<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 2, 1996
REGISTRATION NO. 33-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BENEDEK COMMUNICATIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 6719 36-4076007
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
STEWART SQUARE, SUITE 210
308 WEST STATE STREET
ROCKFORD, ILLINOIS 61101
(815) 987-5350
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
A. RICHARD BENEDEK
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BENEDEK COMMUNICATIONS CORPORATION
STEWART SQUARE, SUITE 210
308 WEST STATE STREET
ROCKFORD, ILLINOIS 61101
(815) 987-5350
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
PAUL S. GOODMAN, ESQ.
SHACK & SIEGEL, P.C.
530 FIFTH AVENUE
NEW YORK, NEW YORK 10036
(212) 782-0700
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE(1)
<S> <C> <C> <C> <C>
13 1/4% Senior Subordinated Discount Notes
due 2006.................................. $170,000,000 53.046% $90,178,200 $ 31,096.15
</TABLE>
(1) Calculated pursuant to Rule 457(f).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 2, 1996
PROSPECTUS
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006, WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006,
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1996, UNLESS EXTENDED
------------------------
Benedek Communications Corporation, a Delaware corporation (the 'Company'),
hereby offers to exchange $1,000 principal amount at maturity of its 13 1/4%
Senior Subordinated Discount Notes due 2006 (the 'Exchange Securities') which
have been registered under the Securities Act of 1933, as amended (the
'Securities Act'), pursuant to a Registration Statement of which this Prospectus
is a part, for each $1,000 principal amount at maturity of its 13 1/4% Senior
Subordinated Discount Notes due 2006 (the 'Existing Notes') outstanding on the
date hereof upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitute the 'Exchange Offer'). The Exchange Securities and Existing Notes are
collectively hereinafter referred to as the 'Notes.' The terms of the Exchange
Securities are identical in all material respects to those of the Existing Notes
except (i) for certain transfer restrictions and registration rights relating to
the Existing Notes and (ii) that, if by November 4, 1996, neither an Exchange
Offer with respect to the Existing Notes has been consummated nor a Shelf
Registration Statement (as defined) with respect to such Existing Notes has been
declared effective, additional cash interest will accrue on each Existing Note
from and including November 5, 1996 until but excluding the earlier of the date
of consummation of the Exchange Offer and the effective date of the Shelf
Registration Statement at a rate of 0.50% per annum. The Exchange Securities
will be issued pursuant to, and entitled to the benefits of, the Indenture (as
defined) governing the Existing Notes.
The Existing Notes were issued at a substantial discount from their
principal amount. Interest will not accrue on the Notes prior to May 15, 2001.
Thereafter, interest will be payable in cash semi-annually on May 15 and
November 15 of each year, commencing on November 15, 2001.
The Exchange Securities will be obligations of the Company evidencing the
same debt as the Existing Notes, and will be entitled to the benefits of the
same Indenture, which governs both the Existing Notes and the Exchange
Securities. The form and terms of the Exchange Securities are the same as the
form and terms of the Existing Notes except that the Exchange Securities have
been registered under the Securities Act and hence will not bear legends
restricting the transfer thereof. See 'The Exchange Offer.' The Existing Notes
are, and the Exchange Securities will be, subordinated in right of payment to
all existing and future Senior Debt (as defined) of the Company. As of March 31,
1996, on a pro forma basis after giving effect to the Transactions (as defined),
the Company would have had outstanding approximately $263.7 million of Senior
Debt. The Existing Notes are, and the Exchange Securities will be, effectively
subordinated to creditors of subsidiaries of the Company. At March 31, 1996, on
a pro forma basis, the total liabilities of the Company's subsidiaries would
have been $286.3 million, including $263.7 million of Senior Debt.
The Company will accept for exchange any and all Existing Notes validly
tendered and not withdrawn prior to the Expiration Date. The term 'Expiration
Date' shall mean 5:00 p.m., New York City time, on , 1996, unless
the Company shall, in its sole discretion, have extended the period of time for
which the Exchange Offer is open, in which event the 'Expiration Date' shall
mean the latest time and date at which the Exchange Offer, as so extended by the
Company, shall expire. The Exchange Offer may be extended, terminated or amended
as provided herein. Notwithstanding the foregoing, the Expiration Date shall not
be later than 5:00 p.m., New York City time, on the date 60 days from the date
of this Prospectus. The Exchange Offer is subject to certain customary
conditions. See 'The Exchange Offer.'
(Cover continued on next page)
------------------------
Prior to the Exchange Offer, there has been no public market for the
Existing Notes. If a market for the Exchange Securities should develop, such
Exchange Securities could trade at a discount from the Accreted Value (as
defined). The Company currently does not intend to list the Exchange Securities
on any securities exchange or to seek approval for quotation through any
automated quotation system and no active public market for the Exchange
Securities is currently anticipated. There can be no assurance that an active
public market for the Exchange Securities will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange pursuant to the Exchange Offer.
SEE 'RISK FACTORS' ON PAGE 23 FOR A DISCUSSION OF CERTAIN FACTORS WHICH
HOLDERS OF EXISTING NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
<PAGE>
(Cover continued from previous page)
The Exchange Securities are being offered hereunder in order to satisfy
certain obligations of the Company contained in the Exchange and Registration
Rights Agreement dated May 30, 1996 (the 'Registration Agreement'), between the
Company and Goldman, Sachs & Co., as the initial purchaser (the 'Initial
Purchaser'), with respect to the initial sale of the Existing Notes. Based on
interpretations by the staff of the Securities and Exchange Commission (the
'SEC') in letters issued to third parties, Exchange Securities issued pursuant
to the Exchange Offer in exchange for Existing Notes may be offered for resale,
resold and otherwise transferred by holders thereof (other than any such holder
which is an 'affiliate' of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Exchange
Securities are acquired in the ordinary course of such holder's business, such
holder has no arrangement or understanding with any person to participate in the
distribution of such Exchange Securities and such holder is not engaged in and
does not intend to engage in a distribution of such Exchange Securities. Each
broker-dealer that receives Exchange Securities for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an 'underwriter' within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Existing Notes
where such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See 'Plan of Distribution.'
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of
Existing Notes pursuant to the Exchange Offer may be withdrawn at any time prior
to the Expiration Date for the Exchange Offer. In the event the Company
terminates the Exchange Offer and does not accept for exchange any Existing
Notes with respect to the Exchange Offer, the Company will promptly return such
Existing Notes to the holders thereof. See 'The Exchange Offer.'
AVAILABLE INFORMATION
The Company has filed with the SEC a Registration Statement (which term
shall include any amendment thereto) on Form S-4 under the Securities Act, with
respect to the Exchange Securities offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain items of which are omitted in accordance with the
rules and regulations of the SEC. For further information with respect to the
Company and the Exchange Securities, reference is made to the Registration
Statement, including the exhibits and schedules to such Registration Statement,
copies of which may be obtained as noted below. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the SEC. Each such
statement is qualified in its entirety by such reference.
The Registration Statement and the exhibits and schedules to such
Registration Statement filed by the Company with the SEC, may be inspected and
copied at the Public Reference Section of the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the SEC located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of all or part of such materials can be obtained from the
Public Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
Following consummation of the Exchange Offer, the Company will be subject
to the informational reporting requirements of the Securities Exchange Act of
1934, as amended (the 'Exchange Act'), during the current fiscal year by reason
of the public offering and the issuance of the Exchange Securities. In
accordance with the Exchange Act, the Company will file with the SEC the reports
and other information required to be filed under the Exchange Act. The Company
anticipates, however, that it will not be subject to the reporting requirements
of the Exchange Act in future fiscal years; however, the Indenture governing the
Exchange Securities provides that the Company must continue to file with the SEC
copies of the annual reports and other information, documents and reports
specified in Sections 13 and 15(d) of the Exchange Act so long as the Exchange
Securities are outstanding.
2
<PAGE>
<PAGE>
[THE STATIONS GRAPHIC REPRESENTATION]
3
<PAGE>
<PAGE>
CERTAIN DEFINITIONS
As used in the Prospectus, unless the context otherwise requires:
Company refers to Benedek Communications Corporation, a Delaware
corporation which is the sole stockholder of Benedek Broadcasting;
Benedek Broadcasting refers to Benedek Broadcasting Corporation, a Delaware
corporation, and its subsidiaries (BLC);
LLC refers to Benedek Broadcasting Company, L.L.C., a Delaware limited
liability company, owned 99% by Benedek Broadcasting and 1% by A. Richard
Benedek, formed in connection with the issuance of Benedek Broadcasting's
outstanding 11 7/8% Senior Secured Notes due 2005 (the 'Senior Secured Notes')
to hold all of the licenses and authorizations issued by the Federal
Communications Commission (the 'FCC') for the operation of the Benedek Stations
which was merged with BLC upon the consummation of the Transactions;
BLC refers to Benedek License Corporation, a Delaware corporation which was
merged with the LLC upon the consummation of the Transactions as a result of
which it became a wholly-owned subsidiary of Benedek Broadcasting, and which
holds all of the licenses and authorizations issued by the FCC for the operation
of all the Stations;
Benedek Stations refers to the nine network-affiliated television stations
owned by Benedek Broadcasting prior to consummation of the Transactions;
Stauffer refers to Stauffer Communications, Inc.;
Stauffer Agreement refers to the Assets Purchase and Sale Agreement, as
amended, among the Company, Stauffer and Morris Communications Corporation
pursuant to which the Company acquired substantially all of the broadcast
television assets of Stauffer.
Stauffer Stations refers to the five network-affiliated television stations
(and four satellite stations) owned by Stauffer prior to the consummation of the
Transactions and acquired by Benedek Broadcasting;
Brissette refers to Brissette Broadcasting Corporation and its wholly-owned
subsidiaries;
Brissette Agreement refers to the Stock Purchase Agreement, as amended,
among the Company, Mr. Paul Brissette, General Electric Capital Corporation
('GECC') and Brissette, pursuant to which the Company acquired all of the
capital stock of Brissette.
Brissette Stations refers to the eight network-affiliated television
stations owned by Brissette prior to the consummation of the Transactions and
acquired by Benedek Broadcasting;
Acquired Stations refers collectively to the Stauffer Stations and the
Brissette Stations; and
Stations refers collectively to the Benedek Stations and the Acquired
Stations.
As further described under 'The Acquisitions,' Benedek Broadcasting
acquired substantially all of the television broadcast assets of Stauffer and
all of the capital stock of Brissette (the 'Acquisitions'). The Company,
together with Benedek Broadcasting, implemented a financing plan (the 'Financing
Plan,' and together with the Acquisitions and certain other events, the
'Transactions') in order to finance the Acquisitions and to pay fees and
expenses related thereto. The Financing Plan consisted of the offer and sale by
the Company of the Existing Notes, borrowings by Benedek Broadcasting under the
Credit Agreement, the offer and sale by the Company of the Units and the
issuance by the Company of its Seller Junior Discount Preferred Stock. Issue
Date refers to June 6, 1996, the date on which the Transactions were completed.
Credit Agreement refers to the credit agreement, dated as of June 6, 1996,
among Benedek Broadcasting, as borrower, the Company, the Lenders referred to
therein, Canadian Imperial Bank of Commerce, New York Agency ('CIBC'), as
administrative agent and collateral agent, Pearl Street L.P. ('Pearl Street'),
as arranging agent, and Goldman, Sachs & Co., as syndication agent, pursuant to
which Benedek Broadcasting borrowed $128.0 million in term loans (the 'Term Loan
Facilities') and may borrow up to $15.0 million in revolving credit loans (the
'Revolving Credit Facility');
Exchangeable Preferred Stock refers to the 15.0% Exchangeable Redeemable
Senior Preferred Stock issued by the Company;
Seller Junior Discount Preferred Stock refers to the preferred stock issued
by the Company to GECC and Mr. Paul Brissette, the sellers of the Brissette
Stations;
4
<PAGE>
<PAGE>
Senior Secured Notes refers to the 11 7/8% Senior Secured Notes due 2005 of
Benedek Broadcasting;
Units refers to the Units issued by the Company, each consisting of ten
shares of Exchangeable Preferred Stock, ten Initial Warrants and 14.8 Contingent
Warrants;
Initial Warrants refers to 600,000 warrants, each to purchase one share of
Class A Common Stock of the Company;
Contingent Warrants refers to 888,000 warrants, each to purchase one share
of Class A Common Stock of the Company;
Warrants refers to the Initial Warrants and the Contingent Warrants;
Warrant Shares refers to the shares of the Company's Class A Common Stock
issuable upon exercise of the Warrants;
Operating cash flow refers to operating income before financial income
(expense) as derived from statements of operations plus depreciation and
amortization, amortization of program broadcast rights and non-cash compensation
less cash payments for program broadcast rights;
Operating cash flow margin refers to operating cash flow divided by net
revenues;
Broadcast cash flow refers to operating income before financial income
(expense) as derived from statements of operations plus depreciation and
amortization, amortization of program broadcast rights, corporate expenses and
non-cash compensation less cash payments for program broadcast rights; and
Broadcast cash flow margin refers to broadcast cash flow divided by net
revenues.
Operating cash flow and broadcast cash flow data have been included herein
because such data is used by certain investors to measure a company's ability to
service debt. Operating cash flow and broadcast cash flow do not purport to
represent cash provided by operating activities as reflected in the Consolidated
Financial Statements of Benedek Broadcasting, the Financial Statements of
Stauffer or the Consolidated Financial Statements of Brissette, are not measures
of financial performance under generally accepted accounting principles ('GAAP')
and should not be considered in isolation or as substitutes for measures of
performance prepared in accordance with GAAP.
MARKET AND INDUSTRY DATA
As used in the Prospectus:
designated market area ('DMA') or market area is defined as a specific
geographic market designated by A.C. Nielsen Company ('Nielsen') for the sale of
national 'spot' and local advertising time sales;
market rank means the ranking of the DMA among all markets, measured by the
number of television households in each DMA, as listed in the February 1996
Nielsen Station Index reports;
number of commercial stations in market represents the number of television
broadcasting stations in the market, excluding public, low power and national
cable stations;
station rank in market is a station's rank in the market among all
commercial stations in a station's market, measured by such station's average
share during the February, May, July and November ratings periods, Sunday
through Saturday, 6:00 a.m. to 2:00 a.m., unless another measurement period is
referenced;
a station's rating represents the number of households actually viewing the
station as a percentage of the total potential audience in the DMA, measured by
such station's average ratings during the February, May, July and November
ratings periods, Sunday through Saturday, 6:00 a.m. to 2:00 a.m., unless another
measurement period is referenced;
a station's share represents the percentage of households actually viewing
television which are viewing that station, measured by such station's average
Nielsen shares during the February, May, July and November ratings periods,
Sunday through Saturday, 6:00 a.m. to 2:00 a.m., unless another measurement
period is referenced; and
cable penetration means the percentage of all television households in a
DMA subscribing to cable television service, according to the February 1996
Nielsen Station Index reports.
All rank, rating and share information set forth in the Prospectus refers
to the calendar year 1995 unless otherwise specified. See 'Business -- Rating
Service Data.'
5
<PAGE>
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
included elsewhere in this Prospectus. As used herein, unless the context
otherwise requires, the 'Company' means Benedek Communications Corporation and
its subsidiaries (including Benedek Broadcasting Corporation) after giving
effect to the Transactions, which were completed on June 6, 1996. Certain
capitalized terms used in the Offering Circular are defined herein under the
caption 'Description of the Notes -- Certain Definitions.'
THE COMPANY
The Company owns 22 network-affiliated television stations in the United
States. The Stations are diverse in geographic location and network affiliation,
serve small to medium-sized markets and, in the aggregate, reach communities in
24 states. Twelve of the Stations are affiliated with CBS, six are affiliated
with ABC, and four are affiliated with NBC. On a pro forma basis giving effect
to the Transactions, the Company would have had net revenues, broadcast cash
flow and operating cash flow of $121.3 million, $52.7 million and $50.8 million,
respectively, for the fiscal year ended December 31, 1995.
The Company believes that the Acquired Stations have been underperforming
in terms of their overall revenue potential and can be operated more efficiently
under Company management, thereby offering the Company an attractive opportunity
to improve broadcast cash flow. The Company believes that such improvement can
be achieved by expanding the Acquired Stations' share of market revenues and by
increasing viewership levels through an increased emphasis on local news and
informational programming and cost-effective purchasing of competitive
syndicated and first run programming.
The Company believes that the broadcast cash flow margins of the Stauffer
Stations of 19.7%, 29.5% and 23.1% during 1993, 1994 and 1995, respectively, can
be substantially improved in the near-term. In comparison, the broadcast cash
flow margins for the Benedek Stations for the same periods were 40.5%, 44.4% and
42.3%, respectively. The Company further believes that although the Brissette
Stations have operated at attractive margins, the previous ownership of the
Brissette Stations operated with a focus on managing costs, not on maximizing
revenues and broadcast cash flow growth. This strategy typically resulted in the
Brissette Stations capturing a smaller share of advertising revenue in their
respective markets than their audience share in these markets. The compound
annual growth rate of net revenues and broadcast cash flow of the Benedek
Stations (excluding the station in Dothan, Alabama acquired by Benedek
Broadcasting in 1995) for the five-year period from 1991 through 1995 was 7.8%
and 9.0%, respectively, as compared to 4.0% and 3.6%, respectively, for the
Brissette Stations during the same period.
The Stations are located in markets ranked in size from 83 to 201 out of
the 211 markets surveyed by Nielsen. The Company believes that broadcast
television stations in small to medium-sized markets offer an opportunity to
generate attractive and stable operating cash flow due to limited competition
for viewers from other over-the-air broadcasters, from other media soliciting
advertising expenditures and from other broadcasters purchasing syndicated
programming. The Company targets small and medium-sized markets that have stable
employment and population and a diverse base of employers. The markets targeted
by the Company generally have population centers that share common community
interests and are receptive to local programming. Each of the Stations is
affiliated with one of the national television networks, which provides an
established audience and reputation for national news, sports and entertainment
programming. With the established audiences provided by network affiliations,
management seeks to implement its strategy to enhance non-network ratings and
revenues while controlling costs.
The Company believes that the television industry is in a period of
consolidation as a result of which a relatively small number of station
operators will emerge as the leading television station group owners in the
United States. Recent telecommunications legislation that eliminates
restrictions on the number of television stations that any individual or entity
may own so long as the aggregate audience reach does not exceed 35% of all
United States households is likely to accelerate this trend. The Company's
growth strategy, of which the acquisition of the Stauffer Stations and Brissette
Stations is a part, is to become one of the leading group owners of small to
medium-sized market television stations in the United States. The Company
believes that this expansion will create economies of scale which will (i)
improve its ability to negotiate more favorable arrangements with program
suppliers, national sales representation firms, equipment vendors and television
networks, (ii) enable it to develop program consortiums for regional news and
sports programming and (iii) enhance its ability to attract and retain strong
management and on-air talent.
6
<PAGE>
<PAGE>
The following table sets forth certain information for each of the Stations
and the markets they serve:
<TABLE>
<CAPTION>
NUMBER OF
COMMERCIAL
STATIONS STATION
MARKET CALL NETWORK IN RANK IN CABLE
MARKET AREA RANK LETTERS CHANNEL(c) AFFILIATION MARKET MARKET PENETRATION
- ------------------------------------------- ------ ---------- ---------- ------------ ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BENEDEK STATIONS
Youngstown, Ohio 95 WYTV 33 ABC 3 3 72.3%
Duluth, Minnesota and 134 KDLH-TV 3 CBS 3 2 52.7%
Superior, Wisconsin
Rockford, Illinois 136 WIFR-TV 23 CBS 4 1 68.4%
Quincy, Illinois and Hannibal, Missouri 158 KHQA-TV 7 CBS 2 1 60.6%
Dothan, Alabama 172 WTVY-TV 4 CBS 3 1 65.8%
Panama City, Florida 159 WTVY-TV 4 CBS 4 3 68.3%
Bowling Green, Kentucky 181 WBKO-TV 13 ABC 2 1 56.7%
Meridian, Mississippi 182 WTOK-TV 11 ABC 3 1 52.4%
Parkersburg, West Virginia 184 WTAP-TV 15 NBC 1 1 76.4%
Harrisonburg, Virginia 201 WHSV-TV 3 ABC 1 1 67.3%
STAUFFER STATIONS
Santa Barbara, Santa Maria and 115 KCOY-TV 12 CBS 4 3 85.7%
San Luis Obispo, California
Topeka, Kansas 140 WIBW-TV 13 CBS 3 1 73.1%
Columbia and Jefferson City, Missouri 146 KMIZ(TV) 17 ABC 3 3 59.7%
Casper and Riverton, Wyoming 192 KGWC-TV 14 CBS 3 2(e) 68.9%(e)
192 KGWL-TV(a) 5 CBS (d) (e) (e)
192 KGWR-TV(a) 13 CBS (d) (e) (e)
Cheyenne, Wyoming, Scottsbluff, 193 KGWN-TV 5 CBS 4 1(f) 73.0%(f)
Nebraska and Sterling, Colorado 193 KSTF-TV(b) 10 CBS (d) (f) (f)
193 KTVS-TV(b) 3 CBS (d) (f) (f)
BRISSETTE STATIONS
Madison, Wisconsin 83 WMTV(TV) 15 NBC 4 2 61.5%
Springfield and Holyoke, Massachusetts 102 WWLP(TV) 22 NBC 2 1 81.8%
Lansing, Michigan 106 WILX-TV 10 NBC 4 2 65.1%
Peoria and Bloomington, Illinois 109 WHOI(TV) 19 ABC 4 3 71.3%
Wausau and Rhinelander, Wisconsin 131 WSAW-TV 7 CBS 3 1 50.6%
Wheeling, West Virginia and 138 WTRF-TV 7 CBS 2 2 76.4%
Steubenville, Ohio
Wichita Falls, Texas and 139 KAUZ-TV 6 CBS 4 3 68.8%
Lawton, Oklahoma
Odessa and Midland, Texas 149 KOSA-TV 7 CBS 4 2 73.5%
</TABLE>
- ------------
(a) Satellite station of KGWC-TV.
(b) Satellite station of KGWN-TV.
(c) Channels 2 through 13 are broadcast over the very high frequency (VHF) band
of the broadcast spectrum and channels 14 through 69 are broadcast over the
ultra-high frequency (UHF) band of the broadcast spectrum.
(d) Satellite stations are not considered distinct stations in this market for
Nielsen purposes.
(e) Station Rank and Cable Penetration information for KGWC-TV includes data for
satellite stations KGWL-TV, Lander, Wyoming and KGWR-TV, Rock Springs,
Wyoming, as reported by Nielsen.
(f) Station Rank and Cable Penetration information for KGWN-TV includes data for
satellite stations KSTF-TV, Scottsbluff, Nebraska and KTVS-TV, Sterling,
Colorado, as reported by Nielsen.
7
<PAGE>
<PAGE>
STRATEGY
The Company's senior management team, led by A. Richard Benedek, Chairman
and Chief Executive Officer, and K. James Yager, President and Chief Operating
Officer, has extensive experience in acquiring and improving the operations of
television stations. Management's primary operating strategy is to maximize each
Station's advertising revenue through local news, information and
community-oriented programming that has broad audience appeal and value-added
sales potential, while maintaining strict cost controls. Key elements of
management's strategy include:
LOCAL NEWS LEADERSHIP AND LOCAL PROGRAMMING. The Company concentrates
its programming resources on local news and informational programming that
distinguish its Stations in their respective markets. Management of the
Company believes that strong, well-differentiated local news programming
attracts high viewership levels, particularly of demographic groups that
are appealing to both local and national advertisers, thereby allowing the
Company to maximize advertising rates. Six of the nine Benedek Stations are
the number one ranked news stations in their respective markets, whereas
only four of the 13 Acquired Stations are the number one ranked news
stations in their respective markets. The Company believes that the
Acquired Stations will benefit from the Company's focus on local news and
community-oriented programming.
SYNDICATED PROGRAMMING. The Company selectively purchases first run
and off-network syndicated programming designed to reach specific
demographic groups attractive to advertisers. The Company seeks to acquire
programs that are available on a cost effective basis for limited licensing
periods, allow scheduling flexibility, complement each Station's overall
programming mix and counter competitive programming. As a result of the
limited competition from other broadcasters purchasing syndicated
programming in the small and medium-sized markets served by the Company,
program expense as a percentage of net revenues for the Stations was 4.3%
and 4.1% in 1994 and 1995, respectively, as compared to approximately 9.1%
for all network-affiliated stations in 1994. In addition, the Company
believes that the programming mix of the Acquired Stations can be improved
on a cost effective basis.
LOCAL SALES EMPHASIS. Management's sales strategy focuses on
increasing the sale of local advertising by attracting new advertisers to
television and increasing the amount of advertising dollars being spent by
existing local advertisers. Management emphasizes local sales by operating
professional local sales departments, utilizing extensive sales training
programs, producing commercials for local clients, producing news and
informational programming with local advertising appeal and sponsoring or
co-promoting local events and activities that give local advertisers unique
value-added community identity.
FINANCIAL PLANNING AND CONTROLS. Management emphasizes strict control
of the Company's programming and operating costs as an important factor in
increasing broadcast cash flow. The Company continually seeks to identify
and implement cost savings opportunities. Furthermore, the Company
maintains a detailed budgeting process and reviews performance relative to
budget monthly with respect to both revenues and expenses, thereby enabling
management to react promptly to changes in market conditions.
FUTURE ACQUISITIONS AND OPPORTUNITIES. The Company intends to pursue
additional acquisitions of broadcast television stations, primarily of
network-affiliated stations in small to medium-sized markets where the
Company believes it can successfully implement its operating strategy and
where such stations can be acquired on financially acceptable terms.
Additionally, a rule making proceeding is currently pending before the FCC
regarding possible relaxation of the local television duopoly rules. If
these rules are implemented, the Company intends to explore opportunities
to enter into local marketing agreements with other stations in markets
where it currently operates as well as in other markets.
8
<PAGE>
<PAGE>
THE ACQUISITIONS
The Acquisitions are a central part of the Company's strategy to become one
of the leading television station group owners of small to medium-sized market
television stations in the United States. The Acquisitions are consistent with
the Company's strategy to acquire network-affiliated television stations in
markets with a limited number of media competitors for local advertising
revenues.
The Company has identified approximately $4.998 million of increases to
operating cash flow which it would have realized in 1995 on a pro forma basis
giving effect to the Transactions. See 'Pro Forma Financial Statements.' Of this
amount, the Company would have realized an increase in pro forma net revenues of
$0.446 million to reflect (i) increased network compensation under new
affiliation agreements for certain of the Stations and (ii) increased revenues
from a national sales representative firm for certain of the Acquired Stations.
In addition the Company would have realized $4.552 million of pro forma cost
savings at the Stations comprised of (i) the net effect of the elimination of
substantially all of the corporate expenses of Brissette, offset in part by the
addition of certain corporate management by the Company and related costs
($1.983 million on a net basis), (ii) the effect of reduced commission rates
payable to national sales representative firms under new agreements negotiated
by the Company ($0.284 million), (iii) elimination of redundant operating
expenses, including the elimination of certain positions at the Acquired
Stations ($1.345 million), (iv) adjustments to certain employee benefits and
compensation practices at the Acquired Stations ($0.355 million), (v)
implementation at the Acquired Stations of operating strategies currently
utilized at the Benedek Stations ($0.545 million) and (vi) the implementation of
the Company's historical program purchase practices ($0.040 million).
THE STAUFFER ACQUISITION. On June 6, 1996, the Company acquired
substantially all of the broadcast television assets (including working capital
of approximately $1.6 million) of Stauffer consisting of five principal
broadcast television stations and four satellite broadcast television stations
for a purchase price of $54.5 million. The principal stations acquired by the
Company were KCOY-TV, Santa Maria, California; WIBW-TV, Topeka, Kansas;
KMIZ(TV), Columbia, Missouri; KGWC-TV, Casper, Wyoming; and KGWN-TV, Cheyenne,
Wyoming. KGWC-TV operates two satellite stations, KGWL-TV, Lander, Wyoming, and
KGWR-TV, Rock Springs, Wyoming, both of which rebroadcast the programming of
KGWC-TV. KGWN-TV operates two satellite stations, KSTF-TV, Scottsbluff, Nebraska
and KTVS-TV, Sterling, Colorado, both of which rebroadcast the programming of
KGWN-TV. All of the Stauffer Stations are affiliated with CBS, except for
KMIZ(TV), Columbia, Missouri, which is affiliated with ABC. For the year ended
December 31, 1995, the Stauffer Stations had net revenues of $17.3 million,
broadcast cash flow of $4.0 million and broadcast cash flow margin of 23.1%.
THE BRISSETTE ACQUISITION. On June 6, 1996, the Company acquired all of the
capital stock of Brissette for $270.0 million in cash and preferred stock. All
of the outstanding indebtedness of Brissette was paid in full by the sellers at
the closing. Pursuant to the Brissette Agreement, at the closing Brissette was
required to have working capital of at least $8.8 million and any amount in
excess thereof was paid to the sellers. By acquiring all of the capital stock of
Brissette, the Company acquired eight network-affiliated television stations
including WMTV(TV), the NBC affiliate serving Madison, Wisconsin; WWLP(TV), the
NBC affiliate serving Springfield, Massachusetts; WILX-TV, the NBC affiliate
serving Lansing, Michigan; WHOI(TV), the ABC affiliate serving Peoria, Illinois;
WSAW-TV, the CBS affiliate serving Wausau, Wisconsin; WTRF-TV, the CBS affiliate
serving Wheeling, West Virginia and Steubenville, Ohio; KAUZ-TV, the CBS
affiliate serving Wichita Falls, Texas; and KOSA-TV, the CBS affiliate serving
Odessa, Texas. For the year ended December 31, 1995, Brissette had net revenues
of $51.3 million, broadcast cash flow of $23.9 million and broadcast cash flow
margin of 46.5%.
Of the $270.0 million paid for the capital stock of Brissette, $225.0
million was paid in cash and $45.0 million was paid by the issuance to GECC and
Mr. Paul Brissette of the Seller Junior Discount Preferred Stock of the Company.
See 'The Financing Plan.'
9
<PAGE>
<PAGE>
THE FINANCING PLAN
The Company, together with its subsidiary Benedek Broadcasting, implemented
the Financing Plan in order to finance the Acquisitions and to pay fees and
expenses related thereto. The Financing Plan consisted of (i) the offer and sale
by the Company of the Existing Notes to generate gross proceeds of $90.2
million, (ii) the offer and sale by the Company of the Units to generate gross
proceeds of $60.0 million, (iii) Benedek Broadcasting borrowing $128.0 million
pursuant to the Term Loan Facilities of the Credit Agreement and (iv) the
Company issuing an aggregate of $45.0 million initial liquidation preference of
Seller Junior Discount Preferred Stock to GECC and Mr. Paul Brissette.
The following table sets forth the sources and uses for the Financing Plan
on a pro forma basis as of March 31, 1996:
<TABLE>
<CAPTION>
(DOLLARS
IN THOUSANDS)
<S> <C>
SOURCES:
Benedek Broadcasting
Cash.................................................................... $ 7,322
Deposit(a).............................................................. 5,000
Credit Agreement
Revolving Credit Facility(b)....................................... --
Term Loan Facilities............................................... 128,000
The Company
The Existing Notes...................................................... 90,178
The Units(c)............................................................ 60,000
Seller Junior Discount Preferred Stock.................................. 45,000
--------------
$335,500
--------------
--------------
USES:
Stauffer Acquisition.................................................... $ 54,500
Brissette Acquisition................................................... 270,000
Fees and Expenses....................................................... 11,000
--------------
$335,500
--------------
--------------
</TABLE>
- ------------
(a) Pursuant to the Stauffer Agreement, Benedek Broadcasting had made a $5.0
million down payment which had been deposited in escrow pending consummation
of the Stauffer Acquisition.
(b) Benedek Broadcasting has available to it $15.0 million under the Revolving
Credit Facility.
(c) Each Unit consisted of ten shares of Exchangeable Preferred Stock, ten
Initial Warrants and 14.8 Contingent Warrants, each Warrant to purchase one
share of Class A Common Stock of the Company.
10
<PAGE>
<PAGE>
POST-TRANSACTIONS CORPORATE STRUCTURE(a)
[GRAPHIC]
- ------------
(a) Concurrently with the consummation of the Transactions, Brissette and all of
its subsidiaries were merged with and into Benedek Broadcasting with the
result that the operating assets of all of the Stations (other than the FCC
licenses and authorizations) are owned directly by Benedek Broadcasting.
(b) The obligations of Benedek Broadcasting in respect of the Senior Secured
Notes, the Term Loan Facilities and the Revolving Credit Facility are
guaranteed by the Company and, except in the case of the Revolving Credit
Facility, by BLC. Although the Credit Agreement does not limit the ability
of Benedek Broadcasting to pay dividends or make other payments to the
Company, the Senior Secured Note Indenture does contain such limitations.
However, after giving effect to the Transactions (assuming the contribution
to the common equity of Benedek Broadcasting of approximately $188.5 million
net proceeds of the sale of the Existing Notes, the Units and the Seller
Junior Discount Preferred Stock), as of March 31, 1996, Benedek Broadcasting
could have distributed approximately $188.5 million to the Company under
such limitations.
11
<PAGE>
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
SECURITIES OFFERED..................... Up to $170.0 million aggregate principal amount at maturity of 13 1/4%
Senior Subordinated Discount Notes due 2006. The terms of the Exchange
Securities and Existing Notes are identical in all material respects,
except for certain transfer restrictions and registration rights
relating to the Existing Notes and except for certain interest
provisions relating to the Existing Notes described below under
' -- Terms of Exchange Securities.'
THE EXCHANGE OFFER..................... The Exchange Securities are being offered in exchange for a like
principal amount at maturity of Existing Notes. Existing Notes may be
exchanged only in integral multiples of $1,000. The issuance of the
Exchange Securities is intended to satisfy obligations of the Company
contained in the Registration Agreement.
EXPIRATION DATE; WITHDRAWAL OF
TENDER............................... The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1996, or such later date and time to which it is
extended by the Company. Notwithstanding the foregoing, the Expiration
Date shall not be later than 5:00 p.m., New York City time, on the date
60 days from the date of this Prospectus. The tender of Existing Notes
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. Any Existing Notes not accepted for exchange for any
reason will be returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or termination of the
Exchange Offer.
CERTAIN CONDITIONS TO THE EXCHANGE
OFFER................................ The Exchange Offer is subject to certain customary conditions, which may
be waived by the Company. See 'The Exchange Offer -- Certain Conditions
to the Exchange Offer.'
PROCEDURES FOR TENDERING EXISTING
NOTES................................ Each holder of Existing Notes wishing to accept the Exchange Offer must
complete, sign and date the Letter of Transmittal or a facsimile
thereof, in accordance with the instructions contained herein and
therein, and mail or otherwise deliver such Letter of Transmittal, or
such facsimile, together with such Existing Notes and any other required
documentation, to the Exchange Agent (as defined) at the address set
forth herein. By executing the Letter of Transmittal, each holder will
represent to the Company that, among other things, (i) the holder is not
an 'affiliate' of the Company within the meaning of Rule 405 under the
Securities Act, (ii) the Exchange Securities acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of the holder's
business, (iii) such holder has no arrangement or understanding with any
person to participate in a distribution of such Exchange Securities and
(iv) such holder is not engaged in and does not intend to engage in a
distribution of such Exchange Securities. See 'The Exchange
Offer -- Exchange Offer Procedures.' Pursuant to the Registration
Agreement, the Company is required to file a registration statement for
a continuous offering pursuant to Rule 415 under the Securities Act (a
'Shelf Registration Statement') in respect of Existing Notes held by any
holder which indicates in a Letter of Transmittal that it cannot make
such representations to the Company and that it wishes to have its
Existing Notes registered under the Securities Act.
USE OF PROCEEDS........................ There will be no proceeds to the Company from the exchange of Existing
Notes for Exchange Securities pursuant to the Exchange Offer. The gross
proceeds received by the Company from the sale of the Existing Notes,
together with the gross proceeds from the sale of the Units and advances
under the
</TABLE>
12
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Credit Agreement, were used to finance the Acquisitions and to pay fees
and expenses in connection with the Transactions. See 'The Acquisitions'
and 'The Financing Plan.'
EXCHANGE AGENT......................... United States Trust Company of New York is serving as the Exchange Agent
in connection with the Exchange Offer.
FEDERAL INCOME TAX CONSEQUENCES........ The exchange of Existing Notes for Exchange Securities pursuant to the
Exchange Offer will not be a taxable event for Federal income tax
purposes. See 'Certain Federal Income Tax Consequences -- Exchange
Offer.'
</TABLE>
TERMS OF EXCHANGE SECURITIES
The terms of the Exchange Securities are identical in all material respects
to the Existing Notes, except (i) for certain transfer restrictions and
registration rights relating to the Existing Notes and (ii) that, if by November
4, 1996 neither the Exchange Offer has been consummated nor a Shelf
Registrations Statement has been declared effective, additional cash interest
will accrue on each Existing Note from and including November 5, 1996, until but
excluding the earlier of the date of consummation of the Exchange Offer and the
effective date of a Shelf Registration Statement at a rate of 0.50% per annum.
See 'Description of the Notes.'
THE EXCHANGE SECURITIES
<TABLE>
<S> <C>
SECURITIES OFFERED..................... $170.0 million aggregate principal amount at maturity of 13 1/4% Senior
Subordinated Discount Notes due 2006.
MATURITY DATE.......................... May 15, 2006.
YIELD TO MATURITY...................... 13.25% per annum (computed on a semi-annual bond-equivalent basis)
calculated from June 6, 1996.
INTEREST............................... The Exchange Securities will be issued at 100% of the Accreted Value of
the Existing Notes and no cash interest will accrue prior to May 15,
2001. Thereafter, cash interest will accrue until maturity at an annual
rate of 13.25% payable semi-annually on May 15 and November 15,
commencing November 15, 2001.
OPTIONAL REDEMPTION.................... On or after May 15, 2000, the Notes are redeemable at the option of the
Company, in whole or in part, at the redemption prices set forth herein
plus accrued and unpaid interest, if any, to the date of redemption.
Until May 15, 1999, the Company may, at its option, redeem up to 25% of
the aggregate principal amount at maturity of the Notes at 113.25% of
the Accreted Value thereof with the net proceeds of one or more Public
Equity Offerings or Strategic Investments (as defined) if at least 75%
of the original aggregate principal amount at maturity of the Notes
remain outstanding after each such redemption.
CHANGE OF CONTROL...................... After the occurrence of a Change of Control (as defined), the Company is
required to offer to repurchase all outstanding Notes at 101% of the
principal amount plus accrued interest to the date of repurchase (or, if
prior to May 15, 2001, at 101% of the Accreted Value on the date of
repurchase). There can be no assurance that the Company will have the
financial ability to purchase the Notes upon a Change of Control. See
'Description of the Notes -- Change of Control.'
RANKING................................ The Exchange Securities will be general, unsecured obligations of the
Company, will be subordinated in right of payment to all Senior Debt of
the Company, will rank pari passu with all senior subordinated debt of
the Company, including Existing Notes not exchanged, and will be senior
in right of payment to all existing and future subordinated debt of the
Company. As of March 31,
</TABLE>
13
<PAGE>
<PAGE>
<TABLE>
<S> <C>
1996, on a pro forma basis after giving effect to the Transactions, the
Company would have had no Senior Debt other than its guarantee of the
obligations of Benedek Broadcasting with respect to the Credit Agreement
and the Senior Secured Notes and Benedek Broadcasting would have had
$263.7 million of indebtedness outstanding. The Company has no present
intention to incur any indebtedness junior to the Notes. See 'Risk
Factors -- Leveraged Financial Position,' and ' -- Holding Company
Structure; Subordination of the Notes,' 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity
and Capital Resources' and 'Description of the Notes -- Ranking.'
RESTRICTIVE COVENANTS.................. The indenture pursuant to which the Existing Notes were issued and the
Exchange Securities will be issued (the 'Indenture') contains certain
covenants that, among other things, limit (i) the issuance of additional
indebtedness by the Company and its subsidiaries, (ii) the creation of
certain liens on the assets of the Company and its subsidiaries, (iii)
the Company from entering into certain sale and leaseback transactions,
(iv) the issuance of preferred stock by the Company's subsidiaries, (v)
the payment of dividends on, and redemption of, certain capital stock of
the Company and its subsidiaries and the redemption of certain
subordinated obligations of the Company, (vi) investments in certain
affiliates, (vii) sales of assets and subsidiary stock, (viii)
transactions with affiliates and (ix) consolidations, mergers and
transfers of all or substantially all of the Company's assets. The
Indenture also prohibits certain restrictions on distributions from
subsidiaires. However, all of these limitations and prohibitions are
subject to a number of important qualifications. See 'Description of the
Notes -- Certain Covenants.'
ORIGINAL ISSUE DISCOUNT................ The Existing Notes were offered at an issue price that represented
original issue discount for Federal income tax purposes. Thus, although
cash interest will not accrue on the Notes prior to May 15, 2001,
original issue discount (i.e., the difference between the principal and
interest payable on the Notes and their issue price) will accrete from
the issue date of the Notes and will be included as ordinary income
(including for periods ending prior to May 15, 2001) for Federal income
tax purposes in advance of receipt of cash payments to which such income
is attributable. See 'Certain Federal Income Tax
Consequences -- Original Issue Discount.'
REGISTRATION REQUIREMENTS.............. The Company has agreed to use its best efforts to consummate the
Exchange Offer by October 5, 1996. In the event that applicable
interpretations of the staff of the SEC do not permit the Company to
effect the Exchange Offer, or if for any other reason the Exchange Offer
is not consummated by November 4, 1996, and under certain other
specified circumstances, the Company will use its best efforts to cause
to become effective a Shelf Registration Statement with respect to the
resale of the Existing Notes and to keep the Shelf Registration
Statement effective until three years after the date of the original
issuance of the Existing Notes. If the Company does not comply with its
obligations with respect to the Exchange Offer or the Shelf Registration
Statement, additional cash interest will accrue on the Existing Notes at
a rate of 0.50% per annum until such obligations are satisfied. See 'The
Exchange Offer -- Acceptance of Existing Notes for Exchange; Delivery of
Exchange Securities.'
</TABLE>
14
<PAGE>
<PAGE>
RISK FACTORS
Holders of of the Existing Notes should consider carefully all of the
information set forth in this Prospectus and, in particular, the information set
forth under 'Risk Factors' commencing on page 23.
OTHER INFORMATION
The Company was incorporated under the laws of the State of Delaware on
April 10, 1996. Benedek Broadcasting was incorporated under the laws of the
State of Delaware on January 22, 1979. Benedek Broadcasting is a wholly-owned
subsidiary of the Company. The principal executive offices of the Company and
Benedek Broadcasting are located at 308 West State Street, Rockford, Illinois
61101. The telephone number at the executive offices is 815-987-5350.
SUMMARY PRO FORMA FINANCIAL DATA
The following tables present summary pro forma financial data of the
Company for the year ended December 31, 1995 and as of and for the three months
ended March 31, 1996. The pro forma operations and financial data for the year
ended December 31, 1995 give effect to the Transactions as if the Transactions
had been consummated on January 1, 1995. The pro forma operations and financial
data as of and for the three months ended March 31, 1996 give effect to the
Transactions as if the Transactions had been consummated on January 1, 1996. The
pro forma balance sheet data gives effect to the Transactions as if they had
occurred on March 31, 1996. The pro forma financial statements do not purport to
represent what the Company's results or financial condition would actually have
been if the Transactions had occurred on the dates indicated or to project the
Company's results or financial condition for or at any future period or date.
Additionally, certain reclassification entries have been made to the audited
financial statements of Stauffer and Brissette for consistent presentation with
Benedek Broadcasting. The following financial information should be read in
conjunction with the Pro Forma Financial Statements, Consolidated Financial
Statements of Benedek Broadcasting, the Financial Statements of Stauffer and the
Consolidated Financial Statements of Brissette included elsewhere in this
Prospectus.
15
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------------------------------
BENEDEK HISTORICAL ADJUSTMENTS THE COMPANY
BROADCASTING --------------------- FOR PRO
AS ADJUSTED(a) STAUFFER BRISSETTE TRANSACTIONS FORMA
--------------- -------- --------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.................................. $ 51,972 $ 17,317 $ 51,326 $ 250(e) $ 121,345
132(f)
284(g)
64(h)
Operating expenses:
Station operating expenses................ 30,139 13,534 27,515 (2,245)(i) 68,943
Depreciation and amortization............. 5,467 2,229 6,252 13,677(j) 27,625
--------------- -------- --------- ------------ -----------
Station operating income (loss)......... 16,366 1,554 17,559 (10,702) 24,777
Corporate expenses........................ 1,576(d) -- 2,307 (1,983)(k) 1,900
--------------- -------- --------- ------------ -----------
Operating income (loss)....................... 14,790 1,554 15,252 (8,719) 22,877
Financial expense, net:
Interest expense, net:
Cash interest, net...................... (15,779) -- (20,837) 9,401(l) (27,215)
Other interest.......................... (620) -- (549) (12,602)(l) (13,771)
--------------- -------- --------- ------------ -----------
Total interest, net................... (16,399) -- (21,386) (3,201) (40,986)
Other, net................................ -- -- (354) 354(m) --
Provision for income taxes.................... -- -- (147) 147(n) --
--------------- -------- --------- ------------ -----------
Net income (loss) from continuing
operations.................................. (1,609) 1,554 (6,635) (11,419) (18,109)
--------------- -------- --------- ------------ -----------
Exchangeable Preferred Stock dividends........ -- -- -- (9,519)(o) (9,519)
Seller Junior Discount Preferred Stock
dividends................................... -- -- -- (3,672)(p) (3,672)
--------------- -------- --------- ------------ -----------
Net income (loss) from continuing operations
available to common stockholders............ $ (1,609) $ 1,554 $ (6,635) $(24,610) $ (31,300)
--------------- -------- --------- ------------ -----------
--------------- -------- --------- ------------ -----------
Ratio of earnings to fixed charges(b)......... -- --
CERTAIN FINANCIAL DATA:
Broadcast cash flow........................... $ 21,863 $ 4,000 $ 23,856 $ 3,015 $ 52,734
Broadcast cash flow margin.................... 42.1% 23.1% 46.5% 43.5%
Operating cash flow........................... $ 20,287 $ 4,000 $ 21,549 $ 4,998 $ 50,834
Operating cash flow margin.................... 39.0% 23.1% 42.0% 41.9%
Amortization of program broadcast rights...... $ 2,183 $ 1,025 $ 1,684 $ (39)(q) $ 4,853
Payments for program broadcast rights......... 2,153 808 1,639 (79)(q) 4,521
Capital expenditures.......................... 2,126 406 2,748 -- 5,280
Cash payments for Federal income taxes........ -- --
CERTAIN RATIOS:
Operating cash flow to cash interest
expense, net................................ 1.29x 1.87x
Operating cash flow to total interest
expense, net................................ 1.24x 1.24x
Operating cash flow less capital expenditures
to cash interest expense, net............... 1.15x 1.67x
Operating cash flow less capital expenditures
to total interest expense, net.............. 1.11x 1.11x
Net Senior Debt to operating cash flow(c)..... 6.2x 5.2x
Net debt to operating cash flow(c)............ 6.2x 6.9x
</TABLE>
16
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
-----------------------------------------------------------------------
ADJUSTMENTS THE COMPANY
BENEDEK FOR PRO
BROADCASTING STAUFFER BRISSETTE TRANSACTIONS FORMA
--------------- -------- --------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.................................. $ 11,683 $ 3,965 $ 11,970 $ 34(g) $ 27,652
Operating expenses:
Station operating expenses................ 7,549 3,516 7,107 (520)(i) 17,652
Depreciation and amortization............. 1,360 575 1,513 3,616(j) 7,064
--------------- -------- --------- ------------ -----------
Station operating income (loss)......... 2,774 (126) 3,350 (3,062) 2,936
Corporate expenses........................ 496 -- 762 (762)(k) 496
--------------- -------- --------- ------------ -----------
Operating income (loss)....................... 2,278 (126) 2,588 (2,300) 2,440
Financial expense, net:
Interest expense, net:
Cash interest, net...................... (3,920) -- (4,893) 1,994(l) (6,819)
Other interest.......................... (101) -- (137) (3,107)(l) (3,345)
--------------- -------- --------- ------------ -----------
Total interest, net................... (4,021) -- (5,030) (1,113) (10,164)
Other, net................................ -- -- (109) 109(m) --
Provision for income taxes.................... -- -- (103) 103(n) --
--------------- -------- --------- ------------ -----------
Net income (loss) from continuing
operations.................................. (1,743) (126) (2,654) (3,201) (7,724)
--------------- -------- --------- ------------ -----------
Exchangeable Preferred Stock dividends........ -- -- -- (2,250)(o) (2,250)
Seller Junior Discount Preferred Stock
dividends................................... -- -- -- (891)(p) (891)
--------------- -------- --------- ------------ -----------
Net income (loss) from continuing operations
available to common stockholders............ $ (1,743) $ (126) $ (2,654) $ (6,342) $ (10,865)
--------------- -------- --------- ------------ -----------
--------------- -------- --------- ------------ -----------
Ratio of earnings to fixed charges(b)......... --
CERTAIN FINANCIAL DATA:
Broadcast cash flow........................... $ 4,209 $ 584 $ 4,834 $ 554 $ 10,181
Broadcast cash flow margin.................... 36.0% 14.7% 40.4% 36.8%
Operating cash flow........................... $ 3,713 $ 584 $ 4,072 $ 1,316 $ 9,685
Operating cash flow margin.................... 31.8% 14.7% 34.0% 35.0%
Amortization of program broadcast rights...... $ 597 $ 314 $ 483 $ 1,394
Payments for program broadcast rights......... 522 179 512 1,213
Capital expenditures.......................... 655 43 405 1,103
Cash payments for Federal income taxes........ -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------------------------------
BENEDEK BROADCASTING THE COMPANY
BENEDEK BROADCASTING PRO FORMA(s) PRO FORMA
----------------------- -------------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA(r):
Total assets.................................. $ 107,933 $440,271 $ 440,271
Working capital............................... 11,146 7,860 7,860
Total debt(t)................................. 135,681 263,681 353,859
Exchangeable Preferred Stock.................. -- -- 51,000
Seller Junior Discount Preferred Stock........ -- -- 45,000
Stockholder's equity (deficit)................ (38,305) 153,939 (32,239)
</TABLE>
17
<PAGE>
<PAGE>
(a) Concurrently with the consummation of the Transactions, Benedek
Broadcasting became a wholly-owned subsidiary of the Company. The
operations and financial data of 'Benedek Broadcasting as Adjusted' for the
year ended December 31, 1995 are derived from the pro forma consolidated
financial statements of Benedek Broadcasting adjusted to give pro forma
effect to the acquisition on March 31,1995 of WTVY-TV, serving Dothan,
Alabama and Panama City, Florida (the 'Dothan Station') and the issuance of
the Senior Secured Notes is as if both such events had occurred on January
1, 1995. Capital expenditures do not include assets acquired in connection
with the acquisition of the Dothan Station.
(b) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of net income (loss) before income taxes and extraordinary
item plus fixed charges (excluding capitalized interest). Fixed charges
consist of interest on all debt (including capitalized interest),
amortization of debt discount and deferred loan costs and the portion of
rental expense that is representative of the interest component of rental
expense (deemed to be one-third of rental expense which management believes
is a reasonable approximation of the interest component). For 'Benedek
Broadcasting As Adjusted,' for the year ended December 31, 1995, earnings
were insufficient to cover fixed charges by $1.6 million. The net income
(loss) for 'Benedek Broadcasting As Adjusted' includes certain non-cash
charges as follows: non-cash interest of $0.6 million and depreciation and
amortization of $5.5 million. For 'The Company Pro Forma,' for the year
ended December 31, 1995, earnings were insufficient to cover fixed charges
by $18.1 million. The net income (loss) for 'The Company Pro Forma'
includes certain non-cash charges as follows: non-cash interest of $13.8
million and depreciation and amortization of $27.6 million. For Benedek
Broadcasting for the three months ended March 31, 1996, earnings were
insufficient to cover fixed charges by $1.7 million. The net income (loss)
for Benedek Broadcasting includes certain non-cash charges as follows: non-
cash interest of $0.1 million and depreciation and amortization of $1.4
million. For the 'The Company Pro Forma' for the three months ended March
31, 1996, earnings were insufficient to cover fixed charges by $7.7
million. The net income (loss) for 'The Company Pro Forma' includes certain
non-cash charges as follows: non-cash interest of $3.3 million and
depreciation and amortization of $7.1 million.
(c) Net Senior Debt and net debt are defined as Senior Debt or total debt (as
defined in footnote (t)), as the case may be, less cash and cash
equivalents. These ratios are not the same as the Cash Flow Leverage Ratios
as defined in the Senior Secured Note or Exchange Indentures, or in the
Certificate of Designation for the Exchangeable Preferred Stock, and in
particular, such Cash Flow Leverage Ratios do not credit cash against the
outstanding debt amount.
(d) Includes $0.1 million in one-time expenses incurred in connection with
potential acquisitions which were not entered into by Benedek Broadcasting.
(e) The adjustment reflects the annualized effect of increased network
compensation resulting from new affiliation agreements effective July 1,
1995 for the CBS-affiliated Benedek Stations. In connection with such new
affiliation agreements, CBS paid the Company a bonus payment of $5.0
million which is required under GAAP to be recognized as revenue at the
rate of $500,000 per year over the ten-year term of the affiliation
agreements, of which $250,000 was recognized in Benedek Broadcasting's
statement of operations for 1995.
(f) The adjustment reflects the annualized effect of increased revenues from
the national sales representative firm for the Brissette Stations resulting
from the amortization of a $700,000 signing bonus which is required under
GAAP to be recognized as revenue at the rate of $140,000 per year over a
period of five years, of which $8,000 was recognized in Brissette's
statement of operations for 1995.
(g) The adjustment reflects the annualized effect of reduced commission rates
payable to national sales representative firms under new agreements
negotiated by the Company.
(h) The adjustment reflects the annualized effect of new network compensation
arrangements that took effect at various times in 1995 at certain of the
Acquired Stations.
(i) The adjustment reflects cost savings resulting from the following:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
(i) Elimination of redundant operating expenses, consisting of the
elimination of certain positions at the Acquired Stations........... $1,345 $309
(ii) Adjustments to certain employee benefits and compensation practices
at the Acquired Stations........................................... 355 116
(iii) Implementation at the Acquired Stations of operating strategies
currently utilized at the Benedek Stations......................... 545 95
------------ -----
$2,245 $520
------------ -----
------------ -----
</TABLE>
18
<PAGE>
<PAGE>
The pro forma cost savings as allocated among departments are summarized in
the table below:
<TABLE>
<CAPTION>
THREE MONTHS THIRTEEN WEEKS PERIOD
ENDED ENDED ENDED
YEAR ENDED DECEMBER 31, 1995 MARCH 31, MARCH 31, MARCH 31,
1996 1996 1996
------------------------------- ------------ -------------- --------
STAUFFER BRISSETTE TOTAL STAUFFER BRISSETTE TOTAL
-------- --------- ------ ------------ -------------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Selling expenses............. $ 94 $ 83 $ 177 $ 24 $ 13 $ 37
Programming and technical.... 528 531 1,059 122 133 255
Advertising and promotions... 69 180 249 17 45 62
General and administrative... 522 238 760 130 36 166
-------- --------- ------ ----- ----- -----
Total.................... $1,213 $ 1,032 $2,245 $293 $227 $ 520
-------- --------- ------ ----- ----- -----
-------- --------- ------ ----- ----- -----
</TABLE>
(j) The adjustment reflects primarily the additional depreciation and
amortization expense resulting from the allocation of the purchase price
for the Acquired Stations to the assets acquired, including an increase in
property and equipment and intangible assets to their estimated fair market
value and the recording of goodwill associated with each of the
Acquisitions.
(k) The adjustment reflects the net annualized cost savings resulting from the
acquisition of the Acquired Stations by the Company, including (i) the
elimination of substantially all of the corporate expenses of Brissette and
(ii) the addition of certain corporate management personnel by the Company
and related costs.
(l) Interest expense has been adjusted to reflect the net effect of the change
in outstanding debt and deferred financing costs described in Notes (a) and
(d) to the Pro Forma Balance Sheet as if it had occurred on January 1, 1995
for the year ended December 31, 1995 and January 1, 1996 for the three
months ended March 31, 1996. The following table details the calculation of
the adjustment:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 MARCH 31, 1996
-------------------------------------- -------------------------------------
CASH OTHER INTEREST TOTAL CASH OTHER INTEREST TOTAL
-------- -------------- -------- -------- -------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Notes at a rate of 13.25%........ $ -- $(12,344) $(12,344) $ -- $ (2,987) $(2,987)
Term Loan Facilities at an
assumed blended rate of 8.73%.. (11,039) -- (11,039) (2,793) -- (2,793)
Interest on existing Brissette
notes.......................... 20,837 -- 20,837 4,893 -- 4,893
Reduction in interest income..... (397) -- (397) (106) -- (106)
Increase in amortization of
deferred financing costs....... -- (807) (807) -- (257) (257)
Reduction of amortization on
deferred financing costs on
Brissette debt................. -- 549 549 -- 137 137
-------- -------------- -------- -------- -------------- -------
Net adjustment............... $ 9,401 $(12,602) $ (3,201) $ 1,994 $ (3,107) $(1,113)
-------- -------------- -------- -------- -------------- -------
-------- -------------- -------- -------- -------------- -------
</TABLE>
The actual interest rate with respect to the Term Loan Facilities may be
higher or lower than the rate set forth above. A change of 0.125% in the
interest rate on borrowings under the Term Loan Facilities would change pro
forma interest expense by approximately $160,000 for the year ended December
31, 1995 and by approximately $40,000 for the three months ended March 31,
1996.
(m) The adjustment reflects the elimination of certain legal and investment
advisory fees paid by Brissette in connection with the sale to Benedek
Broadcasting.
(n) The adjustment reflects the elimination of income tax expense. The Company
is not expected to have income tax expense on a pro forma basis.
(o) The adjustment reflects the dividends paid on the Exchangeable Preferred
Stock at a rate of 15.0% per annum paid quarterly for an effective rate of
15.9% annually.
(p) The adjustment reflects the dividends paid on the Seller Junior Discount
Preferred Stock at an assumed rate of 7.92% per annum paid quarterly for an
effective rate of 8.16% annually.
(q) The adjustment reflects a reduction in program payments and the related
amortization to be consistent with Benedek Broadcasting's historical
program purchase practices.
(r) The adjustments reflect the combined effect of the acquisition of the
Stauffer Stations ($54.5 million purchase price) and Brissette ($270.0
million purchase price), using the purchase method of accounting, and the
Financing Plan, all as if the Transactions had occurred on March 31, 1996.
The pro forma financial data reflects the utilization at closing of $7.3
million cash on hand and the application of a $5.0 million deposit. The
Financing Plan includes (i) borrowings by Benedek Broadcasting of $128.0
million under the Term Loan Facilities, (ii) the sale by the Company of the
Existing Notes for gross proceeds of $90.2 million, (iii) the sale by the
Company for $60.0 million of the Units consisting of Exchangeable Preferred
Stock, Initial Warrants to purchase 7.5% of the fully diluted Common Stock
of the Company (with an assumed initial allocated value of $9.0 million)
and Contingent Warrants to purchase 10.0% of the fully diluted Common Stock
of the Company and (iv) the issuance by the Company of the Seller Junior
Discount Preferred Stock with an initial liquidation preference of $45.0
million.
(s) Concurrently with the consummation of the Transactions, Benedek
Broadcasting became a wholly-owned subsidiary of the Company. The pro forma
balance sheet reflects the contribution of the proceeds from the sale of
the Exchangeable Preferred Stock of $51.0 million, the Seller Junior
Discount Preferred Stock of $45.0 million and the Existing Notes of $90.2
million, as additional paid-in capital.
(t) Total debt is defined as notes payable and capital leases payable
(including the current portion thereof).
19
<PAGE>
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following tables present summary historical financial data of (i)
Benedek Broadcasting (prior to the Transactions), (ii) Stauffer and (iii)
Brissette. The following financial information should be read in conjunction
with the Consolidated Financial Statements of Benedek Broadcasting, the
Financial Statements of Stauffer and the Consolidated Financial Statements of
Brissette included elsewhere in this Prospectus.
BENEDEK BROADCASTING (PRIOR TO THE TRANSACTIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(a)................. $33,608 $36,311 $38,352 $44,221 $ 50,329 $ 10,150 $ 11,683
Operating expenses:
Station operating
expenses.................. 20,309 21,511 22,805 24,810 29,049 6,308 7,549
Depreciation and
amortization.............. 5,871 4,428 3,721 3,403 5,041 856 1,360
------- ------- ------- ------- -------- -------- --------
Station operating
income................ 7,428 10,372 11,826 16,008 16,239 2,986 2,774
Corporate expenses.......... 887 1,288 1,249 1,309 1,576 343 496
Special bonus, officer-
stockholder............... -- -- 1,400 -- -- -- --
------- ------- ------- ------- -------- -------- --------
Operating income................ 6,541 9,084 9,177 14,699 14,663 2,643 2,278
------- ------- ------- ------- -------- -------- --------
Interest expense, net(b):
Cash interest, net.......... (9,856) (6,605) (8,194) (7,740) (14,763) (2,274) (3,920)
Other interest.............. (3,923) (7,774) (6,161) (4,905) (712) (753) (101)
------- ------- ------- ------- -------- -------- --------
Total interest, net..... (13,779) (14,379) (14,355) (12,645) (15,475) (3,027) (4,021)
------- ------- ------- ------- -------- -------- --------
Extraordinary item(c)........... -- -- -- -- 6,864 6,864 --
Net income (loss)(d)............ (8,143) (5,605) (5,034) 2,044 6,052 6,480 (1,743)
Ratio of earnings to fixed
charges(e).................... -- -- -- 1.2x -- -- --
CERTAIN FINANCIAL DATA:
Broadcast cash flow............. $13,531 $14,728 $15,546 $19,627 $ 21,310 $ 3,924 $ 4,209
Broadcast cash flow margin...... 40.3% 40.6% 40.5% 44.4% 42.3% 38.7% 36.0%
Operating cash flow............. $12,644 $13,440 $14,297 $18,318 $ 19,734 $ 3,581 $ 3,713
Operating cash flow margin...... 37.6% 37.0% 37.3% 41.4% 39.2% 35.3% 31.8
Amortization of program
broadcast rights.............. $ 2,131 $ 1,996 $ 2,179 $ 2,104 $ 2,162 $ 511 $ 597
Payments for program broadcast
rights........................ 1,899 2,068 2,180 1,888 2,132 429 522
Capital expenditures............ 1,581 1,458 1,278 1,161 2,008 552 655
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------ MARCH 31,
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.................... $ 76,111 $ 77,049 $ 72,818 $ 73,621 $114,453 $107,933
Working capital (deficit)....... 1,997 (71) 3,684 1,611 13,665 11,146
Total debt(e)................... 107,350 109,439 112,874 107,607 135,767 135,681
Stockholder's equity
(deficit)..................... (35,296) (41,004) (44,660) (42,615) (36,563) (38,306)
</TABLE>
20
<PAGE>
<PAGE>
(a) Net revenues reflect deductions from gross revenues for agency and national
sales representative commissions.
(b) Cash interest, net includes cash interest paid and normal adjustments to
accrued interest. Other interest includes accrued interest with respect to
warrants to purchase Benedek Broadcasting's common stock, accrued interest
with respect to the contingent equity value of Benedek Broadcasting and
long-term deferred interest, accrued interest added to long-term debt
balances, deferred loan amortization and accretion of discounts.
(c) Benedek Broadcasting recorded an extraordinary gain from the early
extinguishment of debt comprised of a gain of $11.1 million reduced by
losses of $2.7 million of prepayment premiums and contingent payments and
$1.5 million of unamortized debt discount and deferred loan costs.
(d) Benedek Broadcasting had historically elected to be taxed as an S
Corporation for Federal and state income tax purposes. Accordingly, the
sole stockholder of Benedek Broadcasting has been responsible for the
payment of income taxes on Benedek Broadcasting's taxable income. Net
income (loss) does not include a pro forma adjustment for income taxes due
to the availability of net operating loss carryforwards and a valuation
allowance. Benedek Broadcasting's election to be taxed as an S Corporation
terminated automatically upon the consummation of the Transactions.
(e) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of net income (loss) before income taxes and extraordinary
item plus fixed charges (excluding capitalized interest). Fixed charges
consist of interest on all debt (including capitalized interest),
amortization of debt discount and deferred loan costs and the portion of
rental expense that is representative of the interest component of rental
expense (deemed to be one-third of rental expense which management believes
is a reasonable approximation of the interest component). For each of the
four years ended December 31, 1991, 1992, 1993 and 1995, earnings were
insufficient to cover fixed charges by $8.1 million, $5.6 million, $5.0
million and $0.8 million, respectively. For the year ended December 31,
1994 the ratio of earnings to fixed charges was 1.2 to 1.0. For the three
months ended March 31, 1995 and 1996, earnings were insufficient to cover
fixed charges by $0.4 million and $1.7 million, respectively. Benedek
Broadcasting's net income (loss) includes certain non-cash charges as
follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------- ----------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Non-cash interest........................... $ 3,923 $ 7,774 $ 6,161 $4,905 $ 712 $ 753 $ 101
Depreciation and amortization............... 5,871 4,428 3,721 3,403 5,041 856 1,360
Provision for loss on note receivable....... 905 310 -- -- -- -- --
Special bonus, officer-stockholder.......... -- -- 1,400 -- -- -- --
------- ------- ------- ------ ------ ------ ------
$10,699 $12,512 $11,282 $8,308 $5,753 $1,609 $1,461
------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------ ------ ------ ------
</TABLE>
(f) Total debt is defined as notes payable and capital leases payable (including
the current portion thereof), net of discount.
21
<PAGE>
<PAGE>
STAUFFER(a)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues............................................... $16,661 $19,081 $17,317 $ 4,097 $ 3,965
Operating expenses:
Station operating expenses............................. 13,327 13,422 13,534 3,223 3,516
Depreciation and amortization.......................... 2,264 2,304 2,229 554 575
------- ------- ------- ------- -------
Station operating income........................... 1,070 3,355 1,554 320 (126)
Corporate expenses..................................... -- -- -- -- --
------- ------- ------- ------- -------
Operating income (loss).................................... $ 1,070 $ 3,355 $ 1,554 $ 320 $ (126)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
CERTAIN FINANCIAL DATA:
Broadcast cash flow........................................ $ 3,285 $ 5,623 $ 4,000 $ 882 $ 584
Broadcast cash flow margin................................. 19.7% 29.5% 23.1% 21.6% 14.7%
Operating cash flow........................................ $ 3,285 $ 5,623 $ 4,000 $ 882 $ 584
Operating cash flow margin................................. 19.7% 29.5% 23.1% 21.6% 14.7%
Amortization of program broadcast rights................... $ 1,277 $ 1,045 $ 1,025 $ 234 $ 314
Payments for program broadcast rights...................... 1,326 1,081 808 226 179
Capital expenditures....................................... 1,182 934 406 233 43
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with Benedek Broadcasting.
BRISSETTE(a)
<TABLE>
<CAPTION>
THIRTEEN WEEKS
ENDED
YEAR ENDED DECEMBER 31, ----------------------
--------------------------------------------------- MARCH 26, MARCH 31,
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- --------- ---------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues......................... $43,817 $46,414 $44,404 $49,530 $51,326 $11,602 $11,970
Operating expenses:
Station operating expenses....... 23,470 23,791 23,511 25,667 27,515 6,383 7,107
Depreciation and amortization.... 13,334 12,881 8,116 6,551 6,252 1,432 1,513
------- ------- ------- ------- ------- --------- ---------
Station operating income..... 7,013 9,742 12,777 17,312 17,559 3,787 3,350
Management fee paid to
affiliate(b)................... 2,650 4,365 -- -- -- -- --
Corporate expenses............... 2,204 1,655 1,487 1,895 2,307 687 762
------- ------- ------- ------- ------- --------- ---------
Operating income..................... $ 2,159 $ 3,722 $11,290 $15,417 $15,252 $ 3,100 $ 2,588
------- ------- ------- ------- ------- --------- ---------
------- ------- ------- ------- ------- --------- ---------
CERTAIN FINANCIAL DATA:
Broadcast cash flow.................. $20,688 $22,613 $20,927 $24,065 $23,856 $ 5,220 $ 4,834
Broadcast cash flow margin........... 47.2% 48.7% 47.1% 48.6% 46.5% 45.0% 40.4%
Operating cash flow(b)............... $18,484 $20,958 $19,440 $22,170 $21,549 $ 4,533 $ 4,072
Operating cash flow margin(b)........ 42.2% 45.1% 43.8% 44.8% 42.0% 39.1% 34.0%
Amortization of program broadcast
rights............................. $ 2,709 $ 1,987 $ 1,743 $ 1,757 $ 1,684 $ 400 $ 483
Payments for program broadcast
rights............................. 2,368 1,997 1,709 1,555 1,639 399 512
Capital expenditures................. 2,466 1,280 2,217 1,559 2,748 327 405
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with Benedek Broadcasting.
(b) Brissette paid management fees to an affiliated company for expenses
relating to payroll, rent and other corporate expenses. Operating cash flow
and operating cash flow margin are calculated prior to any reduction for
such management fees.
22
<PAGE>
<PAGE>
RISK FACTORS
Holders of Existing Notes should consider carefully all of the information
set forth in this Prospectus and, in particular, should evaluate the following
risks before tendering their Existing Notes in the Exchange Offer, although the
risk factors (other than the first risk factor) are generally applicable to the
Existing Notes as well as the Exchange Securities.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Existing Notes who do not exchange their Existing Notes for
Exchange Securities pursuant to the Exchange Offer will continue to be subject
to the restrictions on transfer of such Existing Notes as set forth in the
legend thereon as a consequence of the issuance of the Existing Notes pursuant
to the exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Existing Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. The
Company does not currently anticipate that it will register the Existing Notes
under the Securities Act. Based on interpretations by the staff of the SEC in
letters issued to third parties, Exchange Securities issued pursuant to the
Exchange Offer may be offered for resale, resold or otherwise transferred by any
holder thereof (other than any such holder which is an 'affiliate' of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such Exchange Securities are acquired in the
ordinary course of such holder's business, such holder has no arrangement or
understanding with any person to participate in the distribution of such
Exchange Securities and such holder is not engaged in and does not intend to
engage in a distribution of such Exchange Securities. However, to comply with
the securities laws of certain jurisdictions, if applicable, the Exchange
Securities may not be offered or sold unless they have been registered or
qualified for sale in such jurisdictions or an exemption from registration or
qualification is available and is complied with.
LEVERAGED FINANCIAL POSITION
After giving effect to the Transactions, the Company had substantial
indebtedness. Prior to the consummation of the Transactions, Benedek
Broadcasting's total indebtedness was $135.7 million, of which $135.0 million
consisted of the Senior Secured Notes. In connection with the Transactions, the
Company incurred substantial additional indebtedness under the Credit Agreement
and in connection with the issuance of the Existing Notes. As of March 31, 1996,
on a pro forma basis after giving effect to the Transactions, the Company would
have had outstanding total indebtedness of approximately $353.9 million,
redeemable Exchangeable Preferred Stock with an initial liquidation preference
of approximately $60.0 million and redeemable Seller Junior Discount Preferred
Stock with an initial liquidation preference of $45.0 million. The certificates
of designation with respect to the Exchangeable Preferred Stock and the Seller
Junior Discount Preferred Stock (the 'Certificates of Designation') the Exchange
Indenture, the Indenture and the Credit Agreement limit the incurrence of
additional indebtedness and the issuance of redeemable preferred stock by the
Company and its subsidiaries. In addition, the Senior Secured Note Indenture (as
defined) limits the incurrence of additional indebtedness by Benedek
Broadcasting. However, all these limitations are subject to a number of
important qualifications.
The Company's high degree of leverage will have important consequences to
holders of the Notes, including the following: (i) the ability of the Company to
obtain additional financing for working capital, capital expenditures, debt
service requirements or other purposes may be impaired; (ii) a substantial
portion of the Company's operating cash flow will be required to be dedicated to
the payment of the Company's interest expense and principal repayment
obligations; (iii) the Company may be more highly leveraged than companies with
which it competes, which may place it at a competitive disadvantage; and (iv)
the Company may be more vulnerable in the event of a downturn in its business.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
23
<PAGE>
<PAGE>
ABILITY TO SERVICE DEBT
The ability of the Company to make scheduled payments or to refinance its
obligations with respect to its indebtedness and redeemable preferred stock
depends on its financial and operating performance, which, in turn, is subject
to prevailing economic conditions and to financial, business and other factors
beyond its control. There can be no assurance that its operating results will be
sufficient for payment of its indebtedness or the redemption of preferred stock
in the future.
For the year ended December 31, 1995 and the three months ended March 31,
1996, on a pro forma basis after giving effect to the Transactions, the
Company's earnings would have been insufficient to cover fixed charges by $18.1
million and $7.7 million, respectively, and earnings would have been
insufficient to cover fixed charges and preferred stock dividends by $31.3
million and $10.9 million, respectively. If non-cash charges to income for
depreciation and amortization and non-cash interest were excluded, the Company's
pro forma earnings from continuing operations for 1995 and the three months
ended March 31, 1996 would have been sufficient to cover its pro forma fixed
charges for such year.
In order to repay the Notes and the Senior Secured Notes at maturity, the
Company will need to refinance all or a portion of the Notes and Benedek
Broadcasting or the Company will need to refinance all or a portion of the
Senior Secured Notes. The Company's ability to refinance the Notes and the
Company's and Benedek Broadcasting's ability to refinance the Senior Secured
Notes will depend upon Benedek Broadcasting's operating performance, as well as
prevailing economic and market conditions, levels of interest rates, refinancing
costs and other factors, many of which are beyond the Company's control. There
can be no assurance that the Company or Benedek Broadcasting will be able to
refinance the Notes or the Senior Secured Notes, as the case may be, or
otherwise raise funds in a timely manner or that the proceeds therefrom will be
sufficient to effect such refinancing.
The Notes do not bear interest until May 15, 2001, and the Company will not
be obligated to pay cash interest on the Notes until November 15, 2001. In
addition, for all dividend payment dates with respect to the Exchangeable
Preferred Stock and interest payment dates with respect to the Exchange
Debentures through and including July 1, 2001, the Company may, at its option,
pay dividends by adding the amount thereof to the then effective liquidation
preference of the Exchangeable Preferred Stock and pay interest on the Exchange
Debentures by issuing additional Exchange Debentures. For all dividend payment
dates with respect to the Seller Junior Discount Preferred Stock prior to
October 1, 2001, the Company will pay such dividends by adding the amount
thereof to the then effective liquidation preference of the Seller Junior
Discount Preferred Stock. In order for the Company to meet its debt service
obligations and pay required dividends after May 15, 2001 with respect to the
Notes, after July 1, 2001 with respect to the Exchangeable Preferred Stock or
Exchange Debentures, as the case may be, and from and after October 1, 2001 with
respect to the Seller Junior Discount Preferred Stock, the Company will need to
substantially increase broadcast cash flow at the Stations. However, there can
be no assurance that the Company's broadcast cash flow will improve or improve
in a sufficient degree to enable the Company to meet such obligations. The
Credit Agreement restricts the Company's ability to sell assets and use the
proceeds therefrom, and the Senior Secured Note Indenture restricts the ability
of Benedek Broadcasting to sell assets and use the proceeds therefrom. In the
absence of such improvement, the Company could face liquidity problems and might
be required to reduce its capital expenditures and overhead expenses or dispose
of material assets or operations to meet its debt and preferred stock service
and other obligations. There can be no assurance as to the ability of the
Company to consummate such sales or the proceeds which the Company could realize
therefrom or that such proceeds would be adequate to meet the obligations then
due.
If the Company or Benedek Broadcasting is unable to generate sufficient
cash flow or otherwise obtain funds necessary to make required payments on its
indebtedness or, if the Company or Benedek Broadcasting otherwise fails to
comply with the various covenants in such indebtedness (including covenants in
the Credit Agreement), it would be in default under the terms thereof, which
would permit the holders of such indebtedness to accelerate the maturity of such
indebtedness and could cause defaults under other indebtedness of the Company or
Benedek Broadcasting or result in a bankruptcy of the Company or Benedek
Broadcasting. Such defaults or any bankruptcy of the Company or
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<PAGE>
Benedek Broadcasting resulting therefrom would have a material adverse effect on
the holders of the Notes.
HOLDING COMPANY STRUCTURE; SUBORDINATION OF THE NOTES
The Company is a holding company that will derive all of its operating
income and cash flow from its sole subsidiary, Benedek Broadcasting, the common
stock of which, together with all other assets of the Company, has been pledged
to secure the Company's senior guarantee of all indebtedness of Benedek
Broadcasting outstanding under the Credit Agreement and in respect of the Senior
Secured Notes. As a holding company, the Company's ability to pay its
obligations, including its obligation to pay interest on and principal of the
Notes, whether at maturity, upon a Change of Control or otherwise, will be
dependent primarily upon receiving dividends and other payments or advances from
Benedek Broadcasting. Benedek Broadcasting is a separate and distinct legal
entity and has no obligation, contingent or otherwise, to pay any amounts to the
Company or to make funds available to the Company for debt service or any other
obligation.
Although the Credit Agreement does not limit the ability of Benedek
Broadcasting to pay dividends or make other payments to the Company, the Senior
Secured Note Indenture does contain such limitations. However, after giving
effect to the Transactions (assuming the contribution to the common equity of
Benedek Broadcasting of net cash proceeds of approximately $188.5 million from
the sale of the Existing Notes, the Units and the Seller Junior Discount
Preferred Stock), as of March 31, 1996, Benedek Broadcasting could have
distributed approximately $188.5 million to the Company under such limitations.
The Existing Notes are, and the Exchange Securities will be, subordinated
in right of payment to all existing and future Senior Debt of the Company.
Additionally, the Existing Notes are, and the Exchange Securities will be,
effectively subordinated to all existing and future indebtedness and other
obligations of Benedek Broadcasting, including the Senior Secured Notes and the
obligations of Benedek Broadcasting under the Credit Agreement, and of any
future subsidiaries of the Company. As of March 31, 1996, on a pro forma basis
after giving effect to the Transactions, the Company would have had Senior Debt
of $263.7 million, including its guarantee of the obligations of Benedek
Broadcasting with respect to the Credit Agreement and the Senior Secured Notes,
and the aggregate liabilities of the Company's subsidiaries, including with
respect to the Credit Agreement and the Senior Secured Notes, would have been
$286.3 million. See 'Description of the Notes -- Ranking.' In the event of
bankruptcy, liquidation or reorganization of the Company, the assets of the
Company will be available to pay obligations on the Notes only after all Senior
Debt of the Company has been paid in full, and there may not be sufficient
assets remaining to pay amounts due on the Notes then outstanding. Additional
indebtedness, including Senior Debt, may be incurred by the Company from time to
time, subject to the terms of the Indenture.
SENSITIVITY TO GENERAL ECONOMIC CONDITIONS
The Company's operating results are sensitive to general economic
conditions in the United States. Additionally, because the Company relies on
sales of advertising time for substantially all of its revenues, the Company's
operating results are and will be sensitive to local and regional economic
conditions in each of the markets in which the Stations operate. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and 'Business -- Competition.'
COMPETITION WITHIN THE TELEVISION INDUSTRY; ADVANCED TELEVISION
The television broadcast industry faces competition for market share and
advertising revenues from a variety of alternative media, including cable
television, 'wireless' cable systems, direct broadcast satellite systems,
telephone company video systems, radio, newspapers, computer on-line services,
periodicals and other entertainment and advertising media.
The ability of television broadcast stations to generate advertising
revenues depends to a significant degree upon audience ratings. Technological
innovation and the resulting proliferation of programming alternatives, such as
independent broadcast stations, cable television and other multi-channel
competitors, pay-per-view and VCRs, have fractionalized television viewing
audiences
25
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<PAGE>
and subjected television broadcast stations to new types of competition. During
the past decade, cable television and independent stations have captured an
increasing market share while overall viewership of network television has
declined.
Advances in technology may increase competition for household audiences and
advertising revenues. Video compression techniques, now in use with direct
broadcast satellites and in development for cable and 'wireless' cable, are
expected to permit greater numbers of channels to be carried within existing
bandwidths. These compression techniques, as well as other technological
developments, are applicable to all video delivery systems, including
over-the-air broadcasting, and have the potential to provide vastly expanded
programming to highly-targeted audiences. Reduction in the cost of creating
additional channel capacity may lower entry barriers for new channels and
encourage the development of increasingly specialized 'niche' programming. This
ability to reach highly-targeted audiences may alter the competitive dynamics
for advertising expenditures.
The FCC currently is determining whether and how to assign licenses to
permit television broadcasters to provide digital advanced television ('ATV')
services. ATV refers to improvements in image definition and sound quality
(commonly known as high-definition television), as well as flexibility to
provide additional-spectrum based services. The FCC has tentatively decided to
issue a second channel to each television broadcaster to permit it to provide
ATV over a transition period. At the end of the transition period, each
broadcaster would be required to return to the FCC one of these two channels.
This transition will permit broadcasters to provide higher quality services to
their viewers and may permit broadcasters to compete more effectively with other
digital video systems. However, constructing and operating a second television
channel will require a substantial capital outlay for all of the Stations. The
Company is unable to predict the effect that technological changes will have on
the broadcast television industry or the future results of the Company's
operations. See 'Business -- Competition.'
In addition, certain leaders in Congress and the Administration have
proposed legislation that would require broadcasters to (i) bid at auction for
ATV channels, potentially against other non-broadcast applicants, (ii) return
their analog channels on an expedited basis by 2005 to permit the old channels
to be reauctioned to new licensees and/or (iii) pay a fee for use of the second
channel, starting either immediately or after 2005. These proposals, if enacted,
could affect the Company. First, auctions for ATV channels could substantially
increase the Company's up-front costs of converting to ATV and would raise the
possibility that the Company could be subject to additional competition in its
markets if it, or another licensee, is out-bid by a newcomer. Second, an
expedited transition period could require the Company to end analog transmission
before all its viewers (particularly those in the small and medium-sized markets
which the Company serves) have purchased ATV-compatible reception equipment.
REGULATION BY FCC
The broadcasting industry is subject to significant regulation by the FCC
pursuant to the Communications Act of 1934, as amended (the 'Communications
Act'). FCC approval is required for the issuance, renewal and transfer of
station operating licenses. The Company's business is dependent upon the
retention and renewal of television broadcasting licenses from the FCC. While in
the vast majority of cases such licenses are renewed by the FCC, there can be no
assurance that the Company's licenses will be renewed upon their expiration. All
of the Stations are presently operating under five-year licenses expiring on
various dates from 1996 to 1999. Currently, WTAP-TV, Parkersburg, West Virginia,
WHSV-TV, Harrisonburg, Virginia, and WTRF-TV, Wheeling, West Virginia and
Steubenville, Ohio, have pending applications for license renewal. Pursuant to
recent legislation, the term of each of these licenses will be extended to eight
years upon ordinary course renewal. The United States Congress and the FCC
currently have under consideration and may in the future adopt new laws,
regulations and policies regarding a wide variety of matters (including
technological changes) which could, directly or indirectly, affect the
operations and ownership of the Stations. See 'Business -- Federal Regulation of
Television Broadcasting.'
The FCC granted the Company's application to acquire the Stauffer Stations
on April 8, 1996 and its application to acquire the Brissette Stations on May
23, 1996. In approving the Brissette acquisition,
26
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<PAGE>
the FCC granted six-month waivers of the 'duopoly' rule that prevents a licensee
from having an interest in two stations that have a certain degree of overlap in
their transmission signals. The six-month waivers granted by the FCC pertain to
the transmission signal overlap of (i) WIFR-TV, the Benedek Station serving
Rockford, Illinois, and WMTV(TV), the Brissette Station serving Madison,
Wisconsin; (ii) WYTV, the Benedek Station serving Youngstown, Ohio, and WTRF-TV,
the Brissette Station serving Wheeling, West Virginia and Steubenville, Ohio;
and (iii) WTAP-TV, the Benedek Station serving Parkersburg, West Virginia, and
WTRF-TV. These waivers permit the Company to hold the Stations in question for a
six-month period after closing before divesting one of the two Stations that do
not comply with the duopoly rule in each instance. The FCC has a pending
proceeding, which it has committed to complete during 1996, that may result in
the liberalization of the duopoly rule to permit the Company to continue to own
all the Stations it currently owns as well as all of those it has received FCC
consent to acquire. There can be no assurance that the FCC will act to
liberalize the rule or that it will do so in time to avoid the Company's being
required to divest certain Stations in order to eliminate any signal overlap.
DEPENDENCE ON NETWORK AFFILIATION
Each of the Stations is affiliated with either ABC, CBS or NBC. Viewership
levels for each of the Stations are materially dependent upon programming
provided by the Station's affiliated network. There can be no assurance that
such programming will achieve or maintain satisfactory viewership levels in the
future.
Each of the Benedek Stations' network affiliation agreements currently runs
for a period of five to 10 years. WYTV, WBKO-TV, WTOK-TV and WHSV-TV, all of
which are ABC affiliates, each have a five-year affiliation agreement which
expires in 1999. KDLH-TV, WIFR-TV, KHQA-TV and WTVY-TV, all of which are CBS
affiliates, each have a ten-year affiliation agreement which expires in 2005 and
is automatically renewed for successive five-year terms, subject to either
party's right to terminate the agreement at the end of any term upon six months'
advance notice. WTAP-TV, an NBC affiliate, currently operates under a five-year
affiliation agreement which expires in 2000 and is automatically renewed for
successive terms, subject to either party's right to terminate the agreement at
the end of any term upon 12 months' advance notice.
Each of the Stauffer Stations' network affiliation agreements currently
runs for a period of five to 10 years. KMIZ(TV), an ABC affiliate, operates
under an affiliation agreement which expires in 2000 and is automatically
renewed for successive terms, subject to either party's right to terminate the
agreement at the end of its term upon 180 days' advance notice. All of the other
Stauffer Stations are CBS affiliates operating under affiliation agreements
which expire in 2005 and which automatically renew for successive terms, subject
to either party's right to terminate the agreement at the end of its term upon
six months' advance notice.
Each of the Brissette Stations' network affiliation agreements currently
runs for a period of 10 to 11 years. WMTV(TV), WWLP(TV) and WILX-TV, all of
which are NBC affiliates, each has an affiliation agreement which expires in
2006 and is automatically renewed for successive five-year terms, subject to
either party's right to terminate the agreement at the end of any term upon six
months' advance notice. Each of the Brissette CBS affiliates, WSAW-TV, WTRF-TV,
KAUZ-TV and KOSA-TV, are operating under affiliation agreements which expire in
2005 and which automatically renew for successive 10-year terms, subject to
either party's right to terminate the agreement upon six months' advance notice.
WHOI(TV), an ABC affiliate, currently operates under an affiliation agreement
which expires in 2005 and which does not provide for renewals.
Although the Company expects to be able to renew these affiliation
agreements, no assurance can be given that such renewals will be obtained. The
non-renewal or termination of one or more of the network affiliation agreements
would likely have a material adverse effect on the Company's results of
operations. See 'Business -- Network Affiliation of the Stations.'
DEPENDENCE ON MANAGEMENT
Certain of the executive officers of the Company, including A. Richard
Benedek and K. James Yager, are especially important to the direction and
management of the Company. The loss of the
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<PAGE>
services of such persons could have a material adverse effect on the business
and operations of the Company, and there can be no assurance that the Company
would be able to find replacements for such persons with equivalent business
experience.
CONTROL BY SOLE STOCKHOLDER; CHANGE OF CONTROL COULD RESULT IN DEFAULT
A. Richard Benedek owns all of the outstanding common stock of the Company.
Consequently, Mr. Benedek has the power to control the business and affairs of
the Company by virtue of his power to elect all of the Company's directors and
his voting power with respect to actions requiring stockholder approval. See
'Stock Ownership.' The Communications Act and FCC rules require the prior
consent of the FCC to any change of control of the Company.
A Change of Control (as defined in various debt instruments and
certificates of designation) could require the Company and Benedek Broadcasting
to refinance substantial amounts of their indebtedness and preferred stock,
including the Notes, the Senior Secured Notes, the Term Loan Facilities and the
Exchangeable Preferred Stock. The Company's failure to refinance such
indebtedness and preferred stock when required would result in a default under
the Indenture, the Senior Secured Note Indenture and the Credit Agreement. In
the event of a Change of Control, there can be no assurance that the Company
would have sufficient assets to satisfy all of its obligations. In addition, the
Credit Agreement and the Senior Secured Note Indenture both contain provisions
that may prohibit the Company from repurchasing the Notes upon a Change of
Control. See 'Description of Other Indebtedness -- Credit Agreement' and
' -- Senior Secured Notes.'
RISKS ASSOCIATED WITH INTEGRATION OF THE ACQUIRED STATIONS
The Company's strategic plans with respect to the Acquired Stations include
increasing net revenue and broadcast cash flow and controlling operating
expenses. Although the Company believes these strategies are reasonable, there
can be no assurance that it will be able to implement its plans without delay or
that, when implemented, its efforts will result in the increased broadcast cash
flow or other benefits currently anticipated by the Company. In addition, there
can be no assurance that the Company will not encounter unanticipated problems
or liabilities in connection with the Acquired Stations. The integration of the
Acquired Stations into the Company will require substantial attention from the
Company's senior management, which may limit the amount of time available to be
devoted to the Company's existing operations.
TERMINATION OF S CORPORATION STATUS; POTENTIAL CORPORATE TAX LIABILITY
Historically, Benedek Broadcasting had elected to be treated as an S
Corporation for Federal and state income tax purposes. Upon consummation of the
Transactions, Benedek Broadcasting no longer met the requirements for S
Corporation status and, therefore, the Company and Benedek Broadcasting will be
liable for Federal and state taxes on their income from and after the
consummation of the Transactions. As a result, Benedek Broadcasting no longer
has available to it certain suspended losses which would otherwise have been
available to it as an S Corporation.
For so long as the S election was in effect, Benedek Broadcasting was
generally not responsible for Federal income taxes and income taxes of any state
or locality for which a valid S election had been made. A. Richard Benedek, as
the sole stockholder of Benedek Broadcasting prior to the consummation of the
Transactions, is responsible for the payment of income taxes on Benedek
Broadcasting's taxable income prior to the consummation of the Transactions, and
the Indenture and the Senior Secured Note Indenture permit payments to Mr.
Benedek of certain amounts in respect thereof. While the Company believes that
Benedek Broadcasting had met until consummation of the Transactions, the
requirements for S Corporation status, there can be no assurance that such
position, if challenged, would be upheld. If such status were challenged and not
upheld, the Company would be liable for corporate taxes on its income at the
effective Federal and state corporate tax rates for any year in which its S
Corporation status was denied plus interest and perhaps penalties. Mr. Benedek
has agreed to repay to the Company any payments of Tax Amounts (as defined) made
by Benedek Broadcasting for any year for which Benedek Broadcasting's S
Corporation status is ultimately determined to have been invalid. See
'Description of the Notes -- Certain Covenants -- Limitation on
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Restricted Payments.' There can be no assurance, however, that funds for such
repayment would be available or sufficient to reimburse the Company for all
income taxes due.
ORIGINAL ISSUE DISCOUNT CONSEQUENCES
The Existing Notes were, and the Exchange Securities will be, issued with
original issue discount for Federal income tax purposes. Consequently, holders
of the Notes generally will be required to include amounts in gross income for
Federal income tax purposes in advance of receipt of the cash payments to which
the income is attributable. See 'Certain Federal Income Tax Consequences' for a
more detailed discussion of the Federal income tax consequences to the holders
of the Notes of the purchase, ownership and disposition of the Notes.
UNMATURED INTEREST
If a bankruptcy case is commenced by or against the Company under Federal
bankruptcy law after the issuance of the Notes, the claim of a holder of Notes
with respect to the principal amount thereof may be limited to an amount equal
to that portion of the original issue discount which is not deemed to constitute
'unmatured interest' for purposes of Federal bankruptcy law. Any original issue
discount that was not amortized as of any such bankruptcy filing would
constitute 'unmatured interest.'
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The Exchange Securities are being offered to the holders of the Existing
Notes. The Existing Notes were purchased and immediately resold by the Initial
Purchaser in June 1996 to a small number of institutional investors and are
eligible for trading in the Private Offerings, Resale and Trading through
Automatic Linkages (PORTAL) Market.
The Company does not intend to apply for a listing of the Exchange
Securities on a securities exchange. There is currently no established market
for the Exchange Securities and there can be no assurance as to the liquidity of
markets that may develop for the Exchange Securities, the ability of the holders
of the Exchange Securities to sell their Exchange Securities or the price at
which such holders would be able to sell their Exchange Securities. If such
markets were to exist, the Exchange Securities could trade at prices that may be
lower than the initial market values thereof depending on many factors,
including prevailing interest rates and the markets for similar securities.
The liquidity of, and trading market for, the Exchange Securities also may
be adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, the Company.
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THE ACQUISITIONS
The Acquisitions are a central part of the Company's strategy to become one
of the leading television station group owners of small to medium-sized market
television stations in the United States. The Company believes that this
expansion will create economies of scale which will (i) improve its ability to
negotiate more favorable arrangements with program suppliers, national sales
representation firms, equipment vendors and television networks, (ii) enable it
to develop program consortiums for regional news and sports programming and
(iii) enhance its ability to attract and retain strong management and on-air
talent. The Acquisitions are consistent with the Company's strategy to acquire
network-affiliated television stations in markets with a limited number of media
competitors for local advertising revenues.
THE STAUFFER ACQUISITION. On June 6, 1996, the Company acquired
substantially all of the broadcast television assets (including working capital)
of Stauffer consisting of five principal broadcast television stations and four
satellite broadcast television stations for a purchase price of $54.5 million.
The Company also assumed certain liabilities and obligations of Stauffer
incurred in the ordinary course of business, excluding, among other things, any
indebtedness for borrowed money. Pursuant to the Stauffer Agreement, at closing
Stauffer was required to have working capital of at least $1.6 million. To the
extent the working capital of Stauffer exceeded $1.6 million (including therein
accounts receivable of Stauffer only to the extent actually collected), the
Company is obligated to remit such excess to Stauffer over the 90-day period
immediately after the closing.
The principal stations acquired by the Company were KCOY-TV, Santa Maria,
California; WIBW-TV, Topeka, Kansas; KMIZ(TV), Columbia, Missouri; KGWC-TV,
Casper, Wyoming; and KGWN-TV, Cheyenne, Wyoming. KGWC-TV operates two satellite
stations, KGWL-TV, Lander, Wyoming, and KGWR-TV, Rock Springs, Wyoming, both of
which rebroadcast the programming of KGWC-TV. KGWN-TV operates two satellite
stations, KSTF-TV, Scottsbluff, Nebraska and KTVS-TV, Sterling, Colorado, both
of which rebroadcast the programming of KGWN-TV. All of the Stauffer Stations
are affiliated with CBS, except for KMIZ(TV), Columbia, Missouri, which is
affiliated with ABC. For the year ended December 31, 1995, the Stauffer Stations
had net revenues of $17.3 million, broadcast cash flow of $4.0 million and
broadcast cash flow margin of 23.1%.
THE BRISSETTE ACQUISITION. On June 6, 1996, the Company acquired all of the
capital stock of Brissette for $270.0 million in cash and preferred stock. All
of the outstanding indebtedness of Brissette was paid in full by the sellers at
the closing. Pursuant to the Brissette Agreement, at the closing Brissette was
required to have working capital of at least $8.8 million and any amount in
excess thereof will be paid to the sellers. By acquiring all of the capital
stock of Brissette, the Company acquired eight network-affiliated television
stations including WMTV(TV), the NBC affiliate serving Madison, Wisconsin;
WWLP(TV), the NBC affiliate serving Springfield, Massachusetts; WILX-TV, the NBC
affiliate serving Lansing, Michigan; WHOI(TV), the ABC affiliate serving Peoria,
Illinois; WSAW-TV, the CBS affiliate serving Wausau, Wisconsin; WTRF-TV, the CBS
affiliate serving Wheeling, West Virginia and Steubenville, Ohio; KAUZ-TV, the
CBS affiliate serving Wichita Falls, Texas; and KOSA-TV, the CBS affiliate
serving Odessa, Texas. For the year ended December 31, 1995, Brissette had net
revenues of $51.3 million, broadcast cash flow of $23.9 million and broadcast
cash flow margin of 46.5%.
Of the $270.0 million paid for the capital stock of Brissette, $225.0
million was paid in cash and the balance was paid by the issuance to GECC and
Mr. Paul Brissette of the Seller Junior Discount Preferred Stock. See 'The
Financing Plan.'
For a description of the Acquired Stations see 'Business -- The
Stations -- Stauffer' and ' -- Brissette.'
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THE FINANCING PLAN
The Company, together with its subsidiary Benedek Broadcasting, implemented
the Financing Plan in order to finance the Acquisitions and to pay fees and
expenses related thereto. The Financing Plan consisted of (i) the offer and sale
by the Company of the Existing Notes to generate gross proceeds of $90.2
million, (ii) the offer and sale by the Company of the Units to generate gross
proceeds of $60.0 million, (iii) Benedek Broadcasting borrowing $128.0 million
pursuant to the Term Loan Facilities of the Credit Agreement and (iv) the
Company issuing an aggregate of $45.0 million initial liquidation preference of
Seller Junior Discount Preferred Stock to GECC and Mr. Paul Brissette.
The following table sets forth the sources and uses for the Financing Plan
on a pro forma basis as of March 31, 1996:
<TABLE>
<CAPTION>
(DOLLARS
IN THOUSANDS)
<S> <C>
SOURCES:
Benedek Broadcasting
Cash.................................................................... $ 7,322
Deposit(a).............................................................. 5,000
Credit Agreement
Revolving Credit Facility(b)....................................... --
Term Loan Facilities............................................... 128,000
The Company
The Existing Notes...................................................... 90,178
The Units(c)............................................................ 60,000
Seller Junior Discount Preferred Stock.................................. 45,000
--------------
$335,500
--------------
--------------
USES:
Stauffer Acquisition.................................................... $ 54,500
Brissette Acquisition................................................... 270,000
Fees and Expenses....................................................... 11,000
--------------
$335,500
--------------
--------------
</TABLE>
- ------------
(a) Pursuant to the Stauffer Agreement, Benedek Broadcasting had made a $5.0
million down payment which had been deposited in escrow pending
consummation of the Stauffer Acquisition.
(b) Benedek Broadcasting has available to it $15.0 million under the Revolving
Credit Facility.
(c) Each Unit consisted of ten shares of Exchangeable Preferred Stock, ten
Initial Warrants and 14.8 Contingent Warrants, each Warrant to purchase one
share of Class A Common Stock of the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The
gross proceeds received by the Company from the sale of the Existing Notes,
together with the gross proceeds from the sale of the Units and advances under
the Credit Agreement, were used to finance the Acquisitions and to pay fees and
expenses in connection with the Transactions.
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CAPITALIZATION
The following table sets forth at March 31, 1996, the historical
capitalization of Benedek Broadcasting and the pro forma capitalization of
Benedek Broadcasting and the Company after giving effect to the Transactions.
This table should be read in conjunction with the Unaudited Consolidated
Financial Statements of Benedek Broadcasting, the Financial Statement of the
Company and the Pro Forma Financial Statements included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
AT MARCH 31, 1996
-----------------------------------------
BENEDEK BENEDEK
BROADCASTING BROADCASTING THE COMPANY
HISTORICAL PRO FORMA PRO FORMA
------------ ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents.............................................. $ 7,381 $ 940 $ 940
------------ ------------ -----------
------------ ------------ -----------
Current maturities:
Credit Agreement:
Revolving Credit Facility(a)................................. $ -- $ -- $ --
Term Loan Facilities......................................... -- 6,000 6,000
Capital leases payable............................................ 304 304 304
Program broadcast rights payable.................................. 1,754 4,069 4,069
------------ ------------ -----------
Total current indebtedness................................... 2,058 10,373 10,373
------------ ------------ -----------
Long-term obligations:
11 7/8% Senior Secured Notes due 2005............................. 135,000 135,000 135,000
Credit Agreement:
Revolving Credit Facility(a)................................. -- -- --
Term Loan Facilities......................................... -- 122,000 122,000
Capital leases payable............................................ 377 377 377
13 1/4% Senior Subordinated Discount Notes due 2006............... -- -- 90,178
------------ ------------ -----------
135,377 257,377 347,555
Program broadcast rights payable.................................. 479 2,289 2,289
------------ ------------ -----------
Total long-term obligations.................................. 135,856 259,666 349,844
------------ ------------ -----------
Redeemable preferred stock:
Exchangeable Preferred Stock(b)................................... -- -- 51,000
Seller Junior Discount Preferred Stock............................ -- -- 45,000
------------ ------------ -----------
Total preferred stock........................................ -- -- 96,000
------------ ------------ -----------
Stockholder's equity (deficit):
Common Stock...................................................... 1,047 1,047 1,047
Additional paid-in capital (b)(c)(d).............................. 2,758 154,373 (31,805)
Accumulated equity (deficit)(d)................................... (40,629) -- --
------------ ------------ -----------
(36,824) 155,420 (30,758)
Less treasury stock............................................... 1,481 1,481 1,481
------------ ------------ -----------
Total stockholder's equity (deficit)......................... (38,305) 153,939 (32,239)
------------ ------------ -----------
Total capitalization.................................... $ 99,609 $423,978 $ 423,978
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
- ------------
(a) Benedek Broadcasting has available to it $15.0 million under the Revolving
Credit Facility.
(b) Exchangeable Preferred Stock with an initial liquidation preference of $60.0
million was issued by the Company as part of the Units. Each Unit consisted
of ten shares of Exchangeable Preferred Stock, ten Initial Warrants and 14.8
Contingent Warrants, each Warrant to purchase one share of Class A Common
Stock of the Company. An assumed initial value of $9.0 million has been
allocated to additional paid-in capital, representing the portion of the
Units allocated to the Warrants.
(c) Includes the allocation of the purchase price for the Warrants described in
footnote (b) above and is reduced by $2.934 million of the allocable cost
associated with the offering of the Units.
(d) The accumulated deficit has been reclassified to paid-in capital as a result
of the automatic termination upon consummation of the Transactions of
Benedek Broadcasting's election to be treated as an S Corporation for
Federal income tax purposes. In addition, the Pro Forma Balance Sheet
reflects the contribution of the proceeds from the sale of the Exchangeable
Preferred Stock of $51.0 million, the Seller Junior Discount Preferred Stock
of $45.0 million and the Existing Notes of $90.2 million to Benedek
Broadcasting as additional paid-in capital.
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PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements (the 'Pro Forma
Financial Statements') are based on the Consolidated Financial Statements of
Benedek Broadcasting, the Financial Statements of Stauffer and the Consolidated
Financial Statements of Brissette, all of which are included elsewhere in this
Prospectus, adjusted to give pro forma effect to the Acquistions, the Financing
Plan, the acquisition in 1995 of the Dothan Station, the issuance in 1995 of the
Senior Secured Notes and certain contractual arrangements which have been
entered into since January 1, 1995 (collectively, for purposes of the Pro Forma
Financial Statements, the 'Transactions').
The unaudited Pro Forma Statements of Operations for the year ended
December 31, 1995 are derived from the audited consolidated statement of
operations of Benedek Broadcasting for the year ended December 31, 1995, the
audited statement of operations of Dothan Holdings II Inc. (the former owners of
the Dothan Station) for the three months ended March 31, 1995, the audited
statement of operations of Stauffer for the year ended December 31, 1995 and the
audited statement of operations of Brissette for the year ended December 31,
1995, all of which, other than the audited statements of Dothan Holdings II
Inc., are included elsewhere in this Prospectus, and assume that the
Transactions were consummated as of January 1, 1995. The unaudited Pro Forma
Statements of Operations for the three months ended March 31, 1996 are derived
from the unaudited consolidated statement of operations of Benedek Broadcasting
for the three months ended March 31, 1996, the unaudited statement of operations
of Stauffer for the three months ended March 31, 1996, and the unaudited
statement of operations of Brissette for the 13-week period ended March 31,
1996, all of which are included elsewhere in this Prospectus, and assume that
the Transactions were consummated as of January 1, 1996. The unaudited Pro Forma
Balance Sheet is derived from the unaudited balance sheets of Benedek
Broadcasting, Stauffer and Brissette as of March 31, 1996, included elsewhere in
this Prospectus, and assumes that the Transactions were consummated on that
date.
The Pro Forma Financial Statements do not purport to represent what the
Company's results of operations or financial condition would actually have been
if the Transactions had occurred on the dates indicated or to project the
Company's results or financial condition for or at any future period or date.
The Pro Forma Financial Statements are presented for comparative purposes only.
The pro forma adjustments, as described in the accompanying data, are based on
available information and certain assumptions that management believes are
reasonable. Additionally, certain reclassification entries have been made to the
audited financial statements of Stauffer and Brissette for consistent
presentation with Benedek Broadcasting.
The unaudited pro forma information with respect to the Acquisitions is
based on the historical financial statements of the business or assets acquired.
The Acquisitions are and will be accounted for under the purchase method of
accounting. The purchase price for the Acquisitions will be allocated to the
tangible and identifiable intangible assets and liabilities of the acquired
businesses based upon management's preliminary estimates of their fair value
with the remainder, if any, allocated to goodwill. The allocation of purchase
price for the Acquisitions is subject to revision when additional information
concerning asset and liability valuations is obtained. In the opinion of the
Company's management, the asset and liability valuations for the Acquisitions
will not be materially different from the Pro Forma Financial Statements
presented. The pro forma expenses directly attributable to the Transactions
include interest expense and changes in depreciation and amortization expenses
resulting from the allocation of the purchase cost.
33
<PAGE>
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
DOTHAN
JANUARY 1,
1995 TO ADJUSTMENTS BENEDEK HISTORICAL
BENEDEK MARCH 31, FOR DOTHAN BROADCASTING --------------------
BROADCASTING 1995 ACQUISITION AS ADJUSTED(a) STAUFFER BRISSETTE
------------- ------------- ----------- -------------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues...................... $50,329 $ 1,643 $ -- $ 51,972 $ 17,317 $ 51,326
Operating expenses:
Station operating expenses...... 29,049 1,440 (350)(e) 30,139 13,534 27,515
Depreciation and amortization... 5,041 389 37(f) 5,467 2,229 6,252
------------- ------------- ----------- -------------- -------- ---------
Station operating income
(loss)...................... 16,239 (186) 313 16,366 1,554 17,559
Corporate expenses.............. 1,576(d) 182 (182)(g) 1,576 -- 2,307
------------- ------------- ----------- -------------- -------- ---------
Operating income (loss)........... 14,663 (368) 495 14,790 1,554 15,252
------------- ------------- ----------- -------------- -------- ---------
Financial expense, net:
Interest expense, net:
Cash interest, net............ (14,763) (209) (807)(h) (15,779) -- (20,837)
Other interest................ (712) -- 92(i) (620) -- (549)
------------- ------------- ----------- -------------- -------- ---------
Total interest, net......... (15,475) (209) (715) (16,399) -- (21,386)
------------- ------------- ----------- -------------- -------- ---------
Other, net...................... -- -- -- -- -- (354)
Provision for income taxes........ -- 208 (208)(j) -- -- (147)
------------- ------------- ----------- -------------- -------- ---------
Net income (loss) from continuing
operations...................... (812) (369) (428) (1,609) 1,554 (6,635)
Exchangeable Preferred Stock
dividends....................... -- -- -- -- -- --
Seller Junior Discount Preferred
Stock dividends................. -- -- -- -- -- --
------------- ------------- ----------- -------------- -------- ---------
Net income (loss) from continuing
operations available to common
stockholders.................... $ (812) $ (369) $(428) $ (1,609) $ 1,554 $ (6,635)
------------- ------------- ----------- -------------- -------- ---------
------------- ------------- ----------- -------------- -------- ---------
Ratio of earnings to fixed
charges(b)...................... -- --
CERTAIN FINANCIAL DATA:
Broadcast cash flow............... $21,310 $ 103 $ 450 $ 21,863 $ 4,000 $ 23,856
Broadcast cash flow margin........ 42.3% 6.3% 42.1% 23.1% 46.5%
Operating cash flow............... $19,734 $ (79) $ 632 $ 20,287 $ 4,000 $ 21,549
Operating cash flow margin........ 39.2% NM 39.0% 23.1% 42.0%
Amortization of program broadcast
rights.......................... $ 2,162 $ 21 $ -- $ 2,183 $ 1,025 $ 1,684
Payments for program broadcast
rights.......................... 2,132 121 (100)(k) 2,153 808 1,639
Capital expenditures.............. 2,008 118 -- 2,126 406 2,748
Cash payments for Federal income
taxes........................... -- --
CERTAIN RATIOS:
Operating cash flow to cash
interest expense, net........... 1.33x 1.29x
Operating cash flow to total
interest expense, net........... 1.27x 1.24x
Operating cash flow less capital
expenditures to cash interest
expense, net.................... 1.20x 1.15x
Operating cash flow less capital
expenditures to total interest
expense, net.................... 1.15x 1.11x
Net Senior Debt to operating cash
flow(c)......................... 6.4x 6.2x
Net debt to operating cash
flow(c)......................... 6.4x 6.2x
<CAPTION>
THE
ADJUSTMENTS COMPANY
FOR PRO
TRANSACTIONS FORMA
------------ -------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues...................... $ 250(l) $ 121,345
132(m)
284(n)
64(o)
Operating expenses:
Station operating expenses...... (2,245)(p) 68,943
Depreciation and amortization... 13,677(q) 27,625
------------ -------------
Station operating income
(loss)...................... (10,702) 24,777
Corporate expenses.............. (1,983)(r) 1,900
------------ -------------
Operating income (loss)........... (8,719) 22,877
------------ -------------
Financial expense, net:
Interest expense, net:
Cash interest, net............ 9,401(s) (27,215)
Other interest................ (12,602)(s) (13,771)
------------ -------------
Total interest, net......... (3,201) (40,986)
------------ -------------
Other, net...................... 354(t) --
Provision for income taxes........ 147(u) --
------------ -------------
Net income (loss) from continuing
operations...................... (11,419) (18,109)
Exchangeable Preferred Stock
dividends....................... (9,519)(v) (9,519)
Seller Junior Discount Preferred
Stock dividends................. (3,672)(w) (3,672)
------------ -------------
Net income (loss) from continuing
operations available to common
stockholders.................... $(24,610) $ (31,300)
------------ -------------
------------ -------------
Ratio of earnings to fixed
charges(b)...................... --
CERTAIN FINANCIAL DATA:
Broadcast cash flow............... $ 3,015 $ 52,734
Broadcast cash flow margin........ 43.5%
Operating cash flow............... $ 4,998 $ 50,834
Operating cash flow margin........ 41.9%
Amortization of program broadcast
rights.......................... $ (39)(x) $ 4,853
Payments for program broadcast
rights.......................... (79)(x) 4,521
Capital expenditures.............. -- 5,280
Cash payments for Federal income
taxes........................... --
CERTAIN RATIOS:
Operating cash flow to cash
interest expense, net........... 1.87x
Operating cash flow to total
interest expense, net........... 1.24x
Operating cash flow less capital
expenditures to cash interest
expense, net.................... 1.67x
Operating cash flow less capital
expenditures to total interest
expense, net.................... 1.11x
Net Senior Debt to operating cash
flow(c)......................... 5.2x
Net debt to operating cash
flow(c)......................... 6.9x
</TABLE>
34
<PAGE>
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THE
ADJUSTMENTS COMPANY
BENEDEK FOR PRO
BROADCASTING STAUFFER BRISSETTE TRANSACTIONS FORMA
--------------- -------- --------- ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................... $11,683 $3,965 $11,970 $ 34(n) $27,652
Operating expenses:
Station operating expenses........... 7,549 3,516 7,107 (520)(p) 17,652
Depreciation and amortization........ 1,360 575 1,513 3,616(q) 7,064
--------------- -------- --------- ------------ --------
Station operating income (loss).... 2,774 (126) 3,350 (3,062) 2,936
Corporate expenses................... 496 -- 762 (762)(r) 496
--------------- -------- --------- ------------ --------
Operating income (loss)................ 2,278 (126) 2,588 (2,300) 2,440
--------------- -------- --------- ------------ --------
Financial expense, net:
Interest expense, net:
Cash interest, net................. (3,920) -- (4,893) 1,994(s) (6,819 )
Other interest..................... (101) -- (137) (3,107)(s) (3,345 )
--------------- -------- --------- ------------ --------
Total interest, net.............. (4,021) -- (5,030) (1,113) (10,164 )
--------------- -------- --------- ------------ --------
Other, net........................... -- -- (109) 109(t) --
Provision for income taxes............. -- -- (103) 103(u) --
--------------- -------- --------- ------------ --------
Net income (loss) from continuing
operations........................... (1,743) (126) (2,654) (3,201) (7,724 )
Exchangeable Preferred Stock
dividends............................ -- -- -- (2,250)(v) (2,250 )
Seller Junior Discount Preferred
Stock dividends...................... -- -- -- (891)(w) (891 )
--------------- -------- --------- ------------ --------
Net income (loss) from continuing
operations available to common
stockholders......................... $(1,743) $ (126) $(2,654) $ (6,342) $(10,865)
--------------- -------- --------- ------------ --------
--------------- -------- --------- ------------ --------
Ratio of earnings to fixed
charges(b)........................... -- --
CERTAIN FINANCIAL DATA:
Broadcast cash flow.................... $ 4,209 $ 584 $ 4,834 $ 554 $10,181
Broadcast cash flow margin............. 36.0% 14.7% 40.4% 36.8 %
Operating cash flow.................... $ 3,713 $ 584 $ 4,072 $ 1,316 $ 9,685
Operating cash flow margin............. 31.8% 14.7% 34.0% 35.0 %
Amortization of program broadcast
rights............................... $ 597 $ 314 $ 483 $ 1,394
Payments for program broadcast
rights............................... 522 179 512 1,213
Capital expenditures................... 655 43 405 1,103
Cash payments for Federal income
taxes................................ -- -- -- --
</TABLE>
35
<PAGE>
<PAGE>
(a) Concurrently with the consummation of the Transactions, Benedek
Broadcasting became a wholly-owned subsidiary of the Company. The
operations and financial data of 'Benedek Broadcasting as Adjusted' for
the year ended December 31, 1995 are derived from the pro forma
consolidated financial statements of Benedek Broadcasting adjusted to give
pro forma effect to the acquisition on March 31, 1995 of the Dothan
Station and the issuance of the Senior Secured Notes as if both such
events had occurred on January 1, 1995. Capital expenditures do not
include assets acquired in connection with the acquisition of the Dothan
Station.
(b) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of net income (loss) before income taxes and
extraordinary item plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest on all debt (including capitalized
interest), amortization of debt discount and deferred loan costs and the
portion of rental expense that is representative of the interest component
of rental expense (deemed to be one-third of rental expense which
management believes is a reasonable approximation of the interest
component). For 'Benedek Broadcasting As Adjusted,' for the year ended
December 31, 1995, earnings were insufficient to cover fixed charges by
$1.6 million. The net income (loss) for 'Benedek Broadcasting As Adjusted'
includes certain non-cash charges as follows: non-cash interest of $0.6
million and depreciation and amortization of $5.5 million. For 'The
Company Pro Forma,' for the year ended December 31, 1995, earnings were
insufficient to cover fixed charges by $18.1 million. The net income
(loss) for 'The Company Pro Forma' includes certain non-cash charges as
follows: non-cash interest of $13.8 million and depreciation and
amortization of $27.6 million. For Benedek Broadcasting for the three
months ended March 31, 1996, earnings were insufficient to cover fixed
charges by $1.7 million. The net income (loss) for Benedek Broadcasting
includes certain non-cash charges as follows: non cash interest of $0.1
million and depreciation and amortization of $1.4 million. For the 'The
Company Pro Forma,' for the three months ended March 31, 1996, earnings
were insufficient to cover fixed charges by $7.7 million. The net income
(loss) for 'The Company Pro Forma' includes certain non-cash charges as
follows: non-cash interest of $3.3 million and depreciation and
amortization of $7.1 million.
(c) Net Senior Debt and net debt are defined as Senior Debt or total debt, as
the case may be, less cash and cash equivalents. These ratios are not the
same as the Cash Flow Leverage Ratios as defined in the Senior Secured
Note or Exchange Indentures or in the Certificate of Designation for the
Exchangeable Preferred Stock, and in particular, such Cash Flow Leverage
Ratios do not credit cash against the outstanding debt amount.
(d) Includes $0.1 million one-time expenses incurred in connection with
potential acquisitions which were not entered into by Benedek
Broadcasting.
(e) The adjustment reflects the reduction of operating expenses of the former
owner of the Dothan Station for the three months ended March 31, 1995
based on the Company's actual expense reductions made during the nine
months ended December 31, 1995.
(f) The adjustment reflects (i) the additional depreciation and amortization
expense resulting from the allocation of the purchase price of the Dothan
Station to the property and equipment and intangible assets acquired and
(ii) a change in depreciation and amortization resulting from conforming
the estimated useful lives of the assets of the Dothan Station to those of
the Company.
(g) The adjustment reflects the elimination of the management fee paid by the
former owner of the Dothan Station to its parent company prior to the
acquisition by the Company.
(h) The adjustment reflects (i) pro forma adjustments as if the issuance of
the Senior Secured Notes had occurred on January 1, 1995 and the debt
refinanced with the net proceeds of such issuance had been discharged on
such date and (ii) the elimination of interest expense incurred by the
former owner of the Dothan Station prior to the acquisition by the
Company.
(i) The adjustment reflects the net amount required to (i) amortize deferred
financing costs incurred in connection with the issuance of the Senior
Secured Notes as if such issuance had occurred on January 1, 1995 and (ii)
eliminate the amortization in the first quarter of 1995 of the deferred
financing costs incurred by the Company in connection with the debt
refinanced with the net proceeds of the issuance of the Senior Secured
Notes.
(j) The adjustment reflects the elimination of income tax credits recorded by
the former owner of the Dothan Station prior to the acquisition by the
Company.
(k) The adjustment reflects a reduction in program payments and the related
amortization to be consistent with Benedek Broadcasting's historical
programming purchasing.
(l) The adjustment reflects the annualized effect of increased network
compensation resulting from new affiliation agreements effective July 1,
1995 for the CBS-affiliated Benedek Stations. In connection with such new
affiliation agreements, CBS paid the Company a bonus payment of $5.0
million which is required under GAAP to be recognized as revenue at the
rate of $500,000 per year over the ten-year term of the affiliation
agreements, of which $250,000 was recognized in Benedek Broadcasting's
statement of operations for 1995.
(m) The adjustment reflects the annualized effect of increased revenues from
the national sales representative firm for the Brissette Stations resulting
from the amortization of a $700,000 signing bonus which is required under
GAAP to be recognized as revenue at the rate of $140,000 per year over a
period of five years, of which $8,000 was recognized in Brissette's
statement of operations for 1995.
(n) The adjustment reflects the annualized effect of reduced commission rates
payable to national sales representative firms under new agreements
negotiated by the Company.
(o) The adjustment reflects the annualized effect of new network compensation
arrangements that took effect at various times in 1995 at certain of the
Acquired Stations.
36
<PAGE>
<PAGE>
(p) The adjustment reflects cost savings resulting from the following:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 MARCH 31, 1996
----------------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
(i) Elimination of redundant operating expenses, consisting
of the elimination of certain positions at the Acquired
Stations................................................. $ 1,345 $309
(ii) Adjustments to certain employee benefits and
compensation practices at the Acquired Stations......... 355 116
(iii) Implementation at the Acquired Stations of operating
strategies currently utilized at the Benedek Stations... 545 95
------- -----
$ 2,245 $520
------- -----
------- -----
</TABLE>
The pro forma cost savings as allocated among departments are summarized in
the table below:
<TABLE>
<CAPTION>
THREE MONTHS THIRTEEN WEEKS PERIOD
ENDED ENDED ENDED
YEAR ENDED MARCH 31, MARCH 31, MARCH 31,
DECEMBER 31, 1995 1996 1996 1996
------------------------------- ------------ -------------- ---------
STAUFFER BRISSETTE TOTAL STAUFFER BRISSETTE TOTAL
-------- --------- ------ ------------ -------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Selling expenses............... $ 94 $ 83 $ 177 $ 24 $ 13 $ 37
Programming and technical...... 528 531 1,059 122 133 255
Advertising and promotions..... 69 180 249 17 45 62
General and administrative..... 522 238 760 130 36 166
-------- --------- ------ ----- ----- ---------
Total...................... $1,213 $ 1,032 $2,245 $293 $227 $ 520
-------- --------- ------ ----- ----- ---------
-------- --------- ------ ----- ----- ---------
</TABLE>
(q) The adjustment reflects primarily the additional depreciation and
amortization expense resulting from the preliminary allocation of the
purchase price for the Acquired Stations to the assets acquired, including
an increase in property and equipment and intangible assets to their
estimated fair market value and the recording of goodwill associated with
each of the Acquisitions. See Note (c) to the Pro Forma Balance Sheet for
allocation of excess of purchase price over net book value of assets
acquired to property and equipment and intangible assets.
(r) The adjustment reflects the net annualized cost savings resulting from the
acquisition of the Acquired Stations by the Company, including (i) the
elimination of substantially all of the corporate expenses of Brissette
and (ii) the addition of certain corporate management personnel by the
Company and related costs.
(s) Interest expense has been adjusted to reflect the net effect of the change
in outstanding debt and deferred financing costs described in Notes (a)
and (d) to the Pro Forma Balance Sheet as if it had occurred on January 1,
1995 for the year ended December 31, 1995 and January 1, 1996 for the
three months ended March 31, 1996. The following table details the
calculation of the adjustment:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, 1995 MARCH 31, 1996
-------------------------------------- ------------------------------------
CASH OTHER INTEREST TOTAL CASH OTHER INTEREST TOTAL
-------- -------------- -------- ------- -------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Notes at a rate of 13.25%.... $ -- $(12,344) $(12,344) $ -- $ (2,987) $(2,987)
Term Loan Facilities at an
assumed blended rate of
8.73%...................... (11,039) -- (11,039) (2,793) -- (2,793)
Interest on existing
Brissette notes............ 20,837 -- 20,837 4,893 -- 4,893
Reduction in interest
income..................... (397) -- (397) (106) -- (106)
Increase in amortization of
deferred financing costs... -- (807) (807) -- (257) (257)
Reduction of amortization of
deferred financings costs
on Brissette debt.......... -- 549 549 -- 137 137
-------- -------------- -------- ------- ------- -------
Net adjustment........... $ 9,401 $(12,602) $ (3,201) $ 1,994 $ (3,107) $(1,113)
-------- -------------- -------- ------- ------- -------
-------- -------------- -------- ------- ------- -------
</TABLE>
The actual interest rate with respect to the Term Loan Facilities may be
higher or lower than the rate set forth above. A change of 0.125% in the
interest rate on borrowings under the Term Loan Facilities would change pro
forma interest expense by approximately $160,000 for the year ended
December 31, 1995 and by approximately $40,000 for the three months ended
March 31, 1996.
(t) The adjustment reflects the elimination of certain legal and investment
advisory fees paid by Brissette in connection with the sale to Benedek
Broadcasting.
(u) The adjustment reflects the elimination of income tax expense. The Company
is not expected to have income tax expense on a pro forma basis.
(v) The adjustment reflects the dividends paid on the Exchangeable Preferred
Stock at a rate of 15.0% per annum paid quarterly for an effective annual
rate of 15.9%.
(w) The adjustment reflects the dividends paid on the Seller Junior Discount
Preferred Stock at an assumed rate of 7.92% per annum paid quarterly for an
effective annual rate of 8.16%.
(x) The adjustment reflects a reduction in program payments and the related
amortization to be consistent with Benedek Broadcasting's historical
program purchase practices.
37
<PAGE>
<PAGE>
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------- ADJUSTMENTS THE
BENEDEK FOR COMPANY
BROADCASTING STAUFFER BRISSETTE TRANSACTIONS PRO FORMA
--------------- -------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 7,381 $ 347 $ 1,534 $ (8,322)(a) $ 940
Trade receivables............................... 7,771 2,797 9,259 -- 19,827
Other receivables............................... 120 -- -- 2,252(b) 2,372
Current portion of program broadcast rights..... 1,205 874 1,443 -- 3,522
Prepaid expenses................................ 872 128 518 -- 1,518
--------------- -------- --------- ------------ ---------
Total current assets........................ 17,349 4,146 12,754 (6,070) 28,179
--------------- -------- --------- ------------ ---------
Property and equipment.............................. 19,798 10,446 12,012 49,705(c) 91,961
--------------- -------- --------- ------------ ---------
Intangible assets................................... 59,952 7,087 76,349 159,498(c) 302,886
--------------- -------- --------- ------------ ---------
Other assets:
Program broadcast rights, less current
portion....................................... 541 851 1,482 -- 2,874
Deposit on Stauffer Acquisition................. 4,000 -- -- (4,000)(a) --
Deferred financing costs........................ 5,624 -- -- 8,066(d) 13,690
Other........................................... 669 12 -- -- 681
--------------- -------- --------- ------------ ---------
Total other assets.......................... 10,834 863 1,482 4,066 17,245
--------------- -------- --------- ------------ ---------
Total....................................... $ 107,933 $ 22,542 $ 102,597 $ 207,199 $440,271
--------------- -------- --------- ------------ ---------
--------------- -------- --------- ------------ ---------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of notes payable and leases
payable....................................... $ 304 $ -- $ 197,348 $ (197,348)(e) $ 6,304
6,000(a)
Current maturities of program broadcast rights
payable....................................... 1,754 684 1,631 -- 4,069
Accounts payable and accrued expenses........... 3,644 760 4,906 -- 9,310
Deferred revenue................................ 500 -- 136 -- 636
--------------- -------- --------- ------------ ---------
Total current liabilities................... 6,202 1,444 204,021 (191,348) 20,319
--------------- -------- --------- ------------ ---------
Long-term obligations:
Notes and capital leases payable................ 135,377 -- -- 122,000(a) 347,555
90,178(a)
Program broadcast rights payable................ 479 805 1,005 -- 2,289
Deferred revenue................................ 4,180 -- 530 -- 4,710
Other noncurrent liabilities.................... -- -- 1,637 1,637
--------------- -------- --------- ------------ ---------
Total long-term liabilities................. 140,036 805 3,172 212,178 356,191
--------------- -------- --------- ------------ ---------
Redeemable preferred stock:
Exchangeable Preferred Stock...................... -- -- -- 51,000(a) 51,000
Seller Junior Discount Preferred Stock............ -- -- -- 45,000(a) 45,000
--------------- -------- --------- ------------ ---------
Total redeemable preferred stock............ -- -- -- 96,000 96,000
--------------- -------- --------- ------------ ---------
Stockholder's equity (deficit):
Brissette preferred stock....................... -- -- 66,500 (66,500)(e) --
Common stock.................................... 1,047 -- -- -- 1,047
Additional paid-in capital...................... 2,758 -- 35,837 (35,837)(e) (31,805)
9,000(a)
(40,629)(a)
(2,934)(d)
Accumulated (deficit)........................... (40,629) 20,293 (206,933) 40,629(f) --
186,640(e)
--------------- -------- --------- ------------ ---------
(36,824) 20,293 (104,596) 90,369 (30,758)
Less treasury stock............................. 1,481 -- -- -- 1,481
--------------- -------- --------- ------------ ---------
Total stockholder's equity (deficit)........ (38,305) 20,293 (104,596) 90,369 (32,239)
--------------- -------- --------- ------------ ---------
Total....................................... $ 107,933 $ 22,542 $ 102,597 $ 207,199 $440,271
--------------- -------- --------- ------------ ---------
--------------- -------- --------- ------------ ---------
</TABLE>
38
<PAGE>
<PAGE>
(a) Reflects the Financing Plan and costs in connection therewith as follows
(in thousands):
<TABLE>
<S> <C>
Cash............................................................... $ 7,322
Deposit(1)......................................................... 5,000
Term Loan Facilities(2)............................................ 128,000
Notes.............................................................. 90,178
Exchangeable Preferred Stock....................................... 51,000
Initial Warrants(3)................................................ 9,000
Seller Junior Discount Preferred Stock(4).......................... 45,000
--------
Total.......................................................... $335,500
--------
--------
</TABLE>
(1) Pursuant to the Stauffer Agreement, the Company had made an aggregate
down payment of $5.0 million. At March 31, 1996, the amount of the down
payment was $4.0 million. The additional $1.0 million was paid in April
1996.
(2) The pro forma financial statements assume semi-annual principal payments
of $3.0 million for the year ended December 31, 1995.
(3) The Initial Warrants are for the purchase of 7.5% of the fully-diluted
Common Stock of the Company (with an assumed initial allocated value of
$9.0 million).
(4) The Seller Junior Discount Preferred Stock represents securities of the
Company issued to GECC in connection with the acquisition of the
Brissette Stations.
(b) The adjustment reflects the net pro forma increase in working capital to
be acquired from Stauffer and Brissette, as if such transactions had
occurred at December 31, 1995. The purchase agreements require certain
working capital amounts for Stauffer and Brissette at the date of closing.
See Note (c)(2) below.
(c) The Acquisitions will each be accounted for as a purchase, applying the
provisions of Accounting Principles Board Opinion 16. The purchase price
will be allocated to acquired assets and liabilities based on their
relative fair values as of the closing date, determined using valuations
and other studies which are not yet complete. The purchase price and
preliminary allocation of such cost for each Acquisition is as follows,
assuming the Acquisitions occurred on March 31, 1996 (in thousands):
<TABLE>
<CAPTION>
STAUFFER BRISSETTE TOTAL
-------- --------- --------
<S> <C> <C> <C>
Purchase price................................................... $54,500 $ 270,000 $324,500
-------- --------- --------
Book value (deficit) per historical financial statements......... 20,293 (104,596) (84,303)
Add (deduct) --
Indebtedness not assumed(1).................................. -- 197,348 197,348
Adjustment to working capital(2)............................. (935) 3,187 2,252
-------- --------- --------
Adjusted book value...................................... 19,358 95,939 115,297
-------- --------- --------
Excess of purchase price over net book value of assets
acquired....................................................... $35,142 $ 174,061 $209,203
-------- --------- --------
-------- --------- --------
Allocated to:
Property and equipment(3).................................... $11,283 $ 38,422 $ 49,705
Intangible assets(4)......................................... 23,859 135,639 159,498
-------- --------- --------
Total allocated.................................................. $35,142 $ 174,061 $209,203
-------- --------- --------
-------- --------- --------
</TABLE>
(1) The Brissette Agreement specifies that long-term debt owed by Brissette
was required to be discharged by the sellers at closing.
(2) Working capital has been adjusted to reflect that the purchase
agreements specify the level of working capital, exclusive of program
broadcast rights and assets and payables, that existed on the closing
date (Stauffer $1.6 million; Brissette $8.8 million plus a pro rata
portion of the signing bonus received from the national sales
representative firm which portion at March 31, 1996 would have equaled
$657,000).
(3) The recorded value of acquired property and equipment, based on a
preliminary allocation, will total $21.7 million and $50.4 million for
the assets of the Stauffer Stations and Brissette Stations,
respectively.
(4) The recorded value of acquired intangibles, based on a preliminary
allocation, will total $30.9 million and $220.9 million for the assets
of the Stauffer Stations and Brissette Stations, respectively.
(d) The adjustment reflects the estimated transaction costs in connection with
the Financing Plan, of which $8.066 million has been allocated to deferred
financing costs and $2.934 million has been charged to capital as the
allocable cost associated with the sale of the Existing Notes.
(e) The adjustment reflects the elimination of (i) the long-term debt owed by
Brissette and not assumed in the acquisition and (ii) the historical
stockholder's equity of Stauffer and Brissette, as the Acquisitions will
be accounted for using the purchase method of accounting.
(f) The adjustment reflects the reclassification of the accumulated deficit to
paid-in capital, which occurred upon the consummation of the Transactions,
at which time the Company's election to be treated as an S Corporation for
tax purposes automatically terminated.
39
<PAGE>
<PAGE>
SELECTED FINANCIAL DATA
The following tables present selected financial data of (i) Benedek
Broadcasting (prior to the Transactions), (ii) Stauffer and (iii) Brissette. The
following financial information should be read in conjunction with the
Consolidated Financial Statements of Benedek Broadcasting, the Financial
Statements of Stauffer and the Consolidated Financial Statements of Brissette
included elsewhere in this Prospectus.
BENEDEK BROADCASTING (PRIOR TO THE TRANSACTIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(a)............................... $ 33,608 $ 36,311 $ 38,352 $ 44,221 $ 50,329 $10,150 $ 11,683
Operating expenses:
Station operating expenses................ 20,309 21,511 22,805 24,810 29,049 6,308 7,549
Depreciation and amortization............. 5,871 4,428 3,721 3,403 5,041 856 1,360
-------- -------- -------- -------- -------- ------- --------
Station operating income................ 7,428 10,372 11,826 16,008 16,239 2,986 2,774
Corporate expenses........................ 887 1,288 1,249 1,309 1,576 343 496
Special bonus, officer-stockholder........ -- -- 1,400 -- -- -- --
-------- -------- -------- -------- -------- ------- --------
Operating income.............................. 6,541 9,084 9,177 14,699 14,663 2,643 2,278
-------- -------- -------- -------- -------- ------- --------
Financial expenses, net:
Interest expense, net(b):
Cash interest, net........................ (9,856) (6,605) (8,194) (7,740) (14,763) (2,274) (3,920)
Other interest............................ (3,923) (7,774) (6,161) (4,905) (712) (753) (101)
-------- -------- -------- -------- -------- ------- --------
Total interest, net..................... (13,779) (14,379) (14,355) (12,645) (15,475) (3,027) (4,021)
Other, net.................................. (905) (310) 144 (10) -- -- --
-------- -------- -------- -------- -------- ------- --------
Total financial expenses, net........... (14,684) (14,689) (14,211) (12,655) (15,475) (3,027) (4,021)
-------- -------- -------- -------- -------- ------- --------
Net income (loss) before extraordinary item... (8,143) (5,605) (5,034) 2,044 (812) (384) (1,743)
Extraordinary item(c)......................... -- -- -- -- 6,864 6,864 --
-------- -------- -------- -------- -------- ------- --------
Net income (loss)(d).......................... $ (8,143) $ (5,605) $ (5,034) $ 2,044 $ 6,052 $ 6,480 $ (1,743)
-------- -------- -------- -------- -------- ------- --------
-------- -------- -------- -------- -------- ------- --------
Ratio of earnings to fixed charges(e)......... -- -- -- 1.2x -- -- --
CERTAIN FINANCIAL DATA:
Broadcast cash flow........................... $ 13,531 $ 14,728 $ 15,546 $ 19,627 $ 21,310 $ 3,924 $ 4,209
Broadcast cash flow margin.................... 40.3% 40.6% 40.5% 44.4% 42.3% 38.7% 36.0%
Operating cash flow........................... $ 12,644 $ 13,440 $ 14,297 $ 18,318 $ 19,734 $ 3,581 $ 3,713
Operating cash flow margin.................... 37.6% 37.0% 37.3% 41.4% 39.2% 35.3% 31.8%
Amortization of program broadcast rights...... $ 2,131 $ 1,996 $ 2,179 $ 2,104 $ 2,162 $ 511 $ 597
Payment for program broadcast rights.......... 1,899 2,068 2,180 1,888 2,132 429 522
Capital expenditures.......................... 1,581 1,458 1,278 1,161 2,008 552 655
Cash payments for Federal income taxes........ -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------- MARCH 31,
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.................................. $ 76,111 $ 77,049 $ 72,818 $ 73,621 $114,453 $107,933
Working capital (deficit)..................... 1,997 (71) 3,684 1,611 13,665 11,146
Total debt(f)................................. 107,350 109,439 112,874 107,607 135,767 135,681
Stockholder's equity (deficit)................ (35,296) (41,004) (44,660) (42,615) (36,563) (38,306)
</TABLE>
- ------------
(a) Net revenues reflect deductions from gross revenues for agency and national
sales representative commissions.
(b) Cash interest, net includes cash interest paid and normal adjustments to
accrued interest. Other interest includes accrued interest with respect to
warrants to purchase Benedek Broadcasting's common stock, accrued interest
with respect to the contingent equity value of Benedek Broadcasting and
long-term deferred interest, accrued interest added to long-term debt
balances, deferred loan amortization and accretion of discounts.
(c) Benedek Broadcasting recorded an extraordinary gain from the early
extinguishment of debt comprised of a gain of $11.1 million reduced by
losses of $2.7 million of prepayment premiums and contingent payments and
$1.5 million of unamortized debt discount and deferred loan costs.
(d) Benedek Broadcasting has historically elected to be taxed as an S
Corporation for Federal and state income tax purposes. Accordingly, the
sole stockholder of Benedek Broadcasting has been responsible for the
payment of income taxes on Benedek Broadcasting's taxable income. Net
income (loss) does not include a pro forma adjustment for income taxes due
to the availability of net operating loss carryforwards and a valuation
allowance. Benedek Broadcasting's election to be taxed as an S Corporation
terminated automatically upon the consummation of the Transactions.
(e) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of net income (loss) before income taxes and extraordinary
item plus fixed charges (excluding capitalized interest). Fixed charges
consist of interest on all debt (including capitalized interest),
amortization of debt discount and deferred loan costs and the portion of
rental expense that is representative of the interest component of rental
expense (deemed to be one-third of rental expense which management believes
is a reasonable approximation of the interest component). For each of the
four years ended December 31, 1991, 1992, 1993 and 1995, earnings were
insufficient to cover fixed charges by $8.1 million, $5.6 million, $5.0
million and $0.8 million, respectively. For the year ended December 31,
1994 the ratio of earnings to fixed charges was 1.2 to 1.0. For the
40
<PAGE>
<PAGE>
three months ended March 31, 1995 and 1996, earnings were insufficient to
cover fixed charges by $0.4 million and $1.7 million, respectively. Benedek
Broadcasting's net income (loss) includes certain non-cash charges as
follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------- ----------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------ ------ ------ ------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Non-cash interest................................. $ 3,923 $ 7,774 $ 6,161 $4,905 $ 712 $ 753 $ 101
Depreciation and amortization of intangibles...... 5,871 4,428 3,721 3,403 5,041 856 1,360
Provision for loss on note receivable............. 905 310 -- -- -- -- --
Special bonus, officer-stockholder................ -- -- 1,400 -- -- -- --
------- ------- ------- ------ ------ ------ ------
$10,699 $12,512 $11,282 $8,308 $5,753 $1,609 $1,461
------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------ ------ ------ ------
</TABLE>
(f) Total debt is defined as notes payable and capital leases payable
(including the current portion thereof), net of discount.
STAUFFER(a)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- ------------------------
1993 1994 1995 1995 1996
------- ------- ------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................................ $16,661 $19,081 $17,317 $ 4,097 $ 3,965
Operating expenses:
Station operating expenses.............................. 13,327 13,422 13,534 3,223 3,516
Depreciation and amortization........................... 2,264 2,304 2,229 554 575
------- ------- ------- ----------- -----------
Station operating income............................ 1,070 3,355 1,554 320 (126)
Corporate expenses...................................... -- -- -- -- --
------- ------- ------- ----------- -----------
Operating income............................................ $ 1,070 $ 3,355 $ 1,554 $ 320 $ (126)
------- ------- ------- ----------- -----------
------- ------- ------- ----------- -----------
CERTAIN FINANCIAL DATA:
Broadcast cash flow......................................... $ 3,285 $ 5,623 $ 4,000 $ 882 $ 584
Broadcast cash flow margin.................................. 19.7% 29.5% 23.1% 21.6% 14.7%
Operating cash flow......................................... $ 3,285 $ 5,623 $ 4,000 $ 882 $ 584
Operating cash flow margin.................................. 19.7% 29.5% 23.1% 21.6% 14.7%
Amortization of program broadcast rights.................... $ 1,277 $ 1,045 $ 1,025 $ 234 $ 314
Payments for program broadcast rights....................... 1,326 1,081 808 226 179
Capital expenditures........................................ 1,182 934 406 233 43
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with Benedek Broadcasting.
BRISSETTE(a)
<TABLE>
<CAPTION>
THIRTEEN WEEKS
ENDED
YEAR ENDED DECEMBER 31, ----------------------
-------------------------------------------------------- MARCH 26, MARCH 31,
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- --------- ---------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.......................... $ 43,817 $ 46,414 $ 44,404 $ 49,530 $ 51,326 $11,602 $11,970
Operating expenses:
Station operating expenses........ 23,470 23,791 23,511 25,667 27,515 6,383 7,107
Depreciation and amortization..... 13,334 12,881 8,116 6,551 6,252 1,432 1,513
-------- -------- -------- -------- -------- --------- ---------
Station operating income...... 7,013 9,742 12,777 17,312 17,559 3,787 3,350
Management fee paid to
affiliate(b).................... 2,650 4,365 -- -- -- -- --
Corporate expenses................ 2,204 1,655 1,487 1,895 2,307 687 762
-------- -------- -------- -------- -------- --------- ---------
Operating income...................... $ 2,159 $ 3,722 $ 11,290 $ 15,417 $ 15,252 $ 3,100 $ 2,588
-------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- --------- ---------
CERTAIN FINANCIAL DATA:
Broadcast cash flow................... $ 20,688 $ 22,613 $ 20,927 $ 24,065 $ 23,856 $ 5,220 $ 4,834
Broadcast cash flow margin............ 47.2% 48.7% 47.1% 48.6% 46.5% 45.0% 40.4%
Operating cash flow................... $ 18,484 $ 20,958 $ 19,440 $ 22,170 $ 21,549 $ 4,533 $ 4,072
Operating cash flow margin............ 42.2% 45.1% 43.8% 44.8% 42.0% 39.1% 34.0%
Amortization of program broadcast
rights.............................. $ 2,709 $ 1,987 $ 1,743 $ 1,757 $ 1,684 $ 400 $ 483
Payments for program broadcast
rights.............................. 2,368 1,997 1,709 1,555 1,639 399 512
Capital expenditures.................. 2,466 1,280 2,217 1,559 2,748 327 405
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with Benedek Broadcasting.
(b) Brissette paid management fees to an affiliated company for expenses
relating to payroll, rent and other corporate expenses. Operating cash flow
and operating cash flow margin are calculated prior to any reduction for
such management fees.
41
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The operating revenues of Benedek Broadcasting are derived primarily from
the sale of advertising time and, to a lesser extent, from compensation paid by
the networks for broadcasting network programming and from barter transactions
for goods and services. Revenue depends on the ability of Benedek Broadcasting
to provide popular programming which attracts audiences in the demographic
groups targeted by advertisers, thereby allowing Benedek Broadcasting to sell
advertising time at satisfactory rates. Revenue also depends significantly on
factors such as the national and local economy and the level of local
competition.
Approximately 59.2% of the gross revenues of the Benedek Stations in 1995
was generated from local and regional advertising, which is sold primarily by a
Station's sales staff, and the remainder of the advertising revenues is
comprised primarily of national advertising, which is sold by national sales
representatives retained by Benedek Broadcasting. Benedek Broadcasting generally
pays commissions to advertising agencies on local, regional and national
advertising and to national sales representatives on national advertising. Net
revenues reflect deductions from gross revenues for commissions payable to
advertising agencies and national sales representatives.
Local/regional advertising and national advertising constitute the largest
categories of Benedek Broadcasting's operating revenues and represent
approximately 86.0% of gross revenues in each of the last three fiscal years.
Although relatively constant as a total percentage of gross revenues, the mix of
advertising revenue can vary depending on the level of political advertising
revenue. Excluding political advertising revenue, the percentage of gross
revenues attributable to local/regional advertising and national advertising of
Benedek Broadcasting in 1993, 1994 and 1995 was 88.9%, 88.8% and 87.4%,
respectively. The decrease in 1995 was the result of an increase in network
compensation of $0.8 million or 36.5%, representing 5.6% of gross revenues
(excluding political advertising revenues) in 1995 as compared to 4.8% of gross
revenues (excluding political advertising revenues) in 1994.
In 1995, Benedek Broadcasting reported net revenues of $50.3 million
compared to net revenues of $44.2 million in 1994 and $38.4 million in 1993.
Benedek Broadcasting had net income of $6.1 million (after an extraordinary gain
of $6.9 million) in 1995 and $2.0 million in 1994, compared to a loss of $5.0
million in 1993. Operating cash flow in 1995 was $19.7 million compared to $18.3
million in 1994 and $14.3 million in 1993. Benedek Broadcasting's net revenues
and operating cash flow have increased every year since 1989 with the exception
of 1991. In 1991, the television industry experienced an absolute decline in
revenues for the first time since the early 1970s when cigarette advertising on
television was prohibited by Congress. Benedek Broadcasting's revenue growth in
the last three years can be attributed to greater demand for advertising time on
the part of local and national advertisers and increases in unit rates and to
the acquisition of the Dothan Station in March 1995.
In December 1995, Benedek Broadcasting entered into new long-term
affiliation agreements with CBS effective retroactive to July 1, 1995. In
connection with such arrangements, CBS paid Benedek Broadcasting bonus payments
of $2.5 million in the fourth quarter of 1995 and $2.5 million in the first
quarter of 1996. These payments will be recognized as revenue by the Company at
the rate of $0.5 million per year over the ten-year term of the affiliation
agreements. In connection with these payments, Benedek Broadcasting also agreed
with CBS that, upon the consummation of the Acquisitions, the terms of the
affiliation agreements for the Acquired Stations which are CBS affiliates would
be extended through 2005.
Benedek Broadcasting's primary operating expenses are employee
compensation, programming and depreciation and amortization. Changes in
compensation expense result primarily from adjustments to fixed salaries based
on employee performance and inflation and, to a lesser extent, from changes in
sales commissions paid based on levels of advertising revenues. Programming
expense consists primarily of amortization of program rights. Benedek
Broadcasting purchases first run and off-network syndicated programming on an
on-going basis and has a policy of closely matching payments for and
amortization of program rights in each period. A network-affiliated station
receives approximately two-thirds of its required daily programming from the
network at no cost. Depreciation and amortization expense has generally declined
from period to period as assets acquired at the time
42
<PAGE>
<PAGE>
of the acquisition of a station are fully depreciated. However, for 1995
depreciation and amortization increased $1.3 million due to the acquisition of
the Dothan Station. Barter expense generally offsets barter revenue and reflects
the fair market value of goods and services received. Benedek Broadcasting's
operating expenses in 1993, 1994 and 1995 (excluding depreciation and
amortization and a non-cash special bonus paid to the sole stockholder of
Benedek Broadcasting in 1993) have remained fairly constant and represent
approximately 60.9% of net revenues in each such year.
