<PAGE>
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________
FORM 10-Q
QUARTERLY REPORT
Under
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
_____________
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarter ended September 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ___________ to ____________
Commission file number 1-10321
ACKERLEY COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 91-1043807
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
800 Fifth Avenue,
Suite 3770
Seattle, WA 98104
(206) 624-2888
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes X No ___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at November 1, 1994
- - ---------------------------- ------------------------------------------
Common Stock, $.01 par value 9,562,433 shares
Class B Common Stock, $.01 par value 5,901,861 shares
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993 . . . . 1
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994
AND SEPTEMBER 30, 1993 . . . . . . . . . . . . . 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994
AND SEPTEMBER 30, 1993. . . . . . . . . . . . . . 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. . . . 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . 5
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . 11
SIGNATURES. . . . . . . . . . . . . . . . . . . . 11
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 1994 and December 31, 1993
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------ ------------
<S> <C> <C>
ASSETS (In thousands)
Current assets:
Cash and cash equivalents $ 3,518 $ 6,732
Accounts receivable, net of allowance for
doubtful accounts of $978,000 in 1994
and $941,000 in 1993 37,312 37,237
Current portion of broadcast rights 5,523 4,605
Other current assets 8,303 7,625
---------- ----------
Total current assets 54,656 56,199
Property and equipment, net 62,162 61,616
Intangibles, net 38,802 31,769
Other assets 13,466 10,907
---------- ----------
Total assets $ 169,086 $ 160,491
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 5,919 $ 7,463
Accrued interest 7,372 3,979
Other accrued liabilities 5,589 8,721
Deferred revenue 15,044 11,504
Current portion of long-term debt 19,336 16,562
---------- ----------
Total current liabilities 53,260 48,229
Long-term debt - noncurrent portion 214,216 215,114
---------- ----------
Total liabilities 267,476 263,343
Stockholders' deficiency:
Common stock, $.01 par value; 50,000,000 shares
authorized, 10,937,379 shares issued at
September 30, 1994 (10,901,379 at December 31,
1993) and 9,562,433 shares outstanding at
September 30, 1994 (9,526,433 at December 31,
1993). 109 109
Class B common stock, $.01 par value; 6,972,230
shares authorized, 5,901,861 shares issued and
outstanding at September 30, 1994
(5,904,111 at December 31, 1993). 59 59
Capital in excess of par value 3,007 2,945
Deficit (91,476) (95,876)
Less common stock in treasury, at cost (10,089) (10,089)
---------- ----------
Total stockholders' deficiency (98,390) (102,852)
---------- ----------
Total liabilities and stockholders'
deficiency $169,086 $160,491
---------- ----------
---------- ----------
</TABLE>
1
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the periods ended September 30, 1994 and 1993
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1994 1993 1994 1993
------------- ------------ ------------- -------------
(In thousands except (In thousands except
per share amounts) per share amounts)
<S> <C> <C> <C> <C>
Revenue $ 44,125 $ 39,064 $ 146,903 $ 138,650
Less agency commissions
and discounts (6,143) (5,258) (17,627) (15,990)
-------- -------- --------- ---------
Net revenue 37,982 33,806 129,276 122,660
Expenses and other income:
Operating expenses (28,289) (25,779) (101,049) (96,382)
Disposition of assets -- -- 2,543 (500)
Amortization (844) (1,365) (2,309) (3,155)
Depreciation (1,615) (1,905) (4,926) (5,033)
Interest expense (6,675) (5,282) (19,428) (15,710)
Other income(expense), net (16) 500 326 382
-------- -------- --------- ----------
Total expenses and
other income (37,439) (33,831) (124,843) (120,398)
-------- -------- --------- ----------
Income before income tax 543 (25) 4,433 2,262
Income tax expense -- -- (33) (46)
-------- -------- --------- ----------
Net income $ 543 $ (25) $ 4,400 $ 2,216
-------- -------- --------- ----------
-------- -------- --------- ----------
Net income
per common share $ 0.03 $ 0.00 $ 0.28 $ 0.14
-------- -------- --------- ----------
-------- -------- --------- ----------
Weighted average number
of common shares 15,759 15,501 15,759 15,501
</TABLE>
2
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended September 30, 1994 and 1993
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1994 1993
------------- -------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 128,574 $123,543
Cash paid to suppliers and employees (104,692) (95,794)
Interest paid (14,235) (16,088)
--------- --------
Net cash provided by operating activities 9,647 11,661
Cash flows from investing activities:
Proceeds from sale of property 13,239 109
Proceeds from sale of note receivable - 4,500
Capital expenditures (6,277) (2,558)
Payments for acquisitions (17,400) -
Other, net (1,916) (806)
--------- --------
Net cash provided by (used by) investing
activities (12,354) 1,245
Cash flows from financing activities:
Borrowings under new credit agreements 23,883 --
Payments under credit agreements (24,830) (14,250)
Other, net 440 (459)
--------- --------
Net cash used by financing activities (507) (14,709)
--------- --------
Net decrease in cash and cash equivalents (3,214) (1,803)
Cash and cash equivalents at beginning of year 6,732 7,008
--------- --------
Cash and cash equivalents at end of period $ 3,518 $ 5,205
--------- --------
--------- --------
Reconciliation of net income to net cash provided
by operating activities:
Net income $ 4,400 $ 2,216
Adjustments to reconcile net income to net
cash provided by operating activities:
Disposition of assets (2,543) 500
Depreciation and amortization 7,235 8,188
Gain on the sale of property, plant
and equipment (180) (20)
Change in assets and liabilities:
Increase in accounts receivable (929) (1,702)
Decrease (increase) in other current assets (678) 1,812
Decrease in accounts payable and accruals (4,676) (1,946)
Increase (decrease) in accrued interest 3,393 (865)
Increase in deferred revenue 3,540 3,674
Other, net 85 (196)
--------- --------
Net cash provided by operating activities $ 9,647 $ 11,661
--------- --------
--------- --------
Supplemental disclosure of noncash transactions:
Broadcast rights acquired and broadcast
obligations assumed $ 6,224 $ 6,281
</TABLE>
3
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PREPARATION
The interim financial statements are unaudited but, in the
opinion of management, reflect all normal and recurring adjustments
necessary for a fair presentation of results for such periods.
The results of operations for any interim period are not
necessarily indicative of anticipated results for the full year.
These financial statements should be read in conjunction
with the financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
NOTE 2. INVESTMENTS: DEBT AND EQUITY SECURITIES
Effective January 1, 1994, the Company implemented FASB 115,
which concerns accounting for certain investments in debt and
equity securities. FASB 115 has not and is not expected to have
a material impact on the financial statements.
NOTE 3. INCOME TAXES
The Company has no significant income tax liabilities primarily
as a result of operating losses incurred in prior years.
NOTE 4. INVESTMENT IN NEW CENTURY MEDIA PARTNERS, L.P.
On July 14, 1994, the Company completed an agreement with Century
Management, Inc. which formed New Century Seattle Partners,
L.P. (the "Partnership") for the purpose of operating the assets
of KJR Radio Inc. and KUBE(FM). The Partnership purchased
certain assets and liabilities of KUBE(FM) from affiliated
companies of Cook Inlet, Inc., an Alaska-based Native American
corporation for approximately $17.4 million. The Company
contributed substantially all of the assets of KJR Radio Inc. to the
Partnership. Century Management, Inc. is the general partner of
the Partnership, and the Company is participating in the
Partnership as a limited partner originally holding approximately
97% of the Partnership equity interests. The transaction
has been accounted for as a purchase, and the operations of the
Partnership subsequent to the Partnership date are included in
the Company's consolidated statements of operations. Pro forma
results of operations have not been presented as there is no
material impact of the transaction on operations.
-4-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
In the first nine months of 1994, the Company reported record net
income of $4.4 million reflecting a $2.2 million or 98.6%
improvement over last year's first nine months. This net income
included a one-time gain of $2.6 million on the disposition
of assets related to the sale of WAXY(FM) in March 1994. In the
first nine months of 1994, the Company's net revenues
increased over the same period last year by $6.6 million or 5.4%.
The Company's Operating Cash Flow, as defined below,
increased $1.9 million or 7.1% from the same period last year
principally due to improved operating performance in the
Company's out-of-home media segment.
On July 14, 1994, the Company completed an agreement with Century
Management, Inc. which formed the Partnership for the
purpose of operating the assets of KJR Radio Inc. and KUBE(FM).
The venture has been approved by the Federal Communications
Commission. Under the terms of the venture, the Partnership
purchased certain assets of KUBE(FM) from affiliated companies
of Cook Inlet, Inc., an Alaska-based Native American corporation,
and the Company contributed substantially all of the assets of
KJR Radio Inc. to the Partnership. Century Management, Inc. is
the general partner of the Partnership, and the Company is
participating in the Partnership as a limited partner originally
holding approximately 97% of the Partnership equity
interests.
As with many media companies that have grown through
acquisitions, the Company's acquisitions and dispositions of television
and radio stations have resulted in significant non-cash and
non-recurring charges to income. For this reason, in addition to
net income, management believes that Operating Cash Flow (defined
as net revenue less operating expenses plus other income
before amortization, depreciation, interest expense and
disposition of assets) is an appropriate measure of the Company's
financial performance. This measure excludes expenses consisting
of depreciation, amortization, interest and disposition of
assets because these are not considered by the Company to be
costs of ongoing operations. The Company uses Operating Cash
Flow to pay interest and principal on its long-term debt as well
as to finance capital expenditures. Operating Cash Flow,
however, is not to be considered an alternative to net income as
an indicator of the Company's operating performance or to
cash flows as a measure of the Company's liquidity.
5
<PAGE>
RESULTS OF OPERATIONS STATEMENT
The following two tables set forth certain historical financial
and operating data of the Company for the three month and nine
month periods ended September 30, 1994 and September 30, 1993,
respectively, including separate net revenue, operating
expenses and other income, and Operating Cash Flow information by
segment:
Statement of Operations
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------- ---------------------------------------
1994 1993 1994 1993
----------------- ----------------- ------------------ ------------------
As % As % As % As %
of Net of Net of Net of Net
Amount Revenue Amount Revenue Amount Revenue Amount Revenue
------- ------- ------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue...................... $37,982 $33,806 $129,276 $122,660
Operating expenses and other
income:
Operating expenses............. 28,289 74.5% 25,779 76.3 % 101,049 78.2 % 96,382 78.6 %
Other (income) expense, net.... 16 0.0 (500) (1.5) (326) (0.3) (382) (0.3)
------- ------- -------- --------
Total operating expenses
and other income........... 28,305 74.5 25,279 74.8 100,723 77.9 96,000 78.3
------- ------- -------- --------
Operating Cash Flow.............. 9,677 25.5 8,527 25.2 28,553 22.1 26,660 21.7
Other expenses:
Depreciation and
amortization................. 2,459 6.5 3,270 9.7 7,235 5.6 8,188 6.7
Interest expense............... 6,675 17.6 5,282 15.6 19,428 15.0 15,710 12.8
------- ------- -------- --------
Total other expenses......... 9,134 24.1 8,552 25.3 26,663 20.6 23,898 19.5
Income before disposition of
assets and income taxes........ 543 1.4 (25) (0.1) 1,890 1.5 2,762 2.2
(Gain) loss on disposition
of assets...................... 0 -- 0 -- (2,543) (1.9) 500 0.4
Income tax expense............... 0 -- 0 -- 33 0.0 46 0.0
------- ------- -------- --------
Net income....................... $ 543 1.4% $ (25) (0.1)% $ 4,400 3.4 % $ 2,216 1.8 %
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
6
<PAGE>
OPERATING INFORMATION BY BUSINESS SEGMENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1994 1993 1994 1993
--------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Net Revenue:
Out-of-home media.............. $ 22,922 $ 20,186 $ 62,405 $ 55,726
Broadcasting................... 14,036 12,837 51,836 48,684
Other.......................... 1,024 783 15,035 18,250
--------- --------- ----------- ----------
Total net revenue............ $ 37,982 $ 33,806 $ 129,276 $ 122,660
--------- --------- ----------- ----------
--------- --------- ----------- ----------
Oper exp and other income:
Out-of-home media.............. $ 14,889 $ 13,590 $ 43,324 $ 40,698
Broadcasting................... 10,669 9,342 31,730 29,109
Other.......................... 2,747 2,347 25,669 26,193
--------- --------- ----------- ----------
Total oper exp and other inc $ 28,305 $ 25,279 $ 100,723 $ 96,000
--------- --------- ----------- ----------
--------- --------- ----------- ----------
Operating Cash Flow:
Out-of-home media............... $ 8,033 $ 6,596 $ 19,081 $ 15,028
Broadcasting.................... 3,367 3,495 20,106 19,575
Other........................... (1,723) (1,564) (10,634) (7,943)
--------- -------- ----------- ----------
Total Operating Cash Flow...... $ 9,677 $ 8,527 $ 28,553 $ 26,660
--------- -------- ----------- ----------
--------- -------- ----------- ----------
Change in net revenue from
prior periods:
Out-of-home media............... 13.6 % (1.2)% 12.0 % (5.0)%
Broadcasting.................... 9.3 0.8 6.5 2.0
Other........................... 30.8 (2.0) (17.6) 48.3
Change in total net revenue... 12.4 (0.5) 5.4 3.3
Operating data as a percent
of net revenue
Oper exp and other income:
Out-of-home media............... 65.0 % 67.3 % 69.4 % 73.0 %
Broadcasting.................... 76.0 72.8 61.2 59.8
Other........................... 268.3 299.7 170.7 143.5
Total oper exp and other inc.. 74.5 74.8 77.9 78.3
Operating Cash Flow:
Out-of-home media............... 35.0 % 32.7 % 30.6 % 27.0 %
Broadcasting.................... 24.0 27.2 38.8 40.2
Other........................... (168.3) (199.7) (70.7) (43.5)
Total Operating Cash Flow..... 25.5 25.2 22.1 21.7
</TABLE>
7
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED WITH THREE MONTHS
ENDED SEPTEMBER 30, 1993
NET REVENUE. Net revenue for the quarter ended September 30,
1994, increased $4.2 million or 12.4% to $38.0 million from
$33.8 million in 1993. The Company's out-of-home media segment's
net revenue increased $2.7 million or 13.6% mainly due to
increased national advertising sales and a return to a normal
sales volume in the South Florida market which had depressed
sales in 1993 due to the continuing effects of Hurricane Andrew.
The Company's broadcasting segment increased $1.2 million or
9.3% mainly due to the addition of KUBE(FM) in July, 1994. Net
revenue in the Company's other segment showed a slight
increase of $0.3 million in the third quarter 1994 compared to
the same period last year.
OPERATING EXPENSES AND OTHER INCOME. Operating expenses and
other income increased $3.0 million or 12.0% to $28.3 million in
1994 compared to $25.3 million in 1993. In the Company's
out-of-home media segment, operating expenses and other income
increased by $1.3 million or 9.6% to $14.9 million due to the
effects of increased business activity. Operating expenses and
other income in the Company's broadcasting segment increased by
$1.3 million or 14.2% to $10.7 million mostly due to the
addition of KUBE(FM) in July, 1994. Operating expenses and other
income from the Company's other segment increased $0.4
million compared to the same period last year.
OPERATING CASH FLOW. The Company's Operating Cash Flow increased
$1.2 million or 13.5% for the three months ended September
30, 1994 from the same period in 1993. The $1.4 million increase
in the out-of-home segment's Operating Cash Flow was
slightly offset by a combined decrease in the Company's
broadcasting and other segment's Operating Cash Flow for the
quarter. Operating Cash Flow as a percentage of net revenue increased
slightly to 25.5% for the three months ended September 30, 1994
from 25.2% for the comparable period in 1993.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization
expenses decreased $0.8 million or 24.8% to $2.5 million in 1994
as compared to $3.3 million in 1993.
INTEREST EXPENSE. Interest expense for the quarter ended
September 30, 1994 increased $1.4 million or 26.4% to $6.7
million from $5.3 million in 1993 mainly due to an increase in the
average interest rate applied to outstanding debt as well as an
increase in the amortization of deferred charges relating to the
Company's refinancing of its senior debt in October 1993 and
the amortization of deferred charges relating to the financing of
the KUBE(FM) acquisition.
NET INCOME. Net income for the three months ended September 30,
1994 increased to $0.5 million from a slight deficit for the
comparable period last year as a result of increases in the
Company's Operating Cash Flow offset mainly by increased
interest expense.
