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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
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ML Media Partners, L.P.
(Name of Subject Company)
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ML Media Partners, L.P.
(Name of Person(s) Filing Statement)
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Units of Limited Partnership Interest
(Title of Class of Securities)
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NONE
(CUSIP Number of Class of Securities)
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James V. Caruso
Executive Vice President
ML Media Management Inc.
World Financial Center
South Tower - 23rd Floor
New York, NY 10080-6123
(212) 236-4368
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
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Copies to:
Susan D. Lewis, Esq.
Brown & Wood LLP
One World Trade Center
New York, NY 10048-0557
(212) 839-5317
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is ML Media Partners, L.P., a
Delaware limited partnership (the "Partnership"). The general partner of the
Partnership is Media Management Partners, a New York general partnership (the
"General Partner") between RP Media Management ("RPMM") and ML Media
Management Inc. ("MLMM"). The principal executive offices of both the
Partnership and the General Partner are located at World Financial Center,
South Tower-23rd Floor, New York, New York 10080-6123. The title of the class
of equity securities to which this Schedule 14D-9 (the "Statement") relates is
units of limited partnership interest of the Partnership ("Units").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the unsolicited tender offer made by
Smithtown Bay, LLC, a Delaware limited liability company (the "Purchaser"),
and Global Capital Management, Inc., a Delaware corporation, disclosed in a
Tender Offer Statement on Schedule 14D-1 dated January 27, 1999 (the "Schedule
14D-1"), to purchase for cash up to 6,500 Units, representing approximately
3.5% of the Units outstanding as of January 27, 1999, at a purchase price of
$950 per Unit (reduced by the $50 transfer fee (per transfer, not per Unit)
and further reduced by the amount of any distributions with respect to Units
paid or declared after January 1, 1999) and upon the terms and conditions set
forth in the Offer to Purchase dated January 27, 1999 (the "Offer to
Purchase"), and the related Agreement of Transfer and Sale (the "Agreement of
Transfer and Sale" and, together with the Offer to Purchase, the " Current
Offer"). Neither the Purchaser nor any of its affiliates is affiliated with
the Partnership or the General Partner, and the Current Offer was not
solicited by the Partnership, the General Partner or any of their affiliates.
The Schedule 14D-1 states that the principal executive offices of the
Purchaser are located at 601 Carlson Parkway, Suite 200, Minnetonka, Minnesota
55305.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which is the person
filing this statement, are set forth in Item 1 above.
(b) (i) The Partnership is a limited partnership and has no executive
officers or directors. Pursuant to Section 5.1 of the Partnership's Second
Amended and Restated Agreement of Limited Partnership dated May 14, 1986, as
amended (the "Partnership Agreement"), which is filed as Exhibit (c)(1)
hereto, the General Partner manages the business and affairs of the
Partnership and has authority to make all decisions regarding the business of
the Partnership. The responsibilities of the General Partner are carried out
by executive officers of either RPMM or MLMM, each a general partner in the
General Partner, acting on behalf of the General Partner. The executive
officers and directors of RPMM are: I. Martin Pompadur, President, Chief
Executive Officer, Chief Operating Officer, Secretary and Director; and
Elizabeth McNey Yates, Executive Vice President. The executive officers and
directors of MLMM are: Kevin K. Albert, President and Director; James V.
Caruso, Executive Vice President and Director; Rosalie Y. Goldberg, Vice
President and Director; David G. Cohen, Vice President and Director; Kevin T.
Seltzer, Vice President and Treasurer; and Frank J. Marinaro, Secretary.
To the knowledge of the Partnership, the executive officers, directors
and affiliates of the General Partner in the aggregate own less than 1% of the
Units.
Pursuant to the Partnership Agreement, which is filed as Exhibit (c)(1)
hereto, the General Partner receives certain management fees and
reimbursements from the Partnership and shares in allocations of profits and
losses and distributions from the Partnership.
Pursuant to the Partnership Agreement, subject to certain limitations set
forth therein, the General Partner is paid an annual "Partnership Management
Fee", equal to $557,979, and is reimbursed for its actual, out-of-pocket
expenses incurred on behalf of the Partnership in connection with the
management of the Partnership; provided, however, that such reimbursement in
any one year shall not be in excess of an amount which currently equals
$696,628, subject to adjustment annually in accordance with changes in the
Consumer Price Index.
Also pursuant to the Partnership Agreement, subject to certain
limitations set forth therein, the General Partner is paid an annual "Property
Management Fee", which for 1998 equaled $649,709, as compensation for
supervising the management of the Partnership's media properties (the "Media
Properties"), and is reimbursed for its actual, out-of-pocket expenses
incurred on behalf of the Partnership in connection with the supervision of
the Partnership's Media Properties; provided, however, that such reimbursement
in any one year shall not exceed an amount which currently equals $647,586,
subject to adjustment annually in accordance with changes in the Consumer
Price Index; provided further, however, that each of such Property Management
Fee and the maximum expense reimbursement will be reduced by an amount equal
to 2/3 of 1% of the amount otherwise computed for every 1% reduction in the
"Media Property Base" (i.e., the investment by the Partnership in the Media
Property), for Media Properties subsequently sold, effective as of the date of
consummation of the related sale; and provided further that the Property
Management Fee and maximum expense reimbursement shall be zero from and after
the earlier to occur of (a) completion of all property management duties of
the General Partner and (b) six months after the consummation of the last sale
of Media Properties.
For each of the years ended 1997, 1996 and 1995 the Partnership paid
the General Partner a Partnership Management Fee of $557,979, and for the
thirty-nine week period ended September 25, 1998 the Partnership paid the
General Partner a Partnership Management Fee of $418,485. For the years ended
1997, 1996 and 1995 the Partnership paid the General Partner Property
Management Fees of $653,692, $779,055 and $1,008,266, respectively, and for
the thirty-nine week period ended September 25, 1998 the Partnership paid the
General Partner a Property Management Fee of $488,012. During those same years
the General Partner incurred reimbursable operating expenses of $951,940,
$799,055 and $1,039,772, respectively, and for the thirty-nine week period
ended September 25, 1998 the General Partner incurred reimbursable operating
expenses of approximately $639,000.
Pursuant to the terms of the Partnership Agreement, profits of the
Partnership are generally allocated between the General Partner and the
limited partners of the Partnership (the "Limited Partners"; the General
Partner and the Limited Partners being collectively referred to as the
"Partners") as follows: (a) first, in proportion to any negative balances in
capital accounts of the Partners, until the balances of all capital accounts
equal zero; (b) second, 99% to the Limited Partners and 1% to the General
Partner until an amount equal to the sum of previously allocated losses plus
an additional amount computed at the rate of 7% per annum, cumulative, but not
compounded, on the weighted average daily amount of their adjusted capital
contributions (the "Return") has been allocated; (c) third (after certain
curative allocations are made, if necessary), 80% to the Limited Partners and
20% to the General Partner until the sum of profits allocated to the Limited
Partners equals the aggregate amount of losses previously allocated to the
Limited Partners plus an amount equal to the amount of their capital
contributions; and (d) fourth, 70% to the Limited Partners and 30% to the
General Partner. Losses are generally allocated in the reverse order of
profits previously allocated, and then 99% to the Limited Partners and 1% to
the General Partner.
Distributions of cash and sale proceeds, after payment of or reserves
for certain debts and obligations of the Partnership, are generally
distributed as follows: (a) first, 99% to the Limited Partners and 1% to the
General Partner until the Limited Partners have received distributions equal
to the amount of the Return and an amount equal to the amount of their capital
contributions; (b) second, 80% to the Limited Partners and 20% to the General
Partner until the total distributions to Limited Partners has equaled twice
the amount of their capital contributions; and (c) third, 70% to the Limited
Partners and 30% to the General Partner.
The General Partner, its partners (MLMM and RPMM), and their
executive officers, directors and affiliates are entitled to indemnification
under certain circumstances from the Partnership pursuant to the Partnership
Agreement. For the thirty-nine week period ending September 25, 1998, the
Partnership incurred obligations of approximately $194,000 for legal costs in
connection with such indemnification related to the litigation described in
Item 8(b) below. Cumulative indemnified legal costs amount to approximately
$474,000 through September 25, 1998.
(ii) During January 1997, the Purchaser, which was at such time a
Limited Partner in the Partnership, requested from the Partnership a list (the
"1997 List") of the names, addresses of and the number of Units held by
Limited Partners for the purpose of making an unsolicited offer for the
purchase of no more than 5% of the then outstanding Units of the Partnership.
As a condition to the Partnership providing the 1997 List, the Purchaser
entered into an agreement with the Partnership pursuant to which, among other
things, the Purchaser agreed not to acquire more than 5% of the Units. On May
23, 1997, the Purchaser entered into a separate agreement with the Partnership
(the "May 1997 Agreement") which, among other things, restricts the
Purchaser's activities and interests in Media Properties and prohibits the
Purchaser from any direct or indirect involvement in the management or
operation of the Partnership's media related activities and also provides that
the Purchaser will at no time own more than 5% of the Units. The Purchaser
also submitted information to the Partnership enabling the Partnership to
determine at such time that the Purchaser's ownership of Units would not
violate Federal Communications Commissions ("FCC") rules applicable to the
Partnership.
The General Partner is aware that in 1997 the Purchaser made several
unsolicited tender offers for the purchase of Units of the Partnership at
prices ranging from $410 per Unit to $600 per Unit. On November 20, 1998, a
representative of the Purchaser contacted a representative of the Partnership
requesting that the Partnership waive the 5% ownership restriction, based on
the Purchaser's representation that it then owned less than 5% of the
outstanding Units of the Partnership and that the Purchaser intended to
initiate a tender offer in accordance with the Securities Exchange Act of
1934, as amended, and the rules promulgated thereunder (the "Exchange Act")
for not more than an additional 5% of the outstanding Units. By letter dated
November 24, 1998 to the Purchaser, based on such representations, the
Partnership's representative stated that the Partnership would waive the 5%
ownership restriction contained in the May 1997 Agreement, provided the
Purchaser's potential offer met certain conditions, including the safe harbor
provisions set forth in the IRS Notice described in Item 4(b)(vi) below,
applicable FCC restrictions, and the satisfaction of the provisions of the
Partnership Agreement. The Purchaser subsequently filed with the Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
dated November 27, 1998, as amended (the "Prior Offer"), disclosing its
unsolicited offer to purchase up to 9,000 Units, representing approximately
4.8% of the then outstanding Units at a price of $950 per Unit (less transfer
fees and less distributions described therein). The Purchaser's Prior Offer
terminated on December 31, 1998, and the Purchaser has announced that 2,582
Units were purchased pursuant to the Purchaser's Prior Offer. According to the
books and records of the Partnership, as of February 1, 1999, the Purchaser
and an affiliate of the Purchaser owned of record an aggregate of 11,943
Units, or approximately 6.4% of the outstanding Units of the Partnership.
During the week of January 11, 1999, the Purchaser contacted the
Partnership by telephone in an attempt to obtain a current list of the names,
addresses of and the number of Units held by Limited Partners (the "1999
List") for the purpose of making an unsolicited offer for the purchase of
Units of the Partnership. The Partnership declined to provide the 1999 List
until the Purchaser complied with the provisions of the Exchange Act in
connection with its request. On January 27, 1999, pursuant to the provisions
of the Exchange Act the Purchaser again requested from the Partnership the
1999 List; the 1999 List was sent to the Purchaser on January 29, 1999.
Except as described herein or in paragraph (i) above, there exists on
the date hereof no material contract, agreement, arrangement or understanding,
and no actual or potential conflict of interest, between the Partnership or
its affiliates and (x) the Partnership, its executive officers, directors or
affiliates or (y) the Purchaser, its executive officers, directors or
affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) At a meeting of the General Partner held on February 3, 1999, at
which RPMM and MLMM, as general partners of the General Partner participated,
the General Partner, on behalf of the Partnership, concluded that the Current
Offer is inadequate and not in the best interest of the Limited Partners, and
recommends that the Limited Partners reject the Current Offer and not tender
their Units pursuant to the Current Offer. A letter to the Limited Partners of
the Partnership communicating the Partnership's view with respect to the
Current Offer is filed as Exhibit (a)(1) hereto and incorporated herein by
reference. Depending on, among other things, (i) the personal tax situation,
liquidity needs and other financial considerations of each Limited Partner and
such Limited Partner's own facts and circumstances, (ii) such Limited
Partner's own assessment of the Current Offer and the relevant facts, as well
as the Madison Offer (described below), (iii) such Limited Partner's
willingness to accept the risks relating to the amount of proceeds that the
Partnership will actually realize from the sales of its remaining Media
Properties and (iv) the timing of any distributions of such proceeds, certain
Limited Partners may determine that it is appropriate to tender their Units in
the Current Offer. However, the Partnership and the General Partner believe
that all Limited Partners should carefully consider the information set forth
in Item 4(b) below before making a decision whether or not to tender their
Units.
(b) The Partnership reached the conclusion set forth in Item 4(a)
after considering the following factors:
(i) Expected First Quarter 1999 Cash Distribution. The previously
announced sales of the Partnership's radio stations in Anaheim,
California and Cleveland, Ohio were consummated on January 4,
1999, and January 28, 1999, respectively, in accordance with the
terms provided in the respective sales agreements. The
distributions from these sales will be made to limited partners
of record as of January 4, 1999, and January 28, 1999,
respectively, in accordance with the terms of the Partnership's
Partnership Agreement. It is expected that a distribution of
approximately $300 per Unit will be made by the end of the first
quarter of 1999. The distribution will consist primarily of
distributable proceeds from the sales of the Anaheim and
Cleveland radio stations, as well as certain amounts released
from reserves created in connection with the prior sale of the
Partnership's California cable system. The Current Offer
provides that any such distribution will be deducted by the
Purchaser from the cash amount it will pay to tendering Limited
Partners. See paragraph (viii) below.
(ii) Sales of Remaining Media Properties. The Partnership
presently expects to sell its cable system in San Juan, Puerto
Rico, in 1999, although it has not reached any agreement with
respect to any such sale. In addition, the Partnership is
presently negotiating a sale of its Bridgeport, Connecticut
radio combination, although there can be no assurance as to
whether and on what terms such sale may be consummated. Limited
Partners who tender their Units to the Purchaser will not
receive any economic benefit from such sales if and when
consummated by the Partnership, to the extent not reflected in
the Current Offer price.
(iii) The Value of the Partnership's Remaining Assets Could be
Substantially Higher than the Value Reflected in the Current
Offer. The General Partner currently estimates that the net
asset value of the Partnership, computed as of September 25,
1998, adjusted to reflect the actual sales prices of the Anaheim
and Cleveland radio stations, is $1,150 per Unit. Such estimated
net asset value takes into consideration the estimated value of
the Partnership's Media Properties (including the Anaheim and
Cleveland radio stations), its cash holdings, as well as its
other assets and liabilities; and it reflects the Partnership's
estimated fees and expenses to be incurred in connection with
its remaining operations and the winding up of the Partnership,
but does not reflect any potential costs, expenses or
liabilities related to the litigation described in Item 8(b)
below. In addition, although there can be no assurance that the
Partnership's net asset value can or will be realized, or
certainty as to the amount of future fees and expenses, the
General Partner believes that it has used conservative
assumptions in estimating the value of its remaining Media
Properties. As a result, there is a possibility that the actual
proceeds received by the Partnership from the sales of its Media
Properties could be significantly higher than the value assumed.
Specifically, the General Partner believes that there is
significant upside potential to the value it has assigned to the
Puerto Rico cable systems (owned through its interest in
Century-ML Cable Venture), which the Partnership currently
expects to sell in 1999, although there can be no assurance as
to the price that the Partnership will ultimately realize from
such sale. Therefore, the Partnership has concluded that it
would be better for a Limited Partner to hold its Units rather
than to tender them to the Purchaser pursuant to the Current
Offer.
However, there can be no assurance that changing market
conditions or other factors will not have a negative impact on
the value of the Partnership's cable systems in San Juan, Puerto
Rico or its radio station combination in Bridgeport, Connecticut
or its ability to sell either or both of such assets at any
particular price or within any particular time frame.
Furthermore, the actual proceeds received by the Partnership
from the sales of its Media Properties could be lower than
estimated.
The actual value of Units to be ultimately realized by Limited
Partners from the Partnership will also be dependent on the
ability of the Partnership to sell its Media Properties, and the
actual proceeds received for such Media Properties, as well as
the actual costs and expenses (including with respect to
litigation) incurred prior to the completion of the liquidation
of the Partnership and the results of the litigation referred to
in Item 8(b) below. Also, the pendency of the litigation may
delay distributions to the Limited Partners. The Partnership's
estimates and assumptions have not been reviewed by an
independent appraiser or financial advisor.
(iv) Purchaser's Profit Motive. As set forth in the Purchaser's
Current Offer to Purchase dated January 27, 1999, the Purchaser
is making the Current Offer for investment purposes and with the
intention of making a profit from ownership of the Units. The
Purchaser also stated that its intent is to acquire the Units at
a discount to the value that the Purchaser might ultimately
realize from owning the Units. Please note that the Current
Offer price is $950 per Unit, reduced by the $50 transfer fee
(per transfer, not per Unit), and further reduced by the amount
of any distributions paid or declared with respect to the Units
after January 1, 1999 (including the expected first quarter 1999
distribution as described in paragraph (i) above). The terms and
conditions of the Current Offer have been determined and
established by the Purchaser and not pursuant to negotiations or
discussions with, or input from, the Partnership, the General
Partner or any of their affiliates.
(v) No Established Market Valuations by Third Parties. Limited
partnership interests are generally illiquid and there is no
established trading market for the Units to provide established
market valuations for the Units against which to compare the
purchase price in the Current Offer. Secondary market sales
activity for the Units, including privately negotiated sales,
has been limited and sporadic. Privately negotiated sales and
sales through intermediaries (e.g., through the matching
services for buyers and sellers of partnership interests)
currently are the primary means available to a Limited Partner
to liquidate an investment in the Units (other than tender
offers to purchase, including the Current Offer) because the
Units are not listed or traded on any exchange or quoted on any
NASDAQ list or system. During the past twelve months, however,
several Limited Partners of the Partnership who are not in any
other way affiliated with the Partnership or the General Partner
conducted unregistered unsolicited tender offers for Units in
the Partnership at prices ranging from $360 per Unit to $600 per
Unit, and registered unsolicited tender offers for Units in the
Partnership at prices ranging from $750 to $950 per Unit (see
below). In addition, private sales during the past twelve months
generally have ranged from $125 per Unit to $1,020 per Unit.
Sales prices in the informal secondary market have typically
reflected a discount to the Partnership's estimates of net asset
value at the time.
Madison Liquidity Investors 104, LLC ("Madison"), a Delaware
limited liability company unaffiliated with the Partnership and
the General Partner, has disclosed in a Tender Offer Statement
on Schedule 14D-1 filed with the SEC on November 23, 1998, as
amended, its unsolicited tender offer (the "Madison Offer") to
purchase up to 9.9% of outstanding Units of the Partnership at a
price of $750 per Unit (less transfer fees and less cash
distributions, as described therein). The Partnership has stated
its position as to the Madison Offer in a Recommendation
Statement on Schedule 14D-9 dated November 30, 1998, as amended.
Madison has announced that as of the close of business on
January 13, 1999, 329 Units have been tendered. In addition, the
Purchaser filed with the SEC a Tender Offer Statement on
Schedule 14D-1 dated November 27, 1998, as amended, in
connection with its Purchaser's Prior Offer, pursuant to which
it offered to purchase up to 4.8% of the then outstanding Units
of the Partnership at a price of $950 per Unit (less transfer
fees and less cash distributions, as described therein). The
Purchaser's Prior Offer terminated on December 31, 1998, and the
Purchaser has announced that it purchased 2,582 Units pursuant
to such Prior Offer, representing approximately 1.4% of the
issued and outstanding Units.
(vi) Limitations on Recognition of Transfers in any Tax Year;
Uncertainty as to Timing of Payment for Units Tendered. As
provided by Section 7.1B(1) of the Partnership Agreement, the
Partnership need not recognize any transfer that would cause the
Partnership to be treated as an association taxable as a
corporation for federal income tax purposes, which could be the
result if the transfers of Units were deemed to cause the
Partnership to be a "publicly traded partnership" for federal
income tax purposes. As more fully described in Item 8(a) below,
it has been and is the Partnership's practice in any tax year to
limit the number of transfers recognized in any Partnership tax
year to no more than 4.8% of outstanding Units in order to stay
within a safe harbor from classification of the Partnership as a
"publicly traded partnership", as provided in Internal Revenue
Service Notice 88-75 (the "IRS Notice"). In tax year 1998, the
Partnership recognized transfers of 4.8% of Units (a limit
previously set by the General Partner in an effort not to
inadvertently exceed the 5% limitation), and did not recognize
any transfers in such tax year after August 1998. Similarly, in
tax year 1997 the Partnership reached its limitation in June of
that year and no further transfers were recognized in that tax
year (other than excluded transfers under the IRS Notice). The
Partnership's policy of limiting transfers to stay within the
safe harbor limitations established by the IRS Notice may have
the effect of limiting the number of Units that can be
transferred pursuant to the Current Offer in any tax year of the
Partnership. Thus, notwithstanding that the Purchaser seeks to
acquire up to 3.5% of the outstanding Units, the actual number
of Units tendered pursuant to the Current Offer that will be
recognized for transfer by the Partnership in the 1999 tax year,
after taking into account the numbers of other transfers
recognized for such tax year (whether as a result of private
sales, competing tender offers or the Purchaser's Prior Offer
(the latter of which transfers already have been recognized in
the Partnership's 1999 tax year)) could be considerably less
than the number of Units sought. In addition, based on the terms
of the Current Offer, the Purchaser has stated that it will not
pay for tendered Units until it has confirmed that it will
become a registered owner on the books and records of the
Partnership, although tendered Units may be withdrawn (a) at any
time prior to the Current Offer's expiration date (February 26,
1999, unless extended) or (b) unless previously accepted for
payment, at any time after March 28, 1999 (or such later date as
may apply in case the Current Offer is extended). Thus, it is
uncertain when the transfer of certain Units tendered pursuant
to the Current Offer, and not otherwise withdrawn, will be
recognized and when tendering Limited Partners will actually be
paid.
(vii) Tendering Limited Partners Will Receive Schedule K-1s for
1999. The ability of a Limited Partner to transfer Units is
subject to the terms and conditions set forth in the Partnership
Agreement. As provided in Section 7.1C of the Partnership
Agreement, transfers of Units are recognized by the Partnership
as of the last day of the calendar month. Such transfers will be
recognized after the close of business on the last day of the
calendar month in which all conditions to transfer have been
satisfied and will be effective for the period commencing on the
first day of the following month. Limited Partners who tender
their Units in connection with the Current Offer will receive
Schedule K-1 tax forms for 1999.
(viii) Continuing Tax Allocations by the Partnership. The Current
Offer provides that a Limited Partner who tenders Units assigns
to the Purchaser all profits, losses and distributions paid or
declared by the Partnership after January 1, 1999, with respect
to those Units; and any distributions received by the tendering
Limited Partner from the Partnership will reduce the amount of
the purchase price paid by the Purchaser to the tendering
Limited Partner. However, pursuant to the Partnership Agreement,
as described above, transfers of Units are only recognized by
the Partnership on monthly transfer dates and subject to the
terms and conditions of the Partnership Agreement. Thus,
tendering Limited Partners will receive no additional economic
benefit with respect to tendered Units from any distributions
paid or declared after January 1, 1999, but a tendering Limited
Partner will receive any tax allocations from the Partnership
relating to such distributions, as reflected on a Schedule K-1
tax form, until a transfer of such Limited Partner's Units is
actually recognized by the Partnership, which period could,
based on the terms of the Current Offer, extend beyond tax year
1999, depending on the aggregate number of Units presented by
all tendering Limited Partners to the Partnership for transfer.