On March 31, 1995, Benedek Broadcasting acquired for a cash purchase price
of $28.7 million substantially all of the assets (excluding cash and accounts
receivable) of the Dothan Station which is the CBS affiliate serving both
Dothan, Alabama and Panama City, Florida.
Benedek Broadcasting has included operating cash flow data because such
data is used by certain investors to measure a company's ability to service
debt. Operating cash flow is defined as operating income before financial income
as derived from statements of operations plus depreciation and amortization,
amortization of program broadcast rights and non-cash compensation less cash
payments for program broadcast rights. Operating cash flow is used to pay
principal and interest on long-term debt and to fund capital expenditures.
Operating cash flow does not purport to represent cash provided by operating
activities as reflected in Benedek Broadcasting's Consolidated Financial
Statements, is not a measure of financial performance under generally accepted
accounting principles and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles.
RESULTS OF OPERATIONS
The following table sets forth certain pro forma financial and operating
data for the Company for the year ended December 31, 1995 and the three months
ended March 31, 1996 giving effect to the Transactions as if the Transactions
had been consummated at January 1, 1995 for the year ended December 31, 1995 and
January 1, 1996 for the three months ended March 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 MARCH 31, 1996
----------------- --------------------------
PRO FORMA PRO FORMA
----------------- --------------------------
<S> <C> <C> <C> <C>
Revenues:
Local/regional................................................. $ 78,769 56.7% $ 17,370 54.7%
National....................................................... 42,316 30.5 9,488 29.9
Political...................................................... 1,389 1.0 887 2.8
Network........................................................ 9,689 7.0 2,499 7.9
Barter......................................................... 4,046 2.9 759 2.4
Other.......................................................... 2,661 1.9 728 2.3
-------- ----- ----------- ------
Gross revenues..................................................... 138,870 100.0% 31,731 100.0%
----- ------
----- ------
Agency and national sales representative commissions........... 17,525 4,079
-------- -----------
Net revenues....................................................... 121,345 27,652
-------- -----------
Operating expenses:
Compensation expense and payroll taxes(a)...................... 39,198 9,941
Amortization of program broadcast rights....................... 4,853 1,394
Depreciation and amortization.................................. 27,625 7,064
Barter......................................................... 3,574 648
Other(b)....................................................... 21,318 5,669
-------- -----------
96,568 24,716
-------- -----------
Station operating income........................................... 24,777 2,936
Corporate expenses............................................. 1,900 496
Operating income................................................... 22,877 2,440
Financial (expense), net........................................... (40,986) (10,164)
-------- -----------
Net income (loss) before extraordinary item........................ (18,109) (7,724)
Extraordinary item, gain on early extinguishment of debt........... 6,864 --
-------- -----------
Net income (loss).................................................. $(11,245) $ (7,724)
-------- -----------
-------- -----------
Broadcast cash flow................................................ $ 52,734 $ 10,181
Broadcast cash flow margin......................................... 43.5% 36.8%
Operating cash flow................................................ $ 50,834 $ 9,685
Operating cash flow margin......................................... 41.9% 35.0%
</TABLE>
- ------------
(a) Does not include corporate overhead.
(b) Includes utilities, insurance and other general and administrative
expenses.
43
<PAGE>
<PAGE>
The following table sets forth certain historical financial and operating
data for the periods indicated:
BENEDEK BROADCASTING (PRIOR TO THE TRANSACTIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------------------------- -----------------------------------
1993 1994 1995 1995 1996
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Revenues:
Local/regional........... $26,844 60.6% $29,622 58.1% $34,111 59.2% $ 6,901 59.0% $ 7,553 56.9%
National................. 12,164 27.4 13,406 26.3 15,456 26.8 3,438 29.4 3,437 25.9
Political................ 394 0.9 2,662 5.2 923 1.6 14 0.1 445 3.4
Network.................. 2,280 5.1 2,320 4.5 3,166 5.5 605 5.2 972 7.3
Barter................... 1,829 4.1 2,076 4.1 2,943 5.1 487 4.2 589 4.4
Other.................... 817 1.9 940 1.8 1,035 1.8 243 2.1 275 2.1
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Gross revenues............... 44,328 100.0% 51,026 100.0% 57,634 100.0% 11,688 100.0% 13,271 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Agency and national sales
representative
commissions............ 5,976 6,805 7,305 1,538 1,588
------- ------- ------- ------- -------
Net revenues................. 38,352 44,221 50,329 10,150 11,683
------- ------- ------- ------- -------
Operating expenses:
Compensation expense and
payroll taxes(a)....... 12,106 13,165 15,410 3,386 4,088
Amortization of program
broadcast rights....... 2,179 2,104 2,162 511 597
Depreciation and
amortization........... 3,721 3,403 5,041 856 1,360
Special bonus, officer-
stockholder............ 1,400 -- -- -- --
Barter................... 1,737 1,766 2,414 434 494
Other(b)................. 6,783 7,775 9,063 1,977 2,370
------- ------- ------- ------- -------
27,926 28,213 34,090 7,164 8,909
------- ------- ------- ------- -------
Station operating income..... 10,426 16,008 16,239 2,986 2,774
Corporate expenses....... 1,249 1,309 1,576 343 496
------- ------- ------- ------- -------
Operating income............. 9,177 14,699 14,663 2,643 2,278
Financial (expenses), net.... (14,211) (12,655) (15,475) (3,027) (4,021)
------- ------- ------- ------- -------
Net income (loss) before
extraordinary item......... (5,034) 2,044 (812) (384) (1,743)
Extraordinary item, gain on
early extinguishment of
debt....................... -- -- 6,864 6,864 --
------- ------- ------- ------- -------
Net income (loss)............ $(5,034) $ 2,044 $ 6,052 $ 6,480 $(1,743)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Broadcast cash flow.......... $15,546 $19,627 $21,310 $ 3,924 $ 4,209
Broadcast cash flow margin... 40.5% 44.4% 42.3% 38.7% 36.0%
Operating cash flow.......... $14,297 $18,318 $19,734 $ 3,581 $ 3,713
Operating cash flow margin... 37.3% 41.4% 39.2% 35.3% 31.8%
</TABLE>
- ------------
(a) Does not include corporate overhead or special bonus.
(b) Includes utilities, insurance and other general and administrative
expenses.
44
<PAGE>
<PAGE>
The following table contains a summary of Benedek Broadcasting's historical
operations as a percentage of net revenues and the percentage change in the
dollar amounts as compared to prior periods:
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES PERIOD TO PERIOD
----------------------------------------- PERCENTAGE CHANGES
----------------------------------
YEAR THREE MONTHS THREE MONTHS
ENDED ENDED MARCH FISCAL YEARS ENDED
DECEMBER 31, 31, ------------------ MARCH 31,
----------------------- -------------- 1994 VS 1995 VS 1996
1993 1994 1995 1995 1996 1993 1994 VS 1995
----- ----- ----- ----- ----- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues......................... 100.0% 100.0% 100.0% 100.0% 100.0% 15.3 % 13.8% 15.1%
----- ----- ----- ----- -----
Operating expenses:
Compensation expense and payroll
taxes.......................... 31.6 29.8 30.6 33.4 35.0 8.7 17.1 20.7
Amortization of program broadcast
rights......................... 5.7 4.8 4.3 5.0 5.1 (3.4) 2.8 16.8
Depreciation and amortization.... 9.7 7.7 10.0 8.4 11.6 (8.5) 48.2 58.9
Special bonus,
officer-stockholder............ 3.7 -- -- -- -- (100.0) -- --
Barter........................... 4.5 4.0 4.8 4.3 4.2 1.7 36.7 13.8
Other............................ 17.7 17.6 18.1 19.5 20.4 14.6 16.6 19.9
----- ----- ----- ----- -----
72.9 63.9 67.8 70.6 76.3 1.0 20.8 24.4
----- ----- ----- ----- -----
Station operating income............. 27.1 36.2 32.2 29.4 23.7 53.5 1.4 (7.1)
Corporate expenses............... 3.2 3.0 3.1 3.4 4.2 4.8 20.4 44.6
----- ----- ----- ----- -----
Operating income..................... 23.9 33.2 29.1 26.0 19.5 60.2 (0.3) (13.8)
Financial (expenses), net............ (37.0) (28.6) (30.7) (29.8) (34.4) (10.9) 22.3 32.8
----- ----- ----- ----- -----
Net income (loss).................... (13.1)% 4.6% (1.6)% (3.8)% (14.9)% -- -- --
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Broadcast cash flow.................. 40.5% 44.4% 42.3% 38.7% 36.0% 26.2 % 8.6% 7.3%
Operating cash flow.................. 37.3% 41.4% 39.2% 35.3% 31.8% 28.1 % 7.7% 3.7%
</TABLE>
The following tables set forth certain historical financial and operating
data for Stauffer and Brissette for the periods indicated:
<TABLE>
<CAPTION>
STAUFFER(a)
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------------------------- ---------------------------------
1993 1994 1995 1995 1996
--------------- --------------- --------------- -------------- --------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Local/regional.............. $11,795 61.7% $11,944 53.7% $12,061 60.5% $2,826 59.7% $2,587 56.8%
National.................... 5,220 27.3 6,042 27.2 5,646 28.3 1,415 29.9 1,261 27.7
Political................... 78 0.4 2,223 10.0 87 0.4 3 0.1 140 3.1
Network..................... 1,292 6.8 1,305 5.9 1,492 7.5 337 7.1 400 8.8
Barter...................... -- -- -- -- -- --
Other....................... 730 3.8 706 3.2 652 3.3 150 3.2 163 3.6
------- ----- ------- ----- ------- ----- ------ ----- ------ -----
Gross revenues.................. 19,115 100.0% 22,220 100.0% 19,938 100.0% 4,731 100.0% 4,551 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Agency and national sales
representative
commissions............... 2,454 3,139 2,621 634 586
------- ------- ------- ------ ------
Net revenues.................... 16,661 19,081 17,317 4,097 3,965
------- ------- ------- ------ ------
Operating expenses:
Compensation expense and
payroll taxes(b).......... 7,542 7,718 7,904 1,900 2,012
Amortization of program
broadcast rights.......... 1,277 1,045 1,025 234 314
Depreciation and
amortization.............. 2,264 2,304 2,229 554 575
Barter...................... -- -- -- -- --
Other(c).................... 4,508 4,659 4,606 1,089 1,190
------- ------- ------- ------ ------
15,591 15,726 15,763 3,777 4,091
------- ------- ------- ------ ------
Station operating income
(loss)........................ 1,070 3,355 1,554 320 (126)
Corporate expenses.......... -- -- -- -- --
------- ------- ------- ------ ------
Operating Income (loss)......... $ 1,070 $ 3,355 $ 1,554 $ 320 $(126)
------- ------- ------- ------ ------
------- ------- ------- ------ ------
Broadcast cash flow............. $ 3,285 $ 5,623 $ 4,000 $ 882 $ 584
Broadcast cash flow margin...... 19.7% 29.5% 23.1% 21.6% 14.7%
Operating cash flow............. $ 3,285 $ 5,623 $ 4,000 $ 882 $ 584
Operating cash flow margin...... 19.7% 29.5% 23.1% 21.6% 14.7%
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with Benedek Broadcasting.
(b) Does not include corporate overhead.
(c) Includes utilities, insurance and other general and administrative
expenses.
45
<PAGE>
<PAGE>
BRISSETTE(a)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THIRTEEN WEEKS ENDED
------------------------------------------------------- -----------------------------------
1993 1994 1995 MARCH 26, 1995 MARCH 31, 1996
--------------- --------------- --------------- --------------- ---------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Local/regional........... $28,214 54.9% $30,091 52.1% $31,575 53.5% $ 7,002 52.6% $ 7,230 52.0%
National................. 17,730 34.5 19,391 33.6 20,617 34.9 4,813 36.2 4,790 34.4
Political................ 403 0.8 3,536 6.1 379 0.6 57 0.4 302 2.2
Network.................. 3,163 6.2 3,094 5.4 4,589 7.8 1,043 7.8 1,127 8.1
Barter................... 569 1.1 686 1.2 903 1.5 139 1.0 170 1.2
Other.................... 1,273 2.5 941 1.6 990 1.7 261 2.0 290 2.1
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Gross revenues............... 51,352 100.0% 57,739 100.0% 59,053 100.0% 13,314 100.0% 13,909 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Agency and national sales
representative
commissions............ 6,948 8,209 7,727 1,712 1,939
------- ------- ------- ------- -------
Net revenues................. 44,404 49,530 51,326 11,602 11,970
------- ------- ------- ------- -------
Operating expenses:
Compensation expense and
payroll taxes(b)....... 13,855 15,494 16,647 3,929 4,266
Amortization of program
broadcast rights....... 1,743 1,757 1,684 400 483
Depreciation and
amortization........... 8,116 6,551 6,252 1,432 1,513
Special deferred
compensation........... 44 196 616 -- --
Barter................... 495 877 903 165 154
Other(c)................. 7,374 7,343 7,665 1,889 2,204
------- ------- ------- ------- -------
31,627 32,218 33,767 7,814 8,620
------- ------- ------- ------- -------
Station operating income..... 12,777 17,312 17,559 3,787 3,350
Corporate expenses....... 1,487 1,895 2,307 687 762
------- ------- ------- ------- -------
Operating income............. $11,290 $15,417 $15,252 $ 3,100 $ 2,588
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Broadcast cash flow.......... $20,927 $24,065 $23,856 $ 5,220 $ 4,834
Broadcast cash flow margin... 47.1% 48.6% 46.5% 45.0% 40.4%
Operating cash flow.......... $19,440 $22,170 $21,549 $ 4,533 $ 4,072
Operating cash flow margin... 43.8% 44.8% 42.0% 39.1% 34.0%
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with Benedek Broadcasting.
(b) Does not include corporate overhead.
(c) Includes utilities, insurance and other general and administrative
expenses.
46
<PAGE>
<PAGE>
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
Net revenues for the three months ended March 31, 1996 increased $1.5
million or 15.1% to $11.7 million from $10.2 million for the three months ended
March 31, 1995. Of this increase, $1.4 million was attributable to the
acquisition in March 1995 of the Dothan Station. For the eight Benedek Stations
owned by Benedek Broadcasting during the entire first quarter of both 1995 and
1996, net revenues for the three months ended March 31, 1996 increased $0.2
million or 1.5% from the three months ended March 31, 1995. For such Benedek
Stations, political advertising revenue for the three months ended March 31,
1996 increased by $0.4 million to $0.4 million. Gross revenues for such Benedek
Stations excluding political advertising revenue decreased $0.4 million or 3.1%
from the three months ended March 31, 1995.
Operating expenses for the three months ended March 31, 1996 increased $1.9
million or 25.3% to $9.4 million from $7.5 million for the three months ended
March 31, 1995. Of the increase in operating expenses, $1.4 million was
attributable to the acquisition of the Dothan Station. As a percentage of net
revenues, operating expenses increased to 80.5% from 74.0% in the three months
ended March 31, 1995, primarily as a result of an increase of $0.5 million in
depreciation and amortization expense. For the eight Benedek Stations owned by
Benedek Broadcasting during the entire first quarter of both 1995 and 1996,
operating expenses for the three months ended March 31, 1996 increased $0.5
million or 6.1% from the three months ended March 31, 1995. Operating expenses
as a percentage of net revenues for such Benedek Stations increased from 74.0%
for the three months ended March 31, 1995 to 77.3% in the three months ended
March 31, 1996.
Operating income for the three months ended March 31, 1996 decreased $0.4
million or 13.8% to $2.3 from $2.7 million for the three months ended March 31,
1995.
Financial (expenses), net for the three months ended March 31, 1996
increased $1.0 million or 32.9% to $4.0 million from $3.0 million in the three
months ended March 31, 1995 due to Benedek Broadcasting's higher debt level
following the offering of the Senior Secured Notes in March 1995.
Net loss for the three months ended March 31, 1996 was $1.7 million as
compared to net income of $6.5 million for the three months ended March 31, 1995
primarily as a result of an extraordinary gain of $6.9 million on the early
extinguishment of debt.
Operating cash flow for the three months ended March 31, 1996 increased
$0.1 million or 3.6% to $3.7 million from $3.6 million for the three months
ended March 31, 1995 primarily as a result of the acquisition of the Dothan
Station. As a percentage of net revenues, operating cash flow decreased to 31.8%
for the three months ended March 31, 1996 from 35.3% for the three months ended
March 31, 1995. For the eight Benedek Stations owned by Benedek Broadcasting
during the entire first quarter of both 1995 and 1996, operating cash flow for
the three months ended March 31, 1996 decreased $0.3 million or 7.9% to $3.3
million from $3.6 million for the three months ended March 31, 1995. As a
percentage of net revenues, operating cash flow decreased to 31.8% for the three
months ended March 31, 1996 from 35.3% for the three months ended March 31,
1995. The first quarter of each fiscal year is typically characterized by lower
operating cash flow margins than Benedek Broadcasting would realize for the full
fiscal year due to the seasonal nature of the broadcasting business.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net revenues for the year ended December 31, 1995 increased $6.1 million or
13.8% to $50.3 million from $44.2 million for the year ended December 31, 1994.
Of this increase, $5.0 million was attributable to the acquisition in March 1995
of the Dothan Station. For the eight Benedek Stations owned by Benedek
Broadcasting for all of 1994 and 1995, net revenues for the year ended December
31, 1995 increased $1.1 million or 2.4% from the year ended December 31, 1994.
For such Benedek Stations, political advertising revenue for the year ended
December 31, 1995 decreased $1.8 million or 66.7% to $0.9 million from $2.7
million for the year ended December 31, 1994. Gross revenues for such Benedek
Stations excluding political advertising revenue increased $2.7 million or 5.6%
from 1994 to 1995.
Operating expenses for the year ended December 31, 1995 increased $6.1
million or 20.8% to $35.7 million from $29.5 million for the year ended December
31, 1994. Of the increase in operating
47
<PAGE>
<PAGE>
expenses, $4.4 million was attributable to the acquisition of the Dothan
Station. As a percentage of net revenues, operating expenses increased to 70.9%
from 66.8% in the year ended December 31, 1994, primarily as a result of an
increase of $1.6 million in depreciation and amortization expense. For the eight
Benedek Stations owned by Benedek Broadcasting for all of 1994 and 1995,
operating expenses for the year ended December 31, 1995 increased $1.7 million
or 5.6% from the year ended December 31, 1994. For such Benedek Stations,
payroll expense remained relatively constant at approximately 30.0% of net
revenues. Operating expenses as a percentage of net revenues for such Benedek
Stations increased from 66.8% for fiscal 1994 to 68.9% in fiscal 1995, primarily
as a result of an increase in depreciation and amortization from 7.7% to 7.9% of
net revenues and an increase in barter transactions, primarily related to
programming and promotion, from 4.0% to 5.0% of net revenues.
Operating income for the years ended December 31, 1995 and 1994 remained
flat at $14.7 million as a result of the above factors.
Financial (expenses), net for the year ended December 31, 1995 increased
$2.8 million or 22.3% to $15.5 million from $12.7 million in the year ended
December 31, 1994 due to Benedek Broadcasting's higher debt level following the
offering of the Senior Secured Notes in March 1995.
Net income for the year ended December 31, 1995 increased to $6.1 million
from $2.0 million for the year ended December 31, 1994 primarily as a result of
a gain of $6.9 million on the early extinguishment of debt. This gain resulted
from the refinancing of Benedek Broadcasting's debt from the proceeds of the
offering of the Senior Secured Notes in March 1995.
Operating cash flow for the year ended December 31, 1995 increased $1.4
million or 7.7% to $19.7 million from $18.3 million for the year ended December
31, 1994 primarily as a result of the acquisition of the Dothan Station. As a
percentage of net revenues, operating cash flow decreased to 39.2% for the year
ended December 31, 1995 from 41.4% for the year ended December 31, 1994. For the
eight Benedek Stations owned by Benedek Broadcasting for all of 1994 and 1995,
operating cash flow for the year ended December 31, 1995 decreased $0.6 million
or 3.5% from the year ended December 31, 1994.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
Net revenues for the year ended December 31, 1994 increased $5.9 million or
15.3% to $44.2 million from $38.4 million for the year ended December 31, 1993.
The growth in net revenues resulted from increases in advertising expenditures
by local/regional and national advertisers as advertisers anticipated continued
economic recovery and increases in political advertising expenditures during the
1994 election year.
Operating expenses for the year ended December 31, 1994 increased $1.7
million or 6.3% to $29.5 million from $27.8 million for the year ended December
31, 1993, excluding the special bonus. As a percentage of net revenues,
operating expenses declined to 66.8% in the year ended December 31, 1994 from
72.4% in the year ended December 31, 1993, excluding the special bonus,
primarily as a result of the greater rate of increase in net revenues than in
compensation expense. Compensation expense in the year ended December 31, 1994
increased $1.1 million or 8.7% from the year ended December 31, 1993 due to
overall salary increases and increases in commission expense resulting from
higher advertising sales. Amortization of program rights and corporate expenses
during such periods remained relatively constant.
Operating income for the year ended December 31, 1994 increased $4.1
million or 40.0% to $14.7 million from $10.6 million for the year ended December
31, 1993, excluding the special bonus. This increase resulted from the greater
rate of increase in net revenues than in compensation expense.
Financial (expenses), net for the year ended December 31, 1994 decreased
$1.6 million or 10.9% to $12.7 million from $14.2 million for the year ended
December 31, 1993 due primarily to a net reduction in the amount of non-cash
interest accrued in respect of warrants held by certain of Benedek
Broadcasting's lenders which were restructured in 1993, offset in part by $1.0
million of interest accrued in respect of a contingent payment due to another of
Benedek Broadcasting's lenders based upon the appreciation in the equity value
of certain of the Benedek Stations.
48
<PAGE>
<PAGE>
Net income (loss) for the year ended December 31, 1994 increased to income
of $2.0 million from a loss of $5.0 million for the year ended December 31, 1993
as a result of the factors described above.
Operating cash flow for the year ended December 31, 1994 increased $4.0
million or 28.1% to $18.3 million from $14.3 million for the year ended December
31, 1993 primarily as a result of the increase in net revenues. As a percentage
of net revenues, operating cash flow increased to 41.4% for the year ended
December 31, 1994 from 37.3% for the year ended December 31, 1993.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operating Activities is the primary source of liquidity for
Benedek Broadcasting and were $(0.2) million for the three months ended March
31, 1996 compared to $(4.9) million for the three months ended March 31, 1995.
For the three months ended March 31, 1996 cash flows from operating activities
primarily resulted from a $4.6 million decrease in receivables, which included
$2.5 million from the bonus payment from CBS, offset by a decrease in accrued
interest of $4.0 million. For the three months ended March 31, 1995 cash flows
from operating activities primarily resulted from the refinancing of
substantially all of Benedek Broadcasting's existing long-term debt in March
1995 and the payment of $4.4 million of deferred and contingent interest and
$2.7 million of prepayment premiums. In addition, cash used by operations
included $6.9 million of non-cash gain on early extinguishment of debt.
Cash flows from operating activities were $3.3 million in 1995 compared to
$10.5 million in 1994. The 1995 cash flows from operating activities primarily
resulted from an increase in accounts payable and accrued expenses of $4.7
million and an increase in deferred revenue of $4.8 million from the bonus
payment from CBS, offset by a $4.6 million increase in accounts receivable.
Accounts receivable, accounts payable and accrued expenses increased as a result
of the acquisition of the Dothan Station and as a result of increased revenues
and operating expenses. In 1995, in connection with the refinancing of
substantially all of its existing long-term debt, Benedek Broadcasting paid $4.4
million of deferred and contingent interest and $2.7 million of prepayment
premiums. Cash flows from operating activities in 1995 includes net income plus
depreciation and amortization which totaled $11.8 million, including $6.9
million of non-cash gain on early extinguishment of debt. The 1994 cash flows
from operating activities primarily resulted from a $3.3 million increase in
contingent and deferred interest payable. Cash flows from operating activities
in 1994 includes net income plus depreciation and amortization which totaled
$7.0 million.
Cash Flows from Investing Activities were $(1.9) million for the three
months ended March 31, 1996, compared to $(26.9) million for the three months
ended March 31, 1995. For the three months ended March 31, 1996, cash flows from
investing activities primarily resulted from a $1.0 million deposit made to
acquire the Stauffer Stations and $0.6 million of capital expenditures. For the
three months ended March 31, 1995 cash flows used in investing activities
included $26.7 million paid to acquire the Dothan Stations.
Cash flows from investing activities were $31.0 million in 1995 compared to
$2.5 million in 1994. The 1995 cash flows used in investing activities primarily
resulted from $26.7 million paid to acquire the Dothan Station and a $3.0
million deposit in connection with the Stauffer Acquisition. The 1994 cash flows
used in investing activities included a $2.0 million deposit in connection with
the acquisition of the Dothan Station.
Cash Flows from Financing Activities were $(0.2) million for the three
months ended March 31, 1996 compared to $33.8 million for the three months ended
March 31, 1995. For the three months ended March 31, 1995 cash flows from
financing activities primarily resulted from the issuance in March 1995 of
$135.0 million of Benedek Broadcasting's Senior Secured Notes to refinance
existing indebtedness and finance the acquisition of the Dothan Station, offset
by $96.0 million of principal payments on existing indebtedness. The
consummation of the refinancing resulted in an extraordinary gain on the early
extinguishment of debt comprised of a gain of $11.1 million from adjusting the
carrying value of certain warrants held by Benedek Broadcasting's lenders offset
by $2.7 million of prepayment premiums and $1.5 million of unamortized debt
discount and deferred loan costs.
Cash flows from financing activities were $32.8 million in 1995 compared to
$(7.0) million in 1994. The 1995 cash flows provided by financing activities
primarily resulted from the issuance in March
49
<PAGE>
<PAGE>
1995 of $135.0 million of Benedek Broadcasting's Senior Secured Notes to
refinance existing indebtedness and finance the acquisition of the Dothan
Station, offset by $96.0 million of principal payments on such existing
indebtedness. The consummation of the refinancing resulted in an extraordinary
gain from the early extinguishment of debt, comprised of a gain of $11.1 million
from adjusting the carrying value of certain warrants held by Benedek
Broadcasting's lenders from $19.0 million to the redemption price of $7.9
million offset by $2.7 million of prepayment premiums and $1.5 million of
unamortized debt discount and deferred loan costs.
THE FINANCING PLAN
The Company, together with its subsidiary Benedek Broadcasting, implemented
the Financing Plan in order to finance the Acquisitions and to pay fees and
expenses related thereto. The Financing Plan consisted of (i) the offer and sale
by the Company of the Existing Notes to generate gross proceeds of $90.2
million, (ii) the offer and sale by the Company of the Units to generate gross
proceeds of $60.0 million, (iii) Benedek Broadcasting borrowing $128.0 million
pursuant to the Term Loan Facilities of the Credit Agreement and (iv) the
Company issuing an aggregate of $45.0 million initial liquidation preference of
Seller Junior Discount Preferred Stock to GECC and Mr. Paul Brissette. Benedek
Broadcasting also has available to it $15.0 million under the Revolving Credit
Facility of the Credit Agreement.
The Company believes that the Financing Plan will provide for a long-term
financing structure that will allow management to concentrate its efforts on
maximizing results of operations. The Company anticipates that operating cash
flow of Benedek Broadcasting will be sufficient to finance the operating
requirements of the Stations, debt service requirements and presently
anticipated capital expenditures. The Company anticipates that substantial
capital expenditures may be required at a number of the Acquired Stations.
The Notes do not bear interest until May 15, 2001, and the Company will not
be obligated to pay cash interest on the Notes until November 15, 2001. In
addition, for all dividend payment dates with respect to the Exchangeable
Preferred Stock and interest payment dates with respect to the Exchange
Debentures through and including July 1, 2001, the Company may, at its option,
pay dividends by adding the amount thereof to the then effective liquidation
preference of the Exchangeable Preferred Stock and pay interest on the Exchange
Debentures by issuing additional Exchange Debentures. For all dividend payment
dates with respect to the Seller Junior Discount Preferred Stock prior to
October 1, 2001, the Company will pay such dividends by adding the amount
thereof to the then effective liquidation preference of the Seller Junior
Discount Preferred Stock. In order for the Company to meet its debt service
obligations and pay required dividends after May 15, 2001 with respect to the
Notes, after July 1, 2001 with respect to the Exchangeable Preferred Stock or
Exchangeable Debentures, as the case may be, and from and after October 1, 2001
with respect to the Seller Junior Discount Preferred Stock, the Company will
need to substantially increase broadcast cash flow at the Stations.
In order to repay the Notes and the Senior Secured Notes at maturity, the
Company will need to refinance all or a portion of such Notes. The Company's
ability to refinance the Notes and the Senior Secured Notes will depend upon the
Company's operating performance, as well as prevailing economic and market
conditions, levels of interest rates, refinancing costs and other factors, many
of which are beyond the Company's control. There can be no assurance that the
Company will be able to refinance the Notes and the Senior Secured Notes or
otherwise raise funds in a timely manner or that the proceeds therefrom will be
sufficient to effect such refinancing.
The Company is a holding company that will derive all of its operating
income and cash flow from its sole subsidiary, Benedek Broadcasting, the common
stock of which, together with all other assets of the Company, have been pledged
to secure the Company's senior guarantee of all indebtedness of Benedek
Broadcasting outstanding under the Credit Agreement and in respect of the Senior
Secured Notes. As a holding company, the Company's ability to pay its
obligations, including its obligation to pay interest on and principal of the
Notes, whether at maturity, upon a Change of Control or otherwise, will be
dependent primarily upon receiving dividends and other payments or advances from
Benedek Broadcasting. Benedek Broadcasting is a separate and distinct legal
entity and has no obligation,
50
<PAGE>
<PAGE>
contingent or otherwise, to pay any amounts to the Company or to make funds
available to the Company for debt service or any other obligation. Although the
Credit Agreement does not limit the ability of Benedek Broadcasting to pay
dividends or make other payments to the Company, the Senior Secured Note
Indenture does contain such limitations. However, after giving effect to the
Transactions (assuming the contribution to the common equity of Benedek
Broadcasting of net cash proceeds of approximately $188.5 million from the sale
of the Notes, the Units and the Seller Junior Discount Preferred Stock), as of
March 31, 1996, Benedek Broadcasting could have distributed approximately $188.5
million to the Company under such limitations.
SEASONALITY
Net revenues and operating cash flow of Benedek Broadcasting are generally
higher during the fourth quarter of each year, primarily due to increased
expenditures by advertisers in anticipation of holiday season consumer spending
and an increase in viewership during this period, and, to a lesser extent,
during the second quarter of each year.
INCOME TAXES
Historically, Benedek Broadcasting had elected to be taxed as an S
Corporation. Net income (loss) does not include a pro forma adjustment for
income tax expense because the Company would not, under Statement of Financial
Accounting Standards No. 109 'Accounting For Income Taxes,' have had a tax
provision due to net operating loss carryforwards and a valuation allowance.
Benedek Broadcasting's election to be taxed as an S Corporation automatically
terminated concurrently with the consummation of the Transactions. Under the
Indenture, the Company may distribute cash to its stockholder to pay individual
income taxes arising from taxable income of Benedek Broadcasting for periods
prior to the termination of the S election.
EMERGING ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 123, 'Accounting for Stock Based Compensation'
in October 1995, which establishes financial accounting and reporting standards
for stock based employee compensation plans, including stock purchase plans,
stock options, restricted stock, and stock appreciation rights. The Company has
elected to continue accounting for stock based compensation under Accounting
Principles Board Opinion No. 25. The disclosure requirements of SFAS No. 123
will be effective for the Company's financial statements beginning in 1996.
Management does not believe that the implementation of SFAS 123 will have a
material effect on its consolidated financial statements.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Existing Notes were originally issued and sold on June 6, 1996. The
offer and sale of the Existing Notes was not required to be registered under the
Securities Act in reliance upon the exemption provided by Section 4(2) of the
Securities Act. In connection with the sale of the Existing Notes, the Company
agreed to file with the SEC a registration statement relating to an exchange
offer pursuant to which new senior subordinated discount notes of the Company
covered by such registration statement and containing terms identical in all
material respects to the terms of the Existing Notes would be offered in
exchange for Existing Notes tendered at the option of the holders thereof or, if
applicable interpretations of the staff of the SEC did not permit the Company to
effect such an Exchange Offer, or, among other things, if the Exchange Offer is
not consummated, the Company agreed, at its cost, to file a Shelf Registration
Statement covering resales of the Existing Notes and to use all reasonable
efforts to have such Shelf Registration Statement declared effective and kept
effective for a period of three years from the effective date thereof.
The purpose of the Exchange Offer is to fulfill certain of the Company's
obligations under the Registration Agreement. This Prospectus may not be used by
any holder of the Existing Notes or any holder of the Exchange Securities to
satisfy the registration and prospectus delivery requirements
51
<PAGE>
<PAGE>
under the Securities Act that may apply in connection with any resale of such
Existing Notes or Exchange Securities. See ' -- Terms of the Exchange Offer;
Period for Tendering Existing Notes.'
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Existing Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term 'Expiration Date' means 5:00 p.m., New
York City time, on , 1996; provided, however, that if the Company,
in its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term 'Expiration Date' means the latest time and date to
which the Exchange Offer is extended. Notwithstanding the foregoing, the
Expiration Date shall not be later than 5:00 p.m., New York City time, on the
date 60 days from the date of this Prospectus.
As of the date of this Prospectus, $170.0 million aggregate principal
amount at maturity of the Existing Notes was outstanding. This Prospectus,
together with the Letter of Transmittal, is first being sent on or about
, 1996, to all holders of Existing Notes known to the Company. The
Company's obligation to accept Existing Notes for exchange pursuant to the
Exchange Offer is subject to certain conditions as set forth under ' -- Certain
Conditions to the Exchange Offer.'
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Existing Notes, by giving oral or
written notice of such extension to the holders thereof. During any such
extension, all Existing Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company. Any Existing
Notes not accepted for exchange for any reason will be returned without expense
to the tendering holder thereof as promptly as practicable after the expiration
or termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Existing Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified below under ' -- Certain Conditions to the Exchange
Offer.' The Company will give oral or written notice of any extension,
amendment, non-acceptance or termination to the holders of the Existing Notes as
promptly as practicable, such notice in the case of any extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
EXCHANGE OFFER PROCEDURES
The tender to the Company of Existing Notes by a holder thereof as set
forth below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Existing Notes for exchange pursuant to the Exchange Offer must transmit a
properly completed and duly executed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to United States Trust Company
of New York (the 'Exchange Agent') at one of the addresses set forth below under
'Exchange Agent' on or prior to the Expiration Date. In addition, either (i)
certificates for such Existing Notes must be received by the Exchange Agent
along with the Letter of Transmittal, (ii) a timely confirmation of a book-entry
transfer (a 'Book-Entry Confirmation') of such Existing Notes, if such procedure
is available, into the Exchange Agent's account at The Depository Trust Company
(the 'Book-Entry Transfer Facility') pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the holder must comply with the 'Guaranteed Delivery
Procedures' below. THE METHOD OF DELIVERY OF EXISTING NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR EXISTING NOTES SHOULD BE SENT TO THE COMPANY.
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Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Existing Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the
Existing Notes who has not completed the box entitled 'Special Issuance
Instruction' or 'Special Delivery Instructions' on the Letter of Transmittal or
(ii) for the account of an Eligible Institution (as defined). In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantees must be by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, 'Eligible
Institutions'). If Existing Notes are registered in the name of a person other
than a signatory of the Letter of Transmittal, the Existing Notes surrendered
for exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered holder with the
signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Existing Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Existing Notes not properly tendered or to not accept
any particular Existing Notes which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to any particular Existing Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Existing Notes in the Exchange Offer). The interpretation of the terms
and conditions of the Exchange Offer as to any particular Existing Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
Existing Notes for exchange must be cured within such reasonable period of time
as the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Existing Notes for exchange, nor
shall any of them incur any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Existing Notes, such Existing Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case,
signed exactly as the name or names of the registered holder or holders
appear(s) on the Existing Notes.
If the Letter of Transmittal or any Existing Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of their authority to so
act must be submitted.
By tendering, each holder will represent to the Company that, among other
things, the Exchange Securities acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person receiving such
Exchange Securities, whether or not such person is the holder, that neither the
holder nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such Exchange Securities and that
neither the holder nor any such other person is an 'affiliate,' as defined under
Rule 405 of the Securities Act, of the Company.
Each broker-dealer that receives Exchange Securities for its own account in
exchange for Existing Notes where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See 'Plan of Distribution.'
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ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE SECURITIES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept promptly after the Expiration Date, all Existing Notes
properly tendered and will issue the Exchange Securities promptly after
acceptance of such Existing Notes. See ' -- Certain Conditions to the Exchange
Offer.' For purposes of the Exchange Offer, the Company shall be deemed to have
accepted properly tendered Existing Notes for exchange when, as and if the
Company has given oral or written notice thereof to the Exchange Agent.
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive an Exchange Security having a principal amount at maturity
equal to that of the surrendered Existing Note. If by November 4, 1996, neither
the Exchange Offer is consummated nor a Shelf Registration Statement is declared
effective, additional cash interest will accrue on each Existing Note from and
including November 5, 1996 until but excluding the earlier of the date of
consummation of the Exchange Offer and the effective date of the Shelf
Registration Statement at a rate of 0.50% per annum. Holders of Existing Notes
accepted for exchange will be deemed to have waived the right to receive any
other payments or accrued interest on such Existing Notes.
In all cases, issuance of Exchange Securities for Existing Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Existing Notes or
a timely Book-Entry Confirmation of such Existing Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents. If any
tendered Existing Notes are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer or if Existing Notes are submitted for a
greater principal amount at maturity than the holder desires to exchange, such
unaccepted or non-exchanged Existing Notes will be returned without expense to
the tendering holder thereof (or, in the case of Existing Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility pursuant to the book-entry transfer procedures described below, such
non-exchanged Existing Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Existing Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry deliver of Existing Notes by causing the
Book-Entry Transfer Facility to transfer such Existing Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Existing Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under 'Exchange Agent' on or prior to the Expiration
Date or the guaranteed delivery procedures described below must be complied
with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Existing Notes desires to tender such
Existing Notes and the Existing Notes are not immediately available, or time
will not permit such holder's Existing Notes or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made through an Eligible Institution, (ii) prior
to the Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and a notice of guaranteed delivery ('Notice of Guaranteed
Delivery'), substantially in the form provided by the Company (by telegram,
telex, facsimile transmission, mail or hand delivery), setting forth the name
and address of the holder of Existing Notes and the principal amount at maturity
of Existing Notes tendered, stating that the tender is being made thereby and
guaranteeing that within
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five New York Stock Exchange ('NYSE') trading days after the date of execution
of the Notice of Guaranteed Delivery, the certificates for all physically
tendered Existing Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the Letter
of Transmittal will be deposited by the Eligible Institution with the Exchange
Agent and (iii) the certificates for all physically tendered Existing Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
all other documents required by the Letter of Transmittal are received by the
Exchange Agent within five NYSE trading days after the date of execution of the
Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
'Exchange Agent.' Any such notice of withdrawal must specify the name of the
person having tendered the Existing Notes to be withdrawn, identify the Existing
Notes to be withdrawn (including the principal amount at maturity of such
Existing Notes) and (where certificates for Existing Notes have been
transmitted) specify the name in which such Existing Notes are registered, if
different from that of the withdrawing holder. If certificates for Existing
Notes have been delivered or otherwise identified to the Exchange Agent, then,
prior to the release of such certificates the withdrawing holder must also
submit the serial numbers of the particular certificates to be withdrawn and a
signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such holder is an Eligible Institution. If Existing Notes
have been tendered pursuant to the procedure for 'Book-Entry Transfer' described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Existing
Notes and otherwise comply with the procedures of such facility. All questions
as to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any Existing Notes so withdrawn will be deemed not
to have been validly tendered for exchange for purposes of the Exchange Offer.
Any Existing Notes which have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder thereof without cost to
such holder (or, in the case of Existing Notes tendered by book-entry transfer
into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant
to the 'Book-Entry Transfer' procedures described above, such Existing Notes
will be credited to an account maintained with such Book-Entry Transfer Facility
for the Existing Notes) as soon as practicable after withdrawal, rejection of
tender or termination of the Exchange Offer. Properly withdrawn Existing Notes
may be retendered by following one of the procedures described under
' -- Exchange Offer Procedures' above at any time on or prior to the Expiration
Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue Exchange Securities in
exchange for, any Existing Notes and may terminate or amend the Exchange Offer
if at any time before the acceptance of such Existing Notes for exchange or the
exchange of the Exchange Securities for such Existing Notes any of the following
events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof or (ii) resulting in a material delay in the
ability of the Company to accept for exchange or exchange some or all of
the Existing Notes pursuant to the Exchange Offer; or any statute, rule,
regulation, order or injunction shall be sought, proposed, introduced,
enacted, promulgated or deemed applicable to the Exchange Offer or any of
the transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken,
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proposed or threatened, by any government, governmental authority, agency
or court, domestic or foreign, that in the sole judgment of the Company
might directly or indirectly result in any of the consequences referred to
in clauses (i) or (ii) above or, in the sole judgment of the Company, might
result in the holders of Exchange Securities having obligations with
respect to resales and transfers of Exchange Securities which are greater
than those described in the interpretation of the SEC referred to on the
cover page of this Prospectus, or would otherwise make it inadvisable to
proceed with the Exchange Offer;
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by any governmental agency or authority which may adversely affect the
ability of the Company to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar internal calamity directly or indirectly involving the
United States, or, in the case of any of the foregoing existing at the time
of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company and its subsidiaries taken as a whole that, in the
sole judgment of the Company, is or may be adverse to the Company, or the
Company shall have become aware of facts that, in the sole judgment of the
Company, have or may have adverse significance with respect to the value of
the Existing Notes or the Exchange Securities;
which, in the reasonable judgment of the Company in any case, and regardless of
the circumstances (including any action by the Company) giving rise to any such
condition, makes it inadvisable to proceed with the Exchange Offer and/or with
such acceptance for exchange or with such exchange.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Existing Notes
tendered, and no Exchange Securities will be issued in exchange for any such
Existing Notes, if at such time any stop order shall be threatened or in effect
with respect to the Registration Statement of which this Prospectus constitutes
a part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended.
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EXCHANGE AGENT
United States Trust Company of New York has been appointed as the Exchange
Agent of the Exchange Offer. All executed Letters of Transmittal should be
directed to the Exchange Agent at one of the addresses set forth below.
Questions and requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Mail:
United States Trust Company of New York
P.O. Box 844
Cooper Station
New York, NY 10276-0844
By Hand:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, NY 10006
By Overnight Courier:
United States Trust Company of New York
770 Broadway
New York, NY 10003
Attn: Corporate Trust
By Facsimile:
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
DELIVERY OF DOCUMENTS TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$ which includes fees and expenses of the Exchange Agent and accounting,
legal, printing and related fees and expenses.
TRANSFER TAXES
Holders who tender their Existing Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register Exchange Securities in the name of, or request
that Existing Notes not tendered or not accepted in the Exchange Offer be
returned to, a person other than the registered tendering holder will be
responsible for the payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Existing Notes who do not exchange their Existing Notes for
Exchange Securities pursuant to the Exchange Offer will continue to be subject
to the restrictions on transfers of such Existing Notes as set forth in the
legend thereon as a consequence of the issuance of the Existing Notes pursuant
to the exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Existing Notes may not be
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offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Existing Notes under the Securities Act. Based on
interpretations by the staff of the SEC in letters issued to third parties,
Exchange Securities issued pursuant to the Exchange Offer may be offered for
resale, resold or otherwise transferred by any holder thereof (other than any
such holder which is an 'affiliate' of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such Exchange
Securities are acquired in the ordinary course of such holder's business, such
holder has no arrangement or understanding with respect to the distribution of
the Exchange Securities to be acquired pursuant to the Exchange Offer and such
holder is not engaged in and does not intend to engage in a distribution of such
Exchange Securities. If any person were to be participating in the Exchange
Offer for the purpose of distributing securities in a manner not permitted by
the interpretations of the staff of the SEC referred to above, such person (i)
could not rely on the applicable interpretations of the staff of the SEC and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction. In
addition, to comply with the securities laws of certain jurisdictions, if
applicable, the Exchange Securities may not be offered or sold unless they have
been registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Agreement and subject to certain specified
limitations therein, to register or qualify the Exchange Securities for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Exchange Securities reasonably requests in writing.
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BUSINESS
The Company owns 22 network-affiliated television stations in the United
States. The Stations are diverse in geographic location and network affiliation,
serve small to medium-sized markets and, in the aggregate, reach communities in
24 states. Twelve of the Stations are affiliated with CBS, six are affiliated
with ABC and four are affiliated with NBC. On a pro forma basis giving effect to
the Transactions, the Company would have had net revenues, broadcast cash flow
and operating cash flow of $121.3 million, $52.7 million and $50.8 million,
respectively, for the fiscal year ended December 31, 1995.
The Company believes that the Acquired Stations have been underperforming
in terms of their overall revenue potential and can be operated more efficiently
under Company management, thereby offering the Company an attractive opportunity
to improve broadcast cash flow. The Company believes that such improvement can
be achieved by expanding the Acquired Stations' share of market revenues and by
increasing viewership levels through an increased emphasis on local news and
informational programming and cost-effective purchasing of competitive
syndicated and first run programming.
The Company believes that the broadcast cash flow margins of the Stauffer
Stations of 19.7%, 29.5% and 23.1% during 1993, 1994 and 1995, respectively, can
be substantially improved in the near-term. By comparison, the broadcast cash
flow margins for the Benedek Stations for the same periods were 40.5%, 44.5% and
42.3%, respectively. The Company further believes that although the Brissette
Stations have operated at attractive margins, the previous ownership of the
Brissette Stations operated with a focus on managing costs, not on maximizing
revenues and broadcast cash flow growth. This strategy typically resulted in the
Brissette Stations capturing a smaller share of advertising revenue in their
respective markets than their audience share in these markets. The compound
annual growth rate of net revenues and broadcast cash flow of the Benedek
Stations (excluding the station in Dothan, Alabama acquired by Benedek
Broadcasting in 1995) for the five-year period from 1991 through 1995 was 7.8%
and 9.0%, respectively, as compared to 4.0% and 3.6%, respectively, for the
Brissette Stations during the same period.
The Stations are located in markets ranked in size from 83 to 201 out of
the 211 markets surveyed by Nielsen. The Company believes that broadcast
television stations in small to medium-sized markets offer an opportunity to
generate attractive and stable operating cash flow due to limited competition
for viewers from other over-the-air broadcasters, from other media soliciting
advertising expenditures and from other broadcasters purchasing syndicated
programming. The Company targets small and medium-sized markets that have stable
employment and population and a diverse base of employers. The markets targeted
by the Company generally have population centers that share common community
interests and are receptive to local programming. Each of the Stations is
affiliated with one of the national television networks, which provides an
established audience and reputation for national news, sports and entertainment
programming. With the established audiences provided by network affiliations,
management seeks to implement its strategy to enhance non-network ratings and
revenues while controlling costs.
The Company believes that the television industry is in a period of
consolidation as a result of which a relatively small number of station
operators will emerge as the leading television station group owners in the
United States. Recent telecommunications legislation that eliminates
restrictions on the number of television stations that any individual or entity
may own so long as the aggregate audience reach does not exceed 35% of all
United States households is likely to accelerate this trend. The Company's
growth strategy, of which the acquisition of the Stauffer Stations and Brissette
Stations is a part, is to become one of the leading group owners of small to
medium-sized market television stations in the United States. The Company
believes that this expansion will create economies of scale which will (i)
improve its ability to negotiate more favorable arrangements with program
suppliers, national sales representation firms, equipment vendors and television
networks, (ii) enable it to develop program consortiums for regional news and
sports programming and (iii) enhance its ability to attract and retain strong
management and on-air talent.
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INDUSTRY BACKGROUND
Commercial television broadcasting began in the United States on a regular
basis in the 1940s. Currently there are a limited number of channels available
for broadcasting in any one geographic area, and the license to operate a
broadcast station is granted by the FCC. Television stations can be
distinguished by the frequency on which they broadcast. Television stations
which broadcast over the very high frequency ('VHF') band (channels 2-13) of the
spectrum generally have some competitive advantage over television stations
which broadcast over the ultra-high frequency ('UHF') band (channels 14-69) of
the spectrum because VHF channels typically cover larger geographic areas and
operate at a lower transmission cost. However, specific market characteristics
such as population densities, geographic features or other factors may determine
whether UHF stations are in fact at a competitive disadvantage.
Television station revenues are primarily derived from local, regional and
national advertising and, to a modest extent, from network compensation and
revenues from tower rentals and commercial production activities. Advertising
rates are based upon numerous factors including a program's popularity among the
viewers an advertiser wishes to attract, the number of advertisers competing for
the available time allotted to commercials, the size and demographic make-up of
the audience and the availability of alternative advertising media in the market
area. The extent of advertising expenditures, which are sensitive to broad
economic trends, has historically affected the broadcast industry.
Whether or not a station is affiliated with one of the four major networks
(ABC, CBS, NBC or Fox) may have a significant impact on the composition of the
station's programming, revenues, expenses and operations. A typical network
affiliate receives a significant portion of its daily programming from the
network. This programming, together with cash payments, is provided to the
affiliate by the network in exchange for a substantial majority of the
advertising time sold during the broadcast of network programming. The Fox
network has operating characteristics which are similar to ABC, CBS and NBC,
although the hours of network programming produced for Fox affiliates is less
than that produced by the other major networks. In addition, UPN and the Warner
Bros. Network recently have been launched as new television networks. However,
neither produce a significant amount of network programming.
Through the 1970s, network television broadcasting generally enjoyed
dominance in viewership and television advertising revenues. FCC regulation
evolved to address this dominance, with the focus on increasing competition and
diversity of programming in the television broadcasting industry. See
' -- Federal Regulation of Television Broadcasting.'
Cable television systems were first installed in significant numbers in the
late 1960s and early 1970s and were initially used to retransmit broadcast
television programming in areas with poor broadcast signal reception. According
to the 1996 Television & Cable Factbook, cable television currently passes
approximately 90% of all television households nationwide and approximately 68%
of such households are cable subscribers. Cable-originated programming has
emerged as a significant competitor for viewers of broadcast television
programming. With increased cable penetration, the cable programming share of
advertising revenues has increased. Notwithstanding increased cable viewership
and advertising, broadcast television remains the dominant distribution system
for mass market television advertising. No single cable programming network
regularly attains audience levels amounting to more than a small fraction of any
single major broadcast network. Despite the growth in alternative programming
from cable, according to Nielsen, 65% of all prime time television viewing time
during the 1994-1995 broadcast season was spent viewing ABC, CBS, NBC and Fox
programming.
Other developments have also affected television programming and delivery.
Independent stations have emerged as viable competitors for television
viewership share, particularly as the result of the availability of first run
network programming from UPN and the Warner Bros. Network. In addition, there
has been substantial growth in the number of home satellite dish receivers and
VCRs, which has further expanded the number of programming alternatives for
television audiences. Furthermore, direct broadcast services ('DBS') to homes
from satellites became available on a nationwide basis during 1994. See
' -- Competition.'
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STRATEGY
The Company's senior management team, led by A. Richard Benedek, Chairman
and Chief Executive Officer, and K. James Yager, President and Chief Operating
Officer, has extensive experience in acquiring and improving the operations of
television stations. Management's primary operating strategy is to maximize each
Station's advertising revenue through local news, information and
community-oriented programming that has broad audience appeal and value-added
sales potential, while maintaining strict cost controls. Key elements of
management's strategy include:
LOCAL NEWS LEADERSHIP AND LOCAL PROGRAMMING. Management believes that
local news and informational programming leadership contributes to higher
ratings and, therefore, increased advertising revenues. Management's
emphasis on local news and on-going community involvement allows the
Benedek Stations to maximize the advertising rates they can charge local,
regional and national accounts, not only for news, but for network and
nationally-syndicated programming which the Benedek Stations broadcast in
time periods adjacent to regularly scheduled local newscasts and local news
specials.
The Company has focused on maintaining and building each Benedek
Station's local news franchise as the key element in its strategy to build
and maintain audience loyalty. Management believes that strong,
well-differentiated local news programming attracts high viewership levels,
particularly of demographic groups that are appealing to both local and
national advertisers, thereby allowing the Company to maximize advertising
rates.
Management of the Company believes that television stations with a
prominent local identity and active community involvement can realize
additional revenues from local advertisers through the development and sale
of special promotional programming. The Benedek Stations have developed
high-quality programming which highlights community events and topics of
local interest. Locally produced programming includes 'Our Town' segments
featuring local news reports, special promotional announcements and local
advertising focused on communities within a particular market; 'Town
Meetings,' which provide a forum for members of local communities to
discuss and debate issues of local concern; 'Live Line' programs on health,
money and legal matters in which viewers call in to a panel of local
experts; and home shopping programs sold exclusively to local merchants.
The Benedek Stations also sell promotional advertising packages tied to
various local events such as youth expos, county fairs, parades, athletic
events and other local activities. These local programs have proven
successful in attracting incremental advertising revenues and are a core
element of each Benedek Station's local identity.
Six of the nine Benedek Stations are the number one ranked news
stations in their respective markets, whereas only four of the 13 Acquired
Stations are the number one ranked news stations in their respective
markets. The Company believes that the Acquired Stations will benefit from
the Company's focus on local news and community-oriented programming.
SYNDICATED PROGRAMMING. The Company selectively purchases first run
and off-network syndicated programming designed to reach specific
demographic groups attractive to advertisers. Currently, the three most
highly-rated first run syndicated programs in the United States are 'The
Oprah Winfrey Show,' 'Wheel of Fortune' and 'Jeopardy.' The Company
broadcasts 'The Oprah Winfrey Show' on six of the Benedek Stations, 'Wheel
of Fortune' on seven of the Benedek Stations and 'Jeopardy' on four of the
Benedek Stations. Additionally, the Company recently began broadcasting the
newly syndicated 'Home Improvement' on four of the Benedek Stations and
'Seinfeld' on three of the Benedek Stations. The Company broadcasts other
highly-rated first run syndicated programs on several of the Benedek
Stations including 'Live with Regis & Kathie Lee,' 'Ricki Lake' and 'Jenny
Jones.' A number of the Benedek Stations also broadcast other highly-rated
off-network syndicated programming including 'Cheers,' 'M*A*S*H' and
'Roseanne.' The Company believes that the programming mix of the Acquired
Stations can be improved on a cost effective basis. Of the 13 Acquired
Stations, one broadcasts 'The Oprah Winfrey Show,' three broadcast 'Wheel
of Fortune,' four broadcast 'Jeopardy,' four broadcast 'Home Improvement'
and two broadcast 'Seinfeld.' The Stauffer Stations also broadcast first
run and off-network syndicated programming including 'Live with Regis &
Kathie Lee,' 'Montel Williams,' 'Ricki Lake,' 'Jenny Jones' and 'Golden
Girls.' The Brissette Stations' first run and off-network syndicated
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programming includes 'Live with Regis & Kathie Lee,' 'Married . . . with
Children,' 'Roseanne' and 'Cheers.'
The Company seeks to acquire programs that are available on a cost
effective basis for limited licensing periods, allow scheduling
flexibility, complement each Station's overall programming mix and counter
competitive programming. The Company has been able to purchase syndicated
programming at attractive rates in part as a result of the limited
competition for such programming in the Company's markets. As a result of
the limited competition from other broadcasters purchasing syndicated
programming in the small and medium-sized markets served by the Company,
program expense as a percentage of net revenues for the Stations was 4.3%
and 4.1% in 1994 and 1995, respectively, as compared to approximately 9.1%
for all network-affiliated stations in 1994. In addition, the Company
believes that the programming mix of the Acquired Stations can be improved
on a cost effective basis.
LOCAL SALES EMPHASIS. Management's sales strategy focuses on
increasing the sale of local advertising by attracting new advertisers to
television and increasing the amount of advertising dollars being spent by
existing local advertisers. Management of the Company believes that its
leadership in local news and informational programming enhances its ability
to develop and attract local advertising expenditures. Management believes
that through local sales efforts it can stimulate local advertising
expenditures more readily than it can national advertising expenditures.
This enables the Company to react promptly to changes in the national and
local advertising climate and better maintain consistent operating cash
flows.
Trained and experienced sales personnel sell local advertising for the
Company in each of its markets. The Company focuses on local advertisers by
producing their commercials, producing news and informational programming
with local advertising appeal and sponsoring or co-promoting local events
and activities that give local advertisers unique value-added community
identity. Approximately 59% of Benedek Broadcasting's revenues in 1995 were
generated from local and regional advertisers. Local and regional revenues
at the Benedek Stations increased 44.5% from 1990 to 1994 compared to a
23.4% increase in the national spot television revenues of the Benedek
Stations during the same period.
FINANCIAL PLANNING AND CONTROLS. Management emphasizes strict control
of the Company's programming and operating costs as an important factor in
increasing broadcast cash flow. The Company continually seeks to identify
and implement cost savings opportunities. Furthermore, the Company
maintains a detailed budgeting process and reviews performance relative to
budget monthly with respect to both revenues and expenses, thereby enabling
management to react promptly to changes in market conditions. Management of
the Company believes that controlling costs is an essential factor in
achieving and maintaining profitability and that it can materially reduce
costs of the Stauffer Stations through its budgeting procedures. The
Company intends to continue to identify opportunities to increase operating
cash flow through its on-going strategic planning and budgeting process.
FUTURE ACQUISITIONS AND OPPORTUNITIES. The Company intends to pursue
additional acquisitions of broadcast television stations, primarily of
network-affiliated stations in small to medium-sized markets where the
Company believes it can successfully implement its operating strategy and
where such stations can be acquired on financially acceptable terms.
Additionally, a rule making proceeding is currently pending before the FCC
regarding possible relaxation of the local television duopoly rules. If
these rules are implemented, the Company intends to explore opportunities
to enter into local marketing agreements with other stations in markets
where it currently operates as well as in other markets.
NETWORK AFFILIATION OF THE STATIONS
Each of the Stations is affiliated with either ABC, CBS or NBC pursuant to
an affiliation agreement (an 'Affiliation Agreement'). Each Affiliation
Agreement provides the affiliated Station with the right to broadcast all
programs transmitted by the network with which the Station is affiliated. In
return, the network has the right to sell a substantial majority of the
advertising time during such broadcasts. In
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exchange for every hour that a Station elects to broadcast network programming,
the network pays the Station a specified fee, which varies with the time of day.
Typically, prime-time programming generates the highest hourly rates. Rates are
subject to increase or decrease by the network during the term of an Affiliation
Agreement, with provisions for advance notices and the right of termination by
the Station in the event of a reduction of rates.
Each of the Benedek Stations' network affiliation agreements currently runs
for a period of five to 10 years. WYTV, WBKO-TV, WTOK-TV and WHSV-TV, all of
which are ABC affiliates, each have a five-year affiliation agreement which
expires in 1999. KDLH-TV, WIFR-TV, KHQA-TV and WTVY-TV, all of which are CBS
affiliates, each have a ten-year affiliation agreement which expires in 2005 and
is automatically renewed for successive five-year terms, subject to either
party's right to terminate the agreement at the end of any term upon six months'
advance notice. WTAP-TV, an NBC affiliate, currently operates under a five-year
affiliation agreement which expires in 2000 and is automatically renewed for
successive terms, subject to either party's right to terminate the agreement at
the end of any term upon 12 months' advance notice.
Each of the Stauffer Stations' network affiliation agreements currently
runs for a period of five to 10 years. KMIZ(TV), an ABC affiliate, operates
under an affiliation agreement which expires in 2000 and is automatically
renewed for successive terms, subject to either party's right to terminate the
agreement at the end of its term upon 180 days' advance notice. All of the other
Stauffer Stations are CBS affiliates operating under affiliation agreements
which expire in 2005 and which automatically renew for successive terms, subject
to either party's right to terminate the agreement at the end of its term upon
six months' advance notice.
Each of the Brissette Stations' network affiliation agreements currently
runs for a period of 10 to 11 years. WMTV(TV), WWLP(TV) and WILX-TV, all of
which are NBC affiliates, each have an affiliation agreement which expires in
2006 and is automatically renewed for successive five-year terms, subject to
either party's right to terminate the agreement at the end of any term upon six
months' advance notice. Each of Brissette's CBS affiliates, WSAW-TV, WTRF-TV,
KAUZ-TV and KOSA-TV, are operating under affiliation agreements which expire in
2005 and which automatically renew for successive 10-year terms, subject to
either party's right to terminate the agreement upon six months' advance notice.
WHOI(TV), an ABC affiliate, currently operates under an affiliation agreement
which expires in 2005 and which does not provide for renewals.
In December 1995, the Company entered into new long-term affiliation
agreements with CBS effective retroactive to July 1, 1995 for three of the four
Benedek Stations that are CBS affiliates and agreed to extend the term of the
fourth CBS affiliate from 2004 to 2005. In connection with such arrangements,
CBS paid the Company bonus payments of $2.5 million in the fourth quarter of
1995 and $2.5 million in the first quarter of 1996. These payments will be
recognized as revenue by the Company at the rate of $0.5 million per year over
the ten-year period of the affiliation agreements. The Company also agreed with
CBS that, upon the consummation of the Acquisitions, the term of the affiliation
agreements of the Stauffer Stations that are CBS affiliates would be extended
from 2000 to 2005 and the term of the affiliation agreements of the Brissette
Stations that are CBS affiliates will be extended from 2004 to 2005.
In addition to its affiliation arrangements, the Company entered into
agreements with Fox to broadcast football games of the National Football
Conference ('NFC') of the National Football League and certain other Fox
programming in non-network time periods for the 1994 and 1995 broadcast seasons.
In 1995, the Company broadcast the NFC football games and other Fox programming
on KHQA-TV, WHSV-TV, WTOK-TV and WYTV. The Company believes that broadcasting
NFC football games increased its audience ratings during the times the games
were broadcast. Stauffer entered into similar agreements with Fox on behalf of
KCOY-TV and KMIZ(TV).
ADVERTISING SALES
Television station revenues are primarily derived from local, regional and
national advertising and, to a modest extent, from network compensation and
revenues from tower rentals and commercial production activities. Advertising
rates are based upon numerous factors including a program's
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popularity among the viewers an advertiser wishes to target, the number of
advertisers competing for the available time, the size and demographic
composition of a program's audience and the availability of competing or
alternative advertising media in the market area. Because broadcast television
stations rely on advertising revenue, declines in advertising budgets,
particularly in recessionary periods, adversely affect the broadcast industry
and as a result may contribute to a decrease in the revenues of broadcast
television stations. The Company seeks to manage its spot inventory efficiently
thereby maximizing advertising rates.
Local Sales. Approximately 59% of the gross revenues of the Benedek
Stations in 1995 came from local and regional advertisers. Local and regional
advertising is sold primarily by each Station's professional sales staff.
Typical local and regional advertisers include automobile dealerships,
retailers, local grocery chains, soft drink bottlers, state lotteries and
restaurants. The Company focuses on local advertisers by producing their
commercials, producing news and informational programming with local advertising
appeal and sponsoring or co-promoting local events and activities that give
local advertisers value-added community identity. The Company's management team
monitors sales plans and promotional activities and shares such information
among the Benedek Stations on a weekly basis.
National Sales. Approximately 27% of the gross revenues of the Benedek
Stations in 1995 came from national advertisers. Typical national advertisers
include automobile manufacturers, consumer goods manufacturers, communications
companies, fast food franchisors, national retailers and direct marketers.
National advertising time is sold through representative agencies retained by
Benedek Broadcasting, Stauffer and Brissette. Six of the Benedek Stations are
represented by Katz Communications, Inc. KDLH-TV retains Seltel, Inc. as its
national sales representative and WYTV and WTVY-TV retain Petry, Inc. as their
national sales representative. The Benedek Stations' national sales coordinators
actively assist their national sales representatives to induce national
advertisers to increase their national spot expenditures designated to the
Company's markets. All of the Stauffer Stations are represented by Petry, Inc.
Five of the Brissette Stations retain Harrington, Righter & Parsons, L.L.P. as
their national sales representative and the other three Brissette Stations are
represented by TeleRep, Inc.
RATING SERVICE DATA
All television stations in the United States are grouped into 211
television markets which are ranked in size according to the numbered television
households in such markets. Until recently, two national audience measuring
services, Arbitron Company ('Arbitron') and Nielsen, periodically published
reports on estimated audience for the television stations in the various
television markets throughout the country. Arbitron recently discontinued
providing such services. The audience estimates are expressed in terms of the
percentage of the total potential audience in a market viewing a particular
station (the station's 'rating') and of the percentage of households actually
viewing television (the station's 'share'). The ratings reports provide data on
the basis of total television households and selected demographic groupings in
15-minute or half-hour increments for a particular market. Nielsen calls each
specific geographic market a DMA. Arbitron called each specific geographic
market an Area of Dominant Influence ('ADI'). The geographic area covered by a
DMA generally corresponded to the geographic area covered by the corresponding
ADI. Every county in the continental United States is assigned to a DMA, and was
assigned to an ADI, of a specific television market on an exclusive basis. In
larger markets, ratings are determined by a combination of meters connected
directly to selected television sets (the results of which are reported on a
daily basis) and weekly diaries of television viewing prepared by the actual
viewers, while in smaller markets only weekly diaries are completed during four
separate four-week periods during the course of any year. These periods are
commonly known as 'sweeps periods.' All the Company's markets are measured
during these sweeps periods.
All television audience share and aggregate television audience information
contained in this Prospectus is based on data compiled from either Nielsen or
Arbitron surveys, depending on which service each of the Stations subscribed to.
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The following table sets forth certain information for each of the Stations
and the markets they serve:
<TABLE>
<CAPTION>
NUMBER OF
COMMERCIAL
STATIONS STATION
MARKET CALL NETWORK IN RANK IN STATION
MARKET AREA RANK LETTERS CHANNEL(c) AFFILIATION MARKET MARKET SHARE
- ---------------------------------------- ------ ----------- ---------- ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BENEDEK STATIONS
Youngstown, Ohio 95 WYTV 33 ABC 3 3 17%
Duluth, Minnesota and 134 KDLH-TV 3 CBS 3 2 19%
Superior, Wisconsin
Rockford, Illinois 136 WIFR-TV 23 CBS 4 1 19%
Quincy, Illinois and Hannibal, 158 KHQA-TV 7 CBS 2 1 26%
Missouri
Dothan, Alabama 172 WTVY-TV 4 CBS 3 1 29%
Panama City, Florida 159 WTVY-TV 4 CBS 4 3 12%
Bowling Green, Kentucky 181 WBKO-TV 13 ABC 2 1 36%
Meridian, Mississippi 182 WTOK-TV 11 ABC 3 1 32%
Parkersburg, West Virginia 184 WTAP-TV 15 NBC 1 1 29%
Harrisonburg, Virginia 201 WHSV-TV 3 ABC 1 1 29%
STAUFFER STATIONS
Santa Barbara, Santa Maria and 115 KCOY-TV 12 CBS 4 3 11%
San Luis Obispo, California
Topeka, Kansas 140 WIBW-TV 13 CBS 3 1 23%
Columbia and Jefferson City, 146 KMIZ(TV) 17 ABC 3 3 13%
Missouri
Casper and Riverton, Wyoming 192 KGWC-TV 14 CBS 3 2(e) 12%(e)
192 KGWL-TV(a) 5 CBS (d) (e) (e)
192 KGWR-TV(a) 13 CBS (d) (e) (e)
Cheyenne, Wyoming, Scottsbluff, 193 KGWN-TV 5 CBS 4 1(f) 20%(f)
Nebraska and Sterling, Colorado 193 KSTF-TV(b) 10 CBS (d) (f) (f)
193 KTVS-TV(b) 3 CBS (d) (f) (f)
BRISSETTE STATIONS
Madison, Wisconsin 83 WMTV(TV) 15 NBC 4 2 14%
Springfield and Holyoke, 102 WWLP(TV) 22 NBC 2 1 21%
Massachusetts
Lansing, Michigan 106 WILX-TV 10 NBC 4 2 15%
Peoria and Bloomington, Illinois 109 WHOI(TV) 19 ABC 4 3 16%
Wausau and Rhinelander, Wisconsin 131 WSAW-TV 7 CBS 3 1 26%
Wheeling, West Virginia and 138 WTRF-TV 7 CBS 2 2 20%
Steubenville, Ohio
Wichita Falls, Texas and 139 KAUZ-TV 6 CBS 4 3 14%
Lawton, Oklahoma
Odessa and Midland, Texas 149 KOSA-TV 7 CBS 4 2 15%
<CAPTION>
CABLE
MARKET AREA PENETRATION
- ---------------------------------------- -----------
<S> <C>
BENEDEK STATIONS
Youngstown, Ohio 72.3%
Duluth, Minnesota and 52.7%
Superior, Wisconsin
Rockford, Illinois 68.4%
Quincy, Illinois and Hannibal, 60.6%
Missouri
Dothan, Alabama 65.8%
Panama City, Florida 68.3%
Bowling Green, Kentucky 56.7%
Meridian, Mississippi 52.4%
Parkersburg, West Virginia 76.4%
Harrisonburg, Virginia 67.3%
STAUFFER STATIONS
Santa Barbara, Santa Maria and 85.7%
San Luis Obispo, California
Topeka, Kansas 73.1%
Columbia and Jefferson City, 59.7%
Missouri
Casper and Riverton, Wyoming 68.9%(e)
(e)
(e)
Cheyenne, Wyoming, Scottsbluff, 73.0%(f)
Nebraska and Sterling, Colorado (f)
(f)
BRISSETTE STATIONS
Madison, Wisconsin 61.5%
Springfield and Holyoke, 81.8%
Massachusetts
Lansing, Michigan 65.1%
Peoria and Bloomington, Illinois 71.3%
Wausau and Rhinelander, Wisconsin 50.6%
Wheeling, West Virginia and 76.4%
Steubenville, Ohio
Wichita Falls, Texas and 68.8%
Lawton, Oklahoma
Odessa and Midland, Texas 73.5%
</TABLE>
- ------------
(a) Satellite station of KGWC-TV.
(b) Satellite station of KGWN-TV.
(c) Channels 2 through 13 are broadcast over the very high frequency (VHF) band
of the broadcast spectrum and channels 14 through 69 are broadcast over the
ultra-high frequency (UHF) band of the broadcast spectrum.
(d) Satellite stations are not considered distinct stations in this market for
Nielsen purposes.
(e) Station Rank, Station Share and Cable Penetration information for KGWC-TV
includes data for satellite stations KGWL-TV, Lander, Wyoming and KGWR-TV,
Rock Springs, Wyoming, as reported by Nielsen.
(f) Station Rank, Station Share and Cable Penetration information for KGWN-TV
includes data for satellite stations KSTF-TV, Scottsbluff, Nebraska and
KTVS-TV, Sterling, Colorado, as reported by Nielsen.
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BENEDEK STATIONS
WYTV (ABC) YOUNGSTOWN, OHIO
Market Description. The Youngstown DMA consists of four counties, three of
which are in northeastern Ohio and one of which is in western Pennsylvania.
Youngstown is situated in northeastern Ohio along the Ohio/Pennsylvania border
within 65 miles of Cleveland, Ohio to the northwest and Pittsburgh, Pennsylvania
to the southeast. The Youngstown economy is historically based on processing of
pig iron and steel. While still part of a major steel producing area,
Youngstown's economy has diversified to include manufacturing, warehousing and
distribution companies. Some of the major employers in the area include the
Buick, Oldsmobile and Cadillac Division of General Motors Corporation, the
Packard Electric Corporation Division of General Motors Corporation, St.
Elizabeth's Medical Center, Western Reserve Care System and LTV Steel Tubular
Products Division of Republic Steel Works. This area is also the home of
Youngstown State University with approximately 16,000 students.
Station History and Characteristics. WYTV was originally licensed in 1953
to serve Youngstown, Ohio. The Youngstown market is ranked 95th in the United
States, with approximately 275,000 television households and a population of
approximately 694,000. This market has a cable penetration rate of 72.3%. WYTV
is broadcast on UHF channel 33 and is an ABC affiliate. The Company acquired
WYTV in 1983. The other local stations with which WYTV competes are also UHF
stations, one of which is an NBC affiliate and the other of which is a CBS
affiliate.
Station Performance. According to the 1995 Nielsen ratings reports, WYTV
was ranked number three in its market with a 6 rating and a 17% share of
households viewing television, as compared with a 6 rating and 19% share and a 6
rating and 19% share for the numbers one and two stations, respectively. As a
result of this relatively even market share distribution, WYTV maintains its
ability to sell advertising time at competitive rates. WYTV currently is the
number two ranked news station in this market and broadcasts three hours and 12
minutes of local news programming each weekday. WYTV's special value-added local
sales efforts in 1995 included the sale of a trip incentive package, the
publication of two four-color coupon brochures for local retailers that were
mailed to all homes in the Station's DMA, the development of vendor support for
the Station's local retail advertisers, the sale and production of four special
call-in programs, and the sponsorship of a year-long series of 30 second
announcements as well as 30 and 60 minute programs designed to create community
awareness of the role of the family in the 1990s and a season-long educational
program entitled 'Weatherschool' reaching approximately 20,000 students which,
in 1996, will include a computerized feature called Weather Net which will
provide additional sponsorship opportunities. WYTV's first run and off-network
syndicated programming includes 'Wheel of Fortune,' 'Jeopardy,' 'Roseanne,'
'Live with Regis & Kathie Lee' and 'Home Improvement.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WYTV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1991 1992 1993 1994 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net revenue growth over prior year.............................. 0.7% 18.1% 1.7% 19.2% 3.4%
Broadcast cash flow margin...................................... 33.0% 33.9% 32.5% 38.5% 37.8%
Station audience share.......................................... 18 16 18 18 17
Station rank in market.......................................... 3 3 3 3 3
</TABLE>
KDLH-TV (CBS) DULUTH, MINNESOTA AND SUPERIOR, WISCONSIN
Market Description. The Duluth-Superior DMA consists of 13 counties, seven
of which are in northeastern Minnesota, five of which are in northwestern
Wisconsin and one of which is in the upper peninsula of Michigan. Duluth,
Minnesota and Superior, Wisconsin are adjacent to each other and are
approximately 150 miles from Minneapolis, Minnesota. The Duluth-Superior
economy, historically based on mining and shipping, also includes the fishing,
food products, paper, education, medical, timber and tourism industries. Duluth
is one of the major United States ports from which iron ore, taconite, coal,
lumber, cement, grain, paper and chemicals are shipped. Prominent corporations
with facilities in the area include Minnesota Power, US West Communications,
Duluth, Missabe & Iron
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Range Railway Co., Louis Kemp Seafood Co., Lake Superior Paper Industries,
Potlatch Corporation, Boise Cascade, Burlington Northern Sante Fe Railway,
Georgia-Pacific Corporation, U.S. Steel, National Steel Pellet Co. and NorWest
Bank-Minnesota North. The region is also host to a number of colleges and
universities, including the University of Minnesota-Duluth ('UMD'), UMD Medical
School, College of St. Scholastica, Northland College and the University of
Wisconsin-Superior. In addition, the area's extensive forests and numerous lakes
have fostered a local tourism industry and attract thousands of tourists
annually who camp, hike, ski, fish and boat in hundreds of state and Federal
parks.
Station History and Characteristics. KDLH-TV was originally licensed in
1954 to serve the Duluth, Minnesota -- Superior, Wisconsin metropolitan area.
The Duluth-Superior market is ranked 134th in the United States, with
approximately 169,000 television households and a population of approximately
407,000. This market has a cable penetration rate of 52.7%. KDLH-TV is broadcast
on VHF channel 3 and is a CBS affiliate. The Company acquired KDLH-TV in 1985.
KDLH-TV competes with both an ABC and NBC affiliate which are also broadcast on
VHF channels.
Station Performance. According to the 1995 Nielsen ratings reports, KDLH-TV
was tied for the number two ranking in its market with a 6 rating and a 19%
share of households viewing television as compared with a 7 rating and 22% share
for the number one ranked station in the market and a 6 rating and 19% share for
the other number two station in the market. As a result of this relatively even
market share distribution, KDLH-TV maintains its ability to sell advertising
time at competitive rates. KDLH-TV currently is the number three ranked news
station in this market and broadcasts two hours and 25 minutes of local news
programming each weekday. KDLH-TV's special value-added local sales efforts in
1995 included the production and sale of live coverage of the Dyno-American
Birkebeiner cross country ski race, the introduction of a sales supportive, 16
page, four-color, glossy station magazine called 'Watch and Win Sweepstakes,'
the exclusive television sponsorship of the Duluth Bayfront Blues Fest which had
attendance of approximately 75,000, a special year-long incentive package for
local retailers and carriage of the Minnesota High School Hockey championship
games. KDLH-TV's first run and off-network syndicated programming includes
'Seinfeld,' 'Ricki Lake,' 'Jenny Jones,' 'COPS' and 'Cheers.' In January 1996,
KDLH-TV commenced broadcasting Fox Sports programming.
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
KDLH-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1991 1992 1993 1994 1995
------- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year.................. (5.5%) 8.7% 7.5% 15.5% (3.4%)
Broadcast cash flow margin.................................... 14.8% 23.1% 24.5% 30.8% 26.7%
Station audience share........................................ 23 24 23 24 19
Station rank in market........................................ 3 2 1 1 2
</TABLE>
WIFR-TV (CBS) ROCKFORD, ILLINOIS
Market Description. The Rockford DMA consists of five counties in northern
Illinois. Rockford is approximately 80 miles west of Chicago, Illinois. The
Rockford economy, historically centered on manufacturing, has recently
diversified with the growth of service-based industries such as insurance and
financial services. Nevertheless, manufacturing still represents the largest
source of private employment in Rockford, known as the 'Fastener Capital of the
World.' Prominent corporations with facilities located in the greater Rockford
area include Chrysler Corporation, Sundstrand Corporation, Ingersoll Milling
Machine Co., Barber-Colman Company, Newell Company, Elco Industries, Inc. and
Warner-Lambert Company. One of the largest employers in the service industry in
this area is Rockford Memorial Hospital. Other service industry employers in the
area include Pioneer Life Insurance Company, AMCORE Bank N.A., Aetna Life &
Casualty and Blue Cross/Blue Shield of Illinois. Additionally, United Parcel
Service completed construction of a major facility at the Rockford Airport in
late 1994, which functions as its distribution center for the entire mid-western
region of the United States.
Station History and Characteristics. WIFR-TV was licensed in 1965 to
Freeport, Illinois to serve the greater Rockford market. Rockford is the 136th
largest market in the United States, with
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approximately 164,000 television households and a population of approximately
417,000. This market has a cable penetration rate of 68.4%. WIFR-TV is broadcast
on UHF channel 23 and is a CBS affiliate. The Company acquired WIFR-TV in 1986.
There are three other licensed commercial television stations in the Rockford
market, of which two are UHF stations and one is a VHF station. Although the VHF
station's signal extends to a larger geographical area than any of the UHF
stations, including WIFR-TV, such area is outside the Rockford DMA and does not
impact audience ratings or shares within the DMA. The other three stations in
this market are affiliated with ABC, NBC and Fox.
Station Performance. According to the 1995 Nielsen ratings reports, WIFR-TV
was tied for the number one ranking in its market with a 5 rating and a 19%
share of households viewing television. WIFR-TV currently is the number one
ranked news station in this market and broadcasts three hours and fifteen
minutes of local news programming each weekday. WIFR-TV captured 30% of the
total television revenues available in its market in 1995 based upon a report by
an independent accounting firm using the most recent available data submitted by
all Rockford stations. WIFR-TV's special value-added local sales efforts in 1995
included three week-long 'Our Town' promotions, a winter sale-a-thon, a health
matters and family matters live line program and a season-long educational
program entitled 'Weatherschool.' WIFR-TV is also this market's Big Ten Football
and Basketball network station. WIFR-TV's first run and off-network syndicated
programming includes 'The Oprah Winfrey Show,' 'The Maury Povich Show,'
'Roseanne' and 'Inside Edition.' Beginning in 1996, WIFR-TV will add 'Doctor
Quinn, Medicine Woman' and 'Mad About You' to its syndicated programming
line-up.
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WIFR-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (7.6%) 11.4% 6.6% 18.4% (3.1%)
Broadcast cash flow margin................................. 44.1% 46.0% 45.5% 50.1% 43.6%
Station audience share..................................... 21 23 24 24 19
Station rank in market..................................... 2 1 1 1 1
</TABLE>
KHQA-TV (CBS) QUINCY, ILLINOIS AND HANNIBAL, MISSOURI
Market Description. The Quincy-Hannibal DMA consists of 18 counties, eight
of which are in western Illinois, nine of which are in northeastern Missouri and
one of which is in southeastern Iowa. Quincy, Illinois and Hannibal, Missouri
are situated on opposite sides of the Mississippi River approximately 100 miles
northwest of St. Louis, Missouri. The Quincy-Hannibal economy is predominantly
agricultural. This market is considered one of the largest soybean, hog and corn
producing areas in the nation. Prominent corporations with facilities in this
market include Moorman Manufacturing Company, American Cyanamid Company,
Pillsbury, Inc., Quincy Soybean Co., Harris Corporation, Shaeffer Pen and
Buckhorn Rubber Products.
Station History and Characteristics. KHQA-TV was originally licensed in
1953 to serve the greater Quincy, Illinois-Hannibal, Missouri market. The
Quincy-Hannibal market is ranked 158th in the United States, with approximately
117,000 television households and a population of approximately 286,000. This
market has a cable penetration rate of 60.6%. KHQA-TV is broadcast on VHF
channel 7 and is a CBS affiliate. The Company acquired KHQA-TV in 1986. There is
one other station in this market, a NBC affiliate carried on a VHF channel.
Station Performance. According to the 1995 Nielsen ratings reports, KHQA-TV
was ranked number one in its market with an 8 rating and a 26% share of
households viewing television. KHQA-TV currently is the number two ranked news
station in this market and broadcasts two hours and 17 minutes of local news
programming each weekday. KHQA-TV's special value-added local sales efforts in
1995 included two local home shopping programs, a Mother's Day Get-A-Way
Give-A-Way promotion, a scholarship essay contest for high school students, a
Home for the Holidays promotion, a season-long educational program entitled
'Weatherschool' and a 'Weatherline,' which viewers can call to obtain local
forecasts. KHQA-TV's first run and off-network syndicated programming includes
'The Oprah Winfrey Show,' 'Wheel of Fortune,' 'Jeopardy,' 'Seinfeld' and
'Cheers.'
In 1993, the Quincy-Hannibal market was severely impacted by the flooding
of the Mississippi River. The flood adversely affected both local and national
advertising revenues of KHQA-TV during
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the second, third and fourth quarters of 1993. However, during the first quarter
of 1994, local and regional revenues returned to normal levels. During the
second and third quarters of 1993, the Station sponsored an on-going 'Flood Aid'
promotional campaign to raise financial support for flood victims and local
social service agencies assisting in flood relief throughout the Station's DMA.
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
KHQA-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (13.7%) 5.4% (1.5%) 17.8% 2.7%
Broadcast cash flow margin................................. 40.0% 37.3% 30.1% 38.2% 33.3%
Station audience share..................................... 26 31 32 31 26
Station rank in market..................................... 1 1 1 1 1
</TABLE>
WTVY-TV (CBS) DOTHAN, ALABAMA AND PANAMA CITY, FLORIDA
Market Description. WTVY-TV is one of the few stations in the United States
that serves two DMAs. The Dothan DMA consists of six counties, five of which are
in southeastern Alabama and one of which is in southwestern Georgia. Dothan is
located approximately 80 miles southeast of Montgomery, Alabama and 65 miles
north of Panama City, Florida. The Panama City DMA consists of nine counties in
the middle of the Florida Panhandle.
The Dothan economy, historically agricultural, is currently evenly
distributed among the service, manufacturing and agricultural sectors. Dothan is
known as the 'Peanut Capital of the World.' Peanuts account for half of the
area's farm income, with cattle, poultry, corn, wheat, soybeans, cotton, fruits
and vegetables making up the other half. Prominent corporations with facilities
in the area include the Sony Corporation, Perdue Farms, Inc., General Electric
Company and AAA Cooper Transport Company. Dothan is also home to the area's
largest regional shopping mall, two regional hospitals and five educational
institutions offering collegiate, technical and vocational studies. The Dothan
DMA is also the site of the Fort Rucker United States Army Aviation Station.
Currently, the base is not on the government list of facilities to be closed,
but there can be no assurance that such status will not change in the future.
Panama City is the county seat of Bay County, Florida and is located on the
Gulf of Mexico at the mouth of St. Andrew's Bay. The Panama City economy is
heavily based on year-round tourism as a result of its affordability when
compared to other Florida beach areas. Prominent corporations in the area
include the Champion Paper Company and Stone Container Corporation, as well as
more than 100 other manufacturers. The Panama City DMA is also the site of the
Tyndall United States Air Force Base and the Coastal Systems Station of the
United States Navy. Currently these locations are not on the government list of
facilities to be closed, but there can be no assurance that such status will not
change in the future. In addition, Panama City has a foreign trade zone and deep
water port, rail transportation and easy access to Interstate-10, the
Jacksonville, Florida to New Orleans, Louisiana Interstate highway.
Station History and Characteristics. WTVY-TV, originally licensed in 1955
to serve the Dothan, Alabama metropolitan area, currently serves the DMAs of
Dothan, Alabama and Panama City, Florida. The Dothan market is ranked 172nd in
the United States, with approximately 86,000 television households and a
population of approximately 219,000, while the Panama City market is ranked
159th with approximately 110,000 television households and a population of
approximately 275,000. The Dothan market has a cable penetration rate of 65.8%
and the Panama City market has a cable penetration rate of 68.3%. If combined,
these two markets would rank as the 123rd largest market in the United States.
WTVY-TV is broadcast on VHF channel 4 and is a CBS affiliate. The Company
acquired WTVY-TV on March 31, 1995. WTVY-TV competes with two other stations in
the Dothan market, affiliates of ABC and Fox which broadcast on UHF channels. In
the Panama City market, WTVY-TV competes with three other commercial stations,
affiliates of ABC and NBC which broadcast on VHF channels and a Fox affiliate
which broadcasts on a UHF channel.
Station Performance. According to the 1995 Nielsen ratings reports, WTVY-TV
was ranked number one in the Dothan market with a 9 rating and a 29% share of
households viewing television. It was also ranked third in the Panama City
market with a 4 rating and a 13% share of households viewing
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television. WTVY-TV currently is the number one ranked news station in the
Dothan market and broadcasts four hours of local news programming each weekday,
including a new 6:00 a.m. to 7:00 a.m. news program added in August 1995.
WTVY-TV's special value-added local sales efforts in 1995 included the
production of a live call-in program entitled 'Health Matters' in which viewers
could speak with local doctors and hospital representatives, a weekly program
concerning local community affairs issues entitled 'Community Focus' and student
of the week news segments. WTVY-TV's first run and off-network syndicated
programming includes 'Wheel of Fortune' and 'Roseanne.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WTVY-TV (for all periods prior to March 31, 1995, the data pertains to the
operation of WTVY-TV under former ownership):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (9.4%) (9.3%) 6.8% 21.4% (6.8%)
Broadcast cash flow margin................................. 47.1% 41.2% 33.5% 43.9% 34.4%
Station audience share(a).................................. 35 33 33 31 29
Station rank in market(a).................................. 1 1 1 1 1
</TABLE>
- ------------
(a) Station audience share and rank in market provided for Dothan, Alabama DMA
only.
WBKO-TV (ABC) BOWLING GREEN, KENTUCKY
Market Description. The Bowling Green DMA consists of seven counties in
southcentral Kentucky. Bowling Green is approximately 110 miles south of
Louisville, Kentucky and 60 miles north of Nashville, Tennessee. Bowling Green
lies between two different geographic regions: the 'Pennyroyal,' a rural area
where agriculture and mining are major factors in the economy, and the
'Bluegrass,' a region featuring rich soil and rolling hills on which some of the
most prominent thoroughbred horse farms in the world are located. Prominent
corporations with facilities in this area include Fruit of the Loom, General
Motors Corvette Assembly Division, the Holley Division of Coltec Industries,
Eaton Corporation, Lord Corporation, Pan American Mills, Inc., Country Oven
Bakery Division of Kroger Stores, Inc. and Hills Pet Products. Bowling Green is
also the home of Western Kentucky University with approximately 16,000 students
and 2,500 employees.
Station History and Characteristics. WBKO-TV was originally licensed in
1962 to serve southcentral Kentucky. The Bowling Green market is ranked 181st in
the United States, with approximately 68,000 television households and a
population of approximately 170,000. This market has a cable penetration rate of
56.7%. WBKO-TV is broadcast on VHF channel 13 and is an ABC affiliate. The
Company acquired WBKO-TV in 1983. The only other local commercial station
broadcasting in this market is a Fox affiliate which broadcasts on a UHF
channel. WBKO-TV also competes to some extent with three stations broadcasting
from Nashville, Tennessee.
Station Performance. According to the 1995 Nielsen ratings reports, WBKO-TV
was ranked number one in its market with a 10 rating and a 36% share of
households viewing television. WBKO-TV has been ranked first in this market
since its acquisition by the Company. WBKO-TV currently is the number one ranked
news station in this market and broadcasts three hours of local news programming
each weekday. WBKO-TV's special value-added local sales efforts in 1995 included
the sale and production of a number of live broadcasts of Western Kentucky
University basketball games, the sale and production of a men's and women's
Western Kentucky University basketball coaches show, a live 30 minute call-in
program on personal finance and a year-long series of news stories,
announcements and vignettes entitled 'Kids First' which emphasized positive news
about youth and their involvement in the Bowling Green community. WBKO-TV's
first run and off-network syndicated programming includes 'The Oprah Winfrey
Show,' 'Wheel of Fortune,' 'Live with Regis & Kathie Lee' and 'Home
Improvement.'
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<PAGE>
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WBKO-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... 11.7% (4.1%) 8.0% 17.5% 10.8%
Broadcast cash flow margin................................. 50.1% 47.8% 47.6% 49.4% 53.3%
Station audience share..................................... 39 39 40 39 36
Station rank in market..................................... 1 1 1 1 1
</TABLE>
WTOK-TV (ABC) MERIDIAN, MISSISSIPPI
Market Description. The Meridian DMA consists of seven counties, five of
which are in eastern Mississippi and two of which are in western Alabama.
Meridian is approximately 150 miles west of Montgomery, Alabama and 90 miles
east of Jackson, Mississippi. The Meridian economy, traditionally based on the
cattle and timber industries, has recently evolved into a medical and financial
hub for eastern Mississippi and western Alabama. In addition, Meridian's
favorable industrial climate has lured over 100 manufacturing plants to the
area, including Peavey Electronics Corporation, James River Corp., Avery
Dennison Stationery Products Division and the Delco-Remy Division of General
Motors. There are also many large hospitals in the area, including Rush
Foundation Hospital, East Mississippi State Hospital, Riley Memorial Hospital
and Jeff Anderson Regional Medical Center, which together employ over 3,800
individuals. Meridian is also site of the Meridian Naval Air Station, a United
States Naval training facility. Currently, the base is not on the government
list of facilities to be closed, but there can be no assurance that such status
will not change in the future. Additionally, property has recently been cleared
for a ground breaking of a long awaited regional mall to be built in Meridian.
The target date for completion of the mall is the fall of 1997.
Station History and Characteristics. WTOK-TV was originally licensed in
1953 to serve Meridian, Mississippi. The Meridian market is ranked 182nd in the
United States, with approximately 66,000 television households and a population
of approximately 173,000. This market has a cable penetration rate of 52.4%.
WTOK-TV is broadcast on VHF channel 11 and is an ABC affiliate. The Company
acquired WTOK-TV in 1988. The other two commercial stations in the market,
affiliates of NBC and CBS, are broadcast on UHF channels with considerably
smaller broadcast coverage than WTOK-TV. The CBS affiliate recommenced
broadcasting in April 1994 after ceasing operations in April 1992. In August
1995, the CBS and NBC affiliates entered into a local marketing agreement
pursuant to which the CBS affiliate would manage the NBC affiliate.
Station Performance. According to the 1995 Nielsen ratings reports, WTOK-TV
was ranked number one in its market with a 10 rating and a 32% share of
households viewing television. WTOK-TV has been ranked first in this market
since its acquisition by the Company. WTOK-TV currently is the number one ranked
news station in this market and broadcasts two hours and 49 minutes of local
news programming each weekday. WTOK-TV's special value-added local sales efforts
in 1995 included the production of a live call-in program on the subject of
health, the staging of a year-long series of 30 second announcements, news
features and programs aimed at increasing public awareness of the needs of
children in today's society and the production of several one hour 'Town
Meetings' on topics such as the needs of all levels of education in the Meridian
area and economic development in the Station's DMA. Additionally, a tie-in
advertising opportunity, combining television and direct mail through a full
color magazine, was distributed to 45,000 homes in the area in October 1995.
WTOK-TV's first run syndicated programming includes 'The Oprah Winfrey Show,'
'Sally Jesse Raphael' and 'Wheel of Fortune.'
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The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WTOK-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (0.6%) 1.8% 7.0% 6.9% 3.4%
Broadcast cash flow margin................................. 43.1% 37.2% 39.4% 39.6% 38.4%
Station audience share..................................... 44 40 38 37 32
Station rank in market..................................... 1 1 1 1 1
</TABLE>
WTAP-TV (NBC) PARKERSBURG, WEST VIRGINIA
Market Description. The Parkersburg DMA consists of three counties, two of
which are in western West Virginia and one of which is in eastern Ohio.
Parkersburg is located at the confluence of the Little Kanawha and the Ohio
rivers, approximately 140 miles from Pittsburgh, Pennsylvania and approximately
75 miles from Charleston, West Virginia. The Parkersburg economy is evenly
distributed among the manufacturing and services sectors. A number of prominent
companies maintain facilities in the Parkersburg market, including E. I. du Pont
de Nemours & Co., General Electric Plastics, Shell Chemical, Ames Company,
Nashua Photo, Inc. and Schott Scientific Glass, Inc. The area is also home to
the Bureau of Public Debt, the printer for all United States government bonds,
as well as several regional educational institutions including West Virginia
University at Parkersburg, Ohio Valley College and Marietta College.
Station History and Characteristics. WTAP-TV was originally licensed in
1953 and is the only commercial television station licensed to serve the
Parkersburg market. The Parkersburg market is ranked 184th in the United States,
with approximately 61,500 television households and a population of
approximately 153,000. This market has a cable penetration rate of 76.4%.
WTAP-TV is broadcast on UHF channel 15 and is an NBC affiliate. The Company
acquired WTAP-TV in 1979. Other network affiliated stations, including one NBC
affiliate, located in Charleston, West Virginia and Columbus, Ohio are carried
on cable systems in Parkersburg, but are not part of the Parkersburg DMA.
Station Performance. According to the 1995 Nielsen ratings reports, WTAP-TV
had a 9 rating and a 29% share of households viewing television. WTAP-TV
currently broadcasts two hours and 35 minutes of local news programming each
weekday, including 30 minutes which were added in mid-1995. WTAP-TV's special
value-added local sales efforts in 1995 included a year-long series of news
features on outstanding community volunteers, the production of special high
school athlete of the week awards, a program entitled 'Prom Promise' focusing on
drug and alcohol prevention for high school students on prom night and a
three-day celebration of the 'Parkersburg Homecoming Festival.' WTAP-TV's first
run and off-network syndicated programming includes 'The Oprah Winfrey Show,'
'Wheel of Fortune,' 'Jeopardy,' 'Ricki Lake,' 'Home Improvement,' 'Seinfeld' and
'Live with Regis & Kathie Lee.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WTAP-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth over prior year......................... 10.7% 16.3% 11.1% 21.8% 10.4%
Broadcast cash flow margin................................. 36.4% 41.3% 44.3% 49.0% 48.2%
Station audience share..................................... 26 30 27 27 29
Station rank in market..................................... 1 1 1 1 1
</TABLE>
WHSV-TV (ABC) HARRISONBURG, VIRGINIA
Market Description. The Harrisonburg DMA consists of three counties, one of
which is in northwestern Virginia and two of which are in northeastern West
Virginia. Harrisonburg is located in the Shenandoah Valley between the
Appalachian and Blue Ridge Mountains, approximately 110 miles west of
Washington, D.C. and 110 miles northwest of Richmond, Virginia. The Harrisonburg
economy
72
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<PAGE>
has been growing rapidly over the past several years. Several prominent
companies have established regional operations in the Harrisonburg market,
including the Coors Brewing Company and R.R. Donnelly & Sons Co., Inc. Other
companies in this area include Rocco Turkey, Inc., WLR Foods, Inc., Tyson Foods,
Inc., Hershey Co., Owens-Brockway Plastics & Closures and Merck & Co., Inc.
Harrisonburg is also the home of James Madison University, the largest state
university in the Virginia University system with approximately 13,000 students.
Station History and Characteristics. Since its inception in 1953, WHSV-TV
has been the only VHF commercial television station serving the Harrisonburg
market. The Harrisonburg market is ranked 201st in the United States, with
approximately 40,000 television households and a population of approximately
103,000. This market has a cable penetration rate of 67.3%. WHSV-TV is broadcast
on VHF channel 3 and is an ABC affiliate. The Company acquired WHSV-TV in 1986.
The Station is also carried on a UHF translator on channel 64 in the adjacent
Charlottesville, Virginia market. The higher costs for advertising in
surrounding urban areas results in a competitive advantage for WHSV-TV in
attracting local advertising revenues.
Station Performance. According to the 1995 Nielsen ratings reports, WHSV-TV
had a 7 rating and a 29% share of households viewing television. WHSV-TV
currently broadcasts two hours and 45 minutes of local news programming each
weekday, including one hour which was added in October 1995. WHSV-TV's special
value-added local sales efforts in 1995 included production of a Fourth of July
'Sky Concert' and fireworks show, a weekly student-athlete of the week news
segment, a locally produced Friday night high school football wrap-up show
called 'The EndZone' and a holiday shopping program featuring local retailers.
WHSV-TV's first run and off-network syndicated programming includes 'The Oprah
Winfrey Show,' 'Wheel of Fortune,' 'Jeopardy,' 'Home Improvement' and 'Live with
Regis & Kathie Lee.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WHSV-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... 4.5% 5.2% 7.3% 4.6% (2.1%)
Broadcast cash flow margin................................. 55.5% 55.6% 57.4% 57.9% 53.4%
Station audience share..................................... 35 34 33 29 29
Station rank in market..................................... 1 1 1 1 1
</TABLE>
STAUFFER STATIONS
KCOY-TV (CBS) SANTA BARBARA, SANTA MARIA AND SAN LUIS OBISPO, CALIFORNIA
Market Description. The Santa Barbara - Santa Maria - San Luis Obispo DMA
consists of three counties on the southcentral coast of California. Santa Maria
is approximately 170 miles north of Los Angeles and 270 miles south of San
Francisco. The region has a stable economic base which includes agriculture,
transportation, oil, tourism and manufacturing. Prominent corporations with
facilities in the area include Raytheon Company, Delco Systems Operations,
Chevron USA, Santa Barbara Research (a subsidiary of the Hughes Corporation),
Applied Magnetics Corp. and Lockheed-Martin. The area is also site of the
Vandenberg United States Air Force Base with approximately 8,400 military, civil
service and civilian employees. Currently, the base is not on the government
list of facilities to be closed, but there can be no assurance that such status
will not change in the future. Additionally, the University of California at
Santa Barbara and California Polytechnic University, with an aggregate student
population of approximately 34,000, are located within this DMA.
Station History and Characteristics. KCOY-TV was originally licensed in
1964 to serve Santa Maria, California. The Santa Barbara - Santa Maria - San
Luis Obispo market is ranked 115th in the United States, with approximately
211,000 television households and a population of approximately 564,000. This
market has a cable penetration rate of 85.7%. KCOY-TV is broadcast on VHF
channel 12 and is a CBS affiliate. There are three other commercial stations in
this market, ABC and NBC affiliates which broadcast on VHF channels and an
independent station which broadcasts on a UHF
73
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channel. Until recently, KCOY-TV was negatively impacted by the cable television
retransmission in Santa Barbara of KCBS, Los Angeles, California. However, in
September 1995, KCOY-TV was granted non-duplication protection against KCBS and
is now the only CBS affiliate whose programming is available on the Santa
Barbara cable system.
Station Performance. According to the 1995 Nielsen ratings reports, KCOY-TV
was ranked number three in its market with a 3 rating and an 11% share of
households viewing television compared to a 5 rating and 17% share and a 3
rating and 12% share for the numbers one and two stations, respectively. KCOY-TV
currently is the number two ranked news station in this market and broadcasts
two hours of local news programming each weekday. KCOY-TV's special value-added
local sales efforts in 1995 included a 12-month sponsorship of the close
captioning of newscasts, a three-week series entitled 'Child Lure' concerning
protecting children from abduction, a series of vignettes entitled 'Health
Minutes' providing important health information, publication of the 'KCOY
Weather Almanac' and the production of a Friday night high school football
program called 'High School Game Day.' KCOY-TV's first run and off-network
syndicated programming includes 'The Maury Povich Show,' 'Montel Williams' and
'Golden Girls.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
KCOY-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1993 1994 1995
------ ------ -------
<S> <C> <C> <C>
Net revenue growth (decline) over prior year..................................... (6.9%) 21.0% (16.2%)
Broadcast cash flow margin....................................................... 13.1% 22.8% 18.1%
Station audience share........................................................... 13 15 11
Station rank in market........................................................... 3 2 3
</TABLE>
WIBW-TV (CBS) TOPEKA, KANSAS
Market Description. The Topeka DMA consists of 14 counties in northeastern
Kansas. Topeka, the capital of Kansas, is located near the geographic center of
the United States, approximately 60 miles west of Kansas City, Missouri and 120
miles south of Omaha, Nebraska. This area's diversified economy includes
concentrations in the agriculture, manufacturing and service industries. Major
employers in this market include Goodyear Tire & Rubber Company, Payless
ShoeSource, Jostons Printing and Publishing, Hallmark Cards, Inc., Frito-Lay,
Inc., Burlington Northern Santa Fe Railway, Blue Cross/Blue Shield of Kansas,
Stormont-Vail Regional Medical Center and Menninger Hospital and School of
Psychiatric Medicine. The region is also home to several universities including
the University of Kansas, Kansas State University, Washburn University of Topeka
and Emporia State University, with an aggregate student population in excess of
60,000.
Station History and Characteristics. WIBW-TV was originally licensed in
1953 to serve Topeka, Kansas. The Topeka market is ranked 140th in the United
States with approximately 154,000 television households and a population of
384,000. This market has a cable penetration rate of 73.1%. WIBW-TV is broadcast
on VHF channel 13 and is a CBS affiliate. The other two commercial stations in
the market, affiliates of ABC and NBC, are broadcast on UHF channels with
smaller broadcast coverage than WIBW-TV.
Station Performance. According to the 1995 Nielsen ratings reports, WIBW-TV
was ranked number one in its market with a 6 rating and a 23% share of
households viewing television. WIBW-TV currently is the number one ranked news
station in this market and broadcasts two hours and 50 minutes of local news
programming each weekday. WIBW-TV's special value-added local sales efforts in
1995 included the sale of a trip incentive package, a long-term educational
program entitled 'Baby Your Baby' concerning prenatal care which included
vignettes, a live call-in program and a community charity baby shower, a weekly
segment and annual live call-in program on general health issues called 'To Your
Health,' a high school player of the week award and the sponsorship of the
'Bridal Fair,' 'Health & Fitness Expo' and 'Women's Show.' WIBW-TV's first run
syndicated programming includes 'Wheel of Fortune,' 'Montel Williams' and 'Star
Trek: Deep Space 9.'
74
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The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WIBW-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
Net revenue growth (decline) over prior year...................................... 6.2% 13.4% (9.4%)
Broadcast cash flow margin........................................................ 30.7% 39.5% 31.7%
Station audience share............................................................ 28 28 23
Station rank in market............................................................ 1 1 1
</TABLE>
KMIZ(TV) (ABC) COLUMBIA AND JEFFERSON CITY, MISSOURI
Market Description. The Columbia-Jefferson City DMA consists of 13 counties
in central Missouri. Columbia and Jefferson City, approximately 30 miles apart,
are situated in the center of Missouri within 130 miles of Kansas City, Missouri
to the west and St. Louis, Missouri to the east. The Columbia-Jefferson City
economy is based primarily on education, health, insurance and agriculture.
Additionally, Jefferson City is the capital of Missouri adding governmental
employment to the economic base of the area that has been called a recession
resistant community due to its diversity and stable economy. Prominent
corporations with facilities in this market include Toastmaster, Inc., State
Farm Insurance Companies, Shelter Insurance Companies, Quaker Oats, Oscar Mayer
Foods Corporation, Scholastic Books, ABB Power T&D Company and A.B. Chance
Company. The area is also home to the University of Missouri, with approximately
24,000 students and 13,000 employees. In addition, the Fort Leonard Wood United
States Army Base and the Whitman United States Air Force Base are located within
this market. Currently, these locations are not on the government list of
facilities to be closed, but there can be no assurance that such status will not
change in the future.
Station History and Characteristics. KMIZ(TV) was originally licensed in
1971 to serve the Columbia-Jefferson City, Missouri area. The Columbia-Jefferson
City market is ranked 146th in the United States, with approximately 140,000
television households and a population of approximately 356,000. This market has
a cable penetration rate of 59.7%. KMIZ(TV) is broadcast on UHF channel 17 and
is an ABC affiliate. The two other commercial stations in the market, affiliates
of CBS and NBC, are broadcast on VHF channels.
Station Performance. According to the 1995 Nielsen ratings reports,
KMIZ(TV) was ranked number three in its market with a 4 rating and a 13% share
of households viewing television. KMIZ(TV) currently is the number three news
station in this market and broadcasts one hour and 30 minutes of local news
programming each weekday. KMIZ(TV)'s special value-added local sales efforts in
1995 included the sponsorship and live broadcast of the 'Fire in the Sky' Fourth
of July fireworks celebration, a year-long series of vignettes promoting the
efforts of local not-for-profit organizations entitled 'Leadership in Mid
Missouri,' production of live call-in programs on local college and professional
sports called 'Sports Line' and production of a special program on asthma in
conjunction with the American Lung Association. KMIZ(TV)'s first run and
off-network syndicated programming includes 'Live with Regis & Kathie Lee,'
'Home Improvement,' 'Seinfeld' and 'Married . . . With Children.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
KMIZ(TV):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
Net revenue growth over prior year................................................ 4.4% 15.2% 17.1%
Broadcast cash flow margin........................................................ 17.3% 24.5% 24.2%
Station audience share............................................................ 12 12 13
Station rank in market............................................................ 3 3 3
</TABLE>
KGWC-TV (CBS) CASPER, WYOMING
KGWL-TV (CBS) LANDER, WYOMING
KGWR-TV (CBS) ROCK SPRINGS, WYOMING
Market Description. The Casper-Riverton DMA consists of six counties in
central Wyoming. Casper is located approximately 290 miles southeast of
Billings, Montana and 275 miles north of Denver, Colorado. The Casper economy,
historically centered on oil and agriculture, has recently
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diversified with the growth of its service sector. Major employers in the area
include the Wyoming Medical Center, Wotco, Inc, Conoco, True Oil & Affiliates
and Rissler McMurry. Casper is also home to Casper College and the University of
Wyoming-Casper, with an aggregate student population of approximately 4,500.
In order to properly serve the vast geographic area covered by the
Casper-Riverton DMA, KGWC-TV operates two satellite television stations, KGWL-TV
in Lander, Wyoming and KGWR-TV in Rock Springs, Wyoming. Lander is located in
Freemont County approximately 120 miles west of Casper. Rock Springs is located
in Sweetwater County approximately 165 miles southwest of Casper. The satellite
stations serve sparsely populated rural areas which lack the resources to
support full-service broadcast operations unrelated to the parent Station's more
populous communities.
Station History and Characteristics. KGWC-TV, originally licensed in 1980
to serve Casper, Wyoming, also serves Lander, Wyoming through satellite station
KGWL-TV and Rock Springs, Wyoming through satellite station KGWR-TV. The
Casper-Riverton market is ranked 192nd in the United States, with approximately
50,000 television households and a population of approximately 125,000. This
market has a cable penetration rate of 68.9%. KGWC-TV is broadcast on UHF
channel 14 and is a CBS affiliate. KGWL-TV, broadcast on VHF channel 5, and
KGWR-TV, broadcast on VHF channel 13, are operated as S-1 satellite stations
receiving all of their programming from KGWC-TV. KGWC-TV competes with two other
commercial stations in this market, an NBC affiliate which broadcasts on a VHF
channel and an ABC/Fox affiliate which broadcasts on a UHF channel.
Station Performance. According to the 1995 Nielsen ratings reports, KGWC-TV
was ranked number two in its market with a 3 rating and a 12% share of
households viewing television. KGWC-TV currently is tied for the number two news
ranking in this market and broadcasts one hour and five minutes of local news
programming each weekday. KGWC-TV's special value-added local sales efforts in
1995 included special coverage of the Powder River Rodeo Association Season
Finale Rodeo (the last stop on the National Finals Rodeo circuit) including
interviews, news segments and a 'Cutest Little Cowboy & Cowgirl' contest,
sponsorship of the local and state-wide 'Catch a Rising Star' talent contest,
sponsorship of the Classicfest, Karaoke Fest and Slam Fest, all part of a
special summer festival culminating with a Fourth of July celebration, and a
daily community events program entitled 'Wyoming Wake Up.' KGWC-TV's first run
syndicated programming includes 'Live with Regis & Kathie Lee,' 'Ricki Lake,'
'Jenny Jones' and 'Hard Copy.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
KGWC-TV (including its satellite stations):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1993 1994 1995
------- ------ -------
<S> <C> <C> <C>
Net revenue growth (decline) over prior year.................................... (12.5%) 2.9% (27.0%)
Broadcast cash flow margin...................................................... (7.7%) 9.0% (15.0%)
Station audience share.......................................................... 16 11 12
Station rank in market.......................................................... 2 3 2
</TABLE>
KGWN-TV (CBS) CHEYENNE, WYOMING
KSTF-TV (CBS) SCOTTSBLUFF, NEBRASKA
KTVS-TV (CBS) STERLING, COLORADO
Market Description. The Cheyenne-Scottsbluff-Sterling DMA consists of the
three counties, two in southeastern Wyoming and one in western Nebraska.
Cheyenne, the state capital of Wyoming, is located approximately 100 miles north
of Denver, Colorado. The Cheyenne economy is supported primarily by government,
transportation, tourism, services and light manufacturing. Significant employers
in the area include Union Pacific Railroad, United Medical Center, Veteran's
Administration Hospital, Safecard and Frontier Oil Refinery. Cheyenne is also
home to the F. E. Warren United States Air Force Base, which employs more than
4,000 people in military and civilian capacities. Currently, the base is not on
the government list of facilities to be closed, but there can be no assurance
that such status will not change in the future.
In order to properly serve the Cheyenne-Scottsbluff-Sterling DMA, KGWN-TV
operates two satellite television stations, KSTF-TV in Scottsbluff, Nebraska and
KTVS-TV in Sterling, Colorado. Scottsbluff is located in Scotts Bluff County,
Nebraska approximately 100 miles northeast of Cheyenne.
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Sterling is located in Logan County, Colorado approximately 100 miles southeast
of Cheyenne. The satellite stations serve sparsely populated rural areas which
lack the resources to support full-service broadcast operations unrelated to the
parent Station's more populous communities.
Station History and Characteristics. KGWN-TV, originally licensed in 1954
to serve Cheyenne, Wyoming, also serves Scottsbluff, Nebraska through satellite
station KSTF-TV and Sterling, Colorado through satellite station KTVS-TV. Since
first going on the air, KGWN-TV has been the only home market station in the
city of Cheyenne and Laramie County. The Cheyenne-Scottsbluff-Sterling market is
ranked 193rd in the United States with approximately 50,000 television
households and a population of approximately 123,000. This market has a cable
penetration rate of 73.0%. KGWN-TV is broadcast on VHF channel 5 and is a CBS
affiliate. KSTF-TV, broadcast on VHF channel 10, and KTVS-TV, broadcast on VHF
channel 3, are operated as S-2 satellites receiving a substantial portion of
their programming from KGWN-TV. However, as S-2 satellites, KSTF-TV and KTVS-TV
broadcast some self-produced local programming which is not provided by KGWN-TV.
KGWN-TV competes with two other commercial stations in the Cheyenne market, a
satellite station of an ABC affiliate in Casper, Wyoming which broadcasts Fox
programming in Cheyenne, and a satellite station of an NBC affiliate, both of
which satellite stations broadcast on UHF channels. KSTF-TV competes with one
other commercial station in the Scottsbluff market, a satellite station of an
ABC affiliate which broadcasts on a VHF channel. KTVS-TV competes to some extent
with several stations broadcasting from Denver, Colorado.
Station Performance. According to the 1995 Nielsen ratings reports, KGWN-TV
was ranked number one in its market with a 5 rating and a 20% share of
households viewing television. KGWN-TV currently is the number one news station
in this market and broadcasts one hour and 10 minutes of local news programming
each weekday. KGWN-TV's special value-added local sales efforts in 1995 included
live and promotional coverage of Cheyenne Frontier Days, a 10-day western
celebration featuring the world's largest outdoor rodeo, live and promotional
coverage of the Laramie County Small Business Showcase, a daily five-minute
program highlighting local not-for-profit organizations and community activities
entitled '5 In The Morning' and the live broadcast of the 'Fire in the Sky'
Fourth of July celebration. KGWN-TV's first run syndicated programming includes
'Live with Regis & Kathie Lee,' 'Ricki Lake' and 'Jenny Jones.'
KSTF-TV has the largest television production facilities in western
Nebraska and broadcasts 12 local newscasts each week. KSTF-TV also produced a
variety of local specials in 1995 including the annual 'Crimestoppers Telethon,'
as well as extensive news coverage of such activities as the 'Oregon Trail Days'
and other local events.
KTVS-TV produces the only local news program in the Sterling area. KTVS-TV
broadcasts 12 local newscasts each week. KTVS-TV also broadcasts two
self-produced weekly programs, 'Government in Action,' focusing on government
and politics, and 'Plains Talk,' focusing on public service.
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
KGWN-TV (including its satellite stations):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1993 1994 1995
------ ------ -------
<S> <C> <C> <C>
Net revenue growth (decline) over prior year..................................... (7.7%) 12.1% (12.6%)
Broadcast cash flow margin....................................................... 19.6% 30.3% 22.4%
Station audience share........................................................... 24 22 20
Station rank in market........................................................... 1 1 1
</TABLE>
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BRISSETTE STATIONS
WMTV(TV) (NBC) MADISON, WISCONSIN
Market Description. The Madison DMA consists of 11 counties in southwestern
Wisconsin. Recent growth in the area has increased the population in the Madison
DMA, moving it from the 93rd largest market in 1991 to the 83rd largest market
in 1995. Madison, the Wisconsin state capital, is located in southcentral
Wisconsin, 150 miles north of Chicago, Illinois and 75 miles west of Milwaukee,
Wisconsin. The Madison economy is a diverse and stable balance of the
industrial, governmental and service sectors. Additionally, agricultural
production of corn, alfalfa, tobacco, oats, eggs, cattle, hogs and, of course,
dairy products have greatly contributed to further stability in the local
economy. Many of the country's leading insurance companies, including American
Family Mutual Insurance Group, CUNA Mutual Insurance Group and General Casualty
have facilities in Madison. Other prominent corporations with facilities in the
area include General Motors Corporation, Meriter Health Services, Oscar Mayer
Foods Corporation, Famous Footwear, Lands' End and Rayovac Corporation. Madison
is also home to the University of Wisconsin, with approximately 40,000 students.
Station History and Characteristics. WMTV(TV) was originally licensed in
1953 to serve Madison, Wisconsin. The Madison market is ranked 83rd in the
United States, with approximately 308,000 television households and a population
of approximately 775,000. This market has a cable penetration rate of 61.5%.
WMTV(TV) is broadcast on UHF channel 15 and is an NBC affiliate. There are three
other commercial television stations in the Madison DMA, a CBS affiliate which
broadcasts on a VHF channel and ABC and Fox affiliates which broadcast on UHF
channels.
Station Performance. According to the 1995 Nielsen ratings reports,
WMTV(TV) was tied for the number two ranking in its market with a 4 rating and a
14% share of households viewing television. WMTV(TV) currently is the number
three ranked news station in this market and broadcasts two hours and 19 minutes
of local news programming each weekday. WMTV(TV)'s special value-added local
sales efforts in 1995 included a weekly series of educational programs entitled
'Honor Roll,' the publication of five issues of a newspaper entitled 'Kids
Matter' distributed to approximately 27,000 grade school students featuring art
and literary works of local students, quarterly sponsorship of six web page
segments covering the Station's history, news, weather, sports, programming and
personality profiles, the sale of trip incentive packages, a season-long high
school football series entitled 'Game Day' and local coverage of University of
Wisconsin and other Big Ten conference basketball and football games. WMTV(TV)'s
first run syndicated programming includes 'Wheel of Fortune' and 'Live with
Regis & Kathie Lee.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WMTV(TV):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (9.3%) 7.1% (3.8%) 10.4% 9.9%
Broadcast cash flow margin................................. 51.8% 49.3% 50.2% 51.3% 50.6%
Station audience share..................................... 14 15 13 13 14
Station rank in market..................................... 3 3 3 3 2
</TABLE>
WWLP(TV) (NBC) SPRINGFIELD AND HOLYOKE, MASSACHUSETTS
Market Description. The Springfield-Holyoke DMA consists of three counties
in midwestern Massachusetts running north to south between the New
Hampshire/Vermont and Connecticut state borders. Springfield is located in the
Pioneer Valley, approximately 25 miles north of Hartford, Connecticut and 85
miles east of Boston, Massachusetts. The Springfield economy has a diversified
industrial base. The area's most prominent employers include Massachusetts
Mutual Life Insurance Company, Milton Bradley, Inc., Monsanto Company, Friendly
Ice Cream Corporation, Spalding Sports Worldwide, Stanhome, Inc. and Baystate
Medical Center. Many universities and colleges are located in this region,
including, the University of Massachusetts, with a student population of
approximately
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<PAGE>
23,000, Amherst College, Smith College and Mount Holyoke College. Springfield is
also the home of the Naismith Memorial Basketball Hall of Fame.
Station History and Characteristics. WWLP(TV) was originally licensed in
1953 to serve the greater Springfield area. Springfield-Holyoke is the 102nd
largest market in the United States, with approximately 242,000 television
households and a population of approximately 613,000. This market has a cable
penetration rate of 81.8%. WWLP(TV) is broadcast on UHF channel 22 and is an NBC
affiliate. The only other commercial television station in this market is an ABC
affiliate which also broadcasts on a UHF channel. WWLP(TV) also competes with a
CBS affiliate on a VHF channel and, to a lesser extent, a Fox affiliate on a UHF
channel both of which are broadcast from Hartford, Connecticut.
Station Performance. According to the 1995 Nielsen ratings reports,
WWLP(TV) was ranked number one in its market with an 7 rating and 21% share of
households viewing television. WWLP(TV) is the number one ranked news station in
this market and currently broadcasts four hours and 32 minutes of local news
programming each weekday. WWLP(TV)'s special value-added local sales efforts in
1995 included 'As Schools Match Wits,' the nation's longest running locally
produced quiz show in which area high school students compete academically, and
a home showcase by a local real estate agency providing viewers the opportunity
to shop for homes and real estate on television. WWLP(TV)'s first run syndicated
programming includes 'Wheel of Fortune,' 'Jeopardy' and 'Live with Regis &
Kathie Lee.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WWLP(TV):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (19.8%) 14.2% (0.3%) 15.9% 6.0%
Broadcast cash flow margin................................. 50.2% 52.3% 50.1% 53.6% 52.3%
Station audience share..................................... 21 21 19 21 21
Station rank in market..................................... 1 1 1 1 1
</TABLE>
WILX-TV (NBC) LANSING, MICHIGAN
Market Description. The Lansing DMA consists of five counties in
southcentral Michigan. Lansing is the state capital of Michigan and is located
approximately 75 miles west of Detroit, Michigan. The Lansing economy, though
recently diversified, is still a stronghold of the automotive industry.
Prominent employers in the area include General Motors Corporation (Oldsmobile
Worldwide Headquarters), Meijer, Inc., Michigan Capital Healthcare and Michigan
National Bank. Additionally, there are many smaller companies, employing in
excess of 3,000 people, that provide auto parts to General Motors. Lansing is
also home to the largest university in Michigan, Michigan State University, with
more than 40,000 students and 12,000 faculty and staff.
Station History and Characteristics. WILX-TV was originally licensed in
1957 to Onondaga, Michigan. The Lansing market is ranked 106th in the United
States, with approximately 229,000 television households and a population of
approximately 589,000. This market has a cable penetration rate of 65.1%.
WILX-TV is broadcast on VHF channel 10 and is an NBC affiliate. WILX-TV competes
with three other commercial stations in this market, a CBS affiliate which also
broadcasts on a VHF channel and ABC and Fox affiliates which broadcast on UHF
channels.
Station Performance. According to the 1995 Nielsen ratings reports, WILX-TV
was ranked second in its market with a 4 rating and a 15% share of households
viewing television. WILX-TV is currently the number two ranked news station in
this market and broadcasts one hour and 27 minutes of local news programming
each weekday. WILX-TV's special value-added local sales efforts in 1995 included
the production of a series of live call-in programs entitled 'Ask the Mayor,'
production of the local broadcast of the Children's Miracle Network Telethon, a
season-long educational program entitled 'Weatherschool' and a 'Weatherline,'
which viewers can call for up-to-the-minute weather information. WILX-TV's first
run and off-network syndicated programming includes 'Seinfeld,' 'Live with Regis
& Kathie Lee,' 'Married . . . With Children' and 'Cheers.'
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The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WILX-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............. (17.4%) 1.1% (10.0%) 9.8% 9.2%
Broadcast cash flow margin............................... 54.6% 55.3% 47.7% 48.2% 48.7%
Station audience share................................... 19 18 17 14 15
Station rank in market................................... 2 2 2 2 2
</TABLE>
WHOI(TV) (ABC) PEORIA AND BLOOMINGTON, ILLINOIS
Market Description. The Peoria-Bloomington DMA consists of 10 counties
located in central Illinois. Peoria is located approximately 150 miles southwest
of Chicago, Illinois and 170 miles north of St. Louis, Missouri. The major
economic sectors in the area include agriculture, manufacturing and information
technology. Prominent employers in the greater Peoria area include Caterpillar,
Inc., State Farm Insurance, Saint Francis Medical Center, Diamond Star Motors
and Methodist Medical Center. This area is also home to Illinois State
University, with approximately 18,000 students and 3,100 employees, as well as
Bradley University and the University of Illinois School of Medicine.
Station History and Characteristics. WHOI(TV) was originally licensed in
1953 to serve Peoria, Illinois. The Peoria-Bloomington market is ranked 109th in
the United States, with approximately 225,000 television households and a
population of approximately 562,000. This market has a cable penetration rate of
73.1%. WHOI(TV) is broadcast on UHF channel 19 and is an ABC affiliate. There
are three other commercial stations in this market, affiliates of CBS, NBC and
Fox. All of these competitor stations are also broadcast on UHF channels.
Station Performance. According to the 1995 Nielsen ratings reports,
WHOI(TV) was ranked number three in its market with a 5 rating and a 16% share
of households viewing television as compared to a 6 rating and 22% share and a 5
rating and 18% share for the numbers one and two stations, respectively. As a
result of this relatively even market share distribution, WHOI(TV) maintains its
ability to sell advertising time at competitive rates. WHOI(TV) currently is the
number three ranked news station in this market and broadcasts two hours and 5
minutes of local news programming each weekday. WHOI(TV)'s special value-added
local sales efforts in 1995 included the sale and production of live broadcasts
of commercials from remote locations, local advertiser sponsorship of features
such as 'Athlete of the Week,' 'Person of the Week' and 'Stock Quotes' as well
as sponsorship of the close captioning of newscasts, an eight-week series
entitled 'Best in the Class' saluting the top high school graduates in the area
and a twice-weekly report entitled 'Health Segment' reporting the latest changes
in health care issues. WHOI(TV)'s first run and off-network syndicated
programming includes 'Live with Regis & Kathie Lee,' 'Home Improvement,'
'Married . . . With Children' and 'Golden Girls.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WHOI(TV):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (18.7%) 5.8% (7.8%) 12.3% 1.0%
Broadcast cash flow margin................................. 44.9% 45.3% 45.3% 48.9% 48.8%
Station audience share..................................... 22 20 18 17 16
Station rank in market..................................... 1 2 3 3 3
</TABLE>
WSAW-TV (CBS) WAUSAU AND RHINELANDER, WISCONSIN
Market Description. The Wausau-Rhinelander DMA consists of 13 counties in
central Wisconsin bisected by the Wisconsin River. Wausau is approximately 90
miles west of Green Bay, Wisconsin and 180 miles east of Minneapolis, Minnesota.
The Wausau economy, historically based on the timber industry, has diversified
into the farming, manufacturing and service sectors. The area continues to be
one of the nation's leading producers of cheddar cheese and ginseng. Prominent
corporations with
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facilities in the greater Wausau area include Wausau Insurance Companies, Sentry
Insurance, Kolbe & Kolbe Millwork, Inc., Weyerhauser Co., Consolidated Papers,
Inc., Ore-Ida Foods, Inc., Marathon Cheese Corp. and Georgia-Pacific
Corporation. The area is also home to the University of Wisconsin-Stevens Point
with approximately 10,000 students and the University of Wisconsin-Marathon
Center with a student population of approximately 1,300.
Station History and Characteristics. WSAW-TV was originally licensed in
1954 to serve Wausau, Wisconsin. The Wausau-Rhinelander market is ranked 131st
in the United States, with approximately 173,000 television households and a
population of approximately 447,000. This market has a cable penetration rate of
50.6%. WSAW-TV is broadcast on VHF channel 7 and is a CBS affiliate. WSAW-TV
competes with affiliates of ABC and NBC which are also broadcast on VHF
channels.
Station Performance. According to the 1995 Nielsen ratings reports, WSAW-TV
was ranked number one in its market with a 7 rating and a 26% share of
households viewing television. WSAW-TV currently is the number one ranked news
station in the market and broadcasts two hours and 38 minutes of local news
programming each weekday. WSAW-TV's special value-added local sales efforts in
1995 included a program co-produced with a local newspaper entitled 'Behind The
Headlines,' live remote broadcasts of 'News 7 at Noon' from the Marathon County
Fair and the production and broadcast of a local fishing tips program. WSAW-TV's
first run and off-network syndicated programming includes 'Live with Regis &
Kathie Lee,' 'Home Improvement,' 'Full House' and 'Cheers.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WSAW-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (6.5%) 11.6% (0.4%) 14.5% 9.4%
Broadcast cash flow margin................................. 48.1% 54.0% 53.6% 54.5% 53.6%
Station audience share..................................... 31 31 30 30 26
Station rank in market..................................... 1 1 1 1 1
</TABLE>
WTRF-TV (CBS) WHEELING, WEST VIRGINIA AND STEUBENVILLE, OHIO
Market Description. The Wheeling-Steubenville DMA consists of 12 counties,
six of which are in northwestern West Virginia and six of which are in eastern
Ohio. Located in the Ohio Valley, Wheeling and Steubenville are situated along
opposite sides of the Ohio River approximately 25 miles apart. Wheeling is
approximately 55 miles southwest of Pittsburgh, Pennsylvania and approximately
120 miles east of Columbus, Ohio. The area's economy, historically based on
heavy manufacturing, has diversified into the manufacturing, services and
advanced technology sectors. Prominent corporations with facilities in this
region include Wheeling Pittsburgh Steel Corporation, TIMET, Miles, Inc., PPG
Industries and Consolidation Coal Company. Wheeling is also home to the National
Technology Transfer Center, an independent organization formed to provide
private business and industry with a central access point for the knowledge and
data gathered by the Federal government's 100,000 research professionals.
Station History and Characteristics. WTRF-TV was originally licensed in
1953 to serve the Wheeling, West Virginia market. The Wheeling-Steubenville
market is ranked 138th in the United States, with approximately 157,000
television households and a population of approximately 391,000. This market has
a cable penetration rate of 76.4%. WTRF-TV is broadcast on VHF channel 7 and is
a CBS affiliate. There is one other commercial station in this market, an NBC
affiliate also broadcast on a VHF channel.
Station Performance. According to the 1995 Nielsen ratings reports, WTRF-TV
was ranked number two in its market with an 8 rating and an 20% share of
households viewing television compared to a 7 rating and a 22% share for the
number one station in the market. WTRF-TV currently is the number two ranked
news station in this market and broadcasts 57 minutes of local news programming
each weekday. WTRF-TV's special value-added local sales efforts in 1995 included
the sale of a trip incentive package, production of a live call-in program
entitled 'Health Fair Lifeline,' a weekly 30 minute
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educational program entitled 'Good News Network,' a weekly high school sports
update program called 'WTRF Sports Blitz' and the live broadcast of the Wheeling
'Fantasy of Lights Parade' and related festivities. WTRF-TV's first run and
off-network syndicated programming includes 'Live with Regis & Kathie Lee,'
'Home Improvement,' 'Married . . . With Children' and 'Roseanne.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
WTRF-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (8.0%) 2.0% (6.0%) 10.9% 6.1%
Broadcast cash flow margin................................. 49.8% 50.8% 49.7% 48.2% 35.8%
Station audience share..................................... 26 24 24 24 20
Station rank in market..................................... 1 1 1 1 2
</TABLE>
KAUZ-TV (CBS) WICHITA FALLS, TEXAS AND LAWTON, OKLAHOMA
Market Description. The Wichita Falls-Lawton DMA consists of 18 counties,
12 of which are in northcentral Texas and six of which are in southwestern
Oklahoma. Wichita Falls is located in the cross timbers section of the North
Central Plains of Texas, approximately 60 miles south of Lawton, Oklahoma and
approximately 125 miles from Dallas, Texas and Oklahoma City, Oklahoma. The
Wichita Falls-Lawton economy, historically based on agriculture, ranching and
petroleum, also includes the manufacturing, transportation, tourism and service
industries. Prominent corporations with facilities in the area include the
Cryovac Division of W.R. Grace & Co., the Mechanics Tools Division of Stanley
Works, Levi Strauss & Company, PPG Industries and Goodyear Tire & Rubber Co. In
addition, in 1995 the Texas Department of Criminal Justice ('TDCJ') opened its
James V. Allred Unit in Wichita Falls adding approximately 875 jobs to the area.
The TDCJ has announced expansion plans for this Unit which is expected to create
an additional 200 local jobs. The area is also home to the Sheppard United
States Air Force Base which trains over 20,000 military, civilian and allied
students, annually. Currently, the base is not on the government list of
facilities to be closed, but there can be no assurance that such status will not
change in the future.
Station History and Characteristics. KAUZ-TV was originally licensed in
1953 to serve the Wichita Falls area. The Wichita Falls-Lawton market is ranked
139th in the United States, with approximately 155,000 television households and
a population of approximately 391,000. This market has a cable penetration rate
of 68.8%. KAUZ-TV is broadcast on VHF channel 6 and is a CBS affiliate. KAUZ-TV
competes with three other commercial stations in this market, ABC and NBC
affiliates which broadcast on VHF channels and a Fox affiliate which broadcasts
on a UHF channel.
Station Performance. According to the 1995 Nielsen ratings reports, KAUZ-TV
was ranked number three in its market with a 5 rating and a 14% share of
households viewing television as compared to a 6 rating and 19% share and a 5
rating and 16% share for the numbers one and two stations, respectively. KAUZ-TV
currently is the number three ranked news station in this market and broadcasts
two hours and 5 minutes of local news programming each weekday. KAUZ-TV's
special value-added local sales efforts in 1995 included a program entitled
'Youth of the Month' honoring outstanding young people in the community, the
production of a series entitled 'Texoma Farm and Ranch Report,' production of a
week-long series to educate viewers about threatening weather entitled
'Surviving Spring's Fury,' a season-long high school football program entitled
'Friday Night High School Football Update' and a local news insert entitled
'About the House' providing helpful hints to homeowners. KAUZ-TV's first run
syndicated programming includes 'The Oprah Winfrey Show,' 'Married . . . With
Children' and 'COPS.' Beginning in 1996, KAUZ-TV will add 'Wheel of Fortune' and
'Jeopardy' to its syndicated programming line-up.
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The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
KAUZ-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (9.3%) 0.1% (4.8%) (0.6%) (4.1%)
Broadcast cash flow margin................................. 30.8% 29.8% 28.8% 27.5% 21.7%
Station audience share..................................... 18 17 17 17 14
Station rank in market..................................... 2 2 2 3 3
</TABLE>
KOSA-TV (CBS) ODESSA AND MIDLAND, TEXAS
Market Description. The Odessa-Midland DMA consists of 20 counties, 19 of
which are in southwestern Texas and one of which is in southeastern New Mexico.
Odessa, the largest city in the Permian Basin, is approximately 275 miles east
of El Paso, Texas and 350 miles west of Dallas, Texas. The Odessa-Midland
economy is historically based on the oil and gas industry. The area has recently
diversified into the manufacturing and industrial services sectors, although
ties to the energy sector remain very significant. Some of the major employers
in the area include Phillips Petroleum Company, Exxon Corporation, the Shell Oil
Co. Odessa Refinery, EVI-Highland Pump Company, Rexene Corporation, Ref-Chem
Corporation, Texas Instruments Inc. and Medical Center Hospital. Odessa is also
home to the University of Texas of the Permian Basin, Texas Tech University
Health Sciences Center at Odessa and Odessa College, with an aggregate student
enrollment of approximately 7,000.
Station History and Characteristics. KOSA-TV was originally licensed in
1956 to serve Odessa, Texas. The Odessa-Midland market is ranked 149th in the
United States, with approximately 137,000 television households and a population
of approximately 375,000. This market has a cable penetration rate of 73.5%.
KOSA-TV is broadcast on VHF channel 7 and is a CBS affiliate. There are three
other commercial stations in the market, ABC and NBC affiliates which broadcast
on VHF channels and a Fox affiliate which broadcasts on a UHF channel.
Station Performance. According to the 1995 Nielsen ratings reports, KOSA-TV
was tied for the number two ranking in its market with a 4 rating and a 15%
share of households viewing television as compared to a 5 rating and 17% share
for the number one station in the market and a 5 rating and 15% share for the
other number two station in the market. KOSA-TV currently is the number three
ranked news station in the market and broadcasts one hour and 21 minutes of
local news programming each weekday. KOSA-TV's special value-added local sale
efforts in 1995 included the sale of a trip incentive package, a weekly
student-athlete of the week news segment, production of a weekly program of
Hispanic music videos and local human interest stories entitled 'Tiempo Tejano,'
special advertising tie-in sweepstakes promotions providing viewers the chance
to win trips to Disney World, Las Vegas and a taping of Late Night with David
Letterman in New York City. KOSA-TV's first run and off-network syndicated
programming includes 'Live With Regis & Kathie Lee,' 'Married . . . With
Children' and 'Montel Williams.'
The following table sets forth certain historical data with respect to the
television advertising revenues and station rank and audience share data for
KOSA-TV:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net revenue growth (decline) over prior year............... (13.6%) (0.2%) 1.5% 11.9% (9.0%)
Broadcast cash flow margin................................. 28.2% 34.9% 38.0% 38.1% 33.1%
Station audience share..................................... 20 18 17 18 15
Station rank in market..................................... 2 2 2 1 2
</TABLE>
COMPETITION
The principal methods of competition in television broadcasting are the
development of audience interest through programming and promotions and
competition in rates charged to advertisers. Broadcast television stations
compete for advertising revenues with other broadcast stations, cable
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television and all other advertising media in their market areas and generally
do not compete with stations in other markets. The Company has generally
acquired stations in markets where there are only a limited number of
over-the-air television stations competing for local viewership and for local
advertising revenues. In two of its markets, the Company owns the only local
television station. In four markets, the Company owns one of only two local
television stations. In seven markets, the Company owns one of three local
television stations. In eight markets, the Company owns one of four local
television stations. WTVY-TV competes with two other stations in the Dothan
market and with three other stations in the Panama City market.
Audience. Stations compete for audience on the basis of program popularity
which has a direct effect on advertising rates. A significant portion of the
Company's daily programming is supplied by the networks. In those time periods,
the Stations are totally dependent upon the performance of the networks'
programs in attracting viewers. Non-network time periods are programmed by the
Stations with local news and syndicated programs generally purchased for cash
and barter and, to a lesser extent, barter-only. The Stations also air sports,
public affairs and other entertainment programming.
The development of methods of television transmission of video programming
other than over-the-air broadcasting, and in particular the growth of cable
television, has significantly altered competition for audience in the television
industry. These other transmission methods can increase competition for a
broadcasting station by bringing into its market distant broadcasting signals
not otherwise available to the station's audience and also by serving as a
distribution system for non-broadcast programming distributed by the cable
system. As the technology of satellite program delivery to cable systems
advanced in the late 1970s, development of programming for cable television
accelerated dramatically, resulting in the emergence of multiple, national-scale
program alternatives and the rapid expansion of cable television and higher
subscriber growth rates. Historically, cable operators have not sought to
compete with broadcast stations for a share of the local news audience.
The FCC has authorized several entities to construct and launch satellites
to deliver DBS to homes from satellites. Two DBS companies provide nationwide
service, a third is expected to launch its satellite server in mid-1996, and MCI
Communications has acquired the right to launch a fourth DBS satellite server in
a joint venture with the parent of Fox. The FCC has also adopted rules which may
significantly increase the number of multipoint distribution service stations
('MDS') (i.e., video service distributed on microwave frequencies which can only
be received by special microwave antennae). These MDS stations have launched
service in several cities, and several telephone companies have also begun
offering MDS service. In addition, the FCC has proposed to authorize a 28 GHz
microwave cable service that will have the potential to provide up to 100
channels of video. The FCC is also licensing low power television stations which
are television stations with coverage areas much smaller than those served by
full power conventional television stations.
Current technology offers several different methods for transmitting
television signals with greatly improved definition, color rendition, sound and
wider screen picture. Collectively, these improvements are referred to as ATV,
with the most advanced type of transmission system being high definition
television. Intensive research and development efforts have achieved forms of
ATV that can be transmitted by existing terrestrial broadcasters in the United
States. A number of such proposed systems have been extensively tested by an
industry test center under the auspices of an Industry Advisory Committee
reporting to the FCC. Following such testing, the major proponents of the
competing systems agreed to combine their efforts to produce a single ATV
system, and these efforts resulted in technical standards that were submitted to
the FCC in 1995, and the FCC is now accepting comments on that standard. The
proposed standard will involve the broadcast of ATV on a separate television
channel from that used for conventional broadcasting and that channel may also
be used by broadcasters for data transmission and multi-channel transmission.
The FCC currently is determining whether and how to assign licenses to permit
television broadcasters to provide ATV services. The FCC has tentatively decided
to issue a second channel to each television broadcaster to permit it to provide
ATV during a transition period. At the end of the transition period, each
broadcaster would be required to return to the FCC one of these two channels.
This transition ultimately will permit broadcasters to provide higher quality
services to their viewers and may permit broadcasters to compete more
effectively with other digital video systems. However, constructing and
operating a
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second television channel will require a substantial capital outlay for all of
the Stations. The Company is unable to predict the effect that technological
changes will have on the broadcast television industry or the future results of
the Company's operations.
In addition, certain leaders in Congress and the Administration have
proposed legislation that would require broadcasters to (i) bid at auction for
ATV channels, potentially against other non-broadcast applicants, (ii) return
their analog channels on an expedited basis by 2005 to permit the old channels
to be reauctioned to new licensees and/or (iii) pay a fee for the use of the
second channel, starting either immediately or after 2005. These proposals, if
enacted, could affect the Company. First, auctions for ATV channels could
substantially increase the Company's up-front costs of converting to ATV and
would raise the possibility that the Company could be subject to additional
competition in its markets if it, or another licensee, is out-bid by a newcomer.
Second, an expedited transition period could require the Company to end analog
transmission before all its viewers (particularly those in the smaller markets
which the Company serves) have purchased ATV-compatible reception equipment. See
'Risk Factors -- Competition Within the Television Industry; Advanced
Television.'
Programming. Competition for programming involves negotiating with national
program distributors or syndicators which sell first run and rerun packages of
programming. The Stations compete against local broadcast stations for exclusive
access to first run product (such as 'The Oprah Winfrey Show,' 'Wheel of
Fortune' and 'Jeopardy') and for off-network reruns (such as 'Home Improvement,'
'Seinfeld' and 'Roseanne') in their respective markets. Cable systems generally
do not compete with local stations for programming, although various national
cable networks have acquired programs that would have otherwise been offered to
local television stations. Competition also occurs for exclusive news stories
and features.
Advertising. The Stations compete for advertising revenues with other
television stations in their respective markets, as well as with other
advertising media, such as newspapers, radio, magazines, outdoor advertising,
transit advertising, yellow page directories, direct mail and local cable
systems. Competition for advertising expenditures in the broadcasting industry
occurs primarily in individual markets. Generally, television broadcasting
stations in one market do not compete with stations in other market areas.
Management cannot predict the exact nature of the competition it will face
in any market since competing stations may change owners, affiliations and/or
programming focus at any time. The Company cannot predict the effect the changes
in legislation or technology, discussed herein, will have on its operations. In
certain markets, construction permits for new stations have been or may be
granted.
FEDERAL REGULATION OF TELEVISION BROADCASTING
Existing Regulation. Television broadcasting is subject to the jurisdiction
of the FCC, pursuant to the Communications Act. The Communications Act prohibits
the operation of television broadcasting stations except under a license issued
by the FCC and empowers the FCC to issue, renew, revoke and modify broadcasting
licenses, regulate the frequency and operating power of stations, determine
station location, regulate the equipment used by stations, adopt rules and
regulations to carry out the provisions of the Communications Act and to impose
certain penalties for violation of the Communications Act. The Communications
Act prohibits the assignment of a license or the transfer of control of a
licensee without prior approval of the FCC.
License Grant and Renewal. Television broadcasting licenses are usually
granted or renewed for the maximum allowable term of five years which will be
expanded to eight years under recently enacted legislation. The FCC may revoke a
license or renew a license for a period shorter than the maximum allowable term
if the FCC finds that the licensee has committed a serious violation of FCC
rules, has committed other violations which taken together would constitute a
pattern of abuse, or has otherwise failed to serve the public interest. At the
time the application is made for renewal of a television license, parties in
interest may file petitions to deny renewal, and such parties as well as members
of the public may comment upon the service the station has provided during the
preceding license term and urge
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denial of the application. Additionally, if an incumbent licensee fails to meet
the renewal standard, and if if does not show other mitigating factors
warranting a lesser sanction, the FCC then has the authority to deny the renewal
application and consider a competing application.
In the vast majority of cases, broadcast licenses are renewed by the FCC
even when petitions to deny are filed against broadcast license renewal
applications. All of the Stations are presently operating under five-year
licenses expiring on various dates from 1996 to 1999. Currently, WTAP-TV,
Parkersburg, West Virginia, WHSV-TV, Harrisonburg, Virginia, and WTRF-TV,
Wheeling, West Virginia and Steubenville, Ohio, have pending applications for
license renewal. The Company is not aware of any facts or circumstances that
might prevent any of the Stations from having its current license renewed at the
end of its respective term or which might prevent the license renewal for
WTAP-TV, WHSV-TV or WTRF-TV from being granted.
The Communications Act prohibits the assignment of a license or the
transfer of control of a license without prior approval of the FCC. Under the
Communications Act, no license may be held by a corporation of which more than
20% of the capital stock is owned of record, voted or subject to control by
aliens, and no corporation may hold the capital stock of another corporation
holding broadcast licenses if more than 25% of the capital stock of such parent
corporation is owned of record, voted or subject to control by aliens, unless
specific FCC authorization is obtained.
Multiple Ownership Restrictions. The FCC has promulgated a number of rules
designed to limit the ability of individuals and entities to own or have an
ownership interest above a certain level (an 'attributable interest,' defined
more fully below) in broadcast stations, as well as other mass media entities.
These rules include limits on the number of television stations that may be
owned both on a national and a local basis. On a national basis, FCC rules
generally limit any individual or entity from having attributable interests in
television stations with an aggregate audience reach exceeding 35% of all United
States households.
The FCC also limits the common ownership of broadcast stations with
overlapping service areas, combined local ownership of a newspaper and a
broadcast station and combined local ownership of a cable television system and
a broadcast television station. FCC rules currently allow an entity to have an
attributable interest in only one television station in a market. In approving
the Brissette acquisition, the FCC granted six-month waivers of that rule as it
pertains to the transmission signal overlap of (i) WIFR-TV, the Benedek Station
serving Rockford, Illinois, and WMTV(TV), the Brissette Station serving Madison,
Wisconsin; (ii) WYTV, the Benedek Station serving Youngstown, Ohio, and WTRF-TV,
the Brissette Station serving Wheeling, West Virginia and Steubenville, Ohio;
and (iii) WTAP-TV, the Benedek Station serving Parkersburg, West Virginia, and
WTRF-TV. These waivers will permit the Company to hold the Stations in question
for a six-month period after closing before divesting one of the two Stations
that do not comply with the duopoly rule in each instance. The FCC has a pending
proceeding, which it has committed to complete during 1996, that may result in
the liberalization of the duopoly rule to permit the Company to continue to own
all the Stations it currently owns as well as all of those it has received FCC
consent to acquire. There can be no assurance that the FCC will act to
liberalize the rule or that it will do so in time to avoid the Company's being
required to divest certain Stations in order to eliminate any signal overlap.
See 'Risk Factors -- Regulation by FCC.' Expansion of the Company's broadcast
operations in particular areas and nationwide will continue to be subject to the
FCC's ownership rules and any changes the FCC may adopt.
Under the FCC's ownership rules, if a purchaser of the Company's common
stock acquires an 'attributable' interest in the Company, a violation of FCC
regulations could result if that purchaser owned or acquired an attributable
interest in other media properties in a manner prohibited by the FCC's rules.
All officers and directors of a licensee, as well as stockholders who own 5% or
more of the outstanding voting stock of a licensee (either directly or
indirectly), will generally be deemed to have an attributable interest. For
certain institutional investors who exert no control or influence over a
licensee, the bench-mark is 10% or more of such outstanding voting stock before
attribution occurs. Under FCC regulations, debt instruments, non-voting stock
and certain limited partnership interests and voting stock held by non-majority
stockholders in cases in which there is a single majority stockholder are not
generally subject to attribution. The Company currently has a single
stockholder. In the event the Company no longer had a single majority
stockholder, minority interests would be deemed to be
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attributable interests. The FCC has initiated an inquiry into modifying several
of these attribution standards. It is unlikely that this inquiry will be
concluded before the end of 1996, and there can be no assurance that these rules
will be changed.