8
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED WITH NINE MONTHS
ENDED SEPTEMBER 30, 1993
NET REVENUE. Net revenue for the nine months ended September 30,
1994, increased $6.6 million or 5.4% to $129.3 million from
$122.7 million in 1993. The Company's out-of-home media
segment's net revenue increased $6.7 million or 12.0% mainly due
to increased national advertising sales and a return to a normal
sales volume in the South Florida market which had depressed
sales in the first three quarters of 1993 due to the continuing
effects of Hurricane Andrew. The Company's broadcasting
segment increased $3.2 million or 6.5% mainly due to increased
rates and sales volume in the first quarter 1994 and the
addition of KUBE(FM) in July 1994. Net revenue in the Company's
other businesses segment decreased $3.2 million mainly due to
the SuperSonics participating in 5 games of the 1994 NBA playoffs
compared to 17 games in 1993.
OPERATING EXPENSES AND OTHER INCOME. Operating expenses and
other income increased $4.7 million or 4.9% to $100.7 million in
1994 compared to $96.0 million in 1993. In the Company's
out-of-home media segment, operating expenses and other income
increased $2.6 million or 6.5% to $43.3 million due to the
effects of increased business activity. Operating expenses and
other income in the Company's broadcasting segment increased by
$2.6 million or 9.0% to $31.7 million mostly due to the
addition of KUBE(FM) in July 1994. Operating expenses and other
income from the Company's other segment decreased $.5 million
to $25.7 million or 2.0% mainly from reduced basketball operating
expenses related to participating in only 5 games of the
1994 NBA playoffs compared to 17 games in 1993.
OPERATING CASH FLOW. The Company's Operating Cash Flow increased
$1.9 million or 7.1% for the nine months ended September 30,
1994 from the same period in 1993. The $4.1 million increase in
the out-of-home segment's Operating Cash Flow and the $0.5
million increase in the broadcasting segment's Operating Cash
Flow offset the $2.7 million decrease in the Company's other
segment's Operating Cash Flow. Operating Cash Flow as a
percentage of net revenue increased slightly to 22.1% for the
nine months ended September 30, 1994 from 21.7% for the comparable
period in 1993.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization
expense for the nine months ended September 30, 1994 decreased
$1.0 million or 11.6% to $7.2 million from the comparable period
in 1993.
INTEREST EXPENSE. Interest expense for the nine months ended
September 30, 1994 increased $3.7 million or 23.7% to $19.4
million from $15.7 million in 1993 due to an increase in the
average interest rate applied to outstanding debt as well as an
increase in the amortization of deferred charges relating to the
Company's refinancing of its senior debt in October 1993 and
the amortization of the deferred charges from financing the
KUBE(FM) acquisition.
INCOME TAX EXPENSE. For the nine months ended September 30, 1994,
the Company had $33,000 income tax expense compared to
$46,000 income tax expense for the same period in 1993. The
$13,000 or 28.3% decrease is mainly due to the effect on taxable
income of the sale of WAXY(FM). Management anticipates that the
Company will incur income tax expenses under the alternative
minimum tax this year and in future years until operating loss
carryforwards are substantially reduced.
NET INCOME. Net income of $4.4 million for the nine months ended
September 30, 1994 increased $2.2 million from $2.2 million
in 1993. The increase was mainly due to a gain from the
disposition of assets of the sale of WAXY(FM).
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Under the Credit Agreement, as of November 1, 1994, the Company
has approximately $6.0 million available for borrowing under
the revolving credit facility and has borrowed all amounts
available under the term loans. The Credit Agreement and
Subordinated Note Agreements require the consent of the banks and
other lenders prior to any material expansion of the
Company's operations.
Borrowings under the Credit Agreement bear annual interest at
either the prime rate plus 1.75% or LIBOR plus 3.0%. The Senior
Notes bear annual interest at 10.75%. The Subordinated Notes bear
an annual blended interest rate of 10.58%. The borrowings
and the Notes are subject to the Company's compliance with
certain financial ratios and covenants set forth in the Credit
Agreement, Senior Note Indenture and Subordinated Note
Agreements. As of September 30, 1994, the Company was in
compliance with all such ratios and covenants. The borrowings under the
Credit Agreement and the Senior Notes are secured by the pledge
of stock of the Company's subsidiaries. Substantially all of the
$14.0 million received from the sale of WAXY(FM) was used to
reduce long-term debt.
The Company's working capital decreased $6.6 million to $1.4
million at September 30, 1994 from $8.0 million at December 31,
1993. This decrease was mainly due to the use of $3.6 million of
working capital and $9.1 million of income from operations
(net income before tax, amortization, depreciation, and
disposition of assets), to purchase new property and equipment
and to pay long-term debt. Working capital was further reduced by
$3.0 million due to a reclassification of an asset from current to
long-term.
Cash provided by operating activities for the first nine months
of 1994 decreased $2.0 million to $9.6 million from $11.6
million in 1993 due to a net $3.9 million decrease in cash from
ongoing business operations offset by a $1.9 million decrease
in interest payments.
At September 30, 1994, the Company's capital resources consisted
of $3.5 million in cash and cash equivalents and
approximately $12.0 million available under the Credit
Agreement.
Capital expenditures for new property and equipment of $6.3
million in the first nine months of 1994 were financed with cash
provided by operating activities and borrowings from the
revolving credit facility. These capital expenditures were
primarily for advertising signs, displays, vehicles, broadcast equipment,
and a new practice facility for the SuperSonics.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10. Amended and Restated Limited Partnership Agreement
of New Century Seattle Partners, L.P. dated
July 14, 1994.
(b) No reports on Form 8-K were filed during the three months
ended September 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ACKERLEY COMMUNICATIONS, INC.
DATED: November 11, 1994 BY ___________________________
Denis M. Curley
Sr. Vice President and
Chief Financial Officer,
Treasurer and Asst. Secretary
(Principal Financial Officer)
11
<PAGE>
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
NEW CENTURY SEATTLE PARTNERS, L.P.
------------------------
JULY 14, 1994
<PAGE>
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
NEW CENTURY SEATTLE PARTNERS, L.P.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SECTION 1 DEFINITIONS........................................................................................................ 1
1.1 Terms Defined in this Section......................................................................................... 1
1.2 Terms Defined Elsewhere in this Agreement............................................................................. 5
1.3 Terms Defined Elsewhere............................................................................................... 5
SECTION 2 THE PARTNERSHIP AND ITS BUSINESS................................................................................... 5
2.1 Formation and Continuation............................................................................................ 5
2.2 Filing of Certificates of Limited Partnership......................................................................... 5
2.3 Partnership Name...................................................................................................... 5
2.4 Term of the Partnership............................................................................................... 6
2.5 Purposes and Authority of the Partnership............................................................................. 6
2.6 Principal Office and Other Offices; Registered Agent.................................................................. 7
2.7 Foreign Qualification................................................................................................. 7
2.8 Fiscal Year........................................................................................................... 7
2.9 Addresses of the Partners............................................................................................. 7
SECTION 3 PARTNERSHIP CAPITAL................................................................................................ 8
3.1 Capital Contributions................................................................................................. 8
3.2 Loans by Partners..................................................................................................... 9
3.3 Disbursements......................................................................................................... 9
3.4 Withdrawal of Contributions........................................................................................... 9
SECTION 4 CASH DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS................................................................. 10
4.1 Distributions......................................................................................................... 10
4.2 Capital Accounts; Tax Allocations..................................................................................... 12
SECTION 5 RIGHTS, POWERS, AND DUTIES OF THE PARTNERS AND THE PARTNERSHIP.....................................................
13
5.1 Rights, Powers, and Duties of the General Partner..................................................................... 13
5.2 Actions Requiring Consent of KJR/LP................................................................................... 14
5.3 Actions Requiring Consent of ASDP/LP.................................................................................. 16
5.4 Meetings of the Partners; Representatives............................................................................. 20
5.5 Tax Matters Partner................................................................................................... 20
5.6 Third Parties......................................................................................................... 21
5.7 Rights, Powers, and Duties of the Limited Partners.................................................................... 21
5.8 Reimbursement of Expenses............................................................................................. 21
5.9 Exculpation and Indemnification....................................................................................... 22
5.10 Permitted Transactions................................................................................................ 22
5.11 Management Fees....................................................................................................... 22
5.12 Affiliate Salaries and Corporate Overhead............................................................................. 23
5.13 Upgrade of Transmission Facilities.................................................................................... 24
5.14 KJR/LP Local Marketing Agreement...................................................................................... 24
SECTION 6 ADDITIONAL PROVISIONS REGARDING LIMITED PARTNERS................................................................... 25
6.1 Liability of Limited Partners......................................................................................... 25
6.2 Agreement Not to Pledge............................................................................................... 25
</TABLE>
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<TABLE>
<C> <S> <C>
SECTION 7 ASSIGNMENT, TRANSFER, OR SALE OF INTERESTS IN PARTNERSHIP.......................................................... 25
7.1 Withdrawal of a General Partner....................................................................................... 25
7.2 Removal of General Partner by ASDP/LP................................................................................. 25
7.3 Transfer of Partnership Interests and Substitution of Partners........................................................ 26
7.4 Death, Insanity, or Dissolution of Limited Partners................................................................... 27
7.5 Redemption of Certain Units........................................................................................... 27
SECTION 8 DISSOLUTION AND TERMINATION OF THE PARTNERSHIP..................................................................... 28
8.1 Events of Dissolution................................................................................................. 28
8.2 Actions on Dissolution................................................................................................ 28
SECTION 9 BOOKS, RECORDS AND RETURNS; TAX YEAR............................................................................... 29
9.1 Books of Account and Records.......................................................................................... 29
9.2 Accounting Reports.................................................................................................... 29
9.3 Tax Returns........................................................................................................... 30
9.4 Deposit of Partnership Funds.......................................................................................... 30
SECTION 10 AMENDMENTS AND WAIVERS............................................................................................ 30
10.1 Amendments............................................................................................................ 30
10.2 Waivers............................................................................................................... 30
SECTION 11 MISCELLANEOUS..................................................................................................... 30
11.1 Captions.............................................................................................................. 30
11.2 Pronouns, Singular and Plural Form.................................................................................... 30
11.3 Further Action........................................................................................................ 30
11.4 Execution of Documents................................................................................................ 30
11.5 Put and Call.......................................................................................................... 31
11.6 Entire Agreement...................................................................................................... 31
11.7 Agreement Binding..................................................................................................... 31
11.8 Notices............................................................................................................... 31
11.9 Severability.......................................................................................................... 33
11.10 Counterparts.......................................................................................................... 33
11.11 Governing Law......................................................................................................... 33
11.12 No Third-Party Beneficiaries.......................................................................................... 33
</TABLE>
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LIMITED PARTNERSHIP AGREEMENT
OF
NEW CENTURY SEATTLE PARTNERS, L.P.
THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (the "Agreement") of
New Century Seattle Partners, L.P. is entered into as of July 14, 1994, by and
among New Century Seattle, Inc., a Delaware corporation ("NCSI"); Century
Management, Inc., a Delaware corporation ("Century"); ASDP/New Century, Inc., a
Massachusetts corporation ("ASDP/LP"); Union Venture Corporation, a California
corporation ("UVC/LP"); KJR Radio, Inc., a Washington corporation ("KJR/LP"),
and Ackerley Communications, Inc., a Delaware corporation.
PRELIMINARY STATEMENT
New Century Seattle Partners, L.P. was organized under the Delaware Revised
Uniform Limited Partnership Act on December 28, 1993, pursuant to a Limited
Partnership Agreement between Century, as general partner, and NCSI, as general
partner and limited partner. The parties desire to enter into this Amended and
Restated Limited Partnership Agreement to provide for the continuation of the
Partnership, the withdrawal of NCSI from the partnership, the admission of
KJR/LP, UVC/LP and ASDP/LP as limited partners, the authorization of the limited
partnership interests being issued to UVC/LP and the Preferred LP Units, the
allocation of profit and loss, cash flow, and other proceeds of the Partnership
among the Partners, the respective rights, obligations, and interests of the
Partners to each other and to the Partnership, and certain other matters.
AGREEMENT
In consideration of the mutual covenants and agreements set forth in this
Agreement, the parties agree that the Limited Partnership Agreement of New
Century Seattle Partners, L.P. is amended and restated in its entirety as
follows.
SECTION 1 DEFINITIONS.
1.1 TERMS DEFINED IN THIS SECTION. The following terms, as used in this
Agreement, shall have the meanings set forth in this Section:
"Ackerley" means Ackerley Communications, Inc., a Delaware corporation.
"Ackerley Stations" means radio stations KJR-AM and KLTX-FM, Seattle
Washington.
"Act" means the Delaware Revised Uniform Limited Partnership Act.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"ASDP" means Alta Subordinated Debt Partners III, L.P., a Delaware limited
partnership.
"ASDP/LP Adjusted Capital Contribution" means the Capital Contribution of
ASDP/LP, plus the amount of ASDP/LP Preferred Return previously accrued, less
the amount of distributions from the Partnership to ASDP/LP other than
distributions pursuant to Section 4.1(a)(i).
"ASDP/LP Preferred Return" means an amount equal to 18% per annum, computed
on the basis of twelve thirty day months, cumulative and compounded annually, of
the ASDP/LP Adjusted Capital Contribution from time to time, commencing on the
date hereof.
"ASDP/LP Preference Amount" means the amount required to be distributed to
ASDP/LP under Section 4.1(a)(ii)(C) and Section 4.1(a)(ii)(D).
"Cash Available for Distribution" means the gross cash proceeds from
Partnership operations less the portion thereof used to pay or establish
reserves for all Partnership expenses, debt payments,
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Capital Expenditures, replacements, and contingencies, plus the net cash
proceeds from all sales, other dispositions, and refinancings of Partnership
property, less any portion thereof used to establish reserves, all as determined
by the General Partner.
"Century" means Century Management, Inc., a Delaware corporation.
"Charlie Brown Indebtedness" means Indebtedness owed to Charlie Brown as of
the date hereof as described in the Charlie Brown Employment Agreement attached
as Exhibit F of the Securities Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any subsequent federal law of similar import, and, to the extent
applicable, the Treasury Regulations.
"Contribution Agreement" means the Contribution Agreement, dated as of
February 4, 1994, among the Partnership, Century, KJR/LP, and Ackerley.
"Fiscal Year" means the Partnership's fiscal year, which shall be the
calendar year.
"General Partner" means Century, in its capacity as general partner of the
Partnership, and any other Person that succeeds or replaces it as a general
partner of the Partnership in accordance with the provisions of this Agreement.
"Indebtedness" has the meaning assigned to that term in the Securities
Purchase Agreement.
"Joint Supplementary Agreement" means the letter agreement of even date
herewith entered into by the Partnership, KJR/LP, and Ackerley.
"KJR/LP" means KJR Radio, Inc., a Washington corporation, a wholly-owned
subsidiary of Ackerley.
"KJR/LP Adjusted Capital Contribution" means the Capital Contribution of
KJR/LP pursuant to Section 3.1(c), plus the amount of KJR/LP Preferred Return
previously accrued, less the amount of distributions from the partnership to
KJR/LP pursuant to paragraphs (3), (4), and (5) of Section 4.1(a)(ii)(E).
"KJR/LP Preferred Return" means an amount equal to 6% per annum, computed on
the basis of twelve thirty day months, cumulative and compounded quarterly, of
the KJR/LP Adjusted Capital Contribution from time to time, commencing on the
date hereof.
"KUBE" means radio station KUBE-FM, Seattle, Washington.
"KUBE Acquisition Agreement" means the Asset Purchase Agreement, dated as of
February 4, 1994, among the Partnership, Cook Inlet Radio Partners, L.P., and
Cook Inlet Radio License Partnership, L.P.
"License Partnership" means New Century Seattle License Partnership, a
Delaware general partnership.
"Limited Partner" or "Limited Partners" means KJR/LP, UVC/LP, ASDP/LP, and
any Preferred Limited Partners and any of their respective
successors-in-interest under this Agreement, and any other Person admitted as a
Limited Partner in accordance with the provisions of this Agreement.
"NCSI" means New Century Seattle, Inc., a Delaware corporation.
"Operating Partnership" means New Century Seattle Partners, a Delaware
general partnership.
"Partners" means the General Partner, UVC/LP, ASDP/LP, the Preferred Limited
Partners and KJR/LP.
"Partnership" means the partnership created by the Limited Partnership
Agreement between NCSI and Century and continued by the Partners pursuant to
this Agreement.
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"Partnership Interest" shall mean the entire ownership interest of a Partner
in the Partnership at any time, including all of its rights and obligations
under this Agreement and under the Act.
"Person" means an individual, corporation, association, partnership, joint
venture, trust, estate, limited liability company limited liability partnership,
or other entity or organization.
"Preferred Limited Partners" means the holders of Preferred LP Units issued
pursuant to the terms of the Securities Purchase Agreement and the UVC/LP
Securities Purchase Agreement.