See paragraph (vi) above. Accordingly, with respect to the sales
of the Anaheim and Cleveland stations, for example, the gain or
loss from such sales will be reported on a Schedule K-1 tax form
to Limited Partners (including tendering Limited Partners) from
the Partnership, but tendering Limited Partners would not
receive the economic benefit of the sale proceeds, except to the
extent reflected in the value of the Current Offer price. See
paragraphs (i) and (ii) above.
(ix) Other Limitations to Recognition of Transfers. The
Partnership Agreement, in Section 7.3, also contains other
limitations applicable to the transfer of interests. Units may
only be transferred to "Eligible Citizens", as defined in the
Partnership Agreement. Furthermore, additional information must
be provided to the Partnership by any transferee wishing to be
recognized as the owner of 1% or more of the Partnership Units
to address certain FCC regulatory concerns related to the
ownership of the Partnership's Media Properties. As described in
Item 3(b)(ii) above, the Partnership has previously been
provided with confirmation as to these matters from the
Purchaser. Transfers will be recorded on the books and records
of the Partnership only upon the satisfactory completion and
acceptance by the General Partner of transfer documents
acceptable to the General Partner, in compliance with applicable
laws and the terms of the Partnership Agreement.
(x) Limited Partners May Be Able to Sell Their Units at a Higher
Price. The Partnership recommends that Limited Partners who seek
current liquidity but do not wish to sell their Units pursuant
to the Current Offer make their own inquiry as to alternative
transactions that may be available, including among others, the
limited informal secondary market for trading limited
partnership interests, any proposed or pending tender offer by
any other party and any other offer that may be announced prior
to the expiration of the Current Offer. There can be no
assurance, however, that a Limited Partner will be able to sell
its Units or achieve a higher price in an alternative
transaction. The Partnership has stated its position as to the
Madison Offer in a Recommendation Statement on Schedule 14D-9
dated November 30, 1998, as amended.
In making its recommendation with respect to the Purchaser's Current
Offer, the Partnership has not taken into account the personal financial
situation of, or the tax consequences to, an individual Limited Partner as a
result of accepting or rejecting the Current Offer; those tax consequences
could vary significantly for each Limited Partner based on such Limited
Partner's unique tax situation or other circumstances. In addition, the
Partnership has not engaged any financial advisor to evaluate the terms of the
Current Offer or to determine whether the Current Offer is fair to Limited
Partners.
Each Limited Partner must make his, her or its own decision whether
to accept or reject the Current Offer. Limited Partners are urged to carefully
and completely review all the information contained in or incorporated by
reference in the Current Offer and the competing Madison Offer, as well as the
Partnership's publicly available annual, quarterly and other reports and the
Partnership's communications with Limited Partners. The Partnership urges
Limited Partners to carefully consider all such information as well as the
information contained herein and to consider their own personal situation and
consult with their own tax, financial and other advisors in evaluating the
terms of the Current Offer before deciding to tender Units.
Limited Partners should carefully and completely review the terms of
all information available, including the terms of any competing offers, prior
to deciding to tender Units.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Partnership nor anyone acting on its behalf, has
employed, retained or compensated, or intends to employ, retain or compensate,
any person to make solicitations or recommendations to Limited Partners on its
behalf concerning the Current Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Neither the Partnership nor the General Partner has effected any
transactions in the Units during the past 60 days. The Partnership is not
aware of any transaction in the Units during the past 60 days by any of its
executive officers, directors, affiliates or subsidiaries.
(b) Neither the General Partner, nor to the knowledge of the General
Partner, any of its executive officers, directors, affiliates or subsidiaries,
intends to tender Units owned by them to the Purchaser pursuant to the Current
Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTION BY THE SUBJECT COMPANY.
(a) No negotiation is being undertaken or is underway by the Partnership
in response to the Current Offer which relates to or would result in: (i) an
extraordinary transaction such as a merger or reorganization, involving the
Partnership or any subsidiary of the Partnership; (ii) a purchase, sale or
transfer of a material amount of assets by the Partnership or any subsidiary;
(iii) a tender offer for or other acquisition of securities by or of the
Partnership; or (iv) any material change in the present capitalization or
distribution policy of the Partnership. However, as noted above, the
Partnership presently expects to sell its San Juan, Puerto Rico cable systems
in 1999 and is presently negotiating the sale of its Bridgeport, Connecticut
radio combination. These activities are continuing but are not in response to
the Current Offer.
(b) Except as provided below, there are no transactions, board or
partnership resolutions, agreements in principle or signed contracts in
response to the Current Offer which relate to or would result in one or more
of the matters referred to in Item 7(a). However, as described in Item
3(b)(ii) above, the Partnership is party to agreements entered into in 1997
with the Purchaser which, among other things, restrict the Purchaser's
acquisition of Units to not more than 5% of the outstanding Units of the
Partnership. On November 20, 1998, the Purchaser requested that the
Partnership waive such restriction, indicating its intention to commence a
registered tender offer. On November 24, 1998, the General Partner agreed to
such waiver upon certain restrictions and conditions, including the continuing
restrictions related to the Partnership's reliance on the safe harbor
provisions contained in the IRS Notice, the applicable FCC restrictions, and
the satisfaction of the provisions of the Partnership Agreement. Pursuant to
an unsolicited tender offer commenced by the Purchaser on November 27, 1998
and which terminated on December 31, 1998, the Purchaser acquired 1.4% of the
outstanding Units and currently owns approximately 6.4% of the outstanding
Units.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) Limited Partners are advised that all transfers of Units of the
Partnership are subject to the satisfaction of the General Partner that the
conditions necessary to transfer pursuant to the Partnership Agreement have
been satisfied.
The Partnership currently is treated as a partnership for Federal
income tax purposes, and the General Partner believes it has a duty to all
Limited Partners to preserve this tax treatment. The General Partner will take
no action that it believes could cause the Partnership to be treated as an
association taxable as a corporation and not as a partnership for Federal
income tax purposes. It has been and is the policy of the General Partner that
it will not recognize any transfers of Units on behalf of the Partnership in
any tax year of the Partnership if such transfers, together with all other
transfers made during such tax year, would cause transfers of Units to exceed
4.8% of the outstanding Units (an amount previously set by the Partnership so
as not to inadvertently exceed the 5% safe harbor set forth in Paragraph II,
Section C(1) of the IRS Notice). The General Partner believes that this policy
serves the best interests of the Partnership and the Limited Partners. The
General Partner will consider any transfer pursuant to the Current Offer as
counting toward the 5% limitation set forth in the IRS Notice unless it has
been advised by private letter ruling of the Internal Revenue Service
addressed to the Partnership and the General Partner that such transfers would
be excluded transfers under the IRS Notice and would be disregarded for the
purposes of such percentage limitations.
As of the date of this Statement, the Partnership has determined that
if all 3.5% of the outstanding Units sought by the Purchaser are tendered, the
amount of transfers that may be recognized in tax year 1999 would exceed the
Partnership's 4.8% limitation. Accordingly, transfers of all of the Units
tendered pursuant to the Current Offer may not be recognized for transfer in
1999.
(b) A purported class action was commenced in New York Supreme
Court, New York County, on behalf of the Limited Partners of the Partnership,
against the Partnership, the General Partner, RPMM, MLMM, Merrill Lynch & Co.,
Inc. ("ML&Co.") and Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"). The action concerns the Partnership's payment of certain
management fees and expenses to the General Partner and the payment of certain
purported fees to an affiliate of RPMM.
Specifically, the plaintiffs allege breach of the Partnership
Agreement, breach of fiduciary duties, and unjust enrichment by the General
Partner in that the General Partner allegedly: (1) improperly deferred and
accrued certain management fees and expenses in an amount in excess of $14.0
million, (2) improperly paid itself such fees and expenses out of proceeds
from sales of Partnership assets, and (3) improperly paid MultiVision Cable TV
Corp., an affiliate of RPMM, supposedly duplicative fees in an amount in
excess of $14.4 million.
With respect to ML&Co., Merrill Lynch, MLMM, and RPMM, plaintiffs
claim that these defendants aided and abetted the General Partner in the
alleged breach of the Partnership Agreement and in the alleged breach of the
General Partner's fiduciary duties. Plaintiffs seek, among other things, an
injunction barring defendants from paying themselves management fees or
expenses not expressly authorized by the Partnership Agreement, an accounting,
disgorgement of the alleged improperly paid fees and expenses, and
compensatory and punitive damages. Defendants have moved to dismiss the
complaint and each claim for relief therein; the court has not yet ruled on
the motion. Defendants believe that they have good and meritorious defenses to
the action, and vigorously deny any wrongdoing with respect to the alleged
claims.
The Partnership Agreement provides for indemnification, to the
fullest extent provided by law, for any person or entity named as a party to
any threatened, pending or completed lawsuit by reason of any alleged act or
omission arising out of such person's activities as a General Partner or as an
officer, director or affiliate of either RPMM, MLMM or the General Partner,
subject to specified conditions. In connection with the purported class action
described above, the Partnership has received notices of requests for
indemnification from the following defendants named therein: the General
Partner, RPMM, MLMM, ML&Co. and Merrill Lynch. See Item 3(b)(i) above.
(c) This Statement contains certain forward-looking statements about
estimates of Media Property values, estimates of net asset value, business
prospects, litigation and other similar matters. In order to comply with the
terms of the safe harbor for such statements provided by the Private
Securities Litigation Reform Act of 1995, the Partnership notes that a variety
of factors, many of which are beyond its control, affect Media Property values
and the Partnership's value, business prospects, and results and could cause
actual results and experience to differ materially from the expectations and
estimates expressed in this Statement. These factors include, but are not
limited to, the effect of changing economic and market conditions, generally,
and particularly with respect to media businesses, generally, or in the
specific local markets where the Media Properties are located, or on specific
trends in business and finance and in investor sentiment, the level of
volatility of interest rates, the actions undertaken by both current and
potential or new competitors, the impact of and inherent uncertainties in
current, pending, and future legislation, regulation, and litigation, and the
other risks and uncertainties detailed in this Statement. The Partnership
undertakes no responsibility to update publicly or revise any forward-looking
statements.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Letter from the Partnership to Limited Partners dated
February 9, 1999.
(b) Not applicable.
(c)(1) Second Amended and Restated Agreement of Limited Partnership
of ML Media Partners, L.P., dated as of May 14, 1986, as
amended by Amendment No. 1, dated February 27, 1987.
(2) Confidentiality Agreement, dated January 24, 1997, between
the Purchaser and the Partnership.
(3) Agreement, dated May 23, 1997, between Partnership and the
Purchaser regarding FCC requirements for ownership of Units.
(4) Letter, dated November 20, 1998, from the Purchaser to
Partnership requesting a waiver of certain ownership
restrictions of Units contained in a certain agreement.
(5) Letter, dated November 24, 1998, from Partnership to the
Purchaser granting waiver of certain ownership restrictions
of Units contained in a certain agreement.
<PAGE>
SignatureS
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
ML MEDIA PARTNERS, L.P.
By Media Management Partners, its
General Partner
By RP Media Management, general partner
By: /s/ Elizabeth McNey Yates
------------------------------------
Name: Elizabeth McNey Yates
Title: Executive Vice President
By ML Media Management Inc., general partner
By: /s/ James V. Caruso
-------------------------------
Name: James V. Caruso
Title: Executive Vice President
Dated: February 9, 1999
Exhibit 9.a.1
ML MEDIA PARTNERS, L.P.
World Financial Center
South Tower, 23rd Floor
New York, NY 10080-6123
February 9, 1999
Re: Smithtown Bay, LLC - 1999 Tender Offer
Partnership's Position and Recommendation
-----------------------------------------
Dear Limited Partner of ML Media Partners, L.P.:
ML Media Partners, L.P., a Delaware limited partnership (the
"Partnership"), has reviewed the unsolicited tender offer (the "Current
Smithtown Offer") dated January 27, 1999, by Smithtown Bay, LLC ("Smithtown")
and Global Capital Management, Inc., to purchase up to 3.5% of the units of
limited partnership interest (the "Units") of the Partnership at a purchase
price of $950 per Unit (less transfer fees and less subsequent cash
distributions, as described below). The Partnership has filed with the
Securities and Exchange Commission (the "SEC") a Recommendation Statement on
Schedule 14D-9 with respect to the Current Smithtown Offer (the
"Recommendation Statement"); we have enclosed a copy of that Recommendation
Statement with this letter and urge you to carefully and completely review it.
Please note that the Current Smithtown Offer is a newly filed tender
offer, separate from the tender offer made by Smithtown in late 1998 and
described on page 3 (the "Prior Smithtown Offer"). The Prior Smithtown Offer
terminated on December 31, 1998.
As more fully described in the Recommendation Statement, the
Partnership has concluded that the Current Smithtown Offer is inadequate and
not in the best interests of the Limited Partners. ACCORDINGLY, THE
PARTNERSHIP RECOMMENDS THAT LIMITED PARTNERS REJECT THE CURRENT SMITHTOWN
OFFER AND NOT TENDER ANY OF THEIR UNITS. Neither the Partnership's general
partner, Media Management Partners (the "General Partner"), nor any of its
officers, directors or affiliates intends to tender any of their Units
pursuant to the Current Smithtown Offer.
In addition, the Partnership urges you to consider the terms of any
competing tender offer before deciding whether to tender your Units. In a
recommendation statement on Schedule 14D-9 which was mailed to you on or about
November 30, 1998, and amended on December 10, 1998, the Partnership
communicated to you its position regarding the unsolicited tender offer by
Madison Liquidity Investors 104, LLC (the "Madison Offer").
Certain statements in the following discussion constitute "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. The Partnership notes that a variety of factors, many of
which are beyond its control, affect media property values and the
Partnership's value, business prospects, and results and could cause actual
results and experience to differ materially from the expectations and
estimates expressed herein. These factors include, but are not limited to, the
effect of changing economic and market conditions, generally, and particularly
with respect to media businesses, generally, or in specific local markets
where the Partnership's media properties are located, or on specific trends in
business and finance and in investor sentiment, the level of volatility of
interest rates, the actions undertaken by both current and potential or new
competitors, the impact of and inherent uncertainties in current, pending and
future legislation, regulation, and litigation, and the other risks and
uncertainties described herein and in the accompanying Recommendation
Statement. The Partnership undertakes no responsibility to update publicly or
revise any forward-looking statements.
In arriving at its recommendation, the Partnership reviewed the
Current Smithtown Offer and considered many factors, including the business,
financial condition and prospects of the Partnership and the potential value
of its remaining assets. The Partnership believes that all Limited Partners
should carefully consider these and all other relevant facts and
circumstances, including their own personal tax situation, liquidity needs and
other financial considerations, and should review all available information
before making a decision whether or not to tender their Units. Depending on,
among other things, (a) each Limited Partner's own consideration of such
factors, (b) such Limited Partner's own assessment of the Current Smithtown
Offer and the relevant facts, as well as the Madison Offer, (c) such Limited
Partner's willingness to accept the risks relating to the amount of proceeds
that the Partnership will actually realize from the sales of the Partnership's
remaining media properties (the "Media Properties") and (d) the timing of any
distributions of such proceeds, certain Limited Partners may determine that it
is appropriate to tender their Units in the Current Smithtown Offer. Factors
that have been considered by the Partnership include the following, which are
more fully discussed in the accompanying Recommendation Statement:
o EXPECTED FIRST QUARTER 1999 CASH DISTRIBUTION. The previously
announced sales of the Partnership's radio stations in Anaheim,
California and Cleveland, Ohio were consummated on January 4, 1999,
and January 28, 1999, respectively, in accordance with the terms
provided in the respective sales agreements. The distributions from
these sales will be made to Limited Partners of record as of January
4, 1999, and January 28, 1999, respectively, in accordance with the
terms of the Partnership's Partnership Agreement. It is expected that
a distribution of approximately $300 per Unit will be made by the end
of the first quarter of 1999. This distribution will consist
primarily of distributable proceeds from the sales of the Anaheim and
Cleveland radio stations as well as certain amounts released from
reserves created in connection with the prior sale of the
Partnership's California cable system. The Current Smithtown Offer
provides that any such distribution will be deducted by Smithtown
from the cash amount it will pay to tendering Limited Partners.
o SALES OF REMAINING MEDIA PROPERTIES. The Partnership presently
expects to sell its cable system in San Juan, Puerto Rico, in 1999,
although it has not reached any agreement with respect to any such
sale. In addition, the Partnership is presently negotiating a sale of
its Bridgeport, Connecticut radio combination, although there can be
no assurance as to whether and on what terms such sale may be
consummated. Limited Partners who tender their Units to the Purchaser
will not receive any economic benefit from such sales if and when
consummated by the Partnership, to the extent not reflected in the
Current Smithtown Offer price.
o THE VALUE OF THE PARTNERSHIP'S REMAINING ASSETS COULD BE SUBSTANTIALLY
HIGHER THAN THE VALUE REFLECTED IN THE CURRENT SMITHTOWN OFFER. The
General Partner currently estimates that the net asset value of the
Partnership, computed as of September 25, 1998, adjusted to reflect
the actual sales prices of the Anaheim and Cleveland radio stations,
is $1,150 per Unit. Such estimated net asset value takes into
consideration the estimated value of the Partnership's Media
Properties (including the Anaheim and Cleveland radio stations), its
cash holdings, as well as its other assets and liabilities; and it
reflects the Partnership's estimated fees and expenses to be incurred
in connection with its remaining operations and the winding up of the
Partnership, but does not reflect any potential costs, expenses or
liabilities relating to the litigation described in the
Recommendation Statement. In addition, although there can be no
assurance that the Partnership's net asset value can or will be
realized, or certainty as to the amount of future fees and expenses,
the General Partner believes that it has used conservative
assumptions in estimating the value of the remaining Media
Properties. As a result, there is a possibility that the actual
proceeds received by the Partnership from the sale of its Media
Properties could be significantly higher than the value assumed.
Specifically, the General Partner believes that there is significant
upside potential to the value it has assigned to the Puerto Rico
cable systems, which it currently expects to sell in 1999, although
there can be no assurance as to the price that the Partnership will
ultimately realize from such sale. Therefore, the Partnership has
concluded that it would be better for a Limited Partner to hold its
Units rather than to tender them to the Purchaser pursuant to the
Current Smithtown Offer.
However, there can be no assurance that changing market conditions or
other factors will not have a negative impact on the value of the
Partnership's cable systems in San Juan, Puerto Rico or its radio
station combination in Bridgeport, Connecticut or its ability to sell
either or both of such assets at any particular price or within any
particular time frame. Furthermore, as further discussed in the
accompanying Recommendation Statement, the actual proceeds received
by the Partnership from the sales of its Media Properties could be
lower than estimated. Also, the pendency of the litigation described
in the Recommendation Statement may delay distributions to Limited
Partners. The Partnership's estimates and assumptions have not been
reviewed by an independent appraiser or financial advisor.
o SMITHTOWN'S PROFIT MOTIVE. As set forth in the Current Smithtown
Offer, Smithtown is making the Current Smithtown Offer for investment
purposes and with the intention of making a profit from ownership of
the Units. Smithtown also stated that its intent is to acquire the
Units at a discount to the value that Smithtown might ultimately
realize from owning the Units. Please note that the Current Smithtown
Offer price is $950 per Unit, REDUCED BY the $50 transfer fee (per
transfer, not per Unit) and further REDUCED BY the amount of any
distributions paid with respect to the Units on and after January 1,
1999 (including the expected first quarter 1999 distribution,
described above).
o NO ESTABLISHED MARKET VALUATIONS BY THIRD PARTIES. Limited partnership
interests are generally illiquid and there is no established trading
market for the Units to provide established market valuations for the
Units against which to compare the purchase price in the Current
Smithtown Offer. As further discussed in the accompanying
Recommendation Statement, secondary market activity for the Units,
including privately negotiated sales, has been limited and sporadic.
However, in late November 1998, Madison Liquidity Investors 104, LLC,
a Delaware limited liability company unaffiliated with the
Partnership and the General Partner ("Madison"), commenced its
unsolicited tender offer to purchase up to 9.9% of the outstanding
Units of the Partnership at a price of $750 per Unit (less transfer
fees and less cash distributions, as described therein). Madison has
announced that as of the close of business on January 13, 1999, 329
Units have been tendered. (The Partnership has separately
communicated to Limited Partners its position as to the Madison
Offer.) In addition, also in late November 1998, Smithtown commenced
its prior unsolicited tender offer to purchase up to 4.8% of the then
outstanding Units of the Partnership at a price of $950 per Unit
(less transfer fees and less cash distributions as described
therein). The Prior Smithtown Offer terminated on December 31, 1998,
and Smithtown has announced that it purchased 2,582 Units pursuant to
such prior offer, representing approximately 1.4% of the issued and
outstanding Units.
o LIMITATIONS ON RECOGNITION OF TRANSFERS IN ANY TAX YEAR;
UNCERTAINTY AS TO TIMING OF PAYMENT FOR UNITS TENDERED. It has been
and is the Partnership's practice to limit transfers within any tax
year of the Partnership to no more than 4.8% of outstanding Units in
order to stay within certain safe harbor tax provisions so that the
Partnership is not classified as a "publicly traded partnership."
Thus, notwithstanding that Smithtown seeks to acquire up to 3.5% of
the outstanding Units, the actual number of Units tendered pursuant
to the Current Smithtown Offer that will be recognized for transfer
by the Partnership in the 1999 tax year, after taking into account
the numbers of other transfers recognized for such tax year (whether
as a result of private sales, competing tender offers or the Prior
Smithtown Offer (the latter of which transfers already have been
recognized in the Partnership's 1999 tax year)) could be considerably
less than the number of Units sought. In addition, based on the terms
of the Current Smithtown Offer, Smithtown has stated that it will not
pay for tendered Units until it has confirmed that it will become a
registered owner on the books and records of the Partnership. Thus,
although tendered Units may be withdrawn (a) at any time prior to the
Current Smithtown Offer's expiration date (February 26, 1999, unless
extended) or (b) unless previously accepted for payment, at any time
after March 28, 1999 (or such later date as may apply in case the
Current Smithtown Offer is extended), it is uncertain when the
transfer of certain Units tendered pursuant to the Current Smithtown
Offer, and not otherwise withdrawn, will be recognized and when such
tendering Limited Partners will actually be paid.
o TENDERING LIMITED PARTNERS WILL RECEIVE SCHEDULE K-1S FOR 1999.