To the best of the Company's knowledge, no officer, director or stockholder
of the Company holds an interest in another radio or television station, cable
television system or daily newspaper that is inconsistent with the FCC's
ownership rules and policies.
Regulation of Broadcast Operations. Television broadcasters are subject to
FCC regulation in several other areas, including political broadcasting,
children's programming, obscene and indecent programming and equal employment
opportunities.
Candidates for Federal elective office have a right to buy advertising time
on television stations. Stations may also choose, but are not required, to carry
advertising by state or local candidates. When a station carries advertising by
one candidate (whether Federal, state, or local), the station must afford 'equal
time' for advertising by that candidate's opponent(s). During the last 45 days
of a primary campaign and the last 60 days of a general electlon campaign,
stations may not charge political candidates rates any higher than the rate
being charged to the most favored commercial advertiser during the same period.
These requirements can have the effect of reducing the revenues that a station
might otherwise earn during pre-election periods.
Television stations must serve the educational and informational needs of
children in their overall programming, and must air some programming
specifically designed to serve those needs. The programming obligation applies
to programs originally produced and broadcast for an audience of children 16
years of age and younger. Commercial time is limited to 10.5 minutes per hour on
weekends and 12 minutes per hour on weekdays for programs originally produced
and broadcast primarily for an audience of children 12 years of age and younger.
Television stations may not air obscene programming at any time, and may
not air indecent programming during the morning, afternoon and early evening.
Material is obscene if it appeals to viewers' prurient interests by depicting
sexual conduct in a patently offensive manner and lacks serious literary,
artistic, political or scientific value. Material is indecent if it describes in
patently offensive terms, sexual or excretory activities or organs.
Television stations must have an equal employment opportunity ('EEO')
policy that prohibits discrimination based on race, color, sex, religion or
national origin, and must establish EEO programs that encourage recruitment and
hiring of women and minorities. The FCC requires licensees to file regular
employment reports with the agency, recruit minority or female applicants for
vacancies, maintain records documenting the recruitment of women and minorities,
work with local organizations to identify female and minority job candidates,
and examine their sources of job referrals to determine if those sources are
effective in providing a station with female or minority applicants. The FCC
recently issued a notice of proposed rulemaking regarding its EEO rules, stating
that it hoped to make its EEO rules less burdensome (especially for small
stations).
In all of the foregoing areas, as well as in other matters that affect
operations and competition in the television broadcast industry, regulatory
policies are subject to change over time and cannot be fully predicted.
Proposed Legislation and Regulation. The Congress and the FCC currently
have under consideration, and may in the future adopt, new rules, regulations
and policies regarding a wide variety of matters which could, directly or
indirectly, affect the operation and ownership of the Stations. In addition to
the proposed changes set forth above, examples of such matters include policies
concerning eliminating certain cross-ownership restrictions, political
advertising and programming practices, flexible use of broadcast spectrum,
spectrum use fees, the standards to govern evaluation of television programming
directed toward children and violent and indecent programming. Other matters
that could affect the Company's broadcast properties include technological
innovations and developments generally affecting competition in the mass
communications industry, such as the initiation of DBS, the continued
establishment of wireless cable systems and low power television stations and
the participation of telephone companies in the provision of video programming
by wire.
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Implementation of the Cable Act of 1992. The Cable Television Consumer
Protection and Competition Act of 1992 (the 'Cable Act') was enacted on October
5, 1992. The Cable Act imposes cable rate regulation, establishes cable
ownership limitations, regulates the relationships between cable operators and
their program suppliers, regulates signal carriage and retransmission consent
and regulates numerous other aspects of the cable television business.
The signal carriage, or 'must carry,' provisions of the Cable Act require
cable operators to carry the signals of local commercial and non-commercial
television stations and certain low power television stations. Systems with 12
or fewer usable activated channels and more than 300 subscribers must carry the
signals of at least three local commercial television stations. A cable system
with more than 12 usable activated channels, regardless of the number of
subscribers, must carry the signals of all local commercial television stations,
up to one-third of the aggregate number of usable activated channels of such
system. The Cable Act also includes a retransmission consent provision that
requires cable operators and other multi-channel video programming distributors
to obtain the consent of broadcast stations prior to carrying them in certain
circumstances. The must carry and retransmission consent provisions are related
in that a television station must elect once every three years either to waive
its right to mandatory, but uncompensated, carriage or to negotiate a grant of
retransmission consent to permit the cable system to carry the station's signal.
In April 1993, a three-judge panel of the United States District Court of
the District of Columbia upheld the constitutionality of the legislative
must-carry provisions. In June 1994, the Supreme Court ruled that the must-carry
provisions were 'content-neutral' and, thus, not subject to strict scrutiny and
that Congress's stated interests in preserving the benefits of free, off-air
local broadcast television, promoting the widespread dissemination of
information from a multiplicity of sources and promoting fair competition in the
market for television programming all qualify as important governmental
interests. The Court, however, remanded to the lower federal court with
instructions to hold further proceedings with respect to evidence that lack of
the must-carry requirements would harm free, off-air broadcasting. In 1995, the
lower court again upheld the constitutionality of must-carry requirements after
reviewing the required evidence. The Supreme Court recently agreed to review the
case again in the fall of 1996.
Under rules adopted to implement these must carry and retransmission
consent provisions, local broadcast stations were required to make their initial
elections of must carry or retransmission consent by June 17, 1993, effective
October 6, 1993. The next opportunity for election will be October 1, 1996,
effective January 1, 1997. Stations that failed to elect were deemed to have
elected carriage under the must carry provisions. Other issues addressed in the
FCC rules were market designations, the scope of retransmission consent and
procedural requirements for implementing the signal carriage provisions.
In 1993, the Company elected and negotiated retransmission consents with
all of the local cable systems which carry the signals of the Benedek Stations.
The Company has entered into agreements for each Benedek Station with all of
these cable system operators. All of these agreements grant such cable system
operators consent to retransmit the Benedek Station's signal. These
retransmission arrangements do not represent a significant source of revenue for
the Company. The terms of these retransmission agreements range from one to five
years. In 1993, each of Stauffer and Brissette also elected and negotiated
retransmission consents with all the local cable systems carrying the signals of
their respective Stations and each entered into agreements for its Stations
similar to the retransmission consent agreements entered into by the Company.
The Stations are currently negotiating with these operators to enter into longer
term agreements. The Company cannot predict the outcome of these negotiations.
In addition, although the Company expects to be able to renew its current
retransmission agreements when such agreements expire, there can be no assurance
that such renewals will be obtained.
EMPLOYEES
The Company currently employs approximately 1,277 full-time and 252
part-time employees, of which 12 are part of the Company's corporate
headquarters staff and the balance are employed at the Stations. Approximately
272 of the Company's employees located at WMTV(TV), WILX-TV, WHOI(TV), WTRF-TV,
KDLH-TV and WYTV are represented by labor unions under collective bargaining
agreements. The KDLH-TV collective bargaining agreement expired in November 1995
and is currently
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being renegotiated. The WMTV(TV), WILX-TV, WHOI(TV), WTRF-TV and WYTV collective
bargaining agreements expire at various times from 1996 through 1998. There are
no unionized employees at the remaining Stations. The Company believes that its
relationship with all of its employees, including those represented by labor
unions, is satisfactory.
PROPERTIES
The Company's principal executive offices are located in leased premises in
Rockford, Illinois.
The types of properties required to support each of the Stations include
offices, studios and tower and transmitter sites. A station's studio and office
are generally located in business districts while tower and transmitter sites
are generally located so as to provide maximum signal coverage to each market.
The following table contains certain information describing the general
character of the properties of the Company:
BENEDEK STATIONS
<TABLE>
<CAPTION>
MARKET AREA, STATION AND USE OWNED OR LEASED APPROXIMATE SIZE(a) HEIGHT/POWER EXPIRATION OF LEASE
- ---------------------------------- --------------- ------------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Youngstown, Ohio
WYTV
Office and Studio................. Owned 18,964 sq. ft. -- --
Tower/Transmitter Site............ Owned (b) 642 ft./550 kw --
Duluth, Minnesota and Superior,
Wisconsin
KDLH-TV
Office and Studio................. Owned 25,000 sq. ft.(c) -- --
Tower/Transmitter Site............ Owned 1,040 sq. ft. 811 ft./100 kw --
Rockford, Illinois
WIFR-TV
Office and Studio................. Owned 13,500 sq. ft. -- --
Tower/Transmitter Site............ Owned (b) 674 ft./562 kw --
Quincy, Illinois and
Hannibal, Missouri
KHQA-TV
Office and Studio................. Leased 13,120 sq. ft. -- (d)
Tower/Transmitter Site............ Owned 1,200 sq. ft. 804 ft./269 kw --
Dothan, Alabama and
Panama City, Florida
WTVY-TV
Office and Studio................. Leased 20,440 sq. ft. -- 12/31/02
Tower/Transmitter Site............ Owned 2,500 sq. ft. 1,880 ft./100 kw --
Bowling Green, Kentucky
WBKO-TV
Office and Studio................. Owned 17,598 sq. ft. -- --
Tower/Transmitter Site............ Owned 1,175 sq. ft. 603 ft./316 kw --
Meridian, Mississippi
WTOK-TV
Office and Studio................. Owned 13,188 sq. ft. -- --
Tower/Transmitter Site............ Owned 1,504 sq. ft. 316 ft./316 kw --
Parkersburg, West Virginia
WTAP-TV
Office and Studio................. Leased 17,500 sq. ft. -- 04/30/05(e)
Tower/Transmitter Site............ Owned 3,600 sq. ft. 439 ft./208 kw --
Harrisonburg, Virginia
WHSV-TV
Office and Studio................. Owned 6,720 sq. ft. -- --
Tower/Transmitter Site............ Leased 2,016 sq. ft. 337 ft./8.32 kw 12/31/01(f)
</TABLE>
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STAUFFER STATIONS
<TABLE>
<CAPTION>
MARKET AREA, STATION AND USE OWNED OR LEASED APPROXIMATE SIZE(a) HEIGHT/POWER EXPIRATION OF LEASE
- ------------------------------ --------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Santa Barbara, Santa Maria and
San Luis Obispo, California
KCOY-TV
Office and Studio............. Owned 18,000 sq. ft. -- --
Tower/Transmitter Site........ Leased 1,200 sq. ft. 140 ft./115 kw (g)
Topeka, Kansas
WIBW-TV
Office and Studio............. Leased 18,774 sq. ft.(h) -- 08/31/98
Tower/Transmitter Site........ Leased 2,338 sq. ft. 1,249 ft./316 kw 02/14/62
Columbia and Jefferson City,
Missouri
KMIZ(TV)
Office and Studio............. Owned 5,993 sq. ft. -- --
Tower/Transmitter Site........ Owned 875 sq. ft. 1,030 ft./1,580 kw --
Casper and Riverton,
Wyoming
KGWC-TV
Office and Studio............. Leased 6,827 sq. ft. -- 8/31/97
Tower/Transmitter Site........ Owned 1,692 sq. ft. 235 ft./60 kw --
Lander, Wyoming
KGWL-TV (satellite)
Tower/Transmitter Site........ Leased 768 sq. ft. 155 ft./30 kw 12/31/07
Rock Springs, Wyoming
KGWR-TV (satellite)
Tower/Transmitter Site........ Leased 400 sq. ft. 100 ft./12 kw 05/22/99
Cheyenne, Wyoming
KGWN-TV
Office and Studio............. Owned 7,500 sq. ft. -- --
Tower/Transmitter Site........ (i) 2,646 sq. ft. 620 ft./100 kw --
Scottsbluff, Nebraska
KSTF-TV (satellite)
Office and Studio............. Owned 2,400 sq. ft. -- --
Tower/Transmitter Site........ Owned 2,457 sq. ft. 674 ft./240 kw --
Sterling, Colorado
KTVS-TV (satellite)
Office and Studio............. Owned 3,750 sq. ft. -- --
Tower/Transmitter Site........ Owned 2,640 sq. ft. 730 ft./60.6 kw --
</TABLE>
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BRISSETTE STATIONS
<TABLE>
<CAPTION>
MARKET AREA, STATION AND USE OWNED OR LEASED APPROXIMATE SIZE(a) HEIGHT/POWER EXPIRATION OF LEASE
- ------------------------------ --------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Madison, Wisconsin
WMTV(TV)
Office and Studio............. Owned 16,485 sq. ft. -- --
Tower/Transmitter Site........ Owned (b) 1,040 ft./955 kw --
Springfield and Holyoke,
Massachusetts
WWLP(TV)
Office and Studio............. Owned 20,000 sq. ft. -- --
Tower/Transmitter Site........ Owned (b) 500 ft./342 kw --
Lansing, Michigan
WILX-TV
Office and Studio............. Owned 13,700 sq. ft. -- --
Tower/Transmitter Site........ Owned 5,000 sq. ft. 994 ft./309 kw --
Peoria and Bloomington,
Illinois
WHOI(TV)
Office and Studio............. Owned 16,900 sq. ft. -- --
Tower/Transmitter Site........ Owned (b) 640 ft./2,240 kw --
Wausau and Rhinelander,
Wisconsin
WSAW-TV
Office and Studio............. Owned 24,400 sq. ft. -- --
Tower/Transmitter Site........ Leased(j) 432 sq. ft. 650 ft./316 kw 08/01/02
Wheeling, West Virginia and
Steubenville, Ohio
WTRF-TV
Office and Studio............. Owned 43,872 sq. ft.(k) -- --
Tower/Transmitter Site........ Owned 2,000 sq. ft. 741 ft. /316 kw --
Wichita Falls, Texas and
Lawton, Oklahoma
KAUZ-TV
Office and Studio............. Owned 13,078 sq. ft. -- --
Tower/Transmitter Site........ Owned (b) 1,028 ft./100 kw --
Odessa and Midland, Texas
KOSA-TV
Office and Studio............. Owned 14,222 sq. ft. -- --
Tower/Transmitter Site........ Leased 930 sq. ft. 726 ft./316 kw 10/31/98
</TABLE>
--------------
(a) Approximate size is for building space only and does not include the land on
which the facilities are located.
(b) Tower/Transmitter Site is located at and included within the size of the
office and studio premises.
(c) The Company owns a building of approximately 55,000 sq. ft. in which the
offices and studio of KDLH-TV are located and of which approximately 30,000
sq. ft. are leased to third parties.
(d) The Company has an option to purchase the premises on each of May 1, 2000
and 2005 for $650,000 and $750,000, respectively.
(e) Occupied on a month-to-month basis.
(f) Occupied pursuant to a Special Use Permit granted by the United States
Department of Agriculture Forest Service.
(g) Occupied on a month-to-month basis pursuant to approval of the United States
Department of Agriculture Forest Service. This property was previously
occupied pursuant to a Special Use Permit. Currently the United States
Department of Agriculture Forest Service is revising certain provisions of
its form of Special Use Permit which would otherwise have been reissued to
Stauffer in the ordinary course of business. The Company has applied for and
anticipates that it will be issued a Special Use Permit with respect to this
property upon completion of the aforementioned revisions. However, there can
be no assurance that such a Special Use Permit will be issued in the future.
(h) The Company leases a building of approximately 23,837 sq. ft. in which the
offices and studio of WIBW-TV are located and of which approximately 5,063
sq. ft. are subleased to the Stauffer Topeka Radio Trust, which is
beneficially owned by Stauffer and operates radio stations WIBW AM and FM.
(i) This property is utilized subject to an easement granted by the State of
Wyoming.
(j) Leased together with TAK Communications from the Wisconsin Educational
Board.
(k) The Company owns a building of approximately 46,872 sq. ft. in which the
offices and studio of WTRF-TV are located and of which approximately 3,000
sq. ft. are leased to a third party.
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LEGAL PROCEEDINGS
The Company currently and from time to time is involved in litigation
incidental to the conduct of its business. The Company (including in its
capacity as successor to Brissette) is not currently a party to any lawsuit or
proceeding which, in the opinion of the Company, is likely to have a material
adverse effect on the Company.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to each
director and executive officer of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ ------- -----------------------------------------------------------
<S> <C> <C>
A. Richard Benedek.................. 57 Chairman, Chief Executive Officer and Director
K. James Yager...................... 61 President and Director
Douglas E. Gealy.................... 36 Executive Vice President of Benedek Broadcasting
Ronald L. Lindwall.................. 51 Senior Vice President-Finance, Chief Financial Officer,
Treasurer, Secretary and Director
Terrance F. Hurley.................. 40 Senior Vice President of Benedek Broadcasting
Keith L. Bland...................... 40 Senior Vice President-Planning and Technology of Benedek
Broadcasting
Mary L. Flodin...................... 40 Vice President and Controller
Jay Kriegel......................... 55 Director
Paul S. Goodman..................... 42 Director
</TABLE>
Mr. A. Richard Benedek has been engaged in the television broadcasting
industry for over 15 years. Mr. Benedek is the Chairman and Chief Executive
officer of the Company. Mr. Benedek has served as Chairman and Chief Executive
Officer of Benedek Broadcasting since its formation in January 1979. From the
formation of Benedek Broadcasting until March 1995, Mr. Benedek also served as
President of Benedek Broadcasting. Additionally, Mr. Benedek has also served as
President and Chief Executive Officer of Blue Grass Television, Inc. ('Blue
Grass') and Youngstown Broadcasting Co., Inc. ('Youngstown') from their
formation in January 1980, and September 1982, respectively, until both were
merged into Benedek Broadcasting on March 10, 1995 (the 'Merger'). Prior to his
activities in the television broadcasting industry, Mr. Benedek was a partner in
the investment banking firm of Bear, Stearns & Co. Inc.
Mr. K. James Yager has been engaged in the television broadcasting industry
for over 35 years. Mr. Yager is the President of the Company. Mr. Yager has
served as President of Benedek Broadcasting since March 1995. From 1987 until he
became President, Mr. Yager served as Executive Vice President of Benedek
Broadcasting. Mr. Yager has also served as Vice President of each of Blue Grass
and Youngstown from 1990 and 1993, respectively, until the Merger. Mr. Yager was
employed by Cosmos Broadcasting from 1960 until 1980, including as general
manager of its television stations in Columbia, South Carolina and New Orleans,
Louisiana. From 1980 until 1986, Mr. Yager was Executive Vice President and
Chief Operating Officer of Spartan Radiocasting, which then owned three
television stations and four radio stations.
Mr. Douglas E. Gealy was recently hired in anticipation of the completion
of the Acquisitions to serve as Executive Vice President of Benedek
Broadcasting. Mr. Gealy was employed as Vice President and General Manager of
WCMH-TV, the NBC affiliate serving Columbus, Ohio which was owned by Outlet
Communications until February 1996. WCMH-TV was acquired by the National
Broadcasting Company in February 1996 at which time Mr. Gealy was promoted to
President of WCMH-TV. Prior thereto, Mr. Gealy was General Manager of WHOI-TV
(now a Brissette Station) from 1989 until 1991.
Mr. Ronald L. Lindwall is the Senior Vice President-Finance, Chief
Financial Officer, Secretary and Treasurer of the Company. Mr. Lindwall has also
held the same positions at Benedek Broadcasting since March 1995. From 1990
until March 1995, Mr. Lindwall served as Senior Vice President, Chief Financial
Officer and Treasurer of Benedek Broadcasting. Mr. Lindwall has also served as
Senior Vice President, Chief Financial Officer and Treasurer of each of Blue
Grass and Youngstown until the Merger. From 1982 to 1990, Mr. Lindwall was a
partner at the accounting firm of McGladrey & Pullen.
Mr. Terrance F. Hurley was recently promoted to Senior Vice President of
Benedek Broadcasting in anticipation of the completion of the Acquisitions. From
December 1995 until his promotion, Mr. Hurley served as Vice President/General
Manager of KDLH-TV serving Duluth, Minnesota and Superior,
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Wisconsin. Mr. Hurley also served as General Manager of KDLH-TV from October
1994 until December 1995 and General Sales Manager of KHQA-TV serving Quincy,
Illinois and Hannibal, Missouri from May 1993 until December 1995. From 1991
until May 1993, Mr. Hurley was employed by Dix Communications as the General
Sales Manager of KAAL-TV, serving Austin, Minnesota.
Mr. Keith L. Bland has been engaged in the television broadcasting industry
for over 22 years. Mr. Bland has served as Vice President-Planning and
Technology of Benedek Broadcasting since January 1996. From March 1995 until
January 1996, Mr. Bland served as Vice President and General Manager of WTAP-TV
serving Parkersburg, West Virginia. Mr. Bland also served as General Manager of
WTAP-TV from January 1990 until March 1995, General Sales Manager of WIFR-TV
serving Rockford, Illinois from September 1989 until January 1990 and
Local/Regional Sales Manager of WIFR-TV from July 1987 until September 1989.
Ms. Mary L. Flodin is the Vice President and Controller of the Company. Ms.
Flodin has also held the same positions at Benedek Broadcasting since 1990. From
1988 to 1990, Ms. Flodin served as Controller of Benedek Broadcasting. Ms.
Flodin has also served as Vice President and Controller of each of Blue Grass
and Youngstown from 1990 until the Merger. From 1983 to 1988, Ms. Flodin served
in various financial capacities as Vice President of AMCORE Financial, Inc.
Mr. Jay L. Kriegel has been engaged in the communications industry for over
20 years. Since March 1994, Mr. Kriegel has been a counsellor with the public
relations firm of Abernathy MacGregor Scanlon. From 1988 to 1994, Mr. Kriegel
was Senior Vice President of CBS Inc. Mr. Kriegel has served as a director of
Benedek Broadcasting since May 1994 and as a Director of the Company since its
inception.
Mr. Paul S. Goodman has been corporate counsel to the Company since 1983.
Since April 1993, Mr. Goodman has been a member of the law firm of Shack &
Siegel, P.C. From January 1990 to April 1993, Mr. Goodman was a member of the
law firm of Whitman & Ransom. Mr. Goodman has served as a director of Benedek
Broadcasting since November 1994 and as a Director of the Company since its
inception.
All directors hold office until their successors are duly elected and
qualify. Executive officers of the Company are appointed by the Board of
Directors and serve at the Board's discretion. Directors of the Company received
no cash compensation for such services to the Company during 1994. In 1995, the
Company paid each director who is not an employee of the Company $2,500 per
quarter and $500 per Board meeting for his services as a director. No family
relationship exists between any of the executive officers or directors of the
Company.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid to the Company's Chief Executive Officer and to each executive
officer whose aggregate compensation exceeded $100,000 during the fiscal years
ended December 31, 1995 and December 31, 1994. The amounts set forth in the
following table for 1994 include amounts paid to the listed executive officers
by Benedek Group, Inc., which was owned by Messrs. Benedek, Yager and Lindwall
and which provided management and accounting services to the Company during part
of 1994.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ALL
---------------------- OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(a)
- ----------------------------------------------------- ---- --------- -------- ------------------
<S> <C> <C> <C> <C>
A. Richard Benedek, Chairman and 1995 475,000 -- --
Chief Executive Officer 1994 450,000 -- --
K. James Yager, President 1995 344,950 -- 2,300
1994 307,550 -- 2,700
Ronald L. Lindwall, Senior Vice President-Finance, 1995 107,652 55,000 2,310
Chief Financial Officer, Secretary and Treasurer 1994 109,808 10,000 1,859
</TABLE>
- ------------
(a) Represents the amount of the Company's contribution under its 401(k) plan.
------------------------
The following table sets forth the value, at December 31, 1995, of options
to purchase common stock of Benedek Broadcasting held by the executive officers
named in the Summary Compensation Table above.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END
-------------------------------------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------------------------- ----------------------------- ----------- -------------
<S> <C> <C> <C> <C>
K. James Yager.................. 7.78 -- $ 3,982,000(a) --
</TABLE>
- ------------
(a) The value of the options at December 31, 1995 is based upon a multiple of
operating cash flow. The Company believes this method of valuation is
reasonable because there is no public market for the shares underlying the
options and operating cash flow best represents the underlying value of
Benedek Broadcasting. The multiple chosen by the Company is based on
existing broadcast market conditions. All of Mr. Yager's options are
immediately exercisable. The foregoing options, in the aggregate, will
entitle Mr. Yager to acquire shares representing 5% of the outstanding
common stock of the Company, after giving effect to the issuance thereof
but prior to any dilution resulting from the exercise of any of the
Warrants.
EMPLOYMENT AGREEMENTS
Mr. Benedek is employed by Benedek Broadcasting pursuant to an employment
agreement that expires May 31, 2000. During the term of the agreement, Mr.
Benedek is to be paid at a rate per annum of not less than $525,000. The
employment agreement requires Mr. Benedek to devote substantially all of his
business time to the business of Benedek Broadcasting and precludes Mr. Benedek
from engaging in activities competitive with the business of Benedek
Broadcasting throughout the term of the employment agreement.
Mr. Yager is employed by Benedek Broadcasting pursuant to an employment
agreement that expires May 31, 2000. During the term of the agreement, Mr. Yager
is to be paid at a rate per annum of not less than $400,000. The employment
agreement requires Mr. Yager to devote his full time to the business of Benedek
Broadcasting and precludes Mr. Yager from engaging in activities competitive
with the business of Benedek Broadcasting throughout the term of the employment
agreement.
Mr. Gealy is employed by Benedek Broadcasting pursuant to an employment
agreement that expires April 30, 1999. Pursuant to the employment agreement, Mr.
Gealy is to be paid a base salary at the rate of $235,000 per annum through
April 30, 1997, $260,000 per annum from May 1, 1997 through April 30, 1998, and
$285,000 per annum from May 1, 1998 through April 30, 1999. The employment
agreement requires Mr. Gealy to devote his full time to the business of Benedek
Broadcasting and precludes Mr. Gealy from engaging in activities competitive
with the business of Benedek Broadcasting throughout the term of the employment
agreement and for a period of one year thereafter with respect to designated
market areas then served by a television station owned by Benedek Broadcasting.
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Mr. Lindwall is employed by Benedek Broadcasting pursuant to an employment
agreement that expires May 31, 1999. During the term of the agreement, Mr.
Lindwall is to be paid at a rate per annum of not less than $150,000. The
employment agreement requires Mr. Lindwall to devote his full time to the
business of Benedek Broadcasting.
Mr. Hurley is employed by Benedek Broadcasting pursuant to an employment
agreement that expires May 31, 1999. During the term of the agreement, Mr.
Hurley is to be paid at a rate per annum of not less than $150,000. The
employment agreement requires Mr. Hurley to devote his full time to the business
of Benedek Broadcasting and precludes Mr. Hurley from engaging in activities
competitive with the business of Benedek Broadcasting throughout the term of the
employment agreement and for a period of one year thereafter with respect to
designated market areas then served by a television station owned by Benedek
Broadcasting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Benedek, Yager and Lindwall, all of whom are executive officers of
the Company, serve as directors of the Company. Presently, the Company does not
have a compensation committee. Compensation for executive officers is
recommended to the Board of Directors by the Chief Executive Officer. In making
his compensation recommendations, the Chief Executive Officer considers several
criteria, including the Company's performance and growth, industry standards for
similarly situated companies and experience and qualitative performance of such
executive officers.
STOCK OWNERSHIP
Mr. Benedek owns 7,030,000 shares of Class B common stock of the Company,
representing all of its outstanding common stock.
Mr. Yager holds options to purchase 370,000 shares of common stock of the
Company for an aggregate purchase price of approximately $1,192,500. All of Mr.
Yager's options are immediately exercisable.
The Initial Warrants are exercisable for approximately 7.5% of the common
stock of the Company, on a fully-diluted basis, but excluding the Contingent
Warrants. The Contingent Warrants are exercisable for approximately 10.0% of
such common stock on a fully-diluted basis, including the Initial Warrants.
DESCRIPTION OF OTHER INDEBTEDNESS
CREDIT AGREEMENT
The Credit Agreement was entered into concurrently with the consummation of
the sale of the Existing Notes, the Acquisitions and the other aspects of the
Financing Plan. The material terms of the Credit Agreement are described below.
The Term Loan Facilities consist of (i) an AXELs'sm' Series A Facility of
$70.0 million and (ii) an AXELs'sm' Series B Facility of $58.0 million. The Term
Loan Facilities provide for quarterly amortization until final maturity (except
in the first year during which amortization will be on a semi-annual basis). The
AXELs'sm' Series A Facility will mature five years and the AXELs'sm' Series B
Facility will mature six and one-half years after the closing. Benedek
Broadcasting is required to make scheduled amortization payments on the Term
Loan Facilities, on an aggregate basis for AXELs'sm' Series A and Series B
Facilities, as follows: first year after closing, $6.0 million; second year
after closing, $11.0 million; third year after closing, $14.5 million; fourth
year after closing, $16.0 million; fifth year after closing, $27.5 million;
sixth year after closing, $15.0 million; and the first half of the seventh year
after closing, $38.0 million.
In addition, Benedek Broadcasting is required to make prepayments on the
Term Loan Facilities under certain circumstances, including upon certain asset
sales and issuance of debt or equity securities by the Company or Benedek
Broadcasting. Benedek Broadcasting is also required to make prepayments on the
Term Loan Facilities in an amount equal to 50% of Benedek Broadcasting's Excess
Cash Flow (as defined). These mandatory prepayments will be applied to prepay,
on a pro rata
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basis, the AXELs'sm' Series A and Series B Facilities. The AXELs'sm' Series A
Facility bear interest, at Benedek Broadcasting's option, at a customary base
rate plus a spread of 2.0% or at a Eurodollar rate plus a spread of 3.0%. The
AXELsSM Series B Facility bear interest, at Benedek Broadcasting's option, at a
customary base rate plus a spread of 2.5% or at a Eurodollar rate plus a spread
of 3.5%. The margins above the customary base rate and the Eurodollar rate at
which the Term Loan Facilities and Revolving Credit Facility bear interest will
be subject to reductions at such times as certain leverage ratio performance
tests are met.
Benedek Broadcasting has the ability, subject to a borrowing base and
compliance with certain covenants and conditions, to borrow up to an additional
$15.0 million for general corporate purposes pursuant to the Revolving Credit
Facility. The Revolving Credit Facility has a term of five years and is fully
revolving until final maturity. The Revolving Credit Facility will bear interest
when drawn upon, at Benedek Broadcasting's option, at a customary base rate plus
a spread of 2.0% or at a Eurodollar rate plus a spread of 3.0%.
The Term Loan Facilities and the Revolving Credit Facility are guaranteed
by the Company and are secured by certain of the Company's and Benedek
Broadcasting's present and future property and assets. The Term Loan Facilities
are also guaranteed by BLC and are secured by all of the stock of BLC.
The Term Loan Facilities and the Revolving Credit Facility contain certain
financial covenants applicable to the Company and Benedek Broadcasting,
including, but not limited to, covenants related to cash interest coverage,
fixed charge coverage, Bank Debt/EBITDA ratio, total debt/EBITDA ratio and
minimum EBITDA. In addition, the Term Loan Facilities and the Revolving Credit
Facility will contain other affirmative and negative covenants relating to
(among other things) liens, payments on other debt, restricted junior payments
(excluding distributions from Benedek Broadcasting to the Company) transactions
with affiliates, mergers and acquisitions, sales of assets, leases, guarantees
and investments. The Term Loan Facilities and the Revolving Credit Facility
contain customary events of default for highly-leveraged financings, including
certain changes in ownership or control of the Company.
Although the Credit Agreement does not limit the ability of Benedek
Broadcasting to pay dividends or make other payments to the Company, the Senior
Secured Note Indenture does contain such limitations. However, after giving
effect to the Transactions (assuming the contribution to the common equity of
Benedek Broadcasting of net cash proceeds of approximately $188.5 million from
the sale of the Notes, the Units and the Seller Junior Discount Preferred
Stock), as of December 31, 1995, Benedek Broadcasting could have distributed
approximately $188.5 million to the Company under such limitations.
SENIOR SECURED NOTES
Benedek Broadcasting currently has outstanding $135.0 million aggregate
principal amount of its 11 7/8% Senior Secured Notes due 2005, which were issued
in an exchange offer in December 1995. The Senior Secured Notes were issued in
exchange for all of Benedek Broadcasting's then outstanding 11 7/8% senior
secured notes (the 'Original Notes'). The Original Notes and the Senior Secured
Notes exchanged therefor were both issued pursuant to an indenture (the 'Senior
Secured Note Indenture') dated as of March 1, 1995, among Benedek Broadcasting,
the LLC and The Bank of New York, as trustee. The Senior Secured Notes are
senior secured obligations of Benedek Broadcasting and will rank pari passu in
right of payment with the Term Loan Facilities and Revolving Credit Facility
under the Credit Agreement. The Senior Secured Notes are currently guaranteed by
the LLC and, upon consummation of the Transactions, will be guaranteed by BLC
and the Company. The Senior Secured Notes will mature on March 1, 2005. The
Senior Secured Notes are redeemable at Benedek Broadcasting's option, in whole
or in part, at any time after March 1, 2000, at the following redemption prices
(expressed as percentages of the principal amount): if redeemed during the
12-month period commencing March 1 of (a) 2000, 105.938%; (b) 2001, 102.969%;
(c) 2002, 101.484%; and (d) 2003 and thereafter, 100.0%.
So long as the Senior Secured Notes remain outstanding, Benedek
Broadcasting will remain subject to the Senior Secured Note Indenture. The
Senior Secured Note Indenture contains covenants that, among other things, limit
(i) the issuance of additional indebtedness by Benedek Broadcasting, (ii)
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the creation of liens on the assets of Benedek Broadcasting and its
subsidiaries, (iii) Benedek Broadcasting from entering into sale and leaseback
transactions, (iv) the issuance of debt and preferred stock by Benedek
Broadcasting's subsidiaries, (v) the payment of dividends on, and redemption of,
capital stock of Benedek Broadcasting and its subsidiaries and the redemption of
certain subordinated obligations of Benedek Broadcasting, (vi) investments in
certain affiliates, (vii) sales of assets and subsidiary stock, (viii)
transactions with affiliates and (ix) consolidations, mergers and transfers of
all or substantially all of Benedek Broadcasting's assets. The Senior Secured
Note Indenture also prohibits certain restrictions on distributions from
subsidiaries. The Senior Secured Note Indenture also contains certain customary
events of default, which include the failure to pay interest and principal, the
failure to comply with certain covenants in the Senior Secured Notes or the
Senior Secured Note Indenture, a default under certain indebtedness, the
imposition of certain final judgements or warrants of attachment and certain
events occurring under bankruptcy laws.
In connection with the Transactions, all of the obligations of Benedek
Broadcasting under the Senior Secured Notes and the Senior Secured Note
Indenture were unconditionally guaranteed by the Company.
EXCHANGE DEBENTURES
The Exchangeable Preferred Stock is exchangeable, at the option of the
Company, for the Company's Subordinated Notes due 2007 (the 'Exchange
Debentures'). The Exchange Debentures, if issued, will be issued under an
indenture (the 'Exchange Indenture'), to be entered into between the Company and
IBJ Schroder Bank & Trust Company, as trustee. The Exchange Debentures will be
general, unsecured obligations of the Company, ranking subordinate in right of
payment to all senior indebtedness of the Company, including the Notes and the
Company's guarantees of Benedek Broadcasting's obligations under the Credit
Agreement and with respect to the Senior Secured Notes. Interest on the Exchange
Debentures will accrue at the same rate per annum as the dividend rate on the
Exchangeable Preferred Stock. Interest will accrue from the date the Exchange
Debentures are issued and be payable semi-annually in cash (or, at the option of
the Company, on or prior to July 1, 2001, in additional Exchange Debentures) in
arrears on each July 1 and January 1, commencing with the first such date after
the issuance of the Exchange Debentures. The Exchange Debentures will be
redeemable, at the Company's option, in whole at any time or in part from time
to time, at the redemption prices (expressed in percentages of the principal
amount thereof) set forth below, plus without duplication, accrued and unpaid
interest on the Exchange Debentures to the date of redemption: if redeemed prior
to July 1, 1996 at 115.000%, and if redeemed during the 12-month period
commencing July 1 of (a) 1996 through 1999, 115.000%; (b) 2000, 112.000%; (c)
2001, 109.000%; (d) 2002, 106.000%; (e) 2003, 103.000%; and (f) 2004 and
thereafter, 100.000%. The Exchange Indenture will also provide that upon the
occurrence of a change of control (to be defined in the Exchange Indenture) of
the Company, each holder will have the right to require that the Company
repurchase all or a portion of such holder's Exchange Debentures at a purchase
price equal to 101% of the principal amount thereof plus accrued interest, if
any, to the date of repurchase. The payment of all obligations on the Exchange
Debentures will be subordinated and junior in right of payment to the prior
payment in full of all obligations senior to the Exchange Debentures, including
the Notes, the Credit Agreement and the Senior Secured Notes. The Exchange
Indenture will contain certain covenants that, among other things, limit (i) the
issuance of additional indebtedness by the Company and its subsidiaries, (ii)
the creation of certain liens on the assets of the Company and its subsidiaries,
(iii) the Company from entering into certain sale and leaseback transactions,
(iv) the payment of dividends on, and redemption of, certain capital stock of
the Company and its subsidiaries and the redemption of certain subordinated
obligations of the Company, (v) investments in certain affiliates, (vi) sales of
assets and subsidiary stock, (vii) transactions with affiliates and (viii)
consolidations, mergers and transfers of all or all of the Company's assets.
Additionally, the events of default in the Exchange Indenture will be similar to
the events of default contained in the Indenture.
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DESCRIPTION OF THE NOTES
The Exchange Securities will be issued under the Indenture, dated as of May
15, 1996 between the Company and United States Trust Company of New York, as
trustee (the 'Trustee'). The Existing Notes were also issued pursuant to the
Indenture. The Indenture provides that the Existing Notes and the Exchange
Securities are pari passu in all respects.The following summary, which describes
certain provisions of the Indenture and the Notes, does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Indenture and the Notes, including the definitions therein of terms not
defined in this Prospectus. A copy of the Indenture is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
GENERAL
The Notes are unsecured senior subordinated obligations of the Company,
limited to $170.0 million aggregate principal amount at maturity, and will
mature on May 15, 2006. Prior to May 15, 2001, except as described below, no
interest will accrue on the Notes. From and after May 15, 2001, interest on the
Notes will accrue at the rate shown on the front cover of this Offering Circular
and will be payable semi-annually in arrears on each May 15 and November 15,
commencing November 15, 2001. Interest on overdue principal and (to the extent
permitted by law) on overdue installments of interest will accrue at a rate of
1.0% in excess of the rate per annum borne by the Notes. The interest rate on
the Existing Notes is subject to increase in certain circumstances if the
Exchange Offer is not consummated by November 4, 1996 or if certain other
conditions are not satisfied.
For Federal income tax purposes, Holders of the Notes will be required to
recognize interest income in respect of the Notes in the form of original issue
discount in advance of the receipt of cash payments to which such income is
attributable.
Interest on the Notes will be computed on the basis of a 360-day year of
twelve 30-day months. Principal and interest will be payable at the office of
the Trustee, but, at the option of the Company and subject to certain
exceptions, interest may be paid by check mailed to the registered holders at
their registered addresses. However, any global Note will be payable in
immediately available funds by wire transfer to The Depository Trust Company
(the 'Depository'). See ' -- Same-Day Settlement and Payment.' The Notes will be
transferable and exchangeable at the office of the Trustee and will be issued in
fully registered form, without coupons.
FORM, DENOMINATION AND BOOK-ENTRY PROCEDURES
The Existing Notes are represented by one fully-registered global note
without coupons (the 'Existing Global Note') and two fully-registered
certificated notes without coupons. The Existing Global Note is on deposit with
the Depository and registered in the name of the Depository or a nominee of the
Depository.
The Exchange Securities will be issued in the form of one or more
fully-registered notes in global form without coupons (an 'Exchange Global
Note') and one or more fully-registered certificated notes without coupons (the
'Certificated Exchange Securities'). The Exchange Global Note will be deposited
with the Depository and registered in the name of the Depository or a nominee of
the Depository (the 'Exchange Global Note Registered Owner').
The Depository has advised the Company that the Depository is a limited
purpose trust company created to hold securities for its participating
organizations (collectively, the 'Participants') and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Access to the Depository's system
is also available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the 'Indirect
Participants'). Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual
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purchaser of each security held by or on behalf of the Depository are recorded
on the records of the Participants and Indirect Participants.
The Depository has also advised the Company that, pursuant to procedures
established by it, (i) upon deposit of the Exchange Global Note, the Depository
will credit the accounts of Participants with portions of the principal amount
of the Exchange Global Note and (ii) ownership of such interests in the Exchange
Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by the Depository (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the Exchange Global Note). The laws
of some states require that certain persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer the
Exchange Securities will be limited to that extent.
So long as the Depository or its nominee is the registered owner of the
Exchange Global Note, the Depository or such nominee, as the case may be, will
be considered the sole owner or Holder of the Exchange Securities represented by
the Exchange Global Note for all purposes under the Indenture. Except as
described below, owners of interests in the Exchange Global Note will not have
the Exchange Securities registered in their names, will not receive physical
delivery of the Exchange Securities in definitive form and will not be
considered the Registered Owners thereof under the Indenture for any purpose.
Accordingly, each person owning a beneficial interest in the Exchange
Global Note must rely on the procedures of the Depository and, if such person is
not a Participant or an Indirect Participant, on the procedures of the
Participant through which such person owns its interest, to exercise any rights
of a Holder under the Indenture or such Exchange Global Note. The Company
understands that under existing industry practice, in the event the Company
requests any action of Holders or a person that is an owner of a beneficial
interest in an Exchange Global Note desires to take any action that the
Depository, as the Holder of such Exchange Global Note, is entitled to take, the
Depository would authorize the Participants to take such action and the
Participants would authorize persons owning through such Participants to take
such action or would otherwise act upon the instruction of such persons. None of
the Company, the Trustee nor any agent of the Company or the Trustee will have
any responsibility or liability for (i) any aspect of the Depository's records
or any Participant's records relating to payments made on account of beneficial
ownership interests in the Exchange Global Note, or for maintaining, supervising
or reviewing any of the Depository's records or any Participant's records
relating to the beneficial ownership interests in the Exchange Global Note or
(ii) any other actions and practices of the Depository or any of the
Participants.
Payments in respect of the principal of and interest on any Exchange
Securities registered in the name of the Exchange Global Note Registered Owner
will be payable by the Trustee to or at the direction of the Exchange Global
Note Registered Owner in its capacity as the Registered Owner under the
Indenture. Under the terms of the Indenture, the Company and the Trustee will
treat the persons in whose names the Exchange Securities, including the Exchange
Global Note, are registered as the owners thereof for the purpose of receiving
such payments and for any and all other purposes whatsoever. Consequently,
neither the Company, the Trustee nor any agent of the Company or the Trustee has
or will have any responsibility or liability for the payment of such amounts to
beneficial owners of Exchange Securities or for any other matter relating to
actions or practices of the Depository or any of the Participants. Payments by
the Participants and the Indirect Participants to the beneficial owners of
Exchange Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of the Depository, the Trustee
or the Company. Neither the Company nor the Trustee will be liable for any delay
by the Depository or any of the Participants in identifying the beneficial
owners of the Exchange Securities, and the Company and the Trustee may
conclusively rely on and will be protected in relying on instructions from the
Exchange Global Note Registered Owner for all purposes.
The Exchange Global Note is exchangeable for Certificated Exchange
Securities if (i) the Depository notifies the Company that it is unwilling or
unable to continue as Depository for the Exchange Global Note or if the Company
determines that the Depository is unable to continue as Depository and the
Company thereupon fails to appoint a successor Depository, (ii) the Company, at
its
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option, notifies the Trustee in writing that it elects to cause the issuance of
Certificated Exchange Securities in definitive registered form or (iii) there
shall have occurred and be continuing an Event of Default or any event which
after notice or lapse of time would be an Event of Default with respect to the
Exchange Securities. Such Certificated Exchange Securities shall be registered
in the names of the owners of the beneficial interests in the Exchange Global
Note as provided by the Depository. Certificated Exchange Securities will be in
fully registered form, without coupons, in multiples of $1,000. Upon issuance of
Certificated Exchange Securities, the Trustee is required to register the
Exchange Securities in the name of, and cause the Exchange Securities to be
delivered to, the person or persons (or the nominee thereof) identified as the
beneficial owner as the Depository shall direct.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Exchange Securities
represented by an Exchange Global Note (including principal, premium and
interest) be made by wire transfer of immediately available funds to the
accounts specified by the Depository. The Company will make all payments in
respect of the Certificated Exchange Securities (including principal, premium
and interest), by mailing a check to each such Holder's registered address;
provided, however, that payments on the Exchange Securities may also be made, in
the case of a Holder of at least $1,000,000 aggregate principal amount at
maturity of Exchange Securities, by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion). Secondary trading in long-term notes and
debentures of corporate issuers is generally settled in clearing-house or
next-day funds. In contrast, the Exchange Global Note will be eligible to trade
in the PORTAL Market and to trade in the Depositary's Same-Day Funds Settlement
System, and any permitted secondary market trading activity in interests
represented by the Exchange Global Note will, therefore, be required by the
Depositary to be settled in immediately available funds. The Company expects
that secondary trading in the Certificated Exchange Securities will also be
settled in immediately available funds.
OPTIONAL REDEMPTION
Except as described below, the Notes may not be redeemed at the option of
the Company prior to May 15, 2000. On or after such date, the Notes may be
redeemed at the option of the Company, at any time as a whole, or from time to
time in part, on not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of Accreted Value) set forth below,
plus accrued interest (if any) to the date of redemption (subject to the right
of holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
if redeemed during the 12-month period commencing May 15:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---------------------------------------------------------------------- ----------
<S> <C>
2000.................................................................. 108.833%
2001.................................................................. 106.625
2002.................................................................. 104.417
2003.................................................................. 102.208
2004 and thereafter................................................... 100.000
</TABLE>
Notwithstanding the foregoing, until May 15, 1999, the Company may, at its
option, redeem up to 25% of the aggregate principal amount at maturity of the
Notes at 113.25% of the Accreted Value thereof with the net proceeds of one or
more Public Equity Offerings or Strategic Investments (to the extent such net
proceeds are contributed to the equity capital of the Company in the case of a
Public
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Equity Offering by Parent or Strategic Investment in Parent) if at least 75% of
the original aggregate principal amount at maturity of the Notes remain
outstanding after each such redemption.
SINKING FUND
There will be no mandatory sinking fund payments for the Notes.
RANKING
The indebtedness evidenced by the Notes is senior subordinated, unsecured
obligations of the Company. The payment of the principal of, premium (if any),
interest and all other obligations in respect of the Notes is subordinate in
right of payment, as set forth in the Indenture, to the prior payment in full in
cash or cash equivalents of all Senior Debt of the Company, whether outstanding
on the Issue Date or thereafter incurred, including the Company's guarantee of
Benedek Broadcasting's obligations under the Credit Agreement and with respect
to the Senior Secured Notes.
As of March 31, 1996, after giving pro forma effect to the Transactions,
the Company's Senior Debt would have been approximately $263.7 million. Although
the Indenture contains limitations on the amount of additional Debt that the
Company may incur, under certain circumstances the amount of such Debt could be
substantial and, in any case, such Debt may be Senior Debt. See ' -- Certain
Covenants -- Limitation on Debt.'
All the operations of the Company are conducted through its subsidiaries.
Claims of creditors of such subsidiaries, including trade creditors, secured
creditors and creditors holding indebtedness and guarantees issued by such
subsidiaries, and claims of preferred stockholders (if any) of such subsidiaries
generally will have priority with respect to the assets and earnings of such
subsidiaries over the claims of creditors of the Company, including holders of
the Notes, even though such obligations will not constitute Senior Debt. The
Notes, therefore, will be effectively subordinated to creditors (including trade
creditors) and preferred stockholders (if any) of subsidiaries of the Company.
At March 31, 1996, after giving pro forma effect to the Transactions, the total
liabilities of the Company's subsidiaries would have been $286.3 million,
including trade payables and $263.7 million of Senior Debt. Although the
Indenture limits the incurrence of Debt and preferred stock of certain of the
Company's subsidiaries, such limitation is subject to a number of significant
qualifications. Moreover, the Indenture does not impose any limitation on the
incurrence by such subsidiaries of liabilities that are not considered Debt
under the Indenture. See ' -- Certain Covenants -- Limitation of Debt.'
Only Debt of the Company that is Senior Debt will rank senior to the Notes
in accordance with the provisions of the Indenture. The Notes will in all
respects rank pari passu with all other Senior Subordinated Debt of the Company.
The Company has agreed in the Indenture that it will not Incur, directly or
indirectly, any Debt that is subordinate or junior in ranking in right of
payment to its Senior Debt unless such Debt is Senior Subordinated Debt or is
expressly subordinated in right of payment to Senior Subordinated Debt.
Unsecured Debt is not deemed to be subordinated or junior to Senior Debt merely
because it is unsecured.
The Company may not pay principal of, premium (if any), interest on or any
other obligation in respect of, the Notes or make any deposit pursuant to the
provisions described under 'Defeasance' below and may not repurchase, redeem or
otherwise retire any Notes (collectively, 'pay the Notes') if (i) any Designated
Senior Debt is not paid when due or (ii) any other default on Designated Senior
Debt occurs and the maturity of such Designated Senior Debt is accelerated in
accordance with its terms unless, in either case, the default has been cured or
waived and any such acceleration has been rescinded or such Designated Senior
Debt has been paid in full in cash or cash equivalents. However, the Company may
pay the Notes without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from the Representative of the
Designated Senior Debt with respect to which either of the events set forth in
clause (i) or (ii) of the immediately preceding sentence has occurred and is
continuing. Upon the occurrence and during the continuance of any default (other
than a default described in clause (i) or (ii) of the second preceding sentence)
with respect to any Designated Senior Debt pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration)
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or the expiration of any applicable grace periods, the Company may not pay the
Notes for a period (a 'Payment Blockage Period') commencing upon the receipt by
the Trustee (with a copy to the Company) of written notice (a 'Blockage Notice')
of such default from the Representative of the holders of such Designated Senior
Debt specifying an election to effect a Payment Blockage Period and ending 179
days thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the Representative of such
Designated Senior Debt Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because such Designated Senior Debt has been repaid in full in cash or
cash equivalents). Notwithstanding anything in the foregoing to the contrary, a
Blockage Notice may only be given by and, therefore shall only be effective in
respect of the Company and the Trustee if given by, (i) the Representative of
the Bank Debt as long as any Bank Debt is outstanding or the Representative of
the Senior Secured Notes as long as any Senior Notes are outstanding and (ii) if
no Bank Debt or Senior Secured Notes are outstanding, any other Representative
of outstanding Designated Senior Debt. Notwithstanding the provisions described
in the immediately preceding sentence, unless the holders of such Designated
Senior Debt or the Representative of such holders have accelerated the maturity
of such Designated Senior Debt, the Company may resume payments on the Notes
after the end of such Payment Blockage Period. The Notes shall not be subject to
more than one Payment Blockage Period in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior Debt
during such period.
Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization of or similar proceeding
relating to the Company or its property, the holders of Senior Debt will be
entitled to receive payment in full in cash or cash equivalents of such Senior
Debt before the Noteholders are entitled to receive any payment, and until the
Senior Debt is paid in full in cash or cash equivalents, any payment or
distribution to which Noteholders would be entitled but for the subordination
provisions of the Indenture will be made to holders of such Senior Debt as their
interests may appear. The foregoing shall not prohibit the receipt by
Noteholders in such a proceeding prior to the payment in full of the Senior Debt
of a distribution of shares of stock or debt securities that are subordinated to
the same extent as the Notes. If a distribution is made to Noteholders that, due
to the subordination provisions, should not have been made to them, such
Noteholders are required to hold it in trust for the holders of Senior Debt and
pay it over to them as their interests may appear.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of Designated Senior
Debt or the Representative of such holders of the acceleration.
For purposes of the subordination provisions in the Indenture, Senior Debt
outstanding under the Bank Credit Agreement shall not be deemed paid in full in
cash or cash equivalents at any time unless all letters of credit outstanding
under the Bank Credit Agreement which have not been drawn upon at such time are
fully cash collateralized or returned undrawn.
By reason of the subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior Debt
may recover more, ratably, than the Noteholders, and creditors of the Company
who are not holders of Senior Debt may recover less, ratably, than holders of
Senior Debt and may recover more, ratably, than the Noteholders.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a 'Change of
Control'), each holder of Notes will have the right to require the Company to
repurchase all or any part of such holder's Notes at a repurchase price equal to
101% of the Accreted Value thereof plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date):
(i) prior to the first public offering of common stock of the Company
or Parent, the Permitted Holders cease to be the 'beneficial owner' (as
defined in Rules 13d-3 and 13d-5 under the
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Exchange Act), directly or indirectly, of a majority in the aggregate of
the total voting power of the Voting Stock of the Company, whether as a
result of Issuance of securities of the Company, any merger, consolidation,
liquidation or dissolution of the Company, any direct or indirect transfer
of securities or otherwise (for purposes of this clause (i) and clause (ii)
below, the Permitted Holders shall be deemed to beneficially own any Voting
Stock of a corporation (the 'specified corporation') held by any other
corporation (the 'parent corporation') so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the aggregate
a majority of the voting power of the Voting Stock of the parent
corporation);
(ii) any 'person' (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in clause (i) above, except that such
person shall be deemed to have 'beneficial ownership' of all shares that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
more than 35% of the total voting power of the Voting Stock of the Company;
provided, however, that the Permitted Holders beneficially own (as defined
in clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company
than such other person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the Board of Directors of the Company (for the purposes of this clause
(ii), such other person shall be deemed to beneficially own any Voting
Stock of a specified corporation held by a parent corporation, if such
other person is the beneficial owner (as defined in this clause (ii)),
directly or indirectly, of more than 35% of the voting power of the Voting
Stock of such parent corporation and the Permitted Holders beneficially own
(as defined in clause (i) above), directly or indirectly, in the aggregate
a lesser percentage of the voting power of the Voting Stock of such parent
corporation and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors of such parent corporation); or
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of 66 2/3% of the directors of the Company
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
The foregoing provisions cannot be waived by the Board of Directors of the
Company (except that the Board may approve a new group of directors as described
in paragraph (iii) above and thereby prevent the occurrence of such a Change of
Control). The provisions relative to the Company's obligation to make an offer
to repurchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the holders of a majority in principal
amount of the Notes.
Within 30 days following any Change of Control, the Company will mail a
notice to each holder stating (i) that a Change of Control has occurred and that
such holder has the right to require the Company to repurchase all or any part
of such holder's Notes at a repurchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date); (ii) the
circumstances and relevant facts regarding such Change of Control (including
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control); (iii) the
repurchase date (which will be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (iv) the instructions, determined by
the Company consistent with the Indenture, that a holder must follow in order to
have its Notes repurchased.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchaser. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control
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under the Indenture, but that could increase the amount of indebtedness
outstanding at such time or otherwise affect the Company's capital structure or
credit ratings. Restrictions on the ability of the Company to incur additional
Debt are contained in the covenants described under 'Certain
Covenants -- Limitation on Debt,' ' -- Limitation on Liens' and ' -- Limitation
on Sale/Leaseback Transactions.' Such restrictions can only be waived with the
consent of the holders of a majority of the principal amount of the Notes then
outstanding. Except for the limitations contained in such covenants, however,
the Indenture will not contain any covenants or provisions that may afford
holders of the Notes protection in the event of a highly leveraged transaction.
The Senior Secured Note Indenture and the Credit Agreement contain, and
future indebtedness of the Company and Benedek Broadcasting may contain,
prohibitions of certain events which would constitute a Change of Control or
require such indebtedness to be repurchased upon a Change of Control. Moreover,
the exercise by the holders of their right to require the Company to repurchase
the Notes could cause a default under such indebtedness, even if the Change of
Control itself does not, due to the financial effect of such repurchase on the
Company. Finally, the Company's ability to pay cash to the holders of Notes upon
a repurchase may be limited by the Company's then existing financial resources.
There can be no assurance that sufficient funds will be available when necessary
to make any required repurchases. In the event a Change of Control occurs at a
time when the Company is prohibited from purchasing Notes, the Company could
seek the consent of its lenders to the purchase of Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company will remain
prohibited from purchasing Notes. In such case, the Company's failure to offer
to purchase or to purchase tendered Notes would constitute an Event of Default
under the Indenture and could, in turn, constitute a default under the Bank
Credit Agreement and any future indebtedness. In such circumstances, the
subordination provisions in the Indenture would restrict payments to the holders
of Notes.
The Company will comply with any tender offer rules under the Exchange Act
which may then be applicable, including Rule 14e-1, in connection with any offer
required to be made by the Company to repurchase the Notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the Indenture, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the Indenture by virtue thereof.
CERTAIN COVENANTS
Set forth below are certain covenants contained in the Indenture:
Limitation on Debt. (a) The Company shall not, and shall not permit any
Restricted Subsidiary to, Issue, directly or indirectly, any Debt; provided,
however, that the Company may Issue Debt if at the date of such Issuance the
Cash Flow Leverage Ratio does not exceed the ratio indicated below for Debt
Issued in each period indicated:
<TABLE>
<CAPTION>
PERIOD RATIO
- -------------------------------------------------------------------------------- ----------
<S> <C>
Through September 30, 1996...................................................... 7.0 to 1.0
From October 1, 1996 through March 31, 1998..................................... 6.5 to 1.0
From April 1, 1998 and thereafter............................................... 6.0 to 1.0
</TABLE>
(b) Notwithstanding the foregoing paragraph (a), the Company and the
Restricted Subsidiaries may Issue the following Debt: (1) Debt of the Company or
Benedek Broadcasting Issued pursuant to the Bank Credit Agreement (including
Guarantees thereof and any letters of credit Issued thereunder) or any other
agreement or indenture in a principal amount which, when taken together with the
principal amount of all other Debt Issued pursuant to this clause (1) and then
outstanding, does not exceed the greater of (i) $15.0 million and (ii) 75% of
the book value of the accounts receivable of the Company and the Restricted
Subsidiaries; (2) Debt of the Company or Benedek Broadcasting Issued pursuant to
the Bank Credit Agreement (including Guarantees thereof and any letters of
credit Issued thereunder) or any other agreement or indenture in an aggregate
principal amount which, when taken together with the principal amount of all
other Debt Issued pursuant to this clause (2) and then
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outstanding, does not exceed (A) $128.0 million less (B) the lesser of (i) the
aggregate amount of all principal repayments of any such Debt actually made
after the Issue Date (other than any such principal repayments made as a result
of the Refinancing of any such Debt) and (ii) the scheduled principal
amortization payments to have been made by then under the terms of the Bank
Credit Agreement (but without giving effect to any changes to such scheduled
principal payments after the Issue Date); (3) Debt owed to and held by the
Company or a Wholly Owned Subsidiary; provided, however, that any subsequent
Issuance or transfer of any Capital Stock or any other event which results in
any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Debt (other than to a Wholly Owned Subsidiary) shall
be deemed, in each case, to constitute the Issuance of such Debt by the issuer
thereof; (4) the Notes and Refinancing Debt of the Company Issued in respect of
any Debt permitted by this clause (4) and Guarantees thereof (including the
accretion of any original issue discount associated with Debt permitted by this
clause (4)); (5) Debt (other than Debt described in clause (1), (2) (3) or (4)
of this covenant but including the Debt represented by the Company Pledge
Agreement) outstanding on the Issue Date, Refinancing Debt in respect of any
Debt permitted by this clause (5) or clause (8) below or by paragraph (a) above,
Guarantees of the Senior Secured Notes and Refinancing Debt of the Company in
respect of the Senior Secured Notes; (6) Debt or Preferred Stock of a Subsidiary
Issued and outstanding on or prior to the date on which such Subsidiary became a
Subsidiary or was acquired by the Company (other than Debt or Preferred Stock
Issued in connection with, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary or was
acquired by the Company) and Refinancing Debt of such Subsidiary Issued in
respect of any Debt of such Subsidiary permitted by this clause (6); provided,
however, that after giving effect thereto, except in the case of any Refinancing
Debt, the Company could Issue an additional $1.00 of Debt pursuant to paragraph
(a) above; (7) Debt consisting of Guarantees by BLC of Permitted Acquisition
Debt; (8) Specified Debt of a Restricted Subsidiary; provided, however, that
after giving effect thereto, the Company could Issue an additional $1.00 of Debt
pursuant to paragraph (a) above; (9) Exchange Debentures Issued in lieu of cash
interest payments with respect to the Exchange Debentures and Refinancing Debt
in respect of any Debt permitted by this clause (9); and (10) Debt of the
Company or any Restricted Subsidiary (in addition to the Debt permitted to be
Issued pursuant to paragraph (a) above or in any other clause of this paragraph
(b)) in an aggregate principal amount on the date of Issuance which, when added
to all other Debt Issued pursuant to this clause (10) and then outstanding,
shall not exceed $15.0 million.
(c) Notwithstanding any other provision of this covenant, the Company shall
not Issue any Debt under paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Debt shall be subordinated to
the Notes to at least the same extent as such Subordinated Obligations.
Limitation on Subordinated Debt. The Company shall not issue any Debt if
such Debt is subordinate or junior in ranking in any respect to any Senior Debt,
unless such Debt is Senior Subordinated Debt or is expressly subordinated in
right of payment to Senior Subordinated Debt.
Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, create, incur or suffer to exist any Lien upon any of
its property or assets now owned or hereafter acquired by it securing any Debt
that is expressly by its terms junior or subordinate in right of payment to any
other Debt of the Company, unless contemporaneously therewith effective
provision is made for securing the Notes equally and ratably with such Debt as
to such property for so long as such Debt will be so secured.
Limitation on Sale/Leaseback Transactions. The Company shall not, and shall
not permit any Restricted Subsidiary to, enter into a Sale/Leaseback Transaction
unless (i) the Company would be able to incur Debt in an amount equal to the
Attributable Debt with respect to such Sale/Leaseback Transaction secured by a
Lien pursuant to the provisions of the covenants described under ' -- Limitation
on Debt' and ' -- Limitation on Liens' above or (ii) the Company or such
Restricted Subsidiary receives consideration from such Sale/Leaseback
Transaction at least equal to the fair market value of the property subject
thereto (which shall be determined in good faith by the Board of Directors and
evidenced by a resolution of the Board of Directors) and elects to treat the
disposition of
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assets subject to such Sale/Leaseback Transaction as an Asset Disposition
subject to the covenant described under ' -- Limitation on Sales of Assets and
Subsidiary Stock' below.
Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any Restricted Subsidiary, directly or indirectly, to (i) declare or pay
any dividend or make any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or consolidation involving
the Company) or to the direct or indirect holders of its Capital Stock (except
dividends or distributions payable solely in its Non-Convertible Capital Stock
or in options, warrants or other rights to purchase its Non-Convertible Capital
Stock and except dividends or distributions payable to the Company or a
Subsidiary and, if a Subsidiary is not wholly owned, to the other stockholders
on a pro rata basis), (ii) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company or of any direct or indirect parent of
the Company, (iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) make any Investment in any Affiliate of the Company other than a Restricted
Subsidiary or a person which will become a Restricted Subsidiary as a result of
any such Investment (any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition, retirement or Investment being herein
referred to as a 'Restricted Payment') if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); (2) the Company is not
able to Issue an additional $1.00 of Debt pursuant to paragraph (a) of the
covenant described under ' -- Limitation on Debt' above; or (3) the aggregate
amount of such Restricted Payment and all other Restricted Payments since the
Issue Date would exceed the sum of: (a) the cumulative Operating Cash Flow
(whether positive or negative) accrued during the period (treated as one
accounting period) from the beginning of the fiscal quarter during which the
Issue Date occurs to the end of the most recent fiscal quarter ending at least
45 days prior to the date of such Restricted Payment less the product of 1.4
multiplied by the cumulative Consolidated Interest Expense during such period;
provided, however, that Operating Cash Flow and Consolidated Interest Expense
for the period from the beginning of the fiscal quarter during which the Issue
Date occurs through the Issue Date are originally Issued shall be calculated on
a pro forma basis to give effect to the Acquisitions, including the financing
thereof (as if the Acquisitions were consummated on the last day of the fiscal
quarter prior to the fiscal quarter during which the Issue Date occurs); (b) the
aggregate Net Cash Proceeds received by the Company from the Issue or sale of
its Capital Stock (other than Redeemable Stock or Exchangeable Stock and other
than the Exchangeable Preferred Stock and the Seller Junior Discount Preferred
Stock) subsequent to the Issue Date (other than an Issuance or sale to a
Subsidiary or to an employee stock ownership plan or other trust established by
the Company or any of the Subsidiaries for the benefit of their employees or to
officers, directors or employees to the extent that the Company or any
Subsidiary has outstanding loans or advances to such employees pursuant to
clause (vii) of the second paragraph of this covenant or clause (iii) of the
second paragraph under ' -- Limitations on Transactions with Affiliates' (all
such excluded Capital Stock being herein collectively called 'Excluded Stock'));
and (c) the amount by which indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary), subsequent to the Issue Date, of any Debt of the Company that is by
its original terms convertible or exchangeable for Capital Stock (other than
Redeemable Stock or Exchangeable Stock) of the Company (less the amount of any
cash, or other property, distributed by the Company upon such conversion or
exchange); provided, however, that, for the purposes of the calculation required
by this clause (3), the value of any such Restricted Payment, if other than
cash, shall be evidenced by a resolution of the Board of Directors and
determined in good faith by the disinterested members of the Board of Directors;
provided further, however, that, in the case of a distribution or other
disposition by the Company of all or substantially all of the assets of a
broadcast station or other business unit, the value of any such Restricted
Payment shall be determined by an investment banking firm of national prominence
that is not an Affiliate of the Company.
(b) The provisions of the preceding paragraph shall not prohibit: (i) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the
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proceeds of the substantially concurrent sale of, Capital Stock of the Company
(other than Redeemable Stock or Exchangeable Stock and other than Excluded
Stock); provided, however, that (A) such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale shall be excluded from clauses (3)(b) and (3)(c) of
the previous paragraph; (ii) any purchase or redemption of Subordinated
Obligations or the Exchangeable Preferred Stock of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale of, Debt of the
Company which is permitted to be Issued pursuant to the covenant described above
under ' -- Limitation on Debt'; provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments; (iii) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by the covenant described below under
' -- Limitation on Sales of Assets and Subsidiary Stock'; provided, however,
that such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments; (iv) dividends paid within 60 days after the date
of declaration thereof if at such date of declaration such dividend would have
complied with this covenant; provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or result
therefrom); provided further, however, that such dividend shall be included in
the calculation of the amount of Restricted Payments; (v) Investments in
Non-Recourse Affiliates in an aggregate amount (which amount shall be reduced by
the amount equal to the net reduction in Investments in Non-Recourse Affiliates
resulting from payments of dividends, repayments of loans or advances or other
transfers of assets to the Company or any Restricted Subsidiary from
Non-Recourse Affiliates) not to exceed $6.0 million; provided, however, that the
amount of such Investments shall be excluded in the calculation of the amount of
Restricted Payments; (vi) with respect to each tax period prior to the Issue
Date that Benedek Broadcasting qualifies as an S Corporation under the Code, or
any similar provision of state or local law, distributions of Tax Amounts;
provided, however, that prior to any distribution of Tax Amounts a duly
authorized officer of Benedek Broadcasting certifies to the Trustee that Benedek
Broadcasting qualified as an S Corporation for Federal income tax purposes for
such period and for the states in respect of which distributions are being made
and that at the time of such distributions, the most recent audited financial
statements of Benedek Broadcasting provide that Benedek Broadcasting was treated
as an S Corporation for Federal income tax purposes for the applicable portion
of the period of such financial statements; provided further, however, that the
amount of such distributions shall be excluded in the calculation of the amount
of Restricted Payments; (vii) loans or advances to officers and directors of the
Company (other than a Restricted Holder) (A) in the ordinary course of business
in an aggregate amount outstanding not in excess of $1.0 million or (B) the
proceeds of which are used to acquire Capital Stock of the Company (other than
Redeemable Stock or Exchangeable Stock); provided, however, that such loans and
advances shall be excluded in the calculation of the amount of Restricted
Payments; (viii) the retirement of the Exchangeable Preferred Stock through the
issuance of the Exchange Debentures; provided, however, the amount thereof shall
be excluded in the calculation of the amount of Restricted Payments or (ix) cash
dividends or distributions payable to holders of Exchangeable Preferred Stock as
Liquidated Damages (as defined in the Certificate of Designation) in an
aggregate amount not to exceed $300,000; provided, however, that the amount of
such dividends or distributions shall be included in the calculation of the
amount of Restricted Payments.
The Company shall not be permitted to make distributions pursuant to clause
(vi) above (1) unless and until the Company has entered into a binding written
agreement with each stockholder (copies of which will be promptly furnished to
the Trustee prior to the making of any such distribution) providing that if any
amount distributed to such stockholder pursuant to such clause (vi) is later
determined to have been, as a result of a change in applicable law or the
failure of Benedek Broadcasting to effect or maintain a valid S Corporation
election or otherwise, in excess of the amount permitted to be distributed or
paid under such clause (vi), such excess shall be refunded to the Company at
least five Business Days prior to the next due date of individual estimated
income tax payments and (2) in the event it has been determined that any such
excess distribution or payment has been made, unless the Company has requested
and received all refunds pursuant to such agreements.
Limitation on Restrictions on Distributions from Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary
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to (i) pay dividends or make any other distributions on its Capital Stock or pay
any Debt owed to the Company, (ii) make any loans or advances to the Company or
(iii) transfer any of its property or assets to the Company, except: (1) any
encumbrance or restriction pursuant to an agreement in effect at or entered into
on the Issue Date; (2) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any Debt Issued by
such Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Debt Issued as consideration
in, or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the
Company) and outstanding on such date; (3) any encumbrance or restriction
pursuant to an agreement effecting a Refinancing of Debt Issued pursuant to an
agreement referred to in clause (1) or (2) of this covenant or contained in any
amendment to an agreement referred to in clause (1) or (2) of this covenant;
provided, however, that the encumbrances and restrictions contained in any such
Refinancing agreement or amendment are no less favorable to the Noteholders than
encumbrances and restrictions contained in such agreements; (4) any such
encumbrance or restriction consisting of customary nonassignment provisions in
leases governing leasehold interests to the extent such provisions restrict the
transfer of the lease; (5) in the case of clause (iii) above, restrictions
contained in security agreements securing Debt of a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject to such
security agreements; and (6) any restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition.
Limitation on Sales of Assets and Subsidiary Stock. The Company shall not,
and shall not permit any Restricted Subsidiary to make any Asset Disposition
unless (i) the Company or such Restricted Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair market value, as
determined in good faith by the Board of Directors (including as to the value of
all non-cash consideration), of the shares and assets subject to such Asset
Disposition and at least 90% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash and (ii) an amount
equal to 100% of the Net Available Cash from such Asset Disposition is applied
by the Company (or such Restricted Subsidiary, as the case may be) (A) first, to
the extent the Company elects (or is required by the terms of any Senior Debt)
to prepay, repay or purchase Senior Debt or Debt (other than any Redeemable
Stock) of a Wholly Owned Subsidiary (in each case other than Debt owed to the
Company or an Affiliate of the Company) within 60 days after the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; (B)
second, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), at the Company's election to the
investment by the Company or any Restricted Subsidiary in assets to replace the
assets that were the subject of such Asset Disposition or in assets that, as
determined by the Board of Directors and evidenced by resolutions of the Board
of Directors, will be used in the businesses of the Company and its Restricted
Subsidiaries existing on the Issue Date or in businesses reasonably related
thereto, in all cases within 270 days after the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; (C) third, to the extent
the Company is entitled pursuant to then existing contractual limitations to
receive dividends and distributions from the relevant Restricted Subsidiary and
of the balance of such Net Available Cash after application in accordance with
clauses (A) and (B), to make an offer pursuant to and subject to the conditions
contained in the Indenture to the holders of the Notes (and to holders of other
Senior Subordinated Debt designated by the Company) to purchase Notes (and such
other Senior Subordinated Debt) at a purchase price of 100% of the Accreted
Value thereof (without premium) plus accrued and unpaid interest (or in respect
of such other Senior Subordinated Debt such lesser price, if any, as may be
provided for by the terms of such other Senior Subordinated Debt) and (D)
fourth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B) and (C), to (x) the acquisition
by the Company or any Restricted Subsidiary of assets to replace the assets that
were the subject of such Asset Disposition or assets that, as determined by the
Board of Directors and evidenced by resolutions of the Board of Directors, will
be used in the businesses of the Company and its Restricted Subsidiaries
existing on the Issue Date or in businesses reasonably related thereto or (y)
the prepayment, repayment or purchase of
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Debt (other than any Redeemable Stock) of the Company (other than Debt owed to
an Affiliate of the Company) or Debt of any Restricted Subsidiary (other than
Debt owed to the Company or an Affiliate of the Company), in each case within
360 days after the later of the receipt of such Net Available Cash and the date
the offer described in clause (C) is consummated; provided, however that in
connection with any prepayment, repayment or purchase of Debt pursuant to clause
(A), (C) or (D) above, the Company or such Restricted Subsidiary shall retire
such Debt and shall cause the related loan commitment (if any) to be permanently
reduced in an amount equal to the principal amount so prepaid, repaid or
purchased. Notwithstanding the foregoing provisions of this paragraph, the
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash (other than Net Available Cash from an Asset Disposition
consisting of a Sale/Leaseback Transaction that the Company has elected to treat
as an Asset Disposition pursuant to clause (ii) of the covenant described under
' -- Limitation on Sale/Leaseback Transactions' above) in accordance with this
paragraph except to the extent that the aggregate Net Available Cash from all
Asset Dispositions which are not applied in accordance with this paragraph
exceeds $5.0 million. The Company shall not permit any Non-Recourse Subsidiary
to make any Asset Disposition unless such Non-Recourse Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value of the shares or assets so disposed of. Pending application of Net
Available Cash pursuant to this covenant, such Net Available Cash shall be
invested in Permitted Investments.
In the event of an Asset Disposition that requires the purchase of Notes
(and other Senior Subordinated Debt) pursuant to clause (ii)(C) above, the
Company will be required to purchase Notes tendered pursuant to an offer by the
Company for the Notes (and other Senior Subordinated Debt at the purchase price
set forth above) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in the Indenture. The Company shall not be
required to make such an offer to purchase Notes if the Net Available Cash
available therefor is less than $5.0 million for any particular Asset
Disposition (which lesser amount shall be carried forward for purposes of
determining whether such an offer is required with respect to any subsequent
Asset Disposition).
The Company shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this clause by virtue thereof.
Limitation on Transactions with Affiliates. The Company shall not, and
shall not permit any Restricted Subsidiary to, conduct any business or enter
into any transaction or series of related transactions (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company unless the terms of such business, transaction or
series of transactions are as favorable to the Company or such Restricted
Subsidiary as terms that would be obtainable at the time for a comparable
transaction or series of similar transactions in arm's-length dealings with an
unrelated third person; provided, however, that in the case of any transaction
or series of related transactions involving aggregate payments or other
transfers by the Company and its Restricted Subsidiaries in excess of (i) $1.0
million, the Company shall deliver an Officers' Certificate to the Trustee
certifying that the terms of such business, transaction or series of
transactions (x) comply with this covenant, (y) have been set forth in writing
and (z) have been determined in good faith by the disinterested members of the
Board of Directors to satisfy the criteria set forth in this covenant, and (ii)
$5.0 million, the Company shall also deliver to the Trustee an opinion from an
investment banking firm of national prominence that is not an Affiliate of the
Company to the effect that such business, transaction or transactions are fair
to the Company or such Restricted Subsidiary from a financial point of view.
The provisions of the preceding paragraph shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the provisions of the
covenant described under ' -- Limitation on Restricted Payments,' (ii) any
Issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors in the
ordinary course of business and consistent with
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industry practices, (iii) loans or advances to employees of the Company and the
Subsidiaries (other than Restricted Holders) (A) in the ordinary course of
business in an aggregate amount outstanding not to exceed $1.0 million or (B)
the proceeds of which are used to acquire from the Company Capital Stock of the
Company (other than Redeemable Stock or Exchangeable Stock); (iv) the payment of
reasonable fees to directors of the Company and its Subsidiaries (other than a
Restricted Holder) who are not employees of the Company or its Subsidiaries; (v)
salaries to employees in the ordinary course of business and consistent with
industry practices; and (vi) any transaction between the Company and a
Restricted Subsidiary or between Restricted Subsidiaries; provided, however,
that no portion of the minority interest in any such Restricted Subsidiary is
owned by an Affiliate (other than the Company or a Wholly Owned Subsidiary) of
the Company.
Limitation on Guarantees Issued by BLC. The Company shall not permit BLC to
Issue, directly or indirectly, any Guarantee of any Debt of the Company that is
expressly by its terms junior or subordinate in right of payment to any other
Debt of the Company, unless contemporaneously therewith effective provision is
made to Guarantee the Notes equally and ratably with, or prior thereto, such
Debt for so long as such Debt is so Guaranteed.
SEC Reports and Other Information. Notwithstanding that the Company may not
be required to be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Company shall file with the SEC and thereupon provide
the Trustee and Noteholders with such annual reports and such information,
documents and other reports are as specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections, such
information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports under
such Sections. In addition, for so long as any of the Notes remain outstanding,
the Company will make available to any prospective purchaser of the Notes or
beneficial owner of the Notes in connection with any sales thereof the
information required by Rule 144A(d)(4) under the Securities Act.
SUCCESSOR COMPANY
The Company may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any person unless: (i)
the resulting, surviving or transferee person (if not the Company), is organized
and existing under the laws of the United States of America or any State thereof
or the District of Columbia and such entity expressly assumes by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Indenture and the Notes;
(ii) immediately prior to and after giving effect to such transaction (and
treating any Debt which becomes an obligation of the resulting, surviving or
transferee person or any Subsidiary as a result of such transaction as having
been incurred by such person or such Subsidiary at the time of such
transaction), no Default has occurred and is continuing; (iii) immediately after
giving effect to such transaction, the resulting, surviving or transferee person
(in the case of a transaction involving the Company) would be able to Issue an
additional $1.00 of Debt pursuant to paragraph (a) of the covenant described
under 'Certain Covenants -- Limitation on Debt' above; (iv) immediately after
giving effect to such transaction, the resulting, surviving or transferee person
has Consolidated Net Worth in an amount which is not less than the Consolidated
Net Worth of the Company prior to such transaction; and (v) the Company delivers
to the Trustee an Officers' Certificate and an Opinion of Counsel, stating that
such consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture. The resulting, surviving or transferee person will be
the successor company.
The Company shall not permit Benedek Broadcasting to consolidate with or
merge with or into, or convey, transfer or lease all or substantially all its
assets to, any person unless: (i) the resulting, surviving or transferee person
(if not Benedek Broadcasting), is organized and existing under the laws of the
United States of America or any State thereof or the District of Columbia; (ii)
immediately prior to and after giving effect to such transaction (and treating
any Debt which becomes an obligation of the resulting, surviving or transferee
person or any Subsidiary as a result of such transaction as having been incurred
by such person or such Subsidiary at the time of such transaction), no Default
has occurred and is continuing; (iii) immediately after giving effect to such
transaction, the Company would
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be able to Issue an additional $1.00 of Debt pursuant to paragraph (a) of the
covenant described under 'Certain Covenants -- Limitation on Debt' above; and
(iv) the Company delivers to the Trustee an Officers' Certificate and an Opinion
of Counsel, stating that such consolidation, merger or transfer complies with
the Indenture.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest on the Notes when due, continued for 30 days, (ii) a default
in the payment of principal of any Note when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
(iii) the failure by the Company to comply with its obligations under
' -- Successor Company' above, (iv) the failure by the Company to comply for 30
days after notice with any of its obligations under the covenants described
under 'Change of Control' above or under the covenants described under
' -- Certain Covenants' above (in each case, other than a failure to purchase
Notes), (v) the failure by the Company to comply for 60 days after notice with
any of its other agreements or covenants or any provisions contained in the
Indenture, (vi) Debt of the Company, BLC or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is accelerated
by the holders thereof because of a default and the total amount of such Debt
unpaid or accelerated exceeds $5.0 million and such failure continues for 10
days after notice (the 'cross acceleration provision'), (vii) certain events of
bankruptcy, insolvency or reorganization of the Company, BLC or a Significant
Subsidiary (the 'bankruptcy provisions'), (viii) any judgment or decree for the
payment of money in excess of $5.0 million is rendered against the Company, BLC
or a Significant Subsidiary, remains outstanding for a period of 60 days
following such judgment and is not discharged, waived or stayed (the 'judgment
default provision') or (ix) the Company, Benedek Broadcasting, BLC or a
Significant Subsidiary fails to maintain any License or Licenses with respect to
a Television Station or Television Stations owned by it which License is
necessary for continued transmission of such Television Station's normal
programming and the Operating Cash Flow for the most recently completed four
fiscal quarters of the Company of such Television Station or Television Stations
exceeds 10% of the Operating Cash Flow of the Company for such period (the
'license maintenance provision'). However, a default under clause (iv), (v),
(vi) or (viii) will not constitute an Event of Default until the Trustee or the
holders of 25% in principal amount of the outstanding Notes notify the Company
of the default and the Company does not cure such default within the time
specified after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes may declare the
Accreted Value and accrued but unpaid interest on all the Notes (collectively,
the 'Default Amount') to be due and payable. Upon such a declaration, such
Default Amount shall be due and payable immediately. If an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company occurs and is continuing, the Default Amount will ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any holders of the Notes. Under certain circumstances, the
holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of the Notes unless
such holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no holder of a Note
may pursue any remedy with respect to the Indenture or the Notes unless (i) such
holder has previously given the Trustee notice that an Event of Default is
continuing, (ii) holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy, (iii) such holders have
offered the Trustee reasonable security or indemnity against any loss, liability
or expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity and (v) the
holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day
period. Subject to certain restrictions, the holders of a majority in principal
amount of the
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outstanding Notes are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
holder of a Note or that would involve the Trustee in personal liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder of the Notes notice
of the Default within 10 days after it occurs. In addition, the Company is
required to deliver to the Trustee, within 90 days after the end of each fiscal
year and within 45 days after the end of each of the first three fiscal quarters
of each year, a certificate indicating whether the signers thereof know of any
Default that occurred during the previous year. The Company also is required to
deliver to the Trustee, within 10 days after the occurrence thereof, written
notice of any event which would constitute certain Defaults, their status and
what action the Company is taking or proposes to take in respect thereof.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay at such time if the Company then had elected to redeem the Notes pursuant
to the provisions described under ' -- Optional Redemption' above, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs prior to May 15, 2000 by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to May 15, 2000, pursuant to the
provisions described under ' -- Optional Redemption' above, then the premium
payable for purposes of this paragraph shall be as set forth in the following
table expressed as a percentage of the Accreted Value, plus accrued interest, if
any, to the date of payment if the Event of Default occurs during the 12 month
period commencing on May 15:
<TABLE>
<CAPTION>
PERCENTAGE OF
YEAR ACCRETED VALUE
- --------------------------------------------------------------------------------------- --------------
<S> <C>
1996................................................................................... 113.250%
1997................................................................................... 113.250
1998................................................................................... 113.250
1999................................................................................... 111.042
</TABLE>
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority of the principal amount of the Notes then
outstanding and any past default or compliance with any provisions may be waived
with the consent of the holders of a majority of the principal amount of the
Notes then outstanding. However, without the consent of each holder of an
outstanding Note, no amendment may, among other things, (i) reduce the amount of
Notes whose holders must consent to an amendment, (ii) reduce the rate of or
extend the time for payment of interest on any Note, (iii) reduce the principal
of or extend the Stated Maturity of any Note, (iv) reduce the premium payable
upon the redemption of any Note or change the time at which any Note may be
redeemed as described under ' -- Optional Redemption' above, (v) make any Note
payable in money other than that stated in the Note, (vi) impair the right of
any holder of the Notes to receive payment of principal of and interest on such
holder's Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such holder's Notes, (vii) make
any change in the amendment provisions which require each holder's consent or in
the waiver provisions or (viii) make any change to the subordination provisions
of the Indenture.
Without the consent of any holder of the Notes, the Company and the Trustee
may amend or supplement the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of the Company under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Internal
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Revenue Code of 1986, as amended (the 'Code'), or in a manner such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the Code), to add
Guarantees with respect to or secure the Notes, to add to the covenants of the
Company for the benefit of the holders of the Notes or to surrender any right or
power conferred upon the Company or to make any change that does not adversely
affect the rights of any holder of the Notes or to comply with any requirements
of the SEC in connection with the qualification of the Indenture under the TIA.
However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or their Representative)
consents to such change.
The consent of the holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all holders of the Notes,
or any defect therein, will not impair or affect the validity of the amendment.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ('legal defeasance'), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under the covenants
described under ' -- Certain Covenants' and ' -- Change of Control,' the
operation of the cross acceleration provision, the bankruptcy provisions with
respect to Significant Subsidiaries, the judgment default provision and the
license maintenance provision described under 'Defaults' above and the
limitations contained in clauses (iii) and (iv) of the first paragraph or clause
(iii) of the second paragraph described under 'Successor Company' above
('covenant defeasance').
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect only to
Significant Subsidiaries), (viii) or (ix) under 'Defaults' above or because of
the failure of the Company to comply with clause (iii) or (iv) of the first
paragraph or clause (iii) of the second paragraph under 'Successor Company'
above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the 'defeasance trust') with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivering to the Trustee an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same amount and
in the same manner and at the same times as would have been in the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
United States Trust Company of New York is the Trustee under the Indenture
and has been appointed by the Company as Registrar and Paying Agent with regard
to the Notes.
The Indenture and provisions of the TIA incorporated by reference therein
contain limitations on the rights of the Trustee, should it become a creditor of
the Company, to obtain payment of claims in certain cases or to realize on
certain property received by it in respect of any such claim as security or
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otherwise. The Trustee is permitted to engage in other transactions with the
Company or any Affiliate; provided, however, that if it acquires any conflicting
interest (as defined in the Indenture or in the TIA), it must eliminate such
conflict or resign.
GOVERNING LAW
The Indenture provides that it and the Notes are governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
'Accreted Value' as of any date (the 'Specified Date') means, with respect
to each $1,000 principal amount at maturity of Notes:
(i) if the Specified Date is one of the following dates (each a
'Semi-Annual Accrual Date'), the amount set forth opposite such date below:
<TABLE>
<CAPTION>
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE
- ----------------------------------------------------------------------------- --------------
<S> <C>
June 6, 1996............................................................ $ 530.46
November 15, 1996............................................................ 561.50
May 15, 1997............................................................ 598.70
November 15, 1997............................................................ 638.37
May 15, 1998............................................................ 680.66
November 15, 1998............................................................ 725.75
May 15, 1999............................................................ 773.83
November 15, 1999............................................................ 825.10
May 15, 2000............................................................ 879.76
November 15, 2000............................................................ 938.05
May 15, 2001............................................................ 1,000.00
</TABLE>
(ii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the sum of (A) the Accreted Value for the Semi-Annual Accrual Date
immediately preceding the Specified Date and (B) an amount equal to the
product of (i) the Accreted Value for the immediately following Semi-Annual
Accrual Date less the Accreted Value for the immediately preceding
Semi-Annual Accrual Date and (ii) a fraction, the numerator of which is the
number of days from the immediately preceding Semi-Annual Accrual Date to
the Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180 (or, if the Semi-Annual Accrual Date
immediately preceding the Specified Date is June 6, 1996, the denominator
of which is 159); and
(iii) if the Specified Date occurs after the last Semi-Annual Accrual
Date, $1,000.
'Acquired Station' means any Television Station acquired by the Company
after the Issue Date.
'Affiliate' of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person or (ii) any other person who is a director or
officer (A) of such specified person, (B) of any subsidiary of such specified
person or (C) of any person described in clause (i) above. For purposes of the
covenants described under 'Certain Covenants -- Limitation on Restricted
Payments,' ' -- Limitation on Transactions with Affiliates' and ' -- Limitation
on Sales of Assets and Subsidiary Stock,' (a) control of a person means the
power, direct or indirect, to direct or cause the direction of the management
and policies of such person whether by contract or otherwise and (b) beneficial
ownership of 5% or more of the voting common equity (on a fully diluted basis)
or warrants to purchase such equity (whether or not currently exercisable) of a
person shall be deemed to be control of such person; and the terms 'controlling'
and 'controlled' have meanings correlative to the foregoing.
'Asset Disposition' means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) of shares of
Capital Stock of a Subsidiary (other than directors' qualifying shares),
property or other assets (each referred to for the purposes of this definition
as a
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'disposition') by the Company or any of its Subsidiaries (including any
disposition by means of a merger, consolidation or similar transaction) other
than (i) a disposition by a Subsidiary to the Company or by the Company or a
Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of property or
assets at fair market value in the ordinary course of business, (iii) a
disposition of obsolete assets in the ordinary course of business, (iv) for
purposes of the covenant described under 'Certain Covenants -- Limitation on
Sales of Assets and Subsidiary Stock' only, a disposition subject to the
covenant described under ' -- Limitation on Restricted Payments' or a
disposition consisting of a Sale/Leaseback Transaction unless the Company has
elected to treat such Sale/Leaseback Transaction as an Asset Disposition
pursuant to clause (ii) of the covenant described under ' -- Limitation on
Sale/Leaseback Transactions,' (v) a disposition subject to the provisions set
forth in 'Successor Company' (except to the extent the Company disposes of
substantially all (but not all) of its assets, in which event the assets not so
disposed of shall be deemed as having been sold by the Company), (vi) a
disposition pursuant to the terms of the Company Pledge Agreement or (vii) a
disposition by the Company in which and to the extent the Company receives as
consideration Capital Stock of a person engaged in, or assets that will be used
in, the business of the Company existing on the Issue Date or in businesses
reasonably related thereto, as determined by the Board of Directors of the
Company, the determination of which will be conclusive and evidenced by a
resolution of the Board of Directors of the Company at the time of such
disposition.
'Attributable Debt' in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
set forth on the face of the Notes, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
'Average Life' means, as of the date of determination, with respect to any
Debt, the quotient obtained by dividing (i) the sum of the products of (a) the
numbers of years from the date of determination to the dates of each successive
scheduled principal payment or redemption or similar payment with respect to
such Debt multiplied by (b) the amount of such payment, by (ii) the sum of all
such payments.
'Bank Credit Agreement' means the Credit Agreement, dated as of June 6,
1996, among Benedek Broadcasting, as borrower, the Company, the Lenders referred
to therein, CIBC, as administrative agent and collateral agent, Pearl Street, as
arranging agent, and Goldman, Sachs & Co., as syndication agent, and all
promissory notes, guarantees, security agreements, pledge agreements, deeds of
trust, mortgages, letters of credit and other instruments, agreements and
documents executed pursuant thereto or in connection therewith, in each case as
the same may be amended, supplemented, restated, renewed, refinanced, replaced
or otherwise modified (in whole or in part and without limitation as to amount,
terms, conditions, covenants or other provisions) from time to time.
'Bank Debt' means all Senior Debt outstanding under the Bank Credit
Agreement.
'BLC' means Benedek License Corporation, a corporation organized under the
laws of the State of Delaware, and any successor company.
'Board of Directors' means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
'Business Day' means each day which is not a Legal Holiday.
'Capital Lease Obligations' of a person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
'Capital Stock' of any person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such
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person, including any Preferred Stock, but excluding any debt securities
convertible into or exchangeable for such equity.
'Cash Flow Leverage Ratio' as of any date of determination means the ratio
of (i) the aggregate amount outstanding of all Debt of the Company and the
Restricted Subsidiaries (including any Debt issued under paragraph (b) of the
covenant described under 'Certain Covenants -- Limitation on Debt') at the end
of the most recent fiscal quarter ending at least 45 days prior to the date of
determination to (ii) Operating Cash Flow for the four fiscal quarters ending on
the last day of such fiscal quarter; provided, however, that (1) if the Company
or any Restricted Subsidiary has Issued any Debt since the beginning of such
period that remains outstanding or if the transaction giving rise to the need to
calculate the Cash Flow Leverage Ratio is an Issuance of Debt, or both, Debt as
of such date and Operating Cash Flow (including Consolidated Interest Expense)
for such period shall be calculated after giving effect on a pro forma basis to
such Debt (in the case of Operating Cash Flow, as if such Debt had been Issued
on the first day of such period) and the discharge of any other Debt repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new Debt
(in the case of Operating Cash Flow, as if such discharge had occurred on the
first day of such period), (2) if since the beginning of such period the Company
or any Restricted Subsidiary shall have made any Asset Disposition, (A) the
Operating Cash Flow for such period shall be reduced by an amount equal to the
Operating Cash Flow (if positive) directly attributable to the assets which are
the subject of such Asset Disposition for such period, or increased by an amount
equal to the Operating Cash Flow (if negative), directly attributable thereto
for such period (including an adjustment for Consolidated Interest Expense
directly attributable to any Debt (the 'Discharged Debt') of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its continuing Restricted Subsidiaries in connection
with such Asset Dispositions for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Discharged Debt of such Restricted Subsidiary)) and
(B) Debt for such period shall be reduced by an amount equal to the Discharged
Debt, (3) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any person which becomes a Restricted Subsidiary) or
an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business,
Operating Cash Flow for such period shall be calculated after giving pro forma
effect thereto (including the Issuance of any Debt) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such period any person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such period, Operating Cash Flow (including Consolidated
Interest Expense) for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition, Investment or acquisition occurred
on the first day of such period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto, and the amount of Consolidated Interest Expense
associated with any Debt Issued in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Company. If any Debt bears a floating rate of interest
and is being given pro forma effect, the interest on such Debt shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Protection Agreement applicable to such Debt if such Interest Rate Protection
Agreement has a remaining term in excess of 12 months).
'Code' means the Internal Revenue Code of 1986, as amended.
'Consolidated Interest Expense' means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such interest expense, (i) interest expense
attributable to capital leases, (ii) amortization of debt discount and debt
Issuance cost, (iii) capitalized interest, (iv) non-cash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) interest actually paid by the
Company or any such Restricted Subsidiary under any Guarantee of Debt or other
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obligation of any other person, (vii) net costs associated with Hedging
Obligations (including amortization of fees), (viii) Preferred Stock dividends
in respect of all Preferred Stock of Restricted Subsidiaries and Redeemable
Stock of the Company held by persons other than the Company or a Wholly Owned
Subsidiary and (ix) the cash contributions to any employee stock ownership plan
or similar trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any person (other than the Company) in connection
with loans incurred by such plan or trust to purchase newly issued or treasury
shares of the Company.
'Consolidated Net Income' means, for any period, the net income of the
Company and its consolidated subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income of any
person if such person is not a Restricted Subsidiary, except that (A) the
Company's equity in the net income of any such person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such person for such period shall be included in determining
such Consolidated Net Income, (ii) any net income of any person acquired by the
Company or a Restricted Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition, (iii) any net income of any
Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution to another Restricted Subsidiary, to the
limitation contained in this clause) and (B) the Company's equity in a net loss
of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income, (iv) any gain (but not loss) realized
upon the sale or other disposition of any property, plant or equipment of the
Company or its consolidated subsidiaries (including pursuant to any
sale-and-leaseback arrangement) which is not sold or otherwise disposed of in
the ordinary course of business and any gain (but not loss) realized upon the
sale or other disposition of any Capital Stock of any person and (v) the
cumulative effect of a change in accounting principles. Notwithstanding the
foregoing, for the purposes of the covenant described under 'Certain
Covenants -- Limitation on Restricted Payments' only, there shall be excluded
from Consolidated Net Income any dividends, repayments of loans or advances or
other transfers of assets from a Non-Recourse Affiliate to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under such covenant
pursuant to clause (v) of paragraph (b) thereof.
'Consolidated Net Worth' of any person means the total of the amounts shown
on the balance sheet of such person and its consolidated subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principles, as of the end of the most recent fiscal quarter of such
person ending at least 45 days prior to the taking of any action for the purpose
of which the determination is being made, as (i) the par or stated value of all
outstanding Capital Stock of such person plus (ii) paid-in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit, (B) any amounts attributable to
Redeemable Stock and (C) any amounts attributable to Exchangeable Stock.
'Debt' of any person means, without duplication, (i) the principal of and
premium (if any) in respect of (A) indebtedness of such person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is responsible or
liable; (ii) all Capital Lease Obligations and all Attributable Debt of such
person; (iii) all obligations of such person Issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such person and
all obligations of such person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(iv) all obligations of such person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
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obligations described in (i) through (iii) above) entered into in the ordinary
course of business of such person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such person of a demand
for reimbursement following payment on the letter of credit); (v) the amount of
all obligations of such person with respect to the redemption, repayment or
other repurchase of, in the case of a Subsidiary, any Preferred Stock and, in
the case of any other person, any Redeemable Stock (but excluding any accrued
dividends); (vi) all obligations of the type referred to in clauses (i) through
(v) of other persons and all dividends of other persons for the payment of
which, in either case, such person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including any Guarantees of such
obligations and dividends; and (vii) all obligations of the type referred to in
clauses (i) through (vi) of other persons secured by any Lien on any property or
asset of such person (whether or not such obligation is assumed by such person),
the amount of such obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured.
The amount of Debt of any person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
'Default' means any event which is, or after notice or passage of time or
both would be, an Event of Default.
'Designated Senior Debt' means (i) the Bank Debt and the Senior Secured
Notes and (ii) any other Senior Debt of the Company which, at the date of
determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are committed to lend up to,
at least $25.0 million and is specifically designated by the Company in the
instrument evidencing or governing such Senior Debt as 'Designated Senior Debt'
for purposes of the Senior Subordinated Discount Note Indenture.
'EBITDA' for any period means the Consolidated Net Income for such period
(but without giving effect to adjustments, accruals, deductions or entries
resulting from purchase accounting, extraordinary losses or gains and any gains
or losses from any Asset Dispositions), plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) income tax expense,
(ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense (including the amortization of Program Obligations) and (v)
all other noncash charges deducted in the calculation of such Consolidated Net
Income (but excluding (a) any noncash charges related to the items described in
clauses (i) through (v) of the definition of 'Consolidated Net Income' and (b)
any noncash charges to the extent that they require an accrual of or a reserve
for cash disbursements for any future period), and minus, without duplication,
all noncash items (but excluding revenue from barter transactions) that
increased such Consolidated Net Income.
'Exchange Act' means the Securities Exchange Act of 1934, as amended.
'Exchangeable Stock' means any Capital Stock which is exchangeable or
convertible into another security (other than Capital Stock of the Company which
is neither Exchangeable Stock nor Redeemable Stock).
'Existing Station' means (i) each of the Television Stations owned by the
Company as of the Issue Date and (ii) each other Television Station acquired by
the Company after the Issue Date and the License for which is owned by BLC.
'Guarantee' means any obligation, contingent or otherwise, of any person
directly or indirectly guaranteeing any Debt or other obligation of any person
and any obligation, direct or indirect, contingent or otherwise, of such person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation of such person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term 'Guarantee' shall not include
endorsements for collection or deposit
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in the ordinary course of business. The term 'Guarantee' used as a verb has a
corresponding meaning.
'Hedging Obligations' of any person means the obligations of such person
pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement designed to protect such person against changes
in interest rates or foreign exchange rates.
'Interest Rate Protection Agreement' means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
'Investment' in any person means any loan or advance to, any Guarantee of,
any acquisition of any Capital Stock, equity interest, obligation or other
security of, or capital contribution or other investment in, such person.
Investments shall exclude advances to customers and suppliers in the ordinary
course of business.
'Issue' means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Debt or Capital Stock of a person existing at
the time such person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be issued by such Subsidiary at the
time it becomes a Subsidiary; and the term 'Issuance' has a corresponding
meaning. For purposes of the covenant described under 'Certain
Covenants -- Limitation on Debt,' if any Debt Issued by a Non-Recourse
Subsidiary thereafter ceases to be Non-Recourse Debt of a Non-Recourse
Subsidiary, then such event shall be deemed for the purpose of such covenant to
constitute the Issuance of such Debt by the issuer thereof.
'Issue Date' means the date on which the Notes are initially issued.
'Legal Holiday' means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.
'License' means, with respect to any Television Station, any and all
licenses and authorizations issued by the Federal Communications Commission with
respect to such Television Station.
'Lien' means any mortgage, pledge, security interest, conditional sale or
other title retention agreement or other similar lien.
'LMA' means a local marketing arrangement, sale agreement, time brokerage
agreement, management agreement or similar arrangement pursuant to which a
person, subject to customary preemption rights and other limitations (i) obtains
the right to sell at least a majority of the advertising inventory of a radio or
television station of which a third party is the licensee, (ii) obtains the
right to exhibit programming and sell advertising time during a majority of the
air time of a television or radio station or (iii) manages the selling
operations of a radio or television station with respect to at least a majority
of the advertising inventory of such station.
'Maximum Amount' as of any date of determination means, with respect to any
Acquired Station, the product of (i) the Operating Cash Flow of such Acquired
Station for the four most recent fiscal quarters ending at least 45 days prior
to such date of determination and (ii) the number 5.0; provided, however, that
if such Acquired Station is acquired by the Company in connection with an Asset
Disposition of an Existing Station, the amount in clause (i) above shall be
reduced by the Operating Cash Flow for such period of such Existing Station.
'Net Available Cash' from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Debt or other obligations relating to such
properties or assets or received in any other noncash form) therefrom, in each
case net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial, foreign
and local taxes required to be accrued as a liability under generally accepted
accounting principles, as a consequence of such Asset Disposition, (ii) all
payments made on any Debt which is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any lien upon or other security
agreement of any kind with respect to such assets, or which must by its
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terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with generally accepted accounting
principles, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Subsidiary after such
Asset Disposition.
'Net Cash Proceeds,' with respect to any Issuance or sale of Capital Stock,
means the cash proceeds of such Issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such Issuance or sale and net of taxes paid or payable as a
result thereof.
'Non-Convertible Capital Stock' means, with respect to any corporation, any
non-convertible Capital Stock of such corporation and any Capital Stock of such
corporation convertible solely into non-convertible common stock of such
corporation; provided, however, that Non-Convertible Capital Stock shall not
include any Redeemable Stock or Exchangeable Stock.
'Non-Recourse Affiliate' means a Non-Recourse Subsidiary or any other
Affiliate of the Company or a Restricted Subsidiary which (i) has not acquired
any assets (other than cash) directly or indirectly from the Company or any
Restricted Subsidiary, (ii) only owns properties acquired after the Issue Date
and (iii) has no Debt other than Non-Recourse Debt.
'Non-Recourse Debt' means Debt or that portion of Debt (i) as to which
neither the Company nor its Restricted Subsidiaries (A) provide credit support
(including any undertaking, agreement or instrument which would constitute
Debt), (B) is directly or indirectly liable or (C) constitute the lender and
(ii) no default with respect to which (including any rights which the holders
thereof may have to take enforcement action against a Non-Recourse Affiliate)
would permit (upon notice, lapse of time or both) any holder of any other Debt
of the Company or its Restricted Subsidiaries to declare a default on such other
Debt or cause the payment thereof to be accelerated or payable prior to its
Stated Maturity.
'Non-Recourse Subsidiary' means a Subsidiary which (i) has not acquired any
assets (other than cash) directly or indirectly from the Company or any
Restricted Subsidiary, (ii) only owns properties acquired after the Issue Date
and (iii) has no Debt other than Non-Recourse Debt.
'Noteholder' or 'Holder' means the person in whose name a Note is
registered on the Registrar's books.
'Officer' means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
'Officers' Certificate' means a certificate signed by two Officers.
'Operating Cash Flow' for any period means EBITDA for such period less
Program Obligation Payments for such period; provided, however, that, when used
in the definition of 'Maximum Amount' with respect to a Television Station, all
references to the Company and Restricted Subsidiaries and consolidated
subsidiaries used in the definitions of 'EBITDA' and 'Program Obligation
Payments' and the definitions used therein shall be deemed to refer to such
Television Station.
'Opinion of Counsel' means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
'Parent' means any person that beneficially owns, directly or indirectly,
all the Voting Stock of the Company.
'Permitted Acquisition Debt' means Debt of the Company or any Restricted
Subsidiary Issued to finance all or any portion of the cost of the acquisition
of an Acquired Station, where the License for such Acquired Station is owned by
BLC, and Refinancing Debt in respect of such Debt; provided, however, that the
aggregate amount of such Permitted Acquisition Debt with respect to any Acquired
Station shall not exceed the Maximum Amount with respect to such Acquired
Station.
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'Permitted Holders' shall mean (i) A. Richard Benedek; (ii) family members
or relatives of A. Richard Benedek; (iii) any trusts created for the benefit of
the persons described in clauses (i), (ii) or (iv) of this paragraph or any
trust for the benefit of any trust; (iv) in the event of the death or
incompetence of any person described in clauses (i) or (ii) of this paragraph
such person's estate, executor, administrator, committee or other personal
representative or beneficiaries; or (v) any Affiliate of A. Richard Benedek.
'Permitted Investments' shall mean (i) investments in direct obligations of
the United States of America maturing within 90 days of the date of acquisition
thereof, (ii) investments in certificates of deposit maturing within 90 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States or any state thereof having
capital, surplus and undivided profits aggregating in excess of $500.0 million,
and (iii) investments in commercial paper given the highest rating by two
established national credit rating agencies and maturing not more than 90 days
from the date of acquisition thereof.
'person' means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
'Preferred Stock,' as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
'principal' of any debt security means the principal amount of such
security (in the case of a Note, the Accreted Value of the Note) plus the
premium, if any, payable on such debt security which is due or overdue or is to
become due at the relevant time.
'Program Obligation Payments' means, for any period of calculation, an
amount equal to the aggregate amount paid in cash by or on behalf of the Company
and the Restricted Subsidiaries during such period with respect to, or on
account of, Program Obligations.
'Program Obligations' means the obligations of the Company and the
Restricted Subsidiaries with respect to the acquisition of the right to
broadcast films and other programming material, payable in a form other than
barter.
'Public Equity Offering' means an underwritten public offering of common
stock of the Company or Parent pursuant to an effective registration statement
under the Securities Act.
'Redeemable Stock' means any Capital Stock that by its terms or otherwise
is required to be redeemed on or prior to the first anniversary of the Stated
Maturity of the Notes or is redeemable at the option of the holder thereof at
any time on or prior to the first anniversary of the Stated Maturity of the
Notes.
'Refinance' means, in respect of any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to Issue indebtedness in
exchange or replacement for, such Debt. 'Refinanced' and 'Refinancing' shall
have correlative meanings.
'Refinancing Debt' means Debt that Refinances any Debt of the Company or
any Restricted Subsidiary existing on the Issue Date or Issued in compliance
with the Indenture; provided, however, that (i) such Refinancing Debt has a
Stated Maturity no earlier than the Stated Maturity of the Debt being
Refinanced, (ii) such Refinancing Debt has an Average Life at the time such
Refinancing Debt is Issued that is equal to or greater than the Average Life of
the Debt being Refinanced and (iii) such Refinancing Debt has an aggregate
principal amount (or if Issued with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or if
Issued with original issue discount, the aggregate accreted value) then
outstanding or committed under the Debt being Refinanced; provided further,
however, that Refinancing Debt shall not include (x) Debt of a Subsidiary that
Refinances Debt of the Company or (y) Debt of the Company or a Restricted
Subsidiary that Refinances Debt of a Non-Recourse Subsidiary.
'Representative' means any trustee, agent or representative (if any) for an
issue of Senior Debt of the Company.
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'Restricted Holder' means a Permitted Holder or a person (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act and will be deemed to
include each person included in such person) that owns, directly or indirectly,
10% or more of the total voting power of the Voting Stock of the Company;
provided, however, that for purposes of this definition a person shall be deemed
to have ownership of all shares (a) that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time and (b) of a corporation held by any other corporation (the 'parent
corporation') if such person is the owner, directly or indirectly, of more than
10% of the total voting power of the Voting Stock of such parent corporation.
'Restricted Subsidiary' shall mean any Subsidiary that is not a
Non-Recourse Subsidiary.
'Sale/Leaseback Transaction' means any arrangement relating to a property
owned as of the Issue Date whereby the Company or a Restricted Subsidiary
transfers such property to a person and leases it back from such person.
'SEC' means the Securities and Exchange Commission.
'Senior Debt' means (i) all obligations of the Company now or hereafter
existing under the Bank Credit Agreement, including principal of, premium, and
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
post-petition interest is allowed as a claim in such proceeding) on Debt
outstanding under the Bank Credit Agreement, reimbursement obligations of the
Company with respect to any letters of credit outstanding under the Bank Credit
Agreement and any obligations thereunder for fees, expenses and indemnities,
(ii) Debt of the Company, whether outstanding on the Issue Date or thereafter
Issued and (iii) accrued and unpaid interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company whether or not post-filing interest is allowed in such proceeding)
in respect of (A) indebtedness of the Company for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which the Company is responsible or liable unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not superior in right of
payment to the Notes; provided, however, that Senior Debt shall not include (i)
any obligation of the Company to any Subsidiary, (ii) any liability for Federal,
state, local or other taxes owed or owing by the Company, (iii) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including Guarantees thereof or instruments evidencing such
liabilities), (iv) any Debt, Guarantee or obligation of the Company which is
subordinate or junior in any respect to any other Debt, Guarantee or obligation
of the Company or (v) that portion of any Debt which at the time of Issuance is
Issued in violation of the Indenture.
'Senior Secured Notes' means the 11 7/8% Senior Secured Notes due 2005 of
Benedek Broadcasting.
'Senior Subordinated Debt' means the Notes and any other Debt of the
Company that specifically provides that such Debt is to rank pari passu with the
Notes in right of payment and is not subordinated by its terms in right of
payment to any Debt or other obligation of the Company which is not Senior Debt.
'Significant Subsidiary' means (i) any domestic Subsidiary of the Company
(other than a Non-Recourse Subsidiary) which at the time of determination either
(A) had assets which, as of the date of the Company's most recent quarterly
consolidated balance sheet, constituted at least 3% of the Company's total
assets on a consolidated basis as of such date, or (B) had revenues for the
12-month period ending on the date of the Company's most recent quarterly
consolidated statement of income which constituted at least 3% of the Company's
total revenues on a consolidated basis for such period, (ii) any foreign
Subsidiary of the Company (other than a Non-Recourse Subsidiary) which at the
time of determination either (A) had assets which, as of the date of the
Company's most recent quarterly consolidated balance sheet, constituted at least
5% of the Company's total assets on a consolidated basis as of such date, in
each case determined in accordance with generally accepted accounting
principles, or (B) had revenues for the 12-month period ending on the date of
the Company's most recent quarterly consolidated statement of income which
constituted at least 5% of the Company's total revenues on a consolidated basis
for such period, or (iii) any Subsidiary of the Company (other than a
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Non-Recourse Subsidiary) which, if merged with all Defaulting Subsidiaries of
the Company, would at the time of determination either (A) have had assets
which, as of the date of the Company's most recent quarterly consolidated
balance sheet, would have constituted at least 10% of the Company's total assets
on a consolidated basis as of such date or (B) have had revenues for the
12-month period ending on the date of the Company's most recent quarterly
consolidated statement of income which would have constituted at least 10% of
the Company's total revenues on a consolidated basis for such period (each such
determination being made in accordance with generally accepted accounting
principles). 'Defaulting Subsidiary' means any Subsidiary of the Company (other
than a Non-Recourse Subsidiary) with respect to which an event described under
clause (vi), (vii) or (viii) of the first paragraph under ' -- Defaults' has
occurred and is continuing.
'Specified Debt' means Debt the proceeds of which are utilized solely to
(i) acquire all or substantially all of the assets or a majority of the Voting
Stock of an existing television or radio broadcasting business, franchise or
station or any business related or ancillary thereto or (ii) finance an LMA
(including to Refinance indebtedness or other obligations incurred in connection
with such acquisition or LMA, as the case may be, and to pay related fees and
expenses); provided, however, that (A) such Debt is incurred within 270 days
after the date on which the related definitive acquisition agreement or LMA, as
the case may be, was entered into by the Company or a Restricted Subsidiary, (B)
the aggregate principal amount of such Debt is no greater than the aggregate
principal amount of Debt set forth in a notice from the Company to the Trustee
(an 'Incurrence Notice') within ten days after the date on which the related
definitive acquisition agreement or LMA, as the case may be, was entered into
which notice shall be executed on the Company's behalf by its chief financial
officer in such capacity and shall describe in reasonable detail the acquisition
or LMA, as the case may be, which such Debt will be incurred to finance, (C)
such Debt is utilized solely to finance the acquisition or LMA, as the case may
be, described in such Incurrence Notice (including to Refinance indebtedness or
other obligations incurred in connection with such acquisition or LMA, as the
case may be, and to pay related fees and expenses).
'Stated Maturity' means, with respect to any security, the date specified
in such security as the fixed date on which the principal of such security is
due and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof upon the happening of any contingency unless such
contingency has occurred).
'Strategic Equity Investor' means any person which is, or is a controlled
Affiliate of any person which is, engaged principally in a media business;
provided, however, that Strategic Equity Investor shall not include any
Affiliate of the Company.
'Strategic Investment' means a sale by the Company or Parent of its common
stock to one or more Strategic Equity Investors.
'Subordinated Obligation' means any Debt of the Company (whether
outstanding on the date of the Indenture or thereafter Issued) which is
expressly subordinate or junior in right of payment to the Notes.
'Subsidiary' means any corporation, association, partnership, limited
liability company or other business entity of which more than 50% of the total
voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) the Company,
(ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
'Tax Amounts' with respect to any calendar year means the sum of (a) an
amount equal to the product of (i) the Federal taxable income of Benedek
Broadcasting for such year as determined in good faith by the Board of Directors
and as certified by a nationally recognized tax accounting firm and without
taking into account the deductibility of state income taxes for Federal income
tax purposes multiplied by (ii) the State Tax Percentage (as defined below) plus
(b) the greater of (i) the product of (w) the Federal taxable income of Benedek
Broadcasting for such year as determined in good faith by the Board of Directors
and as certified by a nationally recognized tax accounting firm and taking into
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account the deductibility of the amount determined in clause (a) above as a
state income tax for Federal income tax purposes multiplied by (x) the Federal
Tax Percentage (as defined below) and (ii) the product of (y) the alternative
minimum taxable income attributable to Benedek Broadcasting's stockholder(s) by
reason of the income of Benedek Broadcasting for such year as determined in good
faith by the Board of Directors and as certified by a nationally recognized tax
accounting firm multiplied by (z) the Federal Tax Percentage; provided, however,
the amount as calculated above shall be reduced by the amount of any income tax
benefit attributable to Benedek Broadcasting which could be realized by Benedek
Broadcasting's stockholders in the current or a prior taxable year (including
tax losses, alternative minimum tax credits, other tax credits and carryforwards
or carrybacks thereof) to the extent not previously taken into account. The
amount of any such income tax benefit described in the proviso to the preceding
sentence shall be determined in a manner consistent with the calculation of the
Tax Amount for the relevant year. Any part of the Tax Amount not distributed in
respect of a tax year for which it is calculated shall be available for
distribution in subsequent tax years. The term 'State Tax Percentage' shall mean
the highest applicable statutory marginal rate of state and local income tax to
which an individual resident of the Relevant Jurisdiction (as defined below)
would be subject in the relevant year of determination as a result of being a
stockholder of a corporation taxable as an S Corporation in such jurisdiction
(as certified to the Trustee by a nationally recognized tax accounting firm).
The term 'Relevant Jurisdiction' shall mean the jurisdiction in which, during
the relevant taxable year, (c) Benedek Broadcasting is doing business for state
and local income tax purposes, (d) Benedek Broadcasting derives the first,
second, third or fourth highest percentage of its gross income as calculated for
Federal income tax purposes (excluding therefrom any gain or loss from the sale
or other disposition of any television station then owned by Benedek
Broadcasting) and (e) Benedek Broadcasting is taxable as an S Corporation for
state and local income tax purposes that imposes the highest aggregate marginal
rate of state and local income tax on individuals (as certified to the Trustee
by a nationally recognized tax accounting firm). The term 'Federal Tax
Percentage' shall mean the highest applicable statutory marginal rate of Federal
income tax or, in the case of clause (b)(ii) above, alternative minimum tax, to
which an individual resident of the United States would be subject in the
relevant year of determination (as certified to the Trustee by a nationally
recognized tax accounting firm); provided, however, that, for any taxable year
(or portion thereof) for which Benedek Broadcasting is not taxable as an S
Corporation for Federal income tax purposes, the Federal Tax Percentage shall be
zero. Notwithstanding the foregoing, the sum of the State Tax Percentage and the
Federal Tax Percentage (the 'Total Tax Percentage') shall not exceed the
percentage (the 'Maximum Tax Percentage') equal to the lesser of (f) the highest
applicable statutory marginal rate of Federal, state and local income tax or,
when applicable, alternative minimum tax, to which a corporation doing business
in any state in which Benedek Broadcasting is doing business at the time of
determination would be subject in the relevant year of determination (as
certified to the Trustee by a nationally recognized tax accounting firm) plus 5%
and (g) 55%. If the Total Tax Percentage exceeds the Maximum Tax Percentage, the
Federal Tax Percentage shall be reduced to the extent necessary to cause the
Total Tax Percentage to equal the Maximum Tax Percentage. Distributions of Tax
Amounts may be made from time to time with respect to a tax year based on
reasonable estimates, with reconciliation within 40 days of the earlier of (i)
Benedek Broadcasting's filing of the Internal Revenue Service Form 1120S for the
applicable taxable year and (ii) the last date such form is required to be
filed. The stockholder of Benedek Broadcasting will enter into a binding
agreement with Benedek Broadcasting to reimburse Benedek Broadcasting for
certain positive differences between the distributed amount and the Tax Amount,
which difference must be paid at the time of such reconciliation.
'Television Station' means any group of assets which constitutes all or
substantially all of the assets which would be necessary to carry on the
business of a commercial television broadcast station and which, when purchased
by a single purchaser would (together with any necessary licenses,
authorizations, working capital and operating location) be substantially
sufficient to allow such purchaser to carry on such business.
'TIA' means the Trust Indenture Act of 1939 (15 U.S.C.
'SS''SS' 77aaa-77bbbb) as in effect on the Issue Date.
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'U.S. Government Obligations' means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
'Voting Stock' of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
'Wholly Owned Subsidiary' means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or another Wholly Owned Subsidiary.
REGISTRATION RIGHTS
Holders of the Exchange Securities are not entitled to any registration
rights with respect to the Exchange Securities. Under the Registration
Agreement, the Company has agreed to use its best efforts to consummate the
Exchange Offer by October 5, 1996 for the benefit of the Holders of the Existing
Notes. The Company will keep the Exchange Offer open for not less than 30 days
(or longer if required by applicable law) after the date notice of the Exchange
Offer is mailed to the Holders of the Existing Notes.
In the event that applicable interpretations of the staff of the SEC in
letters issued to third parties do not permit the Company to effect the Exchange
Offer, or if the Initial Purchaser so requests with respect to Existing Notes
not eligible to be exchanged for Exchange Securities in the Exchange Offer or if
any Holder of Existing Notes is not eligible to participate in the Exchange
Offer or does not receive freely tradeable Exchange Securities in the Exchange
Offer, the Company will, at its cost, (a) as promptly as practicable, file a
Shelf Registration Statement covering resales of the Existing Notes or the
Exchange Securities, as the case may be, (b) use its best efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
and (c) keep the Shelf Registration Statement effective until three years after
the date of original issuance of the Existing Notes. The Company will, in the
event a Shelf Registration Statement is filed, among other things, provide to
each Holder for whom such Shelf Registration Statement was filed copies of the
prospectus which is a part of the Shelf Registration Statement, notify each such
Holder when the Shelf Registration Statement has become effective and take
certain other actions as are required to permit unrestricted resales of the
Existing Notes or the Exchange Securities, as the case may be. A Holder that
sells such Notes pursuant to the Shelf Registration Statement generally would be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Agreement which are
applicable to such a Holder.
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Agreement, a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 25,000,000 shares
of Class A Common Stock, par value $0.01 per share, 25,000,000 shares of Class B
Common Stock, par value $.01 per share, and 2,500,000 shares of preferred stock,
par value $0.01 per share. The Company has outstanding 7,030,000 shares of Class
B Common Stock, 600,000 shares of Exchangeable Preferred Stock and 450,000
shares of Seller Junior Discount Preferred Stock. In addition, the Company has
1,488,000 shares of Class A Common Stock reserved for issuance upon exercise of
the Warrants and 370,000 shares of Class B Common Stock reserved for issuance
upon exercise of outstanding options held by the President of the Company.
COMMON STOCK
The following description of the Common Stock of the Company does not
purport to be complete and is subject to, and is qualified in its entirety by
the provisions of its Certificate of Incorporation. A
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copy of the Certificate of Incorporation is filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
Dividends. Holders of shares of Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available for such purpose. No dividend may be declared or paid in cash or
property on any share of any class of Common Stock, however, unless
simultaneously the same dividend is declared or paid on each share of the other
classes of Common Stock. In the case of any stock dividend, holders of Class A
Common Stock are entitled to receive the same percentage dividend (payable in
shares of Class A Common Stock) as the holders of Class B Common Stock (payable
in shares of Class B Common Stock).
Voting Rights. Holders of shares of Class A Common Stock and Class B Common
Stock vote as a single class on all matters submitted to a vote of the
stockholders, with each share of Class A Common Stock entitled to one vote and
each share of Class B Common Stock entitled to ten votes, except (i) at such
time as any class of Common Stock of the Company is subject to Rule 13e-3
promulgated under the Exchange Act, with respect to any 'going private'
transaction between the Company and any Permitted Holder and (ii) as otherwise
provided by law. A 'going private' transaction is any 'Rule 13e-3 Transaction,'
as such term is defined in Rule 13e-3.
The holders of the Class A Common Stock and Class B Common Stock vote as a
single class with respect to any proposed 'going private' transaction with any
Permitted Holder, with each share of Class A Common Stock and Class B Common
Stock entitled to one vote.
Under Delaware law, the affirmative vote of the holders of a majority of
the outstanding shares of any class of Common Stock is required to approve,
among other things, a change in the designations, preferences or limitations of
the shares of such class of Common Stock.
Liquidation Rights. Upon liquidation, dissolution or winding-up of the
Company, the holders of Class A Common Stock are entitled to share ratably with
the holders of Class B Common Stock in all assets available for distribution
after payment in full of creditors.
Other Provisions. Each share of Class B Common Stock is convertible,
subject to compliance with FCC rules and regulations, at the option of its
holder, into one share of Class A Common Stock at any time. Each share of Class
B Common Stock converts automatically into one share of Class A Common Stock
upon its sale or other transfer to a party other than a Permitted Holder,
subject to compliance with FCC rules and regulations. The holders of Common
Stock are not entitled to preemptive or subscription rights. The shares of
Common Stock presently outstanding are validly issued, fully paid and
nonassessable. In any merger, consolidation or business combination, the
consideration to be received per share by holders of Class A Common Stock must
be identical to that received by holders of Class B Common Stock. No class of
Common Stock may be subdivided, consolidated, reclassified or otherwise changed
unless concurrently the other classes of Common Stock are subdivided,
consolidated, reclassified or otherwise changed in the same proportion and in
the same manner.
EXCHANGEABLE PREFERRED STOCK
The following description of the Exchangeable Preferred Stock does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all of the provisions in the Certificate of Designation relating
thereto. A copy of the Certificate of Designation for the Exchangeable Preferred
Stock is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
Ranking. The Exchangeable Preferred Stock, with respect to dividend rights
and rights on liquidation, winding-up and dissolution, ranks (i) senior to the
common stock of the Company and the Seller Junior Discount Preferred Stock and
to each other class of capital stock or series of preferred stock established
after the date of the consummation of the offering of the Units (the
'Exchangeable Preferred Stock Issue Date') by the Board of Directors of the
Company the terms of which do not expressly provide that it ranks senior to, or
on a parity with, the Exchangeable Preferred Stock (the 'Company Junior
Securities'), (ii) on a parity with each other class of capital stock or series
of preferred stock established after the Exchangeable Preferred Stock Issue Date
by the Board of Directors of the Company the terms of which expressly provide
that such class or series will rank on a parity with the Exchangeable Preferred
Stock (the 'Company Parity Securities') and (iii) junior to each
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class of capital stock or series of preferred stock established after the
Exchangeable Preferred Stock Issue Date by the Board of Directors of the Company
the terms of which expressly provide that such class or series will rank senior
to the Exchangeable Preferred Stock.
Dividends. Holders of the outstanding shares of Exchangeable Preferred
Stock are entitled to receive, when, as and if declared by the Board of
Directors of the Company, out of funds legally available therefor, cash
dividends on the Exchangeable Preferred Stock at a rate per annum equal to 15.0%
of the then effective liquidation preference per share of Exchangeable Preferred
Stock, payable quarterly. If any dividend payable on any dividend payment date
on or before July 1, 2001, is not declared or paid in full in cash on such
dividend payment date, the amount payable as dividends on such dividend payment
date will be added automatically to the liquidation preference of the
Exchangeable Preferred Stock on such dividend payment date and will be deemed
paid in full and will not accumulate. No full dividends may be declared or paid
or funds set apart for the payment of dividends on any Company Parity Securities
for any period unless full cumulative dividends shall have been or
contemporaneously are declared and paid (or are deemed declared and paid) in
full or declared and, if payable in cash, a sum in cash sufficient for such
payment is set apart for such payment on the Exchangeable Preferred Stock. If
full dividends are not so paid, the Exchangeable Preferred Stock will share
dividends pro rata with the Company Parity Securities. No dividends may be paid
or set apart for such payment on Company Junior Securities (except dividends on
Company Junior Securities payable in additional shares of Company Junior
Securities) and no Company Junior Securities or Company Parity Securities may be
repurchased, redeemed or otherwise retired nor may funds be set apart for
payment with respect thereto, if full cumulative dividends have not been
declared and paid in full (or deemed paid) on the Exchangeable Preferred Stock.
Liquidation. The Exchangeable Preferred Stock was issued with an initial
aggregate liquidation preference of $60.0 million. Holders of the Exchangeable
Preferred Stock, in the event of any liquidation, dissolution or winding-up of
the Company, will be entitled to be paid, out of the assets of the Company
available for distribution to stockholders, the then effective liquidation
preference per share of Exchangeable Preferred Stock (initially $100 per share,
but subject to increase to the extent dividends are not declared and paid on or
prior to July 1, 2001), plus, without duplication, accrued and unpaid dividends
thereon, before any distribution is made on any Company Junior Securities,
including, without limitation, common stock of the Company and the Seller Junior
Discount Preferred Stock. If the assets of the Company are insufficient to
permit the payment of the full preferential amounts payable to holders of the
Exchangeable Preferred Stock and holders of any other class of Company Parity
Securities upon liquidation, dissolution or winding-up of the affairs of the
Company, each holder of Exchangeable Preferred Stock and Company Parity
Securities will share equally and ratably in any distribution of assets of the
Company in proportion to the respective preferential amounts to which they are
entitled.
Mandatory Redemption. The Exchangeable Preferred Stock is also subject to
mandatory redemption (subject to legal availability of funds therefor) in whole
on July 1, 2007, at a price equal to 100% of the then effective liquidation
preference thereof, plus, without duplication, accrued and unpaid dividends to
the date of redemption.
Optional Redemption. The Exchangeable Preferred Stock may be redeemed
(subject to contractual and other restrictions with respect thereto, and to the
legal availability of funds therefor) at any time, in whole or in part, at the
option of the Company, at the redemption prices (expressed in percentages of the
then effective liquidation preference thereof) set forth below, plus, without
duplication, accrued and unpaid dividends on the Exchangeable Preferred Stock to
the date of redemption: if redeemed prior to July 1, 1996 at 115.000%, and if
redeemed during the 12-month period commencing July 1 of (a) 1996 through 1999,
115.000%; (b) 2000, 112.000%; (c) 2001, 109.000%; (d) 2002, 106.000%; (e) 2003,
103.000%; and (f) 2004 and thereafter, 100.000%.
Exchange. The Company may, at its option, subject to certain conditions, on
any scheduled dividend payment date, exchange the Exchangeable Preferred Stock,
in whole but not in part, for the Exchange Debentures (as defined). Holders of
the Exchangeable Preferred Stock will be entitled to receive $1.00 principal
amount of Exchange Debentures for each $1.00 liquidation preference of
Exchangeable Preferred Stock held by them.
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Voting Rights. The holders of Exchangeable Preferred Stock, except as
otherwise required under Delaware law or as set forth below, are not entitled to
vote on any matter required or permitted to be voted upon by the stockholders of
the Company. The holders of the Exchangeable Preferred Stock, voting together as
a single class, have the right to elect the greater of two directors and that
number of directors constituting 25% of the members of the Board of Directors of
the Company upon the occurrence of certain events including, but not limited to,
the failure by the Company after July 1, 2001 to pay cash dividends in full on
the Exchangeable Preferred Stock for four or more quarterly dividend periods,
the failure by the Company to redeem the Exchangeable Preferred Stock on July 1,
2007, or the failure to otherwise discharge any redemption obligation with
respect to the Exchangeable Preferred Stock, the breach or violation of one or
more of the covenants contained in the Certificate of Designation for the
Exchangeable Preferred Stock, the failure by the Company to repay at final
stated maturity, or the acceleration of the final stated maturity of, certain
indebtedness of the Company or an event of default occurs with respect to any
such indebtedness (which event of default is not waived by the holders of such
indebtedness within 30 days thereof).
Change of Control. The Certificate of Designation for the Exchangeable
Preferred Stock provides that, upon the occurrence of a change of control (as
defined in the Certificate of Designation for the Exchangeable Preferred Stock),
each holder will have the right to require that the Company repurchase all or a
portion of such holder's Exchangeable Preferred Stock in cash at a purchase
price equal to 101% of the then effective liquidation preference thereof, plus,
without duplication, an amount in cash equal to all accrued and unpaid dividends
per share to the date of repurchase.
Certain Covenants. The Certificate of Designation for the Exchangeable
Preferred Stock contains certain covenants that, among other things, limit (i)
the issuance of additional indebtedness by the Company and its subsidiaries,
(ii) the payment of dividends on, and redemption of, certain capital stock of
the Company and its subsidiaries and the redemption of certain subordinated
obligations of the Company, (iii) investments in certain affiliates, (iv) sales
of assets and subsidiary stock, (v) transactions with affiliates and (vi)
consolidations, mergers and transfers of all or substantially all of the
Company's assets.
Exchangeable Preferred Stock Exchange Offer. The Company has filed a
registration statement on Form S-4 relating to a registered exchange offer for
the Exchangeable Preferred Stock (the 'Exchangeable Preferred Stock Exchange
Offer'). The Company anticipates that the registration statement relating to the
Exchangeable Preferred Stock Exchange Offer will be declared effective
contemporaneously with or shortly after the Registration Statement relating to
the Exchange Offer made hereby. Additionally, the Company anticipates that the
Exchangeable Preferred Stock Exchange Offer will (i) take place
contemporaneously, in whole or in part, with the Exchange Offer and (ii) expire
on the expiration date of the Exchange Offer or shortly thereafter.
SELLER JUNIOR DISCOUNT PREFERRED STOCK
The following description of the Seller Junior Discount Preferred Stock
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all of the provisions in the Certificate of
Designation therefor. A copy of the Certificate of Designation for the Seller
Junior Discount Preferred Stock is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
Ranking. The Seller Junior Discount Preferred Stock, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, ranks (i)
junior to the Exchangeable Preferred Stock and each class of Capital Stock or
series of Preferred Stock established hereafter by the Board of Directors of the
Company, the terms of which expressly provide that such class or series will
rank senior to the Seller Junior Discount Preferred Stock as to dividend rights
and rights upon liquidation, winding-up and dissolution of the Company; (ii)
senior to all classes of common stock and to each other class of Capital Stock
or series of Preferred Stock established hereafter by the Board of Directors of
the Company the terms of which do not expressly provide that it ranks senior to,
or on a parity with, the Seller Junior Discount Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution of the Company; and
(iii) subject to certain conditions, on a parity with each other class of
Capital Stock or series of Preferred Stock established hereafter by the Board of
Directors of the
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Company, the terms of which expressly provide that such class or series will
rank on a parity with the Seller Junior Discount Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution. All claims of the
holders of the Seller Junior Discount Preferred Stock, including without
limitation, claims with respect to dividend payments, redemption payments,
mandatory repurchase payments or rights upon liquidation, winding-up or
dissolution, shall rank junior to the claims of the holders of any debt of the
Company, holders of any senior preferred stock, including the Exchangeable
Preferred Stock, and, except with respect to declared and unpaid dividends, all
other creditors of the Company. The Certificate of Designation for the Seller
Junior Discount Preferred Stock contains limitations on the issuance of
additional preferred stock by the Company. See ' -- Voting Rights.'
Dividends. Holders of the Seller Junior Discount Preferred Stock are
entitled to receive out of any funds legally available therefor, dividends on
the Seller Junior Discount Preferred Stock at a rate per annum equal to the
Dividend Rate (as defined) of the then effective liquidation value per share of
Seller Junior Discount Preferred Stock, payable (i) during the period from the
date of issuance thereof (the 'Seller Junior Discount Preferred Stock Issue
Date') through, but not including, the fifth anniversary of the Seller Junior
Discount Preferred Stock Issue Date, quarterly, and (ii) thereafter,
semi-annually. The term 'Dividend Rate' means (i) for the period from the Seller
Junior Discount Preferred Stock Issue Date through (but not including) the fifth
anniversary of the Seller Junior Discount Preferred Stock Issue Date, 7.92% per
annum, (ii) for the period from the fifth anniversary of the Seller Junior
Discount Preferred Stock Issue Date through (but not including) the seventh
anniversary of the Seller Junior Discount Preferred Stock Issue Date, 15% per
annum, and (iii) from the seventh anniversary of the Seller Junior Discount
Preferred Stock Issue Date and thereafter, 18% per annum, provided, however,
that during any period during which any dividend is not paid, the Seller Junior
Discount Preferred Stock is not redeemed in accordance with the terms of the
Certificate of Designation therefor or the Company takes any action in violation
of such Certificate of Designation, the Dividend Rate shall be the Dividend Rate
determined in accordance with clauses (i) through (iii) above plus 2% per annum.
Dividends on the Seller Junior Discount Preferred Stock will be cumulative from
the Seller Junior Discount Preferred Stock Issue Date. Through and including the
fifth anniversary of the Seller Junior Discount Preferred Stock Issue Date,
dividend payments thereon may not be made in cash and will instead be added
automatically to the liquidation preference of the Seller Junior Discount
Preferred Stock on the dividend payment date and will be deemed paid in full and
will not accumulate.
Liquidation. The Seller Junior Discount Preferred Stock was issued with an
initial aggregate liquidation preference of $45.0 million. Holders of the Seller
Junior Discount Preferred Stock, in the event of any liquidation, dissolution or
winding-up of the Company, will be entitled to be paid, out of the assets of the
Company available for distribution to stockholders, the then effective
liquidation preference per share of Seller Junior Discount Preferred Stock
(initially $100 per share, but subject to increase to the extent dividends
thereon accrue prior to the fifth anniversary of the Seller Junior Discount
Preferred Stock Issue Date), plus, without duplication, accrued and unpaid
dividends, thereon, before any distribution is made on any Common Stock of the
Company or any securities which are junior to the Seller Junior Discount
Preferred Stock. If the assets of the Company are insufficient to permit payment
of the full preferential amounts payable to holders of the Seller Junior
Discount Preferred Stock and holders of any other class of securities that rank
on par thereto upon liquidation, dissolution or winding-up of the affairs of the
Company, each holder of Seller Junior Discount Preferred Stock and such parity
securities will share equally and ratably in any distribution of assets of the
Company in proportion to the respective preferential amounts to which they are
entitled.
Mandatory Redemption. The Seller Junior Discount Preferred Stock is subject
to mandatory redemption (subject to contractual and other restrictions with
respect thereto and to the legal availability of funds therefor) in whole on
July 1, 2008, at a price equal to the sum of the liquidation value per share
plus an amount equal to all accumulated and unpaid dividends per share to the
date of redemption.
Optional Redemption. The Seller Junior Discount Preferred Stock may be
redeemed (subject to contractual and other restrictions with respect thereto and
to the legal availability of funds therefor), in whole or in part at any time at
the option of the Company, at the redemption price equal to the sum of
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the liquidation value per share redeemed plus an amount equal to all accumulated
and unpaid dividends per share to the date of redemption.
Voting Rights. The holders of Seller Junior Discount Preferred Stock have
no voting rights, except as required by law, provided, however, that the holders
of Seller Junior Discount Preferred Stock, voting separately as a class, have
the right to elect one director to the Board of Directors of the Company in
addition to the number to be elected by the holders of the Company's common
stock or any other shares of preferred stock of the Company upon the failure by
the Company to pay dividends for any six consecutive quarterly dividend periods
or three consecutive semi-annual periods or the failure of the Company to
discharge any mandatory redemption or repayment obligation with respect to the
Seller Junior Discount Preferred Stock, provided further, however, that without
the affirmative vote of the holders of at least a majority of the outstanding
Seller Junior Discount Preferred Stock, neither the Company nor any of its
subsidiaries may, after the Seller Junior Discount Preferred Stock Issue Date
(and therefore not applicable to the Financing Plan), incur any indebtedness
(which includes any preferred stock of a subsidiary of the Company) if, on the
date of such incurrence, after giving effect to the incurrence of such
indebtedness, the cash flow leverage ratio of the Company (defined in the same
manner as in the Senior Secured Note Indenture as to Benedek Broadcasting)
exceeds 8.5 to 1.0; provided that the Company and its subsidiaries may incur
indebtedness, without regard to such cash flow leverage ratio, if, after giving
effect to such incurrence, the aggregate amount of all indebtedness of the
Company and its subsidiaries outstanding which was incurred at such time or
times as the cash flow leverage ratio exceeded 8.5 to 1.0, does not exceed 150%
of the consolidated net interest expense for the four quarter period ending as
of the end of the fiscal quarter ending immediately prior thereto. Preferred
stock that is senior or pari passu in ranking to the Seller Junior Discount
Preferred Stock or that is junior in ranking thereto but is mandatorily
redeemable within one year prior to the mandatory redemption date of the Seller
Junior Discount Preferred Stock is considered indebtedness (and interest thereon
is considered interest expense) for purposes of the foregoing limitations. The
Exchangeable Preferred Stock is considered indebtedness for purposes of the
foregoing limitation and the Seller Junior Discount Preferred Stock is not
considered indebtedness for such purposes. Indebtedness is not deemed incurred
for this purpose upon either (i) the issuance of additional preferred stock on
account of then existing payment-in-kind preferred stock as a payment of
dividends (such as dividends on the Exchangeable Preferred Stock) or (ii) the
accretion of discount with respect to indebtedness (such as accretion of
discount on the Notes).
WARRANTS
The Company has outstanding 600,000 Initial Warrants and 888,000 Contingent
Warrants, each Warrant to acquire one share of Class A Common Stock of the
Company, at an initial exercise price of $0.01 per share. Under certain
circumstances, the number of Contingent Warrants may be reduced or the
Contingent Warrants may be required to be returned to the Company.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Federal income tax discussion set forth below is intended only as a
summary and does not purport to be a complete analysis or listing of all the
potential tax consequences that may be relevant to persons acquiring, holding or
disposing of the Notes. This discussion does not address the tax consequences
that may be relevant to particular categories of investors subject to special
treatment under certain Federal income tax laws, such as dealers in securities,
banks, insurance companies, tax-exempt organizations, foreign individuals and
entities; tax consequences arising under the law of any state, locality or
foreign jurisdictions; or any estate or gift tax considerations. This discussion
is based upon currently existing provisions of the Internal Revenue Code of
1986, as amended (the 'Code'), applicable Treasury Regulations (including
proposed Treasury Regulations) thereunder and current administrative rulings and
judicial decisions, as of the date hereof. It is addressed to original
purchasers of Notes who will hold the Notes as capital assets. All of the
foregoing are subject to change at any time and any such change could affect the
continuing validity of this discussion in a manner that could adversely affect a
holder of the Notes. Further, the tax treatment of a purchaser of the Notes may
vary depending upon his particular situation. PERSONS CONSIDERING THE PURCHASE,
OWNERSHIP OR DISPOSITION OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR
SITUTATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTION.
ORIGINAL ISSUE DISCOUNT
The Notes will be treated as issued with original issue discount ('OID')
because the 'issue price' of the Notes was less than their 'stated redemption
price at maturity' by more than a de minimis amount. The 'issue price' of the
Existing Notes was equal the first price at which a substantial amount of the
Existing Notes were sold to persons other than bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers. The 'stated redemption price at maturity' will equal the
sum of all payments provided under the Notes other than payments of 'qualified
stated interest.' A 'qualified stated interest' payment is generally any one of
a series of stated interest payments that, among other requirements, are
unconditionally payable at least annually. Because the Notes will not pay
interest prior to the Cash Interest Date, none of the interest on the Notes
prior to the Cash Interest Date will be 'qualified stated interest.' Therefore,
all such payments made under the Notes will be included in the 'stated
redemption price at maturity' and the total OID on a Note will equal the
difference between the sum of those payments provided under the Note and its
issue price.
A holder of a Note must include OID in income calculated in accordance with
a constant-yield method before the receipt of cash attributable to such income.
Under the constant-yield method, interest is accrued at a constant rate based on
the Notes' yield to maturity, which is the discount rate that, when used in
computing the present value of all payments to be made under the Notes, produces
an amount equal to their issue price. The amount of OID includible in income by
a holder of a Note is the sum of the daily portions of OID with respect to the
Note for each day during the taxable year or portion of the taxable year on
which the holder holds such Note ('accrued OID'). The daily portion is
determined by allocating to each day in any 'accrual period' a pro rata portion
of the OID allocable to that accrual period. Accrual periods with respect to a
Note may be of any length selected by the holder and may vary in length over the
term of the Note as long as (i) no accrual period is longer than one year and
(ii) each scheduled payment of interest or principal on the Note occurs on
either the final or first day of an accrual period. The amount of OID allocable
to an accrual period will equal the product of the Note's 'adjusted issue price'
at the beginning of the accrual period and such Note's yield to maturity
(determined on the basis of compounding at the close of each accrual period and
properly adjusted for the length of the particular accrual period). The amount
of OID allocable to an initial short accrual period may be computed using any
reasonable method if all other accrual periods other than a final short accrual
period are of equal length. The amount of OID allocable to the final accrual
period is the difference between the amount payable at the maturity of the Note
and the Note's adjusted issue price as of the beginning of the final accrual
period.
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The 'adjusted issue price' of a Note at the beginning of any accrual period
will be the issue price of the Note increased by the amount of accrued OID for
each prior accrual period and decreased by the amount of any payments made on
the Note. Because OID will accrue and be includible in income at least annually
and no payments will be made under the Notes until May 15, 2001, the adjusted
issue price will increase until the Cash Interest Date. The amount of OID
includible in income will therefore increase during each accrual period until
the Cash Interest Date. The adjusted issue price after the Cash Interest Date
will decrease (or increase) if payments made thereafter are greater (or less)
than the amounts of OID accrued between payments, and the OID includible in
income will decrease (or increase) accordingly.
MARKET DISCOUNT AND ACQUISITION DISCOUNT
If a Note is acquired at a 'market discount' (i.e., a discount other than
at original issue), some or all of any gain recognized upon the disposition of
the debt instrument by the holder will be taxable as ordinary interest income,
rather than as capital gain, to the extent such gain does not exceed the accrued
market discount on such debt instrument at the time of such disposition. 'Market
discount' generally means the excess, if any, of a debt instrument's 'revised
issue price' over the price paid by the holder therefor, subject to a de minimis
exception. The revised issue price of a Note will equal the issue price of the
Note, increased by the amount of OID accrued with respect to the Note as of the
acquisition date, and decreased by any payments made on the Note prior to the
acquisition date. A holder of a Note who acquires the debt instrument at a
market discount may also be required to defer the deduction of a portion of the
amount of interest that the holder paid or accrued during the taxable year on
indebtedness incurred or maintained to purchase or carry such debt instrument.
A holder of a Note acquired at a market discount may elect to include
market discount in gross income, for Federal income tax purposes, as such market
discount accrues, either on a straight-line basis or on a constant interest rate
basis. This current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may not be revoked without the consent
of the Internal Revenue Service. If a holder of a Note makes such an election,
the foregoing rules regarding the recognition of ordinary income on sales and
other dispositions and regarding the deferral of interest deductions on
indebtedness incurred or maintained to purchase or carry such debt instruments,
will not apply.
If a holder acquires a Note at a price that is in excess of its revised
issue price but is less than such Note's remaining stated redemption price at
maturity, such holder will be allowed to reduce the amount of OID otherwise
includible in income after the acquisition date to reflect such excess.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange, retirement or other disposition of a Note, a
holder will generally recognize gain or loss equal to the difference between the
amount realized on the disposition and the holder's adjusted tax basis in the
Note. The adjusted tax basis of the Notes for holders will generally be equal to
the issue price, increased by the amount of OID and market discount included in
gross income prior to the time of disposition, and decreased by any payments
made on the Notes prior to disposition. Subject to the market discount rules
discussed above, gain or loss recognized by a holder on the disposition of a
Note will be capital gain or loss, and will be long-term capital gain or loss if
the Note had been held for more than one year.
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY
The Company's deductions for accrued interest on the Notes will be
deferred, and will be disallowed in part, because the Notes constitute
'applicable high yield discount obligations' ('AHYDOS'). The Notes constitute
AHYDOS in part because their yield-to-maturity equals or exceeds five percentage
points over the 'applicable federal rate' (the 'AFR') in effect when the Notes
were issued.
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The Company's deductions for interest on the portion of the interest that
exceeds the AFR by more than six percentage points will be disallowed. The
Company will be allowed to deduct the remaining interest. However, such interest
will not be deductible until it is actually paid.
Corporate holders of the Notes will be entitled to a partial
dividends-received deduction with respect to the disallowed portion of accrued
interest on the Notes to the extent that the Company has earnings and profits
from which it could pay a dividend. The Company will report to the holders the
amount of any disallowed interest that could be treated as a dividend subject to
a partial dividends-received deduction.
BACKUP WITHHOLDING
A holder of a Note may be subject to backup withholding at the rate of 31%
with respect to payments of principal and interest paid on the Note, and gross
proceeds upon sale or retirement of a Note, unless such holder (i) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a correct taxpayer identification
number, certifies that backup withholding is not in effect and otherwise
complies with the applicable requirements of the backup withholding rules.
Holders of Notes should consult their tax advisors as to their qualification for
exemption from U.S. backup withholding and the procedure for obtaining such an
exemption. Any amount paid as backup withholding will be creditable against the
holder's Federal income tax liability.
