide funds for general corporate purposes, including working capital
requirements and future acquisitions.
Indebtedness under our revolving credit facility accrues interest at
variable rates and must be repaid in full by September 30, 2002. At June 30,
1999, the weighted average interest rate on revolving credit facility borrowings
was 8.0%. Indebtedness incurred on April 23 and June 23, 1999 to acquire WBDT,
WIWB and WBUI accrues interest at a rate of 22.5% and must be repaid in full on
the earlier of April 23, 2002 or consummation by us of any debt or equity
financings generating net proceeds greater than the outstanding loan balance.
Pending use of the net proceeds as described above, we will invest the net
proceeds in investment grade, short-term marketable securities.
DIVIDEND POLICY
We have not declared or paid any cash dividends or distributions on our
common stock since our inception. We anticipate that, for the foreseeable
future, all earnings will be retained for use in our business and no cash
dividends will be paid on our common stock. Any payment of future cash dividends
on our common stock will be dependent upon the ability of our subsidiaries to
pay dividends or make cash payments or advances to us. Our credit agreement and
our subsidiaries' indentures impose restrictions on our subsidiaries' ability to
make these payments. Our ability to pay future dividends will also be subject to
restrictions under any future debt obligations and other factors that our board
of directors deems relevant.
16
<PAGE> 18
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization as of June 30, 1999 on an actual basis, and on a pro forma basis
(see the pro forma financial information included elsewhere in this prospectus)
as adjusted to reflect the estimated net proceeds of $92 million from this
offering and the use of those proceeds.
The table should be read in conjunction with the consolidated financial
statements and related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
---------------------
(UNAUDITED)
PRO FORMA
AS
ACTUAL ADJUSTED
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents(1)............................... $ 1,669 $ 13,903
======== =========
Current portion of obligations under lease................. $ 1,277 $ 1,277
Obligations under lease, net of current portion............ 4,078 4,078
Long-term debt:
Revolving credit facility(2)............................. 39,400 --
Bridge loan(2)........................................... 15,000 --
10 7/8% senior discount notes............................ 153,357 153,357
12% senior secured notes................................. 44,913 44,913
Convertible debentures(3)................................ 24,756 --
-------- ---------
Total long-term debt.................................. 277,426 198,270
-------- ---------
Minority interest(3)....................................... 830 --
Members' capital (deficit) / stockholders' equity(3):
Members' capital(3)...................................... 41,532 --
Preferred stock, $0.01 par value; 10,000,000 shares
authorized; no shares issued and outstanding actual
and as adjusted....................................... -- --
Common stock, $0.01 par value; 50,000,000 shares
authorized; no shares issued and outstanding actual;
16,750,000 shares issued and outstanding as pro forma
adjusted(2)(3)........................................ -- 168
Additional paid-in capital(2)(3)......................... -- 123,532
Accumulated deficit(3)................................... (57,818) --
-------- ---------
Total members' deficit / stockholders' equity......... (16,286) 123,700
-------- ---------
Total capitalization............................. $267,325 $ 327,325
======== =========
</TABLE>
- -------------------------
(1) Cash and cash equivalents pro forma as adjusted includes estimated net
proceeds of $92 million offset by the following uses:
- $39.4 million to repay revolving credit facility borrowings at June 30,
1999;
- $24.0 million to fund the $25.0 million acquisition price for KASY, net
of $1.0 million paid to the seller in August 1999; and
- $15.0 million to repay the bridge loan plus $366,000 of interest payable.
(2) Adjusted to reflect the issuance of common stock with estimated net proceeds
of $92 million, and the use of proceeds as discussed in (1) above. It is
estimated that 16,750,000 shares will be outstanding upon completion of the
offering.
(3) Adjusted to reflect the reorganization as disclosed in the pro forma
financial statements.
17
<PAGE> 19
DILUTION
Our pro forma net tangible book deficit as of June 30, 1999 was $247.1
million or a deficit of $21.03 per share of common stock. Pro forma net tangible
book deficit per share represents the amount of our total pro forma tangible
assets reduced by the amount of our total pro forma liabilities, divided by the
number of shares of common stock outstanding on a pro forma basis. Our pro forma
net tangible book deficit, as adjusted for the sale of 5,000,000 shares of
common stock to be issued in this offering and the application of the net
proceeds from the sale, and after deducting underwriting discounts and estimated
offering expenses, would have been $155.1 million or a deficit of $9.26 per
share. This represents an immediate decrease in pro forma net tangible book
value deficit of $11.77 per share to stockholders immediately before this
offering and an immediate dilution of $29.26 per share to new investors. The
following table illustrates this dilution on a per share basis:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......... $20.00
Net tangible book deficit per share before the
offering........................................... $(21.03)
Decrease per share attributable to new investors...... 11.77
-------
Pro forma net tangible book value per share after the
offering.............................................. (9.26)
------
Dilution per share to new investors..................... $29.26
======
</TABLE>
The following table summarizes, after giving effect to the offering, the
differences between existing stockholders and new investors with respect to the
number of shares of common stock purchased from us, the total consideration paid
to us and the average price per share paid, based on an assumed initial public
offering price of $20.00 per share:
<TABLE>
<CAPTION>
SHARES TOTAL
PURCHASED CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing
stockholders(1)......... 11,750,000 70.1% $ 60,839,000 37.8% $ 5.18
New investors............. 5,000,000 29.9% 100,000,000 62.2% 20.00
---------- ----- ------------ ----- ------
Total................... 16,750,000 100.0% $160,839,000 100.0% $ 9.60
========== ===== ============ ===== ======
</TABLE>
- -------------------------
(1) Reflects total consideration of issuance of units, issuance of convertible
debentures, accrued interest payable on convertible debentures, and issuance
of minority interest.
18
<PAGE> 20
PRO FORMA FINANCIAL INFORMATION
The following pro forma consolidated financial statements of ACME
Communications, Inc. are presented to reflect the acquisition of Koplar
Communications, Inc. and the reorganization of ACME Communications, Inc. The
accompanying pro forma financial information includes:
1. Pro forma balance sheet as of June 30, 1999 for ACME
Communications, Inc., prepared as if the reorganization related
transactions were effective as of that date;
2. Pro forma statement of operations for ACME Communications, Inc. for
the year ended December 31, 1998, prepared as if the Koplar acquisition and
the reorganization had occurred at the beginning of the period; and
3. Pro forma statement of operations for ACME Communications, Inc. for
the six months ended June 30, 1999 for ACME Communications, Inc., prepared
as if the reorganization had occurred at the beginning of the period.
The pro forma balance sheets were derived from the combined unaudited
balance sheet of ACME Communications, Inc. and the unaudited balance sheet of
ACME Television Holdings, LLC as of June 30, 1999.
The pro forma statement of operations for the year ended December 31, 1998
was derived from the audited consolidated statement of operations for ACME
Television Holdings, LLC for the year then ended.
The pro forma statement of operations for the six months ended June 30,
1999 was derived from the unaudited consolidated statement of operations for
ACME Television Holdings, LLC for the period then ended.
The pro forma data are based upon available information and certain
assumptions that management believe are reasonable. The pro forma adjustments
are described in the footnotes to the pro forma financial statements. The
compensation expense related to the conversion of management carry units into
shares of common stock and the acquisition of minority interest in exchange for
shares of common stock is based on preliminary estimates of the fair value of
securities to be issued in the offering. It is possible that the estimates noted
above might require further revisions. The pro forma consolidated financial
statements do not purport to represent what ACME Communication, Inc.'s results
of operations or financial condition would actually have been had the
transactions occurred on such dates or to project ACME Communication, Inc.'s
results of operations or financial condition for any future period or date.
The pro forma financial information should be read in conjunction with the
historical financial statements for ACME Television Holdings, LLC and the
historical balance sheet of ACME Communications, Inc. at June 30, 1999, which
were used to prepare the pro forma financial information. The historical
financial statements of ACME Television Holdings, LLC and the historical balance
sheet of ACME Communications, Inc. are included in this document.
19
<PAGE> 21
ACME COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ACME
ACME TELEVISION COMMUNICATIONS,
HOLDINGS, LLC REORGANIZATION INC.
--------------- -------------- ---------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,669 $ -- $ 1,669
Accounts receivable....................................... 13,151 -- 13,151
Current portion of program rights......................... 6,508 -- 6,508
Prepaid expenses and other current assets................. 798 -- 798
-------- -------- --------
Total current assets................................ 22,126 -- 22,126
Property and equipment, net................................. 25,002 -- 25,002
Program rights, net of current portion...................... 5,757 -- 5,757
Deposits.................................................... 536 -- 536
Deferred income taxes....................................... 3,971 -- 3,971
Intangible assets, net...................................... 261,156 17,649(1) 278,805
Other assets................................................ 11,734 -- 11,734
-------- -------- --------
Total assets........................................ 330,282 17,649 347,931
======== ======== ========
Current liabilities:
Accounts payable.......................................... 4,951 -- 4,951
Accrued liabilities....................................... 7,851 -- 7,851
Current portion of program rights payable................. 6,082 -- 6,082
Current portion of obligations under lease................ 1,277 -- 1,277
-------- -------- --------
Total current liabilities........................... 20,161 -- 20,161
Program rights payable, net of current portion.............. 4,964 -- 4,964
Obligations under lease, net of current portion............. 4,078 -- 4,078
Other liabilities........................................... 5,670 (4,751)(2) 919
Deferred income taxes....................................... 33,439 -- 33,439
Revolving credit facility................................... 39,400 -- 39,400
Bridge loan................................................. 15,000 -- 15,000
Convertible debt............................................ 24,756 (24,756)(2) --
10 7/8% senior discount notes............................... 153,357 -- 153,357
12% senior secured notes.................................... 44,913 -- 44,913
-------- -------- --------
Total liabilities................................... 345,738 (29,507) 316,231
Minority interest........................................... 830 (830)(1) --
Members' capital (deficit) / stockholders' equity:
Members' capital.......................................... 41,532 (41,532)(3) --
Preferred stock........................................... -- -- --
$.01 par value; 10,000,000 shares authorized no shares
issued and outstanding
Common stock............................................ -- -- --
$.01 par value; 0 shares outstanding on a historical
basis; 11,750,000 shares outstanding on a pro forma
basis................................................. 118(4) 118
29,507(2)
18,479(1)
16,343(5)
(118)(4)
41,532(3)
Additional paid in capital................................ -- (74,161)(6) 31,582
(16,343)(5)
Accumulated deficit....................................... (57,818) 74,161(6) --
-------- -------- --------
Total members' deficit / stockholders' equity....... (16,286) 47,986 31,700
-------- -------- --------
Total liabilities and members'
capital / stockholders' equity.................... $330,282 $ 17,649 $347,931
======== ======== ========
</TABLE>
- -------------------------
(1) In conjunction with the reorganization, we will acquire the minority
interest of ACME Intermediate Holdings, LLC. The excess of the estimated
fair value of the securities issued to acquire the minority interest over
the book value of minority interest of approximately $17.6 million will be
allocated to the fair value of the assets acquired, primarily broadcast
licenses and goodwill. For pro forma purposes, the entire excess has been
allocated to broadcast licenses and goodwill, with an amortization period of
20 years.
20
<PAGE> 22
(2) Reflects the conversion of the convertible debt and its accrued interest of
$4.8 million into shares of common stock, pursuant to the original
conversion terms, in conjunction with the reorganization.
(3) In conjunction with the reorganization, members units will be exchanged for
common stock. Accordingly, members' capital has been reclassified to
additional paid in capital.
(4) Estimated number of shares of our common stock outstanding immediately prior
to the consummation of the offering, including approximately 5,386,000
shares issued in exchange for ACME Television Holdings, LLC units,
approximately 924,000 shares issued to acquire minority interest,
approximately 4,088,000 shares issued in the conversion of the convertible
debentures and approximately 1,352,000 shares issued in exchange for
management carry units.
(5) Reflects compensation expense related to the conversion of management carry
units to shares of common stock with an estimated value of $27.0 million
reduced by $10.7 million expensed through June 30, 1999. The actual expense
relating to the shares issued in exchange for the management carry units
will be based on the number of shares actually issued and the offering
price.
(6) Reclassification of accumulated deficit to additional paid in capital to
reflect the reorganization.
21
<PAGE> 23
ACME COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ACME
ACME TELEVISION KOPLAR COMMUNICATIONS,
HOLDINGS, LLC ACQUISITION REORGANIZATION INC.
--------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C>
Net revenues.................... $ 43,928 $ -- $ -- $ 43,928
Operating expenses:
Station operating expenses.... 32,973 -- -- 32,973
Depreciation and
amortization................ 11,355 2,496(1) 728(2) 14,579
Corporate..................... 2,627 -- -- 2,627
-------- ------- ----------- -----------
Total operating expenses.... 46,955 2,496 728 50,179
-------- ------- ----------- -----------
Operating loss.............. (3,027) (2,496) (728) (6,251)
Other income (expenses):
Interest income............... 231 -- -- 231
Interest expense.............. (23,953) -- 2,475(3) (21,478)
Gain on sale of asset......... 1,112 -- -- 1,112
Other......................... (380) -- -- (380)
-------- ------- ----------- -----------
Loss before taxes and minority
interest...................... (26,017) (2,496) 1,747 (26,766)
Income tax benefit.............. 2,393 998(4) 7,311(5) 10,702
-------- ------- ----------- -----------
Loss before minority interest... (23,624) (1,498) 9,058 (16,064)
Minority interest............. 1,684 -- (1,684)(6) --
-------- ------- ----------- -----------
Net loss...................... $(21,940) $(1,498) $ 7,374 $ (16,064)
======== ======= =========== ===========
Net loss per share.............. n/a n/a n/a $ (1.37)
======== ======= =========== ===========
Weighted average shares
outstanding................... n/a n/a 11,750,000(7) 11,750,000
======== ======= =========== ===========
</TABLE>
- -------------------------
(1) Represents depreciation of $151,000 and amortization of $2.3 million for the
first three months of 1998 giving effect to the acquisition of KPLR (which
was acquired on March 13, 1998) as if it occurred on January 1, 1998. The
results of operations of KPLR have been included in our operations for the
period from January 1, 1998 to March 31, 1998 pursuant to a local marketing
agreement.
(2) In conjunction with the reorganization, we will acquire the minority
interest of ACME Intermediate Holdings, LLC. The excess of the estimated
fair value of the securities issued to acquire the minority interest over
the book value of minority interest at January 1, 1998 of approximately
$14.6 million will be allocated to the fair value of the net assets
acquired, primarily broadcast licenses and goodwill. For pro forma purposes,
the entire excess has been allocated to broadcast licenses and goodwill,
with an amortization period of 20 years.
(3) Adjustment eliminates interest expense of $2.5 million to give effect to the
exchange of convertible debentures for shares of our common stock in
conjunction with the reorganization as if it occurred as of January 1, 1998.
(4) Tax benefit relating to additional depreciation and amortization expense
relating to KPLR, as described in footnote (1).
22
<PAGE> 24
(5) To adjust the provision for income taxes on pro forma net loss before income
taxes and minority interest, which gives effect to the change in our income
tax status to a C corporation in connection with the reorganization. In
connection with this adjustment, we estimated an effective tax rate of 40%
and recorded a deferred tax benefit based on the deferred tax liabilities on
our books as of December 31, 1998.
(6) In conjunction with the reorganization, the minority interest has been
acquired by us and the allocation of loss to minority interest has been
eliminated.
(7) Estimated number of shares of our common stock outstanding immediately prior
to the consummation of the offering, including approximately 5,386,000
shares issued in exchange for ACME Television Holdings, LLC units,
approximately 924,000 shares issued to acquire minority interest,
approximately 4,088,000 shares issued in the conversion of the convertible
debentures and approximately 1,352,000 shares issued in exchange for the
management carry units.
23
<PAGE> 25
ACME COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ACME
ACME TELEVISION COMMUNICATIONS,
HOLDINGS, LLC REORGANIZATION INC.
--------------- -------------- ---------------
<S> <C> <C> <C>
Net revenues............................. $ 26,635 $ -- $ 26,635
Operating expenses
Station operating expenses............. 19,990 -- 19,990
Depreciation and amortization.......... 8,159 406(1) 8,565
Corporate.............................. 1,483 -- 1,483
Equity-based compensation.............. 10,700 -- 10,700
-------- ----------- -----------
Total operating expenses............ 40,332 406 40,738
-------- ----------- -----------
Operating income (loss)............. (13,697) (406) (14,103)
Other income (expenses)
Interest income........................ 27 -- 27
Interest expense....................... (14,068) 1,228(2) (12,840)
Gain on sale of assets................. -- -- --
Other.................................. -- -- --
-------- ----------- -----------
Loss before taxes and minority
interest.......................... (27,738) 822 (26,916)
Income tax benefit (expense)...... (2,064) 12,812(3) 10,748
-------- ----------- -----------
Loss before minority interest....... (29,802) 13,634 (16,168)
Minority interest................. 1,403 (1,403)(4) --
-------- ----------- -----------
Net loss.......................... $(28,399) $ 12,231 $ (16,168)
======== =========== ===========
Net loss per share....................... $ n/a $ n/a $ (1.38)
======== =========== ===========
Weighted average shares outstanding...... n/a 11,750,000(5) 11,750,000
======== =========== ===========
</TABLE>
- -------------------------
(1) In conjunction with the reorganization, we will acquire the minority
interest of ACME Intermediate Holdings, LLC. The excess of the estimated
fair value of the securities issued to acquire the minority interest over
the book value of minority interest at January 1, 1999 of approximately
$16.2 million will be allocated to the fair value of the assets acquired,
primarily broadcast licenses and goodwill. For pro forma purposes, the
entire excess has been allocated to broadcast licenses and goodwill, with an
amortization period of 20 years.
(2) Adjustment eliminates interest expense, $1.2 million for the six months
ended June 30, 1999, to give effect to the exchange of convertible
debentures for shares of our common stock in conjunction with the
reorganization as if this occurred as of January 1, 1998.
(3) To adjust the provision for income taxes on pro forma net loss before income
taxes and minority interest, which gives effect to the change in our income
tax status to a C corporation in connection with the reorganization. In
connection with this adjustment, we estimated an effective tax rate of 40%
and recorded a deferred benefit based on the deferred tax liabilities on its
books.
(4) In conjunction with the reorganization, the minority interest has been
acquired by us and the allocation of loss to minority interest has been
eliminated.
(5) Estimated number of shares of our common stock outstanding immediately prior
to the consummation of the offering, including approximately 5,386,000
shares issued in exchange for ACME Television Holdings, LLC units,
approximately 924,000 shares issued to acquire minority interest,
approximately 4,088,000 shares issued in the conversion of the convertible
debentures and approximately 1,352,000 shares issued in exchange for
management carry units.
24
<PAGE> 26
SELECTED CONSOLIDATED AND PRO FORMA FINANCIAL DATA
The following selected financial data should be read in conjunction with
our consolidated financial statements and accompanying notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in the prospectus. The selected consolidated financial data
presented below as of and for the years ended December 31, 1997 and 1998 are
derived from our consolidated financial statements, which have been audited by
KPMG LLP, independent auditors. The selected consolidated financial data
presented below as of June 30, 1999 and for the six months ended June 30, 1998
and 1999 are derived from the unaudited financial statements of ACME Television
Holdings, LLC, which in the opinion of our management, contain all necessary
adjustments of a normal recurring nature, to present the financial statements in
conformity with generally accepted accounting principles. Our results for the
six month period ended June 30, 1999 are not necessarily indicative of the
results for the year ended December 31, 1999. Our selected financial data is not
comparable from period to period because of our acquisition of television
broadcast stations. The pro forma statement of operations data for ACME
Communications, Inc., gives effect to the acquisition of Koplar Communication
Inc. and to our reorganization at the beginning of each period indicated,
whereas the pro forma ACME Communication, Inc. balance sheet data gives effect
only to the reorganization as of the date presented.
<TABLE>
<CAPTION>
PRO FORMA
ACME
PRO FORMA COMMUNICATIONS,
ACME TELEVISION ACME ACME TELEVISION INC.(1)
HOLDINGS, LLC COMMUNICATIONS, HOLDINGS, LLC ---------------
-------------------- INC.(1) ---------------------
YEARS ENDED --------------- SIX MONTHS ENDED SIX MONTHS
DECEMBER 31, YEAR ENDED JUNE 30, ENDED
-------------------- DECEMBER 31, --------------------- JUNE 30,
1997 1998 1998 1998 1999 1999
-------- --------- --------------- --------- --------- ---------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues............................. $ 11,347 $ 43,928 $ 43,928 $ 19,327 $ 26,635 $ 26,635
Operating expenses:
Station operating expenses............. 10,158 32,973 32,973 15,165 19,990 19,990
Depreciation and amortization.......... 1,215 11,355 14,579 4,181 8,159 8,565
Corporate.............................. 1,415 2,627 2,627 1,194 1,483 1,483
Equity-based compensation.............. -- -- -- -- 10,700 10,700
-------- --------- ---------- --------- --------- ----------
Operating loss........................... (1,441) (3,027) (6,251) (1,213) (13,697) (14,103)
Other income (expenses):
Interest income........................ 287 231 231 188 27 27
Interest expense....................... (6,562) (23,953) (21,478) (11,472) (14,068) (12,840)
Gain on sale of asset.................. -- 1,112 1,112 -- -- --
Other.................................. -- (380) (380) 10 -- --
-------- --------- ---------- --------- --------- ----------
Loss before taxes and minority
interest............................... (7,716) (26,017) (26,766) (12,487) (27,738) (26,916)
Income tax benefit (expense)............. -- 2,393 10,702 365 (2,064) 10,748
-------- --------- ---------- --------- --------- ----------
Loss before minority interest............ (7,716) (23,624) (16,064) (12,122) (29,802) (16,168)
Minority interest........................ 237 1,684 -- 868 1,403 --
-------- --------- ---------- --------- --------- ----------
Net loss................................. $ (7,479) $ (21,940) $ (16,064) $ (11,254) $ (28,399) $ (16,168)
======== ========= ========== ========= ========= ==========
Pro forma basic and diluted net loss per
share.................................. n/a n/a $ (1.37) n/a n/a $ (1.38)
Basic and diluted weighted average shares
outstanding(1)......................... n/a n/a 11,750,000 n/a n/a 11,750,000
BALANCE SHEET DATA:
Total assets............................. $220,475 $ 288,082 n/a $ 290,439 $ 330,282 $ 347,931
Long-term debt(2)........................ 192,452 220,256 n/a 214,074 277,426 252,670
Total members' capital................... 16,306 1,413 n/a 12,488 (16,286) n/a
Total shareholders' equity............... n/a n/a n/a n/a n/a 31,700
</TABLE>
25
<PAGE> 27
<TABLE>
<CAPTION>
ACME TELEVISION HOLDINGS, LLC
---------------------------------------------
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
--------------------- --------------------
1997 1998 1998 1999
--------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SUPPLEMENTAL FINANCIAL DATA:
Broadcast cash flow and adjusted EBITDA(3):
Operating loss....................................... $ (1,441) $ (3,027) $ (1,213) $(13,697)
Add back:
Equity-based compensation.......................... -- -- -- 10,700
Depreciation and amortization...................... 1,215 11,355 4,181 8,159
Time brokerage fees................................ -- 228 228 --
Amortization of program rights..................... 1,433 5,321 2,195 3,250
Corporate expenses................................. 1,415 2,627 1,194 1,483
Adjusted program payments(3)....................... (1,598) (5,124) (2,152) (3,379)
--------- -------- -------- --------
Broadcast cash flow.............................. $ 1,024 $ 11,380 $ 4,433 $ 6,516
Less:
Corporate expenses................................. 1,415 2,627 1,194 1,483
--------- -------- -------- --------
Adjusted EBITDA.................................. $ (391) $ 8,753 $ 3,239 $ 5,033
Broadcast cash flow margin(3).......................... 9.0% 25.9% 22.9% 24.5%
Adjusted EBITDA margin(3).............................. n/m 19.9% 16.8% 18.9%
Cash flows provided by (used in) operations:
Operating activities................................. $ (599) $ 319 $ (89) $ 3,731
Investing activities................................. (191,730) (15,504) (20,790) (48,841)
Financing activities................................. 201,153 7,362 13,949 45,778
Deficiency of earnings to fixed charges(4)............. $ 7,716 $ 23,624 $ 12,122 $ 29,802
</TABLE>
- -------------------------
(1) Reflects the acquisition of Koplar Communications, Inc. and our
reorganization as explained in the pro forma financial information included
elsewhere in this prospectus.
(2) Includes amounts outstanding under our bridge loan, convertible debentures,
10 7/8% senior discount notes and 12% senior secured notes.
(3) We define:
- broadcast cash flow as operating income, plus equity-based compensation,
depreciation and amortization, time brokerage fees, amortization of
program rights, and corporate expenses, less program payments -- the
latter as adjusted to reflect reductions for liabilities relating to
expired rights or rights which have been written-off in connection with
acquisitions;
- adjusted EBITDA as broadcast cash flow less corporate expenses;
- broadcast cash flow margin as broadcast cash flow as a percentage of net
revenues; and
- adjusted EBITDA margin as adjusted EBITDA as a percentage of net
revenues.
We have included broadcast cash flow, broadcast cash flow margin, adjusted
EBITDA and adjusted EBITDA margin data because management believes that
these measures are useful to an investor to evaluate our ability to service
debt and to assess the earning ability of our stations' operations.
However, you should not consider these items in isolation or as substitutes
for net income, cash flows from operating activities and other statement of
operations or cash flows data prepared in accordance with generally
accepted accounting principles. These measures are not necessarily
comparable to similarly titled measures employed by other companies.
(4) Earnings are defined as earnings or loss before minority interest and fixed
charges. Fixed charges are the sum of:
- interest costs, including estimated interest within rental expense; and
- amortization of deferred financing costs.
We have disclosed the deficiency of earnings to fixed charges as earnings
were not adequate to cover fixed charges in each of the periods presented.
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<PAGE> 28
OUR PREDECESSOR'S SUMMARY CONSOLIDATED FINANCIAL DATA
The following table summarizes the financial data of our predecessor,
Channel 32, Incorporated. The data presented in this table are derived from the
financial statements and notes which are included elsewhere in this prospectus.
You should read those sections for a further explanation of the financial data
summarized here.
<TABLE>
<CAPTION>
CHANNEL 32, INCORPORATED (PREDECESSOR)
--------------------------------------------------------
PERIOD FROM
DECEMBER 16, PERIOD FROM
1993 (INCEPTION) YEARS ENDED JUNE 30, JULY 1, 1996
TO JUNE 30, -------------------- TO JUNE 17,
1994 1995 1996 1997
---------------- -------- -------- ------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues..................... $ -- $ 288 $ 2,729 $ 1,306
Operating expenses:
Station operating expenses..... 17,626 896 4,736 2,364
Depreciation and
amortization................ -- 234 542 346
-------- ------- ------- -------
Operating loss................... (17,626) (842) (2,549) (1,404)
Other income (expenses):
Interest income................ -- -- 45 --
Interest expense............... (4,691) (200) (3,252) (2,222)
Other.......................... -- -- (259) (10)
-------- ------- ------- -------
Net loss......................... $(22,317) $(1,042) $(6,015) $(3,636)
======== ======= ======= =======
</TABLE>
27
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with ACME Television
Holdings, LLC's consolidated financial statements and related notes included
elsewhere in this prospectus.
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.
The carrying value of long-lived assets, consisting of tangible,
identifiable intangible, and goodwill, is reviewed if the facts and
circumstances suggest that they might be impaired. For purposes of this review,
assets are grouped at the operating company level, which is the lowest level for
which there are identifiable cash flows. If this review indicates that an
asset's carrying value will not be recoverable, as determined based on future
expected, undiscounted cash flows, the carrying value is reduced to fair market
value. There are neither facts nor circumstances that would lead management to
believe that any of our long-lived assets are impaired.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1999 compared to Six Months Ended June 30, 1998
Net revenues increased 38% to $26.6 million for the first half of 1999
compared to the first half of 1998. This gain reflects 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 and
market revenue shares at these stations.
Station operating expenses increased 32% to $20.0 million for the first
half of 1999 compared to the first half of 1998. This increase is primarily
related to increased
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<PAGE> 30
programming and staffing related costs at our developing stations, KWBP, KUWB,
KWBQ, WBXX and WTVK.
Depreciation and amortization expense increased 95% to $8.2 million during
the first half of 1999 compared to the first half of 1998. This significant
increase primarily relates to the March 1998 acquisition of KPLR and the
resulting amortization of the intangible assets of that station.
Corporate expenses increased 24% to $1.5 million for the first half of 1999
compared to the first half of 1998. This increase relates primarily to increased
staffing to support the growing operations of our station group.
Equity-based compensation expense during the first half of 1999 totaled
$10.7 million. There was no corresponding expense in the first half of 1998.
This non-cash charge relates to an estimated increase in the value of the
management carry units that were issued in June 1997 to our senior management
members. The increase in the estimated value is in part a result of the
increasing success of The WB Network, our recent operating results and the
increased number of the stations under our ownership and management.
Interest expense for first half of 1999 was $14.1 million, an increase of
23% over the first half of 1998. This increase relates primarily to the
continued increased principal balance of our 10 7/8% senior discount notes and
our 12% senior secured notes, and the April 1999 borrowings under our revolving
credit facility in connection with the acquisition of WBDT, WIWB and WBUI from
Paxson Communications.
We recorded a net income tax expense of $2.1 million during the first half
of 1999 compared to a $365,000 net income tax benefit recorded for the first
half of 1998. This accrual was partially offset by a tax expense that relates to
a accrual of $3.0 million in connection with a benefit of $936,000 relating to a
net operating loss carryforward at KPLR and a reduction of a deferred tax
liability primarily related to KPLR'S FCC license.
Minority interest represents the allocation of the loss for the respective
periods to the minority interest holders of our subsidiary ACME Intermediate
Holdings, LLC.
Our net loss for the six months ended June 30, 1999 was $28.4 million
compared to a net loss for the first half of 1998 of $11.3 million. This $17.1
million increase in our net loss is attributable primarily to increased interest
expense, increased amortization of intangible assets, exclusive of depreciation
and amortization, increased income tax expense and the equity-based compensation
expense, net of improved operating results.
Broadcast cash flow for the first half of 1999 increased 47% to $6.5
million. This increase was driven by significant revenue gains and improved
operating margins at all of our stations. Adjusted EBITDA increased 55% for the
first half of 1999 due to increased broadcast cash flow and a lower rate of
growth of corporate expenses compared to our rate of broadcast cash flow growth.
Year Ended December 31, 1998 compared to Year Ended December 31, 1997
Net revenues for the year ended December 31,1998 increased $32.6 million,
or 287%, to $43.9 million as compared to $11.3 million for the year ended
December 31, 1997. The most significant reason for this increase is that our
1997 net revenues included only the fourth quarter results of KPLR, which we
began managing on October 1, 1997, compared to 1998, which included KPLR's full
year results. Also favorably impacting the 1998 comparison to 1997 was our
fourth quarter 1997 launch of WBXX, the second quarter 1998 launch of
29
<PAGE> 31
KUWB, increased revenues at KWBP and our acquisition of WTVK, which we began
operating in March 1998.
Operating expenses increased to $47.0 million compared to the prior year's
operating expenses of $12.8 million, or 267%. Station operating and corporate
expenses increased significantly in 1998 due to the significant increase in the
number of stations we added or launched since the third quarter of 1997.
Depreciation and amortization expense for the year includes $9.4 million in
the amortization of intangible assets. As of December 31, 1997, only KWBP and
WBXX stations had been acquired and, accordingly, there was only $874,000 in
amortization expense for that period.
Interest expense for 1998 was $24.0 million, primarily representing the
amortization of original issuance discount of our 10 7/8% senior discount notes,
12% senior secured discount notes and interest on our 10% convertible
debentures, along with related amortization of prepaid financing costs. The
interest expense of $6.6 million for 1997 represents primarily the interest
expense on the 10 7/8% senior discounted notes and 12% senior secured notes,
which were outstanding only during the fourth quarter of the year and interest
on the convertible debentures, which were issued in June 1997 and therefore were
outstanding for only a little more than six months during 1997.
Station KPLR is our only operating C corporation. During 1993, KPLR, after
deduction of allocable interest charges, generated a net taxable loss. The
deferred tax benefit corresponding to that loss was $2.4 million.
Our net loss for 1998 was $21.9 million compared to a net loss of $7.5
million for 1997. This increased net loss is due primarily to the increased
amortization of intangible assets relating to our newly acquired and launched
stations and the substantially increased interest expense incurred in connection
with the September 1997 issuance of long-term debt to finance our acquisitions.
These increased expenses were offset by improved operating performance which is
attributable to the inclusion of the full year operating results of KPLR.
Our broadcast cash flow for 1998 was $11.4 million, compared to a $1.0
million broadcast cash flow in 1997. This increase is primarily attributable to
the profitable operations of KPLR -- only the fourth quarter operating results
of KPLR are included in our full year 1997 results, whereas KPLR's full year
results are included in our 1998 results. To a lesser extent, the increase in
broadcast cash flow is due to significantly reduced losses at KWBP for 1998.
INCOME TAXES
Historically, we and all of our operating subsidiaries, other than our
subsidiary related to KPLR which is a C corporation, have been organized as
limited liability companies. Accordingly, although we have been subject to
various minimum state taxes, all federal tax attributes have been passed through
to our members. Upon our reorganization into a C corporation, we will be subject
to federal and state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Our revolving credit facility allows for borrowings up to a maximum of
$40.0 million, which are dependent upon our meeting certain financial ratio
tests as delineated 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 revolving credit facility. Amounts
30
<PAGE> 32
outstanding under our revolving credit facility bear interest at a base rate,
that at our option is either the bank's prime rate or LIBOR, plus a spread. We
will repay all amounts outstanding under our revolving credit facility with a
portion of the net proceeds of this offering.
Cash provided by our operating activities during 1998 was $319,000 and for
the six months ended June 30, 1999 was $3.7 million due to significantly
improved broadcast cash flow.
Cash used in our investing activities during 1998 was $15.5 million and
related partially to the acquisition of WTVK and the purchase of property and
equipment, offset by the net gain related to the acquisition and subsequent sale
of a construction permit in the Springfield, Missouri market. Cash used in
investing activities during the first six months of 1999 was $48.8 million and
related primarily to our acquisitions of WBDT, WIWB and WBUI, the final payment
in connection with our acquisition of KUPX, our investment in a digital tower
joint venture in the Portland, Oregon market and the purchase of property and
equipment.
Cash provided by our financing activities during 1998 was $7.4 million and
related primarily to net borrowings under our revolving credit facility in
connection with our acquisition of WTVK offset by repayments of capital leases.
Cash provided by financing activities during the first six months of 1999 was
$45.8 million consisting of revolving credit borrowings in connection with our
acquisitions of WBDT, WIWB and WBUI, the completion of our acquisition of KUPX,
our digital tower joint venture investment in Portland and capital expenditures.
Cash interest on ACME Intermediate's 12% senior secured notes due 2005,
$71.6 million fully accreted principal amount, will begin accruing in 2002 and
is payable starting in 2003. Cash interest on ACME Television's 10 7/8% senior
discount notes due 2004, $175.0 million fully accreted principal amount, will
begin accruing in 2000 and is payable starting in 2001.
We expect that we will incur approximately $14 million in capital
expenditures over the next twelve months in connection with the build-out,
upgrade and initial digital conversion of our current facilities.
We believe that funds generated from operations will be sufficient to
satisfy our cash requirements for our existing operations for at least the next
twelve months. We expect that any future acquisitions of television stations
would be financed through proceeds from this offering, funds generated from
operations, through borrowings under our revolving credit facility, and through
additional debt and equity financings. However, we cannot guarantee the offering
will be completed or that such additional debt and/or equity financing will be
available or available at rates acceptable to us.
YEAR 2000
Year 2000 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 then be unable to uniquely distinguish
dates beyond the year 1999, which could cause system failures or miscalculations
at our broadcast and corporate locations that could cause disruption of
operations, including a temporary inability to produce broadcast signals or
engage in normal business activities.
We are in the process of evaluating potential year 2000 issues for both our
information technology and non-information technology systems such as telephone
systems, fax machines, editing equipment, cameras, microphones, etc. All of our
internal software and
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<PAGE> 33
hardware is purchased, leased or licensed from third party vendors. Most of our
station facilities are new or have been recently upgraded and we have polled all
of our significant software vendors and have been advised by them that their
software is year 2000 compliant.
We have completed the assessment, planning and testing phases and have
commenced the final phase of our year 2000 project implementation. During this
phase, we will fix, retest and implement critical applications that were
discovered to be year 2000 deficient during the preceding phases.
We are not aware of any additional significant upgrades or changes that
will need to be made to our internal software and hardware to become year 2000
ready or any material supplier with year 2000 readiness problems. This is
subject to change as the compliance testing process continues. We expect to be
able to implement the systems and programming changes necessary to address year
2000 information technology and non-information technology readiness issues and,
based on preliminary estimates, we do not believe that the costs of doing so
will have a material effect on our results of operations or financial condition.
As of June 30, 1999, we have spent less than $100,000 on year 2000 activities
and our budgeted expenditures for the remainder of 1999 are less than $75,000 in
total. As we obtain the results of compliance testing, there might be a delay
in, or increased costs associated with the implementation of changes.
RECENT DEVELOPMENTS
On February 19, 1999, we entered into an asset purchase agreement with
Ramar Communications II, Ltd. to acquire the television broadcast assets of
KASY, serving the Albuquerque-Santa Fe, New Mexico market, for approximately
$27.3 million, $25.0 million of which will be paid at closing, less $500,000
which has been deposited into escrow and $1.0 million paid to the seller in
August, 1999. On July 30, 1999, we amended the agreement and paid $1.0 million
of the purchase price to Ramar. In a related transaction, we are selling KWBQ,
our existing station serving the Albuquerque - Santa Fe market, to Ramar for
$100,000. At the closing, Ramar will grant Montecito Communications, LLC, a
limited liability company owned entirely by members of our senior management, an
option to purchase KWBQ for an exercise price of $100,000. We anticipate that
Montecito will assign the option to us immediately after the closing of the sale
of KWBQ. The closings of both the KASY and the KWBQ transactions, which have
been approved by the FCC, are subject to various conditions and are expected to
occur shortly after the completion of this offering. Under the KASY purchase
agreement we are required to close the transaction by October 31, 1999, or the
purchase price will increase by a rate of 10% per annum, retroactive to August
13, 1999 through the actual date of closing. If the transaction does not close
before February 1, 2000, Ramar may keep the $1.0 million and will receive the
$500,000 in escrow as liquidated damages. We also would be required to pay an
additional $1.7 million as liquidated damages pursuant to a local marketing
agreement relating to KASY to which Ramar is a party. After the closing, we
intend to operate KWBQ under a local marketing agreement with Ramar, which was
filed with the FCC prior to the adoption of the new ownership rules on August 5,
1999. Subject to FCC approval, we may purchase the station if Montecito assigns
the option to us. We believe this transaction will allow us to enhance revenues
and cash flows in this market through cross-promotion and achieving operating
efficiencies, including operating both stations from one studio and office
facility.
In September 1999, we closed the swap of Station KUWP in Salt Lake City,
which we operated but did not own, for Station KUPX, which we owned and did not
operate.
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<PAGE> 34
FUTURE NON-RECURRING CHARGES
We expect to incur approximately $19.3 million of non-recurring
compensation expense related charges in connection with this offering. Of these
charges, a $3.0 million cash bonus to be paid in first quarter 2000 will be
earned by senior management upon completion of this offering. In addition, a
non-cash charge of approximately $16.3 million will be incurred in connection
with the exchange of the management carry units for shares of our common stock.
PENDING ADOPTION OF ACCOUNTING STANDARD
The FASB (Financial Accounting Standards Board) has issued FASB statement
No. 133 "Accounting for Derivative Instruments and Hedging Activities" which we
will be required to adopt for its year ending December 31, 2000. This
pronouncement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, which are 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 have a
significant impact on our financial statements since we currently have no
derivative instruments.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our revolving credit facility has a variable interest rate and our interest
expense can therefore be materially affected by future fluctuations in the
applicable interest rate. At June 30, 1999, a hypothetical 100 basis point
increase in the prime rate would result in additional interest expense of
approximately $394,000 on an annualized basis.
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<PAGE> 35
INDUSTRY OVERVIEW
Commercial television broadcasting. Commercial television broadcasting
began in the United States on a regular basis in the 1940s over a portion of the
broadcast spectrum commonly know as the VHF Band, which consists of very high
frequency broadcast channels numbered 2 through 13. Additional television
channels were later assigned by the FCC under broadcast spectrum commonly known
as the UHF Band, which consists of ultra-high frequency broadcast channels
numbered 14 through 83; channels 70 through 83 have been reassigned to
non-broadcast services. Currently, there are a limited number of channels
available for broadcasting in any one designated market area, and the license to
operate a broadcast station in a designated market area is granted by the FCC.
Although UHF and VHF stations compete in the same market, UHF stations have
historically suffered a competitive disadvantage, as UHF signals are more
subject to obstructions such as terrain than VHF signals and VHF stations are
able to provide higher quality signals to a wider area. Over time, the
disadvantage of UHF stations has gradually declined through UHF stations'
carriage on local cable systems and improved receivers and transmitters.
A majority of the commercial television stations in the United States are
affiliated with NBC, CBS or ABC -- the traditional networks -- or with Fox. Each
traditional network provides the majority of its affiliates' programming each
day without charge in exchange for a substantial majority of the available
advertising time in the programs supplied. Fox has operating characteristics
similar to ABC, CBS and NBC, although the hours of network programming provided
for Fox affiliates is less than that provided by the traditional networks. Each
of the traditional networks and Fox sell this advertising time and retain the
revenues. The affiliate typically receives compensation from the traditional
network and retains the revenues from advertising time sold in and between
network programs and in programming the affiliate produces or purchases from
non-network sources.
Stations not affiliated with one of the traditional networks were
historically considered independent stations. Independent stations generally
rely on and broadcast syndicated programming, which is acquired by the station
for cash or occasionally barter. Through the acquisition of syndicated
programming the acquiring station generally obtains exclusive rights to
broadcast a program in the market for a specified period of time or number of
episodes agreed upon between the independent station and the distributor of the
syndicated programming. Types of syndicated programming include feature films,
popular television series previously shown on network television and current
television series produced for direct distribution to television stations.
Through barter and cash-plus-barter arrangements, a national syndicated program
distributor typically retains and sells a portion of the available advertising
time for programming it supplies, in exchange for reduced fees to the station
for such programming.
Like Fox, United Paramount Network and The WB Network have each established
affiliations predominantly with formerly independent stations, and in some
cases, with newly constructed stations. These networks supply their affiliates
with significantly less programming than ABC, CBS and NBC. As a result, these
stations retain a significantly higher portion of their available inventory of
advertising time for their own use than do traditional network affiliates. In
August 1998, Pax Net, an affiliate of Paxson Communications and a seventh
broadcast network, was launched. Unlike the other networks, Pax Net provides
substantially all of the programming to its affiliates, most of which were
previously independent or religious broadcasters or are newly built television
stations.
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<PAGE> 36
Ratings. All television stations in the United States are grouped into 210
television markets that are ranked by size according to the number of households
with televisions in each market. Almost all commercial television stations, and
all of our stations, subscribe to Nielsen Media Research, which periodically
publishes reports on the estimated audience for television stations in the
various television markets throughout the country. These audience reports, which
are based on a randomly selected sample of homes in each market, provide
audience data on the basis of total television households and selected
demographic groupings in 15-minute or half-hour increments for each program and
market. The audience estimates are expressed in terms of the number of
households or demographic groups watching a given program:
- as a percentage of all households or demographic groups in the
market -- the program's rating; and
- as a percentage of households or demographic groups actually viewing
television during that program's time period -- the program's share.
For example, a program generating a 3.5 household rating and a 6 household
share means that 3.5% of the total homes with televisions were watching that
show and of the homes watching television at that time, 6% were watching that
program.
Each specific geographic television market is called a designated market
area. A designated market area is determined as an exclusive geographic area
consisting of all counties in which the home-market commercial stations receive
the greatest percentage of total viewing hours.
In larger markets, Nielsen measures audience viewing through a combination
of meters connected directly to selected television sets which report the
household rating and share results on a daily basis and weekly diaries of
television viewing that are periodically prepared over a four-week period by the
actual viewers. Nielsen refers to these markets as metered markets. In smaller
markets, only weekly diaries are completed periodically by the actual viewers
and Nielsen refers to these markets as diary markets. The periodic four-week
diary periods are commonly known as sweeps periods and are critical to stations
since they provide independent information to advertisers about the viewing
level of a given station's programming to a multitude of demographic age and
gender groups. Due to the underlying costs of installing meters in a market, the
monthly Nielsen subscription fees for each station in a metered market are
significantly higher than those for diary markets.
While meters do not provide daily demographic ratings, the daily reported
household ratings and shares give the stations in metered markets key
information about the general performance of a given show. Also, results in
metered markets tend to more accurately reflect viewing since measurement is not
totally dependent on the memory of the viewer and timeliness of the diary entry.
Currently, we operate in three metered markets: St. Louis, Portland and
Salt Lake City. All of our other markets are diary markets. Over the past five
years, Nielsen has expanded the number of metered markets from 32 to 46, and we
believe that they will continue to convert markets from diary to metered
markets. In most cases where such conversions have taken place, affiliates of
The WB Network and Fox show immediate increases in ratings and share, which we
believe are related to a number of factors, including more accurate reporting
and a shift in the audience sample to those, usually younger households, more
comfortable with electronic measurement devices.
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<PAGE> 37
Advertising. The advertising rates charged by competing stations within a
designated market depend primarily on four factors:
- the station's ratings of households viewing its programs as a percentage
of total households with televisions in that designated market area;
- audience share of households viewing its programs as a percentage of
households actually watching television at a specific time;
- the time of day the advertising is aired; and
- the demographic qualities of the program's viewers, primarily age and
gender.
Additional factors include:
- the size of the designated market area in which the station operates;
- the number of advertisers competing for available advertising time;
- demographic characteristics of the designated market area served by the
station, the availability and pricing of alternative advertising media in
the designated market area;
- relative ability of competing sales forces; and
- the development of projects and marketing programs that tie advertiser
messages to programming.
All network affiliated stations, including those affiliated with Fox, UPN,
The WB Network and Pax Net are required to carry national and regional spot
advertising sold by their networks. This reduces the amount of advertising time
available for sale directly by the network-affiliated stations.
Advertisers wishing to reach a national audience usually purchase time
directly from the traditional networks, Fox, UPN, The WB Network, Pax Net and
cable networks, or advertise nationwide on an ad hoc basis. National advertisers
who wish to reach a particular regional or local audience buy advertising time
directly from local stations through national advertising sales representative
firms, or in the cases of some large stations groups, from the station group
itself. Local businesses purchase advertising time directly from the station's
local sales staff.
36
<PAGE> 38
BUSINESS
COMPANY OVERVIEW
We currently own and operate nine broadcast television stations in
medium-sized markets across the United States. Each of our stations is a network
affiliate of The WB Network, making us the third largest WB Network affiliated
station group in the country. Our television stations broadcast in markets that
cover in aggregate approximately 5.4% of the total U.S. television households.
Mr. Kellner, our Chairman and Chief Executive Officer, is also a founder, Chief
Executive Officer and partner of The WB Network, and was President of Fox
Broadcasting Company from its inception in 1986 through 1993. Mr. Kellner and
our other founders formed our company to capitalize on the opportunity to
affiliate with The WB Network, the fastest growing English-language broadcast
television network in the country. We will continue to expand our station group
by selectively acquiring and building primarily WB Network affiliated stations
in medium-sized markets.
Since our formation in 1997, we have focused primarily on acquiring
independently-owned stations, under-performing stations and construction permits
for new stations in markets that we believe have the growth potential and
demographic profile to support the successful launch of a new WB Network
affiliate. We believe that medium-sized markets provide advantages such as fewer
competitors and lower operating costs compared to large markets. Our strategy is
to capitalize on these advantages and to grow our revenues and cash flow by
focusing on generating local sales. Since we centralize many of our stations'
administrative functions and primarily provide entertainment programming, our
station general managers are able to focus on increasing sales and improving
operating margins. We have experienced significant revenue and broadcast cash
flow growth and we anticipate further growth because many of our stations are
newly launched. For the six months ended June 30, 1999, we generated $26.6
million in revenues and $6.5 million in broadcast cash flow, representing an
increase of 37.8% in revenues and 47.0% in broadcast cash flow over the six
months ended June 30, 1998.
Like The WB Network, we target our programming to younger audiences, in
particular, young adults, teens and kids. We believe that these younger
audiences are a growing and increasingly important demographic target for
advertisers, and that our affiliation with The WB Network affords us a
significant competitive advantage over other network affiliated television
broadcasters in attracting these younger audiences. Since its launch in 1995,
The WB Network is the only English-language broadcast network in the United
States to increase its audience share in these key target demographic groups. To
build and retain our audience share during non-network hours, we also acquire
the broadcast rights to popular syndicated programming that we believe
complements The WB Network programming. In addition, we broadcast local
programming such as news in St. Louis, local weather updates and local and
regional sports programming in selected markets. We believe this programming
will enhance our ability to sell advertising time to local and regional
advertisers and increase audience awareness of our newly launched stations.
OUR STRATEGY
The principal components of our business and growth strategy are:
- Our WB Network Affiliation. Our WB Network affiliation provides our
stations with popular prime time and kids programming and the opportunity
to co-brand our stations with the Warner Bros. brand, which is one of the
most recognized brands in the entertainment industry. We believe that
affiliating and co-branding a start up station with The WB Network gives
that station immediate brand recognition and
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<PAGE> 39
audience awareness. In addition, we believe our stations' affiliation
with The WB Network provides us with a significant competitive advantage
in attracting the younger audiences we believe are a growing and
increasingly important demographic target for advertisers. The
traditional networks attract viewers with a median age ranging from 42 to
53. Fox attracts viewers with a median age of 34 years while the median
age of The WB Network viewers is 27 years of age. We expect that stations
we acquire in new markets will enter into affiliation agreements with The
WB Network.
- Strength of Our Senior Management Team. Our senior management team is one
of the most experienced in the industry with an average of over 20 years
of experience owning and operating broadcast television stations and
selling television advertising time. Mr. Kellner, our Chairman and Chief
Executive Officer, is also a founder, Chief Executive Officer and partner
of The WB Network, and was President of Fox Broadcasting Company from its
inception in 1986 through 1993. Mr. Gealy, our President and Chief
Operating Officer, began his broadcast television career in sales and
since then has held various management positions, including station
general manager and group executive responsible for eight stations. Mr.
Allen, our Executive Vice President and Chief Financial Officer, has
spent 13 years as an executive in the entertainment industry, including
seven years as Chief Financial Officer of Fox Broadcasting Company.
- Popular and Proven Syndicated Programming. While The WB Network
programming provides the foundation of our programming, we also acquire
popular syndicated programming, which is an important part of building
our stations' audience and revenue share. We believe that broadcasting
popular and targeted programming before and after The WB Network prime
time programs builds and retains our audience share during these critical
dayparts. We seek to acquire programming that targets demographic groups
similar to those targeted by The WB Network during its prime time
programming. Our syndicated programming for the 1999 and 2000 seasons
includes newly syndicated programming such as The Drew Carey Show,
Suddenly Susan, Caroline in the City and Spin City, as well as proven
programs such as Friends, Seinfeld and Star Trek: The Next Generation.
- Focus on Sales. To grow our revenues, we aggressively market our
advertising time to local advertisers and also sell advertising time to
regional and national advertisers. We believe that our focus on local
sales enables us to capture existing local advertising revenues and to
create new television advertising revenues by selling to first-time
buyers of television advertising time. Since we centralize many of our
stations' administrative functions and primarily provide entertainment
programming, our station general managers are able to focus on increasing
sales and improving operating margins. Our station general managers have
an average of over 18 years of experience selling television advertising
time and are directly involved in their stations' sales management. When
we acquire or build a station, we focus on building the station's sales
force and provide on-going in-house sales training and development.
- Selective and Opportunistic Expansion in Medium-Sized Markets. We will
continue to expand our group of television stations selectively and
opportunistically by acquiring independently-owned stations,
under-performing stations and construction permits for new stations.
Since our inception in 1997, we have acquired six stations, built three
stations and entered into joint services agreements with two other
stations. We target medium-sized markets because they are typically
characterized by fewer and less sophisticated competing television
station operators and other media, and lower operating costs than larger
markets.
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<PAGE> 40
- Focus on a Young and Growing Audience. We target our programming
primarily to young adults, teens and kids, demographic groups that are
growing in size and purchasing power. For example, in 1998 teens spent
and/or influenced $140 billion in purchases, up from $120 billion in
1997. As a population, teens are growing at approximately twice the rate
of the rest of the U.S. population. Kids also exert indirect influence
over approximately $400 billion each year in purchases such as cars,
vacations and household goods. We believe that our programming strategy
enhances our ability to sell advertising time by providing direct access
to these attractive demographic groups.
- Significant Economic and Operating Efficiencies. We believe that we
benefit from significant economic and operating efficiencies as a result
of the size of our station group. We centralize our graphic design and
production, scheduling, purchasing, national sales and some accounting
and treasury functions at our corporate headquarters. For example,
because we buy syndicated programming on a centralized basis, we believe
that we have access to higher quality syndicated programming at
attractive prices.
PROGRAMMING
We broadcast programs to attract young adults, teens and kids. Our
programming includes:
- The WB Network prime time programming;
- Kids' WB!;
- syndicated programming; and
- local programming.
Prime Time Programming. In prime time, The WB Network is currently ranked
number one among teens. Prime time programming includes: 7th Heaven, Buffy the
Vampire Slayer, Dawson's Creek, Charmed and Felicity. When The WB Network began
broadcasting in 1995, it provided two hours of prime time programming per week.
In the 1999/2000 season, The WB Network will provide 13 hours of prime time
programming Sunday through Friday and has announced plans to provide two hours
of prime time programming on Saturday for the 2000/2001 season.
The bar graphs below present ratings information for The WB Network prime
time programming as reported by Nielsen Television Index and for each of the
broadcast seasons indicated.
[Adult Share Performance Graph]
<TABLE>
<CAPTION>
ADULTS 18-34
------------
<S> <C>
94-95 1.2
95-96 1.3
96-97 1.4
97-98 1.8
98-99 2.0
</TABLE>
[Teen Share Performance Graph]
<TABLE>
<CAPTION>
TEENS 12-17
-----------
<S> <C>
94-95 1.9
95-96 2.6
96-97 3.1
97-98 4.5
98-99 4.2
</TABLE>
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<PAGE> 41
[BAR GRAPH -- The bar graph on the left side presents rating data for adults 18
to 34 years of age for the 1994/1995 through the 1998/1999 broadcast seasons.
The growth achieved in ratings points in the five year period among adults 18 to
34 is included above the bar representing the 1998/1999 broadcast season. The
bar graph on the right side presents rating data for teens 12 to 17 years of age
for the 1994/1995 through the 1998/1999 broadcast seasons. The growth achieved
in ratings points over in the five year period among teens 12 to 17 is included
above the bar representing the 1998/1999 broadcast season.]
Kids' WB! Programming. The WB Network launched Kids' WB! in September 1995
with three hours of programming on Saturdays, and currently provides 19 hours of
kids' programming Monday through Saturday. Kids' WB! programming includes
Pokemon, the number one rated kids animated program. Kids' WB! currently airs
three episodes of Pokemon on Saturday and this fall, will air two episodes on
Saturday and two episodes each day, Monday through Friday. Based on the high
ratings for Pokemon, we believe the significant increase in Pokemon airings will
increase Kids' WB! weekday ratings this fall. Kids' WB! also airs Warner Bros.
produced shows such as Batman Beyond, Animaniacs, Pinky and the Brain and
Superman. Warner Bros.' animated programs also feature popular Looney Toons
characters such as Bugs Bunny, Daffy Duck, Tazmanian Devil, Tweety Bird,
Sylvester, Road Runner and Wile E. Coyote.
The bar graph below presents ratings information for The WB Network's Kids'
WB! Saturday programming as reported by Nielsen Television Index and for each of
the broadcast seasons indicated.
[Kids Share Performance Graph]
<TABLE>
<CAPTION>
SATURDAY: KIDS 2-11
-------------------
<S> <C>
95-96 2.0
96-97 1.7
97-98 2.1
</TABLE>
[BAR GRAPH -- The bar graph presents ratings data for the Kids' WB! Saturday
programming from the 1995/1996 through the 1998/1999 broadcast season. The
growth achieved in ratings points in the three year period among kids 2-11 is
included above the bar representing the 1998/1999 broadcast season.]
Syndicated Programming. In addition to The WB Network programming, our
stations air syndicated programs. Generally, our most profitable programming
time periods are those immediately before and after The WB Network programming.
Consequently, during these time periods, we air programs that are targeted to
the audiences similar in demographics as those that watch The WB Network prime
time programs. These important syndicated programs include Friends, Star Trek:
Next Generation, and Seinfeld, and we have acquired the broadcast rights to The
Drew Carey Show, Suddenly Susan, Caroline in the City, and Spin City. We have
multi-year contracts to air most of our syndicated programming.
Local Programming. Each of our stations airs programming of local interest,
which we believe creates immediate viewership at our start-up stations,
increases local awareness of our stations and expands our advertiser base. At
KWBP, our station in Portland, we air weather updates throughout each evening, a
format we intend to replicate at our other stations. At many of our stations, we
acquire broadcast rights and air certain regional and local sporting events
including games of the St. Louis Cardinals and the St. Louis Blues at KPLR, the
Seattle Mariners and the University of Oregon Ducks at KWBP, the Atlanta Braves
and the Atlanta Hawks at WBXX and the Colorado Rockies at KUWB. In addition,
KPLR airs a nightly 30-minute local newscast.
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<PAGE> 42
OUR STATIONS
The following table provides general information concerning our
stations(1):
<TABLE>
<CAPTION>
MAY 1999 AUDIENCE SHARE
-----------------------------------
TV HOUSEHOLDS(2) ADULTS 18-34 TEENS 12-17
-------------------- ---------------- ---------------- BEGINNING OF
STATION - CHANNEL MARKET PRIME SIGN-ON/ PRIME SIGN-ON/ ACME
MARKETPLACE RANKING NUMBER TIME SIGN-OFF TIME SIGN-OFF OPERATION
----------------- -------- --------- ----- -------- ----- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
KPLR - 11
St. Louis, MO............. 21 1,110,000 14 16 21 23 October 1997
KWBP - 32
Portland, OR.............. 23 994,000 4 4 5 4 February 1997
KUWB - 30
Salt Lake City, UT........ 36 707,000 2 3 4 7 April 1998
KWBQ - 19
Albuquerque-Santa Fe,
NM(3)................... 49 566,000 n/a n/a n/a n/a March 1999
WBDT - 26
Dayton, OH(4)............. 54 504,000 n/a n/a n/a n/a June 1999
WBXX - 20
Knoxville, TN............. 63 447,000 5 6 3 3 October 1997
WIWB - 14
Green Bay-Appleton,
WI(4)................... 69 385,000 n/a n/a n/a n/a June 1999
WBUI - 23
Champaign-Springfield-
Decatur, IL(4).......... 82 335,000 n/a n/a n/a n/a June 1999
WTVK - 46
Ft. Myers-Naples, FL...... 83 330,000 3 3 8 5 March 1998
</TABLE>
- -------------------------
(1) All ownership and statistical information is from BIA Publishing, Inc. and
Nielsen Media Research.
(2) All television stations throughout the United States are grouped into 210
markets that are ranked in size according to the number of households with
televisions in the market for the 1998/1999 season.
(3) KWBQ will be sold once we acquire KASY, also in the Albuquerque-Santa Fe
market. We intend to operate KWBQ under a local marketing agreement. KWBQ
was not reportable in the market in May 1999.
(4) We acquired and began operating these stations in June 1999. Prior to our
acquisition they did not carry The WB Network programming and did not
generate any measurable audience shares in May 1999.
KPLR: ST. LOUIS, MISSOURI
Designated Market Area: 21 TV Households: 1,110,000
Total Age 2+ Population: 2,819,000
Market Description. Thirty-three percent of the total population of St.
Louis is under 25 years of age. The estimated average household income in the
St. Louis market is approximately $45,000 per year. Major employers in the
market include Emerson Electric, May Department Stores, Anheuser-Busch,
Monsanto, Ralston Purina and TWA. The television advertising revenue in the St.
Louis marketplace was estimated at $219.9 million in 1998 and has grown at a
compound annual rate of approximately 6.1% over the past five years.
Station Overview. We began operating KPLR under a local marketing agreement
in October 1997 and acquired the station in March 1998. KPLR signed on the air
in 1959 and has been affiliated with The WB Network since the network's launch.
In addition to carrying The WB Network prime time programming and Kids8 WB!, the
station broadcasts a daily 9pm, half-hour local newscast and also has the
exclusive broadcast rights to air games of the
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<PAGE> 43
St. Louis Cardinals and the St. Louis Blues. In addition, the station's
syndicated programming currently includes Friends, Seinfeld, Sister Sister,
Martin and Cheers. The station has contracted for the future exclusive market
broadcast rights to popular shows such as The Drew Carey Show (9/99), Spin City
(9/00) and Sabrina (9/00). In the May 1999 sweeps period, KPLR was the first or
second most watched station in the market during the Monday through Sunday 5
p.m. to 1 a.m. time period in important demographic audiences such as teens,
persons 12 - 24 years of age, adults 18 - 34 years of age and adults 18 - 49
years of age. On an adults 18 - 49 years of age share basis, the station is
regularly one of the top three performing WB Network affiliates in the country
in prime time. The station has also been the number one ranked WB affiliate in
kids ratings during the last two seasons.
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the St. Louis designated
market area:
<TABLE>
<CAPTION>
SIGN-ON/SIGN-OFF: MON - SUN 7AM - 1AM
--------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/- SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ---------------- ------------------
<S> <C> <C> <C> <C>
ACME................. KPLR - 11 WB 18 (LOGO)3
Belo Corporation..... KMOV - 4 CBS 9 -1
Fox.................. KTVI - 2 FOX 11 0
Gannett.............. KSDK - 5 NBC 19 -5
Sinclair Broadcast... KDNL - 30 ABC 11 (LOGO)1
</TABLE>
KWBP: PORTLAND, OREGON
<TABLE>
<S> <C>
Designated Market Area: 23 TV Households: 994,000
Total Age 2(LOGO) Population:
2,493,000
</TABLE>
Market Description. Thirty-two percent of the total population of Portland
is under 25 years of age. The estimated average household income in the Portland
market is approximately $42,000 per year. Major employers in the market include
Intel, Fred Meyer, Providence Health System, U.S. Bank of Oregon, Tektronix and
Safeway. The television advertising revenue in the Portland marketplace was
estimated at $179.8 million in 1998 and has grown at a compound annual rate of
approximately 8.4% over the past five years.
Station Overview. We began operating KWBP under a local marketing agreement
in February 1997 and acquired the station in June 1997. KWBP signed on the air
in 1989 and has been affiliated with The WB Network since the network's launch.
In addition to carrying The WB Network prime time programming and Kids' WB!, the
station's syndicated programming currently includes Star Trek: The Next
Generation, Full House, Xena: Warrior Princess and America's Funniest Home
Videos. To date, the audience share at KWBP has been adversely affected
primarily by the lack of available quality syndicated programming for that
market and, to a lesser extent, due to a transmission site located further away
from the market's population center than our competitors' sites. We have
recently acquired a transmission site that will improve our signal coverage. In
addition, the station has contracted for the future exclusive market broadcast
rights to popular shows such as The Drew Carey Show (9/99), Caroline in the City
(9/99) and King of the Hill (9/01). In the May 1999 sweeps period, KWBP
delivered an average weekly cumulative number of 438,000 households from sign-on
to sign-off, representing an 11% increase over May 1998.
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<PAGE> 44
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the Portland designated
market area:
<TABLE>
<CAPTION>
SIGN-ON/SIGN-OFF: MON - SUN 7AM - 1AM
-------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/- SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ---------------- ------------------
<S> <C> <C> <C> <C>
ACME................... KWBP - 32 WB 3 +1
Belo Corporation....... KGW - 8 NBC 18 -1
BHC Corporation........ KPTV - 12 UPN 8 -4
Fisher Broadcasting.... KATU - 2 ABC 13 +2
Lee Enterprises........ KOIN - 6 CBS 8 +1
Meredith Corporation... KPDX - 49 FOX 16 +1
Paxson
Communications....... KPXG - 22 PAX 1 +1
</TABLE>
KUWB: SALT LAKE CITY, UTAH
<TABLE>
<S> <C>
Designated Market Area: 36 TV Households: 707,000
Total Age 2+ Population: 2,131,000
</TABLE>
Market Description. Forty-four percent of the total population of Salt Lake
City is under 25 years of age. The estimated average household income in the
Salt Lake City market is approximately $43,000 per year. Major employers in the
market include Intermountain Health Care, Brigham Young University, IOMEGA, ICON
Health and Fitness and Smith Food & Drug Centers. Salt Lake City is the site of
the 2002 winter Olympic Games. The television advertising revenue in the Salt
Lake City marketplace was estimated at $155.2 million in 1998 and has grown at a
compound annual rate of approximately 8.6% over the past five years.
Station Overview. We began operating KUWB in April 1998 under a local
marketing agreement and acquired the station in September 1999. KUWB has been
affiliated with The WB Network since the network's launch. When we began
operating the station, we replaced the primarily religious paid programming and
infomercials that were being run on the station in all non-WB Network time
periods with syndicated programming. This station's syndicated programming
currently includes The Fresh Prince, Cheers, Roseanne and Full House. It also
carries the NBC-affiliated Saturday Night Live and the daytime drama Sunset
Beach. The station has contracted for the future exclusive market broadcast
rights to popular shows such as The Drew Carey Show (9/99), Caroline in the City
(9/99), Spin City (9/00) and Sabrina (9/00). In the May 1999 sweeps period, KUWB
delivered an average weekly cumulative number of 293,000 households from sign-on
to sign-off, an increase of 144,000 homes compared to May 1998. The WB Network
prime time programming contributed significantly to KUWB's success in the
market. In The WB Network prime time, KUWB increased its share of the teen
audience by five share points compared to May 1998 and its adult demographics
gained approximately two share points during the same time period.
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<PAGE> 45
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the Salt Lake City
designated market area:
<TABLE>
<CAPTION>
SIGN-ON/SIGN-OFF: MON - SUN 7AM - 1AM
--------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/- SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ----------------- ------------------
<S> <C> <C> <C> <C>
ACME.................. KUWB - 30 WB 4 13
CBS................... KUTV - 2 CBS 8 0
Fox................... KSTU(1) - 13 FOX 17 -2
KSL - International... KSL - 5 NBC 19 -2
Larry Miller
Broadcasting........ KJZZ - 14 UPN 10 -4
Paxson
Communications...... KUPX - 16 PAX 0 0
United Television..... KTVX - 4 ABC 10 -1
</TABLE>
- -------------------------
(1) The ratings reported by Nielsen for this station include information for
total satellite stations. These satellite stations are fully licensed for
broadcasting on a regular channel assignment but they carry only programming
which duplicates entirely the programming and commercial content of a parent
station. Nielsen viewing credit is generally given to the total satellite
station.
KWBQ: ALBUQUERQUE - SANTA FE, NEW MEXICO
<TABLE>
<S> <C>
Designated Market Area: 49 TV Households: 566,000
Total Age 21 Population: 1,513,000
</TABLE>
Market Description. Thirty-six percent of the total population of
Albuquerque - Santa Fe is under 25 years of age. The estimated average household
income in the Albuquerque - Santa Fe market is approximately $37,000 per year.
Major employers in the market include Intel, Motorola, General Electric, General
Mills, Philips and Levi Strauss. The television advertising revenue in the
Albuquerque - Santa Fe marketplace was estimated at $94.4 million in 1998 and
has grown at a compound annual rate of approximately 9.1% over the past five
years.
Station Overview. We launched KWBQ in March 1999 with The WB Network prime
time programming and Kids' WB!. In addition, the station's syndicated
programming currently includes Full House, Step By Step, The Fresh Prince,
America's Funniest Home Videos and Roseanne. The station has contracted for the
future exclusive market broadcast rights to popular shows such as Star Trek:
Voyager (9/99), Caroline in the City (9/99) and Spin City (9/00). After only two
months of broadcast time, KWBQ entered its first major sweeps period in May
1999. From sign-on to sign-off, KWBQ reached an average of 41,000 households, or
7% of the total designated market area. However, in the Albuquerque - Santa Fe
metropolitan statistical area, KWBQ reached 13% of the households.
Shortly after the completion of this offering, we will acquire KASY, a UPN
affiliated station serving the Albuquerque - Santa Fe market, from Ramar and
sell the KWBQ broadcast license to Ramar. At the closing of these transactions,
Ramar will grant Montecito an option to purchase KWBQ which we anticipate that
Montecito will assign to us. We will continue to operate KWBQ as a WB Network
affiliate under a separate local marketing agreement with Ramar, therefore
allowing us to manage two stations in the market. We plan to aggressively
cross-promote the two stations and operate them from a single studio and office
facility. Subject to FCC approval, we may purchase the station if Montecito
assigns the option to us.
44
<PAGE> 46
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the Albuquerque - Santa Fe
designated market area:
<TABLE>
<CAPTION>
SIGN-ON/ SIGN-OFF: MON - SUN 7AM - 1AM
---------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/-SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ----------------- -------------------
<S> <C> <C> <C> <C>
ACME................... KWBQ - 19 WB 0 0
Belo Corporation....... KASA - 2 FOX 10 +1
Hubbard Broadcasting... KOB(1) - 4 NBC 16 -3
Lee Enterprises........ KRQE(1) - 13 CBS 7 +1
Pulitzer
Broadcasting......... KOAT(1) - 7 ABC 12 0
Ramar Communications... KASY(1) - 50 UPN 2 -1
Univision Television
Group................ KLUZ - 41 UNI 4 +1
</TABLE>
- -------------------------
(1) The ratings reported by Nielsen for this station include information for
total satellite stations. These satellite stations are fully licensed for
broadcasting on a regular channel assignment but they carry only programming
which duplicates entirely the programming and commercial content of a parent
station. Nielsen viewing credit is generally given to the total satellite
station.
WBDT: DAYTON, OHIO
<TABLE>
<S> <C>
Designated Market Area: 54 TV Households: 504,000
Total Age 2+ Population: 1,268,000
</TABLE>
Market Description. Thirty-three percent of the total population of Dayton,
Ohio is under 25 years of age. The estimated average household income in the
Dayton market is approximately $43,000 per year. Major employers in the market
include Chrysler Corp/ Acustar Inc., General Motors, Bank One Dayton, American
Matsushita and BF Goodrich. The television advertising revenue in the Dayton
marketplace was estimated at $88.4 million in 1998 and has grown at a compound
annual rate of approximately 5.9% over the past five years.
Station Overview. We acquired WBDT in June 1999 after the May 1999 sweeps
period. WBDT signed on the air in October 1980 and has been affiliated with The
WB Network since our acquisition of the station. WBDT, former Pax Net station,
currently carries a combination of Pax Net and WB Network programming. Pax Net
programming including Dr. Quinn, Diagnosis Murder and Touched by an Angel is
shown during the morning and prime access time periods. The WB Network prime
time programming and Kids' WB! is shown at The WB Network scheduled times. In
addition, the station has contracted for the future exclusive market broadcast
rights to popular shows such as Full House (9/99), Family Matters (9/00), Fresh
Prince (9/99), America's Funniest Home Videos (9/99), Sabrina (9/00), Clueless
(9/00) and Everybody Loves Raymond (9/01). We believe that our programming
changes, in particular the airing of The WB Network and new syndicated programs,
will improve WBDT's ratings.
45
<PAGE> 47
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the Dayton designated market
area, prior to our purchase of WBDT, formerly WDPX.
<TABLE>
<CAPTION>
SIGN-ON/SIGN-OFF: MON - SUN 7AM - 1AM
-------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/- SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ---------------- ------------------
<S> <C> <C> <C> <C>
Cox Broadcasting....... WHIO - 7 CBS 16 +1
Glencairn Ltd.......... WRGT - 45 FOX 10 +1
Paxson
Communications....... WDPX - 26 PAX 1 +1
Sinclair Broadcast..... WKEF - 22 NBC 12 0
STC Broadcasting....... WDTN - 2 ABC 11 -1
Trinity Broadcasting
Network.............. WKOI - 43 Ind. 0 0
</TABLE>
WBXX: KNOXVILLE, TENNESSEE
<TABLE>
<S> <C>
Designated Market Area: 63 TV Households: 447,000
Total Age 2+ Population: 1,098,000
</TABLE>
Market Description. Thirty-one percent of the total population of Knoxville
is under 25 years of age. The estimated average household income in the
Knoxville market is approximately $37,000 per year. Major employers in the
market include the University of Tennessee, TVA, Oakridge National Laboratories,
Alcoa and Nippondenso. The television advertising revenue in the Knoxville
marketplace was estimated at $68.0 million in 1998 and has grown at a compound
annual rate of approximately 7.9% over the past five years.
Station Overview. We launched WBXX in October 1997. In addition to carrying
The WB Network prime time programming and Kids' WB!, the station has broadcast
rights to air games of the Atlanta Braves. In addition, the station's syndicated
programming currently includes Friends, Sister Sister, Full House and Cheers.
The station has contracted for the future exclusive market broadcast rights to
popular shows such as The Drew Carey Show (9/99), Caroline in the City (9/99),
Sabrina (9/00), Spin City (9/00) and Suddenly Susan (9/00). In the May 1999
sweeps period, WBXX delivered an average weekly cumulative number of 135,000
households from sign-on to sign-off, an increase of 3,000 households compared to
May 1998. From May 1998 to May 1999, WBXX was the only station in the market to
increase its average weekly number of households.
In April 1999, we entered into a ten year joint services agreement with
Paxson Communications under which we provide certain sales and operational
services to WPXK, serving the Knoxville, Tennessee market. Through April 2009,
WPXK will carry solely the Pax Net supplied programming and we will share
equally with Paxson Communications the excess of station revenues over certain
operating expenses.
46
<PAGE> 48
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the Knoxville designated
market area:
<TABLE>
<CAPTION>
SIGN-ON/SIGN-OFF: MON - SUN 7AM - 1AM
-------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/- SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ---------------- ------------------
<S> <C> <C> <C> <C>
ACME................... WBXX - 20 WB 5 0
Gannett................ WBIR - 10 NBC 16 -4
Gray Communications.... WVLT - 8 CBS 7 -2
Paxson Communications.. WPXK - 54 PAX 0 0
Raycom Media........... WTNZ - 43 FOX 6 -2
Young Broadcasting..... WATE - 6 ABC 13 +4
</TABLE>
WIWB: GREEN BAY - APPLETON, WISCONSIN
<TABLE>
<S> <C>
Designated Market Area: 69 TV Households: 385,000
Total Age 2+ Population: 982,000
</TABLE>
Market Description. Thirty-four percent of the total population of Green
Bay - Appleton is under 25 years of age. The estimated average household income
in the Green Bay - Appleton market is approximately $41,000 per year. Major
employers in the market include Fort James Corporation, the Oneida Tribe of
Indians of Wisconsin, Schneider National, Humana, Shopko Stores, American
Medical Security, Bellin Memorial Hospital and Procter & Gamble Paper Products.
The television advertising revenue in the Green Bay - Appleton marketplace was
estimated at $53.9 million in 1998 and has grown at a compound annual rate of
approximately 7.4% over the past five years.
Station Overview. We acquired WIWB in June 1999 after the May 1999 sweeps
period. WIWB signed on the air in August 1998 and has been affiliated with The
WB Network since our acquisition of the station. WIWB, a former Pax Net station,
currently carries a combination of Pax Net and WB Network programming. Pax Net
programming including Dr. Quinn, Diagnosis Murder and Touched by an Angel is
shown during the morning and prime access time periods. The WB Network prime
time and Kids' WB! is shown at The WB Network scheduled times. The station has
contracted for the future exclusive market broadcast rights to popular shows
such as Step by Step (9/99), Fresh Prince (9/99), Jerry Springer (9/99), Sabrina
(9/00), Clueless (9/00), Suddenly Susan (9/00), Jamie Foxx (9/00) and Everybody
Loves Raymond (9/01). We believe that our programming changes, in particular the
airing of the WB Network programming and new syndicated programs, will improve
WIWB's ratings.
47
<PAGE> 49
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the Green Bay - Appleton
designated market area, prior to our purchase of WIWB, formerly WPXG.
<TABLE>
<CAPTION>
SIGN-ON/SIGN-OFF: MON - SUN 7AM - 1AM
-------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/- SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ---------------- ------------------
<S> <C> <C> <C> <C>
Ace TV................. WACY - 32 UPN 4 -2
Aires
Telecommunications... WGBA - 26 NBC 16 -2
CBS.................... WFRV - 5 CBS 8 -3
Paxson Communications.. WPXG - 14 PAX 1 +1
SF Broadcasting........ WLUK - 11 FOX 12 +1
Young Broadcasting..... WBAY - 2 ABC 15 -1
</TABLE>
WBUI: CHAMPAIGN - SPRINGFIELD - DECATUR, ILLINOIS
<TABLE>
<S> <C>
Designated Market Area: 82 TV Households: 335,000
Total Age 2+ Population: 814,000
</TABLE>
Market Description. Thirty-three percent of the total population of
Champaign - Springfield - Decatur is under 25 years of age. The estimated
average household income in the Champaign - Springfield - Decatur market is
approximately $42,000 per year. Major employers in the market include ADM,
Staley's, Caterpillar, Mueller, Illinois Power, Kraft and the University of
Illinois. The television advertising revenue in the Champaign - Springfield -
Decatur marketplace was estimated at $42.7 million in 1998 and has grown at a
compound annual rate of approximately 6.6% over the past five years.
Station Overview. We acquired WBUI in June 1999 after the May 1999 sweeps
period. WBUI signed on the air in May 1984 and has been affiliated with The WB
Network since our acquisition of the station. WBUI, a former Pax Net station,
currently carries a combination of Pax Net and WB Network programming. Pax Net
programming including Dr. Quinn, Diagnosis Murder and Touched by an Angel is
shown during the morning and prime access time periods. The WB Network prime
time and Kids' WB! is shown at The WB Network scheduled times. The station has
contracted for the future exclusive market broadcast rights to popular shows
such as Full House (9/99), Star Trek: Voyager (9/99), Fresh Prince (9/99),
Entertainment Tonight (9/99), Sabrina (9/00), Suddenly Susan (9/00), Spin City
(9/00) and Clueless (9/00). We believe that our programming changes, in
particular the airing of The WB Network and new syndicated programs, will
improve WBUI's ratings.
48
<PAGE> 50
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the
Champaign - Springfield - Decatur designated market area, prior to our purchase
of WBUI, formerly WPXU.
<TABLE>
<CAPTION>
SIGN-ON/SIGN-OFF: MON - SUN 7AM - 1AM
---------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/- SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ------------------ ------------------
<S> <C> <C> <C> <C>
Bahakel
Communications..... WRSP(1) - 55 FOX 11 +3
Gannett.............. WICS(1) - 20 NBC 20 -3
LIN Television....... WAND - 17 ABC 12 0
Midwest Television... WCIA(1) - 3 CBS 11 -2
Paxson
Communications..... WPXU - 23 PAX 1 +1
</TABLE>
- -------------------------
(1) The ratings reported by Nielsen for this station include information for
total satellite stations. These satellite stations are fully licensed for
broadcasting on a regular channel assignment but they carry only programming
which duplicates entirely the programming and commercial content of a parent
station. Nielsen viewing credit is generally given to the total satellite
station.
WTVK: FT. MYERS - NAPLES, FLORIDA
<TABLE>
<S> <C>
Designated Market Area: 83 TV Households: 330,000
Total Age 2+ Population: 782,000
</TABLE>
Market Description. Twenty-five percent of the total population of Ft.
Myers - Naples is under 25 years of age. The estimated average household income
in the Ft. Myers - Naples market is approximately $45,000 per year. Major
employers in the market include The Lee County School District, Lee Memorial
Health System, Columbia Healthcare and Publix SuperMarkets. The television
advertising revenue in the Ft. Myers - Naples marketplace was estimated at $56.2
million in 1998 and has grown at a compound annual rate of approximately 7.4%
over the past five years.
Station Overview. We began operating WTVK in March 1998 under a local
marketing agreement and acquired the station in June 1998. WTVK signed on the
air in October 1990 and has been affiliated with The WB Network since our
acquisition of the station. In addition to carrying The WB Network prime time
programming and Kids' WB!, the station's syndicated programming currently
includes Sister Sister, The Nanny, Mad About You, NewsRadio, X-Files and
Stargate. The station has contracted for the future exclusive market broadcast
rights to popular shows such as Star Trek: Voyager (9/99), Drew Carey (9/99),
Sabrina (9/00), Suddenly Susan (9/00), Spin City (9/00) and Caroline in the City
(9/00). In the May 1999 sweeps period WTVK delivered a two household share from
sign-on to sign-off for the third consecutive sweeps period. WTVK delivered an
average weekly household cumulative number of 76,000 in May 1999, an increase of
3,000 households since May 1998. WTVK has increased its share of the teen
audience significantly Monday through Wednesday 8pm to 10pm. In May 1999, WTVK
held an 18 share of the teen audience making it the number one station in the
time period in that demographic.