Limited Partners who tender their Units in connection with the
Current Smithtown Offer will receive Schedule K-1 tax forms for 1999.
o CONTINUING TAX ALLOCATIONS BY THE PARTNERSHIP. Tendering Limited
Partners will receive no additional economic benefit from any
distributions paid or declared after January 1, 1999, but a tendering
Limited Partner will receive any tax allocations from the Partnership
relating to such distributions, as reflected on a Schedule K-1 tax
form, until a transfer of such Limited Partner's Units is actually
recognized by the Partnership, which period could, based on the terms
of the Current Smithtown Offer, extend beyond tax year 1999,
depending on the number of Units presented by all tendering Limited
Partners to the Partnership for transfer. See above.
o OTHER LIMITATIONS TO RECOGNITION OF TRANSFERS. The Second
Amended and Restated Agreement of Limited Partnership, as amended,
which governs the Partnership, contains other limitations applicable
to the transfer of interests pursuant to restrictions established by
the Federal Communications Commission and otherwise.
o LIMITED PARTNERS MAY BE ABLE TO SELL THEIR UNITS AT A HIGHER
PRICE. The Partnership recommends that Limited Partners who seek
current liquidity but do not wish to sell their Units pursuant to the
Current Smithtown Offer make their own inquiry as to alternative
transactions that may be available, including among others, the
informal secondary market for trading limited partnership interests,
any proposed or pending tender offer by any other parties and any
other offer that may be announced prior to the expiration of the
Current Smithtown Offer. There can be no assurance, however, that a
Limited Partner will be able to sell its Units or achieve a higher
price in an alternative transaction. The Partnership has separately
communicated to Limited Partners its position as to the Madison Offer
described above.
In making its recommendation with respect to the Current Smithtown
Offer, the Partnership has not taken into account the tax consequences of, or
the tax consequences to, individual Limited Partners as a result of accepting
or rejecting the Current Smithtown Offer; those tax consequences could vary
significantly for each Limited Partner based on such Limited Partner's unique
tax situation or other circumstances. In addition, the Partnership has not
engaged any financial advisor to evaluate the terms of the Current Smithtown
Offer or to determine whether the Current Smithtown Offer is fair to Limited
Partners.
Each Limited Partner must make his, her, or its own decision whether
to accept or reject the Current Smithtown Offer. Limited Partners are urged to
carefully review all the information contained in or incorporated by reference
in the Current Smithtown Offer and the competing Madison Offer, as well as the
Partnership's publicly available annual, quarterly and other reports, and the
Partnership's communications with Limited Partners. The Partnership urges
Limited Partners to carefully consider all such information, as well as the
information contained in the accompanying Recommendation Statement on Schedule
14D-9, and to consider their own personal situation and consult with their own
tax, financial or other advisors in evaluating the terms of the Current
Smithtown Offer before deciding to tender Units.
Limited Partners should carefully and completely review the terms of
all information available, including the terms of any competing offers prior
to deciding to tender Units.
TO THE EXTENT THAT YOU HAVE ALREADY TENDERED UNITS PURSUANT TO THE
CURRENT SMITHTOWN OFFER, YOU SHOULD CONSIDER THAT YOU HAVE A RIGHT TO WITHDRAW
YOUR TENDER BY FOLLOWING THE PROCEDURES SET FORTH UNDER "SECTION 4. WITHDRAWAL
RIGHTS" IN SMITHTOWN'S OFFER TO PURCHASE DATED JANUARY 27, 1999. The Offer to
Purchase provides that Units tendered pursuant to the Current Smithtown Offer
may be withdrawn (a) at any time prior to the Current Smithtown Offer's
expiration date (February 26, 1999, unless extended) or (b) unless such
Limited Partner's tendered Units have been accepted for payment, at any time
after March 28, 1999 (or such later date as may apply in case the Current
Smithtown Offer is extended). For withdrawal to be effective, a written notice
of withdrawal must be timely received by Smithtown's transfer agent, MAVRICC
Management Systems, Inc., Post Office Box 7090, Troy, Michigan 48007-7090. Any
such notice of withdrawal must specify the name of the person who tendered the
Units to be withdrawn and must be signed by the person(s) who signed the
Agreement of Transfer and Sale in the same manner as the Agreement of Transfer
and Sale was signed and it must also contain a medallion signature guarantee.
The attached Recommendation Statement on Schedule 14D-9 expands upon
the reasons for the position taken by the Partnership concerning the Current
Smithtown Offer, and contains additional information about the potential risks
to Limited Partners from their continuing to hold their Units through the
planned liquidation of the Partnership. We urge you to read the Recommendation
Statement carefully.
Please do not hesitate to call our Investor Services Information
Center at (800) 288-3694 for assistance in any Partnership matter. Our
Investor Services Information Center operates Monday through Friday, from
10:00 a.m. to 1:00 p.m. and from 2:00 p.m. to 5:00 p.m. Eastern time.
ML MEDIA PARTNERS, L.P.
- --------------------------------------------------------------------
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
ML MEDIA PARTNERS, L.P.
Dated as of May 14, 1986
- -------------------------------------------------------------------------------
<PAGE>
Table of Contents
Page
ARTICLE ONE Defined Terms ........................................1
ARTICLE TWO Continuation; Name, Place Of Business And Office;
Purpose; Term.........................................8
Section 2.1 Continuation..........................................8
Section 2.2 Name, Place of Business and Office....................8
Section 2.3 Purpose...............................................8
Section 2.4 Term..................................................8
Section 2.5 Registered Agent and Registered Office................9
ARTICLE THREE Partners And Capital..................................9
Section 3.1 General Partner.......................................9
Section 3.2 Initial Limited Partner...............................9
Section 3.3 Additional Limited Partners...........................9
Section 3.4 Certain Returns of Capital............................10
Section 3.5 Partnership Capital...................................12
Section 3.6 Liability of Partners.................................12
Section 3.7 General Partner as Limited Partner....................13
Section 3.8 Lender as Partner.....................................13
ARTICLE FOUR Distributions Of Cash; Allocations Of
Profits And Losses....................................13
Section 4.1 Distributions of Distributable Cash from Operations...13
Section 4.2 Distributions of Proceeds Arising from a
Refinancing or Sale...................................14
Section 4.3 Allocations of Profits and Losses.....................17
Section 4.4 Determination of Distribution and Allocations
Among Partners........................................18
ARTICLE FIVE Rights, Powers And Duties Of The General Partner......19
Section 5.1 Management and Control of the Partnership.............19
Section 5.2 Authority of the General Partner......................19
Section 5.3 Dealings of the General Partner and Its Affiliates with the
Partnership ..........................................22
Section 5.4 Restrictions on the Authority of the General Partner..27
Section 5.5 Duties and Obligations of General Partner.............27
Section 5.6 Compensation of the General Partner...................30
Section 5.7 Other Businesses of Partners..........................30
Section 5.8 Indemnification of the General Partner and
Its Affiliates........................................30
ARTICLE SIX Transferability Of General Partner's Interest.........31
Section 6.1 Admission of Successor or Additional General Partner..31
Section 6.2 Removal of the General Partner; Designation of a Successor
General Partner.......................................32
Section 6.3 Incapacity, Removal or Resignation of a
General Partner.......................................33
Section 6.4 Liability of a Withdrawn General Partner..............34
Section 6.5 Restrictions on Transfer of General Partner's
Interest..............................................34
Section 6.6 Consent of Limited Partners to Admission of Successor
or Additional General Partners........................35
ARTICLE SEVEN Transfer Of Limited Partners' Interests; Admission Of
Substituted Limited Partners..........................35
Section 7.1 Transfer of Interests.................................35
Section 7.2 Substituted Limited Partners..........................36
Section 7.3 Transfers of Interests to, or Holding of Interests by,
Ineligible Persons....................................36
Section 7.4 Redemption of Disqualified Interest...................38
ARTICLE EIGHT Dissolution, Liquidation And Termination Of
The Partnership.......................................39
Section 8.1 Events Causing Dissolution............................39
Section 8.2 Liquidation...........................................40
ARTICLE NINE Books And Records; Accounting; Tax Elections; Etc.....40
Section 9.1 Books and Records.....................................40
Section 9.2 Accounting; Fiscal Year...............................41
Section 9.3 Bank Accounts.........................................41
Section 9.4 Reports...............................................41
Section 9.5 Depreciation and Elections............................43
Section 9.6 Capital Accounts......................................43
ARTICLE TEN Amendments............................................43
Section 10.1 Proposal of Amendments Generally......................43
Section 10.2 Adoption of Amendments; Limitations Thereon...........44
Section 10.3 Amendments on Admission or Withdrawal of Partners.....45
Section 10.4 Copies of Amendments..................................45
ARTICLE ELEVEN Consents, Voting And Meetings.........................45
Section 11.1 Method of Giving Consent..............................45
Section 11.2 Meetings of Partners..................................46
Section 11.3 Submissions to Limited Partners.......................46
ARTICLE TWELVE Miscellaneous Provisions..............................46
Section 12.1 Appointment of the General Partner as
Attorney-in-fact......................................46
Section 12.2 Limitations on Ownership..............................47
Section 12.3 Notification..........................................48
Section 12.4 Binding Provisions....................................48
Section 12.5 Applicable Law........................................48
Section 12.6 Counterparts..........................................48
Section 12.7 Separability of Provisions............................48
Section 12.8 Entire Agreement......................................49
Section 12.9 Section Titles........................................49
<PAGE>
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ML MEDIA PARTNERS, L.P.
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP dated as
of May 14, 1996, of ML MEDIA PARTNERS, L.P. among MEDIA MANAGEMENT PARTNERS, a
joint venture organized as a general partnership under the law of the State of
New York, consisting of RP Media Management, a New York general partnership, and
ML Media Management Inc., a Delaware corporation, as General Partner, and LESTER
SCHOENFELD as the Initial Limited Partner, and those Persons listed in the books
and records of the Partnership as Additional Limited Partners.
WHEREAS, the Partnership which was originally named MLL Equipment
Partners L.P. -- 1985B has heretofore been formed as a limited partnership under
the Delaware Revised Uniform Limited Partnership Act pursuant to a Certificate
of Limited Partnership dated as of January 30, 1985, and filed in the office of
the Secretary of State of the State of Delaware on February 1, 1985, as amended
by an amendment thereto, dated as of and filed with the Secretary of State of
the State of Delaware on December 12, 1985, and as further amended and restated
pursuant to a First Restated Certificate of Limited Partnership, dated as of
December 16, 1985, and filed in the office of the Secretary of State of the
State of Delaware on December 17, 1985; and
WHEREAS, the parties hereto desire to provide for the governance of the
Partnership and to set forth in detail their respective rights and duties
relating to the Partnership and to amend and restate in its entirety the
Agreement of Limited Partnership of the Partnership dated as of February 1,
1985, as heretofore amended and restated to so provide;
NOW, THEREFORE, in consideration of the mutual promises and agreements
made herein, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE ONE
DEFINED TERMS
The defined terms used in this Agreement shall, unless the context
otherwise requires, have the meaning specified in this Article One. The singular
shall include the plural and the masculine gender shall include the feminine,
the neuter and vice versa, as the context requires.
"Accountants" means Deloitte Haskins & Sells or such other nationally
recognized firm of independent certified public accountants as shall be engaged
from time to time by the General Partner for the Partnership.
"Acquisition Expenses" means any legal fees or expenses, the cost of
any credit reports, appraisals, consulting fees or miscellaneous expenses
(including travel and communications expenses) borne by the Partnership in
connection with selection, evaluation, acquisition and placing in service by the
Partnership of any media business or negotiations of initial operating
arrangements and/or initial management arrangements for any media business,
whether or not such media business is acquired, but does not include Acquisition
Fees.
"Acquisition Fee" means any fee or commission paid by any Person to any
other Person, including the General Partner or its Affiliates, in connection
with the selection, evaluation, investigation, negotiation, acquisition, initial
operation, initial arrangement for management, or placing in service of any
Partnership Media Property, whether designated as a sales commission,
acquisition fee, finder's fee, selection fee, development fee, construction fee,
start-up fee, non-recurring management fee, consulting fee, or any fee,
commission or compensation of similar nature however designated and however
treated for tax or accounting purposes, but does not include Financing Fees.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time (6 Del.C. ss.17-101 et seq.).
"Additional Acquisition" has the meaning given in Section 4.1A and
subparagraphs (1) and (2) of the second paragraph of Section 4.2A.
"Additional Limited Partner" means any Person admitted to the
Partnership pursuant to Section 3.3 and shown as a Limited Partner on the books
and records of the Partnership.
"Adjusted Capital Contributions" means, at any specified time, the
Capital Contributions of the Limited Partners, as a class, reduced by all
amounts distributed pursuant to Sections 4.2B(2) through (5), to the extent, and
from and after the time, the related Distributable Refinancing or Sale Proceeds
are distributed, to, but not including, such specified time.
"Affiliate" means, when used with reference to a specified Person, (i)
any Person that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with the specified
Person, (ii) any Person that is an officer, partner or trustee of, or serves in
a similar capacity with respect to, the specified Person or of which the
specified Person is an officer, partner or trustee, or with respect to which the
specified Person serves in a similar capacity, (iii) any Person that, directly
or indirectly, is the beneficial owner of 10% or more of any class of equity
securities of, or otherwise has a substantial beneficial interest in, the
specified Person or of which the specified Person is directly or indirectly the
owner of 10% or more of any class of equity securities or in which the specified
Person has a substantial beneficial interest and (iv) any relative or spouse of
the specified Person.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership as amended, modified, supplemented or restated from time to time, as
the context requires.
"Available Cash from Operations" means, with respect to any period
selected by the Partnership for accounting purposes, the excess of cash receipts
of the Partnership (other than Capital Contributions or the proceeds of any loan
or receipts arising from Sales, but including any interest received on
purchase-money obligations accepted by the Partnership on any sale or other
disposition of any assets of the Partnership during such period over the sum of
the following: (i) the amount of cash (except cash withdrawn from reserves
therefor) disbursed in such period in order to obtain cash receipts (other than
Capital Contributions or the proceeds of any loan or receipts arising from
Sales) including, but not limited to, the expenses of management of the Media
Properties, insurance premiums, taxes, maintenance and repair, computer
time-sharing, accounting, statistical or bookkeeping service, travel on
Partnership business, and telephone expenses, (ii) payments of principal of and
interest on loans to the Partnership, (iii) the amount of cash (except cash
withdrawn from reserves therefor) disbursed in such period for capital
expenditures and related fees and expenses with respect to Partnership Media
Property, (iv) the amount of cash (except cash withdrawn from reserves therefor)
disbursed in such period to pay other costs and expenses incident to the
ownership and operation of the Partnership Media Property or the operation and
management of the Partnership and (v) payments actually made or amounts actually
allocated during such period to reserves to pay taxes, insurance, debt service,
maintenance, and/or other costs, expenses and liabilities of the type described
in clauses (i) through (iv) of this definition and for the payment of which the
General Partner believes cash from the operations of the Partnership might not
be available when such payments are required to be made.
"Available Refinancing Proceeds" has the meaning given in Section 4.2A.
"Available Sale Proceeds" has the meaning given in Section 4.2A.
"Capital Account" means, with respect to any Partner, the "capital
account at the end of the year" of such Partner, as determined for purposes of,
and shown on, the Schedule K-1 (Form 1065) for such Partner for Federal income
tax purposes.
"Capital Contribution" means, at any specified time, the total amount
of money contributed to the Partnership by all the Partners or any class of
Partners or any one Partner, as the case may be (or the predecessor holders of
the Interest of such Partners or Partner), reduced, in the case of the Limited
Partners or any one Limited Partner, as the case may be, by the amount of any
funds distributed to the Limited Partners or such Limited Partner, as the case
may be, pursuant to Section 3.4 to, but no including, such specified time.
"Certificate" means the Certificate of Limited Partnership as
originally filed with the Secretary of State of the State of Delaware pursuant
to the Act, and as amended, modified, supplemented or restated from time to
time, as the context requires.
"Closing" means a closing of the sale of Interests in the Partnership
pursuant to the terms enumerated in the Prospectus and the last such Closing is
the "final Closing".
"Code" means the Internal Revenue Code of 1954, as amended (or any
corresponding provision of succeeding law).
"Consent" means the prior written consent of a Person, or the
affirmative vote of such Person at a meeting called and held pursuant to Section
11.2, as the case may be, to do the act or thing for which the consent is
solicited, or the act of granting such consent, as the context may require.
"Consumer Price Index" means the Consumer Price Index for Urban
Consumers from time to time published by the United States Bureau of Labor
Statistics, and if such index ceases to be published, a similar index selected
by the General Partner.
"Disqualified Interest" has the meaning given in Section 7.3D.
"Distributable Cash from Operations" means, with respect to any period
selected by the Partnership for accounting purposes, the excess of Available
Cash from Operations for such period over amounts actually applied during such
period to Additional Acquisitions.
"Distributable Refinancing Proceeds" has the meaning given in Section 4.2A.
"Distributable Sale Proceeds" has the meaning given in Section 4.2A.
"Eligible Citizen" means a Person that is a citizen of the United States,
or a partnership that is created under the laws of the United States or any
State, Territory or possession of the United Sates and of which each member is
an individual who is a citizen of the United States and excludes (a) any alien
or the representative of any alien; (b) any corporation organized under the laws
of any foreign government; (c) any corporation of which any officer or director
is an alien or of which more than one-fifth of the capital stock is owned of
record or voted by aliens or their representatives or by a foreign government or
representative thereof or by any corporation organized under the laws of a
foreign country; and (d) any corporation directly or indirectly controlled by
any other corporation of which any officer or more than one-fourth of the
directors are aliens, or of which more than one-fourth of the capital stock is
owned of record or voted by aliens, their representatives, or by a foreign
government or representative thereof, or by any corporation organized under the
laws of a foreign country.
"FCC" means the Federal Communications Commission or any successor agency.
"Federal Tax Allowance" means, in connection with determination pursuant to
Section 4.1 of the amount of Distributable Cash from Operations for any fiscal
period of the Partnership an amount equal to 40 percent of the sum of (a) the
Partners' shares of Partnership taxable income for such period reduced by any
previously suspended Partnership losses that were applicable against such income
during such period and (b) any amounts from the Partnership required to be
included in income by such Partners pursuant to Section 465(e) of the Code by
virtue of any reduction in such Partners' amounts "at risk" below zero during or
with respect to such period and, in connection with determination pursuant to
Section 4.2A of the amount of Distributable Refinancing Proceeds or
Distributable Sale Proceeds, an amount equal to 40 percent of the Partners'
shares of taxable income upon such Refinancing or Sale reduced by any previously
suspended Partnership losses that were applicable against the gain on such
Refinancing or Sale (assuming, in each case, that (i) there have not been any
material changes subsequent to the date of the original filing of this Agreement
in the Federal income tax laws, (ii) such Partners have been Partners since the
closing of the sale of their units of limited partnership interest pursuant to
the Registration Statement, (iii) such Partners are subject to the "at risk"
rules under Section 465 of the Code and initially are considered "at risk" with
respect to their Capital Contributions, and (iv) such Partners are not subject
to the alternative minimum tax).
"Financing" means any borrowing incurred or made to finance the
Partnership's purchase of any specified Media Property or element thereof, or,
within the two-year period commencing with the initial acquisition by the
Partnership of such specified Media Property or element thereof, to recapitalize
the Partnership's equity investment in, and/or to refinance any loan used to
finance the purchase of or secured by, such specified Media Property or element
thereof.
"Financing Expenses" includes any legal fees and expenses (including legal
fees and expenses of lenders), the cost of any credit reports or appraisals,
recording and filing fees or miscellaneous expenses borne by the Partnership in
connection with the negotiation and documentation of Partnership borrowings, but
does not include commitment or stand-by fees payable to lenders.
"Financing Fee" means any fee or commission borne by the Partnership and
paid to any other Person, including the General Partner or its Affiliates, for
placing or arranging any Financing, but does not include Financing Expenses or
commitment or stand-by fees paid to lenders.
"General Partner" means Media Management Partners, acting through RP Media
Management or ML Media Management Inc., and/or any other Person that becomes a
successor or additional General Partner of the Partnership as provided herein,
in such Person's capacity as a General Partner of the Partnership.
"Incapacity" means, as to any Person, the bankruptcy, death, adjudication
of incompetence or insanity, incapacity, disability, dissolution or termination,
as the case may be, of such Person or such Person's becoming an Ineligible
Person; provided, however, the dissolution of a sole General Partner shall not
be deemed to be an Incapacity if ML Media Management Inc., or an affiliate
thereof, designates a successor General Partner which succeeds to the rights of
the General Partner at the time of such dissolution pursuant to Section 6.1B.
"Ineligible Person" has the meaning given in Section 7.3A.
"Initial Limited Partner" means Lester Schoenfeld.
"Interest" means the interest of a Partner in the Partnership as determined
under the Act and this Agreement. Reference to a majority or a specified
percentage in interest of the Limited Partners means Limited Partners whose
combined Capital Contributions represent over 50% or such specified percentage,
respectively, of the Capital Contributions of all Limited Partners.
"Limited Partner" means any Person who is a Limited Partner as shown on the
books and records of the Partnership (whether an Initial Limited Partner, an
Additional Limited Partner, or a Substituted Limited Partner) at the time of
reference thereto in such Person's capacity as a Limited Partner of the
Partnership.
"Media Property" means all media businesses and media business property and
other property (including real and personal property) that the Partnership may
acquire, or in which the Partnership may acquire an interest through equity
interest, debt participation, other securities holdings or other interest or
which will be acquired by another partnership, joint venture or other entity in
which the Partnership may become a partner or co-venture or acquire a direct or
indirect interest, and all improvements to and replacements and renewals of such
property, as described in the Prospectus.
"Media Property Base" means the aggregate Media Property Cost of all Media
Properties at the time the Partnership has made the final Media Property
acquisition provided for during the initial 24-month investment period.
"Media Property Cost" means, with respect to any specific Media Property or
element thereof acquired by the Partnership, the cost of such property paid by
the Partnership to the seller; with respect to any specific Media Property in
which the Partnership acquires an interest, the cost of such interest paid by
the Partnership to or for the benefit of the seller; and, with respect to any
specific Media Property owned by another partnership, joint venture or other
entity in which the Partnership acquires a direct or indirect interest, the cost
to the Partnership of such interest in such partnership, joint venture or other
entity; but Media Property Cost does not include, in any case, organizational
expenses incurred in connection with any partnership, joint venture or other
entity which owns a specific Media Property, or Acquisition Fees, Acquisition
Expenses, Financing Fees or Financing Expenses, whether or not such Fees or
Expenses are paid by the seller and passed on to the Partnership in the cost of
the Media Property or the direct or indirect interest therein.
"Notification" means a writing, containing the information required by this
Agreement to be communicated to any Person, sent as provided in Section 12.3.
"Operating Cash Expenses" means, with respect to any period selected by the
Partnership for accounting purposes, those items of operating cash expenditures
of the Partnership set forth in clauses (i) - (v) of the definition of
"Available Cash from Operations".
"Partner" means any General Partner or Limited Partner.
"Partnership" means the limited partnership formed and continued by and
governed under and pursuant to this Agreement, as said limited partnership may
from time to time be constituted.
"Partnership media Property" means, with respect to any specific Media
Property acquired by the Partnership, such Media Property; with respect to any
specific Media Property in which the Partnership acquires an interest, either
the Partnership's aliquot share of such Media Property or such interest, as the
context requires; and, with respect to any specific Media Property owned by
another partnership, joint venture or other entity in which the Partnership owns
a direct or indirect interest, either the Partnership's indirect aliquot share
of such item of Media Property or the Partnership's interest in such other
partnership, joint venture or other entity, as the context requires.
"Partnership Management Fee" has the meaning given it in Section 5.3A(5).
"Person" means any individual, corporation, partnership, trust,
unincorporated organization or association or other entity.
"Prime Rate" means the rate per annum from time to time announced by
Citibank, N.A. in New York, New York as its base lending rate.
"Profits" and "Losses" means the profits or losses of the Partnership for
Federal income tax purposes including, without limitation, each item of
Partnership income, gain, loss, deduction or credit.
"Property Management Fee" has the meaning given it in Section 5.3A(6).