EXCHANGE OFFER
The exchange of Exchange Securities for Existing Notes pursuant to the
Exchange Offer will not be treated as an 'exchange' for Federal income tax
purposes because the Exchange Securities will not be considered to differ
materially in kind or extent from the Existing Notes. Rather, the Exchange
Securities received by a holder will be treated as a continuation of the
Existing Notes in the hands of such holder. As a result, there will be no
Federal income tax consequences to holders exchanging Existing Notes for the
Exchange Securities pursuant to the Exchange Offer. If, however, the exchange of
Existing Notes for the Exchange Securities were treated as an 'exchange' for
Federal income tax purposes, such exchange would constitute a recapitalization
for Federal income tax purposes. Holders exchanging Existing Notes pursuant to
such recapitalization would not recognize any gain or loss upon the exchange.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Existing Notes where such Existing Notes were acquired as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1996, all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an 'underwriter' within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. Each Letter of Transmittal states that,
by acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an 'underwriter' within the
meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in its Letter
of Transmittal. The Company has agreed to pay all expenses incident to the
Exchange Offer (including the expenses of one counsel for the holders of the
Notes) other than commissions or concessions of any brokers or dealers and will
indemnify holders of the Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Notes will be passed on for the
Company by Shack & Siegel, P.C., New York, New York. Paul S. Goodman, a member
of the firm of Shack & Siegel, P.C., is a director of the Company and Benedek
Broadcasting. During fiscal 1995, the Company paid approximately $559,000 for
legal services to Shack & Siegel, P.C.
EXPERTS
The financial statement of the Company as of April 10, 1996 (date of
inception) included in this Prospectus have been audited by McGladrey & Pullen,
LLP, independent auditors, as stated in their report with respect thereto, and
is included herein in reliance upon the authority of said firm as experts in
giving said report.
The Consolidated Financial Statements of Benedek Broadcasting as of
December 31, 1994 and 1995 and for each of the three years ended December 31,
1995, included in this Prospectus have been audited by McGladrey & Pullen, LLP,
independent auditors, as stated in their report with respect thereto, and is
included herein in reliance upon the authority of said firm as experts in giving
said report.
The balance sheets of the TV Division of Stauffer as of December 31, 1994
and 1995 and the related statements of income, division equity and cash flows
for each of three years in the period ended December 31, 1995, included in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and is included
herein in reliance upon the authority of said firm as experts in giving said
report.
The consolidated balance sheets of Brissette as of December 25, 1994 and
December 31, 1995 and the related statements of operations, stockholder's
investment and cash flows for the fiscal years ended December 26, 1993, December
25, 1994 and December 31, 1995, included in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and is included herein in reliance upon the
authority of said firm as experts in giving said report.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Benedek Communications Corporation
Independent Auditor's Report..................................................................................... F-2
Balance Sheet as of April 10, 1996............................................................................... F-3
Note to Financial Statement...................................................................................... F-4
Benedek Broadcasting Corporation and Subsidiary
Independent Auditor's Report..................................................................................... F-5
Consolidated Balance Sheets as of December 31, 1994 and 1995..................................................... F-6
Consolidated Statements of Operations for the Three Years Ended December 31, 1995................................ F-7
Consolidated Statements of Stockholder's Deficit for the Years Ended
December 31, 1993, 1994 and 1995............................................................................... F-8
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 1995................................ F-9
Notes to Consolidated Financial Statements....................................................................... F-10
Consolidated Balance Sheet as of March 31, 1996 (Unaudited)...................................................... F-20
Consolidated Statements of Operations for the Three Months Ended
March 31, 1995 and 1996 (Unaudited)............................................................................ F-21
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1995 and 1996 (Unaudited)............................................................................ F-22
Notes to Consolidated Financial Statements (Unaudited)........................................................... F-23
TV Division of Stauffer Communications, Inc.
Report of Independent Public Accountants......................................................................... F-26
Balance Sheets as of December 31, 1994 and 1995.................................................................. F-27
Statements of Income for the Three Years Ended December 31, 1995................................................. F-28
Statements of Division Equity for the Years Ended December 31, 1993, 1994 and 1995............................... F-29
Statements of Cash Flows for the Three Years Ended December 31, 1995............................................. F-30
Notes to Financial Statements.................................................................................... F-31
Balance Sheet as of March 31, 1996 (Unaudited)................................................................... F-34
Statements of Income for the Three Months Ended March 31, 1995 and 1996 (Unaudited).............................. F-35
Statement of Division Equity for the Three Months Ended March 31, 1996 (Unaudited)............................... F-36
Statements of Cash Flows for the Three Months Ended March 31, 1995 and 1996 (Unaudited).......................... F-37
Notes to Financial Statements (Unaudited)........................................................................ F-38
Brissette Broadcasting Corporation and Subsidiaries
Report of Independent Public Accountants......................................................................... F-41
Consolidated Balance Sheets as of December 25, 1994 and December 31, 1995........................................ F-42
Consolidated Statements of Operations for the Three Years Ended December 31, 1995................................ F-43
Consolidated Statements of Stockholder's Investment for the Years Ended
December 26, 1993, December 25, 1994 and December 31, 1995..................................................... F-44
Consolidated Statements of Cash Flows for the Three Years Ended
December 31, 1995.............................................................................................. F-45
Notes to Consolidated Financial Statements....................................................................... F-46
Consolidated Balance Sheet as of March 31, 1996 (Unaudited)...................................................... F-54
Consolidated Statements of Operations for the Thirteen Weeks Ended March 31, 1995 and 1996 (Unaudited)........... F-55
Consolidated Statements of Cash Flows for the Thirteen Weeks Ended March 31, 1995 and 1996 (Unaudited)........... F-56
Consolidated Statements of Stockholder's Investment for the Thirteen Weeks Ended March 31, 1996 (Unaudited)...... F-57
Note to Consolidated Financial Statements (Unaudited)............................................................ F-58
</TABLE>
F-1
<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
BENEDEK COMMUNICATIONS CORPORATION
Rockford, Illinois
We have audited the accompanying balance sheet of Benedek Communications
Corporation as of April 10, 1996 (date of inception). This financial statement
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Benedek Communications
Corporation as of April 10, 1996, in conformity with generally accepted
accounting principles.
MCGLADREY & PULLEN, LLP
Rockford, Illinois
April 10, 1996
F-2
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION
BALANCE SHEET
APRIL 10, 1996
<TABLE>
<S> <C>
ASSETS
Cash...................................................................................................... $100
----
----
STOCKHOLDER'S EQUITY
Stockholder's Equity
Preferred Stock, $.01 par value, 2,500,000 shares authorized, none issued or outstanding............. $--
Common Stock, Class A, $.01 par value, 25,000,000 shares authorized, none issued or outstanding...... --
Common Stock, Class B, $.01 par value, 25,000,000 shares authorized, 10,000 shares issued and
outstanding......................................................................................... 100
----
$100
----
----
</TABLE>
The accompanying note is an integral part of the financial statement.
F-3
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION
NOTE TO FINANCIAL STATEMENT
(NOTE A) -- FORMATION AND NATURE OF BUSINESS
FORMATION AND NATURE OF BUSINESS: The Company was formed on April 10, 1996
by the sole stockholder of Benedek Broadcasting Corporation. Upon consummation
of certain acquisition and financing transactions, the sole stockholder will
contribute all of the outstanding shares of common stock of Benedek Broadcasting
Corporation to the Company in exchange for the issuance to him of all of the
outstanding shares of common stock of the Company.
F-4
<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
Rockford, Illinois
We have audited the accompanying consolidated balance sheets of Benedek
Broadcasting Corporation and subsidiary as of December 31, 1994 and 1995 and the
related consolidated statements of operations, stockholder's deficit, and cash
flows for the years ended December 31, 1993, 1994 and 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Benedek
Broadcasting Corporation and subsidiary as of December 31, 1994 and 1995, and
the results of their operations and their cash flows for the years ended
December 31, 1993, 1994 and 1995 in conformity with generally accepted
accounting principles.
MCGLADREY & PULLEN, LLP
Rockford, Illinois
February 9, 1996, except for Note L as to
which the date is June 6, 1996.
F-5
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
ASSETS(Note F)
Current Assets
Cash and cash equivalents................................................ $ 4,617,242 $ 9,668,331
Receivables:
Trade, net, less allowance for doubtful accounts of $100,268 and
$249,023 for 1994 and 1995, respectively.......................... 7,923,039 9,918,633
Due from Network.................................................... -- 2,500,000
Other............................................................... 32,367 111,063
Current portion of program broadcast rights.............................. 1,501,396 1,575,325
Prepaid expenses......................................................... 521,109 576,697
------------ ------------
Total current assets........................................... 14,595,153 24,350,049
------------ ------------
Property and Equipment (Note D)............................................... 14,216,963 20,035,715
------------ ------------
Intangible Assets (Note E).................................................... 40,859,681 60,420,617
------------ ------------
Other Assets
Program broadcast rights, less current portion (Note G).................. 271,152 687,320
Advance to affiliate (Note C)............................................ 2,000,000 --
Deposit on Acquisition................................................... -- 3,000,000
Acquisition costs........................................................ -- 225,359
Deferred loan costs...................................................... 1,569,338 5,625,261
Land held for sale....................................................... 109,000 109,000
------------ ------------
3,949,490 9,646,940
------------ ------------
$ 73,621,287 $114,453,321
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Current maturities of notes and leases payable........................... $ 8,441,031 $ 318,077
Current maturities of program broadcast rights payable................... 1,920,745 2,042,643
Accounts payable and accrued expenses (Note H)........................... 2,622,169 7,824,296
Deferred revenue......................................................... -- 500,000
------------ ------------
Total current liabilities...................................... 12,983,945 10,685,016
------------ ------------
Long-Term Obligations
Notes and capital leases payable (Note F)................................ 99,165,618 135,448,948
Program broadcast rights payable (Note G)................................ 248,716 632,444
Deferred revenue......................................................... -- 4,250,000
Deferred and contingent interest payable................................. 3,838,213 --
------------ ------------
103,252,547 140,331,392
------------ ------------
Commitments (Note I, K)
Stockholder's Deficit (Note E)
Common stock, no par, authorized 200 shares; issued 178.09 shares........ 1,046,500 1,046,500
Additional paid-in capital............................................... 2,758,178 2,758,178
Accumulated deficit...................................................... (44,938,734) (38,886,616)
------------ ------------
(41,134,056) (35,081,938)
Less 30.24 shares held in treasury....................................... 1,481,149 1,481,149
------------ ------------
(42,615,205) (36,563,087)
------------ ------------
$ 73,621,287 $114,453,321
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net revenues................................................. $ 38,351,734 $ 44,221,027 $ 50,329,019
------------ ------------ ------------
Operating expenses:
Selling, technical and program expenses (Note C)........ 16,161,766 17,739,786 21,199,067
General and administrative.............................. 6,642,578 7,069,730 7,849,845
Depreciation and amortization........................... 3,721,415 3,403,263 5,041,719
Corporate (Note C)...................................... 1,248,666 1,308,984 1,575,792
Special bonus, officer-stockholder (Note C)............. 1,400,377 -- --
------------ ------------ ------------
29,174,802 29,521,763 35,666,423
------------ ------------ ------------
Operating income................................... 9,176,932 14,699,264 14,662,596
Financial income (expense):
Interest expense (Note A):
Cash interest...................................... (8,358,237) (7,904,530) (15,159,766)
Other interest..................................... (6,160,670) (4,904,834) (711,934)
------------ ------------ ------------
(14,518,907) (12,809,364) (15,871,700)
Interest income......................................... 163,711 164,627 397,460
Other, net.............................................. 143,850 (10,168) --
------------ ------------ ------------
(14,211,346) (12,654,905) (15,474,240)
------------ ------------ ------------
Income (loss) before extraordinary item............ (5,034,414) 2,044,359 (811,644)
Extraordinary item, gain on early extinguishment of debt
(Note F)................................................... -- -- 6,863,762
------------ ------------ ------------
Net income (loss).................................. $ (5,034,414) $ 2,044,359 $ 6,052,118
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
NOTE AND
ACCRUED
ADDITIONAL INTEREST
COMMON PAID-IN ACCUMULATED TREASURY RECEIVABLE,
STOCK CAPITAL DEFICIT STOCK STOCKHOLDER TOTAL
---------- ---------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992..... $1,046,500 $2,758,178 $(40,944,866) $(1,481,149) $(2,382,340) $(41,003,677)
Accrued interest............ -- -- -- -- (21,850) (21,850)
Net (loss).................. -- -- (5,034,414) -- -- (5,034,414)
Dividends (Note C).......... -- -- (1,003,813) -- 1,003,813 --
Bonus to officer-stockholder
(Note C).................. -- -- -- -- 1,400,377 1,400,377
---------- ---------- ------------ ----------- ----------- ------------
Balance at December 31, 1993..... 1,046,500 2,758,178 (46,983,093) (1,481,149) -- (44,659,564)
Net income.................. -- -- 2,044,359 -- -- 2,044,359
---------- ---------- ------------ ----------- ----------- ------------
Balance at December 31, 1994..... 1,046,500 2,758,178 (44,938,734) (1,481,149) -- (42,615,205)
Net income.................. -- -- 6,052,118 -- -- 6,052,118
---------- ---------- ------------ ----------- ----------- ------------
Balance at December 31, 1995..... $1,046,500 $2,758,178 $(38,886,616) $(1,481,149) $ -- $(36,563,087)
---------- ---------- ------------ ----------- ----------- ------------
---------- ---------- ------------ ----------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------
1993 1994 1995
----------- ----------- ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss)...................................................... $(5,034,414) $ 2,044,359 $ 6,052,118
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Amortization of program broadcast rights........................... 2,178,974 2,103,606 2,161,545
Depreciation and amortization...................................... 2,288,487 2,133,940 3,268,939
(Gain) on early extinguishment of debt............................. -- -- (6,863,762)
Amortization of intangibles and deferred loan costs................ 1,731,444 2,775,321 2,425,488
(Gain) loss on sale of property and equipment...................... 10,644 (55,222) 27,535
Payment of deferred and contingent interest........................ -- -- (4,405,746)
Payment of prepayment premiums..................................... -- -- (2,748,896)
Interest added to capital note warrants and long-term debt......... 5,154,432 -- --
Bonus paid through reduction of note receivable, stockholder....... 1,400,377 -- --
Other.............................................................. 15,346 166,730 31,691
Change in assets and liabilities, net of effects of acquisition:
Receivables........................................................ (624,482) (329,105) (4,574,290)
Prepaid expenses................................................... 111,897 (102,858) (48,023)
Payments on program broadcast rights payable....................... (2,180,531) (1,887,768) (2,131,990)
Accounts payable and accrued expenses.............................. (677,184) 357,041 4,738,408
Deferred income.................................................... -- -- 4,750,000
Contingent and deferred interest payable........................... 550,882 3,287,331 567,533
----------- ----------- ------------
Net cash provided by (used in) operating activities............ 4,925,872 10,493,375 3,250,550
----------- ----------- ------------
Cash Flows From Investing Activities
Purchase of property and equipment..................................... (869,904) (574,171) (1,478,893)
Proceeds from sale of equipment........................................ 6,304 75,380 425,994
Payment for acquisition of station..................................... -- -- (26,698,516)
Deposit on acquisition................................................. -- -- (3,000,000)
Advance to affiliate................................................... -- (2,000,000) --
Payment of acquisition costs........................................... -- -- (225,359)
Other.................................................................. -- (8,267) 4,504
----------- ----------- ------------
Net cash (used in) investing activities........................ (863,600) (2,507,058) (30,972,270)
----------- ----------- ------------
Cash Flows From Financing Activities
Principal payments on notes, including capital lease payables.......... (5,665,212) (5,795,902) (96,351,288)
Proceeds from senior secured debt issue................................ -- -- 135,000,000
Payment of debt acquisition costs...................................... (1,285,332) (1,240,602) (5,875,903)
----------- ----------- ------------
Net cash provided by (used in) financing activities............ (6,950,544) (7,036,504) 32,772,809
----------- ----------- ------------
Increase (decrease) in cash and cash equivalents............... (2,888,272) 949,813 5,051,089
Cash and cash equivalents:
Beginning.............................................................. 6,555,701 3,667,429 4,617,242
----------- ----------- ------------
Ending................................................................. $ 3,667,429 $ 4,617,242 $ 9,668,331
----------- ----------- ------------
----------- ----------- ------------
Supplemental Disclosure of Cash Flow Information
Cash payments for interest............................................. $ 8,809,487 $ 7,904,530 $ 13,654,225
----------- ----------- ------------
----------- ----------- ------------
Supplemental Schedule of Non-Cash Investing and Financing Activities
Acquisition of program broadcast rights................................ $ 1,688,123 $ 2,044,692 $ 2,558,122
Note payable and capital lease obligation incurred for purchase of
equipment............................................................. 230,013 273,995 197,288
Equipment acquired by barter transactions.............................. 178,242 312,965 331,843
Reduction of note receivable, officer-stockholder through dividends
paid.................................................................. 1,003,813 -- --
Accrued interest added to long-term debt due to refinancing............ 4,996,568 -- --
Accounts payable transferred to note payable........................... -- 88,079 --
----------- ----------- ------------
----------- ----------- ------------
Acquisition of WTVY-TV:
Cash purchase price................................................ $ 26,698,516
------------
------------
Property and equipment acquired at fair market value............... 7,533,196
Intangible assets acquired......................................... 21,306,181
Other, net......................................................... (140,861)
------------
28,698,516
Less: Application of advance to affiliate.......................... 2,000,000
------------
$ 26,698,516
------------
------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-9
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(NOTE A) -- NATURE OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
NATURE OF BUSINESS: Benedek Broadcasting Corporation ('Benedek
Broadcasting') owns and operates nine television stations located throughout the
United States which operate under network affiliation contracts. The networks
provide programs to the affiliated stations and the stations sell commercial
time during the programs to national, regional, and local advertisers. The
networks also sell commercial time during the programs to national advertisers.
Credit arrangements are determined on an individual customer basis.
BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of Benedek Broadcasting and Benedek Broadcasting Company, L.L.C. (the
'LLC'), a 99% owned subsidiary. All significant intercompany items and
transactions have been eliminated in the consolidated financial statements.
SIGNIFICANT ACCOUNTING POLICIES
(1) ACCOUNTING ESTIMATES:
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts in the consolidated
financial statements and the accompanying notes. Actual results could differ
from those estimates.
(2) CASH EQUIVALENTS AND CONCENTRATION:
Benedek Broadcasting considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
At various times during the periods, Benedek Broadcasting had cash and cash
equivalents on deposit with a financial institution in excess of federal
depository insurance and it has not experienced any credit losses on these
deposits.
(3) REVENUES:
Revenue related to the sale of advertising, network compensation and
contracted time is recognized at the time of broadcast. Net revenues are shown
net of agency and national representatives commissions.
Deferred revenue relates to network compensation due from the network at
inception of the network affiliation agreement. This revenue is recognized over
the life of the agreement on a straight-line method. In 1995, Benedek
Broadcasting signed an agreement with a network which provided a $5,000,000
payment, $2,500,000 of which was receivable at December 31, 1995 and
subsequently paid in February 1996. Since this payment is earned over the life
of the affiliation agreement, it will be recognized over ten years.
(4) BARTER TRANSACTIONS:
Revenue from barter transactions (advertising provided in exchange for
goods and services) is recognized as income when advertisements are broadcast
and merchandise or services received are charged to expense (or capitalized as
appropriate) when received or used. The transactions are recorded at the fair
market value of the asset or service received.
(5) PROGRAM BROADCAST RIGHTS AND LIABILITIES:
Program broadcast rights represent rights for the telecast of feature
length motion pictures, series produced for television and other films, and are
presented at the lower of unamortized cost or net
F-10
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
realizable value. Each agreement is recorded as an asset and liability when the
license period begins and the program is available for its first showing.
Program broadcast rights are amortized on a straight-line method over the life
of the contract, which is included in selling, technical and program expenses.
The agreements are classified between current and long-term according to the
estimated time of future usage. The related liability is classified between
current and long-term on the basis of the payment terms. The amounts recorded as
rights and liabilities prior to December 31, 1995 have been reclassified to
conform with the 1995 presentation which at December 31, 1994, was a reduction
of approximately $4,806,000.
(6) DEFERRED LOAN AND ACQUISITION COSTS:
Deferred loan costs are amounts incurred in connection with long-term
financing. The costs are amortized on a straight-line method over the terms of
the related debt security. Costs incurred in connection with long-term financing
which is not consummated are expensed at the point in time when the negotiation
on the financing ceases. Included in other interest for the year ended December
31, 1994 are costs incurred in 1994 of approximately $900,000 related to
financing which was not consummated.
Acquisition costs are amounts incurred in connection with acquiring
additional television stations. Costs incurred in connection with acquisitions
which are not consummated are expensed at the point of time when the negotiation
on the acquisition ceases. The acquisition costs related to successful
acquisitions are treated as part of the purchase price and are allocated to the
assets purchased.
(7) PROPERTY AND EQUIPMENT:
Property and equipment are recorded at cost and depreciated using the
straight-line method over the following estimated ranges of useful lives:
<TABLE>
<CAPTION>
YEARS
---------
<S> <C>
Buildings and improvements................................................ 5-40
Towers.................................................................... 5-12
Transmission equipment.................................................... 3-10
Other equipment........................................................... 2-5
</TABLE>
Benedek Broadcasting records amortization expense on leased assets with the
depreciation expense on owned assets. Gains and losses on the disposition of
property and equipment are insignificant and included in depreciation and
amortization on the statement of operations.
(8) INTANGIBLE ASSETS:
Intangible assets, which include FCC licenses, network affiliation
agreements and goodwill, have been recorded at cost and are amortized over 40
years using the straight-line method.
Benedek Broadcasting reviews their intangibles periodically to determine
potential impairment by comparing the carrying value of the intangible with the
undiscounted anticipated future cash flows of the related property before
interest charges. If the future cash flows are less than the carrying value, the
Company would obtain an appraisal on the property and adjust the carrying value
of the intangibles to the appraisal value if the appraisal value is less than
the carrying value.
(9) OTHER INTEREST EXPENSE:
Other interest includes interest expense due to the increase in the BBC
Warrants (as defined), contingent equity value, accrued interest added to
long-term debt balances, deferred loan cost amortization, financing costs not
consummated, and accretion of discounts.
F-11
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(10) INCOME TAXES:
Benedek Broadcasting, with the consent of its stockholder, has elected to
be taxed as an 'S' Corporation under sections of the federal and state income
tax laws, which provide that, in lieu of corporation income taxes, the
stockholder accounts for items of income, deductions, losses and credits.
Therefore, historical net income (loss) does not include a provision (refund)
for corporate income taxes.
The LLC files a partnership tax return. Benedek Broadcasting and the
minority stockholder report their respective shares of the LLC's items of
income, deduction, losses and credits.
(11) FAIR VALUE OF FINANCIAL INSTRUMENTS:
Financial instruments include cash, short-term debt, current receivables
and payables, and fixed rate long-term debt. For each class of financial
instruments, the carrying amount approximates fair value.
(12) EMPLOYEE BENEFITS:
Benedek Broadcasting has a defined contribution plan covering all eligible
employees. The contribution is at the discretion of the Board of Directors.
Benedek Broadcasting self-insures for health benefits which are provided to
all full time employees with specified periods of service and maintains
insurance coverage for claims in excess of specific and annual aggregate limits.
(13) EMERGING ACCOUNTING STANDARDS:
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 123, 'Accounting for Stock Based Compensation'
in October 1995, which establishes financial accounting and reporting standards
for stock based employee compensation plans, including stock purchase plans,
stock options, restricted stock, and stock appreciation rights. Benedek
Broadcasting has elected to continue accounting for stock based compensation
under Accounting Principles Board Opinion No. 25. The disclosure requirements of
SFAS No. 123 will be effective for Benedek Broadcasting's financial statements
beginning in 1996. Management does not believe that the implementation of SFAS
123 will have a material effect on its consolidated financial statements.
(NOTE B) -- BUSINESS COMBINATION AND ACQUISITION
(1) BUSINESS COMBINATION:
On March 10, 1995, two affiliates of Benedek Broadcasting, Blue Grass
Television, Inc. ('Blue Grass') and Youngstown Broadcasting Co., Inc.
('Youngstown'), were merged into Benedek Broadcasting. Since these entities had
identical stockholder ownership, this was accounted for in a manner similar to
that in pooling-of-interests accounting.
Benedek Broadcasting issued 92.85 shares of its common stock for all the
outstanding common shares of Blue Grass and Youngstown, and such shares are
treated as if they were outstanding for all periods presented.
On March 10, 1995, the FCC licenses for all the television stations owned
by Benedek Broadcasting were transferred to the newly formed LLC. Benedek
Broadcasting owns 99% of the membership interest in the LLC and its principal
stockholder owns the remaining 1% minority membership interest. The assets,
liabilities and results of operations of the LLC are included in these
consolidated financial statements. The minority membership interest in the LLC
is not significant.
F-12
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(2) ACQUISITION:
On March 31, 1995, Benedek Broadcasting acquired substantially all of the
assets of WTVY-TV which serves Dothan, Alabama and Panama City, Florida for an
aggregate purchase price of approximately $28,699,000. The acquired assets
include property and equipment with a fair market value of approximately
$7,533,000 and program broadcast rights of approximately $93,000, offset by
liabilities under program broadcast rights of approximately $79,000 and net
liabilities under trade and barter contracts of approximately $155,000. Benedek
Broadcasting also assumed commitments of approximately $214,000 related to
programming. The excess of the purchase price over the net assets acquired
totaled approximately $21,306,000 and has been allocated to intangible assets
which will be amortized over 40 years. This transaction has been accounted for
under the purchase method of accounting. Accordingly, the results of operations
for WTVY-TV have been included in the results of operations of these
consolidated financial statements since the date of acquisition.
The pro forma results of operations for the years ended December 31, 1994
and 1995, assuming the acquisition of WTVY-TV had taken place on January 1,
1994, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1995
------------ -----------
<S> <C> <C>
Net revenue............................................................ $ 51,582,464 $51,972,804
Operating expenses..................................................... 35,647,105 37,577,459
Financial expense...................................................... 16,442,853 16,173,049
------------ -----------
(Loss) before extraordinary item.................................. (507,494) (1,777,704)
Extraordinary item..................................................... -- 6,863,762
------------ -----------
Net income (loss)................................................. $ (507,494) $ 5,086,058
------------ -----------
------------ -----------
</TABLE>
(NOTE C) -- RELATED PARTY TRANSACTIONS
(1) NOTE RECEIVABLE FROM STOCKHOLDER:
On March 31, 1993, Benedek Broadcasting recorded a bonus of $1,400,377 to
its officer-stockholder and declared a dividend of $1,003,813 which were offset
against a note receivable and accrued interest from the stockholder.
(2) ADMINISTRATIVE SERVICES:
Benedek Broadcasting paid management fees for accounting services of
approximately $208,000 (two months) and $1,309,000 in 1993 and 1994 to a company
which was affiliated through common ownership. These services were terminated
January 1, 1995.
(3) BENEDEK ACQUISITION CORPORATION:
In December 1994, Benedek Acquisition Corporation, a company affiliated
through common ownership, entered into a definitive agreement to acquire
substantially all of the assets of WTVY-TV Dothan, Alabama. In conjunction with
the agreement, Benedek Broadcasting advanced $2,000,000 to Benedek Acquisition
Corporation which was used as a deposit on the purchase. In 1995, Benedek
Acquisition Corporation assigned to Benedek Broadcasting its rights under the
purchase agreement to acquire the television station. (See Note B).
(4) STOCK OPTION AGREEMENTS:
In 1988 a key employee was granted an option, expiring 1998, to purchase
2.75 shares of common stock of Benedek Broadcasting for $206,539.
F-13
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On March 10, 1995, Benedek Broadcasting granted the key employee an
additional option, expiring 2004, to acquire 5.03 shares of common stock of
Benedek Broadcasting at an aggregate exercise price of $986,000. This option,
along with the 1988 option, will entitle the key employee to shares representing
5% of the outstanding common stock of Benedek Broadcasting after giving effect
to the issuance thereof. The options were issued at fair market value on the
date of grant.
(5) LEASES:
In 1993, Benedek Broadcasting entered into a lease agreement for mobile
transmission equipment with an officer. The agreement calls for total rental
payments of approximately $163,000 over its three year term and is recorded as
an operating lease. In May 1994, Benedek Broadcasting entered into a lease
agreement for station equipment with an affiliated company. The agreement calls
for total rental payments of approximately $132,000 over its five year term and
is recorded as an operating lease. Effective January 1, 1995 the lease agreement
with the affiliated company was terminated and the related assets and the
associated note payable were transferred to Benedek Broadcasting.
(NOTE D) -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1995
----------- -----------
<S> <C> <C>
Land and improvements.................................................. $ 1,208,337 $ 1,259,938
Buildings and improvements............................................. 11,151,081 12,183,267
Towers................................................................. 3,203,647 5,786,099
Transmission and studio equipment...................................... 19,674,920 23,205,748
Office equipment....................................................... 2,318,893 3,024,834
Records and tapes...................................................... 20,788 22,732
Transportation equipment............................................... 429,378 708,152
Construction in progress............................................... 10,628 150,188
----------- -----------
38,017,672 46,340,958
Less accumulated depreciation and amortization......................... 23,800,709 26,305,243
----------- -----------
$14,216,963 $20,035,715
----------- -----------
----------- -----------
</TABLE>
(NOTE E) -- INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1995
----------- -----------
<S> <C> <C>
Goodwill............................................................... $20,883,109 $28,837,585
FCC licenses........................................................... 7,389,610 15,304,138
Network affiliations................................................... 12,570,077 15,998,174
Other.................................................................. 16,885 280,720
----------- -----------
$40,859,681 $60,420,617
----------- -----------
----------- -----------
</TABLE>
Intangible assets are recorded net of accumulated amortization of
$11,580,054 and $13,325,299 as of December 31, 1994 and 1995, respectively.
F-14
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(NOTE F) -- NOTES PAYABLE, GAIN ON EXTINGUISHMENT OF DEBT AND CAPITAL LEASES
PAYABLE
(1) NOTES PAYABLE:
During 1995, Benedek Broadcasting issued $135,000,000 of 11 7/8% Senior
Secured Notes due 2005 (the 'Senior Secured Notes'). The net proceeds of the
Senior Secured Notes were used, together with available cash, to (i) refinance
certain indebtedness, (ii) finance the acquisition of WTVY-TV and (iii) pay fees
and expenses in connection with the offering. The Senior Secured Notes have been
registered with the Securities and Exchange Commission in a registration
statement declared effective in November 1995.
The Senior Secured Notes bear interest at the rate of 11 7/8%, payable
semiannually on March 1 and September 1 of each year and mature in March 2005.
The Senior Secured Notes may be redeemed by Benedek Broadcasting in whole or in
part after March 1, 2000 subject to certain prepayment premiums. The Senior
Secured Notes contain various restrictive covenants relating to limitations on
dividends, transactions with affiliates, further issuance of debt, and sales of
assets, among others. As of December 31, 1995, Benedek Broadcasting was in
compliance with these covenants.
The Senior Secured Notes are collateralized by Benedek Broadcasting's 99%
interest in the LLC, certain agreements and contract rights related to the
stations which includes network affiliation agreements and certain general
intangibles. The minority membership interest holder has also entered into a
pledge and security agreement providing for the pledge of his 1% interest in the
LLC.
Notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1994 1995
------------ ------------
<S> <C> <C>
Senior Secured Notes................................................ $ -- $135,000,000
Senior secured note, with interest at 9.5%.......................... 23,729,837 --
Series notes, with interest ranging from 10.36% to 11.325%.......... 36,095,000 --
Subordinated series notes, with interest ranging from 7.728% to
15%............................................................... 19,701,084 --
Subordinated capital notes, net of unamortized discount of $407,000,
and $573,730, respectively, interest at 11.5% compounded
quarter-annually with interest and principal payable December 31,
1996.............................................................. 8,203,000 --
BBC Warrants........................................................ 18,978,618 --
Capital leases and other............................................ 899,110 767,025
------------ ------------
107,606,649 135,767,025
Less current maturities............................................. 8,441,031 318,077
------------ ------------
$ 99,165,618 $135,448,948
------------ ------------
------------ ------------
</TABLE>
At December 31, 1995, the notes provide for annual reductions as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- --------------------------------------------------------
<S> <C>
1996.......................................... $ 318,077
1997.......................................... 256,980
1998.......................................... 144,882
1999.......................................... 45,778
2000.......................................... 1,308
Thereafter.................................... 135,000,000
------------
$135,767,025
------------
------------
</TABLE>
In 1994, Benedek Broadcasting recorded contingent interest of $1,000,000
relating to certain note agreements, which were paid in 1995 in connection with
the refinancing.
F-15
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(2) CAPITAL NOTES, DETACHABLE WARRANTS AND GAIN ON EARLY EXTINGUISHMENT OF DEBT:
Subordinated capital notes were issued with detachable stock purchase
warrants (the 'BBC Warrants'), which provided the right to purchase 45 shares of
common stock of Benedek Broadcasting for $.10 per share. The agreement
guaranteed an annual pretax return of 27.5% including interest paid and the
implied increase in value of the warrants. The original value assigned to the
BBC Warrants of $1,290,000 was reflected as debt discount and was amortized over
the term of these notes using the interest method.
In 1995, Benedek Broadcasting exercised an option to call the warrants for
a specific ladder call price of $7,850,912. The difference between this ladder
price and the carrying value of the warrants of $18,978,618 was recorded as an
extraordinary gain of $11,128,000 reduced by losses of approximately $1,140,000
from unrecognized deferred loan costs, approximately $2,749,000 of prepayment
premiums and contingent payments and $375,000 of unamortized debt discount
related to the existing debt.
(3) CAPITAL LEASES:
Benedek Broadcasting leases equipment under agreements which expire in 1996
through 2000. These leases are considered capital leases, and the leased
property and the related liabilities have been recorded at the present value of
the future payments using interest rates ranging from 6.9% to 15.8%.
The assets recorded under capital leases and the related accumulated
amortization are included in the accompanying balance sheets as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
-------- --------
<S> <C> <C>
Transmission and studio equipment............................................. $396,763 $396,763
Office equipment.............................................................. 164,839 219,972
Transportation equipment...................................................... 23,170 23,170
-------- --------
584,772 639,905
Less accumulated amortization................................................. 230,721 502,793
-------- --------
$354,051 $137,112
-------- --------
-------- --------
</TABLE>
(NOTE G) -- PROGRAM BROADCAST RIGHTS PAYABLE
(1) Program broadcast rights and program broadcast rights payable consist
of the following:
<TABLE>
<CAPTION>
PROGRAM BROADCAST PROGRAM BROADCAST
RIGHTS RIGHTS PAYABLE
----------------- -----------------
<S> <C> <C>
Balance at December 31, 1993................................. $ 1,831,462 $ 2,012,537
Contracts acquired...................................... 2,044,692 2,044,692
Amortization............................................ (2,103,606) --
Payments................................................ -- (1,887,768)
----------------- -----------------
Balance at December 31, 1994................................. 1,772,548 2,169,461
Contracts acquired...................................... 2,651,642 2,637,616
Amortization............................................ (2,161,545) --
Payments................................................ -- (2,131,990)
----------------- -----------------
Balance at December 31, 1995................................. $ 2,262,645 $ 2,675,087
----------------- -----------------
----------------- -----------------
</TABLE>
(2) The current maturities of program broadcast rights payable consist of
the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1995
---------- ----------
<S> <C> <C>
Program contracts, due in varying installments through 2000.............. $2,169,461 $2,675,087
Less current maturities.................................................. 1,920,745 2,042,643
---------- ----------
Long-term portion........................................................ $ 248,716 $ 632,444
---------- ----------
---------- ----------
</TABLE>
F-16
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The maturities of the contracts are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- -----------------------------------------------------------
<S> <C>
1996............................................. $2,042,643
1997............................................. 398,225
1998............................................. 206,486
1999............................................. 23,833
2000............................................. 3,900
----------
$2,675,087
----------
----------
</TABLE>
In addition, Benedek Broadcasting has entered into noncancelable
commitments for future program rights aggregating approximately $4,745,800 as of
December 31, 1995.
(NOTE H) -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1995
---------- ----------
<S> <C> <C>
Trade payables................................................. $ 499,618 $ 379,901
Barter, net.................................................... 358,308 292,051
Compensation and benefits...................................... 1,367,649 1,397,796
Interest....................................................... -- 5,343,754
Other.......................................................... 396,594 410,794
---------- ----------
$2,622,169 $7,824,296
---------- ----------
---------- ----------
</TABLE>
(NOTE I) -- LEASES
Benedek Broadcasting leases land, office space and office and
transportation equipment under agreements which expire from 1996 through 2004
and require various minimum annual rentals. The leases also require payment of
the normal maintenance, real estate taxes, and insurance on the properties.
Benedek Broadcasting has the option to acquire one of the leased premises on
each of May 1, 2000 and 2005 for $650,000 and $750,000, respectively.
The approximate total minimum rental commitments at December 31, 1995 under
these leases are due as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- -----------------------------------------------------------
<S> <C>
1996............................................. $ 582,700
1997............................................. 323,900
1998............................................. 250,400
1999............................................. 213,900
2000............................................. 186,600
Thereafter....................................... 512,900
----------
$2,070,400
----------
----------
</TABLE>
Total rental expense under these agreements and other monthly rentals for
the years ended 1993, 1994 and 1995 was approximately $455,000, $463,000 and
$626,000, respectively, including the related party lease discussed in Note C.
Benedek Broadcasting is a lessor of certain portions of its real property
to various organizations. Total rental income under these agreements for the
years ended 1993, 1994 and 1995 was approximately $233,000, $280,000 and
$324,000, respectively.
(NOTE J) -- PRO FORMA INCOME TAXES
Net income (loss) in the accompanying statements of operations does not
include a pro forma adjustment for income tax expense which would have been
provided had Benedek Broadcasting been taxed as a corporation because Benedek
Broadcasting would not have a tax provision due to net operating loss
carryforwards and a valuation allowance.
F-17
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Under the provision of Statement of Financial Accounting Standards (SFAS)
No. 109, the deferred tax asset and liabilities consist of the following
components:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Loss carryforwards............................... $ 8,337,000 $ 6,823,000 $ 7,063,000
Non-deductible allowances and other.............. 80,000 70,000 416,000
Capital note warrants............................ 4,874,000 4,874,000 --
Network agreement................................ -- -- 1,900,000
Intangibles...................................... 1,739,000 2,013,000 2,131,000
----------- ----------- -----------
15,030,000 13,780,000 11,510,000
Less valuation allowance.............................. (14,372,000) (13,020,000) (10,628,000)
----------- ----------- -----------
658,000 760,000 882,000
----------- ----------- -----------
Deferred tax liabilities:
Property and equipment........................... 658,000 760,000 882,000
----------- ----------- -----------
$ -- $ -- $ --
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
A valuation allowance has been established since in the opinion of
management, it is more likely than not that the deferred tax assets will not be
realized.
The difference between the statutory federal income tax rate of 35% and the
pro forma income taxes reported in the statements of operations are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1993 1994 1995
---------- ----------- -----------
<S> <C> <C> <C>
Computed 'expected' tax expense (credits).............. ($1,762,000) $ 715,000 $ 2,118,000
Increase (decrease) in taxes resulting from:
State and local taxes, net of federal benefit..... (171,000) 71,000 242,000
Nondeductible expenses............................ 238,000 461,000 142,000
Change in enacted tax rate........................ (300,000) -- --
Change in valuation allowance before expiration of
net operating loss carryforwards................ 1,995,000 (1,247,000) (2,502,000)
---------- ----------- -----------
$ -- $ -- $ --
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
Under provisions of the Internal Revenue Code, Benedek Broadcasting has
approximately $414,400 of actual net operating loss carryforwards which arose
prior to its election to be an 'S' Corporation, which expire in varying amounts
from December 31, 1996 to 2001. These net operating loss carryforwards will only
be available to offset future tax liabilities of Benedek Broadcasting if it
terminates the 'S' Corporation status.
(NOTE K) -- PROGRAMMING COMMITMENTS
Benedek Broadcasting has assumed or has entered into commitments for future
syndicated programming. Future payments with respect to these commitments for
the years ending December 31 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- -----------------------------------------------------------
<S> <C>
1996............................................. $ 503,200
1997............................................. 1,307,300
1998............................................. 1,309,500
1999............................................. 1,181,400
2000............................................. 444,400
----------
$4,745,800
----------
----------
</TABLE>
F-18
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(NOTE L) -- ACQUISITIONS AND SUBSEQUENT EVENTS
(1) ACQUISITIONS:
On November 22, 1995, Benedek Broadcasting entered into an agreement,
subject to regulatory approvals, to acquire the assets of five television
stations (and four satellite stations) for a total purchase price of
$54,500,000.
On December 15, 1995, Benedek Broadcasting entered into a stock purchase
agreement to acquire all the issued and outstanding shares of capital stock of a
corporation which owned and operated eight television stations for a purchase
price of $270,000,000.
Both acquisitions were consummated on June 6, 1996 in conjunction with the
financing arrangements described in (2) below.
(2) SUBSEQUENT EVENTS:
On April 10, 1996, the sole stockholder of Benedek Broadcasting formed
Benedek Communications Corporation ('BCC') in conjunction with the above
acquisitions. At the closing of the acquisitions and related financing
transactions, the sole stockholder of Benedek Broadcasting contributed all of
the outstanding shares of common stock of Benedek Broadcasting to BCC in
exchange for the issuance to him of all of the outstanding shares of common
stock of BCC.
The financing transactions for the acquisitions consisted of (i) BCC
issuing (a) senior subordinated discount notes, (b) units, consisting of
exchangeable preferred stock and warrants to acquire common stock of BCC, and
(c) seller junior discount preferred stock and (ii) Benedek Broadcasting
entering into a new credit agreement. The new credit agreement includes
$128,000,000 term loan facilities and a $15,000,000 revolving credit facility.
These financing transactions were consummated concurrently with the
acquisitions.
On April 18, 1996, Benedek Broadcasting formed Benedek License Corporation
('BLC') in conjunction with the aforementioned acquisitions. On June 6, 1996,
the LLC was merged with BLC and all of the licenses and authorizations issued by
the FCC for the operation of the Stations are now held by BLC.
F-19
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31,
1996
------------
(UNAUDITED)
<S> <C>
ASSETS
Current Assets
Cash and cash equivalents.................................................................. $ 7,381,555
Receivables:
Trade, net, less allowance for doubtful accounts of $241,883.......................... 7,770,821
Other................................................................................. 119,924
Current portion of program broadcast rights................................................ 1,204,839
Prepaid expenses........................................................................... 871,637
------------
Total current assets............................................................. 17,348,776
------------
Property and Equipment.......................................................................... 19,797,949
------------
Intangible Assets............................................................................... 59,952,607
------------
Other Assets
Program broadcast rights, less current portion............................................. 540,810
Deposit on Acquisition..................................................................... 4,000,000
Acquisition costs.......................................................................... 559,928
Deferred loan costs........................................................................ 5,624,178
Land held for sale......................................................................... 109,000
------------
10,833,916
------------
$107,933,248
------------
------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Current maturities of notes and leases payable............................................. $ 304,712
Current maturities of program broadcast rights payable..................................... 1,753,982
Accounts payable and accrued expenses...................................................... 3,643,758
Deferred revenue........................................................................... 500,000
------------
Total current liabilities........................................................ 6,202,452
------------
Long-Term Obligations
Notes and capital leases payable........................................................... 135,377,037
Program broadcast rights payable........................................................... 479,296
Deferred revenue........................................................................... 4,180,123
------------
140,036,456
------------
Commitments
Stockholder's Deficit
Common stock, no par, authorized 200 shares; issued 178.09 shares.......................... 1,046,500
Additional paid-in capital................................................................. 2,758,178
Accumulated deficit........................................................................ (40,629,189)
------------
(36,824,511)
Less 30.24 shares held in treasury......................................................... 1,481,149
------------
(38,305,660)
------------
$107,933,248
------------
------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-20
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
--------------------------
1995 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Net revenues..................................................................... $10,149,581 $11,682,871
----------- -----------
Operating expenses:
Selling, technical and program expenses..................................... 4,413,684 5,537,572
General and administrative.................................................. 1,893,658 2,010,695
Depreciation and amortization............................................... 856,107 1,360,430
Corporate................................................................... 343,256 495,892
----------- -----------
7,506,705 9,404,589
----------- -----------
Operating income....................................................... 2,642,876 2,278,282
Financial income (expense):
Interest expense:
Cash interest.......................................................... (2,410,691) (4,026,253)
Other interest......................................................... (752,658) (100,457)
----------- -----------
(3,163,349) (4,126,710)
Interest income............................................................. 136,906 105,855
----------- -----------
(3,026,443) (4,020,855)
----------- -----------
(Loss) before extraordinary item....................................... (383,567) (1,742,573)
Extraordinary item, gain on early extinguishment of debt......................... 6,863,762 --
----------- -----------
Net income (loss)...................................................... $ 6,480,195 $(1,742,573)
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-21
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
---------------------------
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss).................................................................. $ 6,480,195 $(1,742,573)
Adjustments to reconcile net income (loss) to net cash (used in) operating
activities:
Amortization of program broadcast rights....................................... 510,967 597,308
Depreciation and amortization.................................................. 529,889 892,420
(Gain) on early extinguishment of debt......................................... (6,863,762) --
Amortization of intangibles and deferred loan costs............................ 482,505 568,467
(Gain) loss on sale of property and equipment.................................. (2,853) --
Payment of deferred and contingent interest.................................... (4,405,746) --
Payment of prepayment premiums................................................. (2,748,896) --
Other.......................................................................... 31,691 --
Change in assets and liabilities, net of effects of acquisition:
Receivables.................................................................... 539,518 4,638,951
Prepaid expenses............................................................... (204,128) (294,940)
Payments on program broadcast rights payable................................... (429,021) (522,121)
Accounts payable and accrued expenses.......................................... 593,679 (4,222,411)
Deferred income................................................................ -- (69,877)
Contingent and deferred interest payable....................................... 567,533 --
------------ -----------
Net cash (used in) operating activities.................................... (4,918,429) (154,776)
------------ -----------
Cash Flows From Investing Activities
Purchase of property and equipment................................................. (359,996) (612,766)
Proceeds from sale of equipment.................................................... 9,173 --
Payment for acquisition of station................................................. (26,558,152) --
Deposit on acquisition............................................................. -- (1,000,000)
Payment of acquisition costs....................................................... -- (334,569)
Other.............................................................................. -- (15)
------------ -----------
Net cash (used in) investing activities.................................... (26,908,975) (1,947,350)
------------ -----------
Cash Flows From Financing Activities
Principal payments on notes, including capital lease payables...................... (96,075,529) (85,276)
Proceeds from senior secured debt issue............................................ 135,000,000 --
Payment of debt acquisition costs.................................................. (5,085,944) (99,374)
------------ -----------
Net cash provided by (used in) financing activities........................ 33,838,527 (184,650)
------------ -----------
Increase (decrease) in cash and cash equivalents........................... 2,011,123 (2,286,776)
Cash and cash equivalents:
Beginning.......................................................................... 4,617,242 9,668,331
------------ -----------
Ending............................................................................. $ 6,628,365 $ 7,381,555
------------ -----------
------------ -----------
Supplemental Disclosure of Cash Flow Information
Cash payments for interest......................................................... $ 5,894,091 $ 8,034,064
------------ -----------
------------ -----------
Supplemental Schedule of Non-Cash Investing and Financing Activities
Acquisition of program broadcast rights............................................ $ 318,442 $ 80,312
Note payable and capital lease obligation incurred for purchase of equipment....... 107,672 --
Equipment acquired by barter transactions.......................................... 84,676 41,888
------------ -----------
------------ -----------
Acquisition of WTVY-TV:
Cash purchase price............................................................ $ 26,558,152 $ --
------------ -----------
------------ -----------
Property and equipment acquired at fair market value........................... 7,533,196 --
Intangible assets acquired..................................................... 21,306,181 --
Other, net..................................................................... (281,225) --
------------ -----------
28,558,152 --
Less: Application of advance to affiliate...................................... 2,000,000 --
------------ -----------
$ 26,558,152 $ --
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-22
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
(NOTE A) -- NATURE OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
NATURE OF BUSINESS: Benedek Broadcasting Corporation ('Benedek
Broadcasting') owns and operates nine television stations located throughout the
United States which operate under network affiliation contracts. The networks
provide programs to the affiliated stations and the stations sell commercial
time during the programs to national, regional, and local advertisers. The
networks also sell commercial time during the programs to national advertisers.
Credit arrangements are determined on an individual customer basis.
BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of Benedek Broadcasting and Benedek Broadcasting Company, L.L.C. (the
'LLC'), a 99% owned subsidiary. All significant intercompany items and
transactions have been eliminated in the consolidated financial statements. The
financial statements include all adjustments, consisting of normal and recurring
adjustments, which are considered necessary in the opinion of management for the
fair presentation of the financial position as of March 31, 1996 and the results
of operations and cash flows for the three months ended March 31, 1995 and 1996.
These financial statements do not include all the information and footnotes
required by generally accepted accounting principles.
Operating results for the three month period ended March 31, 1996 are not
necessarily indicative of the operating results that may be expected for the
fiscal year ending December 31, 1996.
(NOTE B) -- BUSINESS COMBINATION, ACQUISITION AND SUBSEQUENT EVENTS
(1) BUSINESS COMBINATION:
On March 10, 1995, two affiliates of Benedek Broadcasting, Blue Grass
Television, Inc. ('Blue Grass') and Youngstown Broadcasting Co., Inc.
('Youngstown'), were merged into Benedek Broadcasting. Since these entities had
identical stockholder ownership, this was accounted for in a manner similar to
that in pooling-of-interests accounting.
Benedek Broadcasting issued 92.85 shares of its common stock for all the
outstanding common shares of Blue Grass and Youngstown, and such shares are
treated as if they were outstanding for all periods presented.
On March 10, 1995, the FCC licenses for all the television stations owned
by Benedek Broadcasting were transferred to the newly formed LLC. Benedek
Broadcasting owns 99% of the membership interest in the LLC and its principal
stockholder owns the remaining 1% minority membership interest. The assets,
liabilities and results of operations of the LLC are included in these
consolidated financial statements. The minority membership interest in the LLC
is not significant.
(2) ACQUISITION:
On March 31, 1995, Benedek Broadcasting acquired substantially all of the
assets of WTVY-TV which serves Dothan, Alabama and Panama City, Florida for an
aggregate purchase price of approximately $28,699,000. The acquired assets
include property and equipment with a fair market value of approximately
$7,533,000 and program broadcast rights of approximately $93,000, offset by
liabilities under program broadcast rights of approximately $79,000 and net
liabilities under trade and barter contracts of approximately $155,000. Benedek
Broadcasting also assumed commitments of approximately $214,000 related to
programming. The excess of the purchase price over the net assets acquired
totaled approximately $21,306,000 and has been allocated to intangible assets
which will be amortized over 40 years. This transaction has been accounted for
under the purchase method of accounting. Accordingly, the results of operations
for WTVY-TV have been included in the results of operations of these
consolidated financial statements since the date of acquisition.
F-23
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UNAUDITED
The pro forma results of operations for the three months ended March 31,
1995, assuming the acquisition of WTVY-TV had taken place on January 1, 1994, is
as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
1995
------------
<S> <C>
Net revenue......................................................... $ 11,793,367
Operating expenses.................................................. 9,346,343
Financial expense................................................... 3,952,089
------------
(Loss) before extraordinary item............................... (1,505,065)
Extraordinary item.................................................. 6,863,762
------------
Net income (loss).............................................. $ 5,358,697
------------
------------
</TABLE>
(3) SUBSEQUENT EVENTS
On November 22, 1995, Benedek Broadcasting entered into an agreement,
subject to regulatory approvals, to acquire the assets of five television
stations (and four satellite stations) for a total purchase price of
$54,500,000.
On December 15, 1995, Benedek Broadcasting entered into a stock purchase
agreement to acquire all the issued and outstanding shares of capital stock of a
corporation which owned and operated eight television stations for a purchase
price of $270,000,000.
Both acquisitions were consummated on June 6, 1996 in conjunction with the
financing arrangements described below.
On April 10, 1996, the sole stockholder of Benedek Broadcasting formed
Benedek Communications Corporation ('BCC') in conjunction with the above
acquisitions. At the closing of the acquisitions and related financing
transactions, the sole stockholder of Benedek Broadcasting contributed all of
the outstanding shares of common stock of Benedek Broadcasting to BCC in
exchange for the issuance to him of all of the outstanding shares of common
stock of BCC.
The financing transactions for the acquisitions consisted of (i) BCC
issuing (a) senior subordinated discount notes, (b) units, consisting of
exchangeable preferred stock and warrants to acquire common stock of BCC, and
(c) seller junior discount preferred stock and (ii) Benedek Broadcasting
entering into a new credit agreement. The new credit agreement includes
$128,000,000 term loan facilities and a $15,000,000 revolving credit facility.
These financing transactions were consummated concurrently with the
acquisitions.
On April 18, 1996, Benedek Broadcasting formed Benedek License Corporation
('BLC') in conjunction with the aforementioned acquisitions. On June 6, 1996,
the LLC merged with BLC and all of the licenses and authorizations issued by the
FCC for the operation of the Stations are now held by BLC.
(NOTE C) -- NOTES PAYABLE, GAIN ON EXTINGUISHMENT OF DEBT AND CAPITAL LEASES
PAYABLE
(1) NOTES PAYABLE:
During 1995, Benedek Broadcasting issued $135,000,000 of 11 7/8% Senior
Secured Notes due 2005 (the 'Senior Secured Notes'). The net proceeds of the
Senior Secured Notes were used, together with available cash, to (i) refinance
certain indebtedness, (ii) finance the acquisition of WTVY-TV and (iii) pay fees
and expenses in connection with the offering. The Senior Secured Notes have
F-24
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UNAUDITED
been registered with the Securities and Exchange Commission in a registration
statement declared effective in November 1995.
The Senior Secured Notes bear interest at the rate of 11 7/8%, payable
semiannually on March 1 and September 1 of each year and mature in March 2005.
The Senior Secured Notes may be redeemed by Benedek Broadcasting in whole or in
part after March 1, 2000 subject to certain prepayment premiums. The Senior
Secured Notes contain various restrictive covenants relating to limitations on
dividends, transactions with affiliates, further issuance of debt, and sales of
assets, among others.
The Senior Secured Notes are collateralized by Benedek Broadcasting's 99%
interest in the LLC, certain agreements and contract rights related to the
stations which includes network affiliation agreements and certain general
intangibles. The minority membership interest holder has also entered into a
pledge and security agreement providing for the pledge of his 1% interest in the
LLC.
Notes payable consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
1996
--------------
<S> <C>
Senior Secured Notes.............................................. $ 135,000,000
Capital leases and other.......................................... 681,749
--------------
135,681,749
Less current maturities........................................... 304,712
--------------
$ 135,377,037
--------------
--------------
</TABLE>
(2) CAPITAL NOTES, DETACHABLE WARRANTS AND GAIN ON EARLY EXTINGUISHMENT OF DEBT:
Subordinated capital notes were issued with detachable stock purchase
warrants (the 'BBC Warrants'), which provided the right to purchase 45 shares of
common stock of Benedek Broadcasting for $.10 per share. The agreement
guaranteed an annual pretax return of 27.5% including interest paid and the
implied increase in value of the warrants. The original value assigned to the
BBC Warrants of $1,290,000 was reflected as debt discount and was amortized over
the term of these notes using the interest method.
In 1995, Benedek Broadcasting exercised an option to call the warrants for
a specific ladder call price of $7,850,912. The difference between this ladder
price and the carrying value of the warrants of $18,978,618 was recorded as an
extraordinary gain of $11,128,000 reduced by losses of approximately $1,140,000
from unrecognized deferred loan costs, approximately $2,749,000 of prepayment
premiums and contingent payments and $375,000 of unamortized debt discount
related to the existing debt.
(NOTE D) -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
1996
----------
<S> <C>
Trade payables....................................................... $ 335,315
Barter, net.......................................................... 238,866
Compensation and benefits............................................ 1,332,756
Interest............................................................. 1,335,943
Other................................................................ 400,878
----------
$3,643,758
----------
----------
</TABLE>
F-25
<PAGE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
STAUFFER COMMUNICATIONS, INC.:
We have audited the accompanying balance sheets of the TV Division of
Stauffer Communications, Inc. (a Delaware corporation) (the Company) as of
December 31, 1994 and 1995, and the related statements of income, division
equity and cash flows for each of the years in the three-year period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the TV Division of Stauffer
Communications, Inc., as of December 31, 1994 and 1995 and its operations and
its cash flows for each of the years in the three-year period ended December 31,
1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
March 1, 1996
F-26
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
BALANCE SHEETS
DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash........................................................................ $ 465,428 $ 209,987
Accounts receivable, net of reserve for doubtful accounts of $75,000 in 1994
and $99,000 in 1995....................................................... 3,750,721 3,515,457
Current portion of deferred film costs...................................... 769,513 941,766
Prepayments................................................................. 165,717 81,180
----------- -----------
Total current assets................................................... 5,151,379 4,748,390
Plant and Equipment, at Cost:
Land........................................................................ 867,937 867,937
Building.................................................................... 3,893,047 3,929,046
Equipment................................................................... 22,180,248 22,598,639
Construction in progress.................................................... 70,752 2,981
----------- -----------
27,011,984 27,398,603
Less -- Accumulated depreciation............................................ (15,145,074) (16,606,429)
----------- -----------
11,866,910 10,792,174
Other Assets:
Excess of cost over net assets of acquired companies, less accumulated
amortization of $8,028,122 in 1994 and $8,775,815 in 1995................. 8,021,715 7,274,023
Long-term portion of deferred film costs.................................... 614,619 1,055,472
Other....................................................................... 37,682 7,906
----------- -----------
8,674,016 8,337,401
----------- -----------
$25,692,305 $23,877,965
----------- -----------
----------- -----------
LIABILITIES AND DIVISION EQUITY
Current Liabilities:
Current maturities of film contract obligations............................. $ 606,173 $ 715,303
Accounts payable............................................................ 199,261 145,113
Accrued expenses............................................................ 615,448 569,335
----------- -----------
Total current liabilities.............................................. 1,420,882 1,429,751
Film Contract Obligations, Less Current Maturities............................... 189,857 911,342
Contingencies
Division Equity.................................................................. 24,081,566 21,536,872
----------- -----------
$25,692,305 $23,877,965
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-27
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Broadcast Operating Revenues:
Local...................................................... $11,815,748 $11,968,705 $12,076,769
National................................................... 5,222,225 6,045,572 5,652,105
Political.................................................. 77,979 2,222,724 87,345
Network programming........................................ 1,291,557 1,305,329 1,491,786
Other...................................................... 607,571 552,713 457,807
----------- ----------- -----------
19,015,080 22,095,043 19,765,812
Less --
Agency commissions....................................... 1,938,824 2,432,430 2,108,974
Representative's commissions............................. 515,332 706,626 512,319
----------- ----------- -----------
Net broadcast revenue................................. 16,560,924 18,955,987 17,144,519
Operating Expenses:
News-editorials............................................ 2,240,225 2,292,252 2,382,486
Technical.................................................. 1,249,882 1,270,885 1,347,207
Program.................................................... 3,145,641 2,901,656 2,986,263
Depreciation and amortization.............................. 2,264,114 2,303,848 2,228,832
Rent expense, net of sublease income....................... 223,798 224,188 192,685
Sales and promotions....................................... 2,936,347 3,219,720 2,949,498
General and administrative................................. 3,445,543 3,425,632 3,581,764
----------- ----------- -----------
Total operating expenses.............................. 15,505,550 15,638,181 15,668,735
----------- ----------- -----------
Income from operations................................ 1,055,374 3,317,806 1,475,784
Other Nonoperating Income....................................... 14,434 37,228 78,220
----------- ----------- -----------
Division-Net Income............................................. $ 1,069,808 $ 3,355,034 $ 1,554,004
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-28
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
STATEMENTS OF DIVISION EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Balance, Beginning of Year...................................... $25,636,696 $25,024,736 $24,081,566
Division net income........................................ 1,069,808 3,355,034 1,554,004
Cash transfers to parent, net.............................. (1,681,768) (4,298,204) (4,098,698)
----------- ----------- -----------
Balance, End of Year............................................ $25,024,736 $24,081,566 $21,536,872
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-29
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income.................................................. $ 1,069,808 $ 3,355,034 $ 1,554,004
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation........................................... 1,516,422 1,556,156 1,481,140
Amortization of intangibles............................ 747,692 747,692 747,692
Amortization of deferred film costs.................... 1,276,500 1,044,561 1,025,491
(Increase) decrease in other assets.................... (31,234) (40,655) 114,311
(Increase) decrease in accounts receivable............. (219,462) (133,612) 235,264
Increase (decrease) in liabilities..................... (70,849) 70,683 (100,261)
Payments for film contract obligations................. (1,326,358) (1,081,130) (807,980)
----------- ----------- -----------
Total adjustments................................. 1,892,711 2,163,695 2,695,657
----------- ----------- -----------
Net cash provided by operating activities......... 2,962,519 5,518,729 4,249,661
Cash Flows from Investing Activities:
Property, plant and equipment, net.......................... (1,182,472) (934,294) (406,404)
----------- ----------- -----------
Net cash used in financing activities............. (1,182,472) (934,294) (406,404)
Cash Flows from Financing Activities:
Cash transfers to Parent, net............................... (1,681,768) (4,298,204) (4,098,698)
----------- ----------- -----------
Net cash used in financing activities............. (1,681,768) (4,298,204) (4,098,698)
Net Increase (Decrease) in Cash.................................. 98,279 286,231 (255,441)
Cash, Beginning of Year.......................................... 80,918 179,197 465,428
----------- ----------- -----------
Cash, End of Year................................................ $ 179,197 $ 465,428 $ 209,987
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-30
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
1. SUMMARY OF ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying financial statements include the accounts of the TV
Division of Stauffer Communications, Inc. (the 'Parent'). The TV Division
includes the following locations: KMIZ-TV in Columbia, Missouri; KGWN-TV in
Cheyenne, Wyoming; KTVS-TV in Scottsbluff, Nebraska; KSTF-TV in Sterling,
Colorado; KGWC-TV in Casper, Wyoming; KCOY-TV in Santa Maria, California; and
WIBW-TV in Topeka, Kansas. In June 1995, Stauffer Communications, Inc. was
acquired by Morris Communications Company and has continued to operate as a
wholly owned subsidiary under the name Stauffer Communications, Inc.
The Parent has entered into an Assets Purchase and Sale Agreement dated
November 22, 1995, whereby substantially all assets and liabilities of the TV
Division will be sold to Benedek Acquisition Corporation. Closing of this
transaction is contingent upon, among other things, obtaining a final order of
the FCC setting forth its consent to the transaction. The purchase price of
$54,500,000 may be adjusted based on changes in the amount of working capital,
as defined, on the closing date which is anticipated to occur before September
30, 1996.
These financial statements reflect the revenues and expenses of the TV
Division, including those direct expenses of the Division that are paid by the
Parent and charged directly to the Division. Certain expenses incurred by the
Parent have not been allocated to the TV Division. These expenses include
general corporate management, corporate accounting, general corporate legal
service and deferred compensation expense. Additionally, the taxable income of
the TV Division is included in the consolidated tax return of the Parent. No
income tax expense or related current or deferred tax assets or liabilities have
been allocated to the TV Division by the Parent.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
PLANT AND EQUIPMENT
Depreciation of plant and equipment is computed using both accelerated and
straight-line methods. Useful lives are 15 to 45 years for buildings and 3 to 20
years for equipment.
DEFERRED FILM COSTS
In accordance with Statement of Financial Accounting Standards No. 63 (SFAS
No. 63), deferred film costs are recorded at contract price when the license
period begins and all of the following conditions have been met: (a) the cost of
each program is known or reasonably determinable, (b) the program material has
been accepted in accordance with the conditions of the license agreement (c) the
program is available for its first showing or telecast. Contractual agreements
define the life of the license and the number of showings available. Deferred
film cost with lives greater than 12 months are amortized using the
sum-of-the-runs method over the life of the contract. All others are amortized
using the straight-line method. The contract rights estimated to be used within
one year are included in current assets.
Commitments for broadcast contract rights that have been executed, but
which have not been recorded in the accompanying consolidated financial
statements (because they do not meet the criteria prescribed in SFAS No. 63),
were approximately $460,000 as of December 31, 1994, and were insignificant at
December 31, 1995.
F-31
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1995
BARTER TRANSACTIONS
Barter transactions, which represent the exchange of advertising time for
goods or services, are recorded at the estimated fair value of the products or
services received. Barter revenue is recognized when commercials are broadcast
and expenses are recognized when the related products or services are received.
Barter transactions were insignificant in 1993, 1994 and 1995.
DIVISION EQUITY
The TV Division participates in the Parent's cash management system. Under
this system, all cash generated by the TV Division is transferred to the Parent
and all cash requirements of the TV Division are funded by the Parent. These
transfers of funds are reflected in the division equity account.
2. EXCESS OF COST OVER NET ASSETS OF ACQUIRED COMPANIES:
Excess of cost over net assets of acquired companies consists of goodwill
and other intangible assets. Goodwill is amortized over periods of 20 to 40
years. Other intangible assets are amortized over periods of 4 to 18 years.
Amortization of such assets was approximately $748,000 in 1993, 1994 and 1995.
The following table details the components of these assets:
<TABLE>
<CAPTION>
ORIGINAL ACCUMULATED NET BOOK
BALANCE AMORTIZATION VALUE
----------- ----------- ----------
<S> <C> <C> <C>
Goodwill................................................. $ 7,854,879 $ 2,389,117 $5,465,762
Network affiliation...................................... 756,000 582,750 173,250
Operating license........................................ 2,123,723 812,605 1,311,118
Assembled work force..................................... 286,331 286,331 --
Advertising accounts..................................... 5,024,887 4,700,994 323,893
Other.................................................... 4,018 4,018 --
----------- ----------- ----------
$16,049,838 $ 8,775,815 $7,274,023
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
3. FILM CONTRACT OBLIGATIONS:
Film contract obligations consist of the following:
<TABLE>
<CAPTION>
1994 1995
-------- ----------
<S> <C> <C>
Film contracts payable, due in various installments through 2000............ $796,030 $1,626,645
Less -- Current portion..................................................... 606,173 715,303
-------- ----------
$189,857 $ 911,342
-------- ----------
-------- ----------
</TABLE>
Maturities on the TV Division's film contract obligations for each of the
next five years are as follows:
<TABLE>
<CAPTION>
YEAR MATURITY
- ------------------------------------------------------------------------------- ----------
<S> <C>
1996........................................................................... $ 715,303
1997........................................................................... 535,166
1998........................................................................... 314,685
1999........................................................................... 60,379
2000........................................................................... 1,112
----------
Total..................................................................... $1,626,645
----------
----------
</TABLE>
F-32
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1995
4. PENSION PLANS:
Substantially all nonunion employees and officers of the TV Division are
covered by a defined benefit pension plan sponsored by the Parent. Benefits are
based on an integrated, career average, salary related formula and have been
funded by mandatory employee contributions, plus employer contributions that at
least equal the minimum funding requirements under ERISA.
A portion of the expense of this plan is allocated to the TV Division based
on the number of TV Division participants relative to the number of total
participants. The allocated cost was approximately $116,000, $170,000 and
$155,000 in 1993, 1994 and 1995, respectively.
5. CONTINGENCIES:
The Parent, including the TV Division, has various lawsuits outstanding
incidental to its operations. Management believes the outcome of this litigation
will not have a material adverse effect on the financial position or results of
operations of the TV Division.
The TV Division leases certain equipment and land, principally on a
month-to-month or annually renewable basis. Gross lease expenses were $284,241,
$287,212 and $299,777 for the years ending December 31, 1993, 1994 and 1995,
respectively.
F-33
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
BALANCE SHEETS
MARCH 31, 1995 AND 1996
<TABLE>
<CAPTION>
ASSETS 1995 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Current Assets:
Cash...................................................................... $ 221,020 $ 346,859
Accounts receivable, net of reserve for doubtful accounts of $75,000 in
1995 and $99,000 in 1996................................................ 3,308,868 2,796,812
Current portion of deferred film costs.................................... 697,351 874,165
Prepayments............................................................... 124,073 127,984
------------ ------------
Total current assets................................................. 4,351,312 4,145,820
Plant and Equipment, at cost:
Land...................................................................... 867,937 867,937
Buildings................................................................. 3,893,047 3,929,046
Equipment................................................................. 22,377,540 22,644,212
Construction-in-progress.................................................. 106,682 --
------------ ------------
27,245,206 27,441,195
------------ ------------
Less -- Accumulated depreciation.......................................... (15,497,787) (16,995,153)
------------ ------------
11,747,419 10,446,042
Other Assets:
Excess of cost over net assets of acquired companies, less accumulated
amortization of $8,215,047 in 1995 and $8,962,738 in 1996............... 7,834,791 7,087,100
Long-term portion of deferred film costs.................................. 1,108,620 851,240
Other..................................................................... 29,801 12,241
------------ ------------
8,973,212 7,950,581
------------ ------------
$ 25,071,943 $ 22,542,443
------------ ------------
------------ ------------
LIABILITIES AND DIVISION EQUITY
Current Liabilities:
Current maturities of film contract obligations........................... $ 539,247 $ 684,442
Accounts payable.......................................................... 121,044 111,164
Accrued expenses.......................................................... 592,279 648,731
------------ ------------
Total current liabilities............................................ 1,252,570 1,444,337
Film Contract Obligations, less current maturities............................. 687,556 805,434
Contingencies
Division Equity................................................................ 23,131,817 20,292,672
------------ ------------
$ 25,071,943 $ 22,542,443
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to the financial statements should be read in conjunction
with these balance sheets.
F-34
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
STATEMENTS OF INCOME
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Broadcast Operating Revenues:
Local......................................................................... $2,829,765 $2,593,262
National...................................................................... 1,415,708 1,261,198
Political..................................................................... 3,100 140,485
Network programming........................................................... 336,577 400,274
Other......................................................................... 116,756 103,232
---------- ----------
4,701,906 4,498,451
Less --
Agency commissions....................................................... 504,722 473,854
Representative's commissions............................................. 128,780 111,917
---------- ----------
Net broadcast revenue............................................... 4,068,404 3,912,680
Operating Expenses:
News-editorials............................................................... 571,750 668,481
Technical..................................................................... 319,109 336,455
Program....................................................................... 720,003 801,275
Depreciation and amortization................................................. 553,898 575,648
Rent expense, net of sublease income.......................................... 43,933 43,545
Sales and promotions.......................................................... 718,567 665,057
General and administrative.................................................... 829,393 961,376
---------- ----------
Total operating expenses................................................. 3,756,653 4,051,837
---------- ----------
(Loss) income from operations............................................ 311,751 (139,157)
Other Nonoperating Income.......................................................... 7,949 12,997
---------- ----------
Division -- Net (loss) income...................................................... $ 319,700 $ (126,160)
---------- ----------
---------- ----------
</TABLE>
The accompanying notes to the financial statements should be read in conjunction
with these statements.
F-35
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
STATEMENTS OF DIVISION EQUITY
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED)
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Balance, beginning of period..................................................... $24,081,566 $21,536,872
Division net (loss) income.................................................. 319,700 (126,160)
Cash transfers to parent, net............................................... (1,269,449) (1,118,040)
----------- -----------
Balance, end of period........................................................... $23,131,817 $20,292,672
----------- -----------
----------- -----------
</TABLE>
The accompanying notes to the financial statements should be read in conjunction
with these statements.
F-36
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) income............................................................. $ 319,700 $ (126,160)
Adjustments to reconcile net (loss) income to cash provided by operating
activities --
Depreciation............................................................. 352,713 388,724
Amortization of intangibles.............................................. 186,923 186,923
Amortization of deferred film costs...................................... 234,491 314,400
(Increase) decrease in other assets...................................... 49,526 (51,136)
Decrease in accounts receivable.......................................... 441,853 718,645
Increase (decrease) in liabilities....................................... (101,386) 45,447
Payments for film contract obligations................................... (225,557) (179,339)
----------- ----------
Total adjustments................................................... 938,563 1,423,664
----------- ----------
Net cash provided by operating activities..................................... 1,258,263 1,297,504
Cash Flows from Investing Activities:
Property, plant and equipment, net............................................ (233,222) (42,592)
----------- ----------
Net cash used in financing activities......................................... (233,222) (42,592)
Cash Flows from Financing Activities:
Cash transfers to Parent, net................................................. (1,269,449) (1,118,040)
----------- ----------
Net cash used in financing activities......................................... (1,269,449) (1,118,040)
----------- ----------
Net Increase (Decrease) in Cash.................................................... (244,408) 136,872
Cash, beginning of period.......................................................... 465,428 209,987
----------- ----------
Cash, end of period................................................................ $ 221,020 $ 346,859
----------- ----------
----------- ----------
</TABLE>
The accompanying notes to the financial statements should be read in conjunction
with these statements.
F-37
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1996
1. SUMMARY OF ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying financial statements include the accounts of the TV
Division of Stauffer Communications, Inc. (the TV Division). The TV Division
includes the following locations: KMIZ-TV in Columbia, Missouri; KGWN-TV in
Cheyenne, Wyoming; KTVS-TV in Scottsbluff, Nebraska; KSTF-TV in Sterling,
Colorado; KGWC-TV in Casper, Wyoming; KCOY-TV in Santa Maria, California; and
WIBW-TV in Topeka, Kansas.
In June 1995, Stauffer Communications, Inc., was acquired by Morris
Communications Company and has continued to operate as a wholly owned subsidiary
under the name Stauffer Communications, Inc. (the Parent). The Parent has
entered into an assets purchase and sale agreement dated November 22, 1995,
whereby substantially all assets and liabilities of the TV Division will be sold
to Benedek Broadcasting Corporation. Closing of this transaction is contingent
upon, among other things, obtaining a final order from the FCC setting forth its
consent to the transaction. The purchase price of $54,500,000, may be adjusted
based on changes in the amount of working capital, as defined, on the closing
date which is expected to occur before September 30, 1996.
These financial statements reflect the revenues and expenses of the TV
Division, including those direct expenses of the TV Division that are paid by
the Parent and charged directly to the TV Division. Certain expenses incurred by
the Parent have not been allocated to the TV Division. These expenses include
general corporate management, corporate accounting, general corporate legal
service and deferred compensation expense. Additionally, the taxable income of
the TV Division is included in the consolidated tax return of the Parent. No
income tax expense or related current or deferred tax assets or liabilities have
been allocated to the TV Division by the Parent.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
PLANT AND EQUIPMENT
Depreciation of plant and equipment is computed using both accelerated and
straight-line methods. Useful lives are 15 to 45 years for buildings and 3 to 20
years for equipment.
DEFERRED FILM COSTS
In accordance with Statement of Financial Accounting Standards No. 63 (SFAS
No. 63), deferred film costs are recorded at contract price when the license
period begins and all of the following conditions have been met: (a) the cost of
each program is known or reasonably determinable, (b) the program material has
been accepted in accordance with the conditions of the license agreement, and
(c) the program is available for its first showing or telecast. Contractual
agreements define the life of the license and the number of showings available.
Deferred film costs with lives greater than 12 months are amortized using the
sum-of-the-runs method over the life of the contract. All others are amortized
using the straight-line method. The contract rights estimated to be used within
one year are included in current assets.
Commitments for broadcast contract rights that have been executed, but
which have not been recorded in the accompanying consolidated financial
statements (because they do not meet the criteria prescribed in SFAS No. 63),
were approximately $345,000 as of March 31, 1995, and were insignificant at
March 31, 1996.
F-38
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1995 AND 1996
BARTER TRANSACTIONS
Barter transactions, which represent the exchange of advertising time for
goods or services, are recorded at the estimated fair value of the products or
services received. Barter revenue is recognized when commercials are broadcast
and expenses are recognized when the related products or services are received.
Barter transactions were insignificant during the three-month periods ended
March 31, 1995 and 1996.
DIVISION EQUITY
The TV Division participates in the Parent's cash management system. Under
this system, all cash generated by the TV Division is transferred to the Parent
and all cash requirements of the TV Division are funded by the Parent. These
transfers of funds are reflected in the division equity account.
2. EXCESS OF COST OVER NET ASSETS OF ACQUIRED COMPANIES:
Excess of cost over net assets of acquired companies consists of goodwill
and other intangible assets. Goodwill is amortized over periods of 20 to 40
years. Other intangible assets are amortized over periods of 4 to 18 years.
Amortization of such assets was approximately $187,000 during each of the
three-month periods ended March 31, 1995 and 1996. The following table details
the components of these assets at March 31, 1996:
<TABLE>
<CAPTION>
ORIGINAL ACCUMULATED NET BOOK
BALANCE AMORTIZATION VALUE
----------- ----------- ----------
<S> <C> <C> <C>
Goodwill................................................. $ 7,854,879 $ 2,436,254 $5,418,625
Network affiliation...................................... 756,000 592,200 163,800
Operating license........................................ 2,123,723 825,716 1,298,007
Assembled work force..................................... 286,331 286,331 --
Advertising accounts..................................... 5,024,887 4,818,219 206,668
Other.................................................... 4,018 4,018 --
----------- ----------- ----------
$16,049,838 $ 8,962,738 $7,087,100
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
3. FILM CONTRACT OBLIGATIONS:
Film contract obligations consist of the following:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Film contracts payable, due in various
installments through 2000.............................................. $1,226,803 $1,489,876
Less- Current portion.................................................... 539,247 684,442
---------- ----------
$ 687,556 $ 805,434
---------- ----------
---------- ----------
</TABLE>
Maturities on the TV Division's film contract obligations for each of the
next five years ending March 31 are as follows:
<TABLE>
<CAPTION>
YEAR MATURITY
- ------------------------------------------------------------------------------- ----------
<S> <C>
1997........................................................................... $ 684,442
1998........................................................................... 498,301
1999........................................................................... 276,061
2000........................................................................... 31,072
2001........................................................................... --
----------
Total..................................................................... $1,489,876
----------
----------
</TABLE>
F-39
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1995 AND 1996
4. PENSION PLANS:
In 1995 substantially all nonunion employees and officers of the TV
Division are covered by a defined benefit pension plan sponsored by the Parent.
Benefits are based on an integrated, career average, salary related formula and
have been funded by mandatory employee contributions, plus employer
contributions that at least equal the minimum funding requirements under ERISA.
A portion of the expense of this plan is allocated to the TV Division based on
the number of TV Division participants relative to the number of total
participants. The allocated cost was approximately $39,000 during the
three-month period ended March 31, 1995. In 1996, the TV Division has accrued
$72,000 for potential contributions for employee retirement benefits based on
the funding formula for the Morris Communications Profit Sharing Plan.
5. CONTINGENCIES:
The Parent, including the TV Division, has various lawsuits outstanding
incidental to its operations. Management believes the outcome of this litigation
will not have a material adverse effect on the financial position or results of
operations of the TV Division.
The TV Division leases certain equipment and land, principally on a
month-to-month or annually renewable basis. Gross lease expenses were $70,706
and $82,649 for the three-month periods ended March 31, 1995 and 1996,
respectively.
F-40
<PAGE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholder of
BRISSETTE BROADCASTING CORPORATION:
We have audited the accompanying consolidated balance sheets of Brissette
Broadcasting Corporation (a Delaware corporation) and Subsidiaries as of
December 25, 1994 and December 31, 1995 and the related statements of
operations, stockholders' investment and cash flows for the fiscal years ended
December 26, 1993, December 25, 1994 and December 31, 1995. These financial
statements are the responsibility of Brissette Broadcasting Corporation
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
Brissette Broadcasting Corporation and Subsidiaries as of December 25, 1994, and
December 31, 1995, and the results of their operations and their cash flows for
the years ended December 26, 1993, December 25, 1994 and December 31, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 8, 1996
F-41
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 25, 1994 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
1994 1995
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................................ $ 881,000 $ 2,102,000
Receivables, less allowances of $151,000 and $206,000 in 1994 and 1995,
respectively........................................................... 10,141,000 10,543,000
Film contract rights..................................................... 1,256,000 1,616,000
Prepaid expenses and other current assets................................ 387,000 176,000
------------ ------------
Total current assets................................................ 12,665,000 14,437,000
------------ ------------
Film Contract Rights.......................................................... 1,132,000 1,778,000
------------ ------------
Property and Equipment:
Land..................................................................... 1,838,000 1,838,000
Buildings and improvements............................................... 9,348,000 9,464,000
Broadcasting equipment................................................... 30,246,000 32,454,000
Furniture and fixtures................................................... 2,798,000 3,121,000
Vehicles and other....................................................... 1,696,000 1,831,000
------------ ------------
45,926,000 48,708,000
Less -- Accumulated depreciation and amortization........................ (33,753,000) (36,478,000)
------------ ------------
Net property and equipment.......................................... 12,173,000 12,230,000
------------ ------------
Intangible Assets, net........................................................ 81,482,000 77,376,000
------------ ------------
$107,452,000 $105,821,000
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current maturities of long-term debt..................................... $ 4,000,000 $ --
Accounts payable......................................................... 650,000 905,000
Accrued expenses......................................................... 2,510,000 2,413,000
Accrued interest......................................................... 1,361,000 1,742,000
Film contract obligations................................................ 1,214,000 1,832,000
Deferred revenue......................................................... -- 140,000
Taxes payable............................................................ 141,000 65,000
------------ ------------
Total current liabilities........................................... 9,876,000 7,097,000
Long-Term Debt................................................................ 191,048,000 197,348,000
Film Contract Obligations, less current portion............................... 981,000 1,303,000
Retiree Benefits Payable...................................................... 278,000 270,000
Deferred Revenue, less current portion........................................ -- 552,000
Other Noncurrent Liabilities.................................................. 576,000 1,193,000
------------ ------------
Total liabilities................................................... 202,759,000 207,763,000
------------ ------------
Stockholder's Investment:
Preferred stock, Series A, B, C and D, $.001 par value, 500 shares
authorized, issued and outstanding for each series (Note 5)............ 66,500,000 66,500,000
Common stock, $.001 par value, 2,000 shares authorized, issued and
outstanding (Note 6)................................................... -- --
Additional paid-in capital............................................... 35,837,000 35,837,000
Deficit.................................................................. (197,644,000) (204,279,000)
------------ ------------
Total stockholder's investment...................................... (95,307,000) (101,942,000)
------------ ------------
$107,452,000 $105,821,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
F-42
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 26, 1993, DECEMBER 25, 1994 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Broadcast Operating Revenues:
Local................................................... $ 28,214,000 $ 30,091,000 $ 31,575,000
National................................................ 17,730,000 19,391,000 20,617,000
Political............................................... 403,000 3,536,000 379,000
Network programming..................................... 3,163,000 3,094,000 4,589,000
Barter.................................................. 569,000 686,000 903,000
Other................................................... 1,273,000 941,000 990,000
------------ ------------ ------------
51,352,000 57,739,000 59,053,000
Less --
Agency commissions................................. 5,961,000 6,907,000 6,903,000
Representatives' commissions....................... 987,000 1,302,000 824,000
------------ ------------ ------------
Net broadcast revenue......................... 44,404,000 49,530,000 51,326,000
------------ ------------ ------------
Broadcast Operating Expenses:
Engineering............................................. 2,441,000 2,739,000 2,880,000
Programming............................................. 4,906,000 5,318,000 5,485,000
News.................................................... 5,663,000 6,427,000 6,901,000
Promotion............................................... 573,000 410,000 537,000
Sales................................................... 4,497,000 4,603,000 4,901,000
General and administrative.............................. 4,852,000 5,223,000 5,611,000
Amortization of intangibles............................. 5,316,000 4,160,000 4,106,000
Amortization of interest rate caps...................... 390,000 -- --
Depreciation............................................ 2,811,000 2,338,000 2,719,000
Corporate expense....................................... 1,443,000 1,699,000 1,844,000
Long-term incentive..................................... 44,000 196,000 616,000
Barter.................................................. 495,000 877,000 903,000
Other................................................... 130,000 115,000 120,000
------------ ------------ ------------
Total broadcast operating expenses............ 33,561,000 34,105,000 36,623,000
------------ ------------ ------------
Broadcast Operating Profit................................... 10,843,000 15,425,000 14,703,000
------------ ------------ ------------
Other (Expense) Income:
Interest income......................................... 30,000 51,000 61,000
Interest expense........................................ (15,212,000) (17,042,000) (20,898,000)
Other................................................... -- -- (354,000)
------------ ------------ ------------
Total other expense........................... (15,182,000) (16,991,000) (21,191,000)
------------ ------------ ------------
Loss Before Income Taxes..................................... (4,339,000) (1,566,000) (6,488,000)
Income Taxes, State.......................................... 278,000 79,000 147,000
------------ ------------ ------------
Net Loss..................................................... $ (4,617,000) $ (1,645,000) $ (6,635,000)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-43
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S INVESTMENT
FOR THE YEARS ENDED DECEMBER 26, 1993, DECEMBER 25, 1994 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK ADDITIONAL
--------------- -------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------ ------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 27, 1992.................... 2,000 $ -- 2,000 $66,500,000 $ 35,837,000 $(191,382,000)
Net loss...................................... -- -- -- -- -- (4,617,000)
------ ------ ------ ----------- ------------ -------------
Balance, December 26, 1993.................... 2,000 $ -- 2,000 $66,500,000 $ 35,837,000 $(195,999,000)
Net loss...................................... -- -- -- -- -- (1,645,000)
------ ------ ------ ----------- ------------ -------------
Balance, December 25, 1994.................... 2,000 $ -- 2,000 $66,500,000 $ 35,837,000 $(197,644,000)
Net loss...................................... -- -- -- -- -- (6,635,000)
------ ------ ------ ----------- ------------ -------------
Balance, December 31, 1995.................... 2,000 $ -- 2,000 $66,500,000 $ 35,837,000 $(204,279,000)
------ ------ ------ ----------- ------------ -------------
------ ------ ------ ----------- ------------ -------------
<CAPTION>
TOTAL
-------------
<S> <C>
Balance, December 27, 1992.................... $ (89,045,000)
Net loss...................................... (4,617,000)
-------------
Balance, December 26, 1993.................... $ (93,662,000)
Net loss...................................... (1,645,000)
-------------
Balance, December 25, 1994.................... $ (95,307,000)
Net loss...................................... (6,635,000)
-------------
Balance, December 31, 1995.................... $(101,942,000)
-------------
-------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-44
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 26, 1993, DECEMBER 25, 1994 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss.................................................... $(4,617,000) $(1,645,000) $(6,635,000)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation........................................... 2,811,000 2,338,000 2,719,000
Amortization of intangibles............................ 5,316,000 4,160,000 4,106,000
Amortization of interest rate caps..................... 390,000 -- --
Amortization of film contract rights................... 1,743,000 1,757,000 1,684,000
Net trade/barter (revenue) expense..................... (74,000) 191,000 --
(Gain) loss on sale of assets.......................... 17,000 30,000 (24,000)
(Increase) decrease in assets:
Accounts receivable, net.......................... (520,000) (430,000) (402,000)
Other assets...................................... 17,000 101,000 37,000
Increase (decrease) in liabilities:
Accounts payable and accrued expenses............. 829,000 (678,000) 180,000
Accrued interest.................................. (55,000) 279,000 381,000
Taxes payable..................................... (172,000) 12,000 (76,000)
Increase deferred revenue......................... -- -- 692,000
Other liabilities................................. 227,000 233,000 609,000
Payments for film contract obligations............ (1,709,000) (1,555,000) (1,639,000)
----------- ----------- -----------
Net cash provided by operating activities.... 4,203,000 4,793,000 1,632,000
----------- ----------- -----------
Cash Flows From Investing Activities:
Capital expenditures........................................ (2,217,000) (1,559,000) (2,748,000)
Proceeds from sale of assets................................ 22,000 28,000 37,000
----------- ----------- -----------
Net cash used in investing activities........ (2,195,000) (1,531,000) (2,711,000)
----------- ----------- -----------
Cash Flows From Financing Activities:
Payments on long-term debt.................................. (3,250,000) (3,875,000) (2,000,000)
Proceeds (payments) from borrowings on line of credit,
net....................................................... 900,000 (900,000) 4,300,000
----------- ----------- -----------
Net cash provided by (used in) financing
activities................................. (2,350,000) (4,775,000) 2,300,000
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents............. (342,000) (1,513,000) 1,221,000
Cash and Cash Equivalents, Beginning of Year..................... 2,736,000 2,394,000 881,000
----------- ----------- -----------
Cash and Cash Equivalents, End of Year........................... $ 2,394,000 $ 881,000 $ 2,102,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-45
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF COMPANY
Paul Brissette, Jr. (Brissette) agreed to purchase all the outstanding
shares of stock of Forward Television Corporation II (FTVC or predecessor)
subject to the indebtedness of FTVC. The acquisition was consummated on February
13, 1992. The basis in assets and liabilities were carried over at the time of
this transaction. Accordingly, Brissette changed the name of the corporation to
Brissette Broadcasting Corporation (Brissette Broadcasting) and includes
Brissette TV of Madison, Inc. (WMTV); Brissette TV of Lansing, Inc. (WILX);
Brissette TV of Odessa, Inc. (KOSA); Brissette TV of Peoria, Inc. (WHOI);
Brissette TV of Springfield, Inc. (WWLP); Brissette TV of Wausau, Inc. (WSAW);
Brissette TV of Wichita Falls, Inc. (KAUZ); and Brissette TV of Wheeling, Inc.
(WTRF) as wholly owned subsidiaries.
The accompanying consolidated financial statements have been prepared
assuming that Brissette Broadcasting will continue as a going concern. Brissette
Broadcasting is heavily dependent on General Electric Capital Corporation (GECC)
for the continuation of its ongoing operations, as GECC is the debt holder and
preferred stockholder (see Notes 4 and 5).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Brissette
Broadcasting and its subsidiaries. Significant intercompany accounts and
transactions have been eliminated.
FISCAL YEAR
Brissette Broadcasting utilizes a 52-53 week fiscal year ending the last
Sunday in December to coincide with the normal broadcasting industry year-end.
Fiscal 1995 consisted of 53 weeks and fiscal 1994 and 1993 consisted of 52
weeks.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
BROADCAST CONTRACT RIGHTS
In accordance with Statement of Financial Accounting Standards No. 63 (SFAS
No. 63), broadcast contract rights are recorded at full contract price when the
license period begins and all of the following conditions have been met: (a) the
cost of each program is known or reasonably determinable, (b) the program
material has been accepted in accordance with the conditions of the license
agreement and (c) the program is available for its first showing or telecast.
Contractual agreements define the life of the license and the number of showings
available. Broadcast contract rights are amortized using the straight-line
method over the life of the contract. The contract rights estimated to be used
within one year are included in current assets.
Commitments for broadcast contract rights that have been executed, but
which have not been recorded in the accompanying consolidated financial
statements (because they do not meet the criteria prescribed in SFAS No. 63),
were approximately $1,313,000 and $1,371,000 as of December 25, 1994, and
December 31, 1995, respectively.
F-46
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
BARTER TRANSACTIONS
Barter transactions, which represent the exchange of advertising time for
goods or services, are recorded at the estimated fair value of the products or
services received. Barter revenue is recognized when commercials are broadcast
and expenses are recognized when the related products or services are received.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. The cost of property and
equipment acquired in conjunction with the acquisition, was carried over from
the predecessor. Depreciation is computed on the straight-line method over the
expected useful lives of the respective assets as follows:
<TABLE>
<CAPTION>
ESTIMATED USEFUL LIFE
------------------------
<S> <C>
Buildings.................................................... 27 1/2 - 39 years
Land improvements............................................ 15 years
Broadcasting equipment....................................... 5 - 15 years
Furniture and fixtures....................................... 5 - 7 years
Vehicles..................................................... 5 years
Leasehold improvements....................................... Term of lease
</TABLE>
INTANGIBLE ASSETS
Intangible assets include goodwill, network affiliation rights,
organization and financing costs, noncompete agreements, Federal Communications
Commission (FCC) licenses and other agreements and licenses. Amortization is
computed on a straight-line basis over the estimated useful lives of the assets.
Should events or circumstances occur subsequent to the acquisition of a station
which bring into question the realizable value or impairment of the related
goodwill and intangibles, Brissette Broadcasting will evaluate the remaining
useful life and balance of goodwill and intangibles and make appropriate
adjustments. Brissette Broadcasting's principal consideration in determining
impairment include the strategic benefit to Brissette Broadcasting of the
particular station and the current and expected future operating income and cash
flow levels of that particular station.
Intangible assets as of December 25, 1994 and December 31, 1995, consisted
of the following:
<TABLE>
<CAPTION>
COST BASIS
ESTIMATED ----------------------------
USEFUL LIFE 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Goodwill........................................... 40 years $ 85,301,000 $ 85,301,000
Network affiliation rights......................... 10-40 years 22,741,000 16,024,000
Organization and financing costs................... 5-10 years 18,942,000 18,446,000
Noncompete agreements.............................. 5 years 11,445,000 --
FCC licenses....................................... 10-40 years 1,659,000 1,659,000
Other.............................................. 5-40 years 3,252,000 2,995,000
------------ ------------
Total intangibles............................. 143,340,000 124,425,000
Accumulated amortization...................... (61,858,000) (47,049,000)
------------ ------------
$ 81,482,000 $ 77,376,000
------------ ------------
------------ ------------
</TABLE>
REVENUE RECOGNITION
Revenue related to the sale of advertising and contracted time is
recognized at the time of broadcast. Income related to production for third
parties is recognized when the production of the television commercials,
programs or sound recording has been completed and delivered.
F-47
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DEFERRED REVENUE
During 1995, Brissette Broadcasting changed national sales representatives.
In connection with this change, the new representatives paid Brissette
Broadcasting a one time fee of $700,000 for their undertaking to buyout whatever
contract rights the previous representative may have had at each station.
Amounts were allocated to the stations as stipulated in the contract. These
amounts are recorded as deferred revenue and will be amortized over five years
which is the term of the representatives agreement.
CASH EQUIVALENTS
Brissette Broadcasting considers all short-term investments purchased with
an original maturity of three months or less to be cash equivalents.
3. INTEREST RATE CAPS
The Company had interest rate cap agreements with financial institutions
which provided for payments to Brissette Broadcasting in the event that actual
market interest rates exceeded the base London Interbank Offered Rate (LIBOR) or
the prime interest rate, as defined. There are no such agreements outstanding as
of December 26, 1993, December 25, 1994 and December 31, 1995.
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
1994 1995
------------ ------------
<S> <C> <C>
Revolving Credit Note..................................... $ -- $ 4,300,000
Term Note................................................. 195,048,000 193,048,000
Less -- Current maturities................................ 4,000,000 --
------------ ------------
$191,048,000 $197,348,000
------------ ------------
------------ ------------
</TABLE>
TERM NOTE
Brissette Broadcasting has a term note agreement with GECC. The agreement,
as amended, requires a payment equal to the remaining balance plus accrued and
unpaid interest due on January 2, 1997. Additionally, Brissette Broadcasting
shall pay interest, at an annual rate equal to the prime rate plus 1.50%, to
GECC, monthly in arrears on the last day of each month.
The Term Note also stipulates that any net proceeds received from any sale
or disposition of assets or properties of Brissette Broadcasting or any of its
subsidiaries other than in the ordinary course of business, or any net proceeds
from the issuance of any stock of Brissette Broadcasting or any subsidiary,
shall be remitted to GECC and shall be applied to the principal installments due
under the Term Note in the inverse order of maturity and be deemed a mandatory
prepayment of the Term Loan; provided, however, that Brissette Broadcasting or
any of its subsidiaries shall be entitled to deduct or hold back from any such
net proceeds to be remitted to GECC an amount of cash sufficient to pay all
federal, state or local income (or similar) taxes applicable to such sale or
disposition of assets or properties and an amount of cash sufficient to pay the
long-term incentive agreement payment if due and payable under the Employment
Agreement (see Note 12).
The Term Note consists of several covenants, more fully defined in the
agreement, including consolidated debt to cash flow ratio maximum of 8.1 to 1.0
for the year ended December 31, 1995, cash flow to debt service requirement of
1.0 to 1.0 and a stipulation that consolidated cash flow plus corporate expenses
must be equal to or greater than $23,849,000 for the fiscal year ended December
31, 1995.
In 1995, Brissette Broadcasting was not in compliance with certain of these
covenants and has obtained a waiver by letter dated May 5, 1995, from GECC.
Brissette Broadcasting expects they will
F-48
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
not be in compliance with certain of these covenants in 1996, therefore, the
agreement was amended as of January 1, 1996 to waive these covenants.
Brissette Broadcasting expects that cash flow from operations will be
sufficient to meet required interest payments under the term loan agreement
through 1996. However, Brissette Broadcasting does not expect that cash flow
from operations will be sufficient to meet the principal payment due on January
2, 1997 and intends to either refinance its debt or recapitalize Brissette
Broadcasting before the payment is due.
REVOLVING CREDIT NOTE
Brissette Broadcasting has a revolving credit agreement with GECC whereby
GECC will provide secured revolving credit advances to Brissette Broadcasting of
up to $8,000,000 in aggregate principal amount outstanding at any one time which
Brissette Broadcasting will use for working capital and other needs of Brissette
Broadcasting and its subsidiaries. All amounts outstanding shall become due
January 2, 1997. Additionally, Brissette Broadcasting shall pay interest, at an
annual rate equal to the prime rate plus 1.50%, to GECC, monthly in arrears on
the last day of each month. There was $4,300,000 and $0 amounts outstanding
under the revolving credit agreement as of December 31, 1995, and December 25,
1994, respectively.
As a requirement of the revolving credit agreement, Brissette Broadcasting
shall repay the aggregate unpaid principal amount of all revolving credit
advances outstanding such that for a period of 30 consecutive days in each
fiscal year Brissette Broadcasting will have no revolving credit advances
outstanding. In 1995, Brissette Broadcasting was not in compliance with this
covenant and has obtained a waiver by letter dated May 5, 1995, from GECC.
So long as any event of default shall be continuing, the interest rate
applicable to the Term Note and the Revolving Credit Note shall be increased by
2% per annum above the rate otherwise applicable.
COLLATERAL
As collateral, Brissette Broadcasting pledged the securities of Brissette
Broadcasting and the certificates representing the pledged securities and all
dividends, distributions, cash instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the pledged securities of Brissette Broadcasting and
all additional shares of capital stock of any subsidiary of Brissette
Broadcasting acquired in any manner and all stock owned by Brissette
Broadcasting.
5. PREFERRED STOCK
The amended and restated certificate of incorporation of Brissette
Broadcasting stipulates that in the event of any liquidation, dissolution or
winding up of Brissette Broadcasting, whether voluntary or involuntary, the
holders of preferred stock then outstanding shall be entitled to be paid out of
the assets of Brissette Broadcasting available for distribution to its
stockholders, whether such assets are capital, surplus or earnings, before any
payment or declaration and setting apart for payment of any amount shall be made
in respect of any shares of common stock, (a) an amount equal to $33,250 per
share of Series A participating preferred stock, (b) an amount equal to $33,250
per share of Series B participating preferred stock, (c) an amount equal to
$33,250 per share of Series C participating preferred stock and (d) an amount
equal to $33,250 per share of Series D participating preferred stock. The total
value of the preferred stock is $66,500,000. The holders of preferred stock
shall be entitled to participate with the holders of common stock with respect
to any cash, stock or other dividends when and as declared by Brissette
Broadcasting's Board of Directors in an amount allocable to the preferred stock
equal to 79% of any such dividend, and the holders of Common stock shall be
entitled to an amount equal to the remaining 21% of any such dividend.
F-49
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Additionally, the loan agreement states that Brissette Broadcasting shall
not have any right to redeem, or any obligation to redeem or otherwise acquire,
any shares of preferred stock. Brissette Broadcasting may not voluntarily
repurchase any shares of preferred stock unless such repurchase is approved by a
vote of the holders of at least 80% of the aggregate voting power of all
stockholders and is otherwise permitted by applicable law.
STOCK VOTING RIGHTS
The holders of common stock and preferred stock shall be entitled to vote
together as a single class on the following matters submitted or required to be
submitted to Brissette Broadcasting's stockholders:
a. Any action to (1) institute proceedings seeking the liquidation,
reorganization, dissolution or other relief with respect to Brissette
Broadcasting or its debts under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect, or (2) consent
to the appointment of a receiver, liquidator, assignee, trustee, custodian
sequestrator or other similar official over BBC or a substantial part of
its property; and
b. Any action to (1) create any class or series of stock ranking prior
to or on a parity with or junior to the Preferred Stock (other than Common
Stock) either as to dividends or upon liquidation, (2) amend, alter or
repeal any of the provisions of Brissette Broadcasting's Certificate of
Incorporation or bylaws so as to affect adversely the preferences, special
rights or powers of the preferred stock, or (3) consolidate or merge with
or into any other corporation (other than a merger of a subsidiary of
Brissette Broadcasting into Brissette Broadcasting whereby Brissette
Broadcasting is the surviving corporation), or liquidate, wind up or
dissolve itself, or convey, sell, assign, transfer or otherwise dispose of,
all or substantially all of its assets.
On matters referred to above, each holder of common stock shall be entitled
to one vote per share of common stock held, and such holders in the aggregate
will have 21% of the aggregate voting power of all stockholders. On the matters
referred to above, the holders of preferred stock shall be entitled to an
aggregate number of votes equal to 3.762 multiplied by the number of shares of
common stock then outstanding, which shall be allocated ratably among the
holders of preferred stock in proportion to the aggregate of the liquidation
preferences specified above with respect to the shares of preferred stock held
by each such holder. Such votes shall entitle the holders of the preferred stock
in the aggregate 79% of the aggregate voting power of all stockholders on such
matters.
All other matters submitted or required to be submitted to Brissette
Broadcasting's stockholders for a vote shall be voted on solely by the holders
of the common stock. Notwithstanding the foregoing, at such time as the holders
of the preferred stock obtain approval from the FCC or its successor (the FCC)
to control Brissette Broadcasting or to exercise any such voting rights, the
holders of preferred stock shall automatically be entitled to vote together with
the holders of the common stock on all matters submitted or required to be
submitted to Brissette Broadcasting's stockholders for a vote in an amount
allocable to the holders of preferred stock equal to 79% of the aggregate voting
power of all stockholders as provided above.
6. COMMON STOCK
In connection with the closing of the amended and restated loan agreement
dated March 6, 1992, Paul Brissette was designated as a sole shareholder of the
common stock of Brissette Broadcasting with 2,000 shares at a par value of $.001
outstanding.
7. INCOME TAXES
Deferred taxes arise from temporary differences in the recognition of
income and expense for income tax and financial statement purposes and result
principally from depreciation and amortization
F-50
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expense as well as net operating loss carryforwards. As of December 31, 1995,
Brissette Broadcasting has a deferred tax asset of approximately $1,292,000 that
is fully reserved for as realization is uncertain.
Brissette Broadcasting files a consolidated federal tax return. Any
applicable income taxes are not allocated to individual stations. Stations are
taxable entities in the states in which they conduct business. The taxes
reflected in the December 31, 1995, financial statements reflect taxes due to
those states, if applicable.
As of December 25, 1994, and December 31, 1995, Brissette Broadcasting has
a net operating tax loss carryforward of approximately $4,959,000 and
$5,574,000, respectively, which begins to expire in 2007. Additionally, there
are other net operating loss carryforwards available which can be utilized upon
the sale of the assets of Brissette Broadcasting.
8. COMMITMENTS AND CONTINGENCIES
LEASES
Future minimum payments under noncancellable operating leases having terms
greater than one year, as of December 31, 1995, are as follows:
<TABLE>
<S> <C>
1996................................................................... $208,000
1997................................................................... 165,000
1998................................................................... 133,000
1999................................................................... 106,000
2000................................................................... 59,000
Thereafter............................................................. 186,000
--------
$857,000
--------
--------
</TABLE>
The operating leases consist of broadcasting facilities and equipment with
remaining terms ranging from one to fifteen years. Certain terms of the
operating leases include renewal provisions which may be exercised at the option
of Brissette Broadcasting.
Aggregate rent expense incurred under operating leases was approximately
$74,000, $142,000 and $187,000 in 1993, 1994 and 1995, respectively.
FILM CONTRACT RIGHTS AND OBLIGATIONS
Future minimum payments for film contract obligations, including those
mentioned in footnote 2, are as follows:
<TABLE>
<S> <C>
1996................................................................. $2,000,000
1997................................................................. 1,323,000
1998................................................................. 818,000
1999................................................................. 364,000
----------
$4,505,000
----------
----------
</TABLE>
The fair value of the film contract obligations at December 31, 1995, is
approximately $3,775,000. This amount was estimated by computing the net present
value of the above-mentioned obligations utilizing a 10.0% discount rate.
LITIGATION
Brissette Broadcasting is involved in various litigation matters arising in
the normal course of business. It is the opinion of management that the ultimate
resolution of such litigation will not have a
F-51
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
material adverse effect on the consolidated financial position of Brissette
Broadcasting or results of operations.
9. DEFERRED SAVINGS AND PROFIT-SHARING PLAN
Brissette Broadcasting maintains a 401(k) retirement plan. Employees must
have attained age 21 and have completed one year of consecutive service to
participate in the plan. Employees may contribute up to 15% of their salaries in
accordance with IRS limitations. On a discretionary basis, Brissette
Broadcasting matches employee contributions at a rate up to 50% (up to 6%) of
the employee's salary. Brissette Broadcasting's contribution to the plan totaled
approximately $55,000, $225,000 and $229,000 for 1993, 1994 and 1995,
respectively.
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year was as follows:
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Interest.................................... $15,254,000 $16,764,000 $20,516,000
Income taxes................................ 321,000 536,000 313,000
----------- ----------- -----------
$15,575,000 $17,300,000 $20,829,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
11. RELATED-PARTY TRANSACTIONS
Brissette Broadcasting recognized income of $411,000, $402,000 and $68,000
in 1993, 1994 and 1995, respectively, for management fees for expenses related
to payroll, rent and other corporate expenses from WWAY (Wilmington) and WHBQ
(Memphis). These stations are related through common management. Brissette
Broadcasting discontinued providing management services to WHBQ in 1994 and WWAY
in 1995.
During fiscal 1993, 1994 and 1995, Brissette Broadcasting paid
approximately $50,000, $85,000 and $138,000, respectively, to Mr. Greg
Brissette, son of the sole common shareholder, for certain sales related
consultation to the stations.
12. EMPLOYMENT AGREEMENT
As part of the corporate restructuring, Brissette Broadcasting entered into
an employment agreement dated March 6, 1992, with Paul Brissette whereas
Brissette Broadcasting continues to employ Brissette as President and Chief
Operating Officer. The employment agreement includes a long-term compensation
component, which is payable to Brissette on December 31, 1996, or sooner if
Brissette's employment ceases or is terminated or there is a sale or disposal of
any station.
The compensation interest is based on (a) gross proceeds received directly
or indirectly from the sale or disposition of any station, the sale of all or
substantially all of the assets related to any station or by merger,
reorganization, consolidation or otherwise; or (b) an increase in operating
profit of a station. Additionally, there are other severance and employee
benefits included in the employment agreement.
During 1995, Brissette Broadcasting entered into incentive compensation
agreements with certain officers and employees of Brissette Broadcasting. The
incentive compensation is a one-time bonus, provided that net income increases
an average of 6% per year, commencing as of the 1995 fiscal year, compounded
through and including the 1999 fiscal year. Payment shall be made at the end of
fiscal year 1999. A pro rata share will be paid to the employee if termination
occurs prior to the end of fiscal year 1999.
F-52
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The 1993, 1994 and 1995 expense related to these employment agreements of
$44,000, $196,000 and $616,000, respectively, is included in long-term incentive
expense on the consolidated statements of operations.
13. POTENTIAL SALE AGREEMENT
During 1995, Brissette Broadcasting signed a stock purchase agreement which
called for the sale of all issued and outstanding shares of capital stock of
Brissette Broadcasting to Benedek Broadcasting Corporation (Benedek
Broadcasting) in exchange for cash and preferred stock. The total purchase price
of approximately $270,000,000 may be adjusted based on targeted working capital
at the closing date. The sale is contingent upon Benedek Broadcasting obtaining
financing and FCC approval.
Brissette Broadcasting also entered into management continuity agreements
with certain employees in order to provide them a severance benefit that would
become effective on the date of a change in ownership. The severance benefit, of
approximately $887,000, is based on annual wages and will be paid to the station
management employees if they are terminated within one year subsequent to the
change in ownership. Corporate employees will receive a severance benefit
regardless if they are terminated or not. These amounts are not accrued for in
the December 31, 1995 financial statements.
F-53
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 26, 1995 AND MARCH 31, 1996
<TABLE>
<CAPTION>
1995 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................................ $ 1,733,000 $ 1,534,000
Receivables, less allowances of $169,000 and $129,000 in 1995 and 1996,
respectively........................................................... 9,185,000 9,259,000
Film contract rights..................................................... 1,133,000 1,443,000
Prepaid expenses and other current assets................................ 850,000 518,000
------------ ------------
Total current assets................................................ 12,901,000 12,754,000
------------ ------------
Film contract rights.......................................................... 1,355,000 1,482,000
------------ ------------
Property and Equipment:
Land..................................................................... 1,838,000 1,838,000
Buildings and improvements............................................... 9,360,000 9,465,000
Broadcasting equipment................................................... 30,506,000 32,683,000
Furniture and fixtures................................................... 2,807,000 3,146,000
Vehicles and other....................................................... 1,745,000 1,965,000
------------ ------------
46,256,000 49,097,000
Less -- Accumulated depreciation and amortization............................. (34,299,000) (37,085,000)
------------ ------------
Net property and equipment............................................... 11,957,000 12,012,000
------------ ------------
Intangible assets, net........................................................ 80,464,000 76,349,000
------------ ------------
$106,677,000 $102,597,000
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENTS
Current Liabilities:
Current maturities of long-term debt..................................... $ -- $197,348,000
Accounts payable......................................................... 578,000 652,000
Accrued expenses......................................................... 2,515,000 2,561,000
Accrued interest......................................................... 1,487,000 1,657,000
Film contract obligations................................................ 1,173,000 1,631,000
Deferred revenue......................................................... -- 136,000
Taxes payable............................................................ 172,000 36,000
------------ ------------
Total current liabilities........................................... 5,925,000 204,021,000
Long-term debt................................................................ 196,048,000 --
Film contract obligations, less current portion............................... 1,133,000 1,005,000
Retiree Benefits payable...................................................... 278,000 267,000
Deferred Revenue, less current portion........................................ -- 530,000
Other noncurrent liabilities.................................................. 800,000 1,370,000
------------ ------------
Total liabilities................................................... 204,184,000 207,193,000
------------ ------------
Stockholder's Investment:
Preferred stock, Series A, B, C and D, $.001 par value, 500 shares
authorized, issued and outstanding for each series (Note 4)............ 66,500,000 66,500,000
Common stock, $.001 par value, 2,000 shares authorized, issued and
outstanding (Note 5)................................................... -- --
Additional paid-in capital............................................... 35,837,000 35,837,000
Deficit.................................................................. (199,844,000) (206,933,000)
------------ ------------
Total stockholder's investment...................................... (97,507,000) (104,596,000)
------------ ------------
$106,677,000 $102,597,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to the unaudited consolidated financial statements
are an integral part of these balance sheets.
F-54
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
<TABLE>
<CAPTION>
1995 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Broadcast Operating Revenues:
Local..................................................................... $ 7,002,000 $ 7,230,000
National.................................................................. 4,813,000 4,790,000
Political................................................................. 57,000 302,000
Network programming....................................................... 1,043,000 1,127,000
Barter.................................................................... 139,000 170,000
Other..................................................................... 261,000 290,000
------------ ------------
13,315,000 13,909,000
Less --
Agency commissions................................................... 1,546,000 1,651,000
Representatives' commissions......................................... 167,000 288,000
------------ ------------
Net broadcast revenue........................................... 11,602,000 11,970,000
------------ ------------
Broadcast Operating Expenses:
Engineering............................................................... 681,000 738,000
Programming............................................................... 1,352,000 1,478,000
News...................................................................... 1,597,000 1,835,000
Promotion................................................................. 101,000 130,000
Sales..................................................................... 1,120,000 1,302,000
General and administrative................................................ 1,345,000 1,450,000
Amortization of intangibles............................................... 1,018,000 1,027,000
Depreciation.............................................................. 552,000 623,000
Corporate expense......................................................... 464,000 479,000
Long-term incentive....................................................... 223,000 177,000
Barter.................................................................... 165,000 154,000
Other..................................................................... 20,000 22,000
------------ ------------
Total broadcast operating expenses.............................. 8,638,000 9,415,000
------------ ------------
Broadcast Operating Profit..................................................... 2,964,000 2,555,000
------------ ------------
Other (Expense) Income:
Interest income........................................................... 15,000 13,000
Interest expense.......................................................... (5,024,000) (4,906,000)
Other..................................................................... -- (213,000)
------------ ------------
Total other expense............................................. (5,009,000) (5,106,000)
------------ ------------
Loss Before Income Taxes....................................................... (2,045,000) (2,551,000)
Income Taxes, state............................................................ 155,000 103,000
------------ ------------
Net Loss....................................................................... $ (2,200,000) $ (2,654,000)
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to the unaudited consolidated financial statements
are an integral part of these statements.
F-55
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
<TABLE>
<CAPTION>
1995 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss..................................................................... $(2,200,000) $(2,654,000)
Adjustments to reconcile net loss to net cash provided by operating
activities --
Depreciation............................................................ 552,000 623,000
Amortization of intangibles............................................. 1,018,000 1,027,000
Amortization of film contract rights.................................... 400,000 483,000
Net trade/barter expense................................................ 26,000 (16,000)
(Gain) loss on sale of assets........................................... -- --
(Increase) decrease in assets --
Accounts receivable, net........................................... 956,000 1,284,000
Other assets....................................................... (468,000) (324,000)
Increase (decrease) in liabilities --
Accounts payable and accrued expenses.............................. (87,000) (108,000)
Accrued interest................................................... 126,000 (85,000)
Taxes payable...................................................... 31,000 (29,000)
Other liabilities.................................................. 224,000 148,000
Payments for film contract obligations............................. (399,000) (512,000)
----------- -----------
Net cash provided by (used by) operating activities........... 179,000 (163,000)
----------- -----------
Cash Flows from Investing Activities:
Capital expenditures......................................................... (327,000) (405,000)
Proceeds from sale of assets................................................. -- --
----------- -----------
Net cash used in investing activities......................... (327,000) (405,000)
----------- -----------
Cash Flows from Financing Activities:
Payments on long-term debt................................................... -- --
Proceeds (payments) from borrowings on line of credit, net................... 1,000,000 --
----------- -----------
Net cash provided by financing activities..................... 1,000,000 --
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............................. 852,000 (568,000)
CASH AND CASH EQUIVALENTS, beginning of year...................................... 881,000 2,102,000
----------- -----------
CASH AND CASH EQUIVALENTS, end of year............................................ $ 1,733,000 $ 1,534,000
----------- -----------
----------- -----------
</TABLE>
The accompanying notes to the unaudited consolidated financial statements
are an integral part of these statements.
F-56
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S INVESTMENT
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK ADDITIONAL
--------------- -------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ------ ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 25, 1994............ 2,000 $ -- 2,000 $66,500,000 $35,837,000 $(197,644,000) $ (95,307,000)
3/26/95 Net loss (unaudited)...... (2,200,000) (2,200,000)
------ ------ ------ ----------- ----------- ------------- -------------
BALANCE, March 26, 1995 (unaudited)... 2,000 $ -- 2,000 $66,500,000 $35,837,000 $(199,844,000) $ (97,507,000)
BALANCE, December 31, 1995............ 2,000 $ -- 2,000 $66,500,000 $35,837,000 $(204,279,000) $(101,942,000)
3/31/96 Net loss (unaudited)...... (2,654,000) (2,654,000)
------ ------ ------ ----------- ----------- ------------- -------------
BALANCE, March 31, 1996 (unaudited)... 2,000 $ -- 2,000 $66,500,000 $35,837,000 $(206,933,000) $(104,596,000)
------ ------ ------ ----------- ----------- ------------- -------------
------ ------ ------ ----------- ----------- ------------- -------------
</TABLE>
The accompanying notes to the unaudited consolidated financial statements
are an integral part of these statements.
F-57
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
1. DESCRIPTION OF COMPANY
Paul Brissette, Jr. (Brissette) agreed to purchase all the outstanding
shares of stock of Forward Television Corporation II (FTVC or predecessor)
subject to the indebtedness of FTVC. The acquisition was consummated on February
13, 1992. The basis in assets and liabilities were carried over at the time of
this transaction. Accordingly, Brissette changed the name of the corporation to
Brissette Broadcasting Corporation (Brissette Broadcasting) and includes
Brissette TV of Madison, Inc. (WMTV); Brissette TV of Lansing, Inc. (WILX);
Brissette TV of Odessa, Inc. (KOSA); Brissette TV of Peoria, Inc. (WHOI);
Brissette TV of Springfield, Inc. (WWLP); Brissette TV of Wausau, Inc. (WSAW);
Brissette TV of Wichita Falls, Inc. (KAUZ); and Brissette TV of Wheeling, Inc.
(WTRF) as wholly owned subsidiaries.
The accompanying unaudited consolidated financial statements have been
prepared assuming that Brissette Broadcasting will continue as a going concern.
Brissette Broadcasting is heavily dependent on General Electric Capital
Corporation (GECC) for the continuation of its ongoing operations, as GECC is
the debt holder and preferred stockholder (see Notes 3 and 4).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The unaudited consolidated financial statements include the accounts of
Brissette Broadcasting and its subsidiaries. Significant intercompany accounts
and transactions have been eliminated.
FISCAL YEAR
Brissette Broadcasting determines their month-end dates based on a 4-4-5
week schedule, which does not coincide with the normal broadcasting industry
month-end.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
BROADCAST CONTRACT RIGHTS
In accordance with Statement of Financial Accounting Standards No. 63 (SFAS
No. 63), broadcast contract rights are recorded at full contract price when the
license period begins and all of the following conditions have been met: (a) the
cost of each program is known or reasonably determinable, (b) the program
material has been accepted in accordance with the conditions of the license
agreement and (c) the program is available for its first showing or telecast.
Contractual agreements define the life of the license and the number of showings
available. Broadcast contract rights are amortized using the straight-line
method over the life of the contract. The contract rights estimated to be used
within one year are included in current assets.
Commitments for broadcast contract rights that have been executed, but
which have not been recorded in the accompanying consolidated financial
statements (because they do not meet the criteria prescribed in SFAS No. 63),
were approximately $1,172,000 and $1,613,000 as of March 26, 1995, and March 31,
1996, respectively.
F-58
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
BARTER TRANSACTIONS
Barter transactions, which represent the exchange of advertising time for
goods or services, are recorded at the estimated fair value of the products or
services received. Barter revenue is recognized when commercials are broadcast
and expenses are recognized when the related products or services are received.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. The cost of property and
equipment acquired in conjunction with the acquisition, was carried over from
the predecessor. Depreciation is computed on the straight-line method over the
expected useful lives of the respective assets as follows:
<TABLE>
<CAPTION>
ESTIMATED USEFUL LIFE
------------------------
<S> <C>
Buildings.................................................... 27 1/2 - 39 years
Land improvements............................................ 15 years
Broadcasting equipment....................................... 5 - 15 years
Furniture and fixtures....................................... 5 - 7 years
Vehicles..................................................... 5 years
Leasehold improvements....................................... Term of lease
</TABLE>
INTANGIBLE ASSETS
Intangible assets include goodwill, network affiliation rights,
organization and financing costs, noncompete agreements, Federal Communications
Commission (FCC) licenses and other agreements and licenses. Amortization is
computed on a straight-line basis over the estimated useful lives of the assets.
Should events or circumstances occur subsequent to the acquisition of a station
which bring into question the realizable value or impairment of the related
goodwill and intangibles, Brissette Broadcasting will evaluate the remaining
useful life and balance of goodwill and intangibles and make appropriate
adjustments. Brissette Broadcasting's principal considerations in determining
impairment include the strategic benefit to Brissette Broadcasting of the
particular station and the current and expected future operating income and cash
flow levels of that particular station.
Intangible assets as of March 26, 1995 and March 31, 1996, consisted of the
following:
<TABLE>
<CAPTION>
COST BASIS
ESTIMATED ----------------------------
USEFUL LIFE 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Goodwill............................................ 40 years $ 85,301,000 $ 85,301,000
Network affiliation rights.......................... 10-40 years 22,740,000 16,024,000
Organization and financing costs.................... 5-10 years 18,942,000 18,446,000
Noncompete agreements............................... 5 years 11,445,000 --
FCC licenses........................................ 10-40 years 1,659,000 1,659,000
Other............................................... 5-40 years 3,252,000 2,995,000
------------ ------------
Total intangibles.............................. 143,339,000 124,425,000
Accumulated amortization....................... (62,875,000) (48,076,000)
------------ ------------
$ 80,464,000 $ 76,349,000
------------ ------------
------------ ------------
</TABLE>
REVENUE RECOGNITION
Revenue related to the sale of advertising and contracted time is
recognized at the time of broadcast. Income related to production for third
parties is recognized when the production of the television commercials,
programs or sound recording has been completed and delivered.
F-59
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
DEFERRED REVENUE
During December 1995, Brissette Broadcasting changed national sales
representatives. In connection with this change, the new representatives paid
Brissette Broadcasting a one time fee of $700,000 for their undertaking to
buyout whatever contract rights the previous representative may have had at each
station. Amounts were allocated to the stations as stipulated in the contract.
These amounts are recorded as deferred revenue and will be amortized over five
years which is the term of the representatives agreement.
CASH EQUIVALENTS
Brissette Broadcasting considers all short-term investments purchased with
an original maturity of three months or less to be cash equivalents.
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
MARCH 26, MARCH 31,
1995 1996
------------- ------------
<S> <C> <C>
Revolving Credit Note.................................... $ 2,000,000 $ 4,300,000
Term Note................................................ 194,048,000 193,048,000
Less -- Current maturities............................... -- (197,348,000)
------------- ------------
$ 196,048,000 $ --
------------- ------------
------------- ------------
</TABLE>
TERM NOTE
Brissette Broadcasting has a term note agreement with GECC. The agreement,
as amended, requires a payment equal to the remaining balance plus accrued and
unpaid interest due on January 2, 1997. Additionally, Brissette Broadcasting
shall pay interest, at an annual rate equal to the prime rate plus 1.50%, to
GECC, monthly in arrears on the last day of each month.
The Term Note also stipulates that any net proceeds received from any sale
or disposition of assets or properties of Brissette Broadcasting or any of its
subsidiaries other than in the ordinary course of business, or any net proceeds
from the issuance of any stock of Brissette Broadcasting or any subsidiary,
shall be remitted to GECC and shall be applied to the principal installments due
under the Term Note in the inverse order of maturity and be deemed a mandatory
prepayment of the Term Loan; provided, however, that Brissette Broadcasting or
any of its subsidiaries shall be entitled to deduct or hold back from any such
net proceeds to be remitted to GECC an amount of cash sufficient to pay all
federal, state or local income (or similar) taxes applicable to such sale or
disposition of assets or properties and an amount of cash sufficient to pay the
long-term incentive agreement payment if due and payable under the Employment
Agreement (see Note 11).
The Term Note consists of several covenants, more fully defined in the
agreement, including consolidated debt to cash flow ratio maximum of 7.6 to 1.0,
and cash flow to debt service requirement of at least 1.0 to 1.0 for the
thirteen week period ended March 31, 1996, and a stipulation that consolidated
cash flow plus corporate expenses must be equal to or greater than $25,066,000
for the fiscal year ended December 29, 1996.
In 1995, Brissette Broadcasting was not in compliance with certain of these
covenants and has obtained a waiver by letter dated May 5, 1995, from GECC.
Additionally, Brissette Broadcasting is not or expects they will not be in
compliance with certain of these covenants in 1996. The agreement was amended as
of January 1, 1996 to waive these covenants.
Brissette Broadcasting expects that cash flow from operations will be
sufficient to meet required interest payments under the term loan agreement
through 1996. However, Brissette Broadcasting does not expect that cash flow
from operations will be sufficient to meet the principal payment due on
F-60
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
January 2, 1997 and intends to either refinance its debt or recapitalize
Brissette Broadcasting before the payment is due.
REVOLVING CREDIT NOTE
Brissette Broadcasting has a revolving credit agreement with GECC whereby
GECC will provide secured revolving credit advances to Brissette Broadcasting of
up to $8,000,000 in aggregate principal amount outstanding at any one time which
Brissette Broadcasting will use for working capital and other needs of Brissette
Broadcasting and its subsidiaries. All amounts outstanding shall become due
January 2, 1997. Additionally, Brissette Broadcasting shall pay interest, at an
annual rate equal to the prime rate plus 1.50%, to GECC, monthly in arrears on
the last day of each month. There was $4,300,000 and $2,000,000 amounts
outstanding under the revolving credit agreement as of March 26, 1995, and March
31, 1996, respectively. Subsequent to March 31, 1996, Brissette Broadcasting
increased the amounts outstanding under the revolving credit agreement to
$5,500,000.
As a requirement of the revolving credit agreement, Brissette Broadcasting
shall repay the aggregate unpaid principal amount of all revolving credit
advances outstanding such that for a period of 30 consecutive days in each
fiscal year Brissette Broadcasting will have no revolving credit advances
outstanding. In 1995, Brissette Broadcasting was not in compliance with this
covenant and has obtained a waiver by letter dated May 5, 1995, from GECC.
Additionally, Brissette Broadcasting was not in compliance with this covenant in
1996 and obtained a waiver dated March 6, 1996, from the GECC.
So long as any event of default shall be continuing, the interest rate
applicable to the Term Note and the Revolving Credit Note shall be increased by
2% per annum above the rate otherwise applicable.
COLLATERAL
As collateral, Brissette Broadcasting pledged the securities of Brissette
Broadcasting and the certificates representing the pledged securities and all
dividends, distributions, cash instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the pledged securities of Brissette Broadcasting and
all additional shares of capital stock of any subsidiary of Brissette
Broadcasting acquired in any manner and all stock owned by Brissette
Broadcasting.
4. PREFERRED STOCK
The amended and restated certificate of incorporation of Brissette
Broadcasting stipulates that in the event of any liquidation, dissolution or
winding up of Brissette Broadcasting, whether voluntary or involuntary, the
holders of preferred stock then outstanding shall be entitled to be paid out of
the assets of Brissette Broadcasting available for distribution to its
stockholders, whether such assets are capital, surplus or earnings, before any
payment or declaration and setting apart for payment of any amount shall be made
in respect of any shares of common stock, (a) an amount equal to $33,250 per
share of Series A participating preferred stock, (b) an amount equal to $33,250
per share of Series B participating preferred stock, (c) an amount equal to
$33,250 per share of Series C participating preferred stock and (d) an amount
equal to $33,250 per share of Series D participating preferred stock. The total
value of the preferred stock is $66,500,000. The holders of preferred stock
shall be entitled to participate with the holders of common stock with respect
to any cash, stock or other dividends when and as declared by Brissette
Broadcasting's Board of Directors in an amount allocable to the preferred stock
equal to 79% of any such dividend, and the holders of Common stock shall be
entitled to an amount equal to the remaining 21% of any such dividend.
F-61
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
Additionally, the loan agreement states that Brissette Broadcasting shall
not have any right to redeem, or any obligation to redeem or otherwise acquire,
any shares of preferred stock. Brissette Broadcasting may not voluntarily
repurchase any shares of preferred stock unless such repurchase is approved by a
vote of the holders of at least 80% of the aggregate voting power of all
stockholders and is otherwise permitted by applicable law.
STOCK VOTING RIGHTS
The holders of common stock and preferred stock shall be entitled to vote
together as a single class on the following matters submitted or required to be
submitted to Brissette Broadcasting's stockholders:
a. Any action to (1) institute proceedings seeking the liquidation,
reorganization, dissolution or other relief with respect to Brissette
Broadcasting or its debts under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect, or (2) consent
to the appointment of a receiver, liquidator, assignee, trustee, custodian
sequestrator or other similar official over BBC or a substantial part of
its property; and
b. Any action to (1) create any class or series of stock ranking prior
to or on a parity with or junior to the Preferred Stock (other than Common
Stock) either as to dividends or upon liquidation, (2) amend, alter or
repeal any of the provisions of Brissette Broadcasting's Certificate of
Incorporation or bylaws so as to affect adversely the preferences, special
rights or powers of the preferred stock, or (3) consolidate or merge with
or into any other corporation (other than a merger of a subsidiary of
Brissette Broadcasting into Brissette Broadcasting whereby Brissette
Broadcasting is the surviving corporation), or liquidate, wind up or
dissolve itself, or convey, sell, assign, transfer or otherwise dispose of,
all or substantially all of its assets.
On matters referred to above, each holder of common stock shall be entitled
to one vote per share of common stock held, and such holders in the aggregate
will have 21% of the aggregate voting power of all stockholders. On the matters
referred to above, the holders of preferred stock shall be entitled to an
aggregate number of votes equal to 3.762 multiplied by the number of shares of
common stock then outstanding, which shall be allocated ratably among the
holders of preferred stock in proportion to the aggregate of the liquidation
preferences specified above with respect to the shares of preferred stock held
by each such holder. Such votes shall entitle the holders of the preferred stock
in the aggregate 79% of the aggregate voting power of all stockholders on such
matters.
All other matters submitted or required to be submitted to Brissette
Broadcasting's stockholders for a vote shall be voted on solely by the holders
of the common stock. Notwithstanding the foregoing, at such time as the holders
of the preferred stock obtain approval from the FCC or its successor (the FCC)
to control Brissette Broadcasting or to exercise any such voting rights, the
holders of preferred stock shall automatically be entitled to vote together with
the holders of the common stock on all matters submitted or required to be
submitted to Brissette Broadcasting's stockholders for a vote in an amount
allocable to the holders of preferred stock equal to 79% of the aggregate voting
power of all stockholders as provided above.
5. COMMON STOCK
In connection with the closing of the amended and restated loan agreement
dated March 6, 1992, Paul Brissette was designated as a sole shareholder of the
common stock of Brissette Broadcasting with 2,000 shares at a par value of $.001
outstanding.
F-62
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
6. INCOME TAXES
Deferred taxes arise from temporary differences in the recognition of
income and expense for income tax and financial statement purposes and result
principally from depreciation and amortization expense as well as net operating
loss carryforwards. As of March 31, 1996, Brissette Broadcasting has a deferred
tax asset of approximately $1,292,000 that is fully reserved for as realization
is uncertain.
Brissette Broadcasting files a consolidated federal tax return. Any
applicable income taxes are not allocated to individual stations. Stations are
taxable entities in the states in which they conduct business. The taxes
reflected in the March 31, 1996, financial statements reflect taxes due to those
states, if applicable.
As of March 26, 1995, and March 31, 1996, Brissette Broadcasting has a net
operating tax loss carryforward of approximately $5,139,000 and $5,574,000,
respectively, which begins to expire in 2007. Additionally, there are other net
operating loss carryforwards available which can be utilized upon the sale of
the assets of Brissette Broadcasting.
7. COMMITMENTS AND CONTINGENCIES
LEASES
Future minimum payments under noncancellable operating leases having terms
greater than one year, as of March 31, 1996, are as follows:
<TABLE>
<S> <C>
For the 39 weeks ending 12/29/96....................................... $196,000
1997................................................................... 180,000
1998................................................................... 147,000
1999................................................................... 115,000
2000................................................................... 68,000
Thereafter............................................................. 155,000
--------
$861,000
--------
--------
</TABLE>
The operating leases consist of broadcasting facilities and equipment with
remaining terms ranging from one to fifteen years. Certain terms of the
operating leases include renewal provisions which may be exercised at the option
of Brissette Broadcasting.
Aggregate rent expense incurred under operating leases was approximately
$37,000 and $65,000 in the thirteen week periods ended March 26, 1995 and March
31, 1996, respectively.
FILM CONTRACT RIGHTS AND OBLIGATIONS
Future minimum payments for film contract obligations, including those
mentioned in footnote 2, are as follows:
<TABLE>
<S> <C>
For the 39 weeks ending December 29, 1996............................ $1,574,000
1997................................................................. 1,469,000
1998................................................................. 831,000
1999................................................................. 375,000
----------
$4,249,000
----------
----------
</TABLE>
The fair value of the film contract obligations at March 31, 1996, is
approximately $3,868,000. This amount was estimated by computing the net present
value of the above-mentioned obligations utilizing a 10.0% discount rate.
F-63
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
LITIGATION
Brissette Broadcasting is involved in various litigation matters arising in
the normal course of business. It is the opinion of management that the ultimate
resolution of such litigation will not have a material adverse effect on the
consolidated financial position of Brissette Broadcasting or results of
operations.
8. DEFERRED SAVINGS AND PROFIT-SHARING PLAN
Brissette Broadcasting maintains a 401(k) retirement plan. Employees must
have attained age 21 and have completed one year of consecutive service to
participate in the plan. Employees may contribute up to 15% of their salaries in
accordance with IRS limitations. On a discretionary basis, Brissette
Broadcasting matches employee contributions at a rate up to 50% (up to 6%) of
the employee's salary. Brissette Broadcasting's contribution to the plan totaled
approximately $54,000, and $66,000 for the thirteen week periods ended March 26,
1995 and March 31, 1996, respectively.
9. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the thirteen week periods ended March 26, 1995 and March
31, 1996 was as follows:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Interest............................................. $4,898,000 $4,991,000
Income taxes......................................... 190,000 132,000
---------- ----------
$5,088,000 $5,123,000
---------- ----------
---------- ----------
</TABLE>
10. RELATED-PARTY TRANSACTIONS
Brissette Broadcasting recognized income of $51,000 and $0 for the thirteen
week periods ended March 26, 1995 and March 31, 1996, respectively, for
management fees for expenses related to payroll, rent and other corporate
expenses from WWAY (Wilmington). This station is related through common
management. Brissette Broadcasting discontinued providing management services to
WWAY in 1995.
During the thirteen week periods ended March 26, 1995 and March 31, 1996,
Brissette Broadcasting paid approximately $30,000 and $31,000, respectively, to
Mr. Greg Brissette, son of the sole common shareholder, for certain sales
related consultation to the stations.
11. EMPLOYMENT AGREEMENT
As part of the corporate restructuring, Brissette Broadcasting entered into
an employment agreement dated March 6, 1992, with Paul Brissette whereas
Brissette Broadcasting continues to employ Brissette as President and Chief
Operating Officer. The employment agreement includes a long-term compensation
component, which is payable to Brissette on December 31, 1996, or sooner if
Brissette's employment ceases or is terminated or there is a sale or disposal of
any station.
The compensation interest is based on (a) gross proceeds received directly
or indirectly from the sale or disposition of any station, the sale of all or
substantially all of the assets related to any station or by merger,
reorganization, consolidation or otherwise; or (b) an increase in operating
profit of a station. Additionally, there are other severance and employee
benefits included in the employment agreement.
During December 1995, Brissette Broadcasting entered into incentive
compensation agreements with certain officers and employees of Brissette
Broadcasting. The incentive compensation is a one-time bonus, provided that net
income increases an average of 6% per year, commencing as of the
F-64
<PAGE>
<PAGE>
BRISSETTE BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THIRTEEN WEEK PERIODS ENDED MARCH 26, 1995 AND MARCH 31, 1996
1995 fiscal year, compounded through and including the 1999 fiscal year. Payment
shall be made at the end of fiscal year 1999. A pro rata share will be paid to
the employee if termination occurs prior to the end of fiscal year 1999.
For the thirteen week periods ended March 26, 1995 and March 31, 1996, the
expense related to these employment agreements was $223,000 and $177,000,
respectively and is included in long-term incentive expense on the consolidated
statements of operations.
12. POTENTIAL SALE AGREEMENT
During 1995, Brissette Broadcasting signed a stock purchase agreement which
called for the sale of all issued and outstanding shares of capital stock of
Brissette Broadcasting to Benedek Broadcasting Corporation (Benedek
Broadcasting) in exchange for cash and preferred stock. The total purchase price
of approximately $270,000,000 may be adjusted based on targeted working capital
at the closing date. The sale is contingent upon Benedek Broadcasting obtaining
financing and FCC approval.
Brissette Broadcasting also entered into management continuity agreements
with certain employees in order to provide them a severance benefit that would
become effective on the date of a change in ownership. The severance benefit, of
approximately $887,000, is based on annual wages and will be paid to the station
management employees if they are terminated within one year subsequent to the
change in ownership. Corporate employees will receive a severance benefit
regardless if they are terminated or not. These amounts are not accrued for in
the March 31, 1996 financial statements.
F-65
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
_____________________________________ _____________________________________
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information............................... 2
Certain Definitions................................. 4
Market and Industry Data............................ 5
Summary............................................. 6
Risk Factors........................................ 23
The Acquisitions.................................... 30
The Financing Plan.................................. 31
Use of Proceeds..................................... 31
Capitalization...................................... 32
Pro Forma Financial Statements...................... 33
Selected Financial Data............................. 40
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 42
Exchange Offer...................................... 51
Business............................................ 59
Management.......................................... 93
Stock Ownership..................................... 96
Description of Other Indebtedness................... 96
Description of the Notes............................ 99
Description of Capital Stock........................ 126
Certain Federal Income Tax Consequences ............ 132
Plan of Distribution................................ 135
Legal Matters....................................... 135
Experts............................................. 135
Index to Financial Statements....................... F-1
</TABLE>
UNTIL , 1996 ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
_____________________________________ _____________________________________
_____________________________________ _____________________________________
$170,000,000
BENEDEK COMMUNICATIONS
CORPORATION
13 1/4% SENIOR SUBORDINATED
DISCOUNT NOTES DUE 2006
------------------------------
PROSPECTUS
------------------
_____________________________________ _____________________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's authority to indemnify its officers and directors is
governed by the provisions of Section 145 of the General Corporation Law of the
State of Delaware (the 'GCL') and by the Certificate of Incorporation of the
Registrant. The Certificate of Incorporation of the Registrant provides that the
Registrant shall, to the fullest extent permitted by Section 145 of the GCL, (i)
indemnify any and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities or other
matters referred to in or covered by said section, and (ii) advance expenses to
any and all said persons, and that such indemnification and advances shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in their official capacities and as to
action in another capacity while holding such offices, and shall continue as to
persons who have ceased to be directors, officers, employees or agents and shall
inure to the benefit of the heirs, executors and administrators of such person.
In addition, the Certificate of Incorporation of the Registrant provides for the
elimination of personal liability of directors of the Registrant to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director, to the fullest extent permitted by the GCL, as amended and
supplemented.
The Registrant has entered into indemnification agreements with each of its
directors and executive officers whereby the Registrant will, in general,
indemnify such directors and executive officers, to the extent permitted by the
Registrant's Certificate of Incorporation or the laws of the State of Delaware,
against any expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement incurred in connection with any actual or threatened action
or proceeding to which such director or officer is made or threatened to be made
a party by reason of the fact that such person is or was a director or officer
of the Registrant.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<C> <S>
3.1 -- Certificate of Incorporation of the Registrant.
3.2 -- By-laws of the Registrant.
3.3 -- Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 15.0% Exchangeable Redeemable Senior Preferred Stock Due 2007 and Qualifications,
Limitations and Restrictions thereof.
3.4 -- Certificate of Designation, Preferences and Relative, Participating, Optional and Other Special Rights of
Series C Junior Discount Preferred Stock and Qualifications, Limitations and Restrictions thereof.
4.1 -- Indenture dated as of May 15, 1996 between the Registrant and United States Trust Company of New York,
relating to the 13 1/4% Senior Subordinated Discount Notes due 2006.
4.2 -- Form of 13 1/4% Senior Subordinated Discount Note due 2006 (included in Exhibit 4.1 hereof).
4.3 -- Indenture dated as of March 1, 1995 between Benedek Broadcasting Corporation ('Benedek Broadcasting') and
The Bank of New York, relating to the 11 7/8% Senior Secured Notes due 2005 of Benedek Broadcasting.
4.4 -- Form of 11 7/8% Senior Secured Note due 2005 of Benedek Broadcasting (included in Exhibit 4.3 hereof).
4.5 -- Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 15.0% Exchangeable Redeemable Senior Preferred Stock Due 2007 and Qualifications,
Limitations and Restrictions thereof (filed as Exhibit 3.3 hereof).
4.6 -- Certificate of Designation, Preferences and Relative, Participating, Optional and Other Special Rights of
Series C Junior Discount Preferred Stock and Qualifications, Limitations and Restrictions thereof (filed
as Exhibit 3.4 hereof).
4.7 -- Warrant Agreement dated as of June 5, 1996 between the Registrant and IBJ Schroder Bank & Trust Company
with respect to Class A Common Stock of the Registrant.
*5 -- Opinion of Shack & Siegel, P.C., counsel for Registrant.
10.1 -- Purchase Agreement dated May 30, 1996 between the Registrant and Goldman, Sachs & Co.
</TABLE>
II-1
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<C> <S>
10.2 -- Exchange and Registration Rights Agreement dated May 30, 1996 between the Registrant and Goldman, Sachs &
Co. with respect to the 13 1/4% Senior Subordinated Discount Notes of the Registrant.
10.3 -- Placement Agreement dated June 5, 1996 among the Registrant, Goldman, Sachs & Co. and BT Securities
Corporation.
10.4 -- Exchange and Registration Rights Agreement dated June 5, 1996 among the Registrant, Goldman, Sachs & Co.
and BT Securities Corporation with respect to the 15.0% Exchangeable Redeemable Senior Preferred Stock due
2007 of the Registrant.
10.5 -- Warrant Agreement dated as of June 5, 1996 between the Registrant and IBJ Schroder Bank & Trust Company
(filed as Exhibit 4.7 hereof).
10.6 -- Contingent Warrant Escrow Agreement dated June 5, 1996 between the Registrant and IBJ Schroder Bank &
Trust Company.
10.7 -- Common Stock Registration Rights Agreement dated as of June 5, 1996 among the Registrant, Goldman, Sachs
& Co. and BT Securities Corporation.
10.8 -- Credit Agreement dated as of June 6, 1996 among the Registrant, Benedek Broadcasting, the Lenders listed
therein, Pearl Street L.P., Goldman, Sachs & Co. and Canadian Imperial Bank of Commerce, New York Agency.
10.9 -- Guaranty dated as of June 6, 1996 by the Registrant in favor of Canadian Imperial Bank of Commerce, New
York Agency.
10.10 -- Pledge Agreement dated as of June 6, 1996 between the Registrant and Canadian Imperial Bank of Commerce,
New York Agency.
10.11 -- Security Agreement dated as of June 6, 1996 between the Registrant and Canadian Imperial Bank of
Commerce, New York Agency.
10.12 -- Collateral Account Agreement dated as of June 6, 1996 between the Registrant and Canadian Imperial Bank
of Commerce, New York Agency.
10.13 -- Third Party Account Agreement dated as of June 6, 1996 among the Registrant, AMCORE Bank, N.A., Rockford
and Canadian Imperial Bank of Commerce, New York Agency.
10.14 -- Form of Indemnity Agreement between the Registrant and each of its executive officers and directors.
*10.15 -- Option Agreement dated as of June 6, 1996 between the Registrant and K. James Yager.
12.1 -- Statement of computation of ratio of earnings to fixed charges.
21 -- Subsidiaries of the Registrant.
*23.1 -- Consent of Shack & Siegel, P.C. (included in Exhibit 5 hereof).
23.2 -- Consent of McGladrey & Pullen, LLP with respect to the Registrant.
23.3 -- Consent of Arthur Andersen LLP with respect to the TV Division of Stauffer Communications, Inc.
23.4 -- Consent of Arthur Andersen LLP with respect to Brissette Broadcasting Corporation.
24.1 -- Power of Attorney of the Registrant (included on page II-4 hereof).
25 -- Statement of Eligibility of Trustee on Form T-1 related to the Notes.
27 -- Financial Data Schedule.
99.1 -- Form of Letter of Transmittal relating to the 13 1/4% Senior Subordinated Discount Notes due 2006.
99.2 -- Form of Notice of Guaranteed Delivery relating to the 13 1/4% Senior Subordinated Discount Notes due
2006.
99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees relating to the
13 1/4% Senior Subordinated Discount Notes due 2006.
99.4 -- Form of Letter to Clients relating to the 13 1/4% Senior Subordinated Discount Notes due 2006.
</TABLE>
- ------------
* To be filed by amendment.
(b) Financial Statement Schedules:
The following consolidated financial statement schedule is included in Part
II of this Registration Statement and should be read in conjunction with the
consolidated financial statements and notes thereto:
Independent Auditors Report
Schedule II -- Valuation and Qualifying Accounts
II-2
<PAGE>
<PAGE>
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on August 2, 1996.
BENEDEK COMMUNICATIONS CORPORATION
(Registrant)
By: /s/ RONALD L. LINDWALL
-----------------------------------
RONALD L. LINDWALL,
SENIOR VICE PRESIDENT-FINANCE, CHIEF
FINANCIAL OFFICER AND TREASURER
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby appoints K. James Yager and Ronald L. Lindwall, and each of them acting
singly, as his attorney-in-fact to sign in his behalf individually and in the
capacity as stated below and to file all amendments and post-effective
amendments to the Registration Statement, which amendment or amendments may make
such changes and additions to the Registration Statement as such
attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ A. RICHARD BENEDEK Chairman, Chief Executive Officer (Principal August 2, 1996
- ------------------------------------------ Executive Officer) and Director
A. RICHARD BENEDEK
/s/ K. JAMES YAGER President and Director August 2, 1996
- ------------------------------------------
K. JAMES YAGER
/s/ RONALD L. LINDWALL Senior Vice President-Finance, Chief August 2, 1996
- ------------------------------------------ Financial Officer, Treasurer (Principal
RONALD L. LINDWALL Financial and Principal Accounting
Officer) and Director
/s/ JAY KRIEGEL Director August 2, 1996
- ------------------------------------------
JAY KRIEGEL
/s/ PAUL S. GOODMAN Director August 2, 1996
- ------------------------------------------
PAUL S. GOODMAN
</TABLE>
II-4
<PAGE>
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
<TABLE>
<S> <C>
Independent Auditors Report................................................................................ S-2
Schedule II -- Valuation and Qualifying Accounts........................................................... S-3
</TABLE>
S-1
<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
Rockford, Illinois
Our audit of the consolidated financial statements of Benedek Broadcasting
Corporation and subsidiary included Schedule II contained herein, for the years
ended December 31, 1993, 1994 and 1995.
In our opinion this schedule presents fairly the information required to be
set forth therein in conformity with generally accepted accounting principles.
MCGLADREY & PULLEN, LLP
Rockford, Illinois
February 9, 1996
S-2
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND DEDUCTIONS END OF
OF PERIOD EXPENSES DESCRIBED(1) PERIOD
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Deducted from asset account -- allowance for doubtful
accounts:
Year ended December 31, 1993............................. $153,137 $253,437 $314,796 $ 91,778
Year ended December 31, 1994............................. 91,778 130,622 122,132 100,268
Year ended December 31, 1995............................. 100,268 201,382 52,627 249,023
</TABLE>
- ------------
(1) Uncollectable accounts written off, net of recoveries.