"Preferred LP Units" means the Preferred LP Units of the Partnership which
shall be entitled to the rights and benefits set forth in this Agreement and of
which no fewer than 9 nor more than 19 Units may be issued pursuant to the
Securities Purchase Agreement and the UVC/LP Securities Purchase Agreement.
"Put and Call Agreement" means the agreement of even date herewith by and
among Century, Michael Williams, Lance W. Anderson, George V. Kriste, and
KJR/LP.
"Residual Net Equity Value" shall mean (A) the fair market value of the
assets of the Partnership and its Subsidiaries (including cash, cash equivalents
and accounts or other receivables) as agreed to by the General Partner and
ASDP/LP or, if not agreed to within 60 days prior to any redemption of, or final
distribution on, ASDP/LP's and UVC/LP's Partnership Interests, the appraised
fair market value, as of the date on which such redemption or final distribution
is to be made, determined as provided below, plus any amounts paid by the
Partnership with respect to the Charlie Brown Indebtedness, and reduced, in each
case, by (B) the sum of (v) the aggregate outstanding amount of the Senior Debt,
plus (w) the aggregate outstanding amount of all Indebtedness owed by the
Partnership on the Subordinated Notes, plus (x) the remaining amount that must
be distributed to UVC/LP in order for it to have received its full UVC/LP Senior
Preference Amount and UVC/LP Preference Amount, plus (y) the remaining amount
that must be distributed to ASDP/LP in order for it to have received its full
ASDP/LP Preference Amount, plus (z) amounts owed to trade creditors incurred in
the ordinary course of business (such aggregate hereinafter being referred to as
the "Offset Amount"). In no event shall the Offset Amount include the Charlie
Brown Indebtedness.
In the event that the General Partner and ASDP/LP fail to agree on the fair
market value of the assets of the Partnership and its Subsidiaries within the
applicable time period specified above, the General Partner and ASDP/LP each
shall select an independent, non-affiliated appraiser of recognized standing
with at least five (5) years of experience in the broadcasting industry (each an
"Independent Appraiser") at least fifty (50) days prior to the date on which the
redemption or final distribution is to be made. Within thirty (30) days after
selection, such Independent Appraisers shall prepare and deliver to the General
Partner and ASDP/LP appraisals of the fair market value of the assets of the
Partnership and its Subsidiaries in accordance with the terms set forth below
and such appraised values shall be averaged and the resulting amount shall be
reduced by the Offset Amount to determine the Residual Net Equity Value.
Notwithstanding the foregoing, in the event that the difference between the two
appraisals is greater than 20% of the higher appraisal, then the fair market
value of the assets of the Partnership and its Subsidiaries shall be determined
by taking the average of (a) the fair market value of the assets of the
Partnership and its Subsidiaries determined by a third independent appraiser
(selected by the two original Independent Appraisers) and (b) the appraisal of
the fair market value of the assets of the Partnership and its Subsidiaries
prepared by the Independent Appraiser that is closest in amount to the third
appraisal. All appraisals hereunder will appraise the fair market value of the
assets of the Partnership and its Subsidiaries (i) as a going concern and valued
as if debt-free and without any discount for (A) lack of liquidity, (B) other
considerations relating to the nonpublic status of the Partnerships' securities,
(C) the minority, non-controlling interest represented by UVC/LP's, ASDP/LP's or
the Preferred Limited Partners' Partnership Interests or (D) the rights that
KJR/LP and its Affiliates have pursuant to the Put and Call Agreement or any
appraisal conducted thereunder, and (ii) on the valuation for which a willing
buyer, with recourse to any necessary financing, would pay for all of the assets
of the Partnership and its Subsidiaries to a willing seller who is under no
compunction to sell. Notwithstanding the foregoing, in the event that the
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Partnership and its Subsidiaries sell their assets to a non-affiliated third
party, the aggregate purchase
price and all other consideration received or receivable for such assets
pursuant to such sale shall be deemed by the parties to be the fair market value
of the assets of the Partnership and its Subsidiaries for purposes of
determining the residual Net Equity Value. The General Partner and ASDP/LP shall
each bear the costs of their respective Independent Appraiser and the costs of
the third appraisal, if necessary, shall be borne by the Partnership.
"Securities Purchase Agreement" means the Agreement for Purchase and Sale of
certain Subordinated Notes, Partnership Interests and Warrants, dated as of the
date hereof, by and among ASDP, ASDP/LP, the Partnership, License Partnership
and Operating Partnership.
"Senior Debt" means all indebtedness and liabilities of the Partnership to
the Senior Lender arising under the Senior Loan Documents.
"Senior Lender" means Union Bank, Los Angeles, California, or any successor,
assigns, or replacement bank or banks or senior lender which refinances the
Senior Debt in accordance with the terms of this Agreement.
"Senior Loan Documents" means the Revolving Credit and Term Loan Agreement
and related documents dated the date hereof by and among the Senior Lender and
the Partnership.
"Stations" mean the Ackerley Stations and KUBE.
"Subordinated Notes" means the Subordinated Notes in the aggregate principal
amount of $6,175,758 issued pursuant to the Securities Purchase Agreement.
"Subsidiary" means any corporation, unincorporated organization or
association, or other partnership substantially owned and controlled by the
Partnership and through which the Partnership has elected to accomplish its
purposes.
"Tax Distributions" means distributions to the Partners pursuant to Section
4.1(a)(i).
"Taxable Income" means for each Fiscal Year or other period the amount equal
to the Partnership's taxable income for such Fiscal Year or other period,
determined for federal income tax purposes in accordance with Code Section
703(a).
"Treasury Regulations" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"UVC/LP Adjusted Preferred Capital Contribution" means the UVC/LP Preferred
Capital Contribution, plus the amount of the UVC/LP Preferred Return previously
accrued, less the amount of distributions from the Partnership to UVC/LP other
than distributions pursuant to Section 4.1(a)(i).
"UVC/LP Adjusted Senior Capital Contribution" means the UVC/LP Senior
Capital Contribution, plus the amount of the UVC/LP Senior Preferred Return
previously accrued less the amount of distributions from the Partnership to
UVC/LP pursuant to Section 4.1(a)(i) and paragraphs (A) and (B) of Section
4.1(a)(ii).
"UVC/LP Preference Amount" means the amount required to be distributed to
UVC/LP under Section 4.1(a)(ii)(C) and Section 4.1(a)(ii)(D).
"UVC/LP Preferred Return" means an amount equal to 18% per annum, computed
on the basis of twelve thirty day months, cumulative and compounded annually, of
the UVC/LP Adjusted Preferred Capital Contribution from time to time, commencing
on the date hereof.
"UVC/LP Securities Purchase Agreement" means the Agreement for Purchase and
Sale of certain Partnership Interests and Warrants, dated as of the date hereof,
by and among UVC/LP, the Partnership and certain others.
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"UVC/LP Senior Preferred Return" means an amount equal to 18% per annum,
computed on the basis of twelve thirty day months, cumulative and compounded
annually, of the UVC/LP Adjusted Senior Capital Contribution from time to time,
commencing on the date hereof.
"UVC/LP Senior Preference Amount" means the amount required to be
distributed to UVC/LP under Section 4.1(a)(ii)(A) and Section 4.1(a)(ii)(B)
before any distributions (other than Tax Distributions) are made to any other
Partners.
"Warrantholders" means the holders of the Warrants issued pursuant to the
Securities Purchase Agreement and the UVC/LP Securities Purchase Agreement.
1.2 TERMS DEFINED ELSEWHERE IN THIS AGREEMENT. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
<TABLE>
<S> <C>
Capital Account Section 4.3
Capital Contribution Section 3.1(e)
Certificate Section 3.2
Event of Default Section 7.2
Indemnitee Section 5.9(a)
Tax Matters Partner Section 5.4(a)
UVC/LP Preferred Capital Contribution Section 3.1(e)(ii)
UVC/LP Senior Capital Contribution Section 3.1(e)(i)
</TABLE>
1.3 TERMS DEFINED ELSEWHERE. Terms not defined in this Agreement shall
have the meaning given in the Securities Purchase Agreement and the UVC/LP
Securities Purchase Agreement.
SECTION 2 THE PARTNERSHIP AND ITS BUSINESS.
2.1 FORMATION AND CONTINUATION. The Partnership was formed as a limited
partnership pursuant to the provisions of the Act by the filing of the
Certificate with the Secretary of State of Delaware. The Partners agree to
continue the Partnership as a limited partnership pursuant to the provisions of
the Act. Effective on the date of this Agreement, NCSI shall receive a return of
its original capital contribution of $100.00 and shall withdraw as a general
partner and limited partner of the Partnership. Except as provided in this
Agreement, all rights, liabilities, and obligations of the Partners, both as
among themselves and with respect to Persons not parties to this Agreement,
shall be as provided in the Act, and this Agreement shall be construed in
accordance with the provisions of the Act. To the extent that the rights or
obligations of any Partner are different by reason of any provision of this
Agreement than they would be in the absence of such provision, this Agreement
shall, to the extent permitted by the Act, control, except that no Limited
Partner shall be personally liable for obligations of the Partnership beyond the
liability provided in the Act.
2.2 FILING OF CERTIFICATE OF LIMITED PARTNERSHIP. NCSI and Century have
caused a Certificate of Limited Partnership conforming with the Act (the
"Certificate") to be filed with the Secretary of State of Delaware. The General
Partner shall cause the Certificate to be filed or recorded in any other public
office where the General Partner deems filing or recording of the Certificate to
be required or advisable. The General Partner shall do, and continue to do, all
other things that are required or advisable to maintain the Partnership as a
limited partnership existing pursuant to the laws of the State of Delaware.
2.3 PARTNERSHIP NAME. The name of the Partnership shall continue to be
"New Century Seattle Partners, L.P." The business of the Partnership may be
conducted under that name or "New Century Media" or, upon compliance with
applicable laws, any other name that the General Partner deems appropriate or
advisable. The General Partner shall file any assumed name certificates and
similar filings, and any amendments thereto, that the General Partner considers
appropriate or advisable.
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2.4 TERM OF THE PARTNERSHIP. The term of the Partnership commenced on the
date of the filing of the Certificate with the Secretary of State of Delaware
and, unless the Partnership is earlier terminated pursuant to Section 8 of this
Agreement, shall continue until December 31, 2005.
2.5 PURPOSES AND AUTHORITY OF THE PARTNERSHIP.
(a) PURPOSES OF THE PARTNERSHIP. The purposes of the Partnership are:
(i) to acquire (in accordance with the Contribution Agreement), own,
and dispose of those assets that shall be contributed by KJR/LP to the
Partnership as described in Section 3.1(c), and to exercise all rights
incident thereto;
(ii) to acquire, own, and dispose of the assets of KUBE, and to
exercise all rights incident thereto pursuant to the KUBE Acquisition
Agreement;
(iii) to engage in the business, directly or indirectly through
interests in one or more corporations or partnerships, of acquiring,
developing, owning, operating, managing, and selling the Ackerley
Stations, KUBE, and other radio broadcast stations and other related and
ancillary businesses;
(iv) to engage in the business of managing radio broadcast stations
and other related and ancillary businesses;
(v) to possess, transfer, mortgage, pledge, or otherwise deal in, and
to exercise all rights, powers, privileges, and other incidents of
ownership or possession with respect to, securities or other assets held
or owned by the Partnership, and to hold securities or assets in the name
of a nominee or nominees; and
(vi) to own, lease or otherwise acquire any and all assets and
services related to the foregoing purposes and to engage in such other
activities related either directly or indirectly to the foregoing
purposes as may be necessary, advisable, or appropriate, in the opinion
of the General Partner, for the promotion or conduct of the business of
the Partnership.
(b) AUTHORITY OF THE PARTNERSHIP. Subject to the provisions of
Sections 5.2 and 5.3 hereof, the Partnership shall be empowered and
authorized to do all lawful acts and things necessary, appropriate, proper,
advisable, incidental to, or convenient for the futherance and
accomplishment of its purposes. Subject to the provisions of Sections 5.2
and 5.3 hereof, the Partnership shall be empowered and authorized, for
itself or on behalf of any Subsidiary:
(i) to construct, operate, maintain, improve, expand, buy, own, sell,
convey, assign, mortgage, refinance, rent, or lease real or personal
property, which may be held in the name of the Partnership or any
Subsidiary, in the name of the General Partner as nominee or trustee for
the beneficial owner of the property, or in any other manner that the
General Partner deems to be in the best interests of the Partnership or
any Subsidiary, so long as all such property is properly reflected on the
books of the Partnership and any Subsidiary;
(ii) to enter into, perform, and carry out contracts and agreements
of any kind necessary to, in connection with, or incidental to
accomplishing the purposes of the Partnership;
(iii) to borrow money and issue evidences of indebtedness in
furtherance of the purposes of the Partnership and to secure any such
indebtedness by mortgage, security interest, or other lien;
(iv) to maintain and operate the assets of the Partnership and any
Subsidiary;
(v) to negotiate for and conclude agreements for the sale, exchange,
or other disposition of all or any part of the property of the
Partnership or of any Subsidiary, or for the purchase or lease of
additional property of the Partnership or any Subsidiary;
6
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(vi) to hire and compensate employees, agents, independent
contractors, attorneys, and accountants; and
(vii) to bring and defend actions in law and equity.
2.6 PRINCIPAL OFFICE AND OTHER OFFICES; REGISTERED AGENT. The office
required to be maintained by the Partnership in the State of Delaware pursuant
to Section 17-104 of the Act shall be located at 1309 Orange Street, Wilmington,
New Castle County, Delaware 19801. The resident agent of the Partnership
pursuant to Section 17-104 of the Act shall be The Corporation Trust Company.
The principal office of the Partnership shall be located at 190 Queen Anne
Avenue North, Suite 100, Seattle, Washington 98109. The Partnership may maintain
any other offices at any other places that the General Partner deems advisable.
The Partnership may, upon compliance with the applicable provisions of the Act,
change its principal office or resident agent from time to time in the
discretion of the General Partner.
2.7 FOREIGN QUALIFICATION. The General Partner shall take all necessary
actions to cause the Partnership to be authorized to conduct business legally in
all appropriate jurisdictions, including registration or qualification of the
Partnership as a foreign limited partnership in those jurisdictions that provide
for registration or qualification and the filing of a certificate of limited
partnership in the appropriate public offices of those jurisdictions that do not
provide for registration or qualification.
2.8 FISCAL YEAR. The Fiscal Year of the Partnership shall be the calendar
year. The Partnership shall have the same Fiscal Year for income tax purposes
and for financial and partnership accounting purposes.
2.9 ADDRESSES OF THE PARTNERS. The respective addresses of the Partners
are as follows:
General Partner:
Century Management, Inc.
190 Queen Anne Avenue North, Suite 100
Seattle, Washington 98109
Attention: Lance Anderson
KJR/LP:
KJR Radio, Inc.
c/o Ackerley Communications, Inc.
900 Fifth Avenue, Suite 3770
Seattle, Washington 98104
Attention: Mr. Denis Curley
ASDP/LP:
ASDP/New Century, Inc.
c/o Burr, Egan, Deleage & Co.
Suite 3800
One Post Office Square
Boston, Massachusetts 02110
Attention: Brian W. McNeill
UVC/LP:
Union Venture Corporation
445 South Figueroa Street
13th Floor
Los Angeles, California 90071
Attention: Robert C. Dawson
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SECTION 3 PARTNERSHIP CAPITAL.
3.1 CAPITAL CONTRIBUTIONS.
(a) DEFINITION OF CAPITAL CONTRIBUTIONS. For purposes of this
Agreement, a Partner's "Capital Contribution" means the amount of money
contributed by such Partner to the Partnership pursuant to this Agreement
plus the fair market value without regard to Code Section 7701(g) of
property contributed by such Partner to the Partnership pursuant to this
Agreement (net of liabilities that are secured by such contributed property
or that the Partnership or any other Partner is considered to assume under
Code Section 752).
(b) CONTRIBUTIONS BY CENTURY.
(i) Prior to the date of this Agreement, Century has contributed to
the Partnership cash in the amount of $200,000.
(ii) Upon the execution of this Agreement, Century shall convert
$100,000 of the amounts owed to it pursuant to Section 5.8 into a
contribution of $100,000 in cash by it to the Partnership.
(c) CONTRIBUTIONS BY KJR/LP. Upon the execution of this Agreement and
in accordance with the terms and conditions of the Contribution Agreement,
KJR/LP shall contribute to the Partnership, free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever the Ackerley Stations and
those other assets specified in the Contribution Agreement. The Partners
agree that the fair market value of the assets contributed by KJR/LP
pursuant to this Section 3.1(c) shall be determined in accordance with the
Contribution Agreement.