"Prospectus" means, at the time of reference thereto, the prospectus
contained in the Registration Statement at the time in effect except that if the
prospectus filed by the Partnership pursuant to Rule 424(b) or 424(c) under the
Securities Act of 1933 differs from the prospectus contained in the Registration
Statement, as aforesaid, then the term "Prospectus" refers to the Rule 424(b) or
424(c) prospectus from and after the time it is mailed to the Securities and
Exchange Commission for filing.
"Refinancing" means any borrowing incurred or made after the two-year
period commencing with the initial acquisition by the Partnership of any
specified Media Property or element thereof to recapitalize the Partnership's
equity investment income and/or to refinance any loan used to finance the
purchase of or secured by, such specified Media Property or element hereof.
"Refinancing Fee" means any fee or commission borne by the Partnership and
paid to any other Person, other than the General Partner or its Affiliates, for
placing or arranging any Refinancing, but does not include Financing Expenses or
commitment or stand-by fees paid to lenders.
"Registration Statement" means the registration statement on file with the
Securities and Exchange Commission pursuant to the Securities Act of 1933 for
the registration of the units of limited partnership interest to be sold to the
Additional Limited Partners at the time the registration statement becomes
effective; except that if the Partnership files a post-effective amendment to
the registration statement or a new registration statement the prospectus
included in which may be used by the Partnership pursuant to Rule 429 under the
Securities Act of 1933 (or any corresponding provision of succeeding rules or
regulations of the Securities and Exchange Commission), then the term
"Registration Statement" shall, from and after the declaration of the
effectiveness of such post-effective amendment or such new registration
statement, refer to the registration statement as amended by such post-effective
amendment thereto or the then effective registration statement, as the case may
be.
"Sale" means any event or Partnership transaction (other than receipt of
Capital Contributions) not in the ordinary course of the Partnership's business,
including, without limitation, (a) receipt of any installment of the outstanding
principal amount of (but not interest on) purchase-money obligations accepted by
the Partnership on any sale or other disposition of Partnership assets, (b) any
damage to or condemnation or destruction of Media Property, or any part thereof,
resulting in receipt by the Partnership of condemnation awards or insurance
awards or insurance proceeds in excess of the amounts, if any, thereof applied
to replacement, repair or restoration of such Media Property, and (c) receipt by
the Partnership of any amounts remaining in any cash reserve provided pursuant
to Section 4.2A(1) upon the satisfaction or discharge of the debts, obligations,
contingencies or unforeseen liabilities for which such reserves have been
created; provided, however, that (i) the receipt by the Partnership of any
amount derived from interest on investments (including on investment of any
Capital Contributions or Partnership borrowings) or otherwise shall not be
considered a Sale for the purpose of this Agreement and (ii) the receipt by the
Partnership of any proceeds of a Financing or Refinancing shall not be
considered a Sale for the purpose of this Agreement.
"Sales Commission" means any fee or commission paid by any Person to any
other Person, other than to the General Partner or its Affiliates, in connection
with the sale or other disposition of any Partnership Media Property, whether
designated as a sales commission, disposition fee, nonrecurring advisory fee or
any fee, commission or compensation of similar nature however designated and
however treated for tax or accounting purposes, but does not include Refinancing
Fees.
"State" means the State of Delaware.
"Substituted Limited Partner" means any Person admitted to the Partnership
as a Limited Partner pursuant to the provisions of Section 7.2 and shown as a
Limited Partner on the books and records of the Partnership.
"Suitability Standards" mean the investor suitability standards applicable
to the offering of Interests pursuant to the Prospectus and any Exhibits thereto
and any subsequent state "blue sky" standards applicable to transferees or
assignees of Interests.
"Transfer Application" has the meaning given in Section 7.2.
ARTICLE TWO
CONTINUATION; NAME, PLACE OF BUSINESS AND OFFICE;
PURPOSE; TERM
Section 2.1 Continuation
The parties hereto hereby continue the limited partnership heretofore
formed pursuant to the provisions of the Act.
Section 2.2 Name, Place of Business and Office
The name of the limited partnership formed and continued hereby is ML
Media Partners, L.P. The principal place of business of the Partnership shall be
at c/o ML Media Management Inc., One Liberty Plaza, 165 Broadway, New York, New
York 10080. The General Partner may at any time change the location of such
office and may establish such additional offices as it shall deem advisable.
Section 2.3 Purpose
The purpose and character of the business of the Partnership is to
acquire, finance, hold, develop, improve, maintain, operate, lease, sell,
exchange, dispose of and otherwise invest in and deal with Media Property and
direct and indirect interests therein and to exercise such powers as are
incidental or necessary in connection with the foregoing.
Section 2.4 Term
The Partnership shall continue in full force and effect until December
31, 2011, or until dissolution prior thereto pursuant to the provisions hereof.
Section 2.5 Registered Agent and Registered Office
The Partnership shall maintain a registered office in the State at c/o
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name and address of the
registered agent for service of process on the Partnership in the State is The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
ARTICLE THREE
PARTNERS AND CAPITAL
Section 3.1 General Partner
The name, business, residence or mailing address and Capital
Contribution of the General Partner of the Partnership is set forth in the books
and records of the Partnership. The General Partner shall contribute cash to the
capital of the Partnership such that its Capital Contribution as General Partner
shall at all times be equal to not less than one percent (1%) of the total
Capital Contributions to the Partnership. Except as set forth in the previous
sentence, the General Partner, as such, shall not make any additional Capital
Contribution to the Partnership.
Section 3.2 Initial Limited Partner
The name, business, mailing or residence address and Capital
Contribution of the Initial Limited Partner are set forth in the books and
records of the Partnership.
Section 3.3 Additional Limited Partners
A. The General Partner is authorized to admit Additional Limited Partners
to the Partnership if, after the admission of such Additional Limited Partners,
the Capital Contributions of all Additional Limited Partners would be not less
than $25,000,000 and not more than such maximum amount (not to exceed
$250,000,000) as the General Partner shall determine. The Capital Contributions
of the Additional Limited Partners shall be made in cash upon admission to the
Partnership. The manner of the offering of Additional Limited Partners'
Interests, the terms and conditions under which subscriptions for such Interests
will be accepted, and the manner of and conditions to the sale of Interests to
subscribers therefor and the admission of such subscribers as Additional Limited
Partners will be as provided in the Prospectus and subject to any provisions
hereof.
B. The names, business, mailing or residence addresses and Capital
Contributions of the Additional Limited Partners shall be set forth in the books
and records of the Partnership.
C. No Limited Partner shall be required to make any additional Capital
Contribution to the Partnership.
Section 3.4 Certain Returns of Capital
A. Any portion of the Capital Contributions of the Partners that is not
invested or committed for investment within 24 months from the date of the final
Closing (except for any amounts (i) paid by the Partnership as a selling
commission with respect to such Capital Contributions, as described in the
Prospectus, (ii) utilized to pay Partnership organization and offering expenses,
as provided in the Prospectus or (iii) utilized to pay Operating Cash Expenses
of the Partnership) shall be distributed to the Partners, together with interest
actually earned thereon and not theretofore distributed, pro rata in proportion
to their Capital Contributions, by the Partnership as a return of capital. For
the purpose of this Agreement, funds will be deemed to have been committed to
investment and will not be returned to the Limited Partners to the extent that:
(1) such funds have been utilized or set aside to pay Acquisition
Fees, Acquisition Expenses, Financing Fees or Financing Expenses in
connection with any Partnership funds proposed to be invested or committed
for investment within such 24-month period (including pursuant to Section
3.4A(3));
(2) such funds have been set aside for working capital or upgrade
reserves, as provided in the Prospectus, in the amount of 3% of aggregate
Media Property Cost at the time (including Media Properties in which the
Partnership is committed to invest as described in Section 3.4A(3)) or in
such greater or lesser amount as the General Partner shall have determined
to be appropriate at the end of such 24-month period;
(3) such funds shall have been set aside to pay amounts payable, or
expected to be payable, under written agreements or under agreements in
principle, commitment letters, letters of intent or understanding, option
agreements or any similar contracts or understandings which have been
executed and are in effect at the end of such 24-month period;
(4) such funds shall have been set aside and reserved at the end of
such 24-month period to make contingent payments in connection with any
property; or
(5) such funds shall have been utilized or set aside to provide
compensating balances, reserve funds, escrow funds, advance payments or
other similar funds or set-asides required, or reasonably anticipated by
the General Partner to required, by lenders in connection with any
Financing or Refinancing the proceeds of which are to be applied with, or
to recapitalize, any Partnership funds invested or committed for investment
within such 24-month period (including funds committed for investment as
described in Section 3.4A(3)).
To the extent that the General Partners shall, in its sole discretion,
elect the cash receipts of the Partnership arising from a Financing and
remaining after such applications of such receipts as are considered appropriate
by the General Partner may be treated as a portion of the Additional Limited
Partners' Capital Contributions and, to the extent and under the conditions
provided in this Section 3.4A distributed to the Limited Partners by the
Partnership as a return of capital.
B. In the event that:
(1) any agreement in principle or commitment letter referred to in
Section 3.4A(3) shall not be reduced to a definitive agreement, any option
agreement or similar agreement referred to in Section 3.4A(3) shall expire
unexercised, any agreement referred to in Section 3.4A(3) shall be
terminated, or the transaction contemplated by any agreement referred to in
Section 3.4A(3) shall not be consummated; or
(2) the General Partner shall determine that any funds referred to in
Section 3.4A(1), 3.4A(3), 3.4A(4) and/or 3.4A(5) have not been and will not
be applied to the uses for which such funds were set aside and reserved,
such funds shall, as promptly as practicable, be distributed to the Partners,
pro rata in proportion to their Capital Contributions, by the Partnership as a
return of capital.
C. To the extent that:
(1) as of the close of any fiscal quarter during the first 24 months
from the date of the final Closing, the amount of the working capital and
upgrade reserves of the type described in the Prospectus (measured by
reference to aggregate Media Property Cost at the close of such quarter)
shall, except as a result of capital expenditures, be lower than both (a)
3% of aggregate Media Property Cost at the close of such quarter (including
Media Properties in which the Partnership is committed to invest, as
described in Section 3.4A(3)) and (b) the lowest amount of such reserves as
of the close of any preceding fiscal quarter (measured by reference to
aggregate Media Property Cost at the close of such preceding quarter); and
(2) as of the close of any fiscal quarter following the close of the
first 24 months from the date of the final Closing, the amount of such
working capital reserves (measured by reference to aggregate Media Property
Cost at the close of such quarter), or the amount of any compensating
balances, reserves, escrows or other similar funds or set-asides referred
to in Section 3.4A(5), as the case may be, shall, except as a result of
capital expenditures, be reduced below both (a) the amount thereof provided
for in Section 3.4A(2) or 3.4A(5), as the case may be, and (b) the lowest
amount of such working capital reserves, or of such balances, reserves,
escrows or other set-asides referred to in Section 3.4A(5), as the case may
be, as of the close of any fiscal quarter following the close of such 24
months,
amounts distributed to the Partners pursuant to Section 4.1 with respect to such
fiscal quarter and, to the extent necessary, any preceding fiscal quarter (in
inverse serial order) shall be considered as, and shall for all purposes be
deemed to have been, a return of capital to the Partners, pro rata in proportion
to their Capital Contributions, rather than a distribution of Distributable Cash
from Operations; provided, however, to the extent that the amount of the working
capital reserves set forth in Section 3.4A(2) exceeds the lesser of the amounts
referred to in Sections 3.4C(1)(a) and 3.4C(1)(b), amounts referred to in
Section 3.4C(1) which were, pursuant to Section 3.4C, treated as returns of
capital shall retroactively be recharacterized and shall be considered to have
been, and shall for all purposes be deemed to have been, distributions of
Distributable Cash from Operations.
D. If at any time it is determined that any further investments of the
Partnership would cause the Partnership to be treated as an association taxable
as a corporation for Federal income tax purposes (either with respect to
ownership of assets subsequently acquired, or otherwise) any portion of the
Capital Contributions of the Partners not "invested or committed for investment"
as described in Section 3.4A herein shall, as promptly as practicable, be
distributed to the Partners, pro rata in proportion of their Capital
Contributions as a return of capital.
E. Under the circumstances requiring a return of any Capital Contribution,
no Partner shall have the right to receive property other than cash. If any
assets of the Partnership are to be distributed in kind, such assets shall be
distributed in accordance with Sections 4.2, 7.5D(6) and 8.2B.
F. Any return of any Capital Contribution under this Section 3.4 shall be
deemed to be a compromise within the meaning of Section 17-502(b) of the Act and
the Limited Partners receiving any such return shall not be obligated to return
any such money or property to the Partnership or a creditor of the Partnership.
Section 3.5 Partnership Capital
A. No Partner shall be paid interest on any Capital Contribution to the
Partnership or on such Partner's Capital Account, notwithstanding any
disproportion therein as between Partners.
B. The Partnership shall not redeem or repurchase any Partner's Interest,
except as provided in Section 7.4, and no Partner shall have the right to
withdraw from the Partnership, except as provided in Section 6.1, or, receive
any return of any Capital Contribution, except as provided in Section 3.4.
Section 3.6 Liability of Partners
A. Subject to the provisions of Section 3.6B, no Limited Partner shall have
any personal liability whatever in his capacity as a Limited Partner, whether to
the Partnership, to any of the Partners or to the creditors of the Partnership,
for the debts, liabilities, contracts or any other obligations of the
Partnership or for any losses of the Partnership. A Limited Partner shall be
liable only to make his Capital Contribution and shall not be required to lend
any funds to the Partnership or, after his Capital Contribution shall have been
paid, subject to the provisions of Section 3.6B, to make any further capital
contributions to the Partnership or to repay to the Partnership, any Partner ,
or any creditor of the Partnership all or any portion of any negative amount of
such Limited Partner's Capital Account.
B. In accordance with State law, a limited partner of a partnership may,
under certain circumstances, be required to return to the partnership, for the
benefit of partnership creditors, amounts previously returned or distributed to
such partner as a return of capital and distributions wrongfully made to such
limited partner. It is the intent of the Partners that no return or distribution
to any Limited Partner of Distributable Cash from Operations pursuant to Section
4.1 (except as provided in Section 3.4C) or of Distributable Refinancing
Proceeds of Distributable Sale Proceeds pursuant to Section 4.2B shall be deemed
a return or withdrawal of capital, even if such return or distribution
represents, for Federal income tax purposes or otherwise (in whole or in part),
a distribution of depreciation of any other non-cash item accounted for as a
loss or deduction from or offset to the Partnership's income, and that no
Limited Partner shall be obligated to pay any such amount to, or for the account
of the Partnership or any creditor of the Partnership. The payment of any such
money or distribution of any such property to a Limited Partner, whether or not
deemed to be a return of Capital Contribution, shall be deemed to be a
compromise within the meaning of Section 17-502(b) of the Act, and the Limited
Partner receiving any such money or property shall not be required to return any
such money or property to the Partnership or any creditor of the Partnership.
However, if any court of competent jurisdiction holds that, notwithstanding the
provisions of this Agreement, any Limited Partner is obligated to make any such
payment, such obligation shall be the obligation of such Limited Partner and not
of the General Partner.
C. Neither the General Partner nor any of its Affiliates shall have any
personal liability for the return or repayment of the Capital Contribution or
Adjusted Capital Contribution of any Limited Partner or to repay to the
Partnership any portion or all of any negative amount of the General Partner's
Capital Account, except as otherwise provided by law.
Section 3.7 General Partner as Limited Partner
The General Partner shall also be a Limited Partner to the extent that it
purchases or becomes a transferee of all or any part of the Interest of a
Limited Partner, and to such extent shall be treated in all respects as a
Limited Partner.
Section 3.8 Lender as Partner
No creditor who makes a loan to the Partnership may have or acquire, at any
time as a result of making the loan, any direct or indirect interest in the
profits, capital or property of the Partnership other than as a secured
creditor.
ARTICLE FOUR
DISTRIBUTIONS OF CASH;
ALLOCATIONS OF PROFITS AND LOSSES
Section 4.1 Distributions of Distributable Cash from Operations
A. The investment or reinvestment by the Partnership of Available Cash from
Operations or Distributable Cash from Operations, other than in temporary money
market or government securities, is prohibited, except that until the Capital
Contributions of the Partners or the proceeds of any Financing have been
invested or committed for investment, or have been returned to the Partners, as
provided in Section 3.4, any Available Cash from Operations for any fiscal
period of the Partnership in excess of the Federal Tax Allowance for such period
may be invested in Media Properties and/or applied to any purpose described in
Section 3.4A(1) through (5). Media Properties acquired pursuant to this Section
4.1A, together with additional Media Properties consisting of new or replacement
lines of business referred to in subparagraphs (1) and (2) of the Second
Paragraph of Section 4.2A, are referred to as "Additional Acquisitions".
B. All Distributable Cash from Operations for each fiscal quarter of the
Partnership shall, subject to the provisions of Section 6.2B, be distributed
within 45 days after the close of such quarter, as follows:
(1) first, to the Partners, pro rata in proportion to their Capital
Contributions (that is 99% to the Limited Partners, as a class, and 1% to
the General Partner) until the Limited Partners, as a class, shall have
received, from distributions then or theretofore made pursuant to this
Section 4.1B or Section 4.2B, an amount equal to an aggregate return (the
"Return") of 7% per annum, cumulative but not compounded, on the weighted
average daily amount of their Adjusted Capital Contributions from the first
day of the first quarter commencing after the final Closing through the
date of first making distributions pursuant to either Section 4.1B(3) or
Section 4.2B(3);
(2) second, to the Partners, pro rata in proportion to their Capital
Contributions (that is, 99% to the Limited Partners, as a class, and 1% to
the General Partner), until the Limited Partners, as a class, shall have
received, from distributions then or theretofore made pursuant to this
Section 4.1B or Section 4.2B, an amount equal to the amount of their
Capital Contributions together with the Return described in clause (1)
above;
(3) third, 80% to the Limited Partners, as a class, and 20% to the
General Partner, until the Limited Partners, as a class, shall have
received, from distributions then or theretofore made pursuant to this
Section 4.1B or Section 4.2B, an amount equal to twice their Capital
Contributions; and
(4) fourth, thereafter, 70% to the Limited Partners, as a class, and
30% to the General Partner.
C. The foregoing provisions of this Section 4.1 notwithstanding, within 45
days after the close of the second fiscal quarter of the first fiscal year of
the Partnership commencing after the final Closing, and within 45 days after
each subsequent fiscal quarter, to the extent necessary, the Partnership shall
make a special distribution to Partners of Distributable Cash from Operations in
such amounts as may be necessary to equalize the capital accounts of Limited
Partners. Distributions pursuant to this Section 4.1C shall be made in the
proportions of 99% to the Limited Partners receiving such distributions and 1%
to the General Partner. From and after such time as capital accounts of all
Limited Partners are first equalized pursuant to this Section 4.1C, no further
special distributions shall be made pursuant hereto.
Section 4.2 Distributions of Proceeds Arising from a Refinancing or Sale
A. All cash receipts of the Partnership arising from a Refinancing or Sale
shall, as soon as practicable after the occurrence of such Refinancing or Sale,
be applied, in the priority set forth, as follows:
(1) first, in the priority provided by law or any applicable agreement
or undertaking of the Partnership, to
(a) payment, to the extent applicable, of all amounts required to
be disbursed in connection with such Refinancing or Sale (which shall
include, (i) in connection with any Refinancing, the related
Refinancing Fee or Fees payable to any Person other than the General
Partner or its Affiliates, (ii) in connection with any sale or
disposition of Media Properties, the related Sales Commission payable
to any Person other than the General Partner or its Affiliates and
(iii) in connection with damage recoveries or insurance or
condemnation proceeds, cash paid or to be paid in connection with
repairs or replacements, at the discretion of the General Partner,
relating to the damage to or partial condemnation of the affected
Media Property and (iv) may include, at the discretion of the General
Partner, cash paid or to be paid for real property underlying, housing
or incidental to the use of such Media Property or cash paid or to be
paid to purchase any interest owned by others in a joint venture,
partnership or other entity, in which the Partnership holds a direct
or indirect interest, which owns such Media Property or element
thereof);
(b) payment of all debts and obligations of the Partnership then
due, related to the particular Refinancing or Sale (including, in the
case of any Refinancing of existing Partnership borrowings, repayment
of the principal of, and premium, if any, and interest on, such
existing borrowings);
(c) in the case of any Refinancing or Sale made, in whole or in
part, in order to provide funds to improve, modify or repair any
Partnership Media Property, to the payment of the excess of the costs
or expenses of such improvement, modification or repair over any other
Partnership funds available therefor;
(d) creation of reasonable cash reserves considered appropriate
by the General Partner, with the advice of the Accountants, to provide
for payment of and to pay taxes, debt service, insurance, repairs,
replacements or renewals and/or other costs, expenses and liabilities,
contingent or otherwise, related to such Refinancing or Sale or the
assets affected thereby, payment of which is not then due and for
which other cash receipts related to such Refinancing or Sale or the
assets affected thereby are not expected by the General Partner to be
received prior to the time such payments are required to be made; and
(e) payment of all other debts and obligations of the Partnership
then due, other than to any Partner; and
(2) second, to payment of all debts and obligations of the Partnership
to any Partners, prorated if such remaining amounts are not sufficient to
pay all such debts and obligations.
The amount of cash receipts remaining after the foregoing applications is,
in this Agreement, called "Available Refinancing Proceeds" or "Available Sale
Proceeds", as the case may be.
The investment or reinvestment by the Partnership of Available Sale
Proceeds or Available Refinancing Proceeds, other than in temporary money market
or government securities, is prohibited, except that:
(1) until the Capital Contributions of the Partners or the proceeds of
any Financing have been invested or committed for investment, or have been
returned to the Partners as provided in Section 3.4, Available Sale
Proceeds or Available Refinancing Proceeds in excess of the Federal Tax
Allowance, resulting from the sale, or binding commitment for sale, of a
stand-alone business, component business, or line of business (each a
"business line") of a Partnership Media Property, may be reinvested in
Media Properties or other property which constitutes additional business
lines of, improvements or additions to, or enhancements or upgrades of, or
which is used in conjunction with or to enhance the performance or
profitability of, Media Properties then owned by the Partnership and/or
applied to any purpose described in Section 3.4A(1) through (5); and
(2) at any time thereafter, any Available Sale Proceeds or Available
Refinancing Proceeds in excess of the Federal Tax Allowance, resulting from
the sale of a business line of a Partnership Media Property, may be
reinvested in additional business lines for or other property which
constitutes improvement or additions to, enhancements or upgrades of, or
property used in conjunction with or to enhance the profitability of, that
Partnership Media Property.
The amount of Available Refinancing Proceeds or Available Sale Proceeds
remaining after any applications permitted by the foregoing subparagraphs is, in
this Agreement, called "Distributable Refinancing Proceeds" or "Distributable
Sale Proceeds", as the case may be.