49
<PAGE> 51
Competition. The following table outlines summary information regarding the
commercially-rated broadcast television stations in the Ft. Myers - Naples
designated market area:
<TABLE>
<CAPTION>
SIGN-ON/SIGN-OFF: MON - SUN 7AM - 1AM
-------------------------------------
CALL LETTERS - MAY '99 SHARE OF +/- SHARE POINTS
OWNER CHANNEL AFFILIATION PERSONS 12 - 34 MAY '99 VS MAY '98
----- -------------- ----------- ---------------- ------------------
<S> <C> <C> <C> <C>
ACME................... WTVK - 46 WB 3 +1
Emmis Communications... WFTX - 36 FOX 13 0
Ft. Myers
Broadcasting......... WINK - 11 CBS 11 +1
Montclair
Communications....... WZVN - 26 ABC 6 -3
Waterman Broadcasting.. WBBH - 20 NBC 14 -3
West Coast Christian
TV................... WRXY - 49 Ind. 0 0
</TABLE>
WZPX: GRAND RAPIDS, MICHIGAN
In addition to the nine stations described above, in April 1999, we entered
into a joint sales agreement with DP Media for WZPX, serving the Grand Rapids,
Michigan market. WZPX is a primary affiliate of Pax Net. In connection with this
agreement, WZPX will enter into a secondary affiliation agreement with The WB
Network for five years. Under our joint sales agreement, we sell certain
advertising time for WZPX, and as compensation, we retain a portion of the
excess of station revenues over station operating expenses, if any. We are
obligated to pay any expenses which are not covered by advertising revenues and
40% of all interest expense owed by DP Media with respect to WZPX. DP Media has
the right to sell the station to us at any time during the next four years for
$30.0 million. We have limited rights to acquire the station for that same
amount if DP Media chooses to sell the station.
OUR AFFILIATION AGREEMENTS
Each of our stations has entered into a station affiliation agreement with
The WB Network that provides each station with the exclusive right to broadcast
The WB Network programming in its respective market. These affiliate agreements
generally have three to ten year terms.
Under the affiliation agreements, The WB Network retains the right to
program and sell approximately 75% of the advertising time available during The
WB Network prime time schedule with the remaining 25% available for sale by our
stations. The WB Network retains approximately 50% of the advertising time
available during Kids' WB! programs aired in other dayparts.
In addition to the advertising time retained for sale by The WB Network,
each station is also required to pay annual compensation to The WB Network. The
amount of compensation is determined by taking into account the station's
average ratings among adults ages 18 - 49 during The WB Network prime time
programming, as well as the number of prime time programming hours provided per
week by The WB Network. We participate in cooperative marketing efforts with The
WB Network whereby the network reimburses up to 50% of certain approved
advertising expenditures by a station to promote network programming. Our
affiliation agreements for KPLR, KWBP and WBXX, also entitle those stations to
the most favorable terms agreed to by The WB Network and any affiliate, except
for superstation WGN, during the term of the affiliation agreements, and any
subsequent modifications.
In addition, as part of our acquisition of WBDT, WIWB and WBIU, we entered
into a five-year secondary affiliation agreement with Pax Net at these stations.
We are generally
50
<PAGE> 52
obligated to run the Pax Net prime time programming in certain morning dayparts.
We retain a portion of the advertising time during this programming for local
sales, and Pax Net retains the balance.
ADVERTISING/SALES
Virtually all of our revenues for 1997 and 1998 and the first six months of
1999 consisted of advertising revenues, and no single advertiser accounted for
more than 10% of our gross advertising revenues in these periods. Our
advertising revenues are generated both by local advertising and national spot
advertising.
Local Advertising. Local advertising revenues are generated by both local
merchants and service providers and by regional and national businesses and
advertising agencies located in a particular designated market area. Local
advertising revenues represented 42% of our net advertising revenues in 1997,
54% in 1998 and 58% in the first six months of 1999.
National Spot Advertising. National spot advertising represents time sold
to national and regional advertisers based outside a station's designated market
area. National spot advertising revenues represented 58% of our net advertising
revenues in 1997, 46% in 1998 and 45% in the first six months of 1999. National
spot advertising primarily comes from:
- new advertisers wishing to test a market;
- advertisers who are regional retailers and manufacturers without national
distribution;
- advertisers who need to enhance network advertising in given markets; and
- advertisers wishing to place more advertisements in specified geographic
areas.
OUR COMPETITION
Broadcast television stations compete for advertising revenues primarily
with other broadcast television stations in their respective markets and, to a
lesser but an increasing extent, with radio stations, cable television system
operators, newspapers, billboard companies, direct mail and internet sites.
Traditional network and Fox programming generally achieves higher household
audience levels than that of The WB Network and syndicated programming aired by
independent stations which is attributable to a number of factors, including:
- the traditional networks' efforts to reach a broader audience;
- historically, less competition;
- generally better channel positions;
- more network programming being broadcast weekly;
- the traditional networks' cross-promotions; and
- the traditional networks' more established market presence than The WB
Network.
However, because The WB Network provides fewer hours of programmings per
week than the traditional networks, we have a significantly higher inventory of
advertising time for our own use and our programs therefore achieve a share of
television market advertising revenues greater than their share of the market's
audience. We believe that this available advertising time, combined with our
efforts to attract audiences with our programming
51
<PAGE> 53
which are key targets of advertisers and our focus on advertising sales allows
us to compete effectively for advertising revenues within our stations' markets.
The broadcasting industry is continuously faced with technical changes and
innovations, the popularity of competing entertainment and communications media,
changes in labor conditions, and governmental restrictions or actions of federal
regulatory bodies, including the FCC, any of which could possibly have a
material adverse effect on a television station's operations and profits.
Sources of video service other than conventional television stations, the most
common being cable television, can increase competition for a broadcast
television station by bringing distant broadcasting signals not otherwise
available to the station's audience, serving as a distribution system for
national satellite-delivered programming and other non-broadcast programming
originated on a cable system and selling advertising time to local advertisers.
Other principal sources of competition include home video exhibition,
direct-to-home broadcast satellite television, entertainment services and
multichannel multipoint distribution services. Currently, two FCC permitees,
DirecTV and Echostar, provide subscription DBS services via high-power
communications satellites and small dish receivers, and other companies provide
direct-to-home video service using lower powered satellites and larger
receivers.
Other technology advances and regulatory changes affecting programming
delivery through fiber optic telephone lines and video compression could lower
entry barriers for new video channels and encourage the development of
increasingly specialized niche programming. The Telecommunications Act of 1996
permits telephone companies to provide video distribution services via radio
communication, on a common carrier basis, as cable systems or as open video
systems, each pursuant to different regulatory schemes. We cannot predict the
effect that these and other technological and regulatory changes will have on
the broadcast television industry and on the future profitability and value of a
particular broadcast television station.
Broadcast television stations compete with other television stations in
their designated market areas for the acquisition of programming. Generally,
cable systems do not compete with local stations for programming, but various
national cable networks do from time to time and on an increasing basis acquire
programming that could have been offered to local television stations. Public
broadcasting stations generally compete with commercially-rated broadcasters for
viewers, but do not compete for advertising revenues. Historically, the cost of
programming has increased because of an increase in the number of independent
stations and a shortage of quality programming.
FEDERAL REGULATION OF TELEVISION BROADCASTING
Television broadcasting is a regulated industry and is subject to the
jurisdiction of the FCC under the Communications Act of 1934, as amended from
time to time. The Communications Act prohibits the operation of television
broadcasting stations except under a license issued by the FCC. The
Communications Act empowers the FCC, among other things:
- to issue, revoke and modify broadcast licenses;
- to decide whether to approve a change of ownership or control of station
licenses;
- to regulate the equipment used by stations; and
- to adopt and implement regulations to carry out the provisions of the
Communications Act.
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<PAGE> 54
Failure to observe FCC or other governmental rules and policies can result
in the imposition of various sanctions, including monetary forfeitures, the
grant of short, or less than maximum, license renewal terms or, for a
particularly egregious violations, the denial of a license renewal application,
the revocation of a license or denial of FCC consent to acquire additional
broadcast properties.
License Grant, Renewal, Transfer and Assignment. A party must obtain a
construction permit from the FCC to build a new television station. Once a
station is constructed and commences broadcast operations, the permittee will
receive a license which must be renewed by the FCC at the end of each eight-year
license term. The FCC grants renewal of a broadcast license if it finds that the
station has served the public interest, convenience, and necessity and the
licensee has not seriously violated the Communications Act or FCC rules and
policies. If the FCC finds that a licensee has failed to meet these standards,
the FCC may deny renewal or condition renewal. Any other party with standing may
petition the FCC to deny a broadcaster's application for renewal. However, only
if the FCC issues an order denying renewal will the FCC accept and consider
applications from other parties for a construction permit for a new station to
operate on that channel. The FCC may not consider any applicant in making
determinations concerning the grant or denial of the licensee's renewal
application. Although renewal of licenses is granted in the majority of cases
even when petitions to deny have been filed, we cannot be sure our station
licenses will be renewed for a full term or without modification.
Our current licenses expire as follows:
<TABLE>
<CAPTION>
STATION EXPIRATION DATE
------- ----------------
<S> <C>
KPLR.......................................... February 1, 2006
KWBP.......................................... February 1, 2007
KUWB.......................................... October 1, 2006
KWBQ(1)....................................... October 1, 2006
WBDT.......................................... October 1, 2005
WBXX.......................................... August 1, 2005
WIWB.......................................... December 1, 2005
WBUI.......................................... December 1, 2005
WTVK.......................................... February 1, 2005
</TABLE>
- -------------------------
(1) We currently operate under a construction permit. We expect the license to
be granted during the second half of 1999.
The Communications Act prohibits the assignment of a broadcast license or
the transfer of control of a broadcast licensee without the prior approval of
the FCC. In determining whether to permit the assignment or transfer of control
of, or the grant or renewal of, a broadcast license, the FCC considers a number
of factors pertaining to the licensee, including:
- compliance with various rules limiting common ownership of media
properties;
- the character of the licensee and those persons holding attributable
interests therein; and
- compliance with the Communications Act's limitations on alien ownership.
Character generally refers to the likelihood that the licensee or applicant
will comply with applicable law and regulation. Attributable interests generally
refers to the level of ownership or other involvement in station operations
which would result in the FCC
53
<PAGE> 55
attributing ownership of that station or other media outlet to the person or
entity in determining compliance with FCC ownership limitations.
To obtain the FCC's prior consent to assign a broadcast license or transfer
control of a broadcast licensee, an application must be filed with the FCC. If
the application involves a substantial change in ownership or control, the
application must be placed on public notice for a period of no less than 30 days
during which petitions to deny the application may be filed by interested
parties, including certain members of the public. If the FCC grants the
application, interested parties have no less than 30 days from the date of
public notice of the grant to seek reconsideration or review of that grant by
the full commission or, as the case may be, a court of competent jurisdiction.
The full FCC commission has an additional 10 days to set aside on its own motion
any action taken by the FCC's staff. When passing on an assignment or transfer
application, the FCC is prohibited from considering whether the public interest
might be served by an assignment or transfer to any party other than the
assignee or transferee specified in the application.
The FCC staff informed us that, so long as we have an interim voting
agreement, our reorganization from a limited liability company into a
corporation and our issuance of shares to the public in the offering will be
deemed to result in a non-substantial change of ownership requiring a short-form
application to the FCC. Accordingly, we applied for FCC approval to complete the
reorganization and offering conditioned on our entry into the interim voting
agreement. The FCC staff granted that application on September 2, 1999.
Interested parties will have 30 days from the date of public notice of that
grant to seek FCC reconsideration or review of the grant of the full commission
or a court. The full commission also has an additional 10 days to reconsider the
grant on its own motion. We cannot predict how long the FCC would take to act
upon a request for reconsideration or review. We expect the period to request
FCC reconsideration to expire in mid-October, 1999. If this offering closes
before the FCC order approving our short-form application becomes final, we
would be at risk of third party challenges to and FCC reconsideration of that
initial approval.
The FCC staff has also informed us that, without the required interim
voting agreement, our reorganization and our issuance of shares to the public in
the offering will result in a substantial change of control requiring a
long-form application to the FCC. Accordingly, in addition to our short-form
application, we have made a long-form application to the FCC to go forward from
the reorganization and offering without the interim voting agreement. We must
receive the final order of the FCC approving the long-form application before we
can terminate the interim voting agreement. That long-form application must be
open to the public for challenge or other comment for 30 days before the FCC
staff can act on it. Interested parties may file petitions to deny the
application on or before that date. The 30-day period runs through September 27,
1999. If the FCC grants the long-form application, interested parties will have
another 30 days from public notice of the grant to seek FCC reconsideration or
review of the grant of the full commission or a court. The full commission also
has an additional 10 days to reconsider the grant on its own motion. We may
decide to go forward with our reorganization and the offering whether or not the
FCC has granted our long-form application. If this offering closes before the
FCC order granting our long-form application becomes final, we would be at risk
of third party challenges to and FCC reconsideration of that initial approval.
Although we believe that it is likely we will receive final FCC orders
approving our reorganization and this offering, third party challenges to or FCC
reconsideration of our applications may require changes to permit approval to
become final. Nor can we assure you that the interim voting agreement will
remain in effect as required by the FCC. If the FCC or a court reconsiders or
reviews the grant of our short-form application and the grant of our
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<PAGE> 56
short-form application is rescinded, or if the interim agreement terminates
without approval of our long-form application, the FCC could force us to divest
our FCC licenses, pay fines, deny renewal of our license, refuse to approve of
any of our acquisitions, order us to restructure our reorganization or order us
to take any other action necessary to come into compliance with an FCC order.
Ownership Restrictions. The officers, directors and equity owners of 5% or
more of our outstanding voting stock or the voting stock of a company holding
one or more broadcast licenses are deemed to have attributable interests in the
broadcast company. However, minority voting stock interests generally will not
be attributable if there is a single holder of more than 50% of the outstanding
voting power of the corporation. Also, specified institutional investors,
including mutual funds, insurance companies and banks acting in a fiduciary
capacity, may own up to 10% of the outstanding voting stock without being
subject to attribution if they exercise no control over the management or
policies of the broadcast company.
Under the rules currently in effect, the FCC will not grant a license to
operate a television station, unless established waiver standards are met, to
any party, or parties under common control, that has an attributable interest in
another television station with an overlapping service contour. FCC regulations
also prohibit one owner from having attributable interests in television
broadcast stations that reach in the aggregate more than 35% of the nation's
television households. For purposes of this calculation, stations in the UHF
band which covers channels 14 - 69 are attributed with only 50% of the
households attributed to stations in the VHF band, which covers channels 2 - 13.
Subject to certain exceptions, the rules generally prohibit, the holder of an
attributable interest in a television station from also having an attributable
interest in a radio station, daily newspaper or cable television system serving
a community located within the relevant coverage area of that television
station. Separately, the FCC's cross-interest policy may prohibit the common
ownership of an attributable interest in one media outlet and a non-attributable
equity interest in another media outlet, among other significant interests, in
the same market.
The FCC recently adopted amendments to its ownership rules. Among other
things, the new rules:
- determine whether stations are in the same market by reference to a
Nielsen designated market area rather than through a signal overlap among
stations;
- permit common ownership of two television stations in the same designated
market area under certain circumstances;
- permit some radio-television ownership combinations;
- eliminate the cross-interest policy;
- attribute the ownership of a station to parties whose debt and/or equity
holdings in the company exceed 33% of the station's total assets if
certain other factors are present;
- increase the benchmark for certain passive investors from 10% to 20%; and
- treat some local marketing agreements or time brokerage agreements with
television stations as an attributable interest.
Those amendments are not yet effective, nor are the FCC's actions final. We do
not know whether the new rules will become effective in their present form or be
modified in future proceedings.
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Restrictions on Foreign Ownership. The Communications Act prohibits the
issuance of broadcast licenses to, or the holding of a broadcast license by
foreign citizens or any corporation of which more than 20% of the capital stock
is owned of record or voted by non-U.S. citizens or their representatives or by
a foreign government or a representative thereof, or by any corporation
organized under the laws of a foreign country. The Communications Act also
authorizes the FCC to prohibit the issuance of a broadcast license to, or the
holding of a broadcast license by, any corporation controlled by any other
corporation of which more than 25% of the capital stock is owned of record or
voted by aliens. The FCC has interpreted these restrictions to apply to other
forms of business organizations, including partnerships. As a result of these
provisions, the licenses granted to our subsidiaries that hold FCC licenses
could be revoked if more than 25% of our stock were directly or indirectly owned
or voted by aliens. Our certificate of incorporation contains limitations on
alien ownership and control substantially similar to those contained in the
Communications Act. Pursuant to our certificate of incorporation, we have the
right to refuse to sell shares to aliens or to repurchase alien-owned shares at
their fair market value to the extent necessary, in the judgment of our board of
directors, to comply with the alien ownership restrictions.
Programming and Operation. The Communications Act requires broadcasters to
serve the public interest, convenience and necessity. The FCC has gradually
restricted or eliminated many of the more formalized procedures it had developed
to promote the broadcast of programming responsive to the needs of the station's
community of license. Licensees continue to be required, however, to present
programming that is responsive to community problems, needs and interests and to
maintain certain records demonstrating such responsiveness. Complaints from
listeners concerning a station's programming will be considered by the FCC when
it evaluates the licensee's renewal application, but these complaints may be
filed and considered at any time.
Stations must also pay regulatory and application fees and follow various
FCC rules that regulate, among other things:
- political advertising;
- children's programming;
- the broadcast of obscene or indecent programming;
- sponsorship identification; and
- technical operations and equal employment opportunity requirements.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
short, less than the maximum, renewal terms, or for particularly egregious
violations, the denial of a license renewal application or the revocation of a
license.
Review of Must Carry Rules. FCC regulations implementing the Cable
Television Consumer Protection and Competition Act of 1992 require each
television broadcaster to elect, at three year intervals beginning October 1,
1993, to either:
- require carriage of its signal by cable systems in the station's market
which is referred to as must carry rules; or
- negotiate the terms on which such broadcast station would permit
transmission of its signal by the cable systems within its market which
is referred to as retransmission consent.
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The United States Supreme Court upheld the must-carry rules in a 1997
decision. These must carry rights are not absolute, and their exercise is
dependent on a variety of factors such as:
- the number of active channels on the cable system;
- the location and size of the cable system; and
- the amount of programming on a broadcast station that duplicates the
programming of another broadcast station carried by the cable system.
Therefore under certain circumstance, a cable system may choose to decline
to carry a given station. We have elected must carry with respect to each of our
stations which are each carried on the related cable system.
Local Marketing Agreements. We have, from time to time, entered into local
marketing agreements, generally in connection with pending station acquisitions.
By using local marketing agreements, we can provide programming and other
services to a station proposed to be acquired before we receive all applicable
FCC and other governmental approvals.
FCC rules and policies generally permit local marketing agreements if the
station licensee retains ultimate responsibility for and control of the
applicable station, including finances, personnel, programming and compliance
with the FCC's rules and policies. We cannot be sure that we will be able to air
all of our scheduled programming on a station with which we have local marketing
agreements or that we will receive the anticipated revenue from the sale of
advertising for such programming.
Under the rules currently in effect, the licensee of a television station
providing programming on another television station under a local marketing
agreement is not considered to have an attributable interest in the other
station. However, the FCC recently adopted rules provide that the licensee of a
television station which provides programming for more than 15% of the time on
another television station serving the same market would be deemed to have an
attributable interest in the latter station for purposes of the national and
local multiple ownership rules. The FCC also adopted a grandfathering policy
providing that local marketing agreements that are in compliance with existing
FCC rules and policies and were entered into before November 5, 1996 would be
permitted to continue in force until the FCC conducts its biennial review of
regulations in 2004. Local marketing agreements entered into after that date but
prior to the FCC action will be grandfathered until August 2001.
None of our local marketing agreements were in existence on the date of
enactment of the Telecommunications Act or on November 5, 1996. Therefore we may
be forced to terminate the KWBQ local marketing agreement in August 2001 if it
has not been previously terminated, unless holding an attributable interest in
KWBQ and KASY would comply with the television duopoly rule or a waiver of the
rule was granted.
Digital Television Services. The FCC has adopted rules for implementing
digital television service in the United States. Implementation of digital
television will improve the technical quality of television signals and provide
broadcasters the flexibility to offer new services, including high-definition
television and data broadcasting.
The FCC has established service rules and adopted a table of allotments for
digital television. Under the table, all eligible broadcasters with a full-power
television station are allocated a separate channel for digital television
operation. Stations will be permitted to phase in their digital television
operations over a period of years following the adoption of a final table of
allotments, after which they will be required to surrender their license to
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broadcast the analog, or non-digital television, signal. Affiliates of the top
four networks in the top ten markets are already required to be on the air with
a digital signal. Affiliates of the top four networks in the next twenty largest
markets must be on the air with a digital signal by November 1, 1999. Our
stations must be on the air with a digital signal by May 1, 2002. Under
applicable law and regulation, television broadcasters must return their analog
license to the government by 2006 unless specified conditions exist, that in
effect, affect the public's limited access to digital television transmissions
in a particular market.
The Communications Act and the FCC's rules impose certain conditions on the
FCC's implementation of digital television service. Among other requirements,
the FCC must:
- limit the initial eligibility for licenses to existing television
broadcast licensees or permittees;
- allow digital television licensees to offer ancillary and supplementary
services; and
- charge appropriate fees to broadcasters that supply ancillary and
supplementary services for which such broadcasters derive certain
nonadvertising revenues.
Equipment and other costs associated with the digital television
transition, including the necessity of temporary dual-mode operations, will
impose some near-term financial costs on television stations providing the
services. The potential also exists for new sources of revenue to be derived
from digital television. We cannot predict the overall effect the transition to
digital television might have on our business.
Children's Television Act. FCC rules limit the amount of commercial matter
that a television station may broadcast during programming directed primarily at
children 12 years old and younger. FCC rules further require television stations
to serve the educational and informational needs of children 16 years old and
younger through the stations' own programming as well as through other means.
Television broadcasters must file periodic reports with the FCC to document
their compliance with foregoing obligations.
Other Pending FCC and Legislative Proceedings. In 1995, the FCC issued
notices of proposed rulemaking proposing to modify or eliminate most of its
remaining rules governing the broadcast network-affiliate relationship. The
network-affiliate rules were originally intended to limit networks' ability to
control programming aired by affiliates or to set station advertising rates and
to reduce barriers to entry by networks. The dual network rule, which generally
prevents a single entity from owning more than one broadcast television network,
is among the rules under consideration in these proceedings. Although the
Telecommunications Act substantially relaxed the dual network rule by providing
that an entity may own more than one television network, none of the four major
national television networks may merge with each other or acquire certain other
networks in existence on February 8, 1996. We cannot predict how or when the FCC
proceeding will be resolved or how those proceedings or the relaxation of the
dual network rule may affect our business.
The Satellite Home Viewer Act allows satellite carriers to deliver
broadcast programming to subscribers who are unable to obtain television network
programming over the air from local television stations. Congress is currently
considering legislation to amend the act to facilitate the ability of satellite
carriers to provide subscribers with programming from a non-local television
station. We cannot predict whether any such legislation will be enacted or what,
if any, impact such legislation may have on us.
The FCC has also initiated a proceeding to reexamine rules that previously
required broadcast licensees to provide equal employment opportunities. If the
FCC does adopt new rules governing equal employment opportunities we may have
additional administrative burdens. However, adoption of any new rules will not
affect our continuing obligation to comply with other federal and state laws
concerning equal employment opportunities.
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Federal regulatory agencies and Congress from time to time consider
proposals for additional or revised rules. We cannot predict the resolution of
these issues or other issues discussed above, although their outcome could, over
a period of time, affect, either adversely or favorable, the broadcasting
industry generally or us specifically.
The foregoing summary of FCC and other governmental regulations is not
intended to be comprehensive. For further information concerning the nature and
extent of federal regulation of broadcast stations, you should refer to the
Communications Act, the Telecommunications Act, other Congressional acts, FCC
rules and the public notices and rulings of the FCC.
EMPLOYEES
At June 30, 1999, we had 309 employees, including 44 at KPLR in St. Louis
who were subject to collective bargaining agreements. We believe that our
relationships with our employees and the unions representing our unionized
employees are good.
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PROPERTIES AND FACILITIES
All of our leased studio, office and tower facilities are leased pursuant
to long-term leases. We believe that all facilities and equipment are adequate,
with minor changes and additions, for conducting operations as presently
contemplated. Set forth below is information with respect to our existing
studios and other facilities. Information as to tower size reflects the height
above average terrain of the antenna radiation center.
<TABLE>
<CAPTION>
MARKET APPROXIMATE SIZE OWNERSHIP
------ ---------------- ---------
<S> <C> <C>
St. Louis, Missouri
Studio and office facilities(1).................. 36,000 sq. ft. Owned
Tower............................................ 1,011 ft. Leased
Portland, Oregon
Studio and office facilities..................... 15,255 sq. ft. Owned
Tower............................................ 1,785 ft. Leased
Knoxville, Tennessee
Studio and office facilities..................... 8,000 sq. ft. Leased
Tower............................................ 2,399 ft. Owned(2)
Salt Lake City, Utah
Studio and office facilities..................... 9,500 sq. ft. Leased
Tower............................................ 3,839 ft. Leased
Ft. Myers - Naples, Florida
Studio and office facilities..................... 5,000 sq. ft. Leased
Tower............................................ 1,000 ft. Leased
Albuquerque - Santa Fe, New Mexico
Studio and office facilities..................... 9,000 sq. ft. Owned
Tower............................................ 1,234 ft. Leased
Dayton, Ohio
Studio and office facilities..................... 14,150 sq. ft Owned
Tower............................................ 485 ft. Owned
Green Bay - Appleton, Wisconsin
Studio and office facilities..................... 2,640 sq. ft. Leased
Tower............................................ 660 ft. Leased
Champaign - Springfield - Decatur, Illinois
Studio and office facilities..................... 9,600 sq. ft. Owned
Tower............................................ 1,030 ft. Owned
</TABLE>
- -------------------------
(1) Excludes 30,000 square feet of apartment space located above the studio and
office facilities.
(2) Tower owned on leased property.
LEGAL PROCEEDINGS
We are currently in a dispute with Edward Koplar in connection with Mr.
Koplar's resignation in the fall of 1998 from his position as Chief Executive
Officer of ACME Television of Missouri, Inc., formerly Koplar Communications,
Inc. Mr. Koplar has claimed that we breached his management agreement, and under
the terms of that agreement has claimed that we owe him $4 million and has
threatened to bring suit against us. We believe that Mr. Koplar's claim is
without merit and that the resolution of this matter will not have a material
adverse effect on our financial condition or results of operations. We have
accrued $350,000 as a reserve relating to this matter.
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In addition, we are currently and from time to time involved in litigation
incidental to the conduct of our business. We maintain comprehensive general
liability and other insurance which we believe to be adequate for the purpose.
We are not currently a party to any lawsuit or proceeding that we believe would
have a material adverse effect on our financial condition or results of
operations.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information about our executive officers and
directors as of August 31, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jamie Kellner...... 52 Chairman of the Board and Chief Executive Officer
Doug Gealy......... 39 President, Chief Operating Officer and Director
Tom Allen.......... 46 Executive Vice President, Chief Financial Officer
and Director
Edward Danduran.... 47 Vice President, Controller
James Collis(1).... 36 Director
Thomas Embrescia... 53 Director
Brian McNeill(1)... 43 Director
Michael Roberts.... 50 Director
Darryl Schall(1)... 38 Director
</TABLE>
- -------------------------
(1) Will resign from his position after the pricing of this offering but before
our reorganization and in accordance with our short-term application to the
FCC and has agreed to become a director again after final FCC approval of
our long-form application.
Jamie Kellner is a founder of ACME and has served as our Chief Executive
Officer and Chairman of the Board since 1997. Mr. Kellner is also a founder,
Chief Executive Officer and partner of The WB Network since 1993. Previously,
Mr. Kellner was President of Fox Broadcasting Company since its inception in
1986 to 1993. He currently serves on the board of directors of NELVANA LTD., a
Canadian company internationally recognized for its children's and family
programming, worldwide distribution and merchandise licensing.
Doug Gealy is a founder of ACME and has served as our President and Chief
Operating Officer and as a member of our Board since 1997. Since December of
1996, Mr. Gealy has been involved in development activities for ACME. Before
founding ACME, Mr. Gealy served for one year as Executive Vice President of
Benedek Broadcasting Corporation. From 1991 to 1996, Mr. Gealy was a Vice
President and General Manager of WCMH and its local marketing agreement, WWHO,
both in Columbus, Ohio, and following the acquisition of these stations by NBC,
served as President and General Manager of these stations.
Tom Allen is a founder of ACME and has served as our Executive Vice
President and Chief Financial Officer and as a member of our Board since 1997.
Since June 1996, Mr. Allen has been involved in development activities for ACME.
From August 1993 to May 1996, Mr. Allen was the Chief Operating Officer and
Chief Financial Officer for Virgin Interactive Entertainment. Before that Mr.
Allen served as the Chief Financial Officer of the Fox Broadcasting Company from
1986 to 1993.
Edward Danduran has been our Vice President and Controller since July 1997.
From November 1995 until April 1997, Mr. Danduran was a Financial Consultant for
Virgin Interactive Entertainment, Inc. From 1989 to 1995, Mr. Danduran was the
Chief Financial Officer of Phoneby, a business communications company.
James Collis has served as a member of our Board since July 1999. Mr.
Collis is an Executive Vice President of CEA Management Corp., a corporation
formed to manage CEA Capital Partners USA, L.P. and CEA Capital Partners USA CI,
L.P. Mr. Collis has served in this role since 1997. Before joining CEA
Management Corp., Mr. Collis was a Principal at Chase
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Manhattan Bank beginning in December 1996. Before becoming a Principal, Mr.
Collis was a Vice President of Chase Manhattan Bank beginning in June 1995 and
an associate before that beginning in June 1991. Mr. Collis has also been an
investor in the media and communications industry for nine years and serves on
the board of directors for numerous private media and communication companies.
Thomas Embrescia has served as a member of our Board since we acquired WTVK
from Second Generation Television, Inc. in June 1998. Mr. Embrescia is the
Chairman and principal investor of Second Generation Television, a company he
formed in 1993. In addition, he also serves as chairman or Chief Executive
Officer and is a principal investor in several other media and marketing related
businesses. Mr. Embrescia has over 31 years of experience in the broadcasting
and media industry.
Brian McNeill has served as a member of our Board since July 1999. Since
1996, he has been the managing general partner of Alta Communications, a private
venture capital firm he co-founded, which specializes in the communications
industry. Since 1986, Mr. McNeill has been a general partner of various funds
affiliated with Burr, Egan, Deleage & Co., a major private equity firm which
specializes in investments in the communications and technology industries. He
has served as a director in many private radio and television broadcasting
companies such as Tichenor Media Systems, OmniAmerica Group, Panache
Broadcasting and Shockley Communications and a publicly traded company, Radio
One, Inc.
Michael Roberts has served as a member of our Board since April 1999. Mr.
Roberts is a co-founder of Roberts Broadcasting which owns several television
stations in medium-sized markets in the U.S. and has served as its Chairman and
Chief Executive Officer since 1981. Mr. Roberts is also the founder of companies
active in commercial real estate development, construction program management
and corporate management consulting. Mr. Roberts is also a Managing Member for
Roberts Wireless Communications, a Sprint affiliate serving Missouri, Southern
Illinois and Kansas.
Darryl Schall has served as a member of our Board since July 1999. Mr.
Schall has been a Senior Vice President of Trust Company of the West since
November 1995. Mr. Schall was Director of Research at Crescent Capital
Corporation from July 1994 until its acquisition by Trust Company of the West in
1995.
COMMITTEES OF OUR BOARD OF DIRECTORS
The board of directors has established an audit committee and a
compensation committee. The audit committee currently consists of Messrs. Schall
and Collis. As required by the FCC, Messrs. Schall and Collis will not serve as
members of our board until final approval of our long-form application. Messrs.
Schall and Collis will resign as board members immediately after pricing but
before our reorganization. During this period, Messrs. Embrescia and Roberts
will serve as the members of the audit committee until Messrs. Schall and Collis
rejoin the board and replace them on the audit committee. The audit committee
will make recommendations to the board of directors regarding the selection of
independent auditors, review the results and scope of the audit and other
services provided by our independent auditors and will review and evaluate our
audit and control functions.
The compensation committee consists of Messrs. Embrescia and McNeill. As
with Messrs. Schall and Collis, Mr. McNeill will not serve as a member of our
board until final approval of our long-form application. During this period Mr.
Roberts will serve as a member of the compensation committee until Mr. McNeill
rejoins the board and replaces him on the compensation committee. The
compensation committee makes recommendations
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regarding our equity compensation plans and makes decisions concerning salaries
and incentive compensation for our employees.
DIRECTOR COMPENSATION
Our directors do not currently receive any cash compensation for services
on our board of directors or any committee of our board. However, directors may
be reimbursed for expenses they incur in attending board and committee meetings.
All directors are eligible to participate in our 1999 Stock Incentive Plan.
EXECUTIVE COMPENSATION
The following table sets forth compensation earned for the years ended
December 31, 1998 and 1997, the year of our formation, by our Chief Executive
Officer, and our next three most highly paid executive officers.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) COMPENSATION(4)
- --------------------------- ---- -------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Jamie Kellner.............. 1998 $175,000(5) $100,000 $ -- $ --
Chairman of the Board and 1997 -- -- -- --
Chief Executive Officer
Doug Gealy................. 1998 300,000 25,000 5,351 93,870
President and Chief 1997 227,083 50,000 -- 2,406
Operating Officer
Tom Allen.................. 1998 300,000 25,000 -- 6,334
Executive Vice President 1997 145,833 50,000 105,000 2,171
and Chief Financial
Officer
Edward Danduran............ 1998 106,016 20,000 -- 3,000
Vice President,
Controller 1997 67,017 -- -- --
</TABLE>
- -------------------------
(1) We did not have restricted stock, stock appreciation rights or payouts on
long term incentive compensation plans during the periods covered.
(2) Amounts disclosed in the column reflect payments under the incentive
provisions of employment agreements which are described under "Employment
Agreements and Arrangements."
(3) Amounts disclosed in this column include:
(a) For Mr. Gealy, a company leased automobile; and
(b) For Mr. Allen, a signing bonus that was paid upon the closing of
acquisitions of KPLR, KWPB, WBXX and KWBQ.
(4) Amounts disclosed in this column include:
(a) Our contributions under our 401K Savings Plan, a defined contribution
plan;
(b) Reimbursements of COBRA expenses;
(c) Payments on behalf of the named executives for life insurance; and
(d) For Mr. Gealy, reimbursement of moving expenses in the amount of
$86,251.
(5) For Mr. Kellner, this amount is his consulting fee.
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EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
We have entered into a non-exclusive consulting agreement with Mr. Kellner
and full-time exclusive employment agreements with each of Messrs. Gealy and
Allen. Each of the agreements expires on June 16, 2002. We will have the option
to extend the term of these senior management members' employment until
September 29, 2003. If we exercise the extension option, the senior management
member's then current base salary would be increased by 10% for the period of
the extension. If we do not exercise an extension option, vesting of all of the
senior management member's options granted as of the closing of this offering
will accelerate and become immediately exercisable on June 16, 2002. The
employment agreements provide for annual compensation reviews by our
compensation committee, with stipulated minimum annual adjustments equal to
increases in the Consumer Price Index. Mr. Kellner's consulting compensation is
set annually on a discretionary basis by the compensation committee.
As of August 31, 1999, Mr. Kellner's annual consulting fee is $175,000. For
the year, beginning January 1, 2000, Mr. Kellner's annual consulting fee will be
$250,000. Mr. Kellner is entitled to annual cash bonuses as determined by our
compensation committee. In addition, in January 2000, we will pay Mr. Kellner a
$1,070,000 cash bonus.
The employment and consulting agreements require the compensation committee
to recommend to our board of directors for adoption no later than November 30,
1999 a cash incentive plan under which Messrs. Kellner, Gealy and Allen will be
eligible to receive awards. No later than January 1, 2000, each executive will
be awarded cash incentives under such plan if they meet performance targets
during fiscal 2000.
As of August 31, 1999, each of Mr. Gealy's and Mr. Allen's base salary is
$300,000. For the year beginning January 1, 2000, each of Mr. Gealy's and Mr.
Allen's base salary will be $375,000. Mr. Gealy and Mr. Allen are entitled to
annual cash bonuses as determined by our compensation committee. In addition, in
January 2000, we will pay each of Mr. Gealy and Mr. Allen a $802,500 cash bonus.
Mr. Danduran is employed by us pursuant to a full-time exclusive employment
agreement that expires December 31, 2002. Mr. Danduran's base salary is $115,000
and will increase by $10,000 each January 1. Mr. Danduran is entitled to an
annual cash bonus of up to 20% of his current base salary.
1999 STOCK INCENTIVE PLAN
Before this offering, we had long-term incentive compensation plans in
which all general managers and non-founder corporate office executives
participated. The awards generally vested in equal thirds on the third, fourth
and fifth anniversaries of the effective date of the awards. For 1998, we
recorded an expense of $399,000 representing the estimated awards earned during
1998 related to this plan. No awards granted under our long-term incentive
compensation plans have vested and such awards have been converted to discounted
stock options. See "Certain Specific Awards" below for a description of the
discounted options.
In September 1999, we adopted our 1999 Stock Incentive Plan to provide an
additional means to attract, motivate, reward and retain key personnel. The plan
gives the administrator the authority to grant different types of stock and cash
incentive awards and to select participants. While only stock options and
restricted stock awards are contemplated at this time, the other forms of awards
that may be granted give us flexibility to structure future
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incentives. Our employees, officers, directors, and consultants may be selected
to receive awards under the plan. The following summary is qualified by
reference to the complete plan, which is on file with the Securities and
Exchange Commission.
Share Limits. A maximum of 4,200,000 shares of our common stock may be
issued under the plan, or approximately 25.08% of our outstanding shares after
giving effect to the public offering. The aggregate number of shares subject to
stock options and stock appreciation rights granted under the plan to any one
person in a calendar year can not exceed 1,000,000 shares. The aggregate number
of shares subject to all awards granted under the plan to any one person in a
calendar year cannot exceed 1,000,000 shares. Performance-based awards payable
solely in cash that are granted under the plan to any one person in a calendar
year cannot provide for payment of more than $1,000,000.
Each share limit and award under the plan is subject to adjustment for
certain changes in our capital structure, reorganizations and other
extraordinary events. Shares subject to awards that are not paid or exercised
before they expire or are terminated are available for future grants under the
plan.
Awards. Awards under the plan may be in the form of:
- nonqualified stock options;
- incentive stock options;
- stock appreciation rights;
- limited stock appreciation rights, which are stock appreciation rights
limited to specific events, such as in a change of control or other
special circumstances;
- restricted stock;
- performance shares;
- stock units;
- stock bonuses; or
- cash bonuses based on performance.
Awards may be granted individually or in combination with other awards. Any
cash bonuses and certain types of stock-based performance awards under the plan
will depend upon the extent to which performance goals set by the administrator
are met during the performance period.
Awards under the plan generally will be nontransferable, subject to such
exceptions such as a transfer to a family member or to a trust, as authorized by
the administrator.
Nonqualified stock options and other awards may be granted at prices below
the fair market value of the common stock on the date of grant. Restricted stock
awards can be issued for nominal or the minimum lawful consideration. Incentive
stock options must have an exercise price that is at least equal to the fair
market value of the common stock, or 110% of fair market value of the common
stock for any owner of more than 10% of our common stock, on the date of grant.
These and other awards may also be issued solely or in part for services.
Administration. The plan will be administered by our board of directors or
a committee of directors appointed by the board. Currently, our board has
delegated general administrative authority over the plan to our compensation
committee.
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The administrator of the plan has broad authority to:
- designate recipients of awards;
- determine or modify, subject to any required consent, the terms and
provisions of awards, including the price, vesting provisions, terms of
exercise and expiration dates;
- approve the form of award agreements;
- determine specific objectives and performance criteria with respect to
performance awards;
- construe and interpret the plan; and
- reprice, accelerate and extend the exercisability or term, and establish
the events of termination or reversion of outstanding awards.
Change of Control. Upon a change of control event, each option and stock
appreciation right will become immediately exercisable, restricted stock will
immediately vest free of restrictions, and the number of shares, cash or other
property covered by each performance award will be issued to the holder of the
award, unless our board of directors determines to the contrary. Generally
speaking, a change of control event will be triggered under the plan:
- upon our dissolution or liquidation;
- in connection with certain mergers or consolidations of ACME
Communications, Inc. into or with, or upon a sale of all or substantially
all of our assets to another entity other than one of our affiliates
where our stockholders before the transaction own less than 50% of the
surviving entity;
- if a change in ownership of more than 50% of our outstanding common stock
occurs; or
- if a majority of our board of directors changes, other than through
normal appointments and succession, over a period of two years or less.
The administrator of the plan may also provide for alternative settlements of
awards, the assumption or substitution of awards, or other adjustments of
awards, in connection with a change of control or other reorganization of ACME
Communications, Inc.
Plan Amendment, Termination and Term. Our board of directors may amend,
suspend or discontinue the plan at any time, but no such action will affect any
outstanding award in any manner materially adverse to a participant without the
consent of the participant. Plan amendments will generally not be submitted to
stockholders for their approval unless such approval is required by applicable
law.
The plan will remain in existence as to all outstanding awards until such
awards are exercised or terminated. The maximum term of options, stock
appreciation rights and other rights to acquire common stock under the plan is
10 years after the initial date of award, subject to provisions for further
deferred payment in certain circumstances. No award can be granted ten years
after adoption of the plan by our board of directors.
Payment for Shares. The exercise price of options or other awards may
generally be paid in cash or, subject to certain restrictions, shares of common
stock. Subject to any applicable limits, we may finance or offset shares to
cover any minimum withholding taxes due in connection with an award.
Federal Tax Consequences. The current federal income tax consequences of
awards authorized under the plan follow certain basic patterns. Generally,
awards under the plan that are includable in the income of the recipient at the
time of exercise, vesting or
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payment, such as nonqualified stock options, stock appreciation rights,
restricted stock and performance awards, are deductible by us, and awards that
are not required to be included in the income of the recipient, such as
incentive stock options, are not deductible by us.
Generally speaking, Section 162(m) of the Internal Revenue Code provides
that a public company may not deduct compensation, except for compensation that
is commission or performance-based paid to its chief executive officer or to any
of its four other highest compensated officers to the extent that the
compensation paid to such person exceeds $1 million in a tax year. The
regulations exclude from these limits compensation that is paid pursuant to a
plan in effect before the time that a company is publicly held. We expect that
compensation paid under the plan will not be subject to Section 162(m) in
reliance on this transition rule, as long as such compensation is paid or stock
options, stock appreciation rights, and/or restricted stock awards are granted
before the earlier of a material amendment to the plan or our annual
stockholders meeting in the year 2003.
In addition, we may not be able to deduct certain compensation attributable
to the acceleration of payment and/or vesting of awards in connection with a
change of control event should that compensation exceed certain threshold limits
under Section 280G of the Internal Revenue Code.
Non-Exclusive Plan. The plan is not exclusive. Our board of directors (or
its delegate), under Delaware law, may grant stock and performance incentives or
other compensation, in stock or cash, under other plans or authority.
Specific Awards. Approximately 2,708,341 shares are subject to options that
will be outstanding before the consummation of this offering, and the balance of
1,491,659 shares remain available for grant purposes.
The shares covered by currently outstanding options represent the 10-year
stock option grants authorized by our compensation committee in late August
1999. The outstanding option grants consist of:
- Options to acquire 283,500 shares upon conversion of our long-term
incentive compensation plan awards. These options were granted at an
exercise price of $15.00 per share and vest in equal thirds on December
31, 2000, 2001 and 2002.
- Options to acquire approximately an additional 215,750 shares granted as
incentives to employees and other eligible persons. Of these grants,
options to acquire 58,500 shares were granted at an exercise price of
$18.00 per share and options to acquire 157,250 shares were granted at an
exercise price equal to the initial public offering price of our shares
of common stock. These options vest in equal installments over five
years.
- Options to acquire an additional 2,209,091 shares, or approximately 13%
of our common stock after giving effect to this offering, were granted to
Messrs. Kellner, Gealy, and Allen. Of this number, options to acquire
838,635 shares were granted to Mr. Kellner, options to acquire 685,228
shares were granted to Mr. Gealy, and options to acquire 685,228 shares
were granted to Mr. Allen. These options were granted at an exercise
price equal to the initial public offering price of our shares of common
stock and vest in four equal annual installments with the first
installment vesting on the first anniversary of this offering. Vesting of
these options accelerate upon change of control, death, disability and
termination without cause.
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401(K) PLAN
In 1998, we established a 401(k) defined contribution plan which covers all
eligible employees. Participants in the 401(k) are allowed to make
nonforfeitable contributions up to 15% of their annual salary, but may not
exceed the annual maximum contribution limitations established by the Internal
Revenue Service. We currently match 50% of the amounts contributed by each
participant but do not match participant's contributions in excess of 6% of
their contribution per pay period. We contributed and expensed $200,000 to the
401(k) in 1998.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following contains information regarding the beneficial ownership of
our common stock for:
- certain holders or groups of related holders who, individually or as a
group, are the beneficial owners of 5% or more of our common stock;
- the executive officers;
- each director who beneficially owns shares of our common stock;
- our executive officers and directors as a group; and
- those stockholders who will sell shares to the extent the over-allotment
option is exercised.
Unless otherwise noted, the address for each person or entity named below
is c/o ACME Communications, Inc. 2101 E. Fourth Street, Suite 202, Santa Ana,
California 92705.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated by footnote, and subject
to community property laws where applicable, the persons named in the table
below have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them.
Because our reorganization will not be completed until after the date of
this prospectus, we have calculated the conversion of the limited liability
company membership interests into shares of our common stock assuming that the
mid-point of the range of offering price per share on the cover of this
prospectus will be the actual offering price and also assumes our conversion
from a limited liability company into a C corporation immediately before the
closing of this offering. Pursuant to the ACME Television Holdings, LLC
operating agreement, in connection with our reorganization, as the offering
price increases, Messrs. Kellner, Gealy and Allen receive a disproportionately
greater share of our pre-offering equity relative to our other pre-offering
stockholders. Accordingly, if the offering price is higher than $20.00 per
share, Messrs. Kellner, Gealy and Allen will have a greater percentage of our
equity and our other pre-offering stockholders will have a lesser percentage,
both before and after the offering. Similarly, if the offering price is lower
than $20.00 per share, Messrs. Kellner, Gealy and Allen will have a lesser
percentage of our equity and our other pre-offering stockholders will have a
greater percentage. Within the $19.00 - $21.00 per share offering price range,
these percentage differences are not substantial. These differences do not, in
any event, affect the aggregate number of shares and aggregate percentage
ownership of our pre-offering stockholders taken as a group, including Messrs.
Kellner, Gealy and Allen.
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Because this table assumes no exercise of the underwriters' over-allotment
option and because our existing stockholders will only sell to the extent the
option is exercised, the table below does not reflect any shares they may sell.
<TABLE>
<CAPTION>
PERCENTAGE OF
COMMON
STOCK BENEFICIALLY
NUMBER OWNED
OF SHARES ----------------------
NAME AND ADDRESS OF BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED OFFERING OFFERING
------------------- ------------ -------- -----------
<S> <C> <C> <C>
Jamie Kellner............................................... 619,719 5.27% 3.70%
Doug Gealy.................................................. 449,160 3.82 2.68
Tom Allen................................................... 446,441 3.80 2.67
Edward Danduran............................................. -- * *
James Collis(1)(2).......................................... 1,598,348 13.60 9.54
Thomas Embrescia(3)......................................... 332,403 2.82 1.99
Brian McNeill(1)(4)......................................... 1,598,348 13.60 9.54
Michael Roberts............................................. 490,663 4.18 2.93
Darryl Schall(1)(5)......................................... 1,527,198 13.00 9.12
BancBoston Ventures Inc.(6)................................. 1,608,765 13.69 9.60
Alta Communications, Inc./Burr, Egan, Deleage & Co.,
Inc.(4)................................................... 1,598,348 13.60 9.54
CEA ACME, Inc.(2)........................................... 1,598,348 13.60 9.54
TCW Asset Management Company(5)............................. 1,527,198 13.00 9.12
Peregrine Capital, Inc.(7).................................. 734,846 6.25 4.39
Continental Casualty Company/Loews Corporation(8)........... 877,794 7.47 5.24
American High-Income Trust(9)............................... 273,855 2.33 1.64
ACME Capital Partners(10)................................... 206,808 1.76 1.23
The Lincoln National Life Insurance Company(11)............. 205,384 1.75 1.23
American Variable Insurance Series-High-Yield Bond.......... 136,936 1.17 *
1994 Embrescia FITrust f/b/o F.M. Embrescia(12)............. 68,495 * *
1994 Embrescia FITrust f/b/o M.M. Embrescia(13)............. 68,495 * *
1994 Embrescia FITrust f/b/o A.M. Embrescia(14)............. 68,495 * *
The Value Realization Fund, L.P.(15)........................ 15,395 * *
The Canyon Value Realization Fund (Cayman) Ltd.(15)......... 46,214 * *
Jonathan Pinch & Linda Pinch(16)............................ 50,364 * *
Larry S. Blum Living Trust(17).............................. 20,145 * *
Post Advisory Group(18)..................................... 20,551 * *
All directors and executive officers as a group (9
persons).................................................. 7,062,280 60.09 42.17
</TABLE>
- -------------------------
* Represents beneficial ownership of less than 1%.
(1) Will resign from his position after the pricing of this offering but before
our reorganization in accordance with our short-form application to the FCC
and has agreed to become a director again after FCC approval of our
long-form application.
(2) Includes 1,221,617 shares held by CEA Capital Partners USA, L.P. and
376,731 shares held by CEA Capital Partners USA CI, L.P. Mr. Collis, one of
our directors, is an Executive Vice President of CEA Management Corp., a
corporation formed to manage CEA Capital Partners USA, L.P. and CEA Capital
Partners USA CI, L.P. and therefore may be deemed to having voting and
investment power over the shares. Mr. Collis and CEA Management Corp. have
no pecuniary interest in and disclaim beneficial ownership of these shares.
The address for CEA Management Corp. is 17 State Street, 35th Floor, New
York, NY 10004.
(3) Includes 68,495 shares held by each of three trusts, 1994 Embrescia FITrust
f/b/o F.M. Embrescia, 1994 Embrescia FITrust f/b/o M.M. Embrescia and 1994
Embrescia FITrust f/b/o A.M. Embrescia, of which Mr. Embrescia is trustee.
Mr. Embrescia is deemed to be the beneficial owner of these shares. The
address for Mr. Embrescia is 1228 Euclid Avenue, Suite 860, Cleveland, OH
44115. Mr. Embrescia has granted the
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underwriters an option to purchase up to 25,636 shares of his common stock
pursuant to the underwriters' over-allotment option.
(4) Includes 399,587 shares held by Alta Subordinated Debt Partners III, LP,
1,172,082 shares held by Alta Communications VI, LP, and 26,679 shares held
by Alta Comm S by S, LLC. Alta Subordinated Debt Partners III, L.P. is
managed by Burr, Egan, Deleage & Co., Inc. and Alta Communications VI, L.P.
and Alta Comm S By S, LLC are indirectly managed by Alta Communications,
Inc. which may be deemed to have investment powers with respect to the
shares held by these partnerships. Mr. McNeill is the general partner of
the general partner of Alta Subordinated Debt Partners III and of Alta
Communications VI and is a member of Alta Comm S by S, and may be deemed to
have investment power with respect to the shares owned by these funds. Mr.
McNeill disclaims beneficial ownership of the shares held by these funds,
except to the extent of his proportionate pecuniary interest therein. The
address for both Alta Communications, Inc. and Burr, Egan, Deleage & Co.,
Inc., which have common ownership, is One Post Office Square, Suite 3800,
Boston, MA 02109.
(5) Includes 1,039,470 shares held by TCW Leveraged Income Trust, LP, and
487,728 shares held by TCW Shared Opportunity Fund II LP, investment funds
for which TCW Asset Management provides investment advisory services. Mr.
Schall is a Senior Vice President of TCW Asset Management and may be deemed
to have investment powers with respect to the shares owned by these funds.
Mr. Schall has no pecuniary interest in and disclaims beneficial ownership
of these shares. The address for TCW Asset Management Company is 11100
Santa Monica Boulevard, Suite 2000, Los Angeles, CA 90025. Affiliates of
TCW Asset Management Company have granted the underwriters an option to
purchase up to 308,479 shares of its common stock pursuant to the
underwriters' over-allotment option.
(6) BankBoston Corporation directly or indirectly has voting control with
respect to the stock of BancBoston Ventures. The address for BancBoston
Ventures Inc. is 100 Federal Street, Boston, MA 02110.
(7) Linda D. Rose and Daniel J. Alderman directly or indirectly have voting
control with respect to the stock of Peregrine Capital, Inc. The address
for Peregrine Capital, Inc. is 9725 SW Beaverton-Hillsboro Hwy., Suite 350,
Beaverton, OR 97005-3366.
(8) Lawrence A. Tisch and Preston R. Tisch directly or indirectly have voting
control with respect to the stock of the Loews Corporation, the parent
corporation of Continental Casualty Company. The address for Continental
Casualty/Loews is 667 Madison Ave., 7th Fl., New York, NY 10021.
Continental Casualty has granted the underwriters an option to purchase up
to 177,306 shares of its common stock pursuant to the underwriters'
over-allotment option.
(9) American High-Income Trust has granted the underwriters an option to
purchase up to 55,321 shares of its common stock pursuant to the
underwriters' over-allotment option. American Variable Insurance
Series-High-Yield Bond has granted the underwriters an option to purchase
up to 27,656 shares of its common stock pursuant to the underwriters'
over-allotment option. The address for both American High-Income Trust and
American Variable Insurance Series-High-Yield Bond is 667 Madison Avenue,
7th Floor, New York, NY 10021.
(10) ACME Capital Partners has granted the underwriters an option to purchase up
to 41,772 shares of its common stock pursuant to the underwriters'
over-allotment option. The address for ACME Capital Partners is 101 E.
Kennedy Blvd., Suite 3300, Tampa, FL 33602.
(11) Lincoln National has granted the underwriters an option to purchase up to
41,487 shares of its common stock pursuant to the underwriters'
over-allotment option. The address for Lincoln National is 200 East Berry
Street 2R02, Fort Wayne, IN 46802.
(12) 1994 Embrescia FITrust f/b/o F.M. Embrescia has granted the underwriters an
option to purchase up to 13,835 shares of its common stock pursuant to the
underwriters' over-allotment option. The address for 1994 Embrescia FITrust
f/b/o F.M. Embrescia is c/o Mr. Embrescia, 1228 Euclid Avenue, Suite 860,
Cleveland, OH 44115.
(13) 1994 Embrescia FITrust f/b/o M. M. Embrescia has granted the underwriters
an option to purchase up to 13,835 shares of its common stock pursuant to
the underwriters' over-allotment option. The address for 1994 Embrescia
FITrust f/b/o M.M. Embrescia is c/o Mr. Embrescia, 1228 Euclid Avenue,
Suite 860, Cleveland, OH 44115.
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(14) 1994 Embrescia FITrust f/b/o A. Embrescia has granted the underwriters an
option to purchase up to 13,835 shares of its common stock pursuant to the
underwriters' over-allotment option. The address for 1994 Embrescia FITrust
f/b/o A. Embrescia is c/o Mr. Embrescia, 1228 Euclid Avenue, Suite 860,
Cleveland, OH 44115.
(15) The Value Realization Fund, L.P. has granted the underwriters an option to
purchase up to 3,109 shares of its common stock pursuant to the
underwriters' over-allotment option. The Canyon Value Realization Fund
(Cayman) Ltd. has granted the underwriters an option to purchase up to
9,337 shares of its common stock pursuant to the underwriters'
over-allotment option. The address for both The Value Realization Fund,
L.P. and The Canyon Value Realization Fund (Cayman) Ltd. is 9665 Wilshire
Blvd., Suite 200, Beverly Hills, CA 90212.
(16) Jonathan Pinch & Linda Pinch have granted the underwriters an option to
purchase up to 10,173 shares of their common stock pursuant to the
underwriters' over-allotment option. The address for Jonathan Pinch & Linda
Pinch is 1228 Euclid Avenue, Suite 860, Cleveland, OH 44115.
(17) Larry S. Blum Living Trust has granted the underwriters an option to
purchase up to 4,069 shares of its common stock pursuant to the
underwriters' over-allotment option. The address for Larry S. Blum Living
Trust is 1228 Euclid Avenue, Suite 860, Cleveland, OH 44115
(18) Post Advisory Group has granted the underwriters an option to purchase up
to 4,150 shares of its common stock pursuant to the underwriters'
over-allotment option. The address for Post Advisory Group is 18880 Century
Park East, Suite 820, Los Angeles, CA 90067.
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CERTAIN TRANSACTIONS
THE WB TELEVISION NETWORK
Our stations have entered into affiliation agreements and, from time to
time, related marketing arrangements with The WB Network. Mr. Kellner is an
owner and the Chief Executive Officer of The WB Network. We believe that the
terms of each of these affiliation agreements or marketing agreements are or
were at least as favorable to us or our affiliates as those that could be
obtained from an unaffiliated party.
AGREEMENTS WITH VARIOUS SELLERS OF STATIONS
Pursuant to June 1995 agreements among Koplar Communications, Inc. the
company from which we acquired KPLR, Roberts Broadcasting, and its owners,
Michael Roberts and his brother Steven Roberts, Roberts Broadcasting cannot:
- transfer its license for WHSL, East St. Louis, Missouri;
- commit any programming time of the station for commercial programming or
advertising; or
- enter into a local marketing agreement with respect to such station until
June 1, 2000.
If the current affiliation agreement for WHSL is terminated, the substitute
format must be substantially similar to the current home shopping network format
or, in the alternative, an infomercial format. Annual payments from KPLR under
the agreements were $200,000 in each of 1995, 1996 and 1997 and subsequent to
our acquisition of KPLR, we paid a total of $300,000 in each of 1998 and 1999.
Both Michael and Steven Roberts are stockholders of our Company and Michael
Roberts is one of our directors.
In connection with our stations in Utah and New Mexico, we entered into
long-term agreements to lease studio facilities and/or transmission tower space
from an affiliate of Michael and Steven Roberts. These leases have terms of
approximately fifteen years and provide for monthly payments aggregating
approximately $25,000, subject to adjustment based on the Consumer Price Index.
In addition, upon consummation of this offering, entities affiliated with
Michael and Steven Roberts have the option to purchase the studio building in
Albuquerque from us at its original cost and to lease it back to us at fair
market value. In October 1998, we paid Michael Roberts an $60,000 finder's fee
in connection with our purchase of the property.
In connection with our purchase of KWBP in June 1997, Peregrine Capital,
Inc., one of our stockholders, acquired 4,400 membership units in our
predecessor, ACME Television Holdings, LLC as part of the purchase price for
KWBP. In addition, we loaned the seller of KWBP, an affiliate of Peregrine
Capital, approximately $119,000. This loan was repaid in July 1999. In January
1998, we purchased the construction permit for KWBQ, formerly KAOU, from an
affiliate of Michael Roberts and Steven Roberts for $10,000. In connection with
our purchase of WTVK in June 1998, Thomas Embrescia one of our directors and
stockholders and his affiliates, collectively acquired 2,062.5 membership units
in our predecessor, ACME Television Holdings, LLC, as part of the purchase price
for WTVK. In connection with our purchase of KUPX, one of our directors, Michael
Roberts and Steven Roberts, each acquired 3,000 membership units in our
predecessor, ACME Television Holdings, LLC, as part of the purchase price for
KUPX in December 1997. In addition, in December 1997, we loaned Michael Roberts
and Steven Roberts $4.0 million, in connection
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with the purchase of KUPX. This loan was repaid in connection with the closing
of the KUPX sale in February 1999.
VOTING AGREEMENTS
To satisfy FCC requirements until our pending long-form change of control
application is approved by the FCC and becomes final, we have entered into an
interim voting agreement with Messrs. Kellner, Gealy, Allen, Embrescia and
Roberts, and certain investment funds managed by or affiliated with Alta
Communications, BancBoston, CEA Capital and TCW Asset Management Company, all of
whom are current stockholders. Under the interim voting agreement, the
stockholders have agreed to vote their common stock to permit Messrs. Kellner,
Gealy and Allen to elect our board of directors but retain approval rights over
some corporate actions. In addition, these stockholders are parties to a
long-term voting agreement that takes effect when we receive the final order by
the FCC for our long-term application. Pursuant to the long-term voting
agreement, if it takes effect, Messrs. Kellner, Gealy, Allen, Embrescia and
Roberts and affiliates of Alta Communications, BancBoston, CEA Capital and TCW
Asset Management Company will be able to elect at least a majority of our board.
If it takes effect, the long-term voting agreement will expire two years from
the closing of this offering. In addition to being stockholders, Messrs.
Kellner, Gealy, Allen, Embrescia and Roberts are all directors.
AGREEMENTS WITH OTHER STOCKHOLDERS AND DIRECTORS
On October 1, 1997, in connection with our acquisition of KWBP, we paid
CEA, Inc., an affiliate of one of our stockholders, CEA Capital Partners, a
broker's fee of approximately $176,000. On the same day, we paid CEA, Inc.,
$132,000 in connection with the purchase of WBXX, $25,000 in connection with the
purchase of the construction permit for KWBQ (formerly KAOU), $45,000 in
connection with the purchase of the construction permit for KUPX (formerly KZAR)
and $889,000 in connection with the purchase of KPLR, as broker's fees in each
of the transactions. Additionally, in connection with the recent acquisition of
WBUI, WIWB and WBDT, we paid CEA, Inc. a broker's fee of $125,000. CEA, Inc.
also received compensation from the seller in connection with the purchase of
WBUI, WIWB and WBDT. One of our directors, Mr. Collis, is an officer of an
affiliate of CEA Capital Partners.
In June and September 1997, we issued 10% convertible debentures with the
right to convert into 24,775,970 membership units to affiliates of Alta
Communications, Banc Boston, CEA Capital Partners and TCW Asset Management
Company, each of which are stockholders. Another of our directors, Mr. Schall,
is an officer of an affiliate of TCW Asset Management Company and Mr. McNeill,
also one of our directors, is an officer of an affiliate of Alta Communications.
In connection with the sale of the 12% senior secured notes in September
1997, we paid CEA, Inc. $165,622 in financing fees and $527,378 in connection
with the sale of the 10 7/8% senior discount notes. Additionally, in connection
with each of the June and September 1997 issuances of membership units and 10%
convertible debentures, we paid CEA, Inc. a financing fee of $440,000 and $1.1
million.
In February 1999, we exercised our option to purchase the property where
KWBP is located for $1.5 million from an affiliate of Peregrine Capital. Before
the purchase, we leased the property from the same affiliate.
We believe that the terms of each of the foregoing transactions are or were
at least as favorable to us or our affiliates as those that could be obtained
from an unaffiliated party.
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FORMATION TRANSACTIONS
In June 1997, we issued to each of Mr. Kellner, Mr. Gealy and Mr. Allen
membership units all at $1,000 per unit with a preferential return at 2.0 times
the rate of return on all non-founder membership units as follows:
- Mr. Kellner acquired 290 membership units;
- Mr. Gealy acquired 160 membership units; and
- Mr. Allen acquired 150 membership units.
In June and September 1997, we issued 1,342.5 membership units, all at
$1,000 per unit, to affiliates of BancBoston, CEA Capital Partners, Alta
Communications, ACME Capital Partners and TCW Asset Management Company with a
preferential return at 1.5 times the rate of return on all of these membership
units.
Also in connection with our formation, we issued to Mr. Kellner an
additional 40 management carry units, to Mr. Gealy 30 management carry units and
to Mr. Allen 30 management carry units in consideration for their founding of,
and services, to us.
BRIDGE LOAN
On April 23, 1999, to finance in part the acquisition of WBDT, WIWB and
WBUI affiliates of certain of our stockholders, Alta Communications, TCW Asset
Management Company, BancBoston and CEA Capital Partners agreed to make a $15.0
million loan to us, $7 million of which was paid on April 23, 1999 and $8
million of which was paid on June 23, 1999. Interest on the loan accrues
beginning at 22.5% per year and escalates quarterly after six months and is due
on the earlier of April 2002 or consummation by us of any debt or equity
financings generating net proceeds greater than the outstanding loan balance. We
anticipate that we will use the proceeds of this offering to repay the investors
in full for the loan. Three of our directors are officers of entities making the
loans. Brian McNeill is an officer of an affiliate of Alta Communications,
Darryl Schall is an officer of an affiliate of TCW Asset Management Company and
James Collis is an officer of an affiliate of CEA Capital Partners.
KWBQ OPTION
In connection with the closing of the KASY purchase and the KWBQ sale, we
anticipate that Ramar Communications will grant Montecito Communications, LLC, a
limited liability company owned entirely by Messrs. Kellner, Gealy and Allen, an
option to purchase KWBQ for an exercise price of $100,000. We anticipate that
Montecito will assign the option to us immediately after the closing of the sale
of KWBQ. We anticipate that the closing of these transactions will take place in
the fourth quarter of 1999.
REGISTRATION RIGHTS
Rights of ACME Television Holdings, LLC Unitholders
We have entered into a registration rights agreement with some of our
existing investors. At any time after the earlier to occur of June 30, 2002 or
180 days after the consummation of this offering, a majority in interest of
these holders may demand that we file a registration statement under the
Securities Act covering all or a portion of the securities of ours held by them.
However, the securities to be registered must have an
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anticipated aggregate public offering price of at least $7.5 million. These
holders can effect two such demand registrations.
When we are eligible to use a Registration Statement on Form S-3 to
register an offering of our securities, these stockholders may request that we
file a registration statement on Form S-3, covering all or a portion of
securities of ours held by them, provided that the aggregate public offering
price is at least $2.0 million. These stockholders can request that we file one
S-3 registration statement per year.
These registration rights will be subject to our right to delay the filing
of a registration statement, not more than once in any 12-month period, for not
more than 90 days.
In addition, these stockholders will have certain piggyback registration
rights. If we propose to register any common stock under the Securities Act,
other than pursuant to the registration rights noted above, these stockholders
may require us to include all or a portion of their securities in such
registration. However, the managing underwriter, if any, of any such offering
has certain rights to limit the number of registrable securities proposed to be
included in such registration.
We would bear all registration expenses incurred in connection with these
registrations. The stockholders would pay all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of its securities.
The registration rights of these stockholders under the registration rights
agreement terminate when that entity may transfer its securities under rule 144
promulgated under the Securities Act or have otherwise been transferred.
Rights of Holders of Membership Units Issued September 1997
In September 1997, ACME Intermediate privately placed 71,634 units
consisting of the 12% senior secured notes and membership units in ACME
Intermediate, pursuant to which certain investors acquired approximately 6% of
the membership interests of ACME Intermediate. Concurrently, an affiliate of TCW
Asset Management Company acquired convertible debentures and preferred
membership units issued by one of our subsidiaries which are convertible into
membership units representing approximately 2% of the membership interests in
ACME Intermediate. In conjunction with the September 1997 private placement, we
entered into the membership unitholders agreement, dated September 30, 1997 with
CIBC Wood Gundy Securities Corp. which provides the purchasers of the membership
units and convertible securities with certain registration rights. As described
in the section entitled "The Reorganization" we will exchange shares of our
common stock for these interests in ACME Intermediate. At any time after the
consummation of this offering, holders of 25% of the common stock issued in
exchange for the securities related to ACME Intermediate may demand that we file
a registration statement under the Securities Act covering all or a portion of
their shares of our common stock. These holders can effect two such demand
registrations.
In addition, these holders will have certain piggyback registration rights.
If we propose to register any common stock under the Securities Act, other than
pursuant to the registration rights noted above, these holders may require us to
include all or a portion of their securities in such registration. However, the
managing underwriter, if any, of such offering has certain rights to limit the
number of registrable securities proposed to be included in such registration.
The holders making the demand would bear all registration expenses incurred
in connection with any demand registrations and we would bear all registration
expenses
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incurred with any other registrations. The holders would pay all underwriting
discounts, selling commissions and stock transfer taxes applicable to the sale
of its securities.
Rights of Certain Acme Communication, Inc. Stockholders
In connection with our reorganization, we intend to enter into a
registration rights agreement with all of our stockholders immediately before
the offering. This agreement will supersede both of the ACME Television Holdings
registration rights agreement and the ACME Intermediate registration rights
agreement. The rights of our current stockholders under the new registration
rights agreement will be substantially similar to the rights of the parties to
the ACME Television Holdings registration rights agreement described above.
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THE REORGANIZATION
Immediately before the closing of the offering, we will complete the
reorganization described below. The FCC granted approval of our short-form
application to complete the reorganization subject to our entry into an interim
voting agreement. We expect the period to request FCC reconsideration of the
grant of our short-form application to expire in mid-October 1999.
First, ACME Communications will issue common stock in exchange for all of
the convertible debentures of ACME Television Holdings, LLC.
Second, ACME Communications will exchange shares of its common stock for
- membership units representing approximately 6% of ACME Intermediate;
and
- all of the convertible debentures and preferred convertible membership
units of ACME Subsidiary Holdings IV, LLC.
Third, ACME Communications Merger Subsidiary, LLC, a wholly-owned
subsidiary of ACME Communications, will merge into ACME Television Holdings,
LLC. In this merger, ACME Television Holdings, LLC's membership units will be
exchanged for shares of common stock of ACME Communications.
Fourth, ACME Subsidiary Holdings, LLC, a wholly-owned subsidiary of ACME
Television Holdings, LLC, will dissolve and its sole asset, a 0.49146% interest
in ACME Intermediate, will be distributed to ACME Television Holdings, LLC.
Last, ACME Subsidiary Holdings IV, LLC will dissolve and its sole asset, a
1.99037% interest in ACME Intermediate, will be distributed to ACME Television
Holdings, LLC. After this dissolution, ACME Communications will own directly or
indirectly 100% of the membership units of each of ACME Television Holdings, LLC
and of ACME Intermediate.
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[Pre-Reorg. Corporate Structure Flow Chart]
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[Post-Reorg. Corporate Structure Flow Chart]
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DESCRIPTION OF CAPITAL STOCK
GENERAL
Immediately before the closing of this offering, our authorized capital
stock will consist of 50,000,000 shares of common stock, $0.01 par value and
10,000,000 shares of preferred stock, $0.01 par value.
As of June 30, 1999, assuming the conversion of our business form into a C
corporation, there were outstanding 11,750,000 shares of common stock, each with
a par value of $0.01, held of record by 32 stockholders.
COMMON STOCK
Subject to the preferences of any preferred stock outstanding at the time,
the holders of our common stock are entitled to receive dividends out of legally
available assets as and when determined by our board. Holders of our common
stock are entitled to one vote for each share held on all matters submitted to a
vote of stockholders. Our certificate of incorporation does not authorize
cumulative voting for the election of our directors, which means that the
holders of a majority of the shares voted can elect all of our directors then
standing for election. Our common stock is not entitled to preemptive rights and
is not subject to conversion or redemption. Upon liquidation, dissolution or
winding-up, the assets legally available for distribution to our stockholders
are distributable ratably among the holders of our common stock after payment of
liquidation preferences, if any, on any outstanding preferred stock and payment
of other claims of creditors. Each outstanding share of our common stock is, and
all shares of our common stock to be outstanding upon completion of this
offering will be upon payment therefore, duly and validly issued, fully paid and
nonassessable.
PREFERRED STOCK
Our board is authorized, subject to any limitations prescribed by Delaware
law, to issue preferred stock in one or more series. Our board can fix the
rights, preferences and privileges of the shares of each series and any
qualifications, limitations or restrictions thereon.
Our board may authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of our common stock. The issuance of preferred stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes could, among other things, under certain circumstances, have
the effect of delaying, deferring or preventing a change of control. We have no
current plan to issue any shares of preferred stock.
CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS
Advance Notice. Our bylaws provide that advance notice of all director
nominations or other business matters proposed to be brought before an annual
meeting of our stockholders be delivered to our secretary at our corporate
office not later than 90 nor more than 120 days prior to the first anniversary
of the preceding year's annual meeting. This provision may make it more
difficult for stockholders to nominate or elect directors or take action opposed
by the board.
Special Meetings. Our bylaws provide that special meetings of the
stockholders may be called only by the board of directors, the chairman of the
board of directors or the
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president. This provision may make it more difficult for stockholders to take
action opposed by the board.
No Stockholder Action by Written Consent. Our certificate of incorporation
provides that stockholders can take action only at an annual or special meeting
of stockholders duly called in accordance with our bylaws. Accordingly, our
stockholders will not be able to take action by written consent in lieu of a
meeting. This provision may have the effect of deterring hostile takeovers or
delaying changes in control or management.
Indemnification of Directors and Officers. Our certificate of incorporation
and bylaws provide indemnification to the fullest extent permitted by law for
expenses, attorney's fees, damages, punitive damages, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by any
threatened, pending or completed proceeding by or in our right by reason of the
fact that the person is or was serving as one of our directors or officers. If
we request any of these indemnitees to act as a director, officer, partner,
venturer, proprietor, employee, agent, or trustee of another enterprise, we will
also indemnify that person. Our certificate of incorporation and bylaws provide
for the advancement of expenses to an indemnified party if the party agrees to
repay those amounts if it is finally determined that the indemnified party is
not entitled to indemnification. In addition, we have entered into
indemnification agreements with each of our directors and executive officers.
Our bylaws authorize us to take steps to ensure that all persons entitled
to the indemnification are properly identified and indemnified, including, if
the board of directors so determines, purchasing and maintaining insurance.
FOREIGN OWNERSHIP RESTRICTIONS
Our certificate of incorporation includes provisions designed to ensure
that our control and management remains with citizens of the United States
and/or corporations formed under the laws of the United States or any of the
states of the United States, as required by the Communications Act.
These provisions include restrictions on transfers of our capital stock by
an alien. For the purpose of these restrictions, an alien is:
- a person who is a citizen of a country other than the United States;
- any entity organized under the laws of a government other than the
government of the United States or any state, territory, or possession of
the United States;
- a government other than the government of the United States or of any
state, territory, or possession of the United States; or
- a representative of, or an individual or entity controlled by, any of the
foregoing.
Specifically, our foreign ownership restrictions provide:
- We cannot issue to an alien any shares of our capital stock if such
issuance would result in the total number of shares of such capital stock
held or voted by aliens, or for or by the account of aliens, to exceed
25% of:
- the total number of all shares of such capital stock outstanding at any
time and from time to time; or
- the total voting power of all shares of such capital stock outstanding
and entitled to vote at any time and from time to time.
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- We cannot permit the transfer on our books of any capital stock to any
alien that would result in the total number of shares of such capital
stock held or voted by aliens, or for or by the account of aliens,
exceeding such 25% limits.
- No alien or aliens, individually or collectively, shall be entitled to
vote or direct or control the vote of more than 25% of:
- the total number of all shares of our capital stock outstanding at any
time and from time to time; or
- the total voting power of all shares of our capital stock outstanding
and entitled to vote at any time and from time to time.
Issuance or transfer of our capital stock in violation of this provision is
prohibited.
Our board of directors have all powers necessary to implement these
provisions and ensure compliance with the alien ownership restrictions of the
Communications Act, including the power to prohibit the transfer of any shares
of our capital stock to any alien and to take or cause to be taken any action it
deems appropriate to implement this prohibition. We will place a legend
regarding restrictions on foreign ownership of the capital stock on certificates
representing our capital stock.
In addition, any shares of our capital stock determined by the board of
directors to be owned beneficially by an alien or aliens will always be subject
to redemption by us by action of the board of directors or any other applicable
provision of law, to the extent necessary, in the judgment of the board of
directors, to comply with the alien ownership restrictions. The terms and
conditions of redemption are as follows:
- the redemption price will be equal to the lower of:
- the fair market value of the shares to be redeemed, as determined by
the board of directors in good faith;
- the alien's purchase price for such shares;
- the redemption price may be paid in cash, securities or any combination
thereof;
- if less than all the shares held by aliens are to be redeemed, the shares
to be redeemed will be selected in any manner determined by the board of
directors to be fair and equitable;
- at least 10 days' prior written notice of the redemption date will be
given to the holders of record of the shares selected to be redeemed
unless waived in writing by any such holder, but the redemption date may
be the date we give written notice to holders if the cash or securities
necessary to effect the redemption have been deposited in trust for the
benefit of those holders and subject to immediate withdrawal by them upon
proper surrender;
- from and after the redemption date, the shares to be redeemed will cease
to be regarded as outstanding and any rights of the holders in respect of
the shares to be redeemed or attaching to such shares of whatever nature,
including any rights to vote or participate in dividends declared on
capital stock of the same class or series as such shares, will cease and
those holders thereafter will be entitled only to receive the cash or
securities payable upon redemption; and
- other terms and conditions as the board of directors determines.
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CERTAIN PROVISIONS OF DELAWARE LAW
We are a Delaware corporation and are subject to the provisions of Section
203 of the Delaware General Corporation Law, an anti-takeover law. In general,
the statute prohibits a publicly held Delaware corporation from engaging in a
business combination with an interested stockholder for a period of three years
after the date of the transaction by which that person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
For purposes of Section 203, a business combination includes a merger, asset
sale or other transaction resulting in a financial benefit to the interested
stockholder, and an interested stockholder is a person who, together with
affiliates and associates, owns, or within three years prior did own, 15% or
more of our voting stock.
VOTING AGREEMENTS
Interim Voting Agreement. To satisfy FCC requirements until our pending
long-form change of control application with the FCC is approved and becomes
final, we will enter into an interim voting agreement with Messrs. Kellner,
Gealy, Allen, Roberts, Embrescia and our initial institutional investors,
certain investment funds managed by or affiliated with Alta Communications,
BancBoston, CEA Capital and TCW Asset Management Company. During the term of
this interim voting agreement, our board of directors will be comprised of five
members.
The parties to this interim voting agreement have agreed to vote their
shares to elect Messrs. Kellner, Gealy and Allen to the board of directors.
Additionally, these institutional investors have also agreed to vote their
shares to elect to our board of directors two individuals designated by Messrs.
Kellner, Gealy and Allen. Those two designees must be qualified under the
Communications Act and the FCC's rules and not be in privity with Messrs.
Kellner, Gealy or Allen. Messrs. Roberts and Embrescia are the two designees and
their qualifications have been approved by the FCC. The parties to the interim
voting agreement have agreed that their shares will be voted in the same manner
as a majority of Messrs. Kellner, Gealy and Allen in their capacities as
stockholders.
In consideration for their agreement to cast their votes as described
above, these institutional investors will retain their approval rights under
existing agreements entered into with respect to their investments in ACME
Television Holdings.
At least 60% in interest of the institutional investors must approve the
following actions:
- redemption of our shares;
- authorization or issuance of additional shares of our common stock;
- payment or declaration of dividends;
- our merger or consolidation;
- the reorganization or sale of us, our subsidiaries, or any of our
material assets;
- entry into new businesses;
- our consent to enter into bankruptcy;
- incurrence of substantial debt;
- significant capital expenditures;
- any change of control requiring FCC approval;
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- significant acquisitions; and
- changes in senior management or senior management compensation.
Long-Term Voting Agreement. Messrs. Kellner, Gealy, Allen, Embrecia and
Roberts and certain investment funds managed by or affiliated with Alta
Communications, BancBoston, CEA Capital and TCW Asset Management Company will
enter into a voting agreement that will become effective upon FCC approval of
our pending long-term change of control application becoming a final order.
Under this agreement, the parties will vote for the election to our board of
three individuals designated by Messrs. Kellner, Gealy and Allen, three
individuals designated by the institutional investors who are parties to that
agreement and each of Messrs. Embrecia and Roberts. In each case, the
designations are subject to reasonable approval of the groups that have not made
the designations. The parties to the agreement will collectively hold more than
50% of our common stock, and the institutional investors as a separate group
will own approximately 38% of our common stock following completion of this
offering. As the institutional investors' aggregate percentage ownership
decreases, and as Messers. Embrescia's and Roberts' percentage ownership
decreases, the number of board members they will be able to designate will
decline. In any event, this agreement will expire two years from the closing of
this offering.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is U.S. Stock
Transfer Corporation.
LISTING
We have applied to list our common stock on the Nasdaq National Market
under the trading symbol "ACME."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 16,750,000 shares of common
stock outstanding. The 5,000,000 shares of common stock to be sold by us in this
offering will be freely tradeable without restriction or limitation under the
Securities Act, except for shares held by our affiliates, as defined under Rule
144 of the Securities Act. Shares of common stock held by our affiliates may be
sold only if registered under the Securities Act or sold in accordance with an
applicable exemption from registration, such as Rule 144. Our directors,
executive officers and our existing stockholders have agreed not to sell,
directly or indirectly, any shares owned by them for a period of 180 days after
the date of this prospectus without the prior written consent of Deutsche Bank
Securities Inc. See "Underwriting." Upon the expiration of this 180 day lock-up
period, substantially all of these shares will become eligible for sale, subject
to the restrictions of Rule 144.
RULE 144
In general, under Rule 144, a person, or persons whose shares are
aggregated, who has beneficially owned shares for at least one year, including
our affiliates, would be entitled to sell, within any three-month period, that
number of shares that does not exceed the greater of 1% of the then-outstanding
shares of common stock and the average weekly trading volume in the common stock
during the four calendar weeks immediately preceding the date on which the
notice of sale is filed with the Securities and Exchange Commission,
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provided certain manner of sale and notice requirements and requirements as to
the availability of current public information about us are satisfied. A holder
of restricted securities who is not deemed an affiliate of the issuer and who
has beneficially owned shares for at least two years would be entitled to sell
shares under Rule 144(k) without regard to these limitations. Our affiliates
must comply with the restrictions and requirements of Rule 144, other than the
one-year holding period requirement, in order to publicly sell shares of common
stock. As defined in Rule 144, an affiliate of an issuer is a person who,
directly or indirectly, through the use of one or more intermediaries controls,
or is controlled by, or is under common control with, such issuer.