S-3
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NO. DESCRIPTION NUMBERING SYSTEM
- ------- --------------------------------------------------------------------------------------- -------------------
<C> <S> <C>
3.1 -- Certificate of Incorporation of the Registrant......................................
3.2 -- By-laws of the Registrant...........................................................
3.3 -- Certificate of Designation of the Powers, Preferences and Relative, Participating,
Optional and Other Special Rights of 15.0% Exchangeable Redeemable Senior Preferred
Stock Due 2007 and Qualifications, Limitations and Restrictions thereof..............
3.4 -- Certificate of Designation, Preferences and Relative, Participating, Optional and
Other Special Rights of Series C Junior Discount Preferred Stock and Qualifications,
Limitations and Restrictions thereof.................................................
4.1 -- Indenture dated as of May 15, 1996 between the Registrant and United States Trust
Company of New York, relating to the 13 1/4% Senior Subordinated Discount Notes due
2006.................................................................................
4.2 -- Form of 13 1/4% Senior Subordinated Discount Note due 2006 (included in Exhibit 4.1
hereof)..............................................................................
4.3 -- Indenture dated as of March 1, 1995 between Benedek Broadcasting Corporation
('Benedek Broadcasting') and The Bank of New York, relating to the 11 7/8% Senior
Secured Notes due 2005 of Benedek Broadcasting.......................................
4.4 -- Form of 11 7/8% Senior Secured Note due 2005 of Benedek Broadcasting (included in
Exhibit 4.3 hereof)..................................................................
4.5 -- Certificate of Designation of the Powers, Preferences and Relative, Participating,
Optional and Other Special Rights of 15.0% Exchangeable Redeemable Senior Preferred
Stock Due 2007 and Qualifications, Limitations and Restrictions thereof (filed as
Exhibit 3.3 hereof)..................................................................
4.6 -- Certificate of Designation, Preferences and Relative, Participating, Optional and
Other Special Rights of Series C Junior Discount Preferred Stock and Qualifications,
Limitations and Restrictions thereof (filed as Exhibit 3.4 hereof)...................
4.7 -- Warrant Agreement dated as of June 5, 1996 between the Registrant and IBJ Schroder
Bank & Trust Company with respect to Class A Common Stock of the Registrant..........
*5 -- Opinion of Shack & Siegel, P.C., counsel for Registrant.............................
10.1 -- Purchase Agreement dated May 30, 1996 between the Registrant and Goldman, Sachs &
Co...................................................................................
10.2 -- Exchange and Registration Rights Agreement dated May 30, 1996 between the Registrant
and Goldman, Sachs & Co. with respect to the 13 1/4% Senior Subordinated Discount
Notes of the Registrant..............................................................
10.3 -- Placement Agreement dated June 5, 1996 among the Registrant, Goldman, Sachs & Co.
and BT Securities Corporation........................................................
10.4 -- Exchange and Registration Rights Agreement dated June 5, 1996 among the Registrant,
Goldman, Sachs & Co. and BT Securities Corporation with respect to the 15.0%
Exchangeable Redeemable Senior Preferred Stock due 2007 of the Registrant............
10.5 -- Warrant Agreement dated as of June 5, 1996 between the Registrant and IBJ Schroder
Bank & Trust Company (filed as Exhibit 4.7 hereof)...................................
10.6 -- Contingent Warrant Escrow Agreement dated June 5, 1996 between the Registrant and
IBJ Schroder Bank & Trust Company....................................................
10.7 -- Common Stock Registration Rights Agreement dated as of June 5, 1996 among the
Registrant, Goldman, Sachs & Co. and BT Securities Corporation.......................
10.8 -- Credit Agreement dated as of June 6, 1996 among the Registrant, Benedek
Broadcasting, the Lenders listed therein, Pearl Street L.P., Goldman, Sachs & Co. and
Canadian Imperial Bank of Commerce, New York Agency..................................
10.9 -- Guaranty dated as of June 6, 1996 by the Registrant in favor of Canadian Imperial
Bank of Commerce, New York Agency....................................................
10.10 -- Pledge Agreement dated as of June 6, 1996 between the Registrant and Canadian
Imperial Bank of Commerce, New York Agency...........................................
10.11 -- Security Agreement dated as of June 6, 1996 between the Registrant and Canadian
Imperial Bank of Commerce, New York Agency...........................................
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NO. DESCRIPTION NUMBERING SYSTEM
- ------- --------------------------------------------------------------------------------------- -------------------
<C> <S> <C>
10.12 -- Collateral Account Agreement dated as of June 6, 1996 between the Registrant and
Canadian Imperial Bank of Commerce, New York Agency..................................
10.13 -- Third Party Account Agreement dated as of June 6, 1996 among the Registrant, AMCORE
Bank, N.A., Rockford and Canadian Imperial Bank of Commerce, New York Agency.
10.14 -- Form of Indemnity Agreement between the Registrant and each of its executive
officers and directors...............................................................
*10.15 -- Option Agreement dated as of June 6, 1996 between the Registrant and K. James
Yager................................................................................
12.1 -- Statement of computation of ratio of earnings to fixed charges......................
21 -- Subsidiaries of the Registrant......................................................
*23.1 -- Consent of Shack & Siegel, P.C. (included in Exhibit 5 hereof)......................
23.2 -- Consent of McGladrey & Pullen, LLP with respect to the Registrant...................
23.3 -- Consent of Arthur Andersen LLP with respect to the TV Division of Stauffer
Communications, Inc..................................................................
23.4 -- Consent of Arthur Andersen LLP with respect to Brissette Broadcasting
Corporation..........................................................................
24.1 -- Power of Attorney of the Registrant (included on page II-4 hereof)..................
25 -- Statement of Eligibility of Trustee on Form T-1 related to the Notes................
27 -- Financial Data Schedule.............................................................
99.1 -- Form of Letter of Transmittal relating to the 13 1/4% Senior Subordinated Discount
Notes due 2006.......................................................................
99.2 -- Form of Notice of Guaranteed Delivery relating to the 13 1/4% Senior Subordinated
Discount Notes due 2006..............................................................
99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees relating to the 13 1/4% Senior Subordinated Discount Notes due 2006.........
99.4 -- Form of Letter to Clients relating to the 13 1/4% Senior Subordinated Discount Notes
due 2006.............................................................................
</TABLE>
- ------------
* To be filed by amendment.
STATEMENT OF DIFFERENCE
The service mark shall be expressed as ..........'sm'
The section mark shall be expressed as...........'SS'
<PAGE>
<PAGE>
CERTIFICATE OF INCORPORATION
OF
BENEDEK COMMUNICATIONS CORPORATION
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
ARTICLE ONE
NAME
The name of the corporation (hereinafter called the "Corporation") is
BENEDEK COMMUNICATIONS CORPORATION.
ARTICLE TWO
REGISTERED OFFICE
The address, including street, number, city and county, of the registered
office of the Corporation in the State of Delaware is 1013 Centre Road, City of
Wilmington, County of New Castle, and the name of the registered agent of the
Corporation in the State of Delaware at such address is The Corporation Service
Company.
ARTICLE THREE
PURPOSES
The nature of the business or purposes to be conducted or promoted is:
<PAGE>
<PAGE>
To engage in any lawful act or activity for which
corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE FOUR
CAPITAL STRUCTURE
4.1 Authorized Shares. The total number of shares of capital stock
which the Corporation shall have authority to issue is 52,500,000 shares,
consisting of three classes of capital stock:
(a) 25,000,000 shares of Class A Common Stock, par value
$.01 per share (the "Class A Shares");
(b) 25,000,000 shares of Class B Common Stock, par value
$.01 per share (the "Class B Shares" and together
with the Class A Shares, the "Common Shares"); and
(c) 2,500,000 shares of Preferred Stock, par value $.01
per share (the "Preferred Shares").
4.2 Designations, Preferences, etc. The designations, preferences,
powers, qualifications, and special or relative rights, or privileges of the
capital stock of the Corporation shall be as set forth in ARTICLE FIVE and
ARTICLE SIX below.
ARTICLE FIVE
COMMON SHARES
5.1 Identical Rights. Except as herein otherwise expressly provided in
this ARTICLE FIVE, all Common Shares shall be identical and shall entitle the
holders thereof to the same rights and privileges.
5.2 Dividends. (a) When, as, and if dividends are declared
by the Corporation's Board of Directors, whether payable in cash, in property,
or in securities of the Corporation, the holders of Common Shares shall be
entitled to share equally in and to receive,
2
<PAGE>
<PAGE>
in accordance with the number of Common Shares held by each such holder, all
such dividends, except that if dividends are declared that are payable in Common
Shares, such stock dividends shall be payable at the same rate on each class of
Common Shares and shall be payable only in Class A Shares to holders of Class A
Shares and in Class B Shares to holders of Class B Shares.
(b) Dividends payable under this Paragraph 5.2 shall be paid
to the holders of record of the outstanding Common Shares as their names shall
appear on the stock register of the Corporation on the record date fixed by the
Board of Directors in advance of declaration and payment of each dividend. Any
Common Shares issued as a dividend pursuant to this Paragraph 5.2 shall, when so
issued, be duly authorized, validly issued, fully paid and non-assessable, and
free of all liens and charges. The Corporation shall not issue fractions of
Common Shares on payment of such dividend but shall issue a whole number of
shares to such holder of Common Shares rounded up or down in the Corporation's
sole discretion to the nearest whole number, without compensation to the
stockholder whose fractional share has been rounded down or from any stockholder
whose fractional share has been rounded up.
(c) Notwithstanding anything contained herein to the contrary,
no dividends on Common Shares shall be declared by the Corporation's Board
of Directors or paid or set apart for payment by the Corporation at any time
that such declaration, payment, or setting apart is prohibited by applicable
law.
5.3 Stock Splits. The Corporation shall not in any manner subdivide
(by any stock split, reclassification, stock dividend, recapitalization, or
otherwise) or combine the outstanding shares of one class of Common Shares
unless the outstanding shares of all classes
3
<PAGE>
<PAGE>
of Common Shares shall be proportionately subdivided or combined.
5.4 Liquidation Rights. Upon any voluntary or involuntary
liquidation, dissolution, or winding-up of the affairs of the Corporation, after
payment shall have been made to holders of outstanding Preferred Shares, if any,
of the full amount to which they are entitled pursuant to this Certificate of
Incorporation and any resolutions that may be adopted from time to time by the
Corporation's Board of Directors, in accordance with ARTICLE SIX below (for the
purposes of fixing the voting rights, designations, preferences, and relative,
participating, optional, or other special rights of any series of Preferred
Shares), the holders of Common Shares shall be entitled, to the exclusion of the
holders of Preferred Shares, if any, to share ratably, in accordance with the
number of Common Shares held by each such holder, in all remaining assets of the
Corporation available for distribution among the holders of Common Shares,
whether such assets are capital, surplus, or earnings. For the purposes of this
Paragraph 5.4, neither the consolidation or merger of the Corporation with or
into any other corporation or corporations in which the stockholders of the
Corporation receive capital stock and/or other securities (including debt
securities) of the acquiring corporation (or of the direct or indirect parent
corporation of the acquiring corporation), nor the sale, lease, or transfer by
the Corporation of all or any part of its assets, nor the reduction of the
capital stock of the Corporation, shall be deemed to be a voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation as those
terms are used in this Paragraph 5.4.
5.5 Voting Rights. (a) The holders of the Common Shares
shall vote as a single class on all matters submitted to a vote of the
stockholders, with each Class A Share entitled to one vote and each Class B
Share entitled to ten votes, except with respect to any
4
<PAGE>
<PAGE>
Going Private Transaction with a Permitted Holder (as such terms are defined
below), which shall be governed by subparagraph (b) below, and as otherwise
provided by law.
(b) With respect to any Going Private Transaction
between the Corporation and a Permitted Holder, the holders of Class A Shares
and Class B Shares shall vote as a single class, with each Class A Share and
Class B Share entitled to one vote. For purposes of this Paragraph 5.5,
the term "Going Private Transaction" shall mean any transaction that is
a "Rule 13e-3 Transaction," as such term is defined in Rule 13e-3(a)(3),
17 C.F.R. 'SS' 240.13e(3), as amended from time to time, promulgated under
the Securities Exchange Act of 1934, as amended; provided, however, that the
term "affiliate" as used in Rule 13e-3(a)(3)(i) shall be deemed to include an
Affiliate, as defined herein. For purposes of this Paragraph 5.5, the term
Permitted Holders shall mean (i) A. Richard Benedek; (ii) family members or
relatives of A. Richard Benedek; (iii) any trusts created for the benefit
of the persons described in clauses (i), (ii) or (iv) of this paragraph or any
trust for the benefit of any trust; (iv) in the event of the death or
incompetence of any person described in clauses (i) or (ii) of this paragraph
such person's estate, executor, administrator, committee or other personal
representative or beneficiaries; or (v) any Affiliate of A. Richard Benedek.
For purposes of this Paragraph 5.5 the term Affiliate of any specified person
means (i) any other person which, directly or indirectly, is in control of, is
controlled by or is under common control with such specified person or (ii) any
other person who is a director or officer (A) of such specified person, (B) of
any subsidiary of such specified person or (C) of any person described in clause
(i) above. For purposes hereof (a) control of a person means the power, direct
or indirect, to direct or cause the direction of the management and policies
of such person whether by contract or otherwise
5
<PAGE>
<PAGE>
and (b) beneficial ownership of 5% or more of the voting common equity (on a
fully diluted basis) or warrants to purchase such equity (whether or not
currently exercisable) of a person shall be deemed to be control of such person;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
5.6 No Preemptive or Subscription Rights. No holder of
Common Shares shall be entitled to preemptive or subscription rights.
5.7 Conversion Rights.
(a) Each Class B Share shall be convertible, subject
to compliance with Federal Communications Commission rules and regulations, at
the option of its holder, into one fully paid and non-assessable Class A Share
at any time.
(b) Automatic Conversion. Each Class B Share shall
convert automatically into one fully paid and non-assessable Class A Share upon
its sale, gift, or other transfer, voluntary or involuntary, to a party that is
not affiliated with _______________, subject to compliance with Federal
Communications Commission rules and regulations, such a foregoing automatic
conversion event shall be referred to hereinafter as an "Event of Automatic
Conversion."
(c) Voluntary Conversion Procedure. At the time of
a voluntary conversion, the holder of Class B Shares shall deliver to the
office of the Corporation or any transfer agent for the Class A Shares (i) the
certificate or certificates representing the Class B Shares to be converted,
duly endorsed in blank or accompanied by proper instruments of transfer, and
(ii) written notice to the Corporation stating that such holder elects to
convert such share or shares and stating the name and addresses in which each
certificate for Class A Shares
6
<PAGE>
<PAGE>
issued upon such conversion is to be issued. Conversion shall be deemed to have
been affected at the close of business on the date when such delivery is made to
the Corporation of the shares to be converted, and the person exercising such
voluntary conversion shall be deemed to be the holder of record of the number of
Class A Shares issuable upon such conversion at such time. The Corporation shall
promptly deliver certificates evidencing the appropriate number of Class A
Shares to such person.
(d) Automatic Conversion Procedure. Promptly upon
the occurrence of an Event of Automatic Conversion such that Class B Shares
are converted automatically into Class A Shares, the holder of such shares shall
surrender the certificate or certificates therefor, duly endorsed in blank or
acompanied by proper instruments of transfer, at the office of the Corporation,
or of any transfer agent for the Class A Shares, and shall give written notice
to the Corporation, at such office: (i) stating that the shares are being
converted pursuant to an Event of Automatic Conversion into Class A Shares as
provided in Paragraph 5.7(b) of this ARTICLE FIVE, (ii) specifying the Event
of Automatic Conversion (and, if the occurrence of such event is within the
control of the transferor, stating the transferor's intent to effect an Event
of Automatic Conversion), (iii) identifying the number of Class B Shares being
converted and (iv) setting out the name or names (with addresses) and
denominations in which the certificate or certificates for Class A Shares
shall be issued and shall include instructions for delivery thereof. Delivery of
such notice together with the certificates representing the Class B Shares shall
obligate the Corporation to issue certificates representing such Class A
Shares. Thereupon the Corporation or its transfer agent shall promptly issue
and deliver at such stated address to such holder or to the transferee of
Class B Shares a certificate or certificates for the number of Class
7
<PAGE>
<PAGE>
A Shares to which such holder or transferee is entitled registered in the name
of such holder, the designee of such holder or transferee as specified in such
notice.
To the extent permitted by law, conversion pursuant to an Event of
Automatic Conversion shall be deemed to have been affected as of the date on
which the Event of Automatic Conversion has occurred (such time being the
"Conversion Time"). the person entitled to receive the Class A Shares issuable
upon such conversion shall be treated for all purposes as the record holder of
such Class A Shares at and as of the Conversion Time, and the right of such
person as a holder of Class B Shares shall cease and terminate at and as of the
Conversion Time, in each case without regard to any failure by the holder to
deliver the certificates or the notice required by this subpragraph (d).
(e) Unconverted Shares; Notice Required. In the event of the
conversion of less than all of the Class B Shares evidenced by a certificate
surrendered to the Corporation in accordance with the procedures of Paragraph
5.7(c) or (d), the Corporation shall execute and deliver to or upon the written
order of the holder of such certificate, without charge to such holder, a new
certificate evidencing the number of Class B Shares not converted. Class B
shares shall not be transferred on the books of the Corporation unless the
Corporation shall have received from the holder thereof the written notice
described herein.
(f) Reissue of Shares. Class B Shares that are converted into
Class A Shares as provided herein shall be retired and cancelled and shall
not be reissued.
(g) Reservation. The Corporation hereby reserves and shall at
all times reserve and keep available, out of its authorize and unissued Class
A Shares, for the purposes of effecting conversions, such number of duly
authorized Class A Shares as shall from time to
8
<PAGE>
<PAGE>
time be sufficient to effect the conversion of all outstanding Class B Shares.
The Corporation covenants that all the Class A Shares so issuable shall, when so
issued, be duly and validly issued, fully paid and non-assessable, and free from
liens and charges with respect to the issue. The Corporation will take all such
action as may be necessary to assure that all such Class A Shares may be so
issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Class A Shares
may be listed. The Corporation will not take any action that results in any
adjustment of the conversion ratio if the total number of Class A Shares issued
and issuable after such action upon conversion of the Class A Shares then
authorized by this Certificate of Incorporation.
5.8 Consideration on Merger, Consolidation, etc. In any
merger, consolidation, or business combination, the consideration to be received
per share by the holders of Class A Shares and Class B Shares must be identical
for each class of stock, except that in any such transaction in which shares of
common stock are to be distributed, such shares may differ as to voting rights
to the extent that voting rights now differ among the Class A Shares and the
Class B Shares.
ARTICLE SIX
PREFERRED SHARES
Authority is hereby expressly granted to and vested in the board of
directors of the Corporation to provide for the issue of the Preferred Shares in
one or more series and in connection therewith to fix by resolutions providing
for the issue of such series of the number of shares to be included in such
series and the designations and such voting powers, full or limited, or no
voting powers, and such of the preferences and relative, participating,
operational
9
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<PAGE>
or other special rights, and the qualifications, limitations or restrictions
thereof, of such series of the Preferred Shares which are not fixed by the
Certificate of Incorporation, to the full extent now or hereafter permitted by
the laws of the State of Delaware. Without limiting the generality of the grant
of authority contained in the preceding sentence, the board of directors is
authorized to determine any or all of the following, and the shares of each
series may vary from the shares of any other series in any or all of the
following aspects:
(a) The number of shares of such series (which may
subsequently be increased, except as otherwise
provided by the resolutions of the board of directors
providing for the issue of such series, or decreased
to a number not less than the number of shares then
outstanding) and the distinctive designation thereof;
(b) The dividend rights, if any, of such series, the
dividend preferences, if any, as between such series
and any other class or series of stock, whether and
the extent to which shares of such series shall be
entitled to participate in dividends with shares of
any other series or class of stock, whether and the
extent to which dividends on such series shall be
cumulative, and any limitations, restrictions or
conditions on the payment of such dividends;
(c) The time or times during which, the price or prices
at which, and any other terms or conditions on which
the shares of such series may be redeemed, if
redeemable;
(d) The rights of such series, and the preferences, if
any, as between such series and any other class or
series of stock, in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of
the Corporation and whether and the extent to which
shares of any such series shall be entitled to
participate in such event with any other class or
series of stock;
(e) The voting powers, if any, in addition to the voting
powers prescribed by law of shares of such series,
and the terms of exercise of such voting powers;
(f) Whether shares of such series shall be convertible
into or exchangeable for shares of any other series
or class of stock, or any other securities, and the
terms and conditions, if any, applicable to such
right; and
(g) The terms and conditions, if any, of any purchase,
retirement or sinking
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fund which may be provided for the shares of such
series.
ARTICLE SEVEN
INCORPORATOR
The name and the mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Steven M. Lutt, Esq. Shack & Siegel, P.C.
530 Fifth Avenue
New York, NY 10036
ARTICLE EIGHT
PERPETUAL EXISTENCE
The Corporation is to have perpetual existence.
ARTICLE NINE
COMPROMISE WITH CREDITORS
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing
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three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
ARTICLE TEN
BY-LAWS
In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter, or
repeal the by-laws, and to adopt any new by-law, of the Corporation.
ARTICLE ELEVEN
LIMITATION OF LIABILITY OF DIRECTORS
To the fullest extent permitted by the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented, no director
shall be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
ARTICLE TWELVE
REGULATORY COMPLIANCE
The Corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, (i) indemnify any and all persons whom it shall have
power to indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by
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said section, and (ii) advance expenses to any and all said persons. The
indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
vote of stockholders or disinterested directors or otherwise, both as to action
in their official capacities and as to action in another capacity while holding
such offices, and shall continue as to persons who have ceased to be directors,
officers, employees or agents and shall inure to the benefit of the heirs,
executors and administrators of such persons.
THIRTEEN: From time to time any of the provisions of this certificate
of incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said law, and all
rights at any time conferred upon the stockholders of the Corporation by this
certificate of incorporation are granted subject to the provisions of this
Article THIRTEEN.
Signed on April 10, 1996.
/s/ Steven M. Lutt
--------------------------------
Steven M. Lutt, Incorporator
Shack & Siegel, P.C.
530 Fifth Avenue
New York, NY 10036
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on April 9, 1996, before me, a Notary Public
duly authorized by law to take acknowledgement of deeds, personally came Steven
M. Lutt, the incorporator who duly executed the foregoing certificate of
incorporation before me and acknowledged the same to be her act and deed, and
that the facts therein stated are true.
GIVEN under my hand on April 9, 1996.
/s/ Edward J. Shiffbauer
------------------------
Notary Public
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BY-LAWS
OF
BENEDEK COMMUNICATIONS CORPORATION
(Formed under the laws of the State of Delaware)
--------------
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting. A meeting of the stockholders shall
be held annually for the election of directors and the transaction of other
business on such date in each year as may be determined by the Board of
Directors.
Section 2. Special Meetings. Special meetings of the
stockholders may be called by the Board of Directors or by the President and
shall be called by the Board upon the written request of the holders of record
of a majority of the outstanding shares of the Corporation entitled to vote at
the meeting requested to be called. Such request shall state the purpose or
purposes of the proposed meeting.
Section 3. Place of Meetings. Meetings of stockholders shall
be held at such place, within or without the State of Delaware, as may be fixed
by the Board of Directors. If no place is so fixed, such meetings shall be held
at the office of the Corporation in the State of Delaware.
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Section 4. Notice of Meetings. Notice of each meeting of
stockholders shall be given in writing and shall state the place, date and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. Notice of a special meeting shall indicate that
it is being issued by or at the direction of the person or persons calling or
requesting the meeting.
If, at any meeting, action is proposed to be taken which
would, if taken, entitle objecting stockholders to receive payment for their
shares, the notice shall include a statement of that purpose and to that effect.
A copy of the notice of each meeting shall be given,
personally or by first class mail, not less than 10 nor more than 60 days before
the date of the meeting to each stockholder entitled to vote at such meeting. If
mailed, such notice is given when deposited in the United States mail, with
postage thereon prepaid, directed to the stockholder at his address as it
appears on the record of stockholders. In the event of a change of address, he
shall file with the Secretary of the Corporation a written request that his
address be changed in the records of the Corporation, in which event notices to
him shall be directed to him at such other address.
When a meeting is adjourned to another time or place, it shall
not be necessary to give any notice of the adjourned meeting if the time and
place to which the meeting is adjourned are announced at the meeting at which
the adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a new record date
for the adjourned meeting, or if the adjourned meeting is more than 30 days
after the
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adjournment, a notice of the adjourned meeting shall be given to each
stockholder of record on the new record date entitled to notice under the
preceding paragraphs of this Section 4.
Section 5. Waiver of Notice. Notice of a meeting need not be
given to any stockholder who submits a signed waiver of notice, in person or by
proxy, whether before or after the meeting. The attendance of any stockholder at
a meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 6. Inspectors of Election. The Board of Directors, in
advance of any stockholders' meeting, may appoint one or more inspectors to act
at the meeting or any adjournment thereof. If inspectors are not so appointed,
the person presiding at a stockholders' meeting may, and on the request of any
stockholder entitled to vote thereat shall, appoint two inspectors. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board in advance of the meeting or at the meeting by the
person presiding thereat. Each inspector, before entering upon the discharge of
his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are proper
to conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting or
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any stockholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and execute a
certificate of any fact found by them. Any report or certificate made by them
shall be prima facie evidence of the facts stated and of the vote as certified
by them.
Section 7. List of Stockholders at Meetings. A list of
stockholders as of the record date, certified by the Secretary or Assistant
Secretary or by a transfer agent, shall be prepared at least 10 days prior to
each meeting. Such list shall be open to the examination of any stockholder for
purposes germane to the meeting and may be inspected by any stockholder who is
present. If the right to vote at any meeting is challenged, the inspectors of
election, or person presiding thereat, shall require such list of stockholders
to be produced as evidence of the right of the persons challenged to vote at
such meeting, and all persons who appear from such list to be stockholders
entitled to vote thereat may vote at such meeting.
Section 8. Qualification of Voters. Unless otherwise provided
in the Certificate of Incorporation, every stockholder of record shall be
entitled at every meeting of stockholders to one vote for every share standing
in his name on the record of stockholders.
Treasury shares as of the record date and shares held as of
the record date by another domestic or foreign corporation of any type or kind,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held as of the record date by the Corporation, shall
not be shares entitled to vote or to be counted in determining the total number
of outstanding shares.
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Shares held by an administrator, executor, guardian,
conservator, committee, trustee or other fiduciary, may be voted by him, either
in person or by proxy, without transfer of such shares into his name.
Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such officer, agent or proxy as
the by-laws of such corporation may provide, or, in the absence of such
provision, as the board of directors of such corporation may determine.
A stockholder shall not sell his vote or issue a proxy to vote
to any person for any sum of money or anything of value except as permitted by
law.
Section 9. Quorum of Stockholders. The holders of a majority
of the shares entitled to vote thereat shall constitute a quorum at a meeting of
stockholders for the transaction of any business, provided that when a specified
item of business is required to be voted on by a class or series, voting as a
class, the holders of a majority of the shares of such class or series shall
constitute a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any stockholders.
The stockholders who are present, in person or by proxy, and
who are entitled to vote may, by a majority of votes cast, adjourn the meeting
despite the absence of a quorum.
Section 10. Proxies. Every stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent without a meeting may
authorize another person or persons to act for him by proxy.
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Every proxy must be signed by the stockholder or his
attorney-in-fact. No proxy shall be valid after the expiration of three years
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the stockholder executing it, except as
otherwise provided by law.
Except as otherwise required by applicable law, the authority
of the holder of a proxy to act shall not be revoked by the incompetence or
death of the stockholder who executed the proxy unless before the authority is
exercised, written notice of an adjudication of such incompetence or of such
death is received by the Secretary or any Assistant Secretary.
Section 11. Vote or Consent of Stockholders. Directors shall,
except as otherwise required by law, be elected by a plurality of the votes cast
at a meeting of stockholders by the holders of shares entitled to vote in the
election.
Whenever any corporate action, other than the election of
directors, is to be taken by vote of stockholders, it shall, except as otherwise
required by law, be authorized by a majority of the votes cast at a meeting of
stockholders by the holders of shares entitled to vote thereon.
Whenever stockholders are required or permitted to take any
action by vote, such action may be taken without a meeting, without prior notice
and without a vote, on written consent, setting forth the action so taken,
signed by the holders of outstanding stock having not less than the minimum
numbers of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Written consent thus given by such holders so entitled to vote shall have the
same effect as a vote of stockholders at a meeting duly called and held. Prompt
notice of the taking of such action without a meeting
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by less than the unanimous consent of all stockholders shall be given to those
stockholders who did not consent in writing.
Section 12. Fixing Record Date. For the purpose of determining
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or the allotment of any rights, or
for the purpose of any other action, the Board of Directors may fix, in advance,
a date as the record date for any such determination of stockholders. Such date
shall not be more than 60 nor less than 10 days before the date of such meeting,
nor more than 60 days prior to any other action.
When a determination of stockholders of record entitled to
notice of or to vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment thereof, unless
the Board of Directors fixes a new record date for the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Power of Board and Qualification of Directors. The
business of the Corporation shall be managed by the Board of Directors. Each
director shall be at least 18 years of age.
Section 2. Number of Directors. The number of directors
constituting the entire Board of Directors shall be the number, not less than
one nor more than 15, fixed from time to time by a majority of the total number
of directors which the Corporation would have, prior to
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any increase or decrease, if there were no vacancies, provided, however, that no
decrease shall shorten the term of an incumbent director. Until otherwise fixed
by the directors, the number of directors constituting the entire Board shall be
five.
Section 3. Election and Term of Directors. At each annual
meeting of stockholders, directors shall be elected to hold office until the
next annual meeting of stockholders and until their successors have been elected
and qualify or until their respective deaths, resignations or removals in the
manner hereinafter provided.
Section 4. Quorum of Directors and Action by the Board. A
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business, and, except where otherwise provided by these By-laws,
the vote of a majority of the directors present at a meeting at the time of such
vote, if a quorum is then present, shall be the act of the Board.
Any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board or the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consent thereto by the
members of the Board or committee shall be filed with the minutes of the
proceedings of the Board or committee.
Section 5. Meetings of the Board. An annual meeting of the
Board of Directors shall be held in each year directly after the annual meeting
of stockholders. Regular meetings of the Board shall be held at such times as
may be fixed by the Board. Special meetings of the Board may be held at any time
upon the call of the President or any two directors.
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Meetings of the Board of Directors shall be held at such
places as may fixed by the Board for annual and regular meetings and in the
notice of meeting for special meetings. If no place is so fixed, meetings of the
Board shall be held at the office of the Corporation.
No notice need be given of annual or regular meetings of the
Board of Directors. Notice of each special meeting of the Board shall be given
to each director either by mail not later than noon, Eastern time, on the third
day prior to the meeting or by telegram, written message or orally to the
director not later than noon, Eastern time, on the day prior to the meeting.
Notices are deemed to have been given: by mail, when deposited in the United
States mail; by telegram at the time of filing; and by messenger at the time of
delivery. Notices by mail, telegram or messenger shall be sent to each director
at the address designated by him for that purpose, or, if none has been so
designated, at his last known residence or business address.
Notice of a meeting of the Board of Directors need not to be
given to any director who submits a signed waiver of notice whether before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to him.
A notice, or waiver of notice, need not specify the purpose of
any meeting of the Board of Directors.
A majority of the directors present, whether or not a quorum
is present, may adjourn any meeting to another time and place. Notice of any
adjournment of a meeting to another time or place shall be given, in the manner
described above, to the directors who were not present at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
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Section 6. Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board of Directors or to the
President or to the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein; and unless otherwise specified therein the
acceptance of such resignation shall not be necessary to make it effective.
Section 7. Removal of Directors. Any or all of the directors
may be removed with or without cause by vote of the stockholders.
Section 8. Newly Created Directorships and Vacancies. Newly
created directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason except the removal
of directors by stockholders may be filled by vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring as a result of the removal of directors by stockholders shall be
filled by the stockholders. A director elected to fill a vacancy shall be
elected to hold office for the unexpired term of his predecessor.
Section 9. Executive and other Committees of Directors. The
Board of Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an executive committee and other committees
each consisting of one or more directors and each of which, to the extent
provided in the resolution, shall have all the authority of the Board, except
that no such committee shall have authority as to the following matters:
(1) The submission to stockholders of any action that
needs stockholders' approval;
(2) The amendment of the Certificate of Incorporation;
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(3) The filling of vacancies in the Board or in any
committee;
(4) The fixing of compensation of the directors for
serving on the Board or on any committee;
(5) The amendment or repeal of the By-laws, or the
adoption of new By-laws;
(6) The amendment or repeal of any resolution of the
Board which, by its terms, shall not be so amendable or repealable; or
(7) The removal or indemnification of directors; or
unless the resolution, these By-laws or the Certificate of Incorporation
otherwise provide:
(8) The declaration of a dividend;
(9) The issuance of stock; or
(10) The adoption of a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law.
The Board of Directors may designate one or more directors as
alternate members of any such committee, who may replace any absent member or
members at any meeting of such committee.
Unless a greater proportion is required by the resolution
designating a committee, a majority of the entire authorized number of members
of such committee shall constitute a quorum for the transaction of business, and
the vote of a majority of the members present at a meeting at the time of such
vote, if a quorum is then present, shall be the act of such committee.
Each such committee shall serve at the pleasure of the Board
of Directors.
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Section 10. Compensation of Directors. The Board of Directors
shall have authority to fix the compensation of directors for services in any
capacity.
ARTICLE III
OFFICERS
Section 1. Officers. The Board of Directors, as soon as may be
practicable after the annual election of directors, shall elect a Chairman of
the Board, President, a Secretary and a Treasurer, and from time to time may
elect or appoint one or more Vice Presidents or such other officers as it may
determine. Any two or more offices may be held by the same person.
Section 2. Other Officers. The Board of Directors may appoint
such other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 3. Compensation. The salaries of all officers and
agents of the Corporation shall be fixed by the Board of Directors.
Section 4. Term of Office and Removal. Each officer shall hold
office for the term for which he is elected or appointed, and until his
successor has been elected or appointed and qualified. Unless otherwise provided
in the resolution of the Board of Directors electing or appointing an officer,
his term of office shall extend to and expire at the meeting of the Board
following the next annual meeting of stockholders. Any officer may be removed by
the Board, with or without cause, at any time. Removal of an officer without
cause shall be without prejudice to his contract rights, if any, and the
election or appointment of an officer shall not of itself create contract
rights.
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Section 5. Power and Duties.
(a) Chairman of the Board: The Chairman of the Board
shall be the chief executive officer of the Corporation, shall have general and
active management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect. He
shall also preside at all meetings of the stockholders and the Board of
Directors.
He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. The Chairman of the
Board shall counsel freely with the President and shall exercise such other
powers, shall preform such other duties and have such other responsibilities as
may be given from time to time by the Board of Directors or the By-laws of the
Corporation.
(b) President: The President shall be the chief operating
officer of the Corporation. He shall have responsibility for general operation
of the business of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried in effect. In the absence of the Chairman
of the Board or in the event of his inability or refusal to act, the President
shall perform the duties and exercise the powers of the Chairman of the Board.
The President shall perform such other duties and have such other
responsibilities as from time to time may be determined by the Board of
Directors.
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(c) Vice Presidents: The Vice Presidents, in the order
designated by the Board of Directors, or in the absence of any designation, then
in the order of their election, during the absence or disability of or refusal
to act by the President, shall perform the duties and exercise the powers of the
President, and shall perform such other duties as the Board of Directors shall
prescribe.
(d) Secretary and Assistant Secretaries: The Secretary
shall attend all meetings of the Board of Directors and all meetings of the
stockholders and record all the proceedings of the meetings of the Corporation
and of the Board of Directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or President, under whose supervision he
shall be. He shall have custody of the corporate seal of the Corporation and he,
or an Assistant Secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his signature
or by the signature of such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature.
The Assistant Secretary, or if there be more than one,
the Assistant Secretaries in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the Secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the
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Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
(e) Treasurer and Assistant Treasurers: The Treasurer
shall have the custody of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors.
He shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation.
If required by the Board of Directors, he shall give the
Corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
The Assistant Treasurer, or if there shall be more than
one, the Assistant Treasurers in the order determined by the Board of Directors
(or of there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the
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Treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 6. Books to be Kept. The Corporation shall keep (a)
correct and complete books and records of account, (b) minutes of the
proceedings of the stockholders, Board of Directors and any committees of
directors, and (c) a current list of the directors and officers and their
residence addresses; and the Corporation shall also keep at its office or at the
office of its transfer agent or registrar if any, a record containing the names
and addresses of all stockholders, the number and class of shares held by each
and the dates when they respectively became the owners of record thereof.
The Board of Directors may determine whether and to what
extent and at what times and places and under what conditions and regulations
any accounts, books, records or other documents of the Corporation shall be open
to inspection, and no creditor, security holder or other person shall have any
right to inspect any accounts, books, records or other documents of the
Corporation except as conferred by statute or as so authorized by the Board.
Section 7. Checks, Notes, etc. All checks and drafts on, and
withdrawals from the Corporation's accounts with banks or other financial
institutions, and all bills of exchange, notes and other instruments for the
payment of money, drawn, made, endorsed, or accepted by the Corporation, shall
be signed on its behalf by the person or persons thereunto authorized by, or
pursuant to resolution of, the Board of Directors.
16
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ARTICLE IV
FORMS OF CERTIFICATES AND LOSS AND
TRANSFER OF SHARES
Section 1. Forms of Share Certificates. The shares of the
Corporation shall be represented by certificates, in such forms as the Board of
Directors may prescribe, signed by the Chairman of the Board, President or a
Vice President and the Secretary or an Assistant Secretary or the Treasurer or
an Assistant Treasurer, and may be sealed with the seal of the Corporation or a
facsimile thereof. The signatures of the officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent or registered
by a registrar other than the Corporation or its employee. In case any officer
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of issue.
Each certificate representing shares issued by the Corporation
shall set forth upon the face or back of the certificate, or shall state that
the Corporation will furnish to any stockholder upon request and without charge,
a full statement of the designation, relative rights, preferences and
limitations of the shares of each class of shares, if more than one, authorized
to be issued and the designation, relative rights, preferences and limitations
of each series of any class of preferred shares authorized to be issued so far
as the same have been fixed, and the authority of the Board of Directors to
designate and fix the relative rights, preferences and limitations of other
series.
Each certificate representing shares shall state upon the face
thereof:
17
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<PAGE>
(1) That the Corporation is formed under the laws of the
State of Delaware;
(2) The name of the person or persons to whom issued; and
(3) The number and class of shares, and the designation
of the series, if any, which such certificate represents.
Section 2. Transfers of Shares. Shares of the Corporation
shall be transferable on the record of stockholders upon presentment to the
Corporation or a transfer agent of a certificate or certificates representing
the shares requested to be transferred, with proper endorsement on the
certificate or on a separate accompanying document, together with such evidence
of the payment of transfer taxes and compliance with other provisions of law as
the Corporation or its transfer agent may require.
Section 3. Lost, Stolen or Destroyed Share Certificates. No
certificate for shares of the Corporation shall be issued in place of any
certificate alleged to have been lost, destroyed or wrongfully taken, except, if
and to the extent required by the Board of Directors, upon:
(1) Production of evidence of loss, destruction or
wrongful taking;
(2) Delivery of a bond indemnifying the Corporation and
its agents against any claim that may be made against it or them on account of
the alleged loss, destruction or wrongful taking of the replaced certificate or
the issuance of the new certificate;
(3) Payment of the expenses of the Corporation and its
agents incurred in connection with the issuance of the new certificate; and
(4) Compliance with such other reasonable requirements as
may be imposed.
18
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ARTICLE V
OTHER MATTERS
Section 1. Corporate Seal. The Board of Directors may adopt a
corporate seal, alter such seal at pleasure, and authorize it to be used by
causing it or a facsimile to be affixed or impressed or reproduced in any other
manner.
Section 2. Fiscal Year. The fiscal year of the Corporation
shall be the 12 months ending December 31 or such other period as may be fixed
by the Board of Directors.
Section 3. Amendments. By-laws of the Corporation may be
adopted, amended or repealed by vote of the holders of the shares at the time
entitled to vote in the election of any directors. By-laws may also be adopted,
amended or repealed by the Board of Directors, but any By-law adopted by the
Board may be amended or repealed by the stockholders entitled to vote thereon as
hereinabove provided.
If any By-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of stockholders for the election of directors
the By-law so adopted, amended or repealed, together with a concise statement of
the changes made.
19
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CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF 15.0% EXCHANGEABLE
REDEEMABLE SENIOR PREFERRED STOCK DUE 2007 AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
Benedek Communications Corporation (the "Company"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify that, pursuant to authority conferred
upon the board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation (hereinafter referred to as the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors, by unanimous
written consent dated May 29, 1996, duly approved and adopted the following
resolution (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board
of Directors by its Certificate of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issuance of
15.0% Series A Exchangeable Redeemable Senior Preferred Stock due 2007,
par value $.01 per share, with a stated value initially of $100 per
share, consisting of 600,000 shares, and 15.0% Series B Exchangeable
Redeemable Senior Preferred Stock due 2007, par value $.01 per share,
with a stated value initially of $100 per share, consisting of 600,000
shares (collectively, the "Exchangeable Preferred Stock") having the
designations, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in
this Resolution as follows:
(a) Designation. There is hereby created out of
the authorized and unissued shares of Preferred Stock of the
Company (i) a series of Preferred Stock designated as the
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2
"15.0% Series A Exchangeable Redeemable Senior Preferred Stock due 2007" (the
"Class A Stock") and (ii) a series of Preferred Stock designated as the "15.0%
Series B Exchangeable Redeemable Senior Preferred Stock due 2007" (the "Class B
Stock"). The number of shares constituting the Class A Stock shall be 600,000,
and the number of shares constituting the Class B Stock shall be 600,000. The
Class A Stock and the Class B Stock are referred to as the "Exchangeable
Preferred Stock". The liquidation preference of the Exchangeable Preferred Stock
shall be $100 per share (the "Liquidation Preference").
(b) Rank. The Exchangeable Preferred Stock will, with respect
to dividend rights and rights on liquidation, winding-up and dissolution, rank
(i) senior to all classes of common stock and to each other class of Capital
Stock or series of Preferred Stock established hereafter by the Board of
Directors of the Company, the terms of which do not expressly provide that it
ranks senior to, or on a parity with, the Exchangeable Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution of the
Company (collectively referred to, together with all classes of common stock of
the Company, as "Junior Stock"); (ii) on a parity with each other class of
Capital Stock or series of Preferred Stock established hereafter by the Board of
Directors of the Company, the terms of which expressly provide that such class
or series will rank on a parity with the Exchangeable Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution
(collectively referred to as "Parity Stock"); and (iii) junior to each class of
Capital Stock or series of Preferred Stock established hereafter by the Board of
Directors of the Company, the terms of which expressly provide that such class
or series will rank senior to the Exchangeable Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Stock"). The Company may not authorize any
new class of Parity Stock or Senior Stock without the approval of the holders of
at least two-thirds of the shares of Exchangeable Preferred Stock then
outstanding, voting or consenting, as the case may be, as one class. All claims
of the holders of the Exchangeable Preferred Stock, including, without
limitation, claims with respect to dividend payments, redemption payments,
mandatory repurchase payments or rights upon liquidation, winding-up or
dissolution, shall rank junior to the claims of the holders of any debt of the
Company and all other creditors of the Company.
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3
(c) Dividends. (i) Holders of the outstanding shares of
Exchangeable Preferred Stock will be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds legally
available therefor, cash dividends on the Exchangeable Preferred Stock at a rate
per annum equal to 15.0% of the Specified Amount payable quarterly (each such
quarterly period being herein called a "Dividend Period"). In addition to the
dividends described in the preceding sentence, holders of outstanding shares of
Exchangeable Preferred Stock will be entitled to Liquidated Damages if and to
the extent provided for in the Exchange and Registration Rights Agreement. All
dividends will be cumulative, whether or not earned or declared, on a daily
basis from the Issue Date and shall be payable quarterly in arrears on January
1, April 1, July 1 and October 1 of each year (each a "Dividend Payment Date"),
commencing on July 1, 1996 to holders of record on the December 15, March 15,
June 15 and September 15 immediately preceding the relevant Dividend Payment
Date. If any dividend (other than any Liquidated Damages) payable on any
Dividend Payment Date on or before July 1, 2001 is not declared or paid in full
in cash on such Dividend Payment Date, the amount payable as dividends on such
Dividend Payment Date (other than any Liquidated Damages) that is not paid in
cash on such Dividend Payment Date will be added automatically to the Specified
Amount of the Exchangeable Preferred Stock on such Dividend Payment Date and
will be deemed paid in full (such dividends being herein called the "Accumulated
Dividends"). Except as provided herein, accrued and unpaid dividends, if any,
will not bear interest or bear dividends thereon.
(ii) All dividends paid with respect to shares of the
Exchangeable Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata
to the holders entitled thereto.
(iii) No full dividends may be declared or paid or set apart for
the payment of dividends by the Company on any Parity Stock for any period
unless full cumulative dividends shall have been or contemporaneously are
declared and paid (or are deemed declared and paid) in full or declared and, if
payable in cash, a sum in cash sufficient for such payment set apart for such
payment on the Exchangeable Preferred Stock. If full dividends are not so paid,
the Exchangeable Preferred Stock will share dividends pro rata with the Parity
Stock.
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4
(iv) No dividends may be paid or set apart for such payment on
Junior Stock (except dividends on Junior Stock payable in additional shares of
Junior Stock) and no Junior Stock or Parity Stock may be repurchased, redeemed
or otherwise retired nor may funds be set apart for payment with respect
thereto, if full cumulative dividends have not been paid in full (or deemed
paid) on the Exchangeable Preferred Stock.
(v) Dividends on account of arrears for any past Dividend
Period and dividends in connection with any optional redemption may be declared
and paid at any time, without reference to any regular Dividend Repayment Date,
to holders of record on such date, not more than 45 days prior to the payment
thereof, as may be fixed by the Board of Directors of the Company.
(vi) So long as any shares of the Exchangeable Preferred Stock
are outstanding, the Company shall not make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any Parity Stock or Junior Stock or any
warrants, rights, calls or options exercisable for or convertible into any
Parity Stock or Junior Stock, and shall not permit any corporation or other
entity directly or indirectly controlled by the Company to purchase or redeem
any Parity Stock or Junior Stock, or any such warrants, rights, calls or options
unless full cumulative dividends determined in accordance herewith on the
Exchangeable Preferred Stock have been paid (or are deemed paid) in full.
(vii) Dividends payable on the Exchangeable Preferred Stock for
any period less than a year shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in the period for
which payable.
(d) Liquidation Preference. (i) Upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, holders of
Exchangeable Preferred Stock will be entitled to be paid, out of the assets of
the Company available for distribution to its stockholders, the Specified
Amount, plus, without duplication, an amount in cash equal to all accumulated
and unpaid dividends thereon to the date fixed for liquidation, dissolution or
winding-up (including an amount equal to a prorated dividend for the period from
the last Dividend Payment Date to the date fixed
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5
for liquidation, dissolution or winding-up and including an amount equal to the
redemption premium that would have been payable had the Exchangeable Preferred
Stock been the subject of an Optional Redemption on such date) before any
distribution is made on any Junior Stock, including, without limitation, common
stock of the Company. If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the amounts payable with respect to
the Exchangeable Preferred Stock and all Parity Stock are not paid in full, the
Exchangeable Preferred Stock and the Parity Stock will share equally and ratably
in any distribution of assets of the Company to which each is entitled. After
payment of the full amount of the Specified Amount (and, if applicable, an
amount equal to a prorated dividend and redemption premium), the holders of
shares of Exchangeable Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
entities shall be deemed to be a liquidation, dissolution or winding-up of the
Company.
(e) Redemption. (i) Optional Redemption. (A) The Exchangeable
Preferred Stock may be redeemed (subject to the legal availability of funds
therefor) at any time, in whole or in part, at the option of the Company, at the
redemption prices (expressed as a percentage of the Specified Amount) set forth
below, plus, without duplication, an amount in cash equal to all accrued and
unpaid Liquidated Damages and dividends to the date fixed for redemption (the
"Optional Redemption Date") (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to the
Optional Redemption Date to the Optional Redemption Date) (the "Optional
Redemption Price"). If redeemed prior to July 1, 1996, the Optional Redemption
Price shall equal 115.000% of the Specified Amount, plus, without duplication,
all accrued and unpaid Liquidated Damages and dividends (including an amount
equal to a prorated dividend from the immediately preceding Dividend Payment
Date to the Optional Redemption Date), if any, to the Optional Redemption Date
and if redeemed during the 12-month period beginning July 1 of each of the years
set forth below, the Optional
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6
Redemption Price shall be a percentage of the Specified Amount plus, without
duplication, in each case, an amount in cash equal to all accrued and unpaid
Liquidated Damages and dividends (including an amount equal to a prorated
dividend from the immediately preceding Dividend Payment Date to the Optional
Redemption Date), if any, to the Optional Redemption Date:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
1996.................................................. 115.000%
1997.................................................. 115.000%
1998.................................................. 115.000%
1999.................................................. 115.000%
2000.................................................. 112.000%
2001.................................................. 109.000%
2002.................................................. 106.000%
2003.................................................. 103.000%
2004.................................................. 100.000%
2005.................................................. 100.000%
2006 and thereafter................................... 100.000%
</TABLE>
(B) In the event of a redemption of only a portion of the then
outstanding shares of Exchangeable Preferred Stock, the Company shall effect
such redemption on a pro rata basis, except that the Company may redeem such
shares held by holders of fewer than 100 shares (or shares held by holders who
would hold less than 100 shares as a result of such redemption), as may be
determined by the Company.
(ii) Mandatory Redemption. The Exchangeable Preferred Stock
will be subject to mandatory redemption (subject to the legal availability of
funds therefor) in whole on the date which is the earlier of (x) July 1, 2007
(the "Mandatory Redemption Date") and (y) upon one Business Day's notice at any
time on or prior to the date that is four Business Days after the Issue Date
(the date so designated being called the "Early Redemption Date") if the
Acquisitions have not been consummated and Benedek Broadcasting has not become a
wholly owned subsidiary of the Company on or prior to the third Business Day
after the Issue Date or, if it appears in the sole judgment of the Company, that
the Acquisitions will not be consummated in all material respects on or prior to
such third Business Day, in each case at a price equal to 100% of the Specified
Amount, plus, without duplication, all accrued and unpaid Liquidated Damages and
dividends (including an amount equal
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7
to a prorated dividend from the immediately preceding Dividend Payment Date to
the Mandatory Redemption Date or the Early Redemption Date, as the case may be),
if any, to the Mandatory Redemption Date or Early Redemption Date, as the case
may be (the "Mandatory Redemption Price").
(iii) Procedure for Redemption. (A) On and after the Optional
Redemption Date, the Mandatory Redemption Date or the Early Redemption Date, as
the case may be (the "Redemption Date"), unless the Company defaults in the
payment of the applicable redemption price, dividends will cease to accumulate
on shares of Exchangeable Preferred Stock called for redemption and all rights
of holders of such shares will terminate except for the right to receive the
Optional Redemption Price or the Mandatory Redemption Price, as the case may be,
without interest; provided, however, that if a notice of redemption shall have
been given as provided in paragraph (iii)(B) or notice provided in (iii)(D)
below shall not have been given and the funds necessary for redemption
(including an amount in respect of all dividends that will accrue to the
Redemption Date) shall have been segregated and irrevocably set apart by the
Company, in trust for the benefit of the holders of the shares called for
redemption, then dividends shall cease to accumulate on the Redemption Date on
the shares to be redeemed and, at the close of business on the day on which such
funds are segregated and set apart, the holders of the shares to be redeemed
shall cease to be stockholders of the Company and shall be entitled only to
receive the Optional Redemption Price or the Mandatory Redemption Price, as the
case may be, for such shares.
(B) With respect to a redemption pursuant to paragraph e(i) or
e(ii)(x), the Company will send a written notice of redemption by first class
mail to each holder of record of shares of Exchangeable Preferred Stock, not
fewer than 30 days nor more than 60 days prior to the Redemption Date at its
registered address (the "Redemption Notice"); provided, however, that no failure
to give such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Exchangeable Preferred Stock to be
redeemed except as to the holder or holders to whom the Company has failed to
give said notice or except as to the holder or holders whose notice was
defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to
paragraph (e)(i) or (e)(ii)(x) hereof;
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8
(2) the Optional Redemption Price or the Mandatory
Redemption Price, as the case may be;
(3) whether all or less than all the outstanding shares of the
Exchangeable Preferred Stock are to be redeemed and the total number of
shares of the Exchangeable Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the holder is to surrender to the Company, in the
manner, at the place or places and at the price designated, his
certificate or certificates representing the shares of Exchangeable
Preferred Stock to be redeemed; and
(6) that dividends on the shares of the Exchangeable Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date
unless the Company defaults in the payment of the Optional Redemption
Price or the Mandatory Redemption Price, as
the case may be.
(C) Each holder of Exchangeable Preferred Stock shall
surrender the certificate or certificates representing such shares of
Exchangeable Preferred Stock to the Company, duly endorsed (or otherwise in
proper form for transfer, as determined by the Company), in the manner and at
the place designated in the Redemption Notice, and on the Redemption Date the
full Optional Redemption Price or Mandatory Redemption Price, as the case may
be, for such shares shall be payable in cash to the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(D) With respect to a redemption pursuant to paragraph
(e)(ii)(y), pursuant to the terms of an escrow agreement to be entered into
between the Company and the Transfer Agent, an amount equal to the gross
proceeds of the initial issuance of the Units plus an amount equal to cash
dividends on the Exchangeable Preferred Stock at the rate equal to 15.0% per
annum, such cash dividends calculated from the date of initial issuance of the
Exchangeable Preferred Stock until but excluding the last day on which the Early
Redemption Date could occur, will be placed in an
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9
escrow account maintained by the Transfer Agent. All amounts deposited with the
Transfer Agent and any accrued interest thereon (collectively, the "Trust
Funds") will be pledged to and held by the Transfer Agent as security for the
redemption of the Exchangeable Preferred Stock on the Early Redemption Date. If,
prior to the Early Redemption Date, the Company delivers to the Transfer Agent a
certificate stating that (i) the Company proposes to concurrently close the
Acquisitions pursuant to the terms of the purchase agreements for the
Acquisitions; (ii) the terms of the transactions to be entered into and the
businesses to be acquired conform in all material respects to the descriptions
thereof contained in the Private Placement Memorandum subject only to any
changes provided for or contemplated therein; (iii) all conditions to the
closing of the Acquisitions have been satisfied or waived (including receipt of
all necessary FCC consents) and (iv) all Licenses required for the operation of
the Stations will be assigned to BLC at the closing of the Acquisitions, then
the Transfer Agent will release the Trust Funds (except for the amount
representing the Placement Agents' fee) to the Company to fund the Acquisitions
and will release the Placement Agents' fee to Goldman Sachs & Co. and BT
Securities Corporation in the respective amounts set forth in the Placement
Agreement.
Pending release or use as provided above, the Trust Funds will
be invested in Permitted Investments as directed by the Company. If mandatory
redemption is required on the Early Redemption Date, the Exchangeable Preferred
Stock will be redeemed on the Early Redemption Date with the Trust Funds. Any
amounts remaining in the Trust Funds after such mandatory redemption will be
distributed to the Company.
(f) Voting Rights. (i) The holders of Exchangeable Preferred
Stock, except as otherwise required under Delaware law or as set forth in
paragraphs (ii) and (iii) below, shall not be entitled or permitted to vote on
any matter required or permitted to be voted upon by the stockholders of the
Company.
(ii) (A) If (1) after July 1, 2001, dividends on the
Exchangeable Preferred Stock are in arrears and unpaid for four or more Dividend
Periods (whether or not consecutive) (a "Dividend Default"); (2) the Company
fails to redeem the Exchangeable Preferred Stock on July 1, 2007, or fails to
otherwise discharge any redemption obligation with respect to the Exchangeable
Preferred Stock; (3) the
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10
Company fails to make a Change of Control Offer if such Change of Control Offer
is required by paragraph (h) hereof or fails to purchase shares of Exchangeable
Preferred Stock from holders who elect to have such shares purchased pursuant to
the Change of Control Offer; (4) a breach or violation of any of the provisions
set forth in paragraph (l) hereof occurs and the breach or violation continues
for a period of 30 days or more after the Company receives notice thereof
specifying the default from the holders of at least 25% of the shares of
Exchangeable Preferred Stock then outstanding; or (5) the Company fails to pay
at the final stated maturity (giving effect to any extensions thereof) the
principal amount of any Indebtedness of the Company or any Subsidiary of the
Company, or the final stated maturity of any such Indebtedness is accelerated or
a default occurs as a result of the Company's failure to observe any covenant
with respect to any such Indebtedness (which default is not waived by the
holders of such Indebtedness within 30 days thereof), if the aggregate principal
amount of such Indebtedness, together with the aggregate principal amount of any
other such Indebtedness in default for failure to pay principal at the final
stated maturity (giving effect to any extensions thereof) or which has been
accelerated or which is subject to such non-waived default, aggregates
$5,000,000 or more at any time, in each case, after a 10-day period during which
such default shall not have been cured or such acceleration rescinded, then the
number of directors constituting the Board of Directors of the Company will be
adjusted to permit the holders of a majority of the then outstanding shares of
Exchangeable Preferred Stock, voting separately and as a class, to elect the
greater of two directors and that number of directors constituting 25% of the
members of the Board of Directors. Each such event described in clauses (1),
(2), (3), (4) and (5) above is a "Voting Rights Triggering Event".
(B) The voting rights set forth in subparagraph (f)(ii)(A)
above will continue until such time as (x) in the case of a Dividend Default,
all dividends in arrears on the Exchangeable Preferred Stock are paid in full in
cash, and (y) in all other cases, any failure, breach or default giving rise to
such Voting Rights Triggering Event is remedied or waived by the holders of at
least two-thirds of the shares of Exchangeable Preferred Stock then outstanding,
at which time the term of any directors elected pursuant to the provisions of
subparagraph (f)(ii)(A) above shall terminate. At any time after voting power to
elect directors shall have become vested and be continuing in the
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11
holders of Exchangeable Preferred Stock pursuant to subparagraph (f)(ii)(A)
hereof, or if vacancies shall exist in the offices of directors elected by the
holders of Exchangeable Preferred Stock, a proper officer of the Company may,
and upon the written request of the holders of record of at least 25% of the
shares of Exchangeable Preferred Stock then outstanding addressed to the
secretary of the Company shall, call a special meeting of the holders of
Exchangeable Preferred Stock for the purpose of electing the directors which
such holders are entitled to elect. If such meeting shall not be called by a
proper officer of the Company within 20 days after personal service to the
secretary of the Company at its principal executive offices, then the holders of
record of at least 25% of the outstanding shares of Exchangeable Preferred Stock
may designate in writing one of their number to call such meeting at the expense
of the Company, and such meeting may be called by the person so designated upon
the notice required for the annual meetings of stockholders of the Company and
shall be held at the place for holding the annual meetings of stockholders. Any
holder of Exchangeable Preferred Stock so designated shall have, and the Company
shall provide, access to the lists of stockholders to be called pursuant to the
provisions hereof.
(C) At any meeting held for the purposes of electing directors
at which the holders of Exchangeable Preferred Stock shall have the right,
voting together as a separate class, to elect directors as aforesaid, the
presence in person or by proxy of the holders of at least a majority of the
outstanding shares of Exchangeable Preferred Stock shall be required to
constitute a quorum of such Exchangeable Preferred Stock.
(D) Any vacancy occurring in the office of a director elected
by the holders of Exchangeable Preferred Stock may be filled by the remaining
directors elected by the holders of Exchangeable Preferred Stock unless and
until such vacancy shall be filled by the holders of Exchangeable Preferred
Stock. The director to be elected by the holders of Exchangeable Preferred Stock
shall agree, prior to his election to office, to resign upon any termination of
the right of the holders of Exchangeable Preferred Stock to vote as a class for
a director as herein provided, and upon any such termination the director then
in office elected by the holders of Exchangeable Preferred Stock shall forthwith
resign.
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12
(iii) (A) So long as any shares of the Exchangeable Preferred
Stock are outstanding, the Company (x) will not authorize any class of Senior
Stock or Parity Stock and (y) will not make any election under Subchapter S of
the Internal Revenue Code without, in each case, the affirmative vote or consent
of holders of at least two-thirds of the shares of Exchangeable Preferred Stock
then outstanding, voting or consenting, as the case may be, as one class, given
in person or by proxy, either in writing or by resolution adopted at an annual
or special meeting. So long as any shares of the Exchangeable Preferred Stock
are outstanding, the Company will not authorize the issuance of any additional
shares of Exchangeable Preferred Stock without the affirmative vote or consent
of the holders of at least a majority of the then outstanding shares of
Exchangeable Preferred Stock, voting or consenting, as the case may be, as one
class, given in person or by proxy, either in writing or by resolution adopted
at an annual or special meeting.
(B) So long as any shares of the Exchangeable Preferred Stock
are outstanding, the Company will not amend this Certificate of Designation so
as to affect adversely the specified rights, preferences, privileges or voting
rights of holders of shares of Exchangeable Preferred Stock or to authorize the
issuance of any additional shares of Exchangeable Preferred Stock without the
affirmative vote or consent of holders of at least two-thirds of the issued and
outstanding shares of Exchangeable Preferred Stock, voting or consenting, as the
case may be, as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(C) Except as set forth in paragraph (f)(iii)(A) above, (x)
the creation, authorization or issuance of any shares of any Junior Stock,
Parity Stock or Senior Stock, including the designation of a series of
Exchangeable Preferred Stock, or (y) the increase or decrease in the amount of
authorized Capital Stock of any class, including Preferred Stock, shall not
require the consent of holders of Exchangeable Preferred Stock and shall not be
deemed to affect adversely the rights, preferences, privileges or voting rights
of shares of Exchangeable Preferred Stock.
(D) Prior to the exchange of Exchangeable Preferred Stock for
Exchange Debentures, the Company shall not amend or modify the Exchange
Indenture (except as expressly provided therein in respect of amendments without
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13
the consent of holders of Exchange Debentures) without the affirmative vote or
consent of holders of at least a majority of the shares of Exchangeable
Preferred Stock then outstanding, voting or consenting, as the case may be, as
one class, given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting.
(iv) In any case in which the holders of Exchangeable Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or pursuant to
Delaware law, each holder of Exchangeable Preferred Stock entitled to vote with
respect to such matters shall be entitled to one vote for each share of
Exchangeable Preferred Stock held.
(g) Exchange. (i) Exchange for Debentures. (A) The Company
may, at its option, on any scheduled Dividend Payment Date, exchange the
Exchangeable Preferred Stock, in whole but not in part, for the Exchange
Debentures; provided however, that (1) on the date of such exchange there are no
accumulated and unpaid dividends on the Exchangeable Preferred Stock (including
the dividends payable on such date) or other contractual impediment to such
exchange; (2) there shall be funds legally available sufficient therefor; (3)
immediately before and immediately after giving effect to such exchange, no
Default (as defined in the Exchange Indenture) shall have occurred and be
continuing, and (iv) the Company shall have delivered to the Trustee under the
Exchange Indenture an opinion of counsel with respect to the due authorization
and issuance of the Exchange Debentures.
(B) Upon any exchange pursuant to this paragraph (g)(i),
holders of outstanding shares of Exchangeable Preferred Stock will be entitled
to receive $1.00 principal amount of Exchange Debentures for each $1.00 of
Specified Amount of Exchangeable Preferred Stock held by them. Exchange
Debentures issued in exchange for Exchangeable Preferred Stock will be issued in
principal amounts of $1,000 and integral multiples thereof to the extent
possible, and will also be issued in principal amounts less than $1,000 so that
each holder of Exchangeable Preferred Stock will receive certificates
representing the entire amount of Exchange Debentures to which such holder's
shares of Exchangeable Preferred Stock entitle such holder; provided, however,
that the Company may pay cash in lieu of issuing an Exchange Debenture in a
principal amount less than $1,000.
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14
(ii) Procedures. (A) The Company will send a written notice of
exchange (the "Exchange Notice") by mail to each holder of record of shares of
Exchangeable Preferred Stock not fewer than 30 days nor more than 60 days before
the date fixed for such exchange (the "Exchange Date"); provided, however, that
no failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the exchange of any shares of Exchangeable
Preferred Stock to be exchanged except as to the holder or holders to whom the
Company has failed to give said notice or except as to the holder or holders
whose notice was defective. The Exchange Notice shall state:
(1) the Exchange Date;
(2) that the holder is to surrender to the Company, in the
manner and at the place or places designated, his certificate or
certificates representing the shares of Exchangeable Preferred Stock to
be exchanged;
(3) that dividends on the shares of Exchangeable Preferred
Stock to be exchanged shall cease to accrue on such Exchange Date
whether or not certificates for shares of Exchangeable Preferred Stock
are surrendered for exchange on such Exchange Date unless the Company
shall default in the delivery of Exchange Debentures; and
(4) that interest on the Exchange Debentures shall accrue from
the Exchange Date whether or not certificates for shares of
Exchangeable Preferred Stock are surrendered for exchange on such
Exchange Date.
(B) On and after the Exchange Date, dividends will cease to
accrue on the outstanding shares of Exchangeable Preferred Stock, and all rights
of the holders of Exchangeable Preferred Stock (except the right to receive
Exchange Debentures, an amount in cash, to the extent applicable, equal to the
accumulated and unpaid dividends to the Exchange Date and, if the Company so
elects, cash in lieu of any Exchange Debenture that is in a principal amount
that is not an integral multiple of $1,000) will terminate. The person entitled
to receive the Exchange Debentures issuable upon such exchange will be treated
for all purposes as the registered holder of such Exchange Debentures.
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15
(C) On or before the Exchange Date, each holder of
Exchangeable Preferred Stock shall surrender the certificate or certificates
representing such shares of Exchangeable Preferred Stock, in the manner and at
the place designated in the Exchange Notice. The Company shall cause the
Exchange Debentures to be executed on the Exchange Date and, upon surrender in
accordance with the Exchange Notice of the certificates for any shares of
Exchangeable Preferred Stock so exchanged, duly endorsed (or otherwise in proper
form for transfer, as determined by the Company), such shares shall be exchanged
by the Company into Exchange Debentures. The Company shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein from the
Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the foregoing
provisions of this paragraph (g), the Company shall not be entitled to exchange
the Exchangeable Preferred Stock for Exchange Debentures if such exchange, or
any term or provision of the Exchange Indenture or the Exchange Debentures, or
the performance of the Company's obligations under the Exchange Indenture or the
Exchange Debentures, shall materially violate or conflict with any applicable
law or agreement or instrument then binding on the Company or if, at the time of
such exchange, the Company is insolvent or if it would be rendered insolvent by
such exchange.
(iv) Exchange of Series A Stock for Series B Stock. The Series B
Stock will be issued by the Company only in connection with an exchange offer,
on a share for share basis, for the Series A Stock as required pursuant to the
Exchange and Registration Rights Agreement. Each share of Series B Stock issued
in exchange for a share of Series A Stock will be deemed to have the same
Specified Amount as the share of Series A Stock so exchanged.
(h) Change of Control. (i) Upon the occurrence of a Change of
Control (the date of such occurrence being the "Change of Control Date"), each
holder of Exchangeable Preferred Stock will have the right to require that the
Company purchase all or a portion of such holder's Exchangeable Preferred Stock
in cash pursuant to the offer described in paragraph (h)(iii) below (the "Change
of Control Offer") at a purchase price equal to 101% of the Specified Amount,
plus, without duplication, all accrued and unpaid Liquidated Damages and
dividends, if any, to the Change of Control Payment Date, including an amount in
cash
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16
equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Change of Control Payment Date to the Change of Control
Payment Date.
(ii) Prior to the mailing of the notice referred to in
subparagraph (h)(iii) below, but in any event within 45 days following the date
on which the Company becomes aware that a Change of Control has occurred, the
Company covenants that if the purchase of the Exchangeable Preferred Stock would
violate or constitute a default under the Bank Credit Agreement, the Senior
Subordinated Discount Note Indenture or other Debt of the Company, then the
Company shall either (A) repay in full all such Debt and terminate all
commitments outstanding thereunder or (B) obtain the requisite consents, if any,
under the Bank Credit Agreement, the Senior Subordinated Discount Note Indenture
or such Debt required to permit the purchase of Exchangeable Preferred Stock
required by subparagraph (h)(i) above. The Company will first comply with the
covenant in the immediately preceding sentence before it will be required to
make the Change of Control Offer or purchase the Exchangeable Preferred Stock
pursuant to the provisions described herein; provided, however, that the
Company's failure to comply with the provisions of this paragraph (h)(ii) shall
constitute a Voting Rights Triggering Event.
(iii) Within 45 days following the date on which the Company
becomes aware that a Change of Control has occurred, the Company must send, by
first-class mail, postage prepaid, a notice to each holder of Exchangeable
Preferred Stock. Such notice shall contain all instructions and materials
necessary to enable such holders to tender Exchangeable Preferred Stock pursuant
to the Change of Control Offer. Such notice shall state:
(A) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this paragraph (h) and that all
Exchangeable Preferred Stock validly tendered and not withdrawn will be
accepted for payment;
(B) the purchase price (including the amount of accrued
dividends, if any) and the purchase date (which must be no earlier than
30 days nor later than 45 days from the date such notice is mailed,
other than as may be required by law) (the "Change of Control Payment
Date");
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17
(C) that any shares of Exchangeable Preferred
Stock not tendered will continue to accrue dividends;
(D) that, unless the Company defaults in making payment
therefor, any share of Exchangeable Preferred Stock accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
dividends after the Change of Control Payment Date;
(E) that holders electing to have any shares of Exchangeable
Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender such shares of Exchangeable Preferred Stock,
properly endorsed for transfer, together with such other customary
documents as the Company and the Transfer Agent may reasonably request
to the Transfer Agent and registrar for the Exchangeable Preferred
Stock at the address specified in the notice prior to the close of
business on the Business Day prior to the Change of Control Payment
Date;
(F) that holders will be entitled to withdraw their election
if the Company receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, a telex, facsimile
transmission or letter setting forth the name of the holder, the number
of shares of Exchangeable Preferred Stock the holder delivered for
purchase and a statement that such holder is withdrawing his election
to have such shares of Exchangeable Preferred Stock purchased;
(G) that holders whose shares of Exchangeable Preferred Stock
are purchased only in part will be issued a new certificate
representing the unpurchased shares of Exchangeable Preferred Stock;
and
(H) the circumstances and relevant facts regarding such Change
of Control.
(iv) The Company will comply with any tender offer rules under
the Exchange Act which then may be applicable, including Rules 13e-4 and 14e-1,
in connection with any offer required to be made by the Company to repurchase
the shares of Exchangeable Preferred Stock as a result of a Change of Control.
To the extent that the provisions of any securities laws or regulations conflict
with provisions of this Certificate of Designation, the Company shall comply
with the applicable securities laws and regulations and
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18
shall not be deemed to have breached its obligations under this Certificate of
Designation by virtue thereof.
(v) On the Change of Control Payment Date the Company shall
(A) accept for payment the shares of Exchangeable Preferred Stock validly
tendered pursuant to the Change of Control Offer, (B) pay to the holders of
shares so accepted the purchase price therefor in cash and (C) cancel and retire
each surrendered certificate. Unless the Company defaults in the payment for the
shares of Exchangeable Preferred Stock tendered pursuant to the Change of
Control Offer, dividends will cease to accrue with respect to the shares of
Exchangeable Preferred Stock tendered and all rights of holders of such tendered
shares will terminate, except for the right to receive payment therefor, on the
Change of Control Payment Date.
(i) Conversion or Exchange. The holders of shares of
Exchangeable Preferred Stock shall not have any rights hereunder to convert such
shares into or exchange such shares for shares of any other class or classes or
of any other series of any class or classes of Capital Stock of the Company.
(j) Reissuance of Exchangeable Preferred Stock. Shares of
Exchangeable Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall (upon compliance with
any applicable provisions of the laws of Delaware) have the status of authorized
and unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock; provided,
however, that so long as any shares of Exchangeable Preferred Stock are
outstanding, any issuance of such shares must be in compliance with the terms
hereof.
(k) Business Day. If any payment, redemption or exchange shall
be required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(l) Certain Additional Provisions. The Company
covenants and agrees for the benefit of the Holders as
follows:
(i) Limitation on Debt. (A) The Company shall
not, and shall not permit any Restricted Subsidiary to,
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19
Issue, directly or indirectly, any Debt; provided, however, that the Company or
its Restricted Subsidiaries may Issue Debt if at the date of such Issuance the
Cash Flow Leverage Ratio does not exceed the ratio indicated below for Debt
Issued in each period indicated:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
Through September 30, 1996........................................ 7.0 to 1.0
From October 1, 1996 through
March 31, 1998........................................... 6.5 to 1.0
From April 1, 1998 and thereafter................................. 6.0 to 1.0
</TABLE>
(B) Notwithstanding the foregoing paragraph (A), the Company
and the Restricted Subsidiaries may Issue the following Debt: (1) Debt of the
Company or Benedek Broadcasting Issued pursuant to the Bank Credit Agreement
(including Guarantees thereof and any letters of credit Issued thereunder) or
any other agreement or indenture in a principal amount which, when taken
together with the principal amount of all other Debt Issued pursuant to this
clause (1) and then outstanding, does not exceed the greater of (I) $15.0
million and (II) 75% of the book value of the accounts receivable of the Company
and the Restricted Subsidiaries; (2) Debt of the Company or Benedek Broadcasting
Issued pursuant to the Bank Credit Agreement (including Guarantees thereof and
any letters of credit issued thereunder) or any other agreement or indenture in
an aggregate principal amount which, when taken together with the principal
amount of all other Debt Issued pursuant to this clause (2) and then
outstanding, does not exceed (I) $128.0 million less (II) the lesser of (x) the
aggregate amount of all principal repayments of any such Debt actually made
after the Issue Date (other than any such principal repayments made as a result
of the Refinancing of any such Debt) and (y) the scheduled principal
amortization payments to have been made by then under the terms of the Bank
Credit Agreement (but without giving effect to any changes to such scheduled
principal payments after the Issue Date); (3) Debt owed to and held by the
Company or a Wholly Owned Subsidiary; provided, however, that any subsequent
Issuance or transfer of any Capital Stock or any other event which results in
any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Debt (other than to a Wholly Owned Subsidiary) shall
be deemed, in each case to constitute the Issuance of such Debt by the issuer
thereof; (4) the Senior Subordinated Discount Notes, the Exchangeable Preferred
Stock, the Exchange Debentures and Refinancing Debt of the Company Issued in
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20
respect of any Debt permitted by this clause (4) (including the accretion of any
original issue discount associated with Debt permitted by this clause (4) and
the increase in Liquidation Preference with respect to any Debt permitted by
this clause 4); (5) Debt (other than Debt described in clause (1), (2), (3) or
(4) of this covenant but including the Debt represented by the Company Pledge
Agreement) outstanding on the Issue Date, and Refinancing Debt in respect of any
Debt permitted by this clause (5) or by paragraph (A) above; (6) Debt or
Preferred Stock of a Subsidiary Issued and outstanding on or prior to the date
on which such Subsidiary became a Subsidiary or was acquired by the Company
(other than Debt or Preferred Stock Issued in connection with, or to provide all
or any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Subsidiary
became a Subsidiary or was acquired by the Company) and Refinancing Debt of such
Subsidiary Issued in respect of any Debt of such Subsidiary permitted by this
clause (6); provided, however, that after giving effect thereto, except in the
case of any Refinancing Debt, the Company and any Restricted Subsidiary could
Issue an additional $1.00 of Debt pursuant to paragraph (A) above; (7) Debt
consisting of Guarantees by BLC of Permitted Acquisition Debt; and (8) Debt of
the Company or any Restricted Subsidiary (in addition to the Debt permitted to
be Issued pursuant to paragraph (A) above or in any other clause of this
paragraph (B)) in an aggregate principal amount on the date of Issuance which,
when added to all other Debt Issued pursuant to this clause (8) and then
outstanding, shall not exceed $15.0 million.
(ii) Limitation on Restricted Payments. (A) The Company shall
not, and shall not permit any Restricted Subsidiary, directly or indirectly, to
(1) declare or pay any dividend or make any distribution on or in respect of, in
the case of the Company, any Junior Stock or, in the case of any Restricted
Subsidiary, any Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or to the direct or indirect
holders of any such stock (except dividends or distributions payable solely in
its Non-Convertible Common Stock or in options, warrants or other rights to
purchase its Non-Convertible Common Stock and except dividends or distributions
payable to the Company or a Subsidiary and, if a Subsidiary is not wholly owned,
to the other stockholders on a pro rata basis), (2) purchase, redeem or
otherwise acquire or retire for value any Junior Stock of the Company or any
Capital
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21
Stock of any direct or indirect parent of the Company, or (3) make any
Investment in any Affiliate of the Company other than a Restricted Subsidiary or
a person which will become a Restricted Subsidiary as a result of any such
Investment (any such dividend, distribution, purchase, redemption, other
acquisition, retirement or Investment being herein referred to as a "Restricted
Payment") if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment: (I) a Voting Rights Triggering Event shall have occurred and
be continuing (or would result therefrom); (II) the Company is not able to Issue
an additional $1.00 of Debt pursuant to subparagraph (A) of paragraph (l)(i)
above; or (III) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of: (x) the
cumulative Operating Cash Flow (whether positive or negative) accrued during the
period (treated as one accounting period) from the beginning of the fiscal
quarter during which the Issue Date occurs to the end of the most recent fiscal
quarter ending at least 45 days prior to the date of such Restricted Payment
less the product of 1.4 multiplied by the cumulative Consolidated Interest
Expense during such period; provided, however, that Operating Cash Flow and
Consolidated Interest Expense for the period from the beginning of the fiscal
quarter during which the Debt under the Bank Credit Agreement and Senior
Subordinated Discount Notes are originally Issued through the date the Debt
under the Bank Credit Agreement and Senior Subordinated Discount Notes are
originally Issued shall be calculated on a pro forma basis to give effect to the
Acquisitions, including the financing thereof (as if the Acquisitions were
consummated on the last day of the fiscal quarter prior to the fiscal quarter
during which such Debt and the Senior Subordinated Discount Notes are originally
Issued); (y) the aggregate Net Cash Proceeds received by the Company from the
Issue or sale of its Capital Stock (other than Redeemable Stock, Exchangeable
Stock, Senior Stock or Parity Stock and other than the Exchangeable Preferred
Stock and the Seller Junior Discount Preferred Stock) subsequent to the Issue
Date (other than an Issuance or sale to a Subsidiary or to an employee stock
ownership plan or other trust established by the Company or any of the
Subsidiaries for the benefit of their employees or to officers, directors or
employees to the extent that the Company or any Subsidiary has outstanding loans
or advances to such employees pursuant to clause (7) of subparagraph (B) below
or clause (3) of paragraph (v)(B) (all such excluded Capital Stock being herein
collectively called "Excluded Stock")); and (z) the
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22
amount by which indebtedness of the Company is reduced on the Company's balance
sheet upon the conversion or exchange (other than by a Subsidiary), subsequent
to the Issue Date, of any Debt of the Company that is by its original terms
convertible or exchangeable for Capital Stock (other than Redeemable Stock,
Exchangeable Stock, Senior Stock or Parity Stock) of the Company (less the
amount of any cash, or other property, distributed by the Company upon such
conversion or exchange); provided, however, that, for the purposes of the
calculation required by this clause (III), the value of any such Restricted
Payment, if other than cash, shall be evidenced by a resolution of the Board of
Directors and determined in good faith by the disinterested members of the Board
of Directors; provided further, however, that, in the case of a distribution or
other disposition by the Company of all or substantially all the assets of a
broadcast station or other business unit, the value of any such Restricted
Payment shall be determined by an investment banking firm of national prominence
that is not an Affiliate of the Company. Notwithstanding the foregoing, the
Company shall not declare or pay any cash dividend or make any cash distribution
on or in respect of any Parity Stock or any Junior Stock (including the Seller
Junior Discount Preferred Stock and its Common Stock) prior to October 1, 2001.
(B) The provisions of the preceding paragraph (A) shall not
prohibit: (1) any purchase or redemption of Junior Stock of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Junior Stock (other than Redeemable Stock or Exchangeable Stock and other than
Excluded Stock); provided, however, that (I) such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments and (II) the
Net Cash Proceeds from such sale shall be excluded from clauses (III)(y) and
(III)(z) of the previous paragraph (A); (2) dividends paid within 60 days after
the date of declaration thereof if at such date of declaration such dividend
would have complied with this covenant; provided, however, that at any time of
payment of such dividend, no other Default shall have occurred and be continuing
(or result therefrom); provided further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments; (3)
Investments in Non-Recourse Affiliates in an aggregate amount (which amount
shall be reduced by the amount equal to the net reduction in Investments in
Non-Recourse Affiliates resulting from payments of dividends, repayments of
loans or advances or other transfers of assets to the Company or any Restricted
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23
Subsidiary from Non-Recourse Affiliates) not to exceed $6.0 million; provided,
however, that the amount of such Investments shall be excluded in the
calculation of the amount of Restricted Payments; (4) with respect to each tax
period that Benedek Broadcasting qualifies as an S Corporation under the Code,
or any similar provision of state or local law, distributions of Tax Amounts;
provided, however, that prior to any distribution of Tax Amounts a duly
authorized officer of Benedek Broadcasting certifies to the Trustee that Benedek
Broadcasting qualified as an S Corporation for Federal income tax purposes for
such period and for the states in respect of which distributions are being made
and that at the time of such distributions, the most recent audited financial
statements of Benedek Broadcasting provide that Benedek Broadcasting was treated
as an S Corporation for Federal income tax purposes for the applicable portion
of the period of such financial statements; provided further, however, that the
amount of such distributions shall be excluded in the calculation of the amount
of Restricted Payments; or (5) loans or advances to officers and directors of
the Company (other than a Restricted Holder) (I) in the ordinary course of
business in an aggregate amount outstanding not in excess of $1.0 million or
(II) the proceeds of which are used to acquire Capital Stock of the Company
(other than Redeemable Stock, Exchangeable Stock, Senior Stock or Parity Stock);
provided, however, that such loans and advances shall be excluded in the
calculation of the amount of Restricted Payments.
The Company shall not be permitted to make distributions
pursuant to clause (4) above (x) unless and until the Company has entered into a
binding written agreement with each stockholder (copies of which will be
promptly furnished to the Trustee prior to the making of any such distribution)
providing that if any amount distributed to such stockholder pursuant to such
clause (4) is later determined to have been, as a result of a change in
applicable law or the failure of Benedek Broadcasting to effect or maintain a
valid S Corporation election or otherwise, in excess of that amount permitted to
be distributed or paid under such clause (4), such excess shall be refunded to
the Company at least five Business Days prior to the next due date of individual
estimated income tax payments and (y) in the event it has been determined that
any such excess distribution or payment has been made, unless the Company has
requested and received all refunds pursuant to such agreements.
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24
(iii) Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (A) pay dividends or make any other distributions on its Capital
Stock or pay any Debt owed to the Company, (B) make any loans or advances to the
Company or (C) transfer any of its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Issue Date; (2) any encumbrance or restriction with respect
to a Restricted Subsidiary pursuant to an agreement relating to any Debt Issued
by such Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Debt Issued as consideration
in, or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the
Company) and outstanding on such date; (3) any encumbrance or restriction
pursuant to an agreement effecting a Refinancing of Debt Issued pursuant to an
agreement referred to in clause (1) or (2) of this covenant or contained in any
amendment to an agreement referred to in clause (1) or (2) of this covenant;
provided, however, that the encumbrances and restrictions contained in such
Refinancing agreement or amendment are no less favorable to the Holders than
encumbrances or restriction contained in such agreements; (4) any such
encumbrance or restriction consisting of customary nonassignment provisions in
leases governing leasehold interests to the extent such provisions restrict the
transfer of the lease; (5) in the case of clause (C) above, restrictions
contained in security agreements securing Debt of a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject to such
security agreements; and (6) any restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition.
(iv) Limitation on Sales of Assets and Subsidiary Stock. (A) The
Company shall not, and shall not permit any Restricted Subsidiary to, make any
Asset Disposition unless (1) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least
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25
equal to the fair market value, as determined in good faith by the Board of
Directors (including as to the value of all non-cash consideration), of the
shares and assets subject to such Asset Disposition and at least 90% of the
consideration thereof received by the Company or such Restricted Subsidiary is
in the form of cash and (2) an amount equal to 100% of the Net Available Cash
from such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be)(I) first, to the extent the Company elects (or
is required by the terms of any Debt) to prepay, repay or purchase Debt of the
Company or Debt (other than Redeemable Stock) of a Wholly Owned Subsidiary (in
each case other than Debt owed to the Company or an Affiliate of the Company)
within 60 days after the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (II) second, to the extent of the balance of
such Net Available Cash after application in accordance with clause (I), at the
Company's election to the investment by the Company or any Restricted Subsidiary
in assets to replace the assets that were the subject of such Asset Disposition
or in assets that, as determined by the Board of Directors and evidenced by
resolutions of the Board of Directors, will be used in the businesses of the
Company and its Restricted Subsidiaries existing on the Issue Date or in
businesses reasonably related thereto, in all cases within 270 days after the
later of the date of such Asset Disposition or the receipt of such Net Available
Cash; (III) third, to the extent the Company is entitled pursuant to then
existing contractual limitations to receive dividends or distributions from the
relevant Restricted Subsidiary and to the extent of the balance of such Net
Available Cash after application in accordance with clauses (I) and (II), to
make an offer pursuant to and subject to the conditions contained in this
Certificate of Designation to the holders of the Exchangeable Preferred Stock
(and to holders of any Parity Stock designated by the Company) to purchase
Exchangeable Preferred Stock (and such Parity Stock) at a purchase price of 100%
of the Specified Amount plus accrued and unpaid Liquidated Damages and dividends
(including an amount equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the date of such Asset Disposition to
the date of such Asset Disposition), if any, on the date of such Asset
Disposition (or in respect of such Parity Stock such lesser price, if any, as
may be provided for by the terms of such Parity Stock) and (IV) fourth, to the
extent of the balance of such Net Available Cash after application in accordance
with clauses (I), (II) and (III), to (x) the acquisition by
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26
the Company or any Restricted Subsidiary of assets to replace the assets that
were the subject of such Asset Disposition or assets that, as determined by the
Board of Directors and evidenced by resolutions of the Board of Directors, will
be used in the businesses of the Company and its Restricted Subsidiaries
existing on the Issue Date or in businesses reasonably related thereto or (y)
the prepayment, repayment or purchase of Debt (other than any Redeemable Stock)
of the Company (other than Debt owed to an Affiliate of the Company) or Debt of
any Restricted Subsidiary (other than Debt owned to the Company or an Affiliate
of the Company), in each case within 360 days after the later of the receipt of
such Net Available Cash and the date the offer described in clause (C) is
consummated; provided, however, that in connection with any prepayment,
repayment or purchase of Debt pursuant to clause (I), (III) or (IV) above, the
Company or such Restricted Subsidiary shall retire such Debt and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions of this paragraph, the Company and the Restricted
Subsidiaries shall not be required to apply any Net Available Cash in accordance
with this paragraph except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which are not applied in accordance with this
paragraph exceeds $5.0 million. The Company shall not permit any Non-Recourse
Subsidiary to make any Asset Disposition unless such Non- Recourse Subsidiary
receives consideration at the time of such Asset Disposition at least equal to
the fair market value of the shares or assets so disposed of. Pending
application of Net Available Cash pursuant to this covenant, such Net Available
Cash shall be invested in Permitted Investments.
(B) In the event of an Asset Disposition that requires the
purchase of Exchangeable Preferred Stock (and other Parity Stock) pursuant to
clause (2)(III) above, the Company will be required to purchase Exchangeable
Preferred Stock tendered pursuant to an offer (the "Offer") by the Company for
the Exchangeable Preferred Stock (and other Parity Stock at the purchase price
set forth above) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in clause (C). The Company shall not be
required to make such an offer to purchase Exchangeable Preferred Stock if the
Net Available Cash available therefor is less than $5.0 million for any
particular Asset Disposition (which lesser amount shall be
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27
carried forward for purposes of determining whether such an offer is required
with respect to any subsequent Asset Disposition).
(C)(1) Promptly, and in any event within 30 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Transfer Agent and send, by first-class mail to each Holder of
Exchangeable Preferred Stock, a written notice stating that the Holder may elect
to have his Exchangeable Preferred Stock purchased by the Company either in
whole or in part (subject to prorating as hereinafter described in the event the
Offer is oversubscribed), at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (ii) a description of material
developments in the Company's business subsequent to the date of the latest of
such Reports, and (iii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender Exchangeable
Preferred Stock pursuant to the Offer, together with the information contained
in clause (3) below.
(2) Not later than the date upon which written notice of an
Offer is delivered to the Transfer Agent as provided below, the Company shall
deliver to the Transfer Agent an Officers' Certificate as to (i) the amount of
the Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash
from the Asset Dispositions pursuant to which such Offer is being made and (iii)
the compliance of such allocation with the provisions of subparagraph
(l)(iv)(A). On such date, the Company shall also irrevocably deposit with the
Transfer Agent or with a paying agent (or, if the Company is acting as its own
paying agent, aggregate and hold in trust) in immediately available funds an
amount equal to the Offer Amount to be held for payment in accordance with the
provisions of this clause (C). Upon the
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28
expiration of the period for which the Offer remains open (the "Offer Period"),
the Company shall deliver to the Transfer Agent the Exchangeable Preferred Stock
or portions thereof which have been properly tendered to and are to be accepted
by the Company. The Transfer Agent shall, on the Purchase Date, mail or deliver
payment to each tendering Holder in the amount of the purchase price. In the
event that the aggregate purchase price of the Exchangeable Preferred Stock
delivered by the Company to the Transfer Agent is less than the Offer Amount,
the Transfer Agent shall deliver the excess to the Company promptly after the
expiration of the Offer Period.
(3) Holders electing to have Exchangeable Preferred Stock
purchased will be required to surrender the Exchangeable Preferred Stock, with
the form set forth on the reverse of the Exchangeable Preferred Stock duly
completed, to the Company at the address specified in the notice at least ten
Business Days prior to the Purchase Date. Holders will be entitled to withdraw
their election if the Transfer Agent receives not later than three Business Days
prior to the Purchase Date, a facsimile transmission (promptly confirmed in
writing) or letter (a copy of which the Transfer Agent shall give to the Company
not later than one Business Day prior to the Purchase Date) setting forth the
name of the Holder, the number of shares of Exchangeable Preferred Stock which
was delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Exchangeable Preferred Stock purchased. If
at the expiration of the Offer Period the aggregate purchase price of the
Exchangeable Preferred Stock surrendered by Holders, together with the aggregate
purchase price of the other Parity Stock surrendered in connection with the
Offer, exceeds the Offer Amount, the Company shall select the Exchangeable
Preferred Stock and such other Parity Stock to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so that no
fractional shares of Exchangeable Preferred Stock shall be purchased). Holders
whose Exchangeable Preferred Stock are purchased only in part will be Issued new
shares of Exchangeable Preferred Stock representing the unpurchased portion of
the shares of Exchangeable Preferred Stock surrendered.
(4) At the time the Company delivers Exchangeable Preferred
Stock to the Transfer Agent which are to be accepted for purchase, the Company
will also deliver an Officers' Certificate stating that such Exchangeable
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29
Preferred Stock are to be accepted by the Company pursuant to and in accordance
with the terms of this clause (C). Exchangeable Preferred Stock shall be deemed
to have been accepted for purchase at the time the Transfer Agent, directly or
through an agent, mails or delivers payment therefor to the surrendering Holder.
(D) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Exchangeable Preferred
Stock pursuant to this covenant. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this covenant, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Certificate of
Designation by virtue thereof.
(v) Limitation on Transactions with Affiliates. (A) The
Company shall not, and shall not permit any Restricted Subsidiary to, conduct
any business or enter into any transaction or series of related transactions
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Company unless the terms of
such business, transaction or series of transactions are as favorable to the
Company or such Restricted Subsidiary as terms that would be obtainable at the
time for a comparable transaction or series of similar transactions in
arm's-length dealings with an unrelated third person; provided, however, that in
the case of any transaction or series of related transactions involving
aggregate payments or other transfers by the Company and its Restricted
Subsidiaries, in excess of (1) $5.0 million, the Company shall deliver an
Officers' Certificate to the Trustee certifying that the terms of such business,
transaction or series of transactions (I) comply with this covenant, (II) have
been set forth in writing and (III) have been determined in good faith by the
disinterested members of the Board of Directors to satisfy the criteria set
forth in this covenant and (2) $5.0 million, the Company shall also deliver to
the Transfer Agent an opinion from an investment banking firm of national
prominence that is not an Affiliate of the Company to the effect that such
business, transaction or transactions are fair to the Company or such Restricted
Subsidiary from a financial point of view.
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30
(B) The provisions of the preceding paragraph shall not
prohibit (1) any Restricted Payment permitted to be paid pursuant to the
provisions of paragraph (l)(ii) above, (2) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors in the ordinary course of business and
consistent with industry practices, (3) loans or advances to employees of the
Company and the Subsidiaries (other than Restricted Holders) (I) in the ordinary
course of business in an aggregate amount outstanding not to exceed $5.0 million
or (II) the proceeds of which are used to acquire from the Company Capital Stock
of the Company (other than Redeemable Stock or Exchangeable Stock); (4) the
payment of reasonable fees to directors of the Company and its Subsidiaries
(other than a Restricted Holder) who are not employees of the Company or its
Subsidiaries; (5) salaries to employees in the ordinary course of business and
consistent with industry practices; and (6) any transaction between the Company
and a Restricted Subsidiary or between Restricted Subsidiaries; provided,
however, that no portion of the minority interest in any such Restricted
Subsidiary is owned by an Affiliate (other than the Company or a Wholly Owned
Subsidiary) of the Company.
(vi) SEC Reports and Other Information. Notwithstanding that the
Company may not be required to be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC and
thereupon provide the Transfer Agent and the Holders with such annual reports
and such information, documents and other reports as are specified in Sections
13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such Sections, such information, documents and reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections. In addition, for so long as any of the shares
of Exchangeable Preferred Stock are outstanding, the Company will make available
to any prospective purchaser of the shares of Exchangeable Preferred Stock or
beneficial owner of the shares of Exchangeable Preferred Stock in connection
with any sales thereof the information required by Rule 144A(d)(4) under the
Securities Act.
(vii) Limitation on Mergers and Asset Sales. (A) The Company may
not consolidate with or merge with or into, or convey, transfer or lease all or
substantially all
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31
its assets to, any person unless: (1) the resulting, surviving or transferee
person (if not the Company) is organized and existing under the laws of the
United States of America or any State thereof or the District of Columbia and
the Exchangeable Preferred Stock shall be converted into or exchanged for and
shall become shares of such resulting, surviving or transferee person, having in
respect of such resulting, surviving or transferee person the same powers,
preference and relative participating, optional or other special rights and the
qualifications, limitations or restrictions thereon, that the Exchangeable
Preferred Stock had immediately prior to such transaction; (2) immediately prior
to and after giving effect to such transaction (and treating any Debt which
becomes an obligation of the resulting, surviving or transferee person or any
Subsidiary as a result of such transaction as having been incurred by such
person or such Subsidiary at the time of such transaction), no Default has
occurred and is continuing; (3) immediately after giving effect to such
transaction, the resulting, surviving or transferee person would be able to
issue an additional $1.00 of Debt pursuant to paragraph (l)(i)(A) above; (4)
immediately after giving effect to such transaction, the resulting, surviving or
transferee person has Consolidated Net Worth in an amount which is not less than
the Consolidated Net Worth of the Company prior to such transaction; and (5) the
Company delivers to the Transfer Agent an Officers' Certificate and an Opinion
of Counsel stating that such consolidation, merger or transfer complies with
this Certificate of Designation. The resulting, surviving or transferee person
will be the successor company.
(B) The Company shall not permit Benedek Broadcasting to
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any person unless: (1) the resulting, surviving
or transferee person (if not Benedek Broadcasting) is organized and existing
under the laws of the United States of America or any State thereof or the
District of Columbia; (2) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of the resulting,
surviving or transferee person or any Subsidiary as a result of such transaction
as having been incurred by such person or such Subsidiary at the time of such
transaction), no Default has occurred and is continuing; (3) immediately after
giving effect to such transaction, the Company would be able to issue an
additional $1.00 of Debt pursuant to paragraph (l)(i)(A)
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32
above; and (4) the Company delivers to the Transfer Agent an Officers'
Certificate and an Opinion of Counsel stating that such consolidation, merger or
transfer complies with this Certificate of Designation.
(m) Certificates. (i) Form and Dating. The Class A Stock and
the Transfer Agent's certificate of authentication shall be substantially in the
form of Exhibit A, which is hereby incorporated in and expressly made a part of
this Certificate of Designation. The Class B Stock and the Transfer Agent's
certificate of authentication shall be substantially in the form of Exhibit B,
which is hereby incorporated by reference and expressly made a part of this
Certificate of Designation. The Exchangeable Preferred Stock certificate may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Exchangeable Preferred Stock certificate shall be dated the date of its
authentication. The terms of the Exchangeable Preferred Stock certificate set
forth in Exhibit A and Exhibit B are part of the terms of this Certificate of
Designation.
(A) Global Exchangeable Preferred Stock. Class A Stock shall
be issued initially in the form of one or more fully registered global
certificates with the global securities legend and restricted securities legend
set forth in Exhibit A hereto (the "Global Exchangeable Preferred Stock"), which
shall be deposited on behalf of the purchasers represented thereby with the
Transfer Agent, at its New York office, as custodian for DTC (or with such other
custodian as DTC may direct), and registered in the name of DTC or a nominee of
DTC, duly executed by the Company and authenticated by the Transfer Agent as
hereinafter provided. The number of shares of Exchangeable Preferred Stock
represented by Global Exchangeable Preferred Stock may from time to time be
increased or decreased by adjustments made on the records of the Transfer Agent
and DTC or its nominee as hereinafter provided.
(B) Book-Entry Provisions. In the event Global Exchangeable
Preferred Stock is deposited with or on behalf of DTC, the Company shall execute
and the Transfer Agent shall authenticate and deliver initially one or more
Global Exchangeable Preferred Stock certificates that (a) shall be registered in
the name of DTC for such Global Exchangeable Preferred Stock or the nominee of
DTC and (b) shall be
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33
delivered by the Transfer Agent to DTC or pursuant to DTC's instructions or held
by the Transfer Agent as custodian for DTC.
Members of, or participants in, DTC ("Agent Members") shall
have no rights under this Certificate of Designation with respect to any Global
Exchangeable Preferred Stock held on their behalf by DTC or by the Transfer
Agent as the custodian of DTC or under such Global Exchangeable Preferred Stock,
and DTC may be treated by the Company, the Transfer Agent and any agent of the
Company or the Transfer Agent as the absolute owner of such Global Exchangeable
Preferred Stock for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Transfer Agent or any agent of the
Company or the Transfer Agent from giving effect to any written certification,
proxy or other authorization furnished by DTC or impair, as between DTC and its
Agent Members, the operation of customary practices of DTC governing the
exercise of the rights of a holder of a beneficial interest in any Global
Exchangeable Preferred Stock.
(C) Certificated Exchangeable Preferred Stock. Except as
provided in this paragraph (i) or in paragraph (iii), owners of beneficial
interests in Global Exchangeable Preferred Stock will not be entitled to receive
physical delivery of certificated Exchangeable Preferred Stock ("Certificated
Exchangeable Preferred Stock").
After a transfer of any Class A Stock during the period of the
effectiveness of a Shelf Registration Statement with respect to such Class A
Stock, all requirements pertaining to legends on such Class A Stock will cease
to apply, the requirements requiring any such Class A Stock issued to Holders be
issued in global form will cease to apply, and Certificated Exchangeable
Preferred Stock without legends will be available to the transferee of the
Holder of such Class A Stock upon exchange of such transferring Holder's Class A
Stock or directions to transfer such Holder's interest in the Global
Exchangeable Preferred Stock, as applicable. Upon the consummation of a
Registered Exchange Offer with respect to the Class A Stock pursuant to which
Holders of such Class A Stock are offered Class B Stock in exchange for their
Class A Stock, all requirements that Class A Stock be issued in global form will
cease to apply and Certificated Exchangeable Preferred Stock with the restricted
securities legend set forth in Exhibit A hereto will be available to Holders of
such Class A Stock that do
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34
not exchange their Class A Stock, and Class B Stock in certificated form will be
available to Holders that exchange such Class A Stock in such Registered
Exchange Offer.
(ii) Execution and Authentication. Two Officers shall sign the
Exchangeable Preferred Stock for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Exchangeable Preferred Stock and may be in facsimile form.
If an Officer whose signature is on Exchangeable Preferred
Stock no longer holds that office at the time the Transfer Agent authenticates
the Exchangeable Preferred Stock, the Exchangeable Preferred Stock shall be
valid nevertheless.
An Exchangeable Preferred Stock shall not be valid until an
authorized signatory of the Transfer Agent manually signs the certificate of
authentication on the Exchangeable Preferred Stock. The signature shall be
conclusive evidence that the Exchangeable Preferred Stock has been authenticated
under this Certificate of Designation.
The Transfer Agent shall authenticate and deliver: (1) 600,000
shares of Class A Stock for original issue and (2) 600,000 shares of Class B
Stock for issue only in a Registered Exchange Offer pursuant to the Exchange and
Registration Rights Agreement, in each case upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the number of
shares of Exchangeable Preferred Stock to be authenticated and the date on which
the original issue of Exchangeable Preferred Stock is to be authenticated and
whether the Exchangeable Preferred Stock is to be Class A Stock or Class B
Stock.
The Transfer Agent may appoint an authenticating agent
reasonably acceptable to the Company to authenticate the Exchangeable Preferred
Stock. Unless limited by the terms of such appointment, an authenticating agent
may authenticate Exchangeable Preferred Stock whenever the Transfer Agent may do
so. Each reference in this Certificate of Designation to authentication by the
Transfer Agent includes authentication by such agent. An authenticating agent
has the same rights as the Transfer Agent or agent for service of notices and
demands.
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35
(iii) Transfer and Exchange. (A) Transfer and Exchange of
Certificated Exchangeable Preferred Stock. When Certificated Exchangeable
Preferred Stock is presented to the Transfer Agent with a request to register
the transfer of such Certificated Exchangeable Preferred Stock or to exchange
such Certificated Exchangeable Preferred Stock for an equal number of shares of
Certificated Exchangeable Preferred Stock of other authorized denominations, the
Transfer Agent shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Certificated Exchangeable Preferred Stock surrendered for transfer or
exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Transfer Agent, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(2) in the case of Transfer Restricted Securities that are
Certificated Exchangeable Preferred Stock, are being transferred or
exchanged pursuant to an effective registration statement under the
Securities Act or pursuant to clause (I), (II) or (III) below, and are
accompanied by the following additional information and documents, as
applicable:
(I) if such Transfer Restricted Securities are being
delivered to the Transfer Agent by a Holder for registration
in the name of such Holder, without transfer, a certification
from such Holder to that effect in substantially the form of
Exhibit C hereto; or
(II) if such Transfer Restricted Securities are being
transferred to the Company or to a "qualified institutional
buyer" ("QIB") in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Regulation S under the
Securities Act, a certification to that effect (in
substantially the form of Exhibit C hereto); or
(III) if such Transfer Restricted Securities are being
transferred to an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the
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36
Securities Act that is acquiring the Securities for its own
account, or for the account of such an institutional
accredited investor, in each case in a minimum principal
amount of $100,000 for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution
in violation of the Securities Act, or in reliance on another
exemption from the registration requirements of the Securities
Act: (i) a certification to that effect in substantially the
form of Exhibit C hereto, and if the Company or the Transfer
Agent so requests, evidence reasonably satisfactory to them as
to the compliance with the restrictions set forth in the
legend set forth in paragraph (iii)(G)(1) below.
(B) Restrictions on Transfer of Certificated Exchangeable
Preferred Stock for a Beneficial Interest in Global Exchangeable Preferred
Stock. Certificated Exchangeable Preferred Stock may not be exchanged for a
beneficial interest in Global Exchangeable Preferred Stock except upon
satisfaction of the requirements set forth below. Upon receipt by the Transfer
Agent of Certificated Exchangeable Preferred Stock, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Transfer
Agent, together with:
(1) if such Certificated Exchangeable Preferred Stock is a
Transfer Restricted Security, certification that such Certificated
Exchangeable Preferred Stock is being transferred to a QIB in
accordance with Rule 144A under the Securities Act; and
(2) whether or not such Certificated Exchangeable Preferred
Stock is a Transfer Restricted Security, written instructions directing
the Transfer Agent to make, or to direct DTC to make, an adjustment on
its books and records with respect to such Global Exchangeable
Preferred Stock to reflect an increase in the number of shares of
Exchangeable Preferred Stock represented by the Global Exchangeable
Preferred Stock,
then the Transfer Agent shall cancel such Certificated Exchangeable Preferred
Stock and cause, or direct DTC to cause, in accordance with the standing
instructions and procedures existing between DTC and the Transfer Agent, the
number of shares of Exchangeable Preferred Stock represented by the Global
Exchangeable Preferred Stock to be increased
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37
accordingly. If no Global Exchangeable Preferred Stock is then outstanding, the
Company shall issue and the Transfer Agent shall authenticate, upon written
order of the Company in the form of an Officers' Certificate, a new Global
Exchangeable Preferred Stock representing the appropriate number of shares.
(C) Transfer and Exchange of Global Exchangeable Preferred
Stock. The transfer and exchange of Global Exchangeable Preferred Stock or
beneficial interests therein shall be effected through DTC, in accordance with
this Certificate of Designation (including applicable restrictions on transfer
set forth herein, if any) and the procedures of DTC therefor.
(D) Transfer of a Beneficial Interest in Global Exchangeable
Preferred Stock for a Certificated Exchangeable Preferred Stock. (1) Any person
having a beneficial interest in Exchangeable Preferred Stock that is being
transferred or exchanged pursuant to an effective registration statement under
the Securities Act or pursuant to clause (I), (II) or (III) below may upon
request, and if accompanied by the information specified below, exchange such
beneficial interest for Certificated Exchangeable Preferred Stock representing
the same number of shares of Exchangeable Preferred Stock. Upon receipt by the
Transfer Agent of written instructions or such other form of instructions as is
customary for DTC from DTC or its nominee on behalf of any person having a
beneficial interest in Global Exchangeable Preferred Stock and upon receipt by
the Transfer Agent of a written order or such other form of instructions as is
customary for DTC or the person designated by DTC as having such a beneficial
interest in a Transfer Restricted Security only, the following additional
information and documents (all of which may be submitted by facsimile):
(I) if such beneficial interest is being transferred
to the person designated by DTC as being the owner of a
beneficial interest in Global Exchangeable Preferred Stock, a
certification from such person to that effect (in
substantially the form of Exhibit C hereto);
(II) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in accordance
with
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38
Rule 144 or Regulation S under the Securities Act, a
certification to that effect (in substantially the form of
Exhibit C hereto); or
(III) if such beneficial interest is being transferred to
an institutional "accredited investor" as described in Rule
501(a)(1), (2), (3) or (7) under the Securities Act that is
acquiring the security for its own account, or for the account
of such an institutional accredited investor, in each case in
a minimum principal amount of $100,000 for investment purposes
and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act, or
in reliance on another exemption from the registration
requirements of the Securities Act: a certification to that
effect from the transferor (in substantially the form of
Exhibit C hereto), and if the Company or the Transfer Agent so
requests, evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the legend set
forth in paragraph (iii)(G)(1) below.
then, the Transfer Agent or DTC, at the direction of the Transfer Agent, will
cause, in accordance with the standing instructions and procedures existing
between DTC and the Transfer Agent, the number of shares of Exchangeable
Preferred Stock represented by Global Exchangeable Preferred Stock to be reduced
on its books and records and, following such reduction, the Company will execute
and the Transfer Agent will authenticate and deliver to the transferee
Certificated Exchangeable Preferred Stock.
(2) Certificated Exchangeable Preferred Stock issued in
exchange for a beneficial interest in a Global Exchangeable Preferred
Stock pursuant to this paragraph (iii)(D) shall be registered in such
names and in such authorized denominations as DTC, pursuant to
instructions from its direct or indirect participants or otherwise,
shall instruct the Transfer Agent. The Transfer Agent shall deliver
such Certificated Exchangeable Preferred Stock to the persons in whose
names such Exchangeable Preferred Stock are so registered in accordance
with the instructions of DTC.
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39
(E) Restrictions on Transfer and Exchange of Global
Exchangeable Preferred Stock. Notwithstanding any other provisions of this
Certificate of Designation (other than the provisions set forth in paragraph
(iii)(F)), Global Exchangeable Preferred Stock may not be transferred as a whole
except by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC or any such nominee to a successor depository or a
nominee of such successor depository.
(F) Authentication of Certificated Exchangeable
Preferred Stock. If at any time:
(1) DTC notifies the Company that DTC is unwilling or unable
to continue as depository for the Global Exchangeable Preferred Stock
and a successor depository for the Global Exchangeable Preferred Stock
is not appointed by the Company within 90 days after delivery of such
notice;
(2) DTC ceases to be a clearing agency registered
under the Exchange Act;
(3) there shall have occurred and be continuing a
Voting Rights Triggering Event; or
(4) the Company, in its sole discretion, notifies the Transfer
Agent in writing that it elects to cause the issuance of Certificated
Exchangeable Preferred Stock under this Certificate of Designation,
then the Company will execute, and the Transfer Agent, upon receipt of a written
order of the Company signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of the Company requesting the
authentication and delivery of Certificated Exchangeable Preferred Stock to the
persons designated by the Company, will authenticate and deliver Certificated
Exchangeable Preferred Stock equal to the number of shares of Exchangeable
Preferred Stock represented by the Global Exchangeable Preferred Stock, in
exchange for such Global Exchangeable Preferred Stock.
(G) Legend. (1) Except as permitted by the following paragraph
(2), each certificate evidencing the Global Exchangeable Preferred Stock and the
Certificated Exchangeable Preferred Stock (and all Exchangeable Preferred
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40
Stock issued in exchange therefor or substitution thereof) shall bear a legend
in substantially the following form:
"THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE
INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER
THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY SUBSEQUENT
INVESTORS, AS SET FORTH IN (A) ABOVE OR TO AN INSTITUTIONAL ACCREDITED
INVESTOR AS DESCRIBED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE (A) AND (B), IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES."
(2) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by Global
Exchangeable Preferred Stock) pursuant to Rule 144 under the Securities Act or
an effective registration statement under the Securities Act:
(I) in the case of any Transfer Restricted Security
that is a Certificated Exchangeable Preferred Stock, the
Transfer Agent shall permit the Holder thereof to exchange
such Transfer Restricted Security for a Certificated
Exchangeable Preferred Stock that does not bear the legend set
forth above and rescind any restriction on the transfer of
such Transfer Restricted Security;
(II) in the case of any Transfer Restricted Security
that is represented by a Global Exchangeable Preferred Stock,
the Transfer Agent shall permit the Holder thereof to exchange
such Transfer Restricted Security for a Certificated
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41
Exchangeable Preferred Stock Security that does not bear the
legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security, if the Holder's
request for such exchange was made in reliance on Rule 144 and
the Holder certifies to that effect in writing to the Transfer
Agent (such certification to be in the form set forth on the
reverse of the Transfer Restricted Security); and
(III) in the case of any Transfer Restricted Security
that is represented by a Global Exchangeable Preferred Stock,
the Transfer Agent shall permit the Holder thereof to exchange
such Transfer Restricted Security (in connection with the
offer to exchange Class B Stock for Class A Stock pursuant to
the Exchange and Registration Rights Agreement) for another
Global Exchangeable Preferred Stock that does not bear the
legend set forth above.
(H) Cancellation or Adjustment of Global Exchangeable
Preferred Stock. At such time as all beneficial interests in Global Exchangeable
Preferred Stock have either been exchanged for Certificated Exchangeable
Preferred Stock, redeemed, repurchased or canceled, such Global Exchangeable
Preferred Stock shall be returned to DTC for cancellation or retained and
canceled by the Transfer Agent. At any time prior to such cancellation, if any
beneficial interest in Global Exchangeable Preferred Stock is exchanged for
Certificated Exchangeable Preferred Stock, redeemed, repurchased or canceled,
the number of shares of Exchangeable Preferred Stock represented by such Global
Exchangeable Preferred Stock shall be reduced and an adjustment shall be made on
the books and records of the Transfer Agent with respect to such Global
Exchangeable Preferred Stock, by the Transfer Agent or DTC, to reflect such
reduction.
(I) Obligations with Respect to Transfers and Exchanges of
Exchangeable Preferred Stock. (1) To permit registrations of transfers and
exchanges, the Company shall execute and the Transfer Agent shall authenticate
Certificated Exchangeable Preferred Stock and Global Exchangeable Preferred
Stock as required pursuant to the provisions of this paragraph (iii).
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42
(2) All Certificated Exchangeable Preferred Stock and Global
Exchangeable Preferred Stock issued upon any registration of transfer
or exchange of Certificated Exchangeable Preferred Stock or Global
Exchangeable Preferred Stock shall be the valid obligations of the
Company, entitled to the same benefits under this Certificate of
Designation, as the Certificated Exchangeable Preferred Stock or Global
Exchangeable Preferred Stock surrendered upon such registration of
transfer or exchange.
(3) Prior to due presentment for registration of transfer of
any Exchangeable Preferred Stock, the Transfer Agent and the Company
may deem and treat the person in whose name any share of Exchangeable
Preferred Stock is registered as the absolute owner of such
Exchangeable Preferred Stock and neither the Transfer Agent nor the
Company shall be affected by notice to the contrary.
(4) No service charge shall be made to a Holder for any
registration of transfer or exchange upon surrender of any Exchangeable
Preferred Stock Certificate at the office of the Transfer Agent
maintained for that purpose. However, the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or
exchange of Exchangeable Preferred Stock Certificates.
(5) Upon any sale or transfer of shares of Exchangeable
Preferred Stock (including any Exchangeable Preferred Stock represented
by a Global Exchangeable Preferred Stock Certificate) pursuant to an
effective registration statement under the Securities Act, pursuant to
Rule 144 under the Securities Act or pursuant to an opinion of counsel
reasonably satisfactory to the Company that no legend is required:
(A) in the case of any Certificated Exchangeable
Preferred Stock, the Transfer Agent shall permit the
holder thereof to exchange such Exchangeable
Preferred Stock for Certificated Exchangeable
Preferred Stock that does not bear the legend set
forth in paragraph (iii)(G) above and rescind any
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43
restriction on the transfer of such
Exchangeable Preferred Stock; and
(B) in the case of any Global Exchangeable
Preferred Stock, such Exchangeable Preferred
Stock shall not be required to bear the
legend set forth in paragraph (iii)(G) above
but shall continue to be subject to the
provisions of paragraph (iii)(D) hereof;
provided, however, that with respect to any
request for an exchange of Exchangeable
Preferred Stock that is represented by Global
Exchangeable Preferred Stock for Certificated
Exchangeable Preferred Stock that does not
bear the legend set forth in paragraph (iii)(G)
above in connection with a sale or transfer
thereof pursuant to Rule 144 (and based upon
an opinion of counsel if the Company so
requests), the Holder thereof shall certify in
writing to the Transfer Agent that such request
is being made pursuant to Rule 144 (such
certification to be substantially in the form of
Exhibit B hereto).
(iv) Replacement Certificates. If a mutilated Exchangeable
Preferred Stock certificate is surrendered to the Transfer Agent or if the
Holder of a Exchangeable Preferred Stock certificate claims that the
Exchangeable Preferred Stock certificate has been lost, destroyed or wrongfully
taken, the Company shall issue and the Transfer Agent shall countersign a
replacement Exchangeable Preferred Stock certificate if the reasonable
requirements of the Transfer Agent and of Section 8-405 of the Uniform
Commercial Code as in effect in the State of New York are met. If required by
the Transfer Agent or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Transfer Agent to protect the
Company and the Transfer Agent from any loss which either of them may suffer if
an Exchangeable Preferred Stock certificate is replaced. The Company and the
Transfer Agent may charge the Holder for their expenses in replacing a
Exchangeable Preferred Stock certificate. Every replacement Exchangeable
Preferred Stock certificate is an additional obligation of the Company.
(v) Temporary Certificates. Until definitive
Exchangeable Preferred Stock certificates are ready for
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44
delivery, the Company may prepare and the Transfer Agent shall countersign
temporary Exchangeable Preferred Stock certificates. Temporary Exchangeable
Preferred Stock certificates shall be substantially in the form of definitive
Exchangeable Preferred Stock certificates but may have variations that the
Company considers appropriate for temporary Exchangeable Preferred Stock
certificates. Without unreasonable delay, the Company shall prepare and the
Transfer Agent shall countersign definitive Exchangeable Preferred Stock
certificates and deliver them in exchange for temporary Exchangeable Preferred
Stock certificates.
(vi) Cancellation. (A) In the event the Company shall purchase
or otherwise acquire Certificated Exchangeable Preferred Stock, the same shall
thereupon be delivered to the Transfer Agent for cancellation.
(B) At such time as all beneficial interests in Global
Exchangeable Preferred Stock have either been exchanged for Certificated
Exchangeable Preferred Stock, redeemed, repurchased or canceled, such Global
Exchangeable Preferred Stock shall thereupon be delivered to the Transfer
Agent for cancellation.
(C) The Transfer Agent and no one else shall cancel and
destroy all Exchangeable Preferred Stock certificates surrendered for transfer,
exchange, replacement or cancellation and deliver a certificate of such
destruction to the Company unless the Company directs the Transfer Agent to
deliver canceled Exchangeable Preferred Stock certificates to the Company. The
Company may not issue new Exchangeable Preferred Stock certificates to replace
Exchangeable Preferred Stock certificates to the extent they evidence
Exchangeable Preferred Stock which the Company has purchased or otherwise
acquired.
(n) Additional Rights of Holders. In addition to the rights
provided to Holders under this Certificate of Designation, Holders shall have
the rights set forth in the Exchange and Registration Rights Agreement.
(o) Certain Definitions. As used in this Certificate of
Designation, the following terms shall have the following meanings (and (1)
terms defined in the singular have comparable meanings when used in the plural
and vice versa, (2) "including" means including without limitation, (3) "or" is
not exclusive and (4) an accounting term not otherwise defined has the meaning
assigned to it in
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45
accordance with generally accepted accounting principles as in effect on the
Issue Date and all accounting calculations will be determined in accordance with
such principles), unless the content otherwise requires:
"Acquired Station" means any Television Station acquired by
the Company after the Issue Date.
"Acquisitions" means the acquisition by Benedek Broadcasting
of substantially all the television broadcast assets of Stauffer Communications,
Inc. and all the capital stock of Brissette Broadcasting Corporation and its
wholly owned subsidiaries.
"Affiliate" of any specified person means (i) any other person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified person or (ii) any other person who is a
director or officer (A) of such specified person, (B) of any subsidiary of such
specified person or (C) of any person described in clause (i) above. For
purposes of paragraphs (l)(ii), (l)(iv) and (l)(v) above, (a) control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise and
(b) beneficial ownership of 5% or more of the voting common equity (on a fully
diluted basis) or warrants to purchase such equity (whether or not currently
exercisable) of a person shall be deemed to be control of such person; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary (other than directors' qualifying
shares), property or other assets (each referred to for the purposes of this
definition as a "disposition") by the Company or any of its Subsidiaries
(including any disposition by means of a merger, consolidation or similar
transaction) other than (i) a disposition by a Subsidiary to the Company or by
the Company or a Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of
property or assets at fair market value in the ordinary course of business,
(iii) a disposition of obsolete assets in the ordinary course of business, (iv)
for purposes of paragraph (l)(iv) above only, a disposition subject to paragraph
(l)(ii) above, (v) a disposition subject to the provisions set forth
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46
in paragraph (l)(vii) above (except to the extent the Company disposes of
substantially all (but not all) of its assets, in which event the assets not so
disposed of shall be deemed as having been sold by the Company), (vi) a
disposition pursuant to the terms of the Company Pledge Agreement or (vii) a
disposition by the Company in which and to the extent the Company receives as
consideration Capital Stock of a person engaged in, or assets that will be used
in, the business of the Company existing on the Issue Date or in businesses
reasonably related thereto, as determined by the Board of Directors of the
Company, the determination of which will be conclusive and evidenced by a
resolution of the Board of Directors of the Company at the time of such
disposition.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate set forth on the face of the Senior Subordinated Discount Notes,
compounded annually) of the total obligations of the lessee for rental payments
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Debt, the quotient obtained by dividing (i) the sum of the
products of (a) the numbers of years from the date of determination to the dates
of each successive scheduled principal payment or redemption or similar payment
with respect to such Debt multiplied by (b) the amount of such payment, by (ii)
the sum of all such payments.
"Bank Credit Agreement" means the Credit Agreement dated as of
June 6, 1996, among Benedek Broadcasting, as borrower, the Lenders referred to
therein, Canadian Imperial Bank of Commerce New York Agency, as administrative
agent and collateral agent, Pearl Street L.P., as arranging agent, and Goldman,
Sachs & Co., as syndication agent, and all promissory notes, guarantees,
security agreements, pledge agreements, deeds of trust, mortgages, letters of
credit and other instruments, agreements and documents executed pursuant thereto
or in connection therewith, in each case as the same may be amended,
supplemented, restated, renewed, refinanced, replaced or otherwise modified (in
whole or in part and without limitation as to amount, terms, conditions,
covenants or other provisions) from time to time.
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47
"Benedek Broadcasting" means Benedek Broadcasting Corporation,
a Delaware corporation and a wholly owned subsidiary of the Company, and any
successor company.
"BLC" means Benedek License Corporation, a Delaware
corporation and a wholly owned subsidiary of Benedek Broadcasting, and any
successor company.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal
Holiday.
"Capital Lease Obligations" of a person means any obligation
which is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such person prepared in accordance with generally
accepted accounting principles; the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such person,
including any Preferred Stock, but excluding any debt securities convertible
into or exchangeable for such equity.
"Cash Flow Leverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount outstanding of all Debt of the
Company and the Restricted Subsidiaries (including any Debt Issued under
paragraph (l)(i)(B)) at the end of the most recent fiscal quarter ending at
least 45 days prior to the date of determination to (ii) Operating Cash Flow for
the four fiscal quarters ending on the last day of such fiscal quarter;
provided; however, that (1) if the Company or any Restricted Subsidiary has
Issued any Debt since the beginning of such period that remains outstanding or
if the transaction giving rise to the need to calculate the Cash Flow Leverage
Ratio is an Issuance of Debt, or both, Debt as
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48
of such date and Operating Cash Flow (including Consolidated Interest Expense)
for such period shall be calculated after giving effect on a pro forma basis to
such Debt (in the case of Operating Cash Flow, as if such Debt had been Issued
on the first day of such period) and the discharge of any other Debt repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new Debt
(in the case of Operating Cash Flow, as if such discharge had occurred on the
first day of such period), (2) if since the beginning of such period the Company
or any Restricted Subsidiary shall have made any Asset Disposition, (A) the
Operating Cash Flow for such period shall be reduced by an amount equal to the
Operating Cash Flow (if positive), directly attributable to the assets which are
the subject of such Asset Disposition for such period, or increased by an amount
equal to the Operating Cash Flow (if negative) directly attributable thereto for
such period (including an adjustment for Consolidated Interest Expense directly
attributable to any Debt (the "Discharged Debt") of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its continuing Restricted Subsidiaries in connection
with such Asset Dispositions for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Discharged Debt of such Restricted Subsidiary)) and
(B) Debt for such period shall be reduced by an amount equal to the Discharged
Debt, (3) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any person which becomes a Restricted Subsidiary) or
an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business,
Operating Cash Flow for such period shall be calculated after giving pro forma
effect thereto (including the Issuance of any Debt) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such period any person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such period, Operating Cash Flow (including Consolidated
Interest Expense) for such
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49
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any Debt
Issued in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Debt bears a floating rate of interest and is being given pro forma
effect, the interest on such Debt shall be calculated as if the rate in effect
on the date of determination had been the applicable rate for the entire period
(taking into account any Interest Rate Protection Agreement applicable to such
Debt if such Interest Rate Protection Agreement has a remaining term in excess
of 12 months).
"Change of Control" means:
(i) prior to the first public offering of common stock of the
Company or Parent, the Permitted Holders cease to be the "beneficial
owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of a majority in the aggregate of the total
voting power of the Voting Stock of the Company or Parent, whether as a
result of Issuance of securities of the Company, any merger,
consolidation, liquidation or dissolution of the Company, any direct or
indirect transfer of securities or otherwise (for purposes of this
clause (i) and clause (ii) below, the Permitted Holders shall be deemed
to beneficially own any Voting Stock of a corporation (the "specified
corporation") held by any other corporation (the "parent corporation")
so long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the voting power
of the Voting Stock of the parent corporation;
(ii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i) above,
except that such person shall be deemed to have "beneficial ownership"
of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the
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50
total voting power of the Voting Stock of the Company or Parent;
provided, however, that the Permitted Holders beneficially own (as
defined in clause (i) above), directly or indirectly, in the aggregate
a lesser percentage of the total voting power of the Voting Stock of
the Company or Parent than such other person and do not have the right
or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of the Company or
Parent (for the purposes of this clause (ii), such other person shall
be deemed to beneficially own any Voting Stock of a specified
corporation held by a parent corporation, if such other person is the
beneficial owner (as defined in this clause (ii), directly or
indirectly, of more than 35% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders beneficially own (as
defined in clause (i) above), directly or indirectly, in the aggregate
a lesser percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of such parent corporation); or
(iii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of
the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders
of the Company was approved by a vote of 66 2/3% of the directors of
the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company Pledge Agreement" means the Pledge and Security
Agreement dated as of March 10, 1995 between Benedek Broadcasting and The Bank
of New York.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent
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51
not included in such interest expense, (i) interest expense attributable to
capital leases, (ii) amortization of debt discount and debt Issuance cost, (iii)
capitalized interest, (iv) non-cash interest expense, (v) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (vi) interest actually paid by the Company or any such
Restricted Subsidiary under any Guarantee of Debt or other obligation of any
other person, (vii) net costs associated with Hedging Obligations (including
amortization of fees), (viii) Preferred Stock dividends in respect of all
Preferred Stock of Restricted Subsidiaries and Redeemable Stock of the Company
held by persons other than the Company or a Wholly Owned Subsidiary and (ix) the
cash contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any person (other than the Company) in connection with loans incurred by such
plan or trust to purchase newly issued or treasury shares of the Company.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income: (i) any net income
of any person if such person is not a Restricted Subsidiary, except that (A) the
Company's equity in the net income of any such person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such person for such period shall be included in determining
such Consolidated Net Income, (ii) any net income of any person acquired by the
Company or a Restricted Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition, (iii) any net income of any
Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to the Company or
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52
another Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution to another Restricted Subsidiary,
to the limitation contained in this clause) and (B) the Company's equity in a
net loss of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income, (iv) any gain (but not loss) realized
upon the sale or other disposition of any property, plant or equipment of the
Company or its consolidated subsidiaries (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the
ordinary course of business and any gain (but not loss) realized upon the sale
or other disposition of any Capital Stock of any person and (v) the cumulative
effect of a change in accounting principles. Notwithstanding the foregoing, for
the purposes of paragraph (l)(ii) above only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other
transfers of assets from a Non-Recourse Affiliate to the Company or a Restricted
Subsidiary to the extent such dividends, repayments or transfers increase the
amount of Restricted Payments permitted under such paragraph pursuant to clause
(B)(3) thereof.
"Consolidated Net Worth" of any person means the total of the
amounts shown on the balance sheet of such person and its consolidated
subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles, as of the end of the most recent fiscal quarter
of such person ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of such person plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit, (B) any amounts attributable
to Redeemable Stock and (C) any amounts attributable to Exchangeable Stock.
"Contingent Warrants" means 888,000 warrants, each to purchase
one share of Class A Common Stock of the Company.
"Debt" of any person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such
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53
person is responsible or liable; (ii) all Capital Lease Obligations and all
Attributable Debt of such person; (iii) all obligations of such person Issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such person to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by such person of a demand for reimbursement following payment
on the letter of credit); (v) the amount of all obligations of such person with
respect to the redemption, repayment or other repurchase of, in the case of a
Subsidiary, any Preferred Stock and, in the case of any other person, any
Redeemable Stock (but excluding any accrued dividends); (vi) all obligations of
the type referred to in clauses (i) through (v) of other persons and all
dividends of other persons for the payment of which, in either case, such person
is responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise, including any Guarantees of such obligations and dividends; and (vii)
all obligations of the type referred to in clauses (i) through (vi) of other
persons secured by an Lien on any property or asset of such person (whether or
not such obligation is assumed by such person), the amount of such obligation
being deemed to be the lesser of the value of such property or assets or the
amount of the obligation so secured. The amount of Debt of any person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date.
"Default" means any event which is, or after notice or passage
of time or both would be, a Voting Rights Triggering Event.
"DTC" means The Depository Trust Company.
"EBITDA" for any period means the Consolidated Net
Income for such period (but without giving effect to
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54
adjustments, accruals, deductions or entries resulting from purchase accounting,
extraordinary losses or gains and any gains or losses from any Asset
Dispositions), plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expenses, (ii) Consolidated Interest
Expense, (iii) depreciation expense, (iv) amortization expense (including the
amortization of Program Obligations) and (v) all other noncash charges deducted
in the calculation of such Consolidated Net Income (but excluding (a) any
noncash charges related to the items described in clauses (i) through (v) of the
definition of "Consolidated Net Income" and (b) any noncash charges to the
extent that they require an accrual of or a reserve for cash disbursements for
any future period) and minus, without duplication, all noncash items (but
excluding revenue from barter transactions) that increased such Consolidated Net
Income).
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exchange and Registration Rights Agreement" means the
Exchange and Registration Rights Agreement dated as of June 5, 1996 among the
Company, Goldman, Sachs & Co. and BT Securities Corporation with respect to the
Exchangeable Preferred Stock.
"Exchange Debentures" means the debentures
issuable pursuant to the Exchange Indenture.
"Exchange Indenture" means the form of Indenture to be entered
into between the Company and IBJ Schroder Bank & Trust Company, as trustee, in
the event the Exchangeable Preferred Stock is exchanged for Exchange Debentures
at the option of the Company, a copy of which form of Indenture is on file with
the Secretary of the Company.
"Exchangeable Stock" means any Capital Stock which is
exchangeable or convertible into another security (other than Capital Stock of
the Company which is neither Exchangeable Stock nor Redeemable Stock).
"Existing Station" means (i) each of the 22 Television
Stations owned by the Company as of the Issue Date, including the Television
Stations to be acquired pursuant to the Acquisitions, and (ii) each other
Television
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55
Station acquired by the Company after the Issue Date and the License for which
is owned by BLC.
"Guarantee" means any obligation, contingent or otherwise, of
any person directly or indirectly guaranteeing any Debt or other obligation of
any person and any obligation, direct or indirect, contingent or otherwise, of
such person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation of such person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any person means the obligation of
such person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures contract
or other similar agreement or arrangement designed to protect such person
against changes in interest rates or foreign exchange rates.
"Holders" means the registered holders from time to time of
the Exchangeable Preferred Stock.
"Initial Warrants" means 600,000 warrants, each to purchase
one share of Class A Common Stock of the Company.
"Interest Rate Protection Agreement" means any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Investment" in any person means any loan or advance to, any
Guarantee of, any acquisition of any Capital Stock, equity interest, obligation
or other security of, or capital contribution or other investment in, such
person. Investments shall exclude advances to customers and suppliers in the
ordinary course of business.
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56
"Issue" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Debt or Capital Stock of a person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be issued by such
Subsidiary at the time it becomes a Subsidiary; and the term "Issuance" has a
corresponding meaning. For purposes of paragraph (l)(i) above, if any Debt
issued by a Non-Recourse Subsidiary thereafter ceases to be Non-Recourse Debt of
a Non-Recourse Subsidiary, then such event shall be deemed for the purpose of
such covenant to constitute the issuance of such Debt by the issuer thereof.
"Issue Date" means the date on which the Exchangeable
Preferred Stock is initially issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New York.
"License" means, with respect to any Television Station, any
and all licenses and authorizations issued by the Federal Communications
Commission with respect to such Television Station.
"Lien" means any mortgage, pledge, security interest,
condition sale or other title retention agreement or other similar lien.
"Liquidated Damages" means, with respect to any share of
Exchangeable Preferred Stock, the cash dividends then owing on such shares
pursuant to paragraph 3 of the Exchange and Registration Rights Agreement.
"Maximum Amount" as of any date of determination means, with
respect to any Acquired Station, the product of (i) the Operating Cash Flow of
such Acquired Station for the four recent fiscal quarters ending at least 45
days prior to such date of determination and (ii) the number 5.0; provided,
however, that if such Acquired Station is acquired by the Company in connection
with an Asset Disposition of an Existing Station, the amount in clause (i) above
shall be reduced by the Operating Cash Flow for such period of such Existing
Station.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments
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57
received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring person of Debt or other obligations relating to such properties or
assets or received in any other noncash form) therefrom, in each case net of (i)
all legal, title and recording tax expenses, commissions and other fees and
expenses incurred, and all Federal, state, provincial, foreign and local taxes
required to be accrued as a liability under generally accepted accounting
principles, as a consequence of such Asset Disposition, (ii) all payments made
on any Debt which is secured by any assets subject to such Asset Disposition, in
accordance with the terms of any lien upon or other security agreement of any
kind with respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law be
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition and (iv)
the deduction of appropriate amounts to be provided by the seller as a reserve
in accordance with generally accepted accounting principles, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Subsidiary after such Asset Disposition.
"Net Cash Proceeds" with respect to any Issuance or sale of
Capital Stock, means the cash proceeds of such Issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Non-Convertible Common Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible common
stock of such corporation; provided, however, that Non-Convertible Common Stock
shall not include any Redeemable Stock or Exchangeable Stock or, in the case of
the Company, any Senior Stock or Parity Stock.
"Non-Recourse Affiliate" means a Non-Recourse Subsidiary or
any other Affiliate of the Company or a Restricted Subsidiary which (i) has not
acquired any assets
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58
(other than cash) directly or indirectly from the Company or any Restricted
Subsidiary, (ii) only owns properties acquired after the Issue Date and (iii)
has no Debt other than Non-Recourse Debt.
"Non-Recourse Debt" means Debt or that portion of Debt (i) as
to which neither the Company nor its Restricted Subsidiaries (A) provide credit
support (including any undertaking, agreement or instrument which would
constitute Debt), (B) is directly or indirectly liable or (C) constitute the
lender and (ii) no default with respect to which (including any rights which the
holders thereof may have to take enforcement action against a Non-Recourse
Affiliate) would permit (upon notice, lapse of time or both) any holder of any
other Debt of the Company or its Restricted Subsidiaries to declare a default on
such other Debt or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity.
"Non-Recourse Subsidiary" means a Subsidiary which (i) has not
acquired any assets (other than cash) directly or indirectly from the Company or
any Restricted Subsidiary, (ii) only owns properties acquired after the Issue
Date and (iii) has no Debt other that Non-Recourse Debt.
"Officer" means the Chairman of the Board of Directors, the
President, any Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Operating Cash Flow" for any period means EBITDA for such
period less Program Obligation Payments for such period; provided, however,
that, when used in the definition of "Maximum Amount" with respect to a
Television Station, all references to the Company and Restricted Subsidiaries
and consolidated subsidiaries used in the definitions of "EBITDA" and "Program
Obligation Payments" and the definitions used therein shall be deemed to refer
to such Television Station.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Transfer Agent. The counsel may be an employee
of or counsel to the Company or the Transfer Agent.
<PAGE>
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59
"Parent" means any person that beneficially owns, directly or
indirectly, all the Voting Stock of the Company.
"Permitted Acquisition Debt" means Debt of the Company or any
Restricted Subsidiary Issued to finance all or any portion of the cost of the
acquisition of an Acquired Station, where the License for such Acquired Station
is owned by BLC, and Refinancing Debt in respect of such Debt; provided,
however, that the aggregate amount of such Permitted Acquisition Debt with
respect to any Acquired Station shall not exceed the Maximum Amount with respect
to such Acquired Station.
"Permitted Holders" shall mean (i) A. Richard Benedek; (ii)
family members or relatives of A. Richard Benedek; (iii) any trusts created for
the benefit of the persons described in clauses (i), (ii) or (iv) of this
paragraph or any trust for the benefit of any trust; (iv) in the event of the
death or incompetence of any person described in clauses (i) or (ii) of this
paragraph such person's estate, executor, administrator, committee or other
personal representative or beneficiaries; or (v) any Affiliate of A. Richard
Benedek.
"Permitted Investments" shall mean (i) investments in direct
obligations of the United States of America maturing within 90 days of the date
of acquisition thereof, (ii) investments in certificates of deposit maturing
within 90 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the united States or any state
thereof having capital, surplus and undivided profits aggregating in excess of
$500.0 million, and (iii) investments in commercial paper given the highest
rating by two established national credit rating agencies and maturing not more
than 90 days from the date of acquisition thereof.
"person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Placement Agents" means Goldman, Sachs & Co. and
BT Securities Corporation.
<PAGE>
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60
"Placement Agreement" means the Placement Agreement dated June
5, 1996 between the Company and the Placement Agents.
"Preferred Stock" as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of any debt security means the principal amount of
such debt security plus the premium, if any, payable on such debt security which
is due or overdue or is to become due at the relevant time.
"Private Placement Memorandum" means the Private Placement
Memorandum dated May 6, 1996, as supplemented on May 8, 1996.
"Program Obligation Payments" means, for any period of
calculation, an amount equal to the aggregate amount paid in cash by or on
behalf of the Company and the Restricted Subsidiaries during such period with
respect to, or on account of, Program Obligations.
"Program Obligations" means the obligations of the Company and
the Restricted Subsidiaries with respect to the acquisition of the right to
broadcast films and other programming material, payable in a form other than
barter.
"Redeemable Stock" means the Exchangeable Preferred Stock and
any Capital Stock that by its terms or otherwise is required to be redeemed on
or prior to the first anniversary of the Stated Maturity of the Exchangeable
Preferred Stock or is redeemable at the option of the holder thereof at any time
on or prior to the first anniversary of the Stated Maturity of the Exchangeable
Preferred Stock.
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to Issue
indebtedness in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the
Company or any Restricted Subsidiary existing on
<PAGE>
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61
the Issue Date or Issued in compliance with this Certificate of Designation;
provided, however, that (i) such Refinancing Debt has a Stated Maturity no
earlier than the Stated Maturity of the Debt being Refinanced, (ii) such
Refinancing Debt has an Average Life at the time such Refinancing Debt is Issued
that is equal to or greater than the Average Life of the Debt being Refinanced
and (iii) such Refinancing Debt has an aggregate principal amount (or if Issued
with original issue discount, an aggregate issue price) that is equal to or less
than the aggregate principal amount (or if Issued with original issue discount,
the aggregate accreted value) then outstanding or committed under the Debt being
Refinanced; provided further, however, that refinancing Debt shall not include
(x) Debt of a Subsidiary that Refinances Debt of the Company or (y) Debt of the
Company or a Restricted Subsidiary that Refinances Debt of a Non-Recourse
Subsidiary.
"Registered Exchange Offer" means a registered exchange offer
of Exchangeable Preferred Stock under the Securities Act pursuant to the
Exchange and Registration Rights Agreement.
"Restricted Holder" means a Permitted Holder or a person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act and will be
deemed to include each person included in such person) that owns, directly or
indirectly, 10% or more of the total voting power of the Voting Stock of the
Company; provided, however, that for purposes of this definition a person shall
be deemed to have ownership of all shares (a) that any such person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time and (b) of a corporation held by any other corporation (the
"parent corporation") if such person is the owner, directly or indirectly, of
more than 10% of the total voting power of the Voting Stock of such parent
corporation.
"Restricted Subsidiary" shall mean any Subsidiary that is not
a Non-Recourse Subsidiary.
"Sale/Leaseback Transaction" means any arrangement relating to
a property owned as of the Issue Date whereby the Company or a Restricted
Subsidiary transfers such property to a person and leases it back from such
person.
"SEC" means the Securities and Exchange Commission.
<PAGE>
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62
"Securities Act" means the Securities Act of 1933,
as amended.
"Seller Junior Discount Preferred Stock" means the
$45,000,000 Preferred Stock issued by the Company to General
Electric Capital Corporation and Mr. Paul Brissette in
connection with the Acquisitions.
"Senior Subordinated Discount Notes" means the 13-1/4% Senior
Subordinated Discount Notes due 2007 issued pursuant to the Senior Subordinated
Discount Note Indenture.
"Senior Subordinated Discount Note Indenture" means the
Indenture dated as of May 15, 1996, between the Company and United States Trust
Company of New York, as trustee providing for the issuance of the Senior
Subordinated Discount Notes.
"Shelf Registration Statement" means a shelf registration
statement filed with the SEC to cover resales of Transfer Restricted Securities
by holders thereof.
"Specified Amount" means, on any date with respect to any
share of Exchangeable Preferred Stock, the sum of (i) the Liquidation Preference
with respect to such share and (ii) the Accumulated Dividends with respect to
such share that are added automatically to the Specified Amount of such share.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subsidiary" means any corporation, association, partnership,
limited liability company or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) the Company,
(ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
<PAGE>
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63
"Tax Amounts" with respect to any calendar year means the sum
of (a) an amount equal to the product of (i) the Federal taxable income of
Benedek Broadcasting for such year as determined in good faith by the Board of
Directors and as certified by a nationally recognized tax accounting firm and
without taking into account the deductibility of state income taxes for Federal
income tax purposes multiplied by (ii) the State Tax Percentage (as defined
below) plus (b) the greater of (i) the product of (w) the Federal taxable income
of Benedek Broadcasting for such year as determined in good faith by the Board
of Directors and as certified by a nationally recognized tax accounting firm and
taking into account the deductibility of the amount determined in clause (a)
above as a state income tax for Federal income tax purposes multiplied by (x)
the Federal Tax Percentage (as defined below) and (ii) the product of (y) the
alternative minimum taxable income attributable to Benedek Broadcasting's
stockholder(s) by reason of the income of Benedek Broadcasting for such year as
determined in good faith by the Board of Directors and as certified by a
nationally recognized tax accounting firm multiplied by (z) the Federal Tax
Percentage; provided, however, the amount as calculated above shall be reduced
by the amount of any income tax benefit attributable to Benedek Broadcasting
which could be realized by Benedek Broadcasting's stockholders in the current or
a prior taxable year (including tax losses, alternative minimum tax credits,
other tax credits and carryforwards or carrybacks thereof) to the extent not
previously taken into account. The amount of any such income tax benefit
described in the proviso to the preceding sentence shall be determined in a
manner consistent with the calculation of the Tax Amount for the relevant year.
Any part of the Tax Amount not distributed in respect of a tax year for which it
is calculated shall be available for distribution in subsequent tax years. The
term "State Tax Percentage" shall mean the highest applicable statutory marginal
rate of state and local income tax to which an individual resident of the
Relevant Jurisdiction (as defined below) would be subject in the relevant year
of determination as a result of being a stockholder of a corporation taxable as
an S Corporation in such jurisdiction (as certified to the Trustee by a
nationally recognized tax accounting firm). The term "Relevant Jurisdiction"
shall mean the jurisdiction in which, during the relevant taxable year, (c)
Benedek Broadcasting is doing business for state and local income tax purposes,
(d) Benedek Broadcasting derives the first, second, third or fourth highest
percentage of its gross
<PAGE>
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64
income as calculated for Federal income tax purposes (excluding therefrom any
gain or loss from the sale or other disposition of any television station then
owned by Benedek Broadcasting) and (e) Benedek Broadcasting is taxable as an S
Corporation for state and local income tax purposes that imposes the highest
aggregate marginal rate of state and local income tax on individuals (as
certified to the Trustee by a nationally recognized tax accounting firm). The
term "Federal Tax Percentage" shall mean the highest applicable statutory
marginal rate of Federal income tax or, in the case of clause (b)(ii) above,
alternative minimum tax, to which an individual resident of the United States
would be subject in the relevant year of determination (as certified to the
Trustee by a nationally recognized tax accounting firm); provided, however,
that, for any year in which Benedek Broadcasting is not taxable as an S
Corporation for Federal income tax purposes, the Federal Tax Percentage shall be
zero. Notwithstanding the foregoing, the sum of the State Tax Percentage and the
Federal Tax Percentage (the "Total Tax Percentage") shall not exceed the
percentage (the "Maximum Tax Percentage") equal to the lesser of (f) the highest
applicable statutory marginal rate of Federal, state and local income tax or,
when applicable, alternative minimum tax, to which a corporation doing business
in any state in which Benedek Broadcasting is doing business at the time of
determination would be subject in the relevant year of determination (as
certified to the Trustee by a nationally recognized tax accounting firm) plus 5%
and (g) 55%. If the Total Tax Percentage exceeds the Maximum Tax Percentage the
Federal Tax Percentage shall be reduced to the extent necessary to cause the
Total Percentage to equal the Maximum Tax Percentage. Distributions of Tax
Amounts may be made from time to time with respect to a tax year based on
reasonable estimates, with reconciliation within 40 days of the earlier of (i)
Benedek Broadcasting's filing of the Internal Revenue Service Form 1120S for the
applicable taxable year and (ii) the last date such form is required to be
filed. The stockholder of Benedek Broadcasting will enter into a binding
agreement with Benedek Broadcasting to reimburse Benedek Broadcasting for
certain positive differences between the distributed amount and the Tax Amount,
which difference must be paid at the time of such reconciliation.
"Television Station" means any group of assets which
constitutes all or substantially all of the assets which would be necessary to
carry on the business of a commercial television broadcast station and which,
when
<PAGE>
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65
purchased by a single purchaser would (together with any necessary licenses,
authorizations, working capital and operating location) be substantially
sufficient to allow such purchaser to carry on such business.
"Transfer Agent" means the transfer agent for the Exchangeable
Preferred Stock appointed by the Company, which initially shall be IBJ Schroder
Bank & Trust Company.
"Transfer Restricted Securities" means each share of Class A
Stock until (i) such Class A Stock has been exchanged by a person other than a
broker-dealer for freely transferrable Class B Stock in a Registered Exchange
Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange
Offer of Class A Stock for Class B Stock, the date on which such Class B Stock
is sold to a purchaser who receives from such broker-dealer or prior to the date
of such sale a copy of the prospectus contained in the Registered Exchange Offer
registration statement, (iii) the date on which such Class A Stock has been
effectively registered under the Securities Act and disposed of in accordance
with a Shelf Registration Statement or (iv) the date on which such Class A Stock
is distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.