(d) CONTRIBUTIONS BY ASDP/LP. Upon the execution of this Agreement and
the consummation of the transactions contemplated by the Contribution
Agreement and the KUBE Acquisition Agreement and in accordance with the
terms and conditions of the Securities Purchase Agreement, ASDP/LP shall
contribute to the Partnership in cash the amount of four hundred twenty-four
thousand two hundred forty-two dollars ($424,242).
(e) CONTRIBUTION BY UVC/LP. Upon the execution of this Agreement and
the consummation of the transactions contemplated by the Contribution
Agreement and the KUBE Acquisition Agreement and in accordance with the
terms and conditions of the UVC/LP Securities Purchase Agreement, UVC/LP
shall contribute to the Partnership in cash the amount of (i) nine hundred
sixteen thousand six hundred sixty-seven dollars ($916,667) for a deemed
contribution of nine hundred twenty-four thousand two hundred forty-two
dollars ($924,242) (the latter being referred to as the "UVC/LP Senior
Capital Contribution"), and (ii) seventy-five thousand seven hundred
fifty-eight dollars ($75,758) (the "UVC/LP Preferred Capital Contribution).
(f) CONTRIBUTIONS BY PREFERRED LIMITED PARTNERS. Upon the issuance of
any Preferred LP Units in accordance with the terms of the Securities
Purchase Agreement and the UVC/LP Securities Purchase Agreement, the
Preferred Limited Partners shall contribute the amount of Nine Hundred
Thousand Dollars ($900,000) in cash to the Partnership.
(g) ADDITIONAL CAPITAL CONTRIBUTIONS.
(i) KJR/LP shall be obligated to pay all costs and expenses incurred
in connection with moving the transmission facilities for Station KJR-AM,
whether such costs and expenses are incurred prior to or after the date
of this Agreement. Costs and expenses incurred in upgrading the
transmission facilities of Station KJR-AM and in increasing the power of
Station KJR-AM shall be paid by the Partnership, in accordance with
Section 5.13.
(ii) KJR/LP, at its option, may make additional Capital Contributions
to the Partnership solely to allow the Partnership (A) to pay principal
and interest on the Senior Debt; and (B) to pay interest on the
Subordinated Notes and to make distributions of the UVC/LP Senior
Preferred Return pursuant to Section 4.1(a)(ii)(A) and of the ASDP/LP
Preferred Return and
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the UVC/LP Preferred Return pursuant to Section 4.1(a)(ii)(c), pro rata
based on the principal amount then outstanding on the Subordinated Notes,
the UVC/LP Adjusted Senior Preferred Capital Contribution, the ASDP/LP
Adjusted Capital Contribution and the UVC/ LP Adjusted Preferred Capital
Contribution.
(iii) Additional Capital Contributions made by KJR/LP pursuant to
Sections 3.1(g)(i) and (ii) above shall be treated as additional Capital
Contributions to the Partnership; provided, however, that notwithstanding
any such additional Capital Contributions, the Partnership Interests of
KJR/LP shall remain junior to, and shall not dilute, the Partnership
Interests of ASDP/LP, UVC/LP, and any other Preferred Limited Partner,
and no such additional Capital Contributions shall alter in any respect
the distributions and allocations to ASDP/LP and UVC/LP pursuant to
Section 4.
(iv) There shall be no further assessments for additional Capital
Contributions by the Partners to the Partnership. Nothing in this Section
3.1(g)(iv) shall impair the obligation of a Limited Partner under any
agreement by which the Limited Partner assumes liabilities of the
Partnership. Without the prior written consent of all of the Partners, no
Partner may make any additional Capital Contributions except as provided
in Sections 3.1(b), (c), (d), (e), (f), and (g)(i) and (ii) hereof.
(h) FINANCING. To finance the business of the Partnership, including
the acquisition of property, the construction of improvements on land or
leaseholds, or for any other Partnership purposes, the General Partner may,
for the Partnership or on behalf of any Subsidiary, but subject to Sections
5.2 and 5.3, arrange for the Senior Debt and any other loans or the
refinancing of any loans, and may pledge the assets of the Partnership
(including, without limitation, its partnership interests in License
Partnership, Operating Partnership and any other Subsidiary of the
Partnership) or any Subsidiary as security therefor.
3.2 LOANS BY PARTNERS. A Partner may lend funds to the Partnership only on
terms and conditions agreed to by the General Partner, the lending Partner,
KJR/LP, and ASDP/LP.
3.3 DISBURSEMENTS. The Partnership shall pay all operating costs and
expenses of the Partnership business, including financing costs and related
expenses, real estate taxes and other carrying charges, all costs of
construction of improvements on Partnership property or leaseholds, management,
leasing, and loan placement fees, and operating expenses, and including all
reasonable costs and expenses incurred by or on behalf of the Partnership by the
Partners. The Partnership may set aside funds for any items that are proper
Partnership purposes, including operating expenses, debt service, capital
improvements, replacements, repairs, amortization, other capital requirements,
and liabilities, contingent or otherwise, of the Partnership or any Subsidiary,
in each case as determined by the General Partner in its sole discretion.
3.4 WITHDRAWAL OF CONTRIBUTIONS. No Partner shall have the right to
withdraw from the Partnership or to demand a return of all or any part of its
Capital Contribution during the term of the Partnership, and any return of the
Capital Contribution of any Partner shall be made solely from the assets of the
Partnership and only in accordance with the terms of this Agreement. No interest
shall be paid to any Partner with respect to its Capital Contribution to the
Partnership; provided, however, that the foregoing provisions of this sentence
shall not preclude any Limited Partner from receiving the ASDP/LP Preferred
Return, the UVC/LP Preferred Return, the UVC/LP Senior Preferred Return, or the
KJR/LP Preferred Return or any redemption payments in accordance with the
provisions hereof. The Partners expressly acknowledge that certain provisions of
this Agreement that may preclude a Partner from realizing appreciation in the
value of the Partnership's assets are essential to protect the Partners' mutual
interests in the Partnership's assets; accordingly, the Partners waive any right
they otherwise would have to seek a partition or judicial liquidation of the
Partnership or any comparable action, except as otherwise expressly provided in
this Agreement.
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SECTION 4 CASH DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS.
4.1 DISTRIBUTIONS.
(a) DISTRIBUTIONS OTHER THAN ON LIQUIDATION. Except as provided in
Section 4.1(b), but subject to any restrictions set forth in the Senior Loan
Documents and the Securities Purchase Agreement, all Cash Available for
Distribution shall be distributed in accordance with the following
provisions:
(i) first, the General Partner shall cause the Partnership to
distribute to each of the Partners, cash in an amount equal to the
Partner's Tax Liability of such Partner in accordance with Section
5.3(j)(ii);
(ii) second, all other Cash Available for Distribution shall, subject
to Section 5.3, be distributed among the Partners at such times and in
such amounts as the General Partner may determine in accordance with the
following:
(A) first, to UVC/LP until UVC/LP has received aggregate cash
distributions pursuant to this Section 4.1(a)(ii) and Section 7.5(c)
equal to the UVC/LP Senior Preferred Return;
(B) second, to UVC/LP until UVC/LP has received aggregate cash
distributions pursuant to this Section 4.1(a)(ii) and Section 7.5(c)
equal to the UVC/LP Senior Capital Contribution plus the UVC/LP
Senior Preferred Return;
(C) third, 84.9485% to ASDP/LP and 15.1515% to UVC/LP until
ASDP/LP has received aggregate cash distributions pursuant to Section
4.1(a)(ii) equal to the ASDP/ LP Preferred Return and UVC/LP has
received aggregate cash distributions pursuant to Section 4.1(a)(ii)
and Section 7.5(c) equal to the UVC/LP Senior Capital Contribution
plus the UVC/LP Senior Preferred Return plus the UVC/LP Preferred
Return;
(D) fourth, 84.8485% to ASDP/LP and 15.1515% to UVC/LP until
ASDP/LP has received aggregate cash distributions pursuant to Section
4.1(a)(ii) equal to ASDP/LP's Capital Contribution plus the ASDP/LP
Preferred Return and UVC/LP has received aggregate cash distributions
pursuant to Section 4.1(a)(ii) and Section 7.5(c) equal to the UVC/LP
Senior Capital Contribution plus the UVC/LP Senior Preferred Return
plus the UVC/LP Preferred Capital Contribution plus the UVC/LP
Preferred Return;
(E) thereafter, (x) if there are Preferred Limited Partners
holding Preferred LP Units, 1.0000% for each Preferred LP Unit held
by the Preferred Limited Partners in accordance with the number of
Preferred LP Units held by each of them, .8485% to ASDP/LP, .1515% to
UVC/LP, and the remainder to KJR/LP and the General Partner; and (y)
if there are no Preferred Limited Partners holding Preferred LP
Units, .8485% to ASDP/LP, .1515% to UVC/LP, and 99.0000% to KJR/LP
and the General Partner. Distributions to KJR/LP and the General
Partner pursuant to this Section 4.1(a)(ii)(E) shall be made in
accordance with the following:
(1) first, 100% to KJR/LP, until KJR/LP has received
aggregate distributions pursuant to this Section 4.1(a)(ii) equal
to the amount of KJR/LP's additional Capital Contribution
pursuant to Section 3.1(g)(ii)(A) plus accrued interest thereon,
compounded annually, at the default rate under the Senior Loan
Documents;
(2) second, 100% to KJR/LP, until KJR/LP has received
aggregate distributions pursuant to this Section 4.1(a)(ii) equal
to the sum of (i) the amount of KJR/LP's additional Capital
Contribution pursuant to Section 3.1(g)(ii)(A) plus accrued
interest thereon, compounded annually, at the default rate under
the Senior Loan Documents, and (ii) the amount of KJR/LP's
additional Capital Contribution pursuant to
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Section 3.1(g)(ii)(B) plus an amount equal to 6% per annum,
computed on the basis of twelve thirty day months, cumulative and
compounded quarterly, of the amount of such additional Capital
Contribution pursuant to Section 3.1(g)(ii)(B);
(3) third, 99% to KJR/LP and 1% to the General Partner, until
KJR/LP has received aggregate distributions pursuant to this
Section 4.1(a)(ii) equal to the sum of (i) the amount of KJR/LP's
additional Capital Contribution pursuant to Section 3.1(g)(ii)(A)
plus accrued interest thereon, compounded annually, at the
default rate under the Senior Loan Documents, (ii) the amount of
KJR/LP's additional Capital Contribution pursuant to Section
3.1(g)(ii)(B) plus an amount equal to 6% per annum, computed on
the basis of twelve thirty day months, cumulative and compounded
quarterly, of the amount of such additional Capital Contribution
pursuant to Section 3.1(g)(iii)(B), (iii) the KJR/LP Preferred
Return, and (iv) $100,000;
(4) fourth, 97.56% (12,000,000/12,300,000) to KJR/LP and
2.44% (300,000/12,300,000) to the General Partner, until KJR/LP
has received aggregate distributions pursuant to this Section
4.1(a)(ii) equal to the sum of (i) the amount of KJR/LP's
additional Capital Contribution pursuant to Section 3.1(g)(ii)(A)
plus accrued interest thereon, compounded annually, at the
default rate under the Senior Loan Documents, (ii) the amount of
KJR/LP's additional Capital Contribution pursuant to Section
3.1(g)(ii)(B) plus an amount equal to 6% per annum, computed on
the basis of twelve thirty day months, cumulative and compounded
quarterly, of the amount of such additional Capital Contribution
pursuant to Section 3.1(g)(ii)(B), (iii) the KJR/LP Preferred
Return, (iv) $100,000, and (v) KJR/LP's Capital Contribution
pursuant to Section 3.1(c); and
(5) thereafter, 80% to KJR/LP and 20% to the General Partner.
(b) DISTRIBUTIONS ON LIQUIDATION. Upon any liquidation, dissolution,
reorganization, merger or sale of all or substantially all of the assets of the
Partnership, and after payment of, and adequate provision for the debts and
obligations of the Partnership, the remaining assets of the Partnership shall be
distributed as follows:
(i) first, to UVC/LP until UVC/LP has received aggregate
distributions pursuant to Section 4.1(a)(ii), Section 7.5(c) and this
Section 4.1(b)(i) equal to the UVC/LP Senior Preference Amount;
(ii) second, 54.3485% to ASDP/LP and 15.1515% to UVC/LP, until
ASDP/LP has received aggregate distributions pursuant to Section
4.1(a)(ii) and this Section 4.1(b)(ii) equal to the ASDP/LP Preference
Amount and UVC/LP has received aggregate distributions pursuant to
Section 4.1(a)(ii), Section 7.5(c), Section 4.1(b)(i) and this Section
4.1(b)(ii) equal to the UVC/LP Senior Preference Amount plus the UVC/LP
Preference Amount;
(iii) third, 84.8485% to ASDP/LP and 15.1515% to UVC/LP, until ASDP/LP
and UVC/LP have received aggregate distributions pursuant to this Section
4.1(b)(iii) equal to 1% of the Partnership's Residual Net Equity Value;
(iv) fourth, to the Preferred Limited Partners, if any, until the
Preferred Limited Partners have received distributions under this Section
4.1(b)(iv) equal to the product of (x) the number of Preferred LP Units
held by the Preferred Limited Partners (which shall be no less than 9 nor
more than 19) and (y) 1% of the Partnership's Residual Net Equity Value;
and
(v) fifth, to KJR/LP until KJR/LP has received aggregate
distributions under this Section 4.1(b)(v) equal to the amount of
KJR/LP's additional capital contribution pursuant to Section 3.1(g)(i);
and
(vi) thereafter to KJR/LP and the General Partner in accordance with
the provisions of Section 4.1(a)(ii)(E)(1)-(5).
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(c) DISTRIBUTION ATTRIBUTABLE TO LICENSE PARTNERSHIP AND OPERATING
PARTNERSHIP. Any distributions of cash to the General Partner pursuant to
Section 4.1(a) or Section 4.1(b) shall be reduced by the amount of any
distributions to the General Partner by License Partnership or Operating
Partnership, it being the intent of the Partners that the Partnership and
its Partners are entitled to the entire value of License Partnership and
Operating Partnership; provided, however, that this Section 4.1(c) shall not
apply to the extent it would cause the General Partner to receive less than
1% of the total distributions from the Partnership.
(d) WITHHOLDING. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment or
distribution to a Partner shall be treated as amounts distributed to such
Partner pursuant to Section 4.1 for all purposes of this Agreement.
4.2 CAPITAL ACCOUNTS; TAX ALLOCATIONS.
(a) CAPITAL ACCOUNTS. A separate capital account (each, a "Capital
Account") shall be maintained for each Partner in accordance with the rules
of Treasury Regulations Section 1.704-1(b)(2)(iv), and this Section 4.02(a)
shall be interpreted and applied in a manner consistent therewith. Whenever
the Partnership would be permitted to adjust the Capital Accounts of the
Partners pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to
reflect revaluations of Partnership property, the Partnership shall so
adjust the Capital Accounts of the Partners. In the event that the Capital
Accounts of the Partners are adjusted pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of Partnership
property, (i) the Capital Accounts of the Partners shall be adjusted in
accordance with Treasury depreciation, depletion, amortization and gain or
loss, as computed for book purposes, with respect to such property, and (ii)
the Partners' distributive shares of depreciation, depletion, amortization,
gain or loss, as computed for tax purposes, with respect to such property
shall be determined so as to take account of the variation between the
adjusted tax basis and book value of such property in the same manner as
under Code Section 704(c). In the event that Code Section 704(c) applies to
Partnership property, the Capital Accounts of the Partners shall be adjusted
in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for
allocations of depreciation, depletion, amortization and gain and loss, as
computed for book purposes, with respect to such property.
(b) TAX ALLOCATIONS. All items of Partnership income, gain, loss and
deduction as determined for federal income tax purposes shall be allocated
among the Partners, and shall be credited or debited to their respective
Capital Accounts in such a manner that the balance of each Partner's Capital
Account at the end of any Fiscal Year (increased by the sum of (a) such
Partner's "share of partnership minimum gain" as defined in Treasury
Regulations Section 1.704-2(g)(1) and (b) such partner's "share of minimum
gain" as defined in Treasury Regulations Section 1.704-2(i)(5)) would be
positive in the amount of cash, if any, that such Partner would receive (or
would be negative in the amount of cash that such partner would be required
to contribute to the Partnership) if the Partnership sold all of its
property for an amount of cash equal to the book value (as determined
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)) of such property
reduced, but not below zero, by the amount of nonrecourse debt to which such
property is subject) and all of the cash of the Partnership remaining after
payment of all liabilities (other than nonrecourse liabilities) of the
Partnership were distributed in liquidation immediately following the end of
such Fiscal Year pursuant to Section 8.02(b)).