RULE 701
In general, under Rule 701, any of our employees, consultants or advisors
who purchases or receives shares from us in connection with a compensatory
option plan will be eligible to resell their shares beginning 90 days after the
date of this prospectus. Non-affiliates will be able to sell their shares
subject only to the manner-of-sale provisions of Rule 144. Affiliates will be
able to sell their shares without compliance with the holding period
requirements of Rule 144.
REGISTRATION RIGHTS
Upon completion of this offering, the holders of 11,750,000 shares of our
common stock will be entitled to rights with respect to the registration of
their shares under the Securities Act. See "Certain Transactions -- Registration
Rights." Except for shares purchased by affiliates, registration of their shares
under the Securities Act would result in such shares becoming freely tradable
without restriction under the Securities Act immediately upon the effectiveness
of the registration.
STOCK OPTIONS
Immediately after this offering, we intend to file a registration statement
under the Securities Act covering the shares of common stock reserved for
issuance upon exercise of outstanding options. The registration statement is
expected to be filed and become effective as soon as practicable after the
closing of this offering. Accordingly, shares registered under the registration
statement will, subject to Rule 144 volume limitations applicable to affiliates,
be available for sale in the open market beginning 180 days after the effective
date of the registrant statement of which this prospectus is a part.
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of common stock by a
beneficial owner thereof that is a non-U.S. holder. A non-U.S. holder is a
person or entity that, for U.S. federal income tax purposes, is a non-resident
alien individual, a foreign corporation, a foreign partnership, or a foreign
estate or trust.
This discussion is based on the Internal Revenue Code of 1986, as amended,
and administrative interpretations as of the date hereof, all of which are
subject to change, including changes with retroactive effect. This discussion
does not address all aspects of U.S. federal income and estate taxation that may
be relevant to Non-U.S. Holders in light of their particular circumstances and
does not address any tax consequences arising under the laws of any state, local
or foreign jurisdiction. You should consult your own tax advisor with respect to
the particular tax consequences to you of owning and disposing of common stock,
including the consequences under the laws of any state, local or foreign
jurisdiction.
DIVIDENDS
Subject to the discussion below, dividends paid to a non-U.S. holder of
common stock generally will be subject to withholding tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. For purposes
of determining whether tax is to be withheld at a 30% rate or at a reduced rate
as specified by an income tax treaty, we ordinarily will presume that dividends
paid on or before December 31, 1999 to an address in a foreign country are paid
to a resident of such country absent knowledge that such presumption is not
warranted.
Under United States Treasury Regulations issued on October 6, 1997, which
are applicable to dividends paid after December 31, 2000, to obtain a reduced
rate of withholding under a treaty, a non-U.S. holder will generally be required
to provide an Internal Revenue Service Form W-8 certifying such non-U.S.
holder's entitlement to benefits under a treaty. The new regulations also
provide special rules to determine whether, for purposes of determining the
applicability of a tax treaty, dividends paid to a non-U.S. holder that is an
entity should be treated as paid to the entity or those holding an interest in
that entity.
There will be no withholding tax on dividends paid to a non-U.S. holder
that are effectively connected with the non-U.S. holder's conduct of a trade or
business within the United States if a Form 4224 stating that the dividends are
so connected is filed with us. Instead, the effectively connected dividends will
be subject to regular U.S. income tax in the same manner as if the non-U.S.
holder were a U.S. resident. A non-U.S. corporation receiving effectively
connected dividends may also be subject to an additional branch profits tax that
is imposed, under certain circumstances, at a rate of 30%, or such lower rate as
may be specified by an applicable treaty, of the non-U.S. corporation's
effectively connected earnings and profits, subject to certain adjustments.
Under the new regulations, Form W-8 will replace Form 4224.
Generally, we must report to the U.S. Internal Revenue Service the amount
of dividends paid, the name and address of the recipient, and the amount, if
any, of tax withheld. A similar report is sent to the holder. Pursuant to tax
treaties or certain other agreements, the U.S. Internal Revenue Service may make
such reports available to tax authorities in the recipient's country of
residence.
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Dividends paid to a non-U.S. holder at an address within the United States
may be subject to backup withholding imposed at a rate of 31% if the non-U.S.
holder fails to establish that it is entitled to an exemption or to provide a
correct taxpayer identification number and certain other information.
Under current United States federal income tax law, backup withholding
imposed at a rate of 31% generally will not apply to dividends paid on or before
December 31, 2000 to a non-U.S. holder at an address outside the United States
unless the payer has knowledge that the payee is a U.S. person. Under the new
regulations, however, a non-U.S. holder will be subject to backup withholding
unless applicable certification requirements are met.
GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. holder generally will not be subject to U.S. federal income tax
with respect to gain realized on a sale or other disposition of common stock
unless
- the gain is effectively connected with a trade or business of such holder
in the United States;
- in the case of certain non-U.S. holders who are non-resident alien
individuals and hold the common stock as a capital asset, such
individuals are present in the United States for 183 or more days in the
taxable year of the disposition;
- the non-U.S. holder is subject to a tax pursuant to the provisions of the
Internal Revenue Code regarding the taxation of U.S. expatriates; or
- we are or have been a U.S. real property holding corporation within the
meaning of Section 897(c)(2) of the Internal Revenue Code at any time
within the shorter of the five-year period preceding such disposition or
such holder's holding period. We are not, and do not anticipate becoming,
a U.S. real property holding corporation.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING ON DISPOSITION OF
COMMON STOCK
Under current United States federal income tax law, information reporting
and backup withholding imposed at a rate of 31% will apply to the proceeds of a
disposition of common stock by a non-corporate holder through a U.S. office of a
broker unless the disposing holder certifies as to its non-U.S. status or
otherwise establishes an exemption. Generally, U.S. information reporting and
backup withholding will not apply to a payment of disposition proceeds where the
transaction is effected outside the United States through a non-U.S. office of a
non-U.S. broker. However, unless the broker has documentary evidence that the
holder is a non-U.S. holder, U.S. information reporting requirements, but not
backup withholding, will apply to a payment of disposition proceeds where the
transaction is effected outside the United States by or through an office
outside the United States of a broker that is either
- a U.S. person;
- a foreign person which derives 50% or more of its gross income for
certain periods form the conduct of a trade or business in the United
States
- a controlled foreign corporation for U.S. federal income tax purposes; or
- in the case of payments made after December 31, 2000, a foreign
partnership with connections to the United States, unless such broker has
documentary evidence in its
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files of the holder's non-U.S. status and has no actual knowledge to the
contrary or unless the holder establishes an exemption.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the U.S.
Internal Revenue Service.
FEDERAL ESTATE TAX
An individual non-U.S. holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in the common stock will be required
to include the value thereof in his gross estate for U.S. federal estate tax
purposes, and may be subject to U.S. federal estate tax unless an applicable
estate tax treaty provides otherwise.
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UNDERWRITING
We intend to offer our common stock through a number of underwriters.
Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and CIBC World Markets Corp. are
acting as representatives of each of the underwriters named below. Subject to
the terms and conditions set forth in an underwriting agreement among us and the
representatives on behalf of the underwriters, we have agreed to sell to the
underwriters, and each of the underwriters severally and not jointly has agreed
to purchase from us, the number of shares of common stock set forth opposite its
name below.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Deutsche Bank Securities Inc. ..............................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Morgan Stanley & Co. Incorporated...........................
CIBC World Markets Corp.....................................
---------
Total..................................................... 5,000,000
=========
</TABLE>
In the underwriting agreement, the several underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of common stock being sold pursuant to the underwriting agreement if any
of the shares of common stock being sold under the terms of such agreement are
purchased. In a default by an underwriter, the underwriting agreement provides
that, in certain circumstances, the purchase commitments of the nondefaulting
underwriters may be increased or the underwriting agreement may be terminated.
Our shares may not be offered or sold in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing,
or disposing of investments, as principal or agent, for the purposes of their
businesses or otherwise in circumstances which will not result in an offer to
the public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995.
Buyers of the shares offered hereby may be required to pay stamp taxes and
other charges in accordance with the laws and practices of the country of
purchase in addition to the initial public offering price.
We and the selling stockholders have agreed to indemnify the underwriters
against certain liabilities, including certain liabilities under the Securities
Act, or to contribute to payments the underwriters may be required to make in
respect of those liabilities.
The shares of common stock are being offered by the underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
consummation of the reorganization, approval of certain legal matters by counsel
for the underwriters and certain other conditions. The underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in whole or
in part.
COMMISSIONS AND DISCOUNTS
The representatives have advised us that the underwriters propose initially
to offer the shares of common stock to the public at the initial public offering
price set forth on the cover page of this prospectus, and to certain dealers at
such price less a concession not in excess of $ per share of common
stock. The underwriters may allow, and such dealers may reallow, a discount not
in excess of $ per share of common stock on
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sales to certain other dealers. After the initial public offering, the public
offering price, concession and discount may change.
The following table shows the per share and total public offering price,
underwriting discount to be paid by us to the underwriters and the proceeds
before expenses to us. This information is presented assuming either no exercise
or full exercise by the underwriters of the over-allotment option.
<TABLE>
<CAPTION>
PER SHARE WITHOUT OPTION WITH OPTION
--------- -------------- -----------
<S> <C> <C> <C>
Public offering price....................... $ $ $
Underwriting discount....................... $ $ $
Proceeds, before expenses, to ACME.......... $ $ $
Proceeds, before expenses, to the selling
stockholders.............................. $ $ $
</TABLE>
The expenses of the offering, exclusive of underwriting discounts, include
the Securities and Exchange Commission registration fee, the National
Association of Securities Dealers filing fee, the Nasdaq National Market listing
fee, printing expenses, legal fees and expenses, accounting fees and expenses,
road show expenses, Blue Sky fees and expenses, transfer agent and registrar
fees and other miscellaneous fees. The expenses of the offering, exclusive of
the underwriting discount, are estimated at $987,000 and are payable by us.
OVER-ALLOTMENT OPTION
The selling stockholders have granted an option to the underwriters,
exercisable for 30 days after the date of this prospectus, to purchase up to an
aggregate of 750,000 additional shares of our common stock at the public
offering price set forth on the cover page of this prospectus, less the
underwriting discount. The underwriters may exercise this option solely to cover
over-allotments, if any, made on the sale of our common stock offered hereby. To
the extent that the underwriters exercise this option, each underwriter will be
obligated, subject to certain conditions, to purchase a number of additional
shares of our common stock proportionate to such underwriter's initial amount
reflected in the foregoing table.
RESERVED SHARES
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 8% of the shares offered hereby to be sold to some
of our directors, officers, employees, business associates and related persons.
The number of shares of our common stock available for sale to the general
public will be reduced to the extent that those persons purchase the reserved
shares. Any reserved shares that are not orally confirmed for purchase within
one day of the pricing of the offering will be offered by the underwriters to
the general public on the same terms as the other shares offered by this
prospectus.
LOCK-UP
We and our executive officers and directors and all existing stockholders
have agreed, for a period of 180 days after the date of this prospectus, not to
offer, sell, contract to sell, loan, pledge, grant any option to purchase, make
any short sale or otherwise dispose of (a) any shares of our common stock, (b)
any options or warrants to purchase any shares of our common stock or (c) any
securities convertible into, exchangeable for or that represent the right to
receive shares of our common stock. Certain gifts, transfers to trusts, and
distributions to partners or shareholders of a stockholder are permitted where
the transferee
92
<PAGE> 94
agrees to be similarly bound. Transfers may also be made where Deutsche Bank
Securities Inc. on behalf of the underwriters consents in advance.
Before this offering, there has been no public market for our common stock.
The initial public offering price will be determined through negotiations among
us and the representatives. The factors considered in determining the initial
public offering price, in addition to prevailing market conditions, include:
- the valuation multiples of publicly traded companies that the
representatives believe to be comparable to us;
- certain of our financial information;
- our history and our prospects;
- the industry in which we compete;
- an assessment of our management and its past and present operations;
- the prospects for, and timing of, our future revenue;
- the present state of our development; and
- the market values and various valuation measures of other companies
engaged in activities similar to ours.
We cannot be sure that an active trading market will develop for our common
stock or that our common stock will trade in the public market subsequent to the
offering at or above the initial public offering price.
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until the distribution of our common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
certain selling group members to bid for and purchase our common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of our common stock. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of our common stock.
If the underwriters create a short position in our common stock in
connection with the offering, that is, if they sell more shares of our common
stock than are set forth on the cover page of this prospectus, the
representatives may reduce that short position by purchasing our common stock in
the open market. The representatives may also elect to reduce any short position
by exercising all or part of the over-allotment option described above.
The representatives may also impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase shares of
our common stock in the open market to reduce the underwriters' short position
or to stabilize the price of our common stock, they may reclaim the amount of
the selling concession from the underwriters and selling group members who sold
those shares.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of our common stock to the extent that it
discourages resales of our common stock.
93
<PAGE> 95
Neither any of the underwriters nor we make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
any of the underwriters nor we make any representation that the representatives
will engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.
CERTAIN RELATIONSHIPS AND ARRANGEMENTS
Canadian Imperial Bank of Commerce, an affiliate of CIBC World Markets
Corp., is a primary lender and the agent under our credit agreement. We pay CIBC
a commitment fee on the unused portion of its commitment as a lender under our
credit agreement; CIBC also receives a fee for its services as administrative
agent. As a lender, CIBC may receive more than 10% of the net proceeds of this
offering to repay debt under our credit agreement. Under the Conduct Rules of
the National Association of Securities Dealers, Inc., special considerations
apply where a member or person associated with a member participating in an
offering is paid more than 10% of the net proceeds. Accordingly, this offering
is being made pursuant to Rule 2710(c)(8) of the NASD's Conduct Rules, in
conjunction with which Deutsche Bank Securities Inc., a representative, is
acting as a qualified independent underwriter in pricing this offering,
preparing this prospectus and conducting due diligence.
The representatives have informed us that the underwriters will not execute
any sales to any account to which they exercise discretionary authority without
prior specific written approval of the trade and will advise all participating
dealers of the same restriction.
LEGAL MATTERS
O'Melveny & Myers LLP, Newport Beach, California will pass upon the
validity of the shares of common stock offered by this prospectus. Irell &
Manella LLP, Los Angeles, California will pass upon certain legal matters for
the underwriters.
EXPERTS
The consolidated financial statements and schedules of our predecessor ACME
Television Holdings, LLC as of December 31, 1998 and 1997, and for each of the
years in the two-year period ended December 31, 1998, have been included herein
and in the registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Koplar Communications, Inc. for
each of the years in the two-year period ended December 31, 1998, have been
included herein and in the registration statement in reliance upon the report of
KPMG LLP, independent certified public accountants, appearing elsewhere herein,
and upon the authority of said firm as experts in accounting and auditing.
The financial statements of Channel 32, Incorporated for each of the years
in the two-year period ended June 30, 1996, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
94
<PAGE> 96
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act of 1933 with respect to the
common stock offered by this prospectus. As permitted by the rules and
regulations of the SEC, this prospectus, which is part of the registration
statement, omits certain information included in the registration statement and
the exhibits, schedules and undertakings set forth in the registration
statement. For further information pertaining to us and the common stock offered
by this prospectus, reference is made to our registration statement and its
exhibits and schedules. Statements contained in this prospectus concerning the
contents of any contract or any other document referred to in the prospectus are
not necessarily complete. In each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference.
We file reports and other information with the Securities and Exchange
Commission. Such reports and other information, as well as a copy of the
registration statement may be inspected without charge at the SEC's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
regional offices located at the Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of all or any part of the registration
statement may be obtained from such offices upon the payment of the fees
prescribed by the SEC. In addition, registration statements and certain other
filings made with the SEC through its Electronic Data Gathering, Analysis and
Retrieval system, including our registration statement and all exhibits and
amendments to our registration statement, are publicly available through the
SEC's Web site at http://www.sec.gov.
95
<PAGE> 97
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ACME COMMUNICATIONS, INC.
Balance Sheet as of July 23, 1999 (unaudited)............... F-2
Notes to Balance Sheet (unaudited).......................... F-3
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
Report of KPMG LLP, Independent Auditors.................... F-4
Consolidated Balance Sheets as of December 31, 1997 and 1998
and June 30, 1999 (unaudited)............................. F-5
Consolidated Statements of Operations for each of the years
in the two-year period ended December 31, 1998 and the six
months ended June 30, 1998 and 1999 (unaudited)........... F-6
Consolidated Statements of Members' Capital (Deficit) for
each of the years in the two-year period ended December
31, 1998 and the six months ended June 30, 1999
(unaudited)............................................... F-7
Consolidated Statements of Cash Flows for each of the years
in the two-year period ended December 31, 1998 and the six
months ended June 30, 1998 and 1999 (unaudited)........... F-8
Notes to Consolidated Financial Statements.................. F-9
KOPLAR COMMUNICATIONS, INC. AND SUBSIDIARY
Report of KPMG LLP, Independent Auditors.................... F-26
Consolidated Statements of Operations for each of the years
in the two-year period ended December 31, 1997............ F-27
Consolidated Statements of Cash Flows for each of the years
in the two-year period ended December 31, 1997............ F-28
Notes to Financial Statements............................... F-29
CHANNEL 32 INCORPORATED
Report of KPMG LLP, Independent Auditors.................... F-38
Statements of Operations for each of the years in the
two-year period ended June 30, 1996 and the period from
July 1, 1996 to June 17, 1997 (unaudited)................. F-39
Statements of Cash Flows for each of the years in the
two-year period ended June 30, 1996 and the period from
July 1, 1996 to June 17, 1997 (unaudited)................. F-40
Notes to Financial Statements............................... F-41
</TABLE>
F-1
<PAGE> 98
ACME COMMUNICATIONS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
AS OF
JULY 23,
1999
-----------
(UNAUDITED)
<S> <C>
ASSETS
Due from affiliates......................................... $1,000
------
Total assets........................................... $1,000
======
STOCKHOLDER'S EQUITY
Stockholder's equity
Common stock, $.01 par value; 1,000 shares authorized;
100 shares issued and outstanding......................... $ 1
Additional paid-in capital.................................. 999
------
Total stockholder's equity............................. $1,000
======
</TABLE>
See accompanying notes to the balance sheet.
F-2
<PAGE> 99
ACME COMMUNICATIONS, INC.
NOTES TO UNAUDITED BALANCE SHEET
(1) DESCRIPTION OF THE BUSINESS AND FORMATION
FORMATION AND PRESENTATION
ACME Communications, Inc. was formed as a wholly-owned subsidiary of ACME
Television Holdings, LLC ("Parent") on July 23, 1999. On September 8, 1999, the
Company received $1,000 from its Parent which represents its contributed
capital. With the exception of the initial nominal capitalization of the
company, the Company has not had any operations or other activities.
ACME Communications, Inc., is contemplating the issuance of common stock in
an initial public offering. Immediately before the closing, ACME Communications,
Inc., will complete a reorganization with ACME Television Holdings, LLC and will
become the successor entity. ACME Communications, Inc. does not guarantee that
it will be able to successfully complete the issuance of common stock in an
initial public offering.
F-3
<PAGE> 100
INDEPENDENT AUDITORS' REPORT
The Board of Advisors
ACME Television Holdings, LLC:
We have audited the accompanying consolidated balance sheets of ACME
Television Holdings, LLC and subsidiaries as of December 31, 1998 and 1997, and
the related consolidated statements of operations and members' capital and cash
flows for the years ended December 31, 1998 and 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ACME
Television Holdings, LLC and subsidiaries as of December 31, 1998 and 1997 and
the results of operations and cash flows for each of the years then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
Los Angeles, California
July 28, 1999
F-4
<PAGE> 101
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
-------------------- JUNE 30,
1997 1998 1999
-------- -------- -----------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 8,824 $ 1,001 $ 1,669
Accounts receivable, net.................................. 888 10,840 13,151
Current portion of program rights......................... 614 6,357 6,508
Prepaid expenses and other current assets................. 3,121 416 798
-------- -------- --------
Total current assets................................... 13,447 18,614 22,126
Property and equipment, net................................. 7,346 16,441 25,002
Program rights, net of current portion...................... 587 8,046 5,757
Deposits.................................................... 143,000 37 536
Deferred income taxes....................................... -- 3,811 3,971
Intangible assets, net...................................... 36,004 222,987 261,156
Other assets................................................ 20,091 18,146 11,734
-------- -------- --------
Total assets........................................... $220,475 $288,082 $330,282
======== ======== ========
LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Accounts payable.......................................... $ 3,363 $ 4,425 $ 4,951
Accrued liabilities....................................... 651 4,210 7,851
Current portion of program rights payable................. 653 7,649 6,082
Current portion of obligations under lease................ 292 1,273 1,277
-------- -------- --------
Total current liabilities.............................. 4,959 17,557 20,161
Program rights payable, net of current portion.............. 1,351 6,512 4,964
Obligations under lease, net of current portion............. 443 4,199 4,078
Other liabilities........................................... 1,047 4,671 5,670
Deferred income taxes....................................... -- 31,241 33,439
Revolving credit facility................................... -- 8,000 39,400
Bridge loan................................................. -- -- 15,000
Convertible debentures...................................... 24,756 24,756 24,756
10 7/8% senior discount notes............................... 130,833 145,448 153,357
12% senior secured notes.................................... 36,863 42,052 44,913
-------- -------- --------
Total liabilities...................................... 200,252 284,436 345,738
-------- -------- --------
Minority interest........................................... 3,917 2,233 830
Members' capital:
Members' capital.......................................... 23,785 30,832 41,532
Accumulated deficit....................................... (7,479) (29,419) (57,818)
-------- -------- --------
Total members' capital (deficit)....................... 16,306 1,413 (16,286)
-------- -------- --------
Total liabilities and members' capital (deficit)....... $220,475 $288,082 $330,282
======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-5
<PAGE> 102
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------- -----------------------
1997 1998 1998 1999
------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues........................ $11,347 $ 43,928 $ 19,327 $ 26,635
Operating expenses:
Station operating expenses........ 10,158 32,973 15,165 19,990
Depreciation and amortization..... 1,215 11,355 4,181 8,159
Corporate......................... 1,415 2,627 1,194 1,483
Equity-based compensation......... -- -- -- 10,700
------- -------- -------- --------
Total operating expenses....... 12,788 46,955 20,540 40,332
------- -------- -------- --------
Operating loss............... (1,441) (3,027) (1,213) (13,697)
Other income (expenses):
Interest income................... 287 231 188 27
Interest expense.................. (6,562) (23,953) (11,472) (14,068)
Gain on sale of asset............. -- 1,112 -- --
Other............................. -- (380) 10 --
------- -------- -------- --------
Loss before taxes and minority
interest.......................... (7,716) (26,017) (12,487) (27,738)
Income tax benefit (expense)........ -- 2,393 365 (2,064)
------- -------- -------- --------
Loss before minority interest....... (7,716) (23,624) (12,122) (29,802)
Minority interest.............. 237 1,684 868 1,403
------- -------- -------- --------
Net loss..................... $(7,479) $(21,940) $(11,254) $(28,399)
======= ======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-6
<PAGE> 103
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBERS' CAPITAL (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
MEMBERS'
MEMBERS' ACCUMULATED CAPITAL
CAPITAL DEFICIT (DEFICIT)
-------- ----------- ---------
<S> <C> <C> <C>
Balance at December 31, 1996.................... $ -- $ -- $ --
Issuance of units, net........................ 23,785 -- 23,785
Net loss...................................... -- (7,479) (7,479)
------- -------- --------
Balance at December 31, 1997.................... 23,785 (7,479) 16,306
Issuance of units, net........................ 7,047 7,047
Net loss...................................... -- (21,940) (21,940)
------- -------- --------
Balance at December 31, 1998.................... 30,832 (29,419) 1,413
Equity-based compensation..................... 10,700 -- 10,700
Net loss...................................... -- (28,399) (28,399)
------- -------- --------
Balance at June 30, 1999 (unaudited)............ $41,532 $(57,818) $(16,286)
======= ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-7
<PAGE> 104
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED ENDED
DECEMBER 31, JUNE 30,
--------------------- --------------------
1997 1998 1998 1999
--------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (7,479) $(21,940) $(11,254) $(28,399)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization............................. 1,215 11,355 4,181 8,159
Amortization of program rights............................ 1,433 5,321 2,195 3,250
Amortization of debt issuance costs....................... 445 989 247 337
Amortization of discount on 10 7/8% senior discount
notes................................................... 3,463 14,170 6,934 7,909
Amortization of discount on 12% senior secured notes...... 1,213 5,189 2,503 2,861
Minority interest allocation.............................. (237) (1,684) (868) (1,403)
Equity-based compensation................................. -- -- -- 10,700
Deferred taxes............................................ -- (2,393) (345) (962)
Gain on sale of assets.................................... -- (1,112) -- --
Changes in assets and liabilities:
Increase in accounts receivables, net..................... (888) (5,479) (4,023) (2,311)
(Increase) decrease in prepaid expenses................... (3,060) 364 (691) (353)
(Increase) decrease in due from affiliates................ (7) 7 -- --
Increase in other assets.................................. -- (576) -- --
Increase in accounts payable.............................. 3,363 59 102 526
Increase in deferred tax liability........................ -- -- -- 3,000
Increase in accrued expenses.............................. 651 2,639 5,532 5,215
Payments on programming rights payable.................... (1,758) (6,588) (2,853) (4,227)
Increase (decrease) in other liabilities.................. 1,047 (2) (1,749) (571)
--------- -------- -------- --------
Net cash provided by (used in) operating activities..... (599) 319 (89) 3,731
--------- -------- -------- --------
Cash flows from investing activities:
Purchases of property and equipment....................... (6,077) (2,945) (3,934) (4,493)
Purchases of and deposits for station interests........... (175,129) (16,675) (17,635) (41,765)
Cash acquired in acquisition -- St. Louis................. -- 779 779 --
Proceeds from sale of station interest.................... -- 3,337 -- --
Purchase of Sylvan Tower interest......................... -- -- -- (2,583)
Other..................................................... (10,524) -- -- --
--------- -------- -------- --------
Net cash used in investing activities................... (191,730) (15,504) (20,790) (48,841)
--------- -------- -------- --------
Cash flows from financing activities:
Increase in revolving credit facility..................... -- 11,000 12,000 31,400
Increase in bridge loan................................... -- -- -- 15,000
Payments on revolving credit facility..................... -- (3,000) -- --
Payments on capital leases................................ (97) (638) 1,935 (572)
Issuance of members' capital.............................. 19,385 -- -- --
Issuance of convertible debentures........................ 24,756 -- -- --
Issuance of 10 7/8% senior discount notes................. 127,370 -- -- --
Issuance of 12% senior secured notes...................... 35,650 -- -- --
Debt issuance costs....................................... (10,065) -- 14 (50)
Minority interest......................................... 4,154 -- -- --
--------- -------- -------- --------
Net cash provided by financing activities............... 201,153 7,362 13,949 45,778
--------- -------- -------- --------
Net increase (decrease) in cash........................... 8,824 (7,823) (6,930) 668
Cash at beginning of period............................... -- 8,824 8,824 1,001
--------- -------- -------- --------
Cash at end of period..................................... $ 8,824 $ 1,001 $ 1,894 $ 1,669
========= ======== ======== ========
Supplemental disclosures of cash flow information:
Cash payments for:
Interest................................................ $ 514 $ 864 $ 121 $ 630
Taxes................................................... -- 70 18 70
Non-cash transactions:
Purchases of property and equipment in exchange for
capital lease obligations............................. $ -- $ 5,375 $ 2,036 438
Issuance of equity in connection with station
acquisitions.......................................... 4,400 7,047 7,047 --
Use of deposit as consideration for purchase
transaction........................................... -- 143,000 -- --
Exchange of note receivable and option deposit as
purchase consideration for station interest........... $ -- $ -- $ -- $ 7,000
========= ======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-8
<PAGE> 105
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
(1) DESCRIPTION OF THE BUSINESS AND FORMATION
FORMATION AND PRESENTATION
The accompanying consolidated financial statements are presented for ACME
Television Holdings, LLC ("ACME" or the "Company") and its majority and
wholly-owned subsidiaries. Segment information is not presented since all of the
Company's revenues are attributed to a single reportable segment.
Information with respect to the six months ended June 30, 1999 and 1998 is
unaudited. The accompanying unaudited consolidated financial statements have
been prepared on the same basis as the audited financial statements and, in the
opinion of management contain all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation of the financial position, results
of operations and cash flows of the Company and subsidiaries, for the periods
presented. The results of operations for the six month period are not
necessarily indicative of the results of operations for the full year.
NATURE OF BUSINESS
The Company is a holding company with no assets or independent operations
other than its investment in it's majority-owned subsidiary, ACME Intermediate
Holdings LLC ("ACME Intermediate"). As of June 30, 1999, ACME Intermediate,
through its wholly-owned subsidiary, ACME Television, LLC ("ACME Television"),
owns and/or operates nine commercially licensed broadcast television stations
(the "Stations" or "Subsidiaries") located throughout the United States.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the Company
and its subsidiaries. All significant intercompany transactions have been
eliminated.
REVENUE RECOGNITION
Revenue from the sale of airtime related to advertising and contracted time
is recognized at the time of broadcast. The Company generally receives such
revenues net of commissions deducted by the advertising agencies and national
sales representatives.
CASH AND CASH EQUIVALENTS
For purposes of reporting the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.
F-9
<PAGE> 106
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
ACCOUNTS RECEIVABLE
Accounts receivable are presented net of the related allowance for doubtful
accounts which totaled $696,000, $555,000 and $51,000 at June 30, 1999, December
31, 1998 and 1997, respectively.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of accounts receivable and cash. Due to the
short-term nature of these instruments, the carrying value approximates the fair
market value. The Company believes that concentrations of credit risk with
respect to accounts receivable, which are unsecured, are limited due to the
Company's ongoing relationship with its clients. The Company provides its
estimate of uncollectible accounts. The Company has not experienced significant
losses relating to accounts receivable.
PROGRAM RIGHTS
Program rights represent costs incurred for the right to broadcast certain
features and syndicated television programs. Program rights are stated, on a
gross basis, at the lower of amortized cost or estimated realizable value. The
cost of such program rights and the corresponding liability are recorded when
the initial program becomes available for broadcast under the contract.
Generally, program rights are amortized over the life of the contract on a
straight-line basis related to the usage of the program. The portion of the cost
estimated to be amortized within one year and after one year are reflected in
the balance sheets as current and noncurrent assets, respectively. The gross
payments under these contracts that are due within one year and after one year
are similarly classified as current and noncurrent liabilities.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The cost of maintenance is
expensed when incurred. Depreciation and amortization are computed using the
straight-line method over the estimated useful lives of the respective assets.
When property is retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the appropriate accounts and any gain or loss is
included in the results of current operations. The principal lives used in
determining depreciation rates of various assets are as follows:
<TABLE>
<S> <C>
Buildings and Improvements.......................... 20 - 30 years
Broadcast and other equipment....................... 3 - 20 years
Furniture and fixtures.............................. 5 - 7 years
Vehicles............................................ 5 years
</TABLE>
F-10
<PAGE> 107
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
INTANGIBLE ASSETS
Intangible assets consist of broadcast licenses and goodwill, both of which
are amortized on a straight-line basis over a 20-year life.
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, AS OF
------------------- JUNE 30,
1997 1998 1999
------- -------- --------
<S> <C> <C> <C>
Broadcast licenses....................... $24,338 $154,351 $184,011
Goodwill................................. 12,427 78,808 93,799
------- -------- --------
Total intangible assets............. 36,765 233,159 277,810
Less: accumulated amortization........... (761) (10,172) (16,654)
------- -------- --------
Net intangible assets............... $36,004 $222,987 $261,156
======= ======== ========
</TABLE>
BARTER AND TRADE TRANSACTIONS
Revenue and expenses associated with barter agreements in which broadcast
time is exchanged for programming rights are recorded at the estimated average
rate of the airtime exchanged. Trade transactions, which represent the exchange
of advertising time for goods or services, are recorded at the estimated fair
value of the products or services received. Barter and trade revenue is
recognized when advertisements are broadcast. Merchandise or services received
from airtime trade sales are charged to expense or capitalized when used or
received.
LOCAL MARKETING AGREEMENTS
In connection with station acquisitions, and pending FCC approval of the
transfer of license assets, we generally enter into local marketing agreements
with the sellers. Under the terms of these agreements, we obtain the right to
program and sell advertising time on 100% of the station's inventory of
broadcast time, incur certain operating expenses and may make payments to the
sellers. As the holder of the FCC license, the seller/licensee retains ultimate
control and responsibility for all programming broadcast on the station. We, in
turn, record revenues from the sale of advertising time and operating expenses
for costs incurred. Included in the accompanying consolidated statements of
operations for the years ended December 31, 1997 and 1998, are net revenues of
$9.5 million and $6.8 million, respectively, that relate to local marketing
agreements. For the period ended June 30, 1999, $125,000 relating to local
marketing agreements is included in net revenue. Payments to the sellers for the
years ended December 31, 1997 and 1998 and for the six months ended June 30,
1998 and 1999 were $0, $228,000, $228,000 and $0, respectively. At June 30,
1999, the Company was not obligated for any future payments to sellers.
CARRYING VALUE OF LONG-LIVED ASSETS
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived
F-11
<PAGE> 108
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
Assets to be Disposed Of." The carrying value of long-lived assets (tangible,
identifiable intangible, and goodwill) is reviewed if the facts and
circumstances suggest that they may be impaired. For purposes of this review,
assets are grouped at the operating company level, which is the lowest level for
which there are identifiable cash flows. If this review indicates that an
asset's carrying value will not be recoverable, as determined based on future
expected, undiscounted cash flows, the carrying value is reduced to fair market
value.
INCOME TAXES
The Company is a limited liability company, therefore, no income taxes have
been provided for its operations other than at its subsidiary ACME Television of
Missouri, Inc. which is a C Corporation subject to federal and state taxation.
Any liability or benefit from the Company's non-taxable entities' consolidated
income or loss is the responsibility of, or benefit to, the individual members.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. These estimates include the allowance for doubtful accounts
net of the realizable value of programming rights and the evaluation of the
recoverability of intangible assets. Actual results could differ from those
estimates.
RECLASSIFICATIONS
Certain amounts previously reported for 1997 and 1998 have been
reclassified to conform to the 1999 financial statement presentation.
F-12
<PAGE> 109
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
(3) PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
----------------- ---------
1997 1998 1999
------ ------- ---------
<S> <C> <C> <C>
Land........................................ $ -- $ 553 $ 1,158
Buildings and improvements.................. 365 2,529 5,002
Broadcast and other equipment............... 7,201 13,163 21,105
Furniture and fixtures...................... 60 287 703
Vehicles.................................... 61 185 204
Construction in process..................... -- 1,935 702
------ ------- -------
Total.................................. $7,687 $18,652 28,874
Less: accumulated depreciation.............. (341) (2,211) (3,872)
------ ------- -------
Net property and equipment.................. $7,346 $16,441 $25,002
====== ======= =======
</TABLE>
Included in property and equipment are assets acquired under capital leases
with a total cost of $6,645,000 and the associated accumulated depreciation of
$1,121,000 at June 30, 1999.
(4) ACQUISITIONS
On June 17, 1997, the Company acquired substantially all of the assets and
assumed certain liabilities of Channel 32, Incorporated, relating to the
operations of KWBP, in exchange for $18,675,000 in cash and $4,400,000 of
membership units in the Company. The acquisition was accounted for using the
purchase method. The excess of the purchase price plus the fair value of net
liabilities assumed of approximately $23,478,000, has been recorded as an
intangible broadcast license and is being amortized over a period of 20 years.
In addition, the results of operations (excluding depreciation and amortization)
of KWBP were recorded by the Company beginning January 1, 1997 pursuant to a
local marketing agreement whereby ACME Oregon effectively operated the station
and funded the station's losses during the period from January 1, 1997 to June
17 1997 (the acquisition date).
On July 29, 1997, the Company entered into a stock purchase agreement to
acquire Koplar Communications, Inc. (KCI). On September 30, 1997, the Company
placed $143 million in to an escrow account (classified as a deposit on the
December 31, 1997 consolidated balance sheet). In connection with this
acquisition, the Company entered into a long-term local marketing agreement with
KPLR and filed the requisite applications with the FCC for the transfer of the
Station's license to the Company.
Pursuant to the local marketing agreement, the Company retained all
revenues generated by the station, bore substantially all operating expenses
(excluding depreciation and amortization) of the station and was obligated to
pay a local marketing agreement fee. These revenues and expenses for the period
October 1 through December 31, 1997 are included in the Company's operating
results for the year ended December 31, 1997.
F-13
<PAGE> 110
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
On March 13, 1998, the Company 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 the local marketing
agreement referred to above, all revenues and operating expenses of the station
(excluding depreciation and amortization) for the period from September 30, 1997
to March 31, 1998 (the effective date of the purchase transaction) are included
in the Company's operating results. The purchase transaction was recorded on the
consolidated balance sheet of the Company effective March 31, 1998 and the
Company's results of operations includes revenues and expenses (including
amortization of intangible assets) beginning April 1, 1998.
The fair value of the assets acquired and liabilities assumed relating to
the acquisition of KPLR (in thousands):
<TABLE>
<S> <C>
Assets acquired:
Cash and cash equivalents................................. $ 779
Accounts receivables, net................................. 1,703
Program broadcast rights.................................. 8,490
Property and equipment.................................... 2,233
Prepaid expenses and other current assets................. 416
FCC license............................................... 82,563
Goodwill.................................................. 93,775
Other assets.............................................. 395
--------
Total assets acquired.................................. $190,354
========
Liabilities assumed:
Accounts payable.......................................... $ (1,005)
Accrued liabilities....................................... (1,332)
Program broadcast rights payable.......................... (8,258)
Deferred income taxes..................................... (29,889)
Other liabilities......................................... (3,531)
--------
Total liabilities assumed.............................. $(44,015)
--------
Total purchase price................................... $146,339
========
</TABLE>
On October 7, 1997, the Company acquired Crossville Limited Partnership,
the owner of WINT, in exchange for $13,200,000 in cash. Subsequent to the
acquisition, the Company changed the call letters of the station to WBXX. The
acquisition was accounted for using the purchase method. The excess of the
purchase price over the fair value of net assets acquired of approximately
$13,287,000, has been recorded as an intangible broadcast license and is being
amortized over a period of 20 years.
During 1997, the Company entered into an agreement that provided it with
the right to: (i) acquire 49% of the licensee of KUPX (formerly KZAR) in
exchange for membership units valued at $6 million, and (ii) pay $3 million for
an option to acquire the remaining 51% interest in the licensee of KUPX for $5
million, exercisable immediately after the station commences on-air operations.
On December 15, 1997, the Company acquired the 49%
F-14
<PAGE> 111
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
interest in the licensee of KUPX, paid $3 million to acquire the option and
loaned the sellers $4 million (to be applied to the subsequent majority interest
purchase price). On January 22, 1998, the Company issued $6 million of its
member units to the sellers for the 49% interest in the license of KUPX in
connection with the above transaction. The amount of the issuance was based upon
a fixed dollar amount of consideration. The Company accounted for the 49%
investment using the equity method of accounting. On February 16, 1999, the
Company acquired the remaining 51% interest in KUPX. The $4.0 million loan was
applied against the remaining purchase price of $5 million.
In May 1998 the Company and the majority owners of KUPX entered into an
agreement with another broadcaster in Salt Lake City to (i) swap KUPX for KUWB,
subject to FCC approval (ii) enable the Company to operate KUWB under a local
marketing agreement and (iii) enable the owner of KUWB to operate KUPX under a
local marketing agreement. Pursuant to the LMA's, the Company retains all
operating revenues and expenses (excluding depreciation and amortization) of
KUWB and the owner of KUWB retains all operating revenues and expenses
(excluding depreciation and amortization) of KUPX. In March 1999, the FCC
approved the swap of KUPX for KUWB, which is expected to close during the third
quarter of 1999. The Company intends to account for the swap as a business
combination using fair market value. However, the Company believes that the fair
value of KUWB approximates the historical cost of KUPX.
On August 22, 1997, the Company entered into an agreement with affiliates
of the sellers of KZAR to acquire 100% of the interests in the construction
permit for KAUO for a consideration of $10,000. This agreement was consummated
on January 22, 1998. Subsequently, the call letters of KAUO were changed to
KWBQ. Construction of KWBQ was completed and the station commenced broadcasting
in March 1999.
On June 30, 1998, the Company 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 (valued at approximately $1.0 million). The acquisition was accounted for
using the purchase method. The excess of the purchase price over the fair value
of the net assets assumed of approximately $15.5 million has been recorded as an
intangible broadcast license and goodwill, both of which are being amortized
over a period of 20 years. The Company had entered into a local marketing
agreement with WTVK wherein the Company, effective March 3, 1998, retained all
revenues generated by the station, bore all operating expenses of the station
(excluding depreciation and amortization) and had the right to program the
station (subject to WTVK's ultimate authority for programming) and the station's
existing programming commitments. The local marketing agreement terminated upon
the consummation of the acquisition. Consequently, under the local marketing
agreement the revenues and operating expenses (excluding depreciation and
amortization) 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.
F-15
<PAGE> 112
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
On April 23, 1999, the Company acquired the non-FCC license assets of three
Paxson Communication Corporation stations serving the Dayton, OH, Green Bay, WI
and Champaign-Decatur, IL markets for $32 million. On June 23, 1999, following
FCC approval of the transfer of the FCC licenses to ACME, the Company acquired
the licenses and completed the acquisition of the three stations by making to
PCC a final payment of $8.0 million. The Company financed this $40 million
transaction by a $25 million borrowing under its Loan Agreement and a $15
million loan from certain of its members (the "Bridge Loan"). The Bridge Loan
bears interest at 22.5% per annum, is unsecured, may be prepaid at any time
without penalty and is due, along with all accrued interest, on April 23, 2002.
On February 19, 1999, the Company entered into an agreement in principle
with Ramar Communications ("Ramar") to acquire Ramar's KASY TV-50, serving the
Albuquerque market for approximately $27 million. In a related transaction, the
Company will concurrently sell to Ramar its station KWBQ, also serving the
Albuquerque market. The Company will also enter into a 10-year local marketing
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.
The unaudited pro forma financial information for the year ended December
31, 1998 and 1997, set forth below reflects the net revenues and net loss
assuming the KWBP, WBXX, KPLR, WTVK and KWBQ transactions had taken place at the
beginning of each respective year. This unaudited pro forma financial
information does not necessarily reflect the results of operations that would
have occurred had the acquisitions occurred on January 1, 1998 and 1997.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1997 1998
------- -------
<S> <C> <C>
Net revenues.......................................... $35,410 $44,275
Net loss.............................................. (24,044) (24,173)
</TABLE>
(5) UNIT OFFERING
On September 30, 1997, ACME Intermediate issued 71,634 Units (the Unit
Offering) consisting of 71,634 membership units (representing 8% of the ACME
Intermediate's outstanding membership equity) and $71,635,000 (par value at
maturity) in 12% senior secured discount notes due 2005 (Intermediate Notes).
Cash interest on the Intermediate Notes is payable semi-annually in arrears,
commencing with the six-month period ending March 31, 2003. The net proceeds
from the Unit Offering, after the deduction of underwriter fees and other
related offering costs, were $38.3 million and were received by the Company on
September 30, 1997. The Company has allocated approximately $4.2 million of such
net proceeds to minority interest, $35.6 million to the discounted note payable
and $1.5 million to prepaid financing costs -- the latter which is being
amortized over the eight year term of the notes. The Intermediate Notes contain
certain covenants and restrictions including restrictions on future indebtedness
and restricted payments, as defined, and limitations on liens, investments,
transactions with affiliates and certain asset sales. The
F-16
<PAGE> 113
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
Company was in compliance with all such covenants and restrictions at June 30,
1999, December 31, 1998 and 1997.
The Intermediate Notes are secured by a first priority lien on the limited
liability company interests in ACME Television and ACME Subsidiary Holdings II,
LLC, both of which are direct wholly-owned subsidiaries of ACME Intermediate.
ACME Subsidiary Holdings II, LLC was formed solely to own a 0.5% interest in
ACME Television, has no other assets or operations and does not constitute a
substantial portion of the collateral for the Intermediate Notes.
(6) 10 7/8% SENIOR DISCOUNT NOTES
On September 30, 1997, ACME Television issued 10.875% senior discount notes
due 2004 (Notes) with a face value of $175,000,000 and received $127,370,000 in
gross proceeds from such issuance. These Notes provide for semi-annual cash
interest payments beginning in the fourth year with the first interest payment
due on March 31, 2001. The Notes are subordinated to ACME Television's bank
revolver (see Note 7) and to the ACME Television's capital equipment finance
facilities (see Note 10). The Notes mature on September 30, 2004 and may not be
prepaid without penalty.
The Notes contain certain covenants and restrictions including restrictions
on future indebtedness and limitations on investments, and transactions with
affiliates. ACME Television was in compliance with all such covenants and
restrictions at June 30, 1999, December 31, 1998 and December 31, 1997.
Costs associated with the issuance of these notes, including the
underwriters fees and related professional fees are included in long-term other
assets and will be amortized over the seven year term of the notes.
ACME Television's subsidiaries (hereinafter referred to in this section
collectively as Subsidiary Guarantors) are fully, unconditionally, and jointly
and severally liable for ACME Television's notes. The Subsidiary Guarantors are
wholly owned and constitute all of ACME Television's direct and indirect
subsidiaries except for ACME Finance Corporation, a wholly owned finance
subsidiary of ACME Television with essentially no independent operations that is
jointly and severally liable with the Company on the Notes. ACME Television has
not included separate financial statements of the aforementioned subsidiaries
because (i) ACME Television is a holding company with no assets or independent
operations other than its investments in its subsidiaries and (ii) the separate
financial statements and other disclosures concerning such subsidiaries are not
deemed material to investors.
Various agreements to which ACME Television and/or the Subsidiary
Guarantors are parities restrict the activity of the Subsidiary Guarantors to
make distributions to the Company. The Investment and Loan Agreement (the
Investment Agreement), dated June 17, 1997, as amended, among the Company and
the parties thereto and the Limited Liability Company Agreement (the LLC
Agreement), dated June 17, 1997, as amended, among the Company and the parties
thereto each contain certain restrictions on the ability of the Subsidiary
Guarantors to declare or pay dividends to ACME Television in the absence of the
F-17
<PAGE> 114
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
consent of certain parties thereto. The Indenture governing the Notes prevents
the Subsidiary Guarantors from declaring or paying any dividend or distribution
to ACME Television unless certain financial covenants are satisfied and there
has been no default thereof. The revolving credit facility with Canadian
Imperial Bank Corporation (see Note 7) also prohibits distributions from the
Subsidiary Guarantors to ACME Television except in certain circumstances during
which default has not occurred thereunder.
(7) BANK REVOLVER
On August 15, 1997, ACME Television entered into a $22.5 million revolving
credit facility (the Loan Agreement) with Canadian Imperial Bank Corporation
(CIBC), as agent and lead lender. Under the terms of the Loan Agreement,
advances bear interest at a base rate, that at our option, is either the bank's
prime rate or LIBOR, plus a spread. Commitment fees are charged at a rate of .5%
per annum, paid quarterly, on the unused portion of the facility. On December 2,
1997, the Loan Agreement was amended to provide ACME Television with an
increased credit line to $40 million, more favorable interest rates and a
lengthened term. As of June 30, 1999 there was an outstanding balance of $39.4
million and $600,000 was available under the Loan Agreement. As of December 31,
1998 there was an outstanding balance of $8.0 million and $32.0 million was
available under the Loan Agreement. There was no outstanding balance due at
December 31, 1997.
The Loan Agreement contains certain covenants and restrictions including
restrictions on future indebtedness and limitations on investments and
transactions with affiliates. ACME Television was in compliance with all such
covenants and restrictions at June 30, 1999, December 31, 1998 and December 31,
1997.
Costs associated with the procuring of bank credit facilities, including
loan fees and related professional fees, are included in long-term other assets
and are amortized over the term of the Loan Agreement.
(8) CONVERTIBLE DEBENTURES
On June 30, 1997 and on September 30, 1997 the Company issued convertible
debentures to certain investors in the aggregate amount of $24,756,000. The
debentures bear interest at the rate of 10% per annum, compounded annually.
Accrued interest, along with the principle balance is due and payable on June
30, 2008, or earlier in the event of certain specified events of default or in
connection with a change of control of the Company.
Pursuant to the terms of the debentures, the holders may elect at any time
prior to maturity to convert a portion or all of the then outstanding principal
and accrued interest into membership units of the Company. The conversion rate
is fixed by contract and represents, in the aggregate, and assuming the entire
original principal and interest were converted, an additional 24,756 units of
membership. As of June 30, 1999, December 31, 1998 and 1997, the amount of
accrued interest due to the holders of the convertible debt is $4,751,000,
$3,523,000 and $1,048,000, respectively, and is included in other liabilities on
the Company's balance sheets.
F-18
<PAGE> 115
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
(9) BRIDGE LOAN
On April 23, 1999, the Company entered into a $15.0 million loan agreement
(the Bridge Loan) with Alta Communications VI, L.P., Alta Com S by S, LLC, Alta
Subordinated Debt Partners III, L.P., BANCBOSTON Investments, Inc., CEA Capital
Partners USA, L.P., CEA Capital Partners USA CI, L.P., TCW Shared Opportunity
Fund III, L.P., Shared Opportunity Fund IIB, LLC and TCW Leveraged Income Trust
II, L.P. (the Lenders); the proceeds of which were used solely to invest in ACME
Intermediate. ACME Intermediate funded the acquisition of the property and
equipment assets of Stations WBDT, WBWI and WBUI, with the proceeds.
Of the aggregate $15.0 million, $7.0 million was drawn on April 23, 1999
and the remaining $8.0 million was drawn on June 23, 1999.
The loan bears interest at 22.5%, compounded semi-annually. The interest
rate increases 250 basis points on October 23, 1999 and every 90 days
thereafter, not to exceed 35% per annum. The Company can prepay the loan without
penalty. All principal and interest is due on the earlier of April 23, 2002 or
consummation by the Company of any debt or equity financing generating net
proceeds greater than the outstanding loan balance.
(10) COMMITMENTS AND CONTINGENCIES
OBLIGATIONS UNDER OPERATING LEASES
The Company is obligated under noncancelable operating leases for office
space and its transmission sites. Future minimum lease payments as of the year
ended December 31, 1998, under noncancelable operating leases with initial or
remaining terms of one year or more are:
<TABLE>
<S> <C>
1999................................................. $ 1,125,000
2000................................................. 1,118,000
2001................................................. 1,068,000
2002................................................. 970,000
2003................................................. 916,000
Thereafter........................................... 4,806,000
-----------
Total.............................................. $10,003,000
===========
</TABLE>
Total future minimum lease payments under non-cancelable operating leases
were $10,003,000 and $6,615,000 at December 31, 1998 and 1997, respectively.
Total rental expense under operating leases for the six months ended June
30, 1999 and the twelve months ended December 31, 1998 and 1997 was
approximately $562,000, $967,463 and $166,000, respectively.
F-19
<PAGE> 116
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
OBLIGATIONS UNDER CAPITAL LEASES
As of December 31, 1998, approximately $5.5 million of equipment was leased
under capital equipment facilities. These obligations are reflected as current
obligations under capital leases of $1,273,000 and $292,000, and as non-current
liabilities under capital lease of $4,199,000 and $443,000 at December 31, 1998
and 1997 respectively. These capital lease obligations expire over the next five
years. Future minimum lease payments as of December 31, 1998 under capital
leases are:
<TABLE>
<S> <C>
1999.................................................. $ 1,638,000
2000.................................................. 1,431,000
2001.................................................. 1,371,000
2002.................................................. 1,351,000
2003.................................................. 931,000
-----------
Total............................................... $ 6,722,000
Less: interest:..................................... (1,250,000)
-----------
Present value of minimum lease payments.......... $ 5,472,000
===========
</TABLE>
PROGRAM RIGHTS PAYABLE
Commitments for program rights that have been executed, but which have not
been recorded in the accompanying financial statements, as the underlying
programming is not yet available for broadcast, were approximately $28,265,000
and $7,010,000 as of December 31, 1998 and December 31, 1997, respectively.
Maturities on the Company's program rights payables (including commitments
not recognized in the accompanying financial statements due to the lack of
current availability for broadcast) for each of the next five years are:
<TABLE>
<S> <C>
1999................................................. $ 9,316,000
2000................................................. 9,903,000
2001................................................. 8,897,000
2002................................................. 6,322,000
2003................................................. 3,838,000
Thereafter........................................... 4,150,000
-----------
Total.............................................. $42,426,000
===========
</TABLE>
CERTAIN COMPENSATION ARRANGEMENTS
In June 1997, the Company issued an aggregate of 100 management carry units
to certain members of management, which remain outstanding as of June 30, 1999.
These units entitle holders to certain distribution rights upon achievement of
certain returns by non-management investors and are subject to forfeiture or
repurchase by the Company in the event of termination of each individual's
employment by the Company under certain specified circumstances. These
management carry units are accounted for as a variable plan
F-20
<PAGE> 117
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
resulting in an expense when it is probable that any such distributions will be
made. The Company determined the value of these at the issuance date to be
immaterial. During the six months ended June 30, 1999, the Company recorded an
expense of $10.7 million relating to the units. No expense was recorded relating
to these units in 1998 or 1997
LEGAL PROCEEDINGS
We are currently in a dispute with Edward Koplar in connection with Mr.
Koplar's resignation in the fall of 1998 from his position as Chief Executive
Officer of ACME Television of Missouri, Inc., formerly Koplar Communications,
Inc. Mr. Koplar has claimed that the Company breached his management agreement,
and under the terms of that agreement has claimed that we owe him $4 million and
has threatened to bring suit against us. We believe that Mr. Koplar's claim is
without merit and that the resolution of this matter will not have a material
adverse effect on our financial condition or results of operations. We have
accrued $350,000 as a reserve relating to this matter.
In addition, the Company is party to routine claims and suits brought
against it in the ordinary course of business. In the opinion of management, the
outcome of such routine claims will not have a material adverse effect on the
Company's business, financial condition, results of operations or liquidity.
OTHER
In January 1999, the Company mistakenly merged ACME Television Holdings of
Missouri, Inc. ("Holdings"), a C corporation owning KPLR, into ACME Television,
LLC. The Company is rescinding the merger. If the rescission is held not to be
effective for tax purposes, the Company believes, based on an independent
valuation of Holdings' assets, that the merger would result in a tax liability
to the Company of approximately $3.0 million, which has been accrued in the
financial statements.
(11) INCOME TAXES
The income tax benefit consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998
-------------- -------
<S> <C>
Current
Federal income taxes...................................... $ --
State income taxes........................................ --
-------
Total current tax expense................................... --
Deferred tax benefit........................................ (2,393)
-------
Total income tax benefit.................................... $(2,393)
=======
</TABLE>
F-21
<PAGE> 118
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
The differences between the income tax benefit and income taxes computed
using the U.S. Federal statutory income tax rates (35%) consist of the
following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998
-------------- -------
<S> <C>
Tax benefit at U.S. Federal rate............................ $(3,471)
State income taxes, net of Federal tax benefit.............. (261)
Nondeductible expenses...................................... 1,430
Other....................................................... $ (91)
-------
Income tax benefit........................................ $(2,393)
=======
</TABLE>
DEFERRED INCOME TAXES
The Company's subsidiary, ACME Television Holdings of Missouri, Inc. is a
"C" Corporation and is subject to state and federal income taxes (see Note 2
"Income Taxes"). The deferred tax asset of $3,811,000 and liability of
$31,241,000 for the year ended December 31, 1998, were related to the following:
<TABLE>
<CAPTION>
1998
---------
LONG
TERM
---------
<S> <C>
Assets:
Allowances and reserves................................... $ 2,211
Net operating loss carryforwards.......................... 1,255
Other..................................................... 345
---------
Deferred tax asset........................................ $ 3,811
Liabilities:
Program Amortization...................................... $ (944)
Intangibles............................................... (30,297)
---------
Deferred tax liability.................................... $ (31,241)
---------
Net deferred tax liability............................. $ (27,430)
=========
</TABLE>
The primary difference in the book basis and tax basis of the Company's
non-taxable entities relates to intangible assets. Intangible assets of the
non-taxable entities had a book and tax basis of approximately $59 million and
$58 million at December 31, 1998, respectively.
(12) RELATED PARTY TRANSACTIONS
The Company's stations have entered into affiliation agreements and, from
time to time, related marketing arrangements with The WB Network. Jamie Kellner
is an owner and the chief executive officer of The WB Network.
Pursuant to June 1995 agreements among Koplar Communications, Inc., Roberts
Broadcasting, Michael Roberts and Steven C. Roberts, Roberts Broadcasting cannot
F-22
<PAGE> 119
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
(i) transfer its license for WHSL, East St. Louis, Illinois, (ii) commit any
programming time of the station for commercial programming or advertising or
(iii) enter into a local marketing agreement with respect to such station until
June 1, 2000. In the event that the current affiliation agreement for WHSL is
terminated, the substitute format must be substantially similar to the current
home shopping network format or, in the alternative, an infomercial format. The
annual payment from KPLR for these agreements was $200,000 during the first
three years. The Company paid $300,000 in 1998 and will pay $300,000 in 1999
under this agreement.
In connection with our Salt Lake City and New Mexico stations, the Company
has entered into long-term agreements to lease studio facilities and/or
transmission tower space for KUWB, KUPX and KWBQ from an affiliate of Michael
and Steven Roberts. Both Michael and Steven C. Roberts are members of the
Company and Michael Roberts serves on the Company's Board of Advisors. These
leases have terms of approximately fifteen years and provide for monthly
payments aggregating approximately $25,000, subject to adjustment based on the
Consumer Price Index.
On October 1, 1997, in connection with our acquisition of KWBP, we paid
CEA, Inc., an affiliate of one of our stockholders, CEA Capital Partners, a
broker's fee of approximately $176,000. On the same day, we paid CEA, Inc.,
$132,000 in connection with the purchase of WBXX, $25,000 in connection with the
purchase of the construction permit for KWBQ (formerly KAUO), $45,000 in
connection with the purchase of the construction permit for KUPX (formerly KZAR)
and $889,000 in connection with the purchase of KPLR, as broker's fees in each
of the transactions. Additionally, in connection with the recent acquisition of
WBUI, WIWB and WBDT, we paid CEA, Inc. a broker's fee of $125,000. CEA, Inc.
also received compensation from the seller in connection with the purchase of
WBUI, WIWB and WBDT. One of our directors, Mr. Collis, is an officer of an
affiliate of CEA Capital Partners.
In June and September 1997, we issued 10% convertible debentures with the
right to convert into 24,775,970 membership units to affiliates of Alta
Communications, Banc Boston, CEA Capital Partners and TCW Asset Management
Company, each of which are stockholders of our company. Another of our
directors, Mr. Schall, is an officer of an affiliate of TCW Asset Management
Company.
In February 1999, we exercised our option to purchase the property where
KWBP is located for $1.5 million from an affiliate of Peregrine Capital. Before
the purchase, we leased the property from the same affiliate.
In connection with our purchase of KWBP in June 1997, we loaned the seller
of KWBP approximately $119,000. This loan was repaid in July 1999.
(13) DEFINED CONTRIBUTION PLAN
In 1998, the Company established a 401(k) defined contribution plan (the
Plan) which covers all eligible employees (as defined in the Plan). Participants
are allowed to make nonforfeitable contributions up to 15% of their annual
salary, but may not exceed the annual maximum contribution limitations
established by the Internal Revenue Service. The
F-23
<PAGE> 120
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
Company currently matches 50% of the amounts contributed by each participant but
does not match participants' contributions in excess of 6% of their contribution
per pay period. The Company contributed and expensed $200,000 to the Plan for
the year ended December 31, 1998, $97,000 for the six months ended June 30, 1998
and $94,000 for the six months ended June 30, 1999.
(14) MEMBERS' CAPITAL
The Company's membership units are held in various classes, each class of
which entitles the holders to differing levels of distribution. As of December
31, 1997 and 1998, the Company's membership units outstanding were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
----------------- -----------------
CLASS UNITS $000'S UNITS $000'S
----- ------- ------ ------- ------
<S> <C> <C> <C> <C>
Management capital......................... 600 600 600 600
Founders Class A........................... 943 943 943 943
Founders Class B........................... 533 533 533 533
Investor................................... 18,210 18,210 16,757 16,757
Sellers.................................... 4,400 4,400 4,400 4,400
Less: Issuance costs....................... -- (901) -- (901)
------- ------ ------- ------
Total.................................... 24,686 23,785 31,733 30,832
======= ====== ======= ======
</TABLE>
Excludes management carry units issued by the Company to its senior management
team.
(15) SUBSEQUENT EVENT -- REORGANIZATION
ACME Communications, Inc. was incorporated on July 23, 1999 and other than
its initial nominal capitalization has had no operations. ACME Communications,
Inc. is contemplating the issuance of common stock in an initial public
offering.
Immediately before the closing of the offering, we will complete the
reorganization described below. Before the following steps may be completed, we
must receive FCC approval, for which we have filed an application. The Company
does not guarantee the offering of common stock or reorganization transactions
will be completed.
First, ACME Communications will issue common stock in exchange for all of
the convertible debentures of ACME Television Holdings, LLC. The convertible
debentures will be converted pursuant to their original conversion terms and as
such, there will not be a gain or loss related to this transaction.
Second, ACME Communications will exchange shares of its common stock for
(a) membership units representing approximately 6% of ACME Intermediate and (b)
all of the convertible debentures and preferred convertible membership units of
ACME Subsidiary Holdings IV, LLC. These transaction will be treated as
acquisitions of minority interests. The fair value of the stock issued to
acquire the minority interests will be allocated to the net assets acquired.
F-24
<PAGE> 121
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
(INFORMATION AT JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
1999 IS UNAUDITED)
Third, ACME Communications Merger Subsidiary, LLC, a wholly-owned
subsidiary of ACME Communications, will merge into ACME Television Holdings,
LLC. In this merger, ACME Television Holdings, LLC's membership units will be
exchanged for shares of common stock of ACME Communications. This transaction
will be treated as a reorganization at historical cost.
Fourth, ACME Subsidiary Holdings, LLC, a wholly-owned subsidiary of ACME
Television Holdings, LLC, will dissolve and its sole asset, a 0.49146% interest
in ACME Intermediate, will be distributed to ACME Television Holdings, LLC. This
transaction will be treated as a reorganization at historical cost.
Last, ACME Subsidiary Holdings IV, LLC will dissolve and its sole asset, a
1.99037% interest in ACME Intermediate, will be distributed to ACME Television
Holdings, LLC. After this dissolution, ACME Communications will own directly or
indirectly 100% of the membership units of each of ACME Television Holdings, LLC
and of ACME Intermediate. This transaction will be treated as a reorganization
at historical cost.
Also ACME Communications issued options to acquire 283,500 shares of its
common stock upon conversion of the Company's long-term incentive compensation
plan awards granted in 1998. These options were issued at an exercise price of
$15 per share and vest in equal thirds on December 31, 2000, 2001 and 2002.
These options will be valued using the closing price of the offering. The
difference between the accrual under the Company's long-term compensation plan
at the date of the closing and the pro-rata vested portion of the options (using
the original long-term incentive plan award date as the beginning of the vesting
period) will be recorded as an adjustment to equity-based compensation expense.
The remaining value of the options will be recorded on a straight-line basis
over the remaining vesting period. ACME Communications also issued options to
acquire 58,500 shares of its common stock at an exercise price of $18 per share
prior to the offering. The value of these options will also be based on the
closing offering price and will be expensed on a straight-line basis over the
five-year vesting period of the options.
F-25
<PAGE> 122
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Koplar Communications, Inc.:
We have audited the consolidated statements of operations and cash flows of
Koplar Communications, Inc. and subsidiary for the years ended December 31, 1996
and 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of Koplar Communications, Inc. and subsidiary for the years ended December 31,
1996 and 1997 in conformity with generally accepted accounting principles.
/s/ KPMG LLP
St. Louis, Missouri
July 23, 1999
F-26
<PAGE> 123
KOPLAR COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997
------- ---------
<S> <C> <C>
Revenues, net............................................. $27,381 $ 21,488
Operating expenses:
Programming............................................. 11,385 8,458
Selling, general and administrative..................... 11,455 13,896
Depreciation and amortization........................... 702 556
------- ---------
Total operating expenses............................. 23,542 22,910
------- ---------
Operating income (loss).............................. 3,839 (1,422)
------- ---------
Other expense:
Interest expense........................................ 2,155 1,200
Other expense........................................... 663 2,006
------- ---------
Total other expense.................................. 2,818 3,206
------- ---------
Income (loss) before income taxes and extraordinary
item.................................................... 1,021 (4,628)
Provision (benefit) for income taxes...................... 462 (1,081)
------- ---------
Net income (loss) before extraordinary item.......... 559 (3,547)
------- ---------
Extraordinary item:
Loss on early extinguishment of debt, net of taxes of
$868 and $93, respectively........................... (1,359) (146)
------- ---------
Net loss............................................. $ (800) $ (3,693)
======= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-27
<PAGE> 124
KOPLAR COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................ $ (800) $ (3,693)
Adjustments to reconcile net loss to net cash:
Deferred income taxes................................... (173) (361)
Amortization of programming rights...................... 5,360 4,514
Adjustment to carrying value of programming rights...... 1,500 --
Amortization of deferred financing costs................ 411 47
Loss on early extinguishment of debt.................... 2,227 239
Depreciation and amortization........................... 702 556
Changes in operating assets and liabilities:
Receivables............................................. 643 (544)
Prepaid expenses and other current assets............... (142) 150
Other assets............................................ 44 350
Accounts payable and accrued expenses................... (561) 5,247
Accrued interest........................................ (301) (76)
Income taxes receivable/payable......................... (773) (694)
Other long-term liabilities............................. (182) (58)
-------- --------
Net cash provided by operating activities............ 7,955 5,677
-------- --------
Cash flows from investing activities:
Purchases of property and equipment..................... (687) (293)
Deposits for PCS Auction................................ (468) --
Return of deposits for PCS Auction...................... 468 468
Investment in affiliate................................. (100) (384)
-------- --------
Net cash used in investing activities................ (787) (209)
-------- --------
Cash flows from financing activities:
Repayment of notes payable officer/shareholder.......... (1,168) --
Payment on other debt and obligations under capital
leases............................................... (21) (195)
Payment on programming obligations...................... (5,515) (5,567)
Cash overdraft, net..................................... 1,244 (678)
Repayment of long-term debt............................. (11,640) (13,950)
Proceeds from long-term debt............................ 14,159 --
Proceeds from short-term ACME advances.................. -- 14,899
Payments on revolver, net............................... (4,130) --
Payment on deferred financing costs..................... (318) --
-------- --------
Net cash used in financing activities................ (7,389) (5,491)
-------- --------
Net decrease in cash................................. (221) (23)
Cash, beginning of year................................... 244 23
-------- --------
Cash, end of year......................................... $ 23 $ --
======== ========
Cash paid for interest.................................... $ 1,575 $ 1,216
======== ========
Cash paid for income taxes................................ $ 120 $ --
======== ========
Non-cash transactions:
Programming rights purchased under installment
obligations.......................................... $ 3,430 $ 3,205
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-28
<PAGE> 125
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
(1) ORGANIZATION
The Company operates an independent television station in St. Louis,
Missouri (KPLR-TV). The broadcasting license of KPLR-TV is owned by Koplar
Television Co., L.L.C., a 99.9%-owned subsidiary of Koplar Communications, Inc.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies
followed in the preparation of these financial statements:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Koplar
Communications, Inc. and subsidiary (collectively, the Company). Accordingly,
all references herein to Koplar Communications, Inc. include the consolidated
results of its subsidiary. All significant intercompany accounts and
transactions have been eliminated in consolidation.
CASH AND CREDIT CONCENTRATIONS
The Company maintains several cash accounts, including a lockbox account,
in a financial institution. The cash balances in these accounts may at times
exceed insured limits. The majority of the Company's receivables are due from
local and national advertising agencies and are not collateralized.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation expense is
computed using the straight-line method over the estimated useful lives of the
related assets. The accelerated cost recovery system and modified accelerated
cost recovery system are used for income tax purposes. Renewals and betterments
are capitalized to the related asset accounts, while repair and maintenance
costs, which do not improve or extend the lives of the respective assets, are
charged to operations as incurred.
When assets are retired or otherwise disposed of, the assets and related
accumulated depreciation are eliminated from the accounts and any resulting gain
or loss is recorded in operations.
F-29
<PAGE> 126
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
PROGRAMMING RIGHTS
Programming rights are recorded at cost when the program is available to
the Company for broadcasting. Programming rights and related obligations are
recorded at cost without recognition of any imputed interest charges. Agreements
define the lives of the rights and the number of showings. The cost of
programming rights is charged against earnings either on the straight-line basis
over the term of the agreement or per play for certain syndicated contracts
based on the number of plays specified in the contract. Programming rights for
programs which management expect to be broadcast in the succeeding fiscal year
are shown as a current asset.
The Company assesses the valuation of its programming rights on an ongoing
basis by evaluating the unamortized rights and future programming rights
commitments and comparing the anticipated future number of plays and related
revenue potential with the related unamortized cost. When unamortized cost
exceeds the undiscounted estimated future revenue, the Company will recognize an
adjustment to the related carrying value. During 1996, the Company recorded an
adjustment to the carrying value of certain programming rights totaling
approximately $1,500,000.
DEFERRED FINANCING COSTS
Financing costs incurred in connection with obtaining financing are
deferred and amortized on a straight-line basis over the term of the borrowings.
Amortization of deferred financing costs, included in interest expense, totaled
approximately $411,000 and $47,000, for the years ended December 31, 1996 and
1997, respectively. In addition, the Company expensed approximately $2,227,000
and $239,000 of deferred financing costs during 1996 and 1997, respectively, as
a result of the Company's refinancing of its long-term debt (see note 6).
Accordingly, the expense related to these transactions has been reflected as an
extraordinary item, net of tax effects, in the consolidated statements of
operations.
INCOME TAXES
Deferred income taxes are recognized for the tax consequences in future
years of temporary differences between the tax basis of assets and liabilities
and their financial reporting amounts at each year-end based on enacted tax laws
and statutory tax rates applicable to the periods in which the temporary
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.
INTEREST RATE HEDGE AGREEMENTS
The Company enters into interest rate swap agreements which involve the
exchange of fixed and floating rate interest payments periodically over the life
of the agreement without the exchange of the underlying principal amounts. All
agreements entered into by the Company relate to outstanding debt obligations.
Accordingly, the Company accounts for these instruments similar to a hedge
agreement and the differential to be paid or received is
F-30
<PAGE> 127
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
accrued as interest rates change and recognized over the life of the agreements
as an adjustment to interest expense.
REVENUE RECOGNITION
Revenues from advertisements are recognized as commercials are broadcast.
The Company receives such revenues net of commissions deducted for advertising
agencies.
BARTER REVENUES
Barter transactions in which the Company accepts products or services in
exchange for commercial airtime are recorded at the estimated fair values of the
products or services received. Barter revenues are recognized when commercials
are broadcast. The assets or services received in exchange for broadcast time
are recorded when received or used. Certain of the Company's programming
agreements involve the exchange of advertising time for programming. The Company
does not record revenues and cost of revenues related to these arrangements,
which have no impact on earnings. The Company estimates that revenues and costs
associated with these agreements were approximately $2,612,000 and $2,800,000
for 1996 and 1997, respectively.
LOCAL MARKETING AGREEMENTS
The Company entered into a local marketing agreement upon its acquisition
by ACME Television Holdings, LLC (see note 15). As of December 31, 1997,
regulatory approval of the transfer of the Company's License Assets was pending.
Under the terms of the agreement, the Company receives specified periodic
payments to operate KPLR-TV in exchange for the grant to ACME of the right to
program and sell advertising on a specified portion of the station's inventory
of broadcast time. In addition, ACME assumes the obligation to pay all operating
expenses subsequent to September 30, 1998. Accordingly, ACME has recorded all
operating revenues and expenses during the local marketing agreement period from
October 1, 1997 through December 31, 1997. All other non-operating results are
recorded by the Company during the local marketing agreement period.
(3) PREPAID EXPENSES AND OTHER CURRENT ASSETS
In 1995, the Company placed a refundable deposit of $1,235,000 with the FCC
in order to bid on the regional rights for a personal communications system. The
Company expects this product to replace cell phones, beepers and other portable
communications technology. The Company was the successful bidder on a number of
personal communications system licenses. During 1996, $468,000 of the initial
deposit was returned to the Company.
In fourth quarter 1996, another round of personal communications system
bidding was opened by the FCC. The auction was concluded and the deposit was
returned in the first quarter of 1997.
F-31
<PAGE> 128
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
(4) PROPERTY AND EQUIPMENT
A summary of property and equipment at December 31, 1996 and 1997 is as
follows (dollars in thousands):
<TABLE>
<CAPTION>
ESTIMATED
1996 1997 USEFUL LIVES
------- ------- --------------
<S> <C> <C> <C>
Land............................................... $ 464 $ 464 --
Buildings and improvements......................... 1,780 1,705 15 to 40 years
Equipment, furniture and fixtures.................. 6,463 6,311 3 to 15 years
------- -------
8,707 8,480
Less accumulated depreciation...................... (6,069) (6,105)
------- -------
$ 2,638 $ 2,375
======= =======
</TABLE>
Depreciation expense for the years ended December 31, 1996 and 1997 was
approximately $702,000 and $556,000, respectively.
(5) NOTE PAYABLE -- REVOLVER
The note payable - revolver was repaid in July 1996 as part of a debt
refinancing with a financial institution (see note 6).
(6) LONG-TERM DEBT
The Company's long-term debt at December 31, 1996 totaled $13,650,000.
Based upon the borrowing rates available to the Company for bank loans with
similar terms and average maturities, the fair value of long-term debt
approximated carrying value.
On July 10, 1996, the Company refinanced certain existing debt and received
a revolving commitment totaling $19,000,000 (the Loan Agreement), of which
approximately $14,266,000 was drawn from the commitment to satisfy certain
existing obligations and refinancing costs.
At December 31, 1996, the Company had borrowed $13,650,000 against the
revolving commitment agreement. Under the terms of the Loan Agreement, the
Company was required to repay the loan and all unpaid interest thereon on July
1, 2001. The loan interest was based on either the alternative base rate or the
adjusted LIBOR rate, as defined in the Loan Agreement.
In order to limit interest rate risk, the Company entered into a five-year
interest rate swap for $5,000,000 of the borrowings, which locked in an interest
rate of approximately 10%. The Company also entered into a three-year interest
rate swap for $2,000,000 of the borrowings, which locked in an interest rate of
approximately 10%. In addition, the Company entered into a 30-day interest rate
swap for $5,000,000 of the outstanding borrowings, which locked in an interest
rate of approximately 8.87% at December 31, 1996. The remaining borrowings
accrued interest, payable monthly at the prime interest rate plus 0.25% - 0.75%
per annum based on certain criteria. In addition, the Company is required to
F-32
<PAGE> 129
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
pay quarterly a commitment fee of 0.5% per annum of the unused portion of the
revolving commitment.
During 1997, in conjunction with the acquisition by ACME, the outstanding
loan balances were paid in full and certain short-term advances were extended to
the Company by ACME. The total of outstanding advances at December 31, 19997 was
approximately $14,899,000.
(7) PROGRAMMING OBLIGATIONS
Programming obligations are generally classified as current or noncurrent
liabilities according to the payment terms of the various contracts.
At December 31, 1997, future minimum payments based on contractual
agreements are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1998........................................................ $5,030
1999........................................................ 3,295
2000........................................................ 1,373
------
$9,698
======
</TABLE>
(8) NOTE PAYABLE -- PROGRAMMER
Note payable -- programmer represents an additional amount owed to Warner
Bros. ("WB") in connection with the restructuring of certain programming
obligations in 1994. During 1996, the Company entered into a Stock Purchase,
Option and Repurchase Agreement with WB, under which the Company had an
obligation in the amount of $3,692,000 to WB in addition to the liability
recorded as programming obligations.
Under this agreement, the Company issued a promissory note for $3,092,000
to WB (payable in even installments over 36 months, plus interest at 1% over the
prime rate per annum, payments to begin upon notification by WB to the Company),
and also transferred to WB stock in an entity which is partially owned by the
shareholder of the Company (see note 14). However, the agreement granted the
programmer a "Put Right" under which the stock may be transferred by WB to the
Company at any time until either June 28, 1997 or the exercise of the First
Option (see below). In 1995, $100,000 was paid on the Put Right.
The Company replaced the note payable-programmer with a restructured
agreement on December 31, 1996. The previous note payable and the related
accrued interest were replaced with Note A and Note B. Note A was in the amount
of $2,000,000 and at December 31, 1996 and 1997, $1,900,000 was outstanding.
Interest accrues at prime plus 0.5%. Principal of $100,000 plus accrued interest
to date are payable quarterly until the note is satisfied. There was no accrued
interest on Note A at December 31, 1996 and 1997.
Note B was an option note for $2,250,000. At December 31, 1996 and 1997,
$2,250,000 was outstanding on Note B. The programmer was granted an option
callable between
F-33
<PAGE> 130
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
January 1, 2000 and December 31, 2001. If called, WB would receive 12% of a
related entity's stock instead of cash payments on the $2,250,000 promissory
note. The Company's "Put Right" was exercisable between January 1, 1997 and
December 31, 2001. If exercised, WB would receive 12% of the related entity's
stock instead of cash payments on the $2,250,000 promissory note. Interest
accrues at prime. There was no accrued interest on Note B at December 31, 1996
and 1997.
(9) COMMITMENTS
In conjunction with obtaining new programming and other related
considerations, the Company's commitments amounted to approximately $5,395,000
as of December 31, 1997.
The aggregate payments for these commitments over the next five years are
as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1998........................................................ $ 298
1999........................................................ 1,250
2000........................................................ 1,731
2001........................................................ 1,476
2002........................................................ 640
------
$5,395
======
</TABLE>
In January 1995 KPLR-TV became an affiliate of the WB Network. Under the
affiliation agreement, the Company was required to make an annual payment to
Warner Brothers if the ratings and revenue in prime time broadcasts of WB
Network programming for the current year exceed ratings and revenues achieved by
the Company in the preceding year. No such payments were payable to Warner
Brothers for the years ended December 31, 1996 and 1997.
The Company had an operating lease for certain equipment that requires
annual payments of approximately $42,000 for a remaining period of twelve years.
Total rent expense under operating leases for the years ended December 31, 1996
and 1997 was approximately $123,000 and $115,000, respectively.
(10) NOTES PAYABLE -- OFFICER/SHAREHOLDER
Indebtedness to a shareholder of the Company consists of a promissory note
for $1,023,000 and debentures payable for approximately $145,000, totaling
$1,168,000 at December 31, 1995. The notes and interest were repaid in July 1996
when the Company refinanced certain debt with a financial institution (see note
6).
F-34
<PAGE> 131
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
(11) INCOME TAXES
The provisions for income taxes on continuing operations for the years
ended December 31, 1996 and 1997 consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1997
----- -------
<S> <C> <C>
Current:
Federal................................................... $ 552 $ (557)
State..................................................... 83 (163)
Deferred:
Federal................................................... (150) (315)
State..................................................... (23) (46)
----- -------
Provision for income tax............................... $ 462 $(1,081)
===== =======
</TABLE>
The difference between the actual tax provision and the amounts obtained by
applying the statutory U.S. federal income tax rate of 34% to income before
income taxes and extraordinary items for the years ended December 31 is as
follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------
1996 1997
------ -------
<S> <C> <C>
Income before income taxes and extraordinary items.......... $1,021 $(4,628)
------ -------
Tax provision computed at statutory rate.................... $ 347 $(1,574)
Increases (reductions) in taxes due to:
State income taxes (net of federal tax benefit)........... 40 (138)
Investment in affiliate................................... -- 570
Other..................................................... 75 61
------ -------
Actual tax provision........................................ $ 462 $(1,081)
====== =======
</TABLE>
The tax effect of temporary differences between the tax basis of assets and
liabilities and their corresponding amounts for financial statement reporting
purposes at the tax rates expected to be in effect when such differences reverse
are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
Current deferred income tax asset:
Allowance for doubtful accounts........................... $ (83) $ (97)
Accrued vacation payable.................................. (64) (61)
Bonus payable............................................. (195) --
Charitable contributions carryforward..................... -- (40)
Option Agreement.......................................... -- (175)
Noncurrent deferred income tax liability:
Book over tax basis of fixed assets....................... 22 3
Book over tax basis of programming rights................. 1,918 1,607
------ ------
Net deferred income tax liability......................... $1,598 $1,237
====== ======
</TABLE>
F-35
<PAGE> 132
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
(12) 401(K) PLAN
Substantially all employees are eligible to participate in a 401(k) Plan
sponsored by the Company. The plan provides that the Company may match a
specified percentage of an employee's contribution up to a defined limit at its
discretion. The amount charged to expense by the Company for the years ended
December 31, 1996 and 1997 was approximately $55,000 and $60,000, respectively.
(13) INVESTMENT IN AFFILIATE
In 1995, the Company entered into an agreement with another television
station in St. Louis which provides that the Company make annual payments of
$200,000 to the owners of the station (the Owners) for three years, in return
for programming and other considerations over a three-year period. The agreement
may be extended by the Owners for an additional two years. Under a separate
agreement, the Company has agreed to make up to $3,500,000 in capital
contributions to a limited liability company, owned by the Company and the
Owners, formed to acquire television stations and invest in other communications
opportunities, as approved by the Company. No such additional contributions had
been made as December 31, 1997.