B. Distributable Refinancing Proceeds from any Refinancing or Distributable
Sale Proceeds from any Sale, as the case may be, shall, as promptly as
practicable after the applications provided for in Section 4.2A, subject to the
provisions of Section 6.2B, be distributed as follows:
(1) first, to the Partners, pro rata in proportion to their Capital
Contributions (that is, 99% to the Limited Partners, as a class, and 1% to
the General Partner), until the Limited Partners, as a class, shall have
received, from distributions then or theretofore made pursuant to Section
4.1B or this Section 4.2B, an amount equal to an aggregate return (the
"Return") of 7% per annum, cumulative but not compounded, of the weighted
average daily amount of their Adjusted Capital Contributions from the first
day of the quarter commencing after the final Closing through the date of
first making distributions pursuant to either Section 4.1B(3) or Section
4.2B(3);
(2) second, to the Partners, pro rata in proportion to their Capital
Contributions (that is, 99% to the Limited Partners, as a class, and 1% of
the General Partner), until the Limited Partners, as a class, shall have
received, from distributions then or therefore made pursuant to Section
4.1B or this Section 4.2B, an amount equal to the amount of their Capital
Contributions together with the Return described in clause (1) above;
(3) third, 80% to the Limited Partners, as a class, and 20% to the
General Partner, until the Limited Partners, as a class, shall have
received, from distributions then or therefore made pursuant to Section
4.1B and this Section 4.2B, an amount equal to twice their Capital
Contributions; and
(4) fourth, thereafter, 70% to the Limited Partners, as a class, and
30% to the General Partner.
Section 4.3 Allocations of Profits and Losses
A. The Profits and Losses of the Partnership, whether from operations or
Sale, shall be determined in accordance with the accrual method of accounting,
and allocated with respect to each fiscal year of the Partnership as of the end
of, and within 60 days after the end of the year.
B. Except as provided in Section 4.3D, all Losses for each taxable year of
the Partnership shall be allocated to the Partners, pro rata in proportion to
their Capital Contributions (that is 99% to the Limited Partners, as a class,
and 1% to the General Partner). Notwithstanding the provisions of the preceding
sentence of this Section 4.3B, if Profits shall have been previously allocated
to the General Partner pursuant to Section 4.3C(4) or 4.3C(5) then Losses
thereafter shall be allocated between the General Partner and the Limited
Partners as follows:
(1) first, 70% to the Limited Partners, as a class, and 30% to the
General Partner to the extent of the excess of the aggregate amount of
Profits previously allocated pursuant to Section 4.3C(5) over the aggregate
amount of Losses previously allocated pursuant to this Section 4.3B(1);
(2) second, 80% to the Limited Partners, as a class, and 20% to the
General Partner to the extent of the excess of the aggregate amount of
Profits previously allocated pursuant to Section 4.3C(4) over the aggregate
amount of Losses previously allocated pursuant to this Section 4.3B(2); and
(3) third, pro rata in proportion to their Capital Contributions (that
is, 99% to Limited Partners, as a class, and 1% to the General Partner).
C. Except as provided in Section 4.3D, all Profits shall be allocated as
follows:
(1) first, if the Capital Accounts of any Partners have negative
balances, Profits shall be allocated to such Partners in proportion to the
negative balances in their Capital Accounts until the balances of all such
Capital Accounts equal zero;
(2) second, to the Partners, pro rata in proportion to their Capital
Contributions (that is, 99% to the Limited Partners, as a class, and 1% to
the General Partner) until the sum of all Profits allocated to the Limited
Partners equals the sum of all Losses previously allocated to the Limited
Partners plus the amount of the Return described in Section 4.2B(1)
(however, if no distributions have been made pursuant to Sections 4.1B(3)
or 4.2B(3) at the time of the allocation of Profits pursuant to this
Section 4.3C(2), the amount of the Return for purposes of making the
current allocation of Profits under this Section 4.3C(2) is the amount that
the General Partner estimates will be the total Return under Sections
4.1B(1) and 4.2B(1));
(3) third, if after distributions have been made pursuant to Sections
4.1B(3) or 4.2B(3), the amount of Profits previously allocated to the
Limited Partners pursuant to Section 4.3C(2) exceeds the amount of Profits
that would have been allocated to the Limited Partners pursuant to Section
4.3C(2) had the amount of the Return as finally determined under Sections
4.1B(1) and 4.2B(1) been used in determining the amount of Profits to be
allocated pursuant to Section 4.3C(2), then 100% of the Profits shall be
allocated to the General Partner to the extent, if any, of 23.75 percent of
such excess;
(4) fourth, 80% to the Limited Partners, as a class, and 20% to the
General Partner until the sum of all Profits allocated to the Limited
Partners equals the aggregate amount of all Losses previously allocated to
the Limited Partners plus the Capital Contributions of all Limited
Partners; and
(5) fifth, thereafter, 70% to the Limited Partners, as a class, and
30% to the General Partner.
D. All Profits or Losses with respect to any period prior to the first date
on which Additional Limited Partners are admitted to the Partnership pursuant to
Section 3.3A shall be allocated to the Initial Limited Partner and to the
General Partner pro rata, in proportion to their Capital Contributions. Such
Profits or Losses shall be determined on the basis of an interim closing of the
Partnership's books on such date.
E. Notwithstanding that the Code may permit or require that recognition of
any Profits or Losses of the Partnership for any fiscal year be deferred until
some other year, such Profits or Losses shall be determined and allocated in the
manner provided in this Section 4.3 and in Section 4.4 in the year in which such
Profits or Losses arose or, but for the provision of the Code requiring such
deferral, would have been realized, as appropriate (without regard to the year
in which such Profits or Losses may be reported by the Partnership or recognized
by any Partner).
Section 4.4 Determination of Distribution and Allocations Among Partners
A. All Distributable Cash from Operations, Distributable Refinancing
Proceeds and Distributable Sale Proceeds distributable to the Limited Partners,
as a class, and all Profits and Losses allocable to the Limited Partners, as a
class, shall be distributed or allocated among the Limited Partners in the ratio
which the Capital Contribution of such Limited Partner bears to the total
Capital Contributions of all Limited Partners.
B. All Distributable Cash from Operations distributable to the Limited
Partners, as a class, shall be distributed or allocated, as the case may be, to
the Persons who were Limited Partners as of the last day of the fiscal period
for which such distribution or allocation is to be made.
C. Subject to the provisions of Article Seven, all Distributable
Refinancing Proceeds or Distributable Sale Proceeds arising from a Refinancing
or Sale shall be distributed, and all Profits and Losses arising from a Sale
shall be allocated, to the Persons who were Partners as of the date of such
Refinancing or Sale.
D. All Profits and Losses shall be earned or incurred ratably throughout
the year and allocated on a monthly basis to those Partners who were Partners on
the last day of the preceding month.
ARTICLE FIVE
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
Section 5.1 Management and Control of the Partnership
A. Subject to the Consent of the Limited Partners where required by this
Agreement, the General Partner, within the authority granted to it under and in
accordance with the provisions of this Agreement, shall have the full and
exclusive right to manage and control the business and affairs of the
Partnership and to make all decisions regarding the business of the Partnership
and shall have all of the rights, powers and obligations of a general partner of
a limited partnership under the laws of the State.
B. No Limited Partner shall participate in the management of or have any
control over the Partnership's business nor shall any Limited Partner have the
power to represent, act for, sign for or bind the General Partner or the
Partnership. The Limited Partners hereby Consent to the exercise by the General
Partner of the powers conferred on it by this Agreement. C. Any provision of
this Agreement to the contrary notwithstanding, the General Partner shall take
no action or permit the occurrence of any event requiring the prior consent of a
governmental authority (including, without limitation, the FCC) before such
prior consent shall have been obtained. The General Partner shall make all
governmental filings necessary and appropriate to its acquisition, ownership,
operation and disposition of Partnership Media Properties.
Section 5.2 Authority of the General Partner
A. In addition to any other rights and powers that the General Partner may
possess under this Agreement and the Act, the General Partner shall, except to
the extent otherwise provided herein, have all specific rights and powers
required or appropriate to its management of the Partnership business which, by
way of illustration but not by way of limitation, may include the following
rights and powers:
(1) to acquire, hold, improve, maintain, operate, lease, finance,
encumber, manage, sell, dispose of and otherwise deal with and invest in
Media Properties, or direct or indirect interests therein, or interests in
any joint venture, partnership or other entity which owns or holds any
particular item of Media Property; provided, however, that:
(a) the General Partner will limit investments in any one
specific Media Property, or any one partnership, joint venture, or
other entity, to not more than the greater of (i) 20% of the net
proceeds (after selling commission and other offering and
organizational expenses) of the sale of Additional Limited Partners'
Interests and (ii) $15,000,000 of such net offering proceeds;
(b) the General Partner will not acquire any limited partnership
interest in any limited partnership unless such limited partnership is
organized under the REVISED UNIFORM LIMITED PARTNERSHIP ACT (1976) or
a partnership act which affords voting rights to limited partners at
least as permissible;
(c) the aggregate investment by the Partnership in limited
partnership interests, equity, debt or other securities, where the
Partnership acquires less than 100% of such securities, shall not at
any time exceed 35% of Partnership funds used for or available to be
used for acquisition of Media Properties; and
(d) the General Partner will not acquire any interest in a
partnership, joint venture or other entity which owns or holds a
particular item of Media Property unless (1) such item of Media
Property is Media Property of a type that the Partnership would be
permitted to acquire directly, (2) the Partnership's share of any
Acquisition Fees, Acquisition Expenses or Financing Fees payable by
such joint venture, partnership or entity and any Acquisition Fees,
Acquisition Expenses and Financing Fees payable in connection with the
Partnership's acquisition of its interest in such joint venture,
partnership or other entity will not, in the aggregate, exceed the
limitations provided in Sections 5.3A(2) and 5.3A(3), (3) such
acquisition will not involve duplicate Media Property management or
other fees, (4) such acquisition would afford the Partnership the
exercise of a significant aspect of control over such entity, and (5)
such investment will not result in the impairment, abrogation or
circumvention of any of the terms of this Agreement;
(2) to acquire by purchase or otherwise, and to hold, improve,
maintain, operate, finance, encumber, lease, sell, dispose of and otherwise
deal with and invest in, any real or personal property which may be
necessary or incidental to the ownership, holding, financing, use,
operation, sale or disposition of the Media Properties or direct or
indirect interests therein other than limited partnership interests in
other limited partnerships, equity, debt or other securities, unless in
conformance with Section 5.2A(1)(c);
(3) to execute any and all agreements, contracts, documents,
certifications and instruments and make regulatory filings necessary or
convenient in connection with the development, management, maintenance and
operation of the Partnership Media Properties or the Partnership, including
the employment of itself or such Persons, which may include Affiliates of
the General Partner, as may be necessary therefor;
(4) to borrow money and issue evidences of indebtedness, in
furtherance of any or all of the purposes of the Partnership, and to secure
the same by mortgage, pledge or other lien on the Media Properties or any
other assets of the Partnership, and to refinance and/or repay, in whole or
in part, any such borrowings or security; provided, however, that the
Partnership shall not incur indebtedness in excess of the sum of (a) 80% of
the aggregate purchase price of all Media Properties which have not been
the subject of a Refinancing and (b) 80% of the aggregate value as
determined by the lender as of the date of each Refinancing of all Media
Properties which have been the subject of a Refinancing;
(5) to execute, in furtherance of any or all of the purposes of the
Partnership, any deed, lease, security agreement, mortgage, chattel
mortgage, secured note, financing statement, bill of sale, contract or
other instrument purporting to convey or encumber the personal or real
property of the Partnership;
(6) to protect and preserve the title and interest of the Partnership
with respect to the assets at any time owned or acquired by the
Partnership;
(7) to collect all amounts due to the Partnership, and otherwise to
enforce all rights of the Partnership, including all such rights inuring to
the benefit of the Partnership under any lease of its assets, and in that
connection to retain counsel and institute such suits or proceedings, in
the name and on behalf of the Partnership, or, if the General Partner shall
so determine, in the name of the Partners;
(8) to designate and appoint one or more agents for the Partnership
who shall have such authority as may be conferred upon them by the General
Partner, and who may perform any of the duties, and exercise any of the
powers and authority, conferred upon the General Partner hereunder,
including, but not limited to, designation of one or more agents as
authorized signatories on any bank accounts maintained by the Partnership;
(9) to establish and maintain one or more bank accounts for the
Partnership in such bank or banks as the General Partner may, from time to
time, designate as depositaries of the funds of the Partnership;
(10) to the extent that funds of the Partnership are available, to pay
all debts and obligations of the Partnership;
(11) to the extent that funds of the Partnership are available, to
make all distributions periodically to the Partners in accordance with the
provisions of this Agreement;
(12) to enter into and perform the agreements and undertakings
referred to in Section 5.3 and to pay, or cause the Partnership to pay, the
fees, commissions, charges and expenses referred to in Section 5.3;
(13) to perform all normal business functions, and otherwise operate
and manage the business and affairs of the partnership, in accordance with
and as limited by this Agreement;
(14) subject to the provisions of Section 5.3, to deal with, or
otherwise engage in business with, or lease assets or provide services to,
and receive compensation therefor from, any Person who has in the past
dealt or engaged in business with the General Partner or any of its
Affiliates (whether as lender, supplier, agent, lessor, lessee, purchaser
or otherwise) or may in the future have such dealings or do such business
with the General Partner or any of its Affiliates;
(15) to perform all duties imposed on a "tax matters partner" of the
Partnership by Sections 6221 through 6232 of the Code, including (but not
limited to) the following: (a) the power to conduct all audits and other
administrative proceedings (including windfall profit tax audits) with
respect to Partnership tax items; (b) the power to extend the statute of
limitations for all Partners with respect to Partnership tax items; (c) the
power to file a petition with an appropriate federal court for review of a
final Partnership administrative adjustment; and (d) the power to enter
into a settlement with the Internal Revenue Service on behalf of, and
binding upon, those Limited Partners having less than a 1% interest in the
Profits of the Partnership unless a Limited Partner notifies the Internal
Revenue Service and the General Partner that the General Partner may not
act on such Limited Partner's behalf; and
(16) to engage in any kind of activity and to perform and carry out
contracts of any kind necessary to, or in connection with or convenient or
incidental to, the accomplishment of the purposes of the Partnership, so
long as said activities and contracts may be lawfully carried on or
performed by a partnership under the laws of the State.
B. Any Person dealing with the Partnership or the General Partner may rely
upon a certificate signed by the General Partner, thereunto duly authorized, as
to:
(1) the identity of the General Partner or any Limited Partner;
(2) the existence or non-existence of any fact or facts which
constitute conditions precedent to acts by the General Partner or in any
other manner germane to the affairs of the Partnership;
(3) the Persons who are authorized to execute and deliver any
instrument or document of the Partnership; or
(4) any act or failure to act by the Partnership or as to any other
matter whatsoever involving the Partnership or any Partner.
Section 5.3 Dealings of the General Partner and Its Affiliates
with the Partnership
A. Without limitation upon the other powers set forth herein, the General
Partner is expressly authorized for, in the name of and on behalf of the
Partnership to:
(1) enter into contracts with any Affiliates of the General Partner
relating to the purchase of Media Properties or any item thereof to the
extent allowed for in Section 5.3B(1);
(2) pay or cause others to pay Acquisition Fees to the General Partner
or any of its Affiliates, and reimburse or cause others to reimburse the
General Partner or any of its Affiliates for their Acquisition Expenses,
and purchase Media Properties in connection with the purchase of which the
General Partner or any of its Affiliates will receive Acquisition Fees
and/or reimbursement of their Acquisition Expenses; provided, however,
that:
(a) Acquisition Fees shall be paid only for services actually
rendered;
(b) the total of all Acquisition Fees paid by all Persons to all
Persons in connection with the acquisition of any item of Partnership
Media Property shall not exceed amounts reasonably determined by the
General Partner to represent the fair market value of, or the
compensation customarily charged in arm's-length transactions by
others as an on-going public activity for, the services rendered;
(c) neither RP Media Management nor any of its Affiliates shall
be entitled to an Acquisition fee;
(d) no Person shall be entitled to receive any Acquisition Fee to
the extent that, as a result of the payment thereof, the aggregate of
all Acquisition Fees paid by all Persons to all Persons would exceed
the lesser of (1) 4% of the Media Property Cost for such Partnership
Media Property and (2) the amount that would be paid to an independent
party for comparable services; and
(e) the aggregate of all Acquisition Fees, Acquisition Expenses,
Financing Fees and Financing Expenses paid by all Persons to all
Persons in connection with the acquisition of all items of Media
Property (whether or not consummated) shall not exceed 18% of the
Additional Limited Partners' Capital Contributions (and, for purposes
of applying such limitation to the acquisition of any particular item
of Partnership Media Property, the portion of the Additional Limited
Partners' Capital Contributions applicable to such item of Media
Property shall include a proportionate share of uninvested reserves,
selling commissions paid with respect to such Capital Contributions
and a proportionate share of organizational and offering expenses
incurred in connection with the offering and sale of Additional
Limited Partners' Interests);
(3) pay or cause others to pay Financing Fees to Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("ML"), or any of its Affiliates, or reimburse or
cause others to reimburse ML or any of its Affiliates for their Financing
Expenses, in connection with any Financing, or enter into any Financing in
connection with which ML or any of its Affiliates shall receive Financing Fees
and/or reimbursement for their Financing Expenses; provided, however, that (a)
Financing Fees shall be paid only for services actually rendered; (b) neither ML
nor any of its Affiliates shall be entitled to receive any Financing Fee to the
extent that, as a result of the payment thereof, the aggregate of the Financing
Fees paid to all Persons would exceed 1% of the original principal amount of all
Financings; and (c) the aggregate of all Acquisition Fees, Acquisition Expenses,
Financing Fees and Financing Expenses paid by all Persons to all Persons in
connection with the acquisition of all items of Partnership Media Property
(whether or not consummated) shall not exceed 18% of the Additional Limited
Partners' Capital Contributions (and, for purposes of applying such limitation
to the acquisition of any particular item of Media Property, the portion of the
Additional Limited Partners' Capital Contributions applicable to such item of
Media Property shall include a proportionate share of uninvested reserves,
selling commissions paid with respect to such Capital Contributions and a
proportionate share of organizational and offering expenses incurred in
connection with the offering and sale of Additional Limited Partners'
Interests);
(4) offer and sell Additional Limited Partners' Interests, as provided in
the Prospectus, to be reimbursed for any fees paid or expenses incurred on
behalf of the Partnership in connection therewith and to enter into an agency
agreement with ML pursuant to which that firm will assist the Partnership as the
agent of the Partnership in the offering and sale of the Additional Limited
Partners' Interests, as described in the Prospectus, and pursuant to which the
Partnership will agree, among other things, to pay such firm a selling
commission in an amount equal to up to 8% of the gross proceeds of the sale of
the Additional Limited Partners' Interests (it being understood that such firm
may refund part of such selling commission directly to such Additional Limited
Partners whose Capital Contributions equal $500,000 or more), a marketing
management fee and sales expense reimbursement equal to 1/2 of 1% of the gross
proceeds of the sale of the Additional Limited Partners' Interests (it being
understood that such firm may refund part of such fee and reimbursement directly
to Additional Limited Partners whose Capital Contributions equal $1,000,000 or
more) (such fee and reimbursement payable only from the Capital Contributions of
the Partners) and to indemnify and hold harmless that firm (and any selected
dealer participating with that firm in a distribution of Additional Limited
Partners' Interests pursuant to the terms of such agency agreement) from any
liability incurred by it in so acting for the Partnership pursuant to the terms
of such agency agreement;
(5) pay the General Partner an annual Partnership Management Fee, payable
quarterly in advance, equal to a base fee of $250,000 and an incremental fee
equal to 0.35% of the gross proceeds of the sale of Additional Limited Partners'
Interests in excess of $100,000,000 (each prorated in 1986 from the date of the
first Closing), as compensation for managing and controlling the affairs of the
Partnership, and reimburse the General Partner for its actual, out-of-pocket
expenses incurred on behalf of the Partnership in connection with the management
of the Partnership (including, for the performance of bookkeeping, accounting,
administrative, reporting, public relations and other ministerial services for
the Partnership necessary for the prudent administration of the Partnership, and
salaries of its personnel and of ML Media Management Inc., or ML Leasing
Management, Inc. (in each case other than executive personnel), but not RP Media
Management and excluding general or administrative expenses, and overhead, of
the General Partner); provided, however, that such reimbursement in any one year
shall not be in excess of an amount equal to the sum of $250,000 and 0.25% of
the gross proceeds of the sale of Additional Limited Partners' Interests in
excess of $100,000,000, which amount will be adjusted annually after 1987 in
accordance with changes in the Consumer Price Index during the prior year; the
General Partner may delegate any of its Partnership management duties to ML
Leasing Management, Inc. provided that no such delegation shall increase the fee
or expense reimbursement otherwise allowed hereunder;
(6) pay the General Partner an annual Property Management Fee, payable
quarterly in advance, equal to a base fee of $450,000 and an incremental fee
equal to 0.75% of the gross proceeds of the sale of Additional Limited Partners'
Interests in excess of $100,000,000 (each prorated in 1986 from the date of the
first Closing), as compensation for supervising the management of the
Partnership Media Properties, and reimburse the General Partner for its actual,
out-of-pocket expenses incurred on behalf of the Partnership in connection with
the supervision of the Partnership Media Properties (including rent, supplies
and salaries of its personnel and of other than executive personnel of RP Media
Management); provided, however, that such reimbursement in any one year shall
not exceed an amount equal to the sum of $450,000 and 0.50% of the gross
proceeds of the sale of Additional Limited Partners' Interests in excess of
$100,000,000, which amount will be adjusted annually after 1987 in accordance
with changes in the Consumer Price Index during the prior year; provided
further, however, that each of such Property Management Fee and maximum expense
reimbursement will be reduced by an amount equal to 2/3 of 1% of the amount
otherwise computed hereunder for every 1% reduction in the Media Property Base
(effective as of the date of consummation of the sale); provided further that
the Property Management Fee and maximum expense reimbursement hereunder shall be
zero from and after the earlier to occur of (a) completion of all property
management duties of the General Partner and (b) six months after the
consummation of the last sale of Media Properties; and
(7) notwithstanding the provisions of Sections 5.3A(5) and 5.3A(6), any
Partnership Management Fee or Property Management Fee otherwise payable pursuant
to Section 5.3A(5) or 5.3A(6) shall not be payable if to do so would cause the
aggregate of fees paid pursuant to Section 5.3A(5) and 5.3A(6) in such year to
exceed an amount equal to 5% of gross revenues of the Partnership for such year;
provided, however, that during the first twenty-four months after the final
Closing any excess over such 5% limitation shall nevertheless be payable if such
excess when added to Acquisition Fees, Acquisition Expenses, Financing Fees and
Financing Expenses computed in Section 5.3A(3)(C) does not exceed the limitation
set forth in such Section 5.3A(3)(C); provided, further, however, that any fees
otherwise payable pursuant to Section 5.3A(5) or 5.3A(6) which may not be paid
pursuant to this Section 5.3A(7) shall be deferred until the next fiscal year in
which the payment thereof would not exceed the limitations set forth herein and
provided, further, that any fees which have been paid to the General Partner in
excess of the amounts allowed for herein shall be refunded to the Partnership by
the General Partner.