(c) SECTION 704(C) ADJUSTMENTS. Notwithstanding any provisions of this
Agreement to the contrary, in accordance with Section 704(c) of the Code,
income and gain, deduction and loss with respect to any property contributed
to the Partnership shall be allocated among the Partners so as to take
account of the variation between the adjusted basis of such property and its
fair market value at the time of contribution.
(d) ACCOUNTING CONVENTIONS. To determine possible varying interest of
the Partners during the taxable year, the Partnership shall use the
interim-closing of the books method, as permitted by Section 706 of the Code
and the regulations thereunder.
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SECTION 5 RIGHTS, POWERS, AND DUTIES OF THE PARTNERS AND THE PARTNERSHIP.
5.1 RIGHTS, POWERS, AND DUTIES OF THE GENERAL PARTNER.
(a) POWERS IN GENERAL. The General Partner shall have full and
complete charge of all affairs of the Partnership, and the management and
control of the Partnership's business shall rest exclusively with the
General Partner. The General Partner shall be responsible for the management
and operations of the Partnership and, subject to Sections 5.2, 5.3, 5.11,
5.12 and 7.2, shall have all power necessary to manage and control the
Partnership and to conduct the business of the Partnership, and all powers
possessed by general partners under the Act, including the power to cause
the Partnership to take any of the actions described in Section 2.5(b) to
the extent necessary, convenient, or incidental to the accomplishment of the
purposes of the Partnership. The powers of the General Partner shall include
the power on behalf of the Partnership (without regard to the term of the
Partnership), for itself or on behalf of any Subsidiary, to:
(i) acquire by purchase, lease, or otherwise any real or personal
property;
(ii) operate, maintain, finance, improve, construct, own, grant
options with respect to, sell, convey, assign, mortgage, and lease real
and personal property;
(iii) sell or exchange all or any part of the property and assets of
the Partnership or of any Subsidiary for property, cash, or on terms, or
any combination thereof;
(iv) execute and modify leases and other agreements (including leases
and agreements for terms extending beyond the term of the Partnership or
the term of any Subsidiary), and execute and modify options, licenses, or
agreements with respect to any of the assets or the business of the
Partnership or any Subsidiary;
(v) obtain loans, secured and unsecured, for the Partnership or any
Subsidiary and secure the same by mortgaging, assigning for security
purposes, pledging, or otherwise hypothecating, (A) all or any part of
the property and assets of the Partnership or of any Subsidiary (and in
connection therewith to place record title to any such property or assets
in the name or names of a nominee or nominees), or (B) the partnership
interests of the Partners;
(vi) prepay in whole or in part, refinance, recast, increase,
decrease, modify, amend, restate, or extend any such mortgage, security
assignment, pledge, or other security instrument, and in connection
therewith to execute and deliver, for and on behalf of the Partnership or
any Subsidiary, any extensions, renewals, or modifications thereof, any
new mortgage, security assignment, pledge, or other security instrument
in lieu thereof;
(vii) draw, make, accept, endorse, sign, and deliver any notes,
drafts, or other negotiable instruments or commercial paper;
(viii) establish, maintain, and draw upon checking, savings, and other
accounts in the name of the Partnership or any Subsidiary in such banks
or other financial institutions as the General Partner may from time to
time select;
(ix) employ, fix the compensation of, oversee, and discharge agents
and employees of the Partnership and of any Subsidiary as it shall deem
advisable in the operation and management of the business of the
Partnership, including but not limited to such accountants, attorneys,
architects, consultants, engineers, and appraisers, on such terms and for
such compensation, as the General Partner shall determine;
(x) enter into management agreements with third parties pursuant to
which the management, supervision, or control of the business or assets
of the Partnership may be delegated to third parties for reasonable
compensation;
(xi) enter into joint ventures, general or limited partnerships, or
other agreements relating to the Partnership's purposes;
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(xii) compromise any claim or liability due to the Partnership or any
Subsidiary;
(xiii) execute, acknowledge, verify, and file any notifications,
applications, statements, and other filings that the General Partner
considers necessary or desirable to be filed with any state or federal
securities administrator or commission;
(xiv) execute, acknowledge, verify, and file any and all certificates,
documents, and instruments that the General Partner considers necessary
or desirable to permit the Partnership or any Subsidiary to conduct
business in any state in which the General Partner deems advisable;
(xv) do any or all of the foregoing, discretionary or otherwise,
through agents selected by the General Partner and compensated or
uncompensated by the Partnership; and
(xvi) take any other actions and execute any other contracts,
documents, and instruments that it deems appropriate to carry out the
intents and purposes of this Agreement.
(b) RESPONSIBILITIES AND FIDUCIARY OBLIGATIONS OF THE GENERAL PARTNER.
(i) The General Partner shall direct the day-to-day operations of the
Partnership and provide general supervision of the assets and business of
the Partnership in its capacity as General Partner. The directors,
officers, and employees of the General Partner shall be required to
devote to the conduct of the business of the Partnership only as much
time and attention as is necessary to accomplish the purposes and to
conduct properly the business of the Partnership; provided, however, that
Michael Williams shall devote substantially all of his working time to
the operation and management of the Partnership. Subject to the
foregoing, the Partners agree that day-to-day operation, management, and
supervision of the assets and business of the Partnership may be
delegated by the General Partner to other Persons selected by the General
Partner and to the employees of the Partnership.
(ii) Neither the General Partner nor any of its Affiliates shall be
liable to the Partnership or the Partners for any act or omission
performed or omitted by the General Partner or such Affiliates in good
faith pursuant to the terms of, and within the scope of the authority
granted to them by or pursuant to, this Agreement; provided that such act
or omission did not constitute and was not the result of a breach of this
Agreement, fraud, gross negligence or willful misconduct.
5.2 ACTIONS REQUIRING CONSENT OF KJR/LP. The General Partner may not,
without the consent of KJR/LP, cause or permit Century, the Partnership or any
Subsidiary (with all references herein to the Partnership being deemed to
include all of its Subsidiaries) to fail to comply with any of the following
provisions:
(a) INCURRENCE OF DEBT. The Partnership will not, directly or
indirectly, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness or liability, except; (i)
Indebtedness under the Subordinated Notes; (ii) Indebtedness outstanding
under the Senior Loan Documents in an initial outstanding principal amount
of up to $13,000,000; provided, however, that the then outstanding principal
amount of the Senior Debt may be increased by up to $250,000; (iii)
Indebtedness with respect to trade obligations and other normal accruals,
including taxes, assessments, and other governmental charges, arising in the
ordinary course of business and not yet due and payable, or which is being
contested in good faith by appropriate proceedings, and then only to the
extent the amount thereof has been set aside by the Partnership in a cash
reserve; (iv) Indebtedness incurred for purchase money obligations and
Capital Leases, so long as (A) the pertinent assets are acquired in the
ordinary course of the Partnership's business, (B) the Indebtedness secured
thereby does not exceed the fair market value of such assets, and (C) the
aggregate amount of such Indebtedness does not exceed $250,000 at any one
time; and (v) Indebtedness with respect to the Charlie Brown Deferred
Compensation, on the terms in effect on the date hereof.
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(b) SALE OF ASSETS. The Partnership will not sell, lease, transfer or
otherwise dispose of any of the Stations, any of its FCC Licenses or any
other material licenses or any other material portion of its properties,
assets, rights or licenses within three years after the admission of KJR/ LP
to the Partnership.
(c) PURCHASE OF OTHER STATIONS. The Partnership will not acquire any
radio station other than KUBE and the Ackerley Stations.
(d) FORMAT CHANGES. During the term of the Joint Supplementary
Agreement, KJR-AM will be operated in accordance with the Joint
Supplementary Agreement, and the Partnership will not change the format of
radio station KJR-AM from "sports talk"; provided that this Section 5.2(d)
shall not apply to any change in the on-air personalities of KJR-AM
resulting from any employee's voluntary termination of employment or from
the Partnership's fulfillment of its legal obligations as a broadcast
licensee to conduct its operations in accordance with the Communications Act
of 1934, the rules, regulations, and policies of the Federal Communications
Commission, and the Partnership's judgment concerning the public interest.
(e) CAPITAL EXPENDITURES. Subject to Section 5.13, the Partnership
will not make, incur, assume or otherwise become liable for Capital
Expenditures of more than $250,000 in the period from the effective date of
this Agreement through December 31, 1994, or in any subsequent Fiscal Year.
(f) SUBSIDIARIES. The Partnership will not create, or otherwise
acquire an interest in, any Subsidiary other than License Partnership and
Operating Partnership.
(g) ISSUANCE OF PARTNERSHIP INTERESTS. The Partnership will not issue,
sell or grant any Partnership Interests in the Partnership other than the
Preferred LP Units; and the Partnership will not issued, sell or grant any
bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for Partnership Interests in the
Partnership or options, warrants or rights carrying any rights to purchase
convertible or exchangeable securities of the Partnership, other than the
Warrants issued to ASDP pursuant to the Securities Purchase Agreement and to
UVC/LP pursuant to the UVC/LP Securities Purchase Agreement.
(h) OTHER. The Partnership will not (i) do any act in contravention of
this Agreement or the Certificate; (ii) do any act that would make it
impossible to carry on the business of the Partnership, except upon the
liquidation and dissolution of the Partnership in accordance with Section 8;
(iii) confess a judgment against the Partnership; (iv) use any funds or
assets of the Partnership other than for the benefit of the Partnership; or
(v) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose.
5.3 ACTIONS REQUIRING CONSENT OF ASDP/LP. The General Partner may not,
without the prior written consent of ASDP/LP cause or permit Century, the
Partnership or any Subsidiary (with all references herein to the Partnership
being deemed to include all of its Subsidiaries) to fail to comply with any of
the following provisions:
(a) INDEBTEDNESS. Until payment in full of the principal of and
interest on the Subordinates Notes, and until payment in full of the UVC/LP
Senior Preference Amount, the Partnership will not directly or indirectly,
incur, create, assume, become or be liable in any manner with respect to, or
permit to exist, any Indebtedness or liability, except:
(i) Indebtedness under the Subordinated Notes and any other
Indebtedness owed by the Partnership to ASDP;
(ii) Indebtedness outstanding under the Senior Loan Documents
pursuant to Commitments (as defined in the Senior Loan Documents) in a
maximum amount of $13,000,000, which Commitments as so reduced from time
to time in accordance with the terms of Senior Loan Documents may be
increased by not more than $500,000, and related fees and expenses;
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(iii) Indebtedness (including Indebtedness owed to any Partners or
Affiliates of the Partnership) as described in Schedule 5.1(c) of the
Securities Purchase Agreement;
(iv) Indebtedness with respect to trade obligations and other normal
accruals (other than interest accruals), including taxes, assessments,
and other governmental charges, arising in the ordinary course of
business and not yet due and payable, or which is being contested in good
faith by appropriate proceedings, and then only to the extent the amount
thereof has been set aside on the Partnership's books, so long as such
Indebtedness, in the aggregate, does not exceed $250,000 at any one time;
(v) Indebtedness incurred for purchase money obligations and Capital
Leases, so long as (i) the pertinent assets are acquired in the ordinary
course of the Partnership's business, (ii) the Indebtedness secured
thereby does not exceed the fair market value of such assets, and (iii)
the aggregate amount of such Indebtedness does not exceed $125,000 at any
one time;
(vi) Indebtedness in respect of guarantees by the Partnership to a
third party, to the extent that any such guarantee secures Indebtedness
of the Partnership which is specifically permitted to be incurred or to
remain outstanding under the provisions of this Section 5.3;
(vii) Indebtedness under interest rate hedging agreements; and
(viii) Indebtedness with respect to the Charlie Brown Deferred
Compensation, on the terms in effect on the date hereof.
(b) LIENS. The Partnership will not, directly or indirectly, create,
incur, assume or suffer to exist any Lien of any nature whatsoever on any of
its assets (including any leasehold interests in property used by the
Partnership) or ownership interests now or hereafter owned, other than:
(i) Liens securing the payment of taxes, and other government
charges, either not yet due or the validity of which is being contested
in good faith before appropriate proceedings, and as to which it shall
have set aside on its books adequate reserves to the extent required by
generally accepted accounting principles and provided that, in any event,
payment of any such tax, assessment, charge, levy or claim shall be made
before any of the Partnership's property shall be seized and sold in
satisfaction thereof;
(ii) Deposits under Worker's compensation, unemployment insurance and
social security laws;
(iii) Restrictions, easements, and minor irregularities in title which
do not and will not interfere with the occupation, use and enjoyment of
the properties of the Partnership in the normal course of business as
presently conducted or materially impair the value of such assets for the
purpose of such business;
(iv) Liens securing Indebtedness permitted under Section 5.3(a)(ii)
and 5.3(a)(iii); and
(v) Liens imposed by law, such as mechanics', materialmen's,
landlord's, warehousemen's, and carriers' Liens and other similar Liens,
securing obligations incurred in the ordinary course of business which
are not past due for more than sixty days or which are being contested in
good faith by appropriate proceedings and for which appropriate reserves
have been established;
(vi) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of
indebtedness), leases (to the extent permitted under the terms of this
Agreement), public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
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<PAGE>
(vii) Judgment and other similar Liens arising in connections with
court proceedings, provided the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;
(viii) Liens against the fee interest in real property leased by the
Partnership which are securing obligations of the owner of such property;
(ix) Liens on assets acquired with purchase money Indebtedness or as a
result of Capital Leases, permitted by Section 5.1(a)(v) and so long as
the obligation secured by a Lien so created, assumed, or existing shall
not exceed one hundred percent (100%) of the lesser of cost or fair
market value as of the time of acquisition of the property covered
thereby and each such Lien shall attach only to the property so acquired
and fixed improvements thereon; and
(x) Liens set forth on Schedule 5.2 of the Securities Purchase
Agreement.
(c) SALE OF ASSETS. The Partnership will not sell, lease, transfer or
otherwise dispose of any of its FCC Licenses or any other material Licenses
or sell, lease, transfer or otherwise dispose of any material portion of its
properties, assets, rights or licenses; PROVIDED, HOWEVER, that (i) the
Partnership may sell assets that are obsolete or are not required for its
business, or individual assets so long as the Partnership replaces if needed
the sold property within a reasonable period of time with property of equal
or greater utility to the conduct of the Partnership's business and so long
as such sales or other dispositions of assets do not, in the aggregate,
amount to a substantial portion of the assets of the Partnership, and (ii)
the Partnership may sell assets which are not necessary for the operation of
the Station in any single transaction or series of related transactions
involving the same buyer or its affiliates so long as the aggregate sales
value of such assets does not exceed $100,000.
(d) FUNDAMENTAL CHANGES. The Partnership will not (i) form any direct
or indirect subsidiary other than the License Partnership and the Operating
Partnership, (ii) terminate, liquidate, consolidate, or merge with, or
otherwise acquire any additional businesses, (iii) make any advance, loan,
extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any person (including
without limitation any employees, Partners or Affiliates of the Partnership)
or entity except for Capital Expenditures as and to the extent specifically
permitted hereunder and cash and cash equivalents and redemption payments
pursuant to Section 7.5, (iv) enter into any local marketing or time
brokerage arrangements other than as permitted by Section 5.14, (v) file a
voluntary petition in bankruptcy, make an assignment for the benefit of
creditors, file a petition, answer or similar motion or take other action
seeking a voluntary reorganization, arrangement, composition, dissolution,
liquidation, receivership or similar relief, file an answer or other
pleading failing to contest the allegations of any petition filed against it
seeking an involuntary reorganization, arrangement, composition,
dissolution, liquidation, receivership or similar relief, or fail, within 30
days after the commencement of any of the foregoing proceedings, to have
them dismissed or vacated, (vi) take any action to obstruct, impede or
infringe upon ASDP/LP's enforcement of its rights, benefits and remedies
under this Agreement and any agreement related hereto or enter into any
amendments to the Senior Loan Documents or any other agreements with the
Senior Lender, other than an increase of up to $500,000 in the principal
amount of the Senior Debt pursuant to Section 5.3(a) hereof or any
refinancing of the Senior Debt (the "Refinanced Debt") so long as (A) the
intercreditor and subordination terms of the Refinanced Debt and the Senior
Debt are identical in all material respects; (B) the principal amount of the
Refinanced Debt does not exceed the then outstanding principal amount of the
Senior Debt; (C) the amortization and maturity date of the Refinanced Debt
are not materially different from those of the Senior Debt; (D) the interest
rate on the Refinance Debt is not more than the rate provided for under the
terms of the Senior Debt; (E) the terms of the Refinanced Debt do not impose
any additional restrictions on the redemption of
17
<PAGE>
ASDP/LP's Partnership Interest; and (F) the lender extending the Refinanced
Debt is reasonably acceptable to ASDP/LP, or (vii) cause the partnership
agreement of the License Partnership or the Operating Partnership to be
amended.