"Units" means the Units sold by the Company containing the
Class A Stock and the Warrants.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Warrants" means the Initial Warrants and the Contingent
Warrants.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly Owned Subsidiary.
<PAGE>
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66
IN WITNESS WHEREOF, said Benedek Communications Corporation,
has caused this Certificate of Designation to be signed by K. James Yager, its
President, this 31st day of May, 1996.
BENEDEK COMMUNICATIONS CORPORATION,
by /s/ K. James Yager
-------------------------------
Name: K. James Yager
Title: President
<PAGE>
<PAGE>
EXHIBIT A
Number ____ ____ Shares
"THE 15.0% SERIES A EXCHANGEABLE REDEEMABLE SENIOR PREFERRED
STOCK DUE 2007 (THE "EXCHANGEABLE PREFERRED STOCK") OF BENEDEK
COMMUNICATIONS CORPORATION (THE "COMPANY") EVIDENCED HEREBY WAS
INITIALLY ISSUED AS PART OF A UNIT CONSISTING OF SUCH
EXCHANGEABLE PREFERRED STOCK AND INITIAL WARRANTS (THE "INITIAL
WARRANTS") AND ADDITIONAL WARRANTS (THE "CONTINGENT WARRANTS") TO
PURCHASE SHARES OF CLASS A COMMON STOCK OF THE COMPANY. THE
CONTINGENT WARRANTS ARE HELD BY IBJ SCHRODER BANK & TRUST
COMPANY, AS CONTINGENT WARRANT ESCROW AGENT, PURSUANT TO THE
TERMS OF THE CONTINGENT WARRANT ESCROW AGREEMENT, DATED AS OF
JUNE 5, 1996, BETWEEN THE COMPANY AND THE CONTINGENT WARRANT
ESCROW AGENT. UNTIL THE EARLIEST TO OCCUR OF: (i) DECEMBER 1,
1996; (ii) SUCH EARLIER DATE AS MAY BE DETERMINED BY GOLDMAN,
SACHS & CO. AND BT SECURITIES CORPORATION (THE "PLACEMENT
AGENTS"); (iii) IF A CHANGE OF CONTROL (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION (THE "CERTIFICATE OF DESIGNATION")
RELATING TO THE EXCHANGEABLE PREFERRED STOCK) OCCURS, THE DATE
THE COMPANY IS REQUIRED TO MAIL NOTICE THEREOF TO THE HOLDERS OF
EXCHANGEABLE PREFERRED STOCK; (iv) IN THE EVENT THE COMPANY
ELECTS TO ISSUE EXCHANGE DEBENTURES (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION) FOR EXCHANGEABLE PREFERRED STOCK, THE
DATE THE COMPANY MAILS NOTICE THEREOF TO HOLDERS OF EXCHANGEABLE
PREFERRED STOCK; (v) THE DATE THE COMPANY MAILS NOTICE OF
REDEMPTION OF THE EXCHANGEABLE PREFERRED STOCK TO HOLDERS THEREOF
AND (vi) THE EFFECTIVE DATE OF THE EXCHANGE OFFER REGISTRATION
STATEMENT (AS DEFINED IN THE EXCHANGEABLE PREFERRED STOCK
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, DATED JUNE 5, 1996,
BETWEEN THE COMPANY AND THE PLACEMENT AGENTS), THE EXCHANGEABLE
PREFERRED STOCK EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH
SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO THE SAME TRANSFEREE
TEN INITIAL WARRANTS FOR EACH SHARE OF EXCHANGEABLE PREFERRED
STOCK SO TRANSFERRED. UNTIL THE CONTINGENT WARRANT RELEASE DATE
(AS DEFINED IN THE CERTIFICATE OF DESIGNATION) THE EXCHANGEABLE
PREFERRED STOCK EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH
SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO THE SAME TRANSFEREE
14.8 CONTINGENT WARRANTS FOR EACH SHARE OF EXCHANGEABLE PREFERRED
STOCK SO TRANSFERRED.
BENEDEK COMMUNICATIONS CORPORATION
(Incorporated under the laws of the State of Delaware)
<TABLE>
<S> <C> <C>
CUSIP 08170W205
This is to certify that is the owner of ( ) fully paid and non-assessable
shares of the above Company's
</TABLE>
15.0% SERIES A EXCHANGEABLE REDEEMABLE SENIOR PREFERRED STOCK
(Par value $0.01)
transferable only on the books of the Company by the holder hereof or by its
duly authorized attorney upon surrender of this Certificate properly endorsed.
Reference is made hereby to the further provisions of this Certificate set forth
on the reverse hereof and to the provisions of the Certificate of Designation
which set forth the terms and provisions applicable to the Exchangeable
Preferred Stock and such further provisions on the reverse hereof and in the
Certificate of Designation shall for all purposes have the same effect as though
fully set forth at this place.
This Certificate is not valid unless countersigned by the Transfer Agent
and registered by the Registrar.
Witness, the seal of the Company and the signatures or the facsimile
thereof of its duly authorized officers.
<TABLE>
<S> <C> <C>
Dated: Countersigned and Registered:
BENEDEK COMMUNICATIONS CORPORATION IBJ SCHRODER BANK & TRUST COMPANY
as Registrar and Transfer Agent
________________________________________
Vice President _____________________________________
Authorized Signature
________________________________________ [SEAL]
Assistant Secretary
</TABLE>
<PAGE>
<PAGE>
2
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(A) BY THE INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN
OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY
SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE OR TO AN
INSTITUTIONAL ACCREDITED INVESTOR AS DESCRIBED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN
EACH CASE (A) AND (B), IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws of regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT......................... Custodian........................
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act........................................
(State)
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list
For value received ________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
______________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and appoint
____________________________________________________________________________________________________________________________Attorney
to transfer the said Shares on the books of the within named Company with full power of substitution in the premises.
Dated _____________________ 19_______
In presence of _____________________________
______________________________________________
</TABLE>
As required under Delaware law, the Company shall furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the board of directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the classes and series of shares of the Company.
<PAGE>
<PAGE>
Number ____ ____ Shares
"THE 15.0% SERIES A EXCHANGEABLE REDEEMABLE SENIOR PREFERRED
STOCK DUE 2007 (THE "EXCHANGEABLE PREFERRED STOCK") OF BENEDEK
COMMUNICATIONS CORPORATION (THE "COMPANY") EVIDENCED HEREBY WAS
INITIALLY ISSUED AS PART OF A UNIT CONSISTING OF SUCH
EXCHANGEABLE PREFERRED STOCK AND INITIAL WARRANTS (THE "INITIAL
WARRANTS") AND ADDITIONAL WARRANTS (THE "CONTINGENT WARRANTS") TO
PURCHASE SHARES OF CLASS A COMMON STOCK OF THE COMPANY. THE
CONTINGENT WARRANTS ARE HELD BY IBJ SCHRODER BANK & TRUST
COMPANY, AS CONTINGENT WARRANT ESCROW AGENT, PURSUANT TO THE
TERMS OF THE CONTINGENT WARRANT ESCROW AGREEMENT, DATED AS OF
JUNE 5, 1996, BETWEEN THE COMPANY AND THE CONTINGENT WARRANT
ESCROW AGENT. UNTIL THE EARLIEST TO OCCUR OF: (i) DECEMBER 1,
1996; (ii) SUCH EARLIER DATE AS MAY BE DETERMINED BY GOLDMAN,
SACHS & CO. AND BT SECURITIES CORPORATION (THE "PLACEMENT
AGENTS"); (iii) IF A CHANGE OF CONTROL (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION (THE "CERTIFICATE OF DESIGNATION")
RELATING TO THE EXCHANGEABLE PREFERRED STOCK) OCCURS, THE DATE
THE COMPANY IS REQUIRED TO MAIL NOTICE THEREOF TO THE HOLDERS OF
EXCHANGEABLE PREFERRED STOCK; (iv) IN THE EVENT THE COMPANY
ELECTS TO ISSUE EXCHANGE DEBENTURES (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION) FOR EXCHANGEABLE PREFERRED STOCK, THE
DATE THE COMPANY MAILS NOTICE THEREOF TO HOLDERS OF EXCHANGEABLE
PREFERRED STOCK; (v) THE DATE THE COMPANY MAILS NOTICE OF
REDEMPTION OF THE EXCHANGEABLE PREFERRED STOCK TO HOLDERS THEREOF
AND (vi) THE EFFECTIVE DATE OF THE EXCHANGE OFFER REGISTRATION
STATEMENT (AS DEFINED IN THE EXCHANGEABLE PREFERRED STOCK
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, DATED JUNE 5, 1996,
BETWEEN THE COMPANY AND THE PLACEMENT AGENTS), THE EXCHANGEABLE
PREFERRED STOCK EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH
SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO THE SAME TRANSFEREE
TEN INITIAL WARRANTS FOR EACH SHARE OF EXCHANGEABLE PREFERRED
STOCK SO TRANSFERRED. UNTIL THE CONTINGENT WARRANT RELEASE DATE
(AS DEFINED IN THE CERTIFICATE OF DESIGNATION) THE EXCHANGEABLE
PREFERRED STOCK EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH
SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO THE SAME TRANSFEREE
14.8 CONTINGENT WARRANTS FOR EACH SHARE OF EXCHANGEABLE PREFERRED
STOCK SO TRANSFERRED.
BENEDEK COMMUNICATIONS CORPORATION
(Incorporated under the laws of the State of Delaware)
<TABLE>
<S> <C> <C>
CUSIP 08170W205
This is to certify that is the owner of ( ) fully paid and non-assessable
shares of the above Company's
</TABLE>
15.0% SERIES A EXCHANGEABLE REDEEMABLE SENIOR PREFERRED STOCK
(Par value $0.01)
transferable only on the books of the Company by the holder hereof or by its
duly authorized attorney upon surrender of this Certificate properly endorsed.
Reference is made hereby to the further provisions of this Certificate set forth
on the reverse hereof and to the provisions of the Certificate of Designation
which set forth the terms and provisions applicable to the Exchangeable
Preferred Stock and such further provisions on the reverse hereof and in the
Certificate of Designation shall for all purposes have the same effect as though
fully set forth at this place.
This Certificate is not valid unless countersigned by the Transfer Agent
and registered by the Registrar.
Witness, the seal of the Company and the signatures or the facsimile
thereof of its duly authorized officers.
<TABLE>
<S> <C> <C>
Dated: Countersigned and Registered:
BENEDEK COMMUNICATIONS CORPORATION IBJ SCHRODER BANK & TRUST COMPANY
as Registrar and Transfer Agent
________________________________________
Vice President _____________________________________
Authorized Signature
________________________________________ [SEAL]
Assistant Secretary
</TABLE>
<PAGE>
<PAGE>
2
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Unless and until it is exchanged in whole or in part for Exchangeable
Preferred Stock in definitive form, this Exchangeable Preferred Stock may not be
transferred except as a whole by the depository to a nominee of the depository
or by a nominee of the depository to the depository or another nominee of the
depository or by the depository or any such nominee to a successor depository or
a nominee of such successor depository. The Depository Trust Company ("DTC") (55
Water Street, New York, New York) shall act as the depository until a successor
shall be appointed by the Company and the Transfer Agent. Unless this
certificate is presented by an authorized representative of DTC to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(A) BY THE INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN
OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY
SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE OR TO AN
INSTITUTIONAL ACCREDITED INVESTOR AS DESCRIBED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN
EACH CASE (A) AND (B), IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws of regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT.......................... Custodian......................
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act........................................
(State)
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the
above list
For value received ________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
______________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and appoint
____________________________________________________________________________________________________________________________Attorney
to transfer the said Shares on the books of the within named Company with full power of substitution in the premises.
Dated _____________________ 19_______
In presence of _____________________________
______________________________________________
</TABLE>
SCHEDULE OF EXCHANGES OF CERTIFICATED EXCHANGEABLE PREFERRED STOCK
The following exchanges of a part of this Global Exchangeable Preferred Stock
for Certificated Exchangeable Preferred Stock have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal Amount of this
Principal Amount of Principal Amount of Global Exchangeable Preferred Signature of
this Global Exchangeable this Global Exchange Stock following such authorized officer of
Date of Exchange Preferred Stock Preferred Stock decrease (or increase) Transfer Agent
- ----------------- ------------------------ --------------------- ------------------------------ -------------------
<S> <C> <C> <C> <C>
</TABLE>
As required under Delaware law, the Company shall furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the board of directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the classes and series of shares of the Company.
<PAGE>
<PAGE>
EXHIBIT B
Number ____ ____ Shares
"THE 15.0% SERIES A EXCHANGEABLE REDEEMABLE SENIOR PREFERRED
STOCK DUE 2007 (THE "EXCHANGEABLE PREFERRED STOCK") OF BENEDEK
COMMUNICATIONS CORPORATION (THE "COMPANY") EVIDENCED HEREBY WAS
INITIALLY ISSUED AS PART OF A UNIT CONSISTING OF SUCH
EXCHANGEABLE PREFERRED STOCK AND INITIAL WARRANTS (THE "INITIAL
WARRANTS") AND ADDITIONAL WARRANTS (THE "CONTINGENT WARRANTS") TO
PURCHASE SHARES OF CLASS A COMMON STOCK OF THE COMPANY. THE
CONTINGENT WARRANTS ARE HELD BY IBJ SCHRODER BANK & TRUST
COMPANY, AS CONTINGENT WARRANT ESCROW AGENT, PURSUANT TO THE
TERMS OF THE CONTINGENT WARRANT ESCROW AGREEMENT, DATED AS OF
JUNE 5, 1996, BETWEEN THE COMPANY AND THE CONTINGENT WARRANT
ESCROW AGENT. UNTIL THE EARLIEST TO OCCUR OF: (i) DECEMBER 1,
1996; (ii) SUCH EARLIER DATE AS MAY BE DETERMINED BY GOLDMAN,
SACHS & CO. AND BT SECURITIES CORPORATION (THE "PLACEMENT
AGENTS"); (iii) IF A CHANGE OF CONTROL (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION (THE "CERTIFICATE OF DESIGNATION")
RELATING TO THE EXCHANGEABLE PREFERRED STOCK) OCCURS, THE DATE
THE COMPANY IS REQUIRED TO MAIL NOTICE THEREOF TO THE HOLDERS OF
EXCHANGEABLE PREFERRED STOCK; (iv) IN THE EVENT THE COMPANY
ELECTS TO ISSUE EXCHANGE DEBENTURES (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION) FOR EXCHANGEABLE PREFERRED STOCK, THE
DATE THE COMPANY MAILS NOTICE THEREOF TO HOLDERS OF EXCHANGEABLE
PREFERRED STOCK; (v) THE DATE THE COMPANY MAILS NOTICE OF
REDEMPTION OF THE EXCHANGEABLE PREFERRED STOCK TO HOLDERS THEREOF
AND (vi) THE EFFECTIVE DATE OF THE EXCHANGE OFFER REGISTRATION
STATEMENT (AS DEFINED IN THE EXCHANGEABLE PREFERRED STOCK
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, DATED JUNE 5, 1996,
BETWEEN THE COMPANY AND THE PLACEMENT AGENTS), THE EXCHANGEABLE
PREFERRED STOCK EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH
SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO THE SAME TRANSFEREE
TEN INITIAL WARRANTS FOR EACH SHARE OF EXCHANGEABLE PREFERRED
STOCK SO TRANSFERRED. UNTIL THE CONTINGENT WARRANT RELEASE DATE
(AS DEFINED IN THE CERTIFICATE OF DESIGNATION) THE EXCHANGEABLE
PREFERRED STOCK EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH
SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO THE SAME TRANSFEREE
14.8 CONTINGENT WARRANTS FOR EACH SHARE OF EXCHANGEABLE PREFERRED
STOCK SO TRANSFERRED.
BENEDEK COMMUNICATIONS CORPORATION
(Incorporated under the laws of the State of Delaware)
<TABLE>
<S> <C> <C>
CUSIP 08170W205
This is to certify that is the owner of ( ) fully paid and non-assessable
shares of the above Company's
</TABLE>
15.0% SERIES B EXCHANGEABLE REDEEMABLE SENIOR PREFERRED STOCK
(Par value $0.01)
transferable only on the books of the Company by the holder hereof or by its
duly authorized attorney upon surrender of this Certificate properly endorsed.
Reference is made hereby to the further provisions of this Certificate set forth
on the reverse hereof and to the provisions of the Certificate of Designation
which set forth the terms and provisions applicable to the Exchangeable
Preferred Stock and such further provisions on the reverse hereof and in the
Certificate of Designation shall for all purposes have the same effect as though
fully set forth at this place.
This Certificate is not valid unless countersigned by the Transfer Agent
and registered by the Registrar.
Witness, the seal of the Company and the signatures or the facsimile
thereof of its duly authorized officers.
<TABLE>
<S> <C> <C>
Dated: Countersigned and Registered:
BENEDEK COMMUNICATIONS CORPORATION IBJ SCHRODER BANK & TRUST COMPANY
as Registrar and Transfer Agent
______________________________________
Vice President _________________________________
Authorized Signature
______________________________________ [SEAL]
Assistant Secretary
</TABLE>
<PAGE>
<PAGE>
2
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws of regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT......................... Custodian.......................
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act........................................
(State)
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list
For value received ________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
______________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and appoint
____________________________________________________________________________________________________________________________Attorney
to transfer the said Shares on the books of the within named Company with full power of substitution in the premises.
Dated _____________________ 19_______
In presence of _____________________________
______________________________________________
</TABLE>
As required under Delaware law, the Company shall furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the board of directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the classes and series of shares of the Company.
<PAGE>
<PAGE>
Number ____ ____ Shares
"THE 15.0% SERIES A EXCHANGEABLE REDEEMABLE SENIOR PREFERRED
STOCK DUE 2007 (THE "EXCHANGEABLE PREFERRED STOCK") OF BENEDEK
COMMUNICATIONS CORPORATION (THE "COMPANY") EVIDENCED HEREBY WAS
INITIALLY ISSUED AS PART OF A UNIT CONSISTING OF SUCH
EXCHANGEABLE PREFERRED STOCK AND INITIAL WARRANTS (THE "INITIAL
WARRANTS") AND ADDITIONAL WARRANTS (THE "CONTINGENT WARRANTS") TO
PURCHASE SHARES OF CLASS A COMMON STOCK OF THE COMPANY. THE
CONTINGENT WARRANTS ARE HELD BY IBJ SCHRODER BANK & TRUST
COMPANY, AS CONTINGENT WARRANT ESCROW AGENT, PURSUANT TO THE
TERMS OF THE CONTINGENT WARRANT ESCROW AGREEMENT, DATED AS OF
JUNE 5, 1996, BETWEEN THE COMPANY AND THE CONTINGENT WARRANT
ESCROW AGENT. UNTIL THE EARLIEST TO OCCUR OF: (i) DECEMBER 1,
1996; (ii) SUCH EARLIER DATE AS MAY BE DETERMINED BY GOLDMAN,
SACHS & CO. AND BT SECURITIES CORPORATION (THE "PLACEMENT
AGENTS"); (iii) IF A CHANGE OF CONTROL (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION (THE "CERTIFICATE OF DESIGNATION")
RELATING TO THE EXCHANGEABLE PREFERRED STOCK) OCCURS, THE DATE
THE COMPANY IS REQUIRED TO MAIL NOTICE THEREOF TO THE HOLDERS OF
EXCHANGEABLE PREFERRED STOCK; (iv) IN THE EVENT THE COMPANY
ELECTS TO ISSUE EXCHANGE DEBENTURES (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION) FOR EXCHANGEABLE PREFERRED STOCK, THE
DATE THE COMPANY MAILS NOTICE THEREOF TO HOLDERS OF EXCHANGEABLE
PREFERRED STOCK; (v) THE DATE THE COMPANY MAILS NOTICE OF
REDEMPTION OF THE EXCHANGEABLE PREFERRED STOCK TO HOLDERS THEREOF
AND (vi) THE EFFECTIVE DATE OF THE EXCHANGE OFFER REGISTRATION
STATEMENT (AS DEFINED IN THE EXCHANGEABLE PREFERRED STOCK
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, DATED JUNE 5, 1996,
BETWEEN THE COMPANY AND THE PLACEMENT AGENTS), THE EXCHANGEABLE
PREFERRED STOCK EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH
SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO THE SAME TRANSFEREE
TEN INITIAL WARRANTS FOR EACH SHARE OF EXCHANGEABLE PREFERRED
STOCK SO TRANSFERRED. UNTIL THE CONTINGENT WARRANT RELEASE DATE
(AS DEFINED IN THE CERTIFICATE OF DESIGNATION) THE EXCHANGEABLE
PREFERRED STOCK EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR
OTHERWISE TRANSFERRED TO ANY PERSON UNLESS, SIMULTANEOUSLY WITH
SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO THE SAME TRANSFEREE
14.8 CONTINGENT WARRANTS FOR EACH SHARE OF EXCHANGEABLE PREFERRED
STOCK SO TRANSFERRED.
BENEDEK COMMUNICATIONS CORPORATION
(Incorporated under the laws of the State of Delaware)
<TABLE>
<S> <C> <C>
CUSIP 08170W205
This is to certify that is the owner of ( ) fully paid and non-assessable
shares of the above Company's
</TABLE>
15.0% SERIES B EXCHANGEABLE REDEEMABLE SENIOR PREFERRED STOCK
(Par value $0.01)
transferable only on the books of the Company by the holder hereof or by its
duly authorized attorney upon surrender of this Certificate properly endorsed.
Reference is made hereby to the further provisions of this Certificate set forth
on the reverse hereof and to the provisions of the Certificate of Designation
which set forth the terms and provisions applicable to the Exchangeable
Preferred Stock and such further provisions on the reverse hereof and in the
Certificate of Designation shall for all purposes have the same effect as though
fully set forth at this place.
This Certificate is not valid unless countersigned by the Transfer Agent
and registered by the Registrar.
Witness, the seal of the Company and the signatures or the facsimile
thereof of its duly authorized officers.
<TABLE>
<S> <C> <C>
Dated: Countersigned and Registered:
BENEDEK COMMUNICATIONS CORPORATION IBJ SCHRODER BANK & TRUST COMPANY
as Registrar and Transfer Agent
________________________________________
Vice President ______________________________________
Authorized Signature
________________________________________ [SEAL]
Assistant Secretary
</TABLE>
<PAGE>
<PAGE>
2
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Unless and until it is exchanged in whole or in part for Exchangeable
Preferred Stock in definitive form, this Exchangeable Preferred Stock may not be
transferred except as a whole by the depository to a nominee of the depository
or by a nominee of the depository to the depository or another nominee of the
depository or by the depository or any such nominee to a successor depository or
a nominee of such successor depository. The Depository Trust Company ("DTC") (55
Water Street, New York, New York) shall act as the depository until a successor
shall be appointed by the Company and the Transfer Agent. Unless this
certificate is presented by an authorized representative of DTC to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws of regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT........................ Custodian........................
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act........................................
(State)
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the
above list
For value received ________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
______________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and appoint
____________________________________________________________________________________________________________________________Attorney
to transfer the said Shares on the books of the within named Company with full power of substitution in the premises.
Dated _____________________ 19_______
In presence of _____________________________
</TABLE>
______________________________________________
SCHEDULE OF EXCHANGES OF CERTIFICATED EXCHANGEABLE PREFERRED STOCK
The following exchanges of a part of this Global Exchangeable Preferred Stock
for Certificated Exchangeable Preferred Stock have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal Amount of this
Principal Amount of Principal Amount of Global Exchangeable Preferred Signature of
this Global Exchangeable this Global Exchange Stock following such authorized officer of
Date of Exchange Preferred Stock Preferred Stock decrease (or increase) Transfer Agent
- ----------------- ------------------------ --------------------- ------------------------------ -------------------
<S> <C> <C> <C> <C>
</TABLE>
As required under Delaware law, the Company shall furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the board of directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the classes and series of shares of the Company.
<PAGE>
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF EXCHANGEABLE PREFERRED STOCK
Re: 15.0% Series A and Series B Exchangeable Redeemable Senior
Preferred Stock due 2007 (the "Exchangeable Preferred Stock") of
Benedek Communications Corporation (the "Company")
This Certificate relates to ____ shares of Exchangeable
Preferred Stock held in [ ] */ book-entry or [ ] */ definitive form by
_______________ (the "Transferor").
The Transferor*:
[ ] has requested the Transfer Agent by written order to deliver in
exchange for its beneficial interest in the Global Exchangeable Preferred Stock
held by the depository shares of Exchangeable Preferred Stock in definitive,
registered form equal to its beneficial interest in such Global Exchangeable
Preferred Stock (or the portion thereof indicated above); or
[ ] has requested the Transfer Agent by written order to
exchange or register the transfer of Exchangeable Preferred Stock.
In connection with such request and in respect of such
Exchangeable Preferred Stock, the Transferor does hereby certify that the
Transferor is familiar with the Certificate of Designation relating to the above
captioned Exchangeable Preferred Stock and that the transfer of this
Exchangeable Preferred Stock does not require registration under the Securities
Act of 1933 (the "Securities Act") because */:
[ ] Such Exchangeable Preferred Stock is being acquired for the
Transferor's own account without transfer.
[ ] Such Exchangeable Preferred Stock is being transferred to
the Company.
[ ] Such Exchangeable Preferred Stock is being transferred (i) to a
qualified institutional buyer (as defined in Rule 144A under the Securities
Act), in reliance on Rule 144A or (ii) pursuant to an exemption from
registration in accordance with Rule 904 under the Securities Act (and, in the
case of clause (ii), based on an opinion of counsel if the Company so requests
and together with a certification in substantially the form of Exhibit E to the
Certificate of Designation).
[ ] Such Exchangeable Preferred Stock is being transferred to an
institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3)
or (7) under the Securities Act pursuant to a private placement exemption from
the registration requirements of the Securities Act (together with a
certification in substantially the form of Exhibit D to the Certificate of
Designation).
[ ] Such Exchangeable Preferred Stock is being transferred in
reliance on and in compliance with another exemption from the
- --------
*/Please check applicable box.
<PAGE>
<PAGE>
2
registration requirements of the Securities Act (and based on an opinion of
counsel if the Company so requests).
___________________________
[INSERT NAME OF TRANSFEROR]
by
Date: _____________________ __________________________
<PAGE>
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED BY ACCREDITED INSTITUTIONS
-------------, -----
IBJ Schroder Bank & Trust Company, as Transfer Agent
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed purchase of certain 15.0%
Series A and Series B Exchangeable Redeemable Senior Preferred Stock due 2007
(the "Exchangeable Preferred Stock"), of Benedek Communications Corporation, a
Delaware corporation (the "Company"), we represent that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1),(2),(3) or (7) under the Securities Act of 1933 (the
"Securities Act") (an "Institutional Accredited Investor"), or an
entity in which all of the equity owners are Institutional Accredited
Investors;
(ii) any purchase of Exchangeable Preferred Stock will be for
our own account or for the account of one or more other Institutional
Accredited Investors as to which we exercise sole investment
discretion;
(iii) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks
of purchasing Exchangeable Preferred Stock and we and any accounts for
which we are acting are able to bear the economic risks of our or their
investment;
(iv) we are not acquiring Exchangeable Preferred Stock with a
view to any distribution thereof in a transaction that would violate
the Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction; provided that the
disposition of our property and the property of any accounts for which
we are acting as fiduciary shall remain at all times without our
control; and
(v) we acknowledge that we have had access to such financial
and other information, and have been afforded the opportunity to ask
such questions of representatives of the Company and receive answers
thereto, as we deem necessary in connection with our decision to
purchase Exchangeable Preferred Stock.
We understand that the Exchangeable Preferred Stock has not
been registered under the Securities Act, and we agree, on our own behalf and on
behalf of each account for which we acquire any Exchangeable Preferred Stock,
that such Exchangeable Preferred Stock may be offered, resold, pledged or
otherwise transferred only (i) to a person whom we reasonably believe to be a
qualified institutional buyer (as defined in Rule 144A under the Securities Act)
in a transaction meeting the requirements of Rule 144A, in a transaction meeting
the requirements of Rule 144 under the Securities Act, outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904 under
the Securities Act (and, unless such transfer occurs in a
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2
transaction meeting the requirements of Rule 144A, based upon an opinion of
counsel, if the Company so requests), (ii) to the Company or (iii) pursuant to
an effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction. We understand that the registrar will not be required
to accept for registration of transfer any shares of Exchangeable Preferred
Stock, except upon presentation of evidence satisfactory to the Company that the
foregoing restrictions on transfer have been complied with. We further
understand that the Exchangeable Preferred Stock purchased by us will bear a
legend reflecting the substance of this paragraph. We further agree to provide
to any person acquiring any of the Exchangeable Preferred Stock from us a notice
advising such person that resales of the Exchangeable Preferred Stock are
restricted as stated herein.
We acknowledge that you, the Company and others will rely upon
our confirmations, acknowledgements and agreements set forth herein, and we
agree to notify you promptly in writing if any of our representations or
warranties herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
-----------------------------
(Name of Transferee)
by __________________________
Name:
Title:
Address:
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EXHIBIT E
FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S
----------, ----
IBJ Schroder Bank & Trust Company, as Transfer Agent
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed sale of certain 15.0%
Exchangeable Redeemable Senior Preferred Stock due 2007 (the "Exchangeable
Preferred Stock") to purchase ___ shares of Benedek Communications Corporation,
a Delaware corporation ("the "Company"), we represent that:
(i) the offer of the Exchangeable Preferred Stock was not
made to a person in the United States;
(ii) at the time the buy order was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States;
(iii) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act of 1933 (the
"Securities Act"), as applicable; and
(iv) the transaction is not part of a plan or scheme by us to
evade the registration requirements of the Securities Act.
You and the Company are entitled to rely upon this letter and
you are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
----------------------------------
(Name of Transferor)
by _______________________________
Name:
Title:
Address:
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BENEDEK COMMUNICATIONS CORPORATION
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF
SERIES C JUNIOR DISCOUNT PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF
----------------------
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
----------------------
Benedek Communications Corporation (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, hereby certifies that pursuant to the provisions of Section 151 of the
General Corporation Law of the State of Delaware, its Board of Directors, by
unanimous written consent, dated May 29, 1996, adopted the following resolution,
which resolution remains in full force and effect as of the date hereof;
WHEREAS, the Board of Directors of the Company is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation, to
fix by resolution or resolutions the designation of each series of preferred
stock and the powers, preferences and relative participating, optional or other
special rights and qualifications, limitations or restrictions thereof,
including, without limiting the generality of the foregoing, such provisions as
may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution or resolutions of the Board of Directors
under the General Corporation Law of Delaware; and
WHEREAS, it is the desire of the Board of Directors of the Company,
pursuant to its authority as aforesaid, to authorize and fix the terms of a
series of preferred stock to be designated the Series C Junior Discount
Preferred Stock of the Company and the number of shares constituting such
series;
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NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such
series of preferred stock on the terms and with the provisions herein set forth:
TERMS, PREFERENCES, RIGHTS AND LIMITATIONS
of
SERIES C JUNIOR DISCOUNT PREFERRED STOCK
of
BENEDEK COMMUNICATIONS CORPORATION
The relative rights, preferences, powers, qualifications, limitations
and restrictions granted to or imposed upon the Junior Preferred Stock or the
holders thereof are as follows:
1. Definitions. All capitalized terms used in this Designation which are
incorporated by reference from the Indenture (as defined below) for use herein
and all capitalized terms used in any such definition so incorporated by
reference shall have the meanings set forth in the Indenture, except that all
references to the "Company" thereunder shall mean the Company as herein defined
and all references to a "Restricted Subsidiary" or "Restricted Subsidiaries"
thereunder shall mean the Subsidiary or Subsidiaries. For purposes of this
Designation, the following definitions shall apply:
"Board" shall mean the Board of Directors of the Company.
"Capital Stock" of any person means any and all shares, interests, rights
to purchase warrants, options, participation or other equivalents of or
interests in (however designated) equity of such person, including any Preferred
Stock, but excluding any debt securities convertible into or exchangeable for
such equity.
"Cash Flow Leverage Ratio" shall have the meaning set forth in the
Indenture.
"Common Stock" shall mean the Class A and Class B Common Stock, par value
$.01 per share, of the Company.
"Company" shall mean Benedek Communications Corporation.
"Compensation Limit" means in fiscal year 1996, the sum of $750,000, in
fiscal year 1997, the sum of $1,000,000 and in each fiscal year thereafter, 110%
of the Compensation Limit for the prior fiscal year.
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"Consolidated Interest Expense" has the meaning set forth in the Indenture
provided that Consolidated Interest Expense shall include dividends paid or
declared in respect of any Preferred Stock of the Company that is deemed to be
Debt as defined herein.
"Debt" shall have the meaning set forth in the Indenture provided that the
term Debt shall (i) include the Exchangeable Preferred Stock and any shares of
Senior Stock, Parity Stock or Redeemable Stock issued after the Original Issue
Date and (ii) shall not include the Junior Preferred Stock or any Junior Stock
issued after the Original Issue Date.
"Dividend Rate" means (i) for the period from the Original Issue Date
through (but not including) the fifth anniversary of the Original Issue Date,
7.92% per annum, (ii) for the period from the fifth anniversary of the Original
Issue Date through (but not including) the seventh anniversary of the Original
Issue Date, 15% per annum and (iii) from the seventh anniversary of the Original
Issue Date and thereafter, 18% per annum, provided, however, that during any
period during which any dividend is not paid in accordance with the terms hereof
or the Company takes any action in violation of the terms hereof, the Dividend
Rate shall be the Dividend Rate determined in accordance with clauses (i)
through (iii) above plus 2% per annum.
"Exchangeable Preferred Stock" means the shares of 15.0% Series A and
Series B Exchangeable Redeemable Senior Preferred Stock Due 2007 of the Company.
"Indenture" means the Indenture dated as of March 1, 1995 of Benedek
Broadcasting Corporation as issuer and Benedek Broadcasting Company, L.L.C., as
guarantor relating to the issuer's 11 7/8% Senior Secured Notes due 2005, as
such Indenture is in effect as of December 15, 1995.
"Junior Preferred Stock" shall refer to shares of Series C Junior Discount
Preferred Stock, par value $.01 per share, of the Company.
"Junior Stock" shall have the meaning set forth in Paragraph 3 hereof.
"Liquidation Preference" means $100 per share of Junior Preferred Stock
plus the amount of any unpaid dividends added to the Liquidation Preference
thereof pursuant to paragraph 4(c) hereof.
"Mandatory Redemption Date" means July 1, 2008.
"Original Issue Date" shall mean the date of the original issuance of
450,000 shares of Junior Preferred Stock.
"Parity Stock" shall have the meaning set forth in Paragraph 3 hereof.
"Permitted Holder" shall have the meaning set forth in the Indenture.
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"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Redeemable Stock" means any Capital Stock that by its terms or otherwise
is required to be redeemed on or prior to the first anniversary of the Mandatory
Redemption Date or is redeemable at the option of the holder thereof at any time
on or prior to the first anniversary of the Mandatory Redemption Date.
"Redemption Date" shall mean the date on which any shares of Junior
Preferred Stock are redeemed by the Company.
"Senior Stock" shall have the meaning set forth in Paragraph 3 hereof.
"Subsidiary" means any corporation, association, partnership, limited
liability company or other business entity of which more than 50% of the total
voting power of the shares of capital stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) the Company,
(ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
"Tax Amounts" shall have the meaning set forth in the Indenture.
"Unutilized Compensation Amount" means, on a cumulative basis, the amount
of the Compensation Limit for each fiscal year of the Company less the
compensation paid or accrued on a current or deferred basis to A. Richard
Benedek in such fiscal year.
"Warrants" means the warrants to purchase shares of Common Stock to be
issued to the holders of the Exchangeable Preferred Stock.
2. Designation: Number of Shares. The designation of the Junior Preferred
Stock authorized by this resolution shall be "Series C Junior Discount Preferred
Stock" and the number of shares of Junior Preferred Stock authorized hereby
shall be 450,000 shares.
3. Ranking. The Junior Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding-up and dissolution, rank (i) senior to
all classes of Common Stock and to each other class of Capital Stock or series
of Preferred Stock established hereafter by the Board the terms of which do not
expressly provide that it ranks senior to, or on a parity with, the Junior
Preferred Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Company (collectively referred to together with all classes
of Common Stock, as "Junior Stock"); (ii) on a parity with each other class of
Common Stock or series of Preferred Stock established hereafter by the Board the
terms of which expressly provide that such class or series will rank on a parity
with the Junior Preferred Stock as to dividend rights and rights
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on liquidation, winding-up and dissolution (collectively referred to as "Parity
Stock"); and (iii) junior to each class of Capital Stock or series of Preferred
Stock established hereafter by the Board the terms of which expressly provide
that such class or series will rank senior to the Junior Preferred Stock as to
dividend rights and rights upon liquidation, winding-up and dissolution of the
Company (collectively referred to as "Senior Stock"), including without
limitation the Exchangeable Preferred Stock. All claims of the holders of the
Junior Preferred Stock, including without limitation, claims with respect to
dividend payments, redemption payments, mandatory repurchase payments or rights
upon liquidation, winding-up or dissolution, shall rank junior to the claims of
the holders of any indebtedness of the Company for borrowed money and, except as
to claims of holders of Junior Preferred Stock for declared and unpaid dividends
as to which such holders will have whatever claims exist as a matter of law, all
other creditors of the Company.
4. Dividends.
(a) So long as any shares of Junior Preferred Stock shall be
outstanding, the holders of such Junior Preferred Stock shall be entitled to
receive out of any funds legally available therefor, cumulative preferential
dividends in cash, in the amount equal to the Dividend Rate multiplied by the
Liquidation Preference (calculated on a 365 day basis based on the actual number
of days elapsed) per share, payable (i) during the period from the Original
Issue Date through, but not including, the fifth anniversary of the Original
Issue Date, quarterly on each September 5, December 5, March 5 and June 5 and
(ii) thereafter, semi-annually on each December 5 and June 5 (each such
quarterly or semi-annual date being called a "Dividend Payment Date"),
commencing on the first such date occurring after the Original Issue Date. In
the event that sufficient funds for any such dividend shall not at any time be
otherwise legally available, the Company shall use its best efforts to cause
such availability to come into existence. Dividends on the Junior Preferred
Stock shall be cumulative from the Original Issue Date (whether or not declared
and whether or not in any dividend period or dividend periods there shall be not
profits or net assets of the Company legally available for the payment of those
dividends). Additional dividends shall be paid on the Junior Preferred Stock to
the extent there are any accumulated and unpaid dividends. Such additional
dividends shall be calculated as if there were interest upon the unpaid dividend
amount at the Dividend Rate, calculated on a 365 day basis, based on the actual
number of days elapsed.
(b) So long as any shares of Junior Preferred Stock shall remain
outstanding, neither the Company nor any of its Subsidiaries may declare or pay
any dividend, make a distribution, or purchase, acquire, redeem, pay monies to
the holders of, or set aside or make monies available for a sinking fund for the
purchase or redemption of, any shares of Junior Stock, except that if (i) all
dividends in respect of the Junior Preferred Stock for all past dividend periods
have been paid and such dividends for the current dividend period have been paid
or declared and duly provided for, and (ii) all amounts then due in respect of
the mandatory redemption of Junior Preferred Stock pursuant to the terms of
paragraph 6(a) below have been paid, then the Company or any of its Subsidiaries
may (x) redeem or purchase shares of Common Stock owned or held by its employees
other than a Permitted Holder, (y) redeem or purchase outstanding Warrants to
the extent of the then Unutilized Compensation Amount and
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(z) make distributions on its Common Stock of Tax Amounts with respect to
periods on or prior to the Original Issue Date, provided that the aggregate
amount of such distributions of Tax Amounts shall not exceed the sum of
$1,000,000.
(c) Notwithstanding anything to the contrary contained herein, through
and including the fifth anniversary of the Original Issue Date, dividend
payments pursuant to paragraph 4(a) above shall be made by automatically adding
the amount of such payment to the Liquidation Preference of the Junior Preferred
Stock on the applicable Dividend Payment Date.
5. Liquidation Rights of Junior Preferred Stock.
(a) In the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of Junior Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders, whether such assets are capital,
surplus or earnings, before any payment or declaration and setting apart for
payment of any amount shall be made in respect of any shares of Junior Stock, an
amount equal to the Liquidation Preference per share plus all accumulated and
unpaid dividends (including a prorated quarterly or semi-annual (as the case may
be) dividend from the last Dividend Payment Date to the date of such payment) in
respect of any liquidation, dissolution or winding up consummated.
(b) If upon any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the assets to be distributed among the holders
of Junior Preferred Stock shall be insufficient to permit the payment to such
stockholders of the full preferential amounts aforesaid, then the entire assets
of the Company to be distributed shall be distributed ratably among the holders
of Junior Preferred Stock, based on the full preferential amounts for the number
of shares of Junior Preferred Stock held by each holder.
(c) A consolidation or merger of the Company with or into any other
corporation or corporations in which the stockholders of the Company receive
solely capital stock of the acquiring corporation (or of the direct or indirect
parent corporation of the acquiring corporation), except for cash in lieu of
fractional shares, shall not be deemed to be a liquidation, dissolution, or
winding up of the Company as those terms are used in this paragraph 5.
6. Redemption of Junior Preferred Stock.
(a) Mandatory Redemption.
(i) The Company shall, at the redemption price equal to the sum of
the Liquidation Preference per share plus an amount equal to all accumulated and
unpaid dividends per share (including a prorated semi-annual dividend from the
last Dividend Payment Date to the Redemption Date) (the "Redemption Price"), and
in the manner provided in subparagraphs 6(a)(ii) through 6(a)(v), redeem from
any source of funds legally available therefor, all shares of Junior Preferred
Stock outstanding on such date, on the Mandatory Redemption Date, and provided
further, that if there are insufficient legally available funds for
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redemption under this subparagraph (a)(i), the Company shall redeem such lesser
number of shares of Junior Preferred Stock, to the extent there are funds
legally available therefor, and shall redeem all or part of the remainder of the
shares of Junior Preferred Stock subject to redemption as soon as the Company
has sufficient funds which are legally available therefor until all such shares
of Junior Preferred Stock have been redeemed.
(ii) In the event of a redemption of only a portion of the then
outstanding shares of Junior Preferred Stock, the Company shall effect such
redemption pro rata according to the number of shares held by each holder of
Junior Preferred Stock.
(iii) At least twenty (20) days and not more than sixty (60) days
prior to the date fixed for any redemption of the Junior Preferred Stock,
written notice (the "Redemption Notice") shall be mailed, postage prepaid, to
each holder of record of the Junior Preferred Stock at his post office address
last shown on the records of the Company. The Redemption Notice shall state:
(A) whether all or less than all the outstanding shares of
Junior Preferred Stock are to be redeemed and the total number of shares of
Junior Preferred Stock being redeemed;
(B) the number of shares of Junior Preferred Stock held by
the holder that the Company intends to redeem;
(C) the date fixed for redemption and the Redemption Price;
and
(D) that the holder is to surrender to the Company, in the
manner and at the place designated, his certificate or certificates representing
the shares of Junior Preferred Stock to be redeemed.
(iv) On or before the date fixed for redemption, each holder of
Junior Preferred Stock shall surrender the certificate or certificates
representing such shares of Junior Preferred Stock to the Company, in the manner
and at the place designated in the Redemption Notice, and thereupon the
redemption price for such shares shall be payable in cash on the Redemption Date
to the person whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be cancelled and retired.
In the event that less than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(v) Unless the Company defaults in the payment in full of the
Redemption Price, dividends on the Junior Preferred Stock called for redemption
shall cease to accumulate on the Redemption Date, and all rights of the holders
of such shares redeemed shall cease to have any further rights with respect
thereto on the Redemption Date, other than to receive the Redemption Price
without interest.
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(b) Optional Redemption.
The Company may, at the option of the Board, redeem at any time,
from any source of funds legally available therefor, in whole or in part, in the
manner provided in subparagraphs 6(a)(ii) through 6(a)(v), any and all shares of
Junior Preferred Stock at the redemption price equal to the sum of the
Liquidation Preference per share redeemed plus an amount equal to all
accumulated and unpaid dividends per share (including a prorated quarterly or
semi-annual (as the case may be) dividend from the last Dividend Payment Date to
the Redemption Date).
7. Voting Rights.
(a) The holders of Junior Preferred Stock, except as otherwise provided
hereunder or required under Delaware law, shall not be entitled to vote.
(b) From and after the Original Issue Date, if the Company shall be in
arrears in the payment of any six consecutive quarterly dividends or three
consecutive semi-annual dividends on the outstanding shares of Junior Preferred
Stock or shall have failed to redeem shares of Junior Preferred Stock as and
when required, the holders of Junior Preferred Stock, voting separately as a
class, shall have the exclusive right to elect one director in addition to the
number to be elected by the holders of Common Stock or any other shares of
Preferred Stock of the Company, at a special meting of stockholders called for
the election of directors pursuant to the procedures set forth below for the
calling of a special meeting by holders of Junior Preferred Stock if such
meeting is not called by the Board of Directors of the Company within twenty
(20) days after such holders become entitled to such right to elect a director,
and at every subsequent meeting at which the term of office of the director so
elected by the holders of Junior Preferred Stock expires, provided that such
arrearage or failure exists on the date of such meeting or subsequent meetings,
as the case may be.
(c) The right of the holders of Junior Preferred Stock voting
separately as a class to elect members of the Board of Directors of the Company
as aforesaid shall continue until such time as all dividends accumulated on the
Junior Preferred Stock shall have been paid in full and provision has been made
for the payment in full of the dividends for the current period and the Company
shall have redeemed all shares of Junior Preferred Stock then required to be
redeemed pursuant hereto, at which time the special right of the holders of
Junior Preferred Stock so to vote separately as a class for the election of a
director shall terminate, subject to revesting at such time as the Company shall
be in arrears in the payment of any six consecutive quarterly dividends or three
consecutive semi-annual dividends on the outstanding shares of Junior Preferred
Stock or shall have failed to redeem shares of Junior Preferred Stock as and
when required. If the annual meeting of stockholders of the company is not, for
any reason, held within the time fixed in the by-laws of the Company at a time
when the holders of Junior Preferred Stock, voting separately and as a class,
shall be entitled to elect a director, or if vacancies shall exist in the office
of the director elected by the holders of Junior Preferred Stock, a proper
officer of the company, upon the written request of the holders of record of at
least 33 1/3 percent of the shares of Junior Preferred Stock then outstanding,
addressed to the
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Secretary of the Company, shall call a special meeting in lieu of the annual
meeting of stockholders, or in the event of vacancies, a special meeting of the
holders of Junior Preferred Stock, for the purpose of electing a director. Any
such meeting shall be held at the earliest practicable date at the place for the
holding of the annual meetings of stockholders. If such meeting shall not be
called by the proper officer of the Company within twenty (20) days after
personal service of said written request upon the Secretary of the Company, or
within twenty (20) days after mailing the same within the United States by
certified mail, addressed to the Secretary of the Company at its principal
executive offices, then the holders of record of at least 33 1/3 percent of the
outstanding shares of Junior Preferred Stock may designate in writing one of
their number to call such meeting at the expense of the Company, and such
meeting may be called by the person so designated upon the notice required for
the annual meetings of stockholders of the Company and shall be held at the
place for holding the annual meetings of stockholders. Any holder of Junior
Preferred Stock so designated shall have access to the lists of stockholders to
be called pursuant to the provisions hereof.
(d) At any meeting held for the purpose of electing directors at which
the holders of Junior Preferred Stock shall have the right, voting separately as
a class, to elect a director as aforesaid, the presence in person or by proxy of
the holders of at least thirty-three and one-third percent (33-1/3%) of the
outstanding Junior Preferred Stock shall be required to constitute a quorum of
such Junior Preferred Stock.
(e) Any vacancy occurring in the office of the director elected by the
holders of Junior Preferred Stock shall be filled by the holders of Junior
Preferred Stock. The director to be elected by the holders of Junior Preferred
Stock shall agree, prior to his election to office, to resign upon any
termination of the right of the holders of Junior Preferred Stock to vote as a
class for a director as herein provided, and upon any such termination the
director then in office elected by the holders of Junior Preferred Stock shall
forthwith resign. Unless otherwise required to resign as aforesaid, the term of
office of the director elected by the holders of Junior Preferred Stock shall
terminate upon the election of his successor at any meeting of stockholders held
for the purpose of electing directors.
(f) In any case in which the holders of Junior Preferred Stock shall be
entitled to vote pursuant to this Paragraph 6 or pursuant to law, each holder of
Junior Preferred Stock shall be entitled to one vote for each share of Junior
Preferred Stock held.
(g) So long as any shares of Junior Preferred Stock shall remain
outstanding, without the affirmative vote at a meeting or the written consent
with or without a meeting of the holders of at least a majority of the
outstanding shares of Junior Preferred Stock, (1) the Company will not amend,
alter or repeal any of the provisions of the Company's Certificate of
Incorporation or By-Laws so as to affect adversely the preferences, special
rights or powers of the Junior Preferred Stock, (2) the Company will not
consolidate with or merge with or into any person unless (i) the resulting or
surviving person (if not the Company) is organized and existing under the laws
of the United States or any state thereof or the District of Columbia and the
Junior Preferred Stock shall be converted into or exchanged for and shall become
shares of such resulting or surviving transferee person, having in respect of
such resulting or surviving person
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the same powers, preferences and relative, participating, optional or other
special rights or qualifications, limitations and restrictions thereon, that the
Junior Preferred Stock had immediately prior to such transaction and (ii)
immediately after and giving effect to such transaction, the resulting or
surviving corporation would have been able to issue an additional $1.00 of Debt
without the approval of the holders of the Junior Preferred Stock, (3) the
Company will, directly or indirectly, own all of the outstanding Capital Stock
of Benedek Broadcasting Corporation, and (4) neither the Company nor any
Subsidiary will, after the Original Issue Date, incur any Debt if, on the date
of such incurrence, after giving effect to the incurrence of such Debt, the Cash
Flow Leverage Ratio exceeds 8.5:1.0; provided that the Company may permit its
Subsidiaries to incur Debt, without regard to such Cash Flow Leverage Ratio, if,
after giving effect to such incurrence, the aggregate amount of all Debt of the
Company and its Subsidiaries outstanding which was incurred at such time or
times as the Cash Flow Leverage Ratio exceeded 8.5:1.0, does not exceed 150% of
the Consolidated Net Interest Expense for the four quarter period ending as of
the end of the fiscal quarter ending immediately prior thereto. For purposes of
this Section, Debt is not deemed incurred upon either (i) the issuance of
additional Preferred Stock on account of then existing payment-in-kind Preferred
Stock as a payment of dividends provided such payment is in accordance with the
terms thereof and (ii) the accretion of discount with respect to any
indebtedness, provided such accretion is in accordance with the terms thereof.
8. No Reissuance of Junior Preferred Stock. No Junior Preferred Stock
acquired by the Company by reason of redemption, purchase, or otherwise shall be
reissued, and all such shares shall be cancelled, retired and eliminated from
the shares which the Company shall be authorized to issue.
9. Notices. All notices to the Company permitted hereunder shall be
personally delivered or sent by first class mail, postage prepaid, addressed to
its principal office located at 308 West State Street, Rockford, Illinois 61101,
or to such other address at which its principal office is located, or to such
other address at which its principal office is located and as to which notice
thereof is similarly given to the holders of the Junior Preferred Stock at their
addresses appearing on the books of the Company.
IN WITNESS WHEREOF, BENEDEK COMMUNICATIONS CORPORATION caused this
Certificate to be signed by its President and Assistant Secretary respectively,
on this 31st day of May, 1996.
/s/ K. James Yager
------------------------------------
K. James Yager, President
/s/ Paul S. Goodman
------------------------------------
Paul S. Goodman, Assistant Secretary
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BENEDEK COMMUNICATIONS CORPORATION
Issuer
UNITED STATES TRUST COMPANY
OF NEW YORK
Trustee
------------------
$170,000,000
13-1/4% Senior Subordinated Discount Notes Due 2006
------------------
INDENTURE
Dated as of May 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions And Incorporation by Reference
SECTION 1.01. Definitions........................................... 1
SECTION 1.02. Other Definitions..................................... 27
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act............................. 28
SECTION 1.04. Rules of Construction................................. 28
ARTICLE II
The Securities
SECTION 2.01. Form and Dating....................................... 29
SECTION 2.02. Execution and Authentication.......................... 31
SECTION 2.03. Registrar and Paying Agent............................ 32
SECTION 2.04. Paying Agent to Hold Money in
Trust..................................... 33
SECTION 2.05. Securityholder Lists.................................. 33
SECTION 2.06. Transfer and Exchange................................. 34
SECTION 2.07. Replacement Securities................................ 42
SECTION 2.08. Outstanding Securities................................ 42
SECTION 2.09. Temporary Securities.................................. 42
SECTION 2.10. Cancellation.......................................... 44
SECTION 2.11. Defaulted Interest.................................... 44
SECTION 2.12. CUSIP Numbers......................................... 44
SECTION 2.13. Computation of Interest............................... 45
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee.................................... 45
SECTION 3.02. Selection of Securities to Be
Redeemed.................................. 45
SECTION 3.03. Notice of Redemption.................................. 45
SECTION 3.04. Effect of Notice of Redemption........................ 47
SECTION 3.05. Deposit of Redemption Price........................... 47
SECTION 3.06. Securities Redeemed in Part........................... 47
<PAGE>
<PAGE>
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities................................. 47
SECTION 4.02. SEC Reports........................................... 48
SECTION 4.03. Limitation on Debt.................................... 48
SECTION 4.04. Limitation on Restricted Payments..................... 51
SECTION 4.05. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries.............................. 55
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock.......................... 56
SECTION 4.07. Limitation on Transactions with
Affiliates................................ 61
SECTION 4.08. Change of Control..................................... 62
SECTION 4.09. Limitation on Liens................................... 63
SECTION 4.10. Limitation on Sale/Leaseback
Transactions.............................. 64
SECTION 4.11. Limitation on Guarantees Issued
by BLC.................................... 64
SECTION 4.12. Limitation on Subordinated Debt ...................... 64
SECTION 4.13. Compliance Certificate................................ 64
SECTION 4.14. Further Instruments and Acts.......................... 65
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets.................................... 65
SECTION 5.02. When Benedek Broadcasting May Merge
or Transfer Assets........................ 66
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default..................................... 67
SECTION 6.02. Acceleration.......................................... 69
SECTION 6.03. Other Remedies........................................ 70
SECTION 6.04. Waiver of Past Defaults............................... 71
SECTION 6.05. Control by Majority................................... 71
SECTION 6.06. Limitation on Suits................................... 71
-ii-
<PAGE>
<PAGE>
SECTION 6.07. Rights of Holders to Receive
Payment................................... 72
SECTION 6.08. Collection Suit by Trustee............................ 72
SECTION 6.09. Trustee May File Proofs of Claim...................... 72
SECTION 6.10. Priorities............................................ 73
SECTION 6.11. Undertaking for Costs................................. 73
SECTION 6.12. Waiver of Stay or Extension Laws ..................... 74
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee..................................... 74
SECTION 7.02. Rights of Trustee..................................... 75
SECTION 7.03. Individual Rights of Trustee.......................... 76
SECTION 7.04. Trustee's Disclaimer.................................. 76
SECTION 7.05. Notice of Defaults.................................... 76
SECTION 7.06. Reports by Trustee to Holders......................... 77
SECTION 7.07. Compensation and Indemnity............................ 77
SECTION 7.08. Replacement of Trustee................................ 78
SECTION 7.09. Successor Trustee by Merger........................... 79
SECTION 7.10. Eligibility; Disqualification......................... 79
SECTION 7.11. Preferential Collection of Claims
Against Company........................... 80
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on
Securities; Defeasance.................... 80
SECTION 8.02. Conditions to Defeasance.............................. 81
SECTION 8.03. Application of Trust Money............................ 83
SECTION 8.04. Repayment to Company.................................. 83
SECTION 8.05. Indemnity for Government Obliga-
tions..................................... 83
SECTION 8.06. Reinstatement......................................... 83
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders............................ 84
SECTION 9.02. With Consent of Holders............................... 85
-iii-
<PAGE>
<PAGE>
SECTION 9.03. Compliance with Trust Indenture
Act....................................... 86
SECTION 9.04. Revocation and Effect of Consents
and Waivers............................... 86
SECTION 9.05. Notation on or Exchange of
Securities................................ 87
SECTION 9.06. Trustee to Sign Amendments............................ 87
SECTION 9.07. Payment for Consent................................... 87
ARTICLE X
Subordination
SECTION 10.01. Agreement To Subordinate.............................. 87
SECTION 10.02. Liquidation, Dissolution,
Bankruptcy................................ 88
SECTION 10.03. Default on Senior Debt................................ 88
SECTION 10.04. Acceleration of Payment of
Securities................................ 90
SECTION 10.05. When Distribution Must Be Paid
Over...................................... 90
SECTION 10.06. Subrogation........................................... 90
SECTION 10.07. Relative Rights ...................... 90
SECTION 10.08. Subordination May Not Be Impaired
by Company................................ 91
SECTION 10.09. Rights of Trustee and Paying Agent.................... 92
SECTION 10.10. Distribution or Notice of
Representative............................ 92
SECTION 10.11. Article 10 Not To Prevent Events of
Default or Limit Right To
Accelerate................................ 92
SECTION 10.12. Trust Moneys Not Subordinated......................... 93
SECTION 10.13. Trustees Entitled to Rely............................. 93
SECTION 10.14. Trustee To Effectuate
Subordination............................. 93
SECTION 10.15. Trustee Not Fiduciary For Holders
of Senior Debt............................ 94
SECTION 10.16. Reliance by Holders of Senior Debt
on Subordination Provisions............... 94
-iv-
<PAGE>
<PAGE>
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls.......................... 94
SECTION 11.02. Notices............................................... 95
SECTION 11.03. Communication by Holders with Other
Holders................................... 95
SECTION 11.04. Certificate and Opinion as to
Conditions Precedent...................... 95
SECTION 11.05. Statements Required in Certificate
or Opinion................................ 96
SECTION 11.06. When Securities Disregarded........................... 96
SECTION 11.07. Rules by Trustee, Paying Agent and
Registrar................................. 97
SECTION 11.08. Legal Holidays........................................ 97
SECTION 11.09. Governing Law......................................... 97
SECTION 11.10. No Recourse Against Others............................ 97
SECTION 11.11. Successors............................................ 97
SECTION 11.12. Multiple Originals.................................... 97
SECTION 11.13. Table of Contents; Headings........................... 97
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security
-v-
<PAGE>
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310(a)(1) ........................................ 7.10
(a)(2) ........................................ 7.10
(a)(3) ........................................ N.A.
(a)(4) ........................................ N.A.
(a)(5) ........................................ 7.10
(b) ........................................ 7.08; 7.10
(c) ........................................ N.A.
311(a) ........................................ 7.11
(b) ........................................ 7.11
(c) ........................................ N.A.
312(a) ........................................ 2.05
(b) ........................................ 12.03
(c) ........................................ 12.03
313(a) ........................................ 7.06
(b)(1) ........................................ 7.06
(b)(2) ........................................ 7.06
(c) ........................................ 12.02
(d) ........................................ 7.06
314(a) ........................................ 4.02; 4.10
(b) ........................................ N.A.
(c)(1) ........................................ 12.04
(c)(2) ........................................ 12.04
(c)(3) ........................................ N.A.
(d) ........................................ N.A.
(e) ........................................ 12.05
(f) ........................................ 4.10
315(a) ........................................ 7.01
(b) ........................................ 7.05; 12.02
(c) ........................................ 7.01
(d) ........................................ 7.01
(e) ........................................ 6.11
316(a)(last sentence) ........................................ 12.06
(a)(1)(A) ........................................ 6.05
(a)(1)(B) ........................................ 6.04
(a)(2) ........................................ N.A.
(b) ........................................ 6.07
(c) ........................................ N.A.
<PAGE>
<PAGE>
317(a)(1) ........................................ 6.08
317(a)(2) ........................................ 6.09
N.A. means Not Applicable.
- ----------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
<PAGE>
INDENTURE dated as of May 15, 1996, between
BENEDEK COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company") and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York banking corporation
(the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
13-1/4% Senior Subordinated Discount Notes Due 2006 (the "Initial Securities")
and, if and when issued in exchange for Initial Securities, the Company's
13-1/4% Senior Subordinated Discount Notes Series A Due 2006 (the "Exchange
Securities" and, together with the Initial Securities, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Accreted Value" as of any date (the "Specified Date") means,
with respect to each $1,000 principal amount at maturity of Securities:
(i) if the Specified Date is one of the following dates (each
a "Semi-Annual Accrual Date"), the amount set forth opposite such date below:
Semi-Annual Accrual Date Accreted Value
- ------------------------ --------------
June 6, 1996.......................... $530.46
November 15, 1996....................... 561.50
May 15, 1997.......................... 598.70
November 15, 1997....................... 638.37
May 15, 1998.......................... 680.66
November 15, 1998....................... 725.75
May 15, 1999.......................... 773.83
November 15, 1999....................... 825.10
May 15, 2000.......................... 879.76
November 15, 2000....................... 938.05
May 15, 2001.......................... 1,000.00
<PAGE>
<PAGE>
2
(ii) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the sum of (A) the Accreted Value for the Semi-Annual Accrual
Date immediately preceding the Specified Date and (B) an amount equal to the
product of (i) the Accreted Value for the immediately following Semi-Annual
Accrual Date less the Accreted Value for the immediately preceding Semi-Annual
Accrual Date and (ii) a fraction, the numerator of which is the number of days
from the immediately preceding Semi-Annual Accrual Date to the Specified Date,
using a 360-day year of twelve 30-day months, and the denominator of which is
180 (or, if the Semi-Annual Accrual Date immediately preceding the Specified
Date is June 6, 1996, the denominator of which is 159, as certified by the
Company;
(iii) if the Specified Date occurs after the last Semi-Annual
Accrual Date, $1,000.
"Acquired Station" means any Television Station acquired by
the Company after the Issue Date.
"Acquisitions" means the purchase on the Issue Date by Benedek
Broadcasting of all the television broadcast assets of Stauffer Communications,
Inc. and all the capital stock of Brissette Broadcasting Corporation.
"Affiliate" of any specified person means (i) any other person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified person or (ii) any other person who is a
director or officer (A) of such specified person, (B) of any subsidiary of such
specified person or (C) of any person described in clause (i) above. For
purposes of Section 4.04, Section 4.06 and Section 4.07, (a) control of a person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise and (b)
beneficial ownership of 5% or more of the voting common equity (on a fully
diluted basis) or warrants to purchase such equity (whether or not currently
exercisable) of a person shall be deemed to be control of such person; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary (other than directors' qualifying
<PAGE>
<PAGE>
3
shares), property or other assets (each referred to for the purposes of this
definition as a "disposition") by the Company or any of its Subsidiaries
(including any disposition by means of a merger, consolidation or similar
transaction) other than (i) a disposition by a Subsidiary to the Company or by
the Company or a Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of
property or assets at fair market value in the ordinary course of business,
(iii) a disposition of obsolete assets in the ordinary course of business, (iv)
for purposes of Section 4.06 only, a disposition subject to Section 4.04 or a
disposition consisting of a Sale/Leaseback Transaction unless the Company has
elected to treat such Sale/Leaseback Transaction as an Asset Disposition
pursuant to Section 4.10(ii), (v) a disposition subject to Section 5.01 (except
to the extent the Company disposes of substantially all (but not all) of its
assets, in which event the assets not so disposed of shall be deemed as having
been sold by the Company); (vi) a disposition pursuant to the terms of the
Company Pledge Agreement delivered in connection with the Senior Secured Notes;
or (vii) a disposition by the Company in which and to the extent the Company
receives as consideration Capital Stock of a person engaged in, or assets
that will be used in, the business of the Company existing on the Issue Date
or in businesses reasonably related thereto, as determined by the Board of
Directors of the Company, the determination of which will be conclusive and
evidenced by a resolution of the Board of Directors at the time of such
disposition.
"Attributable Debt" in respect of a Sal Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Debt, the quotient obtained by dividing (i) the sum of the
products of (a) the numbers of years from the date of determination to the dates
of each successive scheduled principal payment or redemption or similar payment
with respect to such Debt multiplied by (b) the amount of such payment, by (ii)
the sum of all such payments.
<PAGE>
<PAGE>
4
"Bank Credit Agreement" means the Credit Agreement, dated as
of June 6, 1996, among Benedek Broadcasting, as borrower, the Company, the
lenders referred to therein, Canadian Imperial Bank of Commerce New York Agency,
as administrative agent and collateral agent, Pearl Street L.P., as arranging
agent, and Goldman, Sachs & Co., as syndication agent, and all promissory notes,
guarantees, security agreements and documents, deeds of trust, mortgages,
letters of credit and other instruments, agreements and documents executed
pursuant thereto or in connection therewith, in each case as the same may be
amended, supplemented, restated, renewed, refinanced, replaced or otherwise
modified (in whole or in part and without limitation as to amount, terms,
conditions, covenants or other provisions) from time to time.
"Bank Debt" means all Senior Debt outstanding under the Bank
Credit Agreement.
"Benedek Broadcasting" means Benedek Broadcasting Corporation,
a Delaware corporation and a subsidiary of the Company, and any successor
company.
"BLC" means Benedek License Corporation, a Delaware
corporation and a subsidiary of Benedek Broadcasting, and any successor company.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a person means any obligation
which is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such person prepared in accordance with generally
accepted accounting principles; the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any person means any and all shares,
interests, rights to purchase, warrants, options,
<PAGE>
<PAGE>
5
participations or other equivalents of or interests in (however designated)
equity of such person, including any Preferred Stock, but excluding any debt
securities convertible into or exchangeable for such equity.
"Cash Flow Leverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount outstanding of all Debt of the
Company and the Restricted Subsidiaries (including any Debt issued under Section
4.03(b)) at the end of the most recent fiscal quarter ending at least 45 days
prior to the date of determination to (ii) Operating Cash Flow for the four
fiscal quarters ending on the last day of such fiscal quarter; provided,
however, that (1) if the Company or any Restricted Subsidiary has Issued any
Debt since the beginning of such period that remains outstanding or if the
transaction giving rise to the need to calculate the Cash Flow Leverage Ratio is
an Issuance of Debt, or both, Debt as of such date and Operating Cash Flow
(including Consolidated Interest Expense) for such period shall be calculated
after giving effect on a pro forma basis to such Debt (in the case of Operating
Cash Flow, as if such Debt had been Issued on the first day of such period) and
the discharge of any other Debt repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Debt (in the case of Operating Cash
Flow, as if such discharge had occurred on the first day of such period), (2) if
since the beginning of such period the Company or any Restricted Subsidiary
shall have made any Asset Disposition, (A) the Operating Cash Flow for such
period shall be reduced by an amount equal to the Operating Cash Flow (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to the
Operating Cash Flow (if negative), directly attributable thereto for such period
(including an adjustment for Consolidated Interest Expense directly attributable
to any Debt (the "Discharged Debt") of the Company or any Restricted Subsidiary
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with such Asset
Dispositions for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Discharged Debt of such Restricted Subsidiary)) and (B) Debt
for such period shall be reduced by an amount equal to the Discharged Debt, (3)
if since the beginning of such period the Company or any Restricted Subsidiary
(by merger or otherwise) shall have made an Investment in any Restricted
<PAGE>
<PAGE>
6
Subsidiary (or any person which becomes a Restricted Subsidiary) or an
acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business,
Operating Cash Flow for such period shall be calculated after giving pro forma
effect thereto (including the Issuance of any Debt) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such period any person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such period, Operating Cash Flow (including Consolidated
Interest Expense) for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition, Investment or acquisition occurred
on the first day of such period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto, and the amount of Consolidated Interest Expense
associated with any Debt Issued in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Company. If any Debt bears a floating rate of interest
and is being given pro forma effect, the interest on such Debt shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Protection Agreement applicable to such Debt if such Interest Rate Protection
Agreement has a remaining term in excess of 12 months).
"Change of Control" means the occurrence of any of the
following events:
(i) prior to the first public offering of common stock of the
Company or Parent, the Permitted Holders cease to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of a majority in the aggregate of the total
voting power of the Voting Stock of the Company, whether as a result of
Issuance of securities of the Company, any merger, consolidation,
liquidation or dissolution of the Company, any direct or indirect
<PAGE>
<PAGE>
7
transfer of securities or otherwise (for purposes of this clause (i)
and clause (ii) below, the Permitted Holders shall be deemed to
beneficially own any Voting Stock of a corporation (the "specified
corporation") held by any other corporation (the "parent corporation")
so long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the voting power
of the Voting Stock of the parent corporation);
(ii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i) above,
except that such person shall be deemed to have "beneficial ownership"
of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company; provided, however, that the Permitted
Holders "beneficially own" (as defined in clause (i) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company than such other person and do
not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors
(for the purposes of this clause (ii), such other person shall be
deemed to beneficially own any Voting Stock of a specified corporation
held by a parent corporation, if such other person is the beneficial
owner (as defined in this clause (ii)), directly or indirectly, of more
than 35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders "beneficially own" (as defined in
clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such parent
corporation and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the board of directors of such parent corporation); or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of
<PAGE>
<PAGE>
8
the Company was approved by a vote of 66-2/3% of the directors of the
Company then still in office who were either directors at the beginning
of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors then in office.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Company Pledge Agreement" means the Pledge and Security
Agreement dated as of March 10, 1995, between Benedek Broadcasting and The Bank
of New York.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such interest expense, (i)
interest expense attributable to capital leases, (ii) amortization of debt
discount and debt issuance cost, (iii) capitalized interest, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by the Company or any such Restricted Subsidiary under
any Guarantee of Debt or other obligation of any other person, (vii) net costs
associated with Hedging Obligations (including amortization of fees), (viii)
Preferred Stock dividends in respect of all Preferred Stock of Restricted
Subsidiaries and Redeemable Stock of the Company held by persons other than the
Company or a Wholly Owned Subsidiary and (ix) the cash contributions to any
employee stock ownership plan or similar trust to the extent such contributions
are used by such plan or trust to pay interest or fees to any person (other than
the Company) in connection with loans incurred by such plan or trust to purchase
newly issued or treasury shares of the Company.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated
<PAGE>
<PAGE>
9
subsidiaries; provided, however, that there shall not be included in such
Consolidated Net Income:
(i) any net income of any person if such person is not a
Restricted Subsidiary, except that (A) the Company's equity in the net
income of any such person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (iii) below) and (B)
the Company's equity in a net loss of any such person for such period
shall be included in determining such Consolidated Net Income;
(ii) any net income of any person acquired by the Company or a
Restricted Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition;
(iii) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Company,
except that (A) the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
to another Restricted Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining
such Consolidated Net Income;
(iv) any gain (but not loss) realized upon the sale or other
disposition of any property, plant or equipment of the Company or its
consolidated subsidiaries (including pursuant to any sale-and-leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (but not loss) realized upon the sale
or other disposition of any Capital Stock of any person; and
<PAGE>
<PAGE>
10
(v) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of Section
4.04 only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets from a Non-Recourse
Affiliate to the Company or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under such covenant pursuant to Section 4.04(b)(v).
"Consolidated Net Worth" of any person means the total of the
amounts shown on the balance sheet of such person and its consolidated
subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles, as of the end of the most recent fiscal quarter
of such person ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of such person plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit, (B) any amounts attributable
to Redeemable Stock and (C) any amounts attributable to Exchangeable Stock.
"Contingent Warrants" means 888,000 warrants, each to purchase
one share of Class A Common Stock of the Company.
"Debt" of any person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such person is responsible or liable;
(ii) all Capital Lease Obligations and all Attributable Debt of
such person;
(iii) all obligations of such person Issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
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11
(iv) all obligations of such person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such
person to the extent such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than
the third Business Day following receipt by such person of a demand for
reimbursement following payment on the letter of credit);
(v) the amount of all obligations of such person with respect
to the redemption, repayment or other repurchase of, in the case of a
Subsidiary, any Preferred Stock and, in the case of any other person,
any Redeemable Stock (but excluding any accrued dividends);
(vi) all obligations of the type referred to in clauses (i)
through (v) of other persons and all dividends of other persons for the
payment of which, in either case, such person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
any Guarantees of such obligations and dividends; and
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other persons secured by any Lien on any property or
asset of such person (whether or not such obligation is assumed by such
person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured.
The amount of Debt of any person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
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12
"Designated Senior Debt" means (i) the Bank Debt and the
Senior Secured Notes and (ii) any other Senior Debt of the Company which, at the
date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $25,000,000 and is specifically designated by the Company
in the instrument evidencing or governing such Senior Debt as "Designated Senior
Debt" for purposes of this Indenture.
"EBITDA" for any period means the Consolidated Net Income for
such period (but without giving effect to adjustments, accruals, deductions or
entries resulting from purchase accounting, extraordinary losses or gains and
any gains or losses from any Asset Dispositions), plus the following to the
extent deducted in calculating such Consolidated Net Income: (i) income tax
expense, (ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense (including the amortization of Program Obligations) and (v)
all other noncash charges deducted in the calculation of such Consolidated Net
Income (but excluding (a) any noncash charges related to the items described in
clauses (i) through (v) of the definition of "Consolidated Net Income" and (b)
any noncash charges to the extent that they require an accrual of or a reserve
for cash disbursements for any future period), and minus, without duplication,
all noncash items (but excluding revenue from barter transactions) that
increased such Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Debentures" means the 15.0% Exchange Debentures Due
2007 of the Company issued, at the Company's option, to holders of Exchangeable
Preferred Stock in exchange for the equivalent number of shares of Exchangeable
Preferred Stock.
"Exchange Securities" means the 13-1/4% Senior Subordinated
Discount Notes Series A Due 2006 to be issued pursuant to this Indenture in
connection with the offer to exchange Securities for the Initial Securities that
may be made by the Company pursuant to the Registration Rights Agreement.
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13
"Exchangeable Preferred Stock" means the Company's 15.0%
Exchangeable Redeemable Senior Preferred Stock Due 2007 outstanding on the Issue
Date.
"Exchangeable Preferred Stock Registration Rights Agreement"
means the Exchangeable Preferred Stock Exchange and Registration Rights
Agreement, dated as of May 30, 1996, among the Company, Goldman, Sachs & Co. and
BT Securities Corporation.
"Exchangeable Stock" means any Capital Stock which is
exchangeable or convertible into another security (other than Capital Stock of
the Company which is neither Exchangeable Stock nor Redeemable Stock).
"Existing Station" means (i) each of the Television Stations
owned by the Company as of the Issue Date and (ii) each other Television Station
acquired by the Company after the Issue Date and the License for which is owned
by BLC.
"Guarantee" means any obligation, contingent or otherwise, of
any person directly or indirectly guaranteeing any Debt or other obligation of
any person and any obligation, direct or indirect, contingent or otherwise, of
such person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation of such person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any person means the obligations of
such person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures contract
or other similar agreement or arrangement designed to protect such person
against changes in interest rates or foreign exchange rates.
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14
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended or
supplemented from time to time.
"Initial Securities" means the 13-1/4% Senior Subordinated
Discount Notes Due 2006 issued under this Indenture on or about June 6, 1996.
"Initial Warrants" means 600,000 warrants, each to purchase
one share of Class A Common Stock of the Company.
"Interest Rate Protection Agreement" means any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Investment" in any person means any loan or advance to, any
Guarantee of, any acquisition of any Capital Stock, equity interest, obligation
or other security of, or capital contribution or other investment in, such
person. Investments shall exclude advances to customers and suppliers in the
ordinary course of business.
"Issue" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Debt or Capital Stock of a person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be issued by such
Subsidiary at the time it becomes a Subsidiary; and the term "Issuance" has a
corresponding meaning. For purposes of Section 4.03, if any Debt Issued by a
Non-Recourse Subsidiary thereafter ceases to be Non-Recourse Debt of a
Non-Recourse Subsidiary, then such event shall be deemed for the purpose of such
Section to constitute the Issuance of such Debt by the issuer thereof.
"Issue Date" means the date on which the Initial
Securities are originally issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New York.
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15
"License" means, with respect to any Television Station, any
and all licenses and authorizations issued by the Federal Communications
Commission with respect to such Television Station.
"Lien" means any mortgage, pledge, security interest,
conditional sale or other title retention agreement or other similar lien.
"LMA" means a local marketing arrangement, sale agreement,
time brokerage agreement, management agreement or similar arrangement pursuant
to which a person, subject to customary preemption rights and other limitations
(i) obtains the right to sell at least a majority of the advertising inventory
of a radio or television station of which a third party is the licensee, (ii)
obtains the right to exhibit programming and sell advertising time during a
majority of the airtime of a television or radio station or (iii) manages the
selling operations of a radio or television station with respect to at least a
majority of the advertising inventory of such station.
"Maximum Amount" as of any date of determination means, with
respect to any Acquired Station, the product of (i) the Operating Cash Flow of
such Acquired Station for the four most recent fiscal quarters ending at least
45 days prior to such date of determination and (ii) the number 5.0; provided,
however, that if such Acquired Station is acquired by the Company in connection
with an Asset Disposition of an Existing Station, the amount in clause (i) above
shall be reduced by the Operating Cash Flow for such period of such Existing
Station.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of Debt or other obligations
relating to such properties or assets or received in any other noncash form)
therefrom, in each case net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
generally accepted accounting principles, as a consequence of such Asset
Disposition, (ii) all payments made on any Debt which is secured by any assets
subject to such Asset Disposition,
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16
in accordance with the terms of any lien upon or other security agreement of any
kind with respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law be
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition and (iv)
the deduction of appropriate amounts to be provided by the seller as a reserve,
in accordance with generally accepted accounting principles, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any Issuance or sale of
Capital Stock, means the cash proceeds of such Issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such Issuance or sale and net of taxes paid or
payable as a result thereof.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible common
stock of such corporation; provided, however, that Non-Convertible Capital Stock
shall not include any Redeemable Stock or Exchangeable Stock.
"Non-Recourse Affiliate" means a Non-Recourse Subsidiary or
any other Affiliate of the Company or a Restricted Subsidiary which (i) has not
acquired any assets (other than cash) directly or indirectly from the Company or
any Restricted Subsidiary, (ii) only owns properties acquired after the Issue
Date and (iii) has no Debt other than Non-Recourse Debt.
"Non-Recourse Debt" means Debt or that portion of Debt (i) as
to which neither the Company nor its Restricted Subsidiaries (A) provide credit
support (including any undertaking, agreement or instrument which would
constitute Debt), (B) is directly or indirectly liable or (C) constitute the
lender and (ii) no default with respect to which (including any rights which the
holders thereof may have to take enforcement action against a Non-Recourse
Affiliate) would permit (upon notice, lapse of time or both) any holder
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17
of any other Debt of the Company or its Restricted Subsidiaries to declare a
default on such other Debt or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity.
"Non-Recourse Subsidiary" means a Subsidiary which (i) has not
acquired any assets (other than cash) directly or indirectly from the Company or
any Restricted Subsidiary, (ii) only owns properties acquired after the Issue
Date and (iii) has no Debt other than Non-Recourse Debt.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Operating Cash Flow" for any period means EBITDA for such
period less Program Obligation Payments for such period; provided, however,
that, when used in the definition of "Maximum Amount" with respect to a
Television Station, all references to the Company and Restricted Subsidiaries
and consolidated subsidiaries used in the definitions of "EBITDA" and "Program
Obligation Payments" and the definitions used therein shall be deemed to refer
to such Television Station.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Other Pledge Agreement" means a Pledge and Security Agreement
dated as of March 10, 1995, between A. Richard Benedek and The Bank of New York.
"Parent" means any person that beneficially owns, directly or
indirectly, all the Voting Stock of the Company.
"Permitted Acquisition Debt" means Debt of the Company or any
Restricted Subsidiary Issued to finance all or any portion of the cost of the
acquisition of an Acquired Station, where the License for such Acquired Station
is owned by BLC, and Refinancing Debt in respect of Debt; provided, however,
that the aggregate amount of such Permitted Acquisition Debt with respect to any
Acquired
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Station shall not exceed the Maximum Amount with respect to such Acquired
Station.
"Permitted Holders" shall mean (i) A. Richard Benedek; (ii)
family members or relatives of A. Richard Benedek; (iii) any trusts created for
the benefit of the persons described in clauses (i), (ii) or (iv) of this
paragraph or any trust for the benefit of any trust; (iv) in the event of the
death or incompetence of any person described in clauses (i) or (ii) of this
paragraph such person's estate, executor, administrator, committee or other
personal representative or beneficiaries; or (v) any Affiliate of A. Richard
Benedek.
"Permitted Investments" shall mean (i) investments in direct
obligations of the United States of America maturing within 90 days of the date
of acquisition thereof, (ii) investments in certificates of deposit maturing
within 90 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States or any state
thereof having capital, surplus and undivided profits aggregating in excess of
$500,000,000, and (iii) investments in commercial paper given the highest rating
by two established national credit rating agencies and maturing not more than 90
days from the date of acquisition thereof.
"person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pledge Agreements" means the Company Pledge Agreement and the
Other Pledge Agreement.
"Pledgee" means the pledgee under the Pledge Agreements, who
initially is The Bank of New York.
"Pledgor" means, respectively, Benedek Broadcasting under the
Company Pledge Agreement and A. Richard Benedek under the Other Pledge
Agreement.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution
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19
of such corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of any debt security means the principal amount of
such security (in the case of a Security, the Accreted Value of the Security)
plus the premium, if any, payable on such debt security which is due or overdue
or is to become due at the relevant time.
"Program Obligation Payments" means, for any period of
calculation, an amount equal to the aggregate amount paid in cash by or on
behalf of the Company and the Restricted Subsidiaries during such period with
respect to, or on account of, Program Obligations.
"Program Obligations" means the obligations of the Company and
the Restricted Subsidiaries with respect to the acquisition of the right to
broadcast films and other programming material, payable in a form other than
barter.
"Public Equity Offering" means an underwritten public offering
of common stock of the Company or Parent pursuant to an effective registration
statement under the Securities Act.
"Redeemable Stock" means any Capital Stock that by its terms
or otherwise is required to be redeemed on or prior to the first anniversary of
the Stated Maturity of the Securities or is redeemable at the option of the
holder thereof at any time on or prior to the first anniversary of the Stated
Maturity of the Securities.
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to Issue
indebtedness in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the
Company or any Restricted Subsidiary existing on the Issue Date or Issued in
compliance with this Indenture; provided, however, that (i) such Refinancing
Debt has a Stated Maturity no earlier than the Stated Maturity of the Debt being
Refinanced, (ii) such Refinancing Debt has an Average Life at the time such
Refinancing Debt is Issued that is equal to or greater than the Average Life of
the Debt being Refinanced and (iii) such Refinancing Debt has an aggregate
principal amount (or if Issued with original issue
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20
discount, an aggregate issue price) that is equal to or less than the aggregate
principal amount (or if Issued with original issue discount, the aggregate
accreted value) then outstanding or committed under the Debt being Refinanced;
provided further, however, that Refinancing Debt shall not include (x) Debt of a
Subsidiary that Refinances Debt of the Company or (y) Debt of the Company or a
Restricted Subsidiary that Refinances Debt of a Non-Recourse Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth
in the Registration Rights Agreement.
"Registration Rights Agreement" means the Senior Subordinated
Discount Note Exchange and Registration Rights Agreement, dated as of May 30,
1996, between the Company and Goldman, Sachs & Co.
"Representative" means any trustee, agent or representative
(if any) for an issue of Senior Debt of the Company.
"Restricted Holder" means a Permitted Holder or a person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act and will be
deemed to include each person included in such person) that owns, directly or
indirectly, 10% or more of the total voting power of the Voting Stock of the
Company; provided, however, that for purposes of this definition a person shall
be deemed to have ownership of all shares (a) that any such person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time and (b) of a corporation held by any other corporation (the
"parent corporation") if such person is the owner, directly or indirectly, of
more than 10% of the total voting power of the Voting Stock of such parent
corporation.
"Restricted Subsidiary" shall mean any Subsidiary that is not
a Non-Recourse Subsidiary.
"Sale/Leaseback Transaction" means any arrangement relating to
a property owned as of the Issue Date whereby the Company or a Restricted
Subsidiary transfers such property to a person and leases it back from such
person.
"SEC" means the Securities and Exchange Commission.
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21
"Securities" means the Securities issued under this Indenture.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depository), or any successor person
thereto and shall initially be the Trustee.
"Seller Junior Discount Preferred Stock" means the Preferred
Stock issued by the Company to General Electric Capital Corporation on the Issue
Date.
"Senior Debt" means (i) all obligations of the Company now or
hereafter existing under the Bank Credit Agreement, including principal of,
premium, and interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such post-petition interest is allowed as a claim in such proceeding) on
Debt outstanding under the Bank Credit Agreement, reimbursement obligations of
the Company with respect to any letters of credit outstanding under the Bank
Credit Agreement and any obligations thereunder for fees, expenses and
indemnities, (ii) Debt of the Company, whether outstanding on the Issue Date or
thereafter Issued and (iii) accrued and unpaid interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not post-filing interest is
allowed in such proceeding) in respect of (A) indebtedness of the Company for
money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which the Company is responsible or
liable unless, in the instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Securities; provided, however, that Senior
Debt shall not include (i) any obligation of the Company to any Subsidiary, (ii)
any liability for Federal, state, local or other taxes owed or owing by the
Company, (iii) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities), (iv) any Debt, Guarantee or obligation
of the Company which is subordinate or junior in any respect to any other Debt,
Guarantee or obligation of the Company or (v) that portion of any Debt which at
the time of Issuance is Issued in violation of this Indenture.
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"Senior Secured Notes" means the 11-7/8% Senior Secured Notes
Due 2005 of Benedek Broadcasting.
"Senior Subordinated Debt" means the Securities and any other
Debt of the Company that specifically provides that such Debt is to rank pari
passu with the Securities in right of payment and is not subordinated by its
terms in right of payment to any Debt or other obligation of the Company which
is not Senior Debt.
"Shelf Registration Statement" has the meaning given to that
term in the Registration Rights Agreement.
"Significant Subsidiary" means (i) any domestic Subsidiary of
the Company (other than a Non-Recourse Subsidiary) which at the time of
determination either (A) had assets which, as of the date of the Company's most
recent quarterly consolidated balance sheet, constituted at least 3% of the
Company's total assets on a consolidated basis as of such date, or (B) had
revenues for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which constituted at least 3% of the
Company's total revenues on a consolidated basis for such period, (ii) any
foreign Subsidiary of the Company (other than a Non-Recourse Subsidiary) which
at the time of determination either (A) had assets which, as of the date of the
Company's most recent quarterly consolidated balance sheet, constituted at least
5% of the Company's total assets on a consolidated basis as of such date, in
each case determined in accordance with generally accepted accounting
principles, or (B) had revenues for the 12-month period ending on the date of
the Company's most recent quarterly consolidated statement of income which
constituted at least 5% of the Company's total revenues on a consolidated basis
for such period, or (iii) any Subsidiary of the Company (other than a
Non-Recourse Subsidiary) which, if merged with all Defaulting Subsidiaries of
the Company, would at the time of determination either (A) have had assets
which, as of the date of the Company's most recent quarterly consolidated
balance sheet, would have constituted at least 10% of the Company's total assets
on a consolidated basis as of such date or (B) have had revenues for the
12-month period ending on the date of the Company's most recent quarterly
consolidated statement of income which would have constituted at least 10% of
the Company's total revenues on a consolidated basis for such period (each such
determination being made in accordance with generally accepted accounting
principles). "Defaulting Subsidiary" means any Subsidiary of the Company
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23
(other than a Non-Recourse Subsidiary) with respect to which an event described
under clause (6), (7), (8) or (9) of Section 6.01 has occurred and is
continuing.
"Specified Debt" means Debt the proceeds of which are utilized
solely to (i) acquire all or substantially all of the assets or a majority of
the Voting Stock of an existing television or radio broadcasting business,
franchise or station or any business related or ancillary thereto or (ii)
finance an LMA (including to Refinance indebtedness or other obligations
incurred in connection with such acquisition or LMA, as the case may be, and to
pay related fees and expenses); provided, however, that (A) such Debt is
incurred within 270 days after the date on which the related definitive
acquisition agreement or LMA, as the case may be, was entered into by the
Company or a Restricted Subsidiary, (B) the aggregate principal amount of such
Debt is no greater than the aggregate principal amount of Debt set forth in a
notice from the Company to the Trustee (an "Incurrence Notice") within ten days
after the date on which the related definitive acquisition agreement or LMA, as
the case may be, was entered into which notice shall be executed on the
Company's behalf by its chief financial officer in such capacity and shall
describe in reasonable detail the acquisition or LMA, as the case may be, which
such Debt will be incurred to finance, (C) such Debt is utilized solely to
finance the acquisition or LMA, as the case may be, described in such Incurrence
Notice (including to Refinance indebtedness or other obligations incurred in
connection with such acquisition or LMA, as the case may be, and to pay related
fees and expenses).
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Strategic Equity Investor" means any person which is, or is a
controlled Affiliate of any person which is, engaged principally in a media
business; provided, however, that "Strategic Equity Investor" shall not include
any Affiliate of the Company.
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"Strategic Investment" means a sale by the Company or Parent
of its common stock to one or more Strategic Equity Investors.
"Subordinated Obligation" means any Debt of the Company
(whether outstanding on the date of this Indenture or thereafter Issued) which
is expressly subordinate or junior in right of payment to the Securities.
"Subsidiary" means any corporation, association, partnership,
limited liability company or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) the Company,
(ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
"Tax Amounts" with respect to any calendar year means the sum
of (a) an amount equal to the product of (i) the Federal taxable income of
Benedek Broadcasting for such year as determined in good faith by the Board of
Directors and as certified by a nationally recognized tax accounting firm and
without taking into account the deductibility of state income taxes for Federal
income tax purposes multiplied by (ii) the State Tax Percentage (as defined
below) plus (b) the greater of (i) the product of (w) the Federal taxable income
of Benedek Broadcasting for such year as determined in good faith by the Board
of Directors and as certified by a nationally recognized tax accounting firm and
taking into account the deductibility of the amount determined in clause (a)
above as a state income tax for Federal income tax purposes multiplied by (x)
the Federal Tax Percentage (as defined below) and (ii) the product of (y) the
alternative minimum taxable income attributable to Benedek Broadcasting's
stockholder(s) by reason of the income of Benedek Broadcasting for such year as
determined in good faith by the Board of Directors and as certified by a
nationally recognized tax accounting firm multiplied by (z) the Federal Tax
Percentage; provided, however, the amount as calculated above shall be reduced
by the amount of any income tax benefit attributable to Benedek Broadcasting
which could be realized by Benedek Broad- casting's stockholder(s) in the
current or a prior taxable year (including tax losses, alternative minimum tax
credits, other tax credits and carryforwards or carrybacks thereof)
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25
to the extent not previously taken into account. The amount of any such income
tax benefit described in the proviso to the preceding sentence shall be
determined in a manner consistent with the calculation of the Tax Amount for the
relevant year. Any part of the Tax Amount not distributed in respect of a tax
year for which it is calculated shall be available for distribution in
subsequent tax years. The term "State Tax Percentage" shall mean the highest
applicable statutory marginal rate of state and local income tax to which an
individual resident of the Relevant Jurisdiction (as defined below) would be
subject in the relevant year of determination as a result of being a stockholder
of a corporation taxable as an S Corporation in such jurisdiction (as certified
to the Trustee by a nationally recognized tax accounting firm). The term
"Relevant Jurisdiction" shall mean the jurisdiction in which, during the
relevant taxable year, (c) Benedek Broadcasting is doing business for state and
local income tax purposes, (d) Benedek Broadcasting derives the first, second,
third or fourth highest percentage of its gross income as calculated for Federal
income tax purposes (excluding therefrom any gain or loss from the sale or other
disposition of any television station then owned by Benedek Broadcasting) and
(e) Benedek Broadcasting is taxable as an S Corporation for state and local
income tax purposes that imposes the highest aggregate marginal rate of state
and local income tax on individuals (as certified to the Trustee by a nationally
recognized tax accounting firm). The term "Federal Tax Percentage" shall mean
the highest applicable statutory marginal rate of Federal income tax or, in the
case of clause (b)(ii) above, alternative minimum tax, to which an individual
resident of the United States would be subject in the relevant year of
determination (as certified to the Trustee by a nationally recognized tax
accounting firm); provided, however, that, for any taxable year (or portion
thereof) for which Benedek Broadcasting is not taxable as an S Corporation for
Federal income tax purposes, the Federal Tax Percentage shall be zero.
Notwithstanding the foregoing, the sum of the State Tax Percentage and the
Federal Tax Percentage (the "Total Tax Percentage") shall not exceed the
percentage (the "Maximum Tax Percentage") equal to the lesser of (f) the highest
applicable statutory marginal rate of Federal, state, local income tax or, when
applicable, alternative minimum tax, to which a corporation doing business in
any state in which Benedek Broadcasting is doing business at the time of
determination would be subject in the relevant year of determination (as
certified to the Trustee by a nationally recognized tax accounting firm) plus 5%
and
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26
(g) 55%. If the Total Tax Percentage exceeds the Maximum Tax Percentage, the
Federal Tax Percentage shall be reduced to the extent necessary to cause the
Total Tax Percentage to equal the Maximum Tax Percentage. Distributions of Tax
Amounts may be made from time to time with respect to a tax year based on
reasonable estimates, with reconciliation within 40 days of the earlier of (i)
Benedek Broadcasting's filing of the Internal Revenue Service Form 1120S for the
applicable taxable year and (ii) the last date such form is required to be
filed. The stockholder of Benedek Broadcasting will enter into a binding
agreement with Benedek Broadcasting to reimburse Benedek Broadcasting for
certain positive differences between the distributed amount and the Tax Amount,
which difference must be paid at the time of such reconciliation.
"Television Station" means any group of assets which
constitutes all or substantially all of the assets which would be necessary to
carry on the business of a commercial television broadcast station and which,
when purchased by a single purchaser would (together with any necessary
licenses, authorizations, working capital and operating location) be
substantially sufficient to allow such purchaser to carry on such business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. 'SS'
77aaa-77bbbb) as in effect on the Issue Date, except as provided in Section
9.03.
"Transaction" means the Acquisitions and the Financing Plan.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.06(g).
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
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27
"Units" means the Units offered by the Company on or about the
Issue Date, each consisting of ten shares of Exchangeable Preferred Stock, ten
Initial Warrants and 14.8 Contingent Warrants.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Agent Members" ..................... 2.01
"Bankruptcy Law" .................... 6.01
"covenant defeasance option" ........ 8.01(b)
"Custodian" ......................... 6.01
"Definitive Securities" ............. 2.01
"Event of Default" .................. 6.01
"Excluded Stock" .................... 4.04(a)(3)(b)
"Global Security" ................... 2.01
"legal defeasance option" ........... 8.01(b)
"Non-Global Purchaser" .............. 2.01
"Offer" ............................. 4.06(b)
"Offer Amount" ...................... 4.06(c)(2)
"Offer Period" ...................... 4.06(c)(2)
"Paying Agent" ...................... 2.03
"Purchase Agreement" ................ 2.01
"Purchase Date" ..................... 4.06(c)(1)
"QIB" ............................... 2.01(a)
"Registrar" ......................... 2.03
"Restricted Payment" ................ 4.04
"Rule 144A" ......................... 2.01
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SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect on the date of this Indenture and all
accounting calculations will be determined in accordance with such
principles;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured debt shall not be deemed to be subordinate or
junior to secured debt merely by virtue of its nature as unsecured
debt;
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29
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with generally accepted accounting principles
and accretion of principal on such security shall be deemed to be the
issuance of Debt; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B, which is hereby
incorporated by reference and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibit A and Exhibit B are part of the
terms of this Indenture.
The Initial Securities are being offered and sold by the
Company pursuant to a Purchase Agreement, dated May 30, 1996, between the
Company and Goldman, Sachs & Co. (the "Purchase Agreement").
(a) Global Securities. Initial Securities offered and sold to
a "qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) (a "QIB") in reliance on Rule 144A under the Securities Act ("Rule 144A")
as provided in the Purchase Agreement, shall be issued initially in the form of
one or more permanent global Securities in definitive, fully registered form
without
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30
interest coupons with the global securities legend and restricted securities
legend set forth in Exhibit A hereto (each, a "Global Security"), which shall be
deposited on behalf of the purchasers of the Initial Securities represented
thereby with the Trustee, at its New York office, as custodian for the
Depository (or with such other custodian as the Depository may direct), and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depository or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply
only to the Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as custodian for the
Depository.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as the
custodian of the Depository or under such Global Security, and the Depository
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices of such Depository governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in this
Section or Section 2.06 or 2.09, owners of
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31
beneficial interests in Global Securities will not be entitled to receive
physical delivery of certificated Securities. Purchasers of Initial Securities
who are not QIBs (referred to herein as the "Non-Global Purchasers") will
receive certificated Initial Securities bearing the restricted securities legend
set forth in Exhibit A hereto ("Definitive Securities"); provided, however, that
upon transfer of such certificated Initial Securities to a QIB, such
certificated Initial Securities will, unless the Global Security has previously
been exchanged, be exchanged for an interest in a Global Security pursuant to
the provisions of Section 2.06. Definitive Securities will bear the restricted
securities legend set forth on Exhibit A unless removed in accordance with this
Section 2.01(c) or Section 2.06(g).
After a transfer of any Initial Securities during the period
of the effectiveness of a Shelf Registration Statement with respect to such
Initial Securities, all requirements pertaining to legends on such Initial
Security will cease to apply, the requirements requiring any such Initial
Security issued to certain Holders be issued in global form will cease to apply,
and a certificated Initial Security without legends will be available to the
transferee of the Holder of such Initial Securities upon exchange of such
transferring Holder's certificated Initial Security or directions to transfer
such Holder's interest in the Global Security, as applicable. Upon the
consummation of a Registered Exchange Offer with respect to the Initial
Securities pursuant to which Holders of such Initial Securities are offered
Exchange Securities in exchange for their Initial Securities, all requirements
pertaining to such Initial Securities that Initial Securities issued to certain
Holders be issued in global form will cease to apply and certificated Initial
Securities with the restricted securities legend set forth in Exhibit A hereto
will be available to Holders of such Initial Securities that do not exchange
their Initial Securities, and Exchange Securities in certificated form will be
available to Holders that exchange such Initial Securities in such Registered
Exchange Offer.
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
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32
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver: (1) Initial
Securities for original issue in an aggregate principal amount at maturity of
$170,000,000 and (2) Exchange Securities for issue only in a Registered Exchange
Offer, pursuant to the Registration Rights Agreement, for a like principal
amount at maturity of Initial Securities, in each case upon a written order of
the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. Such order shall specify the
amount of the Securities to be authenticated and the date on which the original
issue of Securities is to be authenticated and whether the Securities are to be
Initial Securities or Exchange Securities. The aggregate principal amount at
maturity of Securities outstanding at any time may not exceed $170,000,000
except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Secur-
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33
ities and of their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. At least
one Business Day prior to each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest when so becoming due. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Securities and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent (other than the
Trustee) to pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably prac ticable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee is
not the Registrar, the Company shall furnish to the Trustee, in
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34
writing at least five Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Securityholders.
SECTION 2.06. Transfer and Exchange. (a) Transfer and Exchange
of Definitive Securities. When Definitive Securities are presented to the
Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Registrar or co-registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, which are being transferred or exchanged
pursuant to an effective registration statement under the Securities
Act or pursuant to clause (A), (B) or (C) below, and are accompanied by
the following additional information and documents, as applicable:
(A) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from
such Holder to that effect (in the form set forth on the
reverse of the Security); or
(B) if such Transfer Restricted Securities are being
transferred to the Company or to a QIB in accordance with Rule
144A under the Securities
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35
Act, a certification to that effect (in the form
set forth on the reverse of the Security); or
(C) if such Transfer Restricted Securities are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act; or (x) to an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is acquiring the Securities for its own
account, or for the account of such an institutional
accredited investor, in each case in a minimum principal
amount of the Securities of $100,000 for investment purposes
and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act; or
(y) in reliance on another exemption from the registration
requirements of the Securities Act: (i) a certification to
that effect (in the form set forth on the reverse of the
Security), and (ii) if the Company or Registrar so requests,
evidence reasonably satisfactory to them as to the compliance
with the restrictions set forth in the legend set forth in
Section 2.06(g)(i).
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred to a QIB
in accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to
make, or to direct the Securities Custodian to make, an adjustment on
its books and records with respect to such Global Security
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36
to reflect an increase in the aggregate principal
amount of the Securities represented by the Global
Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Security for
a Definitive Security. (i) Any person having a beneficial interest in a Global
Security that is being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause (A), (B)
or (C) below may upon request, and if accompanied by the information specified
below, exchange such beneficial interest for a Definitive Security of the same
aggregate principal amount. Upon receipt by the Trustee of written instructions
or such other form of instructions as is customary for the Depository from the
Depository or its nominee on behalf of any Person having a beneficial interest
in a Global Security and upon receipt by the Trustee of a written order or such
other form of instructions as is customary for the Depository or the person
designated by the Depository as having such a beneficial interest in a Transfer
Restricted Security only, the following additional information and documents
(all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
person designated by the Depository as being the owner of a beneficial
interest in a Global Security, a certification from such Person to that
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37
effect (in the form set forth on the reverse of the
Security); or
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certification
to that effect (in the form set forth on the reverse of the Security);
or
(C) if such beneficial interest is being transferred (w)
pursuant to an exemption from registration in accordance with Rule 144
or Regulation S under the Securities Act; or (x) to an institutional
"accredited investor" as described in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act that is acquiring the security for its own
account, or for the account of such an institutional accredited
investor, in each case in a minimum principal amount of the Securities
of $100,000 for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities; or (y) in reliance on another exemption from the
registration requirements of the Securities Act: a certification to
that effect from the transferee or transferor (in the form set forth on
the reverse of the Security), and (ii) if the Company or Registrar so
requests, evidence reasonably satisfactory to them as to the compliance
with the restrictions set forth in the legend set forth in Section
2.06(g)(i),
then the Trustee or the Securities Custodian, at the direction of the
Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities
Custodian, the aggregate principal amount of the Global Security to be
reduced on its books and records and, following such reduction, the
Company will execute and the Trustee will authenticate and deliver to
the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Securities to
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38
the persons in whose names such Securities are so registered in
accordance with the instructions of the Depository.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.06), a Global
Security may not be transferred as a whole except by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities. If at any time:
(i) the Depository notifies the Company that the Depository is
unwilling or unable to continue as Depository for the Global Securities
and a successor Depository for the Global Securities is not appointed
by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive
Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of a written order
of the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company requesting the authentication
and delivery of Definitive Securities to the Persons designated by the Company,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of Global Securities, in exchange for such
Global Securities.
(g) Legend. (i) Except as permitted by the following paragraph
(ii), each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following form:
"THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED
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39
OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (1) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY SUBSEQUENT
INVESTORS, AS SET FORTH IN (A) ABOVE OR TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, AND, IN EACH CASE (A) AND (B), IN ACCORDANCE WITH
ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Security)
pursuant to Rule 144 under the Securities Act or an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security;
(B) in the case of any Transfer Restricted Security that is
represented by a Global Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a Definitive
Security that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security, if
the Holder's request for such exchange was made in reliance on Rule 144
and the Holder certifies to that effect in writing to the Registrar
(such certification to be in the form set forth on the reverse of the
Security); and
(C) in the case of any Transfer Restricted Security that is
represented by a Global Security, the
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40
Registrar shall permit the Holder thereof to exchange such Transfer
Restricted Security (in connection with the offer to exchange Exchange
Securities for Initial Securities pursuant to the Registration Rights
Agreement) for another Global Security that does not
bear the legend set forth above.
(h) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or canceled, such Global
Security shall be returned to the Depository for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Securities. (i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or similar
governmental charge payable upon exchange or transfer pursuant to Sections 3.06,
4.08 and 9.05).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security selected for
redemption in whole or in part pursuant to Article 3, except the unredeemed
portion of any Definitive Security being redeemed in part, or (b) any Security
for a period beginning 15 Business Days before the mailing of a notice of an
offer to repurchase or redeem Securities or 15 Business Days before an interest
payment date.
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41
(iv) Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt and shall
be entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(j) No Obligation of the Trustee. (i) The Trustee shall have
no responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in the Depository or other Person with respect to
the accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depository) of any notice
(including any notice of redemption) or the payment of any amount, under or with
respect to such Securities. All notices and communications to be given to the
Holders and all payments to be made to Holders under the Securities shall be
given or made only to or upon the order of the registered Holders (which shall
be the Depository or its nominee in the case of a Global Security). The rights
of beneficial owners in any Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures of the Depository. The
Trustee may rely and shall be fully protected in relying upon information
furnished by the Depository with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depository
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
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42
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. (a) Until definitive
Securities are ready for delivery, the Company
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43
may prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for temporary
Securities.
(b) A Global Security deposited with the Depository or with
the Trustee as custodian for the Depository pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof only if such transfer complies with
Section 2.06 and (i) the Depository notifies the Company that it is unwilling or
unable to continue as Depository for such Global Security or if at any time such
Depository ceases to be a "clearing agency" registered under the Exchange Act
and a successor depositary is not appointed by the Company within 90 days of
such notice, or (ii) an Event of Default has occurred and is continuing.
(c) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depository
to the Trustee located in the Borough of Manhattan, The City of New York, to be
so transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of each portion of
such Global Security, an equal aggregate principal amount of Initial Securities
of authorized denominations. Any portion of a Global Security transferred
pursuant to this Section shall be executed, authenticated and delivered only in
denominations of $1,000 and any integral multiple thereof and registered in such
names as the Depository shall direct. Any Initial Security delivered in exchange
for an interest in the Global Security shall, except as otherwise provided by
Section 2.06(b), bear the restricted securities legend set forth in Exhibit A
hereto.
(d) Subject to the provisions of Section 2.09(c), the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(e) In the event of the occurrence of either of the events
specified in Section 2.09(b), the Company will promptly make available to the
Trustee a reasonable supply
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44
of certificated Securities in definitive, fully registered
form without interest coupons.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and return all Securities surrendered for registration of transfer,
exchange, payment or cancellation to the Company. The Company may not issue new
Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed (or upon the Company's failure to do so the Trustee shall fix)
any such special record date and payment date to the reasonable satisfaction of
the Trustee which specified record date shall not be less than 10 days prior to
the payment date for such defaulted interest (unless the Trustee agrees
otherwise) and shall promptly mail or cause to be mailed to each Securityholder
a notice that states the special record date, the payment date and the amount of
defaulted interest to be paid. The Company shall notify the Trustee in writing
of the amount of defaulted interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
person entitled to such defaulted interest as in this subsection provided.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained
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45
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
SECTION 2.13. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities it shall notify the
Trustee in writing of the redemption date and the principal amount at maturity
of Securities to be redeemed.
The Company shall give each notice to the Trustee provided for
in this Section at least 45 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company
shall mail a notice of
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46
redemption by first-class mail to each Holder of Securities
to be redeemed.
The notice shall identify the Securities (including CUSIP
number) to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts at maturity of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and
after the redemption date;
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities; and
(8) the aggregate principal amount of Securities being
redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
The notice, if mailed in the manner provided herein, shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice shall not affect the validity of the proceedings for the redemption
of any Security.
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47
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount at maturity to the unredeemed portion of the Security
surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due and the Trustee or the Paying Agent, as the
case may be, is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it
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48
shall pay interest on overdue installments of interest at the same rate to the
extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be required to be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the SEC and thereupon
provide the Trustee and Securityholders with such annual reports and such
information, documents and other reports which are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, such information, documents and reports to be so filed and provided at
the times specified for the filing of such information, documents and reports
under such Sections. The Company also shall comply with the other provisions of
TIA 'SS' 314(a).
Subject to the terms of this Indenture, delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 4.03. Limitation on Debt. (a) The Company shall not,
and shall not permit any Restricted Subsidiary to, Issue, directly or
indirectly, any Debt; provided, however, that the Company may Issue Debt if at
the date of such Issuance the Cash Flow Leverage Ratio does not exceed the ratio
indicated below for Debt Issued in each period indicated:
Period Ratio
------ -----
Through September 30, 1996 7.0 to 1.0
From October 1, 1996 through
March 31, 1998 6.5 to 1.0
From April 1, 1998
and thereafter 6.0 to 1.0
(b) Notwithstanding Section 4.03(a), the Company and the
Restricted Subsidiaries may Issue the following Debt:
(1) Debt of the Company or Benedek Broadcasting
Issued pursuant to the Bank Credit Agreement (including
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49
Guarantees thereof and any letters of credit Issued thereunder) or any
other agreement or indenture in a principal amount which, when taken
together with the principal amount of all other Debt Issued pursuant to
this clause (1) and then outstanding, does not exceed the greater of
(i) $15,000,000 and (ii) 75% of the book value of the accounts
receivable of the Company and the Restricted Subsidiaries;
(2) Debt of the Company or Benedek Broadcasting Issued
pursuant to the Bank Credit Agreement (including Guarantees thereof and
any letters of credit Issued thereunder) or any other agreement or
indenture in an aggregate principal amount which, when taken together
with the principal amount of all other Debt Issued pursuant to this
clause (2) and then outstanding, does not exceed (A) $128,000,000 less
(B) the lesser of (i) the aggregate amount of all principal repayments
of any such Debt actually made after the Issue Date (other than any
such principal repayments made as a result of the Refinancing of any
such Debt) and (ii) the scheduled principal amortization payments to
have been made by then under the terms of the Bank Credit Agreement
(but without giving effect to any changes to such scheduled principal
payments after the Issue Date);
(3) Debt owed to and held by the Company or a Wholly Owned
Subsidiary; provided, however, that any subsequent Issuance or transfer
of any Capital Stock or any other event which results in any such
Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Debt (other than to a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the Issuance
of such Debt by the issuer thereof;
(4) the Securities and Refinancing Debt of the Company Issued
in respect of any Debt permitted by this clause (4) and Guarantees
thereof (including the accretion of any original issue discount
associated with Debt permitted by this clause (4));
(5) Debt (other than Debt described in clause (1), (2), (3),
or (4) of this Section 4.03(b) (but including the Debt represented by
the Company Pledge Agreement)) outstanding on the Issue Date,
Refinancing Debt in respect of any Debt permitted by this clause (5) or
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50
clause (8) below or by the provisions of Section 4.03(a), Guarantees
of the Senior Secured Notes and Refinancing Debt of the Company in
respect of the Senior Secured Notes;
(6) Debt or Preferred Stock of a Subsidiary Issued and
outstanding on or prior to the date on which such Subsidiary became a
Subsidiary or was acquired by the Company (other than Debt or Preferred
Stock Issued in connection with, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Subsidiary became
a Subsidiary or was acquired by the Company) and Refinancing Debt of
such Subsidiary Issued in respect of any Debt of such Subsidiary
permitted by this clause (6); provided, however, that after giving
effect thereto, except in the case of any Refinancing Debt, the Company
could issue an additional $1.00 of Debt pursuant to Section 4.03(a);
(7) Debt consisting of Guarantees by BLC of Permitted
Acquisition Debt;
(8) Specified Debt of a Restricted Subsidiary; provided,
however, that after giving effect thereto, the Company could Issue an
additional $1.00 of Debt pursuant to Section 4.03(a);
(9) Exchange Debentures Issued in lieu of cash interest
payments with respect to the Exchange Debentures and Refinancing Debt
in respect of any Debt permitted by this clause (9); and
(10) Debt of the Company or any Restricted Subsidiary (in
addition to the Debt permitted to be Issued pursuant to Section 4.03(a)
or in any other clause of this Section 4.03(b)) in an aggregate
principal amount on the Issue Date which, when added to all other Debt
Issued pursuant to this clause (10) and then outstanding, shall not
exceed $15,000,000.
(c) Notwithstanding Sections 4.03(a) and 4.03(b), the Company
shall not Issue any Debt under Section 4.03(b) if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Debt shall be
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51
subordinated to the Securities to at least the same extent as such Subordinated
Obligations.
SECTION 4.04. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or to the direct or indirect
holders of its Capital Stock (except dividends or distributions payable solely
in its Non-Convertible Capital Stock or in options, warrants or other rights to
purchase its Non-Convertible Capital Stock, and except dividends or
distributions payable to the Company or a Subsidiary and, if a Subsidiary is not
wholly owned, to the other stockholders on a pro rata basis), (ii) purchase,
redeem or otherwise acquire or retire for value any Capital Stock of the Company
or of any direct or indirect parent of the Company, (iii) purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition) or (iv) make any Investment in any Affiliate of
the Company other than a Restricted Subsidiary or a person which will become a
Restricted Subsidiary as a result of any such Investment (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition,
retirement or Investment being herein referred to as a "Restricted Payment") if
at the time the Company or such Restricted Subsidiary makes such Restricted
Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company is not able to Issue an additional $1.00 of
Debt pursuant to Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of:
(A) the cumulative Operating Cash Flow (whether
positive or negative) accrued during the period (treated as
one accounting period) from the
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beginning of the fiscal quarter during which the Issue Date
occurs to the end of the most recent fiscal quarter ending at
least 45 days prior to the date of such Restricted Payment
less the product of 1.4 multiplied by the cumulative
Consolidated Interest Expense during such period; provided,
however, that Operating Cash Flow and Consolidated Interest
Expense for the period from the beginning of the fiscal
quarter during which the Issue Date occurs through the Issue
Date shall be calculated on a pro forma basis to give effect
to the Acquisitions, including the financing thereof (as if
the Acquisitions were consummated on the last day of the
fiscal quarter prior to the fiscal quarter during which the
Issue Date occurs);
(B) the aggregate Net Cash Proceeds received by the
Company from the Issue or sale of its Capital Stock (other
than Redeemable Stock or Exchangeable Stock and other than
Exchangeable Preferred Stock and the Seller Junior Discount
Preferred Stock) subsequent to the Issue Date (other than an
Issuance or sale to a Subsidiary or to an employee stock
ownership plan or other trust established by the Company or
any of the Subsidiaries for the benefit of their employees or
to officers, directors or employees to the extent that the
Company or any Subsidiary has outstanding loans or advances to
such employees pursuant to clause (vii) of Section 4.04(b) or
clause (iii) of Section 4.07(b) (all such excluded Capital
Stock being herein collectively called "Excluded Stock")); and
(C) the amount by which indebtedness of the Company
is reduced on the Company's balance sheet upon the conversion
or exchange (other than by a Subsidiary), subsequent to the
Issue Date, of any Debt of the Company that is by its original
terms convertible or exchangeable for Capital Stock (other
than Redeemable Stock or Exchangeable Stock) of the Company
(less the amount of any cash, or other property, distributed
by the Company upon such conversion or exchange);
provided, however, that, for the purposes of the calculation required by this
clause (3), the value of any such
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Restricted Payment, if other than cash, shall be evidenced by a resolution of
the Board of Directors and determined in good faith by the disinterested members
of the Board of Directors; provided further, however, that, in the case of a
distribution or other disposition by the Company of all or substantially all the
assets of a broadcast station or other business unit, the value of any such
Restricted Payment shall be determined by an investment banking firm of national
prominence that is not an Affiliate of the Company.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or
Subordinated Obligations of the Company made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Capital Stock of
the Company (other than Redeemable Stock or Exchangeable Stock and
other than Excluded Stock); provided, however, that (A) such purchase
or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall
be excluded from clauses 3(B) and 3(C) of Section 4.04(a);
(ii) any purchase or redemption of Subordinated Obligations or
the Exchangeable Preferred Stock of the Company made by exchange for,
or out of the proceeds of the substantially concurrent sale of, Debt of
the Company which is permitted to be Issued pursuant to Section 4.03;
provided, however, that such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from
Net Available Cash to the extent permitted by Section 4.06; provided,
however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have
complied with this Section 4.04; provided, however, that at the time of
payment of such dividend, no other Default shall have occurred and be
continuing (or result therefrom); provided further, however, that such
dividend shall be included in the calculation of the amount of
Restricted Payments;
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(v) Investments in Non-Recourse Affiliates in an aggregate
amount (which amount shall be reduced by the amount equal to the net
reduction in Investments in Non-Recourse Affiliates resulting from
payments of dividends, repayments of loans or advances or other
transfers of assets to the Company or any Restricted Subsidiary from
Non-Recourse Affiliates) not to exceed $6,000,000; provided, however,
that the amount of such Investments shall be excluded in the
calculation of the amount of Restricted Payments;
(vi) with respect to each tax period prior to the Issue Date
that Benedek Broadcasting qualifies as an S Corporation under the Code,
or any similar provision of state or local law, distributions of Tax
Amounts; provided, however, that prior to any distribution of Tax
Amounts a duly authorized officer of Benedek Broadcasting certifies to
the Trustee that Benedek Broadcasting qualified as an S Corporation for
Federal income tax purposes for such period and for the states in
respect of which distributions are being made and that at the time of
such distributions, the most recent audited financial statements of
Benedek Broadcasting provide that Benedek Broadcasting was treated as
an S Corporation for Federal income tax purposes for the applicable
portion of the period of such financial statements; provided further,
however, that the amount of such distributions shall be excluded in the
calculation of the amount of Restricted Payments;
(vii) loans or advances to officers and directors of the Company
(other than a Restricted Holder) (A) in the ordinary course of business
in an aggregate amount outstanding not in excess of $1,000,000 or (B)
the proceeds of which are used to acquire Capital Stock of the Company
(other than Redeemable Stock or Exchangeable Stock); provided further,
however, that such loans and advances shall be excluded in the
calculation of the amount of Restricted Payments;
(viii) the retirement of the Exchangeable Preferred Stock through
the Issuance of the Exchange Debentures; provided, however, the amount
thereof shall be excluded in the calculation of the amount of
Restricted Payments; or
(ix) cash dividends or distributions payable to
holders of Exchangeable Preferred Stock as Liquidated
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Damages (as defined in the Certificate of Designation governing such
Exchangeable Preferred Stock) in an aggregate amount not to exceed
$300,000; provided, however, that the amount of such dividends or
distributions shall be included in the calculation of the amount of
Restricted Payments.
The Company shall not be permitted to make distributions
pursuant to clause (vi) above (1) unless and until the Company has entered into
a binding written agreement with each stockholder (copies of which will be
promptly furnished to the Trustee prior to the making of any such distribution)
providing that if any amount distributed to such stockholder pursuant to such
clause (vi) is later determined to have been, as a result of a change in
applicable law or the failure of Benedek Broadcasting to effect or maintain a
valid S Corporation election or otherwise, in excess of the amount permitted to
be distributed or paid under such clause (vi), such excess shall be refunded to
the Company at least five Business Days prior to the next due date of individual
estimated income tax payments and (2) in the event it has been determined that
any such excess distribution or payment has been made, unless the Company has
requested and received all refunds pursuant to such agreements.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Debt owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any Debt
Issued by such Restricted Subsidiary on or prior to the date on which
such Restricted Subsidiary was acquired by the Company (other than Debt
Issued as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate,
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the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was
acquired by the Company) and outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Debt Issued pursuant to an agreement
referred to in clause (1) or (2) of this Section 4.05 or contained in
any amendment to an agreement referred to in clause (1) or (2) of this
Section 4.05; provided, however, that the encumbrances and restrictions
contained in any such Refinancing agreement or amendment are no less
favorable to the Securityholders than encumbrances and restrictions
contained in such agreements;
(4) any such encumbrance or restriction consisting of
customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the
lease;
(5) in the case of clause (iii) above, restrictions contained
in security agreements securing Debt of a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject
to such security agreements; and
(6) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, make any Asset Disposition unless (i) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset Disposition at least
equal to the fair market value, as determined in good faith by the Board of
Directors (including as to the value of all non-cash consideration), of the
shares and assets subject to such Asset Disposition and at least 90% of the
consideration thereof received by the Company or such Restricted Subsidiary is
in the form of cash and (ii) an amount equal to 100% of the Net Available Cash
from such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be) (A) first, to the
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57
extent the Company elects (or is required by the terms of any Senior Debt), to
prepay, repay or purchase Senior Debt or Debt (other than any Redeemable Stock)
of a Wholly Owned Subsidiary (in each case other than Debt owed to the Company
or an Affiliate of the Company) within 60 days from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (B) second, to
the extent of the balance of such Net Available Cash after application in
accordance with clause (A), at the Company's election to the investment by the
Company or any Restricted Subsidiary in assets to replace the assets that were
the subject of such Asset Disposition or in assets that, as determined by the
Board of Directors and evidenced by resolutions of the Board of Directors, will
be used in the businesses of the Company and its Restricted Subsidiaries
existing on the Issue Date or in businesses reasonably related thereto, in all
cases within 270 days after the later of the date of such Asset Disposition or
the receipt of such Net Available Cash; (C) third, to the extent the Company is
entitled pursuant to then existing contractual limitations to receive dividends
and distributions from the relevant Restricted Subsidiary and of the balance of
such Net Available Cash after application in accordance with clauses (A) and
(B), to make an offer pursuant to and subject to the conditions contained in
this Indenture to the Holders (and to holders of other Senior Subordinated Debt
designated by the Company) to purchase Securities (and such other Senior
Subordinated Debt) at a purchase price of 100% of the Accreted Value thereof
(without premium) plus accrued and unpaid interest (or in respect of such other
Senior Subordinated Debt such lesser price, if any, as may be provided for by
the terms of such other Senior Subordinated Debt); and (D) fourth, to the extent
of the balance of such Net Available Cash after application in accordance with
clauses (A), (B) and (C), to (x) the acquisition by the Company or any
Restricted Subsidiary of assets to replace the assets that were the subject of
such Asset Disposition or assets that, as determined by the Board of Directors
and evidenced by resolutions of the Board of Directors, will be used in the
businesses of the Company and its Restricted Subsidiaries existing on the Issue
Date or in businesses reasonably related thereto or (y) the prepayment,
repayment or purchase of Debt (other than any Redeemable Stock) of the Company
(other than Debt owed to an Affiliate of the Company) or Debt of any Restricted
Subsidiary (other than Debt owed to the Company or an Affiliate of the Company),
in each case within 360 days after the later of the receipt of such Net
Available Cash and the date the offer described in clause (C) is
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58
consummated; provided, however, that, in connection with any prepayment,
repayment or purchase of Debt pursuant to clause (A), (C) or (D) above, the
Company or such Restricted Subsidiary shall retire such Debt and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions of this Section 4.06, the Company and the Restricted
Subsidiaries shall not be required to apply any Net Available Cash (other than
Net Available Cash from an Asset Disposition consisting of a Sale/Leaseback
Transaction that the Company has elected to treat as an Asset Disposition
pursuant to Section 4.10(ii)) in accordance with this Section 4.06 except to the
extent that the aggregate Net Available Cash from all Asset Dispositions which
are not applied in accordance with this Section 4.06 exceeds $5,000,000. The
Company shall not permit any Non-Recourse Subsidiary to make any Asset
Disposition unless such Non-Recourse Subsidiary receives consideration at the
time of such Asset Disposition at least equal to the fair market value of the
shares or assets so disposed of. Pending application of Net Available Cash
pursuant to this Section 4.06, such Net Available Cash shall be invested in
Permitted Investments.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Subordinated Debt) pursuant to Section
4.06(a)(ii)(C), the Company will be required to purchase Securities tendered
pursuant to an offer by the Company for the Securities (and other Senior
Subordinated Debt) (the "Offer") at a purchase price set forth in Section
4.06(a) in accordance with the procedures (including prorating in the event of
over-subscription) set forth in Section 4.06(c). The Company shall not be
required to make an Offer pursuant to this Section 4.06 if the Net Available
Cash available therefor is less than $5,000,000 for any particular Asset
Disposition (which lesser amount shall be carried forward for purposes of
determining whether an Offer is required with respect to any subsequent Asset
Disposition).
(c)(1) Promptly, and in any event within 30 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer
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59
is oversubscribed) in integral multiples of $1,000 of principal amount, at the
applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
Date") and shall contain information concerning the business of the Company
which the Company in good faith believes will enable such Holders to make an
informed decision (which at a minimum will include (i) the most recently filed
Annual Report on Form 10-K (including audited consolidated financial statements)
of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q
and any Current Report on Form 8-K of the Company filed subsequent to such
Quarterly Report, other than Current Reports describing Asset Dispositions
otherwise described in the offering materials (or corresponding successor
reports), (ii) a description of material developments in the Company's business
subsequent to the date of the latest of such Reports, and (iii) if material,
appropriate pro forma financial information) and all instructions and materials
necessary to tender Securities pursuant to the Offer, together with the
information contained in clause (3) below.
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (i) the amount of the Offer (the
"Offer Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, aggregate and hold in
trust) in immediately available funds an amount equal to the Offer Amount to be
held for payment in accordance with the provisions of this Section 4.06. Upon
the expiration of the period for which the Offer remains open (the "Offer
Period"), the Company shall deliver to the Trustee the Securities or portions
thereof which have been properly tendered to and are to be accepted by the
Company. The Trustee shall, on the Purchase Date, mail or deliver payment to
each tendering Holder in the amount of the purchase price. In the event that the
aggregate purchase price of the Securities delivered by the Company to the
Trustee is less than the Offer Amount, the Trustee shall deliver the excess to
the Company promptly after the expiration of the Offer Period.
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60
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with the form set forth on the reverse of
the Security duly completed, to the Company at the address specified in the
notice at least ten Business Days prior to the Purchase Date. Holders will be
entitled to withdraw their election if the Trustee receives not later than three
Business Days prior to the Purchase Date, a facsimile transmission (promptly
confirmed in writing) or letter (a copy of which the Trustee shall give to the
Company not later than one Business Day prior to the Purchase Date) setting
forth the name of the Holder, the principal amount at maturity of the Security
which was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased. If at the
expiration of the Offer Period the aggregate principal amount of Securities
surrendered by Holders, together with the aggregate purchase price of the other
Senior Subordinated Debt surrendered in connection with the Offer, exceeds the
Offer Amount, the Company shall select the Securities and such other Senior
Subordinated Debt to be purchased on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company so that only Securities having a
principal amount at maturity of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be Issued
new Securities equal in principal amount at maturity to the unpurchased portion
of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company will also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company pursuant to and in accordance with the terms of this Section. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.06. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
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61
have breached its obligations under this Section 4.06 by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
conduct any business or enter into any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company unless the terms
of such business, transaction or series of transactions are as favorable to the
Company or such Restricted Subsidiary as terms that would be obtainable at the
time for a comparable transaction or series of similar transactions in
arm's-length dealings with an unrelated third person; provided, however, that,
in the case of any transaction or series of related transactions involving
aggregate payments or other transfers by the Company and its Restricted
Subsidiaries in excess of (i) $1,000,000, the Company shall deliver an Officers'
Certificate to the Trustee certifying that the terms of such business,
transaction or series of transactions (x) comply with this Section 4.07, (y)
have been set forth in writing and (z) have been determined in good faith by the
disinterested members of the Board of Directors to satisfy the criteria set
forth in this Section 4.07 and (ii) $5,000,000, the Company shall also deliver
to the Trustee an opinion from an investment banking firm of national prominence
that is not an Affiliate of the Company to the effect that such business,
transaction or transactions are fair to the Company or such Restricted
Subsidiary from a financial point of view.
(b) The provisions of Section 4.07(a) shall not
prohibit:
(i) any Restricted Payment permitted to be paid pursuant to
Section 4.04;
(ii) any Issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors in the ordinary course of business
and consistent with industry practices;
(iii) loans or advances to employees of the Company and the
Subsidiaries (other than Restricted Holders) (A) in the ordinary course
of business in an aggregate
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62
amount outstanding not to exceed $1,000,000 or (B) the proceeds of
which are used to acquire from the Company Capital Stock of the Company
(other than Redeemable Stock or Exchangeable Stock);
(iv) the payment of reasonable fees to directors of the Company
and its Subsidiaries (other than a Restricted Holder) who are not
employees of the Company or its Subsidiaries;
(v) salaries to employees in the ordinary course
of business and consistent with industry practices; and
(vi) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries; provided, however, that
no portion of the minority interest in any such Restricted Subsidiary
is owned by an Affiliate (other than the Company or a Wholly Owned
Subsidiary) of the Company.
SECTION 4.08. Change of Control. (a) Upon a Change of Control,
each Holder shall have the right to require that the Company repurchase all or
any part of such Holder's Securities at a purchase price in cash equal to 101%
of the Accreted Value thereof plus accrued and unpaid interest, if any, to the
date of repurchase, in accordance with the terms contemplated in Section 4.08(b)
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee stating:
(i) that a Change of Control has occurred and that such Holder
has the right to require the Company to repurchase all or any part of
such Holder's Securities at a repurchase price in cash equal to 101% of
the Accreted Value thereof plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant
interest payment date);
(ii) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical
income, cash flow and
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63
capitalization after giving effect to such Change of Control);
(iii) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(iv) the instructions determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Securities
repurchased.
(c) Holders electing to have a Security repurchased will be
required to surrender the Security, with the form set forth on the reverse of
the Security duly completed, to the Company at the address specified in the
notice at least 10 Business Days prior to the repurchase date. Holders will be
entitled to withdraw their election if the Trustee receives not later than three
Business Days prior to the repurchase date, a facsimile transmission (promptly
confirmed in writing) or letter (a copy of which the Trustee shall give to the
Company not later than one Business Day prior to the repurchase date) setting
forth the name of the Holder, the principal amount at maturity of the Security
which was delivered for repurchase by the Holder and a statement that such
Holder is withdrawing his election to have such Security repurchased.
(d) On the repurchase date, all Securities repurchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the repurchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.08, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue thereof.
SECTION 4.09. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, create, incur or suffer to exist
any Lien upon any of its property or assets now owned or hereafter acquired by
it
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64
securing any Debt that is expressly junior or subordinate in right of payment to
any other Debt of the Company, unless contemporaneously therewith effective
provision is made for securing the Securities equally and ratably with such Debt
as to such property for so long as such obligation will be so secured.
SECTION 4.10. Limitation on Sale/Leaseback Transactions. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
a Sale/Leaseback Transaction unless (i) the Company would be able to incur Debt
in an amount equal to the Attributable Debt with respect to such Sale/Leaseback
Transaction secured by a Lien pursuant to Section 4.03 and Section 4.09 or (ii)
the Company or such Restricted Subsidiary receives consideration from such Sale/
Leaseback Transaction at least equal to the fair market value of the property
subject thereto (which shall be determined in good faith by the Board of
Directors and evidenced by a resolution of the Board of Directors) and elects to
treat the disposition of assets subject to such Sale/Leaseback Transaction as
an Asset Disposition subject to Section 4.06.
SECTION 4.11. Limitation on Guarantees Issued by BLC. The
Company shall not permit BLC to issue, directly or indirectly, any Guarantee of
any Debt of the Company that is expressly by its terms junior or subordinate in
right of payment to any other Debt of the Company, unless contemporaneously
therewith effective provision is made to Guarantee the Securities equally and
ratably with, or prior thereto, such Debt for so long as such Debt is so
Guaranteed.
SECTION 4.12. Limitation on Subordinated Debt. The Company
shall not issue any Debt if such Debt is subordinated or junior in ranking in
any respect to any Senior Debt, unless such Debt is Senior Subordinated Debt or
is expressly subordinated in right of payment to Senior Subordinated Debt.
SECTION 4.13. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default by the Company and whether or not the signers know
of any Default that occurred during such period. If they do, the certificate
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65
shall describe the Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with TIA
'SS' 314(a)(4). One of the Officers signing such Officers' Certificate shall be
the principal executive, principal financial or principal accounting officer of
the Company.
SECTION 4.14. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any person, unless:
(i) the resulting, surviving or transferee person (if not the
Company) shall be a person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and such entity shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the Securities
and this Indenture;
(ii) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of the
resulting, surviving or transferee person or any Subsidiary as a result
of such transaction as having been incurred by such person or such
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
resulting, surviving or transferee person (in the case of a transaction
involving the Company) would be able to Issue an additional $1.00 of
Debt pursuant to Section 4.03(a);
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66
(iv) immediately after giving effect to such transaction, the
resulting, surviving or transferee person shall have Consolidated Net
Worth in an amount which is not less than the Consolidated Net Worth of
the Company prior to such transaction; and
(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
The resulting, surviving or transferee person shall be the
successor Company and shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture, but the predecessor
Company in the case of a conveyance, transfer or lease shall not be released
from the obligation to pay the principal of and interest on the Securities.
SECTION 5.02. When Benedek Broadcasting May Merge or Transfer
Assets. The Company shall not permit Benedek Broadcasting to consolidate or
merge with or into, or convey, transfer or lease all or substantially all its
assets to, any person, unless:
(i) the resulting, surviving or transferee person (if not
Benedek Broadcasting) shall be organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia;
(ii) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of the
resulting, surviving or transferee person or any Subsidiary as a result
of such transaction as having been incurred by such person or such
Subsidiary at the time of such transaction), no Default has occurred
and is continuing;
(iii) immediately after giving effect to such transaction, the
Company would be able to issue an additional $1.00 of Debt pursuant to
Section 4.03(a); and
(iv) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer complies with this Indenture.
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ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of
Default" occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable and such default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise;
(3) the Company fails to comply with Section 5.01
or Section 5.02;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 or 4.12 (in each case, other
than a failure to purchase Securities) and such failure continues for
30 days after the notice specified below;
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in (1),
(2), (3) or (4) above) and such failure continues for 60 days after the
notice specified below;
(6) Debt of the Company, BLC or any Significant Subsidiary is
not paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default, the total
amount of such Debt unpaid or accelerated exceeds $5,000,000 and such
default continues for 10 days after the notice specified below;
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68
(7) the Company, BLC or any Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company, BLC or
any Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company, BLC
or any Significant Subsidiary or for any substantial part of
its property; or
(C) orders the winding up or liquidation of
the Company, BLC or any Significant Subsidiary;
or any similar relief is granted under any foreign laws
and the order or decree remains unstayed and in effect
for 60 days;
(9) any judgment or decree for the payment of money in excess
of $5,000,000 is entered against the Company, BLC or any Significant
Subsidiary and is not discharged and there is a period of 60 days
following the entry of such judgment or decree during which such
judgment or decree is not discharged, waived or the execution thereof
stayed and such default continues for 10 days after the notice
specified below; or
(10) the Company, Benedek Broadcasting, BLC or a Significant
Subsidiary fails to maintain any License or Licenses with respect to a
Television Station or
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Television Stations owned by it which License is necessary for
continued transmission of such Television Station's normal programming
and the Operating Cash Flow for the most recently completed four fiscal
quarters of the Company of such Television Station or Television
Stations exceeds 10% of the Operating Cash Flow of the Company for such
period.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5), (6) or (9) is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities notify the Company of the Default and the Company
does not cure such Default within the time specified after receipt of such
Notice. Such Notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 10 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (10) and of any event which with the giving
of notice and the lapse of time would become an Event of Default under clause
(4), (5), (6) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company and the Trustee, may declare the Accreted Value of and
accrued but unpaid interest on all the Securities to be due and payable. Upon
such a declaration, such principal and interest shall
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be due and payable immediately. If an Event of Default specified in Section
6.01(7) or (8) with respect to the Company occurs and is continuing, the
Accreted Value of and accrued but unpaid interest on all the Securities shall
ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Securityholders. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay at such time if the Company then had elected to redeem the
Securities pursuant to Article 3 and paragraph 5 of the Securities, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law upon the acceleration of the Securities. If an Event of
Default occurs prior to May 15, 2000 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Securities prior to May 15,
2000, pursuant to Article 3 and paragraph 5 of the Securities, then the premium
payable for purposes of this paragraph shall be as set forth in the following
table
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expressed as a percentage of the Accreted Value, plus accrued interest, if any,
to the date of payment if the Event of Default occurs during the 12-month period
commencing May 15:
Percentage of
Year Accreted Value
---- ---------------
1996 ...................... 113.250%
1997 ...................... 113.250%
1998 ...................... 113.250%
1999 ...................... 111.042%
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
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(2) the Holders of at least 25% in principal amount
outstanding of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or principal specified in Section 6.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid (together with interest on such unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
person performing similar functions, and any Custodian in any such
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judicial proceeding is hereby authorized by each Holder to make payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee under
Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Debt to the extent required by
Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
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SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished in accordance with this Indenture to the Trustee and
conforming to the requirements of this Indenture. However, in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely and
shall be protected in acting or refraining from acting on any document believed
by it to be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the document.
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(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 10 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any
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Security (including payments pursuant to the mandatory redemption provisions of
such Security), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with TIA 'SS' 313(a), if such report is required by TIA 'SS' 313(a).
The Trustee also shall comply with TIA 'SS' 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time such compensation as the Trustee and the
Company shall agree in writing for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company shall indemnify
each of the Trustee or any predecessor Trustee against any and all loss,
liability, damage, claim or expense (including attorneys' fees and expenses and
including taxes (other than taxes based on the income of the Trustee)) incurred
by it in connection with the acceptance or administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee may have separate
counsel and the Company shall pay the fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee
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through the Trustee's own wilful misconduct, negligence or
bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture.
When the Trustee incurs expenses after the occurrence of a
Default specified in Section 6.01(7) or (8) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held
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by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor Trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA 'SS' 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
'SS' 310(b); provided, however, that
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there shall be excluded from the operation of TIA 'SS' 310(b)(1) any indenture
or indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA 'SS' 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA 'SS' 311(a), excluding any creditor
relationship listed in TIA 'SS' 311(b). A Trustee who has resigned or been
removed shall be subject to TIA 'SS' 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Sections 8.01(c) and 8.06, cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company at
any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 5.01(iii),
5.01(iv) or the Company's obligations under 5.02(iii) and the operation of
Sections 6.01(3), 6.01(4), 6.01(6), 6.01(7) (only with respect to Significant
Subsidiaries), 6.01(8) (only with respect to Significant Subsidiaries), 6.01(9)
and 6.01(10)
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("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(4), 6.01(6), 6.01(7) (only with respect to
Significant Subsidiaries), 6.01(8) (only with respect to Significant
Subsidiaries), 6.01(9) and 6.01(10) or because of the failure of the Company to
comply with 5.01(iii), 5.01(iv) or the failure of the Company to comply with
5.02(iii).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of the Accreted
Value, premium (if any) and interest on the Securities to maturity or
redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations
plus any deposited money without investment will provide cash at such
times and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as
the case may be;
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(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) no Default has occurred and is continuing on the date of
such deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(6) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(7) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(9) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance
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and discharge of the Securities as contemplated by this
Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon written request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal or interest that remains unclaimed for
two years, and, thereafter, Securityholders entitled to the money must look to
the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the
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reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 that would limit or
terminate the benefits available to any holder of Senior Debt (or
Representatives therefor) under Article 10;
(5) to add Guarantees with respect to the
Securities or to secure the Securities;
(6) to add to the covenants of the Company for the
benefit of the Holders or to surrender any right or
power herein conferred upon the Company;
(7) to comply with any requirements of the SEC in
connection with qualifying this Indenture under the
TIA; or
(8) to make any change that does not adversely
affect the rights of any Securityholder.
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Notwithstanding the foregoing, no amendment may be made to
Article 10 of this Indenture that adversely affects the rights of any holder of
any Senior Debt then outstanding unless the holders of such Senior Debt (or
their Representative) consent to such change.
After an amendment under this Section 9.01 becomes effective,
the Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding. However,
without the consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may or must be
redeemed in accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Article 10 that adversely affects the
rights of any Securityholder under Article 10; or
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of
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any proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.
An amendment under this Section 9.02 may not make any change
that adversely affects the rights under Article 10 of any holder of Senior Debt
then outstanding unless the holders of such Senior Debt (or any group or
representative therefor authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those persons who were
Securityholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
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SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee to Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company, any
Affiliate of the Company nor any Subsidiary shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid or agreed to be paid to all
Holders which so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
ARTICLE X
Subordination
SECTION 10.01. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the payment of the
principal of and interest on and premiums, penalties, fees and other liabilities
in respect of the Securities (collectively, the "Subordinated Payment
Obligations") are subordinated in right of payment, to the extent and in the
manner provided
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88
in this Article 10, to the prior payment in full in cash or cash equivalents of
all Senior Debt, whether outstanding on the Issue Date or thereafter incurred,
including the Company's guarantee of Benedek Broadcasting's obligations under
the Bank Credit Agreement and with respect to the Senior Secured Notes, and that
the subordination is for the benefit of and enforceable by the holders of Senior
Debt. For purposes of this Article 10, Senior Debt outstanding under the Bank
Credit Agreement shall not be deemed paid in full in cash or cash equivalents at
any time unless all letters of credit outstanding under the Bank Credit
Agreement which have not been drawn upon at such time are fully cash
collateralized or returned undrawn. All provisions of this Article 10 shall be
subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Debt shall be entitled to receive
payment in full in cash or cash equivalents of such Senior Debt before
Securityholders shall be entitled to receive any payment of principal
of, or premium, if any, or interest on the Securities or on any other
Subordinated Payment Obligation; and
(2) until the Senior Debt is paid in full in cash or cash
equivalents, any payment or distribution to which Securityholders would
be entitled but for this Article 10 shall be made to holders of Senior
Debt as their interest may appear, except that so long as the
Securityholders are not in the same or a higher class of creditors in
such liquidation, dissolution or proceeding as the holders of the
Senior Debt, Securityholders may receive shares of stock and any debt
securities that are subordinated to Senior Debt to at least the same
extent as the Securities.
SECTION 10.03. Default on Senior Debt. The Company may not pay
the principal of, premium, if any, interest on or any other Subordinated Payment
Obligation in respect of the Securities or make any deposit pursuant to Article
8 and may not repurchase, redeem or otherwise retire
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89
any Securities (collectively, "pay the Securities") if (i) any Designated Senior
Debt is not paid when due or (ii) any other default on Designated Senior Debt
occurs and the maturity of such Designated Senior Debt is accelerated in
accordance with its terms unless, in either case, (x) the default has been cured
or waived and any such acceleration has been rescinded or (y) such Designated
Senior Debt has been paid in full in cash or cash equivalents; provided,
however, that the Company may pay the Securities without regard to the foregoing
if the Company and the Trustee receive written notice approving such payment
from the Representative of such Designated Senior Debt with respect to which
either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing. Upon the occurrence and
during the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Designated Senior
Debt pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company may
not pay the Securities for a period (a "Payment Blockage Period") commencing
upon the receipt by the Trustee (with a copy to the Company) of written notice
of such default from the Representative of such Designated Senior Debt
specifying an election to effect a Payment Blockage Period (a "Payment Blockage
Notice") and ending 179 days thereafter (or earlier if such Payment Blockage
Period is terminated (i) by written notice to the Trustee and the Company from
the Representative of such Designated Senior Debt or the Person or Persons who
gave such Payment Blockage Notice, (ii) by repayment in full in cash or cash
equivalents of such Designated Senior Debt or (iii) because the default giving
rise to such Payment Blockage Notice is no longer continuing). Notwithstanding
anything in the foregoing to the contrary, a Payment Blockage Notice may only be
given by and therefore shall only be effective in respect of the Company and the
Trustee if given by (i) the Representative of the Bank Debt as long as any Bank
Debt is outstanding or the Representative of the Senior Secured Notes as long as
any Senior Secured Notes are outstanding and (ii) if no Bank Debt or Senior
Secured Notes are outstanding, any other Representative of outstanding
Designated Senior Debt. Notwithstanding the provisions described in the
immediately preceding sentence, unless the holders of such Designated Senior
Debt or the Representative of such holders shall have accelerated the maturity
of such Designated Senior Debt, the
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90
Company may, subject to the provisions contained in the first sentence of this
paragraph, resume payments on the Securities after such Payment Blockage Period
has terminated. Not more than one Payment Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Debt during such period. For purposes of this Section, no
default or event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Debt initiating such Payment Blockage Period shall be, or be made, the
basis of the commencement of a subsequent Payment Blockage Period by the
Representative of such Designated Senior Debt whether or not within a period of
360 consecutive days unless such default or event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
SECTION 10.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company shall promptly notify the holders of the Designated Senior Debt or their
Representative of the acceleration.
SECTION 10.05. When Distribution Must Be Paid Over. If any
distribution is made to Securityholders or the Trustee that because of this
Article 10 should not have been made to them, the Securityholders who receive
the distribution, or subject to Section 10.15, the Trustee, as the case may be,
shall segregate such distribution from other funds or assets, hold it in trust
for holders of Senior Debt and immediately pay or deliver it over to them
ratably in accordance with the respective amounts of Senior Debt held or
represented by each of them until all Senior Debt is paid in full in cash or
cash equivalents.
SECTION 10.06. Subrogation. After all Senior Debt is paid in
full in cash or cash equivalents and until the Securities are paid in full in
cash or cash equivalents, Securityholders shall be subrogated to the rights of
holders of Senior Debt to receive distributions applicable to Senior Debt. A
distribution made under this Article 10 to holders of Senior Debt which
otherwise would have been made to Securityholders is not, as between the Company
and Securityholders, a payment by the Company on Senior Debt.
SECTION 10.07. Relative Rights. This Article 10 defines the
relative rights of Securityholders and holders of Senior Debt. Nothing in this
Indenture shall:
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91
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of, premium, if any, and interest on the Securities in
accordance with their terms; or
(2) except as set forth in Section 10.04, prevent the Trustee
or any Securityholder from exercising its available remedies upon a
Default, subject to the rights of holders of Senior Debt to receive
distributions otherwise payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company or
Holders of Senior Debt. No right of any present or future holder of any Senior
Debt to enforce the subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Securityholders, without
incurring responsibilities to the Securityholders and without impairing or
releasing the subordination provided in this Article 10 or the obligations
hereunder of the Securityholders to the holders of Senior Debt, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, the Senior Debt, or otherwise
amend or supplement in any manner the Senior Debt or instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, foreclose, release or otherwise deal with any property, pledged,
mortgaged or otherwise securing Senior Debt; (iii) release any Person liable in
any manner for the collection of Senior Debt and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
If at any time any payments with respect to any Senior Debt
are rescinded or must otherwise be returned upon the insolvency, bankruptcy,
reorganization or liquidation of the Company, the provisions of this Article 10
shall continue to be effective or reinstated, as the case may be,
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92
to the same extent as though such payments had not been made.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Sections 10.03 and 10.05, the Trustee or Paying Agent may
continue to make payments on the Securities and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than one Business Day prior to the date of such
payment, a Trust Officer of the Trustee receives written notice in accordance
with this Indenture that payments may not be made under this Article 10. The
Company, the Registrar or co-registrar, the Paying Agent, a Representative or a
holder of Senior Debt may give the written notice; provided, however, that, if
an issue of Senior Debt has a Representative, only the Representative may give
the written notice. If an issue of debt has no Representative, the provider of
notice shall state at the time such notice is given, that he is giving notice in
lieu of such Representative.