(14) RELATED PARTY TRANSACTIONS
During previous years, the Company advanced funds under a loan agreement to
ISW, Inc. (ISW), a company which is partially owned by a shareholder of the
Company. In 1996 and 1997, the Company advanced approximately $443,000 and
$1,200,000, respectively, to ISW. This amount was included in a loan receivable
balance and is fully reserved.
At December 31, 1996, the remaining balance of loans and interest
receivable by the Company from ISW was approximately $3,251,000 with a
corresponding allowance. Both amounts were written off and removed from the
records in 1997.
During 1996 and 1997, the Company was charged approximately $139,000 in
rent and parking charges by Koplar Properties, Inc., an entity owned by a
shareholder of the Company.
(15) SALE OF COMPANY
On July 29, 1997, the shareholders of the Company (Shareholders) agreed to
sell all of their shares of the Company's common and preferred stock to ACME
Television Holdings, LLC (ACME) for $146,000,000. On September 30, 1997,
pursuant to the stock purchase agreement between ACME and the Shareholders, ACME
placed $143,000,000 into an escrow account and ACME and the Shareholders filed
with the FCC a request to transfer the Company's broadcast license. The Company
has also entered into a local marketing agreement with ACME under the terms of
which ACME received the economic benefit of the Company's earnings, effective
October 1, 1997. As a result, the consolidated statements of operations reflect
the operating results of the Company through September 30, 1997, as well as any
other non-operating results from October 1, 1997 through December 31, 1997. On
F-36
<PAGE> 133
KOPLAR COMMUNICATIONS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
March 13, 1998, ACME acquired all of the outstanding common and preferred stock
of the Company and the local marketing agreement was terminated.
In connection with the ACME transaction, the Company recorded at December
31, 1997 approximately $5,900,000 in non-recurring bonus expense paid to a
certain executive and other employees of the Company. This amount is included in
other selling, general and administrative expense for the year ending December
31, 1997.
F-37
<PAGE> 134
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Channel 32, Incorporated:
We have audited the accompanying statements of operations and cash flows of
Channel 32, Incorporated (a wholly owned subsidiary of Peregrine Communications,
Ltd. effectively as of July 1, 1995) for the years ended June 30, 1995
(Predecessor) and 1996 (Successor). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards required that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of Channel 32 Incorporated's operations
and its cash flows for the years ended June 30, 1995 (Predecessor) and 1996
(Successor) in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, effective July 1, 1995,
Peregrine Communications, Ltd. acquired all of the outstanding stock of Channel
32, Incorporated in a business combination accounted for as a purchase. As a
result of the acquisition, the financial information for periods after the
acquisition is presented on a different cost basis than for periods before the
acquisition and, therefore is not comparable.
/s/ KPMG LLP
Los Angeles, California
November 13, 1997
F-38
<PAGE> 135
CHANNEL 32 INCORPORATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1996
JUNE 30, JUNE 30, TO
1995 1996 JUNE 17, 1997
------------- ----------- -------------
(SUCCESSOR)
(PREDECESSOR) (SUCCESSOR) (UNAUDITED)
<S> <C> <C> <C>
Broadcast revenues, net............... $ 288,178 $ 2,728,857 $ 1,305,886
Operating expenses:
Programming and production.......... 622,688 3,273,608 1,303,808
Selling, general and
administrative................... 273,422 1,462,360 1,060,497
Depreciation and amortization....... 234,498 541,878 346,469
----------- ----------- -----------
Total operating expenses......... 1,130,608 5,277,846 2,710,774
----------- ----------- -----------
Operating loss................. (842,430) (2,548,989) (1,404,888)
----------- ----------- -----------
Other income (expense):
Interest expense.................... (200,112) (3,252,202) (2,221,688)
Interest income..................... -- 44,821 --
Write-off of due from parent........ -- (188,586) --
Other expenses, net................. -- (70,254) (10,181)
----------- ----------- -----------
Other expense, net............... (200,112) (3,466,221) (2,231,869)
----------- ----------- -----------
Loss before income taxes.............. (1,042,542) (6,015,210) (3,636,757)
Income taxes.......................... -- -- --
----------- ----------- -----------
Net Loss....................... $(1,042,542) (6,015,210) $(3,636,757)
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-39
<PAGE> 136
CHANNEL 32 INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1996
JUNE 30, JUNE 30, TO
1995 1996 JUNE 17, 1997
------------- ----------- -------------
(SUCCESSOR)
(PREDECESSOR) (SUCCESSOR) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................. $(1,042,542) $(6,015,210) $(3,636,757)
Adjustments to reconcile net loss to net
cash:
Depreciation and Amortization......... 288,083 951,377 1,322,513
Changes in assets and liabilities:
Increase in programming rights........ (122,500) (401,559) (380,400)
Increase in accounts receivable....... (59,470) (167,353) 23,242
Increase (decrease) in due from
related
party.............................. -- 14,700 (692,301)
Increase in other assets.............. (5,000) (82,646) (357,606)
Increase (decrease) in due to related
party.............................. -- 63,887 (63,887)
Increase (decrease) in accounts
payable............................ 252,704 (56,523) 651,014
Increase in accrued expenses.......... 179,117 184,414 182,932
Increase in programming rights
payable............................ 97,437 249,377 308,612
----------- ----------- -----------
Net cash used in operating
activities.................... (412,171) (5,259,536) (2,642,638)
----------- ----------- -----------
Cash flows from investing activities:
Acquisition of property and
equipment.......................... (978,711) (998,429) (355,717)
Disposal of property and equipment.... -- 236,910 --
Increase in broadcast licenses........ (243,785) (315,000) --
----------- ----------- -----------
Net cash used in investing
activities.................... (1,222,496) (1,076,519) (355,717)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from borrowings.............. 1,793,519 8,038,056 3,110,138
Payment of borrowings................. (159,417) (1,793,519) (2,635)
Payments of obligations under capital
lease.............................. -- -- (10,217)
Proceeds from issuance of common
stock.............................. 1,600 100,108 --
----------- ----------- -----------
Net cash provided by financing
activities.................... 1,635,702 6,344,645 3,097,286
----------- ----------- -----------
Net increase in cash............. 1,035 8,590 98,931
Cash, beginning of period............... -- 1,035 9,625
----------- ----------- -----------
Cash, end of period..................... $ 1,035 $ 9,625 $ 108,556
=========== =========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest.............................. 51,845 732,582 370,095
Income taxes.......................... 120 -- --
Non-cash transactions:
Acquisition of property and equipment
in exchange for capital lease
obligations........................ 650,000 185,000 --
</TABLE>
See notes to financial statements
F-40
<PAGE> 137
CHANNEL 32 INCORPORATED (NOTE 1)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1996
(INFORMATION RELATING TO THE PERIOD FROM
JULY 1, 1996 TO JUNE 17, 1997 IS UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND FORMATION
Channel 32, Incorporated was incorporated under the laws of the state of
Oregon on December 16, 1993. Channel 32, Incorporated (the Company) owns and
operates KWBP-TV Channel 32, a television station (and The WB Network affiliate)
in Portland, Oregon. The Company is a wholly owned subsidiary of Peregrine
Communications, Ltd. (Peregrine) subsequent to Peregrine's acquisition of the
Company effective July 1, 1995.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Effective July 1, 1995, Peregrine acquired Channel 32, Incorporated, for
approximately $350,000. The Company paid $315,000 of this amount on behalf of
Peregrine. The acquisition was accounted for using the purchase method of
accounting. The Company has applied push-down accounting reflecting the full
acquisition cost and resulting equity in the accompanying financial statements
subsequent to the acquisition date. As a result of the acquisition, the
financial information for periods after the acquisition (Successor) is presented
on a different cost basis than for the periods prior to the acquisition
(Predecessor) and, therefore, is not comparable. The purchase price has been
allocated to the tangible assets of the Company acquired and liabilities assumed
based on their estimated fair market value at the acquisition date. The net
liabilities assumed plus the purchase price totaled approximately $1,400,000 and
was allocated to broadcast licenses.
The financial statements are presented as if the acquisition occurred on
July 1, 1995, rather than the actual purchase dates which occurred between March
and November 1995. The impact of recording the purchase as of July 1, 1995,
instead of the actual acquisition dates, is not material to the accompanying
financial statements.
LOCAL MARKETING AGREEMENT
Effective January 1, 1997, the operations of KWBP-TV were transferred to
ACME Television of Oregon, LLC pursuant to a local marketing agreement.
Accordingly, the Company's financial statements subsequent to December 31, 1996
only include the Company's net activity pursuant to such local marketing
agreement.
REVENUE RECOGNITION
Revenue related to the sale of airtime related to advertising and
contracted time is recognized at the time of broadcast. The Company receives
such revenues net of commissions deducted by advertising agencies and national
sales representatives.
F-41
<PAGE> 138
CHANNEL 32 INCORPORATED (NOTE 1)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996
(INFORMATION RELATING TO THE PERIOD FROM
JULY 1, 1996 TO JUNE 17, 1997 IS UNAUDITED)
CASH AND CASH EQUIVALENTS
For purposes of reporting the statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.
PROGRAMMING RIGHTS
Programming rights represent costs incurred for the right to broadcast
certain features and syndicated television programs. Programming rights are
stated at the lower of amortized cost or estimated realizable value. The cost of
such programming rights and the corresponding liability are recorded when the
initial program becomes available for broadcast under the contract. Programming
rights are amortized over the life of the contract on an accelerated basis
related to the usage of the program. Programming rights expected to be amortized
during the next fiscal year are classified as current in the balance sheets. The
payments under these contracts that are due within one year and after one year
are reflected in the balance sheets as current and noncurrent liabilities,
respectively.
Commitments for programming rights that have been executed, but which have
not been recorded in the accompanying financial statements, as the underlying
programming is not available for broadcast, were approximately $0, $222,249 and
$262,500 as of June 30, 1995, 1996 and March 31, 1997, respectively.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The cost of maintenance is
expensed.
Depreciation and amortization is computed using the straight-line method
over the estimated useful lives of the respective assets. The principal lives
used in determining depreciation and amortization rates of various assets are as
follows:
<TABLE>
<S> <C>
Buildings................................................... 39 years
Broadcasting equipment...................................... 5 - 15 years
Furniture and fixtures...................................... 5 - 7 years
Vehicles.................................................... 5 years
Equipment under capital leases.............................. 5 - 15 years
</TABLE>
BARTER TRANSACTIONS
Revenue and expenses associated with barter agreements in which broadcast
time is exchanged for programming rights are recorded at the average rate of the
airtime exchanged. Barter transactions, which represent the exchange of
adverting time for goods or services, are recorded at the estimated fair value
of the products or services received. Barter revenue is recognized when
advertisements are broadcast. Merchandise or services received from airtime
trade sales are charged to expense or capitalized when used or received.
F-42
<PAGE> 139
CHANNEL 32 INCORPORATED (NOTE 1)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996
(INFORMATION RELATING TO THE PERIOD FROM
JULY 1, 1996 TO JUNE 17, 1997 IS UNAUDITED)
Revenues and expenses include approximately $1,267,600 of barter
transaction for the year ended June 30, 1996. The Company did not record
revenues and expenses associated with barter transactions for the year ended
June 30, 1995. The Company does not believe the omission of such barter
transactions for the year ended June 30, 1995 is material to the Financial
Statements taken as a whole.
CARRYING VALUE OF LONG-LIVED ASSETS
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." The carrying value of long-lived assets
(tangible and intangible) is reviewed if the facts and circumstances suggest
that they may be impaired. If this review indicates that an asset's carrying
value will not be recoverable, as determined based on future expected
undiscounted cash flows, the carrying value is reduced to fair market value.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. Under SFAS
No. 109 deferred income taxes are recognized for tax consequences of temporary
differences by applying enacted statutory tax rates applicable to future years
to differences between financial statement carrying amounts and the tax basis of
existing assets and liabilities.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentration of credit risk consist primarily of accounts receivable. The
Company believes that concentrations of credit risk with respect to accounts
receivable, which are unsecured, are limited due to the Company's ongoing
relationship with its clients. The Company provides for its estimate of
uncollectible accounts on a periodic basis. The Company has not experienced
significant losses relating to accounts receivable. For periods ended June 30,
1994, 1995, 1996 and March 31, 1997 and 1996 no customer accounted for more than
10% of revenues.
(3) INTANGIBLE ASSETS
Intangible assets are stated at cost, less accumulated amortization, and
are comprised of broadcast licenses. Broadcast licenses are being amortized on a
straight-line basis over
F-43
<PAGE> 140
CHANNEL 32 INCORPORATED (NOTE 1)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996
(INFORMATION RELATING TO THE PERIOD FROM
JULY 1, 1996 TO JUNE 17, 1997 IS UNAUDITED)
15 years. The amount of amortization related to broadcast licenses was
approximately $0, $11,000, $97,567, and $93,000 for the periods ended June 30,
1994, 1995 and 1996 and June 17, 1997, respectively.
(4) STOCKHOLDERS' EQUITY
At June 30, 1995, the Company had 2,000 shares of authorized common stock
with 1,000 shares issued to its four original stockholders and an option to
purchase 818 shares representing 45% of the Company, with an exercise price of
$452,000 held by Peregrine (Peregrine Option).
In November 1995, the stockholders approved an increase in the number of
authorized shares to 4,000 shares of common stock. The Company sold 250 shares
of common stock for $100,000 to Aspen TV, LLC and sold an option for $108 to
purchase 51% of the outstanding common stock, or 791 shares, for an exercise
price of $150,000. This option is automatically cancelled and the Company will
be obligated to repurchase the stock sold to Aspen TV, LLC for the sale price
plus interest upon the Company's timely repayment of its debt obligation to
Aspen TV, LLC. The Peregrine Option was cancelled at this time.
(5) RELATED PARTY TRANSACTIONS
Due (to) from related party represent temporary advances in the form of
expenses paid by or on behalf of the Company by Peregrine. The following is a
summary of these amounts:
<TABLE>
<CAPTION>
JUNE 30,
------------------- MARCH 31,
1995 1996 1997
------- -------- ---------
<S> <C> <C> <C>
Due from related party -- Peregrine.............. $14,700 $ -- $ --
Due from related party -- ACME Television of
Oregon......................................... -- -- 692,301
Due to related party -- Peregrine................ -- (63,887) --
------- -------- --------
Total.......................................... $14,700 $(63,887) $692,301
======= ======== ========
</TABLE>
Due from related party, ACME Television of Oregon, LLC relates to the
balance due to the Company pursuant to the local marketing agreement effective
January 1, 1997.
(6) INCOME TAXES
The Company did not record any tax benefit during the period from December
16, 1993 (inception) to June 30, 1994, the years ended June 30, 1995 and 1996
and the nine months ended March 31, 1996 and 1997.
F-44
<PAGE> 141
CHANNEL 32 INCORPORATED (NOTE 1)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996
(INFORMATION RELATING TO THE PERIOD FROM
JULY 1, 1996 TO JUNE 17, 1997 IS UNAUDITED)
The provision for income taxes differs from the amount computed by applying
the Federal statutory income tax rate of 34% to income before income taxes as
shown below:
<TABLE>
<CAPTION>
1994 1995 1996
------- --------- -----------
<S> <C> <C> <C>
Computed "expected" income tax benefit......... $(8,000) $(355,000) $(2,100,000)
Increase in valuation allowance................ 8,000 355,000 2,100,000
------- --------- -----------
Income tax expense (benefit)................. $ -- $ -- $ --
======= ========= ===========
</TABLE>
Deferred income tax assets and liabilities result from temporary
differences. Temporary differences are differences in the recognition of income
and expenses for income tax and financial reporting purposes that will result in
taxable or deductible amounts in future years. At June 30, 1996 and March 31,
1997, the net deferred income tax assets, related primarily to net operating
loss carryforwards, were approximately $1,158,000 and $6,177,000, respectively.
In 1995, the Company experienced an ownership change as defined in Section 382
of the Internal Revenue Code. This change in ownership restricts the utilization
of the Company's net operating loss (NOL) carryforwards to offset future taxable
income. NOL carryforwards arising subsequent to the change of control are not
subject to the limitation. The amount of NOL carryforwards subject to the
limitation is approximately $1,000,000 with an annual limitation of $75,000. The
carryforwards available at June 30, 1996 expire in 2011.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers
projected future taxable income and tax planning strategies in making this
assessment. At June 30, 1995, 1996 and March 31, 1997, based on the level of
historical taxable income and projections for future taxable losses over the
periods in which the level of deferred tax assets are deductible, management
believes that it is not more likely than not that the Company will not realize
the benefits of these deductible differences.
(7) SALE
On June 17, 1997, ACME Television Holdings, LLC (ACME) acquired certain of
the Company's assets, including the broadcast license of KWBP-TV and assumed
certain liabilities, including all of the Company's programming commitments and
the Company's equipment leases, in exchange for $18,675,000 in cash and
$4,400,000 in ACME Parent membership interests.
In addition, pursuant to a local marketing agreement, ACME effectively
operated the station and funded the losses from January 1, 1997 through June 17,
1997 (the acquisition date). Accordingly, there were no operating revenues or
expenses incurred by the Company subsequent to January 1, 1997.
F-45
<PAGE> 142
INSIDE BACK COVER
[ACME COMMUNICATIONS LOGO]
[LOGO'S OF SOME OF THE KIDS' WB PROGRAMMING AND PHOTOGRAPHS OF SEVERAL CARTOON
CHARACTERS]
<PAGE> 143
You may rely only on the information contained in this prospectus. We have not
authorized anyone to provide information different from that contained in this
prospectus. Neither the delivery of this prospectus nor the sale of common stock
means that information contained in this prospectus is correct after the date of
this prospectus. This prospectus is not an offer to sell or solicitation of an
offer to buy these shares in any circumstances under which the offer or
solicitation is unlawful.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY.................... 3
RISK FACTORS.......................... 8
DISCLOSURE REGARDING
FORWARD-LOOKING STATEMENTS.......... 15
USE OF PROCEEDS....................... 16
DIVIDEND POLICY....................... 16
CAPITALIZATION........................ 17
DILUTION.............................. 18
PRO FORMA FINANCIAL INFORMATION....... 19
SELECTED CONSOLIDATED AND PRO FORMA
FINANCIAL DATA...................... 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS....................... 28
INDUSTRY OVERVIEW..................... 34
BUSINESS.............................. 37
MANAGEMENT............................ 62
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.... 70
CERTAIN TRANSACTIONS.................. 74
THE REORGANIZATION.................... 79
DESCRIPTION OF CAPITAL STOCK.......... 82
SHARES ELIGIBLE FOR FUTURE SALE....... 86
CERTAIN U.S. FEDERAL TAX
CONSIDERATIONS FOR NON-U.S. HOLDERS
OF COMMON STOCK..................... 88
UNDERWRITING.......................... 91
LEGAL MATTERS......................... 94
EXPERTS............................... 94
ADDITIONAL INFORMATION................ 94
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS.......................... F-1
</TABLE>
Dealer Prospectus Delivery Obligation:
Until , 1999 (25 days after the date of this prospectus), all
dealers that buy, sell or trade in these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus. Dealers
are also obligated to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
[ACME Communications Logo]
ACME
Communications, Inc.
5,000,000 Shares
Common Stock
Deutsche Banc Alex. Brown
Merrill Lynch & Co.
Morgan Stanley Dean Witter
CIBC World Markets
Prospectus
, 1999
<PAGE> 144
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of the common stock being registered. All amounts are estimates except the
SEC registration fee, the NASD filing fees and the Nasdaq National Market
listing fee.
<TABLE>
<S> <C>
SEC Registration fee........................................ $ 33,569
NASD fee.................................................... 12,575
Nasdaq National Market listing fee.......................... 1,000
Printing and engraving expenses............................. 175,000
Legal fees and expenses..................................... 500,000
Accounting fees and expenses................................ 150,000
Blue sky fees and expenses.................................. 5,000
Transfer agent fees......................................... 5,000
FCC fees.................................................... 7,975
Miscellaneous fees and expenses............................. 96,881
--------
Total..................................................... $987,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our certificate of incorporation and bylaws provide a right to
indemnification to the fullest extent permitted by law for expenses, attorney's
fees, damages, punitive damages, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by any person whether or not the
indemnified liability arises or arose from any threatened, pending or completed
proceeding by or in our right by reason of the fact that such person is or was
serving as a director or officer at our request, as a director, officer,
partner, venturer, proprietor, employee, agent, or trustee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise. Our certificate of incorporation and bylaws provide for the
advancement of expenses to an indemnified party upon receipt of an undertaking
by the party to repay those amounts if it is finally determined that the
indemnified party is not entitled to indemnification. In addition, we have
entered into indemnification agreements with each of our directors and executive
officers.
Our bylaws authorize us to take steps to ensure that all persons entitled
to the indemnification are properly identified, indemnified, including, if the
board of directors so determines, purchasing and maintaining insurance.
We have entered into indemnification agreements with each of our directors
and officers. Pursuant to the indemnification agreements, we have agreed to
indemnify each director or officer, to the maximum extent provided by applicable
law, from claims, liabilities, damages, expenses, losses, costs, penalties or
amounts paid in settlement incurred by each director or officer in or arising
out of such person's capacity as our director, officer, employee and/or agent or
any other corporation of which such person is a director or officer at our
request. In addition, each director or officer is entitled to an advance of
expenses to the maximum extent authorized or permitted by law.
To the extent that our board of directors or the stockholders may in the
future wish to limit or repeal our ability to provide indemnification as set
forth in the certificate of incorporation, such repeal or limitation may not be
effective as to directors and officers who are parties to the indemnification
agreements, because their rights to full protection would
II-1
<PAGE> 145
be contractually assured by the indemnification agreements. We anticipate
entering similar contracts, from time to time, with our future directors.
In addition, the Form of Underwriting Agreement filed as Exhibit 1.1 to
this registration statement provides for indemnification by the underwriters of
us and our officers and directors, and by us of the underwriters, for certain
liabilities arising under the Securities Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Each of the investors who participated in the Section 4(2) transactions
below were sophisticated investors.
On June 17, 1997, we sold (a) to our initial investors, 6,467 membership
units for an aggregate of $6.5 million and 14,700 convertible debentures for an
aggregate of $14.7 million, (b) 4,400 membership units to Channel 32
Incorporated as partial consideration for the assets of KWBP and (c) 290
management capital units to Mr. Kellner, 160 management capital units to Mr.
Gealy and 150 management capital units to Mr. Allen, (d) 40 management carry
units to Mr. Kellner and 30 management carry units to each of Mr. Gealy and Mr.
Allen in partial consideration for their services as founders of our company. We
relied on Section 4(2) under the Securities Act for an exemption from
registration under the Securities Act.
On September 30, 1997, we sold to our initial investors and additional
investors 13,820.5 membership units for an aggregate of $13.8 million and 10,000
convertible debentures for an aggregate of $10.0 million. We relied on Section
4(2) under the Securities Act (with respect to the membership units) and Rule
144A under the Securities Act (with respect to the convertible debentures) for
exemption from registration under the Securities Act.
In each of the June 1997 and September 1997 issuance of membership units
(other than the units we sold to Channel 32 Incorporated) we paid CEA, Inc. a
financing fee of $440,000 and $1.1 million.
In January 1998, we issued 3,000 membership units to each of Michael
Roberts and Steven Roberts as partial consideration for 49% of membership units
of Roberts Broadcasting of Salt Lake City, LLC. We relied on Section 4(2) under
the Securities Act for exemption from registration under the Securities Act.
In June 1998, we sold 2,500 membership units to the sellers of Second
Generation of Florida, Ltd. in partial consideration for the assets of that
entity. We relied on Section 4(2) under the Securities Act for exemption under
the Securities Act.
II-2
<PAGE> 146
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
The following Exhibits are attached hereto and incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
1.1 Form of Underwriting Agreement.
2.1 Form of Agreement and Plan of Reorganization Relating to the
Capitalization of ACME Communications, Inc. by and among the
parties listed in the signature pages thereof.
2.2 Form Exchange Agreement among ACME Communications, Inc. and
the parties listed on the signature pages thereto.
2.3 Form of Agreement of Merger by and among ACME Television
Holdings, LLC, ACME Communications, Inc. and ACME
Communications Merger Subsidiary, LLC.
3.1 Form of Restated Certificate of Incorporation of ACME
Communications, Inc., a Delaware corporation.
3.2 Form of Restated Bylaws of ACME Communications, Inc.
4.1(1) Indenture, dated September 30, 1997, by and among ACME
Intermediate Holdings, LLC and ACME Intermediate Finance,
Inc., as Issuers, and Wilmington Trust Company.
4.2(1) 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.
4.3(4) 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.
4.4(4) 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.
4.5(6) 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.
4.6 Form of Stock Certificate of ACME Communications, Inc.
5.1** Opinion of O'Melveny & Myers LLP regarding the legality of
the securities being registered.
10.1(9) Asset Purchase Agreement, dated April 23, 1999, by and among
Paxson Communications Corporation, Paxson Communications
License Company, LLC, Paxson Communications of Green Bay-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.
10.2(3) Time Brokerage Agreement, dated April 23, 1999, by and among
Paxson Communications License Company, LLC, Paxson
Communications of Green Bay-14, Inc., and ACME Television of
Wisconsin, LLC for Station WPXG-TV, Suring, Wisconsin.
10.3(3) Time Brokerage Agreement, dated April 23, 1999, by and among
Paxson Decatur License, Inc., Paxson Communications of
Decatur-23, Inc., and ACME Television of Illinois, LLC for
Station WPXU-TV, Decatur, Illinois.
</TABLE>
II-3
<PAGE> 147
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.4(3) Time Brokerage Agreement, dated April 23, 1999, by and among
Paxson Dayton License, Inc., Paxson Communications of
Dayton-26, Inc., and ACME Television of Ohio, LLC for
Station WDPX-TV, Springfield, Ohio.
10.5(8) Asset Purchase Agreement, dated February 19, 1999, by and
between ACME Television of New Mexico, LLC and ACME
Television Licenses of New Mexico, LLC and Ramar
Communications II, Ltd., with respect to television station
KWBQ-TV, Santa Fe, New Mexico.
10.5(A)** Amendment to Asset Purchase Agreement, dated July 30, 1999,
by and between ACME Television of New Mexico, LLC and ACME
Television Licenses of New Mexico, LLC and Ramar
Communications II, Ltd., with respect to television station
KASY-TV, Santa Fe, New Mexico.
10.6(8) Asset Purchase Agreement, dated February 19, 1999, by and
between ACME Television of New Mexico, LLC and ACME
Television Licenses of New Mexico, LLC and Ramar
Communications II, Ltd., with respect to television station
KASY-TV, Albuquerque, New Mexico.
10.7(7) Purchase Agreement, dated October 30, 1998, by and between
Roberts Broadcasting of New Mexico, LLC and ACME Television
of New Mexico, LLC.
10.8(7) Option Agreement, dated November 5, 1998, by and between
Roberts Broadcasting of New Mexico, LLC and ACME Television
of New Mexico, LLC.
10.9(1) Asset Purchase Agreement, dated August 22, 1997, by and
between ACME Television Licenses of New Mexico, LLC and
Minority Broadcasters of Santa Fe, Inc.
10.10(1) Management Agreement, dated August 22, 1997, by and between
Minority Broadcasters of Santa Fe, Inc. and ACME Television
of New Mexico, LLC.
10.11(1) Membership Contribution Agreement, dated August 22, 1997, by
and among ACME Television Holdings, LLC, Roberts
Broadcasting of Salt Lake City, LLC, Michael V. Roberts and
Steven C. Roberts.
10.12(8) Membership Purchase Agreement, dated July 10, 1998, by and
between Roberts Broadcasting of Salt Lake City, L.L.C.,
Michael V. Roberts and Steven C. Roberts and ACME Television
Holdings, LLC for a majority interest in Roberts
Broadcasting of Salt Lake City, L.L.C.
10.13(8) Asset Exchange Agreement, dated April 20, 1998 by and among
Paxson Salt Lake City License, Inc., Paxson Communications
of Salt Lake City-30, Inc. and Roberts Broadcasting of Salt
Lake City, L.L.C.
10.14(5) Time Brokerage Agreement, dated April 20, 1998, for KUPX-TV,
by and among Paxson Salt Lake City License, Inc., Paxson
Communications of Salt Lake City-30, Inc. and ACME
Television of Utah, LLC.
10.15(1) Management Agreement, dated August 22, 1997, by and between
Roberts Broadcasting of Salt Lake City, LLC and ACME
Television of Utah, LLC.
10.16(4) Asset Purchase Agreement, dated March 2, 1998, by and
between ACME Television, LLC and Second Generation of
Florida, Ltd.
10.17(4) Time Brokerage Agreement, dated March 2, 1998, by and
between ACME Television, LLC and Second Generation of
Florida, Ltd.
10.18** Station Affiliation Agreement, dated March 15, 1998, by and
between ACME Television Holdings, LLC and The WB Television
Network Partners, L.P.
10.19(4) Agreement, dated January 30, 1998, by and between ACME
Television Licenses of Tennessee, LLC, Ruth Payne Carman
(dba E&R Communications) and the Carman-Holly Partnership.
</TABLE>
II-4
<PAGE> 148
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.20(5) Assignment Agreement, dated June 16, 1998, by and between
ACME Television Licenses of Tennessee, LLC, Ruth Payne
Carman (dba E&R Communications), Carman-Harrison, LLC and
Donald E. Holley.
10.21(1) Stock Purchase Agreement, dated July 29, 1997, by and among
ACME Television Holdings, LLC, Koplar Communications, Inc.
and the shareholders named therein.
10.22(1) Escrow Agreement, dated September 8, 1997, by and among ACME
Television Holdings, LLC, ACME Television Licenses of
Missouri, Inc., Koplar Communications, Inc. the shareholders
of Koplar Communications, Inc. and NationsBank, N.A.
10.23(1) Time Brokerage Agreement for KPLR-TV, dated September 8,
1997, by and among ACME Television Licenses of Missouri,
Inc., ACME Television Holdings, LLC, Koplar Communications
Television, LLC and Koplar Communications, Inc.
10.24(1) Station Affiliation Agreement, dated September 24, 1997, by
and between ACME Holdings of St. Louis, LLC and The WB
Television Network Partners, L.P.
10.25(3) Management Agreement between Edward J. Koplar and ACME
Television Licenses of Missouri, Inc.
10.26(1) Escrow Agreement, dated May 28, 1997, by and among ACME
Television Licenses of Tennessee, LLC, ACME Television of
Tennessee, LLC, Crossville TV Limited Partnership, the
Sellers names therein and NationsBank, N.A., as escrow
agent.
10.27(3) Station Affiliation Agreement, dated August 18, 1997, by and
between ACME Holdings of Knoxville, LLC and The WB
Television Network Partners, L.P.
10.28(3) Station Affiliation Agreement, dated June 10, 1997, by and
between ACME Holdings of Oregon, LLC and The WB Television
Network Partners, L.P.
10.29** Joint Sales Agreement by and between ACME Television
Holdings, LLC and DP Media, Inc., dated April 23, 1999.
10.30** Option Agreement, dated April 23, 1999, by and between ACME
Television Holdings, LLC and DP Media, Inc.
10.31(1) Programming Agreement, dated June 1, 1995, by and among
Koplar Communications, Inc., Roberts Broadcasting Company,
Michael V. Roberts and Steven C. Roberts.
10.32(5) Master Lease Agreement, dated June 30, 1998, by and between
General Electric Capital Corporation and ACME Television,
LLC.
10.33(1) Station Affiliation Commitment Letter dated August 21, 1997,
to ACME Communications, Inc. from The WB Television Network.
10.34** ACME Communications, Inc. 1999 Stock Incentive Plan.
10.35** Form of Employment Agreement, as amended, by and between
ACME Communications, Inc. and Doug Gealy.
10.36** Form of Employment Agreement, as amended, by and between
ACME Communications, Inc. and Tom Allen.
10.37 Consulting Agreement, as amended, by and between ACME
Communications, Inc. and Jamie Kellner.
10.38(1) First Amended and Restated Credit Agreement, dated as of
December 2, 1997, by and among ACME Television, LLC, the
Lenders named therein and Canadian Imperial Bank of
Commerce, New York Agency, as agent for the Lenders.
10.39(3) Securities and Pledge Agreement, dated December 2, 1997, by
and between ACME Subsidiary Holdings III, LLC and Canadian
Imperial Bank of Commerce, as agent for the benefit of CIBC,
Inc. and other financial institutions.
10.40** Amendment No. 1 to First Amended and Restated Credit
Agreement, dated June 30, 1998.
</TABLE>
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<PAGE> 149
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.41** Amendment No. 2 to First Amended and Restated Credit
Agreement, dated June 30, 1998.
10.42** Third Amendment to First Amended and Restated Credit
Agreement, dated March 1, 1999.
10.43** Fourth Amendment to First Amended and Restated Credit
Agreement, dated April 23, 1999.
10.43A** Fifth Amendment to Credit Agreement, dated September 1999
10.44(3) Form of Guaranty by and among ACME subsidiaries, Canadian
Imperial Bank of Commerce, as agent, and the Lenders under
the First Amended and Restated Credit Agreement.
10.45(3) Form of Security and Pledge Agreement by and among ACME
subsidiaries, Canadian Imperial Bank of Commerce, as agent,
and the Lenders under the First Amended and Restated Credit
Agreement.
10.46** Form of Registration Rights Agreement, by and among ACME
Communications, Inc. and the parties on the signature pages
thereto.
10.47(1) Note Purchase Agreement, dated September 24, 1997, by and
among ACME Intermediate Holdings, LLC, ACME Intermediate
Finance, Inc. and CIBC Wood Gundy Securities Corp., as
Initial Purchaser.
10.48(2) Note Purchase Agreement, dated September 24, 1997, by and
among ACME Television, LLC, ACME Finance Corporation, CIBC
Wood Gundy Securities Corp. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
10.49(1) Securities Pledge Agreement, dated September 30, 1997, by
and between ACME Intermediate Holdings, LLC and ACME
Intermediate Finance, Inc., as Pledgers, and Wilmington
Trust Company, as Trustee.
10.50(3) Limited Liability Company Agreement of ACME Television
Holdings, LLC.
10.51(3) First Amendment to Limited Liability Company Agreement of
ACME Television Holdings, LLC.
10.52 Employment Agreement dated September 27, 1999, by and
between ACME Communications, Inc. and Ed Danduran.
10.53** Amended and Restated Investment and Loan Agreement, dated as
of June 17, 1999, by and among ACME Television Holdings, LLC
and Jamie Kellner, Douglas Gealy, Thomas Allen, CEA Capital
Partners USA, L.P. CEA ACME, Inc., Alta Communications VI,
L.P., Alta Subordinated Debt Partners III, L.P., Alta-Comm S
by S, LLC, Alta ACME, Inc., BancBoston Ventures, Inc., CEA
Inc. and Alta Inc.
10.54** Form of Convertible Debenture of ACME Television Holdings,
LLC. Due June 30, 2008.
10.55(8) Agreement of Lease, dated May 16, 1986, by and between CBS,
Inc. and Koplar Communications Inc.
10.56(8) Amendment to Agreement of Lease, dated September 2, 1986, by
and between Viacom Broadcasting of Missouri Inc. and Koplar
Communications Inc.
10.57(1) Amended and Restated Lease Agreement, dated July 1, 1986, by
and between KKSN, Inc. and Channel 32 Incorporated.
10.58(8) Tower Lease Agreement, dated August 22, 1997, by and between
Roberts Broadcasting Company of Utah, Inc. and Roberts
Broadcasting Company of Salt Lake City, LLC.
10.59(3) Amendment to Tower Lease Agreement, dated December 9, 1997,
by and between Roberts Broadcasting Company of Utah, Inc.
and Roberts Broadcasting Company of Salt Lake City LLC.
10.60** Lease Agreement, dated January 1, 1997, by and between Mr.
Tom Winter and VCY/America, Inc.
</TABLE>
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<PAGE> 150
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.61** Assignment and Assumption of Lease and Estoppel Certificate,
dated October 6, 1997.
10.62** Assignment and Assumption of Lease, dated April 23, 1999.
10.63(7) Tower Lease Agreement, dated December 30, 1998, by and
between Roberts Broadcasting Company of New Mexico, LLC and
ACME Television of New Mexico, LLC.
10.64** Tower License Agreement, dated May 21, 1992, by and between
Caloosa Television Corporation and Southwest Florida
Telecommunications, Inc.
10.65** Station Affiliation Agreement, dated April 9, 1998, by and
between ACME Television Licenses of Utah, LLC and The WB
Television Network.
10.66** Station Affiliation Agreement, dated March 4, 1999, by and
between ACME Television Licenses of New Mexico, LLC and The
WB Television Network.
10.67** Station Affiliation Agreement dated May 1, 1999 by and
between ACME Television Licenses of Wisconsin, LLC and The
WB Television Network.
10.68** Station Affiliation Agreement dated May 1, 1999 by and
between ACME Television Licenses of Illinois LLC and The WB
Television Network.
10.69** Station Affiliation Agreement dated May 1, 1999 by and
between ACME Television Licenses of Ohio LLC and The WB
Television Network.
10.70 [Intentionally left blank]
10.71** Bridge Loan Agreement, dated April 23, 1999, by and among
ACME Television Holdings, LLC, Alta Communications VI, L.P.,
Alta Comm S by S, LLC, Alta Subordinated Debt Partners III,
L.P., BancBoston Investments Inc., CEA Capital Partners USA,
L.P., CEA Capital Partners USA CI, L.P., TCW Shared
Opportunity Fund III, L.P., Shared Opportunity Fund IIB, LLC
and TCW Leveraged Income Trust II, L.P.
10.72 Form of Stockholder and Voting Agreement by and among ACME
Communications, Inc. and the parties on the signature pages
thereto.
10.73 Form of Voting Agreement by and among ACME Communications,
Inc. and the parties on the signature pages thereto.
10.74(1) Management Agreement, dated February 6, 1997, by and between
Newco of Oregon, Inc. and Channel 32, Incorporated.
10.75(1) Amendment, dated June 17, 1997, to Management Agreement by
and between ACME Television Holdings of Oregon, LLC and
Channel 32, Incorporated.
21.0** Subsidiaries of Registrant.
23.1 Consent of KPMG LLP regarding ACME Television Holdings, LLC
23.2** Consent of KPMG LLP regarding Koplar Communications, Inc.
and Subsidiary.
23.3** Consent of KPMG LLP regarding Channel 32 Incorporated.
23.4** Consent of O'Melveny & Myers LLP (included in Exhibit 5.1).
24.1** Power of Attorney (included in signature page hereto).
27.1** Financial Data Schedule.
</TABLE>
- -------------------------
* To be filed by amendment.
** Previously filed.
(1) Incorporated by reference to the Registration Statement for ACME
Intermediate Holdings, LLC on Form S-4, File No. 333-4027, filed on November
14, 1997.
(2) Incorporated by reference to the Registration Statement for ACME Television,
LLC on Form S-4, File No. 333-40281, filed on November 14, 1997.
(3) Incorporated by reference to the Registration Statement for ACME Television,
LLC on Form S-4/A, File No. 333-40281, filed on January 16, 1998.
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<PAGE> 151
(4) Incorporated by reference to ACME Intermediate Holdings LLC's Quarterly
Report on Form 10-Q for the period ending March 31, 1998.
(5) Incorporated by reference to ACME Intermediate Holdings LLC's Quarterly
Report on Form 10-Q for the period ending June 30, 1998.
(6) Incorporated by reference to ACME Intermediate Holdings LLC's Quarterly
Report on Form 10-Q for the period ending September 30, 1998.
(7) Incorporated by reference to ACME Intermediate Holdings LLC's Annual Report
on Form 10-K for the For the year ended December 31, 1998.
(8) Incorporated by reference to ACME Television Holdings LLC's Quarterly Report
on Form 10-Q for the period ending March 31, 1999.
(9) Incorporated by reference to ACME Intermediate Holdings LLC's Report on Form
8-K filed May 7, 1999.
(b) FINANCIAL STATEMENT SCHEDULES
Schedule I -- Condensed Financial Information
Schedule II -- Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the provisions referenced in Item 14 of this Registration Statement or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act, and is, therefore, unenforceable. If a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer, or controlling person of
the Company in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered hereunder, the Company will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
The Company hereby undertakes to provide to the underwriters at the
Closing, as specified in the Underwriting Agreement, certificates in such
denomination and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
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<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Santa Ana, State of California, on September 29, 1999.
ACME COMMUNICATIONS, INC.
/s/ THOMAS ALLEN
--------------------------------------
Thomas Allen
Executive Vice President
Chief Financial Officer
Pursuant to the requirements of the Securities Act, this amendment to
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
* Chairman of the Board and September 29, 1999
- --------------------------------------------- Chief Executive Officer
Jamie Kellner (Principal Executive
Officer)
* President and Chief September 29, 1999
- --------------------------------------------- Operating Officer and
Douglas Gealy Director
/s/ THOMAS ALLEN Executive Vice President, September 29, 1999
- --------------------------------------------- Chief Financial Officer
Thomas Allen (Principal Financial and
Accounting Officer) and
Director
* Director September 29, 1999
- ---------------------------------------------
James Collis
* Director September 29, 1999
- ---------------------------------------------
Thomas Embrescia
* Director September 29, 1999
- ---------------------------------------------
Brian McNeill
* Director September 29, 1999
- ---------------------------------------------
Michael Roberts
* Director September 29, 1999
- ---------------------------------------------
Darryl Schall
*By /s/ THOMAS ALLEN
----------------------------------------
Thomas Allen
Attorney-in-fact
</TABLE>
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<PAGE> 153
SCHEDULE I
ACME TELEVISION HOLDINGS, LLC
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION
BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------
1997 1998
------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 4 $ 48
Due from affiliates....................................... 7 --
------- --------
Total current assets................................... 11 48
------- --------
Notes Receivable and accrued interest....................... 211 231
Investment in subsidiaries.................................. 40,806 28,456
Prepaid financing costs..................................... 1,081 959
------- --------
Total assets........................................... $42,109 $ 29,694
======= ========
LIABILITIES AND MEMBERS' CAPITAL
Current Liabilities:
Other current liabilities................................. -- 2
------- --------
Total current liabilities.............................. -- 2
Accrued interest payable.................................... 1,047 3,523
Convertible debentures...................................... 24,756 24,756
------- --------
Total liabilities...................................... $25,803 $ 28,281
======= ========
Members' capital............................................ 23,785 30,832
Accumulated deficit......................................... (7,479) (29,419)
------- --------
Total members' capital................................. 16,306 1,413
Total liabilities and members' capital................. $42,109 $ 29,694
======= ========
</TABLE>
See accompanying notes to the condensed financial statements.
S-1
<PAGE> 154
ACME TELEVISION HOLDINGS, LLC
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------
1997 1998
------- --------
(IN THOUSANDS)
<S> <C> <C>
Net Revenues................................................ $ -- $ --
Other Income (Expenses)..................................... 4 (13)
Interest income............................................. -- 20
Interest expense............................................ (1,096) (2,575)
------- --------
Net other expenses........................................ (1,092) (2,568)
Equity in the net loss of subsidiaries...................... (6,397) (19,372)
------- --------
Net Loss.................................................. $(7,479) $(21,940)
======= ========
</TABLE>
See accompanying notes to the condensed financial statements.
S-2
<PAGE> 155
ACME TELEVISION HOLDINGS, LLC
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION
STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
MEMBERS' ACCUMULATED MEMBERS'
CAPITAL DEFICIT CAPITAL
---------- ----------- -------------
<S> <C> <C> <C>
Balance at December 31, 1996....................... $ -- $ -- $ --
Issuance of Units, net........................... 23,785 -- 23,785
Net Loss....................................... -- (7,479) (7,479)
------- -------- --------
Balance at December 31, 1997....................... 23,785 (7,479) 16,306
Issuance of Units, net........................... 7,047 7,047
Net Loss....................................... -- (21,940) (21,940)
------- -------- --------
Balance at December 31, 1998....................... $30,832 $(29,419) $ 1,413
======= ======== ========
</TABLE>
See accompanying notes to the condensed financial statements.
S-3
<PAGE> 156
ACME TELEVISION HOLDINGS, LLC
(PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1997 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (7,479) $(21,940)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Amortization of debt issuance costs....................... 34 122
Equity in net loss of subsidiary.......................... 6,397 19,372
Changes in assets and liabilities:
(Increase) decrease in accounts receivables, net.......... (211) (20)
(Increase) decrease in prepaid expenses................... -- 25
(Increase) decrease in due from affiliates................ (7) 7
(Increase) other assets................................... -- --
Increase in other current liabilities..................... -- 2
Increase in accrued expenses.............................. 1,047 2,476
-------- --------
Net cash provided by (used in) operating activity...... (219) 44
-------- --------
Cash flows from investing activities:
Purchase of station interests............................. (18,675) --
Investments in and advances to subsidiaries............... (24,128) --
-------- --------
Net cash used in investing activities.................. (42,803) --
-------- --------
Cash flows from financing activities:
Issuance of units......................................... 19,385 --
Debt issuance costs....................................... (1,115) --
Issuance of convertible debt.............................. 24,756 --
-------- --------
Net cash provided by financing activities.............. 43,026 --
-------- --------
Net increase (decrease) in cash........................... 4 44
Cash at beginning of period............................... -- 4
-------- --------
Cash at end of period..................................... $ 4 $ 48
======== ========
Supplemental disclosures of cash flow information:
Non-cash transactions:
Issuance of units as purchase consideration............... 4,400 7,047
Contribution of station interest to subsidiary............ 18,675 --
</TABLE>
See accompanying notes to the condensed financial statements.
S-4
<PAGE> 157
ACME TELEVISION HOLDINGS, LLC
(PARENT COMPANY)
NOTES TO CONDENSED FINANCIAL INFORMATION
(1) BASIS OF PRESENTATION
Pursuant to the rules and regulations of the Securities and Exchange
Commission, the Condensed Financial Statements of ACME Television Holdings, LLC,
does not include all of the information and notes normally included with
financial statements prepared in accordance with generally accepted accounting
principles. It is therefore suggested that these Condensed Financial Statements
be read in conjunction with the Consolidated Financial Statements and Notes
thereto included at Item 8 of this filing.
(2) CASH DIVIDENDS
There have been no cash dividends declared by the Company.
(3) LONG-TERM DEBT
There are no cash interest payments due on the Company's convertible debt
until June 30, 2008. There are no cash interest payments due on ACME
Intermediate Holdings, LLC's Senior Secured Discount Notes until March 31, 2003.
There are no cash interest payments due on ACME Television, LLC's Senior
Discount Notes until March 31, 2001.
(4) SUBSEQUENT EVENT -- REORGANIZATION
First, ACME Communications will issue common stock in exchange for all of
the convertible debentures of ACME Television Holdings, LLC. The convertible
debentures will be converted pursuant to their original conversion terms and as
such, there will not be a gain or loss related to this transaction.
Second, ACME Communications will exchange shares of its common stock for
(a) membership units representing approximately 6% of ACME Intermediate and (b)
all of the convertible debentures and preferred convertible membership units of
ACME Subsidiary Holdings IV, LLC. These transaction will be treated as
acquisitions of minority interests. The fair value of the stock issued to
acquire the minority interests will be allocated to the net assets acquired.
Third, ACME Communications Merger Subsidiary, LLC, a wholly-owned
subsidiary of ACME Communications, will merge into ACME Television Holdings,
LLC. In this merger, ACME Television Holdings, LLC's membership units will be
exchanged for shares of common stock of ACME Communications. This transaction
will be treated as a reorganization at historical cost.
Fourth, ACME Subsidiary Holdings, LLC, a wholly-owned subsidiary of ACME
Television Holdings, LLC, will dissolve and its sole asset, a 0.49146% interest
in ACME Intermediate, will be distributed to ACME Television Holdings, LLC. This
transaction will be treated as a reorganization at historical cost.
Last, ACME Subsidiary Holdings IV, LLC will dissolve and its sole asset, a
1.99037% interest in ACME Intermediate, will be distributed to ACME Television
Holdings, LLC. After this dissolution, ACME Communications will own directly or
indirectly 100% of the membership units of each of ACME Television Holdings, LLC
and of ACME Intermediate. This transaction will be treated as a reorganization
at historical cost.
S-5
<PAGE> 158
SCHEDULE II.
ACME TELEVISION HOLDINGS, LLC AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT ADDITIONS ACQUIRED IN BALANCE AT
ALLOWANCE FOR DOUBTFUL BEGINNING CHARGED TO PURCHASE END OF
ACCOUNTS OF PERIOD EXPENSE TRANSACTIONS(1) DEDUCTIONS PERIOD
- ---------------------- ---------- ---------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December
31, 1997............ -- -- 51,000 -- 51,000
Year ended December
31, 1998............ 51,000 223,776 280,224 -- 555,000
</TABLE>
- -------------------------
(1) Additions relating to purchase transactions.
Other schedules have been omitted because they are not applicable or not
required or because the information is included elsewhere in the consolidated
financial statements or the related notes.
S-6
<PAGE> 159
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
1.1 Form of Underwriting Agreement.
2.1 Form of Agreement and Plan of Reorganization Relating to the
Capitalization of ACME Communications, Inc. by and among the
parties listed in the signature pages thereof.
2.2 Form Exchange Agreement among ACME Communications, Inc. and
the parties listed on the signature pages thereto.
2.3 Form of Agreement of Merger by and among ACME Television
Holdings, LLC, ACME Communications, Inc. and ACME
Communications Merger Subsidiary, LLC.
3.1 Form of Restated Certificate of Incorporation of ACME
Communications, Inc., a Delaware corporation.
3.2 Form of Restated Bylaws of ACME Communications, Inc.
4.1(1) Indenture, dated September 30, 1997, by and among ACME
Intermediate Holdings, LLC and ACME Intermediate Finance,
Inc., as Issuers, and Wilmington Trust Company.
4.2(1) 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.
4.3(4) 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.
4.4(4) 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.
4.5(6) 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.
4.6 Form of Stock Certificate of ACME Communications, Inc.
5.1** Opinion of O'Melveny & Myers LLP regarding the legality of
the securities being registered.
10.1(9) Asset Purchase Agreement, dated April 23, 1999, by and among
Paxson Communications Corporation, Paxson Communications
License Company, LLC, Paxson Communications of Green Bay-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.
10.2(3) Time Brokerage Agreement, dated April 23, 1999, by and among
Paxson Communications License Company, LLC, Paxson
Communications of Green Bay-14, Inc., and ACME Television of
Wisconsin, LLC for Station WPXG-TV, Suring, Wisconsin.
10.3(3) Time Brokerage Agreement, dated April 23, 1999, by and among
Paxson Decatur License, Inc., Paxson Communications of
Decatur-23, Inc., and ACME Television of Illinois, LLC for
Station WPXU-TV, Decatur, Illinois.
10.4(3) Time Brokerage Agreement, dated April 23, 1999, by and among
Paxson Dayton License, Inc., Paxson Communications of
Dayton-26, Inc., and ACME Television of Ohio, LLC for
Station WDPX-TV, Springfield, Ohio.
10.5(8) Asset Purchase Agreement, dated February 19, 1999, by and
between ACME Television of New Mexico, LLC and ACME
Television Licenses of New Mexico, LLC and Ramar
Communications II, Ltd., with respect to television station
KWBQ-TV, Santa Fe, New Mexico.
</TABLE>
<PAGE> 160
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.5(A)** Amendment to Asset Purchase Agreement, dated July 30, 1999,
by and between ACME Television of New Mexico, LLC and ACME
Television Licenses of New Mexico, LLC and Ramar
Communications II, Ltd., with respect to television station
KASY-TV, Santa Fe, New Mexico.
10.6(8) Asset Purchase Agreement, dated February 19, 1999, by and
between ACME Television of New Mexico, LLC and ACME
Television Licenses of New Mexico, LLC and Ramar
Communications II, Ltd., with respect to television station
KASY-TV, Albuquerque, New Mexico.
10.7(7) Purchase Agreement, dated October 30, 1998, by and between
Roberts Broadcasting of New Mexico, LLC and ACME Television
of New Mexico, LLC.
10.8(7) Option Agreement, dated November 5, 1998, by and between
Roberts Broadcasting of New Mexico, LLC and ACME Television
of New Mexico, LLC.
10.9(1) Asset Purchase Agreement, dated August 22, 1997, by and
between ACME Television Licenses of New Mexico, LLC and
Minority Broadcasters of Santa Fe, Inc.
10.10(1) Management Agreement, dated August 22, 1997, by and between
Minority Broadcasters of Santa Fe, Inc. and ACME Television
of New Mexico, LLC.
10.11(1) Membership Contribution Agreement, dated August 22, 1997, by
and among ACME Television Holdings, LLC, Roberts
Broadcasting of Salt Lake City, LLC, Michael V. Roberts and
Steven C. Roberts.
10.12(8) Membership Purchase Agreement, dated July 10, 1998, by and
between Roberts Broadcasting of Salt Lake City, L.L.C.,
Michael V. Roberts and Steven C. Roberts and ACME Television
Holdings, LLC for a majority interest in Roberts
Broadcasting of Salt Lake City, L.L.C.
10.13(8) Asset Exchange Agreement, dated April 20, 1998 by and among
Paxson Salt Lake City License, Inc., Paxson Communications
of Salt Lake City-30, Inc. and Roberts Broadcasting of Salt
Lake City, L.L.C.
10.14(5) Time Brokerage Agreement, dated April 20, 1998, for KUPX-TV,
by and among Paxson Salt Lake City License, Inc., Paxson
Communications of Salt Lake City-30, Inc. and ACME
Television of Utah, LLC.
10.15(1) Management Agreement, dated August 22, 1997, by and between
Roberts Broadcasting of Salt Lake City, LLC and ACME
Television of Utah, LLC.
10.16(4) Asset Purchase Agreement, dated March 2, 1998, by and
between ACME Television, LLC and Second Generation of
Florida, Ltd.
10.17(4) Time Brokerage Agreement, dated March 2, 1998, by and
between ACME Television, LLC and Second Generation of
Florida, Ltd.
10.18** Station Affiliation Agreement, dated March 15, 1998, by and
between ACME Television Holdings, LLC and The WB Television
Network Partners, L.P.
10.19(4) Agreement, dated January 30, 1998, by and between ACME
Television Licenses of Tennessee, LLC, Ruth Payne Carman
(dba E&R Communications) and the Carman-Holly Partnership.
10.20(5) Assignment Agreement, dated June 16, 1998, by and between
ACME Television Licenses of Tennessee, LLC, Ruth Payne
Carman (dba E&R Communications), Carman-Harrison, LLC and
Donald E. Holley.
10.21(1) Stock Purchase Agreement, dated July 29, 1997, by and among
ACME Television Holdings, LLC, Koplar Communications, Inc.
and the shareholders named therein.
10.22(1) Escrow Agreement, dated September 8, 1997, by and among ACME
Television Holdings, LLC, ACME Television Licenses of
Missouri, Inc., Koplar Communications, Inc. the shareholders
of Koplar Communications, Inc. and NationsBank, N.A.
10.23(1) Time Brokerage Agreement for KPLR-TV, dated September 8,
1997, by and among ACME Television Licenses of Missouri,
Inc., ACME Television Holdings, LLC, Koplar Communications
Television, LLC and Koplar Communications, Inc.
10.24(1) Station Affiliation Agreement, dated September 24, 1997, by
and between ACME Holdings of St. Louis, LLC and The WB
Television Network Partners, L.P.
</TABLE>
<PAGE> 161
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.25(3) Management Agreement between Edward J. Koplar and ACME
Television Licenses of Missouri, Inc.
10.26(1) Escrow Agreement, dated May 28, 1997, by and among ACME
Television Licenses of Tennessee, LLC, ACME Television of
Tennessee, LLC, Crossville TV Limited Partnership, the
Sellers names therein and NationsBank, N.A., as escrow
agent.
10.27(3) Station Affiliation Agreement, dated August 18, 1997, by and
between ACME Holdings of Knoxville, LLC and The WB
Television Network Partners, L.P.
10.28(3) Station Affiliation Agreement, dated June 10, 1997, by and
between ACME Holdings of Oregon, LLC and The WB Television
Network Partners, L.P.
10.29** Joint Sales Agreement by and between ACME Television
Holdings, LLC and DP Media, Inc., dated April 23, 1999.
10.30** Option Agreement, dated April 23, 1999, by and between ACME
Television Holdings, LLC and DP Media, Inc.
10.31(1) Programming Agreement, dated June 1, 1995, by and among
Koplar Communications, Inc., Roberts Broadcasting Company,
Michael V. Roberts and Steven C. Roberts.
10.32(5) Master Lease Agreement, dated June 30, 1998, by and between
General Electric Capital Corporation and ACME Television,
LLC.
10.33(1) Station Affiliation Commitment Letter dated August 21, 1997,
to ACME Communications, Inc. from The WB Television Network.
10.34** ACME Communications, Inc. 1999 Stock Incentive Plan.
10.35** Form of Employment Agreement, as amended, by and between
ACME Communications, Inc. and Doug Gealy.
10.36** Form of Employment Agreement, as amended, by and between
ACME Communications, Inc. and Tom Allen.
10.37 Consulting Agreement, as amended, by and between ACME
Communications, Inc. and Jamie Kellner.
10.38(1) First Amended and Restated Credit Agreement, dated as of
December 2, 1997, by and among ACME Television, LLC, the
Lenders named therein and Canadian Imperial Bank of
Commerce, New York Agency, as agent for the Lenders.
10.39(3) Securities and Pledge Agreement, dated December 2, 1997, by
and between ACME Subsidiary Holdings III, LLC and Canadian
Imperial Bank of Commerce, as agent for the benefit of CIBC,
Inc. and other financial institutions.
10.40** Amendment No. 1 to First Amended and Restated Credit
Agreement, dated June 30, 1998.
10.41** Amendment No. 2 to First Amended and Restated Credit
Agreement, dated June 30, 1998.
10.42** Third Amendment to First Amended and Restated Credit
Agreement, dated March 1, 1999.
10.43** Fourth Amendment to First Amended and Restated Credit
Agreement, dated April 23, 1999.
10.43A** Fifth Amendment to Credit Agreement, dated September 1999.
10.44(3) Form of Guaranty by and among ACME subsidiaries, Canadian
Imperial Bank of Commerce, as agent, and the Lenders under
the First Amended and Restated Credit Agreement.
10.45(3) Form of Security and Pledge Agreement by and among ACME
subsidiaries, Canadian Imperial Bank of Commerce, as agent,
and the Lenders under the First Amended and Restated Credit
Agreement.
10.46** Form of Registration Rights Agreement, by and among ACME
Communications, Inc. and the parties on the signature pages
thereto.
10.47(1) Note Purchase Agreement, dated September 24, 1997, by and
among ACME Intermediate Holdings, LLC, ACME Intermediate
Finance, Inc. and CIBC Wood Gundy Securities Corp., as
Initial Purchaser.
</TABLE>
<PAGE> 162
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.48(2) Note Purchase Agreement, dated September 24, 1997, by and
among ACME Television, LLC, ACME Finance Corporation, CIBC
Wood Gundy Securities Corp. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
10.49(1) Securities Pledge Agreement, dated September 30, 1997, by
and between ACME Intermediate Holdings, LLC and ACME
Intermediate Finance, Inc., as Pledgers, and Wilmington
Trust Company, as Trustee.
10.50(3) Limited Liability Company Agreement of ACME Television
Holdings, LLC.
10.51(3) First Amendment to Limited Liability Company Agreement of
ACME Television Holdings, LLC.
10.52 Employment Agreement, dated September 27, 1999 by and
between ACME Communications, Inc. and Ed Danduran.
10.53** Amended and Restated Investment and Loan Agreement, dated as
of June 17, 1999, by and among ACME Television Holdings, LLC
and Jamie Kellner, Douglas Gealy, Thomas Allen, CEA Capital
Partners USA, L.P. CEA ACME, Inc., Alta Communications VI,
L.P., Alta Subordinated Debt Partners III, L.P., Alta-Comm S
by S, LLC, Alta ACME, Inc., BancBoston Ventures, Inc., CEA
Inc. and Alta Inc.
10.54** Form of Convertible Debenture of ACME Television Holdings,
LLC. Due June 30, 2008.
10.55(8) Agreement of Lease, dated May 16, 1986, by and between CBS,
Inc. and Koplar Communications Inc.
10.56(8) Amendment to Agreement of Lease, dated September 2, 1986, by
and between Viacom Broadcasting of Missouri Inc. and Koplar
Communications Inc.
10.57(1) Amended and Restated Lease Agreement, dated July 1, 1986, by
and between KKSN, Inc. and Channel 32 Incorporated.
10.58(8) Tower Lease Agreement, dated August 22, 1997, by and between
Roberts Broadcasting Company of Utah, Inc. and Roberts
Broadcasting Company of Salt Lake City, LLC.
10.59(3) Amendment to Tower Lease Agreement, dated December 9, 1997,
by and between Roberts Broadcasting Company of Utah, Inc.
and Roberts Broadcasting Company of Salt Lake City LLC.
10.60** Lease Agreement, dated January 1, 1997, by and between Mr.
Tom Winter and VCY/America, Inc.
10.61** Assignment and Assumption of Lease and Estoppel Certificate,
dated October 6, 1997.
10.62** Assignment and Assumption of Lease, dated April 23, 1999.
10.63(7) Tower Lease Agreement, dated December 30, 1998, by and
between Roberts Broadcasting Company of New Mexico, LLC and
ACME Television of New Mexico, LLC.
10.64** Tower License Agreement, dated May 21, 1992, by and between
Caloosa Television Corporation and Southwest Florida
Telecommunications, Inc.
10.65** Station Affiliation Agreement, dated April 9, 1998, by and
between ACME Television Licenses of Utah LLC and The WB
Television Network.
10.66** Station Affiliation Agreement, dated March 4, 1999, by and
between ACME Television Licenses of New Mexico LLC and The
WB Television Network.
10.67** Station Affiliation Agreement, dated May 1, 1999, by and
between ACME Television Licenses of Wisconsin LLC and The WB
Television Network.
10.68** Station Affiliation Agreement, dated May 1, 1999, by and
between ACME Television Licenses of Illinois LLC and The WB
Television Network.
10.69** Station Affiliation Agreement, dated May 1, 1999, by and
between ACME Television Licenses of Ohio LLC and The WB
Television Network.
10.70 [Intentionally left blank]
</TABLE>
<PAGE> 163
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.71** Bridge Loan Agreement, dated April 23, 1999, by and among
ACME Television Holdings, LLC, Alta Communications VI, L.P.,
Alta Comm S by S, LLC, Alta Subordinated Debt Partners III,
L.P., BancBoston Investments Inc., CEA Capital Partners USA,
L.P., CEA Capital Partners USA CI, L.P., TCW Shared
Opportunity Fund III, L.P., Shared Opportunity Fund IIB, LLC
and TCW Leveraged Income Trust II, L.P.
10.72 Form of Stockholder and Voting Agreement by and among ACME
Communications Inc. and the parties on the signature pages
thereto.
10.73 Form of Voting Agreement by and among ACME Communications
Inc. and the parties on the signature pages thereto.
10.74(1) Management Agreement, dated February 6, 1997, by and between
Newco of Oregon, Inc. and Channel 32, Incorporated.
10.75(1) Amendment, dated June 17, 1997, to Management Agreement by
and between ACME Television Holdings of Oregon, LLC and
Channel 32, Incorporated.
21.0** Subsidiaries of Registrant.
23.1 Consent of KPMG LLP regarding ACME Television Holdings, LLC
23.2** Consent of KPMG LLP regarding Koplar Communications, Inc.
and Subsidiary.
23.3** Consent of KPMG LLP regarding Channel 32 Incorporated.
23.4** Consent of O'Melveny & Myers LLP (included in Exhibit 5.1).
24.1** Power of Attorney (included in signature page hereto).
27.1** Financial Data Schedule.
</TABLE>
- -------------------------
* To be filed by amendment.
** Previously filed.
(1) Incorporated by reference to the Registration Statement for ACME
Intermediate Holdings, LLC on Form S-4, File No. 333-4027, filed on November
14, 1997.
(2) Incorporated by reference to the Registration Statement for ACME Television,
LLC on Form S-4, File No. 333-40281, filed on November 14, 1997.
(3) Incorporated by reference to the Registration Statement for ACME Television,
LLC on Form S-4/A, File No. 333-40281, filed on January 16, 1998.
(4) Incorporated by reference to ACME Intermediate Holdings LLC's Quarterly
Report on Form 10-Q for the period ending March 31, 1998.
(5) Incorporated by reference to ACME Intermediate Holdings LLC's Quarterly
Report on Form 10-Q for the period ending June 30, 1998.
(6) Incorporated by reference to ACME Intermediate Holdings LLC's Quarterly
Report on Form 10-Q for the period ending September 30, 1998.
(7) Incorporated by reference to ACME Intermediate Holdings LLC's Annual Report
on Form 10-K for the For the year ended December 31, 1998.
(8) Incorporated by reference to ACME Television Holdings LLC's Quarterly Report
on Form 10-Q for the period ending March 31, 1999.
(9) Incorporated by reference to ACME Intermediate Holdings LLC's Report on Form
8-K filed May 7, 1999.
<PAGE> 1
EXHIBIT 1.1
5,750,000 SHARES
ACME COMMUNICATIONS, INC.
COMMON STOCK
- --------------------------------------------------------------------------------
UNDERWRITING AGREEMENT
- --------------------------------------------------------------------------------
, 1999
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Morgan Stanley & Co. Incorporated
CIBC World Markets Corp.
As representatives of the
several Underwriters named in
Schedule I hereto,
c/o Deutsche Bank Securities Inc.
One South Street
Baltimore, MD 21202
Ladies and Gentlemen:
ACME Communications, Inc., a Delaware corporation (together with its
predecessors, the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the Underwriters named in Schedule I hereto
(the "Underwriters") an aggregate of 5,000,000 shares (the "Firm Shares") of
common stock, par value $0.01 per share, of the Company ("Stock"), and the
selling stockholders named in Schedule II hereto (the "Selling Stockholders"),
severally, propose, subject to the terms and conditions stated herein, to sell
to the Underwriters, at the election of the Underwriters, up to an aggregate of
750,000 additional shares of Stock (the "Optional Shares") in the respective
amounts set forth in Schedule II (the Firm Shares and the Optional Shares that
the Underwriters elect to purchase pursuant to Section 3 hereof being
collectively called the "Shares"). In addition, Acme Television Holdings, LLC, a
Delaware limited liability company ("Acme LLC"), is a party to this Agreement
for purposes of Sections 1, 8, 10 and 12 through 17, inclusive.
<PAGE> 2
As part of the offering of 5,000,000 Firm Shares contemplated by this
Agreement, Deutsche Bank Securities Inc. ("Deutsche Bank") has agreed to reserve
out of the Firm Shares set forth opposite its name on Schedule I hereto, up to
250,000 Shares, for sale to certain directors, officers, employees, business
associates and related persons of the Company (collectively, the
"Participants"), as set forth in the Prospectus in the section entitled
"Underwriting" (the "Directed Share Program"). The Shares to be sold by Deutsche
Bank pursuant to the Directed Share Program (the "Directed Shares") will be sold
by Deutsche Bank pursuant to this Agreement at the public offering price. Any
Directed Shares not orally confirmed for purchase by any Participants by the end
of the first business day after the date on which this Agreement is executed
will be offered to the public by Deutsche Bank as set forth in the Prospectus.
The Company and the Underwriters, in accordance with the requirements of
Rule 2710(c)(8) of the National Association of Securities Dealers, Inc.
(the "NASD") and subject to the terms and conditions stated herein, also hereby
confirm the engagement of the services of Deutsche Bank as a "qualified
independent underwriter" within the meaning of Paragraphs (b)(15) and (c)(3) of
Rule 2720 of the NASD in connection with the offering and sale of the Shares.
It is understood that, immediately prior to the First Time of Delivery
(as defined in Section 5 below), the Acme Entities will consummate the
transactions (the "Reorganization Transactions") contemplated by that certain
Agreement and Plan of Reorganization Relating to the Capitalization of ACME
Communications, Inc., dated as of September __, 1999 in the form provided to the
representatives of the Underwriters (the "Plan of Reorganization"). As used in
this Agreement, (a) "Subsidiaries" shall mean the subsidiaries listed on Exhibit
21 to the Registration Statement (as defined below), and (b) "Acme Entities"
shall mean the Company, Acme LLC and the Subsidiaries.
1. Representations and Warranties of the Company and Acme LLC. Each
of the Company and Acme LLC jointly and severally represents and warrants to,
and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No.
333-84191) (the "Initial Registration Statement") with respect to the Shares has
been filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement, together with any post-effective amendments
thereto, each in the form heretofore delivered to you, and, excluding exhibits
thereto, to you for each of the other Underwriters, have been declared effective
by the Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"1933 Act"), which became effective upon filing, no other document with respect
to the Initial Registration Statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or
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<PAGE> 3
filed with the Commission pursuant to Rule 424(a) of the rules and regulations
of the Commission under the 1933 Act is hereinafter called a "Preliminary
Prospectus;" the various parts of the Initial Registration Statement and the
Rule 462(b) Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed with
the Commission pursuant to Rule 424(b) under the 1933 Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the 1933 Act to be
part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statement;" and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the 1933 Act, is hereinafter
called the "Prospectus;"
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and no proceeding for
that purpose has been initiated or threatened by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the 1933 Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by an
Underwriter through Deutsche Bank expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
1933 Act and the rules and regulations of the Commission thereunder and do not
and will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the applicable filing date as to
the Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Deutsche Bank
expressly for use therein;
(d) The consolidated financial statements of Acme LLC and
its subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of Acme LLC and its consolidated subsidiaries, at the
indicated dates and for the indicated periods. Such financial statements and
related schedules have been prepared in accordance with generally accepted
principles of accounting, consistently applied throughout the periods involved,
except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The financial data set
forth in the Prospectus under the captions "Prospectus Summary -- Our Summary
Consolidated Financial Data,"
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<PAGE> 4
"Selected Consolidated Financial Data" and "Capitalization" presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company and Acme LLC. The pro forma and adjusted financial information included
in the Registration Statement and the Prospectus present fairly the information
shown therein, have been properly compiled on the pro forma or adjusted bases
described therein, and, in the opinion of the Company, the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein;
(e) The consolidated financial statements of Koplar
Communications, Inc. ("Koplar") and its subsidiaries, together with related
notes and schedules as set forth in the Registration Statement, present fairly
the financial position and the results of operations and cash flows of Koplar
and its consolidated subsidiaries, at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been prepared in
accordance with generally accepted principles of accounting, consistently
applied throughout the periods involved, except as disclosed therein, and all
adjustments necessary for a fair presentation of results for such periods have
been made.
(f) The financial statements of Channel 32 Incorporated
("Channel 32"), together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of Channel 32, at the indicated dates and for the
indicated periods. Such financial statements and related schedules have been
prepared in accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, except as disclosed
therein, and all adjustments necessary for a fair presentation of results for
such periods have been made.
(g) KPMG LLP, who have certified certain financial
statements of Acme LLC, Koplar and Channel 32 filed with the Commission as part
of the Registration Statement are independent public accountants as required by
the 1933 Act and the rules and regulations of the Commission thereunder;
(h) This Agreement has been duly authorized, executed and
delivered by each of the Company and Acme LLC and constitutes the valid and
binding agreement of each of the Company and Acme LLC, enforceable against the
Company and Acme LLC in accordance with its terms, subject, as to enforcement,
to applicable bankruptcy, insolvency, reorganization and moratorium laws and
other laws relating to or affecting the enforcement of creditors' rights
generally and to general equitable principles and except as the enforceability
of rights to indemnity and contribution under this Agreement may be limited
under applicable securities laws or the public policy underlying such laws;
(i) Except as described in the Prospectus, there are no
legal or governmental proceedings pending or, to the Company's knowledge,
threatened to which the Company or any other Acme Entity is a party or to which
any of the properties of the Company or any other Acme Entity is subject that
(A) are required to be described in the Registration Statement or the Prospectus
and are not so described or any statutes, regulations, contracts or other
documents that are required to be described in the
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<PAGE> 5
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required, or (B) could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), assets, earnings or business affairs of the Company,
ACME LLC and their respective subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business (a "Material Adverse Effect")
(j) Neither the Company nor any other Acme Entity has
sustained since the respective dates as of which information is given in the
Registration Statement and the Prospectus any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as described in the Prospectus; and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any other Acme Entity or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the management, condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and the other Acme
Entities taken as a whole, otherwise than as described in the Prospectus. No
Acme Entity has any contingent obligations that are not disclosed in the
Company's financial statements that are included in the Registration Statement
that could reasonably be expected to have a Material Adverse Effect;
(k) The Company and the other Acme Entities have good and
marketable title to all real property owned by the them, or a valid leasehold
interest in all property leased by the them, and has good title to all other
material assets owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind, except (i) for liens held by the Company's bank lenders under the
Company's revolving credit facility as described in the Prospectus, (ii) for
liens that singly or in the aggregate, could not reasonably be expected to
materially affect the value of such property or interfere with the use made and
proposed to be made of such property by the Company or any of the Acme Entities,
or (iii) where the failure thereof could not reasonably be expected to have a
Material Adverse Effect;
(l) Each of the Company and Acme LLC is a corporation or
limited liability company (as applicable) duly organized, validly existing and
in good standing under the laws of the State of Delaware; each of the Company
and Acme LLC has the organizational power and authority to own or lease its
properties and to carry on its business as described in the Prospectus; each of
the Company and Acme LLC is duly qualified as a foreign corporation or limited
liability company to transact business and is in good standing in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the failure
to so qualify or be in good standing could not reasonably be expected to have a
Material Adverse Effect;
(m) Each Subsidiary is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
its state of organization;
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<PAGE> 6
each Subsidiary has the organizational power and authority to own or lease its
properties and to carry on its business as described in the Prospectus; each
Subsidiary is duly qualified as a foreign corporation or limited liability
company to transact business and is in good standing in each jurisdiction in
which the character of its properties or the nature of its business requires
such qualification or authorization, except where the failure to so qualify or
be in good standing could not reasonably be expected to have a Material Adverse
Effect; Schedule III attached hereto sets forth for each Acme Entity the
jurisdictions in which the character of its properties or the nature of its
business requires it to be qualified to transact business, except where the
failure to so qualified or be in good standing could not reasonably be expected
to have a Material Adverse Effect; other than the Subsidiaries and the equity
securities held in the investment portfolios of the Acme Entities (the
composition of which is not materially different than the disclosures in the
Prospectus as of specific dates), neither the Company nor any other Acme Entity
owns, directly or indirectly, any capital stock or other equity securities of
any other corporation or any ownership interest in any limited liability
company, partnership, joint venture or other association;
(n) The Company has an authorized capitalization as set
forth in the Prospectus under the caption "Capitalization", and all of the
issued and outstanding shares of capital stock of the Company have been, or will
be in connection with the consummation of the Reorganization Transactions, duly
authorized and validly issued and are or will be fully paid and nonassessable
and conform to the description of the Stock contained in the Prospectus; and all
of the issued and outstanding shares of capital stock or other equity securities
or ownership interests of each other Acme Entity have been duly authorized and
validly issued, are fully paid and nonassessable and, except as described in the
Prospectus, are owned directly or indirectly by the Company or Acme LLC, free
and clear of all liens, encumbrances, equities or claims;
(o) Except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or any other Acme
Entity convertible into or exchangeable for any capital stock or other equity
securities or ownership interests of the Company or any other Acme Entity, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
other Acme Entity any such capital stock or other equity securities or ownership
interests or any such convertible or exchangeable securities or obligations or
(iii) obligations of the Company or any other Acme Entity to issue any shares of
capital stock or other equity securities or ownership interests, any such
convertible or exchangeable securities or obligations, or any such warrants,
rights or options;
(p) Except as described in the Prospectus, and except for
such that have been waived or satisfied, there are no persons with registration
rights or other similar rights to have any securities of the Company or any
other ACME Entity registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act. Except as described in the
Prospectus, neither the filing of the Registration Statement nor the offering or
sale of Shares as contemplated by this Agreement gives rise to any rights for or
relating to the registration of any shares of Common Stock or any
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<PAGE> 7
other capital stock or other equity securities or ownership interest of the
Company or any other Acme Entity, except such as have been satisfied or waived;
(q) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly authorized and, when issued and
delivered against payment therefor as provided herein, will be validly issued
and fully paid, nonassessable and free and clear of all preemptive rights, liens
and other encumbrances and will conform to the description of the Stock
contained in the Prospectus;
(r) The Company has not distributed and will not distribute
any offering material in connection with the offering and sale of the Shares
other than the Registration Statement, a Preliminary Prospectus, the Prospectus
and other material, if any, permitted by the 1933 Act;
(s) Neither the Company, nor to the Company's knowledge, any
of its officers, directors or affiliates has (i) taken, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company or any other Acme Entity to facilitate the
sale or resale of the Shares or (ii) since the filing of the Registration
Statement (A) sold, bid for, purchased or paid anyone any compensation for
soliciting purchases of, the Shares or (B) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of the
Company or any other Acme Entity. The Company acknowledges that the Underwriters
may engage in passive market making transactions in the Shares on the National
Association of Securities Dealers Automated Quotations National Market System
(the "Nasdaq National Market") in accordance with Regulation M under the
Securities Exchange Act of 1934, as amended (the "1934 Act");
(t) The execution and delivery of this Agreement, the
compliance by the Company and Acme LLC with all of the provisions herein and the
consummation of the transactions herein contemplated (including without
limitation the issue and sale of the Shares by the Company hereunder) do not and
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or give rise to (with the giving of notice, the passage of time
or both) a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any other Acme Entity
is a party or by which the Company or any other Acme Entity is bound or to which
any of the property or assets of the Company or any other Acme Entity is
subject, except for any such conflicts, breaches or violations that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, nor will such actions result in any violation of the
provisions of the Certificate of Incorporation or Bylaws of the Company, or the
Certificate of Formation or Limited Liability Company Agreement of Acme LLC, or
any statute or any order, rule or regulation applicable to the Company or any
other ACME Entity of any court or governmental agency or body having
jurisdiction over the Company or any other Acme Entity or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the
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<PAGE> 8
consummation by the Company of the transactions contemplated by this Agreement,
except (x) (A) the staff of the Federal Communications Commission (the "FCC")
granted Acme LLC's Form 316 application to transfer control of the FCC Licenses
held by the Acme Entities (the "FCC Licenses") to the Company (subject to
certain stockholders of the Company entering into an Interim Voting Agreement
(the "Interim Voting Agreement")) on September 2, 1999, and the FCC placed that
grant on public notice on September 9, 1999, thus giving interested parties
until October 12, 1999 to file petitions for reconsideration, with the FCC
itself having another 10 days thereafter to reconsider the grant on its own
motion, and (B) transfer of control of the Company to all of the stockholders of
the Company upon a termination of the Interim Voting Agreement cannot be
effected until the FCC grants a separate Form 315 application filed by Acme LLC
to transfer control of the FCC Licenses, and the 30-day public notice period
with respect to such Form 315 application expired on September 27, 1999, (y) the
registration under the 1933 Act of the Shares, and (z) such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the Underwriters;
(u) Each agreement relating to the Reorganization
Transactions (including, without limitation, the Plan of Reorganization and that
certain Agreement of Merger among the Company, Acme LLC and Acme Communications
Merger Subsidiary, LLC) (the "Reorganization Agreements") has been duly
authorized by all necessary board of directors and stockholder action, or all
necessary advisory board, manager and member action, as the case may be, on the
part of the Acme Entities and has been duly executed and delivered by each of
the parties thereto. The Company has provided to the Underwriters true, complete
and correct copies of the Reorganization Agreements, including all amendments
thereto. The execution and delivery of the Reorganization Agreements, the
compliance by the Acme Entities with all of the provisions therein and the
consummation of the transactions therein contemplated do not and will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or give rise to (with the giving of notice, the passage of time
or both) a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any other Acme Entity
is a party or by which the Company or any other Acme Entity is bound or to which
any of the property or assets of the Company or any other Acme Entity is
subject, except for any such conflicts, breaches or violations that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, nor will such actions result in any violation of the
provisions of the certificate or articles of incorporation or bylaws, or the
certificate of formation or limited liability company agreement, as the case may
be, of any Acme Entity as currently in effect and as in effect upon consummation
of the Reorganization Transactions, or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any other Acme Entity or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the consummation by
the Acme Entities of the transactions contemplated by the Reorganization
Agreements except such as have been obtained, except (x) (A) the staff of the
FCC granted Acme LLC's Form 316 application to transfer control of the FCC
Licenses to the Company (subject to certain
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<PAGE> 9
stockholders of the Company entering into the Interim Voting Agreement) on
September 2, 1999, and the FCC placed that grant on public notice on September
9, 1999, thus giving interested parties until October 12, 1999 to file petitions
for reconsideration, with the FCC itself having another 10 days thereafter to
reconsider the grant on its own motion, and (B) transfer of control of the
Company to all of the stockholders of the Company upon a termination of the
Interim Voting Agreement cannot be effected until the FCC grants a separate Form
315 application filed by Acme LLC to transfer control of the FCC Licenses, and
the 30-day public notice period with respect to such Form 315 application
expired on September 27, 1999, and (y) such consent, approval, authorization,
order, registration or qualification which if not obtained could not reasonably
be expected to have a Material Adverse Effect;
(v) The Company and the other Acme Entities are in
compliance with all of the provisions of their respective certificate or
articles of incorporation and bylaws (in the case of the Company and any other
Acme Entity that is a corporation) or limited liability agreement or other
organizational documents (in the case of any other Acme Entity that is a limited
liability company or other entity), and no event has occurred or failed to
occur, which has not been remedied or waived, the occurrence or non-occurrence
of which constitutes, or which with the passage of time or giving of notice or
both would constitute, a default by the Company or any other Acme Entity under
any indenture, agreement or other instrument, or any judgment, decree or order
to which the Company or any other Acme Entity is a party or by which they or any
of their properties is bound which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(w) The statements set forth in the Prospectus (i) under the
caption "The Reorganization," (ii) under the caption "Description of Capital
Stock," insofar as such statements purport to constitute a summary of the terms
of the provisions of the Certificate of Incorporation and Bylaws of the Company
and certain voting agreements among stockholders of the Company, and (iii) under
the captions "Certain U.S. Federal Tax Considerations For Non-U.S. Holders of
Common Stock" and "Underwriting," insofar as such statements purport to describe
the provisions of the laws and documents referred to therein, are, in the case
of each the foregoing clauses (i), (ii) and (iii), accurate and complete;
(x) The Company and the other ACME Entities possess such
permits, licenses, approvals, consents and other authorizations (collectively,
"Licenses") issued by, and have satisfied all filing, registration and other
regulatory requirements (collectively, "Regulations") of, the appropriate
Federal, state, local or foreign regulatory agencies or bodies (including, but
not limited to, the FCC) necessary to conduct the business now operated by them
or, as described in the Prospectus, proposed to be operated by them; the Company
and the other ACME Entities are in compliance with the terms and conditions of
all such Licenses and Regulations, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Licenses are valid and in full force and effect, for the maximum term
customarily issued, with no conditions, restrictions or qualifications (other
than those applicable generally to holders of broadcast
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<PAGE> 10
television licenses from the FCC), except where the invalidity of such Licenses
or the failure of such Licenses to be in full force and effect or the
conditions, restrictions or qualifications could not reasonably be expected to
have a Material Adverse Effect; neither the Company nor any of the other ACME
Entities has received any notice of proceedings relating to the revocation,
modification, non-renewal or suspension of any such Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
could reasonably be expected to result in a Material Adverse Effect; and the
Company knows of no reason why any proceedings relating to the revocation,
modification, non-renewal or suspension of any such Licenses might be initiated
by the FCC or other third parties; the Company and the other Acme Entities are
not required to obtain any material License that has not already been obtained
from, or make any material filing or registration that has not already been made
with, the FCC or any other Federal, state, local or foreign regulatory authority
in connection with the execution and delivery of this Agreement or the
Reorganization Agreements, or the performance thereof (including without
limitation the issuance and sale of the Shares), in accordance with their
respective terms;
(y) The Company and the other Acme Entities are in
compliance in all material respects with all applicable laws; the Company and
the other Acme Entities have duly and timely filed all material reports,
statements and filings that are required to be filed by any of them under the
Communications Act of 1934, as amended, and the rules and regulations
promulgated thereunder, and are in all material respects in compliance
therewith, including without limitation the rules and regulations of the FCC;
(z) The Company is not, and upon the issuance and sale of
the Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be, an "investment company" or
an entity "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act");
(aa) The Company and the other Acme Entities carry, or are
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their respective
properties and as is generally customary in the television broadcast industry;
(bb) The operations of the Company and the other Acme
Entities with respect to any real property currently leased or owned or by any
means controlled by the Company or any other Acme Entity (the "Real Property")
are in compliance with all Federal, state, and local laws, ordinances, rules,
and regulations relating to occupational health and safety and the environment
or hazardous materials or hazardous substances (collectively, "Laws"), except
where non-compliance could not reasonably be expected to have a Material Adverse
Effect, and the Company and the other Acme Entities have not violated any Laws
in a way which could reasonably be expected to have a Material Adverse Effect.