(e) GUARANTEES. The Partnership will not guarantee, endorse or
otherwise in any way become or be responsible for obligations of any other
person, except (i) endorsements of negotiable instruments for collection in
the ordinary course of business; (ii) guarantees permitted pursuant to
Section 5.1(a)(vi) hereof; (iii) guarantees of obligations of any Affiliate
to the extent such obligations are permitted under Section 5.3(a); and (iv)
guarantees of obligations as more fully set forth in Schedule 5.5 of the
Securities Purchase Agreement.
(f) NO SALE AND LEASEBACK. The Partnership will not enter into any
arrangements, directly or indirectly, with any person whereby it shall sell
or transfer any property, real, personal or mixed, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or
lease such property.
(g) NO CHANGE IN ACCOUNTING POLICIES. Except as required by generally
accepted accounting principals, the Partnership will not change or introduce
any new method of accounting which differs in any substantive respect from
the accounting as reflected in the audited financial statements delivered
pursuant to the Securities Purchase Agreement.
(h) RESTRICTIONS ON OTHER AGREEMENTS. The Partnership will not enter
into any agreement with any party which would adversely affect the rights of
ASDP to receive the payments due under the Subordinated Notes other than to
the extent such payments are specifically restricted by the provisions of
the subordination agreement between the Senior Lender and ASDP as in effect
on the Closing Date.
(i) AFFILIATED TRANSACTIONS. The Partnership will not enter any
transactions, agreements or arrangements by and between the Partnership or
any general or limited partner of the Partnership or any director, officer,
or stockholder of any general partner of the Partnership, or Persons
controlled by or affiliated with such general or limited partner or
director, officer, or stockholder, that are not in the ordinary course of
business, consistent with past practices, pursuant to the reasonable
requirements of the Partnership's business and conducted on an arm's length
basis with terms and conditions no less favorable to the Partnership than
could be obtained from nonrelated persons, other than agreements for the
payment of Management Fees, salaries and bonuses described in Section
5.11(e) of the Securities Purchase Agreement and agreements for the payment
of employee benefits.
(j) DISTRIBUTIONS, REDEMPTIONS OR ISSUANCES OF PARTNERSHIP INTERESTS.
(i) Until payment in full of the principal of and interest on the
Subordinates Notes, and until payment in full of the UVC/LP Senior
Preference Amount, except as otherwise expressly permitted under this
Section 5.3(j), the Partnership will not (i) make any distribution or
payment of cash, property or securities, directly or indirectly, to any
Interested Party or any persons or entities controlled by, controlling,
or under common control with any Interested Party for any reason
whatsoever; (ii) make any distributions of cash, property or securities
of the Partnership with respect to any general or limited partnership
interest, or directly or indirectly redeem, purchase, or otherwise
acquire for any consideration any general or limited partnership interest
other than payments of the UVC/LP Senior Preference Amount in accordance
with the terms of hereof; or (iii) except for the Preferred LP Units
issued in connection with the exercise of the Warrants, issue, sell or
grant any general or limited partnership interests of the Partnership, or
bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for general or limited partnership
interests of the Partnership or options, warrants or rights carrying any
rights to purchase convertible or exchangeable securities of the
Partnership.
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<PAGE>
(ii) Notwithstanding the provisions of subsection 5.3(j)(i) above,
the Partnership shall, subject to the terms hereof and with respect to
any period during which the Partnership is a partnership for Federal
income tax purposes, make cash distributions to each of the Partners in
an amount equal to the "Partner's Tax Liability" of each such Partner.
The "Partner's Tax Liability" of a Partner means such Partner's actual
tax liability arising from the operations the Partnership and by reason
of such Partner's ownership in the Partnership.
(A) If the Partnership is found to be an association taxable as a
corporation and not as a partnership for any period, then each
Partner, by its signature hereto, hereby agrees to refund to the
Partnership the aggregate distributions made to such Partner pursuant
to Section 5.3(j)(ii) with respect to the period during which the
Partnership is found to be an association taxable as a corporation
and not as a partnership; provided, however, that no Partner shall
have an obligation to refund any amount to the Partnership until such
time as such Partner shall have received from the IRS a refund of any
such amount as has been paid on account of the Partners Tax Liability
of such Partner.
(B) The Partnership, upon advice of and review by its independent
accountants, may determine in good faith the projected Partner's Tax
Liability of each Partner for each Fiscal Year computed on a
quarterly basis (the "Estimated Quarterly Liability"). The
Partnership may distribute to each of the Partners cash in an amount
equal to such Partner's Estimated Quarterly Liability no earlier than
the eighth day following the end of each fiscal quarter. If any
payments to any Partner pursuant to this paragraph for any Fiscal
Year exceed the Partner's Tax Liability of such Partner computed as
of December 31 of such Year, then the Partnership shall offset the
amount of such excess against future distributions to such Partner
with respect to succeeding Estimated Quarterly Liabilities.
(C) In no event shall any payment or distribution be made under
this Section 5.3(j)(ii) to any Partner unless, not later than ten
days prior to the date of each such proposed payment or distribution,
such Partner shall have provided written notice to the Partnership
setting forth the amount of the proposed payment or distribution and
a statement with the calculations forming the basis for such proposed
payment or distribution.
(k) LIMITATIONS ON SENIOR SUBORDINATED INDEBTEDNESS. The Partnership
will not, directly or indirectly, incur, create, assume, become or be liable
in any manner with respect to, or permit to exist, any Indebtedness which is
subordinate in payment to the Senior Debt (whether by express agreement,
grant or priority of security interests or otherwise) but prior in payment
to the Indebtedness under the Subordinated Notes (whether by express
agreement, grant or priority of security interests or otherwise).
(l) CAPITAL EXPENDITURES. Except for Capital Expenditures incurred in
connection with upgrading the transmission facilities and increasing the
power of the KJR Radio Station, for the remainder of the 1994 Fiscal Year
commencing on the date hereof the Partnership will not make, incur, assume
or otherwise become liable for Capital Expenditures in excess of the
aggregate of $250,000, and $250,000 for any Fiscal Year thereafter;
PROVIDED, HOWEVER, that if the Partnership does not incur Capital
Expenditures in an aggregate of $250,000 in any Fiscal Year, the Partnership
may add such unused portion of permitted Capital Expenditures to the amount
of the Capital Expenditure allotment for the following Fiscal Year.
(m) MODIFICATIONS TO SENIOR DEBT. The Partnership will not cause,
permit, or agree to changes in the terms of the Senior Loan Documents and
related documents, including without limitation, changes made that (i)
increase the interest rate payable by the Partnership on the Senior Debt,
(ii) change the rate of amortization of the Senior Debt, (iii) impose
additional
19
<PAGE>
restrictions on the Partnership's ability to make payments to ASDP on the
Subordinated Notes in accordance with the Securities Purchase Agreement, and
(iv) extend the maturity of the Senior Debt beyond its maturity on the date
hereof.
5.4 MEETINGS OF THE PARTNERS; REPRESENTATIVES.
(a) Quarterly meetings of the Partners shall be held at such place and
time as may be determined from time to time by the General Partner. The
agenda for each quarterly meeting of the Partners shall include the business
plans and results of operations of any radio stations owned by the
Partnership, the Partnership's financial results for the preceding quarter,
and opportunities for the Partnership and Ackerley Communications, Inc. to
promote jointly the business of the Partnership and the Seattle SuperSonics
professional basketball team. The General Partner shall give each Partner at
least ten days notice of the time and place of any quarterly or other
meeting of the Partners. Any such notice shall include, in reasonable
detail, an agenda that sets forth the matters to be considered at such
quarterly or other meeting.
(b) Neither the Partnership, any Partner, nor any other Person shall be
obligated to inquire as to the authority of any agent or other
representative of a Partner to take any action or execute any document on
behalf of such Partner.
5.5 TAX MATTERS PARTNER.
(a) DESIGNATION. The tax matters partner of the Partnership pursuant
to Code Section 6231(a)(7) (the "Tax Matters Partner") shall be the General
Partner.
(b) AUTHORITY. The General Partner shall have any powers necessary to
perform fully as Tax Matters Partner, including the power to retain
attorneys and accountants of its choice. The General Partner, as the Tax
Matters Partner, is authorized to represent the Partnership before taxing
authorities and courts in tax matters affecting the Partnership and the
Partners in their capacity as Partners and is entitled to take any actions
on behalf of the Partnership in any such tax proceedings; provided, however,
that the General Partner shall not cause the Partnership to agree to any
adjustment, settlement or comprise of any matter with the Internal Revenue
Service that may have a material effect on any Limited Partner without the
consent of all of the Partners.
(c) DUTIES. To the extent and in the same manner as provided by
applicable law, the General Partner, as Tax Matters Partner, (A) shall
furnish the name, address, and taxpayer identification number of each
Partner to the Secretary of the Treasury or his delegate, and (B) shall keep
each Partner informed of any administrative and judicial proceedings for the
adjustment at the Partnership level of any items required to be taken into
account by a Partner for income tax purposes. The General Partner shall give
notice to each Partner of a Partnership audit.
(d) EXPENSES. The General Partner shall be entitled to be reimbursed
by the Partnership for all costs and expenses incurred by it in connection
with any administrative or judicial proceeding with respect to any tax
matter involving the Partnership or the Partners in their capacity as
Partners.
5.6 THIRD PARTIES. No Person dealing with the General Partner shall be
required to inquire into the necessity or expediency of any act taken by the
General Partner or be obligated or privileged to inquire into the authority of
such General Partner to perform any such act. Every contract, agreement, or
other instrument executed by the General Partner shall be conclusive evidence in
favor of any Person relying thereon or claiming thereunder that (a) the
Partnership created by this Agreement was in existence at the time of the
execution and delivery thereof, (b) such instrument was duly executed in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership, and (c) the General Partner was duly authorized and empowered
to execute and deliver such instrument in the name and on behalf of the
Partnership.
5.7 RIGHTS, POWERS, AND DUTIES OF THE LIMITED PARTNERS.
20
<PAGE>
(a) IN GENERAL. Except as provided by law the Limited Partners shall
take no part in the control, management, direction, or operation of the
affairs of the Partnership nor shall a Limited Partner in its capacity as a
Limited Partner have any power to act for or bind the Partnership; provided,
however, that this provision shall not be construed to prevent a Limited
Partner from taking any action permitted to it under the Agreement. Except
as specifically provided in this Agreement, no prior consent or approval of
the Limited Partners shall be required with respect to any action to be
taken by the General Partner on behalf of the Partnership.
(b) UVC/LP. Notwithstanding anything contained in this Agreement to
the contrary, neither UVC/LP nor any Affiliate of UVC/LP, shall:
(i) act as an employee of the Partnership;
(ii) serve, in any material capacity, as an independent contractor or
agent of the Partnership with respect to any media enterprises of the
Partnership;
(iii) communicate with the licensee of any media property in which the
Partnership owns an interest or with the General Partner on matters
pertaining to the day-to-day operations of any of the Partnership's
media-related businesses;
(iv) perform any services for the Partnership materially relating to
the day-to-day media activities of the Partnership;
(v) become actively involved in the management or operations of the
media business of the Partnership;
(vi) vote to admit any additional or replacement General Partner to
the Partnership; or
(vii) vote on the removal of the General Partner;
provided, however, that nothing in the foregoing shall prohibit UVC/LP or
any Affiliate of UVC/LP from requesting or receiving information and
reports about the Partnership.
5.8 REIMBURSEMENT OF EXPENSES. Subject to Section 3.1(b), promptly after
the date hereof and with the prior written consent of ASDP/LP, the Partnership
shall reimburse the General Partner, KJR/ LP, ASDP/LP, and UVC/LP and any agent
or representative of the General Partner, KJR/LP, ASDP/LP, and UVC/LP for all
documented out-of-pocket legal fees and other costs and expenses incurred on or
prior to the date hereof in connection with (i) the formation and organization
of the Partnership, License Partnership and Operating Partnership, (ii) the
negotiation and documentation of the Contribution Agreement, the KUBE
Acquisition Agreement and the Securities Purchase Agreement, and (iii) the
implementation of the Partnership operating plan prior to the consummation of
this Agreement.
5.9 EXCULPATION AND INDEMNIFICATION.
(a) The Partnership shall indemnify and hold harmless each of the General
Partner and its Affiliates, and the officers, directors, agents and stockholders
of the General Partner and its Affiliates, (individually, an "Indemnitee") to
the fullest extent permitted by law from and against any and all losses, claims,
costs, damages, liabilities, expenses (excluding any criminal fines or the cost
of criminal proceedings in which the Indemnitee has been convicted), judgments
and settlements incurred by such Indemnitee in the performance of its duties for
the Partnership, if (i) the Indemnitee acted in good faith, and (ii) the
Indemnitee's conduct did not constitute and was not the result of a breach of
this Agreement, fraud, gross negligence or willful misconduct. Any
indemnification hereunder shall be satisfied solely out of the assets of the
Partnership.
(b) Expenses incurred by an Indemnitee in defending any legal action subject
to this Section 5.8 shall, from time to time, be advanced by the Partnership
prior to the final disposition of such legal action; provided that (i) such
legal action relates to the performance of duties or services by such Indemnitee
on behalf of the Partnership, (ii) such legal action is initiated by a third
party who is not a
21
<PAGE>
Limited Partner, and (iii) the Partnership has received an undertaking given by
or on behalf of the Indemnitee to repay such amount unless it shall be
determined that such Indemnitee is entitled to be indemnified as authorized in
this Section 5.8.
5.10 PERMITTED TRANSACTIONS. Any Partner, or any partner, Affiliate,
agent, or representative of any Partner, may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, whether currently existing or hereafter created and whether or not
competitive with or advanced by the business of the Partnership; provided,
however, that any Partner other than ASDP/LP, or any partner, Affiliate, agent,
or representative of any Partner other than ASDP/LP, shall not engage in the
business of radio broadcasting in the Seattle-Tacoma, Washington radio market
other than by and through the Stations. Neither the Partnership nor any of the
other Partners shall have any rights in or to the income or profits derived
therefrom, nor shall any Partner have any obligation to any other Partner with
respect to such enterprise or related transaction.
5.11 MANAGEMENT FEES.
(a) CENTURY FEE. As full compensation for all of the management services
to be provided by, and the corporate overhead to be paid by, the General Partner
pursuant to the terms of this Agreement, the Partnership shall pay to Century an
annual management fee in arrears upon delivery of the audited financial
statements for the applicable year (pursuant to Section 9.2), which fee shall be
in an amount equal to the percentage of Net Revenues indicated below based upon
the achievement of specified levels of Actual Broadcast Cash Flow as indicated
in the table below and, in any event, subject to a maximum of $400,000 per annum
(the "Century Management Fee"):
ACTUAL BROADCAST CASH FLOW
<TABLE>
<CAPTION>
% OF NET REVENUES 1994(1) 1995 1996 1997 1998
--------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1.8%.................................................... > $2,494,800 > $5,337,000 > $6,887,700 > $7,644,600 > $8,163,900
0.9%.................................................... $2,356,200- $5,040,500- $6,505,050- $7,219,900- $7,710,350-
$2,494,799 $5,337,000 $6,887,700 $7,644,600 $8,163,900
0.45%................................................... $2,217,600- $4,744,000- $6,122,400- $6,795,200- $7,256,600-
$2,356,199 $5,040,499 $6,505,049 $7,219,899 $7,710,349
0%...................................................... < $2,217,600 < $4,744,000 < $6,122,400 < $6,795,200 < $7,256,800
<FN>
- - ------------------------
(1) Amounts listed for fiscal year 1994 relate to the achievement of specified
levels of Actual Broadcast Cash Flow during the portion of the fiscal year
remaining after the Closing Date.
</TABLE>
Except as provided in the next succeeding sentence, the Century Management
Fee may be paid on a quarterly basis in accordance with the above schedule with
year-to-date Actual Broadcast Cash Flow being annualized; provided, however, at
the end of each calendar year, and upon receipt and review of the audited
financial statements, the actual Century Management Fee shall be recalculated
and any shortfall or overage shall be settled within thirty days of receiving
such audited financial statements. Notwithstanding anything in this Agreement to
the contrary, at any time that Century or any Affiliate of Century holds an
interest in a radio broadcasting station located outside of the State of
Washington, the maximum Century fee shall be reduced to $250,000 per annum.
(b) KJR/LP FEE. The Partnership shall pay to KJR/LP an annual management
fee paid quarterly in arrears in an amount equal to 1.8% of the KJR-AM Net
Revenues and shall reimburse KJR/LP for certain expenses, for administration of
the Joint Supplementary Agreement and for the duties specifically undertaken
therein, as set forth in the Joint Supplementary Agreement.