The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 10 with respect to any Senior Debt which may at any time be held by it,
to the same extent as any other holder of Senior Debt; and nothing in Article 7
shall deprive the Trustee of any of its rights as such a holder. Nothing in this
Article 10 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice of Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Debt, the distribution may be made and the notice given to their Representative
(if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 10 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 10 shall have
any effect on the right of the Securityholders or the Trustee to accelerate the
maturity of the Securities.
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93
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust by the Trustee for the payment of
principal of and interest on the Securities shall not be subordinated to the
prior payment of any Senior Debt or subject to the restrictions set forth in
this Article 10, and none of the Securityholders shall be obligated to pay over
any such amount to the Company or any holder of Senior Debt of the Company or
any other creditor of the Company.
SECTION 10.13. Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior Debt
for the purpose of ascertaining the persons entitled to participate in such
payment or distribution, the holders of the Senior Debt and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article 10, In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article 10, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such person, the extent to which such person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such person
under this Article 10, and, if such evidence is not furnished, the Trustee may
defer any payment to such person pending judicial determination as to the right
of such person to receive such payment. Subject to Section 10.15, the provisions
of Section 7.01 and 7.02 shall be applicable to all action or omissions of
actions by the Trustee pursuant to this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the
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94
Securityholders and the holders of Senior Debt as provided in this Article 10
and appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary For Holders of Senior
Debt. The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Debt and shall not be liable to any such holders if it shall
mistakenly (in the absence of gross negligence or wilful misconduct) pay over or
distribute to Securityholders or the Company or any other person, money or
assets to which any holders of Senior Debt shall be entitled by virtue of this
Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Debt on
Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Debt, whether such Senior Debt was created or acquired before or after the
issuance of the Securities, to acquire and continue to hold, or to continue to
hold, such Senior Debt and such holder of Senior Debt shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Debt.
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
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95
SECTION 11.02. Notices. Any notice or communication shall
be in writing and delivered in person or mailed by first-class mail addressed
as follows:
if to the Company:
Benedek Communications Corporation
Stewart Square, Suite 210
308 West State Street
Rockford, Illinois 61101
Attention: Chief Financial Officer
if to the Trustee:
United States Trust Company of New York
114 W. 47th Street, 15th Floor
New York, New York 10036
Attention: Corporate Trust Agency Division
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed. Notice to the Trustee shall be sufficiently
given only when received.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA 'SS' 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA 'SS' 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by
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96
the Company to the Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such covenant or condition has been complied with.
SECTION 11.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or
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97
consent, only Securities which the Trustee actually knows are so owned shall be
so disregarded. Also, subject to the foregoing, only Securities outstanding at
the time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 11.08. Legal Holidays. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 11.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 11.13 Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted
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98
for convenience of reference only, are not intended to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.
<PAGE>
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99
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
BENEDEK COMMUNICATIONS
CORPORATION,
by
----------------------------------
Name:
Title:
Attest:
- -----------------------------
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee,
by
----------------------------------
Name:
Title:
Attest:
- -----------------------------
<PAGE>
<PAGE>
EXHIBIT A
TO INDENTURE
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY
THE INITIAL INVESTOR (1) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY
SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE OR TO AN INSTITUTIONAL
ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND IN EACH CASE (A) AND (B) IN
<PAGE>
<PAGE>
2
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES.
[Original Issue Discount Legend]
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING
THE UNITED STATES FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT RULES TO THIS
SECURITY. THE ISSUE DATE OF THIS SECURITY IS JUNE 6, 1996. THE ISSUE PRICE OF
THIS SECURITY IS $530.46. THIS SECURITY IS ISSUED WITH $1,153.99 OF ORIGINAL
ISSUE DISCOUNT PER $1,000 OF INITIAL PRINCIPAL AMOUNT. THE YIELD TO MATURITY OF
THIS SECURITY IS 13-1/4%.
<PAGE>
<PAGE>
3
No. $
CUSIP:
13-1/4% Senior Subordinated Discount Note Due 2006
BENEDEK COMMUNICATIONS CORPORATION, a Delaware corporation,
promises to pay to , or registered assigns, the principal sum of
Dollars on May 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth on the
other side of this Security.
BENEDEK COMMUNICATIONS
CORPORATION,
by
----------------------------------
Vice President
----------------------------------
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
United States Trust Company
of New York, as Trustee,
certifies that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
BENEDEK COMMUNICATIONS CORPORATION
13-1/4% Senior Subordinated Discount Note Due 2006
1. Interest.
Benedek Communications Corporation, a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above; provided, however, that if (i) the applicable Registration Statement is
not filed with the SEC on or prior to 60 days after the Issue Date, (ii) unless
the Exchange Offer would not be permitted by a policy of the Commission, the
Exchange Offer Registration Statement (as defined in the Registration Rights
Agreement) is not declared effective on or prior to 120 days after the Issue
Date, (iii) neither the Exchange Offer is consummated nor the Shelf Registration
Statement is declared effective on or prior to 150 days after the Issue Date, or
(iv) after a Registration Statement is declared effective, such Registration
Statement thereafter ceases to be effective or such Registration Statement or
the related prospectus ceases to be usable (subject to certain exceptions) in
connection with resales of Transfer Restricted Securities during the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (i) through (iv), a "Registration Default"), additional cash interest
will accrue on this Security at a rate of 0.50% per annum from and including the
date on which any such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured, calculated on the
Accreted Value of the Securities as of the Specified Date on which such interest
is payable. Such interest is payable in addition to any other interest payable
from time to time with respect to the Securities.
Prior to May 15, 2001, except as described above, no interest
will accrue on the Securities. From and after May 15, 2001, interest on the
Securities will accrue at the rate shown on the face of this Security and will
be payable semiannually in arrears on each May 15 and November 15, commencing
November 15, 2001. Interest on the Securities will accrue from the most recent
date to which interest has
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<PAGE>
2
been paid or, if no interest has been paid, from May 15, 2001. For Federal
income tax purposes, Holders of Securities will be required to recognize
interest income in respect of the Securities in the form of original issue
discount in advance of the receipt of cash payments to which such income is
attributable. Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal at the rate
borne by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment.
The Company will pay interest on the Securities (except defaulted interest) to
the persons who are registered holders of Securities at the close of business on
the May 1 or November 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of the
Definitive Securities (including principal and interest), by mailing a check to
the registered address of each Holder thereof; provided, however, that payments
on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York, a New York banking
corporation ("Trustee"), will act as Paying
<PAGE>
<PAGE>
3
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture.
The Company issued the Securities under an Indenture dated as of May 15, 1996
("Indenture"), among the Company, and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. 'SS''SS'. 77aaa-77bbbb)
as in effect on the date of the Indenture (the "Act"). Terms defined in the
Indenture and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Securityholders
are referred to the Indenture and the Act for a statement of those terms.
The Securities are general unsecured obligations of the
Company limited to $170,000,000 aggregate principal amount at maturity (subject
to Section 2.07 of the Indenture). The Indenture imposes certain limitations on
the issuance of additional debt and subordinated debt by the Company and its
Restricted Subsidiaries, the creation of liens on the assets of the Company and
its Restricted Subsidiaries, the Company entering into sale and leaseback
transactions, investments in certain affiliates, the payment of dividends and
other distributions and acquisitions or retirements of the Capital Stock of the
Company and Subordinated Obligations, the sale or transfer of assets and
Subsidiary stock, transactions with Affiliates, limitation on Guarantees issued
by Benedek License Corporation and consolidations, mergers and transfers of all
or substantially all of the Company's assets. In addition, the Indenture limits
the ability of the Company and the Restricted Subsidiaries to restrict
distributions and dividends from Subsidiaries and requires the Company, under
certain circumstances, to offer to purchase Securities. The limitations are
subject to a number of important qualifications and exceptions.
<PAGE>
<PAGE>
4
5. Optional Redemption.
Except as set forth in the next paragraph, the Securities may
not be redeemed at the option of the Company prior to May 15, 2000. On and after
that date, the Company may redeem the Securities in whole at any time or in part
from time to time at the following redemption prices (expressed in percentages
of Accreted Value), plus accrued interest (if any) to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date):
if redeemed during the
12-month period beginning
May 15,
Year Redemption Price
---- ----------------
2000 ...................... 108.833%
2001 ...................... 106.625%
2002 ...................... 104.417%
2003 ...................... 102.208%
2004 and thereafter ....... 100.000%
Notwithstanding the foregoing, until May 15, 1999, the Company
may, at its option, redeem up to 25% of the aggregate principal amount at
maturity of the Securities at 113.25% of the Accreted Value thereof, plus
accrued interest (if any) to the date of redemption with the net proceeds of one
or more Public Equity Offerings or Strategic Investments (to the extent such net
proceeds are contributed to the equity capital of the Company in the case of a
Public Equity Offering by Parent or Strategic Investment in Parent) if at least
75% of the original aggregate principal amount at maturity of the Securities
remain outstanding after each such redemption. A "Public Equity Offering" means
an underwritten public offering of common stock of the Company or Parent
pursuant to an effective registration statement under the Securities Act of
1933. A "Strategic Investment" means a sale by the Company or Parent of its
common stock to one or more Strategic Equity Investors.
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his
<PAGE>
<PAGE>
5
registered address. Securities having a principal amount larger than $1,000 may
be redeemed in part but only in whole multiples of $1,000. If money sufficient
to pay the redemption price of and accrued interest on all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
7. Put Provisions.
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the Accreted Value thereof
plus accrued and unpaid interest, if any, to the date of repurchase as provided
in, and subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Debt. To the extent
provided in the Indenture, Senior Debt must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in Article 10 of the Indenture
and authorizes the Trustee to give them effect and appoints the Trustee as
attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 (or, in the case of Securities sold to institutional
accredited investors as described in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, minimum principal amounts of $100,000) and whole multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part,
<PAGE>
<PAGE>
6
the portion of the Security not to be redeemed) or any Securities for a period
of 15 days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
10. Persons Deemed Owners.
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
12. Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
13. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to make any change in Article 10
<PAGE>
<PAGE>
7
that would limit or terminate the benefits available to any holder of Senior
Debt (or Representatives therefor) under Article 10, or to add Guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants of the Company for the benefit of the Holders or surrender rights and
powers conferred on the Company or to comply with any request of the SEC in
connection with qualifying the Indenture under the Act or to make any change
that does not adversely affect the rights of any Security-holder.
Notwithstanding the foregoing, no amendment may be made to the subordination
provisions of the Indenture that adversely affects the rights of any holder of
Senior Debt then outstanding unless the holders of such Senior Debt or their
representative consent to such change.
14. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5, upon required repurchase, upon declaration or otherwise; (iii) failure by the
Company to comply with Section 5.01 and Section 5.02, (iv) failure by the
Company, to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (v) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Debt of the Company, Benedek Broadcasting, BLC or a Significant Subsidiary if
the amount accelerated or so unpaid exceeds $5,000,000 and continues for 10
days; (vi) certain events of bankruptcy or insolvency with respect to the
Company or a Significant Subsidiary; (vii) certain judgments or decrees for the
payment of money in excess of $5,000,000 or (viii) failure by the Company,
Benedek Broadcasting, BLC or a Significant Subsidiary to maintain any License or
Licenses with respect to a Television Station or Television Stations owned by it
which License is necessary for continued transmission of such Television
Station's normal programming and the Operating Cash Flow for the most recently
completed four fiscal quarters of the Company of such Television Station or
Television Stations exceeds 10% of the Operating Cash Flow of the Company for
such period. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare the
Accreted Value of and accrued but unpaid interest on all the Securities to be
due and payable
<PAGE>
<PAGE>
8
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in their interest.
15. Trustee Dealings with the Company.
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company or the Trustee, respectively under the Securities or the Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
17. Authentication.
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
<PAGE>
<PAGE>
9
18. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Security-holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law.
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
<PAGE>
<PAGE>
10
The Company will furnish to any Securityholder upon written
request and without charge to the Security- holder a copy of the Indenture.
Requests may be made to:
Benedek Communications Corporation
Stewart Square, Suite 210
308 West State Street
Rockford, Illinois 61101
Attention: Chief Financial Officer
<PAGE>
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: ________________ Your Signature: _________________________________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guarantee: __________________________________________________________
(Signature must be guaranteed by an
"eligible guarantor institution" that
is, a bank, stockbroker, saving and
loan association or credit union
meeting the requirements of the
Registrar, which requirements include
membership or participation in the
Securities Transfer Agents Medallion
Program ("STAMP") or such other
"signature guarantee program" as may
be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.)
<PAGE>
<PAGE>
12
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $________________ principal amount at maturity of
Securities held in (check applicable space) ____ book-entry or _____ definitive
form by the undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver
in exchange for its beneficial interest in the Global
Security held by the Depository a Security or
Securities in definitive, registered form of authorized
denominations and an aggregate principal amount at
maturity equal to its beneficial interest in such
Global Security (or the portion thereof indicated
above);
[ ] has requested the Trustee by written order to exchange
or register the transfer of a Security or Securities.
The undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
(1) [ ] acquired for the undersigned's own
account, without transfer (in
satisfaction of Section 2.06(a)(ii)(A)
or Section 2.06(d)(i)(A) of the
Indenture); or
(2) [ ] transferred to the Company; or
(3) [ ] transferred pursuant to and in
compliance with Rule 144A under the
Securities Act of 1933; or
(4) [ ] transferred pursuant to and in
compliance with Regulation S under the
Securities Act of 1933; or
(5) [ ] transferred to an institutional
"accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933) and that the
transferor is a "subsequent investor"
within the meaning of the legend on the
face of this Security; or
<PAGE>
<PAGE>
13
(6) [ ] transferred pursuant to another
available exemption from the
registration requirements of the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (4), (5) or
(6) is checked, the Company or the Trustee may require evidence reasonably
satisfactory to them as to the compliance with the restrictions set forth in the
legend on the face of this Security.
_________________________________________
Signature
Signature Guarantee: _________________________________________
(Signature must be guaranteed by an
"eligible guarantor institution", that
is, a bank , stockbroker, saving and
loan association or credit union
meeting the requirements of the
Registrar, which requirements include
membership or participation in the
Securities Transfer Agents Medallion
Program ("STAMP") or such other
"signature guarantee program" as may
be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.)
<PAGE>
<PAGE>
14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 of the Indenture, state the
principal amount at maturity and check the box:
$ [ ]
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state the
principal amount at maturity and check the box:
$
[ ]
Date: __________________ Your Signature: _______________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee: _________________________________________
(Signature must be guaranteed by an
"eligible guarantor institution", that
is, a bank , stockbroker, saving and
loan association or credit union
meeting the requirements of the
Registrar, which requirements include
membership or participation in the
Securities Transfer Agents Medallion
Program ("STAMP") or such other
"signature guarantee program" as may
be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.)
<PAGE>
<PAGE>
15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal Amount at
Principal Amount at Principal Amount at Maturity of this Global Signature of authorized
Date of Maturity of this Global Maturity of this Global Security following such officer of Trustee or
Exchange Security Security decrease or increase Securities Custodian
- -------- ----------------------- ----------------------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
<PAGE>
EXHIBIT B
TO INDENTURE
[FORM OF FACE OF EXCHANGE SECURITY]
No. $
CUSIP:
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.(1)
[Original Issue Discount Legend]
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF
APPLYING THE UNITED STATES FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT RULES TO
THIS SECURITY. THE ISSUE DATE OF THIS SECURITY IS ________________. THE ISSUE
PRICE OF THIS SECURITY IS ____________________. THIS SECURITY IS ISSUED WITH
$______________ OF ORIGINAL ISSUE DISCOUNT PER $1,000 OF INITIAL PRINCIPAL
AMOUNT. THE YIELD TO MATURITY OF THIS SECURITY IS _______%.
- --------
(1) This legend should only be added if the Security is issued in global form.
<PAGE>
<PAGE>
2
13-1/4% Senior Subordinated Discount Note Series A Due 2006
BENEDEK COMMUNICATIONS CORPORATION, a Delaware corporation,
promises to pay to , or registered assigns, the
principal sum of Dollars on May 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1
Additional provisions of this Security are set forth on the
other side of this Security.
BENEDEK COMMUNICATIONS CORPORATION,
by
____________________________________
Vice President
____________________________________
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
United States Trust Company of New York, as Trustee, certifies that this is one
of the Securities referred to in the Indenture.
by
_____________________________
Authorized Signatory
<PAGE>
<PAGE>
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
BENEDEK COMMUNICATIONS CORPORATION
13-1/4% Senior Subordinated Discount Note Due 2006
1. Interest.
Benedek Communications Corporation, a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above; provided, however, that if (i) the applicable Registration Statement is
not filed with the SEC on or prior to 60 days after the Issue Date, (ii) unless
the Exchange Offer would not be permitted by a policy of the Commission, the
Exchange Offer Registration Statement (as defined in the Registration Rights
Agreement) is not declared effective on or prior to 120 days after the Issue
Date, (iii) neither the Exchange Offer is consummated nor the Shelf Registration
Statement is declared effective on or prior to 150 days after the Issue Date, or
(iv) after a Registration Statement is declared effective, such Registration
Statement thereafter ceases to be effective or such Registration Statement or
the related prospectus ceases to be usable (subject to certain exceptions) in
connection with resales of Transfer Restricted Securities during the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (i) through (iv), a "Registration Default"), additional cash interest
will accrue on this Security at a rate of 0.50% per annum from and including the
date on which any such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured, calculated on the
Accreted Value of the Securities as of the Specified Date on which such interest
is payable. Such interest is payable in addition to any other interest payable
from time to time with respect to the Securities.
Prior to May 15, 2001, except as described above, no interest
will accrue on the Securities. From and after May 15, 2001, interest on the
Securities will accrue at the rate shown on the face of this Security and will
be payable semiannually in arrears on each May 15 and November 15, commencing
November 15, 2001. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from May
15, 2001. For Federal income tax purposes, Holders of Securities will be
required to recognize
<PAGE>
<PAGE>
4
interest income in respect of the Securities in the form of original issue
discount in advance of the receipt of cash payments to which such income is
attributable. Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal at the rate
borne by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment.
The Company will pay interest on the Securities (except defaulted interest) to
the persons who are registered holders of Securities at the close of business on
the May 1 or November 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of the
Definitive Securities (including principal and interest), by mailing a check to
the registered address of each Holder thereof; provided, however, that payments
on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
<PAGE>
<PAGE>
5
4. Indenture.
The Company issued the Securities under an Indenture dated as of May 15, 1996
("Indenture"), among the Company, Benedek Broadcasting Corporation and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. 'SS' 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the
Company limited to $170,000,000 aggregate principal amount at maturity (subject
to Section 2.07 of the Indenture). The Indenture imposes certain limitations on
the issuance of additional debt and subordinated debt by the Company and its
Restricted Subsidiaries, the creation of liens on the assets of the Company and
its Restricted Subsidiaries, the Company entering into sale and leaseback
transactions, investments in certain affiliates, the payment of dividends and
other distributions and acquisitions or retirements of the Capital Stock of the
Company and Subordinated Obligations, the sale or transfer of assets and
Subsidiary stock, transactions with Affiliates, limitation on Guarantees issued
by Benedek License Corporation and consolidations, mergers and transfers of all
or substantially all of the Company's assets. In addition, the Indenture limits
the ability of the Company and the Restricted Subsidiaries to restrict
distributions and dividends from Subsidiaries and requires the Company, under
certain circumstances, to offer to purchase Securities. The limitations are
subject to a number of important qualifications and exceptions.
5. Optional Redemption.
Except as set forth in the next paragraph, the Securities may
not be redeemed at the option of the Company prior to May 15, 2000. On and after
that date, the Company may redeem the Securities in whole at any time or in part
from time to time at the following redemption prices (expressed in percentages
of Accreted Value), plus accrued interest (if any) to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date):
<PAGE>
<PAGE>
6
if redeemed during the
12-month period beginning
May 15,
Year Redemption Price
---- ----------------
2000 ...................... 108.833 %
2001 ...................... 106.625 %
2002 ...................... 104.417 %
2003 ...................... 102.208 %
2004 and thereafter ....... 100.000 %
Notwithstanding the foregoing, until May 15, 1999, the Company
may, at its option, redeem up to 25% of the aggregate principal amount at
maturity of the Securities at 113.25% of the Accreted Value thereof, plus
accrued interest (if any) to the date of redemption with the net proceeds of one
or more Public Equity Offerings or Strategic Investments (to the extent such net
proceeds are contributed to the equity capital of the Company in the case of a
Public Equity Offering by Parent or Strategic Investment in Parent) if at least
75% of the original aggregate principal amount at maturity of the Securities
remain outstanding after each such redemption. A "Public Equity Offering" means
an underwritten public offering of common stock of the Company or Parent
pursuant to an effective registration statement under the Securities Act of
1933. A "Strategic Investment" means a sale by the Company or Parent of its
common stock to one or more Strategic Equity Investors.
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities having a principal amount larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
<PAGE>
<PAGE>
7
7. Put Provisions.
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the Accreted Value thereof
plus accrued and unpaid interest, if any, to the date of repurchase as provided
in, and subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Debt. To the extent
provided in the Indenture, Senior Debt must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in Article 10 of the Indenture
and authorizes the Trustee to give them effect and appoints the Trustee as
attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 (or, in the case of Securities sold to institutional
accredited investors as described in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, minimum principal amounts of $100,000) and whole multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners.
The registered holder of this Security may be treated as the
owner of it for all purposes.
<PAGE>
<PAGE>
8
11. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
12. Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
13. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to make any change in Article 10 that would limit or terminate the benefits
available to any holder of Senior Debt (or Representatives therefor) under
Article 10, or to add Guarantees with respect to the Securities or to secure the
Securities, or to add additional covenants of the Company for the benefit of the
Holders or surrender rights and powers conferred on the Company or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act or to make any change that does not adversely affect the rights of any
Securityholder. Notwithstanding the foregoing, no amendment may be made to the
subordination provisions of the Indenture that adversely affects the rights of
any holder of Senior Debt then outstanding unless
<PAGE>
<PAGE>
9
the holders of such Senior Debt or their representative consent to such change.
14. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5, upon required repurchase, upon declaration or otherwise; (iii) failure by the
Company to comply with Section 5.01 and Section 5.02, (iv) failure by the
Company, to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (v) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Debt of the Company, Benedek Broadcasting, BLC or a Significant Subsidiary if
the amount accelerated or so unpaid exceeds $5,000,000 and continues for 10
days; (vi) certain events of bankruptcy or insolvency with respect to the
Company or a Significant Subsidiary; (vii) certain judgments or decrees for the
payment of money in excess of $5,000,000 or (viii) failure by the Company,
Benedek Broadcasting, BLC or a Significant Subsidiary to maintain any License or
Licenses with respect to a Television Station or Television Stations owned by it
which License is necessary for continued transmission of such Television
Station's normal programming and the Operating Cash Flow for the most recently
completed four fiscal quarters of the Company of such Television Station or
Television Stations exceeds 10% of the Operating Cash Flow of the Company for
such period. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare the
Accreted Value of and accrued but unpaid interest on all the Securities to be
due and payable immediately. Certain events of bankruptcy or insolvency are
Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in their interest.
<PAGE>
<PAGE>
10
15. Trustee Dealings with the Company.
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company or the Trustee, respectively under the Securities or the Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
17. Authentication.
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
<PAGE>
<PAGE>
11
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law.
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
<PAGE>
<PAGE>
12
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Benedek Communications Corporation
Stewart Square, Suite 210
308 West State Street
Rockford, Illinois 61101
Attention: Chief Financial Officer
<PAGE>
<PAGE>
13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: ________________ Your Signature: _________________________________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guarantee: __________________________________________________________
(Signature must be guaranteed by an
"eligible guarantor institution" that is, a
bank, stockbroker, saving and loan
association or credit union meeting the
requirements of the Registrar, which
requirements include membership or partici-
pation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.)
<PAGE>
<PAGE>
14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 of the Indenture, state the
amount and check the box:
$ [ ]
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.08 of the Indenture,
state the amount and check the box:
$
[ ]
Date: __________________ Your Signature: _______________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed by an
"eligible guarantor institution", that is, a
bank , stockbroker, saving and loan
association or credit union meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Securities Transfer
Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may
be determined by the Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.)
<PAGE>
<PAGE>
CONFORMED COPY
================================================================================
BENEDEK BROADCASTING CORPORATION
Issuer
BENEDEK BROADCASTING COMPANY, L.L.C.
Guarantor
THE BANK OF NEW YORK
Trustee
------------------
$135,000,000
11-7/8% Senior Secured Notes due 2005
------------------
INDENTURE
Dated as of March 1, 1995
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions And Incorporation by Reference
SECTION 1.01. Definitions........................................... 1
SECTION 1.02. Other Definitions..................................... 25
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act............................. 26
SECTION 1.04. Rules of Construction................................. 26
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating....................................... 27
SECTION 2.02. Execution and Authentication.......................... 30
SECTION 2.03. Registrar and Paying Agent............................ 31
SECTION 2.04. Paying Agent to Hold Money in
Trust..................................... 31
SECTION 2.05. Securityholder Lists.................................. 32
SECTION 2.06. Transfer and Exchange................................. 32
SECTION 2.07. Replacement Securities................................ 40
SECTION 2.08. Outstanding Securities................................ 41
SECTION 2.09. Temporary Securities.................................. 41
SECTION 2.10. Cancellation.......................................... 42
SECTION 2.11. Defaulted Interest.................................... 43
SECTION 2.12. CUSIP Numbers......................................... 43
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee.................................... 43
SECTION 3.02. Selection of Securities to Be
Redeemed.................................. 44
SECTION 3.03. Notice of Redemption.................................. 44
SECTION 3.04. Effect of Notice of Redemption........................ 45
SECTION 3.05. Deposit of Redemption Price........................... 45
SECTION 3.06. Securities Redeemed in Part........................... 45
<PAGE>
<PAGE>
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities................................. 46
SECTION 4.02. SEC Reports........................................... 46
SECTION 4.03. Limitation on Debt.................................... 46
SECTION 4.04. Limitation on Restricted Payments..................... 48
SECTION 4.05. Limitation on Restrictions on Dis-
tributions from Restricted Sub-
sidiaries................................. 52
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock.......................... 53
SECTION 4.07. Limitation on Transactions with
Affiliates................................ 58
SECTION 4.08. Change of Control..................................... 59
SECTION 4.09. Compliance Certificate................................ 61
SECTION 4.10. Further Instruments and Acts.......................... 61
SECTION 4.11. Limitation on Liens................................... 61
SECTION 4.12. Limitation on Sale/Leaseback Trans-
actions................................... 61
SECTION 4.13. Future Guarantors..................................... 62
SECTION 4.14. Limitation on the LLC Subsidiary's
Activities................................ 62
SECTION 4.15. Impairment of Security Interest....................... 63
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets.................................... 64
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default..................................... 65
SECTION 6.02. Acceleration.......................................... 68
SECTION 6.03. Other Remedies........................................ 68
SECTION 6.04. Waiver of Past Defaults............................... 69
SECTION 6.05. Control by Majority................................... 69
SECTION 6.06. Limitation on Suits................................... 69
SECTION 6.07. Rights of Holders to Receive
Payment................................... 70
SECTION 6.08. Collection Suit by Trustee............................ 70
-ii-
<PAGE>
<PAGE>
SECTION 6.09. Trustee May File Proofs of Claim...................... 70
SECTION 6.10. Priorities............................................ 71
SECTION 6.11. Undertaking for Costs................................. 71
SECTION 6.12. Waiver of Stay or Extension Laws ..................... 71
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee..................................... 72
SECTION 7.02. Rights of Trustee..................................... 73
SECTION 7.03. Individual Rights of Trustee.......................... 74
SECTION 7.04. Trustee's Disclaimer.................................. 74
SECTION 7.05. Notice of Defaults.................................... 74
SECTION 7.06. Reports by Trustee to Holders......................... 74
SECTION 7.07. Compensation and Indemnity............................ 75
SECTION 7.08. Replacement of Trustee................................ 76
SECTION 7.09. Successor Trustee by Merger........................... 77
SECTION 7.10. Eligibility; Disqualification......................... 77
SECTION 7.11. Preferential Collection of Claims
Against Company........................... 77
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on
Securities; Defeasance.................... 78
SECTION 8.02. Conditions to Defeasance.............................. 79
SECTION 8.03. Application of Trust Money............................ 80
SECTION 8.04. Repayment to Company.................................. 81
SECTION 8.05. Indemnity for Government Obliga-
tions..................................... 81
SECTION 8.06. Reinstatement......................................... 81
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders............................ 81
SECTION 9.02. With Consent of Holders............................... 82
SECTION 9.03. Compliance with Trust Indenture
Act....................................... 83
SECTION 9.04. Revocation and Effect of Consents
and Waivers............................... 83
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<PAGE>
SECTION 9.05. Notation on or Exchange of
Securities................................ 84
SECTION 9.06. Trustee to Sign Amendments............................ 84
SECTION 9.07. Payment for Consent................................... 85
ARTICLE 10
Guaranty
SECTION 10.01. Guaranty.............................................. 85
SECTION 10.02. Successors and Assigns................................ 87
SECTION 10.03. No Waiver, etc........................................ 87
SECTION 10.04. Modification, etc..................................... 88
ARTICLE 11
Security Documents
SECTION 11.01. Collateral and Security Documents..................... 88
SECTION 11.02. Release of Collateral................................. 89
SECTION 11.03. Certificates and Opinions ............................ 89
ARTICLE 12
Trust Moneys
SECTION 12.01. Delivery and Acceptance of Escrowed
Funds..................................... 90
SECTION 12.02. Disbursement of Trust Funds........................... 91
SECTION 12.03. Indemnity............................................. 92
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls.......................... 92
SECTION 13.02. Notices............................................... 92
SECTION 13.03. Communication by Holders with Other
Holders................................... 93
SECTION 13.04. Certificate and Opinion as to Con-
ditions Precedent......................... 93
SECTION 13.05. Statements Required in Certificate
or Opinion................................ 94
SECTION 13.06. When Securities Disregarded........................... 94
-iv-
<PAGE>
<PAGE>
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar................................. 94
SECTION 13.08. Legal Holidays........................................ 94
SECTION 13.09. Governing Law......................................... 95
SECTION 13.10. No Recourse Against Others............................ 95
SECTION 13.11. Successors............................................ 95
SECTION 13.12. Multiple Originals.................................... 95
SECTION 13.13. Table of Contents; Headings........................... 96
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security
Exhibit C - Form of Guarantee Agreement
Exhibit D - Form of Officers' Certificate
-v-
<PAGE>
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(a)(5) .............................. 7.10
(b) .............................. 7.08; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.05
(b) .............................. 13.03
(c) .............................. 13.03
313(a) .............................. 7.06
(b)(1) .............................. 7.06; 11.02; 11.03
(b)(2) .............................. 7.06
(c) .............................. 13.02
(d) .............................. 7.06
314(a) .............................. 4.02; 4.10; 10.02
(b) .............................. 11.03
(c)(1) .............................. 13.04
(c)(2) .............................. 13.04
(c)(3) .............................. N.A.
(d) .............................. 11.02; 11.03
(e) .............................. 13.05
(f) .............................. 4.10
315(a) .............................. 7.01
(b) .............................. 7.05; 13.02
(c) .............................. 7.01
(d) .............................. 7.01
(e) .............................. 6.11
316(a)(last sentence) .............................. 13.06
(a)(1)(A) .............................. 6.05
(a)(1)(B) .............................. 6.04
(a)(2) .............................. N.A.
(b) .............................. 6.07
(c) .............................. N.A.
317(a)(1) .............................. 6.08
(a)(2) .............................. 6.09
(b) .............................. 2.04
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<PAGE>
318(a) .............................. 13.01
N.A. means Not Applicable.
- ----------
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
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<PAGE>
<PAGE>
CONFORMED COPY
INDENTURE dated as of March 1, 1995, among
BENEDEK BROADCASTING CORPORATION, a Delaware
corporation (the "Company"), BENEDEK BROADCASTING
COMPANY, L.L.C., a limited liability company existing
under the laws of Delaware, and THE BANK OF NEW YORK,
a New York banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
11-7/8% Senior Secured Notes due 2005 (the "Initial Securities") and, if and
when issued in exchange for Initial Securities, the Company's 11-7/8% Senior
Secured Notes Series A due 2005 (the "Exchange Securities" and, together with
the Initial Securities, the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acquired Station" means any Television Station acquired by
the Company after the date of this Indenture other than the Dothan Station.
"Affiliate" of any specified person means (i) any other person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified person or (ii) any other person who is a
director or officer (A) of such specified person, (B) of any subsidiary of such
specified person or (C) of any person described in clause (i) above. For
purposes of Section 4.04, Section 4.06 and Section 4.07, (a) control of a person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise and (b)
beneficial ownership of 5% or more of the voting common equity (on a fully
diluted basis) or warrants to purchase such equity (whether or not currently
exercisable) of a person shall be deemed to be control of such person; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales,
<PAGE>
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2
leases, transfers or dispositions) of shares of Capital Stock of a Subsidiary
(other than directors' qualifying shares), property or other assets (each
referred to for the purposes of this definition as a "disposition") by the
Company or any of its Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or by the Company or a Subsidiary to a Wholly Owned
Subsidiary, (ii) a disposition of property or assets at fair market value in the
ordinary course of business, (iii) a disposition of obsolete assets in the
ordinary course of business, (iv) for purposes of Section 4.06 only, a
disposition subject to Section 4.04 or a disposition consisting of a
Sale/Leaseback Transaction unless the Company has elected to treat such
Sale/Leaseback Transaction as an Asset Disposition pursuant to Section 4.12(ii),
(v) a disposition subject to Section 5.01 (except to the extent the Company
disposes of substantially all (but not all) of its assets, in which event the
assets not so disposed of shall be deemed as having been sold by the Company)
and (vi) the granting of a security interest in, or the enforcement of such
security interest with respect to, the Collateral pursuant to the terms of the
Security Documents.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Debt, the quotient obtained by dividing (i) the sum of the
products of (a) the numbers of years from the date of determination to the dates
of each successive scheduled principal payment or redemption or similar payment
with respect to such Debt multiplied by (b) the amount of such payment, by (ii)
the sum of all such payments.
"Bank Credit Agreement" means any credit facility or agreement
with a bank or syndicate of banks or other financial institutions (including
working capital or revolving credit facilities).
<PAGE>
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3
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a person means any obligation
which is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such person prepared in accordance with generally
accepted accounting principles; the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such person,
including any Preferred Stock, but excluding any debt securities convertible
into or exchangeable for such equity.
"Cash Flow Leverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount outstanding of all Debt of the
Company and the Restricted Subsidiaries at the end of the most recent fiscal
quarter ending at least 45 days prior to the date of determination to (ii)
Operating Cash Flow for the four fiscal quarters ending on the last day of such
fiscal quarter; provided, however, that (1) if the Company or any Restricted
Subsidiary has Issued any Debt since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the Cash
Flow Leverage Ratio is an Issuance of Debt, or both, Debt as of such date and
Operating Cash Flow (including Consolidated Interest Expense) for such period
shall be calculated after giving effect on a pro forma basis to such Debt (in
the case of Operating Cash Flow, as if such Debt had been Issued on the first
day of such period) and the discharge of any other Debt repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Debt (in the case
of Operating Cash Flow, as if such discharge had occurred on the first day of
such period), (2) if since the beginning of such period the Company or any
Restricted Subsidiary shall have
<PAGE>
<PAGE>
4
made any Asset Disposition, (A) the Operating Cash Flow for such period shall be
reduced by an amount equal to the Operating Cash Flow (if positive) directly
attributable to the assets which are the subject of such Asset Disposition for
such period, or increased by an amount equal to the Operating Cash Flow (if
negative), directly attributable thereto for such period (including an
adjustment for Consolidated Interest Expense directly attributable to any Debt
(the "Discharged Debt") of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Company and
its continuing Restricted Subsidiaries in connection with such Asset
Dispositions for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Debt (the "Discharged Debt") of such Restricted Subsidiary))
and (B) Debt for such period shall be reduced by an amount equal to the
Discharged Debt, (3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any person which becomes a Restricted Subsidiary)
or an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business,
Operating Cash Flow for such period shall be calculated after giving pro forma
effect thereto (including the Issuance of any Debt) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such period any person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such period, Operating Cash Flow (including Consolidated
Interest Expense) for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition or Investment occurred on the first
day of such period. For purposes of this definition, whenever pro forma effect
is to be given to an acquisition of assets, the amount of income or earnings
relating thereto, and the amount of Consolidated Interest Expense associated
with any Debt Issued in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company. If any Debt bears a floating rate of interest and is being given
pro
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5
forma effect, the interest on such Debt shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Protection Agreement applicable to
such Debt if such Interest Rate Protection Agreement has a remaining term in
excess of 12 months).
"Change of Control" means the occurrence of any of the
following events:
(i) prior to the first public offering of common stock of the
Company, the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules d-3 and d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of
the Voting Stock of the Company, whether as a result of Issuance of
securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect transfer of
securities or otherwise (for purposes of this clause (i) and clause
(ii) below, the Permitted Holders shall be deemed to beneficially own
any Voting Stock of a corporation (the "specified corporation") held by
any other corporation (the "parent corporation") so long as the
Permitted Holders beneficially own (as so defined), directly or
indirectly, in the aggregate a majority of the voting power of the
Voting Stock of the parent corporation);
(ii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i) above,
except that such person shall be deemed to have "beneficial ownership"
of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company; provided, however, that the Permitted
Holders "beneficially own" (as defined in clause (i) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company than such other person and do
not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of
the Company (for the purposes of this clause (ii), such other person
shall be deemed to beneficially own any Voting Stock of a specified
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6
corporation held by a parent corporation, if such other person is the
beneficial owner (as defined in this clause (ii)), directly or
indirectly, of more than 35% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders "beneficially own"
(as defined in clause (i) above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock
of such parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election
a majority of the Board of Directors of such parent corporation); or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders
of the Company was approved by a vote of 66-2/3% of the directors of
the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively, all the collateral that is
from time to time subject to the Security Documents.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Company Pledge Agreement" means the Pledge and Security
Agreement dated as of March 10, 1995, between the Company and The Bank of New
York.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such interest expense, (i)
interest expense attributable to capital leases, (ii) amortization of debt
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7
discount and debt Issuance cost, (iii) capitalized interest, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by the Company or any such Restricted Subsidiary under
any Guarantee of Debt or other obligation of any other person, (vii) net costs
associated with Hedging Obligations (including amortization of fees), (viii)
Preferred Stock dividends in respect of all Preferred Stock of Restricted
Subsidiaries and Redeemable Stock of the Company held by persons other than the
Company or a Wholly Owned Subsidiary and (ix) the cash contributions to any
employee stock ownership plan or similar trust to the extent such contributions
are used by such plan or trust to pay interest or fees to any person (other than
the Company) in connection with loans incurred by such plan or trust to purchase
newly issued or treasury shares of the Company.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(i) any net income of any person if such person is not a
Restricted Subsidiary, except that (A) the Company's equity in the net
income of any such person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (iii) below) and (B)
the Company's equity in a net loss of any such person for such period
shall be included in determining such Consolidated Net Income,
(ii) any net income of any person acquired by the Company or a
Restricted Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition,
(iii) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Company,
except that (A) the Company's equity in the net income of any
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8
such Restricted Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
to another Restricted Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining
such Consolidated Net Income,
(iv) any gain (but not loss) realized upon the sale or other
disposition of any property, plant or equipment of the Company or its
consolidated subsidiaries (including pursuant to any sale-and-leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (but not loss) realized upon the sale
or other disposition of any Capital Stock of any person, and
(v) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of Section
4.04 only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets from a Non-Recourse
Affiliate to the Company or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under such covenant pursuant to Section 4.04(b)(v).
"Consolidated Net Worth" of any person means the total of the
amounts shown on the balance sheet of such person and its consolidated
subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles, as of the end of the most recent fiscal quarter
of such person ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of such person plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit, (B) any amounts attributable
to Redeemable Stock and (C) any amounts attributable to Exchangeable Stock.
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9
"Debt" of any person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such person is responsible or liable;
(ii) all Capital Lease Obligations and all Attributable Debt
of such person;
(iii) all obligations of such person Issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(iv) all obligations of such person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i)
through (iii) above) entered into in the ordinary course of business of
such person to the extent such letters of credit are not drawn upon or,
if and to the extent drawn upon, such drawing is reimbursed no later
than the third Business Day following receipt by such person of a
demand for reimbursement following payment on the letter of credit);
(v) the amount of all obligations of such person with respect
to the redemption, repayment or other repurchase of, in the case of a
Subsidiary, any Preferred Stock and, in the case of any other person,
any Redeemable Stock (but excluding any accrued dividends);
(vi) all obligations of the type referred to in clauses (i)
through (v) of other persons and all dividends of other persons for the
payment of which, in either case, such person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
any Guarantees of such obligations and dividends; and
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other persons secured by any Lien on any property or
asset of such person
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10
(whether or not such obligation is assumed by such person), the amount
of such obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured.
The amount of Debt of any person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Designated Subsidiary" means any Subsidiary which has any
assets (other than cash) that, as of the date of this Indenture, were assets of
the Company or Dothan Holdings II Inc., an Alabama corporation.
"Dothan Station" means WTVY-TV, a Television Station that
serves both Dothan, Alabama, and Panama City, Florida.
"EBITDA" for any period means the Consolidated Net Income for
such period (but without giving effect to adjustments, accruals, deductions or
entries resulting from purchase accounting, extraordinary losses or gains and
any gains or losses from any Asset Dispositions), plus the following to the
extent deducted in calculating such Consolidated Net Income: (i) income tax
expense, (ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense (including the amortization of Program Obligations) and (v)
all other noncash charges deducted in the calculation of such Consolidated Net
Income (but excluding (a) any noncash charges related to the items described in
clauses (i) through (v) of the definition of "Consolidated Net Income" and (b)
any noncash charges to the extent that they require an accrual of or a reserve
for cash disbursements for any future period), and minus, without duplication,
all noncash items (but excluding revenue from barter transactions) that
increased such Consolidated Net Income.
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11
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Securities" means the 11-7/8% Senior Notes Series A
due 2005 to be issued pursuant to this Indenture in connection with the offer to
exchange Securities for the Initial Securities that may be made by the Company
pursuant to the Registration Rights Agreement.
"Exchangeable Stock" means any Capital Stock which is
exchangeable or convertible into another security (other than Capital Stock of
the Company which is neither Exchangeable Stock nor Redeemable Stock).
"Existing Station" means (i) each of the eight Television
Stations owned by the Company as of the date of this Indenture, (ii) unless the
Mandatory Redemption is effected, the Dothan Station and (iii) each other
Television Station acquired by the Company after the date of this Indenture and
the License for which is owned by the LLC.
"Guarantee" means any obligation, contingent or otherwise, of
any person directly or indirectly guaranteeing any Debt or other obligation of
any person and any obligation, direct or indirect, contingent or otherwise, of
such person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation of such person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantee Agreement" means any agreement executed by a
Designated Subsidiary pursuant to Section 4.13, pursuant to which such
Designated Subsidiary Guarantees payment of the Securities and the performance
of the Company's other obligations under this Indenture on the terms and
conditions set forth in this Indenture. Each such Guarantee Agreement will be
substantially in the form of Exhibit C attached hereto.
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12
"Hedging Obligations" of any person means the obligations of
such person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures contract
or other similar agreement or arrangement designed to protect such person
against changes in interest rates or foreign exchange rates.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Initial Securities" means the 11-7/8% Senior Notes due 2005,
issued under this Indenture on or about the date hereof.
"Interest Rate Protection Agreement" means any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Investment" in any person means any loan or advance to, any
Guarantee of, any acquisition of any Capital Stock, equity interest, obligation
or other security of, or capital contribution or other investment in, such
person. Investments shall exclude advances to customers and suppliers in the
ordinary course of business.
"Issue" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Debt or Capital Stock of a person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be issued by such
Subsidiary at the time it becomes a Subsidiary; and the term "Issuance" has a
corresponding meaning. For purposes of Section 4.03, if any Debt Issued by a
Non-Recourse Subsidiary thereafter ceases to be Non-Recourse Debt of a
Non-Recourse Subsidiary, then such event shall be deemed for the purpose of such
Section to constitute the Issuance of such Debt by the issuer thereof.
"Issue Date" means the date on which the Securities are
originally issued.
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13
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New York.
"License" means, with respect to any Television Station, any
and all licenses and authorizations issued by the Federal Communications
Commission with respect to such Television Station.
"Lien" means any mortgage, pledge, security interest,
conditional sale or other title retention agreement or other similar lien.
"LLC" means Benedek Broadcasting Company, L.L.C., a limited
liability company existing under the laws of the State of Delaware, and any
successor.
"Mandatory Redemption" means a redemption of the Securities
pursuant to paragraph 6 of the Securities.
"Maximum Amount" as of any date of determination means, with
respect to any Acquired Station, the product of (i) the Operating Cash Flow of
such Acquired Station for the four most recent fiscal quarters ending at least
45 days prior to such date of determination and (ii) the number 5.0; provided,
however, that if such Acquired Station is acquired by the Company in connection
with an Asset Disposition of an Existing Station, the amount in clause (i) above
shall be reduced by the Operating Cash Flow for such period of such Existing
Station.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of Debt or other obligations
relating to such properties or assets or received in any other noncash form)
therefrom, in each case net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
generally accepted accounting principles, as a consequence of such Asset
Disposition, (ii) all payments made on any Debt which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any lien upon
or other security agreement of any kind with respect to such assets,
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14
or which must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be repaid out of the proceeds from such
Asset Disposition, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Disposition and (iv) the deduction of appropriate amounts to be
provided by the seller as a reserve, in accordance with generally accepted
accounting principles, against any liabilities associated with the assets
disposed of in such Asset Disposition and retained by the Company or any
Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any Issuance or sale of
Capital Stock, means the cash proceeds of such Issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such Issuance or sale and net of taxes paid or
payable as a result thereof.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible common
stock of such corporation; provided, however, that NonConvertible Capital Stock
shall not include any Redeemable Stock or Exchangeable Stock.
"Non-Recourse Affiliate" means a Non-Recourse Subsidiary or
any other Affiliate of the Company or a Restricted Subsidiary which (i) has not
acquired any assets (other than cash) directly or indirectly from the Company or
any Restricted Subsidiary, (ii) only owns properties acquired after the date of
this Indenture and (iii) has no Debt other than Non-Recourse Debt.
"Non-Recourse Debt" means Debt or that portion of Debt (i) as
to which neither the Company nor its Restricted Subsidiaries (A) provide credit
support (including any undertaking, agreement or instrument which would
constitute Debt), (B) is directly or indirectly liable or (C) constitute the
lender and (ii) no default with respect to which (including any rights which the
holders thereof may have to take enforcement action against a Non-Recourse
Affiliate) would permit (upon notice, lapse of time or both) any holder of any
other Debt of the Company or its Restricted Subsidiaries to declare a default on
such other Debt or cause
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15
the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"Non-Recourse Subsidiary" means a Subsidiary which (i) has not
acquired any assets (other than cash) directly or indirectly from the Company or
any Restricted Subsidiary, (ii) only owns properties acquired after the date
hereof and (iii) has no Debt other than Non-Recourse Debt.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed
by two Officers.
"Operating Cash Flow" for any period means EBITDA for such
period less Program Obligation Payments for such period; provided, however,
that, when used in the definition of "Maximum Amount" with respect to a
Television Station, all references to the Company and Restricted Subsidiaries
and consolidated subsidiaries used in the definitions of "EBITDA" and "Program
Obligation Payments" and the definitions used therein shall be deemed to refer
to such Television Station.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Other Pledge Agreement" means a Pledge and Security Agreement
dated as of March 10, 1995, between A. Richard Benedek and The Bank of New York.
"Permitted Cancellation" means the cancellation by the LLC of
Debt of any of its members owned by the LLC; provided, however, that such Debt
was issued by A. Richard Benedek to the LLC in connection with the transfer of
Licenses to the LLC and no consideration was received therefor other than his
interest as a member in the LLC.
"Permitted Holders" shall mean (i) A. Richard Benedek; (ii)
family members or relatives of A. Richard Benedek; (iii) any trusts created for
the benefit of the persons described in clauses (i), (ii) or (iv) of this
paragraph or any trust for the benefit of any trust; (iv) in the event of the
death or incompetence of any person
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16
described in clauses (i) or (ii) of this paragraph such person's estate,
executor, administrator, committee or other personal representative or
beneficiaries; or (v) any Affiliate of A. Richard Benedek.
"Permitted Investments" shall mean (i) investments in direct
obligations of the United States of America maturing within 90 days of the date
of acquisition thereof, (ii) investments in certificates of deposit maturing
within 90 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States or any state
thereof having capital, surplus and undivided profits aggregating in excess of
$500,000,000, and (iii) investments in commercial paper given the highest rating
by two established national credit rating agencies and maturing not more than 90
days from the date of acquisition thereof.
"Permitted Liens" means (i) Liens for taxes, assessments or
governmental charges or claims not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Company or its Subsidiaries, as the
case may be, in conformity with generally accepted accounting principles; (ii)
Liens imposed by law such as carriers', warehousemen's and mechanics' Liens, in
each case for sums not yet due or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards against the
Company with respect to which the Company shall then be proceeding with an
appeal or other proceedings for review; (iii) pledges or deposits in connection
with workers' compensation, unemployment insurance and other types of social
security benefits; (iv) Liens incurred or deposits made to secure the
performance of statutory obligations or surety or appeal bonds, performance
bonds or other obligations of like nature incurred in the ordinary course of
business (exclusive of obligations for the payment of Debt); (v) easements,
rights-of-way, restrictions and other similar charges or encumbrances not
interfering in any material respect with the business of the Company; (vi)
leases or subleases granted to others in the ordinary conduct of the business of
the Company or any of the Subsidiaries; (vii) title defects or irregularities
which do not in the aggregate materially impair the use of such properties by
the Company; (viii) Capital Lease Obligations permitted under Section 4.03; (ix)
Liens existing on the date of this Indenture; (x) Liens on any accounts
receivable and proceeds thereof of the Company or any
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17
Restricted Subsidiary granted to secure obligations under or in respect of Debt
Issued pursuant to Section 4.03(b)(i); (xi) Liens securing Debt of any entity
existing at the time such entity is acquired by the Company or a Restricted
Subsidiary, whether by merger, consolidation, purchase of assets or otherwise;
provided, however, that such Liens were not created, incurred or assumed in
connection with, or in contemplation of, the acquisition thereof by the Company
or a Restricted Subsidiary; provided further, however, that such Liens do not
extend to any other assets of the Company or any other Restricted Subsidiary;
(xii) Liens securing only the Securities; (xiii) Liens in favor of the Company;
(xiv) Liens on property existing at the time of acquisition thereof by the
Company or a Restricted Subsidiary (and not created, incurred or assumed in
connection with, or in contemplation of, such transaction); provided, however,
that any such Liens do not extend to any other property of the Company or any
Restricted Subsidiary; (xv) Liens securing Debt Issued to finance the
construction, purchase or lease of, or repairs, improvements or additions to,
property or assets; provided, however, that such Liens do not extend to any
other property or assets of the Company or any Restricted Subsidiary at the time
the Lien is incurred, and the Debt secured by such Liens is not Issued more than
365 days after the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the property subject
to such Liens; provided further, however, that in the case where a Restricted
Subsidiary is purchasing such property or assets, such Liens may extend to the
Capital Stock of such Restricted Subsidiary unless such Restricted Subsidiary
owns any other property or assets; (xvi) Liens on property of any Non-Recourse
Subsidiary at the time that it becomes a Restricted Subsidiary; provided,
however, that such Liens were not created, incurred or assumed in connection
with, or in contemplation of, such Non-Recourse Subsidiary becoming a Restricted
Subsidiary; provided further, however, that such Liens do not extend to any
other property of the Company or any other Restricted Subsidiary; (xvii) Liens
on any Capital Stock of any Non-Recourse Affiliate; (xviii) Liens arising
pursuant to Sale/Leaseback Transactions engaged in pursuant to Section 4.12(ii),
(xix) Liens to secure any Refinancing Debt secured by Liens referred to in the
foregoing clauses (ix), (xi) and (xiv) to (xviii) and this clause (xix);
provided, however, that such Liens do not extend to any assets other than assets
securing such Debt to be Refinanced; (xx) any Liens securing Debt owing by the
Company to one or more Wholly Owned Subsidiaries of the
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18
Company (but only if such Debt is held by such Wholly Owned Subsidiaries); and
(xxi) Liens created by the Pledge Agreements or Liens in the Trust Funds.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clauses (xi), (xiv), (xv) or (xvi) above if such Lien applies to
any asset acquired directly or indirectly from Net Available Cash pursuant to
Section 4.06 unless such Net Available Cash is being applied pursuant to Section
4.06(a)(ii)(D).
"Permitted Pari Passu Debt" means Debt of the Company Issued
to finance all or any portion of the cost of the acquisition of an Acquired
Station, where the License for such Acquired Station is owned by the LLC, and
Refinancing Debt in respect of such Debt; provided, however, that the aggregate
amount of such Permitted Pari Passu Debt with respect to any Acquired Station
shall not exceed the Maximum Amount with respect to such Acquired Station;
provided further, however, that the Company shall supplement the Company Pledge
Agreement by adding as additional collateral thereunder the same kind of
collateral with respect to such Acquired Station as the original collateral
covered thereby.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Pledge Agreements" means the Company Pledge Agreement and the
Other Pledge Agreement.
"Pledgee" means the pledgee under the Pledge Agreements, who
initially will be The Bank of New York.
"Pledgor" means, respectively, the Company under the Company
Pledge Agreement and A. Richard Benedek under the Other Pledge Agreement
(collectively, the "Pledgors").
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
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"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Program Obligation Payments" means, for any period of
calculation, an amount equal to the aggregate amount paid in cash by or on
behalf of the Company and the Restricted Subsidiaries during such period with
respect to, or on account of, Program Obligations.
"Program Obligations" means the obligations of the Company and
the Restricted Subsidiaries with respect to the acquisition of the right to
broadcast films and other programming material, payable in a form other than
barter.
"Public Equity Offering" means an underwritten public offering
of common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Redeemable Stock" means any Capital Stock that by its terms
or otherwise is required to be redeemed on or prior to the first anniversary of
the Stated Maturity of the Securities or is redeemable at the option of the
holder thereof at any time on or prior to the first anniversary of the Stated
Maturity of the Securities.
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to Issue
indebtedness in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the
Company or any Restricted Subsidiary existing on the date of this Indenture or
Issued in compliance with this Indenture; provided, however, that (i) such
Refinancing Debt has a Stated Maturity no earlier than the Stated Maturity of
the Debt being Refinanced, (ii) such Refinancing Debt has an Average Life at the
time such Refinancing Debt is Issued that is equal to or greater than the
Average Life of the Debt being Refinanced and (iii) such Refinancing Debt has an
aggregate principal amount (or if Issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate principal
amount (or if Issued with original issue discount, the aggregate accreted value)
then outstanding or committed under the Debt being Refinanced;
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20
provided further, however, that Refinancing Debt shall not include (x) Debt of a
Subsidiary that Refinances Debt of the Company or (y) Debt of the Company or a
Restricted Subsidiary that Refinances Debt of a Non-Recourse Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth
in the Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated March 3, 1995, among the Company, the LLC and Goldman, Sachs &
Co.
"Restricted Holder" means a Permitted Holder or a person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act and will be
deemed to include each person included in such person) that owns, directly or
indirectly, 10% or more of the total voting power of the Voting Stock of the
Company; provided, however, that for purposes of this definition a person shall
be deemed to have ownership of all shares (a) that any such person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time and (b) of a corporation held by any other corporation (the
"parent corporation") if such person is the owner, directly or indirectly, of
more than 10% of the total voting power of the Voting Stock of such parent
corporation.
"Restricted Subsidiary" shall mean any Subsidiary that is not
a Non-Recourse Subsidiary.
"Sale/Leaseback Transaction" means any arrangement relating to
a property owned as of the date of this Indenture whereby the Company or a
Restricted Subsidiary transfers such property to a person and leases it back
from such person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depository), or any successor person
thereto and shall initially be the Trustee.
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21
"Security Documents" means the Pledge Agreements and any other
instruments or documents entered into or delivered in connection with any of the
foregoing, as such agreements, instruments or documents may from time to time be
amended in accordance with the terms hereof and thereof.
"Senior Debt" means any Debt of the Company other than (i) any
obligation of the Company to any Subsidiary, (ii) any liability for Federal,
state, local or other taxes owed or owing by the Company, (iii) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including Guarantees thereof or instruments evidencing such
liabilities), (iv) any Debt, Guarantee or obligation of the Company which is
subordinate or junior in any respect to any other Debt, Guarantee or obligation
of the Company or (v) that portion of any Debt which at the time of Issuance is
Issued in violation of this Indenture.
"Shelf Registration Statement" has the meaning given to that
term in the Registration Rights Agreement.
"Significant Subsidiary" means (i) any domestic Subsidiary of
the Company (other than a Non-Recourse Subsidiary) which at the time of
determination either (A) had assets which, as of the date of the Company's most
recent quarterly consolidated balance sheet, constituted at least 3% of the
Company's total assets on a consolidated basis as of such date, or (B) had
revenues for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which constituted at least 3% of the
Company's total revenues on a consolidated basis for such period, (ii) any
foreign Subsidiary of the Company (other than a Non-Recourse Subsidiary) which
at the time of determination either (A) had assets which, as of the date of the
Company's most recent quarterly consolidated balance sheet, constituted at least
5% of the Company's total assets on a consolidated basis as of such date, in
each case determined in accordance with generally accepted accounting
principles, or (B) had revenues for the 12-month period ending on the date of
the Company's most recent quarterly consolidated statement of income which
constituted at least 5% of the Company's total revenues on a consolidated basis
for such period, or (iii) any Subsidiary of the Company (other than a
Non-Recourse Subsidiary) which, if merged with all Defaulting Subsidiaries of
the Company, would at the time of determination either (A) have had assets
which, as of the date of the Company's most recent quarterly consolidated
balance sheet, would have constituted at least 10% of the
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22
Company's total assets on a consolidated basis as of such date or (B) have had
revenues for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which would have constituted at least
10% of the Company's total revenues on a consolidated basis for such period
(each such determination being made in accordance with generally accepted
accounting principles). "Defaulting Subsidiary" means any Subsidiary of the
Company (other than a Non-Recourse Subsidiary) with respect to which an event
described under clause (6), (7), (8) or (9) of Section 6.01 has occurred and is
continuing.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Debt of the Company
(whether outstanding on the date of this Indenture or thereafter Issued) which
is expressly subordinate or junior in right of payment to the Securities.
"Subsidiary" means the LLC and any corporation, association,
partnership, limited liability company or other business entity of which more
than 50% of the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) the
Company, (ii) the Company and one or more Subsidiaries or (iii) one or more
Subsidiaries.
"Tax Amounts" with respect to any calendar year means the sum
of (a) an amount equal to the product of (i) the Federal taxable income of the
Company for such year as determined in good faith by the Board of Directors and
as certified by a nationally recognized tax accounting firm and without taking
into account the deductibility of state income taxes for Federal income tax
purposes multiplied by (ii) the State Tax Percentage (as defined below) plus (b)
the greater of (i) the product of (w) the Federal taxable income of the Company
for such year as determined in good faith by the Board of Directors and as
certified by a
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23
nationally recognized tax accounting firm and taking into account the
deductibility of the amount determined in clause (a) above as a state income tax
for Federal income tax purposes multiplied by (x) the Federal Tax Percentage (as
defined below) and (ii) the product of (y) the alternative minimum taxable
income attributable to the Company's stockholder(s) by reason of the income of
the Company for such year as determined in good faith by the Board of Directors
and as certified by a nationally recognized tax accounting firm multiplied by
(z) the Federal Tax Percentage; provided, however, the amount as calculated
above shall be reduced by the amount of any income tax benefit attributable to
the Company which could be realized by the Company's stockholder(s) in the
current or a prior taxable year (including tax losses, alternative minimum tax
credits, other tax credits and carryforwards or carrybacks thereof) to the
extent not previously taken into account. The amount of any such income tax
benefit described in the proviso to the preceding sentence shall be determined
in a manner consistent with the calculation of the Tax Amount for the relevant
year. Any part of the Tax Amount not distributed in respect of a tax year for
which it is calculated shall be available for distribution in subsequent tax
years. The term "State Tax Percentage" shall mean the highest applicable
statutory marginal rate of state and local income tax to which an individual
resident of the Relevant Jurisdiction (as defined below) would be subject in the
relevant year of determination as a result of being a stockholder of a
corporation taxable as an S Corporation in such jurisdiction (as certified to
the Trustee by a nationally recognized tax accounting firm). The term "Relevant
Jurisdiction" shall mean the jurisdiction in which, during the relevant taxable
year, (c) the Company is doing business for state and local income tax purposes,
(d) the Company derives the first, second, third or fourth highest percentage of
its gross income as calculated for Federal income tax purposes (excluding
therefrom any gain or loss from the sale or other disposition of any television
station then owned by the Company) and (e) the Company is taxable as an S
Corporation for state and local income tax purposes that imposes the highest
aggregate marginal rate of state and local income tax on individuals (as
certified to the Trustee by a nationally recognized tax accounting firm). The
term "Federal Tax Percentage" shall mean the highest applicable statutory
marginal rate of Federal income tax or, in the case of clause (b)(ii) above,
alternative minimum tax, to which an individual resident of the United States
would be subject in the relevant year of determination (as certified to the
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24
Trustee by a nationally recognized tax accounting firm); provided, however,
that, for any year in which the Company is not taxable as an S Corporation for
Federal income tax purposes, the Federal Tax Percentage shall be zero.
Notwithstanding the foregoing, the sum of the State Tax Percentage and the
Federal Tax Percentage (the "Total Tax Percentage") shall not exceed the
percentage (the "Maximum Tax Percentage") equal to the lesser of (f) the highest
applicable statutory marginal rate of Federal, state, local income tax or, when
applicable, alternative minimum tax, to which a corporation doing business in
any state in which the Company is doing business at the time of determination
would be subject in the relevant year of determination (as certified to the
Trustee by a nationally recognized tax accounting firm) plus 5% and (g) 55%. If
the Total Tax Percentage exceeds the Maximum Tax Percentage, the Federal Tax
Percentage shall be reduced to the extent necessary to cause the Total Tax
Percentage to equal the Maximum Tax Percentage. Distributions of Tax Amounts may
be made from time to time with respect to a tax year based on reasonable
estimates, with reconciliation within 40 days of the earlier of (i) the
Company's filing of the Internal Revenue Service Form 1120S for the applicable
taxable year and (ii) the last date such form is required to be filed. The
stockholder of the Company will enter into a binding agreement with the Company
to reimburse the Company for certain positive differences between the
distributed amount and the Tax Amount, which difference must be paid at the time
of such reconciliation.
"Television Station" means any group of assets which
constitutes all or substantially all of the assets which would be necessary to
carry on the business of a commercial television broadcast station and which,
when purchased by a single purchaser would (together with any necessary
licenses, authorizations, working capital and operating location) be
substantially sufficient to allow such purchaser to carry on such business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. 'SS''SS'
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in
Section 9.03.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.06(g).
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25
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
Defined in
Term Section
"Agent Members" ..................... 2.01
"Bankruptcy Law" .................... 6.01
"covenant defeasance option" ........ 8.01(b)
"Custodian" ......................... 6.01
"Definitive Securities" ............. 2.01
"Event of Default" .................. 6.01
"Excluded Stock" .................... 4.04(a)(3)(b)
"Global Security" ................... 2.01
"Initial Deposit" ................... 12.01(a)
"legal defeasance option" ........... 8.01(b)
"Mandatory Redemption Price" ........ 12.01(b)
"Non-Global Purchaser" .............. 2.01
"Obligations" ....................... 10.01
"Offer" ............................. 4.06(b)
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26
"Offer Amount" ...................... 4.06(c)(2)
"Offer Period" ...................... 4.06(c)(2)
"Paying Agent" ...................... 2.03
"Purchase Agreement" ................ 2.01
"Purchase Date" ..................... 4.06(c)(1)
"QIB" ............................... 2.01(a)
"Registrar" ......................... 2.03
"Required Amounts" .................. 12.01(a)
"Restricted Payment" ................ 4.04
"Rule 144A" ......................... 2.01
"Scheduled Redemption Date" ......... 12.01(a)
"Trust Funds" ....................... 12.01(c)
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, the
LLC and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect on the date
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27
of this Indenture and all accounting calculations will
be determined in accordance with such principles;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and
words in the plural include the singular;
(6) unsecured debt shall not be deemed to be subordinate or
junior to secured debt merely by virtue of its nature as unsecured
debt;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with generally accepted accounting principles
and accretion of principal on such security shall be deemed to be the
issuance of Debt; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater.
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B, which is hereby
incorporated by reference and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in
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28
Exhibit A and Exhibit B are part of the terms of this Indenture.
The Initial Securities are being offered and sold by the
Company pursuant to a Purchase Agreement, dated March 3, 1995, between the
Company, the LLC and Goldman, Sachs & Co. (the "Purchase Agreement").
(a) Global Securities. Initial Securities offered and sold to
a "qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) (a "QIB") in reliance on Rule 144A under the Securities Act ("Rule 144A")
as provided in the Purchase Agreement, shall be issued initially in the form of
one or more permanent global Securities in definitive, fully registered form
without interest coupons with the global securities legend and restricted
securities legend set forth in Exhibit A hereto (each, a "Global Security"),
which shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Trustee, at its New York office, as custodian for
the Depository (or with such other custodian as the Depository may direct), and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depository or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply
only to the Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as custodian for the
Depository.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as the
custodian of the
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29
Depository or under such Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in this
Section or Section 2.06 or 2.09, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of certificated
Securities. Purchasers of Initial Securities who are not QIBs (referred to
herein as the "Non-Global Purchasers") will receive certificated Initial
Securities bearing the restricted securities legend set forth in Exhibit A
hereto ("Definitive Securities"); provided, however, that upon transfer of such
certificated Initial Securities to a QIB, such certificated Initial Securities
will, unless the Global Security has previously been exchanged, be exchanged for
an interest in a Global Security pursuant to the provisions of Section 2.06.
Definitive Securities will bear the restricted securities legend set forth on
Exhibit A unless removed in accordance with this Section 2.01(c) or Section
2.06(g).
After a transfer of any Initial Securities during the period
of the effectiveness of a Shelf Registration Statement with respect to such
Initial Securities, all requirements pertaining to legends on such Initial
Security will cease to apply, the requirements requiring any such Initial
Security issued to certain Holders be issued in global form will cease to apply,
and a certificated Initial Security without legends will be available to the
transferee of the Holder of such Initial Securities upon exchange of such
transferring Holder's certificated Initial Security or directions to transfer
such Holder's interest in the Global Security, as applicable. Upon the
consummation of a Registered Exchange Offer with respect to the Initial
Securities pursuant to which Holders of such Initial Securities are offered
Exchange Securities in exchange for their Initial Securities, all requirements
pertaining to such Initial Securities that Initial Securities issued to
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30
certain Holders be issued in global form will cease to apply and certificated
Initial Securities with the restricted securities legend set forth in Exhibit A
hereto will be available to Holders of such Initial Securities that do not
exchange their Initial Securities, and Exchange Securities in certificated form
will be available to Holders that exchange such Initial Securities in such
Registered Exchange Offer.
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver: (1) Initial
Securities for original issue in an aggregate principal amount of $135,000,000
and (2) Exchange Securities for issue only in a Registered Exchange Offer,
pursuant to the Registration Rights Agreement, for a like principal amount of
Initial Securities, in each case upon a written order of the Company signed by
two Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company. Such order shall specify the amount of the Securities
to be authenticated and the date on which the original issue of Securities is to
be authenticated and whether the Securities are to be Initial Securities or
Exchange Securities. The aggregate principal amount of Securities outstanding at
any time may not exceed $135,000,000 except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authen-
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31
tication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. At least
one Business Day prior to each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest when so becoming due. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Securities and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent (other than the
Trustee) to pay all money held by it to the Trustee and
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32
to account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. (a) Transfer and Exchange
of Definitive Securities. When Definitive Securities are presented to the
Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an
equal principal amount of Definitive Securities of
other authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Registrar or co-registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, are being transferred or exchanged pursuant to
an effective registration statement under the Securities Act or
pursuant to clause (A), (B) or (C) below, and are accompanied by
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33
the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from
such Holder to that effect (in the form set forth on the
reverse of the Security); or
(B) if such Transfer Restricted Securities are being
transferred to the Company or to a QIB in accordance with Rule
144A under the Securities Act, a certification to that effect
(in the form set forth on the reverse of the Security); or
(C) if such Transfer Restricted Securities are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act; or (x) to an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is acquiring the Securities for its own
account, or for the account of such an institutional
accredited investor, in each case in a minimum principal
amount of the Securities of $250,000 for investment purposes
and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act; or
(y) in reliance on another exemption from the registration
requirements of the Securities Act: (i) a certification to
that effect (in the form set forth on the reverse of the
Security), and (ii) if the Company or Registrar so requests,
evidence reasonably satisfactory to them as to the compliance
with the restrictions set forth in the legend set forth in
Section 2.06(g)(i).
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accom-
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34
panied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred to a QIB
in accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to
make, or to direct the Securities Custodian to make, an adjustment on
its books and records with respect to such Global Security to reflect
an increase in the aggregate principal amount of the Securities
represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Security for
a Definitive Security.
(i) Any person having a beneficial interest in a Global
Security that is being transferred or exchanged pursuant to an
effective registration statement under the Securities Act or pursuant
to clause (A), (B) or (C) below may upon request, and if accompanied by
the information specified below, exchange such beneficial interest for
a Definitive Security of the same aggregate principal amount. Upon
receipt by the Trustee of
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35
written instructions or such other form of instructions as is customary
for the Depository from the Depository or its nominee on behalf of any
Person having a beneficial interest in a Global Security and upon
receipt by the Trustee of a written order or such other form of
instructions as is customary for the Depository or the person
designated by the Depository as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information
and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred
to the person designated by the Depository as being the owner
of a beneficial interest in a Global Security, a certification
from such Person to that effect (in the form set forth on the
reverse of the Security); or
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities
Act, a certification to that effect (in the form set forth on
the reverse of the Security); or
(C) if such beneficial interest is being transferred
(w) pursuant to an exemption from registration in accordance
with Rule 144 or Regulation S under the Securities Act; or (x)
to an institutional "accredited investor" as described in Rule
501(a)(1), (2), (3) or (7) under the Securities Act that is
acquiring the security for its own account, or for the account
of such an institutional accredited investor, in each case in
a minimum principal amount of the Securities of $250,000 for
investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the
Securities; or (y) in reliance on another exemption from the
registration requirements of the Securities Act: a
certification to that effect from the transferee or transferor
(in the form set forth on the reverse of the Security), and
(ii) if the Company or Registrar so requests, evidence
reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in Section
2.06(g)(i).
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36
then the Trustee or the Securities Custodian, at the direction
of the Trustee, will cause, in accordance with the standing
instructions and procedures existing between the Depository and the
Securities Custodian, the aggregate principal amount of the Global
Security to be reduced on its books and records and, following such
reduction, the Company will execute and the Trustee will authenticate
and deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Securities to the persons in whose names
such Securities are so registered in accordance with the instructions
of the Depository.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.06), a Global
Security may not be transferred as a whole except by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities. If at any time:
(i) the Depository notifies the Company that the Depository is
unwilling or unable to continue as Depository for the Global Securities
and a successor Depository for the Global Securities is not appointed
by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive
Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of a written order
of the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an
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37
Assistant Secretary of the Company requesting the authentication and delivery of
Definitive Securities to the Persons designated by the Company, will
authenticate and deliver Definitive Securities, in an aggregate principal amount
equal to the principal amount of Global Securities, in exchange for such Global
Securities.
(g) Legend.
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor
or substitution thereof) shall bear a legend in substantially
the following form:
"THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (1) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER (IF AVAILABLE) AND (B) BY SUBSEQUENT INVESTORS,
AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN
INSTITUTIONAL ACCREDITED INVESTOR AS DESCRIBED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
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38
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Security that does not bear the legend set
forth above and rescind any restriction on the transfer of
such Transfer Restricted Security;
(B) in the case of any Transfer Restricted Security
that is represented by a Global Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the
legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security, if the Holder's
request for such exchange was made in reliance on Rule 144 and
the Holder certifies to that effect in writing to the
Registrar (such certification to be in the form set forth on
the reverse of the Security); and
(C) in the case of any Transfer Restricted Security
that is represented by a Global Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security (in connection with the offer to exchange Exchange
Securities for Initial Securities pursuant to the Registration
Rights Agreement) for another Global Security that does not
bear the legend set forth above.
(h) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or canceled, such Global
Security shall be returned to the Depository for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
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39
(i) Obligations with Respect to Transfers and
Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable
upon exchange or transfer pursuant to Sections 3.06, 4.08 and 9.05).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article 3,
except the unredeemed portion of any Definitive Security being redeemed
in part, or (b) any Security for a period beginning 15 Business Days
before the mailing of a notice of an offer to repurchase or redeem
Securities or 15 Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose
name a Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of and interest on
such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and none of the Company, the Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected by
notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
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40
(j) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a
participant in the Depository or other Person with respect to the
accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depository) of
any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Securities shall be given or made only to or upon
the order of the registered Holders (which shall be the Depository or
its nominee in the case of a Global Security). The rights of beneficial
owners in any Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures of the
Depository. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to
its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between or among Depository participants, members or beneficial owners
in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
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41
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. (a) Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall pre pare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
(b) A Global Security deposited with the Depository or with
the Trustee as custodian for the Depository pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof only if such transfer complies with
Section 2.06 and (i) the Depository notifies the
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42
Company that it is unwilling or unable to continue as Depository for such Global
Security or if at any time such Depository ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing.
(c) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depository
to the Trustee located in the Borough of Manhattan, The City of New York, to be
so transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of each portion of
such Global Security, an equal aggregate principal amount of Initial Securities
of authorized denominations. Any portion of a Global Security transferred
pursuant to this Section shall be executed, authenticated and delivered only in
denominations of $1,000 and any integral multiple thereof and registered in such
names as the Depository shall direct. Any Initial Security delivered in exchange
for an interest in the Global Security shall, except as otherwise provided by
Section 2.06(b), bear the restricted securities legend set forth in Exhibit A
hereto.
(d) Subject to the provisions of Section 2.09(c), the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(e) In the event of the occurrence of either of the events
specified in Section 2.09(b), the Company will promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and return all Securities surrendered for registration of transfer,
exchange, payment or cancellation to the Company. The Company may not issue new
Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancellation.
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43
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed (or upon the Company's failure to do so the Trustee shall fix)
any such special record date and payment date to the reasonable satisfaction of
the Trustee which specified record date shall not be less than 10 days prior to
the payment date for such defaulted interest (unless the Trustee agrees
otherwise) and shall promptly mail or cause to be mailed to each Securityholder
a notice that states the special record date, the payment date and the amount of
defaulted interest to be paid. The Company shall notify the Trustee in writing
of the amount of defaulted interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
person entitled to such defaulted interest as in this subsection provided.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities or is required to
redeem Securities pursuant to
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paragraph 6 of the Securities, it shall notify the Trustee in writing of the
redemption date and the principal amount of Securities to be redeemed.
The Company shall give each notice to the Trustee provided for
in this Section at least 45 days (or, in the case of a redemption required
pursuant to paragraph 6 of the Securities, 15 Business Days) before the
redemption date unless the Trustee consents to a shorter period. Such notice
shall be accompanied by an Officers' Certificate and an Opinion of Counsel from
the Company to the effect that such redemption will comply with the conditions
herein.
SECTION 3.02. Selection of Securities to Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days, (or, in the case of a redemption required pursuant to
paragraph 6 of the Securities, at least 10 Business Days but not more than 11
Business Days) before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities (including CUSIP
number) to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
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(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the
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Company shall execute and the Trustee shall authenticate for the Holder (at the
Company's expense) a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be required to be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, commencing April 1, 1995, the Company shall file with
the SEC and thereupon provide the Trustee and Securityholders with the annual
reports and the information, documents and other reports which are specified in
Section 13 of the Exchange Act. The Company and the LLC also shall comply with
the other provisions of TIA 'SS' 314(a).
Subject to the terms of this Indenture, delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 4.03. Limitation on Debt. (a) The Company shall not,
and shall not permit any Restricted Subsidiary (other than the LLC pursuant to
Section 4.14) to, Issue, directly or indirectly, any Debt; provided, however,
that the Company may Issue Debt if at the date of such
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Issuance the Cash Flow Leverage Ratio does not exceed the ratio indicated below
for Debt Issued in each period indicated:
Period Ratio
------ -----
Through September 30, 1996 7.0 to 1.0
From October 1, 1996 through
March 31, 1998 6.5 to 1.0
From April 1, 1998
and thereafter 6.0 to 1.0
(b) Notwithstanding Section 4.03(a) but subject to Section
4.14, the Company and the Restricted Subsidiaries may Issue the following Debt:
(1) Debt of the Company Issued pursuant to one or more Bank
Credit Agreements; provided, however, that, after giving pro forma
effect to such Issuance, the aggregate principal amount of such Debt
outstanding at such time shall not exceed the greater of (i) $5,000,000
and (ii) 75% of the book value of the accounts receivable of the
Company and the Restricted Subsidiaries;
(2) Debt owed to and held by the Company or a Wholly Owned
Subsidiary; provided, however, that any subsequent Issuance or transfer
of any Capital Stock or any other event which results in any such
Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Debt (other than to a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the Issuance
of such Debt by the issuer thereof;
(3) the Securities and Refinancing Debt of the Company Issued
in respect of any Debt permitted by this clause (3), Guarantees thereof
and the Debt represented by the Company Pledge Agreement;
(4) Debt (other than Debt described in clause (1), (2) or (3)
of this Section) outstanding on the date on which the Securities were
originally Issued and Refinancing Debt in respect of any Debt permitted
by this clause (4) or by the provisions of Section 4.03(a);
(5) Debt or Preferred Stock of a Subsidiary Issued and
outstanding on or prior to the date on which such
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Subsidiary became a Subsidiary or was acquired by the Company (other
than Debt or Preferred Stock Issued in connection with, or to provide
all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Subsidiary became a Subsidiary or was acquired by the
Company) and Refinancing Debt of such Subsidiary Issued in respect of
any Debt of such Subsidiary permitted by this clause (5); provided,
however, that after giving effect thereto, except in the case of any
Refinancing Debt, the Company could issue an additional $1.00 of Debt
pursuant to paragraph (a) above; and
(6) Debt consisting of Guarantees by the LLC of Permitted Pari
Passu Debt.
(c) Notwithstanding Sections 4.03(a) and 4.03(b), the Company
shall not Issue any Debt if the proceeds thereof are used, directly or
indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any
Subordinated Obligations unless such Debt shall be subordinated to the
Securities to at least the same extent as such Subordinated Obligations.
SECTION 4.04. Limitation on Restricted Payments. (a) Subject
to Section 4.14, the Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make
any distribution on or in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving the Company) or to the
direct or indirect holders of its Capital Stock (except dividends or
distributions payable solely in its Non-Convertible Capital Stock or in options,
warrants or other rights to purchase its Non-Convertible Capital Stock and
except dividends or distributions payable to the Company or a Subsidiary and, if
a Subsidiary is not wholly owned, to the other stockholders on a pro rata
basis), (ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or of any direct or indirect parent of the Company,
(iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment any Subordinated Obligations (other than the purchase, repurchase
or other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each
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49
case due within one year of the date of acquisition) or (iv) make any Investment
in any Affiliate of the Company other than a Restricted Subsidiary or a person
which will become a Restricted Subsidiary as a result of any such Investment
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Investment being herein referred to as a
"Restricted Payment") if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company is not able to Issue an additional $1.00 of
Debt pursuant to Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the date of original Issuance of the
Securities would exceed the sum of:
(a) the cumulative Operating Cash Flow (whether
positive or negative) accrued during the period (treated as
one accounting period) from the beginning of the fiscal
quarter during which the Securities are originally Issued to
the end of the most recent fiscal quarter ending at least 45
days prior to the date of such Restricted Payment less the
product of 1.4 multiplied by the cumulative Consolidated
Interest Expense during such period; provided, however, that
Consolidated Interest Expense for the period from the
beginning of the fiscal quarter during which the Securities
are originally Issued through the date the Securities are
originally Issued shall be calculated on a pro forma basis to
give effect to the offering of the Securities as if the
offering of the Securities was consummated on the last day of
the fiscal quarter prior to the fiscal quarter during which
the Securities are originally Issued;
(b) the aggregate Net Cash Proceeds received by the
Company from the Issue or sale of its Capital Stock (other
than Redeemable Stock or Exchangeable Stock) subsequent to the
date of original Issuance of the Securities (other than an
Issuance or sale to a Subsidiary or to an employee stock
ownership plan or other trust established by
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the Company or any of the Subsidiaries for the benefit of
their employees or to officers, directors or employees to the
extent that the Company or any Subsidiary has outstanding
loans or advances to such employees pursuant to clause (vii)
of Section 4.04(b) or clause (iii) of Section 4.07(b) (all
such excluded Capital Stock being herein collectively called
"Excluded Stock")); and
(c) the amount by which indebtedness of the Company
is reduced on the Company's balance sheet upon the conversion
or exchange (other than by a Subsidiary), subsequent to the
date of original Issuance of the Securities, of any Debt of
the Company convertible or exchangeable for Capital Stock
(other than Redeemable Stock or Exchangeable Stock) of the
Company (less the amount of any cash, or other property,
distributed by the Company upon such conversion or exchange);
provided, however, that, for the purposes of the calculation required by this
clause (3), the value of any such Restricted Payment, if other than cash, shall
be evidenced by a resolution of the Board of Directors and determined in good
faith by the disinterested members of the Board of Directors; provided further,
however, that, in the case of a distribution or other disposition by the Company
of all or substantially all of the assets of a broadcast station or other
business unit, the value of any such Restricted Payment shall be determined by
an investment banking firm of national prominence that is not an Affiliate of
the Company.
(b) Subject to Section 4.14, the provisions of Section 4.04(a)
shall not prohibit:
(i) any purchase or redemption of Capital Stock or
Subordinated Obligations of the Company made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Capital Stock of
the Company (other than Redeemable Stock or Exchangeable Stock and
other than Excluded Stock); provided, however, that (A) such purchase
or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall
be excluded from clauses 3(b) and 3(c) of Section 4.04(a);
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51
(ii) any purchase or redemption of Subordinated Obligations of
the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Debt of the Company which is
permitted to be Issued pursuant to Section 4.03; provided, however,
that such purchase or redemption shall be excluded in the calculation
of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from
Net Available Cash to the extent permitted by Section 4.06; provided,
however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have
complied with this Section; provided, however, that at the time of
payment of such dividend, no other Default shall have occurred and be
continuing (or result therefrom); provided further, however, that such
dividend shall be included in the calculation of the amount of
Restricted Payments;
(v) Investments in Non-Recourse Affiliates in an aggregate
amount (which amount shall be reduced by the amount equal to the net
reduction in Investments in Non-Recourse Affiliates resulting from
payments of dividends, repayments of loans or advances or other
transfers of assets to the Company or any Restricted Subsidiary from
Non-Recourse Affiliates) not to exceed $3,000,000; provided, however,
that the amount of such Investments shall be excluded in the
calculation of the amount of Restricted Payments;
(vi) with respect to each tax year that the Company qualifies as
an S Corporation under the Code, or any similar provision of state or
local law, distributions of Tax Amounts; provided, however, that prior
to any distribution of Tax Amounts a duly authorized officer of the
Company certifies to the Trustee that the Company qualifies as an S
Corporation for Federal income tax purposes and for the states in
respect of which distributions are being made and that at the time of
such distributions, the most recent audited financial statements of the
Company provide that the Company was treated as an S Corporation for
Federal income tax purposes for the period of such financial
statements; provided further, however, that (C) the
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52
amount of such distributions shall be excluded in the calculation of
the amount of Restricted Payments and (D) the Company shall not be
permitted to make distributions of Tax Amounts pursuant to this Section
4.04(b)(vi) unless and until (1) the Company has entered into a binding
written agreement with each stockholder of the Company (copies of which
will be promptly furnished to the Trustee prior to the making of any
such distribution) providing that if any Tax Amounts distributed to
such stockholder pursuant to this Section 4.04(b)(vi) is later
determined to have been, as a result of a change in applicable law or
the failure of the Company to effect or maintain a valid S Corporation
election or otherwise, in excess of the amount permitted to be
distributed or paid under this Section 4.04(b)(vi), such excess shall
be refunded to the Company at least five Business Days prior to the
next due date of individual estimated income tax payments and (2) in
the event it has been determined that any such excess distribution or
payment has been made, unless the Company has requested and received
all refunds pursuant to such agreements; or
(vii) loans or advances to officers and directors of the Company
(other than a Restricted Holder) (A) in the ordinary course of business
in an aggregate amount outstanding not in excess of $1,000,000 or (B)
the proceeds of which are used to acquire Capital Stock of the Company
(other than Redeemable Stock or Exchangeable Stock).
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Debt owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the date of this Indenture;
(2) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relat-
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53
ing to any Debt Issued by such Restricted Subsidiary on or prior to the
date on which such Restricted Subsidiary was acquired by the Company
(other than Debt Issued as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired by
the Company) and outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Debt Issued pursuant to an agreement
referred to in clause (1) or (2) of this Section or contained in any
amendment to an agreement referred to in clause (1) or (2) of this
Section; provided, however, that the encumbrances and restrictions
contained in any such Refinancing agreement or amendment are no less
favorable to the Securityholders than encumbrances and restrictions
contained in such agreements;
(4) any such encumbrance or restriction consisting of
customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the
lease;
(5) in the case of clause (iii) above, restrictions contained
in security agreements securing Debt of a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject
to such security agreements; and
(6) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets
of such Restricted Subsidiary pending the closing of such sale or
disposition.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) Subject to Section 4.14, the Company shall not, and shall not permit
any Restricted Subsidiary to, make any Asset Disposition unless (i) the Company
or such Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as determined in good faith
by the Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset
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54
Disposition and at least 90% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash and (ii) an amount
equal to 100% of the Net Available Cash from such Asset Disposition is applied
by the Company (or such Restricted Subsidiary, as the case may be) (A) first, to
the extent the Company elects (or is required by the terms of any Senior Debt),
to prepay, repay or purchase Senior Debt or Debt (other than any Redeemable
Stock) of a Wholly Owned Subsidiary (in each case other than Debt owed to the
Company or an Affiliate of the Company) within 60 days from the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; (B)
second, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), at the Company's election to the
investment by the Company or any Restricted Subsidiary in assets to replace the
assets that were the subject of such Asset Disposition or in assets that, as
determined by the Board of Directors and evidenced by resolutions of the Board
of Directors, will be used in the businesses of the Company and its Restricted
Subsidiaries existing on the date of this Indenture or in businesses reasonably
related thereto, in all cases within 180 days after the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (C) third, to
the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to make an offer pursuant to and subject to
this Indenture to the Holders (and to holders of other Senior Debt designated by
the Company) to purchase Securities (and such Senior Debt) at a purchase price
of 100% of the principal amount thereof (without premium) plus accrued and
unpaid interest (or in respect of such other Senior Debt such lesser price, if
any, as may be provided for by the terms of such other Senior Debt); and (D)
fourth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B) and (C), to (x) the acquisition
by the Company or any Restricted Subsidiary of assets to replace the assets that
were the subject of such Asset Disposition or assets that, as determined by the
Board of Directors and evidenced by resolutions of the Board of Directors, will
be used in the businesses of the Company and its Restricted Subsidiaries
existing on the date of this Indenture or in businesses reasonably related
thereto or (y) the prepayment, repayment or purchase of Debt (other than any
Redeemable Stock) of the Company (other than Debt owed to an Affiliate of the
Company) or Debt of any Restricted Subsidiary (other than Debt owed to the
Company or an Affiliate of the Company), in each case within
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55
180 days after the later of the receipt of such Net Available Cash and the date
the offer described in clause (C) is consummated; provided, however, that, in
connection with any prepayment, repayment or purchase of Debt pursuant to clause
(A), (C) or (D) above, the Company or such Restricted Subsidiary shall retire
such Debt and shall cause the related loan commitment (if any) to be permanently
reduced in an amount equal to the principal amount so prepaid, repaid or
purchased. Notwithstanding the foregoing provisions of this Section, the Company
and the Restricted Subsidiaries shall not be required to apply any Net Available
Cash (other than Net Available Cash from an Asset Disposition consisting of a
Sale/Leaseback Transaction that the Company has elected to treat as an Asset
Disposition pursuant to Section 4.12(ii)) in accordance with this Section except
to the extent that the aggregate Net Available Cash from all Asset Dispositions
which are not applied in accordance with this Section exceeds $2,000,000. The
Company shall not permit any Non-Recourse Subsidiary to make any Asset
Disposition unless such Non-Recourse Subsidiary receives consideration at the
time of such Asset Disposition at least equal to the fair market value of the
shares or assets so disposed of. Pending application of Net Available Cash
pursuant to this Section, such Net Available Cash shall be invested in Permitted
Investments. The Company shall not sell, lease, transfer or otherwise dispose of
all or any portion of its interest in the LLC; provided, however, that the
foregoing shall not prohibit (x) the Company from entering into the Company
Pledge Agreement and performing its obligations thereunder or (y) any
transaction permitted by clause (v) of Section 4.14.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Debt) pursuant to Section
4.06(a)(ii)(C), the Company will be required to purchase Securities tendered
pursuant to an offer by the Company for the Securities (and other Senior Debt)
(the "Offer") at a purchase price set forth in Section 4.06(a) in accordance
with the procedures (including prorating in the event of oversubscription) set
forth in Section 4.06(c). The Company shall not be required to make an Offer
pursuant to this Section if the Net Available Cash available therefor is less
than $1,000,000 for any particular Asset Disposition (which lesser amount shall
not be carried forward for purposes of determining whether an Offer is required
with respect to any subsequent Asset Disposition).
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56
(c)(1) Promptly, and in any event within 30 days after the
Company becomes obligated to make an Offer, the Company shall be
obligated to deliver to the Trustee and send, by first-class mail to
each Holder, a written notice stating that the Holder may elect to have
his Securities purchased by the Company either in whole or in part
(subject to prorating as hereinafter described in the event the Offer
is oversubscribed) in integral multiples of $1,000 of principal amount,
at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such
notice (the "Purchase Date") and shall contain information concerning
the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a
minimum will include (i) the most recently filed Annual Report on Form
10-K (including audited consolidated financial statements) of the
Company, the most recent subsequently filed Quarterly Report on Form
10-Q and any Current Report on Form 8-K of the Company filed subsequent
to such Quarterly Report, other than Current Reports describing Asset
Dispositions otherwise described in the offering materials (or
corresponding successor reports), (ii) a description of material
developments in the Company's business subsequent to the date of the
latest of such Reports, and (iii) if material, appropriate pro forma
financial information) and all instructions and materials necessary to
tender Securities pursuant to the Offer, together with the information
contained in clause (3) below.
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall
deliver to the Trustee an Officers' Certificate as to (i) the amount of
the Offer (the "Offer Amount"), (ii) the allocation of the Net
Available Cash from the Asset Dispositions pursuant to which such Offer
is being made and (iii) the compliance of such allocation with the
provisions of Section 4.06(a). On such date, the Company shall also
irrevocably deposit with the Trustee or with a paying agent (or, if the
Company is acting as its own paying agent, aggregate and hold in trust)
in immediately available funds an amount equal to the Offer Amount to
be held for payment in accordance with the provisions of this Section.
Upon the expiration of the period for which the Offer remains open (the
"Offer Period"), the
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57
Company shall deliver to the Trustee the Securities or portions thereof
which have been properly tendered to and are to be accepted by the
Company. The Trustee shall, on the Purchase Date, mail or deliver
payment to each tendering Holder in the amount of the purchase price.
In the event that the aggregate purchase price of the Securities
delivered by the Company to the Trustee is less than the Offer Amount,
the Trustee shall deliver the excess to the Company promptly after the
expiration of the Offer Period.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with the form set forth on the
reverse of the Security duly completed, to the Company at the address
specified in the notice at least ten Business Days prior to the
Purchase Date. Holders will be entitled to withdraw their election if
the Trustee receives not later than three Business Days prior to the
Purchase Date, a facsimile transmission (promptly confirmed in writing)
or letter (a copy of which the Trustee shall give to the Company not
later than one Business Day prior to the Purchase Date) setting forth
the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased. If at the
expiration of the Offer Period the aggregate principal amount of
Securities surrendered by Holders, together with the aggregate purchase
price of the other Senior Subordinated Debt surrendered in connection
with the Offer, exceeds the Offer Amount, the Company shall select the
Securities and such other Senior Subordinated Debt to be purchased on a
pro rata basis (with such adjustments as may be deemed appropriate by
the Company so that only Securities in denominations of $1,000, or
integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part will be Issued new Securities
equal in principal amount to the unpurchased portion of the Securities
surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company will also deliver an
Officers' Certificate stating that such Securities are to be accepted
by the Company pursuant to and in accordance with the terms of this
Section. A Security shall be deemed to have been
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58
accepted for purchase at the time the Trustee, directly or through an
agent, mails or delivers payment therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
conduct any business or enter into any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company unless the terms
of such business, transaction or series of transactions are as favorable to the
Company or such Restricted Subsidiary as terms that would be obtainable at the
time for a comparable transaction or series of similar transactions in
arm's-length dealings with an unrelated third person; provided, however, that,
in the case of any transaction or series of related transactions involving
aggregate payments or other transfers by the Company and its Restricted
Subsidiaries in excess of (i) $1,000,000, the Company shall deliver an Officers'
Certificate to the Trustee certifying that the terms of such business,
transaction or series of transactions (x) comply with this Section 4.07, (y)
have been set forth in writing and (z) have been determined in good faith by the
disinterested members of the Board of Directors to satisfy the criteria set
forth in this Section 4.07 and (ii) $5,000,000, the Company shall also deliver
to the Trustee an opinion from an investment banking firm of national prominence
that is not an Affiliate of the Company to the effect that such business,
transaction or transactions are fair to the Company or such Restricted
Subsidiary from a financial point of view.
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(b) The provisions of Section 4.07(a) shall not prohibit:
(i) any Restricted Payment permitted to be paid pursuant to
Section 4.04;
(ii) any Issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors in the ordinary course of business
and consistent with industry practices;
(iii) loans or advances to employees of the Company and the
Subsidiaries (other than Restricted Holders) (A) in the ordinary course
of business in an aggregate amount outstanding not to exceed $1,000,000
or (B) the proceeds of which are used to acquire from the Company
Capital Stock of the Company (other than Redeemable Stock or
Exchangeable Stock);
(iv) the payment of reasonable fees to directors of the
Company and its Subsidiaries (other than a Restricted Holder) who are
not employees of the Company or its Subsidiaries;
(v) salaries to employees in the ordinary course of business
and consistent with industry practices; and
(vi) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries; provided, however, that
no portion of the minority interest in any such Restricted Subsidiary
(other than the LLC) is owned by an Affiliate (other than the Company
or a Wholly Owned Subsidiary) of the Company.
SECTION 4.08. Change of Control. (a) Upon a Change of Control,
each Holder shall have the right to require that the Company repurchase all or
any part of such Holder's Securities at a purchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase, in accordance with the terms contemplated in Section 4.08(b).
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(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee stating:
(i) that a Change of Control has occurred and that such Holder
has the right to require the Company to repurchase all or any part of
such Holder's Securities at a repurchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any,
to the date of repurchase (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant
interest payment date);
(ii) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical
income, cash flow and capitalization after giving effect to such Change
of Control);
(iii) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(iv) the instructions determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Securities
repurchased.
(c) Holders electing to have a Security repurchased will be
required to surrender the Security, with the form set forth on the reverse of
the Security duly completed, to the Company at the address specified in the
notice at least 10 Business Days prior to the repurchase date. Holders will be
entitled to withdraw their election if the Trustee receives not later than three
Business Days prior to the repurchase date, a facsimile transmission (promptly
confirmed in writing) or letter (a copy of which the Trustee shall give to the
Company not later than one Business Day prior to the repurchase date) setting
forth the name of the Holder, the principal amount of the Security which was
delivered for repurchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security repurchased.
(d) On the repurchase date, all Securities repurchased by the
Company under this Section shall be delivered by the Trustee for cancellation,
and the Company shall pay
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61
the repurchase price plus accrued and unpaid interest, if any, to the Holders
entitled thereto.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.09. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default by the Company and whether or not the signers know
of any Default that occurred during such period. If they do, the certificate
shall describe the Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with TIA
'SS' 314(a)(4). One of the Officers signing such Officers' Certificate shall be
the principal executive, principal financial or principal accounting officer of
the Company.
SECTION 4.10. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. Limitation on Liens. Subject to Section 4.14,
the Company shall not, and shall not permit any Restricted Subsidiary to,
create, incur or suffer to exist any Lien upon any of its property or assets now
owned or hereafter acquired by it securing any obligation except for Permitted
Liens, unless contemporaneously therewith effective provision is made for
securing the Securities equally and ratably with such obligation as to such
property for so long as such obligation will be so secured.
SECTION 4.12. Limitation on Sale/Leaseback Transactions. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
a Sale/Leaseback Trans-
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action unless (i) the Company would be able to incur Debt in an amount equal to
the Attributable Debt with respect to such Sale/Leaseback Transaction secured by
a Lien pursuant to Section 4.03 and Section 4.11 or (ii) the Company or such
Restricted Subsidiary receives consideration from such Sale/Leaseback
Transaction at least equal to the fair market value of the property subject
thereto (which shall be determined in good faith by the Board of Directors and
evidenced by a resolution of the Board of Directors) and elects to treat the
assets subject to such Sale/Leaseback Transaction as an Asset Disposition
subject to Section 4.06.
SECTION 4.13. Future Guarantors. The Company shall cause each
Designated Subsidiary to execute and deliver to the Trustee a Guarantee
Agreement pursuant to which such Designated Subsidiary will Guarantee payment of
the Securities on the terms and conditions set forth in this Indenture. Each
Guarantee Agreement will be limited in amount to an amount not to exceed the
maximum amount that can be Guaranteed by that Designated Subsidiary without
rendering the Guarantee Agreement, as it relates to such Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
SECTION 4.14. Limitation on the LLC Subsidiary's Activities.
The LLC shall not, and the Company shall not permit the LLC to,
(i) Issue, directly or indirectly, any Debt other than a
Guarantee of the Securities and Refinancing Debt of the Company Issued
in respect of the Securities and Guarantees of Permitted Pari Passu
Debt;
(ii) create, incur or suffer to exist any Lien upon any of its
property or assets now owned or hereafter acquired by it; provided,
however, that the LLC may create, incur or suffer to exist upon any of
its property or assets (other than Licenses) Permitted Liens of the
type described in clauses (i) through (vii) of the definition of
"Permitted Liens";
(iii) directly or indirectly, make any Restricted Payment or any
Investment in any Affiliate of the Company; provided, however, the LLC
may Guarantee the Securities, Refinancing Debt of the Company issued in
respect of the Securities and Permitted Pari Passu Debt;
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63
(iv) sell, lease, transfer or otherwise dispose of any property
or assets (each a "disposition") unless the LLC receives consideration
at the time of such disposition at least equal to the fair market
value, as determined in good faith by the Board of Directors (including
as to the value of all non-cash consideration), of the property or
assets subject to such disposition;
(v) consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any person;
provided, however, that the LLC may consolidate with or merge with or
into or convey, transfer or lease such assets to a Wholly Owned
Subsidiary if (A) the sole purpose and effect thereof is to hold the
property and assets of the LLC in a wholly owned corporate subsidiary
of the Company; (B) such Wholly Owned Subsidiary has no liabilities at
the time of such transaction; (C) immediately prior to and after giving
effect to such transaction, no Default shall have occurred and be
continuing; (D) the resulting, surviving or transferee person is
organized and existing under the laws of the United States of America
or any State thereof or the District of Columbia and such entity
expressly assumes by a supplemental indenture, executed and delivered
to the Trustee, in form satisfactory to the Trustee, all the
obligations of the LLC under the Indenture and the LLC Guaranty; (E)
all of the Capital Stock of such entity is effectively pledged under
the Pledge Agreements and such pledge creates a first priority security
interest in such Capital Stock; and (F) the Company delivers to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such transaction and such supplemental indenture comply
with this Indenture; or
(vi) Issue any Capital Stock unless such Capital Stock is
effectively pledged under the Pledge Agreements and such pledge creates
a first priority interest in such Capital Stock;
provided, however, that the foregoing provisions shall not prohibit the
Permitted Cancellation.
SECTION 4.15. Impairment of Security Interest. The Company
shall not, and shall not permit any Subsidiary to, take or knowingly or
negligently omit to take any action, which action or omission might or would
have the
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64
result of materially impairing the security interest created by the Pledge
Agreements with respect to the Collateral for the benefit of the Trustee and the
Holders, and the Company shall not grant to any person (other than the Trustee,
the holders of the Securities or any Refinancing Debt of the Company Issued in
respect of the Securities and any holder of Permitted Pari Passu Debt) any
interest whatsoever in the Collateral.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any person, unless:
(i) the resulting, surviving or transferee person (if not the
Company) shall be a person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and such entity shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the Securities
and this Indenture;
(ii) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of the
resulting, surviving or transferee person or any Subsidiary as a result
of such transaction as having been incurred by such person or such
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
resulting, surviving or transferee person would be able to Issue an
additional $1.00 of Debt pursuant to Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
resulting, surviving or transferee person shall have Consolidated Net
Worth in an amount which is not less than the Consolidated Net Worth of
the Company prior to such transaction; and
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(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
The resulting, surviving or transferee person shall be the
successor Company and shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture, but the predecessor
Company in the case of a conveyance, transfer or lease shall not be released
from the obligation to pay the principal of and interest on the Securities.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable and such default
continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon declaration or otherwise, (ii)
fails to redeem or repurchase Securities when required pursuant to this
Indenture or the Securities;
(3) (i) the Company fails to comply with Section 5.01 or (ii)
the Company or the LLC fails to comply with Section 4.14;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13 or 4.15 (in each case, other
than a failure to purchase Securities) or any Pledgor fails to comply
with any of its obligations under the Security Documents and such
failure continues for 30 days after the notice specified below;
(5) the Company or the LLC fails to comply with
any of its agreements in the Securities or this
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Indenture (other than those referred to in (1), (2), (3) or (4) above)
and such failure continues for, or any representations and warranties
of a Pledgor set forth in the Security Documents proves to have been
materially false at the time it was made and is not cured within, 60
days after the notice specified below;
(6) Debt of the Company, the LLC or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default, the total
amount of such Debt unpaid or accelerated exceeds $1,000,000 and such
default continues for 10 days after the notice specified below;
(7) the Company, the LLC or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company, the LLC or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company, the LLC or
any Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company, the LLC or any Significant Subsidiary;
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or any similar relief is granted under any foreign laws
and the order or decree remains unstayed and in effect
for 60 days;
(9) any judgment or decree for the payment of money in excess
of $1,000,000 is entered against the Company, the LLC or any
Significant Subsidiary and is not discharged and there is a period of
60 days following the entry of such judgment or decree during which
such judgment or decree is not discharged, waived or the execution
thereof stayed and such default continues for 10 days after the notice
specified below; or
(10) (A) any of the provisions of Article 11 or any of the
Pledge Agreements shall cease to be in full force and effect or shall
cease to give the Pledgee, the Trustee, or the Holders the Liens,
rights, powers and privileges purported to be created thereby
(including a perfected security interest in and Lien on all of the
Collateral to the extent provided for therein in favor of the Pledgee,
the Trustee, or the Trustee for the benefit of the Holders); or
(B) the LLC Guaranty (or any other Guarantee of the
Securities) shall cease to be in full force and effect in any material
respect or any provision of Article 10 shall cease to be in full force
and effect, or the LLC or any Designated Subsidiary or any person
acting by or on behalf of them shall deny or disaffirm their
obligations thereunder in any material respect.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5) or (6) is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the Securities notify the Company of the Default and the Company does not cure
such
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Default within the time specified after receipt of such Notice. Such Notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (4), (5) or (6), its status and what action the
Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the Securities by notice to the
Company and the Trustee, may declare the principal of and accrued interest on
all the Securities to be due and payable. Upon such a declaration, such
principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company occurs
and is continuing, the principal of and interest on all the Securities shall
ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Securityholders. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities, this Indenture or the Security
Documents.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or
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remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture, the Securities or the Security
Documents unless:
(1) the Holder gives to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal
amount of the Securities make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee
reasonable security or indemnity against any loss,
liability or expense;
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(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or principal specified in Section 6.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid (together with interest on such unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
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SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
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ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished in accordance with this Indenture to the Trustee and
conforming to the requirements of this Indenture. However, in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith
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in accordance with a direction received by it pursuant
to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers;
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provided, however, that the Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security), the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with TIA 'SS' 313(a), if such report is required
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by TIA 'SS' 313(a). The Trustee also shall comply with TIA 'SS' 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time such compensation as the Trustee and the
Company shall agree in writing for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company shall indemnify
each of the Trustee or any predecessor Trustee against any and all loss,
liability, damage, claim or expense (including attorneys' fees and expenses and
including taxes (other than taxes based on the income of the Trustee)) incurred
by it in connection with the acceptance or administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee may have separate
counsel and the Company shall pay the fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee through the Trustee's own wilful misconduct,
negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture.
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When the Trustee incurs expenses after the occurrence of a
Default specified in Section 6.01(7) or (8) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of
acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent
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jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA 'SS' 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
TIA 'SS' 310(b); provided, however, that there shall be excluded from the
operation of TIA 'SS' 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA 'SS' 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA 'SS' 311(a), excluding any creditor
relationship listed in TIA 'SS' 311(b). A Trustee who has resigned or been
removed shall be subject to TIA 'SS' 311(a) to the extent indicated.
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ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Sections 8.01(c) and 8.06, cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company
and the LLC at any time may terminate (i) all their obligations under the
Securities and this Indenture ("legal defeasance option") or (ii) their
obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12,
4.13, 4.14, 4.15, 5.01(iii) or 5.01(iv) and the operation of Sections
6.01(3)(ii), 6.01(4), 6.01(6), 6.01(7) (only with respect to Significant
Subsidiaries), 6.01(8) (only with respect to Significant Subsidiaries), 6.01(9)
and 6.01(10) ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default and the
Securities will no longer have the benefit of the Security Documents nor the LLC
Guaranty. If the Company exercises its covenant defeasance option, payment of
the Securities may not be accelerated because of an Event of Default specified
in Sections 6.01(3)(ii), 6.01(4), 6.01(6), 6.01(7) (only with respect to
Significant Subsidiaries), 6.01(8) (only with respect to Significant
Subsidiaries), 6.01(9) and 6.01(10)
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or because of the failure of the Company to comply with 5.01(iii) or 5.01(iv)
and the Securities will no longer have the benefit of the Security Documents nor
the LLC Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal and
interest on the Securities to maturity or redemption, as the case may
be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) no Default has occurred and is continuing on the date of
such deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on the Company;
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(6) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(7) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(9) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
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SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal or interest that remains unclaimed for
two years, and, thereafter, Securityholders entitled to the money must look to
the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the
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Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities or to
further secure the Securities;
(5) to add to the covenants of the Company or the LLC or A.
Richard Benedek for the benefit of the Holders or to surrender any
right or power herein conferred upon the Company or the LLC or A.
Richard Benedek;
(6) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA; or
(7) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities. However, without the
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consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may or must be
redeemed in accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Section 6.04 or 6.07 or the second
sentence of this Section; or
(7) amend the LLC Guaranty or the Security Documents or
otherwise affect the interests of any Holder in the Collateral, in each
case in any manner that adversely affects the rights of any Holder or
the Trustee.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subse-
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84
quent Holder of that Security or portion of the Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent or
waiver is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder's Security or portion
of the Security if the Trustee receives the notice of revocation before the date
the amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those persons who were
Securityholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee to Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
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SECTION 9.07. Payment for Consent. Neither the Company, any
Affiliate of the Company nor any Subsidiary shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid or agreed to be paid to all
Holders which so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
ARTICLE 10
Guaranty
SECTION 10.01. Guaranty. The LLC hereby unconditionally and
irrevocably guaranties to each Holder and to the Trustee and its successors and
assigns (a) the full and punctual payment of principal of and interest on the
Securities when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company under this
Indenture and the Securities and (b) the full and punctual performance within
applicable grace periods of all other obligations of the Company under this
Indenture and the Securities (all the foregoing being hereinafter collectively
called the "Obligations"). The LLC further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
the LLC, and that the LLC will remain bound under this Article 10
notwithstanding any extension or renewal of any Obligation.
The LLC waives presentation to, demand of payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. The LLC waives notice of any default under the
Securities or the Obligations. The obligations of the LLC hereunder shall not be
affected by (a) the failure of any Holder or the Trustee to assert any claim or
demand or to enforce any right or remedy against the Company or any other person
under this Indenture, the Securities or any other agreement or otherwise; (b)
any extension or renewal of any thereof; (c) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Indenture, the
Securities or any other agreement; (d) the release of any security held by any
Holder or the Trustee for the Obligations or any of them;
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(e) the failure of any Holder or Trustee to exercise any right or remedy against
any other guarantor of the Obligations; or (f) any change in the ownership of
the LLC.
The LLC further agrees that its Guaranty herein constitutes a
guaranty of payment, performance and compliance when due (and not a guaranty of
collection) and waives any right to require that any resort be had by any Holder
or the Trustee to any security held for payment of the Obligations.
To the fullest extent permitted by law, the obligations of the
LLC hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense of setoff,
counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, to the fullest extent
permitted by law, the obligations of the LLC herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the LLC or would otherwise operate as a discharge of the LLC as a matter of law
or equity.
The LLC further agrees that its Guaranty herein shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against the
LLC by virtue hereof, upon the failure of the Company to pay the principal of or
interest on any Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Obliga-
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tion, the LLC hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the
Trustee an amount equal to the sum of (i) the unpaid principal amount of such
Obligations, (ii) accrued and unpaid interest on such Obligations (but only to
the extent not prohibited by law) and (iii) all other monetary Obligations of
the Company to the Holders and the Trustee.
The LLC agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Obligations guarantied
hereby until payment in full of all Obligations. The LLC further agrees that, as
between the LLC, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the Obligations guarantied hereby may be accelerated
as provided in Article 6 for the purposes of the LLC Guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guarantied hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the LLC for the purposes of this Section.
The LLC also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holder in enforcing any rights under this Section.
SECTION 10.02. Successors and Assigns. This Article 10 shall
be binding upon the LLC and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.03. No Waiver, etc. Neither a failure nor a delay
on the part of either the Trustee or the Holders in exercising any right, power
or privilege under this Article 10 shall operate as a waiver thereof, nor shall
a single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege. The rights, remedies and benefits of the Trustee
and the Holders herein expressly specified are cumulative and not exclusive
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of any other rights, remedies or benefits which either may have under this
Article 10 at law, in equity, by statute or otherwise.
SECTION 10.04. Modification, etc. No modification, amendment
or waiver of any provision of this Article, nor the consent to any departure by
the LLC therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the LLC in any case shall entitle the LLC or any other
guarantor to any other or further notice or demand in the same, similar or other
circumstances.
ARTICLE 11
Security Documents
SECTION 11.01. Collateral and Security Documents. (a) To
secure the due and punctual payment of the obligations of the Company under this
Indenture and the Securities, the Pledgors, the Trustee and the Pledgee have
entered into the Security Documents to create the security interests and related
matters. The Trustee and the Company hereby acknowledge and agree that the
Pledgee holds the Collateral in trust for the equal and ratable benefit of the
Holders and the Trustee and the other parties secured under the Security
Documents pursuant to the terms of the Security Documents.
(b) Each Holder, by accepting a Security, agrees to all of the
terms and provisions of the Security Documents, as the same may be amended from
time to time pursuant to the provisions of the Security Documents and this
Indenture, and authorizes and directs the Pledgee to perform its obligations and
exercise its rights under the Security Documents in accordance therewith;
provided, however, that if any provisions of the Security Documents limit,
qualify or conflict with the duties imposed by the provisions of the TIA, the
TIA will control.
(c) As more fully set forth in, and subject to the provisions
of, the Security Documents, the Holders, and the Trustee on behalf of such
Holders, have rights in and to the Collateral which are equal and ratable with
the rights that may be created in favor of the holders of any Permitted
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Pari Passu Debt and any Refinancing Debt with respect to the Securities.
(d) As set forth in and governed by the Security Documents,
the Collateral as now or hereafter constituted shall be held for the equal and
ratable benefit of the Secured Parties (as defined in the Pledge Agreements)
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance, sale or otherwise, as security for the
Secured Obligations (as defined in the Pledge Agreements). As among the Holders,
the Collateral shall be held for the equal and ratable benefit of the Holders
without preference, priority or distinction of any thereof over any other.
SECTION 11.02. Release of Collateral. Collateral may be
released from the security interest created by the Security Documents at any
time or from time to time in accordance with the provisions of the Security
Documents. The release of any Collateral from the terms hereof and of the
Security Documents or the release of, in whole or in part, the Liens created by
the Security Documents, will not be deemed to impair the Lien on the Collateral
in contravention of the provisions hereof if and to the extent the Collateral or
Liens are released pursuant to the applicable Security Documents and pursuant to
the terms of this Article 11. The Trustee and each of the Holders acknowledge
that a release of Collateral or a Lien strictly in accordance with the terms of
the Security Documents and of this Article 11 will not be deemed for any purpose
to be an impairment of the Lien on the Collateral in contravention of the terms
of this Indenture. To the extent applicable, the Company and each obligor on the
Securities shall cause 'SS' 314(d) of the TIA relating to the release of
property or securities from the Lien hereof and of the Security Documents to be
complied with. Any certificate or opinion required by 'SS' 314(d) of the TIA may
be made by an officer of the Company, except in cases which 'SS' 314(d) of the
TIA requires that such certificate or opinion be made by an independent person.
SECTION 11.03. Certificates and Opinions. (a) The Company
shall deliver to the Trustee:
(i) promptly after the execution and delivery of this
Indenture, an Opinion of Counsel either stating that in the opinion of
such counsel the Indenture and the Security Documents (including
financing statements
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or other instruments) have been properly recorded and filed so as to
make effective the security interest intended to be created for the
benefit of the Securityholders, and reciting the details of such
action, or stating that in the opinion of such counsel no such action
is necessary to make such Lien effective; and
(ii) on or before March 1 of each year, an Opinion of Counsel
either stating that in the opinion of such counsel such action has been
taken with respect to the recording, filing, re-recording and re-filing
of the Indenture and the Security Documents (including financing
statements or other instruments) as is necessary to maintain the
security interest intended to be created thereby for the benefit of the
Securityholders, and reciting the details of such action, or stating
that in the opinion of such counsel no such action is necessary to
maintain such Lien.
(b) The Company shall comply with TIA 'SS' 314(d), relating to,
among other matters, the release of Collateral from the Lien of the Security
Documents and Officers' Certificates or other documents regarding fair value of
the Collateral, to the extent such provisions are applicable. Any certificate or
opinion required by TIA 'SS' 314(d) may be executed and delivered by an Officer
of the Company to the extent permitted by TIA 'SS' 314(d).
ARTICLE 12
Trust Moneys
SECTION 12.01. Delivery and Acceptance of Escrowed Funds. (a)
Concurrently with the execution and delivery of this Indenture, the Company is
depositing the Initial Deposit (as defined below) with the Trustee.
The "Initial Deposit" means an amount of cash equal to the sum
of (i) $29,000,000 and (ii) an amount equal to the total amount of interest that
will accrue on $29,000,000 principal amount of the Securities from the Issue
Date of the Securities to the date that is 10 Business Days after June 30, 1995
(collectively, the "Required Amounts").
(b) The Trustee hereby agrees to accept the Initial Deposit
and to hold such funds and the proceeds
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thereof in trust in one or more separate identifiable accounts for disbursement
in accordance with the provisions of this Indenture. The Initial Deposit and
proceeds thereof shall constitute the "Trust Funds". The Trustee further agrees
to invest the Trust Funds only in Permitted Investments and then only as
specifically directed in writing from time to time by the Company.
(c) The obligation and liability of the Trustee to make the
payments and transfers required by this Article 12 shall be limited to the Trust
Funds. The Trustee shall not be liable for any loss, fee, tax or other charge
resulting from any investment, reinvestment or liquidation made in good faith
pursuant to this Article 12 in compliance with the provisions hereof.
SECTION 12.02. Disbursement of Trust Funds. (a) If at any time
the Trustee receives notice from the Company that the closing of the Acquisition
will occur on or prior to June 30, 1995, the Trustee will promptly release the
Trust Funds to the Company upon presentation of an Officers' Certificate,
substantially in the form of Exhibit D hereto, certifying to the Trustee as to
the matters specified in Exhibit D hereto. The Trustee may rely on such
verification absent manifest error. The Trustee shall be under no obligation to
independently confirm the calculations contained in, or the conclusions reached
by, such statement.
(b) If the Securities become subject to the Mandatory
Redemption, the Company shall provide prompt notice thereof to the Trustee,
together with a certificate of a nationally recognized firm of independent
accountants setting forth a calculation of the amount in cash equal to 100% of
the aggregate principal amount of Securities subject to such Mandatory
Redemption plus accrued and unpaid interest to the redemption date (the
"Mandatory Redemption Price") payable on the date fixed for redemption.
If the Trustee receives a notice from the Company that a
Mandatory Redemption is to occur, the Trustee will release to the Paying Agent
an amount of Trust Funds equal to the Mandatory Redemption Price, as evidenced
in such notice from the Company. Concurrently with such release to the Paying
Agent, the Trustee shall release any Trust Funds in excess of the Mandatory
Redemption Price to the Company.
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(c) Notwithstanding paragraphs 12.02(a) and (b) above, if the
principal amount of and accrued and unpaid interest on the Securities has become
immediately due and payable pursuant to Section 6.02, the Trustee will liquidate
all investments contained in the Trust Funds then held by it and will thereafter
release all Trust Funds to the Paying Agent for payment to the holders of the
Securities.
SECTION 12.03. Indemnity. The Company agrees to indemnify the
Trustee, and its officers, directors, employees and agents, for and to hold it
and each of them harmless against any and all loss, liability, damage, claim or
expense arising out of or in connection with this Article 12 and carrying out
its duties hereunder, including the cost and expenses of defending itself
against any claim of liability; provided, however, that the Company shall not be
liable for indemnification or otherwise for any loss, liability or expense to
the extent arising out of the gross negligence, wilful misconduct or bad faith
of the Trustee.
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Benedek Broadcasting Corporation
Stewart Square, Suite 210
308 West State Street
Rockford, Illinois 61101
Attention: Chief Financial Officer
if to the LLC, in care of the Company at the
address set forth above
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if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA 'SS' 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA 'SS' 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
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SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company,
the LLC or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or the LLC shall be
disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee actually knows
are so owned shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 13.08. Legal Holidays. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
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record date is a Legal Holiday, the record date shall not be affected.
SECTION 13.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 13.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 13.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 13.13 Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be
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considered a part hereof and shall not modify or restrict any of the terms or
provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
BENEDEK BROADCASTING
CORPORATION,
by
/s/ A. Richard Benedek
____________________________________
Name: A. Richard Benedek
Title: President
Attest:
/s/ Paul S. Goodman
__________________________________
BENEDEK BROADCASTING COMPANY,
L.L.C.,
by BENEDEK BROADCASTING
CORPORATION, a Member,
by
/s/ A. Richard Benedek
__________________________________
Name: A. Richard Benedek
Title: President
Attest:
/s/ Paul S. Goodman
__________________________________
THE BANK OF NEW YORK, as Trustee,
by
/s/ Helen M. Cotiaux
_____________________________________
Name: Helen M. Cotiaux
Title: Vice President
Attest:
/s/ Vivian Georges
__________________________________
<PAGE>
<PAGE>
EXHIBIT A
TO INDENTURE
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY
THE INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR
(3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) AND (B) BY SUBSEQUENT
INVESTORS, AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN
INSTITUTIONAL ACCREDITED INVESTOR AS DESCRIBED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN
<PAGE>
<PAGE>
2
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES.
<PAGE>
<PAGE>
No. $
CUSIP:
11-7/8% Senior Secured Note due 2005
BENEDEK BROADCASTING CORPORATION, a Delaware corporation,
promises to pay to , or registered assigns, the
principal sum of Dollars on March 1, 2005.
Interest Payment Dates: March 1 and September 1.
Record Dates: February 15 and August 15.
Additional provisions of this Security are set forth on the
other side of this Security.
BENEDEK BROADCASTING
CORPORATION,
by
______________________________________
President
______________________________________
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
The Bank of New York,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
_____________________________
Authorized Signatory
<PAGE>
<PAGE>
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
BENEDEK BROADCASTING CORPORATION
11-7/8% Senior Secured Note due 2005
1. Interest.
Benedek Broadcasting Corporation, a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above; provided,
however, that if (i) the applicable Registration Statement (as defined in the
Registration Rights Agreement) is not filed with the SEC on or prior to 45 days
after the Issue Date, (ii) neither the Exchange Offer Registration Statement (as
defined in the Registration Rights Agreement) nor the Shelf Registration
Statement (as defined in the Registration Rights Agreement) is declared
effective by November 30, 1995, (iii) unless the Exchange Offer would not be
permitted by a policy of the SEC, the Exchange Offer is not consummated by
December 31, 1995, (iv) the Shelf Registration Statement is required to be filed
by the Company but is not declared effective by December 31, 1995, or (v) after
a Registration Statement is declared effective, such Registration Statement
thereafter ceases to be effective or such Registration Statement or the related
prospectus ceases to be usable (subject to certain exceptions) in connection
with resales of Transfer Restricted Securities during the periods specified in
the Registration Rights Agreement (each such event referred to in clauses (i)
through (v), a "Registration Default"), interest will accrue on this Security at
a rate of 12-3/8% per annum from and including the date on which any such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured.
The Company will pay interest semiannually on March 1 and
September 1 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from March 10, 1995. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company shall pay interest on overdue principal at the
rate borne by the Securities plus 1% per annum, and it shall pay interest
<PAGE>
<PAGE>
5
on overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment.
The Company will pay interest on the Securities (except defaulted interest) to
the persons who are registered holders of Securities at the close of business on
the February 15 or August 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of the
Definitive Securities (including principal, premium and interest), by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar.
Initially, The Bank of New York, a New York banking corporation ("Trustee"),
will act as Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice. The Company or any of
its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
<PAGE>
<PAGE>
6
4. Indenture.
The Company issued the Securities under an Indenture dated as of March 1, 1995
("Indenture"), among the Company, Benedek Broadcasting Company, L.L.C. and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. 'SS''SS' 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement
of those terms.
The Securities are general unsecured obligations of the
Company limited to $135,000,000 aggregate principal amount (subject to Section
2.07 of the Indenture). The Indenture imposes certain limitations on the
issuance of additional debt by the Company and its Subsidiaries, the creation of
liens on the assets of the Company and its Subsidiaries, the Company entering
into sale and leaseback transactions, the issuance of debt and preferred stock
by its Subsidiaries, investments in certain affiliates, the payment of dividends
and other distributions and acquisitions or retirements of the Capital Stock of
the Company and its Subsidiaries and Subordinated Obligations, the sale or
transfer of assets and Subsidiary stock, transactions with Affiliates, certain
activities by the LLC, and consolidations, mergers and transfers of all or
substantially all of the Company's assets. In addition, the Indenture limits the
ability of the Company and the Subsidiaries to restrict distributions and
dividends from Subsidiaries and requires the Company, under certain
circumstances, to offer to purchase Securities. The limitations are subject to a
number of important qualifications and exceptions.
5. Optional Redemption.
Except as set forth in the next paragraph, the Securities may
not be redeemed at the option of the Company prior to March 1, 2000. On and
after that date, the Company may redeem the Securities in whole at any time or
in part from time to time at the following redemption prices (expressed in
percentages of principal amount), plus accrued interest (if any) to the
redemption date (subject to the
<PAGE>
<PAGE>
7
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date):
if redeemed during the
12-month period beginning Redemption
March 1, Price
2000 ...................... 105.938%
2001 ...................... 102.969%
2002 ...................... 101.484%
2003 and thereafter ....... 100.000%
Notwithstanding the foregoing, at any time prior to March 1,
1998, the Company may redeem Securities, in part and from time to time, to the
extent the Company actually receives the net proceeds of one or more Public
Equity Offerings, at 110.875% of the principal amount thereof, plus accrued
interest to the date of redemption (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided, however, that at least $100,000,000 ($75,000,000 if the
Mandatory Redemption described in paragraph 6 below has occurred) aggregate
principal amount of the Securities must remain outstanding after each such
redemption. A "Public Equity Offering" means an underwritten public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act of 1933.
6. Mandatory Redemption.
In the event that the acquisition (the "Acquisition") by the
Company of substantially all of the assets (excluding cash and accounts
receivable) of WTVY-TV (the "Dothan Station") is not consummated on or prior to
June 30, 1995, or, if it appears, in the sole judgment of the Company, that the
Acquisition will not be consummated in all material respects on or prior to such
date, then at any time on or prior to June 30, 1995 (the "Mandatory Redemption
Date"), the Company will redeem $29,000,000 principal amount of the Securities
in accordance with this paragraph and Article 3 of the Indenture. The Company
shall mail a notice of redemption by first-class mail to each Holder of
Securities to be redeemed in accordance with Article 3 of the Indenture. The
Company shall notify each of the Trustee and the Pledgee of such redemption. On
such redemption date the Company shall redeem $29,000,000 principal amount of
the
<PAGE>
<PAGE>
8
Securities at a redemption price of 100% of the principal amount of the
Securities, plus accrued and unpaid interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date).
7. Notice of Redemption.
Subject to paragraph 6 above, notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at his registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
8. Put Provisions.
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities to be repurchased plus accrued interest to the date of repurchase
as provided in, and subject to the terms of, the Indenture.
9. Guarantees.
This Security is guarantied by the LLC to the extent provided
in the Indenture. The Company has also covenanted pursuant to the Indenture to
cause any Designated Subsidiary to execute and deliver to the Trustee a
Guarantee Agreement pursuant to which such Designated Subsidiary will guarantee
this Security on the same terms and conditions as those set forth in the
Indenture.
10. Collateral and Security Documents.
To secure the due and punctual payment of the principal of,
premium, if any, and interest on the Securities and all other amounts payable by
the Company under the
<PAGE>
<PAGE>
9
Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, the Pledgors have granted
security interests in the Collateral to the Pledgee for the benefit of the
holders of Securities pursuant to the Pledge Agreements. Such Collateral also
secures certain other obligations of the Company on a pari passu basis.
11. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 (or, in the case of Securities sold to institutional
accredited investors as described in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, minimum denominations of $250,000) and whole multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
12. Persons Deemed Owners.
The registered holder of this Security may be treated as the
owner of it for all purposes.
13. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
14. Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with
<PAGE>
<PAGE>
10
the Trustee money or U.S. Government Obligations for the payment of principal
and interest on the Securities to redemption or maturity, as the case may be.
15. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add Guarantees with respect to the Securities or to further secure the
Securities, or to add additional covenants of the Company or the LLC or A.
Richard Benedek for the benefit of the Holders or surrender rights and powers
conferred on the Company or the LLC or A. Richard Benedek, or to comply with any
request of the SEC in connection with qualifying the Indenture under the Act or
to make any change that does not adversely affect the rights of any
Securityholder.
16. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities or paragraph 6 of the Securities, upon declaration or
otherwise, or failure by the Company to redeem or purchase Securities when
required; (iii) failure by the Company, the LLC or a Subsidiary to comply with
other agreements in the Indenture or the Securities or the Security Documents or
the breach of certain representations and warranties made in the Pledge
Agreements, in certain cases subject to notice and lapse of time; (iv) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Debt of the Company, the LLC or a Significant Subsidiary if
the amount accelerated or so unpaid exceeds $1,000,000 and continues for
<PAGE>
<PAGE>
11
10 days; (v) certain events of bankruptcy or insolvency with respect to the
Company, the LLC or a Significant Subsidiary; (vi) certain judgments or decrees
for the payment of money in excess of $1,000,000; and (vii) the failure at any
time of the LLC Guaranty (or any other Guarantee of the Notes) or of the
security interest created under the Security Documents. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in their interest.
17. Trustee Dealings with the Company.
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
18. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company or the Trustee, respectively under the Securities or the Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
<PAGE>
<PAGE>
12
19. Authentication.
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
22. Governing Law.
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
<PAGE>
<PAGE>
13
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Benedek Broadcasting Corporation
Stewart Square, Suite 210
308 West State Street
Rockford, Illinois 61101
Attention: Chief Financial Officer
<PAGE>
<PAGE>
14
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ________________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
________________________________________________________________________________
Date: ________________ Your Signature: _____________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guarantee: __________________________________________________________
(Signature must be guaranteed by an "eligible
guarantor institution" that is, a bank,
stockbroker, saving and loan association
or credit union meeting the requirements of
the Registrar, which requirements include
membership or participation in the
Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee
program" as may be determined by the
Registrar in addition to, or in substitution
for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.)
<PAGE>
<PAGE>
15
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER
RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated
above);
[ ] has requested the Trustee by written order to exchange or
register the transfer of a Security or Securities.
The undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
(1) [ ] acquired for the undersigned's own account, with-
out transfer (in satisfaction of Sec-
tion 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of
the Indenture); or
(2) [ ] transferred to the Company; or
(3) [ ] transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933, as
amended; or
(4) [ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933, as
amended; or
(5) [ ] transferred to an institutional
"accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended) and that
the transferor is a "subsequent investor"
within the meaning of the legend on the face
of this Security; or
(6) [ ] transferred pursuant to another available exemp-
tion from the registration requirements of the
Securities Act of 1933, as amended.
<PAGE>
<PAGE>
16
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (4), (5) or
(6) is checked, the Company or the Trustee may require evidence reasonably
satisfactory to them as to the compliance with the restrictions set forth in the
legend on the face of this Security.
______________________________
Signature
Signature Guarantee:_____________________________________________
(Signature must be guaranteed by an "eligible
guarantor institution", that is, a bank , stock-
broker, saving and loan association or credit
union meeting the requirements of the Registrar,
which requirements include membership or partici-
pation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guaran-
tee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of
1934, as amended.)
_________________________________________________________________
<PAGE>
<PAGE>
17
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 of the Indenture, state the
amount and check the box:
$ [ ]
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state the
amount and check the box:
$ [ ]
Date: __________________ Your Signature: _________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:______________________________________________________
(Signature must be guaranteed by an
"eligible guarantor institution", that is, a
bank , stockbroker, saving and loan
association or credit union meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Securities Transfer
Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may
be determined by the Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.)
<PAGE>
<PAGE>
18
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C> <C> <C> <C>
=================================================================================================================================
Principal Amount of this
Amount of decrease in Amount of increase in Global Security following Signature of authorized
Principal Amount of this Principal Amount of this such decrease or increase officer of Trustee or
Date of Global Security Global Security Securities Custodian
Exchange
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
EXHIBIT B
TO INDENTURE
[FORM OF FACE OF EXCHANGE SECURITY]
No. $
CUSIP:
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.*/
11-7/8% Senior Secured Note Series A due 2005
BENEDEK BROADCASTING CORPORATION, a Delaware corporation,
promises to pay to , or registered assigns, the
principal sum of Dollars on March 1, 2005.
Interest Payment Dates: March 1 and September 1.
Record Dates: February 15 and August 15.
- --------
*/ This legend should only be added if the Security is issued in global form.
<PAGE>
<PAGE>
2
Additional provisions of this Security are set forth on the
other side of this Security.
BENEDEK BROADCASTING CORPORATION,
by
[Seal] _____________________________________
President
_____________________________________
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
The Bank of New York,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
______________________________
Authorized Signatory
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[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
BENEDEK BROADCASTING CORPORATION
11-7/8% Senior Secured Note Series A due 2005
1. Interest.
Benedek Broadcasting Corporation, a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on March 1 and September 1 of each year. Interest
on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from March 10, 1995. Interest will
be computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities plus
1% per annum, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
2. Method of Payment.
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are registered holders of Securities at
the close of business on the February 15 or August 15 next preceding the
interest payment date even if Securities are canceled after the record date and
on or before the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal and interest by check payable in such money. It may mail an interest
check to a Holder's registered address.
3. Paying Agent and Registrar.
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any
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Paying Agent, Registrar or co-registrar without notice. The Company or any of
its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
4. Indenture.
The Company issued the Securities under an Indenture dated as of March
1, 1995 ("Indenture"), among the Company, Benedek Broadcasting Company, L.L.C.
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. 'SS''SS' 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of those terms.
The Securities are general unsecured obligations of the
Company limited to $135,000,000 aggregate principal amount (subject to Section
2.07 of the Indenture). The Indenture imposes certain limitations on the
issuance of additional debt by the Company and its Subsidiaries, the creation of
liens on the assets of the Company and its Subsidiaries, the Company entering
into sale and leaseback transactions, the issuance of debt and preferred stock
by its Subsidiaries, investments in certain affiliates, the payment of dividends
and other distributions and acquisitions or retirements of the Capital Stock of
the Company and its Subsidiaries and Subordinated Obligations, the sale or
transfer of assets and Subsidiary stock, transactions with Affiliates, certain
activities by the LLC, and consolidations, mergers and transfers of all or
substantially all of the Company's assets. In addition, the Indenture limits the
ability of the Company and the Subsidiaries to restrict distributions and
dividends from Subsidiaries and requires the Company, under certain
circumstances, to offer to purchase Securities. The limitations are subject to a
number of important qualifications and exceptions.
5. Optional Redemption.
Except as set forth in the next paragraph, the Securities may
not be redeemed at the option of the Company
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prior to March 1, 2000. On and after that date, the Company may redeem the
Securities in whole at any time or in part from time to time at the following
redemption prices (expressed in percentages of principal amount), plus accrued
interest (if any) to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
if redeemed during the
12-month period beginning Redemption
March 1, Price
2000 ...................... 105.938%
2001 ...................... 102.969%
2002 ...................... 101.484%
2003 and thereafter ....... 100.000%
Notwithstanding the foregoing, at any time prior to March 1,
1998, the Company may redeem Securities, in part and from time to time, to the
extent the Company actually receives the net proceeds of one or more Public
Equity Offerings, at 110.875% of the principal amount thereof, plus accrued
interest to the date of redemption (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided, however, that at least $100,000,000 ($75,000,000 if the
Mandatory Redemption described in paragraph 6 below has occurred) aggregate
principal amount of the Securities must remain outstanding after each such
redemption. A "Public Equity Offering" means an underwritten public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act of 1933.
6. Mandatory Redemption.
In the event that the acquisition (the "Acquisition") by the
Company of substantially all of the assets (excluding cash and accounts
receivable) of WTVY-TV (the "Dothan Station") is not consummated on or prior to
June 30, 1995, or, if it appears, in the sole judgment of the Company, that the
Acquisition will not be consummated in all material respects on or prior to such
date, then at any time on or prior to June 30, 1995 (the "Mandatory Redemption
Date"), the Company will redeem $29,000,000 principal amount of the Securities
in accordance with this paragraph and Article 3 of the Indenture. The Company
shall mail a notice
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of redemption by first-class mail to each Holder of Securities to be redeemed in
accordance with Article 3 of the Indenture. The Company shall notify each of the
Trustee and the Pledgee of such redemption. On such redemption date the Company
shall redeem $29,000,000 principal amount of the Securities at a redemption
price of 100% of the principal amount of the Securities, plus accrued and unpaid
interest to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date).
7. Notice of Redemption.
Subject to paragraph 6 above, notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at his registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
8. Put Provisions.
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities to be repurchased plus accrued interest to the date of repurchase
as provided in, and subject to the terms of, the Indenture.
9. Guarantees.
This Security is guarantied by the LLC to the extent provided
in the Indenture. The Company has also covenanted pursuant to the Indenture to
cause any Designated Subsidiary to execute and deliver to the Trustee a
Guarantee Agreement pursuant to which such Designated Subsidiary will guarantee
this Security on the same terms and conditions as those set forth in the
Indenture.
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10. Collateral and Security Documents.
To secure the due and punctual payment of the principal of,
premium, if any, and interest on the Securities and all other amounts payable by
the Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, the Pledgors
have granted security interests in the Collateral to the Pledgee for the benefit
of the holders of Securities pursuant to the Pledge Agreements. Such Collateral
also secures certain other obligations of the Company on a pari passu basis.
11. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
12. Persons Deemed Owners.
The registered holder of this Security may be treated as the
owner of it for all purposes.
13. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
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14. Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
15. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add Guarantees with respect to the Securities or to further secure the
Securities, or to add additional covenants of the Company or the LLC or A.
Richard Benedek for the benefit of the Holders or surrender rights and powers
conferred on the Company or the LLC or A. Richard Benedek, or to comply with any
request of the SEC in connection with qualifying the Indenture under the Act or
to make any change that does not adversely affect the rights of any
Securityholder.
16. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities or paragraph 6 of the Securities, upon declaration or
otherwise, or failure by the Company to redeem or purchase Securities when
required; (iii) failure by the Company, the LLC or a Subsidiary to comply with
other agreements in the Indenture or the Securities or the Security Documents or
the breach of certain representations
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and warranties made in the Pledge Agreements, in certain cases subject to notice
and lapse of time; (iv) certain accelerations (including failure to pay within
any grace period after final maturity) of other Debt of the Company, the LLC or
a Significant Subsidiary if the amount accelerated or so unpaid exceeds
$1,000,000 and continues for 10 days; (v) certain events of bankruptcy or
insolvency with respect to the Company, the LLC or a Significant Subsidiary;
(vi) certain judgments or decrees for the payment of money in excess of
$1,000,000; and (vii) the failure at any time of the LLC Guaranty (or any other
Guarantee of the Notes) or of the security interest created under the Security
Documents. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in their interest.
17. Trustee Dealings with the Company.
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
18. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company or the Trustee,
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respectively under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
19. Authentication.
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
22. Governing Law.
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
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The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Benedek Broadcasting Corporation
Stewart Square, Suite 210
308 West State Street
Rockford, Illinois 61101
Attention: Chief Financial Officer
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
________________________________________________________________________________
Date: ________________ Your Signature: ______________________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guarantee: ________________________________________________
(Signature must be guaranteed by an "eligible
guarantor institution" that is, a bank,
stockbroker, saving and loan association
or credit union meeting the requirements of
the Registrar, which requirements include
membership or participation in the
Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee
program" as may be determined by the
Registrar in addition to, or in substitution
for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.)
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 of the Indenture, state the
amount and check the box:
$
[ ]
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state the
amount and check the box:
$
[ ]
Date: __________________ Your Signature: _________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:______________________________________________________
(Signature must be guaranteed by an
"eligible guarantor institution", that is, a
bank , stockbroker, saving and loan
association or credit union meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Securities Transfer
Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may
be determined by the Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.)
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EXHIBIT C
TO INDENTURE
FORM OF GUARANTEE AGREEMENT
GUARANTEE AGREEMENT, dated as of ,
, made by (the "Guarantor"), the under-
signed subsidiary of Benedek Broadcasting Corporation, in favor of the Holders
and the Trustee (as defined in the Indenture referred to below).
Reference is made to the Indenture dated as of March 1, 1995
(as amended, restated, supplemented, modified or waived from time to time, the
"Indenture"), among Benedek Broadcasting Corporation (the "Company"), a
subsidiary of the Company, and the Trustee.
W I T N E S S E T H:
WHEREAS the Company is a party to the Indenture;
WHEREAS the Company owns directly all of or a majority
interest in the Guarantor;
WHEREAS the Guarantor will derive substantial direct and
indirect benefit from the transactions contemplated by the Indenture;
NOW, THEREFORE, in consideration of the promises thereby, the
Guarantor hereby agrees with and for the benefit of the Holders as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Guarantee, terms
defined in the Indenture or in the preamble or recitals hereto are used herein
as therein defined, except that the term "Holders" in this guarantee shall refer
to the term "Holders" as defined in the Indenture and the Trustee acting on
behalf or for the benefit of such holders.
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ARTICLE II
Representations and Warranties of the Guarantor
SECTION 2.01. Representations and Warranties. The Guarantor
hereby represents and warrants to the Holders as follows:
(a) Due Existence; Compliance. The Guarantor is a corporation
or limited partnership duly organized, validly existing and in good standing,
where applicable, under the laws of the jurisdiction in which it was
incorporated or organized and has all requisite power and authority under such
laws to own or lease and operate its properties and to carry on its business as
now conducted and as proposed to be conducted, and to execute, deliver and
perform its obligations under this Guarantee. The Guarantor is duly qualified or
licensed to do business as a foreign corporation or entity and is in good
standing, where applicable, in all jurisdictions in which it owns or leases
property, or proposes to own or lease property, or in which the conduct of its
business requires it to so qualify or be licensed, except to the extent that the
failure to so qualify or be in good standing would have no material adverse
effect on the business, operations, properties, prospects or condition
(financial or otherwise) of the Guarantor. The Guarantor is in compliance in all
material respects with all applicable law, rules, regulations and orders.
(b) Corporate Authorities; No Conflicts. The execution,
delivery and performance by the Guarantor of this Guarantee is within its
corporate or limited partnership powers and has been duly authorized by all
necessary corporate and stockholder approvals or partnership approvals and (i)
does not contravene its organizational documents or any law, rule, regulation,
judgment, order or decree applicable to or binding on the Guarantor and (ii)
does not contravene, and will not result in the creation of any lien under, any
provision of any contract, indenture, mortgage or agreement to which the
Guarantor is a party, or by which it or any of its properties are bound.
(c) Government Approvals and Authorizations. No authorization
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due execution,
delivery and performance by or enforcement against the Guarantor of this
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Guarantee (except such governmental approvals or authorizations as have been
duly obtained or made and remain in full force and effect).
(d) Legal, Valid and Binding. This Guarantee is the legal
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms.
(e) Litigation. There is no pending or threatened action or
proceeding affecting the Guarantor by or before any court, governmental agency
or arbitrator, which may materially adversely affect the condition, operations,
business, prospects, properties or assets of the Guarantor, or prohibit, limit
in any way or materially adversely affect the ability of the Guarantor to
perform its obligations under this Guarantee.
(f) Immunities. Neither the Guarantor nor its property has any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) under applicable law.
(g) No Filing. To ensure the legality, validity,
enforceability or admissibility in evidence of this Guarantee in each of the
jurisdictions in which the Guarantor is incorporated or organized or any other
jurisdiction in which the Guarantor conducts business, it is not necessary that
this Guarantee be filed or recorded with any court or other authority in such
jurisdiction, or that any stamp or similar tax be paid on or with respect to
this Guarantee.
(h) No Defaults. There does not exist any event of default, or
any event that with notice or lapse of time or both would constitute an event of
default, under any agreement to which the Guarantor is a party or by which it
may be bound, or to which any of its properties or assets may be subject which
default would have a material adverse effect on the Guarantor, or would
materially adversely affect the Guarantor's ability to perform its obligations
under this Guarantee.
(i) Solvency. The Guarantor is on the date hereof, and at all
times will be, solvent.
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ARTICLE III
Guarantee
SECTION 3.01. Guarantee. The Guarantor hereby unconditionally
and irrevocably guaranties to each Holder of the Securities (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under the Indenture and the Securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under the Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Obligations"). The
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from it, and that it will
remain bound under this Article III notwithstanding any extension or renewal of
any Obligation.
The Guarantor waives presentation to, demand of payment from
and protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. The Guarantor waives notice of any default under the
Securities or the Obligations. The obligations of the Guarantor hereunder shall
not be affected by (a) the failure of any Holder to assert any claim or demand
or to enforce any right or remedy against the Company or any other person under
the Indenture, the Securities or any other agreement or otherwise; (b) any
extension or renewal of any thereof; (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of the Indenture, the Securities
or any other agreement; or (d) the failure of any Holder to exercise any right
or remedy against any other Guarantor of the Obligations.
The Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder to any security held for payment of the Obligations.
Except as otherwise provided herein, the obligations of the
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment
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or termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantor herein shall not
be discharged or impaired or otherwise affected by the failure of any Holder to
assert any claim or demand or to enforce any remedy under the Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the Obligations, or by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of the Guarantor or would otherwise operate as a discharge of the Guarantor
as a matter of law or equity.
The Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder has at law or in equity against the Guarantor by
virtue hereof, upon the failure of the Company to pay the principal of or
interest on any Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Obligation, the Guarantor hereby promises to and will, upon
receipt of written demand by the Trustee or the Holders of a majority of the
Securities (the "Majority Securityholders"), forthwith pay, or cause to be paid,
in cash, to the Holders an amount equal to the sum of (i) the unpaid principal
amount of such Obligations, (ii) accrued and unpaid interest on such Obligations
(but only to the extent not prohibited by law) and (iii) all other monetary
Obligations of the Company to the Holders.
The Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Obligations
guarantied hereby until payment in full of all Obligations. The Guarantor
further agrees that, as between such Guarantor, on the one hand, and the
Holders, on the other hand, (x) the maturity of the Obligations guarantied
hereby may be accelerated for the purposes of such Guarantor's Guarantee herein,
notwith-
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standing any stay, injunction or other prohibition preventing such acceleration
in respect of the Obligations guarantied hereby, and (y) in the event of any
declaration of acceleration of such Obligations, such Obligations (whether or
not due and payable) shall forthwith become due and payable by such Guarantor
for the purposes of this Section.
The Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by any Holder in
enforcing any rights under this Section.
SECTION 3.02. Limitation on Liability. (a) Any term or
provision of this Guarantee to the contrary notwithstanding, the maximum
aggregate amount of the Obligations guarantied hereunder by the Guarantor shall
not exceed the maximum amount that can be hereby guarantied without rendering
this Guarantee, as it relates to such Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer.
(b) This Guarantee shall terminate and be of no further force
or effect upon the sale or other transfer (i) by the Guarantor of all or
substantially all of its assets or (ii) by the Company of all of its stock or
other equity interests in the Guarantor, to a Person that is not an Affiliate of
the Company; provided, however, that such sale or transfer constitutes an Asset
Disposition as defined in the Indenture. Upon notice to the Trustee that such a
sale or transfer described in this clause 3.02(b) has occurred, the Trustee
shall return the original Guarantee to the Guarantor.
SECTION 3.03. Successors and Assigns. Subject to Section
3.02(b) hereof, this Article III shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Holders and, in the event of any transfer or assignment of rights
by any Holder, the rights and privileges conferred upon that party in this
Guarantee and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Guarantee.