Except as disclosed in the Prospectus, there is no pending or, to the Company's
knowledge, threatened claim, litigation or any administrative agency proceeding,
nor has the Company or any other Acme Entity received any written notice
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<PAGE> 11
from any governmental entity or third party, that: (i) alleges a violation of
any Laws by the Company or any other Acme Entity or (ii) alleges that the
Company or any other Acme Entity is a liable party under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601
et seq. or any state superfund law;
(cc) The Company and the other ACME Entities own or have the
right to use adequate patents, patent rights, licenses, copyrights, know how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them and, as
described in the Prospectus, proposed to be operated by them, and neither the
Company nor any of the other ACME Entities has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or inadequate
to protect the interest of the Company or any of the other ACME Entities
therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
The Company knows of no material infringement by others of any Intellectual
Property owned by or licensed to the Company or any other Acme Entity;
(dd) Each of the Company and the other Acme Entities makes
and keeps accurate books and records reflecting its assets and maintains
internal accounting controls which provide reasonable assurance that (i)
transactions are executed in accordance with management's authorization, (ii)
transactions are recorded as necessary to permit preparation of the Company's
consolidated financial statements in accordance with generally accepted
accounting principles and to maintain accountability for the assets of the
Company, (iii) access to the assets of the Company and each of the other Acme
Entities is permitted only in accordance with management's authorization, and
(iv) the recorded accountability for assets of the Company and each of the other
Acme Entities is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(ee) The Company and the other Acme Entities have filed all
foreign, Federal, state and local tax returns that are required to be filed by
them or have timely requested extensions thereof and have paid all taxes shown
as due on such returns as well as all other taxes, assessments and governmental
charges that are due and payable; and no material deficiency with respect to any
such return has been assessed or proposed;
(ff) Except for such plans that are expressly disclosed in
the Prospectus, the Company and the other Acme Entities do not maintain,
contribute to or have any material liability with respect to any employee
benefit plan, profit sharing plan, employee pension benefit plan, employee
welfare benefit plan, equity-based plan or deferred compensation plan or
arrangement ("Plans") that are subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended, or the rules and regulations
thereunder ("ERISA"). All Plans are in compliance in all material respects
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<PAGE> 12
with all applicable laws, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"), and have been operated and
administered in all material respects in accordance with their terms. No Plan is
a defined benefit plan or multi-employer plan. The Company does not provide
retiree life and/or retiree health benefits or coverage for any employee or any
beneficiary of any employee after such employee's termination of employment,
except as required by Section 4980B of the Code or under a Plan which is
intended to be "qualified" under Section 401(a) of the Code. No material
liability has been, or could reasonably be expected to be, incurred under Title
IV of ERISA or Section 412 of the Code by any entity required to be aggregated
with the Company or any of the other Acme Entities pursuant to Section 4001(b)
of ERISA and/or Section 414(b) or (c) of the Code (and the regulations
promulgated thereunder) with respect to any "employee pension benefit plan"
which is not a Plan. As used in this subsection, the terms "defined benefit
plan," "employee benefit plan," "employee pension benefit plan," "employee
welfare benefit plan" and "multiemployer plan" shall have the respective
meanings assigned to such terms in Section 3 of ERISA;
(gg) No material labor dispute exists with the Company's or
any other Acme Entity's employees, and no such labor dispute is threatened;
(hh) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or securityholders, except as described in the Registration Statement;
(ii) The Company has reviewed its operations and that of the
other Acme Entities and has polled all of its significant software vendors to
evaluate the extent to which the business or operations of the Company or any
other Acme Entity will be affected by the Year 2000 Problem. As a result of such
review, the Company has no reason to believe, and does not believe, that the
Year 2000 Problem will have a Material Adverse Effect or result in any material
disruption of the Company's business or operations. The "Year 2000 Problem" as
used herein means any significant risk that computer hardware or software used
in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000;
(jj) In connection with the Directed Share Program, (i) the
Company has not offered or sold, and will not offer or sell, any Shares to any
person outside of the United States; (ii) the Company has not distributed and
will not distribute the Prospectus or the Preliminary Prospectus outside of the
United States; and (iii) the Company has not caused and will not cause any other
person to make any such offer, sale or distribution outside of the United
States;
(kk) The Company has not offered, or caused the Underwriters
to offer, Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or
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<PAGE> 13
supplier's level or type of business with the Company, or (ii) a trade
journalist or publication to write or publish favorable information about the
Company or its products; and
(ll) Each of Acme Intermediate Holdings, LLC ("Intermediate")
and Acme Television, LLC ("Television") has filed all forms, reports and
documents required to be filed by it with the Commission since they became
subject to the reporting requirements of the 1934 Act (the "SEC Reports"). Such
documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations thereunder and did not, at the time they were
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
2. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder listed on Schedule II, severally and not jointly, represents
and warrants to each Underwriter and the Company that:
(a) Such Selling Stockholder has full right, power and
authority to enter into this Agreement and to sell, assign, transfer and deliver
the Optional Shares to be sold by such Selling Stockholder hereunder. This
Agreement and the Power of Attorney attached hereto as Exhibit A (the "Power of
Attorney") have been duly authorized, executed and delivered by such Selling
Stockholder, constitute the valid and binding agreements of such Selling
Stockholder, enforceable against such Selling Stockholder in accordance with
their respective terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating to or
affecting the enforcement of creditors' rights generally and to general
equitable principles and except as the enforcement of rights to indemnity and
contribution under this Agreement may be limited under applicable securities
laws or the public policy underlying such laws;
(b) Such Selling Stockholder will convey good and valid
title to the Stock to be delivered by such Selling Stockholder hereunder, free
and clear of all liens, encumbrances, equities and claims whatsoever.
Certificates in negotiable form for the aggregate number of Shares to be sold by
such Selling Stockholder have been placed in custody, under a Custody Agreement
with U.S. Stock Transfer Corporation as custodian in the form attached hereto as
Exhibit B (the "Custody Agreement");
(c) The information with respect to such Selling Stockholder
included in the Registration Statement and the Prospectus under the captions
"Security Ownership of Certain Beneficial Holders and Management" and
"Underwriting" does not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(d) No consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation by such
Selling Stockholder of the transaction contemplated herein, except such as may
have been
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<PAGE> 14
obtained under the 1933 Act or otherwise and such as may be required under state
securities or the "Blue Sky" laws;
(e) The execution and delivery by such Selling Stockholder
of, and the performance by such Selling Stockholder of its obligations under,
this Agreement, and the Custody Agreement will not (with or without the giving
of notice or the passage of time or both) (i) conflict with any term or
provision of such Selling Stockholder's articles of incorporation or bylaws or
other organizational documents, as amended (if such Selling Stockholder is a
corporation, limited liability company, partnership or other entity), (ii)
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Selling
Stockholder is a party or to which its properties or assets is subject or (iii)
conflict with or violate any law, statute, rule or regulation or any order,
judgment or decree of any court or governmental agency or body having
jurisdiction over such Selling Stockholder or any of such Selling Stockholder's
properties or assets;
(f) Such Selling Stockholder has not (i) taken, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased or paid anyone any compensation for soliciting purchases of, the
Shares or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company and
(g) To the extent that any statement or omission in the
Registration Statement, the Prospectus or any post-effective amendment or
supplement thereto is made in reliance upon and in conformity with written
information furnished to the Company or Acme LLC by such Selling Stockholder
expressly for use therein, the Registration Statement, the Prospectus and all
post-effective amendments and supplements thereto will (when they become
effective or are filed with the Commission, as the case may be) conform in all
material respects to the requirements of the 1933 Act and the rules and
regulations promulgated thereunder and not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through Deutsche Bank expressly for use therein.
3. Purchase and Sale of Shares.
(a) Subject to the terms and conditions herein set forth,
(i) the Company agrees to issue and sell, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price per
share of $ , the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto and (ii) in the event and to the extent that
the Underwriters shall exercise the election to purchase Optional Shares as
provided below, each of the Selling Stockholders agrees, severally and not
jointly, to sell, to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from each of the Selling
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<PAGE> 15
Stockholders, at the purchase price per share set forth in clause (i) of this
Section 3(a), that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction, the numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
(b) Each Selling Stockholder, severally and not jointly,
hereby grants to the Underwriters the right to purchase at their election up an
aggregate of 750,000 Optional Shares in the respective amounts set forth by the
Selling Stockholders' names in Schedule II attached hereto, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering overallotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to
Jamie Kellner, Thomas Allen or Douglas Gealy (each as agent for the Selling
Stockholders), given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be purchased
and the date on which such Optional Shares are to be delivered, as determined by
you but in no event earlier than the First Time of Delivery (as defined in
Section 5 hereof) or, unless you and Jamie Kellner, Thomas Allen or Douglas
Gealy (each as agent for the Selling Stockholders) otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
(c) In making this Agreement, each Underwriter is
contracting severally, and not jointly, and except as provided in Section 3(b)
and 11 hereof, the agreement of each Underwriter is to purchase only that number
of Shares specified with respect to that Underwriter in Schedule I hereto. No
Underwriter shall be under any obligation to purchase any Optional Shares prior
to an exercise of the option with respect to such Shares granted pursuant to
Section 3(b) hereof.
4. Offering by the Underwriters. Upon the authorization by you of
the release of the Firm Shares, the several Underwriters propose to offer the
Firm Shares for sale upon the terms and conditions set forth in the Prospectus.
5. Delivery of Shares; Closing.
(a) Certificates representing the Shares to be purchased by
each Underwriter hereunder, in definitive form, and in such authorized
denominations and registered in such names as Deutsche Bank may request upon at
least forty-eight hours' prior notice to the Company and the Selling
Stockholders, shall be delivered by or on behalf of the Company and the Selling
Stockholders to Deutsche Bank, for the account of such Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer of Federal (same-day) funds to the account specified in writing by
the Company or such Selling Stockholder, as the case may be, to Deutsche Bank at
least forty-eight hours in advance. The Company will cause the certificates
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<PAGE> 16
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of The Depository Trust Company, 55 North Water Street,
New York, New York 10041 or at such other location specified by you in writing
at least 48 hours prior to such Time of Delivery. The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New
York City time, on [T+3] or such other time and date as Deutsche Bank and the
Company may agree upon in writing, and, with respect to the Optional Shares,
9:30 a.m., New York time, on the date specified by Deutsche Bank in the written
notice given by Deutsche Bank of the Underwriters' election to purchase such
Optional Shares, or such other time and date as Deutsche Bank and the Company
may agree upon in writing. Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery," such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery," and each such time and date for delivery is herein
called a "Time of Delivery."
(b) The documents to be delivered at each Time of Delivery
by or on behalf of the parties hereto pursuant to Section 9 hereof, including
the cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 9(n) hereof, will be delivered at the offices
of O'Melveny & Myers LLP, 610 Newport Center Drive, Newport Beach, CA 92660 (the
"Closing Location"), and the Shares will be delivered at the office of The
Depository Trust Company, 55 North Water Street, New York, New York 10041. A
meeting will be held at the Closing Location at 2:00 p.m., New York City time,
on the second New York Business Day preceding such Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 5, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
6. Covenants of the Company. The Company covenants and agrees with
each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and
to file such Prospectus pursuant to Rule 424(b) under the 1933 Act not later
than the Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the 1933 Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus prior to
the last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to advise you,
promptly after it receives notice thereof, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or
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<PAGE> 17
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use of any
Prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
(b) The Company will cooperate with the representatives of
the Underwriters in endeavoring to qualify the Shares for sale under the
securities laws of such jurisdictions as the representatives of the Underwriters
may reasonably have designated in writing and will make such applications, file
such documents, and furnish such information as may be reasonably required for
that purpose, provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent. The Company will, from time to time, prepare and file such statements,
reports, and other documents, as are or may be required to continue such
qualifications in effect for so long a period as the representatives of the
Underwriters may reasonably request for distribution of the Shares;
(c) The Company will promptly provide the representatives of
the Underwriters, without charge, (i) four (4) manually executed copies of the
Registration Statement as originally filed with the Commission and of each
amendment thereto, including all exhibits and all documents or information
incorporated by reference therein and (ii) for each other Underwriter, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto, without exhibits but including all documents or information
incorporated by reference therein;
(d) As soon as practicable after the execution of this
Agreement (but in no event later than 9:00 a.m., New York City time, on the
second New York Business Day after the date of this Agreement and from time to
time, to furnish the Underwriters with copies of the Prospectus in New York City
in such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Shares and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the 1933 Act, to notify you
and upon your request to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance, and in
case any Underwriter is required to deliver a prospectus in connection with
sales of any of the Shares at any time nine months or more after the time of
issue of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as you
may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the 1933 Act;
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<PAGE> 18
(e) To make generally available to its stockholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the 1933 Act), an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the 1933 Act and the rules
and regulations thereunder (including, at the option of the Company, Rule 158);
(f) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the Prospectus
(the "Lock-up Period"), not to offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder, any securities of the Company or any
other Acme Entity that are substantially similar to the Shares, including but
not limited to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Stock or any such substantially similar
securities (other than pursuant to employee stock option plans that will exist
on, or upon the conversion or exchange of convertible or exchangeable securities
that will be outstanding as of, the First Time of Delivery as described in the
Prospectus), and (ii) up to _____ shares of Stock in the aggregate that may be
issued to sellers of businesses as consideration for the Company's acquisition
of such businesses if the recipients of such shares execute and deliver the
agreement specified in Section 9(k)), without your prior written consent;
(g) The Company will comply with the 1933 Act and the 1934
Act, and the rules and regulations of the Commission thereunder, so as to permit
the completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus;
(h) During a period of three years from the effective date
of the Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(i) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Stock;
(j) Prior to the termination of the underwriting syndicate
contemplated by this Agreement, neither the Company nor any other Acme Entity
nor any of their respective officers or directors will (i) take, directly or
indirectly, any action designed to cause or to result in, or that might
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company or (ii) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of, the Shares;
(k) To use the net proceeds received by it from the sale of
the Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds;"
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<PAGE> 19
(l) To use its best efforts to list for quotation, subject
to official notice of issuance, the Shares on the Nasdaq National Market; and
(m) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the 1933 Act.
(n) In connection with the Directed Share Program, the
Company will ensure that the Directed Shares will be restricted, to the extent
required by the NASD or the NASD rules and regulations, including but not
limited to, the "Free-Riding and Withholding" Interpretation, from sale,
transfer, assignment, pledge or hypothecation for a period of three months
following the date of the effectiveness of the Registration Statement. Deutsche
Bank will notify the Company as to which Participants will need to be so
restricted. At the request of Deutsche Bank, the Company will direct the
transfer agent to place stop transfer restrictions upon such securities for such
period of time.
(o) The Company and Acme LLC will pay (i) all fees and
disbursements incurred by counsel for the Underwriters and (ii) all stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
7. Covenants of Selling Stockholders. Each Selling Stockholder
agrees with the several Underwriters as follows:
(a) Such Selling Stockholder will cooperate to the extent
reasonably necessary to cause the Registration Statement or any post-effective
amendment thereto to become effective at the earliest possible time.
(b) Such Selling Stockholder will use such Selling
Stockholder's reasonable best efforts to do or perform all things required to be
done or performed by it prior to the Closing Date to satisfy all conditions
precedent to the delivery of the Shares.
(c) Except for the sale of Shares, such Selling Stockholder
will not offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any interests therein, or any
securities convertible into, or exchangeable for, shares of Stock or rights to
acquire the same, (i) except as permitted under the terms of the agreement
specified in Section 9(k) ("Lock-up Agreement"), or (ii) if such Selling
Stockholder shall not have executed a Lock-up Agreement, prior to the expiration
of the Lock-up Period without the prior written consent of the Underwriters.
(d) Such Selling Stockholder will not take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares in violation of the 1934 Act or any
applicable rules of the Nasdaq National Market.
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<PAGE> 20
(e) Each Selling Stockholder agrees to notify the
Underwriters promptly of any information that comes to such Selling
Stockholder's attention that would cause such Selling Stockholder to have reason
to believe that his or its representations, warranties and statements in this
Agreement are not accurate in all material respects.
(f) Except as herein contemplated with respect to the Shares
to be included in the Registration Statement, each Selling Stockholder agrees to
waive any registration rights to which such Selling Stockholder may be entitled
in connection with the public offering herein contemplated.
8. Expenses. Each of the Company and Acme LLC jointly and severally
covenants and agrees with the several Underwriters that, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, it will pay or cause to be paid the following (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the 1933 Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Selected Dealer Agreement,
the Underwriters' Questionnaire submitted to each of the Underwriters by the
representatives of the Underwriters in connection herewith, the power of
attorney executed by each of the Underwriters in favor of Deutsche Bank in
connection herewith, the Blue Sky Memorandum, closing documents (including
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Shares; (iii) all expenses in connection with
the qualification of the Shares for offering and sale under state securities
laws as provided in Section 6(b) hereof, including the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky Memorandum; (iv) all fees and
expenses in connection with listing the Shares on the Nasdaq National Market;
(v) the filing fees incident to securing any required review by the NASD of the
terms of the sale of the Shares (including without limitation counsel fees
incurred on behalf of or disbursements by Deutsche Bank in its capacity as
"qualified independent underwriter"); (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar;
(viii) any fees and disbursements incurred by counsel for the Underwriters and
all stamp duties, similar taxes or duties or other taxes, if any, incurred by
the Underwriters in connection with the Directed Share Program; and (ix) all
other costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for in this Section 8. It
is understood, however, that, except as provided in this Section 8 and Sections
10 and 12 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes on resale of any of
the Shares by them, and any advertising expenses connected with any offers they
may make. Each Selling Stockholder shall pay the costs and expenses incident to
the performance by it of its obligations hereunder and in connection with the
offer, sale and delivery of the Shares to be sold by it, including any stock
transfer taxes payable upon the sale of the
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<PAGE> 21
Shares to the Underwriters, the fees and expenses of any counsel retained by it
and the underwriting discounts and commissions payable to the Underwriters.
9. Conditions to the Underwriters' Obligations. The obligations of
the Underwriters hereunder, as to the Shares to be delivered at each Time of
Delivery, shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of each of the Company, Acme
LLC and the Selling Stockholders contained herein are, at and as of such Time of
Delivery, true and correct, the condition that each of the Company, Acme LLC and
the Selling Stockholders shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the 1933 Act and in accordance with
Section 6(a) hereof; if the Company has elected to rely upon Rule 462(b), the
Rule 462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; no injunction, restraining order, or order of any
nature by a Federal, state, local or foreign court of competent jurisdiction
shall have been issued as of the relevant Time of Delivery that would prevent
the issuance of the Shares or the consummation of the Reorganization
Transactions; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
(b) O'Melveny & Myers LLP, counsel for the Company, shall
have furnished to you their written opinion (a draft of which opinion has been
provided to you), dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of
Delaware. Acme LLC has been duly organized and is validly existing and
in good standing under the laws of the State of Delaware. Each of the
Subsidiaries has been duly organized and is validly existing and in good
standing under the laws of its state of incorporation or organization.
Each of the Company and the other Acme Entities has the organizational
power and authority to own or lease its properties and conduct its
business as described in the Prospectus;
(ii) Each of the Company and the other Acme Entities
is duly qualified as a foreign corporation or limited liability company
to transact business and is in good standing under the laws of the
jurisdictions set forth in Schedule III hereto;
(iii) The Company has an authorized capitalization as
set forth in the Prospectus under the caption "Capitalization";
immediately prior to the First Time of Delivery, the Company's issued
and outstanding capital stock consisted solely of 11,750,000 shares of
common stock; and all of the issued and outstanding shares of capital
stock of the Company have been duly authorized by
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<PAGE> 22
all necessary corporate action on the part of the Company and are
validly issued and are fully paid and nonassessable;
(iv) The unissued Shares to be issued and sold by the
Company to the Underwriters hereunder have been duly authorized by all
necessary corporate action on the part of the Company and, upon payment
for and delivery of the Shares in accordance with this Agreement and the
countersigning of the certificate or certificates representing the
Shares by a duly authorized signatory of the registrar for the Company's
Stock, the Shares will be validly issued, fully paid and non-assessable.
The form of certificate used to evidence the Stock complies with all
applicable requirements of the Certificate of Incorporation and Bylaws
of the Company and the General Corporation Law of the State of Delaware;
(v) Except as described in the Prospectus, holders
of the outstanding shares of capital stock of the Company are not
entitled to any preemptive or other right to subscribe for the Shares or
any additional shares of the Company's capital stock under the Company's
Certificate of Incorporation and Bylaws, or, to such counsel's
knowledge, based solely on a review of the Company's corporate minutes,
the minutes of the proceedings of Acme LLC's members and advisory board,
and factual certificates of responsible officers of the Company (the
"Company Certificates"), and the minutes of the proceedings of Acme
LLC's members and advisory board, any other agreement or instrument to
which the Company is a party or by which it is bound;
(vi) Based solely on a review of records certified to
us as the charter documents of the Company, its corporate minute books
and the minutes of the proceedings of Acme LLC's members and advisory
board, and upon the Company Certificates, the authorized but unissued
shares of capital stock of the Company are not subject to any warrants,
options, rights or commitments granted by the Company, and the Company
is not obligated to issue, purchase or redeem any shares of the
Company's capital stock, except in each instance, as described in the
Prospectus;
(vii) No holder of securities of the Company has the
right under any instrument, agreement or contract which has been filed
as an exhibit to the Registration Statement or described in the
Prospectus to register such securities on or as part of the Registration
Statement, except for (a) any such holder who has effectively waived
such right, and (b) each Selling Stockholder who has agreed to exercise
such right only with respect to the Option Shares which are proposed to
be sold by such Selling Stockholder hereunder;
(viii) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary organizational
action on the part of the Company and Acme LLC and this Agreement has
been duly executed and delivered by each of the Company and Acme LLC and
constitutes the legally valid and binding obligation of each of the
Company and Acme LLC, enforceable
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<PAGE> 23
against the Company and Acme LLC in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by
general principles including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law and
except as the enforceability of rights to indemnity and contribution
under this Agreement may be limited under applicable securities laws or
the public policy underlying such laws;
(ix) The execution and delivery of this Agreement by
the Company and Acme LLC, the compliance by them with all of the
provisions of this Agreement and the consummation of the transactions
contemplated by this Agreement (including without limitation the issue
and sale of the Shares by the Company hereunder) will not (A) violate,
breach or result in a default under any existing obligation of or
restriction on the Company or any of the Subsidiaries under any
instrument, agreement or contract that has been filed as an exhibit to
the Registration Statement or is described in the Prospectus (the "Filed
Agreements"), or (B) violate the provisions of the Certificate of
Incorporation or Bylaws of the Company or the Certificate of Formation
or Limited Liability Company Agreement of Acme LLC, or violate any
California, Delaware or Federal statute or any order, rule or regulation
that such counsel has, in the exercise of customary professional
diligence, recognized as applicable to the Company or any of the
Subsidiaries or to transactions of the type contemplated by this
Agreement (except that such counsel expresses no opinion regarding any
Federal securities laws or Blue Sky or state securities laws or Section
10 of this Agreement, except as otherwise expressly stated herein), or
breach or otherwise violate any existing obligation of or restriction on
the Company or any of the Subsidiaries under any order, judgment or
decree of any California or Federal court or governmental authority
having jurisdiction over the Company or any of the Subsidiaries or any
of its or their respective properties, which order, judgment or decree
has been identified to such counsel in the Company Certificates as being
binding on the Company or any of the Subsidiaries or any of its or their
respective properties. Such counsel expresses no opinion, however, as to
the effect of the Company's performance of its obligations in the
Agreement on the Company's or any other ACME Entity's compliance with
financial covenants in the Filed Agreements;
(x) Each of the Reorganization Agreements has been
duly authorized by all necessary board of directors and stockholder
action, or all necessary advisory board, manager and member action, as
the case may be, on the part of the Acme Entities and has been duly
executed and delivered by each of the parties thereto. The execution and
delivery of the Reorganization Agreements, the compliance by the Acme
Entities with all of the provisions therein and the consummation of the
transactions therein contemplated will not (A) violate, breach or result
in a default under any existing obligation of or restriction on the
Company or any of the Subsidiaries under any of the Filed Agreements, or
(B) violate the
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<PAGE> 24
provisions of the certificate or articles of incorporation or bylaws, or
the certificate of formation or limited liability company agreement, as
the case may be, of any Acme Entity that is a party to the
Reorganization Agreements, or violate any California, Delaware or
Federal statute or any order, rule or regulation that such counsel has,
in the exercise of customary professional diligence, recognized as
applicable to the Company or any of the Subsidiaries or to transactions
of the type contemplated by the Reorganization Agreements (except that
such counsel expresses no opinion regarding any Federal securities laws
or Blue Sky or state securities laws except as otherwise expressly
stated herein), or breach or otherwise violate any existing obligation
of or restriction on the Company or any of the Subsidiaries under any
order, judgment or decree of any California or Federal court or
governmental authority having jurisdiction over the Company or any of
the Subsidiaries or any of its or their respective properties, which
order, judgment or decree has been identified to such counsel in the
Company Certificates as being binding on the Company or any of the
Subsidiaries or any of its or their respective properties;
(xi) To such counsel's knowledge and other than as
described in the Prospectus, there are no material legal or governmental
proceedings pending or threatened against the Company or any other Acme
Entity;
(xii) No order, consent, permit or approval or filing
with or of any California, Delaware or Federal governmental authority
that such counsel has, in the exercise of customary professional
diligence, recognized as applicable to the Company or the other Acme
Entities or to transactions of the type contemplated by this Agreement
is required on the part of the Company or any of the other Acme Entities
for the execution and delivery of this Agreement, or for the issuance
and sale of the Shares pursuant thereto or for the consummation of the
Reorganization Transactions, except (A) such as have already been
obtained or effected, such as have been obtained under the 1933 Act,
such as may be required under applicable Blue Sky or State Securities
Laws, and (B) (1) the staff of the FCC granted Acme LLC's Form 316
application to transfer control of the FCC Licenses to the Company
(subject to certain stockholders of the Company entering into the
Interim Voting Agreement) on September 2, 1999, and the FCC placed that
grant on public notice on September 9, 1999, thus giving interested
parties until October 12, 1999 to file petitions for reconsideration,
with the FCC itself having another 10 days thereafter to reconsider the
grant on its own motion, and (2) transfer of control of the Company to
all of the stockholders of the Company upon a termination of the Interim
Voting Agreement cannot be effected until the FCC grants a separate Form
315 application filed by Acme LLC to transfer control of the FCC
Licenses, and the 30-day public notice period with respect to such
Form 315 application expired on September 27, 1999;
(xiii) To such counsel's knowledge (A) all material
Licenses (other than the FCC Licenses) necessary for the Company and its
subsidiaries to own, build, maintain or operate their businesses or
properties as now conducted as
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<PAGE> 25
described in the Prospectus have been duly authorized and obtained and
are in full force and effect, and (B) no material License (other than
the FCC Licenses) is the subject of any pending or threatened challenge
or revocation;
(xiv) The Registration Statement has been declared
effective under the 1933 Act and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued or threatened by the Commission;
(xv) The statements set forth in the Prospectus (i)
under the caption "The Reorganization," (ii) under the caption
"Description of Capital Stock," insofar as such statements purport to
constitute a summary of the terms of the provisions of the Certificate
of Incorporation and Bylaws of the Company and certain voting agreements
among stockholders of the Company, and (iii) under the captions "Certain
U.S. Federal Tax Considerations For Non-U.S. Holders of Common Stock"
and "Underwriting," insofar as such statements purport to describe the
provisions of the laws and documents referred to therein, are, in the
case of each the foregoing clauses (i), (ii) and (iii), accurate and
complete;
(xvi) The Company is not an "investment company," as
such term is defined in the 1940 Act;
(xvii) The Registration Statement and each further
amendment or supplement thereto made by the Company prior to such Time
of Delivery, on the date it was filed, appeared on its face to comply in
all material respects with the requirements as to form for registration
statements on Form S-1 under the 1933 Act and the related rules and
regulations in effect at the date of filing, except that such counsel
expresses no opinion concerning the financial statements and other
financial information contained therein; and
(xviii) Such counsel does not know of any contract or
other document required to be filed as an exhibit to the Registration
Statement or described in the Registration Statement or the Prospectus
which is not so filed or described as required.
In rendering such opinion, such counsel may state that they express no opinion
as to the laws of any jurisdiction other than California law, the Delaware
General Corporation Law and federal law of the United States. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that in connection with such counsel's participation in conferences in
connection with the preparation of the Registration Statement and the
Prospectus, such counsel has not independently verified the accuracy,
completeness or fairness of the statements contained therein, and the
limitations inherent in the examination made by such counsel and the knowledge
available to such counsel are such that they are unable to assume, and they do
not assume, any responsibility for such accuracy, completeness or fairness
(except as otherwise specifically stated in paragraph (xv) above). Such opinion
shall also include a statement to the effect that, on the basis of such
counsel's review and participation in conferences in connection with the
preparation of the Registration Statement and the Prospectus, and relying as to
materiality to an extent upon opinions of officers and other representatives of
the Company, such counsel does not believe that (A) the Registration Statement
as of its effective date contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
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<PAGE> 26
or necessary to make the statements therein not misleading, (B) the Prospectus
as of the date of this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading or (C)
as of such Time of Delivery, either the Registration Statement or the Prospectus
or any further amendment or supplement thereto made by the Company prior to such
Time of Delivery contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. However, such counsel
does not express an opinion or belief as to the financial statements and other
financial information contained in the Registration Statement or the Prospectus.
Such opinion shall also include a statement to the effect that such counsel does
not know of any contracts or other documents of a character required to be
described in the Registration Statement or the Prospectus that are not filed or
described as required.
(c) Dickstein Shapiro Morin & Oshinsky LLP, counsel for the
Company, shall have furnished to you their written opinion (a draft of which
opinion has been provided to you), dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The execution and delivery of this Agreement by
the Company and Acme LLC, the compliance by them with all of the
provisions of this Agreement and the consummation of the transactions
contemplated by this Agreement (including without limitation the issue
and sale of the Shares by the Company hereunder) will not violate any
provisions of the Communications Act of 1934, as amended, or any of the
rules, regulations or published policies thereunder, or breach or
otherwise violate any existing obligation of or restriction on the
Company or any of the Subsidiaries under any order, judgment or decree
of any Federal court or governmental authority having jurisdiction over
the Company or any of the Subsidiaries or any of its or their respective
properties, which order, judgment or decree has been identified to such
counsel in the Company Certificates as being binding on the Company or
any of the Subsidiaries or any of its or their respective properties;
(ii) The execution and delivery of the Reorganization
Agreements, the compliance by the Acme Entities with all of the
provisions therein and the consummation of the transactions therein
contemplated will not
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<PAGE> 27
violate any provisions of the Communications Act of 1934, as amended, or
any of the rules, regulations or published policies thereunder, or
breach or otherwise violate any existing obligation of or restriction on
the Company or any of the Subsidiaries under any order, judgment or
decree of any Federal court or governmental authority having
jurisdiction over the Company or any of the Subsidiaries or any of its
or their respective properties, which order, judgment or decree has been
identified to such counsel in the Company Certificates as being binding
on the Company or any of the Subsidiaries or any of its or their
respective properties;
(iii) To such counsel's knowledge and other than as
described in the Prospectus, there are no material legal or governmental
proceedings pending or threatened against the Company or any other Acme
Entity;
(iv) No order, consent, permit or approval or filing
with or of the FCC is required on the part of the Company or any of the
other Acme Entities for the execution and delivery of this Agreement, or
for the issuance and sale of the Shares pursuant thereto or for the
consummation of the Reorganization Transactions, except (A) the staff of
the FCC granted Acme LLC's Form 316 application to transfer control of
the FCC Licenses to the Company (subject to certain stockholders of the
Company entering into the Interim Voting Agreement) on September 2, 1999
(the "FCC Consent"), and the FCC placed that grant on public notice on
September 9, 1999, thus giving interested parties until October 12, 1999
to file petitions for reconsideration, with the FCC itself having
another 10 days thereafter to reconsider the grant on its own motion,
and (B) transfer of control of the Company to all of the stockholders of
the Company upon a termination of the Interim Voting Agreement cannot be
effected until the FCC grants a separate Form 315 application filed by
Acme LLC to transfer control of the FCC Licenses, and the 30-day public
notice period with respect to such Form 315 application expired on
September 27, 1999;
(v) To such counsel's knowledge (A) the Acme
Entities hold the FCC Licenses identified in the Prospectus for the
television stations owned by the Acme Entities and such Licenses are in
full force and effect, (B) the FCC Licenses identified in the Prospectus
for the television stations that the Acme Entities program under local
marketing agreements and/or propose to acquire are in full force and
effect, (C) no such License is the subject of any pending or threatened
challenge or revocation, and (D) no petition for reconsideration or
review of the FCC Consent has been filed with the FCC, and the FCC has
not rescinded or revoked the FCC Consent or given public notice of
review of the FCC Consent on its own motion; and
(vi) The statements of the Company in the Prospectus
(A) describing digital television, FCC regulation of the Company's
business, carriage on cable television, applications to the FCC for
consent to transfer control of the
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<PAGE> 28
Company, and control of the Company's board by senior management in the
Section titled "Risk Factors"; and (B) made under the caption "Federal
Regulation of Television Broadcasting" in the Section titled "Business,"
insofar as they constitute summaries of the Communications Act of 1934,
as amended, and the rules, regulations and published policies of the FCC
and material proceedings thereunder, are accurate and fairly present the
information set forth therein in all material respects.
In rendering such opinion, such counsel may state that they express no opinion
as to the laws of any jurisdiction other than the federal law of the United
States.
(d) The Selling Stockholders shall have furnished to you the
opinion of O'Melveny & Myers LLP, counsel for the Selling Stockholders, or of
such other counsel to the Selling Stockholders as shall be satisfactory to Irell
& Manella LLP, counsel for the Underwriters, dated such Time of Delivery, to the
effect that:
(i) This Agreement has been duly authorized,
executed and delivered by the Selling Stockholders;
(ii) Each Selling Stockholder has the power and
authority to sell, transfer and deliver in the manner provided in this
Agreement the Shares being sold by such Selling Stockholders hereunder;
(iii) The Custody Agreement and the Power of Attorney
executed and delivered by each Selling Stockholder is valid and binding;
and
(iv) The delivery by the Selling Stockholders to the
several Underwriters of certificates for the Shares being sold hereunder
by the Selling Stockholders against payment therefor as provided herein,
assuming the Underwriters purchased the Shares in good faith without
knowledge of any adverse claim, will pass good and valid title to such
Shares to the several Underwriters, free and clear of all liens,
encumbrances, equities and claims whatsoever.
(e) Irell & Manella LLP, counsel for the Underwriters, shall
have furnished to you such opinion or opinions, dated such Time of Delivery,
with respect to the valid existence and good standing of the Company, the
validity of the Shares being delivered at such Time of Delivery, the
Registration Statement, the Prospectus, and other related matters as you may
reasonably request, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters;
(f) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery, KPMG
LLP shall have furnished to you a comfort letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to you;
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<PAGE> 29
(g) (i) Neither the Company nor any other Acme Entity shall
have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as described in the Prospectus, and (ii) since the respective dates as of
which information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any other Acme
Entity or any change, or any development involving a prospective change, in or
affecting the management, condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and the other Acme
Entities, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is in the
reasonable judgment of the Underwriters so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(h) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded any Acme Entity's debt securities by any
"nationally recognized statistical rating organization," as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and (ii) no
such organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any Acme Entity's
debt securities;
(i) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or the Nasdaq
National Market; (ii) a suspension or material limitation in trading in the
securities of the Company or any other Acme Entity on the Nasdaq National
Market, the PORTAL System or any other securities exchange; (iii) a general
moratorium on commercial banking activities declared by either Federal, New York
State or California authorities; (iv) any change, or any development or event
involving a prospective change, in the condition (financial or otherwise),
results of operations, business or properties of the Company and the other Acme
Entities taken as a whole which, in the judgment of the Underwriters, is
material and adverse and makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus; or
(v) any outbreak or escalation of hostilities involving the United States, the
declaration by the United States of a national emergency or war, or the
occurrence of any other national or international calamity or crisis or change
in economic or political conditions, which in the judgment of the Underwriters
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(j) The Shares to be sold at such Time of Delivery shall
have been approved for inclusion in the Nasdaq National Market;
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<PAGE> 30
(k) The Company has obtained and delivered to the
Underwriters executed copies of an agreement from each of the directors and
executive officers of the Company and each person who is or will be a
stockholder of the Company upon consummation of the Reorganization Transactions
substantially to the effect set forth in Subsection 6(f) hereof in form and
substance satisfactory to you, and each such agreement shall be in full force
and effect;
(l) The Reorganization Transactions shall have been
consummated concurrently with or prior to the First Time of Delivery to the
satisfaction of the Underwriters and their counsel;
(m) All of the representations and warranties of each of the
Company and Acme LLC in this Agreement and in the certificates delivered by the
Company pursuant to this Agreement shall be true and correct in all material
respects when made and on and as of each Time of Delivery as if made at such
time, and each of the Company and Acme LLC shall have performed all covenants
and agreements and satisfied all conditions contained in this Agreement required
to be performed or satisfied by each of the Company and Acme LLC at or before
such Time of Delivery;
(n) Each of the Company and ACME LLC shall have furnished or
caused to be furnished to you at such Time of Delivery a certificate of their
Vice President and Chief Financial Officer, dated as of such Time of Delivery,
as to the matters set forth in subsections (a), (g), (h), (j), (l) and (m) of
this Section 9 and as to such other matters as you may reasonably request;
(o) All the representations and warranties of the Selling
Stockholders contained in this Agreement shall be true and correct in all
material respects on and as of the date hereof and on and as of such Time of
Delivery as if made on and as of such date, and you shall have received
certificates, dated as of such Time of Delivery and signed by or on behalf of
the Selling Stockholders to the effect set forth in this Section 9(o); and
(p) The Selling Stockholders shall not have failed at or
prior to such Time of Delivery to have performed or complied with any of their
agreements herein contained and required to be performed or complied with by
them hereunder at or prior to such Time of Delivery.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the representatives of the Underwriters and to
Irell & Manella LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 9
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the representatives of the Underwriters by notifying the Company and the Selling
Stockholders of such termination in writing or by telegram at or prior to the
First Time of Delivery or the Second Time of Delivery, as the case may be.
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<PAGE> 31
In such event, the Selling Stockholders, the Company, Acme LLC and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 8, 10 and 12 hereof).
10. Indemnification and Contribution.
(a) Each of the Company and Acme LLC, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or (ii) arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, none of the Company nor Acme LLC shall be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Deutsche Bank expressly for use therein or (ii) the failure of any
Underwriter to distribute any amendment or supplement to a Preliminary
Prospectus or Prospectus, if required, after the Company has amended or
supplemented such, in compliance with this Agreement, if the Preliminary
Prospectus or Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability, unless such failure
is the result of noncompliance by the Company with Section 6(d) hereof.
(b) Each of the Company and Acme LLC, jointly and severally,
will indemnify and hold harmless Deutsche Bank against any losses, claims,
damages or liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (i) that arises out of or is based upon any untrue
statement or alleged untrue statement of any material fact contained in the
prospectus wrapper material prepared by or with the consent of the Company or
Acme LLC for distribution in foreign jurisdictions in connection with the
Directed Share Program attached to the Prospectus or Preliminary Prospectus or
any amendment or supplement thereto or caused by any omission of or alleged
omission to state in the Prospectus or Preliminary Prospectus or any amendment
or supplement thereto, a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) caused by the
failure of any Participant to pay for and accept delivery of the Shares that,
immediately following the effectiveness of the Registration Statement, were
subject to a properly confirmed agreement to purchase, or (iii) related to,
arising out of, or in connection with the Directed Share Program; provided that
the Company and Acme LLC shall not be responsible under this Section 10(b) for
any losses,
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<PAGE> 32
claims, damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
Deutsche Bank.
(c) Each of the Company and Acme LLC, jointly and severally,
will indemnify and hold harmless Deutsche Bank against any losses, claims,
damages or liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) incurred as a result of Deutsche Bank's participation as a
"qualified independent underwriter" within the meaning of Paragraphs (b)(15) and
(c)(3) of Rule 2720 of the NASD in connection with the offering of the Shares;
provided that the Company and Acme LLC shall not be responsible under this
Section 10(c) for any losses, claims, damages or liabilities (or expenses
relating thereto) that are finally judicially determined to have resulted from
the bad faith or gross negligence of Deutsche Bank.
(d) Each Selling Stockholder will, severally but not
jointly, indemnify and hold harmless the Company and each Underwriter against
any losses, claims, damages or liabilities to which the Company, underwriter or
controlling person may become subject under the 1933 Act, the 1934 Act, or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or (ii) arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, in each case only to
the extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by any Selling Stockholder through the
Company (but only in its capacity as custodian of the Selling Stockholders)
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company or Underwriter or controlling
person in connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, no Selling Stockholder shall be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon the failure of any Underwriter to
distribute any amendment or supplement to a Preliminary Prospectus or
Prospectus, if required, after the Company has amended or supplemented such, in
compliance with this Agreement, if the Preliminary Prospectus or Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability; provided further, that each Selling
Stockholder shall not be liable under this Section 10 for any amounts in excess
of the product of the purchase price per share set forth in Section 3 hereof and
the number of shares being sold by such Selling Stockholder hereunder.
(e) Each Underwriter will, severally but not jointly,
indemnify and hold harmless the Company, Acme LLC and each Selling Stockholder
against any losses, claims, damages or liabilities to which the Company, Acme
LLC or such Selling Stockholder may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or (ii) arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was
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<PAGE> 33
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company and Acme LLC by such Underwriter
through Deutsche Bank expressly for use therein; and will reimburse the Company,
Acme LLC or such Selling Stockholder for any legal or other expenses reasonably
incurred by the Company, Acme LLC or such Selling Stockholder in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(f) Promptly after receipt by an indemnified party under
subsection (a), (b), (c) or (d) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve the indemnifying party from
any liability which it may have to any indemnified party under such subsection
except to the extent such indemnifying party is actually prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party); provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have been advised by counsel
that there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party and such
indemnified party shall have the right to select separate counsel to defend such
action on behalf of such indemnified party. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties.
Notwithstanding anything contained herein to the contrary, if indemnity may be
sought pursuant to Section 10(b) or 10(c) hereof in respect of such action or
proceeding, then in addition to such separate firm for the indemnified parties,
the indemnifying party shall be liable for the reasonable fees and expenses of
counsel for Deutsche Bank for the defense of any losses, claims, damages and
liabilities arising out of the Directed Share Program or in its capacity as
"qualified independent underwriter." After such notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. Nothing in this Section 10(f) shall preclude an indemnified party
from participating at its own expense in the defense of any such action so
assumed by the indemnifying party. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
- 33 -
<PAGE> 34
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(g) If the indemnification provided for in this Section 10
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b), (c), (d) or (e) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by each party to this Agreement from the offering of
the Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or to the extent indemnification is
reduced due to the indemnified party's failure to give the notice required under
subsection (f) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of each party to this Agreement in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
Shares purchased under this Agreement (before deducting expenses) received by
the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters with respect to the
Shares purchased under this Agreement, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling Stockholders on
the one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (g)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (g). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (g) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (g), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such
- 34 -
<PAGE> 35
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (g) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(h) The obligations of the Company, Acme LLC and the Selling
Stockholders under this Section 10 shall be in addition to any liability that
the Company, Acme LLC or the Selling Stockholders may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act; and the obligations of the Underwriters under this Section 10
shall be in addition to any liability that the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and Acme LLC and to each person, if any, who
controls the Company, Acme LLC or the Selling Stockholders within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act.
11. Default of Underwriters.
(a) If any Underwriter shall default in its obligation to
purchase and pay for the Shares that it has agreed to purchase and pay for
hereunder at a Time of Delivery, you, as representatives of the Underwriters,
shall use reasonable efforts to arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to you to purchase such Shares on such terms. In the event
that, within the respective prescribed periods, you notify the Company that you
have so arranged for the purchase of such Shares, or the Company notifies you
that it has so arranged for the purchase of such Shares, you or the Company
shall have the right to postpone such Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section 11 with like effect as
if such person had originally been a party to this Agreement with respect to
such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares that remains unpurchased does not exceed one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each non-
- 35 -
<PAGE> 36
defaulting Underwriter to purchase its pro rata share (based on the number of
Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
12. Termination.
(a) This Agreement may be terminated in the sole discretion
of the representatives of the Underwriters by notice to the Company given prior
to the First Time of Delivery or Second Time of Delivery, respectively, in the
event that (i) any condition to the obligations of the Underwriters set forth in
Section 9 hereof has not been satisfied, or (ii) the Company or Selling
Stockholders shall have failed, refused or been unable to deliver such party's
respective Shares or the Company or Selling Stockholders shall have failed,
refused or been unable to perform all obligations and satisfy all conditions on
their respective parts to be performed or satisfied hereunder at or prior to
such Time of Delivery, in either case other than by reason of a default by any
of the Underwriters.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company as provided in Section 11(a) above, the aggregate number of such
Shares that remains unpurchased exceeds one-eleventh of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the Company shall
not exercise the right described in Section 11(b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, the Company or you as the representatives of the Underwriters,
will have the right, by written notice given within the next 36-hour period to
the parties to this Agreement, to terminate this Agreement, without liability on
the part of any non-defaulting Underwriter or the Company, except for the
expenses to be borne by the Company and the Underwriters as provided in Section
8 hereof and the indemnity and contribution agreements in Section 10 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If this Agreement shall be terminated pursuant to
Section 12(b) hereof, the Company shall not then be under any liability to any
Underwriter except as provided in Sections 8 and 10 hereof; but, if this
Agreement shall be terminated pursuant to Section 12(a) hereof or, for any other
reason, any Shares are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 8 and 10
hereof.
13. Survival. The respective indemnities, agreements,
representations and warranties of the Company, Acme LLC, the Selling
Stockholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless
- 36 -
<PAGE> 37
of any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Shares. The respective agreements,
covenants, indemnities and other statements set forth in Sections 8, 10 and 12
hereof shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
14. Information Supplied by the Underwriters and Selling
Stockholders.
The statements set forth (i) in the first paragraph under the
subheading "Commission and Discounts," (ii) under the subheading "Price
Stabilization, Short Positions and Penalty Bids" and (iii) in the list of
Underwriters, in each case under the caption "Underwriting" in the Prospectus,
constitute the only information furnished by the Underwriters to the Company and
the Selling Stockholders for the purposes of Sections 1(b) and Sections 10(a)
and 10(e) hereof.
15. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and if to the Underwriters shall be delivered or
sent by mail, telex or facsimile transmission to you as the representatives in
care of Deutsche Bank Securities Inc., 1 South Street, Baltimore, Maryland
21202, Attention: Registration Department; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 10(e) hereof
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
16. Binding Effect. This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company, Acme LLC and the
Selling Stockholders and, to the extent provided in Sections 10 and 12 hereof,
the officers and directors of the Company, Acme LLC, the Selling Stockholders
and the Underwriters and each person who controls the Company, Acme LLC, the
Selling Stockholders or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
17. Miscellaneous.
- 37 -
<PAGE> 38
(a) Time shall be of the essence of this Agreement.
(b) As used herein, the term "business day" shall mean any
day when the Commission's office in Washington, D.C. is open for business.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among the Underwriters, the Company, Acme LLC and
the Selling Stockholders. It is understood that your acceptance of this letter
on behalf of each of the Underwriters is pursuant to the authority set forth in
a form of Master Agreement among Underwriters, the form of which shall be
submitted to the Company, Acme LLC and the Selling Stockholders for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
[Remainder of this page intentionally left blank.]
- 38 -
<PAGE> 39
Very truly yours,
ACME COMMUNICATIONS, INC.
By:______________________________________
Name:
Title:
ACME TELEVISION HOLDINGS, LLC
By:______________________________________
Name:
Title:
The Selling Stockholders named in
Schedule II hereto, acting severally
By:______________________________________
Name:
Title: Attorney-in-Fact
Accepted as of the date hereof:
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Morgan Stanley & Co. Incorporated
CIBC World Markets Corp.
As representatives of the several
U.S. Underwriters
By: DEUTSCHE BANK SECURITIES INC.
By:_____________________________________
Name: Gregory Paul
Title: Managing Director
By:_____________________________________
Name:
Title:
S-1
<PAGE> 40
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
OPTIONAL SHARES
TOTAL NUMBER OF TO BE PURCHASED
FIRM SHARES TO BE IF MAXIMUM
UNDERWRITER PURCHASED OPTION EXERCISED
----------- ----------------- ----------------
<S> <C> <C>
Deutsche Bank Securities Inc.....................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................
Morgan Stanley & Co. Incorporated................
CIBC World Markets Corp..........................
[Names of other underwriters]....................
Total.................................... 5,000,000 750,000
</TABLE>
<PAGE> 41
SCHEDULE II
Selling Stockholders and Optional Shares
<TABLE>
<CAPTION>
SELLING STOCKHOLDER NUMBER OF OPTIONAL SHARES
- ------------------- -------------------------
<S> <C>
American High Income Trust
American Variable Insurance Series High-Yield
Bond Fund
TCW Shared Opportunity Fund II, L.P.
TCW Leveraged Income Trust, L.P.
Continental Casualty Corporation
The Lincoln National Life Insurance Company
Thomas Embrescia
1994 Embrescia Family Trust F/B/O Matthew Embrescia
1994 Embrescia Family Trust F/B/O Megan Embrescia
1994 Embrescia Family Trust F/B/O Amanda Embrescia
Jonathan Pinch and Linda Pinch
Larry S. Blum Living Trust
The Canyon Value Realization Fund, (Cayman) Ltd.
The Value Realization Fund, L.P.
ACME Capital Partners
Post Total Return Fund, L.P.
Total 750,000
</TABLE>
<PAGE> 42
SCHEDULE III
ACME Entities and Jurisdictions of Organization and Qualification
<TABLE>
<CAPTION>
ENTITY STATE OF FORMATION FOREIGN QUALIFICATIONS
- ------ ------------------ ----------------------
<S> <C> <C>
ACME Communications, Inc. Delaware California
ACME Television Holdings, LLC Delaware None
ACME Intermediate Holdings, LLC Delaware California
ACME Television, LLC Delaware None
ACME Subsidiary Holdings IV, LLC Delaware None
ACME Subsidiary Holdings, LLC Delaware None
ACME Subsidiary Holdings III, LLC Delaware None
ACME Subsidiary Holdings II, LLC Delaware None
ACME Television of Florida, LLC Delaware Florida
ACME Television of Illinois, LLC Delaware Illinois
ACME Television of Michigan, LLC Delaware Michigan
ACME Television of New Mexico, LLC Delaware New Mexico
ACME Television of Ohio, LLC Delaware Ohio
ACME Television of Oregon, LLC Delaware Oregon
ACME Television of Tennessee, LLC Delaware Tennessee
ACME Television of Utah, LLC Delaware Utah
ACME Television of Wisconsin, LLC Delaware Wisconsin
ACME Television Licenses of Florida, LLC Delaware Florida
ACME Television Licenses of Illinois, LLC Delaware Illinois
ACME Television Licenses of New Delaware New Mexico
Mexico, LLC
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
ENTITY STATE OF FORMATION FOREIGN QUALIFICATIONS
- ------ ------------------ ----------------------
<S> <C> <C>
ACME Television Licenses of Ohio, LLC Delaware Ohio
ACME Television Licenses of Oregon, LLC Delaware Oregon
ACME Television Licenses of Tennessee, LLC Delaware Tennessee
ACME Television Licenses of Utah, LLC Delaware Utah
ACME Television Licenses of Wisconsin, LLC Delaware Wisconsin
ACME Intermediate Finance, Inc. Delaware [None]
ACME Finance Corp. Delaware [None]
Roberts Broadcasting of Salt Lake City, Delaware Utah
LLC
ACME Television Holdings of Missouri, Inc. Missouri [None]
ACME Television of Missouri, Inc. Missouri [None]
ACME Television Licenses of Missouri, LLC Missouri [None]
ACME Communications Merger Subsidiary, LLC Delaware [None]
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
RELATING TO THE CAPITALIZATION OF ACME COMMUNICATIONS, INC.
This AGREEMENT AND PLAN OF REORGANIZATION RELATING TO THE
CAPITALIZATION OF ACME COMMUNICATIONS, INC. (this "AGREEMENT") is entered into
as of September __, 1999 by and among the parties listed on the signature pages
hereof (the "PARTIES"). Capitalized terms used in this Agreement without
definition have the meanings given to them in Section I of this Agreement, the
Unitholders Agreement, the TV Holdings LLC Agreement, the Intermediate LLC
Agreement, the Holdings IV LLC Agreement or the Subsidiary Holdings LLC
Agreement, as applicable.
R E C I T A L S
A. The Debenture Holders own debentures that are convertible into
Investor Units of TV Holdings.
B. TV Holdings owns 100% of the Membership Units of Subsidiary
Holdings.
C. TV Holdings owns 100% of the Common Units of Holdings IV.
D. TV Holdings owns 834,874.9 Membership Units of Intermediate.
E. Subsidiary Holdings owns 4,477.1 Membership Units of
Intermediate.
F. The Minority Intermediate Unitholders collectively own 53,502
Membership Units of Intermediate.
G. The Convertible Security Holders own securities in Holdings IV
that are convertible into 18,132 Membership Units of Intermediate.
H. TV Holdings owns 100% of the common stock of the Company.
I. The Company owns 100% of the membership units of Merger LLC.
J. The Company wishes to engage in an underwritten initial public
offering of shares of common stock (the "IPO") in order to raise approximately
$100 million.
K. To effectuate the IPO, the parties desire to implement the
plan of reorganization and capitalization of the Company (the "REORGANIZATION")
described below by executing this Agreement on a date certain after pricing and
before closing the IPO.
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the Parties agree as follows:
I. DEFINITIONS. The following terms have the following respective meanings when
used in this Agreement:
"ALTA INC." means Alta Acme, Inc., a Delaware corporation.
"ALTA SDP" means Alta Subordinated Debt Partners III, L.P., a
Delaware limited partnership.
"ALTA SS" means Alta-Comm S by S, LLC, a Delaware limited
liability company.
"ALTA VI" means Alta Communications VI, L.P. a Delaware limited
partnership.
"BANCBOSTON" means BancBoston Ventures, Inc., a Massachusetts
corporation.
"BLOCKER CORPORATION" means each of Alta Inc., CEA Inc. and LINC.
"CEA" means CEA Capital Partners USA, L.P., a Delaware limited
partnership.
"CEA CI" means CEA Capital Partners USA CI, L.P., a Cayman
Islands limited partnership.
"CEA INC." means CEA Acme, Inc., a Delaware corporation.
"COMPANY" means ACME Communications, Inc., a Delaware
corporation.
"CONVERTIBLE SECURITY HOLDER" means each of TCW and LINC.
"DEBENTURE HOLDER" means each of Alta VI, Alta SDP, Alta SS,
BancBoston, CEA, CEA CI and TCW.
"HOLDINGS IV" means ACME Subsidiary Holdings IV, LLC, a Delaware
limited liability company.
"HOLDINGS IV LLC AGREEMENT" means the Limited Liability Company
Agreement of Holdings IV made as of September 30, 1997.
"INTERMEDIATE" means ACME Intermediate Holdings, LLC, a Delaware
limited liability company.
"INTERMEDIATE INDENTURE" means the Indenture dated as of
September 30, 1997 among Intermediate and ACME Intermediate Finance, Inc., a
Delaware corporation, as issuers, and Wilmington Trust Company, a Delaware
banking corporation, as trustee.
"INTERMEDIATE LLC AGREEMENT" means the Second Amended and
Restated Limited Liability Company Agreement of Intermediate made as of April
23, 1999.
2
<PAGE> 3
"INVESTMENT AND LOAN AGREEMENT" means that certain Amended and
Restated Investment and Loan Agreement dated as of September 30, 1997 by and
among TV Holdings, Jamie Kellner, Douglas Gealy, Thomas Allen, CEA, CEA Inc.,
Alta VI, Alta SDP, Alta SS, Alta Inc., BancBoston, LINC, TCW SHOPII and TCW.
"LINC" means LINC ACME Corporation, a California corporation.
"MINORITY INTERMEDIATE UNITHOLDER" means each of TCW, American
High Income Trust, a Massuchesetts limited partnership, American Variable High
Yield Bond, a Massachusetts limited partnership, The Lincoln National Life
Insurance Company, an Indiana corporation, Continental Casualty Company, an
Illinois insurance company, The Canyon Value Realization Fund (Cayman) Ltd., a
Cayman corporation, The Value Realization Fund, L.P., a Delaware limited
partnership, and Post Total Return Fund L.P., a California limited partnership.
"MERGER LLC" means ACME Communications Merger Subsidiary, LLC, a
Delaware limited liability company.
"SUBSIDIARY HOLDINGS" means ACME Subsidiary Holdings, LLC, a
Delaware limited liability company.
"SUBSIDIARY HOLDINGS LLC AGREEMENT" means the Limited Liability
Company Agreement of Subsidiary Holdings made as of September 24, 1997.
"TCW" means TCW Leveraged Income Trust, L.P., a Delaware limited
partnership.
"TCW SHOPII" means TCW Shared Opportunity Fund L.P., a Delaware
limited partnership.
"TV HOLDINGS" means ACME Television Holdings, LLC, a Delaware
limited liability company.
"TV HOLDINGS LLC AGREEMENT" means the Limited Liability Company
Agreement of TV Holdings made as of June 17, 1997, as amended on September 30,
1997.
"TV INDENTURE" means the Indenture dated as of September 30, 1997
among ACME Television, LLC, a Delaware limited liability company and ACME
Finance Corporation, a Delaware corporation, as issuers, those ACME subsidiaries
a party thereto as guarantors and Wilmington Trust Company, a Delaware banking
corporation, as trustee.
"UNITHOLDERS AGREEMENT" means that certain Membership Unitholders
Agreement dated as of September 30, 1997 among TV Holdings, Intermediate, and
CIBC Wood Gundy Securities Corp.
3
<PAGE> 4
II. REORGANIZATION. Immediately before the closing of the IPO, the Parties will
cause the following transactions to occur in the order set forth below:
A. EQUITY EXCHANGE WITH DEBENTURE HOLDERS.
1. The Company will consummate consensual exchanges with the
Debenture Holders by issuing shares of the Company's common stock
in exchange for the respective convertible debentures made by TV
Holdings in favor of each Debenture Holder. For the purpose of
such exchanges, and in accordance with Section 1.2(c) of the
Investment and Loan Agreement, the value of the convertible
debentures will be based on the principal amount of, plus accrued
interest on, such convertible debentures. Such debentures will be
cancelled after the exchange.
2. As a result of the exchanges described in this Section A, the
Debenture Holders will receive the respective number of shares of
the Company's common stock set forth opposite their names in
"Column 1" on SCHEDULE 1 attached hereto, with any appropriate
adjustments necessary if the IPO offering price to the public
falls between the $.50 incremental projected offering prices set
forth on Schedule 1 (the "ADJUSTMENT").
3. The equity exchanges described in this Section A will be
consummated pursuant to Exchange Agreements substantially in the
form of EXHIBIT A.
B. EQUITY EXCHANGE WITH MINORITY INTERMEDIATE UNITHOLDERS AND WITH
CONVERTIBLE SECURITY HOLDERS.
1. The Company will consummate consensual exchanges with the
Minority Intermediate Unitholders and with the Convertible
Security Holders by issuing shares of the Company's common stock
in exchange for the REGISTRABLE MEMBERSHIP UNITS (as that term is
defined in the Unitholders Agreement) owned or that may be
acquired by the Minority Intermediate Unitholders and the
Convertible Security Holders. The Registrable Membership Units
include: (i) the Membership Units of Intermediate owned by the
Minority Intermediate Unitholders; (ii) the 6.5% convertible
debenture made by Holdings IV in favor of TCW; and (iii) the
Convertible Preferred Units of Holdings IV owned by LINC. The
debenture and the Convertible Preferred Units of Holdings IV will
be cancelled after the exchange.
2. As a result of the equity exchanges described in this Section
B, the Minority Intermediate Unitholders and the Convertible
Security Holders will receive the respective number of shares of
the Company's common stock set forth opposite their names in
"Column 2" on SCHEDULE 1, subject to any
Adjustment.
3. The equity exchanges described in this Section B will be
consummated pursuant to Exchange Agreements substantially in the
forms of EXHIBITS B AND C.
4
<PAGE> 5
C. REVERSE TRIANGULAR MERGER
1. In accordance with Delaware General Corporation Law, the
Company will acquire all of the Membership Units of TV Holdings
(the "ACQUIRED UNITS") by causing Merger LLC to merge with and
into TV Holdings (the "REVERSE MERGER"). 2. As a result of the
Reverse Merger, and in exchange for the Acquired Units, the
holders of the Acquired Units will be issued the shares of the
Company's common stock set forth opposite their names in "Column
3" on Schedule 1, subject to any Adjustment. Further, in the
Reverse Merger, and pursuant to the Reverse Merger Agreement, TV
Holdings agrees the 100 shares of the Company that TV Holdings
owns before the Reverse Merger will be cancelled without
additional consideration paid therefor.
3. The Reverse Merger will be consummated pursuant to a Merger
Agreement (the "REVERSE MERGER AGREEMENT") substantially in the
form of EXHIBIT D.
D. DISSOLUTION OF SUBSIDIARY HOLDINGS. In accordance with Delaware
General Corporation Law, Subsidiary Holdings will dissolve and
will distribute its ownership in Intermediate to TV Holdings.
E. DISSOLUTION OF HOLDINGS IV. In accordance with Delaware General
Corporation Law, Holdings IV will dissolve and will distribute
its ownership in Intermediate to TV Holdings.
F. LIQUIDATION. As soon as practicable following the transactions
discussed above, each Blocker Corporation will liquidate and
distribute to their respective shareholders each of their shares
of the Company's common stock received in the transactions
discussed above.
G. PLEDGE AGREEMENTS. Immediately before the closing of the IPO,
those certain pledge agreements, each dated June 17, 1997, made
by each of Jamie Kellner, Thomas Allen and Doug Gealy in favor of
certain members of TV Holdings will be terminated and all liens
created thereby will be released.
H. INITIAL PUBLIC OFFERING OF SHARES OF THE COMPANY'S COMMON STOCK.
The Company will offer to the public in an underwritten initial
public offering approximately 5,000,000 of its newly issued
shares of common stock (i.e. in addition to the shares of common
stock owned by the Company's pre-IPO shareholders) as determined
by the Company's board of directors.
5
<PAGE> 6
III. INTEGRATED PLAN.
A. SECTION 351 OF THE INTERNAL REVENUE CODE. The parties agree that the
transactions described in Section II above are intended to constitute
interdependent components of a single integrated plan for the
capitalization of the Company under Section 351 of the Internal Revenue
Code.
B. REORGANIZATIONS UNDER SECTION 368(a)(1)(C) OF THE INTERNAL REVENUE
CODE. The parties agree that the exchanges and liquidations engaged in
by each of the Blocker Corporations as described in Section II above are
also intended to constitute reorganizations under Section 368(a)(1)(C)
of the Internal Revenue Code.
C. TRANSACTION DOCUMENTS. The documents substantially in the forms of
EXHIBITS A - D are collectively defined as the "TRANSACTION DOCUMENTS,"
and each as a "TRANSACTION DOCUMENT."
D. NO FRACTIONAL SHARES. No fractional shares of the Company's common
stock will be issued in connection with any of the transactions
described in Section II. Instead, each person entitled to a fractional
share of the Company's common stock will be entitled to receive a cash
payment representing the value of such fraction, which will be
calculated by multiplying such fraction by the initial price that a
share of common stock is offered to the public.
E. TERMINATION. This Agreement and all of the Transaction Documents will
each terminate (the "TERMINATION") and be of no further force and effect
on the earliest to occur of (i) withdrawal of the registration statement
relating to the IPO, (ii) termination of the underwriting agreement
relating to the IPO, or (iii) October 31, 1999.
IV. MISCELLANEOUS.
A. ENTIRE AGREEMENT; SHARE REPRESENTATION. The express provisions of
this Agreement and the Transaction Documents, and the documents
delivered in connection with any thereof, constitute the entire
agreement among the parties and their affiliates, and supersede (i) all
other agreements and understandings, both written and oral, among the
parties and their affiliates, or any of them, with respect to the
subject matter hereof and thereof, and (ii) so long as no provisions of
either the TV Indenture or the Intermediate Indenture are violated, any
and all rights of any of the Parties (including any registration rights)
under any and all operative agreements of any of the Parties including,
but not limited to, the TV Holdings LLC Agreement, the Subsidiary
Holdings LLC Agreement, the Holdings IV LLC Agreement, the Intermediate
LLC Agreement, the Unitholders Agreement and the Investment and Loan
Agreement; provided, however, that the provisions of Section 10
(Indemnification) of the Investment and Loan Agreement will remain in
full force and effect following the execution of this Agreement and
consummation of the Reorganization notwithstanding anything herein to
the contrary. Provided there is no Termination, Schedule 1 will
represent the pre-IPO interests of the Parties in the common stock of
the Company and the agreed value among
6
<PAGE> 7
the Parties of the membership interests and securities being exchanged
therefor, notwithstanding any provisions of any prior agreements to the
contrary. No implied agreements will be deemed to exist with respect to
such subject matter. All references to sections, subsections and
schedules will be deemed references to such part of this Agreement,
unless the context otherwise requires.
B. ASSIGNMENTS. Neither this Agreement nor any rights or obligations
hereunder may be assigned or delegated by any of the parties, in whole
or in part, whether voluntarily, by operation of law or otherwise.
Subject to the foregoing, all of the terms and provisions hereof will be
binding upon, and inure to the benefit of, the permitted successors and
assigns of the parties. Nothing contained herein, express or implied, is
intended to confer on any person other than the parties or their
respective permitted successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
C. INVALIDITY. If any provision of this Agreement is too broad to permit
enforcement to its full extent, such provision will nevertheless be
enforced to the maximum extent permitted by law, and each party agrees
that such provisions may be judicially modified accordingly in any
proceeding brought to enforce this Agreement. If any portion of this
Agreement is held to be indefinite, invalid or otherwise entirely
unenforceable, the entire Agreement will not fail on account thereof.
The balance of this Agreement will continue in full force and effect.
D. AMENDMENTS AND WAIVERS. No modification, amendment, termination or
waiver of any provision of this Agreement, nor consent to any departure
therefrom, will be effective unless the same is in writing and signed by
the parties, and then such waiver or consent will be effective only in
the specific instance and for the purpose for which given. Neither any
course of dealing nor any failure or delay on the part of any of the
parties in exercising any right, power or privilege hereunder will
impair any such power, right or privilege or operate as a waiver thereof
or as a waiver or acquiescence in any default, nor will any single or
partial exercise thereof preclude any other or further exercise of any
other right, power or privilege. No notice to or demand on any of the
parties in any case will entitle such party to any other or further
notice or demand in the same, similar or other circumstances.
E. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same
agreement, and will become effective when one or more counterparts have
been signed by each party and delivered to each party.
F. FURTHER ACTIONS. Subject to the terms and conditions of this
Agreement, each of the parties agrees to use its best efforts to take,
or cause to be taken, all action necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
Agreement, unless the Company determines not to go forward with the IPO.
7
<PAGE> 8
G. SPECIFIC PERFORMANCE. Unless the Company determines not to go forward
with the IPO, the Parties acknowledge that each party would suffer
irreparable injury and would not have an adequate remedy at law for
money damages if the provisions of this Agreement were not performed in
accordance with their terms. Each party agrees that the others will be
entitled to specific enforcement of the terms of this Agreement in
addition to any other remedy to which they are entitled, at law or in
equity. Furthermore, if any action or proceeding is instituted to
enforce the provisions hereof, any party against whom such action or
proceeding is brought hereby waives the claim or defense therein that
there is an adequate remedy at law, and agrees not to urge in any such
action or proceeding the claim or defense that such remedy at law
exists.
H. SECTION AND OTHER HEADINGS. Section titles are for descriptive
purposes only and will not control or alter the meaning of this
Agreement as set forth in the text.
I. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without regard to
conflict of laws principles.
J. JURISDICTION AND VENUE. The parties consent to the jurisdiction of
all federal and state courts in Delaware. Non-exclusive venue will lie
exclusively in Wilmington County, Delaware.
K. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope
of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, but not limited to, contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a
material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that
each will continue to rely on this waiver in their related future
dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with
legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER WILL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
L. REPRESENTATION AND WARRANTIES
1. ACCREDITED INVESTOR. Each of the Parties to this Agreement
represents and warrants that it is an "Accredited Investor," as
that term is defined in Rule 501 of Regulation D of the General
Rules and Regulations promulgated
8
<PAGE> 9
under the Securities Act of 1933, as amended (the "ACT") (a copy
of which definition is included on EXHIBIT E).
2. AUTHORITY. All corporate, partnership or limited liability
company action, as applicable, has been taken on the part of each
Party necessary for the authorization, execution, delivery and
performance of this Agreement. This Agreement constitutes the
legal, valid and binding obligation of each Party, enforceable
against such Party in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights. Such Party has
all requisite power and authority to enter into this Agreement
and to carry out and perform its obligations under the terms of
this Agreement.
[Rest of Page Intentionally Left Blank]
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ACME COMMUNICATIONS, INC.
By: ____________________________________
Name: Thomas Allen
Title: Chief Financial Officer
ACME TELEVISION HOLDINGS, LLC
By: ____________________________________
Name: Thomas Allen
Title: Chief Financial Officer
ACME COMMUNICATIONS MERGER SUBSIDIARY,
LLC
By: ____________________________________
Name: Thomas Allen
Title: Chief Financial Officer
ACME SUBSIDIARY HOLDINGS, LLC
By: ____________________________________
Name: Thomas Allen
Title: Chief Financial Officer
ACME SUBSIDIARY HOLDINGS IV, LLC
By: ____________________________________
Name: Thomas Allen
Title: Chief Financial Officer
S-1
<PAGE> 11
THOMAS ALLEN
___________________________________
DOUGLAS GEALY
___________________________________
JAMIE KELLNER
___________________________________
MICHAEL ROBERTS
___________________________________
STEVEN ROBERTS
___________________________________
THOMAS J. EMBRESCIA
___________________________________
S-2
<PAGE> 12
1994 EMBRESCIA FAMILY TRUST F/B/O MATTHEW
EMBRESCIA, KEY TRUST COMPANY OF OHIO, N.A.,
TRUSTEE
By: ______________________________
Name:
Title:
1994 EMBRESCIA FAMILY TRUST F/B/O Megan
EMBRESCIA, KEY TRUST COMPANY OF OHIO, N.A.,
TRUSTEE
By: ______________________________
Name:
Title:
1994 EMBRESCIA FAMILY TRUST F/B/O AMANDA
EMBRESCIA, KEY TRUST COMPANY OF OHIO, N.A.,
TRUSTEE
By: ______________________________
Name:
Title:
JONATHAN PINCH & LINDA PINCH
__________________________________
__________________________________
LARRY S. BLUM LIVING TRUST
By: ______________________________
Name:
Title: Trustee
S-3
<PAGE> 13
BANCBOSTON VENTURES INC
By: ______________________________
Name: Lars. A. Swanson
Title: Vice President
c/o BancBoston Capital
175 Federal Street
Boston, MA 02110
Attn: Sanford Anstey
Tel: (617) 434-2509
Fax: (617) 434-1153
ALTA COMMUNICATIONS VI, L.P.
By: Alta Communications VI
Management Partners, L.P.,
its general partner
By: ______________________________
Name: Brian McNeill
Title: General Partner
ALTA-COMM S BY S, LLC
By: ______________________________
Name: Brian McNeill
Title: Member
c/o Alta Communications
One Post Office Square
Suite 3800
Boston, MA 02109
Attn: Brian W. McNeill
Tel: (617) 482-8020
Fax: (617) 482-1944
S-4
<PAGE> 14
ALTA SUBORDINATED DEBT PARTNERS III, L.P.
By: Alta Subordinated Debt Management III,
L.P., its general partner
By: ______________________________
Name: Brian McNeill
Title: General Partner
ALTA ACME, INC.
By: ______________________________
Name: Brian McNeill
Title:
CEA CAPITAL PARTNERS USA, L.P.,
By: CEA Management Corp.,
its authorized representative
By: ______________________________
Name: James J. Collis
Title: Executive Vice President
c/o CEA Capital Partners
17 State Street, 35th Floor
New York, NY 10004
Attn: James Collis
Tel: (212) 425-1400
Fax: (212) 425-1420
S-5
<PAGE> 15
CEA CAPITAL PARTNERS USA CI L.P.,
a Cayman Islands limited partnership
By: CEA Management Corp.,
its authorized representative
By: ______________________________
Name: James J. Collis
Title: Executive Vice President
CEA ACME, INC.
By: ______________________________
Name:
Title:
LINC ACME CORPORATION
By: ______________________________
Name:
Title:
POST TOTAL RETURN FUND, L.P.
By: ______________________________
Name:
Title:
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: ______________________________
Name:
Title:
S-6
<PAGE> 16
THE CANYON VALUE REALIZATION FUND
(Cayman) LTD., a Cayman Corporation
By: ______________________________
Name:
Title:
THE VALUE REALIZATION FUND, L.P.,
a Delaware limited partnership
By: Canpartners Investments III, L.P.,
a California limited partnership
Its: General Partner
By: Canyon Capital Advisors LLC, a
Delaware limited liability company
Its: General Partner
By: ______________________________
Name:
Title:
PEREGRINE CAPITAL, INC.