B. Notwithstanding any other provision of this Agreement, the following
transactions are expressly prohibited:
(1) the Partnership shall not purchase Media Properties from the
General Partner or any of its Affiliates, or any Person that was formed and
is operated primarily to invest in and deal with such Media Properties and
in which the General Partner or any of its Affiliates has an interest;
provided, however, that this Section 5.3B(1) shall not preclude (a) the
purchase by the Partnership from Persons other than the General Partner or
its Affiliates of Media Properties, or any direct or indirect interest
therein, the purchase or operation of which has been arranged or
underwritten by the General Partner or any of its Affiliates or (b) the
acquisition by the Partnership of any interest in any joint venture or
other partnership or entity which owns or holds, or has been formed to own
or hold, a particular Media Property and in which the General Partner or
any of its Affiliates has also acquired, or is expected to acquire, an
interest;
(2) the Partnership shall not make any loans to the General Partner or
any of its Affiliates;
(3) the Partnership shall not accept from the General Partner or any
of its Affiliates any loan, secured or unsecured, which would constitute a
Financing or Refinancing and shall not accept from the General Partner or
any of its Affiliates any other loan unless (a) such loan is unsecured and
(b) the interest rate and other finance charges and fees in connection with
such loan are not in excess of the lesser of (i) the amount charged by
unrelated banks or comparable loans to comparable borrowers for the same
purpose and (ii) the cost of money to the General Partner for unsecured,
nonspecific borrowings and (c) such loan does not have a stated term in
excess of 12 months;
(4) except pursuant to Article Eight, the Partnership shall not issue
Limited Partners' Interest in exchange for any property other than cash;
(5) the Partnership shall not give the General Partner or any of its
Affiliates an exclusive right to sell or exclusive employment to sell Media
Properties for the Partnership;
(6) no agent, attorney, accountant or other independent consultant or
contractor who is also employed on a full-time basis by the General Partner
or any of its Affiliates shall be compensated directly by the Partnership
for his services on behalf of the General Partner;
(7) no rebates or "give-ups" may be received by the General Partner or
any of its Affiliates, nor may the General Partner or any of its Affiliates
participate in any reciprocal business arrangements which would have the
effect of circumventing any of the provisions of this Agreement;
(8) the funds of the Partnership shall not be commingled with the
funds of any other Person and the General Partner shall not employ, or
permit any other Person to employ, such funds in any manner except for the
benefit of the Partnership;
(9) expenses of the Partnership shall be billed directly to and paid
by the Partnership, and, except as permitted by Section 5.3A, no
reimbursements shall be made therefor to the General Partner or any of its
Affiliates (other than for organization and offering expenses of the
Partnership, as contemplated by the Prospectus, or for the actual cost to
the General Partner or its Affiliates of goods and materials purchased from
manufacturers, suppliers or dealers not affiliated with the General Partner
or its Affiliates and used for or by the Partnership);
(10) the Partnership shall not pay Refinancing Fees or sales
commissions to the General Partner or any Affiliates thereof;
(11) except as provided in Section 5.3, the Partnership shall not pay
fees or expenses to any Affiliates of the General Partner for any services
rendered; and
(12) no sale by the Partnership of a Media Property to the General
Partner or any of its Affiliates shall be made unless such sale is at a
price no less than the fair market value of such Media Property as
determined by an independent appraisal.
Section 5.4 Restrictions on the Authority of the General Partner
A. Without the Consent of all the Limited Partners, the General Partner
shall not have the authority to:
(1) do any act in contravention of this Agreement;
(2) do any act that would make it impossible to carry on the ordinary
business of the Partnership;
(3) admit a Person as a General Partner, except as provided in this
Agreement;
(4) admit a Person as Limited Partner, except as provided in this
Agreement; or
(5) knowingly perform any act that would subject any Limited Partner
to liability as a general partner in any jurisdiction.
B. Without the Consent of a majority in interest of the Limited Partners,
the General Partner shall not have the authority to:
(1) sell, abandon or otherwise dispose of at any one time all or
substantially all the assets of the Partnership, except for a liquidation
sale of a final Media Property or Media Properties remaining as a result of
the sale of Media Properties in the ordinary course of business; or
(2) elect to dissolve the Partnership.
Section 5.5 Duties and Obligations of General Partner
A. The General Partner shall take all action that may be necessary or
appropriate for the continuation of the Partnership's valid existence as a
limited partnership under the laws of the State (and each other jurisdiction in
which such existence is necessary to protect the limited liability of the
Limited Partners or to enable the Partnership to conduct the business in which
it is engaged) and for the acquisition, management, maintenance and operation of
the Partnership Media Property in accordance with the provisions of this
Agreement and applicable laws and regulations.
B. The General Partner shall devote to the Partnership such time as the
General Partner shall deem to be necessary to conduct the Partnership business
and affairs in an appropriate manner.
C. The General Partner shall be under a fiduciary duty and obligation to
conduct the affairs of the Partnership in the best interests of the Partnership,
including the safekeeping and use of all Partnership funds and assets (whether
or not in the immediate possession or control of the General Partner) and the
use thereof for the benefit of the Partnership. Neither the General Partner nor
any of its Affiliates shall enter into any transaction with the Partnership that
may significantly benefit the General Partner or such Affiliate in its
independent capacity unless the transaction is expressly permitted hereunder.
D. The General Partner shall use its best efforts to maintain at all times
its net worth or if it is organized as a general partnership cause at least one
general partner therein to maintain at all times such general partner's net
worth, at a level that is sufficient to meet all requirements of currently
applicable U.S. income tax regulations and rulings of the Internal Revenue
Service (including pursuant to Revenue Procedure 72-13, to the extent
applicable), and, in addition, shall use its best efforts to meet any future
requirements set by statute, the Internal Revenue Service or the courts, to
assure that the Partnership will not fail to be classified for Federal income
tax purposes as a partnership, rather than as an association taxable as a
corporation, on account of the net worth of the General Partner. Neither the
General Partner nor its general partners shall declare or pay any dividend or
make any distribution to its partners to the extent that, as a result of such
declaration or payment, the General Partner would fail to meet any of such
requirements. The General Partner shall use its best efforts to cause Merrill
Lynch Leasing Inc. to agree to use its best efforts to contribute additional
capital to the General Partner or a general partner thereof so that the General
Partner or a general partner thereof will at all times have a net worth
sufficient to meet all requirements of the Code as currently in effect and as
hereafter amended to assure that the Partnership will be classified for Federal
income tax purposes as a partnership and not as an association taxable as a
corporation.
E. The General Partner shall at all times conduct its affairs and the
affairs of all of its Affiliates and of the Partnership in such a manner that
neither the Partnership nor any Partner nor any Affiliate of any Partner will
have any personal liability with respect to any Partnership indebtedness, unless
in the case of personal liability with respect to the Partnership, the General
Partner or any Affiliate of the General Partner, the General Partner is of the
opinion that such conduct would be in the best interests of the Limited
Partners. The General Partner shall use its best efforts in the conduct of the
Partnership's business, to put all suppliers and other Persons with whom the
Partnership does business on notice that the Limited Partners are not liable for
Partnership obligations, and all agreements to which the Partnership is a party
shall include a statement to the effect that the Partnership is a limited
partnership organized under the Act; but the General Partner shall not be liable
to the Limited Partners for any failure to give such notice to such suppliers or
other Persons or for any such agreement to fail to contain such statement.
F. The General Partner shall prepare or cause to be prepared and shall file
on or before the due date (or any extension thereof) any Federal, State or local
tax returns required to be filed by the Partnership. The General Partner shall
cause the Partnership to pay any taxes payable by the Partnership (it being
understood that the expenses of preparation and filing of such tax returns, and
the amounts of such taxes, are expenses of the Partnership and not of the
General Partner); provided, however, that the General Partner shall not be
required to cause the Partnership to pay any tax so long as the General Partner
or the Partnership is in good faith and by appropriate legal proceedings
contesting the validity, applicability or amount thereof and such contest does
not materially endanger any right or interest of the Partnership.
G. The General Partner shall, from time to time, submit to any appropriate
state securities administrator all documents, papers, statistics and reports
required to be filed with or submitted to such state securities administrator.
H. The General Partner shall use its best efforts to cause the Partnership
to be formed, reformed, qualified to do business, or registered under any
applicable assumed or fictitious name statute or similar law in any state in
which the Partnership then owns Media Property or transacts business, if such
formation, reformation, qualification or registration is necessary in order to
protect the limited liability of the Limited Partners or to permit the Limited
Partnership lawfully to own property or transact business.
I. The General Partner shall, from time to time, prepare and file any
amendment to the Certification or this Agreement and other similar documents
that are required by law to be filed and recorded for any reason, in such office
or offices as are required under the laws of the State or any other state in
which the Partnership is then formed or qualified. The General Partner shall
promptly register the Partnership under any assumed or fictitious name statute
or similar law in force and effect in each state in which the Partnership is
then formed or qualified. The General Partner shall do all other acts and things
(including making publication or periodic filings of the Certificate or this
Agreement or other similar documents, or amendments thereto) that may now or
hereafter be required, or deemed by the General Partner to be necessary, (1) for
the perfection and continued maintenance of the Partnership as a limited
partnership under the laws of the State and each other state in which the
Partnership is then formed, (2) to protect the limited liability of the Limited
Partners as limited partners under the laws of the State and each other state in
which the Partnership is then formed or qualified and (3) to cause the books and
records of the Partnership, and if required by law, to cause the Certificate and
this Agreement to reflect accurately the agreement of the Partners, the identity
of the Limited Partners or the General Partner and the amounts of their
respective Capital Contributions.
J. The General Partner shall use its best efforts to assure that in all
correspondence, contracts, agreements and other documents relating to the
Partnership (1) it shall plainly appear, or be so stated, that the Partnership
is a limited partnership organized under the Act, (2) the full name of the
Partnership shall at all times be used and (3) wherever appropriate it shall be
expressly stated that, for purposes of determining the liability of the Limited
Partners, the Act shall be controlling; but the General Partner shall not be
liable to the Limited Partners for any failure to make such statements.
K. In the case of any vote, Consent or other action by the Limited Partners
hereunder which shall become binding upon the General Partner, the General
Partner, in acting on behalf of the Partnership in the Partnership's capacity as
a partner in any partnership, joint venture or other entity which may own or
hold any particular item of Media Property, shall, to the extent permitted by
the partnership agreement relating to such partnership or joint venture, take
corresponding or identical action or cause an Affiliate of the General Partner
in its capacity as a partner of such partnership or joint venture to take such
action, pursuant to the terms of the partnership agreement relating to such
partnership or joint venture and, in general, shall not act on behalf of the
Partnership in such capacity in a manner inconsistent with any such vote,
Consent or other action pursuant to this Agreement.
L. The General Partner shall use its best efforts to assure that the
Partnership shall not be deemed an investment company as such term is defined in
the Investment Company Act of 1940.
M. The General Partner shall use its best efforts to cause the Partnership
to commit a substantial portion of the gross amount invested in the Partnership
by the Limited Partners toward investment in Media Properties.
Section 5.6 Compensation of the General Partner
The General Partner shall not, either in its capacity as General Partner or
in its individual capacity, receive any salary, fees, commissions, profits,
distributions, or other compensation except as provided or permitted under
Article Four or Article Five.
Section 5.7 Other Businesses of Partners
Any Partner and any Affiliate of any Partner may engage in or possess an
interest in other business ventures of any kind, nature or description,
independently or with others, including, but not limited to, the acquisition,
financing, construction, development, ownership, leasing, operation, management,
syndication and brokerage of media business properties, for their own account or
for the account of others. Nothing in this Agreement shall be deemed to prohibit
the General Partner or any Affiliate of the General Partner from dealing, or
otherwise engaging in business, with Persons transacting business with the
Partnership or from providing services relating to the purchase, sale,
financing, management, or operation of media business properties and receiving
compensation therefor. Neither the Partnership nor any Partner shall have any
rights or obligations by virtue of this Agreement or the partnership
relationship created hereby in or to such independent ventures or the income or
profits or losses derived therefrom, and the pursuit of such ventures, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper. The General Partner will act within the procedures and guidelines
established by its Investment Committee as set forth in the Prospectus and
otherwise designed to minimize any conflict between the Partnership's business
and other business interests of the General Partner and its Affiliates.
Section 5.8 Indemnification of the General Partner and Its Affiliates
A. Neither the General Partner nor any of its Affiliates shall be liable,
responsible or accountable in damages or otherwise to the Partnership or any
Limited Partner for any loss or damage incurred by reason of any act or omission
performed or omitted by the General Partner or such Affiliate in good faith
either on behalf of the Partnership or in furtherance of the interests of the
Partnership and in a manner reasonably believed by it to be within the scope of
the authority granted to it by this Agreement or by law or by the Consent of the
Limited Partners in accordance with the provisions of this Agreement, provided
that the General Partner or such Affiliate was not guilty of negligence,
misconduct or any other breach of fiduciary duty with respect to such act or
omission. To the fullest extent permitted by law, the Partnership shall
indemnify and hold harmless any Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
any action by or in the right of the Partnership), by reason of any act or
omission or alleged act or omission arising out of such Person's activities as a
General Partner or as an officer, director, shareholder or Affiliate of either
RP Media Management or ML Media Management Inc. or the General Partner if such
activities were performed in good faith either on behalf of the Partnership or
in furtherance of the interests of the Partnership, and in a manner reasonably
believed by such Person to be within the scope of the authority conferred by
this Agreement or by law or by the Consent of the Limited Partners in accordance
with the provisions of this Agreement, against losses, damages, or expenses for
which such Person has not otherwise been reimbursed (including attorneys' fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by such Person in connection with such action, suit or proceeding so
long as such Person was not guilty of negligence, misconduct or any other breach
of fiduciary duty with respect to such acts or omissions, provided that the
satisfaction of any indemnification and any holding harmless shall be from and
limited to Partnership assets and no Limited Partner shall have any personal
liability on account thereof, and provided that such an indemnification of an
Affiliate shall be limited to losses, damages or expenses (i) which such
Affiliate incurred solely as a result of such Affiliate's status as an Affiliate
of the General Partner or (ii) to which the Affiliate is subject because it has
performed a fiduciary obligation of the General Partner on behalf of the General
Partner.
B. Notwithstanding the above, neither the General Partner nor its
Affiliates nor any person acting as broker-dealer in connection with the
offering of Interests pursuant to the Prospectus shall be indemnified for any
losses, liabilities or expenses arising from or out of an alleged violation of
federal or state securities laws unless (1) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee, provided that a court approves
indemnification of litigation costs; or (2) such claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee; or (3) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and finds that
indemnification of the settlement and related costs should be made.
C. In any claim for indemnification for Federal or state securities law
violations, the party seeking indemnification shall place before the court the
position of the Securities and Exchange Commission and the Securities Divisions
of Massachusetts and Tennessee with respect to the issue of indemnification for
securities law violations. The Partnership may not incur that portion of
liability insurance which insures the General Partner or any Affiliate for any
liability as to which the General Partner may not be indemnified pursuant to
this Section 5.8.
ARTICLE SIX
TRANSFERABILITY OF GENERAL PARTNER'S INTEREST
Section 6.1 Admission of Successor or Additional General Partner
A. With the Consent of a majority in interest of the Limited Partners
, the General Partner may, in addition to substitutions
permitted by Section 6.1B and subject to the provisions of Section 6.5, at any
time, designate one or more Persons to be successor or additional General
Partners with such participation in the General Partner's Interest as the
General Partner and such successor or additional General Partners may agree
upon; provided that the Interests of the Limited Partners shall not be affected
thereby. Each such designee so Consented to by the Limited Partners shall become
a successor or additional General Partner upon complying with the provisions of
Section 10.3.
B. Except as part of a transfer to a successor or additional General
Partner pursuant to Section 6.1A the General Partner shall not have the right to
resign or to transfer or assign its Interest, except that the General Partner
may substitute in its stead as General Partner any entity which has, by merger,
consolidation or otherwise, acquired substantially all of its assets or stock
and continued its business or any entity formed by ML Media Management Inc. or
any Affiliate thereof and designated thereby to succeed to the rights of the
General Partner at the time of the dissolution of the General Partner. The
designation of such a successor General Partner shall occur, and for all
purposes shall be deemed to have occurred prior to such resignation or transfer.
Each Limited Partner hereby Consents to the admission of any additional or
successor General Partner pursuant to this Section 6.1B, and no further Consent
or approval shall be required.
Any substitution pursuant to this Section 6.1B shall be made only if (1)
such substitute is, or is formed with, a wholly-owned subsidiary (direct or
indirect) of Merrill Lynch & Co., Inc. or any successor entity thereto, and (2)
after such substitution the General Partner would have a net worth computed to
comply with standards set forth in Section 5.5D.
C. Any voluntary resignation by the General Partner from the Partnership,
or any sale, transfer or assignment by the General Partner of its General
Partner's Interest, shall be effective only subsequent to the admission in
accordance with Section 6.1A or 6.1B of a successor or additional General
Partner.
Section 6.2 Removal of the General Partner; Designation of a Successor
General Partner
A. Subject to the provisions of Section 11.3, the General Partner may be
removed for any reason with the Consent of a majority in interest of the Limited
Partners. The removal of the General Partner shall in no way derogate from any
rights or powers of such General Partner, or the exercise thereof, or the
validity of any actions taken pursuant thereto, prior to the date of such
removal.
B. In the event of the removal of the General Partner without cause, the
General Partner's General Partner Interest shall be converted to a Limited
Partner Interest with all rights to distributions previously provided as a
General Partner. In the event of the removal of the General Partner for cause
and continuation of the Partnership, the General Partner's Interest in the
Partnership shall be appraised by two independent appraisers, one selected by
the removed General Partner and one by the remaining General Partner or
Partners. In the event that such two appraisers are unable to agree on the value
of the General Partner's Interest, they shall jointly appoint a third
independent appraiser whose determination shall be final and binding. The cost
of any such appraisal shall be borne by the Partnership. Payment to the removed
General Partner for its Interest shall be made by delivery of a promissory note
of the Partnership, the principal amount of which is equal to the appraised
value of such Interest and which bears interest at a rate per annum equal to the
Prime Rate at the time of removal, with interest payable annually and principal
payable, if at all, only from any Distributable Cash from Operations or
Distributable Refinancing Proceeds or Distributable Sale Proceeds before any
distributions thereof are made to the Partners pursuant to Article Four.
C. With the Consent of a majority in interest of the Limited Partners
, the Limited Partners may, subject to the provisions of Section 6.5, at
any time designate one or more Persons to be successors to a General Partner
concurrently therewith being removed pursuant to Section 6.2A; provided,
however, that the following conditions are satisfied:
(1) the Consent of the Limited Partners given pursuant to this Section
6.2C shall be given not later than the Consent of Limited Partners to the
removal of the General Partner pursuant to Section 6.2A;
(2) the designation of such Person as a successor General Partner
shall occur, and for all purposes shall be deemed to have occurred, prior
to the removal of the General Partner pursuant to Section 6.2A;
(3) the Interests of the Limited Partners shall not be affected by the
admission of such successor General Partner or the transfer of the General
Partner's Interest; and
(4) any Person designated as a successor General Partner pursuant to
this Section 6.2C shall have complied with the provisions of Section 10.3.
Section 6.3 Incapacity, Removal or Resignation of a General Partner
A. In the event of the Incapacity of a General Partner or the removal of a
General Partner pursuant to Section 6.2 or the resignation of a General Partner,
the business of the Partnership shall be continued with Partnership property by
the remaining General Partner or General Partners if the Incapacitated or
removed or resigned General Partner is not then the sole General Partner. In the
event of the Incapacity or removal or resignation of a sole General Partner
(unless a successor General Partner is approved pursuant to Section 6.1B or
6.2C), the Partnership shall be dissolved.
B. Upon the Incapacity, removal or, subject to the provisions of Section
6.1C, resignation of a General Partner, such General Partner shall immediately
cease to be a General Partner and the Interest of any Incapacitated, removed or
resigned General Partner shall terminate; provided, however, that such
termination shall not affect any rights or liabilities of the Incapacitated,
removed or resigned General Partner which matured prior to such Incapacity,
removal or resignation or the value, if any, at the time of such Incapacity,
removal or resignation of such Incapacitated or removed General Partner's
Interest.
C. If, at the time of the Incapacity, removal or resignation of a General
Partner, the Incapacitated, removed or resigned General Partner was not the sole
General Partner the remaining General Partner or Partners shall continue the
business of the Partnership and shall immediately (1) give Notification to the
Limited Partners of such event and (2) make such amendments to this Agreement
and execute and file such amendments of the Certificate or other documents or
instruments as are necessary to reflect the termination of the Interest of the
Incapacitated, removed or resigned General Partner and such Incapacitated,
removed or resigned General Partner having ceased to be a General Partner and
the appointment of any successor General Partner.
Section 6.4 Liability of a Withdrawn General Partner
Any General Partner who shall voluntarily or involuntarily for any reason
(including Incapacity) withdraw, resign or be removed from the Partnership or
sell, transfer or assign its General Partner's Interest shall remain liable for
obligations and liabilities incurred by it as General Partner prior to the time
such withdrawal, resignation, removal, sale, transfer or assignment shall have
become effective, but it shall be free of any obligation or liability incurred
on account of the activities of the Partnership from and after the time such
withdrawal, resignation, removal, sale, transfer or assignment shall have become
effective.
Section 6.5 Restrictions on Transfer of General Partner's Interest
A. No purported or attempted transfer, sale or exchange of all or any part
of the General Partner's Interest to any Person who is not, or does not
represent in writing that such Person is, an Eligible Citizen shall be
permitted, recognized or effective for any purpose and no purported or attempted
designation (even if Consented to by a majority in interest or all of the
Limited Partners) of any Person who is not, or does not represent in writing
that such Person is, an Eligible Citizen shall be recognized or effective for
any purpose.
B. No transfer, sale or exchange of all or any part of the General
Partner's Interest shall be permitted if, in the opinion of counsel for the
Partnership, such transfer, sale or assignment would violate the Securities Act
of 1933 or any state securities or "blue sky" laws (including any investor
suitability standards) applicable to the Partnership or the General Partner's
Interest.
C. No purported or attempted transfer, sale or exchange of all or any part
of the General Partner's Interest to any Person who holds, or does not represent
in writing that such Person does not hold, any interest in Media Property that
could be attributed to the Partnership and be substantially adverse to the
interests of the Partnership shall be permitted, recognized or effective for any
purpose, and no purported or attempted designation (even if consented to by a
majority in interest or all of the Limited Partners) of any Person who holds, or
does not represent in writing that such Person does not hold, such an interest
shall be recognized as effective for any purpose. For the purpose of this
Section 6.5C, an interest will be deemed to be substantially adverse to the
interests of the Partnership if (1) during the first 24 months after the final
Closing, such interests (other than those disclosed in the Prospectus), together
with other interests attributed to the Partnership would, pursuant to FCC
guidelines, significantly reduce the number of Media Properties or the locations
in which the Partnership may acquire Media Properties, or (2) at any time, such
interests would have a material adverse effect, pursuant to FCC guidelines, on
the Partnership's ownership of the Partnership Media Properties.
D. No Person shall be admitted as a successor or additional General
Partner, and no transfer, sale or exchange of all or any part of the General
Partner's Interest shall be permitted, if counsel for the Partnership shall be
of the opinion that such admission, transfer, sale or exchange, or any actions
taken in connection therewith, would cause the Partnership to be classified
other than as a partnership for Federal income tax purposes.
E. No assignee or transferee of all or any part of the General Partner's
Interest shall have any right to become a General Partner except as provided in
this Article Six.
Section 6.6 Consent of Limited Partners to Admission of Successor or
Additional General Partners
Subject to the provisions of Sections 6.1, 6.2 and 6.5, each Limited
Partner, by execution of this Agreement, hereby Consents pursuant to Section
6.1A or Section 6.2C, as the case may be, to the admission of any Person as a
successor or additional General Partner to which there has at the time been
express Consent of such number of Limited Partners as are expressly provided for
in and required by Section 6.1A or Section 6.2C, as the case may be. Upon
receipt pursuant thereto of the Consent of such number of Limited Partners to
such admission, such admission shall, subject to the provisions of Section 6.5,
without any further Consent or approval of the Limited Partners, be an act of
all the Limited Partners.