(c) SUBORDINATION OF FEES. Upon occurrence of any Event of Default under
this Agreement or under the Securities Purchase Agreement, the management fees
payable to Century and KJR/LP hereunder shall be fully subordinated to the
payment in full of the Senior Debt, the Subordinated Notes, the redemption of
UVC/LP's Partnership Interests and the ASDP/LP's Partnership Interests,
22
<PAGE>
and notwithstanding anything in this Agreement to the contrary, unless such
Event of Default is cured, no such fees shall be paid until the Subordinated
Notes have been paid in full and ASDP/LP and UVC/LP have been afforded the
opportunity to redeem their Partnership Interests in full for cash pursuant to
Section 7 hereof.
5.12 AFFILIATE SALARIES AND CORPORATE OVERHEAD.
(a) The Partnership shall not pay any salaries or other cash compensation or
benefits to, or for the benefit of, any of the Affiliates of Century or KJR/LP,
except that Michael Williams and Lance Anderson shall, except as otherwise
provided in the Securities Purchase Agreement, be entitled to receive the
following salary and bonuses:
(i) With respect to the Partnership's 1994 fiscal year, (A) the $200,000
annual base salary of Michael Williams and (B) the $120,000 annual base
salary of Lance Anderson (collectively, the "Base Salaries"); and, with
respect to each of the Partnership's fiscal years after fiscal year 1994,
the immediately preceding fiscal year's Base Salaries, PLUS, if the Actual
Broadcast Cash Flow levels set forth below are met for the relevant fiscal
year, an amount equal to 5% of the immediately preceding fiscal year's Base
Salaries.
<TABLE>
<CAPTION>
FISCAL YEAR ACTUAL BROADCAST CASH FLOW
- - ----------- --------------------------
<S> <C>
1994 $2,217,600*
1995 $4,744,000
1996 $6,122,400
1997 $6,795,200
1998 $7,256,800
<FN>
- - ------------------------
* This amount relates to Actual Broadcast Cash Flow achieved during the
portion of the 1994 fiscal year remaining after the Closing Date, based on
$4,562,000 Actual Broadcast Cash Flow for the entire 1994 fiscal year.
</TABLE>
(ii) The annual incentive-based bonuses paid by the Partnership (a) to
Michael Williams in an aggregate amount equal to $90,000 per annum (as
adjusted as provided below) and (b) to Lance Anderson in an aggregate amount
equal to $50,000 per annum (as adjusted as provided below) (collectively,
the "Management Bonuses"); PROVIDED, HOWEVER, that the respective Management
Bonuses referred to above shall be made on a quarterly basis subject to a
percentage adjustment in accordance with the following table, based upon the
quarterly achievement of specified levels of annual Actual Broadcast Cash
Flow as indicated in the table below:
<TABLE>
<CAPTION>
% OF BONUS EARNED 1994(1) 1995 1996 1997 1998
------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
125%........................................................ > $3,049,200 > $6,523,000 > $8,418,300 > $9,343,400 > $9,978,100
100%........................................................ $2,772,000 $5,930,000 $7,653,000 $8,494,000 $9,071,000
$3,049,200- $6,523,000- $8,418,300- $9,343,400- $9,978,100-
75%......................................................... $2,494,800 $5,337,000 $6,887,700 $7,644,600 $8,163,900
$2,771,999- $5,929,999- $7,652,999- $8,193,999- $9,070,999-
0%.......................................................... < $2,494,800 < $5,337,000 < $6,887,700 < $7,644,600 < $8,163,900
<FN>
- - ------------------------
(1) Amounts listed for fiscal year 1994 relate to the achievement of specified
levels of Actual Broadcast Cash Flow during the portion of the fiscal year
remaining after the Closing Date.
</TABLE>
At the end of each calendar year, and upon receipt and review of the audited
financial statements of the Partnership, the preceding year's Management Bonuses
shall be recalculated and any shortfall or overage shall be settled within
thirty days of receiving such audited financial statements.
(b) Notwithstanding the foregoing, on the first anniversary of the date
hereof and each year thereafter, the Partners shall review Lance Anderson's job
description and responsibilities. Lance Anderson's employment with the
Partnership shall thereafter continue, and he shall be entitled to the
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<PAGE>
salary and bonuses set forth in paragraph (a) above, unless the Partnership,
with the unanimous consent of ASDP/LP and KJR/LP, elects to alter the terms of
Lance Anderson's employment and/or compensation.
(c) Except for reimbursements provided for in Section 5.8, the salary and
bonus payments provided in this Section 5.12 and the management fees provided
for in Section 5.11, the Partnership shall not pay, incur or make any
reimbursements to any Interested Party.
5.13 UPGRADE OF TRANSMISSION FACILITIES. As soon as practicable after the
date hereof, and with the consent of ASDP/LP and KJR/LP, the Partnership shall
undertake to upgrade the transmission facilities and increase the power of
Station KJR-AM and shall pay all costs and expenses incurred in connection with
such upgrade and increase in power.
5.14 KJR/LP LOCAL MARKETING AGREEMENT. If, for any reason, the FCC revokes
the assignment of license relating to KJR-AM as contemplated by the Contribution
Agreement, the Partnership at any time thereafter, may elect to operate KJR-AM,
until the FCC assignment of license transferring the license for KJR-AM to the
Partnership is reinstated without contingencies, under the terms of a local
marketing agreement ("LMA"), in form and substance reasonably satisfactory to
the General Partner, KJR/LP and ASDP/LP. Upon execution of the LMA, the parties
thereto, as soon as practicable and in any event within the time period provided
by the FCC's rules, shall file a copy of the LMA with the FCC (after deletion of
information considered confidential by either party), together with any
certifications required by the FCC's rules in connection therewith. For purposes
of this Agreement and any other agreement executed in connection herewith
(except the LMA), for as long as the LMA remains in effect, (a) KJR-AM shall be
valued as if owned by the Partnership, and (b) the rights and responsibilities
of KJR/LP under such agreement shall be determined as if KJR-AM had been
assigned to the Partnership except as otherwise provided for in or required by
(i) the LMA, (ii) the requirements of the FCC and/or the Communications Act of
1934, as amended, and (iii) this Agreement (including, but not limited to, the
agreement of KJR/LP to seek transfer of KJR-AM to the Partnership). KJR/LP
covenants and agrees that it will (a) use its best efforts to prevent the
revocation of assignment of the KJR-AM FCC License to the Partnership after the
date hereof; and (b) not subject the underlying assets of KJR-AM to any liens or
other encumbrances during the period of the LMA.
SECTION 6 ADDITIONAL PROVISIONS REGARDING LIMITED PARTNERS.
6.1 LIABILITY OF LIMITED PARTNERS. No Limited Partner shall have personal
liability with respect to any liabilities or obligations of the Partnership
except to the extent that such Limited Partner assumes or guarantees any of the
debts of the Partnership. No Limited Partner shall be personally liable or
obligated, except as otherwise required by law, either (a) to pay to the
Partnership or to any creditor of the Partnership or the other Partners any
deficiency in the Partner's Capital Account, or (b) to return to the Partnership
or to pay any creditor of the Partnership or the other Partners the amount of
any distribution to the Partner, including any return to the Partner of the
Partner's Capital
Contribution.
6.2 AGREEMENT NOT TO PLEDGE. The Limited Partners agree not to pledge
their interests in the Partnership without the prior written consent of the
General Partner.
SECTION 7 ASSIGNMENT, TRANSFER, OR SALE OF INTERESTS IN PARTNERSHIP.
7.1 WITHDRAWAL OF A GENERAL PARTNER. The General Partner agrees not to
withdraw from the Partnership without the prior consent of ASDP/LP and KJR/LP,
except upon the transfer of all of its Partnership Interest to one or more
Persons who are admitted as substitute General Partners pursuant to Section 7.2.
For purposes of this Section 7.1, the term "withdrawal" shall include the
happening of any event described in Section 17-402 of the Act.
24
<PAGE>
7.2 REMOVAL OF GENERAL PARTNER BY ASDP/LP.
(a) If the Partnership, directly or indirectly, breaches any of the
covenants set forth in Sections 4.6, 5.1, 5.2, 5.3, 5.4, 5.5, 5.10, 5.11, 5.12,
or 5.15 of the Securities Purchase Agreement and such breach is not cured with
the applicable cure period (any such event being herein referred to as an "Event
of Default"), then ASDP/LP, upon prior written notice to the General Partner,
UVC/LP and KJR/LP, shall have the following rights, exercisable in whole or in
part at its election:
(i) to remove and replace the General Partner in accordance with Section
7.2(b) hereof; provided, however, that the replacement of the General
Partner shall be subject to the consent of the Senior Lender, which consent
shall not be unreasonably withheld;
(ii) to remove one or more members of the management responsible for the
operation of the Partnership, upon notice to the individuals to be removed;
(iii) to cause the Partnership to immediately cease payments of all
management salaries and bonuses permitted under Section 5.11 and Section
5.12.
(b) Upon removal of the General Partner pursuant to Section 7.2(a)(i): the
General Partner's interest in the Partnership shall thereafter be that of a
limited partner without any of the consent rights afforded to the Limited
Partners hereunder); KJR/LP and ASDP/LP shall appoint the person selected as a
replacement general partner pursuant to Section 7.2(a)(i) as a new general
partner and such new general partner shall be issued no more than a 1% interest
in the Partnership without the consent of the Partners other than UVC/LP; and
the new general partner shall be authorized to continue the business of the
Partnership and shall have all of the management and control rights of the
General Partner under this Agreement. In accordance with the Act, the newly
admitted general partner shall execute and file an Amended Certificate of
Limited Partnership to reflect the admission of such Person as a general partner
of the Partnership. Also upon and after the removal of the General Partner
pursuant to this Section 7.2: (i) Century shall convey all of its interests in
any Subsidiary Partnership, including License Partnership and Operating
Partnership, to the newly admitted general partner of the Partnership or its
designee and shall take no further actions with respect to any Subsidiary of the
Partnership, including License Partnership and Operating Partnership, other than
as may be required to obtain the consents referred to in the preceding sentence;
and (ii) the limitations contained in Section 5.10 shall no longer apply to
Century and its Affiliates.
(c) Upon the occurrence of any of the foregoing Events of Default, ASDP/LP
may pursue the right to seek to have a receiver appointed to hold and operate
the assets of the Partnership and effectuate any necessary transfer of the radio
broadcast and related licenses for the Stations held by the Partnership and any
of its Subsidiaries. The rights of ASDP/LP hereunder are subject to applicable
federal communications laws and no transfer of control of the Stations shall
occur unless all appropriate approvals and consents of the Federal
Communications Commission shall have been obtained; provided, however, that all
of the Partners hereby agree to use their best efforts to obtain any such
approvals of consents in accordance with any requests by ASDP/LP and as
expeditiously as possible.
(d) Notwithstanding anything in this Agreement to the contrary and without
limiting any rights that ASDP/LP has under this Agreement, nothing shall be
deemed to limit or restrict the Senior Lender's rights under the Senior Loan
Documents.
7.3 TRANSFER OF PARTNERSHIP INTERESTS AND SUBSTITUTION OF PARTNERS.
(a) PERMITTED TRANSACTIONS. No Partner may assign, transfer, or
otherwise dispose of all or any part of its Partnership Interest, except in
the case of:
(i) a purchase and sale of Partnership Interests pursuant to the
Contribution Agreement; or
(ii) a transfer of all, but not less than all, of a Partner's
Partnership Interest to any Affiliate of such Partner.
25
<PAGE>
(b) RIGHTS OF A TRANSFEREE. A transferee who is not admitted as a
Partner shall not be a Partner with respect to the interest transferred, and
such a transferee shall have none of the rights of a Partner under the Act
or under this Agreement (including the right to vote on or consent to any
matter), other than the right to receive allocations and distributions from
the Partnership with respect to the interest transferred.
(c) SUBSTITUTE PARTNERS. A transferee of all or part of the interest
of a Partner in the Partnership shall be admitted as a substitute Partner of
the Partnership only if the transferee has:
(i) received the prior written consent of the General Partner, if
such transferee has acquired its interest from a Limited Partner;
(ii) received the prior written consent of ASDP/LP and KJR/LP to
continue the business of the Partnership and to admit such transferee as
a new General Partner, if such transferee has acquired its interest from
a General Partner;
(iii) accepted and assumed, in form satisfactory to the General
Partner, all terms and provisions of this Agreement;
(iv) if required by the General Partner, provided an opinion of
counsel, in form and substance acceptable to counsel for the Partnership,
that neither the offering nor the transfer of the partnership interest
violates any provisions of any federal or state securities or comparable
law;
(v) executed any other documents or instruments, and provided any
other opinions or counsel, that the General Partner requires to effect
the admission of the transferee as a substitute Partner; and
(vi) if required by the General Partner, paid all reasonable expenses
of the Partnership in connection with the admission of the transferee as
a substitute Partner, including the cost (including reasonable attorneys'
fees) of the preparation, filing, and publication of any amendment to
this Agreement or to the Certificate that the General Partner may deem
necessary or desirable in connection with such admission.
7.4 DEATH, INSANITY, OR DISSOLUTION OF LIMITED PARTNERS.
(a) In the event of the death, adjudication of incompetency, or bankruptcy
of a Limited Partner, the executor, guardian, administrator, trustee, or legal
representative of the Limited Partner (and, upon termination of the estate of a
deceased Limited Partner, the heirs or legatees of such Limited Partner) shall
succeed to all rights of such Limited Partner to receive allocations and
distributions from the Partnership, but shall not be admitted as a substitute
Limited Partner of the Partnership except upon compliance with all the
requirements of Section 7.2(c).
(b) In the event of the dissolution of a Limited Partner that is a
partnership, corporation, trust, or other entity where such dissolution would
result in multiple ownership of such Limited Partner's interest in the
Partnership, the General Partner may require one or more trustees or nominees to
be designated as the owner of such interest for the purposes of receiving all
notices that may be given under this Agreement and for such other purposes as
the General Partner may deem necessary or desirable.
(c) The death, incompetency, dissolution, or bankruptcy of any Limited
Partner shall not cause the Partnership to be dissolved or terminated.
7.5 REDEMPTION OF CERTAIN UNITS.
(a) Upon any payment or prepayment in full of the Subordinated Notes,
ASDP/LP shall have the right, upon 30 days' prior written notice to the
Partnership, to require the Partnership to redeem the ASDP/LP Partnership
Interests, the UVC/LP Partnership Interests and the Warrants issued to ASDP and
to UVC/LP pursuant to the Securities Purchase Agreement and the UVC/LP
Securities Purchase
26
<PAGE>
Agreement, respectively. If ASDP/LP exercises its right to require the
redemption of the ASDP/LP Partnership Interests, the UVC/LP Partnership
Interests and the Warrants, the closing of the redemption of the ASDP/LP
Partnership Interests, the UVC/LP Partnership Interests and the Warrants shall
take place at the principal office of the Partnership within 30 days after the
later of the notice referred to in the preceding sentence or the determination
of Residual Net Equity Value. Upon delivery to the Partnership of all documents
necessary to transfer to the Partnership good title to the ASDP/LP Partnership
Interests, the UVC/LP Partnership Interests and the Warrants free and clear of
all liens, security interests and other encumbrances, the Partnership shall pay
a redemption price for the ASDP/LP Partnership Interests, the UVC/LP Partnership
Interests and the Warrants, in cash, in an amount equal to the excess of (x) the
amount that would be distributed with respect to the ASDP/LP Partnership
Interests, the UVC/LP Partnership Interests and the Preferred LP Units
attributable to the Warrants pursuant to Section 4.1(b) if the Partnership were
to be liquidated as of the date of the event in respect of which the redemption
has been made and net proceeds in the amount of the Residual Net Equity Value
were distributed to the Partners, over (y) the exercise price of the Warrants as
set forth in the Securities Purchase Agreement and the UVC/LP Securities
Purchase Agreement, respectively.