By: ______________________________
Name:
Title:
CONTINENTAL CASUALTY COMPANY
By: ______________________________
Name:
Title:
AMERICAN HIGH-INCOME TRUST
By: Capital Research & Management Company
as Investment Advisor
By: ______________________________
Name:
S-7
<PAGE> 17
Title:
AMERICAN VARIABLE INSURANCE SERIES-
HIGH-YIELD BOND
By: Capital Research & Management Company
as Investment Advisor
By: ______________________________
Name:
Title:
ACME CAPITAL PARTNERS
By: ______________________________
Name: William K. Lisecky
Title: Executive Vice President
S-8
<PAGE> 18
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Investment Management Company
as investment advisor
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management Company
as investment advisor
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
S-9
<PAGE> 19
EXHIBIT 2.2
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,230,824 22,214 1,253,038
Alta Subordinated Debt Partners III, L.P. 419,613 7,573 427,186
Alta-Comm S by S, LLC 28,016 505 28,521
BancBoston Ventures, Inc. 177,384 1,545,251 1,722,635
American High-Income Trust 153,990 128,222 282,212
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 64,113 141,114
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,282,842 23,152 1,305,994
CEA Capital Partners USA, CI, L.P. 395,611 7,140 402,751
TCW Shared Opportunity Fund II, L.P. 77,956 438,077 516,033
Continental Casualty Company 219,435 704,262 923,697
The Lincoln National Life Insurance Company 115,489 96,162 211,651
Post Total Return Fund, L.P. 11,556 9,622 21,178
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 837,102 233,868 22,495 1,093,465
Peregrine Holdings, Inc. 788,033 788,033
Michael V. Roberts 523,471 523,471
Steven C. Roberts 523,471 523,471
Thomas J. Embrescia 134,903 134,903
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 1
<PAGE> 20
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 Embrescia Family Trust F/B/O Matthew 72,805 72,805
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 72,805 72,805
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 72,805 72,805
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 53,533 53,533
Larry S. Blum Living Trust 21,413 21,413
Jamie Kellner 365,631 365,631
Doug Gealy 258,395 258,395
Thomas D. Allen 255,642 255,642
ACME Capital Partners 214,129 214,129
The Canyon Value Realization Fund 25,989 21,635 47,624
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 7,211 15,865
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,371,392 923,938 6,454,670 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 2
<PAGE> 21
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,222,287 22,154 1,244,441
Alta Subordinated Debt Partners III, L.P. 416,703 7,552 424,255
Alta-Comm S by S, LLC 27,822 504 28,326
BancBoston Ventures, Inc. 176,140 1,534,323 1,710,463
American High-Income Trust 153,990 127,332 281,322
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 63,669 140,670
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,273,945 23,089 1,297,034
CEA Capital Partners USA, CI, L.P. 392,867 7,121 399,988
TCW Shared Opportunity Fund II, L.P. 77,956 435,071 513,027
Continental Casualty Company 219,435 699,375 918,810
The Lincoln National Life Insurance Company 115,489 95,495 210,984
Post Total Return Fund, L.P. 11,556 9,555 21,111
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 831,470 233,868 22,441 1,087,779
Peregrine Holdings, Inc. 782,315 782,315
Michael V. Roberts 520,018 520,018
Steven C. Roberts 520,018 520,018
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 3
<PAGE> 22
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 134,078 134,078
1994 Embrescia Family Trust F/B/O Matthew 72,359 72,359
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 72,359 72,359
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 72,359 72,359
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 53,205 53,205
Larry S. Blum Living Trust 21,282 21,282
Jamie Kellner 392,550 392,550
Doug Gealy 278,580 278,580
Thomas D. Allen 275,826 275,826
ACME Capital Partners 213,552 213,552
The Canyon Value Realization Fund (Cayman) 25,989 21,485 47,474
Ltd. (Canyon Partners)
The Value Realization Fund, 8,654 7,161 15,815
L.P. (Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,341,234 923,938 6,484,828 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 4
<PAGE> 23
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,213,027 22,072 1,235,099
Alta Subordinated Debt Partners III, L.P. 413,546 7,524 421,070
Alta-Comm S by S, LLC 27,611 502 28,113
BancBoston Ventures, Inc. 174,793 1,522,510 1,697,303
American High-Income Trust 153,990 126,367 280,357
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 63,186 140,187
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,264,293 23,003 1,287,296
CEA Capital Partners USA, CI, L.P. 389,891 7,095 396,986
TCW Shared Opportunity Fund II, L.P. 77,956 431,805 509,761
Continental Casualty Company 219,435 694,075 913,510
The Lincoln National Life Insurance Company 115,489 94,771 210,260
Post Total Return Fund, L.P. 11,556 9,483 21,039
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 825,328 233,868 22,363 1,081,559
Peregrine Holdings, Inc. 776,160 776,160
Michael V. Roberts 516,239 516,239
Steven C. Roberts 516,239 516,239
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 5
<PAGE> 24
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 133,161 133,161
1994 Embrescia Family Trust F/B/O Matthew 71,865 71,865
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 71,865 71,865
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 71,865 71,865
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 52,842 52,842
Larry S. Blum Living Trust 21,136 21,136
Jamie Kellner 421,857 421,857
Doug Gealy 300,577 300,577
Thomas D. Allen 297,826 297,826
ACME Capital Partners 212,756 212,756
The Canyon Value Realization Fund 25,989 21,322 47,311
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 7,107 15,761
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,308,489 923,938 6,517,573 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 6
<PAGE> 25
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,203,572 21,978 1,225,550
Alta Subordinated Debt Partners III, L.P. 410,323 7,492 417,815
Alta-Comm S by S, LLC 27,396 500 27,896
BancBoston Ventures, Inc. 173,419 1,510,469 1,683,888
American High-Income Trust 153,990 125,382 279,372
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 62,693 139,694
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,254,439 22,906 1,277,345
CEA Capital Partners USA, CI, L.P. 386,852 7,064 393,916
TCW Shared Opportunity Fund II, L.P. 77,956 428,466 506,422
Continental Casualty Company 219,435 688,663 908,098
The Lincoln National Life Insurance Company 115,489 94,032 209,521
Post Total Return Fund, L.P. 11,556 9,409 20,965
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 819,040 233,868 22,274 1,075,182
Peregrine Holdings, Inc. 769,900 769,900
Michael V. Roberts 512,364 512,364
Steven C. Roberts 512,364 512,364
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 7
<PAGE> 26
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 132,215 132,215
1994 Embrescia Family Trust F/B/O Matthew 71,354 71,354
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 71,354 71,354
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 71,354 71,354
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 52,466 52,466
Larry S. Blum Living Trust 20,986 20,986
Jamie Kellner 451,838 451,838
Doug Gealy 323,091 323,091
Thomas D. Allen 320,345 320,345
ACME Capital Partners 211,855 211,855
The Canyon Value Realization Fund 25,989 21,156 47,145
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 7,051 15,705
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,275,041 923,938 6,551,021 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 8
<PAGE> 27
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,194,674 21,890 1,216,564
Alta Subordinated Debt Partners III, L.P. 407,289 7,462 414,751
Alta-Comm S by S, LLC 27,193 498 27,691
BancBoston Ventures, Inc. 172,126 1,499,136 1,671,262
American High-Income Trust 153,990 124,455 278,445
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 62,230 139,231
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,245,165 22,814 1,267,979
CEA Capital Partners USA, CI, L.P. 383,992 7,036 391,028
TCW Shared Opportunity Fund II, L.P. 77,956 425,324 503,280
Continental Casualty Company 219,435 683,570 903,005
The Lincoln National Life Insurance Company 115,489 93,337 208,826
Post Total Return Fund, L.P. 11,556 9,340 20,896
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 813,122 233,868 22,190 1,069,180
Peregrine Holdings, Inc. 764,009 764,009
Michael V. Roberts 508,717 508,717
Steven C. Roberts 508,717 508,717
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 9
<PAGE> 28
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 131,325 131,325
1994 Embrescia Family Trust F/B/O Matthew 70,874 70,874
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 70,874 70,874
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 70,874 70,874
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 52,113 52,113
Larry S. Blum Living Trust 20,845 20,845
Jamie Kellner 480,052 480,052
Doug Gealy 344,278 344,278
Thomas D. Allen 341,536 341,536
ACME Capital Partners 211,007 211,007
The Canyon Value Realization Fund 25,989 20,999 46,988
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,999 15,653
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,243,561 923,938 6,582,501 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 10
<PAGE> 29
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,186,284 21,807 1,208,091
Alta Subordinated Debt Partners III, L.P. 404,429 7,434 411,863
Alta-Comm S by S, LLC 27,002 496 27,498
BancBoston Ventures, Inc. 170,906 1,488,451 1,659,357
American High-Income Trust 153,990 123,580 277,570
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 61,793 138,794
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,236,420 22,727 1,259,147
CEA Capital Partners USA, CI, L.P. 381,295 7,010 388,305
TCW Shared Opportunity Fund II, L.P. 77,956 422,362 500,318
Continental Casualty Company 219,435 678,768 898,203
The Lincoln National Life Insurance Company 115,489 92,681 208,170
Post Total Return Fund, L.P. 11,556 9,274 20,830
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 807,542 233,868 22,110 1,063,520
Peregrine Holdings, Inc. 758,454 758,454
Michael V. Roberts 505,278 505,278
Steven C. Roberts 505,278 505,278
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 11
<PAGE> 30
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 130,486 130,486
1994 Embrescia Family Trust F/B/O Matthew 70,421 70,421
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 70,421 70,421
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 70,421 70,421
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,780 51,780
Larry S. Blum Living Trust 20,712 20,712
Jamie Kellner 506,656 506,656
Doug Gealy 364,256 364,256
Thomas D. Allen 361,519 361,519
ACME Capital Partners 210,207 210,207
The Canyon Value Realization Fund 25,989 20,852 46,841
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,950 15,604
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,213,878 923,938 6,612,184 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 12
<PAGE> 31
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,178,361 21,728 1,200,089
Alta Subordinated Debt Partners III, L.P. 401,727 7,408 409,135
Alta-Comm S by S, LLC 26,822 494 27,316
BancBoston Ventures, Inc. 169,755 1,478,360 1,648,115
American High-Income Trust 153,990 122,755 276,745
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 61,380 138,381
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,228,162 22,646 1,250,808
CEA Capital Partners USA, CI, L.P. 378,749 6,984 385,733
TCW Shared Opportunity Fund II, L.P. 77,956 419,564 497,520
Continental Casualty Company 219,435 674,233 893,668
The Lincoln National Life Insurance Company 115,489 92,062 207,551
Post Total Return Fund, L.P. 11,556 9,212 20,768
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 802,273 233,868 22,036 1,058,177
Peregrine Holdings, Inc. 753,208 753,208
Michael V. Roberts 502,030 502,030
Steven C. Roberts 502,030 502,030
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 13
<PAGE> 32
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 129,693 129,693
1994 Embrescia Family Trust F/B/O Matthew 69,993 69,993
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 69,993 69,993
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 69,993 69,993
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,465 51,465
Larry S. Blum Living Trust 20,586 20,586
Jamie Kellner 531,780 531,780
Doug Gealy 383,123 383,123
Thomas D. Allen 380,390 380,390
ACME Capital Partners 209,451 209,451
The Canyon Value Realization Fund 25,989 20,712 46,701
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,904 15,558
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,185,849 923,938 6,640,213 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 14
<PAGE> 33
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,170,865 21,654 1,192,519
Alta Subordinated Debt Partners III, L.P. 399,172 7,383 406,555
Alta-Comm S by S, LLC 26,651 492 27,143
BancBoston Ventures, Inc. 168,666 1,468,814 1,637,480
American High-Income Trust 153,990 121,974 275,964
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 60,989 137,990
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,220,350 22,569 1,242,919
CEA Capital Partners USA, CI, L.P. 376,339 6,960 383,299
TCW Shared Opportunity Fund II, L.P. 77,956 416,917 494,873
Continental Casualty Company 219,435 669,943 889,378
The Lincoln National Life Insurance Company 115,489 91,476 206,965
Post Total Return Fund, L.P. 11,556 9,153 20,709
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 797,288 233,868 21,965 1,053,121
Peregrine Holdings, Inc. 748,245 748,245
Michael V. Roberts 498,958 498,958
Steven C. Roberts 498,958 498,958
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 15
<PAGE> 34
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 128,943 128,943
1994 Embrescia Family Trust F/B/O Matthew 69,588 69,588
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 69,588 69,588
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 69,588 69,588
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,167 51,167
Larry S. Blum Living Trust 20,467 20,467
Jamie Kellner 555,549 555,549
Doug Gealy 400,971 400,971
Thomas D. Allen 398,242 398,242
ACME Capital Partners 208,737 208,737
The Canyon Value Realization Fund 25,989 20,581 46,570
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,860 15,514
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,159,331 923,938 6,666,731 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 16
<PAGE> 35
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,163,764 21,584 1,185,348
Alta Subordinated Debt Partners III, L.P. 396,751 7,358 404,109
Alta-Comm S by S, LLC 26,490 491 26,981
BancBoston Ventures, Inc. 167,634 1,459,770 1,627,404
American High-Income Trust 153,990 121,234 275,224
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 60,619 137,620
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,212,949 22,495 1,235,444
CEA Capital Partners USA, CI, L.P. 374,057 6,938 380,995
TCW Shared Opportunity Fund II, L.P. 77,956 414,410 492,366
Continental Casualty Company 219,435 665,878 885,313
The Lincoln National Life Insurance Company 115,489 90,921 206,410
Post Total Return Fund, L.P. 11,556 9,098 20,654
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 792,565 233,868 21,898 1,048,331
Peregrine Holdings, Inc. 743,544 743,544
Michael V. Roberts 496,047 496,047
Steven C. Roberts 496,047 496,047
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 17
<PAGE> 36
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 128,232 128,232
1994 Embrescia Family Trust F/B/O Matthew 69,205 69,205
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 69,205 69,205
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 69,205 69,205
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,886 50,886
Larry S. Blum Living Trust 20,354 20,354
Jamie Kellner 578,065 578,065
Doug Gealy 417,880 417,880
Thomas D. Allen 415,154 415,154
ACME Capital Partners 208,060 208,060
The Canyon Value Realization Fund 25,989 20,456 46,445
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,818 15,472
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,134,210 923,938 6,691,852 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 18
<PAGE> 37
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,157,027 21,517 1,178,544
Alta Subordinated Debt Partners III, L.P. 394,454 7,336 401,790
Alta-Comm S by S, LLC 26,336 489 26,825
BancBoston Ventures, Inc. 166,655 1,451,190 1,617,845
American High-Income Trust 153,990 120,532 274,522
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 60,268 137,269
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,205,927 22,426 1,228,353
CEA Capital Partners USA, CI, L.P. 371,892 6,916 378,808
TCW Shared Opportunity Fund II, L.P. 77,956 412,032 489,988
Continental Casualty Company 219,435 662,022 881,457
The Lincoln National Life Insurance Company 115,489 90,395 205,884
Post Total Return Fund, L.P. 11,556 9,045 20,601
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 788,085 233,868 21,834 1,043,787
Peregrine Holdings, Inc. 739,084 739,084
Michael V. Roberts 493,286 493,286
Steven C. Roberts 493,286 493,286
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 19
<PAGE> 38
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 127,558 127,558
1994 Embrescia Family Trust F/B/O Matthew 68,841 68,841
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 68,841 68,841
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 68,841 68,841
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,618 50,618
Larry S. Blum Living Trust 20,247 20,247
Jamie Kellner 599,427 599,427
Doug Gealy 433,922 433,922
Thomas D. Allen 431,199 431,199
ACME Capital Partners 207,418 207,418
The Canyon Value Realization Fund 25,989 20,337 46,326
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,779 15,433
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,110,376 923,938 6,715,686 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 20
<PAGE> 39
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,150,628 21,454 1,172,082
Alta Subordinated Debt Partners III, L.P. 392,273 7,314 399,587
Alta-Comm S by S, LLC 26,191 488 26,679
BancBoston Ventures, Inc. 165,725 1,443,040 1,608,765
American High-Income Trust 153,990 119,865 273,855
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 59,935 136,936
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,199,257 22,360 1,221,617
CEA Capital Partners USA, CI, L.P. 369,835 6,896 376,731
TCW Shared Opportunity Fund II, L.P. 77,956 409,772 487,728
Continental Casualty Company 219,435 658,359 877,794
The Lincoln National Life Insurance Company 115,489 89,895 205,384
Post Total Return Fund, L.P. 11,556 8,995 20,551
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 783,828 233,868 21,774 1,039,470
Peregrine Holdings, Inc. 734,846 734,846
Michael V. Roberts 490,663 490,663
Steven C. Roberts 490,663 490,663
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 21
<PAGE> 40
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 126,918 126,918
1994 Embrescia Family Trust F/B/O Matthew 68,495 68,495
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 68,495 68,495
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 68,495 68,495
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,364 50,364
Larry S. Blum Living Trust 20,145 20,145
Jamie Kellner 619,719 619,719
Doug Gealy 449,160 449,160
Thomas D. Allen 446,441 446,441
ACME Capital Partners 206,808 206,808
The Canyon Value Realization Fund 25,989 20,225 46,214
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,741 15,395
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,087,737 923,938 6,738,325 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 22
<PAGE> 41
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,144,540 21,394 1,165,934
Alta Subordinated Debt Partners III, L.P. 390,197 7,294 397,491
Alta-Comm S by S, LLC 26,052 486 26,538
BancBoston Ventures, Inc. 164,840 1,435,287 1,600,127
American High-Income Trust 153,990 119,230 273,220
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 59,617 136,618
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,192,912 22,297 1,215,209
CEA Capital Partners USA, CI, L.P. 367,878 6,877 374,755
TCW Shared Opportunity Fund II, L.P. 77,956 407,622 485,578
Continental Casualty Company 219,435 654,875 874,310
The Lincoln National Life Insurance Company 115,489 89,419 204,908
Post Total Return Fund, L.P. 11,556 8,947 20,503
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 779,780 233,868 21,716 1,035,364
Peregrine Holdings, Inc. 730,816 730,816
Michael V. Roberts 488,168 488,168
Steven C. Roberts 488,168 488,168
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 23
<PAGE> 42
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 126,309 126,309
1994 Embrescia Family Trust F/B/O Matthew 68,166 68,166
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 68,166 68,166
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 68,166 68,166
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,122 50,122
Larry S. Blum Living Trust 20,049 20,049
Jamie Kellner 639,024 639,024
Doug Gealy 463,657 463,657
Thomas D. Allen 460,941 460,941
ACME Capital Partners 206,227 206,227
The Canyon Value Realization Fund 25,989 20,118 46,107
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,705 15,359
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,066,199 923,938 6,759,863 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 24
<PAGE> 43
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,136,874 21,297 1,158,171
Alta Subordinated Debt Partners III, L.P. 387,584 7,261 394,845
Alta-Comm S by S, LLC 25,878 484 26,362
BancBoston Ventures, Inc. 163,729 1,425,570 1,589,299
American High-Income Trust 153,990 118,431 272,421
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 59,218 136,219
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,184,922 22,196 1,207,118
CEA Capital Partners USA, CI, L.P. 365,414 6,846 372,260
TCW Shared Opportunity Fund II, L.P. 77,956 404,908 482,864
Continental Casualty Company 219,435 650,487 869,922
The Lincoln National Life Insurance Company 115,489 88,820 204,309
Post Total Return Fund, L.P. 11,556 8,887 20,443
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 774,643 233,868 21,621 1,030,132
Peregrine Holdings, Inc. 725,796 725,796
Michael V. Roberts 484,986 484,986
Steven C. Roberts 484,986 484,986
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 25
<PAGE> 44
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 125,517 125,517
1994 Embrescia Family Trust F/B/O Matthew 67,739 67,739
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 67,739 67,739
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 67,739 67,739
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,808 49,808
Larry S. Blum Living Trust 19,923 19,923
Jamie Kellner 663,461 663,461
Doug Gealy 482,033 482,033
Thomas D. Allen 479,326 479,326
ACME Capital Partners 205,295 205,295
The Canyon Value Realization Fund 25,989 19,983 45,972
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,661 15,315
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,039,044 923,938 6,787,018 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 26
<PAGE> 45
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,128,359 21,180 1,149,539
Alta Subordinated Debt Partners III, L.P. 384,681 7,220 391,901
Alta-Comm S by S, LLC 25,684 482 26,166
BancBoston Ventures, Inc. 162,496 1,414,799 1,577,295
American High-Income Trust 153,990 117,544 271,534
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 58,774 135,775
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,176,047 22,074 1,198,121
CEA Capital Partners USA, CI, L.P. 362,677 6,808 369,485
TCW Shared Opportunity Fund II, L.P. 77,956 401,890 479,846
Continental Casualty Company 219,435 645,614 865,049
The Lincoln National Life Insurance Company 115,489 88,154 203,643
Post Total Return Fund, L.P. 11,556 8,821 20,377
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 768,918 233,868 21,505 1,024,291
Peregrine Holdings, Inc. 720,248 720,248
Michael V. Roberts 481,433 481,433
Steven C. Roberts 481,433 481,433
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 27
<PAGE> 46
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 124,626 124,626
1994 Embrescia Family Trust F/B/O Matthew 67,258 67,258
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 67,258 67,258
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 67,258 67,258
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,455 49,455
Larry S. Blum Living Trust 19,782 19,782
Jamie Kellner 690,668 690,668
Doug Gealy 502,503 502,503
Thomas D. Allen 499,808 499,808
ACME Capital Partners 204,161 204,161
The Canyon Value Realization Fund 25,989 19,833 45,822
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,611 15,265
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,008,862 923,938 6,817,200 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 28
<PAGE> 47
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,120,231 21,068 1,141,299
Alta Subordinated Debt Partners III, L.P. 381,910 7,182 389,092
Alta-Comm S by S, LLC 25,499 479 25,978
BancBoston Ventures, Inc. 161,320 1,404,519 1,565,839
American High-Income Trust 153,990 116,697 270,687
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 58,351 135,352
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,167,575 21,957 1,189,532
CEA Capital Partners USA, CI, L.P. 360,064 6,772 366,836
TCW Shared Opportunity Fund II, L.P. 77,956 399,009 476,965
Continental Casualty Company 219,435 640,963 860,398
The Lincoln National Life Insurance Company 115,489 87,519 203,008
Post Total Return Fund, L.P. 11,556 8,757 20,313
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 763,453 233,868 21,394 1,018,715
Peregrine Holdings, Inc. 714,952 714,952
Michael V. Roberts 478,041 478,041
Steven C. Roberts 478,041 478,041
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 29
<PAGE> 48
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 123,776 123,776
1994 Embrescia Family Trust F/B/O Matthew 66,799 66,799
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 66,799 66,799
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 66,799 66,799
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,117 49,117
Larry S. Blum Living Trust 19,646 19,646
Jamie Kellner 716,639 716,639
Doug Gealy 522,043 522,043
Thomas D. Allen 519,359 519,359
ACME Capital Partners 203,079 203,079
The Canyon Value Realization Fund 25,989 19,690 45,679
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,563 15,217
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,980,052 923,938 6,846,010 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 30
<PAGE> 49
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,112,464 20,960 1,133,424
Alta Subordinated Debt Partners III, L.P. 379,262 7,145 386,407
Alta-Comm S by S, LLC 25,322 477 25,799
BancBoston Ventures, Inc. 160,196 1,394,694 1,554,890
American High-Income Trust 153,990 115,888 269,878
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 57,946 134,947
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,159,480 21,845 1,181,325
CEA Capital Partners USA, CI, L.P. 357,568 6,737 364,305
TCW Shared Opportunity Fund II, L.P. 77,956 396,256 474,212
Continental Casualty Company 219,435 636,518 855,953
The Lincoln National Life Insurance Company 115,489 86,912 202,401
Post Total Return Fund, L.P. 11,556 8,697 20,253
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 758,232 233,868 21,287 1,013,387
Peregrine Holdings, Inc. 709,891 709,891
Michael V. Roberts 474,800 474,800
Steven C. Roberts 474,800 474,800
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 31
<PAGE> 50
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 122,963 122,963
1994 Embrescia Family Trust F/B/O Matthew 66,361 66,361
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 66,361 66,361
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 66,361 66,361
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,794 48,794
Larry S. Blum Living Trust 19,517 19,517
Jamie Kellner 741,455 741,455
Doug Gealy 540,716 540,716
Thomas D. Allen 538,041 538,041
ACME Capital Partners 202,045 202,045
The Canyon Value Realization Fund 25,989 19,554 45,543
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,517 15,171
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,952,524 923,938 6,873,538 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 32
<PAGE> 51
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,105,035 20,858 1,125,893
Alta Subordinated Debt Partners III, L.P. 376,729 7,111 383,840
Alta-Comm S by S, LLC 25,153 474 25,627
BancBoston Ventures, Inc. 159,120 1,385,298 1,544,418
American High-Income Trust 153,990 115,114 269,104
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 57,559 134,560
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,151,737 21,738 1,173,475
CEA Capital Partners USA, CI, L.P. 355,180 6,705 361,885
TCW Shared Opportunity Fund II, L.P. 77,956 393,622 471,578
Continental Casualty Company 219,435 632,266 851,701
The Lincoln National Life Insurance Company 115,489 86,332 201,821
Post Total Return Fund, L.P. 11,556 8,639 20,195
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 753,237 233,868 21,186 1,008,291
Peregrine Holdings, Inc. 705,050 705,050
Michael V. Roberts 471,700 471,700
Steven C. Roberts 471,700 471,700
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 33
<PAGE> 52
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 122,185 122,185
1994 Embrescia Family Trust F/B/O Matthew 65,941 65,941
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 65,941 65,941
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 65,941 65,941
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,486 48,486
Larry S. Blum Living Trust 19,394 19,394
Jamie Kellner 765,191 765,191
Doug Gealy 558,576 558,576
Thomas D. Allen 555,911 555,911
ACME Capital Partners 201,056 201,056
The Canyon Value Realization Fund 25,989 19,423 45,412
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,474 15,128
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,926,191 923,938 6,899,871 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 34
<PAGE> 53
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,097,922 20,760 1,118,682
Alta Subordinated Debt Partners III, L.P. 374,304 7,077 381,381
Alta-Comm S by S, LLC 24,991 472 25,463
BancBoston Ventures, Inc. 158,091 1,376,301 1,534,392
American High-Income Trust 153,990 114,373 268,363
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 57,189 134,190
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,144,323 21,636 1,165,959
CEA Capital Partners USA, CI, L.P. 352,894 6,673 359,567
TCW Shared Opportunity Fund II, L.P. 77,956 391,101 469,057
Continental Casualty Company 219,435 628,195 847,630
The Lincoln National Life Insurance Company 115,489 85,776 201,265
Post Total Return Fund, L.P. 11,556 8,583 20,139
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 748,455 233,868 21,088 1,003,411
Peregrine Holdings, Inc. 700,415 700,415
Michael V. Roberts 468,731 468,731
Steven C. Roberts 468,731 468,731
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 35
<PAGE> 54
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 121,441 121,441
1994 Embrescia Family Trust F/B/O Matthew 65,539 65,539
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 65,539 65,539
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 65,539 65,539
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,191 48,191
Larry S. Blum Living Trust 19,276 19,276
Jamie Kellner 787,918 787,918
Doug Gealy 575,677 575,677
Thomas D. Allen 573,022 573,022
ACME Capital Partners 200,109 200,109
The Canyon Value Realization Fund 25,989 19,298 45,287
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,432 15,086
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,900,980 923,938 6,925,082 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 36
<PAGE> 55
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,091,105 20,665 1,111,770
Alta Subordinated Debt Partners III, L.P. 371,980 7,045 379,025
Alta-Comm S by S, LLC 24,836 470 25,306
BancBoston Ventures, Inc. 157,104 1,367,678 1,524,782
American High-Income Trust 153,990 113,663 267,653
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 56,833 133,834
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,137,219 21,537 1,158,756
CEA Capital Partners USA, CI, L.P. 350,703 6,643 357,346
TCW Shared Opportunity Fund II, L.P. 77,956 388,685 466,641
Continental Casualty Company 219,435 624,294 843,729
The Lincoln National Life Insurance Company 115,489 85,243 200,732
Post Total Return Fund, L.P. 11,556 8,530 20,086
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 743,872 233,868 20,995 998,735
Peregrine Holdings, Inc. 695,974 695,974
Michael V. Roberts 465,887 465,887
Steven C. Roberts 465,887 465,887
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 37
<PAGE> 56
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 120,728 120,728
1994 Embrescia Family Trust F/B/O Matthew 65,154 65,154
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 65,154 65,154
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 65,154 65,154
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,907 47,907
Larry S. Blum Living Trust 19,163 19,163
Jamie Kellner 809,699 809,699
Doug Gealy 592,065 592,065
Thomas D. Allen 589,419 589,419
ACME Capital Partners 199,201 199,201
The Canyon Value Realization Fund 25,989 19,178 45,167
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,392 15,046
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,876,819 923,938 6,949,243 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 38
<PAGE> 57
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,084,567 20,575 1,105,142
Alta Subordinated Debt Partners III, L.P. 369,751 7,014 376,765
Alta-Comm S by S, LLC 24,687 468 25,155
BancBoston Ventures, Inc. 156,158 1,359,408 1,515,566
American High-Income Trust 153,990 112,981 266,971
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 56,493 133,494
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,130,404 21,443 1,151,847
CEA Capital Partners USA, CI, L.P. 348,601 6,614 355,215
TCW Shared Opportunity Fund II, L.P. 77,956 386,368 464,324
Continental Casualty Company 219,435 620,553 839,988
The Lincoln National Life Insurance Company 115,489 84,732 200,221
Post Total Return Fund, L.P. 11,556 8,478 20,034
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 739,476 233,868 20,905 994,249
Peregrine Holdings, Inc. 691,713 691,713
Michael V. Roberts 463,158 463,158
Steven C. Roberts 463,158 463,158
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 39
<PAGE> 58
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 120,043 120,043
1994 Embrescia Family Trust F/B/O Matthew 64,785 64,785
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 64,785 64,785
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 64,785 64,785
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,636 47,636
Larry S. Blum Living Trust 19,054 19,054
Jamie Kellner 830,590 830,590
Doug Gealy 607,784 607,784
Thomas D. Allen 605,147 605,147
ACME Capital Partners 198,331 198,331
The Canyon Value Realization Fund 25,989 19,063 45,052
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,354 15,008
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,853,644 923,938 6,972,418 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 40
<PAGE> 59
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $25.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,078,290 20,488 1,098,778
Alta Subordinated Debt Partners III, L.P. 367,611 6,985 374,596
Alta-Comm S by S, LLC 24,544 466 25,010
BancBoston Ventures, Inc. 155,249 1,351,469 1,506,718
American High-Income Trust 153,990 112,327 266,317
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 56,166 133,167
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,123,862 21,353 1,145,215
CEA Capital Partners USA, CI, L.P. 346,584 6,586 353,170
TCW Shared Opportunity Fund II, L.P. 77,956 384,142 462,098
Continental Casualty Company 219,435 616,960 836,395
The Lincoln National Life Insurance Company 115,489 84,242 199,731
Post Total Return Fund, L.P. 11,556 8,429 19,985
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 735,256 233,868 20,819 989,943
Peregrine Holdings, Inc. 687,623 687,623
Michael V. Roberts 460,539 460,539
Steven C. Roberts 460,539 460,539
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 41
<PAGE> 60
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $25.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 119,387 119,387
1994 Embrescia Family Trust F/B/O Matthew 64,431 64,431
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 64,431 64,431
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 64,431 64,431
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,375 47,375
Larry S. Blum Living Trust 18,950 18,950
Jamie Kellner 850,645 850,645
Doug Gealy 622,873 622,873
Thomas D. Allen 620,245 620,245
ACME Capital Partners 197,495 197,495
The Canyon Value Realization Fund 25,989 18,953 44,942
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,317 14,971
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,831,396 923,938 6,994,666 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 42
<PAGE> 61
EXHIBIT A
FORM OF EXCHANGE AGREEMENT BETWEEN COMPANY AND DEBENTURE HOLDERS
EXHIBIT B
FORM OF EXCHANGE AGREEMENT BETWEEN COMPANY AND CONVERTIBLE SECURITY HOLDERS
EXHIBIT C
FORM OF EXCHANGE AGREEMENT BETWEEN COMPANY AND MINORITY INTERMEDIATE UNITHOLDERS
EXHIBIT D
FORM OF REVERSE MERGER AGREEMENT
A - 1
<PAGE> 62
EXHIBIT E
DEFINITION OF ACCREDITED INVESTOR
(a) Accredited investor. "Accredited investor" shall mean any person who
comes within any of the following categories, or who the issuer reasonably
believes comes within any of the following categories, at the time of the sale
of the securities to that person:
(1) Any bank as defined in Section 3(a)(2) of the Act, or any
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; any insurance company as defined in Section 2(13) of the
Act; any investment company registered under the Investment Company Act of 1940
or a business development company as defined in Section 2(a)(48) of that Act;
any Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Section
230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited
investors.
E - 1
<PAGE> 1
EXHIBIT 2.2
FORM EXCHANGE AGREEMENT
AMONG
ACME COMMUNICATIONS, INC.,
ON THE ONE HAND,
AND
THE PARTIES LISTED AS "EXCHANGERS" ON THE SIGNATURE PAGES HEREOF,
ON THE OTHER HAND.
AS OF
SEPTEMBER __, 1999
<PAGE> 2
FORM EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "AGREEMENT") is made and entered
into as of September __, 1999 by and among ACME COMMUNICATIONS, INC., a Delaware
corporation (the "COMPANY"), on the one hand, and the parties listed as
"Exchangers" on the signature pages hereof (each an "EXCHANGER"), on the other
hand.
BACKGROUND
A. Subject to the terms and conditions of this Agreement,
Exchanger desires to contribute all of its [membership units] [debentures] to
Company; and
B. Subject to the terms and conditions of this Agreement,
the Company desires to acquire such [units] [debentures].
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and
promises made in this Agreement, the parties hereby agree as follows:
1. BASIC TERMS OF EXCHANGE OF EQUITY SECURITIES
1.1 EXCHANGE. Subject to the satisfaction of all the terms and conditions of
this Agreement, on the Closing Date, each Exchanger will receive the
number of shares of the Company's common stock listed in "Column 2" of
SCHEDULE 1, with any appropriate adjustments as described in Section II
of the Plan of Reorganization, in exchange for conveying, assigning,
transferring and delivering all of its [membership units] [debentures]
(the "EXCHANGE SECURITIES") to the Company, which will acquire and
accept from each Exchanger all of the Exchange Securities (the
"EXCHANGE"). No fractional shares of the Company's common stock will be
issued in connection with the Exchange. Instead, any Exchanger entitled
to a fractional share of the Company's common stock will be entitled to
receive a cash payment representing the value of such fraction, which
will be calculated by multiplying such fraction by the initial price
that a share of the Company's common stock is offered to the public.
1.2 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") will be held at the offices of O'Melveny &
Myers LLP, 610 Newport Center Drive, Newport Beach, California 92660, or
such other place as determined by the Company, on the date on which all
conditions set forth in Section 5 of this Agreement have been satisfied
(or waived by the party to be satisfied) and at a time to be mutually
agreed upon by the parties, or on such other date and at such other time
and place as the parties may mutually agree upon, including by way of
facsimile; provided that such date will be no later than October 31,
1999. The date on which the Closing actually occurs is referred to
herein as the "CLOSING DATE."
2. REPRESENTATIONS AND WARRANTIES OF EXCHANGERS
1
<PAGE> 3
Each Exchanger hereby represents and warrants severally, and not
jointly, to the Company, as follows (provided that any representation or
warranty the subject matter of which relates to a Exchanger is made by the
Exchanger as to itself only and not as to the other Exchangers):
2.1 ORGANIZATION AND GOOD STANDING. Such Exchanger is a corporation, limited
partnership or limited liability company, as applicable, is duly
incorporated or organized, as applicable, is validly existing and in
good standing under the laws of the state of its incorporation or
organization, as applicable, and has all requisite power and authority
to carry on its business as now conducted.
2.2 AUTHORIZATION. All corporate, partnership or limited liability company
action has been taken on the part of such Exchanger, necessary for the
authorization, execution, delivery and performance of this Agreement.
This Agreement constitutes the legal, valid and binding obligation of
such Exchanger, enforceable against such Exchanger in accordance with
its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating
to or affecting the enforcement of creditors' rights. Such Exchanger has
all requisite power and authority to enter into this Agreement and to
carry out and perform its obligations under the terms of this Agreement.
2.3 NO CONFLICTS. The execution, delivery and performance of this Agreement
and any related agreements by such Exchanger do not and will not violate
the provisions of, or constitute a breach or default whether upon lapse
of time and/or the occurrence of, any act or event or otherwise under
(a) the charter documents or bylaws of such Exchanger, (b) any law
(other than federal or state securities laws, as to which such Exchanger
makes no representation or warranty) to which such Exchanger is subject,
except to the extent that the effect thereof would not have a material
adverse effect on such Exchanger, or (c) any contract to which such
Exchanger is a party that is material to the financial condition,
results of operations or conduct of the business of such Exchanger,
except to the extent that the effect thereof would not have a material
adverse effect on such Exchanger or the transactions contemplated
hereby.
2.4 EXCHANGE SECURITIES. Such Exchanger is the owner of the respective
Exchange Securities free and clear of any Encumbrance. The Company will
take such Exchanger's Exchange Securities free and clear of any
Encumbrance. The Exchange Securities of such Exchanger consist solely of
those contemplated hereby or contemplated in the Agreement and Plan of
Reorganization dated as of September __, 1999 by and among the Company,
such Exchanger and the parties listed on the signature pages thereto
(the "PLAN OF REORGANIZATION"). "ENCUMBRANCE" means any claim, charge,
easement, encumbrance, lease, covenant, security interest, lien, option,
pledge, rights of others, or restriction (whether on voting, sale,
transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise, except for any restrictions on
transfer generally arising under any applicable federal or state
securities law.
2.5 GOVERNMENTAL AND THIRD PARTY CONSENTS. All consents, approvals, orders,
authorizations, registrations, qualifications, designations,
declarations or filings with or
2
<PAGE> 4
from any federal or state governmental agency or authority or any other
person or entity required on the part of Exchanger in connection with
the execution, delivery or performance of this Agreement and the
consummation of the transactions contemplated herein have been obtained
by Exchanger, other than as may be required under federal or state
securities laws, as to compliance with any of which Exchanger makes no
representation or warranty.
2.6 [SHAREHOLDER] [MEMBER] AGREEMENTS. There are no agreements or
arrangements between Exchanger and any of the Exchangers' [shareholders]
[members], or to the best of such Exchanger's knowledge, between or
among any of such Exchanger's [shareholders] [members], that in any way
affect any [shareholder's] [member's] ability or right freely to
alienate or vote such [shares] [membership units].
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Exchanger as
follows:
3.1 ORGANIZATION AND RELATED MATTERS. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of
Delaware. The Company has all necessary power and authority to carry on
its business as now being conducted. The Company has the necessary power
and authority to execute, deliver and perform this Agreement.
3.2 AUTHORIZATION. All corporate action has been taken on the part of the
Company necessary for the authorization, execution, delivery and
performance of this Agreement. When executed and delivered by the
Company, this Agreement will constitute the valid and legally binding
obligation of the Company, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or affecting
the enforcement of creditors' or security holders' rights.
3.3 NO CONFLICTS. The execution, delivery and performance of this Agreement
and any related agreements by the Company will not violate the
provisions of, or constitute a breach or default whether upon lapse of
time and/or the occurrence of, any act or event or otherwise under (a)
the Certificate of Incorporation or bylaws of the Company, (b) any law
to which the Company is subject, except to the extent that the effect
thereof would not have a material adverse effect on the Company (and
except any violation that could occur before a final order is received
from the Federal Communications Commission with respect to the approval
of both the Company's short-form application on Form 316 and long-form
application on Form 315), or (c) any contract to which the Company is a
party that is material to the financial condition, results of operations
or conduct of the business of Company, except to the extent that the
effect thereof would not have a material adverse effect on the Company.
3.4 GOVERNMENTAL AND THIRD PARTY CONSENTS. Except for final orders from the
Federal Communications Commission with respect to the approval of both
the Company's short-form application on Form 316 and long-form
application on Form 315, all consents,
3
<PAGE> 5
approvals, orders, authorizations, registrations, qualifications,
designations, declarations or filings with or from any federal or state
governmental agency or authority or any other person or entity required
on the part of Company in connection with the execution, delivery or
performance of this Agreement and the consummation of the transactions
contemplated herein have been obtained by Company.
4. COVENANTS BEFORE CLOSING DATE
During the period beginning on the date hereof and ending on the
Closing Date:
4.1 GOVERNMENTAL AND THIRD PARTY CONSENTS. Each Exchanger will use its
reasonable best efforts to obtain (and will immediately prepare all
registrations, filing and applications, requests and notices preliminary
to obtaining) all consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings
with or from any federal or state governmental agency or authority or
any other person or entity required on the part of Exchanger in
connection with the execution, delivery or performance of this Agreement
and the consummation of the transactions contemplated herein; provided,
however, that the Exchanger will not be responsible for compliance with
federal or state securities laws with regard to the issuance of the
shares of the Company's hereunder so long as the representation and
warranty made by such Exchanger in the Plan of Reorganization is true
and correct.
4.2 PROHIBITED ACTIONS. Except as required or permitted by this Agreement,
each Exchanger, without the written consent of the Company, will not:
4.2.1 Amend its Certificate of [Incorporation] [Formation] or [Bylaws]
[Limited Liability Company Operating Agreement], except with respect to
amendments that would not impair the rights of the Company under this
Agreement or such Exchanger's ability to perform this Agreement;
4.2.2 Effect any transaction involving transfer of control of the
Exchange Securities including, but not limited to, any conversion of any
convertible securities; or
4.2.3 Create, incur, assume or permit to exist any lien on or with
respect to the Exchange Securities of each Exchanger, or file or permit
the filing of, or permit to remain in effect, any financing statement or
other similar notice of any lien with respect to the Exchange Securities
under the Uniform Commercial Code of any State or under any similar
recording or notice statute.
5. CONDITIONS TO CLOSING
5.1 GENERAL CONDITIONS. The obligations of the parties to effect the Closing
will be subject to the following conditions:
5.1.1 No Orders; Legal Proceedings. No judgment, order, injunction,
decree, ruling, assessment or writ will have been entered, issued,
promulgated or enforced by any federal or state government agency or
authority or court, nor will any action, suit, arbitration or other
legal proceeding have been instituted and remain pending, at what
4
<PAGE> 6
otherwise would be the Closing Date that prohibits or restricts or would
(if successful) prohibit or restrict the transactions contemplated by
this Agreement.
5.1.2 Consents, Waivers, etc. Except for final orders from the Federal
Communications Commission with respect to the approval of each of the
Company's pending short-form application on Form 316 and long-form
application on Form 315, all consents, approvals, orders,
authorizations, registrations, qualifications, designations,
declarations or filings with or from any federal or state governmental
agency or authority or any other person or entity required on the part
of each Exchanger or the Company, as the case may be, in connection with
the execution, delivery or performance of this Agreement and the
consummation of the transactions contemplated herein, on or before the
Closing Date.
5.1.3 Registration Statement. The registration statement for the
initial public offering (the "IPO") of shares of the Company's common
stock will have become effective and the Company will have entered into
a firm commitment underwriting agreement with respect thereto.
5.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company under this Agreement are subject to the fulfillment of each
of the following conditions at or before the Closing:
5.2.1 Representations and Warranties True at Closing. The
representations and warranties of Exchanger contained in Section 2
hereof will be true and correct when made and will be true and correct
on and as of the Closing Date.
5.2.2 Performance. Each Exchanger will have performed and satisfied
all agreements and conditions contained herein required to be performed
or satisfied by it on or before the Closing Date.
5.2.3 Liquidation. Each Exchanger that is a Blocker Corporation (as
that term is defined in the Plan of Reorganization) will liquidate and
will distribute its assets to its respective shareholders as part of the
reorganization under Section 368(a)(1)(C) that is contemplated in the
Plan of Reorganization and of which this Agreement is a part.
5.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF EXCHANGER. The obligations of
each Exchanger under this Agreement are subject to the fulfillment of
each of the following conditions at or before the Closing:
5.3.1 Representations and Warranties True at Closing. The
representations and warranties of the Company contained in Section 3
hereof will be true and correct when made and will be true and correct
on and as of the Closing Date.
Performance. The Company will have performed and satisfied all
agreements and conditions contained herein required to be performed or satisfied
by it on or before the Closing Date.
5
<PAGE> 7
6. MISCELLANEOUS PROVISIONS
6.1 FURTHER ASSURANCES. Each party agrees to cooperate fully with the other
party and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably
requested by either party to evidence and reflect the transactions
described herein and contemplated hereby, and to carry into effect the
intents and purposes of this Agreement.
6.2 ATTORNEYS' FEES AND COSTS. If any legal action, arbitration or other
proceeding is brought to enforce or interpret this Agreement or matters
relating to it, the substantially prevailing party will be entitled to
recover reasonable attorneys' fees and other costs incurred in such
action, arbitration or proceeding from the other party, in addition to
any other relief to which such prevailing party is entitled.
6.3 SEVERABILITY. The provisions of this Agreement are severable. The
invalidity, in whole or in part, of any provision of this Agreement will
not affect the validity or enforceability of any other of its
provisions. If one or more provisions hereof will be declared invalid or
unenforceable, the remaining provisions will remain in full force and
effect and will be construed in the broadest possible manner to
effectuate the purposes hereof. The parties further agree to replace
such void or unenforceable provisions of this Agreement with valid and
enforceable provisions that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable
provisions.
6.4 HEADINGS; REFERENCES; EXHIBITS. The headings in this Agreement are only
for convenience and ease of reference and are not to be considered in
construction or interpretation of this Agreement, nor as evidence of the
intention of the parties hereto. All exhibits, schedules and appendices
attached to this Agreement are incorporated herein. Except where
otherwise indicated, all references in this Agreement to Sections refer
to Sections of this Agreement.
6.5 COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which will be deemed an original, and when executed, separately
or together, all of such counterparts will constitute a single original
instrument, effective in the same manner as if all parties hereto had
executed one and the same instrument.
6.6 AMENDMENTS; MODIFICATIONS. Any provision of this Agreement may be
amended or modified upon the written consent of each of the parties to
this Agreement.
6.7 INTERPRETATION. If any claim is made by a party relating to any
conflict, omission or ambiguity in the provisions of this Agreement, no
presumption or burden of proof or persuasion will be implied because
this Agreement was prepared by or at the request of any party or its
counsel.
6.8 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, excluding that body
of law relating to conflict of laws.
6
<PAGE> 8
6.9 JURISDICTION AND VENUE. The parties consent to the jurisdiction of all
federal and state courts in Delaware. Non-exclusive venue will lie
exclusively in Wilmington County, Delaware.
6.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope
of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, but not limited to, contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a
material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that
each will continue to rely on this waiver in their related future
dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with
legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER WILL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
6.11 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof will inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties
hereto.
6.12 SURVIVAL. The representations, warranties and agreements in this
Agreement will survive the execution of this Agreement without regard to
any investigation made by any party. All statements as to factual
matters contained in any certificates, exhibits or other instruments
delivered by or on behalf of any party pursuant to the terms hereof or
in connection with the transactions contemplated hereby will be deemed,
for all purposes, to constitute representations and warranties by such
party under the terms of this Agreement given as of the date of such
certificate or instrument.
6.13 ADDITIONAL DOCUMENTS AND ACTS. Each party will execute and deliver such
additional documents and instruments, and perform such additional acts,
as are commercially reasonable and necessary to carry out and perform
its obligations in this Agreement.
6.14 EXPENSES. Except with respect to the obligations set forth in Section
ERROR! REFERENCE SOURCE NOT FOUND., the Company will be responsible for,
and will promptly pay, all costs and expenses incurred in connection
with the transactions contemplated under this Agreement.
6.15 TERMINATION. This Agreement will terminate and be of no further force
and effect on the earliest of (i) withdrawal of the registration
statement relating to the IPO, (ii) the termination of the underwriting
agreement relating to the IPO, or (iii) October 31, 1999.
7
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement with the intent and agreement that the same will be effective as of
the date first above written.
THE COMPANY
ACME COMMUNICATIONS, INC.
By: ______________________________________
Name: Thomas D. Allen
Title: Chief Financial Officer
Notice Address:
2101 E. Fourth Street
Suite 202
Santa Ana, California 92705
Fax: (714) 245-9494
Attn: Tom Allen
EXCHANGER
Alta Communications VI, L.P.
By: Alta Communications VI
Management Partners, L.P.,
its general partner
By: ______________________________
Name: Brian McNeill
Title: General Partner
Notice Address:
1 Post Office Square, Suite 3800
Boston, Massachusetts 02109
Fax: (617) 482-1944
Attn: Brian McNeill
S-1
<PAGE> 10
EXCHANGER
Alta-Comm S by S, LLC
By: ______________________________
Name: Brian McNeill
Title: Member
Notice Address:
1 Post Office Square, Suite 3800
Boston, Massachusetts 02109
Fax: (617) 482-1944
Attn: Brian McNeill
EXCHANGER
Alta Subordinated Debt Partners III, L.P.
By: Alta Subordinated Debt Management III,
L.P., its general partner
By: ______________________________
Name: Brian McNeill
Title: General Partner
Notice Address:
1 Post Office Square, Suite 3800
Boston, Massachusetts 02109
Fax: (617) 482-1944
Attn: Brian McNeill
S-2
<PAGE> 11
EXCHANGER
ALTA ACME, INC.
By: ______________________________
Name: Brian McNeill
Title: General Partner
Notice Address:
1 Post Office Square, Suite 3800
Boston, Massachusetts 02109
Fax: (617) 482-1944
Attn: Brian McNeill
EXCHANGER
CEA Capital Partners USA, L.P.
By: CEA Management Corp.,
its authorized representative
By: ______________________________
Name: James J. Collis
Title: Executive Vice President
Notice Address:
17 State Street
35th Floor
New York, New York 10004
Fax: (212) 425-1420
Attn: James J. Collis
S-3
<PAGE> 12
EXCHANGER
CEA Capital Partners USA CI L.P.,
a Cayman Islands limited partnership
By: CEA Management Corp.,
its authorized representative
By: ______________________________
Name: James J. Collis
Title: Executive Vice President
Notice Address:
17 State Street
35th Floor
New York, New York 10004
Fax: (212) 425-1420
Attn: James J. Collis
EXCHANGER
CEA ACME, INC.
By: ______________________________
Name:
Title:
Notice Address:
17 State Street
35th Floor
New York, New York 10004
Fax: (212) 425-1420
Attn: James J. Collis
S-4
<PAGE> 13
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,230,824 22,214 1,253,038
Alta Subordinated Debt Partners III, L.P. 419,613 7,573 427,186
Alta-Comm S by S, LLC 28,016 505 28,521
BancBoston Ventures, Inc. 177,384 1,545,251 1,722,635
American High-Income Trust 153,990 128,222 282,212
(Capital Research & Management Co)
American Variable Insurance Series 77,001 64,113 141,114
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,282,842 23,152 1,305,994
CEA Capital Partners USA, CI, L.P. 395,611 7,140 402,751
TCW Shared Opportunity Fund II, L.P. 77,956 438,077 516,033
Continental Casualty Company 219,435 704,262 923,697
The Lincoln National Life Insurance Company 115,489 96,162 211,651
Post Total Return Fund, L.P. 11,556 9,622 21,178
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 837,102 233,868 22,495 1,093,465
Peregrine Holdings, Inc. 788,033 788,033
Michael V. Roberts 523,471 523,471
Steven C. Roberts 523,471 523,471
Thomas J. Embrescia 134,903 134,903
</TABLE>
SCHEDULE 1 - 1
<PAGE> 14
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 Embrescia Family Trust F/B/O 72,805 72,805
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 72,805 72,805
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 72,805 72,805
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 53,533 53,533
Larry S. Blum Living Trust 21,413 21,413
Jamie Kellner 365,631 365,631
Doug Gealy 258,395 258,395
Thomas D. Allen 255,642 255,642
ACME Capital Partners 214,129 214,129
The Canyon Value Realization Fund 25,989 21,635 47,624
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 7,211 15,865
(Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,371,392 923,938 6,454,670 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 2
<PAGE> 15
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,222,287 22,154 1,244,441
Alta Subordinated Debt Partners III, L.P. 416,703 7,552 424,255
Alta-Comm S by S, LLC 27,822 504 28,326
BancBoston Ventures, Inc. 176,140 1,534,323 1,710,463
American High-Income Trust 153,990 127,332 281,322
(Capital Research & Management Co)
American Variable Insurance Series 77,001 63,669 140,670
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,273,945 23,089 1,297,034
CEA Capital Partners USA, CI, L.P. 392,867 7,121 399,988
TCW Shared Opportunity Fund II, L.P. 77,956 435,071 513,027
Continental Casualty Company 219,435 699,375 918,810
The Lincoln National Life Insurance Company 115,489 95,495 210,984
Post Total Return Fund, L.P. 11,556 9,555 21,111
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 831,470 233,868 22,441 1,087,779
Peregrine Holdings, Inc. 782,315 782,315
Michael V. Roberts 520,018 520,018
Steven C. Roberts 520,018 520,018
</TABLE>
SCHEDULE 1 - 3
<PAGE> 16
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 134,078 134,078
1994 Embrescia Family Trust F/B/O 72,359 72,359
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 72,359 72,359
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 72,359 72,359
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 53,205 53,205
Larry S. Blum Living Trust 21,282 21,282
Jamie Kellner 392,550 392,550
Doug Gealy 278,580 278,580
Thomas D. Allen 275,826 275,826
ACME Capital Partners 213,552 213,552
The Canyon Value Realization Fund 25,989 21,485 47,474
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 7,161 15,815
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,341,234 923,938 6,484,828 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 4
<PAGE> 17
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,213,027 22,072 1,235,099
Alta Subordinated Debt Partners III, L.P. 413,546 7,524 421,070
Alta-Comm S by S, LLC 27,611 502 28,113
BancBoston Ventures, Inc. 174,793 1,522,510 1,697,303
American High-Income Trust 153,990 126,367 280,357
(Capital Research & Management Co)
American Variable Insurance Series 77,001 63,186 140,187
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,264,293 23,003 1,287,296
CEA Capital Partners USA, CI, L.P. 389,891 7,095 396,986
TCW Shared Opportunity Fund II, L.P. 77,956 431,805 509,761
Continental Casualty Company 219,435 694,075 913,510
The Lincoln National Life Insurance Company 115,489 94,771 210,260
Post Total Return Fund, L.P. 11,556 9,483 21,039
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 825,328 233,868 22,363 1,081,559
Peregrine Holdings, Inc. 776,160 776,160
Michael V. Roberts 516,239 516,239
Steven C. Roberts 516,239 516,239
</TABLE>
SCHEDULE 1 - 5
<PAGE> 18
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 133,161 133,161
- ------------------------------------------------------------------------------------------------------------------------------------
1994 Embrescia Family Trust F/B/O 71,865 71,865
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
1994 Embrescia Family Trust F/B/O 71,865 71,865
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
1994 Embrescia Family Trust F/B/O 71,865 71,865
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Jonathan Pinch & Linda Pinch 52,842 52,842
- ------------------------------------------------------------------------------------------------------------------------------------
Larry S. Blum Living Trust 21,136 21,136
- ------------------------------------------------------------------------------------------------------------------------------------
Jamie Kellner 421,857 421,857
- ------------------------------------------------------------------------------------------------------------------------------------
Doug Gealy 300,577 300,577
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas D. Allen 297,826 297,826
- ------------------------------------------------------------------------------------------------------------------------------------
ACME Capital Partners 212,756 212,756
- ------------------------------------------------------------------------------------------------------------------------------------
The Canyon Value Realization Fund 25,989 21,322 47,311
(Cayman) Ltd.
(Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
The Value Realization Fund, 8,654 7,107 15,761
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,308,489 923,938 6,517,573 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 6
<PAGE> 19
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,203,572 21,978 1,225,550
Alta Subordinated Debt Partners III, L.P. 410,323 7,492 417,815
Alta-Comm S by S, LLC 27,396 500 27,896
BancBoston Ventures, Inc. 173,419 1,510,469 1,683,888
American High-Income Trust 153,990 125,382 279,372
(Capital Research & Management Co)
American Variable Insurance Series 77,001 62,693 139,694
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,254,439 22,906 1,277,345
CEA Capital Partners USA, CI, L.P. 386,852 7,064 393,916
TCW Shared Opportunity Fund II, L.P. 77,956 428,466 506,422
Continental Casualty Company 219,435 688,663 908,098
The Lincoln National Life Insurance Company 115,489 94,032 209,521
Post Total Return Fund, L.P. 11,556 9,409 20,965
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 819,040 233,868 22,274 1,075,182
Peregrine Holdings, Inc. 769,900 769,900
Michael V. Roberts 512,364 512,364
Steven C. Roberts 512,364 512,364
</TABLE>
SCHEDULE 1 - 7
<PAGE> 20
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 132,215 132,215
1994 Embrescia Family Trust F/B/O 71,354 71,354
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 71,354 71,354
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 71,354 71,354
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 52,466 52,466
Larry S. Blum Living Trust 20,986 20,986
Jamie Kellner 451,838 451,838
Doug Gealy 323,091 323,091
Thomas D. Allen 320,345 320,345
ACME Capital Partners 211,855 211,855
The Canyon Value Realization Fund 25,989 21,156 47,145
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 7,051 15,705
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,275,041 923,938 6,551,021 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 8
<PAGE> 21
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,194,674 21,890 1,216,564
Alta Subordinated Debt Partners III, L.P. 407,289 7,462 414,751
Alta-Comm S by S, LLC 27,193 498 27,691
BancBoston Ventures, Inc. 172,126 1,499,136 1,671,262
American High-Income Trust 153,990 124,455 278,445
(Capital Research & Management Co)
American Variable Insurance Series 77,001 62,230 139,231
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,245,165 22,814 1,267,979
CEA Capital Partners USA, CI, L.P. 383,992 7,036 391,028
TCW Shared Opportunity Fund II, L.P. 77,956 425,324 503,280
Continental Casualty Company 219,435 683,570 903,005
The Lincoln National Life Insurance Company 115,489 93,337 208,826
Post Total Return Fund, L.P. 11,556 9,340 20,896
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 813,122 233,868 22,190 1,069,180
Peregrine Holdings, Inc. 764,009 764,009
Michael V. Roberts 508,717 508,717
Steven C. Roberts 508,717 508,717
</TABLE>
SCHEDULE 1 - 9
<PAGE> 22
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 131,325 131,325
1994 Embrescia Family Trust F/B/O 70,874 70,874
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 70,874 70,874
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 70,874 70,874
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 52,113 52,113
Larry S. Blum Living Trust 20,845 20,845
Jamie Kellner 480,052 480,052
Doug Gealy 344,278 344,278
Thomas D. Allen 341,536 341,536
ACME Capital Partners 211,007 211,007
The Canyon Value Realization Fund 25,989 20,999 46,988
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,999 15,653
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,243,561 923,938 6,582,501 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 10
<PAGE> 23
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,186,284 21,807 1,208,091
Alta Subordinated Debt Partners III, L.P. 404,429 7,434 411,863
Alta-Comm S by S, LLC 27,002 496 27,498
BancBoston Ventures, Inc. 170,906 1,488,451 1,659,357
American High-Income Trust 153,990 123,580 277,570
(Capital Research & Management Co)
American Variable Insurance Series 77,001 61,793 138,794
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,236,420 22,727 1,259,147
CEA Capital Partners USA, CI, L.P. 381,295 7,010 388,305
TCW Shared Opportunity Fund II, L.P. 77,956 422,362 500,318
Continental Casualty Company 219,435 678,768 898,203
The Lincoln National Life Insurance Company 115,489 92,681 208,170
Post Total Return Fund, L.P. 11,556 9,274 20,830
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 807,542 233,868 22,110 1,063,520
Peregrine Holdings, Inc. 758,454 758,454
Michael V. Roberts 505,278 505,278
Steven C. Roberts 505,278 505,278
</TABLE>
SCHEDULE 1 - 11
<PAGE> 24
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 130,486 130,486
1994 Embrescia Family Trust F/B/O 70,421 70,421
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 70,421 70,421
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 70,421 70,421
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,780 51,780
Larry S. Blum Living Trust 20,712 20,712
Jamie Kellner 506,656 506,656
Doug Gealy 364,256 364,256
Thomas D. Allen 361,519 361,519
ACME Capital Partners 210,207 210,207
The Canyon Value Realization Fund 25,989 20,852 46,841
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,950 15,604
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,213,878 923,938 6,612,184 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 12
<PAGE> 25
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,178,361 21,728 1,200,089
Alta Subordinated Debt Partners III, L.P. 401,727 7,408 409,135
Alta-Comm S by S, LLC 26,822 494 27,316
BancBoston Ventures, Inc. 169,755 1,478,360 1,648,115
American High-Income Trust 153,990 122,755 276,745
(Capital Research & Management Co)
American Variable Insurance Series 77,001 61,380 138,381
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,228,162 22,646 1,250,808
CEA Capital Partners USA, CI, L.P. 378,749 6,984 385,733
TCW Shared Opportunity Fund II, L.P. 77,956 419,564 497,520
Continental Casualty Company 219,435 674,233 893,668
The Lincoln National Life Insurance Company 115,489 92,062 207,551
Post Total Return Fund, L.P. 11,556 9,212 20,768
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 802,273 233,868 22,036 1,058,177
Peregrine Holdings, Inc. 753,208 753,208
Michael V. Roberts 502,030 502,030
Steven C. Roberts 502,030 502,030
</TABLE>
SCHEDULE 1 - 13
<PAGE> 26
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 129,693 129,693
1994 Embrescia Family Trust F/B/O 69,993 69,993
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 69,993 69,993
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 69,993 69,993
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,465 51,465
Larry S. Blum Living Trust 20,586 20,586
Jamie Kellner 531,780 531,780
Doug Gealy 383,123 383,123
Thomas D. Allen 380,390 380,390
ACME Capital Partners 209,451 209,451
The Canyon Value Realization Fund 25,989 20,712 46,701
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,904 15,558
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,185,849 923,938 6,640,213 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 14
<PAGE> 27
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,170,865 21,654 1,192,519
Alta Subordinated Debt Partners III, L.P. 399,172 7,383 406,555
Alta-Comm S by S, LLC 26,651 492 27,143
BancBoston Ventures, Inc. 168,666 1,468,814 1,637,480
American High-Income Trust 153,990 121,974 275,964
(Capital Research & Management Co)
American Variable Insurance Series 77,001 60,989 137,990
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,220,350 22,569 1,242,919
CEA Capital Partners USA, CI, L.P. 376,339 6,960 383,299
TCW Shared Opportunity Fund II, L.P. 77,956 416,917 494,873
Continental Casualty Company 219,435 669,943 889,378
The Lincoln National Life Insurance Company 115,489 91,476 206,965
Post Total Return Fund, L.P. 11,556 9,153 20,709
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 797,288 233,868 21,965 1,053,121
Peregrine Holdings, Inc. 748,245 748,245
Michael V. Roberts 498,958 498,958
Steven C. Roberts 498,958 498,958
</TABLE>
SCHEDULE 1 - 15
<PAGE> 28
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 128,943 128,943
1994 Embrescia Family Trust F/B/O 69,588 69,588
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 69,588 69,588
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 69,588 69,588
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,167 51,167
Larry S. Blum Living Trust 20,467 20,467
Jamie Kellner 555,549 555,549
Doug Gealy 400,971 400,971
Thomas D. Allen 398,242 398,242
ACME Capital Partners 208,737 208,737
The Canyon Value Realization Fund 25,989 20,581 46,570
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,860 15,514
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,159,331 923,938 6,666,731 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 16
<PAGE> 29
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,163,764 21,584 1,185,348
Alta Subordinated Debt Partners III, L.P. 396,751 7,358 404,109
Alta-Comm S by S, LLC 26,490 491 26,981
BancBoston Ventures, Inc. 167,634 1,459,770 1,627,404
American High-Income Trust 153,990 121,234 275,224
(Capital Research & Management Co)
American Variable Insurance Series 77,001 60,619 137,620
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,212,949 22,495 1,235,444
CEA Capital Partners USA, CI, L.P. 374,057 6,938 380,995
TCW Shared Opportunity Fund II, L.P. 77,956 414,410 492,366
Continental Casualty Company 219,435 665,878 885,313
The Lincoln National Life Insurance Company 115,489 90,921 206,410
Post Total Return Fund, L.P. 11,556 9,098 20,654
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 792,565 233,868 21,898 1,048,331
Peregrine Holdings, Inc. 743,544 743,544
Michael V. Roberts 496,047 496,047
Steven C. Roberts 496,047 496,047
</TABLE>
SCHEDULE 1 - 17
<PAGE> 30
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 128,232 128,232
1994 Embrescia Family Trust F/B/O 69,205 69,205
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 69,205 69,205
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 69,205 69,205
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,886 50,886
Larry S. Blum Living Trust 20,354 20,354
Jamie Kellner 578,065 578,065
Doug Gealy 417,880 417,880
Thomas D. Allen 415,154 415,154
ACME Capital Partners 208,060 208,060
The Canyon Value Realization Fund 25,989 20,456 46,445
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,818 15,472
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,134,210 923,938 6,691,852 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 18
<PAGE> 31
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,157,027 21,517 1,178,544
Alta Subordinated Debt Partners III, L.P. 394,454 7,336 401,790
Alta-Comm S by S, LLC 26,336 489 26,825
BancBoston Ventures, Inc. 166,655 1,451,190 1,617,845
American High-Income Trust 153,990 120,532 274,522
(Capital Research & Management Co)
American Variable Insurance Series 77,001 60,268 137,269
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,205,927 22,426 1,228,353
CEA Capital Partners USA, CI, L.P. 371,892 6,916 378,808
TCW Shared Opportunity Fund II, L.P. 77,956 412,032 489,988
Continental Casualty Company 219,435 662,022 881,457
The Lincoln National Life Insurance Company 115,489 90,395 205,884
Post Total Return Fund, L.P. 11,556 9,045 20,601
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 788,085 233,868 21,834 1,043,787
Peregrine Holdings, Inc. 739,084 739,084
Michael V. Roberts 493,286 493,286
Steven C. Roberts 493,286 493,286
</TABLE>
SCHEDULE 1 - 19
<PAGE> 32
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 127,558 127,558
1994 Embrescia Family Trust F/B/O 68,841 68,841
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 68,841 68,841
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 68,841 68,841
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,618 50,618
Larry S. Blum Living Trust 20,247 20,247
Jamie Kellner 599,427 599,427
Doug Gealy 433,922 433,922
Thomas D. Allen 431,199 431,199
ACME Capital Partners 207,418 207,418
The Canyon Value Realization Fund 25,989 20,337 46,326
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,779 15,433
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,110,376 923,938 6,715,686 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 20
<PAGE> 33
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,150,628 21,454 1,172,082
Alta Subordinated Debt Partners III, L.P. 392,273 7,314 399,587
Alta-Comm S by S, LLC 26,191 488 26,679
BancBoston Ventures, Inc. 165,725 1,443,040 1,608,765
American High-Income Trust 153,990 119,865 273,855
(Capital Research & Management Co)
American Variable Insurance Series 77,001 59,935 136,936
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,199,257 22,360 1,221,617
CEA Capital Partners USA, CI, L.P. 369,835 6,896 376,731
TCW Shared Opportunity Fund II, L.P. 77,956 409,772 487,728
Continental Casualty Company 219,435 658,359 877,794
The Lincoln National Life Insurance Company 115,489 89,895 205,384
Post Total Return Fund, L.P. 11,556 8,995 20,551
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 783,828 233,868 21,774 1,039,470
Peregrine Holdings, Inc. 734,846 734,846
Michael V. Roberts 490,663 490,663
Steven C. Roberts 490,663 490,663
</TABLE>
SCHEDULE 1 - 21
<PAGE> 34
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 126,918 126,918
1994 Embrescia Family Trust F/B/O 68,495 68,495
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 68,495 68,495
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 68,495 68,495
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,364 50,364
Larry S. Blum Living Trust 20,145 20,145
Jamie Kellner 619,719 619,719
Doug Gealy 449,160 449,160
Thomas D. Allen 446,441 446,441
ACME Capital Partners 206,808 206,808
The Canyon Value Realization Fund 25,989 20,225 46,214
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,741 15,395
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,087,737 923,938 6,738,325 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 22
<PAGE> 35
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,144,540 21,394 1,165,934
Alta Subordinated Debt Partners III, L.P. 390,197 7,294 397,491
Alta-Comm S by S, LLC 26,052 486 26,538
BancBoston Ventures, Inc. 164,840 1,435,287 1,600,127
American High-Income Trust 153,990 119,230 273,220
(Capital Research & Management Co)
American Variable Insurance Series 77,001 59,617 136,618
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,192,912 22,297 1,215,209
CEA Capital Partners USA, CI, L.P. 367,878 6,877 374,755
TCW Shared Opportunity Fund II, L.P. 77,956 407,622 485,578
Continental Casualty Company 219,435 654,875 874,310
The Lincoln National Life Insurance Company 115,489 89,419 204,908
Post Total Return Fund, L.P. 11,556 8,947 20,503
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 779,780 233,868 21,716 1,035,364
Peregrine Holdings, Inc. 730,816 730,816
Michael V. Roberts 488,168 488,168
Steven C. Roberts 488,168 488,168
</TABLE>
SCHEDULE 1 - 23
<PAGE> 36
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 126,309 126,309
1994 Embrescia Family Trust F/B/O 68,166 68,166
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 68,166 68,166
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 68,166 68,166
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,122 50,122
Larry S. Blum Living Trust 20,049 20,049
Jamie Kellner 639,024 639,024
Doug Gealy 463,657 463,657
Thomas D. Allen 460,941 460,941
ACME Capital Partners 206,227 206,227
The Canyon Value Realization Fund 25,989 20,118 46,107
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,705 15,359
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,066,199 923,938 6,759,863 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 24
<PAGE> 37
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,136,874 21,297 1,158,171
Alta Subordinated Debt Partners III, L.P. 387,584 7,261 394,845
Alta-Comm S by S, LLC 25,878 484 26,362
BancBoston Ventures, Inc. 163,729 1,425,570 1,589,299
American High-Income Trust 153,990 118,431 272,421
(Capital Research & Management Co)
American Variable Insurance Series 77,001 59,218 136,219
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,184,922 22,196 1,207,118
CEA Capital Partners USA, CI, L.P. 365,414 6,846 372,260
TCW Shared Opportunity Fund II, L.P. 77,956 404,908 482,864
Continental Casualty Company 219,435 650,487 869,922
The Lincoln National Life Insurance Company 115,489 88,820 204,309
Post Total Return Fund, L.P. 11,556 8,887 20,443
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 774,643 233,868 21,621 1,030,132
Peregrine Holdings, Inc. 725,796 725,796
Michael V. Roberts 484,986 484,986
Steven C. Roberts 484,986 484,986
</TABLE>
SCHEDULE 1 - 25
<PAGE> 38
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 125,517 125,517
1994 Embrescia Family Trust F/B/O 67,739 67,739
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 67,739 67,739
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 67,739 67,739
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,808 49,808
Larry S. Blum Living Trust 19,923 19,923
Jamie Kellner 663,461 663,461
Doug Gealy 482,033 482,033
Thomas D. Allen 479,326 479,326
ACME Capital Partners 205,295 205,295
The Canyon Value Realization Fund 25,989 19,983 45,972
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,661 15,315
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,039,044 923,938 6,787,018 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 26
<PAGE> 39
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,128,359 21,180 1,149,539
Alta Subordinated Debt Partners III, L.P. 384,681 7,220 391,901
Alta-Comm S by S, LLC 25,684 482 26,166
BancBoston Ventures, Inc. 162,496 1,414,799 1,577,295
American High-Income Trust 153,990 117,544 271,534
(Capital Research & Management Co)
American Variable Insurance Series 77,001 58,774 135,775
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,176,047 22,074 1,198,121
CEA Capital Partners USA, CI, L.P. 362,677 6,808 369,485
TCW Shared Opportunity Fund II, L.P. 77,956 401,890 479,846
Continental Casualty Company 219,435 645,614 865,049
The Lincoln National Life Insurance Company 115,489 88,154 203,643
Post Total Return Fund, L.P. 11,556 8,821 20,377
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 768,918 233,868 21,505 1,024,291
Peregrine Holdings, Inc. 720,248 720,248
Michael V. Roberts 481,433 481,433
Steven C. Roberts 481,433 481,433
</TABLE>
SCHEDULE 1 - 27
<PAGE> 40
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 124,626 124,626
1994 Embrescia Family Trust F/B/O 67,258 67,258
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 67,258 67,258
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 67,258 67,258
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,455 49,455
Larry S. Blum Living Trust 19,782 19,782
Jamie Kellner 690,668 690,668
Doug Gealy 502,503 502,503
Thomas D. Allen 499,808 499,808
ACME Capital Partners 204,161 204,161
The Canyon Value Realization Fund 25,989 19,833 45,822
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,611 15,265
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,008,862 923,938 6,817,200 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 28
<PAGE> 41
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,120,231 21,068 1,141,299
Alta Subordinated Debt Partners III, L.P. 381,910 7,182 389,092
Alta-Comm S by S, LLC 25,499 479 25,978
BancBoston Ventures, Inc. 161,320 1,404,519 1,565,839
American High-Income Trust 153,990 116,697 270,687
(Capital Research & Management Co)
American Variable Insurance Series 77,001 58,351 135,352
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,167,575 21,957 1,189,532
CEA Capital Partners USA, CI, L.P. 360,064 6,772 366,836
TCW Shared Opportunity Fund II, L.P. 77,956 399,009 476,965
Continental Casualty Company 219,435 640,963 860,398
The Lincoln National Life Insurance Company 115,489 87,519 203,008
Post Total Return Fund, L.P. 11,556 8,757 20,313
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 763,453 233,868 21,394 1,018,715
Peregrine Holdings, Inc. 714,952 714,952
Michael V. Roberts 478,041 478,041
Steven C. Roberts 478,041 478,041
</TABLE>
SCHEDULE 1 - 29
<PAGE> 42
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 123,776 123,776
1994 Embrescia Family Trust F/B/O 66,799 66,799
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 66,799 66,799
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 66,799 66,799
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,117 49,117
Larry S. Blum Living Trust 19,646 19,646
Jamie Kellner 716,639 716,639
Doug Gealy 522,043 522,043
Thomas D. Allen 519,359 519,359
ACME Capital Partners 203,079 203,079
The Canyon Value Realization Fund 25,989 19,690 45,679
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,563 15,217
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,980,052 923,938 6,846,010 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 30
<PAGE> 43
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,112,464 20,960 1,133,424
Alta Subordinated Debt Partners III, L.P. 379,262 7,145 386,407
Alta-Comm S by S, LLC 25,322 477 25,799
BancBoston Ventures, Inc. 160,196 1,394,694 1,554,890
American High-Income Trust 153,990 115,888 269,878
(Capital Research & Management Co)
American Variable Insurance Series 77,001 57,946 134,947
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,159,480 21,845 1,181,325
CEA Capital Partners USA, CI, L.P. 357,568 6,737 364,305
TCW Shared Opportunity Fund II, L.P. 77,956 396,256 474,212
Continental Casualty Company 219,435 636,518 855,953
The Lincoln National Life Insurance Company 115,489 86,912 202,401
Post Total Return Fund, L.P. 11,556 8,697 20,253
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 758,232 233,868 21,287 1,013,387
Peregrine Holdings, Inc. 709,891 709,891
Michael V. Roberts 474,800 474,800
Steven C. Roberts 474,800 474,800
</TABLE>
SCHEDULE 1 - 31
<PAGE> 44
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 122,963 122,963
1994 Embrescia Family Trust F/B/O 66,361 66,361
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 66,361 66,361
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 66,361 66,361
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,794 48,794
Larry S. Blum Living Trust 19,517 19,517
Jamie Kellner 741,455 741,455
Doug Gealy 540,716 540,716
Thomas D. Allen 538,041 538,041
ACME Capital Partners 202,045 202,045
The Canyon Value Realization Fund 25,989 19,554 45,543
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,517 15,171
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,952,524 923,938 6,873,538 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 32
<PAGE> 45
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,105,035 20,858 1,125,893
Alta Subordinated Debt Partners III, L.P. 376,729 7,111 383,840
Alta-Comm S by S, LLC 25,153 474 25,627
BancBoston Ventures, Inc. 159,120 1,385,298 1,544,418
American High-Income Trust 153,990 115,114 269,104
(Capital Research & Management Co)
American Variable Insurance Series 77,001 57,559 134,560
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,151,737 21,738 1,173,475
CEA Capital Partners USA, CI, L.P. 355,180 6,705 361,885
TCW Shared Opportunity Fund II, L.P. 77,956 393,622 471,578
Continental Casualty Company 219,435 632,266 851,701
The Lincoln National Life Insurance Company 115,489 86,332 201,821
Post Total Return Fund, L.P. 11,556 8,639 20,195
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 753,237 233,868 21,186 1,008,291
Peregrine Holdings, Inc. 705,050 705,050
Michael V. Roberts 471,700 471,700
Steven C. Roberts 471,700 471,700
</TABLE>
SCHEDULE 1 - 33
<PAGE> 46
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 122,185 122,185
1994 Embrescia Family Trust F/B/O 65,941 65,941
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 65,941 65,941
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 65,941 65,941
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,486 48,486
Larry S. Blum Living Trust 19,394 19,394
Jamie Kellner 765,191 765,191
Doug Gealy 558,576 558,576
Thomas D. Allen 555,911 555,911
ACME Capital Partners 201,056 201,056
The Canyon Value Realization Fund 25,989 19,423 45,412
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,474 15,128
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,926,191 923,938 6,899,871 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 34
<PAGE> 47
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,097,922 20,760 1,118,682
Alta Subordinated Debt Partners III, L.P. 374,304 7,077 381,381
Alta-Comm S by S, LLC 24,991 472 25,463
BancBoston Ventures, Inc. 158,091 1,376,301 1,534,392
American High-Income Trust 153,990 114,373 268,363
(Capital Research & Management Co)
American Variable Insurance Series 77,001 57,189 134,190
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,144,323 21,636 1,165,959
CEA Capital Partners USA, CI, L.P. 352,894 6,673 359,567
TCW Shared Opportunity Fund II, L.P. 77,956 391,101 469,057
Continental Casualty Company 219,435 628,195 847,630
The Lincoln National Life Insurance Company 115,489 85,776 201,265
Post Total Return Fund, L.P. 11,556 8,583 20,139
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 748,455 233,868 21,088 1,003,411
Peregrine Holdings, Inc. 700,415 700,415
Michael V. Roberts 468,731 468,731
Steven C. Roberts 468,731 468,731
</TABLE>
SCHEDULE 1 - 35
<PAGE> 48
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 121,441 121,441
1994 Embrescia Family Trust F/B/O 65,539 65,539
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 65,539 65,539
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 65,539 65,539
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,191 48,191
Larry S. Blum Living Trust 19,276 19,276
Jamie Kellner 787,918 787,918
Doug Gealy 575,677 575,677
Thomas D. Allen 573,022 573,022
ACME Capital Partners 200,109 200,109
The Canyon Value Realization Fund 25,989 19,298 45,287
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,432 15,086
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,900,980 923,938 6,925,082 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 36
<PAGE> 49
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,091,105 20,665 1,111,770
Alta Subordinated Debt Partners III, L.P. 371,980 7,045 379,025
Alta-Comm S by S, LLC 24,836 470 25,306
BancBoston Ventures, Inc. 157,104 1,367,678 1,524,782
American High-Income Trust 153,990 113,663 267,653
(Capital Research & Management Co)
American Variable Insurance Series 77,001 56,833 133,834
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,137,219 21,537 1,158,756
CEA Capital Partners USA, CI, L.P. 350,703 6,643 357,346
TCW Shared Opportunity Fund II, L.P. 77,956 388,685 466,641
Continental Casualty Company 219,435 624,294 843,729
The Lincoln National Life Insurance Company 115,489 85,243 200,732
Post Total Return Fund, L.P. 11,556 8,530 20,086
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 743,872 233,868 20,995 998,735
Peregrine Holdings, Inc. 695,974 695,974
Michael V. Roberts 465,887 465,887
Steven C. Roberts 465,887 465,887
</TABLE>
SCHEDULE 1 - 37
<PAGE> 50
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 120,728 120,728
1994 Embrescia Family Trust F/B/O 65,154 65,154
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 65,154 65,154
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 65,154 65,154
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,907 47,907
Larry S. Blum Living Trust 19,163 19,163
Jamie Kellner 809,699 809,699
Doug Gealy 592,065 592,065
Thomas D. Allen 589,419 589,419
ACME Capital Partners 199,201 199,201
The Canyon Value Realization Fund 25,989 19,178 45,167
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,392 15,046
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,876,819 923,938 6,949,243 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 38
<PAGE> 51
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,084,567 20,575 1,105,142
Alta Subordinated Debt Partners III, L.P. 369,751 7,014 376,765
Alta-Comm S by S, LLC 24,687 468 25,155
BancBoston Ventures, Inc. 156,158 1,359,408 1,515,566
American High-Income Trust 153,990 112,981 266,971
(Capital Research & Management Co)
American Variable Insurance Series 77,001 56,493 133,494
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,130,404 21,443 1,151,847
CEA Capital Partners USA, CI, L.P. 348,601 6,614 355,215
TCW Shared Opportunity Fund II, L.P. 77,956 386,368 464,324
Continental Casualty Company 219,435 620,553 839,988
The Lincoln National Life Insurance Company 115,489 84,732 200,221
Post Total Return Fund, L.P. 11,556 8,478 20,034
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 739,476 233,868 20,905 994,249
Peregrine Holdings, Inc. 691,713 691,713
Michael V. Roberts 463,158 463,158
Steven C. Roberts 463,158 463,158
</TABLE>
SCHEDULE 1 - 39
<PAGE> 52
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.50)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 120,043 120,043
1994 Embrescia Family Trust F/B/O 64,785 64,785
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 64,785 64,785
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 64,785 64,785
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,636 47,636
Larry S. Blum Living Trust 19,054 19,054
Jamie Kellner 830,590 830,590
Doug Gealy 607,784 607,784
Thomas D. Allen 605,147 605,147
ACME Capital Partners 198,331 198,331
The Canyon Value Realization Fund 25,989 19,063 45,052
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,354 15,008
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,853,644 923,938 6,972,418 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 40
<PAGE> 53
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $25.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,078,290 20,488 1,098,778
Alta Subordinated Debt Partners III, L.P. 367,611 6,985 374,596
Alta-Comm S by S, LLC 24,544 466 25,010
BancBoston Ventures, Inc. 155,249 1,351,469 1,506,718
American High-Income Trust 153,990 112,327 266,317
(Capital Research & Management Co)
American Variable Insurance Series 77,001 56,166 133,167
- - High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,123,862 21,353 1,145,215
CEA Capital Partners USA, CI, L.P. 346,584 6,586 353,170
TCW Shared Opportunity Fund II, L.P. 77,956 384,142 462,098
Continental Casualty Company 219,435 616,960 836,395
The Lincoln National Life Insurance Company 115,489 84,242 199,731
Post Total Return Fund, L.P. 11,556 8,429 19,985
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 735,256 233,868 20,819 989,943
Peregrine Holdings, Inc. 687,623 687,623
Michael V. Roberts 460,539 460,539
Steven C. Roberts 460,539 460,539
</TABLE>
SCHEDULE 1 - 41
<PAGE> 54
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $25.00)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION II C OF COMPANY COMMON STOCK
AGREEMENT AND PLAN AGREEMENT AND PLAN OF AGREEMENT AND PLAN OWNED BY SHAREHOLDERS
OF REORGANIZATION - REORGANIZATION - I.E. OF REORGANIZATION -
I.E. HOLDERS OF EXCHANGES WITH REVERSE TRIANGULAR
DEBENTURES IN TV INTERMEDIATE MINORITY MERGER)
HOLDINGS) UNITHOLDERS AND WITH
CONVERTIBLE SECURITY
HOLDERS OF HOLDINGS
IV)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 119,387 119,387
1994 Embrescia Family Trust F/B/O 64,431 64,431
Matthew Embrescia, Key Trust
Company of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 64,431 64,431
Megan Embrescia, Key Trust Company
of Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O 64,431 64,431
Amanda Embrescia, Key Trust Company
of Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,375 47,375
Larry S. Blum Living Trust 18,950 18,950
Jamie Kellner 850,645 850,645
Doug Gealy 622,873 622,873
Thomas D. Allen 620,245 620,245
ACME Capital Partners 197,495 197,495
The Canyon Value Realization Fund 25,989 18,953 44,942
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, 8,654 6,317 14,971
L.P. (Canyon Partners)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,831,396 923,938 6,994,666 11,750,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 42
<PAGE> 1
EXHIBIT 2.3
AGREEMENT OF MERGER
AMONG
ACME COMMUNICATIONS, INC.,
A DELAWARE CORPORATION,
ACME TELEVISION HOLDINGS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AND
ACME COMMUNICATIONS MERGER SUBSIDIARY, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
<PAGE> 2
AGREEMENT OF MERGER
This Agreement of Merger is made as of September __, 1999 (this
"AGREEMENT"), by and among ACME Television Holdings, LLC, a Delaware limited
liability company ("TARGET LLC"), ACME Communications, Inc., a Delaware
corporation and a wholly-owned subsidiary of Target LLC ("ACQUIROR"), and ACME
Communications Merger Subsidiary, LLC, a Delaware limited liability company and
a wholly-owned subsidiary of Acquiror ("MERGER LLC"). Acquiror, Target LLC and
Merger LLC are collectively referred to herein as the "PARTIES."
RECITALS
A. Target LLC is a limited liability company formed in accordance
with the laws of the State of Delaware pursuant to the filing of a certificate
of formation on April 24, 1997.
B. Acquiror is a corporation organized under the laws of the
State of Delaware pursuant to the filing of a certificate of incorporation on
July 23, 1999.
C. Merger LLC is a limited liability company formed in accordance
with the laws of the State of Delaware pursuant to the filing of a certificate
of formation on September 15, 1999.
D. This Agreement contemplates a tax-free merger (the "MERGER")
of Merger LLC with and into Target LLC subject to the terms and conditions of
this Agreement and the applicable provisions of the laws of the State of
Delaware.
E. The Parties desire to enter into this Agreement to set forth
certain covenants and conditions precedent to the consummation of the Merger.