ARTICLE SEVEN
TRANSFER OF LIMITED PARTNERS' INTERESTS;
ADMISSION OF SUBSTITUTED LIMITED PARTNERS
Section 7.1 Transfer of Interests
A. Subject to the provisions of Section 7.1B and 7.3 of this Agreement, an
Interest of a Limited Partner or any part thereof (but not less than $1,000 in
face amount) may be sold, assigned or transferred without any further Consent or
approval of the Partnership or the Partners.
B. The Partnership need not recognize for any purpose any purported sale,
assignment or transfer of all or any part of the Interest of a Limited Partner:
(1) if such transfer, assignment or negotiation would cause the
Partnership to be treated as an association taxable as a corporation for
Federal income tax purposes or, when added to the total of all other sales
or exchanges of Interests within the preceding 12 months, would result in
the Partnership being considered to have terminated within the meaning of
Section 708 of the Code; and the General Partner is expressly authorized to
enforce this provision by suspending transfers if and when any such
transfer would result in the transfer of 40% or more of the Interests in
the Partnership;
(2) if such transfer or assignment would violate any state securities
or "blue sky" laws (including the Suitability Standards) applicable to the
Partnership or to the Interest to be transferred or assigned, except in the
case of transfers upon the death of the Limited Partner (by bequest or
inheritance) or by operation of law; or
(3) if such transfer or assignment would require prior governmental or
regulatory consent, which consent has not been theretofore obtained.
C. Any sale, assignment or transfer of a Limited Partner's Interest shall
be recognized by the Partnership as of the last day of the calendar month during
which the Partnership receives instruments of transfer and the payment of all
transfer taxes.
Section 7.2 Substituted Limited Partners
A. Upon the sale, assignment or transfer of a Limited Partner's Interest
pursuant to Section 7.1, the transferor shall, subject to the provisions of
Section 7.1B and 7.3, give the transferee the right to be a Substituted Limited
Partner. Each transferee desiring to be a Substituted Limited Partner must
execute and deliver to the Partnership a "Transfer Application" (1) requesting
admission as a Substituted Limited Partner, (2) agreeing to comply with and be
bound by, and thereby executing, this Agreement and agreeing to execute any
document that the General Partner may reasonably require in connection with the
admission of such transferee as a Substituted Limited Partner, (3) appointing
the General Partner the attorney-in-fact for such transferee pursuant to Section
12.1 and (4) acknowledging compliance with the general investor suitability
standards set forth in the Prospectus.
B. As soon as practicable after the last business day of each calendar
quarter the General Partner shall amend the books and records of the
Partnership, in order to admit to the Partnership as Substituted Limited
Partners all Persons entitled to such admission, as provided in Section 7.2A,
who had not theretofore been admitted to the Partnership and to reflect the
withdrawal from the Partnership, and termination of the Interest, of Limited
Partners who have sold, assigned or transferred their entire Interests. The
admission of any Limited Partner shall be effective upon the amendment of the
books and records of the Partnership to show such admission.
C. No person shall be a Substituted Limited Partner until the provisions of
Section 7.3 shall have been complied with; provided, however, that for the
purpose of allocating Profits and Losses, a Person shall be treated as having
become, and as appearing in the records of the Partnerships as, a Limited
Partner on such date as a sale, assignment or transfer to such Person was
recognized by the Partnership pursuant to Section 7.1C. Until a Person entitled
to admission to the Partnership as a Substituted Limited Partner pursuant to
Section 7.2A shall have been admitted to the Partnership pursuant to Section
7.2B, such Person shall be entitled to all of the rights of an assignee of a
limited partnership interest under the Act.
D. Any Limited Partner who shall transfer all of his Interest shall cease
to be a Limited Partner of the Partnership.
E. No Person shall be entitled to become a Limited Partner except pursuant
to Section 3.2 or 3.3 or this Article Seven.
Section 7.3 Transfers of Interests to, or Holding of Interests by,
Ineligible Persons
A. Notwithstanding any other provision of this Agreement, no purported
sale, assignment or transfer of an Interest to or for any Person (referred to in
this Section 7.3 and in Section 7.4 as an "Ineligible Person") who is not, or is
determined by the General Partner not to be, or does not represent in writing
that such Person is, an Eligible Citizen, or who, after giving effect to such
purported sale, assignment or transfer, would own 1% or more of the Interests in
the Partnership, shall be permitted, recognized, or effective for any purpose
and such Interest in the Partnership shall be held as provided in Section 7.3D
and shall be subject to redemption as provided in Section 7.4; provided,
however, that the General Partner may permit, in its sole discretion, a sale,
assignment or transfer to a Person who, (1) is not an Eligible Citizen if as a
result thereof no more than 15% of the Interests are owned by Persons who are
not Eligible Citizens and the Partnership would thereby not jeopardize its
classification as an Eligible Citizen or (2) after giving effect to such sale,
assignment or transfer would own 1% or more but not more than 10% of the
Interests in the Partnership. Such Person shall not be deemed to be an
Ineligible Person if such Person gives the General Partner satisfactory
assurances that any interests of such Person in Media Properties would not be
attributable to the Partnership.
B. Notwithstanding any other provision of this Agreement, if any Interest
shall be owned or held by or for any Person who is or becomes, or is determined
by the General Partner to be or have become, an Ineligible Person, such
Ineligible Person shall cease to be a holder of such Interest, and the Interest
owned or held by or for such Person shall thereafter be held as provided in
Section 7.3D and shall be subject to redemption as provided in Section 7.4.
C. The General Partner shall be entitled to make such inquiry, and shall be
entitled to request such proof or evidence, as it shall reasonably require in
order to establish that any Person is, has become, or has not ceased to be, as
the case may be, an Eligible Citizen or has not otherwise become an Ineligible
Person. The General Partner shall be entitled to treat any Interest as provided
in Section 7.3, to take any other actions provided in Section 7.3, and to redeem
such Interest pursuant to Section 7.4, on the basis of any determination by the
General Partner that any Person is or has become an Ineligible Person (other
than those Persons who were not Eligible Citizens upon admission to the
Partnership as Additional Limited Partners and who were so admitted in the
discretion of the General Partner).
D. If any purchaser, assignee or transferee of any Interest shall be, or be
determined by the General Partner to be, an Ineligible Person, or any Interest
is owned or held by or for any Person who is or becomes, or is determined by the
General Partner to be or have become, an Ineligible Person (other than those
Persons who were not Eligible Citizens upon admission to the Partnership as
Additional Limited Partners and who were so admitted in the discretion of the
General Partner), then:
(1) the Interest of such Ineligible Person shall be cancelled and the
Interest of such Ineligible Person (referred to in this Section 7.3 and in
Section 7.4 as a "Disqualified Interest") shall be held by the General
Partner under and pursuant to this Section 7.3;
(2) such Ineligible Person shall not be admitted to the Partnership as
a Substituted Limited Partner and, if such Ineligible Person has
theretofore been admitted to the Partnership as a Limited Partner, the
General Partner shall amend this Agreement to change the status of such
Ineligible Person and, in either case, the General Partner thereupon shall
become a Substituted Limited Partner in place of the Ineligible Person, for
the purpose and subject to the provisions of this Section 7.3;
(3) as a Substituted Limited Partner in place of the Ineligible
Person, the General Partner shall exercise all rights attributable to the
Disqualified Interest to Consent to, vote upon, or otherwise approve, any
matter submitted to the Limited Partners hereunder (and shall exercise such
right in proportion to the Consent, vote or approval granted or withheld by
the Limited Partners who are then Eligible Citizens);
(4) any Distributable Cash from Operations or Distributable
Refinancing or Sale Proceeds distributable to the Limited Partners, as a
class, pursuant to Article Four and otherwise attributable to the
Disqualified Interest shall be held by the General Partner, in a special
bank account, in trust, for distribution (a) to the Ineligible Person
either upon liquidation of the Partnership or upon determination, as
provided in Section 7.3E, that such Person is or has become an Eligible
Citizen or has divested itself of holdings otherwise characterizing such
Person as an Ineligible Person or (b) to a purchaser, assignee or
transferee of such Disqualified Interest (including the General Partner
upon redemption of such Interest pursuant to Section 7.4) who is an
Eligible Citizen who does not have holdings otherwise characterizing such
Person as an Ineligible Person;
(5) such Ineligible Person shall not be entitled to receive any
reports or other communications delivered to the Partners generally
pursuant to Section 9.4A or 9.4D nor shall such Ineligible Person have any
right to require any information or account of Partnership transactions or
to inspect the Partnership books;
(6) upon liquidation of the Partnership an Ineligible Person shall not
have any right to receive any distribution in kind made by the Partnership,
but shall be entitled only to the cash equivalent thereof; and
(7) the Ineligible Person shall have the authority to sell, assign or
transfer to a Person who is an Eligible Citizen all or any part of the
right, title and interest of the Ineligible Person in the Disqualified
Interest.
E. At any time after an Ineligible Person can and does certify to the
General Partner, and establish to the satisfaction of the General Partner, that
such Ineligible Person is or has become an Eligible Citizen or has divested
itself of its holdings which could cause its media properties to be attributed
to the Partnership, the Interest of such Person shall thereupon cease to be, or
be treated as, a Disqualified Interest and such person shall be entitled (i) to
own and/or hold such Interest; (ii) to be admitted to the Partnership as a
Substituted Limited Partner, and thereupon the General Partner shall cease to be
a Limited Partner in respect of such Interest; and (iii) to receive all
Distributable Cash from Operations and all Distributable Refinancing and Sale
Proceeds theretofore distributable with respect to such Interest, but retained
and held by the General Partner pursuant to Section 7.3D(4).
Section 7.4 Redemption of Disqualified Interest
A. If at any time the Partnership or the General Partner is named a party
in any judicial or administrative proceeding that seeks the cancellation or
forfeiture of any registration, enrollment, license, authority, use, concession
or other right or interest of the Partnership because of the interest of one or
more Ineligible Persons in or in connection with the Partnership or the
Disqualified Interest, the General Partner may redeem the Disqualified Interest
of such Person as follows:
(i) The General Partner shall, not later than the thirtieth
(30th) day before the date fixed for redemption, give Notification of
redemption to such Ineligible Person. Such Notification shall specify
the Interest to be redeemed, the date fixed for redemption and the
place of payment.
(ii) The redemption price shall be the fair market value of
the redeemed Interest as determined by an independent appraiser
selected by the General Partner, the fees and expenses of such
appraiser to be borne by the Ineligible Person.
(iii) Upon payment of the redemption price, the General
Partner shall be the owner of the Disqualified Interest, shall be
entitled to be a Limited Partner with respect to such Interest, and
shall be entitled to receive all Distributable Cash from Operations and
Distributable Refinancing or Sale Proceeds theretofore distributable
with respect to such Interest, but retained and held by the General
Partner pursuant to Section 7.3D(4).
B. Nothing in this Section 7.4 shall prevent any Ineligible Person
receiving a notice of redemption from transferring the Disqualified Interest of
such Person who is not an Ineligible Person before the redemption date. Upon
receipt of Notification of such a transfer, the General Partner shall withdraw
the notice of redemption.
ARTICLE EIGHT
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP
Section 8.1 Events Causing Dissolution
The Partnership shall dissolve and its affairs shall be wound up upon the
happening of any of the following events:
(A) the expiration of its term;
(B) the Incapacity, removal or registration of a sole General Partner,
unless a successor General Partner is designated pursuant to Section 6.1 or
6.2;
(C) the sale or other disposition at one time of all or substantially
all the assets of the Partnership; or
(D) the election by the General Partner, with the Consent of the
Limited Partners pursuant to Section 5.4B(2), to dissolve the Partnership.
Dissolution of the Partnership shall be effective on the day on which the event
occurs giving rise to the dissolution, but the Partnership shall not terminate
until this Agreement has been cancelled and the assets of the Partnership have
been distributed as provided in Section 8.2. Upon the dissolution of the
Partnership, the General Partner shall proceed with the liquidation and
distribution of the assets of the Partnership, and upon the completion of the
winding up of the Partnership shall have the authority to, and shall, execute
and file a certificate of cancellation and such other documents required or
desirable to effectuate and evidence the dissolution and termination of the
Partnership. Prior to the distribution of all of the assets of the Partnership,
the business of the Partnership and the affairs of the Partners, as such, shall
continue to be governed by this Agreement.
Section 8.2 Liquidation
A. Upon dissolution of the Partnership, the General Partner or other
authorized liquidating agent for the Partnership shall commence to wind up the
affairs of the Partnership and to liquidate its assets. The General Partner
shall have full right and unlimited discretion to determine the time, manner and
terms of any sale or sales of Partnership assets pursuant to such liquidation,
having due regard to the activity and condition of the relevant markets and
general financial and economic conditions. The proceeds of such liquidation
shall be applied as provided in Section 4.2.
B. If any assets of the Partnership are to be distributed in kind, such
assets shall be distributed on the basis of the fair market value thereof, and
any Partner entitled to any interest in such assets shall receive such interest
therein as a tenant-in-common with all other Partners so entitled. Such
distributions shall be made as payments or distributions pursuant to Section
4.2.
C. Within a reasonable time following the completion of the liquidation of
the Partnership, the General Partner shall furnish to each of the Partners
reports containing the information required by Sections 9.4C and 9.4D.
ARTICLE NINE
BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS; ETC.
Section 9.1 Books and Records
A. The books and records of the Partnership, including information relating
to the sale by the General Partner or any of its Affiliates of goods or services
to the Partnership, and a list of the names and addresses and Interests of all
Limited Partners, shall be maintained at the office of the Partnership and shall
be available for examination there by any Partner or by such Partner's duly
authorized representatives at any and all reasonable times upon reasonable
notice. Any Partner, or such Partner's duly authorized representatives, upon
Notification to the General Partner and upon paying the costs of collection,
duplication and mailing, shall be entitled for any purpose reasonably related to
the Limited Partner's interest as a Limited Partner in the Partnership to a copy
of information to which such Partner is entitled under the Act. The Partnership
may maintain such other books and records and may provide such financial or
other statements as the General Partner in its discretion deems advisable.
B. The Accountants shall audit all annual financial statements of the
Partnership, which shall be prepared in accordance with generally accepted
accounting principles.
Section 9.2 Accounting; Fiscal Year
The books and records of the Partnership shall be kept on the accrual
basis. The Partnership may report its operations for tax purposes on the cash
receipts and disbursements method. The fiscal year of the Partnership shall
close the last Friday of the calendar year.
Section 9.3 Bank Accounts
The bank accounts of the Partnership shall be maintained in such banking
institutions as the General Partner shall determine, and withdrawals shall be
made only in the regular course of Partnership business on such signature or
signatures as the General Partner may determine. All deposits and other funds
not needed in the operation of the business may be deposited in U.S. government
securities, securities issued or guaranteed by U.S. government agencies,
securities issued or guaranteed by states or municipalities, certificates of
deposit and time or demand deposits in commercial banks, bankers' acceptances,
savings and loan association deposits or deposits in members of the Federal Home
Loan Bank System and, subject to the provisions of Section 5.5L, in such
interest-bearing or noninterest-bearing investments, including, without
limitation, firm repurchase agreements for direct obligations of the United
States of America or any instrumentality thereof for the payment of which the
full faith and credit of the United States of America is pledged or commercial
paper rated A-1 or better by Standard & Poor's Corporation or prime-1 or better
by NCO/Moody's Commercial Paper Division of Moody's Investors Service, Inc., or
the successor to either of them, as shall reasonably be designated by the
General Partner.
Section 9.4 Reports
A. Within 60 days after the end of each fiscal quarter, the General Partner
shall send to each Person who was a Limited Partner at any time during the
quarter then ended the following (none of which need be audited): (1) a balance
sheet; (2) a profit and loss statement; (3) a statement of changes in financial
position; (4) a cash flow statement and statement of Distributable Refinancing
Proceeds and Distributable Sale Proceeds for the quarter then ended; (5) a
report in narrative form describing dealings between the Partnership and the
General Partner or its Affiliates, including (a) any new contract or arrangement
entered into by the Partnership and any Partner or any Affiliate of any Partner
during the period then ended, and (b) the amount of all fees and other
compensation and distributions paid by the Partnership for such period to the
General Partner or any of its Affiliates; (6) until the Limited Partners'
Capital Contributions shall have been invested or returned to the Limited
Partners pursuant to Section 3.4A or 3.4B, as the case may be, a report as to
Media Properties acquisitions during such quarter, including a description of
(a) the Media Properties purchased during such quarter, (b) the terms of each
purchase and (c) the proposed terms of the operation and management of such
Media Properties; (7) a report of any material modification of or capital
improvement to, or disposition of, Media Properties during such quarter,
describing the terms and conditions of any disposition; and (8) a narrative
report of the activities of the Partnership during such quarter. The various
reports required by this Section 9.4A may be sent earlier than or separately
from any of the other reports required by this Section 9.4A, and the information
required to be contained in any of such reports may be contained, in the
aggregate, in more than one report.
B. Within 60 days after the end of each fiscal year, the General Partner
shall furnish to each Person who is a Limited Partner as of the date of the
mailing of such report a report as to (1) the General Partner's evaluation as to
the status of the Partnership's Media Properties investments as of the close of
such year and (2) such other information, if any, as to the value or operation
of the Partnership Media Properties or the prospects of the Partnership as the
General Partner shall elect. The reports referred to in clauses (1) and (2),
insofar as they relate to the value of Partnership Media Properties, may, but
need not be, based upon appraisals prepared, at the expense of the Partnership,
by an independent appraiser; provided, however, that if such reports are not
based upon such appraisals such report shall indicate the bases for the General
Partner's belief (such as, by way of illustration, but not requirement, sale of
comparable Media Properties, capitalization of revenues, or sales of interests
in entities owning comparable Media Properties). The General Partner shall not
have any liability, obligation or responsibility to any Person for or on account
of or with respect to any loss, expense, liability, or other obligation directly
or indirectly caused by, resulting from or arising out of any appraisal prepared
by an independent appraiser or any belief expressed by the General Partner in
good faith.
C. Within 75 days after the end of each fiscal year, the General Partner
shall send to each Person who was a Limited Partner at any time during the
fiscal year then ended such tax information as shall be necessary for the
preparation by such Limited Partner of his, her or its Federal income tax
return, and state income and other tax returns, if any, in states where the
Partnership is organized, is qualified to do business or owns Media Property.
D. Within 120 days after the end of each fiscal year, the General Partner
shall send to each Person who was a Limited Partner at any time during the
fiscal year then ended (1) a balance sheet as of the end of such fiscal year and
statements of income, Partners' equity and changes in financial position for
such fiscal year, all of which shall be prepared in accordance with generally
accepted accounting principles and accompanied by an auditor's report containing
an opinion of the Accountants; (2) a cash flow statement (which need not be
audited); (3) a statement (which need not be audited) showing the Distributable
Cash from Operations and Distributable Refinancing Proceeds or Distributable
Sale Proceeds distributed to the Partners with respect to such year; (4) a
report (which shall be audited) setting forth the amount of fees and other
compensation and remuneration paid by the Partnership for that year to the
General Partner and its Affiliates; (5) a narrative report of the activities of
the Partnership during such fiscal year, including a status report for each
Media Property investment representing at least 10% of the Partnership's
investment; and (6) reports (which need not be audited) setting forth such
information, with respect to such fiscal year, as is set forth in the reports
made pursuant to clauses (6) and (7) of Section 9.4A. The various reports
required by this Section 9.4D may be sent earlier than or separately from any of
the other reports required by this Section 9.4D, and the information required to
be contained in any such reports may be contained, in the aggregate, in more
than one report. The General Partner shall not be required to deliver or mail a
copy of the Certificate or any amendment thereof to the Limited Partners.
E. Within 30 days after the occurrence of any Refinancing or Sale, the
General Partner shall send to each Person who was a Limited Partner at the time
of the occurrence of such Refinancing or Sale a report as to the nature and
terms of such Refinancing or Sale and as to the Profits (including the amount of
any recapture gain) or Losses and Distributable Refinancing Proceeds or
Distributable Sale Proceeds arising from such Refinancing or Sale.
Section 9.5 Depreciation and Elections
With respect to all depreciable assets of the Partnership, the Partnership
may elect to use, so far as permitted by the provisions of the Code, accelerated
depreciation methods. The General Partner may cause the Partnership to change to
or elect some other method of depreciation, and the General Partner may, in its
sole discretion, cause the Partnership to make all elections required or
permitted to be made by the Partnership under the Code and not otherwise
expressly provided for in this Agreement, including, without limitation, the
election referred to in Section 754 of the Code; provided, however, that if the
election referred to in Section 754 is made, the Partnership shall not be
required to make (and shall not be obligated to bear the expenses of making) any
accounting adjustment resulting from such election in the information supplied
to the Partners, or if it provides such adjustments the Partnership shall have
the right to charge the Partner or Partners benefiting from such election for
the Partnership's reasonable expenses in making such adjustments. Each of the
Partners will upon request supply the information necessary to give proper
effect to such election.
Section 9.6 Capital Accounts
The Partnership shall maintain a Capital Account with respect to each
Partner.
ARTICLE TEN
AMENDMENTS
Section 10.1 Proposal of Amendments Generally
A. Amendments to this Agreement to reflect the addition or substitution of
a Limited Partner, the admission of an additional or successor General Partner
or the withdrawal of a General Partner shall be made at the time and in the
manner referred to in Article Six or Section 7.3, as the case may be. Any other
amendment to this Agreement may be proposed by the General Partner or by 10% in
interest of the Limited Partners. The Partners proposing such amendment shall
submit (1) the text of such amendment and (2) a statement of the purpose of such
amendment. The General Partner shall, within 20 days after receipt of any
proposal under this Section 10.1, give Notification to all Partners of such
proposed amendment, such statement of purpose and any opinion of counsel
obtained regarding such proposed amendment, together, in the case of an
amendment proposed by Limited Partners, with the views, if any, of the General
Partner, with respect to such proposed amendment; provided, however, that the
General Partner shall not be required to give Notification to all Partners as
provided in this Section 10.1 of any such proposed amendment and no such
proposed amendment shall be voted on by Partners unless (1) an opinion of
counsel obtained by the partners proposing such amendment shall have been
submitted at the time such amendment was proposed, to the effect that such
amendment, or any vote thereon or vote provided for therein, is permitted by the
Act, will not impair the limited liability of the Limited Partners and will not
adversely affect the classification of the Partnership as a partnership for
Federal income tax purposes, or (2) if no such opinion is submitted by the
Partners proposing such amendment, within 20 days after receipt by the General
Partner of any proposed amendment under this Section 10.1, counsel for the
Partnership has not submitted to the Partners proposing such amendment an
opinion to the effect that there is a substantial likelihood that such
amendment, or any vote thereon or vote provided for therein, would not be
permitted by the Act, would impair the limited liability of the Limited Partners
or would adversely affect the classification of the Partnership as a partnership
for Federal income tax purposes.
B. The General Partner shall, within a reasonable time after the adoption
of any amendment to this Agreement (but not longer than the period required by
the Act), make any filings or publications if required by the Act or desirable
to reflect such amendment, including any required filing of any amendment to
this Agreement or other instrument or similar document of the type contemplated
by Section 5.5I.
