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 ("AFCC") 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, condition 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
of agent with respect to any of the Partnership's media enterprises.
3. Limited Partner shall not communicate with any FCC licensees 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 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/ Xxxxxxx X. Xxxx Date: May 23, 1997
---------------------------------
Limited Partner
Media Management Partners
By: /s/ Xxxxxx X. Xxxxxxxxxx Date: May 28, 1997
---------------------------------
Executive Vice President
ML Media Management Inc.
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Print Name
---------------------------------
Title
2
[LETTERHEAD]
BY FACSIMILE AND U.S. MAIL
November 24, 1998
Xx. Xxxxxx X. Xxxxxxx
Smithtown Bay, LLC
C/O EBF & Associates
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Re: ML MEDIA PARTNERS, L.P. (THE "PARTNERSHIP") - SMITHTOWN BAY, LLC
Dear Xx. Xxxxxxx:
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
Xx. Xxxxxx X. Xxxxxxx
Page 2
November 24, 1998
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/ Xxxx Xxxxx Xxxxxx
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Xxxx Xxxxx Xxxxxx
Vice President & Senior Counsel