NOW, THEREFORE, in consideration of these premises and of the
mutual provisions, conditions and covenants herein contained, the parties agree
as follows:
AGREEMENT
1. DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the respective meanings when used in
this Agreement:
"PLAN OF REORGANIZATION" means the Agreement and Plan of Reorganization
entered into as of September __, 1999 by and among Acquiror, Target LLC, Merger
LLC and the other parties listed on the signature pages thereto.
"CODE" means the Delaware General Corporation Law, as amended from time
to time.
<PAGE> 3
"IPO" means the initial public offering of shares of Acquiror's common
stock.
"LLC OPERATING AGREEMENT" means the Limited Liability Company Agreement
of Target LLC, made as of June 17, 1997, as amended.
"MEMBERSHIP UNITS" has the meaning given to it in the LLC Operating
Agreement.
2. THE MERGER
2.1 CLOSING. The closing of the transactions contemplated by this Agreement
(the "CLOSING") will occur on the Effective Date.
2.2 MERGER. In accordance with the provisions of this Agreement and the
Code, Merger LLC will be merged with and into Target LLC, the separate
existence of Merger LLC will cease and Target LLC will survive the
Merger and will continue to be governed by the laws of the State of
Delaware. Target LLC will be, and is sometimes referred to herein as,
the "SURVIVING ENTITY." The name of the Surviving Entity will be ACME
Television Holdings, LLC.
2.3 EFFECTIVE DATE. Subject to the terms and conditions of this Agreement
and the Plan of Reorganization, at or before the Closing, Merger LLC and
Target LLC will execute and deliver a Certificate of Merger in
substantially the form attached hereto as EXHIBIT A (the "CERTIFICATE OF
MERGER"). The Merger will become effective when: (i) all of the
covenants and conditions precedent to the consummation of the Merger
specified in this Agreement and the Plan of Reorganization have been
satisfied or duly waived by the party entitled to satisfaction thereof;
and (ii) upon the proper filing of the Certificate of Merger with the
Delaware Secretary of State (the "EFFECTIVE DATE").
2.4 EFFECT OF THE MERGER. On the Effective Date: (i) the separate existence
of Merger LLC will cease and Target LLC will continue as the Surviving
Entity and will continue to possess all of its assets, rights, powers
and property as constituted immediately before the Effective Date; (ii)
pursuant to applicable law including, but not limited to, Code Section
18-209, all property, real, personal and mixed, and all debts due to
Merger LLC, as well as all other things and causes of action belonging
to Merger LLC will vest in the Surviving Entity and will thereafter be
the property of the Surviving Entity as they were of Merger LLC; and
(iii) all rights of creditors and all liens upon any property of Merger
LLC will be preserved unimpaired, and all debts, liabilities and duties
of Merger LLC will thenceforth attach to the Surviving Entity, and may
be enforced against it to the same extent as if said debts, liabilities
and duties had been incurred or contracted by it.
2.5 FURTHER ACTS AFTER EFFECTIVE DATE. If, at any time after the Effective
Date, Surviving Entity considers or is advised that any deeds, bills of
sale, assignments, assurances, or any other actions or things are
necessary or desirable to vest, perfect, or confirm of record or
otherwise in Surviving Entity its rights, title, or interest in, to, or
under any of the rights, properties, or assets of Merger LLC or to be
acquired by Surviving Entity as a
2
<PAGE> 4
result of, or in connection with, the Merger or to otherwise carry out
this Agreement, Surviving Entity will and will be authorized to execute
and deliver, in the name and on behalf of Merger LLC, all such deeds,
bills of sale, assignments, and assurances, and to take and do, in the
name and on behalf of Merger LLC, all such other actions and things as
may be necessary or desirable to vest, perfect, or confirm any and all
right, title and interest in, to, and under such rights, properties or
assets in Surviving Entity or to otherwise carry out this Agreement.
3. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
3.1 CERTIFICATE OF FORMATION. The Certificate of Formation of Merger LLC as
in effect immediately before the Effective Date of the Merger will
continue in full force and effect as the Certificate of Formation of the
Surviving Entity until duly amended in accordance with the provisions
thereof and applicable law.
3.2 OPERATING AGREEMENT. The Operating Agreement of Merger LLC as in effect
immediately before the Effective Date of the Merger will continue in
full force and effect as the Operating Agreement of the Surviving Entity
until duly amended in accordance with the provisions thereof and
applicable law.
3.3 ADVISORS AND OFFICERS. The Board of Advisors and officers of Merger LLC
immediately before the Effective Date of the Merger will be the Board of
Advisors and officers of the Surviving Entity until their successors
will have been duly elected and qualified or until as otherwise provided
by law, the Certificate of Formation of the Surviving Entity or the
Operating Agreement of the Surviving Entity.
4. CONVERSION OF MEMBERSHIP UNITS INTO SHARES OF COMMON STOCK;
CANCELLATION OF SHARES OF COMMON STOCK
4.1 As of the Effective Date, by virtue of the Merger and without any action
on the part of Target LLC or Merger LLC, each membership unit of Merger
LLC outstanding immediately before the Effective Date will be converted
into one Membership Unit of the Surviving Entity.
4.2 As of the Effective Date, by virtue of the Merger and without any action
on the part of Target LLC or Acquiror, the Membership Units of Target
LLC outstanding immediately before the Effective Date will be converted
into shares of common stock of the Acquiror in accordance with "Column
3" of SCHEDULE 1, with any appropriate adjustments as described in
Section II of the Plan of Reorganization.
4.3 No fractional shares of the Acquiror's common stock will be issued in
connection with the Merger. Instead, any person entitled to a fractional
share of the Acquiror's common stock will be entitled to receive a cash
payment representing the value of such fraction, which will be
calculated by multiplying such fraction by the initial price that a
share of the Acquiror's common stock is offered to the public.
3
<PAGE> 5
4.4 As of the Effective Date, Target LLC and Acquiror agree that the 100
shares of common stock of the Acquiror that Target LLC currently owns
will be cancelled.
5. CONDITION TO OBLIGATIONS OF TARGET LLC
5.1 OBLIGATIONS. The obligations of Target LLC under this Agreement are
subject to the satisfaction or waiver, at Target LLC's option, at or
before the Closing, of (i) the condition that the requisite officers of
Merger LLC will have executed and delivered to Target LLC duly executed
copies of this Agreement and of the Certificate of Merger, and (ii) the
condition that the registration statement pursuant to the IPO is
effective and that the Acquiror has entered into an underwriting
agreement with respect to the IPO.
5.2 COMPLIANCE. Merger LLC will have performed and complied in all material
respects with each and every covenant, agreement and condition required
by this Agreement and the Plan of Reorganization to be performed or
complied with by it before or at the Closing.
6. CONDITIONS TO OBLIGATIONS OF MERGER LLC
6.1 OBLIGATIONS. The obligations of Merger LLC under this Agreement are
subject to the satisfaction or waiver, at Merger LLC's option, at or
before the Closing, of (i) the condition that the requisite officers of
Target LLC will have executed and delivered to Merger LLC duly executed
copies of this Agreement and the Certificate of Merger, and (ii) the
condition that the registration statement pursuant to the IPO is
effective and that the Acquiror has entered into an underwriting
agreement with respect to the IPO.
6.2 COMPLIANCE. Target LLC will have performed and complied in all material
respects with each and every covenant, agreement and condition required
by this Agreement and the Plan of Reorganization to be performed or
complied with by it before or at the Closing.
7. MISCELLANEOUS
7.1 HEADINGS. The headings of the sections of this Agreement are inserted
for convenience of reference only and are not intended to affect the
meaning or interpretation of this Agreement.
7.2 BINDING NATURE. This Agreement will be binding upon and inure to the
benefit of the parties hereto.
7.3 APPLICABLE LAW. This Agreement will be governed in all respects by the
laws of the State of Delaware.
7.4 JURISDICTION AND VENUE. The parties consent to the jurisdiction of all
federal and state courts in Delaware. Non-exclusive venue will lie
exclusively in Wilmington County, Delaware.
4
<PAGE> 6
7.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope
of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, but not limited to, contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a
material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that
each will continue to rely on this waiver in their related future
dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with
legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER WILL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
7.6 ABANDONMENT. At any time before the Effective Date, this Agreement may
be terminated and the Merger may be abandoned for any reason whatsoever
by the Board of Advisors of Target LLC or by the Board of Advisors of
Merger LLC, or of both, notwithstanding the approval of the Merger by
either the members of Target LLC or by the members of Merger LLC, or by
both.
7.7 REGISTERED OFFICE. The registered office of the Surviving Entity in the
State of Delaware will be 15 E. North Street, Dover, Delaware in the
County of Kent and Paracorp Incorporated will be the registered agent of
the Surviving Entity at such address.
7.8 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Entity at 2101 E. Fourth
Street, Suite 202, Santa Ana, California 92705 and copies thereof will
be furnished to any holder of membership units of Merger LLC or to any
holder of Membership Units of Target LLC, upon request and without cost.
7.9 COUNTERPARTS. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each
of which will be deemed to be an original and all of which together will
constitute one and the same instrument.
7.10 TERMINATION. This Agreement will terminate and be of no further force
and effect on the earliest of (i) withdrawal of the registration
statement relating to IPO, (ii) termination of the underwriting
agreement relating thereto, or (iii) October 31, 1999.
[Rest of Page Intentionally Left Blank]
5
<PAGE> 7
IN WITNESS WHEREOF, Acquiror, Merger LLC and Target LLC have
caused this Agreement to be signed as of the date first above written.
"MERGER LLC"
ACME COMMUNICATIONS MERGER
SUBSIDIARY, LLC.
By:__________________________________
Thomas Allen
Chief Financial Officer
"TARGET LLC"
ACME TELEVISION HOLDINGS, LLC
By:__________________________________
Thomas D. Allen
Chief Financial Officer
"ACQUIROR"
ACME COMMUNICATIONS, INC.
By:__________________________________
Thomas D. Allen
Chief Financial Officer
S-1
<PAGE> 8
EXHIBIT A
CERTIFICATE OF MERGER
OF
ACME COMMUNICATIONS MERGER SUBSIDIARY, LLC
A DELAWARE LIMITED LIABILITY COMPANY
INTO
ACME TELEVISION HOLDINGS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
THE UNDERSIGNED LIMITED LIABILITY COMPANY HEREBY CERTIFIES:
FIRST: That the name and state of formation of each of the
constituent business entities of the merger are as follows:
<TABLE>
<CAPTION>
NAME STATE OF FORMATION
---- ------------------
<S> <C>
ACME Communications Merger Subsidiary, LLC Delaware
ACME Television Holdings, LLC Delaware
</TABLE>
SECOND:That an Agreement of Merger between the parties to the
merger has been approved and executed by ACME Television Holdings, LLC and ACME
Communications Merger Subsidiary, LLC.
THIRD: That the name of the surviving business entity is ACME
Television Holdings, LLC, a Delaware limited liability company.
FOURTH:That the executed Agreement of Merger is on file at the
place of business of ACME Television Holdings, LLC, the address of which is 2101
E. Fourth Street, Suite 202, Santa Ana, California 92705.
FIFTH: That a copy of the Agreement of Merger will be furnished
by ACME Television Holdings, LLC, on request and without cost, to any member of
ACME Television Holdings, LLC or any member of ACME Communications Merger
Subsidiary, LLC.
Dated: ____________, 1999 ACME TELEVISION HOLDINGS, LLC
By: __________________________________
Name: Thomas D. Allen
Title: Chief Financial Officer
S-1
<PAGE> 9
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,230,824 22,214 1,253,038
Alta Subordinated Debt Partners III, L.P. 419,613 7,573 427,186
Alta-Comm S by S, LLC 28,016 505 28,521
BancBoston Ventures, Inc. 177,384 1,545,251 1,722,635
American High-Income Trust 153,990 128,222 282,212
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 64,113 141,114
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,282,842 23,152 1,305,994
CEA Capital Partners USA, CI, L.P. 395,611 7,140 402,751
TCW Shared Opportunity Fund II, L.P. 77,956 438,077 516,033
Continental Casualty Company 219,435 704,262 923,697
The Lincoln National Life Insurance Company 115,489 96,162 211,651
Post Total Return Fund, L.P. 11,556 9,622 21,178
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 837,102 233,868 22,495 1,093,465
Peregrine Holdings, Inc. 788,033 788,033
Michael V. Roberts 523,471 523,471
Steven C. Roberts 523,471 523,471
Thomas J. Embrescia 134,903 134,903
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 1
<PAGE> 10
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 Embrescia Family Trust F/B/O Matthew 72,805 72,805
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 72,805 72,805
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 72,805 72,805
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 53,533 53,533
Larry S. Blum Living Trust 21,413 21,413
Jamie Kellner 365,631 365,631
Doug Gealy 258,395 258,395
Thomas D. Allen 255,642 255,642
ACME Capital Partners 214,129 214,129
The Canyon Value Realization Fund 25,989 21,635 47,624
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 7,211 15,865
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,371,392 923,938 6,454,670 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 2
<PAGE> 11
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,222,287 22,154 1,244,441
Alta Subordinated Debt Partners III, L.P. 416,703 7,552 424,255
Alta-Comm S by S, LLC 27,822 504 28,326
BancBoston Ventures, Inc. 176,140 1,534,323 1,710,463
American High-Income Trust 153,990 127,332 281,322
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 63,669 140,670
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,273,945 23,089 1,297,034
CEA Capital Partners USA, CI, L.P. 392,867 7,121 399,988
TCW Shared Opportunity Fund II, L.P. 77,956 435,071 513,027
Continental Casualty Company 219,435 699,375 918,810
The Lincoln National Life Insurance Company 115,489 95,495 210,984
Post Total Return Fund, L.P. 11,556 9,555 21,111
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 831,470 233,868 22,441 1,087,779
Peregrine Holdings, Inc. 782,315 782,315
Michael V. Roberts 520,018 520,018
Steven C. Roberts 520,018 520,018
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 3
<PAGE> 12
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $15.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 134,078 134,078
1994 Embrescia Family Trust F/B/O Matthew 72,359 72,359
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 72,359 72,359
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 72,359 72,359
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 53,205 53,205
Larry S. Blum Living Trust 21,282 21,282
Jamie Kellner 392,550 392,550
Doug Gealy 278,580 278,580
Thomas D. Allen 275,826 275,826
ACME Capital Partners 213,552 213,552
The Canyon Value Realization Fund (Cayman) 25,989 21,485 47,474
Ltd. (Canyon Partners)
The Value Realization Fund, 8,654 7,161 15,815
L.P. (Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,341,234 923,938 6,484,828 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 4
<PAGE> 13
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,213,027 22,072 1,235,099
Alta Subordinated Debt Partners III, L.P. 413,546 7,524 421,070
Alta-Comm S by S, LLC 27,611 502 28,113
BancBoston Ventures, Inc. 174,793 1,522,510 1,697,303
American High-Income Trust 153,990 126,367 280,357
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 63,186 140,187
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,264,293 23,003 1,287,296
CEA Capital Partners USA, CI, L.P. 389,891 7,095 396,986
TCW Shared Opportunity Fund II, L.P. 77,956 431,805 509,761
Continental Casualty Company 219,435 694,075 913,510
The Lincoln National Life Insurance Company 115,489 94,771 210,260
Post Total Return Fund, L.P. 11,556 9,483 21,039
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 825,328 233,868 22,363 1,081,559
Peregrine Holdings, Inc. 776,160 776,160
Michael V. Roberts 516,239 516,239
Steven C. Roberts 516,239 516,239
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 5
<PAGE> 14
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 133,161 133,161
1994 Embrescia Family Trust F/B/O Matthew 71,865 71,865
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 71,865 71,865
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 71,865 71,865
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 52,842 52,842
Larry S. Blum Living Trust 21,136 21,136
Jamie Kellner 421,857 421,857
Doug Gealy 300,577 300,577
Thomas D. Allen 297,826 297,826
ACME Capital Partners 212,756 212,756
The Canyon Value Realization Fund 25,989 21,322 47,311
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 7,107 15,761
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,308,489 923,938 6,517,573 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 6
<PAGE> 15
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,203,572 21,978 1,225,550
Alta Subordinated Debt Partners III, L.P. 410,323 7,492 417,815
Alta-Comm S by S, LLC 27,396 500 27,896
BancBoston Ventures, Inc. 173,419 1,510,469 1,683,888
American High-Income Trust 153,990 125,382 279,372
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 62,693 139,694
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,254,439 22,906 1,277,345
CEA Capital Partners USA, CI, L.P. 386,852 7,064 393,916
TCW Shared Opportunity Fund II, L.P. 77,956 428,466 506,422
Continental Casualty Company 219,435 688,663 908,098
The Lincoln National Life Insurance Company 115,489 94,032 209,521
Post Total Return Fund, L.P. 11,556 9,409 20,965
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 819,040 233,868 22,274 1,075,182
Peregrine Holdings, Inc. 769,900 769,900
Michael V. Roberts 512,364 512,364
Steven C. Roberts 512,364 512,364
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 7
<PAGE> 16
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $16.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 132,215 132,215
1994 Embrescia Family Trust F/B/O Matthew 71,354 71,354
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 71,354 71,354
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 71,354 71,354
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 52,466 52,466
Larry S. Blum Living Trust 20,986 20,986
Jamie Kellner 451,838 451,838
Doug Gealy 323,091 323,091
Thomas D. Allen 320,345 320,345
ACME Capital Partners 211,855 211,855
The Canyon Value Realization Fund 25,989 21,156 47,145
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 7,051 15,705
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,275,041 923,938 6,551,021 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 8
<PAGE> 17
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,194,674 21,890 1,216,564
Alta Subordinated Debt Partners III, L.P. 407,289 7,462 414,751
Alta-Comm S by S, LLC 27,193 498 27,691
BancBoston Ventures, Inc. 172,126 1,499,136 1,671,262
American High-Income Trust 153,990 124,455 278,445
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 62,230 139,231
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,245,165 22,814 1,267,979
CEA Capital Partners USA, CI, L.P. 383,992 7,036 391,028
TCW Shared Opportunity Fund II, L.P. 77,956 425,324 503,280
Continental Casualty Company 219,435 683,570 903,005
The Lincoln National Life Insurance Company 115,489 93,337 208,826
Post Total Return Fund, L.P. 11,556 9,340 20,896
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 813,122 233,868 22,190 1,069,180
Peregrine Holdings, Inc. 764,009 764,009
Michael V. Roberts 508,717 508,717
Steven C. Roberts 508,717 508,717
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 9
<PAGE> 18
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 131,325 131,325
1994 Embrescia Family Trust F/B/O Matthew 70,874 70,874
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 70,874 70,874
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 70,874 70,874
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 52,113 52,113
Larry S. Blum Living Trust 20,845 20,845
Jamie Kellner 480,052 480,052
Doug Gealy 344,278 344,278
Thomas D. Allen 341,536 341,536
ACME Capital Partners 211,007 211,007
The Canyon Value Realization Fund 25,989 20,999 46,988
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,999 15,653
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,243,561 923,938 6,582,501 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 10
<PAGE> 19
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,186,284 21,807 1,208,091
Alta Subordinated Debt Partners III, L.P. 404,429 7,434 411,863
Alta-Comm S by S, LLC 27,002 496 27,498
BancBoston Ventures, Inc. 170,906 1,488,451 1,659,357
American High-Income Trust 153,990 123,580 277,570
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 61,793 138,794
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,236,420 22,727 1,259,147
CEA Capital Partners USA, CI, L.P. 381,295 7,010 388,305
TCW Shared Opportunity Fund II, L.P. 77,956 422,362 500,318
Continental Casualty Company 219,435 678,768 898,203
The Lincoln National Life Insurance Company 115,489 92,681 208,170
Post Total Return Fund, L.P. 11,556 9,274 20,830
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 807,542 233,868 22,110 1,063,520
Peregrine Holdings, Inc. 758,454 758,454
Michael V. Roberts 505,278 505,278
Steven C. Roberts 505,278 505,278
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 11
<PAGE> 20
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $17.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 130,486 130,486
1994 Embrescia Family Trust F/B/O Matthew 70,421 70,421
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 70,421 70,421
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 70,421 70,421
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,780 51,780
Larry S. Blum Living Trust 20,712 20,712
Jamie Kellner 506,656 506,656
Doug Gealy 364,256 364,256
Thomas D. Allen 361,519 361,519
ACME Capital Partners 210,207 210,207
The Canyon Value Realization Fund 25,989 20,852 46,841
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,950 15,604
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,213,878 923,938 6,612,184 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 12
<PAGE> 21
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,178,361 21,728 1,200,089
Alta Subordinated Debt Partners III, L.P. 401,727 7,408 409,135
Alta-Comm S by S, LLC 26,822 494 27,316
BancBoston Ventures, Inc. 169,755 1,478,360 1,648,115
American High-Income Trust 153,990 122,755 276,745
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 61,380 138,381
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,228,162 22,646 1,250,808
CEA Capital Partners USA, CI, L.P. 378,749 6,984 385,733
TCW Shared Opportunity Fund II, L.P. 77,956 419,564 497,520
Continental Casualty Company 219,435 674,233 893,668
The Lincoln National Life Insurance Company 115,489 92,062 207,551
Post Total Return Fund, L.P. 11,556 9,212 20,768
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 802,273 233,868 22,036 1,058,177
Peregrine Holdings, Inc. 753,208 753,208
Michael V. Roberts 502,030 502,030
Steven C. Roberts 502,030 502,030
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 13
<PAGE> 22
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 129,693 129,693
1994 Embrescia Family Trust F/B/O Matthew 69,993 69,993
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 69,993 69,993
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 69,993 69,993
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,465 51,465
Larry S. Blum Living Trust 20,586 20,586
Jamie Kellner 531,780 531,780
Doug Gealy 383,123 383,123
Thomas D. Allen 380,390 380,390
ACME Capital Partners 209,451 209,451
The Canyon Value Realization Fund 25,989 20,712 46,701
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,904 15,558
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,185,849 923,938 6,640,213 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 14
<PAGE> 23
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,170,865 21,654 1,192,519
Alta Subordinated Debt Partners III, L.P. 399,172 7,383 406,555
Alta-Comm S by S, LLC 26,651 492 27,143
BancBoston Ventures, Inc. 168,666 1,468,814 1,637,480
American High-Income Trust 153,990 121,974 275,964
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 60,989 137,990
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,220,350 22,569 1,242,919
CEA Capital Partners USA, CI, L.P. 376,339 6,960 383,299
TCW Shared Opportunity Fund II, L.P. 77,956 416,917 494,873
Continental Casualty Company 219,435 669,943 889,378
The Lincoln National Life Insurance Company 115,489 91,476 206,965
Post Total Return Fund, L.P. 11,556 9,153 20,709
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 797,288 233,868 21,965 1,053,121
Peregrine Holdings, Inc. 748,245 748,245
Michael V. Roberts 498,958 498,958
Steven C. Roberts 498,958 498,958
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 15
<PAGE> 24
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $18.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 128,943 128,943
1994 Embrescia Family Trust F/B/O Matthew 69,588 69,588
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 69,588 69,588
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 69,588 69,588
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 51,167 51,167
Larry S. Blum Living Trust 20,467 20,467
Jamie Kellner 555,549 555,549
Doug Gealy 400,971 400,971
Thomas D. Allen 398,242 398,242
ACME Capital Partners 208,737 208,737
The Canyon Value Realization Fund 25,989 20,581 46,570
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,860 15,514
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,159,331 923,938 6,666,731 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 16
<PAGE> 25
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,163,764 21,584 1,185,348
Alta Subordinated Debt Partners III, L.P. 396,751 7,358 404,109
Alta-Comm S by S, LLC 26,490 491 26,981
BancBoston Ventures, Inc. 167,634 1,459,770 1,627,404
American High-Income Trust 153,990 121,234 275,224
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 60,619 137,620
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,212,949 22,495 1,235,444
CEA Capital Partners USA, CI, L.P. 374,057 6,938 380,995
TCW Shared Opportunity Fund II, L.P. 77,956 414,410 492,366
Continental Casualty Company 219,435 665,878 885,313
The Lincoln National Life Insurance Company 115,489 90,921 206,410
Post Total Return Fund, L.P. 11,556 9,098 20,654
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 792,565 233,868 21,898 1,048,331
Peregrine Holdings, Inc. 743,544 743,544
Michael V. Roberts 496,047 496,047
Steven C. Roberts 496,047 496,047
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 17
<PAGE> 26
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 128,232 128,232
1994 Embrescia Family Trust F/B/O Matthew 69,205 69,205
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 69,205 69,205
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 69,205 69,205
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,886 50,886
Larry S. Blum Living Trust 20,354 20,354
Jamie Kellner 578,065 578,065
Doug Gealy 417,880 417,880
Thomas D. Allen 415,154 415,154
ACME Capital Partners 208,060 208,060
The Canyon Value Realization Fund 25,989 20,456 46,445
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,818 15,472
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,134,210 923,938 6,691,852 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 18
<PAGE> 27
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,157,027 21,517 1,178,544
Alta Subordinated Debt Partners III, L.P. 394,454 7,336 401,790
Alta-Comm S by S, LLC 26,336 489 26,825
BancBoston Ventures, Inc. 166,655 1,451,190 1,617,845
American High-Income Trust 153,990 120,532 274,522
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 60,268 137,269
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,205,927 22,426 1,228,353
CEA Capital Partners USA, CI, L.P. 371,892 6,916 378,808
TCW Shared Opportunity Fund II, L.P. 77,956 412,032 489,988
Continental Casualty Company 219,435 662,022 881,457
The Lincoln National Life Insurance Company 115,489 90,395 205,884
Post Total Return Fund, L.P. 11,556 9,045 20,601
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 788,085 233,868 21,834 1,043,787
Peregrine Holdings, Inc. 739,084 739,084
Michael V. Roberts 493,286 493,286
Steven C. Roberts 493,286 493,286
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 19
<PAGE> 28
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $19.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 127,558 127,558
1994 Embrescia Family Trust F/B/O Matthew 68,841 68,841
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 68,841 68,841
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 68,841 68,841
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,618 50,618
Larry S. Blum Living Trust 20,247 20,247
Jamie Kellner 599,427 599,427
Doug Gealy 433,922 433,922
Thomas D. Allen 431,199 431,199
ACME Capital Partners 207,418 207,418
The Canyon Value Realization Fund 25,989 20,337 46,326
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,779 15,433
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,110,376 923,938 6,715,686 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 20
<PAGE> 29
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,150,628 21,454 1,172,082
Alta Subordinated Debt Partners III, L.P. 392,273 7,314 399,587
Alta-Comm S by S, LLC 26,191 488 26,679
BancBoston Ventures, Inc. 165,725 1,443,040 1,608,765
American High-Income Trust 153,990 119,865 273,855
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 59,935 136,936
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,199,257 22,360 1,221,617
CEA Capital Partners USA, CI, L.P. 369,835 6,896 376,731
TCW Shared Opportunity Fund II, L.P. 77,956 409,772 487,728
Continental Casualty Company 219,435 658,359 877,794
The Lincoln National Life Insurance Company 115,489 89,895 205,384
Post Total Return Fund, L.P. 11,556 8,995 20,551
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 783,828 233,868 21,774 1,039,470
Peregrine Holdings, Inc. 734,846 734,846
Michael V. Roberts 490,663 490,663
Steven C. Roberts 490,663 490,663
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 21
<PAGE> 30
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 126,918 126,918
1994 Embrescia Family Trust F/B/O Matthew 68,495 68,495
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 68,495 68,495
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 68,495 68,495
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,364 50,364
Larry S. Blum Living Trust 20,145 20,145
Jamie Kellner 619,719 619,719
Doug Gealy 449,160 449,160
Thomas D. Allen 446,441 446,441
ACME Capital Partners 206,808 206,808
The Canyon Value Realization Fund 25,989 20,225 46,214
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,741 15,395
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,087,737 923,938 6,738,325 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 22
<PAGE> 31
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,144,540 21,394 1,165,934
Alta Subordinated Debt Partners III, L.P. 390,197 7,294 397,491
Alta-Comm S by S, LLC 26,052 486 26,538
BancBoston Ventures, Inc. 164,840 1,435,287 1,600,127
American High-Income Trust 153,990 119,230 273,220
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 59,617 136,618
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,192,912 22,297 1,215,209
CEA Capital Partners USA, CI, L.P. 367,878 6,877 374,755
TCW Shared Opportunity Fund II, L.P. 77,956 407,622 485,578
Continental Casualty Company 219,435 654,875 874,310
The Lincoln National Life Insurance Company 115,489 89,419 204,908
Post Total Return Fund, L.P. 11,556 8,947 20,503
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 779,780 233,868 21,716 1,035,364
Peregrine Holdings, Inc. 730,816 730,816
Michael V. Roberts 488,168 488,168
Steven C. Roberts 488,168 488,168
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 23
<PAGE> 32
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $20.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 126,309 126,309
1994 Embrescia Family Trust F/B/O Matthew 68,166 68,166
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 68,166 68,166
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 68,166 68,166
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 50,122 50,122
Larry S. Blum Living Trust 20,049 20,049
Jamie Kellner 639,024 639,024
Doug Gealy 463,657 463,657
Thomas D. Allen 460,941 460,941
ACME Capital Partners 206,227 206,227
The Canyon Value Realization Fund 25,989 20,118 46,107
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,705 15,359
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,066,199 923,938 6,759,863 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 24
<PAGE> 33
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,136,874 21,297 1,158,171
Alta Subordinated Debt Partners III, L.P. 387,584 7,261 394,845
Alta-Comm S by S, LLC 25,878 484 26,362
BancBoston Ventures, Inc. 163,729 1,425,570 1,589,299
American High-Income Trust 153,990 118,431 272,421
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 59,218 136,219
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,184,922 22,196 1,207,118
CEA Capital Partners USA, CI, L.P. 365,414 6,846 372,260
TCW Shared Opportunity Fund II, L.P. 77,956 404,908 482,864
Continental Casualty Company 219,435 650,487 869,922
The Lincoln National Life Insurance Company 115,489 88,820 204,309
Post Total Return Fund, L.P. 11,556 8,887 20,443
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 774,643 233,868 21,621 1,030,132
Peregrine Holdings, Inc. 725,796 725,796
Michael V. Roberts 484,986 484,986
Steven C. Roberts 484,986 484,986
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 25
<PAGE> 34
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 125,517 125,517
1994 Embrescia Family Trust F/B/O Matthew 67,739 67,739
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 67,739 67,739
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 67,739 67,739
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,808 49,808
Larry S. Blum Living Trust 19,923 19,923
Jamie Kellner 663,461 663,461
Doug Gealy 482,033 482,033
Thomas D. Allen 479,326 479,326
ACME Capital Partners 205,295 205,295
The Canyon Value Realization Fund 25,989 19,983 45,972
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,661 15,315
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,039,044 923,938 6,787,018 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 26
<PAGE> 35
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,128,359 21,180 1,149,539
Alta Subordinated Debt Partners III, L.P. 384,681 7,220 391,901
Alta-Comm S by S, LLC 25,684 482 26,166
BancBoston Ventures, Inc. 162,496 1,414,799 1,577,295
American High-Income Trust 153,990 117,544 271,534
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 58,774 135,775
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,176,047 22,074 1,198,121
CEA Capital Partners USA, CI, L.P. 362,677 6,808 369,485
TCW Shared Opportunity Fund II, L.P. 77,956 401,890 479,846
Continental Casualty Company 219,435 645,614 865,049
The Lincoln National Life Insurance Company 115,489 88,154 203,643
Post Total Return Fund, L.P. 11,556 8,821 20,377
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 768,918 233,868 21,505 1,024,291
Peregrine Holdings, Inc. 720,248 720,248
Michael V. Roberts 481,433 481,433
Steven C. Roberts 481,433 481,433
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 27
<PAGE> 36
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $21.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 124,626 124,626
1994 Embrescia Family Trust F/B/O Matthew 67,258 67,258
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 67,258 67,258
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 67,258 67,258
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,455 49,455
Larry S. Blum Living Trust 19,782 19,782
Jamie Kellner 690,668 690,668
Doug Gealy 502,503 502,503
Thomas D. Allen 499,808 499,808
ACME Capital Partners 204,161 204,161
The Canyon Value Realization Fund 25,989 19,833 45,822
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,611 15,265
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,008,862 923,938 6,817,200 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 28
<PAGE> 37
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,120,231 21,068 1,141,299
Alta Subordinated Debt Partners III, L.P. 381,910 7,182 389,092
Alta-Comm S by S, LLC 25,499 479 25,978
BancBoston Ventures, Inc. 161,320 1,404,519 1,565,839
American High-Income Trust 153,990 116,697 270,687
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 58,351 135,352
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,167,575 21,957 1,189,532
CEA Capital Partners USA, CI, L.P. 360,064 6,772 366,836
TCW Shared Opportunity Fund II, L.P. 77,956 399,009 476,965
Continental Casualty Company 219,435 640,963 860,398
The Lincoln National Life Insurance Company 115,489 87,519 203,008
Post Total Return Fund, L.P. 11,556 8,757 20,313
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 763,453 233,868 21,394 1,018,715
Peregrine Holdings, Inc. 714,952 714,952
Michael V. Roberts 478,041 478,041
Steven C. Roberts 478,041 478,041
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 29
<PAGE> 38
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 123,776 123,776
1994 Embrescia Family Trust F/B/O Matthew 66,799 66,799
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 66,799 66,799
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 66,799 66,799
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 49,117 49,117
Larry S. Blum Living Trust 19,646 19,646
Jamie Kellner 716,639 716,639
Doug Gealy 522,043 522,043
Thomas D. Allen 519,359 519,359
ACME Capital Partners 203,079 203,079
The Canyon Value Realization Fund 25,989 19,690 45,679
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,563 15,217
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,980,052 923,938 6,846,010 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 30
<PAGE> 39
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,112,464 20,960 1,133,424
Alta Subordinated Debt Partners III, L.P. 379,262 7,145 386,407
Alta-Comm S by S, LLC 25,322 477 25,799
BancBoston Ventures, Inc. 160,196 1,394,694 1,554,890
American High-Income Trust 153,990 115,888 269,878
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 57,946 134,947
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,159,480 21,845 1,181,325
CEA Capital Partners USA, CI, L.P. 357,568 6,737 364,305
TCW Shared Opportunity Fund II, L.P. 77,956 396,256 474,212
Continental Casualty Company 219,435 636,518 855,953
The Lincoln National Life Insurance Company 115,489 86,912 202,401
Post Total Return Fund, L.P. 11,556 8,697 20,253
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 758,232 233,868 21,287 1,013,387
Peregrine Holdings, Inc. 709,891 709,891
Michael V. Roberts 474,800 474,800
Steven C. Roberts 474,800 474,800
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 31
<PAGE> 40
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $22.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 122,963 122,963
1994 Embrescia Family Trust F/B/O Matthew 66,361 66,361
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 66,361 66,361
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 66,361 66,361
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,794 48,794
Larry S. Blum Living Trust 19,517 19,517
Jamie Kellner 741,455 741,455
Doug Gealy 540,716 540,716
Thomas D. Allen 538,041 538,041
ACME Capital Partners 202,045 202,045
The Canyon Value Realization Fund 25,989 19,554 45,543
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,517 15,171
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,952,524 923,938 6,873,538 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 32
<PAGE> 41
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,105,035 20,858 1,125,893
Alta Subordinated Debt Partners III, L.P. 376,729 7,111 383,840
Alta-Comm S by S, LLC 25,153 474 25,627
BancBoston Ventures, Inc. 159,120 1,385,298 1,544,418
American High-Income Trust 153,990 115,114 269,104
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 57,559 134,560
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,151,737 21,738 1,173,475
CEA Capital Partners USA, CI, L.P. 355,180 6,705 361,885
TCW Shared Opportunity Fund II, L.P. 77,956 393,622 471,578
Continental Casualty Company 219,435 632,266 851,701
The Lincoln National Life Insurance Company 115,489 86,332 201,821
Post Total Return Fund, L.P. 11,556 8,639 20,195
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 753,237 233,868 21,186 1,008,291
Peregrine Holdings, Inc. 705,050 705,050
Michael V. Roberts 471,700 471,700
Steven C. Roberts 471,700 471,700
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 33
<PAGE> 42
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 122,185 122,185
1994 Embrescia Family Trust F/B/O Matthew 65,941 65,941
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 65,941 65,941
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 65,941 65,941
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,486 48,486
Larry S. Blum Living Trust 19,394 19,394
Jamie Kellner 765,191 765,191
Doug Gealy 558,576 558,576
Thomas D. Allen 555,911 555,911
ACME Capital Partners 201,056 201,056
The Canyon Value Realization Fund 25,989 19,423 45,412
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,474 15,128
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,926,191 923,938 6,899,871 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 34
<PAGE> 43
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,097,922 20,760 1,118,682
Alta Subordinated Debt Partners III, L.P. 374,304 7,077 381,381
Alta-Comm S by S, LLC 24,991 472 25,463
BancBoston Ventures, Inc. 158,091 1,376,301 1,534,392
American High-Income Trust 153,990 114,373 268,363
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 57,189 134,190
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,144,323 21,636 1,165,959
CEA Capital Partners USA, CI, L.P. 352,894 6,673 359,567
TCW Shared Opportunity Fund II, L.P. 77,956 391,101 469,057
Continental Casualty Company 219,435 628,195 847,630
The Lincoln National Life Insurance Company 115,489 85,776 201,265
Post Total Return Fund, L.P. 11,556 8,583 20,139
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 748,455 233,868 21,088 1,003,411
Peregrine Holdings, Inc. 700,415 700,415
Michael V. Roberts 468,731 468,731
Steven C. Roberts 468,731 468,731
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 35
<PAGE> 44
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $23.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 121,441 121,441
1994 Embrescia Family Trust F/B/O Matthew 65,539 65,539
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 65,539 65,539
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 65,539 65,539
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 48,191 48,191
Larry S. Blum Living Trust 19,276 19,276
Jamie Kellner 787,918 787,918
Doug Gealy 575,677 575,677
Thomas D. Allen 573,022 573,022
ACME Capital Partners 200,109 200,109
The Canyon Value Realization Fund 25,989 19,298 45,287
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,432 15,086
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,900,980 923,938 6,925,082 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 36
<PAGE> 45
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,091,105 20,665 1,111,770
Alta Subordinated Debt Partners III, L.P. 371,980 7,045 379,025
Alta-Comm S by S, LLC 24,836 470 25,306
BancBoston Ventures, Inc. 157,104 1,367,678 1,524,782
American High-Income Trust 153,990 113,663 267,653
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 56,833 133,834
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,137,219 21,537 1,158,756
CEA Capital Partners USA, CI, L.P. 350,703 6,643 357,346
TCW Shared Opportunity Fund II, L.P. 77,956 388,685 466,641
Continental Casualty Company 219,435 624,294 843,729
The Lincoln National Life Insurance Company 115,489 85,243 200,732
Post Total Return Fund, L.P. 11,556 8,530 20,086
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 743,872 233,868 20,995 998,735
Peregrine Holdings, Inc. 695,974 695,974
Michael V. Roberts 465,887 465,887
Steven C. Roberts 465,887 465,887
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 37
<PAGE> 46
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 120,728 120,728
1994 Embrescia Family Trust F/B/O Matthew 65,154 65,154
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 65,154 65,154
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 65,154 65,154
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,907 47,907
Larry S. Blum Living Trust 19,163 19,163
Jamie Kellner 809,699 809,699
Doug Gealy 592,065 592,065
Thomas D. Allen 589,419 589,419
ACME Capital Partners 199,201 199,201
The Canyon Value Realization Fund 25,989 19,178 45,167
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,392 15,046
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,876,819 923,938 6,949,243 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 38
<PAGE> 47
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,084,567 20,575 1,105,142
Alta Subordinated Debt Partners III, L.P. 369,751 7,014 376,765
Alta-Comm S by S, LLC 24,687 468 25,155
BancBoston Ventures, Inc. 156,158 1,359,408 1,515,566
American High-Income Trust 153,990 112,981 266,971
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 56,493 133,494
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,130,404 21,443 1,151,847
CEA Capital Partners USA, CI, L.P. 348,601 6,614 355,215
TCW Shared Opportunity Fund II, L.P. 77,956 386,368 464,324
Continental Casualty Company 219,435 620,553 839,988
The Lincoln National Life Insurance Company 115,489 84,732 200,221
Post Total Return Fund, L.P. 11,556 8,478 20,034
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 739,476 233,868 20,905 994,249
Peregrine Holdings, Inc. 691,713 691,713
Michael V. Roberts 463,158 463,158
Steven C. Roberts 463,158 463,158
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 39
<PAGE> 48
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $24.50)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 120,043 120,043
1994 Embrescia Family Trust F/B/O Matthew 64,785 64,785
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 64,785 64,785
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 64,785 64,785
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,636 47,636
Larry S. Blum Living Trust 19,054 19,054
Jamie Kellner 830,590 830,590
Doug Gealy 607,784 607,784
Thomas D. Allen 605,147 605,147
ACME Capital Partners 198,331 198,331
The Canyon Value Realization Fund 25,989 19,063 45,052
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,354 15,008
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,853,644 923,938 6,972,418 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 40
<PAGE> 49
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $25.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alta Communications VI, L.P. 1,078,290 20,488 1,098,778
Alta Subordinated Debt Partners III, L.P. 367,611 6,985 374,596
Alta-Comm S by S, LLC 24,544 466 25,010
BancBoston Ventures, Inc. 155,249 1,351,469 1,506,718
American High-Income Trust 153,990 112,327 266,317
(Capital Research & Management Co)
American Variable Insurance Series - 77,001 56,166 133,167
High-Yield Bond
(Capital Research & Management Co)
CEA Capital Partners USA, L.P. 1,123,862 21,353 1,145,215
CEA Capital Partners USA, CI, L.P. 346,584 6,586 353,170
TCW Shared Opportunity Fund II, L.P. 77,956 384,142 462,098
Continental Casualty Company 219,435 616,960 836,395
The Lincoln National Life Insurance Company 115,489 84,242 199,731
Post Total Return Fund, L.P. 11,556 8,429 19,985
(Post Advisory Group, Inc.)
TCW Leveraged Income Trust L.P. 735,256 233,868 20,819 989,943
Peregrine Holdings, Inc. 687,623 687,623
Michael V. Roberts 460,539 460,539
Steven C. Roberts 460,539 460,539
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 41
<PAGE> 50
SCHEDULE 1
SHARE OWNERSHIP OF THE COMMON STOCK OF ACME COMMUNICATIONS, INC.
(AT AN IPO OFFERING PRICE OF $25.00)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER COLUMN 1 COLUMN 2 COLUMN 3 TOTAL SHARES OF
- ----------- -------- -------- -------- ---------------
(PER SECTION II A OF (PER SECTION II B OF (PER SECTION COMPANY COMMON
AGREEMENT AND PLAN OF AGREEMENT AND PLAN OF II C OF STOCK OWNED BY
REORGANIZATION - I.E. REORGANIZATION - I.E. AGREEMENT SHAREHOLDERS
HOLDERS EXCHANGES WITH AND PLAN OF
OF DEBENTURES IN TV INTERMEDIATE REORGANIZATION -
HOLDINGS) MINORITY UNITHOLDERS AND REVERSE
WITH TRIANGULAR
CONVERTIBLE SECURITY MERGER)
HOLDERS
OF HOLDINGS IV)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Embrescia 119,387 119,387
1994 Embrescia Family Trust F/B/O Matthew 64,431 64,431
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Megan 64,431 64,431
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
1994 Embrescia Family Trust F/B/O Amanda 64,431 64,431
Embrescia, Key Trust Company of
Ohio, N.A., Trustee
Jonathan Pinch & Linda Pinch 47,375 47,375
Larry S. Blum Living Trust 18,950 18,950
Jamie Kellner 850,645 850,645
Doug Gealy 622,873 622,873
Thomas D. Allen 620,245 620,245
ACME Capital Partners 197,495 197,495
The Canyon Value Realization Fund 25,989 18,953 44,942
(Cayman) Ltd.
(Canyon Partners)
The Value Realization Fund, L.P. 8,654 6,317 14,971
(Canyon Partners)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,831,396 923,938 6,994,666 11,750,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 1 - 42
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
ACME COMMUNICATIONS, INC.
A DELAWARE CORPORATION
As Secretary of ACME Communications, Inc., a corporation organized and
existing under the laws of the State of Delaware, I do execute this Restated
Certificate of Incorporation and do hereby certify as follows:
1. The name of the corporation is ACME Communications, Inc (the
"Corporation"). The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on July 23, 1999. The
original name of the Corporation was ACME Holdings, Inc.
2. This Restated Certificate of Incorporation of the Corporation amends
and restates the provisions of the Certificate of Incorporation of the
Corporation and was duly adopted in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware and by unanimous written
consent of the stockholders of the Corporation in accordance with Sections 228
and 245 of the General Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation is hereby amended and
restated to read in its entirety as follows:
ARTICLE 1
The name of the Corporation is ACME Communications, Inc.
ARTICLE 2
The address of the registered office of the Corporation in the State of
Delaware is 15 E. North Street, in the City of Dover, County of Kent. The name
of its registered agent at such address is Paracorp Incorporated.
ARTICLE 3
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE 4
4.1 The total number of shares of all classes that this Corporation has the
authority to issue is 60,000,000, which are divided into two classes,
one class designated as "Common Stock," consisting of 50,000,000
authorized shares, $0.01 par value per share, and a second class
designated as "Preferred Stock," consisting of 10,000,000 authorized
shares, $0.01 par value per share.
1
<PAGE> 2
4.2 Except as otherwise provided herein or as otherwise provided by
applicable law, all shares of Common Stock will have identical rights
and privileges in every respect.
4.3 The Preferred Stock may be issued in one or more series, from time to
time, each series to be appropriately designated by a distinguishing
number, letter or title, before the issue of any shares thereof. Shares
of Preferred Stock of any one series will have identical rights and
privileges in every respect.
4.4 Each series of Preferred Stock will consist of such number of shares
and have such voting powers, full or limited, or no voting powers, and
such designations, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or
restrictions thereof, as stated in the resolution or resolutions
providing for the issuance of such series adopted by the Board of
Directors of the Corporation (the "Board of Directors"), and the Board
of Directors is hereby expressly vested with authority, to the full
extent now or hereafter provided by law, to adopt any such resolution
or resolutions.
The authority of the Board of Directors with respect to each series of
Preferred Stock will include, but not be limited to, determination of
the following:
A. The number of shares constituting that series and the distinctive
designation of that series;
B. The dividend rate, if any, on the shares of that series, whether
dividends will be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of
dividends on shares of that series;
C. Whether that series will have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting
rights;
D. Whether that series will be subject to conversion or exchange, and,
if so, the terms and conditions of such conversion or exchange,
including provision for adjustment of the conversion or exchange
rate in such events as the Board of Directors determines;
E. Whether or not the shares of that series will be redeemable, and,
if so, the terms and conditions of such redemption, including the
date or dates upon or after which they will be redeemable, and the
type and amount of consideration per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates;
F. Whether that series will have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount
of such sinking fund;
G. The rights, if any, of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, and the relative rights of priority, if any, of
payment of shares of that series; and
H. Any other relative rights, preferences and limitations, if any, of
that series.
2
<PAGE> 3
ARTICLE 5
As used in this Certificate of Incorporation, the following terms have
the meanings indicated:
"AFFILIATE" means any person or entity directly or indirectly
controlling or controlled by or under direct or indirect common control with
another Person.
"ALIEN" has the meaning given to it from time to time under the
Communications Act.
"ALIEN ENTITY" means any individual not a citizen of the United States
of America; any partnership or limited liability company controlled by Aliens; a
foreign government; a corporation, joint-stock company or association organized
under the laws of a foreign country; any other corporation controlled by Aliens;
and any corporation, joint-stock company, partnership, limited liability
company, trust, association or other entity controlled directly or indirectly by
one or more of the above.
"COMMUNICATIONS ACT" means the Communications Act of 1934 and the
rules, regulations, decisions and written policies of the Federal Communications
Commission thereunder.
"DISQUALIFIED HOLDER" means any holder of outstanding shares of any
class or series of stock of the Corporation whose holding of such stock, either
individually or when taken together with the holding of shares of any class or
series of stock of the Corporation by any other holders, may result, in the
judgment of the Board of Directors, in the loss of, or the failure to secure the
reinstatement of, any license or franchise from any governmental agency held by
the Corporation or any of its subsidiaries to conduct any portion of the
business of the Corporation or any of its subsidiaries.
"FAIR MARKET VALUE" of a share of any class or series of stock of the
Corporation means the average Closing Price for such a share for each of the 45
most recent days on which shares of stock of such class or series have been
traded preceding the day on which notice of redemption is given pursuant to
7.1D; provided, however, that if shares of stock of such class or series are not
traded on the National Association of Securities Dealers, Inc. Automated
Quotation System (or any similar system then in use) ("NASDAQ"), any securities
exchange or in the over-the-counter market, "Fair Market Value" will be
determined by the Board of Directors in good faith. "CLOSING PRICE" on any day
means the reported closing sales price or, in case no such sale takes place, the
average of the reported closing bid and asked prices on NASDAQ or, if such stock
is not listed on NASDAQ, then the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended, on which such
stock is listed, or if no such prices or quotations are available, the fair
market value on the day in question as determined by the Board of Directors in
good faith.
"FCC" means the Federal Communications Commission or any successor
agency.
"PERSON" means an individual, a corporation, a partnership, an
association, a limited liability company or a trust.
3
<PAGE> 4
"REDEMPTION DATE" means the date fixed by the Board of Directors for
the redemption of any shares of stock of the Corporation pursuant to ARTICLE 7.
"REDEMPTION SECURITIES" means any debt or equity securities of the
Corporation, any of its subsidiaries or any other corporation, or any
combination thereof, having such terms and conditions as shall be approved by
the Board of Directors and which, together with any cash to be paid as part of
the redemption price, in the opinion of any nationally recognized investment
banking firm selected by the Board of Directors (which may be a firm which
provides other investment banking, brokerage or other services to the
Corporation), has a value, at the time notice of redemption is given pursuant to
Section 7.1D, at least equal to the price required to be paid pursuant to
Section 7.1A (assuming, in the case of Redemption Securities to be publicly
traded, such Redemption Securities were fully distributed and subject only to
normal trading activity).
ARTICLE 6
For the purpose of monitoring compliance with Section 310 of the
Communications Act and any and all rules or policies of the FCC promulgated
thereunder, the Corporation will, as promptly as practicable after shares of
Common Stock are first held by more than 100 holders of record, implement the
following procedures:
6.1 The Corporation will maintain separate stock records with respect to
all classes of stock: a domestic record covering non-Alien Entity
stockholders and a foreign record covering Alien Entity stockholders.
Every certificate representing shares of stock determined to be owned
of record or beneficially or voted by or for the account of, or
otherwise controlled directly or indirectly by, an Alien Entity will be
marked "FOREIGN SHARE CERTIFICATE". Every certificate issued not marked
"Foreign Share Certificate" will be marked "DOMESTIC SHARE
CERTIFICATE." Any shares of stock represented by book-entry determined
to be owned of record or beneficially or voted by or for the account
of, or otherwise controlled directly or indirectly by, an Alien Entity
will be deposited in the Corporation's foreign account.
6.2 Any holder of shares of any class or series of stock of the Corporation
that are owned of record or beneficially or voted by or for the account
of, or otherwise controlled directly or indirectly by, an Alien Entity
will either (A) deliver any Domestic Share Certificates representing
such shares to the Corporation to be replaced by Foreign Share
Certificates or (B) instruct that such shares represented by book-entry
in the Corporation's foreign account.
6.3 Any holder of Foreign Share Certificates or shares represented by
book-entry in the Corporation's foreign account representing shares of
any class or series of stock of the Corporation that are not owned of
record or beneficially or voted by or for the account of, or otherwise
controlled directly or indirectly by, an Alien Entity may deliver such
Foreign Share Certificates to the Corporation to be replaced by
Domestic Share Certificates or instruct that the shares represented by
book-entry in the Corporation's foreign account be moved to the
Corporation's general account. Any delivery of Foreign
4
<PAGE> 5
Share Certificates or book-entry to the Corporation's general account
pursuant to this subsection must be accompanied by an affidavit in form
and substance reasonably satisfactory to the Corporation stating that
the shares of stock of the Corporation represented by the Foreign Share
Certificate or book-entry are not owned of record or beneficially or
voted by or for the account of, or otherwise controlled directly or
indirectly by, an Alien Entity.
6.4 The Corporation has the right to determine, by vote of the Board of
Directors or in conformity with regulations prescribed by the Board of
Directors, (A) whether any person is an Alien Entity, (B) whether any
shares of stock of the Corporation are owned of record or beneficially
or voted by or for the account of, or otherwise controlled directly or
indirectly by, Alien Entities, and (C) whether any affidavit delivered
pursuant to section 6.3 is false.
6.5 The Corporation will not issue any shares of capital stock of the
Corporation to any Alien if such issuance would result in the total
number of shares of such capital stock held or voted by Aliens (or for
or by the account of Aliens) to exceed 25% of (A) the total number of
all shares of such capital stock outstanding at any time and from time
to time or (B) the total voting power of all shares of such capital
stock outstanding and entitled to vote at any time and from time to
time and will not permit the transfer on the books of the Corporation
of any capital stock to any Alien that would result in the total number
of shares of such capital stock held or voted by Aliens (or for or by
the account of Aliens) exceeding such 25% limits.
6.6 No Alien or Aliens, individually or collectively, will be entitled to
vote or direct or control the vote of more than 25% of (A) the total
number of all shares of capital stock of the Corporation outstanding at
any time and from time to time or (B) the total voting power of all
shares of capital stock of the Corporation outstanding and entitled to
vote at any time and from time to time, and issuances and transfers of
capital stock of the Corporation in violation of this Section 6.6 will
be prohibited.
ARTICLE 7
7.1 Notwithstanding any other provision of this Certificate of
Incorporation to the contrary, outstanding shares of any class or
series of stock of the Corporation held by a Disqualified Holder will
always be subject to redemption by the Corporation, by action of the
Board of Directors, pursuant to Section 151 of the General Corporation
Law of Delaware, or in conformity with regulations prescribed by the
Board of Directors to the extent necessary to prevent the loss or
secure the reinstatement of any license or franchise from any
governmental agency held by the Corporation or any of its subsidiaries
to conduct any portion of the business of the Corporation or any of its
subsidiaries, which license or franchise is conditioned upon some or
all of the holders of the Corporation's stock possessing prescribed
qualifications. The terms and conditions of such redemption will be as
follows:
A. the redemption price of the shares to be redeemed pursuant to this
ARTICLE 7 will be equal to the lesser of (A) the Fair Market Value
of such shares or (B) if
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such shares were purchased by such Disqualified Holder within one
year of the Redemption Date, such Disqualified Holder's purchase
price for such shares;
B. the redemption price of such shares may be paid in cash, Redemption
Securities or any combination thereof;
C. if less than all the shares held by Disqualified Holders are to be
redeemed, the shares to be redeemed and the identity of the
Disqualified Holders from whom shares will be redeemed will be
selected in such manner as will be determined by the Board of
Directors or in conformity with regulations prescribed by the Board
of Directors, which may include selection first of the most
recently purchased shares thereof, selection by lot, selection
based upon failure to comply with ARTICLE 6 hereof or selection in
any other manner determined by the Board of Directors or in
conformity with regulations prescribed by the Board of Directors,
which determination will be conclusive;
D. at least 30 days written notice of the Redemption Date will be
given to the record holders of the shares selected to be redeemed
(unless waived in writing by any such holder), provided that the
Redemption Date may be the date on which written notice is given to
such record holders if cash, Redemption Securities or a combination
thereof sufficient to effect the redemption has been deposited in
trust for the benefit of such record holders and subject to
immediate withdrawal by them upon surrender of the stock
certificates for their shares to be redeemed;
E. from and after the Redemption Date, any and all rights of whatever
nature, of the holders of shares so called for redemption
(including without limitation any rights to vote or participate in
dividends declared on stock of the same class or series as such
shares), shall cease and terminate and such owners shall
thenceforth be entitled only to receive the cash, Redemption
Securities or combination thereof payable in respect of such
redemption; and
F. such other terms and conditions as the Board of Directors shall
determine.
7.2 The Board of Directors will be authorized at any time and from time to
time to adopt such other provisions as the Board of Directors may deem
necessary or desirable to avoid violation of the provisions of Section
310(b) of the Communications Act or the policies and rules of the FCC
promulgated thereunder as now in effect or as may hereafter from time
to time be amended, and to carry out the provisions of ARTICLE 6 and
ARTICLE 7 hereof.
ARTICLE 8
In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized to
adopt, alter, amend and repeal the Bylaws of the Corporation, subject to the
power of the stockholders of the Corporation to alter or repeal any bylaw
whether adopted by them or otherwise; provided, however, that the affirmative
vote of 66 and 2/3 percent of the voting power of the capital stock of the
Corporation entitled to vote thereon will be required for stockholders to adopt,
amend, alter or repeal any provision of the Bylaws of the Corporation.
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ARTICLE 9
The number of directors of the Corporation will be fixed from time to
time by a Bylaw of the Corporation or amendment thereof duly adopted by the
Board of Directors.
ARTICLE 10
10.1 Unless and except to the extent that the Bylaws of the Corporation so
require, election of directors need not be by written ballot.
10.2 The stockholders of the Corporation will not have the right to cumulate
their votes for the election of directors of the Corporation.
ARTICLE 11
11.1 Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws of the Corporation may provide. The books of
the Corporation may be kept (subject to any provision contained in the
laws of the State of Delaware) outside of the State of Delaware at such
place or places as may be designated from time to time by the Board of
Directors or in the Bylaws of the Corporation.
11.2 No action that is required or permitted to be taken by the stockholders
of the Corporation at any annual or special meeting of stockholders may
be effected by written consent of the stockholders instead of a meeting
of stockholders.
11.3 Special meetings of stockholders may be called only by the Board of
Directors, the Chairman of the Board of Directors, the President, or
Chief Financial Officer and may not be called by any other Person or
Persons.
ARTICLE 12
A director of the Corporation will not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the General Corporation Law of Delaware as the
same exists or may hereafter be amended. If the General Corporation Law of
Delaware is amended after the date of the filing of this Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation will be eliminated or limited to the fullest extent permitted by the
General Corporation Law of Delaware as so amended. Any repeal or modification of
this Article by the stockholders of the Corporation will not adversely affect
any right or protection of a director of the Corporation existing at the time,
or increase the liability of any director of the Corporation with respect to any
acts or omissions of such director occurring before, such repeal or
modification.
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ARTICLE 13
The Corporation will indemnify and hold harmless, to the fullest extent
permitted by applicable law as it presently exists or may hereafter be amended,
any person (an "INDEMNITEE") who was or is made or is threatened to be made a
party or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "PROCEEDING"), by reason of the
fact that such person, or a person for whom he or she is the legal
representative, is or was a director or officer of the Corporation or, while a
director or officer of the Corporation, is or was serving at the written request
of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust, enterprise or non-profit
entity, including service with respect to employee benefit plans, against all
liability and loss suffered and expenses (including attorneys' fees) reasonably
incurred by such Indemnitee. Notwithstanding the preceding sentence, except as
otherwise provided in the Restated Bylaws of the Corporation, the Corporation
will be required to indemnify an Indemnitee in connection with a Proceeding (or
part thereof) commenced by such Indemnitee only if the commencement of such
Proceeding (or part thereof) by the Indemnitee was authorized by the Board of
Directors. No repeal or modification of this ARTICLE 13 by the stockholders will
adversely affect any right or protection of a director of the Corporation
existing by virtue of this ARTICLE 13 at the time of such repeal or
modification.
ARTICLE 14
The Corporation hereby reserves the right at any time and from time to
time to amend, alter, change, or repeal any provisions contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law, and all rights, preferences, and privileges
of whatsoever nature conferred upon stockholders, directors, or any other
Persons whomsoever by or pursuant to this Certificate of Incorporation in its
present form or as hereafter amended are granted subject to the right reserved
in this Article.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned hereby acknowledges that the
foregoing Certificate of Incorporation is his act and deed on this _____ day of
_______, 1999.
-------------------------------
Thomas Allen
Secretary
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EXHIBIT 3.2
FORM OF RESTATED BYLAWS OF
ACME COMMUNICATIONS, INC.
A DELAWARE CORPORATION
ARTICLE 1. OFFICES
1.1 The registered office will be in the City of Wilmington, County of New
Castle, State of Delaware.
1.2 The corporation may also have offices at such other places both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE 2. MEETINGS OF STOCKHOLDERS
2.1 All meetings of the stockholders will be held at such place, within or
without the State of Delaware, as will be designated from time to time by the
Board of Directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
2.2 The Secretary will prepare and make, at least 10 days before every
meeting of stockholders, a complete list of stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list will be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days before the meeting, either at a place within the city where the meeting
is to be held, which place will be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list will
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
ANNUAL MEETINGS
2.3 Annual meetings of stockholders will be held at such date and time as
will be designated from time to time by the Board of Directors and stated in the
notice of the meeting, at which they will elect directors and transact such
other business as may properly be brought before the meeting. At an annual
meeting of the stockholders, only such business will be conducted as will have
been properly brought before the meeting.
SPECIAL MEETINGS
2.4 Special meetings of the stockholders may be called only by the Board of
Directors, the Chairman of the Board, the President or the Chief Financial
Officer and may not be called by any other person or persons. Upon such written
request to the Secretary by any person or persons
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(other than the Board of Directors) entitled to call a special meeting of the
stockholders, the Secretary will cause notice to be given to the stockholders
entitled to vote that a meeting will be held at a time requested by the person
or persons calling the meeting, not less than 35 days nor more than 60 days
after the receipt of the request. If notice of a special meeting of the
stockholders is not given within 20 days after the Secretary's receipt of the
request, the person or persons entitled to call the meeting may give the notice.
Subject to the provisions of applicable law, only such business will be
considered at a special meeting of the stockholders as will have been stated in
the notice for such meeting.
BUSINESS THAT MAY BE CONDUCTED
2.5 Annual Meetings of the Stockholders.
2.5.1 Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the stockholders may be
made at an annual meeting of the stockholders only (A) pursuant to the
corporation's notice of meeting (or any supplement thereto), (B) by or
at the direction of the Board of Directors or (C) by any stockholder of
the corporation who was a stockholder of record of the corporation at
the time the notice provided for in this Section is delivered to the
Secretary, who is entitled to vote at the meeting and who complies with
the notice procedures set forth in this Section.
2.5.2 For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (C) of subsection
2.5.1, the stockholder must have given timely notice thereof in writing
to the Secretary and any such proposed business other than the
nominations of persons for election to the Board of Directors must
constitute a proper matter for stockholder action. To be timely, a
stockholder's notice must be delivered to the Secretary at the principal
executive offices of the corporation not later than the close of
business on the 90th day nor earlier than the close of business on the
120th day before the first anniversary of the preceding year's annual
meeting (provided, however, that if the date of the annual meeting is
more than 30 days before or more than 70 days after such anniversary
date, notice by the stockholder must be so delivered not earlier than
the close of business on the 120th day before such annual meeting and
not later than the close of business on the later of the 90th day before
such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by the
corporation). In no event will the public announcement of an adjournment
or postponement of an annual meeting commence a new time period (or
extend any time period) for the giving of a stockholder's notice as
described above. Such stockholder's notice will set forth: (A) as to
each person whom the stockholder proposes to nominate for election as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an
election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") and Rule 14a-11 thereunder (and such person's
written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (B) as to any other business that
the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting,
the text of the proposal or business (including the text of any
resolutions proposed for consideration
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and, in the event that such business includes a proposal to amend the
Bylaws of the corporation, the language of the proposed amendment), the
reasons for conducting such business at the meeting and any material
interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; and (C) as to the
stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (1) the name and address of
such stockholder, as they appear on the corporation's books, and of such
beneficial owner, (2) the class and number of shares of capital stock of
the corporation that are owned beneficially and of record by such
stockholder and such beneficial owner, (3) a representation that the
stockholder is a holder of record of stock of the corporation entitled
to vote at such meeting and intends to appear in person or by proxy at
such meeting to propose such business or nomination, and (4) a
representation whether the stockholder or beneficial owner, if any,
intends or is part of a group that intends (x) to deliver a proxy
statement and/or form of proxy to holders of at least the percentage of
the corporation's outstanding capital stock required to approve or adopt
the proposal or elect the nominee and/or (y) otherwise to solicit
proxies from stockholders in support of such proposal or nomination. The
corporation may require any proposed nominee to furnish such other
information as it may reasonably require to determine the eligibility of
such proposed nominee to serve as a director of the corporation.
2.5.3 Notwithstanding anything in the second sentence of subsection
2.5.2 to the contrary, if the number of directors to be elected to the
Board of Directors at the annual meeting is increased and there is no
public announcement by the corporation naming the nominees for the
additional directorships at least 100 days before the first anniversary
of the preceding year's annual meeting, a stockholder's notice required
by this Section will also be considered timely, but only with respect to
nominees for the additional directorships, if it is delivered to the
Secretary of the corporation at the principal executive offices of the
corporation not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
corporation.
2.6 Special Meetings of the Stockholders. Only such business will be
conducted at a special meeting of the stockholders as will have been brought
before the meeting pursuant to the corporation's notice of meeting. Nominations
of persons for election to the Board of Directors may be made at a special
meeting of the stockholders at which directors are to be elected pursuant to the
corporation's notice of meeting (A) by or at the direction of the Board of
Directors or (B) provided that the Board of Directors has determined that
directors will be elected at such meeting, by any stockholder of the corporation
who is a stockholder of record at the time the notice provided for in this
Section is delivered to the Secretary, who is entitled to vote at the meeting
and upon such election, and who complies with the notice procedures set forth in
this Section. If the corporation calls a special meeting of the stockholders for
the purpose of electing one or more directors to the Board of Directors, any
stockholder entitled to vote in such election of directors may nominate a person
or persons (as the case may be) for election to such position(s) as specified in
the corporation's notice of meeting, if the stockholder's notice required by
subsection 2.5.2 is delivered to the Secretary at the principal executive
offices of the corporation not earlier than the close of business on the 120th
day before such special meeting and not later than the close of business on the
later of the 90th day before such special meeting or the 10th day following the
day on which public announcement is first
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made of the date of the special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting. In no event will the public
announcement of an adjournment or postponement of a special meeting commence a
new time period (or extend any time period) for the giving of a stockholder's
notice as described above.
2.7 General.
2.7.1 Only persons who are nominated in accordance with the procedures
set forth in this ARTICLE 2 will be eligible to be elected at an annual
or special meeting of the stockholders of the corporation to serve as
directors and only such business will be conducted at a meeting of the
stockholders as will have been brought before the meeting in accordance
with the procedures set forth in this Section. Except as otherwise
provided by law, the Chairman of the Board, as chairman of the meeting,
will have the power and duty (A) to determine whether a nomination or
any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set
forth in this ARTICLE 2 (including whether the stockholder or beneficial
owner, if any, on whose behalf the nomination or proposal is made or
solicited (or is part of a group which solicited) or did not so solicit,
as the case may be, proxies in support of such stockholder's nominee or
proposal in compliance with such stockholder's representation as
required by this ARTICLE 2) and (B) if any proposed nomination or
business was not made or proposed in compliance with the ARTICLE 2, to
declare that such nomination will be disregarded or that such proposed
business will not be transacted.
2.7.2 For purposes of this ARTICLE 2, "PUBLIC ANNOUNCEMENT" will
include disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
2.7.3 Notwithstanding the foregoing provisions of this ARTICLE 2, a
stockholder will also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this ARTICLE 2. Nothing in this ARTICLE 2 will
be deemed to affect any rights (A) of stockholders to request inclusion
of proposals in the corporation's proxy statement pursuant to Rule 14a-8
under the Exchange Act or (B) of the holders of any series of Preferred
Stock to elect directors pursuant to any applicable provisions of the
Certificate of Incorporation.
NOTICE
2.8 Written notice of each annual or special meeting must be given not fewer
than 10 days nor more than 60 days before the date of the meeting, to each
stockholder entitled to vote at such meeting. Such notice must state the place,
date and hour of the meeting and (A) in the case of the annual meeting, those
matters that the Board of Directors, at the time of the mailing of the notice,
intends to present for action by the stockholders, and, subject to the
provisions of applicable law, any other matters properly brought may be
presented at the meeting for action, or (B) in the case of a special meeting,
the purpose or purposes for which the meeting was called,
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but, subject to the provisions of applicable law, no other business may be
presented at the special meeting for action. The notice of any meeting at which
directors are to be elected will include the names of nominees intended at the
time of the notice to be presented by the Board of Directors for election.
2.9 Notice of a stockholders' meeting must be given by mail or by other
means of written communication, addressed to the stockholder at the address of
such stockholder appearing on the books of the corporation or given by the
stockholder to the corporation for the purpose of notice. Notice by mail will be
deemed to have been given at the time a written notice is deposited in the
United States mail, postage prepaid. Any other written notice will be deemed to
have been given at the time it is personally delivered to the recipient or is
delivered to a common carrier for transmission, or actually transmitted by the
person giving the notice by electronic means, to the recipient.
QUORUM AND ADJOURNMENT
2.10 Except as otherwise provided by law, the Certificate of Incorporation or
these Bylaws, at each meeting of stockholders the presence in person or by proxy
of the holders of a majority in voting power of the outstanding shares of stock
entitled to vote at the meeting will be necessary and sufficient to constitute a
quorum. In the absence of a quorum, the stockholders so present may, by a
majority in voting power thereof, adjourn the meeting from time to time in the
manner provided in Section 2.11 until a quorum will attend.
2.11 Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting will be given to each stockholder of record entitled to vote
at the meeting.
VOTING
2.12 The stockholders entitled to notice of any meeting or to vote at any
such meeting will be only persons in whose name shares stand on the stock
records of the corporation on the record date determined in accordance with
Section 5.7.
2.13 Voting at meetings of stockholders need not be by written ballot. At all
meetings of stockholders for the election of directors, a plurality of the votes
cast will be sufficient to elect. All other elections and questions will, unless
otherwise provided by the Certificate of Incorporation, these Bylaws, the rules
or regulations of any stock exchange applicable to the corporation or as
otherwise provided by law or pursuant to any regulation applicable to the
corporation, be decided by the affirmative vote of the holders of a majority in
voting power of the shares of stock of the corporation which are present in
person or by proxy and entitled to vote thereon.
2.14 Voting will in all cases be subject to the provisions to the following
provisions:
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2.14.1 The stockholders of the corporation will not have the right to
cumulate their votes for the election of directors of the corporation.
2.14.2 Shares held by an administrator, executor, guardian, conservator
or custodian may be voted by such holder either in person or by proxy,
without a transfer of such shares into the holder's name; and shares
standing in the name of a trust may be voted by the trustee of such
trust, either in person or by proxy, but no trustee will be entitled to
vote shares held by such trust without a transfer of such shares into
the trust's name.
2.14.3 Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into the receiver's
name if authority to do so is contained in the order of the court by
which such receiver was appointed.
2.14.4 Except where otherwise agreed in writing between the parties, a
stockholder whose shares are pledged will be entitled to vote such
shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee will be entitled to vote the shares
so transferred.
2.14.5 Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the
minor, in person or by proxy, whether or not the corporation has notice,
actual or constructive, of the minor's actual age, unless a guardian of
the minor's property has been appointed and written notice of such
appointment given to the corporation.
2.14.6 Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxyholder of such
other corporation as the bylaws of such other corporation may prescribe
or, in the absence of such provision, as the board of directors of such
other corporation may determine or, in the absence of such
determination, by the chairman of the board, president or any vice
president of such other corporation, or by any other person authorized
to do so by the chairman of the board, president or any vice president
of such other corporation. Shares which are purported to be voted or any
proxy purported to be executed in the name of a corporation (whether or
not any title of the person signing is indicated) will be presumed to be
voted or the proxy executed in accordance with the provisions of this
clause, unless the contrary is shown.
2.14.7 Shares of the corporation owned by its subsidiaries will not be
entitled to vote on any matter.
2.14.8 If shares stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in
common, husband and wife as community property, tenants by the entirety,
voting trustees, persons entitled to vote under a stockholder voting
agreement or otherwise, or if two or more persons (including
proxyholders) have the same fiduciary relationship respecting the same
shares, unless the Secretary is given written notice to the contrary and
is furnished with a copy of the instrument or order appointing them or
creating the relationship wherein it is so provided, their acts with
respect to voting will have the following effect:
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(a) If only one votes, such act binds all;
(b) If more than one vote, the act of the majority so voting binds
all; or
(c) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionately.
If the instrument so filed or the registration of the shares shows that any such
tenancy is held in unequal interests, a majority or even split for the purpose
of this Section will be a majority or even split in interest.
PROXIES
2.15 Each stockholder entitled to vote at a meeting of the stockholders may
authorize another person or persons to act for such stockholder by proxy, but no
such proxy will be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. A proxy will be irrevocable if it states
that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or by delivering
a proxy in accordance with applicable law bearing a later date to the Secretary.
2.16 A proxy or consent validly delivered to the corporation will mean any
written authorization that is signed by the person executing the proxy, as well
as any electronic transmission (to include without limitation transmissions by
facsimile and by computer messaging systems) that is authorized by a stockholder
or the stockholder's attorney in fact, which gives another person or persons
power to vote with respect to the shares of such stockholder. A stockholder may
authorize another person or persons to act for such stockholder as proxy by
transmitting or authorizing the transmission of a telegram, cablegram, or other
means of electronic transmission to the person who will be the holder of the
proxy or to a proxy solicitation firm, proxy support service organization or
like agent duly authorized by the person who will be the holder of the proxy to
receive such transmission, provided that any such telegram, cablegram or other
means of electronic transmission must either set forth or be submitted with
information from which it can be determined that the telegram, cablegram or
other electronic transmission was authorized by the stockholder. If it is
determined that such telegrams, cablegrams or other electronic transmissions are
valid, the inspectors of election or, if there are no inspectors, such other
persons making that determination will specify the information upon which they
relied. Any copy, facsimile telecommunication or other reliable reproduction of
the writing or transmission created pursuant to this Section 2.16 may be
substituted or used instead of the original writing or transmission for any and
all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other reproduction will
be a complete reproduction of the entire original writing or transmission.
INSPECTORS OF ELECTION
2.17 In advance of any meeting of stockholders, the Board of Directors will
appoint inspectors of election to act at such meeting and any adjournment
thereof. If inspectors of election are not
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so appointed, or if any persons so appointed fail to appear or refuse to act,
the chairman of any such meeting may, and on the request of any stockholder or
stockholder's proxy will, make such appointment at the meeting. The number of
inspectors will be either one or three. If appointed at a meeting on the request
of one or more stockholders or proxies, the majority of shares present will
determine whether one or three inspectors are to be appointed.
2.18 The duties of such inspectors will include: determining the number of
shares outstanding and the voting power of each; determining the shares
represented at the meeting; determining the existence of a quorum; determining
the authenticity, validity and effect of proxies; receiving votes, ballots or
consents; hearing and determining all challenges and questions in any way
arising in connection with the right to vote; counting and tabulating all votes
or consents; determining when the polls will close; determining the result; and
doing such acts as may be proper to conduct the election or vote with fairness
to all stockholders. If there are three inspectors of election, the decision,
act or certificate of a majority is effective in all respects as the decision,
act or certificate of all.
CONDUCT OF MEETING
2.19 The Chairman of the Board will preside as chairman at all meetings of
the stockholders. The chairman will conduct each such meeting in a businesslike
and fair manner, but will not be obligated to follow any technical, formal or
parliamentary rules or principles of procedure. The chairman's rulings on
procedural matters will be conclusive and binding on all stockholders, unless at
the time of a ruling a request for a vote is made to the stockholders holding
shares entitled to vote and which are represented in person or by proxy at the
meeting, in which case the decision of a majority of such shares will be
conclusive and binding on all stockholders. Without limiting the generality of
the foregoing, the chairman will have all of the powers usually vested in the
chairman of a meeting of stockholders.
CONSENT OF ABSENTEES
2.20 The transactions of any meeting of stockholders, however called and
noticed, and wherever held, are as valid as though conducted at a meeting duly
held after regular call and notice, if a quorum is present either in person or
by proxy, and if, either before or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, signs a written waiver of
notice, or a consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents or approvals will be filed with the
corporate records or made a part of the minutes of the meeting. Attendance of a
person at a meeting will constitute a waiver of notice of and presence at such
meeting, except when the person objects, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened and except that attendance at a meeting is not a waiver of any right to
object to the consideration of matters required by the Delaware General
Corporation Law (the "DGCL") to be included in the notice but not so included,
if such objection is expressly made at the meeting. Neither the business to be
transacted at nor the purpose of any regular or special meeting of stockholders
need be specified in any written waiver of notice, consent to the holding of the
meeting or approval of the minutes thereof, except as provided in the DGCL.
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ARTICLE 3. DIRECTORS
POWERS
3.1 Subject to limitations of the Certificate of Incorporation, of these
Bylaws and of the DGCL relating to action required to be approved by the
stockholders or by the outstanding shares, the business and affairs of the
corporation will be managed and all corporate powers will be exercised by or
under the direction of the Board of Directors and it will have the final
authority in matters of strategy and policy matters for the corporation.
The Board of Directors may delegate management duties for the operation
of the business to those persons to whom authority is properly delegated by the
Board of Directors, including officers of the corporation, provided that the
business and affairs of the corporation will be managed and all corporate powers
will be exercised under the ultimate direction of the Board of Directors.
Without prejudice to such general powers, but subject to the same limitations,
it is hereby expressly declared that the Board of Directors will have the
following powers in addition to the other powers enumerated in these Bylaws:
3.1.1 To select and remove all officers (in accordance with the
provisions of these Bylaws), agents and employees of the corporation;
prescribe the powers and duties for them as may not be inconsistent with
law, the Certificate of Incorporation or these Bylaws; fix their
compensation and require from them an affidavit providing for the good
faith exercise of their duties only in the best interests of the
corporation.
3.1.2 To conduct, manage and control the affairs and business of the
corporation and to make such rules and regulations therefor not
inconsistent with law, the Certificate of Incorporation or these Bylaws,
as they may deem best.
3.1.3 To adopt, make and use a corporate seal, and to prescribe the
forms of certificates of stock, and to alter the form of such seal and
of such certificates from time to time as they may deem best.
3.1.4 To authorize the issuance of shares of stock of the corporation
from time to time, upon such terms and for such consideration as may be
lawful.
3.1.5 To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered, in the corporate
name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities
therefor.
3.1.6 To make, repeal, alter, amend and rescind any or all of these
Bylaws.
NUMBER OF DIRECTORS
3.2 The authorized number of directors of the corporation will be not less
than five nor more than nine. Within such limits, the Board of Directors may fix
the exact number of directors by resolution duly adopted by the Board of
Directors. Initially, the exact number of directors will
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be eight. No reduction of the authorized number of directors will have the
effect of removing any director before the expiration of the director's term of
office.
ELECTION AND TERM OF OFFICE
3.3 Only persons who are nominated by, or at the direction of the Board of
Directors or the Chairman of the Board, or by a stockholder who has given timely
written notice to the Secretary in accordance with these Bylaws, will be
eligible for election as directors of the corporation.
3.4 For a person to be qualified to serve as a director of the corporation,
such person need not be an employee or stockholder of the corporation during his
or her directorship.
3.5 The directors will be elected at each annual meeting of the
stockholders, but if any such annual meeting is not held or the directors are
not elected thereat, the directors may be elected at any special meeting of
stockholders held for that purpose. Each director will hold office until the
next annual meeting and until a successor has been elected and qualified or
until his or her earlier death, resignation, or removal.
RESIGNATIONS AND VACANCIES
3.6 Any director may resign effective upon giving written notice to the
Chairman of the Board, the President, the Secretary or the Board of Directors,
unless the notice specifies a later time for the effectiveness of such
resignation. If the resignation is effective at a future time, a successor may
be elected to take office when the resignation becomes effective.
Any newly-created directorship resulting from an increase in the
authorized number of directors or any vacancies in the Board of Directors
occurring by reason of death, resignation, retirement, disqualification or
removal may be filled by a majority of the remaining directors, though less than
a quorum, or by a sole remaining director, and each director so elected will
hold office until the next annual meeting and until such director's successor
has been elected and qualified.
A vacancy or vacancies in the Board of Directors will be deemed to exist
in case of the death, resignation or removal of any director, or if the
authorized number of directors is increased, or if the stockholders fail, at any
annual or special meeting of the stockholders at which any director or directors
are elected, to elect the full authorized number of directors to be voted for at
that meeting.
MEETINGS OF THE BOARD OF DIRECTORS
3.7 Regular or special meetings of the Board of Directors will be held at
any place within or without the State of Delaware which has been designated from
time to time by the Board of Directors. In the absence of such designation,
regular meetings will be held at the principal executive office of the
corporation.
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3.8 Following each annual meeting of stockholders, the Board of Directors
will hold a regular meeting for the purpose of organization, election of
officers and the transaction of other business. Other regular meetings of the
Board of Directors will be held without call on such dates and at such times as
may be fixed by the Board of Directors. Call and notice of all regular meetings
of the Board of Directors are hereby dispensed with.
3.9 Special meetings of the Board of Directors for any purpose or purposes
may be called at any time by the Chairman of the Board, the President, the Chief
Financial Officer, the Secretary or by any two directors.
Special meetings of the Board of Directors will be held upon four days'
written notice or 48 hours' notice given personally or by telephone, including a
voice messaging system or other system or technology designed to record and
communicate messages, telegraph, telex, facsimile electronic mail or other
similar means of communication. Any such notice will be addressed or delivered
to each director at such director's address as it is shown upon the records of
the corporation or as may have been given to the corporation by the director for
purposes of notice or, if such address is not shown on such records or is not
readily ascertainable, at the place in which the meetings of the directors are
regularly held.