(b) Upon any payment or prepayment in full of the Subordinated Notes, the
Partnership shall have the right, upon 30 days' prior written notice, to redeem
the ASDP/LP Partnership Interests, the UVC/LP Partnership Interests and the
Warrants issued to ASDP and to UVC/LP pursuant to the Securities Purchase
Agreement and the UVC/LP Securities Purchase Agreement, respectively. If the
Partnership exercises its right to redeem the ASDP/LP Partnership Interests, the
UVC/LP Partnership Interests and the Warrants, the closing of the redemption of
the ASDP/LP Partnership Interests, the UVC/LP Partnership Interests and the
Warrants shall take place at the principal office of the Partnership within 30
days after the later of the notice referred to in the preceding sentence or the
determination of Residual Net Equity Value. Upon delivery to the Partnership of
all documents necessary to transfer to the Partnership good title to the ASDP/LP
Partnership Interests, the UVC/LP Partnership Interests and the Warrants free
and clear of all liens, security interests and other encumbrances, the
Partnership shall pay a redemption price for the ASDP/LP Partnership Interests,
the UVC/LP Partnership Interests and the Warrants, in cash, in an amount equal
to the excess of (x) the amount that would be distributed with respect to the
ASDP/LP Partnership Interests, the UVC/LP Partnership Interests and the
Preferred LP Units attributable to the Warrants pursuant to Section 4.1(b) if
the Partnership were to be liquidated as of the date of the event in respect of
which the redemption has been made and net proceeds in the amount of the
Residual Net Equity Value were distributed to the Partners, over (y) the
exercise price of the Warrants as set forth in the Securities Purchase Agreement
and the UVC/LP Securities Purchase Agreement, respectively.
(c) If the Partnership prepays the Subordinated Notes pursuant to Section
1.1(d) of the Securities Purchase Agreement, then it shall distribute to UVC/LP
an amount of cash equal to the UVC/LP Senior Preference Amount. The distribution
to UVC/LP of the UVC/LP Senior Preference Amount shall take place at the
principal office of the Partnership simultaneously with the prepayment of the
Subordinated Notes. In addition, if such distribution occurs on or after the
third anniversary of the effective date hereof but prior to the fourth
anniversary, then the Partnership shall pay to UVC/LP an additional amount equal
to the amount of the UVC/LP Senior Preferred Return that would have accrued for
the period from the date of such distribution to the fourth anniversary of the
effective date hereof.
(d) Until the redemption of the ASDP/LP Partnership Interests, the UVC/LP
Partnership Interests and the Preferred LP Units, ASDP/LP, UVC/LP and the
Preferred Limited Partners shall retain all of their rights as Partners under
this Agreement, and any redemption payments hereunder shall be subject to the
prior written consent of the Senior Lender or the payment in full of the Senior
Debt.
27
<PAGE>
SECTION 8 DISSOLUTION AND TERMINATION OF THE PARTNERSHIP.
8.1 EVENTS OF DISSOLUTION. The Partnership shall dissolve upon the
earliest to occur of:
(a) subject to any restriction in any agreement to which the Partnership
is a party, an election to dissolve the Partnership made by the General
Partner;
(b) the sale, exchange, involuntary conversion, or other disposition or
transfer of all or substantially all the assets of the Partnership;
(c) the occurrence of any event described in Section 17-402 of the Act
with respect to the General Partner, except that dissolution of the
Partnership shall not occur if the General Partner is replaced with a
substitute or replacement general partner which General Partner elects that
the business of the Partnership continue;
(d) the happening of any event that, under applicable law, causes the
dissolution of a limited partnership; or
(e) the expiration of the term of the Partnership.
8.2 ACTIONS ON DISSOLUTION.
(a) LIQUIDATOR. Upon the dissolution of the Partnership, the General
Partner, or, if the General Partner is unable to do so or if the General
Partner wrongfully caused the dissolution of the Partnership, a Person
selected by ASDP/LP and KJR/LP, shall act as liquidator to wind up the
Partnership. The liquidator shall have full power and authority to sell,
assign, and encumber any or all of the Partnership's assets and to wind up
and liquidate the affairs of the Partnership in an orderly and businesslike
manner, subject to any applicable provisions of the Contribution Agreement.
(b) CERTIFICATE OF CANCELLATION OF LIMITED PARTNERSHIP. Upon the
dissolution and winding up of the Partnership, the liquidator shall cause
the cancellation of the Certificate in accordance with Section 17-203 of the
Act.
(c) APPLICATION OF PROCEEDS. The proceeds of liquidation shall be
applied first to the payment of the debts and liabilities of the Partnership
(including any loans to the Partnership made by any Partner), the expenses
of liquidation, and the establishment of any reserves that the liquidator
deems necessary for potential or contingent liabilities of the Partnership.
Remaining proceeds shall be distributed to the Partners as provided in
Section 4.1(b).
(d) DISTRIBUTION IN KIND. If the liquidator determines that the
Partners would be materially adversely affected by a liquidation of the
Partnership's assets, the liquidator may distribute all or a portion of the
Partnership's assets in kind to the Partners, as agreed to by all of the
Partners.
(e) DEFERRAL OF LIQUIDATION. If the liquidator determines that an
immediate sale of part or all of the Partnership's assets would cause undue
loss to the Partners, the liquidator may, to avoid the loss, either:
(i) defer the liquidation of, and withhold from distribution for a
reasonable time, any assets of the Partnership except those necessary to
satisfy debts and liabilities of the Partnership (other than debts or
liabilities to the Partners); or
(ii) distribute to the Partners, in lieu of cash, as tenants in
common, undivided interests in any assets of the Partnership, and
liquidate only those assets that are necessary to pay the debts and
liabilities of the Partnership.
(f) FINAL ACCOUNTING. Upon the dissolution and winding up of the
Partnership, a proper accounting shall be made from the date of the last
previous accounting to the date of winding up.
28
<PAGE>
(g) STATEMENT OF LIQUIDATION. Within a reasonable time following the
completion of the liquidation of the Partnership, the liquidator shall
submit a statement (which need not be audited) to each Partner setting forth
the assets and liabilities of the Partnership as of the date of liquidation
and the amount of the distribution to each Partner pursuant to Section
4.1(b).
(h) EFFECT OF WITHDRAWAL OF GENERAL PARTNER. The withdrawal of the
General Partner (including the happening of any event described in Section
17-402 of the Act) shall not alter the allocations and distributions to be
made to the Partners pursuant to this Agreement.
(i) TERMINATION OF PARTNERSHIP. Upon the completion of the
distribution of the Partnership's assets and the proceeds of liquidation as
provided in this Section 8.2, the Partnership shall be terminated.
SECTION 9 BOOKS, RECORDS, AND RETURNS; TAX YEAR.
9.1 BOOKS OF ACCOUNT AND RECORDS. The Partnership's books and records,
including a register showing the names and addresses of the Partners and their
Partnership Interests, a copy of this Agreement, and any other records required
to be maintained by Section 17-305 of the Act, shall be maintained at the
principal office of the Partnership at the location specified in Section 2.6.
All such books and records shall be available for inspection and copying by the
Partners or their duly authorized representatives during ordinary business
hours. The General Partner shall keep accurate books and records of the
operation of the Partnership which shall reflect all transactions and be
appropriate and adequate for the Partnership's business and for carrying out the
provisions of this Agreement.
9.2 ACCOUNTING REPORTS. Within 120 days after the end of each Fiscal Year
of the Partnership, the General Partner shall cause to be furnished to each
Limited Partner an audited balance sheet of the Partnership as at the end of
such year, together with related audited statements of operations (including
cash flows) of the Partnership for such year, examined and reported upon by
Ernst & Young or another firm of nationally recognized independent public
accountants, prepared in accordance with generally accepted accounting
principles and practices consistently applied, together with a certificate of
the General Partner and a written discussion and analysis by management of such
financial statements, including a comparison of the results versus budget for
the preceding Fiscal Year and an explanation of any significant variances
therein.
9.3 TAX RETURNS. The General Partner shall cause the Partnership's tax
returns to be prepared and filed. Within 90 days after the end of each Fiscal
Year of the Partnership, the General Partner shall cause to be furnished to each
Limited Partner a statement, to be used in the preparation of the Partner's
income tax returns, showing the amounts of any Net Profit and Net Loss, tax
credits, and gains allocable to the Partner for the Fiscal Year, and the amount
of any distributions made to the Partner by the Partnership during the Fiscal
Year.
9.4 DEPOSIT OF PARTNERSHIP FUNDS. All revenues, assessments, loan
proceeds, and other receipts of the Partnership will be maintained on deposit in
interest-bearing and non-interest bearing accounts and other investments as the
General Partner deems appropriate. Any interest or other income generated by the
Partnership's deposits or investments will be for the Partnership's account.
Partnership funds from any of the various sources mentioned above may be
commingled with other Partnership funds, and may be withdrawn, expended, and
distributed as authorized by this Agreement. The Partnership shall not commingle
Partnership funds with the separate funds of the Partners, their Affiliates, or
any other Person.
SECTION 10 AMENDMENTS AND WAIVERS.
10.1 AMENDMENTS.
29
<PAGE>
(a) This Agreement may be modified or amended only with the approval of all
the Partners, subject to the following:
(i) This Agreement may be amended from time to time by the General
Partner without the approval of any other Partner to reflect:
(A) the admission of any Person complying with Section 7.2(c), or
(B) the change of the Partnership's principal office or other place
of business within the State of Washington.
(ii) Except as provided in Section 10.1(a), any other amendment of this
Agreement will require the prior written consent of KJR/LP and ASDP/LP.
(b) The General Partner shall cause to be prepared and filed any amendment
to the Certificate that may be required to be filed under the Act as a
consequence of any amendment to this Agreement.
(c) Any modification or amendment to this Agreement that has received the
requisite consent of the Partners pursuant to this Section 10.1 shall be binding
on all Partners, including any Partner whose consent to such modification or
amendment was not required.
10.2 WAIVERS. The observance or performance of any term or provision of
this Agreement may not be waived (either generally or in a particular instance,
and either retroactively or prospectively) by the General Partner without prior
written consent.
SECTION 11 MISCELLANEOUS.
11.1 CAPTIONS. All section and paragraph captions contained in this
Agreement are for convenience only and shall not be deemed part of this
Agreement.
11.2 PRONOUNS, SINGULAR AND PLURAL FORM. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, and neuter as the
identity of the Person or Persons referred to may require, and all words shall
include the singular or plural as the context or the identity of Persons may
require.
11.3 FURTHER ACTION. The parties shall execute and deliver all documents,
provide all information, and take, or forbear from, all actions that may be
necessary or appropriate to achieve the purposes of this Agreement.
11.4 EXECUTION OF DOCUMENTS. The Partners agree to execute any
instruments, documents, and papers that the General Partner deems necessary or
appropriate to carry out the intent of this Agreement. Each Limited Partner,
including each additional and substituted Limited Partner, by the execution of
this Agreement, irrevocably constitutes and appoints the General Partner its
true and lawful attorney-in-fact with full power and authority in its name,
place, and stead to execute, acknowledge, deliver, swear to, file, and record at
the appropriate public offices any documents that may be necessary or
appropriate to carry out the provisions of this Agreement, including:
(a) all certificates and other instruments (including counterparts of
this Agreement), and any amendments thereof, that the General Partner deems
appropriate to qualify or continue the Partnership as a limited partnership
in any jurisdiction in which the Partnership may conduct business or in
which such qualification or continuation is, in the opinion of the General
Partner, necessary to protect the limited liability of the Limited Partners;
(b) all amendments to this Agreement adopted in accordance with the
terms hereof and all instruments that the General Partner deems appropriate
to reflect a change or modification of the Partnership in accordance with
the terms of this Agreement; and
(c) all conveyances and other instruments that the General Partner deems
appropriate to reflect the dissolution and termination of the Partnership.
30
<PAGE>
The appointment by each Limited Partner of the General Partner as its
attorney-in-fact shall be deemed to be a power coupled with an interest, in
recognition of the fact that each of the Partners under this Agreement will be
relying upon the power of the General Partner to act as contemplated by this
Agreement in any filing and other action by it on behalf of the Partnership, and
shall survive the bankruptcy, death, adjudication of incompetence or insanity,
or dissolution of any Person giving such power and the transfer or assignment of
all or any part of such Person's Partnership Interest in the Partnership.
11.5 PUT AND CALL. On the execution of this Agreement, Michael Williams,
Lance W. Anderson, George V. Kriste, and KJR Radio, Inc. shall execute the Put
and Call Agreement.
11.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding
among the parties regarding the subject matter contained herein and supersedes
any prior understandings and agreements between them regarding the subject
matter of this Agreement.
11.7 AGREEMENT BINDING. This Agreement shall be binding upon the heirs,
executors, guardians, administrators, successors, and assigns of the parties.
11.8 NOTICES. All notices, demands, and requests required or permitted to
be given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly delivered and received (a) on the date of personal
delivery, or (b) on the date of receipt (as shown on the return receipt) if
mailed by registered or certified mail, postage prepaid and return receipt
requested, or if sent by Federal Express or similar courier service, with all
charges prepaid, in each case addressed to the Partner at the address set forth
below or at the last address furnished by the Partner to the other Partners by
notice pursuant to this Section 11.8.
To the General Partner:
Century Management, Inc.
190 Queen Anne Avenue North, Suite 100
Seattle, Washington, 98109
Attention: Lance W. Anderson
Copies to:
George V. Kriste
Century Management, Inc.
12317 Rochedale Lane
Los Angeles, California 90049
31
<PAGE>
Ralph W. Hardy
Dow, Lohnes & Albertson
1255 23rd Street, N.W.
Suite 500
Washington, D.C. 20037
To KJR/LP:
KJR Radio, Inc.
c/o Ackerley Communications, Inc.
800 Fifth Avenue, Suite 3770
Seattle, Washington 98104
Attention: Mr. Denis Curley
Copy to:
Rubin, Winston, Diercks, Harris & Cooke
1730 M Street, Suite 412
Washington, D.C. 20036
Attention: Eric H. Rubin, Esq.
To ASDP/LP:
ASDP/New Century, Inc.
c/o Burr, Egan, Deleage & Co.
Suite 3800
One Post Office Square
Boston, MA 02109
Attention: Brian W. McNeill
Copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Attention: John J. Egan, III, Esq.
To UVC/LP:
Union Venture Corporation
445 South Figueroa Street
13th Floor
Los Angeles, California 90071
Attention: Robert C. Dawson
Copy to:
Union Venture Corporation
Legal Department
445 South Figueroa Street
8th Floor
Los Angeles, California 90071
Attention: Jonathan A. Wright, Esq.
Nothing in this Section 11.8 shall preclude the delivery of notices by
appropriate means other than those described above, including telex or
facsimile.
32
<PAGE>
11.9 SEVERABILITY. If any provision or part of any provision of this
Agreement shall be invalid or unenforceable in any respect, such provision or
part of any provision shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts of such
provision or the remaining provision of this Agreement.
11.10 COUNTERPARTS. This Agreement may be signed in counterparts with the
same effect as if the signature on each counterpart were upon the same
instrument.
11.11 GOVERNING LAW. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Delaware (without regard to
the choice of law provisions thereof).
11.12 NO THIRD-PARTY BENEFICIARIES. This Agreement is not intended to, and
shall not be construed to, create any right enforceable by any Person not a
party hereto, including any creditor of the Partnership or of any of the
Partners.
33
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CENTURY MANAGEMENT, INC.
By: _______/s/_GEORGE V. KRISTE_______
Name: George V. Kriste________________
Title: Chairman_______________________
NEW CENTURY SEATTLE, INC.
By: _______/s/_GEORGE V. KRISTE_______
Name: George V. Kriste________________
Title: Chairman_______________________
KJR RADIO, INC.
By: _________/s/_DENIS CURLEY_________
Name: Denis Curley____________________
Title: Secretary/Treasurer____________
ASDP/NEW CENTURY, INC.
By: _______/s/_BRIAN W. MCNEILL_______
Name: Brian W. McNeill________________
Title: President______________________
UNION VENTURE CORPORATION
By: _______/s/_ROBERT S. CLARKE_______
Name: Robert S. Clarke________________
Title: President______________________
By: ________/s/_KATHLEEN BURNS________
Name: Kathleen Burns__________________
Title: Vice-President_________________
The undersigned signs this Agreement solely for purposes of unconditionally
guaranteeing the obligations of KJR Radio, Inc. under Section 3.1(g)(i).
ACKERLEY COMMUNICATIONS, INC.
By: _________/s/_DENIS CURLEY_________
Name: Denis Curley____________________
Title: Sr. VP/Treasurer_______________
34
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,518
<SECURITIES> 0
<RECEIVABLES> 38,290
<ALLOWANCES> 978
<INVENTORY> 0
<CURRENT-ASSETS> 13,826
<PP&E> 174,000
<DEPRECIATION> 112,000
<TOTAL-ASSETS> 169,086
<CURRENT-LIABILITIES> 53,260
<BONDS> 214,216
<COMMON> (98,390)
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 169,086
<SALES> 0
<TOTAL-REVENUES> 129,276
<CGS> 0
<TOTAL-COSTS> 101,049
<OTHER-EXPENSES> 4,366
<LOSS-PROVISION> 854
<INTEREST-EXPENSE> 19,428
<INCOME-PRETAX> 4,433
<INCOME-TAX> 33
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,400
<EPS-PRIMARY> .28
<EPS-DILUTED> 0
</TABLE>