Section 10.2 Adoption of Amendments; Limitations Thereon
A. A majority in interest of the Limited Partners may, without the
concurrence of any General Partner, amend this Agreement; provided, however,
that no amendment to this Agreement may:
(1) add to, detract from or otherwise modify the purposes of the
Partnership without the Consent of all the Partners;
(2) convert a Limited Partner's Interest into a General Partner's
Interest; modify the limited liability of a Limited Partner; alter the
Interest of any Partner in Profits, Losses, Distributable Cash from
Operations or Distributable Refinancing Proceeds or Distributable Sale
Proceeds; or increase the liabilities or responsibilities of, or diminish
the rights or protections of, the General Partner under this Agreement; in
each case, without the Consent of each affected Partner;
(3) modify the method provided in Article Four of determining Profits
and Losses and the order of allocations thereof and of determining
distributions of Distributable Cash from Operations or Distributable
Refinancing Proceeds or Distributable Sale Proceeds and the order thereof
without the Consent of each Partner adversely affected by such
modification;
(4) amend Section 6.2B without the Consent of the General Partner;
(5) amend any provision hereof which requires the Consent, action or
approval of a specified percentage in interest of the Limited Partners
without the Consent of such specified percentage in interest of the Limited
Partners; or
(6) amend this Section 10.2A without the Consent of all the Limited
Partners.
B. In addition to any amendments otherwise authorized hereby, this
Agreement may be amended from time to time by the General Partner without the
Consent of any of the Limited Partners (1) to add to the representations, duties
or obligations of the General Partner or surrender any right or power granted to
the General Partner herein, (2) to cure any ambiguity or correct or supplement
any provisions hereof which may be inconsistent with any other provision hereof,
or correct any printing, stenographic or clerical errors or omissions; (3) to
conform to any safe harbor provisions which would preserve the substantial
economic effect or alternative economic effect characterization of the
allocations of Profits and Losses set forth in Article Four; and (4) to amend
any provision of this Agreement if not adverse to the interest of the Limited
Partners; provided, however, that no amendment shall be adopted pursuant to this
Section 10.2B unless (a) in the case of any amendment referred to in clause (1),
(2) or (4) of this Section, such amendment would not alter the Interest of a
Partner in Profits, Losses, Distributable Cash from Operations or Distributable
Refinancing Proceeds or Distributable Sale Proceeds and such amendment is not
adverse to the interests of the Limited Partners; and (b) such amendment would
not, in the opinion of counsel for the Partnership, alter, or result in the
alteration of the limited liability of the Limited Partners or the status of the
Partnership as a partnership for Federal income tax purposes.
Section 10.3 Amendments on Admission or Withdrawal of Partners
If this Agreement shall be amended to reflect the admission of an
additional or successor General Partner, such amendment shall be signed by
another General Partner and such additional or successor General Partner. If
this Agreement shall be amended to reflect the withdrawal or removal of the
General Partner and the continuation of the business of the Partnership, such
amendment shall be signed by the remaining or successor General Partner.
Section 10.4 Copies of Amendments
The Certificate and this Agreement and each amendment thereto shall be kept
in the files of the General Partner and copies thereof shall be made available
to each Partner upon written request only for any valid Partnership purpose
reasonably related to the Limited Partner's interest as a Limited Partner in the
Partnership, the General Partner not being otherwise obligated to deliver or
mail a copy of the Certificate or this Agreement or any amendment thereto to the
Limited Partners, either before or after its filing, if any, in the State.
ARTICLE ELEVEN
CONSENTS, VOTING AND MEETINGS
Section 11.1 Method of Giving Consent
Any Consent required by this Agreement may be given by:
(A) a written consent given by the consenting Partner and received by
the General Partner at or prior to the doing of the act or thing for which
the consent is solicited, provided that such consent shall not have been
nullified by (1) Notification to the General Partner of such nullification
by the consenting Partner at or prior to the time of, or the negative vote
by such consenting Partner at, any meeting called and held pursuant to
Section 11.2 to consider the doing of such act or thing, or (2)
Notification to the General Partner of such nullification by the consenting
Partner prior to the doing of any act or thing the doing of which is not
subject to approval at a meeting called pursuant to Section 11.2; or
(B) the affirmative vote by the consenting Partner to the doing of the
act or thing for which the consent is solicited at any meeting called and
held pursuant to Section 11.2 to consider the doing of such act or thing.
Section 11.2 Meetings of Partners
The termination of the Partnership, the removal of the General Partner and
any other matter requiring the Consent of all or any of the Limited Partners
pursuant to this Agreement may be considered at a meeting of the Partners held
not less than 20 nor more than 60 days after Notification thereof shall have
been given by the General Partner to all Partners. Such Notification (A) may be
given by the General Partner, in its discretion, at any time, and (B) shall be
given by the General Partner within 15 days after receipt by the General Partner
of a request for such a meeting made by 10% in interest of the Limited Partners.
Such meeting shall be held at the principal office of the Partnership or the
principal office of the General Partner or at such other place as shall be
specified by the General Partner, if Notification of such meeting is given
pursuant to Section 11.2A, or as shall be specified by the requesting Limited
Partners, if Notification of such meeting is given pursuant to Section 11.2B.
Notification of such meeting shall state the date, time and place and purpose of
the meeting and shall indicate the Partner or Partners at whose direction the
meeting has been called.
Section 11.3 Submissions to Limited Partners
The General Partner shall give all the Limited Partners Notification of any
proposal or other matter required by any provision of this Agreement or by law
to be submitted for the consideration and approval of the Limited Partners. Such
Notification shall include any information required by the relevant provision of
this Agreement or by law.
ARTICLE TWELVE
MISCELLANEOUS PROVISIONS
Section 12.1 Appointment of the General Partner as Attorney-in-fact
A. The Initial Limited Partner by execution of this Agreement, each
Additional Limited Partner by subscribing to purchase Interests and making
payment therefor, and each Substituted Limited Partner by the execution of a
Transfer Application, irrevocably constitutes and appoints the General Partner
the true and lawful attorney-in-fact of such Person with full power and
authority in the name, place and stead of such Person to:
(1) execute, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or
appropriate to carry out the provisions of this Agreement and the
Certificate, including, without limitation, all agreements, certificates
and other instruments (including counterparts of this Agreement and the
Certificate), and amendments thereof (including any such amendment relating
to the admission of each Limited Partner, and the making of the Capital
Contribution of each such Limited Partner to the Partnership), that the
General Partner deems appropriate;
(2) execute, acknowledge, deliver, swear to, file and record all
instruments to qualify or continue the Partnership as a limited partnership
(or a partnership in which the Limited Partners will have limited liability
comparable to that provided by the Act) in each jurisdiction in which the
Partnership may conduct business;
(3) execute, acknowledge, deliver, swear to, file and record all
instruments which the General Partner deems appropriate to reflect a change
or modification of the Partnership in accordance with the terms of this
Agreement; and
(4) execute, acknowledge, deliver, swear to, file and record all
documents and conveyances and other instruments which the General Partner
deems appropriate to reflect the dissolution and termination of the
Partnership, including, without limitation, a certificate of cancellation.
B. The appointment by all Limited Partners of the General Partner as
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 them on behalf of the Partnership,
and shall survive, and not be affected by, the subsequent Incapacity of any
Person or by a transfer or assignment of all or any of the Interest of such
Person giving such power, pursuant to Article Seven hereof; provided, however,
that in the event of the transfer by a Limited Partner of all of the Interest of
such Limited Partner, the foregoing power of attorney of a transferor Partner
shall survive such transfer only until such time as the transferee shall have
been admitted to the Partnership as a Substituted Limited Partner and all
required documents and instruments shall have been duly executed, filed and
recorded to effect such substitution.
C. The foregoing power of attorney-in-fact may be exercised by the General
Partner either by signing separately or jointly as attorney-in-fact for each or
all Limited Partner(s) or by a single signature of the General Partner acting as
attorney-in-fact for all of them.
Section 12.2 Limitations on Ownership
A. No Limited Partner shall at any time, either directly or indirectly, own
1% or more of the Interests of all Partners in the Partnership; provided,
however, that the General Partner may, in its discretion, permit a Limited
Partner to own 1% or more but not more than 10% of the Interests if it
determines that any interests of such Person in media properties would not be
attributable to the Partnership.
B. No Limited Partner shall at any time, either directly or indirectly, own
any stock or other interest in the General Partner or in any Affiliates of the
General Partner if such ownership by itself or in conjunction with the stock or
other interest owned by other Limited Partners, would, in the opinion of counsel
for the Partnership, jeopardized the classification of the Partnership as a
partnership for Federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section 12.2.
Section 12.3 Notification
A. Any Notification to any Limited Partner shall be at the address of such
Partner set forth in the books and records of the Partnership or such other
mailing address of which such Limited Partner shall advise the General Partner
in writing. Any Notification to the Partnership or the General Partner shall be
at the principal office of the General Partner, as set forth in Section 2.2. The
General Partner may at any time change the location of its principal office.
Notification of any such change shall be given to the Partners on or before the
date of any such change.
B. Any Notification shall be deemed to have been duly given if personally
delivered or sent by United States mails or by telegram or telex confirmed by
letter and will be deemed given, unless earlier received, (1) if sent by
certified or registered mail, return receipt requested, or by first-class mail,
five calendar days after being deposited in the United States mails, postage
prepaid, (2) if sent by United States Express Mail, two calendar days after
being deposited in the United States mails, postage prepaid, (3) if sent by
telegram or telex or facsimile transmission, on the date sent provided
confirmatory notice is sent by first-class mail, postage prepaid, and (4) if
delivered by hand, on the date of receipt.
Section 12.4 Binding Provisions
The covenants and agreements contained herein shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the respective parties hereto.
Section 12.5 Applicable Law
This Agreement shall be construed and enforced in accordance with the laws
of the State.
Section 12.6 Counterparts
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto
notwithstanding that all the parties have not signed the same counterpart.
Section 12.7 Separability of Provisions
Each provision of this Agreement shall be considered separable and if for
any reason any provision or provisions of this Agreement, or the application of
such provision to any Person or circumstance, shall be held invalid or
unenforceable in any jurisdiction, such provision or provisions shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without invalidating the remaining provisions hereof, or the
application of the affected provision to Persons or circumstances other than
those to which it was held invalid or unenforceable, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 12.8 Entire Agreement
This Agreement constitutes the entire agreement among the parties. This
Agreement supersedes any prior agreement or understanding among the parties and
may not be modified or amended in any manner other than as set forth herein or
therein.
Section 12.9 Section Titles
Section titles are for descriptive purposes only and shall not control or
alter the meaning of this Agreement as set forth in the text.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Second Amended
and Restated Agreement as of the date first above written.
General Partner:
MEDIA MANAGEMENT PARTNERS
By RP MEDIA MANAGEMENT
By /s/ I. Martin Pompadur
--------------------------
By ML MEDIA MANAGEMENT INC.
By /s/ Lester Schoenfeld
--------------------------
Initial Limited Partner:
/s/ Lester Schoenfeld
-----------------------------
(Lester Schoenfeld)
Limited Partners:
All Limited Partners now
and hereafter admitted as
limited partners of the
Partnership, pursuant to
Powers of Attorney and
authorizations now and
hereafter executed in favor
of, and granted and
delivered to, the General
Partner:
By MEDIA MANAGEMENT PARTNERS
Attorney-in-fact
By ML MEDIA MANAGEMENT INC.
By /s/ Lester Schoenfeld
--------------------------
<PAGE>
Amendment No. 1 to Second Amended and Restated
Agreement of Limited Partnership
AMENDMENT NO. 1 dated as of February 27, 1987 to SECOND AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP dated as of May 14, 1986 of ML MEDIA
PARTNERS, L.P., among MEDIA MANAGEMENT PARTNERS and those persons listed as
Limited Partners in the books and records of the Partnership.
WHEREAS, the parties hereto, having heretofore entered into the
aforementioned Second Amended and Restated Agreement of Limited Partnership (the
"Partnership Agreement"), desire to make certain changes thereto to reflect the
extension of the offering period for Interests as reflected in the Partnership's
Prospectus, which changes are designed to preserve the economic position of
existing Partners as a result of such extension;
WHEREAS, pursuant to Section 10.2B of the Partnership Agreement, the
General Partner may, without the consent of any Limited Partners amend any
provision of such Agreement if not adverse to the interest of the Limited
Partners; and
WHEREAS THE General Partner has determined that the amendments provided
for herein are not adverse to the interests of the Limited Partners;
NOW, THEREFORE, the Partnership Agreement is amended as set forth
below:
1. All terms used herein, unless otherwise defined herein, shall have
the meanings given in the Partnership Agreement.
2. The definition of the term "Closing" as set forth in Article I of
the Partnership Agreement is amended and restated to read as follows:
<PAGE>
"Closing" means a closing of the sale of Interests in the Partnership
pursuant to the terms enumerated in the Prospectus. For purposes of this
Agreement "final Closing" means December 31, 1986, whether or not a Closing
occurs on such date, it being understood that the last Closing may in fact
occur after December 31, 1986.
3. The first sentence of Section 4.1C of the Partnership Agreement is
amended and restated to read as follows:
The foregoing provisions of this Section 4.1 notwithstanding, not
later than 45 days after the close of the second fiscal quarter of fiscal
year 1988 of the Partnership, and not later than 45 days after each
subsequent fiscal quarter, to the extent necessary, the Partnership shall
make a special distribution to Partners of Distributable Cash from
Operations in such amounts as may be necessary to equalize the capital
accounts of Limited Partners.
4. Except as expressly amended pursuant hereto, the Partnership
Agreement continues in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
to Second Amended and Restated Agreement of Limited Partnership as of the date
first above written.
General Partner:
MEDIA MANAGEMENT PARTNERS
By ML Media Management Inc.
By /s/ Kevin K. Albert
---------------------------
Limited Partners:
By Media Management Partners,
attorney-in-fact
By ML Media Management Inc.
By /s/ Kevin K. Albert
--------------------------
SMITHTOWN BAY, L.L.C. ("SMITHTOWN") HEREBY AGREES AND ACKNOWLEDGES:
(i) Smithtown hereby acknowledges that the information being provided by ML
Media Management Inc. ("MLMM") pursuant to this Agreement constitutes
confidential and proprietary information of MLMM. Smithtown agrees that any
list of limited partners obtained by it pursuant to this Agreement shall be
used solely for the purpose of contacting limited partners of the Fund to
inquire as to whether they wish to sell their units to Smithtown or its
affiliates, and for no other purpose. Smithtown, its officers, directors,
principals, agents and affiliates will make all reasonable efforts to
safeguard such list from disclosure to third parties, and will not furnish the
list or the information contained therein to any other person or entity. This
agreement, including this paragraph relating to confidentiality and the uses
to which the list may be put, shall be binding upon Smithtown, its officers,
directors, principals, agents and affiliates.
(ii) Smithtown hereby represents that, Smithtown and any person or entity
controlled, managed or advised by it shall not in any manner acquire, attempt
to acquire, or make a proposal to acquire, directly or indirectly, more than a
5% interest in the Fund through any single offer made to limited partners.
(iii) Smithtown agrees that any communication with any limited partner
identified on the list being provided to it pursuant to this agreement shall
expressly state that "neither Merrill Lynch & Co., Inc., the General Partner
of the Fund, MLMM, the Fund, nor their respective affiliates or subsidiaries
are parties to this offer." Smithtown shall provide in advance to MLMM, World
Financial Center, south Tower, 23rd Floor, New York, NY 10080-6123, Attention:
Tom Casey (Facsimile (212/236-7360) with a copy of any correspondence that
Smithtown sends to the limited partners of the Fund.
(iv) MLMM will deliver to Smithtown a list of the names and addresses of the
limited partners, and the number of partnership units held by each limited
partner in the Fund. The list will be delivered in ASCII format on 3 1/2 inch
computer disk.
Smithtown Bay, L.L.C.
By: Global Capital Management, Inc.
Signed: /s/ Michael J. Frey
------------------------
Title: Vice President Dated: 1/24/97
------------------------- ----------------------------
Agreement
between
ML Media Partners, L.P.
and
Smithtown Bay, LLC,
a Limited Partner
WHEREAS, [Smithtown Bay, LLC] is a limited partner (the "Limited Partner") of
ML Media Partners, L.P. (the "Partnership"); and
WHEREAS, Limited Partner seeks to own or acquire or has acquired through
purchase, assignment or transfer, 1% or more of the Interests in the
Partnership; and
WHEREAS, Section 7.3(A) of the Partnership Agreement provides, among other
things, that no purported sale, assignment or transfer of an Interest to any
person who would own 1% or more of the Interests in the Partnership shall be
permitted, recognized, or effective for any purpose; provided that the General
Partner may permit, in its sole discretion, such sale, assignment or transfer
if such person provides satisfactory assurances to the General Partner that
any interests of such person in media properties would not be attributable to
the Partnership; and
WHEREAS, the Partnership has been advised by the Staff of the Federal
Communications Commission ("FCC") that limited partners seeking to acquire 1%
or more of the Interests in the Partnership shall be considered to hold
attributable interests in the Partnership unless such limited partners satisfy
the FCC's criteria for insulating limited partners from any direct or indirect
involvement in the management or operation of the media-related activities of
the partnership.
NOW THEREFORE, the General Partner has determined to permit, recognize or give
effect to certain proposed transfers which would result in the Limited Partner
owning 1% or more of the Interests in the Partnership in consideration, among
other things, of the Limited Partner's agreement to and compliance with the
following terms, conditions and assurances concerning such Limited Partner's
interests in media properties and the Limited Partner hereby agrees to and
agrees to comply with each of the following:
1. Limited Partner shall not act as an employee of the Partnership.
2. Limited Partner shall not serve as an independent agent or
contractor or agent with respect to any of the Partnership's media
enterprises.
3. Limited Partner shall not communicate with any FCC licensee in which
the Partnership holds an interest or the General Partner on matters
pertaining to the day-to-day operations of any such licensee's
business.
4. Limited Partner agrees that the General Partner may veto any
admissions of additional general partners proposed by the Limited
Partner.
5. Limited Partner shall not be permitted to vote on the removal of the
General Partner, provided, however, that the Limited Partner may
vote on the removal of the General Partner in situations where the
General Partner is subject to bankruptcy proceedings as described in
Section 17-402(a)(4)-(5) of the Delaware Revised Uniform Limited
Partnership Act or is adjudicated incompetent by a court of
competent jurisdiction.
6. Limited Partner shall not perform any services on behalf of the
Partnership relating to its media activities, with the exception of
making loans to, or acting as a surety with respect to such
business.
7. Limited Partner is expressly prohibited from becoming actively
involved in the management or operation of the media business of the
Partnership.
8. Limited Partner agrees that it will at no time own more than 5% of
the Interests in the Partnership.
9. Limited Partner agrees to provide such additional information and
assurances as the General Partner or the Partnership may request
from time to time and acknowledges that the General Partner shall be
entitled to take any actions provided in Section 7.3, and to redeem
such Interests pursuant to Section 7.4, of the Partnership
Agreement, on the basis of any determination by the General Partner
that Limited Partner is or has become an Ineligible Person as
described in Section 7.3 of the Partnership Agreement or has
breached any of the terms of this agreement.
Smithtown Bay, LLC
By: Global Capital Management, its Manager
By: /s/ illegible Date: May 23, 1997
------------------- ----------------------
Limited Partner
Media Management Partners
By: /s/ illegible Date: 5/28/97
------------------- ----------------------
- -------------------------
Print Name
- -------------------------
Title
[Smithtown Bay, LLC Letterhead]
November 20, 1998
Anne Julie Ruvane
Vice President & Senior Counsel
Merrill Lynch
222 Broadway
14th Floor
New York, New York 10038
Re: ML Media Partners LP
Smithtown Bay, LLC
Dear A.J.:
At your request, I am writing to clarify the question I raised in our
telephone conversation today. As you know, Smithtown Bay, LLC has executed
several agreements with ML Media Partners LP ("Partnership") which contain
limitations on the maximum percentage of the outstanding units of the
Partnership it may acquire. Smithtown Bay, LLC is requesting that the
Partnership waive any restrictions contained in the agreements that would
otherwise limit its ownership to not more than 5% of the outstanding units. As
we discussed, it is our intention to initiate a registered tender offer for
not more than an additional 5% of the outstanding units of the Partnership.
Based on our conversation, it is my understanding that the Partnership will
waive the 5% limitations in the agreements, thereby allowing us to commence
the registered offer. Further, it is my understanding that the Partnership
reserves the right to close transfers at 5% of the outstanding units during
any calendar year. It would be helpful to me if you could confirm in writing
that my understanding is correct. Thank you again for your assistance. I can
be reached at 612-476-7236 if you have any questions.
Kindest regards,
/s/Tom
Thomas A. Schmidt
cc: Peter Pancione, Esq.
[Merrill Lynch Letterhead]
BY FACSIMILE AND U.S. MAIL
November 24, 1998
Mr. Thomas A. Schmidt
Smithtown Bay, LLC
C/O EBF & Associates
601 Carlson Parkway, Suite 200
Minnetonka, MN 55305
RE: ML MEDIA PARTNERS, L.P. (THE "PARTNERSHIP")- SMITHTOWN BAY, LLC
Dear Mr. Schmidt:
This letter is in response to your letter dated November 20, 1998 regarding
the intention of Smithtown Bay, LLC ("Smithtown") to initiate a registered
tender offer for up to 5% of the outstanding units of limited partnership
interest (the "Units") in the Partnership. In the context of such proposed
registered tender offer you have requested a waiver of certain ownership
restrictions contained in a certain agreement previously entered into between
Smithtown and the Partnership (i.e., letter agreement dated May 23, 1997 (the
"Prior Agreement"), which among other things, limits Smithtown's ownership of
Units of the Partnership to not more than 5% of the outstanding Partnership
Units. As we discussed, based on Smithtown's representation that it currently
owns less than 5% of the outstanding Units and that it intends to initiate a
registered tender offer (i.e., in accordance with the Securities Exchange Act
of 1934, as amended, and the rules promulgated thereunder (the "Securities
Laws")) for not more than an additional 5% of the Partnership's Units, and
subject to the terms of this letter and the conditions set forth below, the
Partnership will not enforce the 5% ownership limitation (described in
paragraph 8 of such Prior Agreement) in connection with the proposed
registered tender offer. The foregoing waiver is conditioned upon the
following: (i) Smithtown's commencement of a registered tender offer as
provided in the Securities Laws within 5 business days of the date of this
letter, with a purchase price per Unit in Smithtown's offer being an amount in
cash in excess of $750 per Unit as of the tender offer date, (ii) Smithtown's
compliance with the Securities Laws, (iii) the satisfaction of the provisions
of the Partnership's Second Amended and Restated Agreement of Limited
Partnership, as amended (the "Partnership Agreement"), including without
limitation, the provisions of Article Seven of the Partnership Agreement, as
determined by the Partnership's general partner in its sole discretion, and
(iv) the number of Units transferred pursuant to the proposed tender offer
when taken together with all other transfers of Units in the Partnership for
any tax year of the Partnership does not exceed the limitations established by
the Partnership to stay within the 5% safe harbor percentage limitation and
such other limitations set forth in the safe harbor provisions of Internal
Revenue Service Notice 88-75. Please be advised, however, that notwithstanding
the foregoing, the Partnership (i) does not waive any of the provisions of or
its rights pursuant to Sections 7.1, 7.3 or 7.4 of the Partnership Agreement,
and the Partnership reserves its right to limit transfers of Units (including
Units transferred pursuant to the proposed tender offer you describe and other
Units) to less than 5% of outstanding Units in any tax year and (ii) the
agreements of Smithtown set forth in paragraphs 1 through 7 and 9 of the Prior
Agreement shall remain in full force and effect.
Please be further aware that this letter does not make any determination in
favor of Smithtown as to whether the transfer of any such Units will be
recognized by the Partnership when and if submitted to the Partnership for
transfer.
Very truly yours,
/s/ Anne Julie Ruvane
Anne Julie Ruvane
Vice President & Senior Counsel