Notice by mail will be deemed to have been given at the time a written
notice is deposited in the United States mail, first-class postage prepaid. Any
other written notice will be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice will be deemed to have been
given at the time it is communicated, in person or by telephone or wireless, to
the recipient or to a person at the office of the recipient who the person
giving the notice has reason to believe will promptly communicate it to the
recipient.
QUORUM
3.10 A majority of the whole Board of Directors constitutes a quorum of the
Board of Directors for the transaction of business, except to adjourn as
provided below in this Article. Every act or decision done or made by a majority
of the directors present at a meeting duly held at which a quorum is present
will be regarded as the act of the Board of Directors, unless a greater number
be required by law or by the Certificate of Incorporation. A meeting at which a
quorum is initially present may continue to transact business notwithstanding
the withdrawal of directors, if any action taken is approved by at least a
majority of the required quorum for such meeting.
PARTICIPATION BY CONFERENCE TELEPHONE
3.11 Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another and all such directors will be deemed to be present
in person at the meeting.
WAIVER OF NOTICE
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3.12 Notice of a meeting need not be given to any director who signs a waiver
of notice or a consent to holding the meeting or an approval of the minutes
thereof, whether before or after the meeting, or who attends the meeting without
protesting, prior thereto or at its commencement, the lack of notice to such
director. All such waivers, consents and approvals will be filed with the
corporate records or made a part of the minutes of the meeting.
ADJOURNMENT
3.13 A majority of the directors present, whether or not a quorum is present,
may adjourn any directors' meeting to another time and place. Notice of the time
and place of holding an adjourned meeting need not be given to absent directors
if the time and place be fixed at the meeting adjourned, except as provided in
the next sentence. If the meeting is adjourned for more than 24 hours, notice of
any adjournment to another time or place will be given before the time of the
adjourned meeting to the directors who were not present at the time of the
adjournment.
FEES AND COMPENSATION
3.14 Directors and members of committees may receive such compensation, if
any, for their services, and such reimbursement for expenses, as may be fixed or
determined by the Board of Directors.
ACTION WITHOUT MEETING
3.15 Any action required or permitted to be taken by the Board of Directors
may be taken without a meeting if all members of the Board of Directors consent
in writing to such action. Such consent or consents will have the same effect as
a unanimous vote of the Board of Directors and will be filed with the minutes of
the proceedings of the Board of Directors.
COMMITTEES
3.16 The Board of Directors may appoint one or more committees, each
consisting of one or more directors, and delegate to such committees any of the
powers and authority of the Board of Directors, except no such committee will
have power or authority in reference to the following:
3.16.1 Approving, adopting or recommending to the stockholders any
action or matter expressly required by the DGCL to be submitted to the
stockholders for approval; or
3.16.2 Adopting, altering, amending or repealing these Bylaws or any of
them.
Any such committee must be designated, and the members or alternate
members thereof appointed, by resolution adopted by a majority of the authorized
number of directors and any such committee may be designated an Executive
Committee or by such other name as the Board of Directors will specify.
Alternate members of a committee may replace any absent member at any meeting of
the committee. The Board of Directors will have the power to prescribe the
manner in which proceedings of any such committee will be conducted. In the
absence of any such prescription, such committee will have the power to
prescribe the manner in which its proceedings will be conducted. Unless the
Board of Directors or such committee otherwise provide, the regular and special
meetings and other actions of any such committee will be
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governed by the provisions of these Bylaws applicable to meetings and actions of
the Board of Directors. Minutes will be kept of each meeting of each committee.
Initially, the Board of Directors will appoint (A) an Audit Committee,
which will make recommendations to the Board of Directors regarding the
selection of the corporation's independent auditors, review the results and
scope of the audit and other services provided by the independent auditors and
will review and evaluate audit and control functions, and (B) a Compensation
Committee, which will make recommendations to the Board of Directors regarding
equity compensation plans, and which will make decisions concerning salaries and
incentive compensation for employees of the corporation.
ARTICLE 4. OFFICERS
OFFICERS
4.1 The officers of the corporation will be a Chairman of the Board, a Chief
Executive Officer, a President, a Chief Operating Officer, a Secretary, a Chief
Financial Officer and a Treasurer. The corporation may also have, at the
discretion of the Board of Directors, one or more Vice Chairmen of the Board,
one or more Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be elected or appointed in
accordance with the provisions of this Article.
ELECTION
4.2 The officers of the corporation, except such officers as may be elected
or appointed in accordance with the provisions of this ARTICLE 4, will be chosen
annually by, and will serve at the pleasure of, the Board of Directors, and will
hold their respective offices until their resignation, removal, or other
disqualification from service, or until their respective successors will be
elected.
SUBORDINATE OFFICERS
4.3 The Board of Directors may elect, and may empower the Chairman of the
Board, the President and the Chief Financial Officer to appoint, such other
officers as the business of the corporation may require, each of whom will hold
office for such period, have such authority and perform such duties as are
provided in these Bylaws or as the Board of Directors may from time to time
determine.
REMOVAL AND RESIGNATION
4.4 Any officer may be removed, either with or without cause, by the Board
of Directors at any time or, except in the case of an officer chosen by the
Board of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors. Any such removal will be without prejudice
to the rights, if any, of the officer under any contract of employment of the
officer.
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Any officer may resign at any time by giving written notice to the
corporation, but without prejudice to the rights, if any, of the corporation
under any contract to which the officer is a party. Any such resignation will
take effect at the date of the receipt of such notice or at any later time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation will not be necessary to make it effective.
VACANCIES
4.5 A vacancy in any office because of death, resignation, removal,
disqualification or any other cause will be filled in the manner prescribed in
these Bylaws for regular election or appointment to such office.
THE CHAIRMAN OF THE BOARD
4.6 The Chairman of the Board will preside at all meetings of the Board of
Directors and he will have and may exercise such powers as are, from time to
time, assigned to him by the Board of Directors and as may be provided by law.
4.7 In the absence of the Chairman of the Board, the Vice Chairman of the
Board, if any, will preside at all meetings of the Board of Directors and he or
she will have and may exercise such powers as are, from time to time, assigned
to him or her by the Board of Directors and as may be provided by law.
THE CHAIRMAN, PRESIDENT AND VICE-PRESIDENTS
4.8 The Chairman of the Board is the general manager and chief executive
officer of the corporation and has, subject to the control of the Board of
Directors, general supervision, direction and control of the business and
officers of the corporation. The Chairman of the Board will preside at all
meetings of the stockholders and at all meetings of the Board of Directors. The
Chairman of the Board has the general powers and duties of management usually
vested in the office of Chairman of the Board and Chief Executive Officer and
general manager of a corporation and such other powers and duties as may be
prescribed by the Board of Directors.
4.9 In the absence or disability of the Chairman of the Board, the President
will perform all the duties of the Chairman of the Board and, when so acting,
will have all the powers of, and be subject to all the restrictions upon, the
Chairman of the Board. The President will have such other powers and perform
such other duties as from time to time may be prescribed for him by the Board of
Directors.
4.10 In the absence or disability of the President, the Chief Financial
Officer will perform all the duties of the President and, when so acting, will
have all the powers of, and be subject to all the restrictions upon, the
President. The Chief Financial Officer will have such other powers and perform
such other duties as from time to time may be prescribed for him by the Board of
Directors.
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THE SECRETARY AND ASSISTANT SECRETARY
4.11 The Secretary will keep or cause to be kept, at the principal executive
office and such other place as the Board of Directors may order, a book of
minutes of all meetings of stockholders, the Board of Directors and its
committees, with the time and place of holding, whether regular or special, and
if special, how authorized, the notice thereof given, the names of those present
at Board of Directors and committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof. The
Secretary will keep, or cause to be kept, a copy of these Bylaws of the
corporation at the principal executive office or such other place as the Board
of Directors may order.
The Secretary will keep, or cause to be kept, at the principal executive
office or at the office of the corporation's transfer agent or registrar, if one
has been appointed, a share register, or a duplicate share register, showing the
names of the stockholders and their addresses, the number and classes of shares
held by each, the number and date of certificates issued for the same, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The Secretary will give, or cause to be given, notice of all meetings of
the stockholders and of the Board of Directors and any committees thereof
required by these Bylaws or by law to be given, will keep the seal of the
corporation in safe custody, and will have such other powers and perform such
other duties as may be prescribed by the Board of Directors.
4.12 The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) will, in absence of the
Secretary or in the event of his or her inability or refusal to act, perform the
duties and exercise the powers of the Secretary and will perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
THE CHIEF FINANCIAL OFFICER AND ASSISTANT TREASURER
4.13 The Chief Financial Officer is the chief financial officer of the
corporation and will keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
corporation, and will send or cause to be sent to the stockholders of the
corporation such financial statements and reports as are by law or these Bylaws
required to be sent to them. The books of account will at all times be open to
inspection by any director.
The Chief Financial Officer will deposit all moneys and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the Board of Directors. The Chief Financial Officer will
disburse the funds of the corporation as may be ordered by the Board of
Directors, will render to the Chairman of the Board, the President and the
directors, whenever they request it, an account of all transactions as Chief
Financial Officer and of the financial condition of the corporation, and will
have such other powers and perform such other duties as may be prescribed by the
Board of Directors.
4.14 The Assistant Treasurer, or if there be more than one, the Assistant
Treasurers in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) will, in absence of the
Chief Financial Officer or in the event of his
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inability or refusal to act, perform the duties and exercise the powers of the
Chief Financial Officer and will perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
ARTICLE 5. CERTIFICATE OF STOCK
5.1 Every holder of stock in the corporation will be entitled to have a
certificate, signed by, or in the name of the corporation by (A) the Chairman or
Vice Chairman of the Board, or the President or a Vice President and (B) the
Chief Financial Officer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, certifying the number of shares owned by the holder in the
corporation.
5.2 Certificates may be issued for partly paid shares and in such case upon
the face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon will be specified.
5.3 If the corporation is authorized to issue more than one class of stock
or more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualification, limitations or restrictions of such
preferences and/or rights will be set forth in full or summarized on the face or
back of the certificate which the corporation will issue to represent such class
or series of stock, provided that, except as otherwise provided in Section 202
of the DGCL, instead of the foregoing requirements, there may be set forth on
the face or back of the certificate that the corporation will issue to represent
such class or series of stock, a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
5.4 Any of or all the signatures on the certificate may be facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate will have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
5.5 The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his or her legal representative, to
advertise the same in such manner as it will require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
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TRANSFER OF STOCK
5.6 Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it will be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
5.7 In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of the stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date will not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date: (A) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, will, unless otherwise required by law, not be more than 60 nor less
than 10 days before the date of such meeting; (B) in the case of determination
of stockholders entitled to express consent to corporate action in writing
without a meeting, will not be more than 10 days from the date upon which the
resolution fixing the record date is adopted by the Board of Directors and (C)
in the case of any other action, will not be more than 60 days before such other
action. If no record date is fixed: (A) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders will
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; (B) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action of the Board of Directors is
required by law or the Certificate of Incorporation, will be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation in accordance with applicable law, or, if
prior action by the Board of Directors is required by law or the Certificate of
Incorporation, will be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action and (C) the record date
for determining stockholders for any other purpose will be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders will apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
REGISTERED STOCKHOLDERS
5.8 The corporation will be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares and will not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it will have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
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ARTICLE 6. GENERAL PROVISIONS
MAINTENANCE AND INSPECTION OF RECORDS
6.1 Any stockholder of record, in person or by attorney or other agent,
will, upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose will mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath will be accompanies by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath will be directed to the
corporation at its registered office in the State of Delaware or at its
principal executive office.
6.2 Any director will have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to the director's position as a director. The Court
of Chancery is hereby vested with the exclusive jurisdiction to determine
whether a director is entitled to the inspection sought. The Court may summarily
order the corporation to permit the director to inspect any and all books and
records, the stock ledger, and the stock list and to make copies or extracts
therefrom. The Court may, in its discretion, prescribe any limitations or
conditions with reference to the inspection, or award such other and further
relief as the Court may deem just and proper.
ANNUAL REPORT TO STOCKHOLDERS
6.3 At any point at which the corporation has less than 100 holders of
record of its shares, this corporation expressly waives the annual report to
stockholders. Notwithstanding the waiver of such annual report by the
corporation, nothing herein will be interpreted as prohibiting the Board of
Directors from issuing voluntary annual or other periodic reports to
stockholders during such time as the corporation has less than 100 holders of
record.
CHECKS; DRAFTS; EVIDENCE OF INDEBTEDNESS
6.4 From time to time, the Board of Directors will determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
the payment of money, notes or other evidences of indebtedness that are issued
in the name of or payable to the corporation, and only the persons so authorized
will sign or endorse those instruments.
ENDORSEMENT OF DOCUMENTS; CONTRACTS
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6.5 Subject to the provisions of applicable law, any note, mortgage,
evidence of indebtedness, contract, share certificate, conveyance or other
instrument in writing and any assignment or endorsements thereof executed or
entered into between the corporation and any other person, when signed by the
Chairman of the Board, the President or any Vice President and the Secretary,
any Assistant Secretary, the Chief Financial Officer or any Assistant Treasurer
of the corporation will be valid and binding on the corporation in the absence
of actual knowledge on the part of the other person that the signing officers
had no authority to execute the same. Any such instruments may be signed by any
other person or persons and in such manner as from time to time will be
determined by the Board of Directors, and, unless so authorized by the Board of
Directors, no officer, agent or employee will have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or amount.
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
6.6 The Chairman of the Board, the President, the Chief Financial Officer or
any other officer or officers authorized by the Board of Directors or by the
Chairman of the Board, the President or the Chief Financial Officer, are each
authorized to vote, represent and exercise on behalf of the corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the name of the corporation. The authority herein granted may be
exercised either by any such officer in person or by any other person authorized
so to do by proxy or power of attorney duly executed by said officer.
STOCK PURCHASE PLANS
6.7 The corporation may adopt and carry out a stock purchase plan or
agreement or stock option plan or agreement providing for the issue and sale for
such consideration as may be fixed of its unissued shares, or of issued shares
acquired or to be acquired, to one or more of the employees or directors of the
corporation or of a subsidiary or to a trustee on their behalf and for the
payment for such shares in installments or at one time, and may provide for
aiding any such persons in paying for such shares by compensation for services
rendered, promissory notes or otherwise.
Any such stock purchase plan or agreement or stock option plan or
agreement may include, among other features, the fixing of eligibility for
participation therein, the class and price of shares to be issued or sold under
the plan or agreement, the number of shares which may be subscribed for, the
method of payment therefor, the reservation of title until full payment
therefor, the effect of the termination of employment, an option or obligation
on the part of the corporation to repurchase the shares upon termination of
employment, restrictions upon transfer of the shares, the time limits of and
termination of the plan, and any other matters, not in violation of applicable
law, as may be included in the plan as approved or authorized by the Board of
Directors or any committee of the Board of Directors.
CONSTRUCTION AND DEFINITIONS
6.8 Unless the context otherwise requires, the general provisions, rules of
construction and definitions contained in the DGCL will govern the construction
of these Bylaws.
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AMENDMENTS
6.9 These Bylaws may be amended or repealed either by approval of 66-2/3% of
the outstanding shares of the corporation entitled to vote on such action or by
the approval of the Board of Directors, for those amendments to the Bylaws for
which approval of the Board of Directors alone is sufficient under the DGCL.
FISCAL YEAR
6.10 The fiscal year of the corporation will be fixed by resolution of the
Board of Directors.
DIVIDENDS
6.11 Dividends upon the capital stock of the corporation, subject to the
provisions of the Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock, subject to
the provisions of the Certificate of Incorporation.
6.12 Before payment of any dividend, there may be set aside out of any funds
of the corporation available for dividends such sum or sums as the directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purposes as the
directors will think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
LOANS TO OFFICERS AND EMPLOYEES
6.13 The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiaries, including any officer or employee who is a director of the
corporation or its subsidiaries, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be expected to
benefit the corporation. The loan, guarantee or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the Board of
Directors will approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in these Bylaws will be deemed to deny, limit
or restrict the powers of guaranty or warranty of the corporation at common law
or under any statute
ARTICLE 7. INDEMNIFICATION
RIGHT TO INDEMNIFICATION
7.1 The corporation will indemnify and hold harmless, to the fullest extent
permitted by applicable law as it presently exists or may hereafter be amended,
any person (an "Indemnitee") who was or is made or is threatened to be made a
party or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "PROCEEDING"), by reason of the
fact that such person, or a person for whom he or she is the legal
representative, is or was a director or officer of the corporation or, while a
director or officer of the corporation, is or was serving at the written request
of the corporation as a director, officer, employee or agent
20
<PAGE> 21
of another corporation or of a partnership, joint venture, trust, enterprise or
non-profit entity, including service with respect to employee benefit plans,
against all liability and loss suffered and expenses (including attorneys' fees)
reasonably incurred by such Indemnitee. Notwithstanding the preceding sentence,
except as otherwise provided in Section 7.3, the corporation will be required to
indemnify an Indemnitee in connection with a Proceeding(or part thereof)
commenced by such Indemnitee only if the commencement of such Proceeding(or part
thereof) by the Indemnitee was authorized by the Board of Directors.
PREPAYMENT OF EXPENSES
7.2 The corporation will pay the expenses (including attorneys' fees)
incurred by an Indemnitee in defending any Proceeding in advance of its final
disposition, provided, however, that, to the extent required by law, such
payment of expenses in advance of the final disposition of the Proceedingwill be
made only upon receipt of an undertaking by the Indemnitee to repay all amounts
advanced if it should be ultimately determined that the Indemnitee is not
entitled to be indemnified under this Article or otherwise.
CLAIMS
7.3 If a claim for indemnification of advancement of expenses under this
ARTICLE 7 is not paid in full within 60 days after a written claim therefor by
the Indemnitee has been received by the corporation, the Indemnitee may file
suit to recover the unpaid amount of such claim and, if successful in whole or
in part, will be entitled to be paid the expense of prosecuting such claim. In
any such action the corporation will have the burden of proving that the
Indemnitee is not entitled to the requested indemnification or advancement of
expenses under applicable law.
NONEXCLUSIVITY OF RIGHTS
7.4 The rights conferred on any Indemnitee by this Article will not be
exclusive of any other rights which such Indemnitee may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation, these
Bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
OTHER SOURCES
7.5 The corporation's obligation, if any, to indemnify or to advance
expenses to any Indemnitee who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or non-profit entity will be reduced by any amount such
Indemnitee may collect as indemnification or advancement of expenses from such
other corporation, partnership, joint venture, trust, enterprise or non-profit
entity.
AMENDMENT OR REPEAL
7.6 Any repeal or modification of the foregoing provisions of this Article
will not adversely affect any right or protection hereunder of any Indemnitee in
respect of any act or omission occurring before the time of such repeal or
modification.
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<PAGE> 22
OTHER INDEMNIFICATION AND PREPAYMENT OF EXPENSES
7.7 This Article will not limit the right of the corporation, to the extent
and in the manner permitted by law, to indemnify and to advance expenses to
persons other than Indemnitees when and as authorized by appropriate corporate
action.
INSURANCE
7.8 The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or loss
under the law.
INDEMNITY AGREEMENTS
7.9 The corporation may enter into agreements with any director, officer,
employee or agent of the corporation, providing for indemnification to the
fullest extent permissible under the law and the Certificate of Incorporation.
22
<PAGE> 23
CERTIFICATE OF SECRETARY
OF
ACME COMMUNICATIONS, INC.
a Delaware corporation
I hereby certify that I am the duly elected and acting Secretary of ACME
Communications, Inc. and that the foregoing Bylaws, comprising __ pages,
constitute the Bylaws of said corporation as duly adopted at a meeting of the
Board of Directors thereof held on ____ __, 1999.
--------------------------------
Thomas Allen, Secretary
<PAGE> 24
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1. OFFICES.........................................................................1
ARTICLE 2. MEETINGS OF STOCKHOLDERS........................................................1
ANNUAL MEETINGS....................................................................1
SPECIAL MEETINGS...................................................................1
BUSINESS WHICH MAY BE CONDUCTED....................................................2
NOTICE.............................................................................4
QUORUM AND ADJOURNMENT.............................................................5
VOTING.............................................................................5
PROXIES............................................................................7
INSPECTORS OF ELECTION.............................................................7
CONDUCT OF MEETING.................................................................8
CONSENT OF ABSENTEES...............................................................8
ARTICLE 3. DIRECTORS.......................................................................9
POWERS..............................................................................9
NUMBER OF DIRECTORS.................................................................9
ELECTION AND TERM OF OFFICE........................................................10
RESIGNATIONS AND VACANCIES.........................................................10
MEETINGS OF THE BOARD OF DIRECTORS.................................................10
QUORUM.............................................................................11
PARTICIPATION BY CONFERENCE TELEPHONE..............................................11
WAIVER OF NOTICE...................................................................11
ADJOURNMENT........................................................................12
FEES AND COMPENSATION..............................................................12
ACTION WITHOUT MEETING.............................................................12
COMMITTEES.........................................................................12
ARTICLE 4. OFFICERS.......................................................................13
OFFICERS...........................................................................13
ELECTION...........................................................................13
SUBORDINATE OFFICERS...............................................................13
REMOVAL AND RESIGNATION............................................................13
</TABLE>
-i-
<PAGE> 25
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
VACANCIES..........................................................................13
THE CHAIRMAN OF THE BOARD..........................................................14
THE PRESIDENT AND VICE-PRESIDENTS..................................................14
THE SECRETARY AND ASSISTANT SECRETARY..............................................14
THE TREASURER AND ASSISTANT TREASURER..............................................15
ARTICLE 5. CERTIFICATE OF STOCK...........................................................15
LOST CERTIFICATES..................................................................16
TRANSFER OF STOCK..................................................................16
FIXING RECORD DATE.................................................................16
REGISTERED STOCKHOLDERS............................................................17
ARTICLE 6. GENERAL PROVISIONS.............................................................17
MAINTENANCE AND INSPECTION OF RECORDS..............................................17
ANNUAL REPORT TO STOCKHOLDERS......................................................18
CHECKS; DRAFTS; EVIDENCE OF INDEBTEDNESS...........................................18
ENDORSEMENT OF DOCUMENTS; CONTRACTS................................................18
REPRESENTATION OF SHARES OF OTHER CORPORATIONS.....................................18
STOCK PURCHASE PLANS...............................................................18
CONSTRUCTION AND DEFINITIONS.......................................................19
AMENDMENTS.........................................................................19
FISCAL YEAR........................................................................19
DIVIDENDS..........................................................................19
LOANS TO OFFICERS AND EMPLOYEES....................................................20
ARTICLE 7. INDEMNIFICATION................................................................20
RIGHT TO INDEMNIFICATION...........................................................20
PREPAYMENT OF EXPENSES.............................................................20
CLAIMS.............................................................................20
NONEXCLUSIVITY OF RIGHTS...........................................................21
OTHER SOURCES......................................................................21
AMENDMENT OR REPEAL................................................................21
OTHER INDEMNIFICATION AND PREPAYMENT OF EXPENSES...................................21
</TABLE>
-ii-
<PAGE> 26
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
INSURANCE..........................................................................21
INDEMNITY AGREEMENTS...............................................................21
</TABLE>
-iii-
<PAGE> 27
FORM OF RESTATED BYLAWS OF
ACME COMMUNICATIONS, INC.
A DELAWARE CORPORATION
<PAGE> 1
EXHIBIT 4.6
FRONT
COMMON STOCK COMMON STOCK
LU
INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE
SEE REVERSE FOR
CERTAIN DEFINITIONS AND
RESTRICTIONS ON TRANSFER
CUSIP 004631 10 7
THIS CERTIFIES THAT is the record holder of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF
ACME COMMUNICATIONS, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed.
This Certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
U.S. STOCK TRANSFER CORPORATION
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
BACK
The Corporation will furnish without charge to each stockholder who so requests
the powers, designations, preferences and relative, participating, optional, or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
Such requests shall be made to the Corporation's Secretary at the principal
office of the Corporation.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
FOREIGN OWNERSHIP AND ARE REDEEMABLE BY THE CORPORATION UPON THE OCCURRENCE OF
CERTAIN EVENTS AS SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATION, AS AMENDED FROM TIME TO TIME (A COPY OF WHICH MAY BE OBTAINED BY
REQUEST TO THE CORPORATION'S SECRETARY AT THE PRINCIPAL OFFICE OF THE
CORPORATION).
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED THE
CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM [ ] as tenants in common
TEN ENT [ ] as tenants by the entireties
JT TEN [ ] as joint tenants with right of survivorship
and not as tenants in common
<PAGE> 2
UNIF GIFT MIN ACT [ ] Custodian
--------------------------
(Cust) (Minor)
under Uniform Gifts to Minors Act [ ]
--------------
(State)
UNIF TRF MIN ACT [ ] Custodian (until age ______)
---------------------------
(Cust)
--------- under Uniform Transfers
(Minor)
to Minors Act ________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OR ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Date
X
X
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By ___________________________
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C.
RULE 17AD-15.
<PAGE> 1
EXHIBIT 10.37
CONSULTING AGREEMENT
This Agreement is made as of _____________, 1999 by and between ACME
Communications, Inc., a Delaware corporation (the "Company") and Jamie Kellner,
("Executive").
RECITALS
A. The Company wishes to engage Executive's services as a consultant to
the Company and Executive is willing to undertake such engagement on the terms
and conditions set forth herein.
In consideration of the premises, the parties agree as follows:
1. CONSULTING.
The Company hereby engages Executive as a consultant to perform such
management and executive duties on behalf of the Company as the Board of
Directors of the Company may from time to time determine. Consultant title will
be "Chairman and Chief Executive Officer" and he will be free to control the
time and manner in which he performs his duties.
2. DUTIES.
Executive hereby accepts such engagement and agrees that throughout the
period of his employment hereunder, he will devote such of his time, attention,
knowledge and skills necessary to faithfully, diligently and to the best of his
ability acquit his responsibilities in furtherance of the business of the
Company. There is no minimum time commitment required hereunder. Executive
acknowledges that he is an independent contractor and agrees to be responsible
for payment of all taxes due on the payments to him hereunder and to file any
necessary state and federal tax forms and returns in connection therewith.
3. TERM.
Executive will be employed until June 16, 2002, unless Executive's
employment is terminated before that date pursuant to the provisions hereof or
extended in accordance with the next sentence. The Company will have the option
to extend the term of Executive's employment until September 29, 2003. The
Company must give Executive notice of its exercise of its extension option by
March 16, 2002. If the extension option is exercised, Executive's then current
Base Salary would be increased by 10% for the period of the extension. If the
extension option is not exercised, vesting of all of Executive's options granted
as of the date this Agreement becomes effective will accelerate and become
immediately exercisable on June 16, 2002.
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<PAGE> 2
4. COMPENSATION.
As compensation for his services hereunder, the Company will pay
Executive the following:
4.1 CONSULTING FEES. For 1999, Executive's annual consulting fee will
be $175,000. On January 1, 2000, Executive's annual consulting fee will increase
to $250,000 payable semi-monthly. Beginning January 1, 2000, Executive's annual
consulting fee will increase annually as of January 1 by the amount of the
increase in the Consumer Price Index (All Urban Consumers) during the previous
year, and (b) will be reviewed annually by the Company's Compensation Committee
to determine whether an additional increase is appropriate.
4.2 PERFORMANCE BONUS. The Company's Compensation Committee will
recommend to the Company's Board of Directors for the Board's adoption no later
than November 30, 1999 a cash incentive plan under which Executive will be
eligible to receive awards. No later than January 1, 2000, Executive will be
awarded cash incentives under such plan if Executive meets performance targets
during fiscal 2000.
4.3 OTHER BONUSES.
(a) On January __, 2000, Executive will receive a $1,070,000
special, one-time bonus.
(b) Executive will be eligible to receive additional annual
bonuses to the extent, if any, awarded by the Company's
Compensation Committee.
4.4 ADDITIONAL BENEFITS. Executive will be provided a leased vehicle to
be acquired in a "trade deal" (i.e. non-cash); provided, however, that the
Compensation Committee will have the discretion to determine the value of such
trade deal.
5. REIMBURSEMENT.
The Company will reimburse Executive for all expenses reasonably
incurred by him in connection with the performance of his duties hereunder or in
the business of the Company.
6. NON-COMPETITION AND BUSINESS OPPORTUNITIES.
6.1 COMPETITIVE ENTERPRISE. While rendering services to the Company,
and for a period of twelve (12) months after termination of consultant status
for any reason, Executive must not, without the express written consent of the
Board, directly or indirectly, engage in any activity that is, or participate or
invest in or assist (whether as owner, part-owner, stockholder, partner,
director, officer, trustee, employee, agent, independent contractor or
consultant, or in any other capacity) a Competitive Enterprise. "Competitive
Enterprise" means any entity that operates television stations, cable
distribution systems or other video broadcast or distribution enterprises
exclusively in a designated market area ("DMA") where the Company or any
affiliate (as defined in the Securities Exchange Act of 1934) of the Company
owns and/or operates stations.
6.1.1 EXCEPTIONS. Notwithstanding the foregoing, nothing in this
Section 6 will prohibit Executive, after termination of Executive's consultant
status, from
2
<PAGE> 3
engaging in any activity on behalf of, or being employed in any capacity by, a
group television station operator so long as no more than 5% of such operator's
revenues result from a Competitive Enterprise. Executive must not, until July 1,
2000, own any equity interests in any privately-held television enterprise or
more than 5% of the equity interests in any publicly-held television enterprise
if, in either case, such enterprise is engaged in a Competitive Enterprise.
6.1.2 CORPORATE OPPORTUNITY. Executive agrees, while serving as an
officer of the Company, to offer or otherwise make known or available to the
Company without compensation or consideration, any business prospects, contracts
or other business opportunities that Executive may discover, find, develop or
otherwise have available to acquire, own or manage any television stations,
cable distribution systems or other video broadcast or distribution enterprises
that could deliver WB Network programming for DMAs 20 to 100, excluding any Web
Network opportunities controlled by The WB Network and/or Time Warner (such
prospects, contracts or opportunities are referred to as "Television Station
Opportunities"), and further agrees that any such Television Station
Opportunities will be the property of the Company; provided, however, that, the
following will be excluded from Television Station Opportunities:
(a) the ownership and development of certain construction permits
resulting from the applications for spectrum allocation
requests identified on Schedule 6.1.2;
(b) opportunities presented by Executive to unaffiliated third
party entities in which Executive does not then have, and does
not during the term of this Agreement acquire, any equity
interest or other investment or any type of incentive phantom
equity or other compensation arrangement; and
(c) opportunities by an entity in which Executive has, or may in
the future acquire, any equity interest or investment or any
type of incentive, phantom equity or other compensation
arrangement (a "Kellner Affiliate") so long as
(i) Executive is not and does not become the chairman or chief
executive officer of such entity;
(ii) the Company has rejected such opportunity in writing
within seven (7) business days of receipt of Executive's
written notice to the Company of such opportunity; and
(iii) the entity acquires the opportunity at a purchase price
and on all other terms no more favorable to such third party
than those that were offered to the Company; and
(iv) the Company is given the opportunity to acquire up to 30%
of Executive's interests in such Kellner Affiliate on
substantially the same terms offered to Kellner.
3
<PAGE> 4
6.1.3 NON-SOLICITATION. Executive must not, until the second
anniversary his employee status is terminated, whether on behalf of a
Competitive Enterprise or otherwise, hire or attempt to hire any officer or
other senior employee of the Company or any affiliate of the Company or
encourage any officer or other senior employee of the Company or any affiliate
of the Company to terminate his or her relationship with the Company or any
affiliate of the Company.
7. TERMINATION.
7.1 DEATH; DISABILITY. If Executive's consulting services are
terminated by reason of Executive's death or disability, Executive or his estate
will be entitled to one year's severance, based upon the Consulting Fee in
effect at the date of termination, payable in monthly installments in advance.
7.2 WITHOUT CAUSE. If Executive's engagement is terminated by the
Company, without Cause, as that term is defined below, he will be entitled to
receive severance for a period of 18 months, based upon his Consulting Fee in
effect at the time of his termination, payable in monthly installments in
advance.
RESIGNATION; FOR CAUSE. If Executive's engagement is terminated as a
result of his resignation, termination for Cause, he will not be entitled to any
severance payments.
7.3 CAUSE DEFINED. "Cause" will be determined by the Board and will
mean: (A) the conviction of Executive of, or a plea of guilty or nolo contendere
entered by or on behalf of Executive with respect to, a felony or crime, where
such felony or crime involves moral turpitude or where such conviction or plea
is likely to have a material adverse effect on the Company or upon the
Executive's ability to perform his duties as an Executive of the Company; (B)
fraud, embezzlement or other act of dishonesty by Executive with respect to the
Company; (C) the continued willful refusal or neglect of Executive to perform or
discharge any substantial portion of his duties and responsibilities for a
period in excess of thirty (30) days, which willful refusal or neglect continues
for an additional thirty (30) day after written notice to the Executive from the
Company with regard thereto; (D) intentional and willful violation by Executive
of any rule, regulation or policy of the Federal Communications Commission
("FCC") that would reasonably be expected to (i) result in a material loss to
the Company, (ii) result in the termination, cancellation or suspension of any
of the Company's material FCC licenses or permits, or (iii) otherwise have a
material adverse effect on the Company's business or financial condition; or
(iv) the material breach (after expiration of any notice and cure period) of
this Agreement.
8. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES.
Executive represents and warrants to the Company that: (A) the
Executive has the unfettered right to enter into this Agreement on the terms and
subject to the conditions hereof and (B) neither the execution and delivery of
this Agreement nor the performance by Executive of any of Executive's
obligations hereunder constitute or will constitute a violation or breach of
4
<PAGE> 5
or a default under any agreement, arrangement or understanding or any other
restriction of any kind to which Executive is a party or by which Executive is
bound.
9. INSURANCE
The Company will have the right to take out life, health, accident,
"Key-man" or other insurance covering Executive in the name of the Company and
at the Company's expense in any amount deemed appropriate by the Company.
Executive will assist the Company in obtaining such insurance, including, but
not limited to, submitting to any reasonably required medical examination.
10. LIMITATION ON SEVERANCE PAYMENT
If the vesting of any options or other awards granted to Executive
under any incentive plan upon a change in control event (as defined under the
Company's 1999 Stock Incentive Plan) together with all other payments and the
value of any benefit received or to be received by Executive would result in all
or a portion of such payments to be subject to excise tax under Section 4999 of
the Internal Revenue Code (the "Code"), then Executive's payments will be either
(a) the full payments or (b) such lesser amount that would result in no portion
of the payments being subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable Federal,
state, and local employment taxes, income taxes, and the excise tax imposed by
Section 4999 of the Code, results in the receipt by Executive, on an after-tax
basis, of the greatest amount of the payments notwithstanding that all or some
portion of the payments may be taxable under Section 4999 of the Code. Executive
will be entitled to receive the foregoing full payments, however, only if the
excess of (c) the "parachute payments" as defined in Section 280G(b)(2) of the
Code, over (d) 2.99 times Executive's "base amount" as defined in Section
280G(b)(3) of the Code exceeds the sum of (x) the greater of (i) $100,000 or
(ii) ten (10) percent of the payments under this Agreement plus (y) the excise
tax imposed under Section 4999 of the Code, plus (z) the applicable federal,
state, and local employment taxes and income taxes imposed on the excess of (i)
the "parachute payments" as defined in Section 280G(b)(2) of the Code, over (ii)
2.99 times Executive's "base amount" as defined in Section 280G(b)(3) of the
Code. All determinations required to be made under this Section will be made by
any nationally recognized accounting firm that is the Company's outside auditor
at the time of such determination (the "ACCOUNTING FIRM"). The Company will
cause the Accounting Firm to provide detailed supporting calculations of its
determinations to the Company and Executive. Notice must be given to the
Accounting Firm within fifteen (15) business days after an event entitling
Executive to a payment under this Agreement. All fees and expenses of the
Accounting Firm will be borne solely by the Company. The Accounting Firm's
determinations must be made with substantial authority (within the meaning of
Section 6662 of the Code).
5
<PAGE> 6
11. OWNERSHIP OF WORK PRODUCT.
If Executive conceives of, discovers, invents or creates inventions,
improvements, new contributions, literary property, material, ideas and
discoveries, whether patentable or copyrightable or not that relate exclusively
to the business of the Company as opposed to other broadcasters (all of the
foregoing being collectively referred to herein as "WORK PRODUCT"), unless
Company otherwise agrees in writing, all of the foregoing will be owned by and
belong exclusively to Company and Executive will have no personal interest
therein, if they are either related exclusively to the business of the Company
as opposed to other broadcasters, or are conceived or made on solely Company's
time or with the use of Company's facilities or materials. Executive will
further, unless Company otherwise agrees in writing, (a) promptly disclose any
such Work Product to Company; (b) assign to Company, upon request and without
additional compensation, the entire rights to such Work Product and business
opportunities; (c) sign all papers necessary to carry out the foregoing; and (d)
give testimony in support of Executive's inventorship or creation in any
appropriate case. Executive will not to assert any rights to any Work Product as
having been made or acquired by Executive before the date of this Agreement
except for Work Product, if any, disclosed to and acknowledged by Company in
writing before the date of this Agreement.
12. CONFIDENTIALITY.
Executive will hold all Confidential Information in a fiduciary
capacity for the benefit of the Company. After termination of Executive's
employment, Executive will not, without the prior written consent of the Company
or as may otherwise be required by law or legal process, communicate or divulge
any such Confidential Information to anyone other than the Company and those
designated by it.
13. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings among the parties or any of them. There are no representations,
warranties, agreements or understandings other than those expressly contained
herein. No termination, alteration, modification, variation or waiver of this
Agreement or any of the provisions hereof shall be effective unless in writing
and signed by the party against whom enforcement thereof is sought.
14. NOTICE.
Any notice required, permitted or desired to be given pursuant to any
of the provisions of this Agreement shall be deemed to have been sufficiently
given or served for all purposes if sent by certified or registered mail, return
receipt and postage prepaid, hand delivered, overnight delivery service or sent
by telephone facsimile as follows:
6
<PAGE> 7
If to the Company, to it at:
ACME Communications, Inc.
2101 E. Fourth Street, Suite 202
Santa Ana, CA 92705
Attention: Tom Allen
Facsimile No.: (714) 245-9494
If to Executive, to him at:
----------------------------------
----------------------------------
Either of the parties may at any time and from time to time change the address
to which notice shall be sent hereunder by notice to the other party given under
this Section. The date of the giving of any notice sent by mail will be the date
of the posting of the mail; by any other means of delivery it shall be the date
of receipt.
15. ASSIGNMENT.
Neither this Agreement nor the right to receive any payments hereunder
may be assigned by Executive or Company.
16. WAIVER.
No course of dealing nor any delay on the part of the Company in
exercising any rights hereunder will operate as a waiver of any such rights. No
waiver of any default or breach of this Agreement will be deemed a continuing
waiver or a waiver of any other breach or default.
17. GOVERNING LAW.
This Agreement will be governed by and construed in accordance with the
laws of the State of California applicable to agreements executed and to be
performed entirely therein.
18. SEVERABILITY.
Should any clause, section or part of this Agreement be held or
declared to be void or illegal for any reason, all other clauses, paragraphs or
parts of this Agreement which can be effected without such illegal clause,
paragraph or part shall nevertheless remain in full force and effect. If, in the
opinion of any court, any clause, section or part of this Agreement is
unreasonable or unenforceable, such court shall have the right, power and
authority to excise or modify such provisions, or portions thereof, of this
Agreement as the court shall find not be reasonable or enforceable and to
enforce the remainder of such clause, section or part as so excised or modified.
7
<PAGE> 8
19. BINDING EFFECT.
This Agreement will be binding upon and inure to the benefit of the
Company, Executive and Executive's heirs and personal representatives.
20. HEADINGS.
The headings of the sections of this Agreement are inserted for
convenience only and do not constitute a part hereof or affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first above written.
ACME Communications, Inc.
- --------------------------------
By: Thomas D. Allen
Chief Financial Officer
- --------------------------------
Jamie Kellner
8
<PAGE> 1
EXHIBIT 10.52
EMPLOYMENT CONTRACT
THIS AGREEMENT made as of this 27th day of September 1999, by and
between ACME TELEVISION, LLC, a Delaware Limited Liability Company ("ACME") and
Edward Danduran, a resident of Irvine, California (hereinafter "Executive").
In consideration of the mutual covenants contained herein, the parties,
intending to be legally bound, agree as follows:
1. Employment:
(a) In accordance with the terms and conditions of this Agreement,
Executive agrees to render exclusively to ACME his services as Vice
President / Controller and to perform such supervisory or executive
duties on behalf of ACME, as may be directed by ACME (referred to
herein as "Services"). Executive agrees to render the Services
conscientiously and to the best of Executive's ability. Executive shall
serve in the same officer capacity for ACME's affiliates - ACME
Communications, Inc. and ACME Intermediate Holdings, LLC - although his
sole compensation for such services shall be as contained herein.
(b) During the term of employment, the Executive agrees that he shall
devote his exclusive time and energies to the Services on behalf of
ACME as described herein.
(c) Employee is not required to relocate to any location outside of
Orange County, California.
2. Term: The term of employment under this agreement shall commence as of
September 27, 1999, and shall continue through December 31, 2002, unless sooner
terminated as provided herein.
3. Compensation:
(a) Executive's annual salary, so long as Executive remains employed
pursuant to this Agreement, shall be as follows:
September 27, 1999 through December 31, 1999 $115,000
January 1, 2000 through December 31, 2000 $125,000
January 1, 2001 through December 31, 2001 $135,000
January 1, 2002 through December 31, 2002 $145,000
(b) In addition, Executive shall be entitled to receive a discretionary
annual short-term incentive compensation bonus of up to twenty percent
(20%) of his base salary. In determining the Executive's bonus for each
year, his individual performance and ACME's achieving of its annual
bonuses shall be taken into consideration.
(c) Further, Executive shall be eligible to participate in ACME's
established stock option plan. The amount and terms of any option
grants may be determined by ACME in its sole discretion.
(d) The Executive shall be provided a major medical plan, four weeks
vacation per year, and shall be eligible to participate in a 401(k)
plan pursuant to the terms of the plan adopted by ACME.
<PAGE> 2
4. Inability to Perform: In the event of Executive's incapacity, after a period
of 90 days following such incapacity, ACME may, for any period of such
incapacity or inability to perform, suspend the performance of services
hereunder, and/or reduce Executive's compensation hereunder on a pro rata basis
and/or ACME may, by so notifying Executive during or within a reasonable time
after such period of incapacity, terminate this Agreement effective immediately
with no further liability to Executive. As used herein, "incapacity" shall mean
any material, physical, mental or other condition which renders Executive
incapable of performing his or her duties as a key management employee.
5. Restriction on Competition:
(a) In consideration of ACME's entering into this Agreement, Executive
agrees that during the period of his employment hereunder, and for a
period of 12 months after the expiration or earlier termination of this
Agreement, Executive will not, on his own account or on behalf of any
other person or entity, directly or indirectly: (i) solicit, induce or
encourage any person who is an employee of ACME or an affiliate thereof
to terminate his or her employment or other contractual relationship
with ACME or any of its affiliates; (ii) solicit, induce or encourage
any person under contract with ACME or any of its affiliates to
discontinue, terminate, cancel or refrain from entering into a renewal
of such contractual relationship with ACME or any of its affiliates; or
(iii) directly or indirectly own, manage, operate, control, participate
in, invest in (other than investments of less then 5% of any publicly
traded company) or otherwise be connected with, in any manner, whether
as an officer, director, employee, partner, advisor, investor or
otherwise, any business entity which owns, manages, operates, controls
or is otherwise connected with, in any manner, a television station in
any DMA (as defined by Nielsen) then served by a television station
then owned by ACME or any of its affiliates.
(b) Executive agrees that the foregoing restrictions are reasonable and
necessary to protect and preserve the full economic benefit for which
ACME has bargained in this agreement and to protect the legitimate
interest of ACME in preserving the relationship which is established
between ACME and its other employees. Employee further agrees that the
foregoing restrictions are reasonable in all respects, including
duration, geographic scope and scope of activity, and are a material
part of the consideration passing to ACME pursuant to this agreement.
(c) Executive further agrees that, in the event of a breach by
Executive of the restrictions on competition set forth in this
paragraph, ACME will suffer irreparable injury that cannot be
adequately compensated by monetary damages alone. The Executive agrees
that ACME, in lieu of or in addition to the remedy of monetary damages,
shall have the right to injunctive relief prohibiting the Executive
from breaching the restrictions on competition. The Executive also
agrees that the Executive will be fully able to earn an adequate
livelihood for the Executive and Executive's dependents if the
restrictions on competition should be specifically enforced against
him.
(d) The period of non-competition referred to herein shall be extended
by the length of time during which the Executive shall have been found
to be in breach.
(e) The covenants contained in this paragraph shall be construed as
agreements independent of any other provisions of this Agreement. The
<PAGE> 3
obligations hereunder shall survive the term of this Agreement. The
existence of any claim or cause of action by Executive against ACME,
whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by ACME of the covenant against
competition.
6. Property Rights. Any trade secrets (including customer lists and sales
information) inventions, improvements, developments or discoveries developed or
created by Executive (whether alone or with others) during the period of his
employment and related to the business of ACME ("Property"), shall become the
sole and exclusive property of ACME. Executive agrees to execute all documents
requested by ACME to vest in ACME the entire right, title and interest in any
such Property, and give ACME all assistance it reasonably requires to maintain
and protect ACME's rights therein.
7. Confidentiality. Executive shall maintain on a confidential basis all
information, knowledge and data relating to or concerned with ACME's and its
affiliates' operations, sales, business and affairs, and Property and he shall
not, at any time during the term or hereafter, use, disclose or divulge any such
information, knowledge, data or Property to any person, firm or corporation
other than to ACME or its designees, except with the express prior written
consent of ACME.
8. Termination.
(a) ACME shall have the right to terminate this Agreement immediately
upon the death of the Executive. In the event of termination upon death
of the Executive, ACME shall pay the lesser of six months salary or the
salary through the end of the term of the Agreement, to Executive's
estate.
(b) ACME shall have the right to terminate this Agreement for "cause".
"Cause" shall include, without limitation, Executive's breach of any
material provision of this Agreement; Executive's willful or repeated
failure to comply with ACME's policies, rules and procedures as
established from time to time; Executive's willful or repeated failure
to perform assigned responsibilities, or to comply with job
instructions received; or any conduct, off duty or on duty, of
Executive which, in ACME's reasonable judgment, may bring public
discredit or economic injury to ACME.
(c) ACME shall further have the right to terminate this Agreement
without cause in the event that ACME determines that Executive's work
is unsatisfactory or otherwise does not meet the expectations of ACME.
If Executive is terminated pursuant to this provision, then and only
then, Executive shall receive severance pay equivalent to ten weeks'
pay and one additional week's pay for each year of service with ACME
(up to a maximum total of 12 weeks severance).
(d) Nothing in sections (b) and (c) above shall be construed to
required ACME to notify the Executive prior to termination of any basis
for that Executive's Termination or to provide any opportunity for such
Executive to "cure" performance problems.
(e) In the event that ACME terminates Executive's employment without
cause, or the Executive resigns in connection with a relocation of the
his position and the corporate office outside Orange County,
California, then ACME shall pay to Executive his then current base
salary for the shorter period of (a) the
<PAGE> 4
remaining term of this agreement or (b) one year. Any payments under
this section shall be subject to mitigation by Executive.
9. Freedom to Contract: Executive represents and warrants that Executive has the
right to enter into and perform this Agreement, that Executive neither has made,
nor will make, any contractual or other commitments which would conflict with
the performance of Executive's obligations under this Agreement, and that
Executive will neither do any acts nor enter into any commitments in derogation
of the rights granted in this Agreement.
10. Choice of Law: This contract will be construed in accordance with the laws
of the State of California relating to contracts made and to be fully performed
therein.
11. Waiver of Breach: A waiver by either party of any term or condition of this
Agreement in any instance shall not be deemed or construed to be a waiver of
such term or condition for the future, or any subsequent breach thereof. All
remedies, rights, undertakings, obligations and agreements contained herein
shall be cumulative, and none of them shall be in limitation of any other
remedy, right, undertaking, obligation or agreement.
12. Assignment. It is the intention of the parties hereto that the Executive
remain employed pursuant to the provisions hereof by any successor of ACME,
whether by merger, consolidation, acquisition of all or substantially all of the
business or assets, or otherwise, and ACME shall have the right to assign this
Agreement to any such successor.
13. Invalid Provision: The invalidity or unenforceability of any particular
clause, term or provision of this Agreement shall not affect the validity or
enforceability of any other clause, term or provision hereof. If, in the opinion
of any court, any clause, term or provision of this Agreement is found to be
unreasonable or unenforceable, such court shall have the right, power and
authority to excise or modify such provisions, or portions thereof, as the court
deems necessary and to enforce the remainder of such clause, term or provision
as so excised or modified.
14. Notices. Any notices required or permitted to be given under this Agreement
shall be in writing, and shall be deemed given upon receipt if sent by certified
or registered mail, return receipt requested, and postage prepaid, hand
delivered, or via overnight delivery service which provides a receipt. All such
notices shall be addressed as follows:
If to ACME: Thomas D. Allen
Executive Vice President
2101 E. Fourth St., Suite 202
Santa Ana, CA 92705
If to Executive: Edward Danduran
19 Rockwren
Irvine, CA 92715
Either of the parties hereto may at any time change the address to
which notice shall be sent by providing notice to the other party as required
hereunder.
<PAGE> 5
15. Entire Agreement. This Agreement comprises the entire understanding of the
parties hereto with regard to the employment by ACME of Executive, all prior
negotiations having been incorporated herein. This Agreement may not be modified
except in writing signed by the party against whom enforcement is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EXECUTIVE:
---------------------------------------------
Edward Danduran
ACME TELEVISION, LLC
By:
-----------------------------------------
Executive Vice President
<PAGE> 1
EXHIBIT 10.72
STOCKHOLDER AND VOTING AGREEMENT
THIS STOCKHOLDER AND VOTING AGREEMENT (this "AGREEMENT") is
entered into as of September __, 1999, by and among ACME Communications, Inc., a
Delaware corporation (the "COMPANY"), Jamie Kellner, Doug Gealy, Thomas Allen,
Michael Roberts, Thomas Embrescia, BancBoston Ventures, Inc., a Massachusetts
corporation ("BANCBOSTON"), CEA Capital Partners USA, L.P., a Delaware limited
partnership ("CEA CAPITAL"), CEA Capital Partners USA CI L.P., a Cayman Islands
limited partnership ("CEA CAPITAL CI"), Alta Subordinated Debt Partners III,
L.P., a Delaware limited partnership ("ALTA SDP"), Alta Comm S by S, LLC, a
Delaware limited liability company ("ALTA SS"), Alta Communications VI, L.P. a
Delaware limited partnership ("ALTA VI"), and TCW Shared Opportunity Fund II,
L.P., a Delaware limited partnership ("TCW SHOPII"), TCW Leveraged Income Trust,
L.P., a Delaware limited partnership ("TCW-LINC") (collectively, BancBoston, CEA
Capital, CEA Capital CI, Alta SDP, Alta SS, Alta VI, TCW SHOPII and TCW-LINC,
the "INVESTOR STOCKHOLDERS" and each an "INVESTOR STOCKHOLDER").
RECITALS
A. The Company expects to commence the initial public offering
of approximately 5,000,000 of its shares of common stock to the public (the
"IPO").
B. In connection with the IPO and the corporate reorganization
before the IPO, the Company has filed both a Form 316 "short-form" application
and a Form 315 "long-form" application with the Federal Communications
Commission (the "FCC"), for which approval for the former has been granted by
the FCC subject to any appeals or reconsideration thereof and to the
consummation of this Agreement.
C. In connection with the proposed reorganization, the IPO,
the Form 316 application and the Form 315 application, the parties have agreed
to enter into this Agreement upon the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the promises made in this
Agreement, the parties hereby agree as follows:
1. ELECTION OF DIRECTORS
1.1 ELECTION OF MANAGEMENT DIRECTORS. Upon the effectiveness of the
Agreement and Plan of Reorganization relating to the Capitalization of
ACME Communications, Inc. entered into as of September __, 1999 by and
among the parties listed on the signature pages thereof (the "PLAN"),
and until the termination of this Agreement,
<PAGE> 2
each Investor Stockholder agrees to vote or cause to be voted all of
the shares of any class of the Company's capital stock that it owns or
for which it controls the vote in favor of the election to the board of
directors of the Company of each of Jamie Kellner, Doug Gealy and
Thomas Allen (collectively, Jamie Kellner, Doug Gealy and Thomas Allen,
the "MANAGEMENT DIRECTORS").
1.2 ELECTION OF MANAGEMENT DIRECTOR DESIGNEES.
1.2.1 Upon the effectiveness of the Plan, and until the termination
of this Agreement, each Investor Stockholder agrees to vote or
cause to be voted all of the shares of any class of the
Company's capital stock that it owns or for which it controls
the vote in favor of the election to the board of directors of
each of two individuals designated by the Management Directors
(the "MANAGEMENT DIRECTOR DESIGNEES"). Each Management
Director Designee must be qualified to serve as a director
under the Communications Act of 1934, as amended, and the
Commission's rules and no Management Director Designee may be
in privity of contract with any Management Director or any of
their affiliates. The initial Management Director Designees
are Michael Roberts and Thomas Embrescia.
1.2.2 Upon a vacancy in the directorship by either Management
Director Designee during the term of this Agreement, the
Management Directors must notify each of the Investor
Stockholders in writing of the identity of the individual
designated to fill such vacancy (a "DESIGNATION NOTICE") and
the Investor Stockholders will take any action necessary to
cause such designee to be elected as a director to fill such
vacancy within 30 days after receipt of a Designation Notice.
1.2.3 Each Investor Stockholder hereby approves Michael Roberts and
Thomas Embrescia as the initial Management Director Designees.
1.3 NUMBER OF DIRECTORS. During the term of this Agreement, none of the
Investor Stockholders, the Management Directors or Michael Roberts or
Thomas Embrescia will vote or cause to be voted any of the shares of
any class of the Company's capital stock that it or he owns or for
which it or he controls the vote in favor of the election to the
Company's board of directors of any person that is not nominated by a
Management Director or whose election to the board of directors would
cause there to be more than five members of the board of directors.
1.4 VISITATION RIGHTS. During the term of this Agreement, the Company will
invite and permit a representative of each of the Investor Stockholders
to attend, but not vote at, board and significant (including, without
limitation, compensation and audit) committee meetings.
2
<PAGE> 3
2. APPROVAL RIGHTS.
The Company will not engage in any of the following matters without the
written consent of at least 60% in interest of the Investor Stockholders:
2.1 REDEMPTION. The redemption, purchase or other acquisition for value of
any of its capital shares, or other type of equity interest of the
Company or of any of its subsidiaries, or securities convertible or
exchangeable or exercisable for capital shares or other types of equity
interest ("CONSOLIDATED GROUP SECURITIES") of the Company or of any of
its subsidiaries.
2.2 AUTHORIZATION; ISSUANCE. The authorization of any new class or series
or the authorization or issuance of any additional shares of capital
stock of the Company or capital stock or membership units of any of its
subsidiaries, except in connection with options granted under any
option plan of the Company.
2.3 INCREASE OR DECREASE OF CAPITAL SHARES. The increase or decrease of the
total number of authorized shares of capital stock of the Company or
Consolidated Group Securities.
2.4 DIVIDEND. The payment or declaration of any dividend or distribution
with respect to any shares of capital stock of the Company or
Consolidated Group Securities.
2.5 MERGERS. 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).
2.6 REORGANIZATIONS. The authorization of the reorganization or sale of the
Company or any of its material subsidiaries or the sale of any material
assets of the Company or any of its material subsidiaries.
2.7 RECLASSIFICATION. The authorization of any reclassification or
recapitalization of the outstanding shares of capital stock of the
Company or other Consolidated Group Securities.
2.8 OTHER BUSINESS. The 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.
2.9 ALTERATION OF ORGANIZATIONAL DOCUMENTS. The alteration, modification or
amendment of the Company's bylaws or certificate of incorporation.
2.10 BANKRUPTCY. 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; the admission in writing by the Company of its
inability to pay its debts as they mature; the making by the Company of
a general assignment for the benefit of creditors; or 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
3
<PAGE> 4
answer from the Company admitting the material allegations of a
petition filed against it in any proceeding under any such law.
2.11 INCURRENCE OF SUBSTANTIAL DEBT. The direct or indirect incurrence,
creation, or assumption (collectively "INCURRENCE"), of any
Indebtedness (as that term is defined herein) or liability.
Notwithstanding the foregoing, the Company will be able to Incur any
applicable Indebtedness that ACME Television Holdings, LLC ("HOLDINGS")
could have incurred pursuant to Section 4.1 of Holdings' Amended and
Restated Investment and Loan Agreement dated June 17, 1997, as amended
and restated on September 30, 1997 (the "INVESTMENT AND LOAN
AGREEMENT").
2.12 SIGNIFICANT CAPITAL EXPENDITURES. The making or incurrence of any
Capital Expenditures in excess of $1,250,000 in each of 1999, 2000 and
2001.
2.13 EVENT REQUIRING FCC APPROVAL. The occurrence of any event that requires
the Company to file with the FCC a transfer application on Form 315 in
accordance with the Communications Act of 1934, as amended, and the
rules and regulations thereunder (the "COMMUNICATIONS ACT") and the
rules and polices of the FCC.
2.14 SIGNIFICANT ACQUISITIONS OR DISPOSITIONS. The purchase, acquisition,
sale, transfer, lease or other disposition of any FCC licenses,
broadcast television stations, or any other broadcast properties or
other assets at a price in excess of $2,000,000, other than in the
ordinary course of business.
2.15 CHANGES IN SENIOR MANAGEMENT OR SENIOR MANAGEMENT COMPENSATION. Any
change in the current management position of any member of management,
any change in compensation of any member of management or the
appointment of any person to any position vacated by any of the
Management Directors.
2.16 NO CONSENT FOR ACME REORGANIZATION. Notwithstanding the foregoing, no
approval will be required under this Agreement for any transactions in
connection with the Plan or any ancillary document thereto (including
any merger agreement or any exchange agreement).
3. OTHER VOTING
For any matters not covered by Section 2 of this Agreement upon which
the stockholders of the Company may properly vote, each Investor Stockholder and
each Management Director Designee hereby agrees to vote or cause to be voted all
shares of any class of the Company's capital stock that such Investor
Stockholder or Management Director Designee owns or for which it or he controls
the vote with and in the same manner as a majority of the Management Directors,
as such Management Directors vote in their capacities as stockholders of the
Company.
4
<PAGE> 5
4. TERMINATION
This Agreement and the obligations of the parties hereunder will
terminate upon final order by the FCC approving the Company's Form 315
"long-form" application and election of the designees to the Company's Board of
Directors in accordance with the Voting Agreement dated as of the date hereof
among the parties to this Agreement. Each of the Company, the Management
Directors and the Management Director Designees, in each of their respective
capacities as stockholders, directors and employees, as applicable, will use
their respective best efforts to diligently prosecute the Form 315 "long-form"
application with a view to the earliest practicable final order being issued
with respect thereof. The term "FINAL ORDER" means that action will have been
taken by the FCC (including action duly taken by its staff pursuant to delegated
authority) that has not been reversed, stayed, enjoined, set aside, annulled or
suspended, with respect to which no timely request for stay, petition for
rehearing, appeal or certiorari or sua sponte action of the FCC with comparable
effect is pending, and as to which the time for filing any such request,
petition, appeal, certiorari or for the taking of any such sua sponte action by
the FCC has expired or otherwise terminated.
5. DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined have
the following respective meanings:
"CAPITAL EXPENDITURES" means any payments that are made or liabilities
that are incurred by the Company for the lease, purchase, improvement,
construction or use of any Property, the value or cost of which under generally
accepted accounting principles is required to be capitalized and appears on the
Company's balance sheet in the category of property, plant or equipment, without
regard to the manner in which such payments or the instruments pursuant to which
they are made are characterized by the Company or any Person, and include,
without limitation, payments for or liabilities incurred with respect to the
installment purchase of Property and payments under Capital Leases.
"CAPITAL LEASE" means any lease of property (real, personal or mixed)
which in accordance with generally accepted accounting principles consistently
applied, would be capitalized on the lessee's balance sheet or for which the
amount of the asset and liability thereunder should be disclosed in a note to
such balance sheet as if so capitalized.
"INDEBTEDNESS" means with respect to any Person, (i) any liability,
contingent or otherwise, of such Person (A) for borrowed money (whether or not
recourse of the Investors is to the whole of the assets of such Person or only
to a portion thereof), (B) evidenced by a note, debenture or similar instrument
(including a purchase money obligation) given in connection with the acquisition
of any property or assets, (C) for any letter of credit or performance bond in
favor of such Person, (D) for the payment of money relating to a capitalized
lease obligation, or (E) any liability, contingent or otherwise, of such Person
to any other Person for any purchase price associated with any acquisition of
assets, business or otherwise (including any deferred purchase price, assumption
of Indebtedness, noncompetition payments or other forms of consideration); (ii)
any liability of others of the kind described in the preceding clause (i), which
the Person has guaranteed or which is otherwise its legal liability, contingent
or otherwise; (iii) any obligation secured by a Lien to
5
<PAGE> 6
which the property or assets of such Person are subject, whether or not the
obligations secured thereby will have been assumed by or will otherwise be such
Person's legal liability; (iv) all other items (except items of capital stock,
capital or paid-in surplus or of retaining earnings) which in accordance with
generally accepted accounting principles, would be included as a liability on
the balance sheet of such Person on the date of determination; and (v) any and
all deferrals, renewals, extensions or refinancing of, or amendments,
modifications of supplements to, any liability of the kind described in any of
the preceding clauses (i), (ii), (iii) or (iv).
"LIEN" means any interest in, or claim against, property relating to an
obligation owed to, or claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract, and
including but not limited to any security interest, lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes, any rights of first refusal,
charges, claims, liabilities, limitations, conditions, restrictions or other
adverse claims; provided, however, that "Lien" will not include the interest
retained by the lessor under a lease which is not a Capital Lease. For the
purposes of this Agreement, the Company will be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the property has
been retained by or vested in some other person or entity for security purposes
and such retention or vesting will be deemed to be a Lien.
"PERSON" means any individual, corporation, association, partnership
(general or limited), joint venture, trust, unincorporated organization, limited
liability company, and other entity or organization of any kind or any
government or any agency or political subdivision thereof.
"PROPERTY" means all types of real, personal, or mixed property and all
types of tangible or intangible property.
6. MISCELLANEOUS
6.1 NOTICES. All notices, demands and requests required by this Agreement
will be in writing and will be deemed to have been given for all
purposes: (a) upon personal delivery; (b) one day after being sent,
when sent by professional overnight courier service from and to
locations within the continental United States; (c) five days after
posting when sent by registered or certified mail; or (d) on the date
of transmission when sent by facsimile or telecopier, addressed to:
If to the Company:
Tom Allen
2101 E. Fourth Street, Suite 202
Santa Ana, California 92705
6
<PAGE> 7
With a copy to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street NW
Washington, DC 20037
Attention: Lewis Paper
And with a copy to:
O'Melveny & Myers LLP
1999 Avenue of the Stars
Suite 700
Los Angeles, CA 90067
Attention: Allison M. Keller
If to any other party, to the respective
address listed on the signature pages
hereto;
or to such other address or to such other person as either party will have last
designated by such notice to the other party.
6.2 SEVERABILITY. The provisions of this Agreement are severable. The
invalidity, in whole or in part, of any provision of this Agreement
will not affect the validity or enforceability of any other of its
provisions. If one or more provisions are declared invalid or
unenforceable, the remaining provisions will remain in full force and
effect and will be construed in the broadest possible manner to
effectuate the purposes hereof. The parties further agree to replace
such void or unenforceable provisions of this Agreement with valid and
enforceable provisions that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable
provisions.
6.3 AMENDMENT. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers of or consents to departures from
the provisions hereof may not be given, without the written consent of
each of the parties.
6.4 INJUNCTIVE RELIEF. Without intending to limit the remedies available to
the parties, the parties acknowledge that a breach of any of the
covenants contained in this Agreement may result in material
irreparable injury to the other parties for which there is no adequate
remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat
thereof, the other parties will be entitled to obtain a temporary
restraining order and a preliminary or permanent injunction restraining
or requiring actions prohibited or required by this Agreement or such
other relief as may be required to enforce specifically any of the
covenants of this Agreement.
6.5 GOVERNING LAW. This Agreement will be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware.
7
<PAGE> 8
6.6 SUCCESSORS. This Agreement will be binding upon and will inure to the
benefit of the parties hereto and will be binding upon and will inure
to the benefit of their respective successors and assigns. If any party
hereto sells, assigns or otherwise transfers any shares of the
Company's capital stock that such party owns or for which such party
controls the vote, then the individual or entity to whom such shares
was sold, assigned or otherwise transferred will be subject to the
obligations of this Agreement, but will not be entitled to designate
any individual for election to the board of directors or require any
party hereto to vote in a particular manner.
[Rest of Page Intentionally Left Blank]
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
JAMIE KELLNER
----------------------------------------
c/o ACME Communications, Inc.
2101 E. Fourth Street, Suite 202
Santa Ana, CA 92705
DOUG GEALY
----------------------------------------
c/o ACME Communications, Inc.
2101 E. Fourth Street, Suite 202
Santa Ana, CA 92705
THOMAS ALLEN
----------------------------------------
c/o ACME Communications, Inc.
2101 E. Fourth Street, Suite 202
Santa Ana, CA 92705
MICHAEL ROBERTS
----------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
S-1
<PAGE> 10
THOMAS EMBRESCIA
----------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
BANCBOSTON VENTURES, INC
By:
-------------------------------------
Name: Lars A. Swanson
Title: Vice President
c/o BancBoston Capital
175 Federal Street
Boston, Ma 02110
Attn: Sanford Anstey
Tel: (617) 434-2509
ALTA COMMUNICATIONS VI, L.P.
By: Alta Communications VI Management
Partners, L.P., its general partner
By:
------------------------------------
Name: Brian McNeill
Title: G.P.
c/o Alta Communications
One Post Office Square
Suite 3800
Boston, MA 02109
Attn: Brian W. McNeill
Tel: (617) 482-8020
Fax: (617) 482-1944
ALTA-COMM S BY S, LLC
By:
------------------------------------
Name: Brian McNeill, a member
c/o Alta Communications
One Post Office Square
Suite 3800
Boston, MA 02109
Attn: Brian W. McNeill
Tel: (617) 482-8020
Fax: (617) 482-1944
S-2
<PAGE> 11
ALTA SUBORDINATED DEBT PARTNERS III, L.P.
By: Alta Subordinated Debt Management
III, L.P., its general partner
By:
------------------------------------
Name: Brian McNeill
Title: G.P.
ACME COMMUNICATIONS, INC.
By:
------------------------------------
Name: Thomas D. Allen
Title: Chief Financial Officer
CEA CAPITAL PARTNERS USA, L.P.
By: CEA Management Corp.,
its authorized representative
By:
------------------------------------
Name: James J. Collis
Title: Executive Vice President
c/o CEA Capital Partners
17 State Street, 35th Floor
New York, NY 10004
Tel: (212) 425-1400
Fax: (212) 425-1420
CEA CAPITAL PARTNERS USA CI, L.P.,
A CAYMAN ISLANDS LIMITED PARTNERSHIP
By: CEA Management Corp.,
its authorized representative
By:
------------------------------------
Name: James J. Collis
Title: Executive Vice President
c/o CEA Capital Partners
17 State Street, 35th Floor
New York, NY 10004
Tel: (212) 425-1400
Fax: (212) 425-1420
S-3
<PAGE> 12
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management Company
as investment advisor
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
Trust Company of the West
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 90025
Attn: Darryl Schall
Tel: (310) 235-5917
Fax: (310) 235-5968
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Investment Management Company,
Its Investment Manager
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
TCW Advisers (Bermuda), Ltd.,
As General Partner
By:
-------------------------------------
Name:
Title:
Trust Company Of The West
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, Ca 90025
Attn: Darryl Schall
Tel: (310) 235-5917
Fax: (310) 235-5968
S-4
<PAGE> 1
EXHIBIT 10.73
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT") is entered into as of
September __, 1999, by and among Jamie Kellner, Doug Gealy, Thomas Allen,
(collectively, Jamie Kellner, Doug Gealy and Thomas Allen, the "MANAGEMENT
DIRECTORS" and each a "MANAGEMENT DIRECTOR"), Michael Roberts, Thomas Embrescia,
(collectively Michael Roberts and Thomas Embrescia, , the "SELLER DIRECTORS" and
each a "SELLER DIRECTOR"), BancBoston Ventures, Inc., a Massachusetts
corporation ("BANCBOSTON"), CEA Capital Partners USA, L.P., a Delaware limited
partnership ("CEA CAPITAL"), CEA Capital Partners USA CI L.P., a Cayman Island
limited partnership ("CEA CAPITAL CI"), Alta Subordinated Debt Partners III,
L.P., a Delaware limited partnership ("ALTA SDP"), Alta Comm S by S, LLC, a
Delaware limited liability company ("ALTA SS"), Alta Communications VI, L.P. a
Delaware limited partnership ("ALTA VI"), and TCW Shared Opportunity Fund II,
L.P., a Delaware limited partnership ("TCW SHOPII"), TCW Leveraged Income Trust,
L.P., a Delaware limited partnership ("TCW-LINC") (collectively, BancBoston, CEA
Capital, CEA Capital CI, Alta SDP, Alta SS, Alta VI, TCW SHOPII and TCW-LINC,
the "INVESTOR STOCKHOLDERS" and each an "INVESTOR STOCKHOLDER") and ACME
Communications, Inc. (the "COMPANY").
RECITALS
A. ACME Communications, Inc., a Delaware corporation (the "COMPANY")
expects to commence the initial public offering of approximately 5,000,000 of
its shares of common stock to the public (the "IPO").
B. In connection with the IPO and the corporate reorganization before
the IPO, the Company has filed both a Form 316 "short-form" application and a
Form 315 "long-form" application (the "Long-Form Application") with the Federal
Communications Commission (the "FCC").
C. In connection with the IPO and expiration of the Form 315
application, the parties have agreed to enter into this Agreement upon the terms
and conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the promises made in this
Agreement, the parties hereby agree as follows:
1. ELECTION OF DIRECTORS
1.1 ELECTION OF MANAGEMENT DIRECTOR DESIGNEES. During the Term:
1.1.1 Each Investor Stockholder, each Investor Stockholder Designee (as
defined below) and each Seller Director agrees to vote or cause to be
voted all of the shares of
<PAGE> 2
any class of the Company's capital stock that it or he owns or for
which it or he controls the vote in favor of the election to the board
of directors of each of three individuals designated by the Management
Directors (the "MANAGEMENT DIRECTOR DESIGNEES"). The initial Management
Director Designees are Jamie Kellner, Doug Gealy and Thomas Allen.
1.1.2 Upon a vacancy in the directorship by any Management Director
Designee during the term of this Agreement, a majority of the
Management Directors Designees may select a designee to fill such
vacancy. The Management Directors must then notify each of the Investor
Stockholders and Investor Stockholder Designees (only if such Investor
Stockholder Designee owns or controls the vote of any class of the
Company's common stock) and each Seller Director in writing of the
identity of the individual designated to fill such vacancy (a
"MANAGEMENT DESIGNATION NOTICE") and the Investor Stockholders and, if
applicable, the Investor Stockholder Designees in their respective
capacities as stockholders of the Company, and the Seller Directors
will take any action necessary to cause such designee to be elected as
a director to fill such vacancy within 30 days after receipt of a
Management Designation Notice.
1.1.3 Each Investor Stockholder and each Seller Director hereby
approves Jamie Kellner, Doug Gealy and Thomas Allen as the initial
Management Director Designees.
1.2 ELECTION OF INVESTOR STOCKHOLDER DESIGNEES. During the Term:
1.2.1 If the aggregate amount of common stock that is owned or for
which the vote is controlled by the Investor Stockholders is greater
than 20% of the outstanding capital stock of the Company, each
Management Director Designee and Seller Director agrees to vote or
cause to be voted all of the shares of any class of the Company's
capital stock that it or he owns or for which it or he controls the
vote in favor of the election to the board of directors of each of
three individuals designated by a majority in interest of the Investor
Stockholders (the "INVESTOR STOCKHOLDER DESIGNEES").
If the aggregate amount of common stock that is owned or for which the
vote is controlled by the Investor Stockholders equals 20% or less of
the outstanding capital stock of the Company, each Management Director
Designee and Seller Director agrees to vote or cause to be voted all of
the shares of any class of the Company's capital stock that it or he
owns or for which it or he controls the vote in favor of the election
to the board of directors of each of two Investor Stockholder
Designees.
If the aggregate amount of common stock that is owned or for which the
vote is controlled by the Investor Stockholders equals 10% or less of
the outstanding capital stock of the Company, each Management Director
Designee and Seller Director agrees to vote or cause to be voted all of
the shares of any class of the Company's capital stock that it or he
owns or for which it or he controls the vote in favor of the election
to the board of directors of one Investor Stockholder Designee.
2
<PAGE> 3
The initial Investor Stockholder Designees are Darryl Schall, Jim
Collis and Brian McNeill.
1.2.2 Upon a vacancy in the directorship by any Investor Stockholder
Designee during the term of this Agreement, a majority in interest of
the Investor Stockholders may select a designee to fill such vacancy.
The Investor Stockholders must then notify each Management Director and
each of the Management Director Designees (only if such Management
Director Designee owns or controls the vote of any class of the
Company's common stock) and each Seller Director in writing of the
identity of the individual designated to fill such vacancy (an
"INVESTOR DESIGNATION NOTICE") and the Management Directors and, if
applicable, the Management Director Designees in their respective
capacities as stockholders of the Company, and the Seller Directors
will take any action necessary to cause such designee to be elected as
a director to fill such vacancy within 30 days after receipt of an
Investor Designation Notice.
1.2.3 Each Management Director and Seller Director hereby approves
Darryl Schall, Jim Collis and Brian McNeill as the initial Investor
Stockholder Designees.
1.3 ELECTION OF SELLER DIRECTORS. During the Term:
1.3.1 Each Investor Stockholder, Investor Stockholder Designee,
Management Director and Management Director Designee agrees to vote or
cause to be voted all of the shares of any class of the Company's
capital stock that it or he owns or for which it or he controls the
vote in favor of the election to the board of directors of each of
Thomas Embresica and Michael Roberts.
1.3.2 Each Investor Stockholder and each Management Director hereby
approves Thomas Embresica and Michael Roberts as the Seller Directors.
1.3.3 If the amount of common stock that is owned or for which the vote
is controlled by either Seller Director equals 75% or less of the
capital stock of the Company that such Seller Director owned or for
which such Seller Director controlled the vote on the closing date of
the IPO, no Management Director, Management Director Designee, Investor
Stockholder or Investor Stockholder Designee will be required to vote
in favor of the election to the board of directors of such Seller
Director; provided, however, that nothing contained herein releases
such Seller Director from his voting obligations under this Agreement
so long as such Seller Director remains on the board of directors.
1.4 REMOVAL. Each Management Director, Management Director Designee,
Investor Stockholder, Investor Stockholder Designee and Seller Director
agrees during the Term not to vote for the removal as a Company
director of any other person who is or becomes a party to this
Agreement.
3
<PAGE> 4
1.5 VACANCIES. The Company agrees during the Term to use it best efforts to
ensure that there are enough vacancies on the Company's board of
directors for the persons voted in favor of election pursuant to this
Agreement.
2. TERM
2.1 The "Term" of this Agreement will commence on the date that the FCC's
final approval of the Long-Form Application is no longer subject to
appeal or reconsideration, and this Agreement and the obligations of
the parties hereunder will terminate on the second anniversary of the
closing date of the IPO, unless sooner terminated pursuant to the
provisions hereof.
3. MISCELLANEOUS
3.1 VISITATION RIGHTS. During the term of this Agreement, the Company will
invite and permit a representative of BancBoston to attend, but not
vote at, board and significant (including, without limitation,
compensation and audit) committee meetings as long as BancBoston owns
capital stock of the Company.
3.2 NOTICES. All notices, demands and requests required by this Agreement
will be in writing and will be deemed to have been given for all
purposes: (a) upon personal delivery; (b) one day after being sent,
when sent by professional overnight courier service from and to
locations within the continental United States; (c) five days after
posting when sent by registered or certified mail; or (d) on the date
of transmission when sent by facsimile with confirmation of receipt,
addressed to:
If to the Company:
Tom Allen
2101 E. Fourth Street, Suite 202
Santa Ana, California 92705
fax (714) 245-9494
If to any other party, to the respective address listed
on the signature pages hereto;
or to such other address or to such other person as any party will have last
designated by such notice to the other parties.
3.3 SEVERABILITY. The provisions of this Agreement are severable. The
invalidity, in whole or in part, of any provision of this Agreement
will not affect the validity or enforceability of any other of its
provisions. If one or more provisions are declared invalid or
unenforceable, the remaining provisions will remain in full force and
effect and will be construed in the broadest possible manner to
effectuate the purposes hereof, unless such change would adversely
affect one Group (defined below) vis-a-vis another Group, in which case
this Agreement will not be deemed severable. The
4
<PAGE> 5
parties further agree to replace such void or unenforceable provisions
of this Agreement with valid and enforceable provisions that will
achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provisions.
3.4 AMENDMENT. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers of or consents to departures from
the provisions hereof may not be given, without the written consent of
each of the parties.
3.5 INJUNCTIVE RELIEF. Without intending to limit the remedies available to
the parties, the parties acknowledge that a breach of any of the
covenants contained in this Agreement may result in material
irreparable injury to the other parties for which there is no adequate
remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat
thereof, the other parties will be entitled to obtain a temporary
restraining order and a preliminary or permanent injunction restraining
or requiring actions prohibited or required by this Agreement or such
other relief as may be required to enforce specifically any of the
covenants of this Agreement.
3.6 GOVERNING LAW. This Agreement will be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware.
3.7 ASSIGNMENT; SUCCESSORS. This Agreement may not be assigned by any party
within a Group (as defined below) without prior written consent of a
majority of the parties within each other Group, which consent must not
be unreasonably withheld. This Agreement will be binding upon and will
inure to the benefit of the parties hereto and will be binding upon and
will inure to the benefit of their respective successors and assigns.
"GROUP" means any of the (i) Management Directors plus Management
Director Designees, as a group, (ii) Investor Stockholders plus
Investor Stockholder Designees, as a group, and (iii) Seller Directors,
as a group.
[Rest of Page Intentionally Left Blank]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
JAMIE KELLNER
---------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
DOUG GEALY
---------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
THOMAS ALLEN
--------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
Michael Roberts
--------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
THOMAS EMBRESCIA
--------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
S-1
<PAGE> 7
DARRYL SCHALL
--------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
BANCBOSTON VENTURES, INC
By:
----------------------------
Name:
Title:
Address:
---------------------------------
---------------------------------
---------------------------------
ACME COMMUNICATIONS, INC.
By:
-----------------------------
Name: Thomas D. Allen
Title: Chief Financial Officer
S-2
<PAGE> 8
JIM COLLIS
--------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
BRIAN MCNEILL
--------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
c/o Alta Communications
One Post Office Square
Suite 3800
Boston, MA 02109
Attn: Brian W. McNeill
Tel: (617) 482-8020
Fax: (617) 482-1944
ALTA COMMUNICATIONS VI, L.P.
By: Alta Communications VI
Management Partners, L.P.,
its general partner
By:
-----------------------------
Name: Brian McNeill
Title: G.P.
c/o Alta Communications
One Post Office Square
Suite 3800
Boston, MA 02109
Attn: Brian W. McNeill
Tel: (617) 482-8020
Fax: (617) 482-1944
ALTA-COMM S BY S, LLC
By:
-----------------------------
Name: Brian McNeill, a member
c/o Alta Communications
One Post Office Square
Suite 3800
Boston, MA 02109
Attn: Brian W. McNeill
Tel: (617) 482-8020
Fax: (617) 482-1944
S-3
<PAGE> 9
ALTA SUBORDINATED DEBT
PARTNERS III, L.P.
By: Alta Subordinated Debt
Management III, L.P.,
its general partner
By:
------------------------------
Name: Brian McNeill
Title: G.P.
CEA CAPITAL PARTNERS USA, L.P.
By: CEA Management Corp.,
its authorized representative
By:
-----------------------------
Name: James J. Collis
Title: Executive Vice President
c/o CEA Capital Partners
17 State Street, 35th Floor
New York, NY 10004
Tel: (212) 425-1400
Fax: (212) 425-1420
CEA CAPITAL PARTNERS USA CI L.P.
By: CEA Management Corp.,
its authorized representative
By:
------------------------------
Name: James J. Collis
Title: Executive Vice President
c/o CEA Capital Partners
17 State Street, 35th Floor
New York, NY 10004
Tel: (212) 425-1400
Fax: (212) 425-1420
S-4
<PAGE> 10
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management
Company, its Investment Manager
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Address:
---------------------------------
---------------------------------
---------------------------------
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Investment Management
Company, its Investment Manager
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
TCW Advisers (Bermuda), Ltd.,
as General Partner
By:
------------------------------
Name:
Title:
Address:
---------------------------------
---------------------------------
---------------------------------
S-5
<PAGE> 1
EXHIBIT 23.1
The Board of Advisors
ACME Television Holdings, LLC:
The audits referred to in our report dated July 28, 1999, included the
related financial statement schedules as of December 31, 1998, and for each of
the years in the two-year period ended December 31, 1998, included in the
registration statement. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our audits. In our
opinion, such financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Los Angeles, California
September 24, 1999