SECTION 3.04. No Waiver, etc. Neither a failure nor a delay on
the part of the Holders or the Trustee in exercising any right, power or
privilege under this Article III shall operate as a waiver thereof, nor shall a
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single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Holders and
the Trustee herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article III
at law, in equity, by statute or otherwise.
SECTION 3.05. Modification, etc. No modification, amendment or
waiver of any provision of this Article, nor the consent to any departure by the
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Securityholders, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which it was given. No notice to or demand on the Guarantor in any case shall
entitle such Guarantor or any other guarantor to any other or further notice or
demand in the same, similar or other circumstances.
ARTICLE IV
Miscellaneous
SECTION 4.01. Notices. All notices and other communications
pertaining to this Guarantee or any Security shall be in writing and shall be
deemed to have been duly given upon the receipt thereof. Such notices shall be
delivered by hand, or mailed, certified or registered mail with postage prepaid
(a) if to the Guarantor, at its address set forth below, and (b) if to the
Holders or the Trustee, as provided in the Indenture.
SECTION 4.02. Parties. Nothing expressed or mentioned in this
Guarantee is intended or shall be construed to give any Person, firm or
corporation, other than the Holders and the Trustee, any legal or equitable
right, remedy or claim under or in respect of this Guarantee or any provision
herein contained.
SECTION 4.03. Governing Law. This Agreement shall be governed
by the laws of the State of New York regardless of the laws that might otherwise
govern under applicable principles of conflict of laws thereof.
<PAGE>
<PAGE>
8
SECTION 4.04. Severability Clause. In case any provision in
this Guarantee shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.
SECTION 4.05. Waivers, Amendments and Remedies. The failure to
insist in any one or more instances upon strict performance of any of the
provisions of this Guarantee or to take advantage of any of its rights hereunder
shall not be construed as a waiver of any such provisions or the relinquishment
of any such rights, but the same shall continue and remain in full force and
effect. Except as otherwise expressly limited in this Guarantee, all remedies
under this Guarantee shall be cumulative and in addition to every other remedy
provided for herein or by law.
SECTION 4.06. Entire Agreement. This Guarantee is intended by
the parties to be a final expression of their agreement in respect of the
subject matter contained herein and supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
SECTION 4.07. Headings. The headings of the Articles and the
sections in this Guarantee are for convenience of reference only and shall not
be deemed to alter or affect the meaning or interpretation of any provisions
hereof.
IN WITNESS WHEREOF, the Guarantor has duly executed this
Guarantee as of the date first above written.
[NAME OF GUARANTOR],
By
____________________________________
Name:
Title:
Address:
<PAGE>
<PAGE>
EXHIBIT D
TO INDENTURE
Form of Officers' Certificate
of
Benedek Broadcasting Corporation
This certificate is being delivered pursuant to Section
12.02(a) of the Indenture dated as of March 1, 1995 (the "Indenture"), among
Benedek Broadcasting Corporation (the "Company"), Benedek Broadcasting Company,
L.L.C. and The Bank of New York, as Trustee. The undersigned Officers of the
Company hereby certify on behalf of the Company that:
1. Concurrently with the delivery of this Certificate and the
release of funds to the Company pursuant to the provisions of Article 12 of the
Indenture, the Company proposes to close the acquisition of the Dothan Station
(the "Acquisition") pursuant to the terms of the purchase agreement for the
Acquisition between the Company and [relevant counterparty].
2. The terms of the transactions to be entered into and the
business to be acquired conform in all material respects to the descriptions
thereof contained in the Offering Circular dated March 3, 1995.
3. All conditions to the closing of the Acquisition referred
to in paragraph 1 above have been satisfied or waived.
4. The Licenses in respect of the Dothan Station will be
assigned to the LLC at the closing of the Acquisition.
Capitalized terms used herein which are not otherwise defined
shall have the meanings ascribed to them in the Indenture.
IN WITNESS WHEREOF, the undersigned Officers of Benedek
Broadcasting Corporation have hereby signed this Certificate this day
of , 1995.
_________________________________________
Name:
Title:
_________________________________________
Name:
Title:
<PAGE>
<PAGE>
WARRANT AGREEMENT
Dated as of
June 5, 1996
between
BENEDEK COMMUNICATIONS CORPORATION
and
IBJ SCHRODER BANK & TRUST COMPANY,
as the Warrant Agent
---------------------------------------------
Warrants for
Class A Common Stock of
Benedek Communications Corporation
---------------------------------------------
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1
Definitions
SECTION 1.01. Definitions....................................................... 3
SECTION 1.02. Other Definitions................................................. 7
SECTION 1.03. Rules of Construction............................................. 8
ARTICLE 2
Warrant Certificates
SECTION 2.01. Form and Dating................................................... 8
SECTION 2.02. Execution and Countersignature.................................... 9
SECTION 2.03. Certificate Register.............................................. 10
SECTION 2.04. Transfer and Exchange............................................. 10
SECTION 2.05. Replacement Certificates.......................................... 15
SECTION 2.06. Temporary Certificates............................................ 15
SECTION 2.07. Cancellation...................................................... 15
ARTICLE 3
Exercise Terms
SECTION 3.01. Exercise Price.................................................... 16
SECTION 3.02. Exercise Periods.................................................. 16
SECTION 3.03. Expiration........................................................ 16
SECTION 3.04. Manner of Exercise................................................ 16
SECTION 3.05. Issuance of Warrant Shares........................................ 18
SECTION 3.06. Fractional Warrant Shares......................................... 18
SECTION 3.07. Reservation of Warrant Shares..................................... 19
SECTION 3.08. Compliance with Law............................................... 19
SECTION 3.09. Status of Warrants Subject to the
Contingent Warrant Escrow
Agreement..................................................... 20
SECTION 3.10. Notice of Contingent Warrant
Release Date.................................................. 20
</TABLE>
<PAGE>
<PAGE>
2
<TABLE>
<S> <C> <C>
ARTICLE 4
Antidilution Provisions
SECTION 4.01. Changes in Common Stock........................................... 21
SECTION 4.02. Cash Dividends and Other
Distributions................................................... 21
SECTION 4.03. Rights Issue...................................................... 22
SECTION 4.04. Combination; Liquidation.......................................... 23
SECTION 4.05. Tender Offers; Exchange Offers.................................... 24
SECTION 4.06. Other Events...................................................... 25
SECTION 4.07. Superseding Adjustment............................................ 25
SECTION 4.08. Minimum Adjustment................................................ 25
SECTION 4.09. Notice of Adjustment.............................................. 26
SECTION 4.10. Notice of Certain Transactions.................................... 27
SECTION 4.11. Adjustment to Warrant
Certificate..................................................... 28
ARTICLE 5
Transferability
SECTION 5.01. Registration Rights............................................... 28
SECTION 5.02. Legends........................................................... 28
ARTICLE 6
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent...................................... 29
SECTION 6.02. Rights and Duties of
Warrant Agent................................................... 29
SECTION 6.03. Individual Rights of
Warrant Agent................................................... 31
SECTION 6.04. Warrant Agent's Disclaimer........................................ 31
SECTION 6.05. Compensation and Indemnity........................................ 31
SECTION 6.06. Successor Warrant Agent........................................... 32
</TABLE>
<PAGE>
<PAGE>
3
<TABLE>
<S> <C> <C>
ARTICLE 7
Miscellaneous
SECTION 7.01. SEC Reports and Other Information................................. 34
SECTION 7.02. Rule 144A......................................................... 34
SECTION 7.03. Persons Benefitting............................................... 34
SECTION 7.04. Rights of Holders................................................. 34
SECTION 7.05. Amendment......................................................... 35
SECTION 7.06. Notices........................................................... 35
SECTION 7.07. Governing Law..................................................... 36
SECTION 7.08. Successors........................................................ 36
SECTION 7.09. Multiple Originals................................................ 36
SECTION 7.10. Table of Contents................................................. 36
SECTION 7.11. Severability...................................................... 37
EXHIBIT A Form of Face of Warrant Certificate
EXHIBIT B Certificate to be Delivered upon
Exchange or Registration of
Transfer of Warrants
</TABLE>
<PAGE>
<PAGE>
WARRANT AGREEMENT dated as of June 5, 1996,
between BENEDEK COMMUNICATIONS CORPORATION, a
Delaware corporation (the "Company"), and IBJ
SCHRODER BANK & TRUST COMPANY, as Warrant Agent (the
"Warrant Agent").
The Company desires to issue the warrants (the "Warrants")
described herein. The Warrants will initially entitle the holders thereof (the
"Holders") to purchase in the aggregate 1,488,000 shares of Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock") of the Company in
connection with an offering by the Company (the "Offering") of 60,000 units (the
"Units"). Each Unit will consist of (i) ten shares of the Company's 15.0%
Exchangeable Redeemable Senior Preferred Stock Due 2007 (the "Exchangeable
Preferred Stock"), having a liquidation preference of $100.00 per share, (ii)
ten Warrants (the "Initial Warrants") and (iii) 14.8 additional Warrants (the
"Contingent Warrants"). Each Warrant will entitle the Holder to purchase one
share of Class A Common Stock, subject to adjustment as provided herein. In
connection with the sale of the Units, 600,000 Initial Warrants will be issued
to the purchasers of the Units and 888,000 Contingent Warrants will be issued
and placed into escrow pursuant to the terms of an escrow agreement, dated as of
the date hereof (the "Contingent Warrant Escrow Agreement"), between the Company
and IBJ Schroder Bank & Trust Company, as escrow agent (the "Contingent Warrant
Escrow Agent"). The Contingent Warrants will be released from escrow on the
Contingent Warrant Release Date (as defined herein). On the Business Day
immediately preceding the Contingent Warrant Release Date, the Company shall
deliver a certificate as to the Maximum Accreted Amount and as to the aggregate
Specified Amount (in the case of the Exchangeable Preferred Stock) or aggregate
principal amount (in the case of the Exchange Debentures) on such Business Day.
Such outstanding Specified Amount or principal amount, as the case may be, shall
be referred to herein as the "Notional Amount". If the Notional Amount (as so
certified) is less than the Maximum Accreted Amount, then the Contingent Warrant
Escrow Agent shall release to the holders of the Exchangeable Preferred Stock an
aggregate number of Contingent Warrants equal to the product of (x) 888,000 and
(y) a fraction, the numerator of which is the Notional Amount and the
denominator of which is the Maximum Accreted Amount (such product being referred
to herein as the "Partial Number").
<PAGE>
<PAGE>
2
All Contingent Warrants not released to such holders shall be returned to the
Company for cancellation.
The Initial Warrants will not trade separately from the
Exchangeable Preferred Stock until the earliest date (the "Separation Date") to
occur of: (i) December 1, 1996; (ii) such earlier date as may be determined by
the Placement Agents; (iii) in the event a Change of Control (as defined in the
Certificate of Designation) occurs, the date the Company is required to mail
notice thereof to the holders of Exchangeable Preferred Stock; (iv) in the event
the Company elects to issue Exchange Debentures for Exchangeable Preferred
Stock, the date the Company mails notice thereof to the holders of the
Exchangeable Preferred Stock; (v) the date the Company mails notice of
redemption of the Exchangeable Preferred Stock to holders thereof; and (vi) the
effective date of the Exchange Offer Registration Statement. The Contingent
Warrants will not trade separately from the Exchangeable Preferred Stock unless
and until released from escrow on the Contingent Warrant Release Date.
In connection with the sale of Units, (i) the purchasers of
the Units are depositing the gross proceeds from the sale thereof in an escrow
account, pursuant to an escrow agreement dated as of the date hereof (the
"Closing Escrow Agreement") between the Company and IBJ Schroder Bank & Trust
Company, as escrow agent (the "Closing Escrow Agent") and (ii) the Company is
depositing an additional amount in such escrow account. In accordance with and
subject to the terms of the Closing Escrow Agreement, in the event the
consummation of the Acquisitions shall not have occurred or BBC shall not have
become a wholly owned subsidiary of the Company on or prior to the date that is
three Business Days after the closing of the Offering or, if it appears, in the
sole judgment of the Company, that the Acquisitions will not be consummated in
all material respects on or prior to such third Business Day, then the Units
will be subject to mandatory redemption and the gross proceeds thereof, plus
accrued dividends, shall be returned to each purchaser thereof.
The Company further desires the Warrant Agent to act on behalf
of the Company in connection with the issuance of the Warrants as provided
herein and the Warrant Agent is willing to so act.
<PAGE>
<PAGE>
3
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of Warrants:
ARTICLE 1
Definitions
SECTION 1.01. Definitions.
"Acquisitions" means the purchase by BBC of
substantially all the television broadcast assets of
Stauffer Communications, Inc. and all the capital stock of
Brissette Broadcasting Corporation.
"Affiliate" of any Person means (i) any other Person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person, or (ii) any other Person who is a director or officer
(A) of such Person, (B) of any subsidiary of such Person or (C) of any Person
described in clause (i) above. For purposes hereof, (a) "control" of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise and (b)
beneficial ownership of 5% or more of the voting common equity (on a fully
diluted basis) or warrants to purchase such equity (whether or not currently
exercisable) of a Person shall be deemed to be in control of such Person; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"BBC" means Benedek Broadcasting Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company.
"Board" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day that is not a Saturday, a Sunday
or a day on which banking institutions are not required to be open in the State
of New York.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the excess of the Current Market Value per share of Class A Common
Stock on the date of exercise over the Exercise Price per share as of the date
of exercise
<PAGE>
<PAGE>
4
and the denominator of which is the Current Market Value per share of the Class
A Common Stock on the date of exercise.
"Certificate of Designation" means the Certificate of
Designation with respect to the Exchangeable Preferred Stock.
"Class A Common Stock" means the common stock of the Company
issuable upon exercise of the Warrants.
"Class B Common Stock" means the common stock of the Company,
par value $0.01 per share, currently provided for in the Certificate of
Incorporation of the Company, and any other capital stock of the Company into
which the Class B Common Stock may be converted or reclassified or that may be
issued in respect of, in exchange for, or in substitution of, the Class B Common
Stock by reason of any stock split, stock dividend, distribution, merger,
consolidation or similar event.
"Combination" means an event in which the Company consolidates
with, merges with or into, or sells all or substantially all its property and
assets to another Person.
"Common Stock" means the Class A Common Stock and
the Class B Common Stock.
"Contingent Warrant Release Date" means July 1, 2000;
provided, however, that if on June 30, 1999, the ratio (which shall be
calculated on a pro forma basis in the same manner as the "Cash Flow Leverage
Ratio" is calculated in the Certificate of Designation) of (i) the sum of the
aggregate amount outstanding of all debt (net of cash and cash equivalents) of
the Company and the Restricted Subsidiaries (as defined in the Certificate of
Designation) and the aggregate Specified Amount of the Exchangeable Preferred
Stock, in each case as of June 30, 1999 to (ii) "Operating Cash Flow" as defined
in the Certificate of Designation, then the Contingent Warrant Release Date
shall be August 16, 1999.
"Current Market Value" per share of Class A Common Stock or
any other security at any date means (i) if the security is not registered under
the Exchange Act, (a) the value of the security, determined in good faith by the
Board and certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a Person other than an
Affiliate of the Company
<PAGE>
<PAGE>
5
and the closing of which occurs on such date or shall have occurred within the
six-month period preceding such date, or (b) if no such transaction shall have
occurred on such date or within such six-month period, the value of the security
as determined by an independent financial expert or (ii) if the security is
registered under the Exchange Act, the average of the daily closing bid prices
for each Business Day during the period commencing 15 Business Days before such
date and ending on the date one day prior to such date, or if the security has
been registered under the Exchange Act for less than 15 consecutive Business
Days before such date, then the average of the daily closing bid prices for all
of the Business Days before such date for which daily closing bid prices are
available. If the closing bid price is not determinable for at least ten
Business Days in such period, the "Current Market Value" of the security, shall
be determined as if the security were not registered under the Exchange Act.
"DTC" means The Depository Trust Company.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exchange Debentures" means the 15.0% Exchange Debentures Due
2007 issuable to holders of Exchangeable Preferred Stock, at the Company's
option, in exchange for shares of Exchangeable Preferred Stock.
"Exchange Indenture" means the indenture pursuant
to which the Exchange Debentures may be issued.
"Exchange Offer Registration Statement" means a registration
statement filed by the Company with the SEC relating to a registered exchange
offer for the Exchangeable Preferred Stock or Exchange Debentures, as the case
may be, under the Securities Act.
"Issue Date" means the date on which Warrants are
initially issued.
"Maximum Accreted Amount" means the dollar amount equal to the
maximum aggregate Specified Amount of all the Exchangeable Preferred Stock
originally issued by the Company as of the Contingent Warrant Release Date
assuming that such Exchangeable Preferred Stock remains outstanding on the
Contingent Warrant Release Date and no cash dividends
<PAGE>
<PAGE>
6
have been paid on such Exchangeable Preferred Stock on or prior to such time.
"Officer" means the Chairman of the Board, the
President, any Vice President, the Treasurer or the
Secretary of the Company.
"Parent" means any Person who beneficially owns, directly or
indirectly, all the Voting Stock of the Company.
"Permitted Holders" means (i) A. Richard Benedek; (ii) family
members or relatives of A. Richard Benedek; (iii) any trusts created for the
benefit of Persons described in clauses (i), (ii) or (iv) of this paragraph or
any trust for the benefit of any trust; (iv) in the event of the death or
incompetence of any Person described in clauses (i) or (ii) of this paragraph,
such Person's estate, executor, administrator, committee or other personal
representative or beneficiaries; or (v) any Affiliate of A. Richard Benedek.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Placement Agents" means Goldman, Sachs & Co. and
BT Securities Corporation.
"SEC" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933.
"Specified Amount" shall have the meaning ascribed
thereto in the Certificate of Designation.
"Tax Amounts" shall have the meaning ascribed
thereto in the Certificate of Designation.
"Transfer Restricted Securities" means the Warrants and the
Class A Common Stock which may be issued to Holders upon exercise of the
Warrants, whether or not such exercise has been effected. Each such security
shall cease to be a Transfer Restricted Security when (i) it has been disposed
of pursuant to a registration statement of the Company filed with the SEC and
declared effective by the SEC
<PAGE>
<PAGE>
7
that covers the disposition of such Transfer Restricted Security, (ii) it has
been distributed pursuant to Rule 144 (or any similar provisions under the
Securities Act then in effect) or (iii) it has been otherwise transferred and
may be resold without registration under the Securities Act; provided, however,
that all such securities shall cease to be Transfer Restricted Securities if
such securities cease to be outstanding.
"Voting Stock" of a corporation means all classes of capital
stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Warrant Shares" means the Class A Common Stock (and other
securities) issuable upon the exercise of the Warrants.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Cashless Exercise"................................................. 3.04
"Certificate Register............................................... 2.04
"Certificated Warrants"............................................. 2.01(c)
"Class A Common Stock".............................................. Recitals
"Closing Escrow Agent".............................................. Recitals
"Closing Escrow Agreement".......................................... Recitals
"Common Stock Registration Rights
Agreement"......................................................... 5.01
"Company"........................................................... Recitals
"Contingent Warrants"............................................... Recitals
"Contingent Warrant Escrow Recitals
Agent".............................................................
"Contingent Warrant Escrow Recitals
Agreement".........................................................
"Current Market Value".............................................. 3.06
"Exchangeable Preferred Stock"...................................... Recitals
"Exercise Price".................................................... 3.01
"Expiration Date"................................................... 3.02
"Global Warrants"................................................... 2.01(a)
"Holders"........................................................... Recitals
"Initial Warrants".................................................. Recitals
"Mandatory Redemption".............................................. 5.03(a)
"Mandatory Redemption Date"......................................... 5.03(a)
"Mandatory Redemption Price"........................................ 5.03(a)
"Notional Amount.................................................... Recitals
"Offering".......................................................... Recitals
</TABLE>
<PAGE>
<PAGE>
8
<TABLE>
<S> <C>
"Outstanding Shares"................................................ 3.02(b)
"Quoted Price"...................................................... 4.09
"Registrar"......................................................... 3.07
"Separation Date"................................................... Recitals
"Successor Company"................................................. 4.04(a)
"Transfer Agent".................................................... 3.05
"Units"............................................................. Recitals
"Warrants".......................................................... Recitals
"Warrant Agent"..................................................... Recitals
"Warrant Certificates".............................................. 2.01(a)
</TABLE>
SECTION 1.03. Rules of Construction. Unless the
text otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without
limitation; and
(v) words in the singular include the plural and
words in the plural include the singular.
ARTICLE 2
Warrant Certificates
SECTION 2.01. Form and Dating. The Warrants shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Agreement. The Warrants may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company) and shall bear the
legend required by Section 5.02. Each Warrant shall be dated the date of its
countersignature. The terms of the Warrants set forth in Exhibit A are part of
the terms of this Agreement.
<PAGE>
<PAGE>
9
(a) Global Warrant. The Initial Warrants shall be issued
initially in the form of one or more fully registered global certificates with
the global securities legend and restricted securities legend set forth in
Exhibit A hereto (the "Global Warrant"), which shall be deposited on behalf of
the purchasers of the Units with the Warrant Agent, as custodian for DTC (or
with such other custodian as DTC may direct), and registered in the name of DTC
or a nominee of DTC, duly executed by the Company and countersigned by the
Warrant Agent as hereinafter provided. The number of Warrants represented by the
Global Warrant may from time to time be increased or decreased by adjustments
made on the records of the Warrant Agent and DTC or its nominee as hereinafter
provided. Except as provided in Section 2.04, owners of beneficial interests in
a Global Warrant will not be entitled to receive physical delivery of
Certificated Warrants.
(b) Book-Entry Provisions. Members of, or participants in, DTC
("Agent Members") shall have no rights under this Agreement with respect to any
Global Warrant held on their behalf by DTC or by the Warrant Agent as the
custodian of DTC or under such Global Warrant, and DTC may be treated by the
Company, the Warrant Agent and any agent of the Company or the Warrant Agent as
the absolute owner of such Global Warrant for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from giving
effect to any written certification, proxy or other authorization furnished by
DTC or impair, as between DTC and its Agent Members, the operation of customary
practices of DTC governing the exercise of the rights of a holder of a
beneficial interest in any Global Warrant.
(c) Certificated Warrants. The Contingent Warrants shall be
issued initially in definitive form represented by a Certificated Warrant (such
certificate and all other certificates representing physical delivery of
Warrants in definitive form being called "Certificated Warrants"), which shall
be deposited on behalf of the purchasers of the Units with the Contingent
Warrant Escrow Agent pursuant to the terms of the Contingent Warrant Escrow
Agreement.
SECTION 2.02. Execution and Countersignature.
Two Officers shall sign the Warrants for the Company by
manual or facsimile signature. The Company's seal shall be
<PAGE>
<PAGE>
10
impressed, affixed, imprinted or reproduced on the Warrant and may be in
facsimile form. If an Officer whose signature is on a Warrant no longer holds
that office at the time the Warrant Agent countersigns the Warrant, the Warrant
shall be valid nevertheless. A Warrant shall not be valid until an authorized
signatory of the Warrant Agent manually countersigns the Warrant. The signature
shall be conclusive evidence that the Warrant has been countersigned under this
Agreement.
The Warrant Agent shall countersign and deliver (1) 600,000
Initial Warrants and (2) 888,000 Contingent Warrants for original issue, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the number of Warrants to be countersigned and the date on
which the original issue of Warrants is to be countersigned and whether the
Warrants are Initial Warrants or Contingent Warrants.
The Warrant Agent may appoint an agent reasonably acceptable
to the Company to countersign the Warrants. Unless limited by the terms of such
appointment, such agent may countersign Warrants whenever the Warrant Agent may
do so. Each reference in this Agreement to countersignature by the Warrant Agent
includes by such agent. Such agent will have the same rights as the Warrant
Agent for service of notices and demands.
SECTION 2.03. Certificate Register. The Warrant Agent shall
keep a register ("Certificate Register") of the Warrant Certificates and of
their transfer and exchange. The Certificate Register shall show the names and
addresses of the respective Holders and the date and number of Warrants
evidenced on the face of each of the Warrant Certificates. The Company and the
Warrant Agent may deem and treat the Person in whose name a Warrant Certificate
is registered as the absolute owner of such Warrant Certificate for all purposes
whatsoever and neither the Company nor the Warrant Agent shall be affected by
notice to the contrary.
SECTION 2.04. Transfer and Exchange. (a) Transfer and Exchange
of Certificated Warrants. When Certificated Warrants are presented to the
Warrant Agent with a request to register the transfer of such Certificated
Warrants or to exchange such Certificated Warrants for an equal number of
Certificated Warrants of other authorized
<PAGE>
<PAGE>
11
denominations, the Warrant Agent shall register the transfer or make the
exchange as requested if its reasonable requirements for such transaction are
met; provided, however, that the Certificated Warrants surrendered for transfer
or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Warrant Agent, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(ii) in the case of Certificated Warrants that are Transfer
Restricted Securities, shall be accompanied by the following additional
information and documents:
(A) a certificate from such Holder in substantially
the form of Exhibit B hereto certifying that:
(1) such securities are being delivered
for registration in the name of such Holder
without transfer;
(2) such securities are being
transferred to the Company;
(3) such securities are being
transferred pursuant to an effective
registration statement under the Securities
Act; or
(4) such securities are being transferred
(x) to a "qualified institutional buyer" ("QIB") as
defined in Rule 144A under the Securities Act
pursuant to such Rule 144A, (y) in an offshore
transaction in accordance with Rule 904 under the
Securities Act or (z) in a transaction meeting the
requirements of Rule 144 under the Securities Act;
and
(B) in the case of any transfer described under
clause (A)(4)(y) and (z) evidence reasonably satisfactory to
the Warrant Agent and the Company as to compliance with the
restrictions set forth in the legend in Section 5.02.
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12
(b) Restrictions on Transfer of Certificated Warrants for a
Beneficial Interest in a Global Warrant. Certificated Warrants may not be
exchanged for a beneficial interest in a Global Warrant except upon satisfaction
of the requirements set forth below. Upon receipt by the Warrant Agent of
Certificated Warrants, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Warrant Agent, together with:
(i) if such Certificated Warrants are Transfer Restricted
Securities, certification that such Certificated Warrants either do not
involve a change in beneficial ownership or are being transferred to a
QIB in accordance with Rule 144A under the Securities Act; and
(ii) written instructions directing the Warrant Agent to make,
or to direct DTC to make, an adjustment on its books and records with
respect to such Global Warrants to reflect an increase in the number of
Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Certificated Warrants and cause, or
direct DTC to cause, in accordance with the standing instructions and procedures
existing between DTC and the Warrant Agent, the number of Warrants represented
by the Global Warrant to be increased accordingly.
(c) Transfer and Exchange of the Global Warrant. The transfer
and exchange of beneficial interests in a Global Warrant shall be effected
through DTC, in accordance with this Agreement and the procedures of DTC
therefor.
(d) Restrictions on Transfer and Exchange of the Global
Warrant. Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in Section 2.04(g)), the Global Warrant may not be
transferred as a whole except by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC or by DTC or any such nominee to a successor
depository or a nominee of such successor depository.
(e) Authentication and Distribution of
Certificated Warrants. If at any time:
(i) DTC notifies the Company that DTC is unwilling
or unable to continue as depository for the Global
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13
Warrant and a successor depository for the Global Warrant is not
appointed by the Company within 90 days after delivery of such notice;
(ii) DTC ceases to be a clearing agency registered
under the Exchange Act; or
(iii) the Company, in its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of Certificated
Warrants under this Agreement,
then, the Company will execute, and the Warrant Agent, upon receipt of a written
order of the Company signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of the Company requesting the
delivery of Certificated Warrants to the holders of beneficial interests in the
Global Warrant, will countersign and deliver Certificated Warrants equal to the
number of Warrants represented by the Global Warrant, in exchange for such
Global Warrant. Certificated Warrants issued in exchange for a beneficial
interest in a Global Warrant shall be registered in such names and in such
authorized denominations as DTC, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Warrant Agent. The
Warrant Agent shall deliver such Certificated Warrants to the Persons in whose
names such Warrants are so registered in accordance with the instructions of
DTC.
(f) Cancellation or Adjustment of the Global Warrant. At such
time as all beneficial interests in the Global Warrant have either been
exchanged for Certificated Warrants, redeemed, repurchased or canceled, such
Global Warrant shall be returned to DTC for cancellation or retained and
canceled by the Warrant Agent. At any time prior to such cancellation, if any
beneficial interest in the Global Warrant is exchanged for Certificated
Warrants, redeemed, repurchased or canceled, the number of Warrants represented
by such Global Warrant shall be reduced and an adjustment shall be made on the
books and records of the Warrant Agent with respect to such Global Warrant, by
the Warrant Agent or DTC, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of
Warrants. (i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent shall countersign Certificated Warrants and
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14
the Global Warrant as required pursuant to the provisions of
this Section 2.04.
(ii) All Certificated Warrants and the Global Warrant issued
upon any registration of transfer or exchange of Certificated Warrants
shall be the valid obligations of the Company, entitled to the same
benefits under this Agreement, as the Certificated Warrants or the
Global Warrant surrendered upon such registration of transfer or
exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
Person in whose name any Warrant is registered as the absolute owner of
such Warrant and neither the Warrant Agent nor the Company shall be
affected by notice to the contrary.
(iv) No service charge shall be made to a Holder for any
registration of transfer or exchange upon surrender of any Warrant
Certificate at the office of the Warrant Agent maintained for that
purpose. However, the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Warrant
Certificates.
(v) Upon any sale or transfer of Warrants (including any
Warrants represented by the Global Warrant) pursuant to an effective
registration statement under the Securities Act, pursuant to Rule 144
under the Securities Act or pursuant to an opinion of counsel
reasonably satisfactory to the Company that no legend is required:
(A) in the case of any Certificated Warrants, the Warrant
Agent shall permit the Holder thereof to exchange
such Warrants for Certificated Warrants that do not
bear the legend set forth in Section 5.02 and rescind
any restriction on the transfer of such Warrants; and
(B) in the case of any Global Warrant, such Warrant shall
not be required to bear the legend set forth in
Section 5.02.
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15
(vi) Notwithstanding the foregoing, the provisions of this
Section 2.04 shall not apply to Contingent Warrants prior to the
Contingent Warrant Release Date.
SECTION 2.05. Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate if the reasonable requirements of
the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in
effect in the State of New York are met. If required by the Warrant Agent or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Warrant Agent to protect the Company and the Warrant
Agent from any loss which either of them may suffer if a Warrant Certificate is
replaced. The Company and the Warrant Agent may charge the Holder for their
expenses in replacing a Warrant Certificate. Every replacement Warrant
Certificate is an additional obligation of the Company.
SECTION 2.06. Temporary Certificates. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare and the Warrant
Agent shall countersign temporary Warrant Certificates. Temporary Warrant
Certificates shall be substantially in the form of definitive Warrant
Certificates but may have variations that the Company considers appropriate for
temporary Warrant Certificates. Without unreasonable delay, the Company shall
prepare and the Warrant Agent shall countersign definitive Warrant Certificates
and deliver them in exchange for temporary Warrant Certificates.
SECTION 2.07. Cancellation. (a) In the event
the Company shall purchase or otherwise acquire Certificated
Warrants, the same shall thereupon be delivered to the
Warrant Agent for cancellation.
(b) The Warrant Agent and no one else shall cancel and destroy
all Warrant Certificates surrendered for transfer, exchange, replacement,
exercise or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Warrant Agent to deliver canceled Warrant
Certificates to the Company. The Company may not issue new Warrant Certificates
to replace Warrant Certificates to the extent they evidence Warrants which have
been exercised or Warrants which the Company has purchased
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16
or otherwise acquired, including Contingent Warrants delivered to the Company by
the Contingent Warrant Escrow Agent.
ARTICLE 3
Exercise Terms
SECTION 3.01. Exercise Price. Each Warrant shall initially
entitle the Holder thereof, subject to adjustment pursuant to the terms of this
Agreement, to purchase one share of Class A Common Stock for a per share
exercise price (the "Exercise Price"), of $0.01.
SECTION 3.02. Exercise Periods. (a) Subject to the terms and
conditions set forth herein, the Initial Warrants shall be exercisable at any
time or from time to time on or after the Separation Date and the Contingent
Warrants shall be exercisable at any time or from time to time on or after the
Contingent Warrant Release Date; provided, however, that Contingent Warrants
that are held in escrow pursuant to the terms of the Contingent Warrant Escrow
Agreement are not eligible for exercise unless and until they are released from
escrow pursuant to the terms of the Contingent Warrant Escrow Agreement.
(b) No Warrant shall be exercisable after July 1, 2007 (the
"Expiration Date").
SECTION 3.03. Expiration. A Warrant shall terminate and become
void as of the earlier of (i) the close of business on the Expiration Date or
(ii) the date such Warrant is exercised. The Company shall give notice not less
than 90, and not more than 120, days prior to the Expiration Date to the Holders
of all then outstanding Warrants to the effect that the Warrants will terminate
and become void as of the close of business on the Expiration Date; provided,
however, that notwithstanding that the Company may fail to give notice as
provided in this Section 3.03, the Warrants will terminate and become void on
the Expiration Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised
upon (i) surrender to the Warrant Agent of the Warrant Certificates, together
with the form of election to purchase Class A Common Stock on the reverse
thereof duly filled in and signed by the Holder thereof and (ii) payment
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17
to the Warrant Agent, for the account of the Company, of the Exercise Price for
the number of Warrant Shares in respect of which such Warrant is then exercised.
Such payment shall be made (i) in cash or by certified or official bank check
payable to the order of the Company or by wire transfer of funds to an account
designated by the Company for such purpose or (ii) by the surrender (which
surrender shall be evidenced by cancellation of the number of Warrants
represented by any Warrant Certificate presented in connection with a Cashless
Exercise) of a Warrant or Warrants (represented by one or more relevant Warrant
Certificates), and without the payment of the Exercise Price in cash, in
exchange for the issuance of such number of shares of Class A Common Stock equal
to the product of (1) the number of shares of Class A Common Stock for which
such Warrant is then being nominally exercised if payment of the Exercise Price
as of the date of exercise was being made in cash and (2) the Cashless Exercise
Ratio. An exercise of a Warrant in accordance with the immediately preceding
sentence is herein called a "Cashless Exercise". For purposes of Cashless
Exercise, the term "Current Market Value" shall mean, if the Class A Common
Stock is not registered under the Exchange Act and no transaction has occurred
as provided in clause (i)(a) of the definition of Current Market Value, the
value of the Class A Common Stock as determined in good faith by the Board of
Directors. All provisions of this Agreement shall be applicable with respect to
an exercise of Warrant Certificates pursuant to a Cashless Exercise for less
than the full number of Warrants represented thereby. If, pursuant to the
Securities Act, the Company is not permitted to effect the registration under
the Securities Act of the issuance and sale of the Warrant Shares by the Company
to the Holders of the Warrants upon the exercise of the Warrants, the Holders of
the Warrants will be required, if the Company is not then able to rely on an
exemption from the registration requirements of the Securities Act in connection
with the issuance and sale of the Warrant Shares upon exercise of the Warrants,
to effect the exercise of the Warrants solely pursuant to the Cashless Exercise
option. Subject to Section 3.02, the rights represented by the Warrants shall be
exercisable at the election of the Holders thereof either in full at any time or
from time to time in part and in the event that a Warrant Certificate is
surrendered for exercise in respect of less than all the Warrant Shares
purchasable on such exercise at any time prior to the expiration of the Exercise
Period a new Warrant Certificate exercisable for the remaining Warrant Shares
will be issued. The Warrant Agent
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18
shall countersign and deliver the required new Warrant Certificates, and the
Company, at the Warrant Agent's request, shall supply the Warrant Agent with
Warrant Certificates duly signed on behalf of the Company for such purpose.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section
2.05, upon the surrender of Warrant Certificates and payment of the per share
Exercise Price, as set forth in Section 3.04, the Company shall issue and cause
the Warrant Agent or, if appointed, a transfer agent for the Class A Common
Stock ("Transfer Agent") to countersign and deliver to or upon the written order
of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of such Warrants or other securities or property to which it
is entitled, registered or otherwise to the Person or Persons entitled to
receive the same, together with cash as provided in Section 3.06 in respect of
any fractional Warrant Shares otherwise issuable upon such exercise. Such
certificate or certificates shall be deemed to have been issued and any Person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the per share Exercise Price, as aforesaid;
provided, however, that if, at such date, the transfer books for the Warrant
Shares shall be closed, the certificates for the Warrant Shares in respect of
which such Warrants are then exercised shall be issuable as of the date on which
such books shall next be opened and until such date the Company shall be under
no duty to deliver any certificates for such Warrant Shares; provided further,
however, that such transfer books, unless otherwise required by law, shall not
be closed at any one time for a period longer than 20 calendar days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not
be required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be exercised in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant
Shares purchasable pursuant thereto. If any fraction of a Warrant Share would,
except for the provisions of this Section 3.06, be issuable on the exercise of
any Warrant (or specified portion thereof), the Company shall pay an amount in
cash equal to
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19
the Current Market Value for one Warrant Share on the trading day immediately
preceding the date the Warrant is exercised, multiplied by such fraction,
computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. The Company shall
at all times keep reserved out of its authorized shares of Class A Common Stock
a number of shares of Class A Common Stock sufficient to provide for the
exercise of all outstanding Warrants. The registrar for the Class A Common Stock
(the "Registrar") shall at all times until the expiration of the Exercise Period
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent.
All Warrant Shares which may be issued upon exercise of Warrants shall, upon
issue, be fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
The Company will supply such Transfer Agent with duly executed stock
certificates for such purpose and will itself provide or otherwise make
available any cash which may be payable as provided in Section 3.06. The Company
will furnish to such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder.
Before taking any action which would cause an adjustment
pursuant to Article 4 to reduce the Exercise Price below the then par value (if
any) of the Class A Common Stock, the Company shall take any and all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Class A Common Stock at the Exercise Price as so adjusted.
The Company covenants that all shares of Class A Common Stock
which may be issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights, free from all taxes and free from all
liens, charges and security interests, created by or through the Company, with
respect to the issue thereof.
SECTION 3.08. Compliance with Law. (a) Notwithstanding
anything in this Agreement to the contrary, in no event shall a Holder be
entitled to exercise a Warrant unless (i) a registration statement filed under
the Securities Act in respect of the issuance of the Warrant Shares is then
effective or (ii) in the opinion of counsel
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20
to the Company addressed to the Warrant Agent an exemption from the registration
requirements is available under the Securities Act at the time of such exercise.
(b) If any shares of Class A Common Stock required to be
reserved for purposes of exercise of Warrants require, under any other Federal
or state law or applicable governing rule or regulation of any national
securities exchange, registration with or approval of any governmental
authority, or listing on any such national securities exchange before such
shares may be issued upon exercise, the Company will in good faith and as
expeditiously as possible endeavor also to cause such shares to be duly
registered or approved by such governmental authority or listed on the relevant
national securities exchange, as the case may be.
SECTION 3.09. Status of Contingent Warrants Subject to the
Contingent Warrant Escrow Agreement. The Contingent Warrants held in escrow
pursuant to the Contingent Warrant Escrow Agreement shall not be deemed
outstanding for any purpose under this Agreement until and unless such
Contingent Warrants are released from escrow on the Contingent Warrant Release
Date in accordance with the terms of the Contingent Warrant Escrow Agreement;
provided, however, that upon issuance of the Contingent Warrants and deposit
thereof with the Contingent Warrant Escrow Agent, the Contingent Warrants shall
be deemed outstanding for the purpose of Article 4.
SECTION 3.10. Notice of Contingent Warrant Release Date. (a)
The Company shall deliver a certificate no later than August 1, 1999, to the
Contingent Warrant Escrow Agent notifying the Contingent Warrant Escrow Agent,
the Warrant Agent and the holders of the Exchangeable Preferred Stock whether or
not the Contingent Warrant Release Date will be August 16, 1999.
(b) On the Business Day immediately preceding the Contingent
Warrant Release Date, the Company shall deliver to the Contingent Warrant Escrow
Agent a certificate as to (i) the Maximum Accreted Amount, (ii) the Notional
Amount on such Business Day and (iii) the calculation of the Partial Number. If
the Notional Amount (as so certified) is less than the Maximum Accreted Amount,
then pursuant to the Contingent Warrant Escrow Agreement the Contingent Warrant
Escrow Agent is to release to the holders of the Exchangeable Preferred Stock an
aggregate number of Contingent Warrants equal to the Partial Number.
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21
ARTICLE 4
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at
any time or from time to time the Company shall (i) pay a dividend or make a
distribution on its Class A Common Stock in shares of its Class A Common Stock
or other shares of capital stock, (ii) subdivide its outstanding shares of Class
A Common Stock into a larger number of shares of Class A Common Stock, (iii)
combine its outstanding shares of Class A Common Stock into a smaller number of
shares of Class A Common Stock or (iv) increase or decrease the number of shares
of Class A Common Stock outstanding by reclassification of its Class A Common
Stock, then the number of shares of Class A Common Stock purchasable upon
exercise of each Warrant immediately after the happening of such event shall be
adjusted so that, after giving affect to such adjustment, the holder of each
Warrant shall be entitled to receive the number of shares of Class A Common
Stock upon exercise that such holder would have owned or have been entitled to
receive had such Warrants been exercised immediately prior to the happening of
the events described above (or, in the case of a dividend or distribution of
Common Stock, immediately prior to the record date therefor), and the Exercise
Price for each Warrant shall be adjusted in inverse proportion. An adjustment
made pursuant to this Section 4.01 shall become effective immediately after the
effective date, retroactive to the record date therefor in the case of a
dividend or distribution in shares of Class A Common Stock, and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distributions. In case
at any time or from time to time the Company shall distribute to holders of
Class A Common Stock (i) any dividend or other distribution of cash, evidences
of its indebtedness, shares of its capital stock or any other properties or
securities or (ii) any options, warrants or other rights to subscribe for or
purchase any of the foregoing (other than, in each case, (x) any dividend or
distribution described in Section 4.01, (y) any rights, options, warrants or
securities described in Section 4.03 and (z) any distributions of Tax Amounts in
respect of any tax period that BBC qualifies as an S corporation under the
Internal Revenue Code or any similar provision of state or
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22
local law), then the number of shares of Class A Common Stock purchasable upon
the exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Class A Common Stock purchasable upon the
exercise of such Warrant immediately prior to the record date for any such
dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per share of Class A Common Stock on the record date for
such distribution, and the denominator of which shall be such Current Market
Value per share of Class A Common Stock less the sum of (x) any cash distributed
per share of Class A Common Stock and (y) the fair value (as determined in good
faith by the Board, whose determination shall be evidenced by a board resolution
filed with the Warrant Agent, a copy of which will be sent to Holders upon
request) of the portion, if any, of the distribution applicable to one share of
Class A Common Stock consisting of evidences of indebtedness, shares of stock,
securities, other property, warrants, options or subscription of purchase
rights; and the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such record date by the above
fraction. Such adjustments shall be made whenever any distribution is made and
shall become effective as of the date of distribution, retroactive to the record
date for any such distribution; provided, however, that the Company is not
required to make an adjustment pursuant to this Section 4.02 if at the time of
such distribution the Company makes the same distribution to Holders of Warrants
as it makes to holders of Class A Common Stock pro rata based on the number of
shares of Class A Common Stock for which such Warrants are exercisable (whether
or not currently exercisable). No adjustment shall be made pursuant to this
Section 4.02 which shall have the effect of decreasing the number of shares of
Class A Common Stock purchasable upon exercise of each Warrant or increasing the
Exercise Price.
SECTION 4.03. Rights Issue. In the event that at any time or
from time to time the Company shall issue rights, options or warrants for, or
securities convertible or exchangeable into, Class A Common Stock to all holders
of Class A Common Stock without any charge, entitling such holders to subscribe
for or purchase shares of Class A Common Stock at a price per share that is
lower at the record date for such issuance than the then Current Market Value
per share of Class A Common Stock as determined by the Board, the number of
shares of Class A Common Stock thereafter purchasable upon the exercise of each
Warrant shall be determined by multiplying the number of shares of
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23
Class A Common Stock theretofore purchasable upon exercise of each Warrant by a
fraction, the numerator of which shall be the number of shares of Class A Common
Stock outstanding on the date of issuance of such rights, options, warrants or
securities plus the number of additional shares of Class A Common Stock offered
for subscription or purchase or into which such securities are convertible or
exchangeable, and the denominator of which shall be the number of shares of
Class A Common Stock outstanding on the date of issuance of such rights,
options, warrants or securities plus the total number of shares of Class A
Common Stock which the aggregate consideration expected to be received by the
Company would purchase at the Current Market Value per share of Class A Common
Stock. In the event of any such adjustment, the Exercise Price shall be adjusted
to a number determined by dividing the Exercise Price immediately prior to such
date of issuance by the aforementioned fraction. Such adjustment shall be made
whenever such rights, options or warrants are issued and shall become effective
retroactively immediately after the record date for the determination of
stockholders entitled to receive such rights, options, warrants or securities.
No adjustment shall be made pursuant to this Section 4.03 which shall have the
effect of decreasing the number of shares of Class A Common Stock purchasable
upon exercise of each Warrant or of increasing the Exercise Price.
SECTION 4.04. Combination; Liquidation. (a) Except as provided
in Section 4.04(b), in the event of a Combination, the Holders shall have the
right to receive upon exercise of the Warrants such number of shares of capital
stock or other securities or property which such Holder would have been entitled
to receive upon or as a result of such Combination had such Warrant been
exercised immediately prior to such event. Unless paragraph (b) is applicable to
a Combination, the Company shall provide that the surviving or acquiring Person
(the "Successor Company") in such Combination will enter into an agreement with
the Warrant Agent confirming the Holders' rights pursuant to this Section
4.04(a) and providing for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 4. The
provisions of this Section 4.04(a) shall similarly apply to successive
Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to
the holders of Class A Common Stock in exchange for their shares is payable
solely in cash, or
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24
(ii) the dissolution, liquidation or winding-up of the Company, then the holders
of the Warrants will be entitled to receive distributions on an equal basis with
the holders of Class A Common Stock or other securities issuable upon exercise
of the Warrants, as if the Warrants had been exercised immediately prior to such
event, less the Exercise Price.
In case of any Combination described in this Section 4.04(b),
the surviving or acquiring Person and, in the event of any dissolution,
liquidation or winding-up of the Company, the Company, shall deposit promptly
with the Warrant Agent the funds, if any, necessary to pay to the holders of the
Warrants the amounts to which they are entitled as described above. After such
funds and the surrendered Warrant Certificates are received, the Warrant Agent
shall make payment to the Holders by delivering a check in such amount as is
appropriate (or, in the case of consideration other than cash, such other
consideration as is appropriate) to such Person or Persons as it may be directed
in writing by the holders surrendering such Warrants.
SECTION 4.05. Tender Offers; Exchange Offers. In the event
that the Company or any subsidiary of the Company shall purchase shares of Class
A Common Stock pursuant to a tender offer or an exchange offer for a price per
share of Class A Common Stock that is greater than the then Current Market Value
per share of Class A Common Stock in effect at the end of the trading day
immediately following the day on which such tender offer or exchange offer
expires, then the Company, or such subsidiary of the Company, shall offer to
purchase Warrants for comparable consideration per share of Class A Common Stock
based on the number of shares of Class A Common Stock which the Holders of such
Warrants would receive upon exercise of such Warrants; provided, however, that
if the Contingent Warrants are then still held by the Contingent Escrow Agent
pursuant to the Contingent Warrant Escrow Agreement, the Company shall, in lieu
of making an offer for such Contingent Warrants, deposit an amount equal to the
aggregate amount that would have been required to consummate such a tender offer
or exchange offer for the Contingent Warrants (assuming acceptance by all the
holders of the Contingent Warrants) with the Contingent Warrant Escrow Agent for
distribution to the holder of the Exchangeable Preferred Stock if and upon the
release of the Contingent Warrants from escrow, such amount to be
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25
distributed pro rata with the distribution (or cancellation) of such Contingent
Warrants.
SECTION 4.06. Other Events. If any event occurs as to which
the foregoing provisions of this Article 4 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
and adequately protect the purchase rights of the Warrants in accordance with
the essential intent and principles of such provisions, then such Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of such Board, to protect such purchase rights as aforesaid,
but in no event shall any such adjustment have the effect of increasing the
Exercise Price or decreasing the number of shares of Class A Common Stock
subject to purchase upon exercise of this Warrant.
SECTION 4.07. Superseding Adjustment. Upon the expiration of
any rights, options, warrants or conversion or exchange privileges which
resulted in the adjustments pursuant to this Article 4, if any thereof shall not
have been exercised, the number of Warrant Shares purchasable upon the exercise
of each Warrant shall be readjusted as if (A) the only shares of Class A Common
Stock issuable upon exercise of such rights, options, warrants, conversion or
exchange privileges were the shares of Class A Common Stock, if any, actually
issued upon the exercise of such rights, options, warrants or conversion or
exchange privileges and (B) shares of Class A Common Stock actually issued, if
any, were issuable for the consideration actually received by the Company upon
such exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants or
conversion or exchange privileges whether or not exercised and the Exercise
Price shall be readjusted inversely; provided, however, that no such
readjustment shall (except by reason of an intervening adjustment under Section
4.01) have the effect of decreasing the number of Warrant Shares purchasable
upon the exercise of each Warrant or increase the Exercise Price by an amount in
excess of the amount of the adjustment initially made in respect of the
issuance, sale or grant of such rights, options, warrants or conversion or
exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by
the preceding Sections of this Article 4
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26
shall be made whenever and as often as any specified event requiring an
adjustment shall occur, except that no adjustment of the Exercise Price or the
number of shares of Class A Common Stock purchasable upon exercise of Warrants
that would otherwise be required shall be made (except in the case of a
subdivision or combination of shares of Common Stock, as provided for in Section
4.01) unless and until such adjustment either by itself or with other
adjustments not previously made increases or decreases by at least 1% of the
Exercise Price or the number of shares of Class A Common Stock purchasable upon
exercise of Warrants immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Article 4 and not previously made, would result in
a minimum adjustment. For the purpose of any adjustment, any specified event
shall be deemed to have occurred at the close of business on the date of its
occurrence. In computing adjustments under this Article 4, fractional interests
in Class A Common Stock shall be taken into account to the nearest one-hundredth
of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise
Price or the number of shares of Class A Common Stock and other property, if
any, purchasable upon exercise of Warrants is adjusted, as herein provided, the
Company shall deliver to the Warrant Agent a certificate of a firm of
independent accountants selected by the Board (who may be the regular
accountants employed by the Company) setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of Directors
of the Company determined the fair market value of any evidences of
indebtedness, other securities or property or warrants or other subscription or
purchase rights), and specifying the Exercise Price and the number of shares of
Class A Common Stock purchasable upon exercise of Warrants after giving effect
to such adjustment. The Company shall promptly cause the Warrant Agent to mail a
copy of such certificate to each Holder in accordance with Section 7.06. The
Warrant Agent shall be entitled to rely on such certificate and shall be under
no duty or responsibility with respect to any such certificate, except to
exhibit the same from time to time, to any Holder desiring an inspection thereof
during reasonable business hours. The Warrant Agent shall not at any time be
under any duty or responsibility to any Holder to determine whether any facts
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27
exist which may require any adjustment of the Exercise Price or the number of
shares of Class A Common Stock or other stock or property, purchasable on
exercise of the Warrants, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed in making such
adjustment or the validity or value of any shares of Class A Common Stock.
SECTION 4.10. Notice of Certain Transactions. In the event
that the Company shall propose (a) to pay any dividend payable in securities of
any class to the holders of its Class A Common Stock or to make any other
distribution to the holders of its Class A Common Stock, (b) to offer the
holders of its Class A Common Stock rights to subscribe for or to purchase any
securities convertible into shares of Class A Common Stock or shares of Common
Stock or shares of stock of any class or any other securities, rights or
options, (c) to effect any capital reorganization, consolidation or merger or
(d) to effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or in the event of a tender offer or exchange offer
described in Section 4.05, the Company shall within 5 days send to the Warrant
Agent and the Warrant Agent shall within 5 days send the Holders a notice (in
such form as shall be furnished to the Warrant Agent by the Company) of such
proposed action or offer, such notice to be mailed by the Warrant Agent to the
Holders at their addresses as they appear in the Certificate Register, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Class A Common Stock, if any such date
is to be fixed, and shall briefly indicate the effect of such action on the
Class A Common Stock and on the number and kind of any other shares of stock and
on other property, if any, and the number of shares of Class A Common Stock and
other property, if any, purchasable upon exercise of each Warrant and the
Exercise Price after giving effect to any adjustment which will be required as a
result of such action. Such notice shall be given as promptly as possible and,
in the case of any action covered by clause (a) or (b) above, at least 10 days
prior to the record date for determining holders of the Class A Common Stock for
purposes of such action and, in the case of any other such action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Class A Common Stock, whichever shall be
the earlier.
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28
SECTION 4.11. Adjustment to Warrant Certificate. The form of
Warrant Certificate need not be changed because of any adjustment made pursuant
to this Article 4, and Warrant Certificates issued after such adjustment may
state the same Exercise Price and the same number of shares of Common Stock as
are stated in the Warrant Certificates initially issued pursuant to this
Agreement. The Company, however, may at any time in its sole discretion make any
change in the form of Warrant Certificate that it may deem appropriate to give
effect to such adjustments and that does not affect the substance of the Warrant
Certificate, and any Warrant Certificate thereafter issued or countersigned,
whether in exchange or substitution for an outstanding Warrant Certificate or
otherwise, may be in the form as so changed.
ARTICLE 5
Transferability
SECTION 5.01. Registration Rights. The Holders and holders of
Warrant Shares that are Transfer Restricted Securities shall be entitled to the
registration rights with respect thereto pursuant to the Common Stock
Registration Rights Agreement dated as of the date hereof between the Company
and the Placement Agents (the "Common Stock Registration Rights Agreement"). The
Company shall keep a copy of the Common Stock Registration Rights Agreement, and
any amendments thereto, on file with the Warrant Agent and shall furnish copies
thereof, without charge, to any holder of Transfer Restricted Securities upon
request.
SECTION 5.02. Legends. Except for Warrant Certificates
delivered pursuant to Section 2.04(g)(v) of this Agreement, each Warrant
Certificate evidencing the Global Warrants and the Certificated Warrants (and
all Warrant Certificates issued in exchange therefor or substitution thereof)
and each certificate representing the Warrant Shares shall bear a legend in
substantially the following form (with any appropriate modification for the
Warrant Shares):
"THE WARRANTS AND THE WARRANT SHARES (THE
"SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
<PAGE>
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29
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE
LAWS. THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS
PREVIOUSLY REGISTERED UNDER THE SECURITIES ACT, ONLY (A) TO
THE COMPANY; (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A OR (D) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT."
ARTICLE 6
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
provisions of this Agreement and the Warrant Agent hereby accepts such
appointment.
SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent
for the Company. In acting under this Warrant Agreement and in connection with
the Warrant Certificates, the Warrant Agent is acting solely as agent of the
Company and does not assume any obligation or relationship or agency or trust
for or with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) Counsel. The Warrant Agent may consult with counsel
satisfactory to it, and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the advice of such counsel.
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30
(c) Documents. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be
obligated to perform only such duties as are herein and in the Warrant
Certificates specifically set forth and no implied duties or obligations shall
be read into this Agreement or the Warrant Certificates against the Warrant
Agent. The Warrant Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability for which it
does not receive indemnity if such indemnity is reasonably requested. The
Warrant Agent shall not be accountable or under any duty or responsibility for
the use by the Company of any of the Warrant Certificates countersigned by the
Warrant Agent and delivered by it to the Holders or on behalf of the Holders
pursuant to this Agreement or for the application by the Company of the proceeds
of the Warrants. The Warrant Agent shall have no duty or responsibility in case
of any default by the Company in the performance of its covenants or agreements
contained herein or in the Warrant Certificates or in the case of the receipt of
any written demand from a Holder with respect to such default, including any
duty or responsibility to initiate or attempt to initiate any proceedings at law
or otherwise.
(e) Not Responsible for Adjustments or Validity of Stock. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist that may require an adjustment of
the number of shares of Class A Common Stock purchasable upon exercise of each
Warrant or the Exercise Price, or with respect to the nature or extent of any
adjustment when made, or with respect to the method employed, or herein or in
any supplemental agreement provided to be employed, in making the same. The
Warrant Agent shall not be accountable with respect to the validity or value of
any shares of Common Stock or of any securities or property which may at any
time be issued or delivered upon the exercise of any Warrant or upon any
adjustment pursuant to Article 4, and it makes no representation with respect
thereto. The Warrant Agent shall not be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any
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31
shares of Common Stock or stock certificates upon the surrender of any Warrant
Certificate for the purpose of exercise or upon any adjustment pursuant to
Article 4, or to comply with any of the covenants of the Company contained in
Article 4.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company
or its affiliates or become pecuniarily interested in transactions in which the
Company or its affiliates may be interested, or contract with or lend money to
the Company or its affiliates or otherwise act as fully and freely as though it
were not the Warrant Agent under this Agreement. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent
shall not be responsible for and makes no representation as to the validity or
adequacy of this Agreement or the Warrant Certificates and it shall not be
responsible for any statement in this Agreement or the Warrant Certificates
other than its countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company and the
Warrant Agent have entered into an agreement pursuant to which the Company
agrees to pay the Warrant Agent from time to time reasonable compensation for
its services and to reimburse the Warrant Agent upon request for all reasonable
out-of-pocket expenses incurred by it, including the reasonable compensation and
expenses of the Warrant Agent's agents and counsel. The Company shall indemnify
the Warrant Agent against any loss, liability or expense (including agents' and
attorneys' fees and expenses) incurred by it without negligence or bad faith on
its part arising out of or in connection with the acceptance or performance of
its duties under this Agreement. The Warrant Agent shall notify the Company
promptly of any claim for which it may seek indemnity. The Company need not
reimburse any expense or indemnify against any loss or liability incurred by the
Warrant Agent through wilful misconduct, negligence or bad faith. The Company's
payment obligations pursuant to this Section 6.05 shall survive the termination
of this Agreement.
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32
To secure the Company' payment obligations under this
Agreement, the Warrant Agent shall have a lien prior to the Warrant Holders on
all money or property held or collected by the Warrant Agent.
SECTION 6.06. Successor Warrant Agent. (a) The Company to
Provide Warrant Agent. The Company agrees for the benefit of the Holders that
there shall at all times be a Warrant Agent hereunder until all the Warrants
have been exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at any time
resign by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall not be less than 60 days after the date
on which such notice is given unless the Company otherwise agrees. The Warrant
Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than 60 days after such notice is given unless the Warrant Agent otherwise
agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent.
(c) The Company to Appoint Successor. In case at any time the
Warrant Agent shall resign, or shall be removed, or shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Warrant Agent or its property
or affairs, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due, or
shall take corporate action in furtherance of any such action, or a decree or
order for relief by a court having jurisdiction in the premises shall have been
entered in respect of the Warrant Agent in an involuntary case under the Federal
<PAGE>
<PAGE>
33
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law; or a decree order by a
court having jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of the Warrant Agent
or of its property or affairs for the purpose of rehabilitation, conservation,
winding up of or liquidation, a successor Warrant Agent, qualified as aforesaid,
shall be appointed by the Company by an instrument in writing, filed with the
successor Warrant Agent. Upon the appointment as aforesaid of a successor
Warrant Agent and acceptance by the successor Warrant Agent of such appointment,
the Warrant Agent shall cease to be Warrant Agent hereunder; provided, however,
that in the event of the resignation of the Warrant Agent hereunder, such
resignation shall be effective on the earlier of (i) the date specified in the
Warrant Agent's notice of resignation and (ii) the appointment and acceptance of
a successor Warrant Agent hereunder.
(d) Successor To Expressly Assume Duties. Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the rights and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such predecessor, as
Warrant Agent hereunder.
(e) Successor by Merger. Any corporation into which the
Warrant Agent hereunder may be merged or consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent shall be a
party, or any corporation to which the Warrant Agent shall sell or otherwise
transfer all or substantially all the assets and business of the Warrant Agent,
provided that it shall be qualified as aforesaid, shall be the successor Warrant
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
<PAGE>
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34
ARTICLE 7
Miscellaneous
SECTION 7.01. SEC Reports and Other Information.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with the SEC and thereupon provide the Warrant Agent and Holders with such
annual reports and such information, documents and other reports are as
specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S.
corporation subject to such Sections, such information, documents and other
reports to be so filed and provided at the times specified for the filing of
such information, documents and reports under such Sections. In addition, for as
long as any of the Warrants are outstanding, the Company will make available to
any prospective purchaser of the Warrants or Warrant Shares or beneficial owner
thereof in connection with any sales thereof the information required by Rule
144A(d)(4) under the Securities Act.
SECTION 7.02. Rule 144A. The Company hereby agrees with each
Holder, for so long as any Registrable Securities remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to any Holder or
beneficial owner of Registrable Securities in connection with any sale thereof
and any prospective purchaser of such Registrable Securities from such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A.
SECTION 7.03. Persons Benefitting. Nothing in this Agreement
is intended or shall be construed to confer upon any Person other than the
Company, the Warrant Agent and the Holders any right, remedy or claim under or
by reason of this agreement or any part hereof.
SECTION 7.04. Rights of Holders. Holders of unexercised
Warrants are not entitled (i) to receive dividends or other distributions (ii)
to receive notice of or vote at any meeting of the stockholders, (iii) to
consent to any action of the stockholders, (iv) to receive notice of
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35
any other proceedings of the Company or (v) to exercise any other rights as
stockholders of the Company.
SECTION 7.05. Amendment. This Agreement may be amended by the
parties hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or making any other provisions with respect to matters or
questions arising under this Agreement as the Company and the Warrant Agent may
deem necessary or desirable; provided, however, that such action shall not
affect adversely the rights of the Holders. Any amendment or supplement to this
Agreement that has an adverse effect on the interests of the Holders shall
require the written consent of the Holders of two-thirds of the then outstanding
Warrants. The consent of each Holder affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided herein). In determining whether the
Holders of the required number of Warrants have concurred in any direction,
waiver or consent, Warrants owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Warrant Agent shall be
protected in relying on any such direction, waiver or consent, only Warrants
which the Warrant Agent knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Warrants outstanding at the time shall be
considered in any such determination.
SECTION 7.06. Notices. Any notice or communication shall be in
writing and delivered in Person or mailed by first-class mail addressed as
follows:
if to the Company:
Benedek Communications Corporation
308 West State Street
Rockford, Illinois 61101
Attention: Mr. Ronald L. Lindwall
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<PAGE>
36
with a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attention: Paul S. Goodman, Esq.
if to the Warrant Agent:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Department
The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to the Holder at the Holder's address as it appears on the Certificate Register
and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 7.07. Governing Law. The laws of the State of New York
shall govern this Agreement and the Warrant Certificates.
SECTION 7.08. Successors. All agreements of the Company in
this Agreement and the Warrant Certificates shall bind its successors. All
agreements of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.09. Multiple Originals. The parties may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Agreement.
SECTION 7.10. Table of Contents. The table of contents and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference
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37
only, are not intended to be considered a part hereof and shall not modify or
restrict any of the terms or provisions hereof.
SECTION 7.11. Severability. The provisions of this Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
<PAGE>
<PAGE>
37A
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
BENEDEK COMMUNICATIONS
CORPORATION,
by /s/ Ronald L. Lindwall
-----------------------------
Name: Ronald L.Lindwall
Title: Secretary,
Senior Vice President -- Finance
IBJ SCHRODER BANK & TRUST
COMPANY, as Warrant Agent,
by /s/ Thomas J. Bogert
-----------------------------
Name: Thomas J. Bogert
Title: Assistant Vice President
<PAGE>
<PAGE>
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
THE WARRANTS AND THE WARRANT SHARES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH
OTHER APPLICABLE LAWS. THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED
UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; OR (D)
PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT.
[Unless and until it is exchanged in whole or in part for
Warrants in definitive form, this Warrant may not be transferred except as a
whole by the depository to a nominee of the depository or by a nominee of the
depository to the depository or another nominee of the depository or by the
depository or any such nominee to a successor depository or a nominee of such
successor depository. The Depository Trust Company ("DTC") (55 Water Street, New
York, New York) shall act as the depository until a successor shall be appointed
by the Company and the Warrant Agent. Unless this certificate is presented by an
authorized representative of DTC to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.](1)
No. [ ] Certificate for ______ Warrants
WARRANTS TO PURCHASE CLASS A COMMON STOCK OF
BENEDEK COMMUNICATIONS CORPORATION
THIS CERTIFIES THAT, [ ], or its
registered assigns, is the registered holder of the number of Warrants set forth
above (the "Warrants"). Each Warrant entitles the holder thereof (the "Holder"),
at its option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from Benedek Communications
Corporation, a Delaware corporation ("the Company"), one share of Class A Common
Stock, par value of $0.01 per share, of the Company (the "Class A Common Stock")
at the per share exercise price of $0.01 (the "Exercise Price"), or by Cashless
Exercise referred to below. This Warrant Certificate shall terminate and become
- --------
(1) To be included only if the Warrant is in global form.
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2
void as of the close of business on July 1, 2007 (the "Expiration Date") or upon
the exercise hereof as to all the shares of Class A Common Stock subject hereto.
The number of shares purchasable upon exercise of the Warrants and the Exercise
Price per share shall be subject to adjustment from time to time as set forth in
the Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement dated as of June 5, 1996 (the "Warrant Agreement"),
between the Company and IBJ Shroder Bank & Trust Company (the "Warrant Agent",
which term includes any successor Warrant Agent under the Warrant Agreement),
and is subject to the terms and provisions contained in the Warrant Agreement,
to all of which terms and provisions the Holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is hereby incorporated
herein by reference and made a part hereof. Reference is hereby made to the
Warrant Agreement for a full statement of the respective rights, limitations of
rights, duties and obligations of the Company, the Warrant Agent and the Holders
of the Warrants. Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Warrant Agreement. A copy of the Warrant
Agreement may be obtained for inspection by the Holder hereof upon written
request to the Warrant Agent at One State Street, New York, NY 10004, attention
of Corporate Trust Department.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by presentation of this Warrant
Certificate with the Purchase Form attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose. Payment by Cashless Exercise shall be made by the surrender of a
Warrant or Warrants represented by one or more Warrant Certificates and without
payment of the Exercise Price in cash, for such number of shares of Class A
Common Stock equal to the product of (1) the number of shares of Class A Common
Stock for which such Warrant is exercisable with payment in cash of the Exercise
Price as of the date of exercise and (2) a fraction, the numerator of which is
the excess of the Current Market Value per share of Class A Common Stock on the
date of exercise over the Exercise Price per share as of the date of exercise
and the denominator of which is the Current Market Value per share of the Class
A Common Stock on the date of exercise.
As provided in the Warrant Agreement and subject to the terms
and conditions therein set forth, the Warrants shall be exercisable at any time
on or after the Separation Date; provided, however, that no Warrant shall be
exercisable after July 1, 2007.
In the event the Company enters into a Combination, the Holder
hereof will be entitled to receive the shares of capital stock or other
securities or other property of such surviving entity as the Holder would have
received had the Holder exercised its Warrants immediately prior to such
Combination; provided, however, that in the event that, in connection with such
Combination, consideration to holders of Class A Common Stock in exchange for
their shares is payable solely in cash or in the event of the dissolution,
liquidation or winding-up of the Company, the Holder hereof will be entitled to
receive
<PAGE>
<PAGE>
3
cash distributions as the Holder would have received had the Holder exercised
its Warrants immediately prior to such Combination, less the Exercise Price.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 2.04 of the Warrant
Agreement but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate in
respect of the shares of Class A Common Stock as to which the Warrants shall not
have been exercised. This Warrant Certificate may be exchanged at the office of
the Warrant Agent by presenting this Warrant Certificate properly endorsed with
a request to exchange this Warrant Certificate for other Warrant Certificates
evidencing an equal number of Warrants. No fractional Warrant Shares will be
issued upon the exercise of the Warrants, but the Company shall pay an amount in
cash equal to the Current Market Value for one Warrant Share on the trading day
immediately preceding the date the Warrant is exercised, multiplied by the
fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Class A Common Stock issuable by the Company
upon the exercise of the Warrants shall, upon such issue, be duly and validly
issued and fully paid and non-assessable.
The holder in whose name the Warrant Certificate is registered
may be deemed and treated by the Company and the Warrant Agent as the absolute
owner of the Warrant Certificate for all purposes whatsoever and neither the
Company nor the Warrant Agent shall be affected by notice to the contrary.
<PAGE>
<PAGE>
4
The Warrants do not entitle any holder hereof to any of the
rights of a shareholder of the Company.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
BENEDEK COMMUNICATIONS CORPORATION,
by
---------------------------------
[SEAL]
Attest:
-------------------------------
Secretary
DATED:
Countersigned:
IBJ SHRODER BANK & TRUST COMPANY,
as Warrant Agent,
by
-------------------------------
Authorized Signatory
<PAGE>
<PAGE>
5
FORM OF ELECTION TO PURCHASE WARRANT CERTIFICATES
(to be executed only upon exercise of Warrants)
BENEDEK COMMUNICATIONS CORPORATION
The undersigned hereby irrevocably elects to exercise [ ]
Warrants at an exercise price per Warrant (subject to adjustment) of $[ ] to
acquire an equal number of shares of Class A Common Stock, par value $0.01 per
share, of Benedek Communications Corporation, on the terms and conditions
specified in the within Warrant Certificate and the Warrant Agreement therein
referred to, surrenders this Warrant Certificate and all right, title and
interest therein to Benedek Communications Corporation and directs that the
shares of Class A Common Stock deliverable upon the exercise of such Warrants be
registered or placed in the name and at the address specified below and
delivered thereto.
Date: ___________________ , 19__
__________________________________ (2)
(Signature of Owner)
__________________________________
(Street Address)
__________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
__________________________________
- --------
(2) The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national bank or
trust company or by a member firm of any national securities exchange.
<PAGE>
<PAGE>
6
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
<PAGE>
<PAGE>
7
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS (3)
The following exchanges of a part of this Global Warrant for definitive Warrants
have been made:
<TABLE>
<CAPTION>
Amount of Number of
increase in Warrants in
Number of this Global Signature of
Warrants in Warrant authorized
Date of this Global following officer of
Exchange Warrant such increase Warrant Agent
<S> <C> <C> <C>
</TABLE>
- --------
(3) To be included only if the Warrant is in global form.
<PAGE>
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Class A Common Stock (the "Warrants")
of Benedek Communications Corporation (the "Company")
This Certificate relates to Warrants held in definitive
form by _______________ (the "Transferor").
The Transferor has requested the Warrant Agent by written
order to exchange or register the transfer of a Warrant or Warrants. In
connection with such request and in respect of each such Warrant, the Transferor
does hereby certify that the Transferor is familiar with the Warrant Agreement
relating to the above captioned Warrants and that the transfer of this Warrant
does not require registration under the Securities Act of 1933, (the "Securities
Act") because */:
[ ] Such Warrant is being acquired for the Transferor's own
account without transfer.
[ ] Such Warrant is being transferred to the Company.
[ ] Such Warrant is being transferred pursuant to an effective
registration statement pursuant to the Securities Act.
[ ] Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Securities Act), in reliance on Rule
144A.
[ ] Such Warrant is being transferred pursuant to an offshore
transaction in accordance with Rule 904 under the Securities Act.
[ ] Such Warrant is being transferred in a transaction meeting
the requirements of Rule 144 under the Securities Act.
If such transfer is being made pursuant to an offshore
transaction in accordance with Rule 904 under the Securities Act, the Transferor
further certifies that:
(i) the offer of the Warrants was not made to a Person in
the United States;
(ii) at the time the buy order was originated, the transferee
was outside the United States or we and any Person acting on our behalf
reasonably believed that the transferee was outside the United States;
(iii) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act of 1933, (the
"Securities Act"), as applicable; and
(iv) the transaction is not part of a plan or scheme by us to
evade the registration requirements of the Securities Act.
Terms used in this paragraph have the meanings set forth in Regulation S.
- --------
*/Please check applicable box.
<PAGE>
<PAGE>
2
The Warrant Agent and the Company are entitled to rely upon
this Certificate and are irrevocably authorized to produce this Certificate or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.
__________________________
[INSERT NAME OF TRANSFEROR]
by
Date:______________________________ __________________________
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION
$170,000,000 13-1/4% Senior Subordinated
Discount Notes Due 2006
------------------------------------------------------------------
Purchase Agreement
May 30, 1996
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Benedek Communications Corporation, a Delaware corporation
(the "Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell (the "Offering") to Goldman, Sachs & Co. (the "Initial
Purchaser") an aggregate of $170,000,000 principal amount at maturity of the
Senior Subordinated Discount Notes of the Company specified above (the
"Securities") as part of the financing of the proposed acquisition by Benedek
Broadcasting (as defined below) of the television broadcast assets (including
certain working capital) of Stauffer Communications, Inc. (the "Stauffer
Stations") and the capital stock of Brissette Broadcasting Corporation (the
"Brissette Stations" and, together with the Stauffer Stations, the
"Acquisitions").
The Securities are to be issued under a senior subordinated
discount note indenture (the "Indenture") to be dated as of May 15, 1996,
between the Company and United States Trust Company of New York, as trustee (the
"Trustee"). Holders (including subsequent transferees) of the Securities will
have the registration rights set forth in the Senior Subordinated Discount Notes
Exchange and Registration Rights Agreement dated as of May 30, 1996 (the
"Registration Rights Agreement"), between the Company and the Initial Purchaser.
Pursuant to the Registration Rights Agreement, the Company has agreed to file
with the Securities and Exchange Commission (the "Commission") (i) a
registration statement under the Securities Act (the "Exchange Offer
Registration Statement") registering an issue of a series of senior subordinated
discount notes (the "Exchange Securities") identical in all material respects to
<PAGE>
<PAGE>
2
the Securities (except that the Exchange Securities will not contain terms with
respect to transfer restrictions) to be offered in exchange for the Securities
(the "Exchange Offer") and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement"). Capitalized terms used herein but not defined shall
have the meaning assigned thereto in the Indenture.
1. The Company represents and warrants to, and
agrees with, the Initial Purchaser that:
(a) A preliminary offering circular, dated May 10,
1996 (the "Preliminary Offering Circular") and an offering
circular, dated May 30, 1996 (the "Offering Circular") have
been prepared in connection with the offering of the
Securities. Any reference to the Preliminary Offering Circular
or the Offering Circular shall be deemed to refer to and
include any Additional Issuer Information (as defined in
Section 5(h)) furnished by the Company prior to the completion
of the distribution of the Securities. The Preliminary
Offering Circular or the Offering Circular and any amendments
or supplements thereto did not and will not, as of their
respective dates, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to the
Company by the Initial Purchaser expressly for use therein;
(b) The Company has not sustained since the date of
the latest audited financial statements included in the
Offering Circular any material loss or interference with its
business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Circular;
and, since the respective dates as of which information is
given in the Offering Circular, there has not been any change
in the
<PAGE>
<PAGE>
3
capital stock or long-term debt of the Company or any material
adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, stockholder's equity or
results of operations of the Company, otherwise than as set
forth or contemplated in the Offering Circular;
(c) Each of the Company, Benedek Broadcasting and BLC
has good and marketable title in fee simple to all real
property and good and marketable title to all personal
property owned by it, free and clear of all liens,
encumbrances and defects except such as are described in the
Offering Circular and the Indenture or such as do not
materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company, Benedek Broadcasting and BLC; and any
real property and buildings held under lease by the Company,
Benedek Broadcasting and BLC are held by them under valid,
subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and
proposed to be made of such property and buildings by the
Company, Benedek Broadcasting and BLC;
(d) Each of the Company, Benedek Broadcasting and BLC
has received and is operating in compliance in all material
respects with all material governmental or regulatory or other
franchises, grants, authorizations, approvals, licenses,
permits, easements, consents, certificates and orders,
necessary to own its properties or conduct its respective
businesses as currently owned and conducted and as proposed to
be conducted;
(e) Each of the Company, Benedek Broadcasting and BLC
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware, with
power and authority (corporate and other) to own its
properties and conduct its business as described in the
Offering Circular, and has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing
<PAGE>
<PAGE>
4
under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require
such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any
such jurisdiction.
(f) The Securities have been duly authorized and,
when issued and delivered pursuant to this Agreement, will
have been duly executed, authenticated, issued and delivered
and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture
under which they are to be issued, which will be substantially
in the form previously delivered to you; the Indenture and the
Registration Rights Agreement have been duly authorized and,
when executed and delivered by the Company and the applicable
counterparty, the Indenture, and the Registration Rights
Agreement will each constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
the Securities, the Indenture and the Registration Rights
Agreement will conform to the descriptions thereof in the
Offering Circular and with respect to the Securities, the
Indenture and the Registration Rights Agreement, will be in
substantially the form previously delivered to you;
(g) None of the transactions contemplated by this
Agreement (including, without limitation, the use of the
proceeds from the sale of the Securities) will violate or
result in a violation of Section 7 of the Exchange Act, or any
regulation promulgated thereunder, including, without
limitation, Regulations G, T, U, and X of the Board of
Governors of the Federal Reserve System;
(h) The issue and sale of the Securities by
the Company and the compliance by the Company with
all of the provisions of the Securities, the
Indenture, and the Registration Rights Agreement
<PAGE>
<PAGE>
5
and this Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company, Benedek Broadcasting or BLC
is a party or by which the Company, Benedek Broadcasting or
BLC is bound or to which any of the property or assets of the
Company, Benedek Broadcasting or BLC is subject, nor will such
action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company,
Benedek Broadcasting or BLC or any statute or any order, rule
or regulation of any court or governmental agency or body
having jurisdiction over the Company, Benedek Broadcasting or
BLC or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for
the issue and sale of the Securities or the consummation by
the Company of the transactions contemplated by this
Agreement, the Indenture and the Registration Rights
Agreement, except for (i) the filing of a registration
statement by the Company with the Commission pursuant to the
United States Securities Act of 1933 (the "Securities Act")
pursuant to Section 5(n) hereof, (ii) the filing of a notice
on Form D by the Company with the Commission pursuant to
Section 5(j) hereof and (iii) such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the
Initial Purchaser;
(i) Neither the Company, Benedek Broadcasting nor BLC
is in violation of its Certificate of Incorporation or By-laws
or in default in the performance or observance of any material
obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it
or any of its properties may be bound;
<PAGE>
<PAGE>
6
(j) The statements set forth in the Offering Circular
under the caption "Description of the Notes", insofar as they
purport to constitute a summary of the terms of the
Securities, under the caption "Certain Federal Income Tax
Consequences" and under the caption "Offering and Resale",
insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate, complete and
fair;
(k) Other than as set forth in the Offering Circular,
there are no legal or governmental proceedings pending to
which the Company, Benedek Broadcasting or BLC is a party or
of which any property of the Company, Benedek Broadcasting or
BLC is the subject which, if determined adversely to the
Company, Benedek Broadcasting or BLC, would individually or in
the aggregate have a material adverse effect on the current or
future financial position, stockholder's equity or results of
operations of the Company, Benedek Broadcasting or BLC; and,
to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others;
(l) When the Securities are issued and delivered
pursuant to this Agreement, the Securities will not be of the
same class (within the meaning of Rule 144A under the
Securities Act as securities of the Company which are listed
on a national securities exchange registered under Section 6
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or quoted in a U.S. automated inter-dealer
quotation system;
(m) The Company is not, and after giving effect to
the offering and sale of the Securities, will not be an
"investment company", or an entity "controlled" by an
"investment company", as such terms are defined in the United
States Investment Company Act of 1940, as amended (the
"Investment Company Act");
(n) Neither the Company, nor any person acting on its
or their behalf (assuming that the Initial Purchaser complies
with Section 3(c) herein) has offered or sold the Securities
by
<PAGE>
<PAGE>
7
means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act;
(o) Within the preceding six months neither the
Company nor any other person acting on behalf of the Company
has offered or sold to any person any Securities, or any
securities of the same or a similar class as the Securities,
other than Securities offered or sold to the Initial Purchaser
hereunder, it being understood that the Company had previously
filed a registration statement number 33-91412 on Form S-1
with respect to a series of senior secured notes. The Company
will take reasonable precautions designed to ensure that any
offer or sale, direct or indirect, in the United States or to
any U.S. person (as defined in Rule 902 under the Securities
Act) of any Securities or any substantially similar security
issued by the Company, within six months subsequent to the
date on which the distribution of the Securities has been
completed (as notified to the Company by the Initial
Purchaser), is made under restrictions and other circumstances
reasonably designed not to affect the status of the offer and
sale of the Securities in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt
from the registration provisions of the Securities Act;
(p) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Section
517.075, Florida Statutes;
(q) McGladrey & Pullen, LLP, who have certified the
combined financial statements of the Company and Arthur
Andersen, L.L.P., who have certified certain financial
statements of the Stauffer Stations and the Brissette
Stations, are each independent public accountants as required
by the Securities Act and the rules and regulations of the
Commission thereunder; and
(r) The Company does not have any subsidiaries other
than Benedek Broadcasting and BLC.
<PAGE>
<PAGE>
8
2. Subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the Initial Purchaser, and the
Initial Purchaser agrees to purchase from the Company, at a purchase
price of 97% of the initial Accreted Value thereof, plus accrued
interest, if any, from May 30, 1996 to the Time of Delivery (as defined
herein) hereunder, the Securities.
3. Upon the authorization by you of the release of the
Securities, the Initial Purchaser proposes to offer the Securities for
sale upon the terms and conditions set forth in this Agreement and the
Offering Circular and the Initial Purchaser hereby represents and
warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to:
(i) persons who it reasonably believes are "qualified
institutional buyers" ("QIBs") within the meaning of Rule 144A
under the Securities Act in transactions meeting the
requirements of Rule 144A or (ii) institutions which it
reasonably believes are "accredited investors" ("Institutional
Accredited Investors") within the meaning of Rule 501 under
the Securities Act;
(b) It is an Institutional Accredited
Investor; and
(c) It has not and will not offer or sell the
Securities by any form of general solicitation or general
advertising, including but not limited to the methods
described in Rule 502(c) under the Securities Act.
4. (a) Except as set forth in the next paragraph, the
Securities to be purchased by the Initial Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with The
Depository Trust Company ("DTC") or its designated custodian. The
Company will deliver the Securities to the Initial Purchaser, for the
account of the Initial Purchaser, against payment by or on behalf of
the Initial Purchaser of the purchase price therefor by book-entry or
wire transfer, certified or official bank check or checks, payable to
the order of the Company in Federal (same day) funds, by causing DTC to
<PAGE>
<PAGE>
9
credit the Securities to the account of the Initial Purchaser at DTC.
The Company will cause the certificates representing the Securities to
be made available to the Initial Purchaser for checking at least
twenty-four hours prior to the Time of Delivery at the office of DTC or
its designated custodian (the "Designated Office"). The time and date
of such delivery and payment shall be 9:30 a.m., New York City time, on
June 6, 1996 or such other time and date as the Initial Purchaser and
the Company may agree upon in writing. Such time and date are herein
called the "Time of Delivery".
Such Securities, if any, as the Initial Purchaser may request
upon at least forty-eight hours prior notice to the Company (such
request to include the authorized denominations and the names in which
they are to be registered), shall be delivered in definitive
certificated form, by or on behalf of the Company to the Initial
Purchaser for the account of the Initial Purchaser, against payment by
or on behalf of the Initial Purchaser of the purchase price therefor by
wire transfer or certified or official bank check or checks, payable to
the order of the Company in Federal (same day) funds. The Company will
cause the certificates representing the Securities to be made available
for checking and packaging at least twenty-four hours prior to the Time
of Delivery at the office of the Initial Purchaser, 85 Broad Street,
New York, New York 10004.
(b) The documents to be delivered at the Time of
Delivery by or on behalf of the parties hereto pursuant to
Section 7 hereof, including the cross-receipt for the
Securities and any additional documents requested by the
Initial Purchaser pursuant to Section 7(j) hereof, will be
delivered at the Time of Delivery at the offices of Cravath,
Swaine & Moore, New York, New York or such other location as
the parties hereto shall select (the "Closing Location"), and
the Securities will be delivered at the Designated Office, all
at the Time of Delivery. A meeting will be held at the Closing
Location at 2:00 p.m., New York City time, on the New York
Business Day next preceding the Time of Delivery, at which
meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will
<PAGE>
<PAGE>
10
be available for review by the parties hereto. For the
purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to
close.
5. The Company agrees with the Initial
Purchaser:
(a) To prepare the Offering Circular in a form
approved by you; to make no amendment or any supplement to the
Offering Circular which shall be disapproved by you promptly
after reasonable notice thereof; and to furnish you with
copies thereof;
(b) Promptly from time to time to take such action as
you may reasonably request to qualify the Securities for
offering and sale under the securities laws of such
jurisdictions as you may request and to comply with such laws
so as to permit the continuance of sales and dealings therein
in such jurisdictions for as long as may be necessary to
complete the distribution of the Securities, provided that in
connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction;
(c) To furnish the Initial Purchaser with 4 copies of
the Offering Circular and each amendment or supplement thereto
signed by an authorized officer of the Company with the
independent accountants' reports in the Offering Circular, and
any amendment or supplement containing amendments to the
financial statements covered by such reports, signed by the
accountants, and additional copies thereof in such quantities
as you may from time to time reasonably request, and if, at
any time prior to the expiration of nine months after the date
of the Offering Circular, any event shall have occurred as a
result of which the Offering Circular as then amended or
supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to
make the
<PAGE>
<PAGE>
11
statements therein, in the light of the circumstances under
which they were made when such Offering Circular is delivered,
not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or
supplement the Offering Circular, to notify you and upon your
request to prepare and furnish without charge to the Initial
Purchaser and to any dealer in securities as many copies as
you may from time to time reasonably request of an amended
Offering Circular or a supplement to the Offering Circular
which will correct such statement or omission or effect such
compliance;
(d) Upon consummation of the Acquisitions by
the Company, to transfer the FCC licenses with
respect to the Stauffer Stations and Brissette
Stations to BLC;
(e) During the period beginning from the date hereof
and continuing until the date six months after the Time of
Delivery, not to offer, sell, contract to sell, or otherwise
dispose of, except as provided pursuant to the Registration
Rights Agreement with respect to the Exchange Securities, any
securities of the Company that are substantially similar to
the Securities;
(f) Not to be or become, at any time prior to the
expiration of three years after the Time of Delivery, an
open-end investment company, unit investment trust, closed-end
investment company or face-amount certificate company that is
or is required to be registered under Section 8 of the
Investment Company Act;
(g) At any time when the Company is not subject to
Section 13 or 15(d) of the Exchange Act, for the benefit of
holders from time to time of Securities, to furnish at its
expense, upon request, to holders of Securities and
prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements
of subsection (d)(4)(i) of Rule 144A under the Securities Act;
(h) If requested by you, to use its best efforts
to cause such Designated Securities to be
<PAGE>
<PAGE>
12
eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
(i) To file with the Commission, not later than 15
days after the Time of Delivery, five copies of a notice on
Form D under the Securities Act (one of which will be manually
signed by a person duly authorized by the Company); to
otherwise comply with the requirements of Rule 503 under the
Securities Act; and to furnish promptly to you evidence of
each such required timely filing (including a copy thereof);
(j) To furnish to the holders of the Securities as
soon as practicable after the end of each fiscal year an
annual report (including a balance sheet and statements of
income, stockholder's equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the date of the Offering
Circular), consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable
detail;
(k) During a period of five years from the date of
the Offering Circular, to furnish to you copies of all reports
or other communications (financial or other) furnished to
holders of the Securities, and following any initial public
offering of equity securities of the Company, to stockholders
of the Company and to deliver to you (i) as soon as they are
available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities
exchange on which the Securities or any class of securities of
the Company is listed; and (ii) such additional information
concerning the business and financial condition of the Company
as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the
extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to holders of the
Securities, and following any initial public offering of
equity securities of
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13
the Company, to stockholders of the Company generally or to
the Commission);
(l) During the period of three years after the Time
of Delivery, the Company will not, and will not permit any of
its "affiliates" (as defined in Rule 144 under the Securities
Act) to, resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been
reacquired by any of them;
(m) To comply with the Registration Rights Agreement
and all agreements set forth in the representation letters of
the Company to DTC relating to the approval of the Securities
for "book-entry" transfer; and
(n) To use the net proceeds received by it from the
sale of the Securities pursuant to this Agreement in the
manner specified in the Offering Circular under the caption
"Use of Proceeds".
6. The Company covenants and agrees with the Initial Purchaser
that the Company will pay or cause to be paid the following: (i) the
fees, disbursements and expenses of the Company's counsel and
accountants in connection with the issue of the Securities and all
other expenses in connection with the printing of the Preliminary
Offering Circular and the Offering Circular and any amendments and
supplements thereto and the mailing and delivering of copies thereof to
the Initial Purchaser and dealers; (ii) the cost of printing or
producing this Agreement, the Registration Rights Agreement, the
Indenture, the Blue Sky and Legal Investment Memoranda, closing
documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the
Securities; (iii) all expenses in connection with the qualification of
the Securities for offering and sale under state securities laws as
provided in Section 5(b) hereof, including the fees and disbursements
of counsel for the Initial Purchaser in connection with such
qualification and in connection with the Blue Sky and legal investment
surveys; (iv) any fees charged by securities rating services for rating
the Securities; (v) the cost of preparing the Securities; (vi) the fees
and expenses of the Trustee and any agent thereof and the fees and
disbursements of
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14
counsel for the Trustee in connection with the Indenture and the
Securities; (vii) any cost incurred in connection with the designation
of the Securities for trading in PORTAL; and (viii) all other costs and
expenses incident to the performance of its obligations hereunder which
are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section and
Sections 8 and 10 hereof, the Initial Purchaser will pay all of its own
costs and expenses, including the fees of its counsel, transfer taxes
on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Initial Purchaser hereunder shall be
subject, in their discretion, to the condition that all representations
and warranties and other statements of the Company herein are, at and
as of the Time of Delivery, true and correct, the condition that the
Company shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) Cravath, Swaine & Moore, counsel for the Initial
Purchaser, shall have furnished to you such opinion or
opinions, dated the Time of Delivery, with respect to the
incorporation of the Company, the validity of the Indenture
and the Securities, the exemption from registration for the
offer and sale of the Securities, the Offering Circular as
amended or recirculated and such other related matters as you
may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to
enable them to pass upon such matters;
(b) Shack & Siegel, P.C., counsel for the Company,
shall have furnished to you their written opinion, dated the
Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) the Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of Delaware, with corporate
power and authority to own its properties and conduct
its business as described in the Offering Circular;
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15
(ii) the Company has an authorized
capitalization as set forth in the Offering Circular,
and all of the issued shares of capital stock of the
Company have been duly and validly authorized and
issued and are fully paid and non-assessable;
(iii) the Company has been duly qualified as a
foreign corporation for the transaction of business
and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or
conducts any business so as to require such
qualification, except for such jurisdictions where
the failure, either singly or in the aggregate, to do
so would not materially and adversely affect the
business operations or financial condition of the
Company;
(iv) each of Benedek Broadcasting and BLC has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of
Delaware; and all of the issued shares of capital
stock of each of Benedek Broadcasting and BLC have
been duly and validly authorized and issued, are
fully paid and non-assessable, and are owned in the
manner described in the Offering Circular;
(v) to the best of such counsel's knowledge
and other than as set forth in the Offering Circular,
there are no legal or governmental proceedings
pending to which the Company, Benedek Broadcasting or
BLC is a party or of which any property of the
Company, Benedek Broadcasting or BLC is the subject
which, if determined adversely to the Company,
Benedek Broadcasting or BLC, would individually or in
the aggregate have a material adverse effect on the
current or future consolidated financial position,
shareholders' equity or results of operations of the
Company, Benedek Broadcasting or BLC; and, to the
best of such counsel's knowledge, no such proceedings
are threatened or contemplated by governmental
authorities or threatened by others;
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16
(vi) the descriptions in the Offering Circular
of statutes (insofar as they relate, to the knowledge
of such counsel, to the business of the Company),
legal or governmental actions, suits, proceedings and
contracts to which the Company is a party are
accurate in all material respects and fairly present,
as to such statutes, legal or governmental actions,
suits, proceedings and contracts and other documents
described therein, the information that would be
required to be presented with respect thereto if the
Offering Circular were a prospectus included in a
registration statement on Form S-1 under the
Securities Act; as of its date and at the Time of
Delivery, the Offering Circular (except for financial
statements and the notes thereto included in the
Offering Circular, as to which no opinion need be
expressed) complies as to form in all material
respects with that which would be required by the Act
and the rules and regulations of the Commission
thereunder applicable to a definitive prospectus
forming part of a registration statement on Form S-1
under the Securities Act;
(vii) each of this Agreement, the Indenture and
the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and
each constitutes a valid and legally binding
instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors'
rights and to general equity principles, except that
rights to indemnity and contribution under the
Registration Rights Agreement may be limited by the
Securities Laws of the United States or any of the
States of the United States;
(viii) the Securities have been duly authorized,
executed, authenticated, issued and delivered and
constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the
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17
Indenture and are enforceable in accordance with
their terms (subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting
creditors rights and to general equity principles);
and the Securities, the Registration Rights Agreement
and the Indenture conform to the descriptions thereof
in the Offering Circular;
(ix) the Indenture conforms as to form in all
material respects with the requirements of the Trust
Indenture Act and the rules and regulations of the
Commission applicable to an indenture which is
qualified thereunder;
(x) the issue and sale of the Securities and
the compliance by the Company with all of the
provisions of the Securities, the Indenture, the
Registration Rights Agreement, and this Agreement and
the consummation of the transactions herein and
therein contemplated will not conflict with or result
in a breach or violation of any of the terms or
provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel
to which the Company, Benedek Broadcasting or BLC is
a party or by which the Company, Benedek Broadcasting
or BLC is bound or to which any of the property or
assets of the Company, Benedek Broadcasting or BLC is
subject (except for breaches or violations that do
not result in material adverse change, or any
development including a prospective material adverse
change, in or affecting the general affairs,
management, financial position, stockholder's equity
or results of operations of the Company), nor will
such actions result in any violation of the
provisions of the Certificate of Incorporation or
By-laws of the Company, Benedek Broadcasting or BLC
or any statute or any order, rule or regulation of
any court or governmental agency or body having
jurisdiction over the Company, Benedek Broadcasting
or BLC or any of their properties (other than state
securities laws
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18
as to which such counsel need not express an
opinion);
(xi) no consent, approval, authorization,
order, registration or qualification of or with any
court or governmental agency or body is required for
the issue and sale of the Securities or the
consummation by the Company of the transactions
contemplated by this Agreement, the Registration
Rights Agreement or the Indenture, except for (i)
such consents, approvals, authorizations,
registrations or qualifications as may be required
under state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities
by the Initial Purchaser and (ii) any consent,
approval, authorization, order, registration or
qualification from the Commission required in
connection with the Exchange Offer Registration
Statement or the Shelf Registration Statement;
(xii) no registration of the Securities under
the Securities Act, and no qualification of an
indenture under the Trust Indenture Act with respect
thereto, is required for the offer, sale and initial
resale of the Securities by the Initial Purchaser in
the manner contemplated by this Agreement;
(xiii) the Company is not an "investment company"
or an entity "controlled" by an "investment company",
as such terms are defined in the Investment Company
Act; and
(xiv) the Acquisitions have been validly
consummated.
In addition to the matters set forth above, such opinion shall
also include a statement to the effect that such counsel have participated in
the preparation of the Preliminary Offering Circular and the Offering Circular
and have had discussions with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and the
Initial Purchaser at which the contents of the Preliminary Offering Circular and
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19
the Offering Circular and related matters were discussed, and although such
counsel are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Offering Circular and the Offering Circular (except in respect of
the matters referred to in the second sentence of paragraph (vi) above on the
basis of the foregoing, such counsel have no reason to believe that the Offering
Circular and any further amendments or supplements thereto made by the Company
prior to the Time of Delivery (other than the financial statements therein, as
to which such counsel need express no opinion), contained as of its date or
contains as of the Time of Delivery an untrue statement of a material fact or
omitted or omits, as the case may be, to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may rely (A) as to
matters governed by the laws of any jurisdiction other than the State of New
York or the United States of America on local counsel in such jurisdictions
provided that such counsel shall state that they believe that they and the
Initial Purchaser are justified in relying on such other counsel and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials and such counsel may
state it is expressing no opinion as to matters covered by the opinion rendered
pursuant to Section 7(d) insofar as they relate to FCC matters.
(c) The Company shall have furnished to the Initial
Purchaser the opinion of Covington & Burling, counsel for the
Company, dated the Time of Delivery, to the effect that:
(i) the execution and delivery of the
Indenture, this Agreement and the Securities by the
Company and the performance by the Company of its
obligations under the Indenture, the Registration
Rights Agreement, this Agreement and the Securities
do not violate the Communications Act of 1934, as
amended, or any rules or regulations thereunder
binding on the Company or any subsidiary or any
order, writ, judgment, injunction, decree or award,
of the FCC
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20
binding on the Company or any of its
subsidiaries;
(ii) except for proceedings of general
applicability affecting the broadcasting industry
generally, there is no proceeding or investigation
pending before the FCC or to our knowledge threatened
by the FCC against the Company or to our knowledge
any of its subsidiaries which, if adversely
determined, would have a material adverse effect on
the condition (financial or other), business,
prospects or results of operations of the Company and
its subsidiaries taken as a whole. To the best
knowledge of such counsel after due inquiry, each of
the Company and its subsidiaries is in material
compliance with all applicable statutes, rules,
regulations and orders of the FCC;
(iii) BLC validly holds the FCC Licenses listed
in such opinion. Such FCC Licenses are in full force
and effect and are for the full license term
customarily issued to broadcast stations licensed
within the states that the Stations operate;
(iv) the FCC has issued orders granting its
consent (i) to the Acquisitions and (ii) except as
noted in such opinion (which exceptions shall be
reasonably acceptable to the Initial Purchaser), to
the assignment of the FCC licenses held by the
Company to BLC. Except as noted in such opinion
(which exceptions shall be reasonably acceptable to
the Initial Purchaser) and except for requirements of
the FCC pertaining to license assignments and
transfers of control in the event of foreclosure, no
additional FCC consent is required to be obtained by
the Company, Benedek Broadcasting or BLC in
connection with the execution and delivery by the
Company of the Indenture, the Registration Rights
Agreement, this Agreement or the Securities or the
performance by the Company of its obligations under
the Indenture, the Registration Rights Agreement,
this Agreement and the Securities; and
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21
(v) the descriptions of the statutes and
legal matters under the caption "Regulation by FCC"
in the Preliminary Offering Circular and the Offering
Circular are accurate and fairly present the
information required to be shown.
(e) On the date of the Offering Circular prior to the
execution of this Agreement and at the Time of Delivery
McGladrey & Pullen, LLP and Arthur Andersen, L.L.P. each shall
have furnished to you a letter or letters, dated the date
thereof, in form and substance satisfactory to you, to the
effect set forth in Annex I hereto;
(f) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Offering Circular
any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the
Offering Circular there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs,
management, financial position, stockholder's equity or
results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Offering
Circular, the effect of which, in any such case described in
Clause (i) or (ii), is in the judgment of the Initial
Purchaser so material and adverse as to make it impracticable
or inadvisable to proceed with the offering or the delivery of
the Securities on the terms and in the manner contemplated in
this Agreement and in the Offering Circular;
(g) On or after the date hereof (i) no downgrading
shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating
organization", as that term is defined by the
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22
Commission for purposes of Rule 436(g)(2) under the Securities
Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with
possible negative implications, its rating of any of the
Company's debt securities;
(h) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York
Stock Exchange; (ii) a suspension or material limitation in
trading in securities generally on the Private Offerings,
Resales and Trading through Automated Linkages (PORTAL) market
("PORTAL"); (iii) a general moratorium on commercial banking
activities declared by either Federal or New York State
authorities; or (iv) the occurrence of any material adverse
change in the existing, financial, political or economic
conditions in the United States or elsewhere which in the
judgment of the Initial Purchaser would materially and
adversely affect the financial markets or the markets for the
Securities and other debt securities; or (v) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or
war, if the effect of any such event specified in this Clause
(v) in the judgment of the Initial Purchaser makes it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in
the manner contemplated in the Offering Circular;
(i) The Securities have been designated for
trading on PORTAL;
(j) The Company shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of
officers of the Company satisfactory to you as to the accuracy
of the representations and warranties of the Company herein at
and as of such Time of Delivery, as to the performance by the
Company of all of its obligations hereunder to be performed at
or prior to such Time of Delivery, as to the matters set forth
in subsection (f) of this Section and as to such other matters
as you may reasonably request;
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23
(k) The Acquisitions shall have been consummated on
or prior to the Time of Delivery;
(l) The Credit Agreement dated as of June 6, 1996
among Benedek Broadcasting, as Borrower, the Company, the
lenders party thereto and Canadian Imperial Bank of Commerce,
as Administrative Agent and Collateral Agent, shall be
executed and the initial funding thereunder shall have
occurred; and
(m) At the Time of Delivery, Benedek
Broadcasting shall own the FCC licenses with respect to the
Stations.
8. (a) The Company shall indemnify and hold harmless the
Initial Purchaser against any losses, claims, damages or liabilities,
joint or several, to which the Initial Purchaser may become subject,
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Circular or the
Offering Circular, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not
misleading, and will reimburse the Initial Purchaser for any legal or
other expenses reasonably incurred by the Initial Purchaser in
connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that the Company shall
be not liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Initial Purchaser expressly
for use therein.
(b) The Initial Purchaser will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the
Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
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24
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
any Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Initial Purchaser expressly
for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses
are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or
any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the
<PAGE>
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25
entry of any judgment with respect to, any pending or threatened action
or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or
claim and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Initial Purchaser on the other
from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice
required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and
the Initial Purchaser on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company
on the one hand and the Initial Purchaser on the other shall be deemed
to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the
Initial Purchaser, in each case as set forth in the Offering Circular.
The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Initial Purchaser on the other and the parties' relative intent,
knowledge, access to
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26
information and opportunity to correct or prevent such statement or
omission. The Company and the Initial Purchaser agree that it would not
be just and equitable if contribution pursuant to this subsection (d)
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this subsection (d), the Initial Purchaser shall not
be required to contribute any amount in excess of the amount by which
the total price at which the Securities offered to the public exceeds
the amount of any damages which the Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls the Initial Purchaser within the meaning of the
Securities Act; and the obligations of the Initial Purchaser under this
Section 8 shall be in addition to any liability which the Initial
Purchaser may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the
Securities Act.
9. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Initial
Purchaser, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of the Initial Purchaser
or any controlling person of the Initial Purchaser, or the Company or
any officer or director or controlling person of the Company and shall
survive delivery of and payment for the Securities.
10. If for any reason, other than the Initial Purchaser's
failure to purchase the Securities as
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27
required pursuant to Section 2 hereof, the Securities are not delivered
by or on behalf of the Company as provided herein, the Company will
reimburse the Initial Purchaser for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Initial Purchaser in making preparations for
the purchase, sale and delivery of the Securities, but the Company
shall then be under no further liability to the Initial Purchaser
except as provided in Sections 6 and 8 hereof.
11. All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Initial Purchaser shall be delivered
or sent by mail, telex or facsimile transmission to you at 85 Broad
Street, New York, New York 10004, Attention: Registration Department;
and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company, 308 West State
Street, Rockford, Illinois, 61101, Attention: Secretary. Any such
statements, requests, notices or agreements shall take effect upon
receipt thereof.
12. This Agreement shall be binding upon, and inure solely to
the benefit of, the Initial Purchaser and the Company and, to the
extent provided in Sections 8 and 9 hereof, the officers and directors
of the Company and each person who controls the Company or the Initial
Purchaser, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any
right under or by virtue of this Agreement. No purchaser of any of the
Securities from the Initial Purchaser shall be deemed a successor or
assign by reason merely of such purchase.
13. Time shall be of the essence of this Agreement.
14. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such respective counterparts shall
together constitute one and the same instrument.
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28
If the foregoing is in accordance with your understanding,
please sign and return to us four counterparts hereof, and upon the acceptance
hereof by you this letter and such acceptance hereof shall constitute a binding
agreement between the Initial Purchaser and the Company.
Very truly yours,
BENEDEK COMMUNICATIONS
CORPORATION,
by /s/ Ronald L. Lindwall
---------------------
Name:
Title:
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
by /s/ Goldman, Sachs & Co.
------------------------
(Goldman, Sachs & Co.)
<PAGE>
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BENEDEK COMMUNICATIONS CORPORATION
$170,000,000 13-1/4% Senior Subordinated Discount Notes
Due 2006
Exchange And Registration Rights Agreement
May 30, 1996
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Benedek Communications Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell to Goldman, Sachs & Co. (the
"Initial Purchaser"), upon the terms set forth in a purchase agreement of even
date herewith (the "Purchase Agreement"), $170,000,000 principal amount at
maturity of its 13-1/4% Senior Subordinated Discount Notes Due 2006 (the
"Securities"). Capitalized terms used but not specifically defined herein are
defined in the Purchase Agreement. As an inducement to the Initial Purchaser to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, for the benefit of the
holders of the Securities (including the Initial Purchaser) and of the Exchange
Securities (as defined below) (collectively the "Holders"), as follows:
1. Registered Exchange Offer. The Company (a) shall prepare
and, not later than 60 days following the Time of Delivery, shall file with the
Securities and Exchange Commission (the "Commission") a registration statement
(the "Exchange Offer Registration Statement") on Form S-1 or Form S-4 under the
Securities Act with respect to a proposed offer (the "Exchange Offer") to the
Holders of Transfer Restricted Securities (as defined in Section 3), who are not
prohibited by any law or policy of the Commission from participating in the
Exchange Offer, to issue and deliver to
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such Holders, in exchange for the Securities, a like aggregate principal amount
of debt securities of the Company (the "Exchange Securities") identical in all
material respects to the Securities, except for the transfer restrictions
relating to the Securities, that would be registered under the Securities Act,
(b) shall use its best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act no later than 120 days
following the Time of Delivery, and shall keep the Exchange Offer Registration
Statement effective for not less than 30 days (or longer, if required by
applicable law) after the date notice of the Exchange Offer is mailed to the
Holders (such period being called the "Exchange Offer Registration Period"). The
Exchange Securities will be issued under the Indenture.
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Exchange Offer, it being the
objective of such Exchange Offer to enable each Holder of Transfer Restricted
Securities (as defined in Section 3) electing to exchange Securities for
Exchange Securities (assuming that such Holder is not an affiliate of the
Company within the meaning of the Securities Act, acquires the Exchange
Securities in the ordinary course of such Holder's business, has no arrangements
with any person to participate in the distribution of the Exchange Securities
and is not prohibited by any law or policy of the Commission from participating
in the Exchange Offer) to trade such Exchange Securities from and after their
receipt without any limitations or restrictions under the Securities Act and
without material restrictions under the securities laws of the several states of
the United States. The Company acknowledges that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act,
(i) each Holder which is a broker-dealer electing to exchange Securities,
acquired for its own account as a result of market making activities or other
trading activities, for Exchange Securities (an "Exchanging Dealer"), is
required to deliver a prospectus containing the information set forth in Annex A
hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section, and in Annex C hereto
in the "Plan of Distribution" section of such prospectus in connection with a
sale of any such Exchange Securities received by such Exchanging Dealer pursuant
to the Exchange Offer and (ii) the Initial Purchaser which elects to sell
Exchange Securities acquired in exchange for
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Securities constituting any portion of an unsold allotment is required to
deliver a prospectus, containing the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in connection with such
a sale.
In connection with the Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Exchange Offer open for not less than 30 days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(c) utilize the services of a Depositary for the
Exchange Offer with an address in the Borough of
Manhattan, the City of New York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all
applicable laws.
As soon as practicable after the close of the Exchange Offer,
the Company shall:
(a) accept for exchange all Securities tendered
and not validly withdrawn pursuant to the Exchange
Offer;
(b) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(c) cause the Trustee promptly to authenticate and deliver to
each Holder of Securities Exchange Securities equal in principal amount
to the Securities of such Holder so accepted for exchange.
The Company shall make available for a period of 90 days after
the consummation of the Exchange Offer a copy of the prospectus forming part of
the Exchange Offer
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Registration Statement to any broker-dealer for use in connection with any
resale of any Exchange Securities.
Interest on each Exchange Security issued pursuant to the
Exchange Offer will accrue from the last interest payment date on which interest
was paid on the Securities surrendered in exchange therefor or, if no interest
has been paid on the Securities, from the date of original issue of the
Securities.
Each Holder participating in the Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Exchange Offer (i) any Exchange Securities received by such Holder will be
acquired in the ordinary course of business, (ii) such Holder will have no
arrangements or understanding with any person to participate in the distribution
of the Securities or the Exchange Securities within the meaning of the
Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405
of the Securities Act, of the Company or if it is an affiliate, such Holder will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in
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the light of the circumstances under which they were made,
not misleading.
2. Shelf Registration. If, because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines that it is not permitted to effect the Exchange Offer as contemplated
by Section 1 hereof, or if for any other reason the Exchange Offer is not
consummated within 120 days of the Time of Delivery, or if the Initial Purchaser
so requests with respect to Securities not eligible to be exchanged for Exchange
Securities in a Exchange Offer and held by it following consummation of the
Exchange Offer or if any Holder (other than an Exchanging Dealer) is not
eligible to participate in the Exchange Offer or, if any Holder that
participates in the Exchange Offer (other than an Exchanging Dealer), does not
receive freely tradeable Exchange Securities in exchange for tendered
Securities, the following provisions shall apply:
(a) The Company shall as promptly as practicable file with the
Commission and thereafter shall use its best efforts to cause to be declared
effective a registration statement on an appropriate form under the Securities
Act relating to the offer and sale of the Transfer Restricted Securities (as
defined below) by the Holders from time to time in accordance with the methods
of distribution elected by such Holders and set forth in such registration
statement (hereafter, a "Shelf Registration Statement" and, together with any
Exchange Offer Registration Statement, a "Registration Statement"); provided,
however, that no Holder (other than the Initial Purchaser) shall be entitled to
have Securities held by it covered by such Shelf Registration Statement unless
such Holder agrees in writing to be bound by all the provisions of this
Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
forming part thereof to be usable by Holders for a period of three years from
the Time of Delivery or such shorter period that will terminate when all the
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement (in any such case, such period being called
the "Shelf Registration Period"). The Company shall be deemed not to have used
its best efforts to keep the Shelf Registration Statement effective during the
requisite period
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if it voluntarily takes any action that would result in Holders of Securities
covered thereby not being able to offer and sell such Securities during that
period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any prospectus forming part
of any Shelf Registration Statement, and any supplement to such prospectus, does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Interest Adjustment. (a) If (i) the applicable Registration
Statement is not filed with the Commission on or prior to 60 days after the Time
of Delivery, (ii) unless the Exchange Offer would not be permitted by a policy
of the Commission, the Exchange Offer Registration Statement is not declared
effective within 120 days following the Time of Delivery, (iii) neither the
Exchange Offer is consummated nor the Shelf Registration Statement is declared
effective within 150 days following the Time of Delivery, or (iv) after a
Registration Statement is declared effective, such Registration Statement
thereafter ceases to be effective or such Registration Statement or the related
prospectus ceases to be usable (except as permitted by the following paragraph)
in connection with resales of Transfer Restricted Securities (as defined below)
during the periods specified herein (each such event referred to in clauses (i)
through (iv), a "Registration Default"), the Securities will provide that
interest will accrue on the Securities at a rate of 13.75% per annum from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured. At all
other times, the Securities will bear interest at the rate stated in the title
of the Securities.
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A Registration Default described in clause (v) of the
immediately preceding paragraph shall be deemed not to have occurred and be
continuing by reason of a Shelf Registration Statement or the related prospectus
ceasing to be usable if (i) such Shelf Registration Statement or prospectus has
ceased to be usable solely as a result of (A) the filing of a post-effective
amendment thereto to incorporate annual audited financial information with
respect to the Company where such post-effective amendment is not yet effective
and needs to be declared effective to permit Holders to use the related
prospectus or (B) other material events, with respect to the Company, that would
need to be described in such Shelf Registration Statement or the related
prospectus and (ii) in the case of clause (B), the Company is proceeding
promptly and in good faith to amend or supplement such Shelf Registration
Statement and related prospectus to describe such events; provided, however,
that in any case if such Shelf Registration Statement or prospectus is not
usable for a continuous period in excess of 30 days, a Registration Default
shall be deemed to have occurred on the day following such 30-day period and to
be continuing until such Registration Default is cured.
"Transfer Restricted Securities" means each Security or
Exchange Security until (i) the date on which such Transfer Restricted Security
has been exchanged by a person other than a broker-dealer for a freely
transferrable Exchange Security in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of a Transfer Restricted
Security for an Exchange Security, the date on which such Exchange Security is
sold to a purchaser who receives from such broker-dealer on or prior to the date
of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (iii) the date on which such Transfer Restricted
Security has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement or (iv) the date on which
such Transfer Restricted Security is distributed to the public pursuant to Rule
144 under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.
Notwithstanding anything to the contrary in this Section 3(a),
the Company shall not be required to include in the Shelf Registration Statement
Transfer Restricted Securities of a Holder if such Holder fails to provide the
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information required to be provided by it, if any, pursuant
to Section 4(n).
(b) The Company shall notify the Trustee and Paying Agent
under the Indenture immediately upon the happening of each and every
Registration Default.
4. Registration Procedures. In connection with
any Registration Statement, the following provisions shall
apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that the Initial Purchaser (with respect to any
portion of an unsold allotment from the original offering) is participating in
the Exchange Offer or the Shelf Registration Statement, shall use its best
efforts to reflect in each such document, when so filed with the Commission,
such comments as you reasonably may propose; (ii) include the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of the prospectus forming a part
of the Exchange Offer Registration Statement, and include the information set
forth in Annex D hereto in the letter of transmittal delivered pursuant to the
Exchange Offer; (iii) if requested by the Initial Purchaser, include the
information required by Items 507 or 508 of Regulation S-K under the Securities
Act, as applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement; and (iv) in the case of a Shelf Registration Statement,
include the name of a Holder who proposes to sell Securities pursuant to the
Shelf Registration Statement as a selling securityholder.
(b) The Company shall advise you and the Holders (if
applicable), and, if requested by you or any such Holder, confirm such advice in
writing (which advice pursuant to clauses (ii)-(v) hereof shall be accompanied
by an instruction to suspend the use of the prospectus until the requisite
changes have been made):
(i) when the Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective;
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(ii) of any request by the Commission for
amendments or supplements to the Registration Statement
or the prospectus included therein or for additional
information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of
any actions or proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification
of the Securities or the Exchange Securities for sale in any
jurisdiction or the initiation or threatening of any action or
proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in the Registration Statement or the prospectus (or
documents incorporated or deemed incorporated therein by reference) so
that, as of such date, the statements therein are not misleading and do
not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(c) The Company will make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of any Registration
Statement or the lifting of any suspension of the qualification or exemption
from qualification of any Securities or Exchange Securities for sale in any
jurisdiction in the United States, at the earliest possible time.
(d) The Company will furnish to each Holder of Securities
included within the coverage of any Shelf Registration Statement, without
charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(e) The Company will deliver to each Holder of Securities
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the prospectus (including each preliminary prospectus)
included in such Shelf Registration Statement and any
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amendment or supplement thereto as such Holder may reasonably request; and the
Company consents to the use of the prospectus or any amendment or supplement
thereto by each of the selling Holders of Securities in connection with the
offering and sale of the Securities covered by the prospectus or any amendment
or supplement thereto.
(f) The Company will furnish to each Exchanging Dealer or the
Initial Purchaser, as applicable, which so requests, without charge, at least
one copy of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Exchanging Dealer or Initial Purchaser, as applicable, so requests in writing,
all exhibits (including those incorporated by reference).
(g) The Company will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly deliver to each
Exchanging Dealer or the Initial Purchaser, as applicable, without charge, as
many copies of the prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as such Exchanging Dealer or
the Initial Purchaser, as applicable, may reasonably request for delivery by (i)
such Exchanging Dealer in connection with a sale of Exchange Securities received
by it pursuant to the Exchange Offer or (ii) the Initial Purchaser in connection
with a sale of Exchange Securities received by it in exchange for Securities
constituting any portion of an unsold allotment; and the Company consents to the
use of the prospectus or any amendment or supplement thereto by any such
Exchanging Dealer or the Initial Purchaser, as applicable, as aforesaid.
(h) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company will use its best
efforts to register or qualify or cooperate with the Holders of Securities
included therein and their respective counsel in connection with the
registration or qualification of such securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holder reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Securities
or Exchange Securities covered by such Registration Statement; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to
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take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(i) The Company will cooperate with the Holders of Securities
to facilitate the timely preparation and delivery of certificates representing
Securities or Exchange Securities to be sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders or the Managing Underwriters, if any, may
request in writing prior to sales of Securities or Exchange Securities pursuant
to such Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 4(b) hereof during the period for which
the Company is required to maintain an effective Registration Statement, the
Company will promptly prepare a post-effective amendment to the Registration
Statement or a supplement to the related prospectus or file any other required
document so that, as thereafter delivered to purchasers of the Securities or
purchasers of Exchange Securities from an Exchanging Dealer or a Holder, as
applicable, the prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities or Exchange Securities, as the case may be, and provide the Trustee
with printed certificates for the Securities or Exchange Securities, as the case
may be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its security
holders as soon as practicable but in any event not later than eighteen months
after the effective date of the applicable Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act.
(m) The Company will cause the Indenture to be
qualified under the Trust Indenture Act as required by
applicable law in a timely manner. In the event that such
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qualification would require the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee thereunder pursuant to the
applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be
sold pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such Securities as the
Company may from time to time reasonably require for inclusion in such
Registration Statement, and the Company may exclude from such registration the
Securities of any Holder that unreasonably fails to furnish such information
within a reasonable time after receiving such request.
(o) The Company shall enter into such customary agreements
(including if requested an underwriting agreement in customary form) and take
all such other action, if any, as Holders of a majority in aggregate principal
amount of Securities or Exchange Securities being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate the
disposition of Securities pursuant to any Shelf Registration Statement;
provided, however, that the Company shall have no obligation to pay any
discounts or underwriting commission.
(p) In the case of a Shelf Registration Statement, the Company
shall (i) make reasonably available upon reasonable notice and during reasonable
business hours for inspection by a representative of, and Special Counsel (as
defined in Section 5 hereof) acting for, a majority in aggregate principal
amount of the Holders, and any underwriter participating in any disposition
pursuant to a Shelf Registration Statement, all relevant financial and other
records, pertinent corporate documents and properties of the Company and each
subsidiary of the Company and (ii) cause each of the Company's (and each of the
Company's subsidiary's) officers, directors, employees, accountants and auditors
to supply all relevant information reasonably requested by such representative,
counsel or any such underwriter (an "Inspector") in connection with any such
Registration Statement, in each case, as shall be reasonably necessary, in the
judgment of the Special Counsel referred to in this paragraph, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act;
provided, however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or records
reasonably designated by
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the Company in writing as being confidential, until such time as (A) such
information becomes a matter of public record (whether by virtue of its
inclusion in such registration statement or otherwise), (B) such person shall be
required to disclose such information pursuant to a subpoena or order of any
court or other governmental agency or body having jurisdiction over the matter
(subject to the requirements of such order, and only after such person shall
have given the Company prompt prior written notice of such requirement) or (C)
such information is required to be set forth in such Shelf Registration
Statement or the prospectus included therein or in an amendment to such Shelf
Registration Statement or an amendment or supplement to such prospectus in order
that such Shelf Registration Statement, prospectus, amendment or supplement, as
the case may be, does not contain an untrue statement of a material fact or omit
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing;
(q) In the case of a Shelf Registration Statement, the
Company, if requested by Holders of a majority in aggregate principal amount of
the Securities and Exchange Securities being sold, their Special Counsel (as
defined in Section 5 below), or the managing underwriters (if any) in connection
with any Shelf Registration Statement, shall use its best efforts to cause (i)
its counsel to deliver an opinion relating to the Shelf Registration Statement
and the Securities or the Exchange Securities, as applicable, in customary form
addressed to such Holders and the managing underwriters, if any, thereof and
dated the effective date of such Shelf Registration Statement (it being agreed
that the matters to be covered by such opinion shall include, without
limitation, the due incorporation and good standing of the Company and its
subsidiaries; the qualification of the Company and its subsidiaries to transact
business as foreign corporations; the due authorization, execution and delivery
of the relevant agreements of the type referred to in Section 4(o) hereof; the
due authorization, execution, authentication and issuance, and the validity and
enforceability, of the Securities or the Exchange Securities, as applicable; the
absence of material legal or governmental proceedings involving the Company; the
absence of governmental approvals required to be obtained in connection with the
Shelf Registration Statement, the offering and sale of the Securities or the
Exchange Securities, as applicable, or any agreement of the type referred to in
Section 4(o) hereof;
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the compliance as to form of such Shelf Registration Statement and any documents
incorporated by reference therein and of the Indenture with the requirements of
the Securities Act and the Trust Indenture Act, respectively; and, as of the
date of the opinion and of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence from such
Shelf Registration Statement and the prospectus included therein, as then
amended or supplemented, and from the documents incorporated by reference
therein of an untrue statement of a material fact or the omission to state
therein a material fact necessary to make the statements therein not misleading
(in the case of such documents, in light of the circumstances existing at the
time such documents were filed with the Commission under the Securities Exchange
Act of 1934 (the "Exchange Act")));, (ii) its officers to execute and deliver
all customary documents and certificates requested by Holders of a majority in
aggregate principal amount of the Securities and Exchange Securities being sold,
their Special Counsel or the managing underwriters (if any) and (iii) its
independent public accountants to provide a comfort letter in customary form,
subject to receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
(r) The Company will use its best efforts to cause the
Securities or the Exchange Securities, as applicable, covered by a Registration
Statement to be rated with the appropriate rating agencies, if so requested by
Holders of a majority in aggregate principal amount of Securities covered by
such Registration Statement or the Exchange Securities, as the case may be, or
by the managing underwriters, if any.
(s) The Company will use its best efforts to cause the
Securities or the Exchange Securities, as applicable, relating to such
Registration Statement to be listed on each securities exchange, if any, on
which debt securities issued by the Company are then listed, if so requested by
Holders of a majority in aggregate principal amount of Securities covered by
such Registration Statement or the Exchange Securities, as the case may be, or
by the managing underwriters, if any.
(t) In the case of a Shelf Registration Statement, each Holder
of Securities agrees by acquisition of such Securities that, upon receipt of any
notice of the
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Company pursuant to paragraphs (ii) through (v) of Section 4(b) hereof, such
Holder will discontinue disposition of such Securities covered by such
Registration Statement until such Holder's receipt of copies of the supplemental
or amended prospectus contemplated by Section 4(j) hereof, or until advised in
writing (the "Advice") by the Company that the use of the applicable prospectus
may be resumed. If the Company shall give any notice under Section 4(b)(ii)
through (v) during the period that the Company is required to maintain an
effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Securities covered by such Registration Statement shall
have received (x) the copies of the supplemental or amended prospectus
contemplated by Section 4(j) (if an amended or supplemental prospectus is
required) or (y) the Advice (if no amended or supplemental prospectus is
required).
(u) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or Exchange Securities or
participate as a member of an underwriting syndicate or selling group or "assist
in the distribution" (within the meaning of the Rules of Fair Practice and the
By-Laws of the National Association of Securities Dealers, Inc. ("NASD"))
thereof, whether as a Holder of such Securities or Exchange Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise assist such broker-dealer in complying with the
requirements of such Rules and By-Laws, including, without limitation, by (A) if
such Rules or By-Laws, including Schedule E thereto, shall so require, engaging
a "qualified independent underwriter" (as defined in such Schedule) to
participate in the preparation of the Registration Statement relating to such
Securities or Exchange Securities, to exercise usual standards of due diligence
in respect thereto and, if any portion of the offering contemplated by such
Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Securities or Exchange
Securities, (B) indemnifying any such qualified independent underwriter to the
extent of the indemnification of underwriters provided in Section 7 hereof and
(C) providing such information to such broker-dealer as may be required in order
for such broker-dealer to comply with the requirements of the Rules of Fair
Practice of the NASD.
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5. Registration Expenses. The Company will bear all expenses
incurred in connection with the performance of its obligations under Sections 1,
2, 3 and 4 hereof and the Company will reimburse the Initial Purchaser and the
Holders for the reasonable fees and disbursements of one firm of attorneys (in
addition to local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Securities and the Exchange Securities to be sold
pursuant to a Registration Statement (the "Special Counsel") acting for the
Initial Purchaser or Holders in connection therewith.
6. Representations and Warranties. The Company represents and
warrants to, and agrees with, the Initial Purchaser and each of the Holders from
time to time of Securities or Exchange Securities that:
(a) Each Registration Statement covering Securities or
Exchange Securities and each prospectus (including any preliminary or summary
prospectus) contained therein or furnished pursuant to Section 4(e) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as the
case may be, and, in the case of an underwritten offering of Securities or
Exchange Securities, at the time of the closing under the underwriting agreement
relating thereto, will conform in all material respects to the requirements of
the Securities Act and the Trust Indenture Act and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
at all times subsequent to the date on which such Registration Statement becomes
effective, when a prospectus would be required to be delivered under the
Securities Act, each such Registration Statement and each prospectus (including
any summary prospectus) concerned therein or furnished pursuant to Section 4(e)
hereof, as then amended or supplemented, will conform in all material respects
to the requirements of the Securities Act and the Trust Indenture Act and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; provided,
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to
<PAGE>
<PAGE>
17
the Company by a Holder of Securities or Exchange Securities
expressly for use therein.
(b) The compliance by the Company with all of the provisions
of this Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is bound or to
which any of the property or assets of the Company or any subsidiary is subject
nor create or give rise to a right in any other party to or beneficiary of any
such indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to take security in assets of the Company or any of its subsidiaries,
nor will such action result in any violation of the provisions of the
Certificate of Incorporation, as amended, or the By-laws of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any subsidiary or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the consummation by the Company of the transactions contemplated by
this Agreement, except the registration under the Securities Act of the
Securities or the Exchange Securities, qualification of the Indenture under the
Trust Indenture Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under State securities or blue sky laws in
connection with the offering and distribution of the Securities or the Exchange
Securities.
7. Indemnification. (a) Indemnification by the Company. Upon
the registration of the Securities or Exchange Securities pursuant to Sections 1
or 2 hereof, and in consideration of the agreements of the Initial Purchaser
contained herein, and as an inducement to the Initial Purchaser to purchase the
Securities, the Company shall indemnify and hold harmless each of the Holders of
Securities or Exchange Securities to be included in such registration, and each
person who participates as a placement or sales agent or as an underwriter in
any offering or sale of such Securities or Exchange Securities against any
losses, claims, damages or liabilities, joint or several, to which such Holder,
agent or underwriter may become subject under the Securities Act or otherwise,
<PAGE>
<PAGE>
18
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Securities or Exchange Securities were registered under the Securities Act,
or any preliminary, final or summary prospectus contained therein or furnished
by the Company to any such Holder, agent or underwriter, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company agrees
to reimburse such Holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable to any such person in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, or preliminary, final or
summary prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by such person
expressly for use therein.
(b) Indemnification by the Holders and any Agents and
Underwriters. The Company may require, as a condition to including any
Securities or Exchange Securities in any Registration Statement filed pursuant
to Sections 1 or 2 hereof and to entering into any underwriting agreement with
respect thereto, that the Company shall have received an undertaking reasonably
satisfactory to it from the Holder of such Securities or Exchange Securities and
from each underwriter named in any such underwriting agreement, severally and
not jointly, to (i) indemnify and hold harmless the Company, and all other
Holders of Securities or Exchange Securities, against any losses, claims,
damages or liabilities to which the Company or such other Holders of Securities
or Exchange Securities may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, or any
preliminary, final or summary prospectus contained therein or furnished by the
Company to any such Holder, agent or underwriter, or any amendment or supplement
thereto, or arise out of or are
<PAGE>
<PAGE>
19
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Holder or underwriter expressly for use therein and (ii)
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that no such Holder shall be
required to undertake liability to any person under this Section 7(b) for any
amounts in excess of the dollar amount of the proceeds to be received by such
Holder from the sale of such Holder's Securities or Exchange Securities pursuant
to such registration.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of this Section 7, notify such indemnifying party in
writing of the commencement of such action; provided, however, that the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party other than under the indemnification
provisions of Section 7(a) or 7(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, such indemnifying party shall
not be liable to such indemnified party for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation.
<PAGE>
<PAGE>
20
(d) Contribution. Each party hereto agrees that, if for any
reason the indemnification provisions of Section 7(a) or Section 7(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 7(d) was determined by pro rata allocation (even if the Holders or any
agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7(d), no Holder shall
be required to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such Holder from the sale of any Securities
or Exchange Securities (after deducting any fees, discounts and commissions
applicable thereto) exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the Securities or Exchange Securities underwritten by it and distributed
to the public were
<PAGE>
<PAGE>
21
offered to the public exceeds the amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' and any underwriters' obligations in
this Section 7(d) to contribute shall be several in proportion to the principal
amount of Securities or Exchange Securities registered or underwritten, as the
case may be, by them and not joint.
(e) Miscellaneous. The obligations of the Company under this
Section 7 shall be in addition to any liability that the Company may otherwise
have and shall extend, upon the same terms and conditions, to each officer,
director and partner of each Holder, agent and underwriter and each person, if
any, who controls any Holder, agent or underwriter within the meaning of the
Securities Act; and the obligations of the Holders and any underwriters
contemplated by this Section 7 shall be in addition to any liability which the
respective Holder or underwriter may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his consent, is named in any Registration
Statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Securities Act.
8. Rules 144 and 144A. The Company shall use its best efforts
to file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder of Transfer
Restricted Securities, make publicly available other information so long as
necessary to permit sales of their securities pursuant to Rules 144 and 144A.
The Company covenants that it will take such further action as any Holder of
Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Transfer Restricted
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to
prospective purchasers of Securities identified to the Company by the Initial
Purchaser upon request. Upon the request of any Holder of Transfer Restricted
Securities, the Company shall deliver to such Holder a written statement as to
whether it
<PAGE>
<PAGE>
22
has complied with such requirements. Notwithstanding the foregoing, nothing in
this Section 8 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing Underwriters") will be
selected by the Holders of a majority in aggregate principal amount of such
Transfer Restricted Securities included in such offering.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities and the Exchange Securities, taken as a
single class. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of the Holders whose Securities or Exchange Securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of a majority in
aggregate principal amount of the Securities or Exchange Securities being sold
by such Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
9(b), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the
<PAGE>
<PAGE>
23
Indenture, with a copy in like manner to the Initial
Purchaser;
(2) if to you, initially at the respective address
set forth in the Purchase Agreement; and
(3) if to the Company, 308 West State Street,
Rockford, Illinois 61101, Attention: Secretary.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; three business
days after being delivered to a next-day air courier; when answered back, if
faxed; and when receipt is acknowledged by the recipient's telecopier machine,
if telecopied.
(c) Successors and Assigns. This Agreement shall
be binding upon the Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopies) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(f) Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN
<PAGE>
<PAGE>
24
BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY
HOLDER OF A TRANSFER RESTRICTED SECURITY TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
(g) Remedies. In the event of a breach by the Company, or by a
Holder of Transfer Restricted Securities, of any of their obligations under this
Agreement, each Holder of Transfer Restricted Securities or the Company, as the
case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company and each Holder of Transfer
Restricted Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(h) No Inconsistent Agreements. The Company has not entered,
nor shall the Company on or after the date of this Agreement enter, into any
agreement that is inconsistent with the rights granted to the Holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. With the exception of the Exchange and Registration Rights
Agreement dated March 3, 1995 among BBC, BLC (successor by merger to the LLC)
and the Initial Purchaser in connection with the issuance and sale of
$135,000,000 11-7/8% Senior Secured Notes due 2005 and the Exchange and
Registration Rights Agreement dated June 5, 1996 among the Company, the Initial
Purchaser and BT Securities Corporation in connection with the issuance and sale
of 15.0% Exchangeable Redeemable Senior Preferred Stock Due 2007, the Company
has not previously entered into any agreement granting any registration rights
with respect to any of its preferred stock or debt securities to any person.
Without limiting the generality of the foregoing, without the written consent of
the Holders of a majority in aggregate principal amount of the then outstanding
Transfer Restricted Securities, the Company shall not grant to any person the
right to request the Company to register any preferred stock or debt securities
of the Company under the Securities Act unless the rights so granted are subject
in all respects to the prior rights of the Holders of Transfer Restricted
Securities set forth herein, and are not otherwise in conflict or inconsistent
with the provisions of the Agreement.
<PAGE>
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25
(i) No Piggyback on Registrations. Neither the Company nor any
of its securityholders (other than the Holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Registration Statement other than Transfer Restricted Securities.
(j) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
<PAGE>
<PAGE>
26
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
BENEDEK COMMUNICATIONS
CORPORATION,
by /s/ Ronald L. Lindwall
----------------------
Name: Ronald L. Lindwall
Title: Senior Vice President-Finance
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.,
by /s/ Goldman, Sachs & Co.
------------------------
(Goldman, Sachs & Co.)
<PAGE>
<PAGE>
ANNEX A
to the Exchange and
Registration Rights Agreement
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. The
letter of transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
<PAGE>
ANNEX B
to the Exchange and
Registration Rights Agreement
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
<PAGE>
ANNEX C
to the Exchange and
Registration Rights Agreement
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 199 ,
all dealers effecting transactions in the Exchange Securities may be required
to deliver a prospectus.*
The Company will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or negotiated prices. Any such resale may be made directly to purchasers
or to or through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer or the purchasers of any
such Exchange Securities. Any broker-dealer that resells Exchange Securities
that were received by it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of such Exchange
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Securities and any
commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer
- --------
*In addition, the legend required by Item 502(e) of Regulation S-K will appear
on the back cover page of the Exchange Offer prospectus.
<PAGE>
<PAGE>
2
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of 90 days after the Expiration Date the Company
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
<PAGE>
ANNEX D
to the Exchange and
Registration Rights Agreement
----
/____/ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND
10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ____________________________________________
Address: _________________________________________
_________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION
60,000 Units
Each Unit Consisting of Ten Shares of
15.0% Exchangeable Redeemable Senior Preferred Stock,
Ten Initial Warrants and 14.8 Contingent Warrants,
Each Warrant to Purchase One Share of
Class A Common Stock
------------------------------------------------------------------
Placement Agreement
June 5, 1996
Goldman, Sachs & Co. BT Securities Corporation
85 Broad Street One Banker's Trust Plaza
New York, New York 10004 New York, New York 10006
Ladies and Gentlemen:
Reference is made to the Engagement Letter dated April 11,
1996 (the "Engagement Letter"), among Benedek Communications Corporation, a
Delaware corporation (the "Company"), Benedek Broadcasting Corporation, a
Delaware corporation ("BBC"), Goldman, Sachs Co. ("Goldman Sachs") and BT
Securities Corporation ("BT", and, together with Goldman Sachs, the "Placement
Agents"). The Company and the Placement Agents agree that the Engagement Letter
shall be superseded and replaced in its entirety by this Agreement.
Subject to the terms of this Agreement, the Placement Agents
hereby agree to serve as exclusive agents in connection with the Company's
proposed offering, issue and sale privately (the "Offering") of no more than
60,000 nor less than 54,000 Units of the Company specified above (the
"Securities") as part of the financing of the proposed acquisition by BBC of the
television broadcast assets (including certain working capital) of Stauffer
Communications, Inc. and the capital stock of Brissette Broadcasting Corporation
(together, the "Acquisitions"). A private placement memorandum, dated May 6,
1996, and supplemented by a Supplement dated May 8, 1996 (together, the "Private
Placement Memorandum"), has been prepared in connection with the Offering.
Capitalized terms used herein
<PAGE>
<PAGE>
2
and not defined shall have the meanings assigned to such terms in the Private
Placement Memorandum.
The Securities are to be sold and delivered to purchasers
(collectively, the "Purchasers") subject to the terms and conditions of the
commitment letters entered into between the Company and each Purchaser
(collectively, the "Commitment Letters"), a form of which is attached as Annex A
to the Private Placement Memorandum. Payment by the Purchasers for the
Securities purchased pursuant to the Commitment Letters is subject to the terms
and conditions of an escrow agreement dated as of June 5, 1996 (the "Closing
Escrow Agreement"), between the Company and IBJ Schroder Bank & Trust Company,
as Closing Escrow Agent, pursuant to which certain amounts deposited by the
Purchasers and the Company in an escrow account with the Closing Escrow Agent
shall be released to the Purchasers and the Units shall be redeemed by the
Company for cancellation if the consummation of the Acquisitions shall not have
occurred or BBC shall not have become a wholly owned subsidiary of the Company
on or prior to the date that is three Business Days after the Closing of the
Offering or, if it appears in the sole judgment of the Company that the
Acquisitions will not be consummated in all material respects on or prior to
such third business day (such event being called an "Early Mandatory
Redemption").
The shares of Exchangeable Preferred Stock are to be issued
subject to the terms and conditions of a Certificate of Designation (the
"Certificate of Designation"). The Exchange Debentures for which the
Exchangeable Preferred Stock may be exchanged at the option of the Company will
be issued pursuant to an Exchange Indenture (the "Exchange Indenture"). The
Warrants are to be issued pursuant to a Warrant Agreement (the "Warrant
Agreement"). Pursuant to the terms of an escrow agreement dated as of June 5,
1996 (the "Contingent Warrant Escrow Agreement"), between the Company and IBJ
Shroder Bank and Trust Company, as the Contingent Warrant Escrow Agent,
delivered in connection with the Warrant Agreement, on the date of initial
issuance of the Warrants the Contingent Warrants will be placed into an escrow
account (the "Contingent Escrow Account") and will be held in such Contingent
Warrant Escrow Account and shall not be deemed outstanding until the Contingent
Warrant Release Date.
Holders of shares of Exchangeable Preferred Stock
or Exchange Debentures will have the exchange and
<PAGE>
<PAGE>
3
registration rights set forth in the Exchangeable Preferred Stock Exchange and
Registration Rights Agreement dated as of June 5, 1996 (the "Exchangeable
Preferred Stock Registration Rights Agreement"), between the Company and the
Placement Agents on behalf of the Purchasers. Pursuant to and subject to the
terms of the Exchangeable Preferred Stock Registration Rights Agreement the
Company has agreed to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of a series of
Exchangeable Preferred Stock or Exchange Debentures, as the case may be (the
"Exchange Securities"), identical in all material respects to the Exchangeable
Preferred Stock or Exchange Debentures, as the case may be (except that the
Exchange Securities will not contain terms with respect to transfer
restrictions) to be offered in exchange for Exchangeable Preferred Stock or
Exchange Debentures, as the case may be (the "Exchange Offer"), and (ii) under
certain circumstances, a shelf registration statement pursuant to Rule 415 under
the Securities Act (the "Shelf Registration Statement"). Holders of Warrants
will have the registration rights set forth in the Common Stock Registration
Rights Agreement (the "Common Stock Registration Rights Agreement") dated as of
June 5, 1996, between the Company and the Placement Agents on behalf of the
Purchasers. Pursuant to and subject to the terms of the Common Stock
Registration Rights Agreement, Holders of 20% or more of the total number of
shares of Common Stock of the Company issuable upon exercise of the Initial
Warrants at the time outstanding or 20% or more of the total number of shares of
Class A Common Stock of the Company issuable upon exercise of the Contingent
Warrants after the Contingent Warrant Release Date at the time outstanding will
be entitled to two demand registration rights with respect to the shares of
Class A Common Stock of the Company issuable upon exercise of the Initial
Warrants or the Continent Warrants, as applicable (such shares being
collectively called the "Warrant Shares"), and the Company has agreed to file
with the Commission a registration statement under the Securities Act
registering any outstanding Warrant Shares with respect to a public offering of
the Company's common stock (the "Warrant Registration Statement").
<PAGE>
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4
1. The Company represents and warrants to, and
agrees with, the Placement Agents that:
(a) Each of the representations and warranties made
by the Company to the Purchasers in paragraph 5 of the
Commitment Letters are hereby made to the Placement Agents.
(b) This Agreement has been duly authorized, executed
and delivered by the Company and will constitute a valid and
binding obligation of the Company, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors'
rights and general equity principles.
(c) None of the transactions contemplated by this
Agreement (including, without limitation, the use of the
proceeds from the sale of the Securities) will violate or
result in a violation of Section 7 of the Exchange Act, or any
regulation promulgated thereunder, including, without
limitation, Regulations G, T, U, and X of the Board of
Governors of the Federal Reserve System;
(d) The statements set forth in the Private Placement
Memorandum under the caption "Description of the Units",
insofar as they purport to constitute a summary of the terms
of the Securities, under the caption "Certain Federal Income
Tax Consequences" and under the caption "Plan of
Distribution", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are
accurate, complete and fair;
(e) Neither the Company nor any person acting on its
behalf (assuming that the Placement Agents comply with Section
2 herein) has offered or sold the Securities by means of any
general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act;
(f) Within the preceding six months neither
the Company nor any other person acting on its
behalf has offered or sold to any person any
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<PAGE>
5
Securities, or any securities of the same or a similar class
as the Securities, other than Securities offered or sold to
the purchasers pursuant to the Commitment Letters, it being
understood that the Company had previously filed a
registration statement number 33-91412 on Form S-1 with
respect to a series of senior secured notes. The Company will
take reasonable precautions designed to ensure that any offer
or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Securities Act)
of any Securities or any substantially similar security issued
by the Company, within six months subsequent to the date on
which the distribution of the Securities has been completed
(as notified to the Company by the Placement Agents), is made
under restrictions and other circumstances reasonably designed
not to affect the status of the offer and sale of the
Securities in the United States and to U.S. persons
contemplated by this Agreement as transactions exempt from the
registration provisions of the Securities Act;
(g) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Section
517.075, Florida Statutes.
(h) The Company will file with the Commission, not
later than 15 days after the Issue Date, five copies of a
notice on Form D under the Securities Act (one of which will
be manually signed by a person duly authorized by the
Company); to otherwise comply with the requirements of Rule
503 under the Securities Act; and to furnish promptly to you
evidence of each such required timely filing (including a copy
thereof);
(i) During the period of three years after the Issue
Date, the Company will not, and will not permit any of its
"affiliates" (as defined in Rule 144 under the Securities Act)
to, resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of
them;
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<PAGE>
6
(j) Neither the Company nor any person acting on its
behalf will, directly or indirectly (except through the
Placement Agents), sell or offer, or attempt or offer to
dispose of, or solicit any offer to buy, or otherwise approach
or negotiate with anyone in respect of, any of the Securities,
and neither the Company nor any person acting on its behalf
has heretofore done any of the foregoing. As used in this
paragraph, the terms "offer" and "sale" have the meanings
specified in Section 2(3) of the Securities Act;
(k) The Company will reasonably believe on the Issue
Date that each Purchaser is an institutional "accredited
investor", as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Act;
(l) The Company has exercised reasonable care to
assure that the Purchasers are not underwriters within the
meaning of Section 2(11) of the Act; and
(m) The Company will furnish and make available to
each Purchaser the information and the opportunity to ask
questions and receive answers required by Rule 502(b) under
the Act. The Company shall be solely responsible for the
contents of any disclosure documents used in the Offering and
the Company represents, warrants and agrees that such
documents will not, as of the date of any offer or sale of the
Securities or the date on which the Commitment Letters are
executed, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances
under which they were made, not misleading. The Company hereby
authorizes the Placement Agents to use such reports and
documents in connection with the Offering.
2. As agents of the Company in the offering and
sale of the Securities, the Placement Agents agree to
use reasonable efforts to place the Securities upon the
terms and conditions set forth in this Agreement and
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<PAGE>
7
each of the Placement Agents hereby represents and warrants to, and
agrees with the Company that:
(a) It will place the Securities only with
institutions which it reasonably believes are "accredited
investors" ("Institutional Accredited Investors") within the
meaning of Rule 501 under the Securities Act; and
(b) It has not and will not place the Securities by
any form of general solicitation or general advertising,
including but not limited to the methods described in Rule
502(c) under the Securities Act.
3. The obligations of the Placement Agents here-
under shall be subject, in their discretion, to the
following conditions:
(a) All representations and warranties and
other statements of the Company herein are, at and
as of the Issue Date, true and correct;
(b) The Company shall have performed all its
obligations under this Agreement theretofore to be
performed;
(c) The Company shall have delivered to the Placement
Agents a copy of the legal opinions described in paragraph
3(e) of the Commitment Letters;
(d) The Company shall have furnished or caused to be
furnished to the Placement Agents on the Issue Date
certificates of officers of the Company satisfactory to the
Placement Agents as to the accuracy of the representations and
warranties of the Company herein on and as of the such Issue
Date, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to the Issue
Date, as to the matters set forth in clause (e) of this
paragraph 3 and as to such other matters as you may reasonably
request;
(e) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Private Placement
Memorandum any
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<PAGE>
8
loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated
in the Private Placement Memorandum, and (ii) since the
respective dates as of which information is given in the
Private Placement Memorandum there shall not have been any
change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general
affairs, management, financial position, stockholder's equity
or results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Private
Placement Memorandum, the effect of which, in any such case
described in clause (i) or (ii) above, is in the judgment of
the Placement Agents so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or
the delivery of the Securities on the terms and in the manner
contemplated in this Agreement and in the Private Placement
Memorandum;
(f) On or after the date hereof (i) no downgrading
shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii)
no such organization shall have publicly announced that it has
under surveillance or review, with possible negative
implications, its rating of any of the Company's debt
securities; and
(g) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York
Stock Exchange; (ii) a suspension or material limitation in
trading in securities generally on the Private Offerings,
Resales and Trading through Automated Linkages (PORTAL) market
("PORTAL"); (iii) a general moratorium on commercial banking
activities declared by either Federal or New York State
authorities; or (iv) the occurrence of any
<PAGE>
<PAGE>
9
material adverse change in the existing, financial, political
or economic conditions in the United States or elsewhere which
in the judgment of the Placement Agents would materially and
adversely affect the financial markets or the markets for the
Securities and other debt securities; or (v) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or
war, if the effect of any such event specified in this clause
(v) in the judgment of the Placement Agents makes it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in
the manner contemplated in the Private Placement Memorandum.
4. The Placement Agents' total fee for services hereunder in
the event that the Offering is consummated shall be 4.5% of the gross proceeds
of the Offering, such fee to be earned and payable upon the closing of the
Offering and in the event no Early Mandatory Redemption has occurred. In
addition to the foregoing fee, the Company shall reimburse each Placement Agent
for its reasonable out-of-pocket expenses, which shall include the fees and
disbursements of its counsel, Cravath, Swaine & Moore, plus any sales tax, use
tax or similar taxes (including additions to such taxes, if any) arising in
connection with the sale of the Securities, such reimbursement to be payable
whether or not the closing of the Offering or an Early Mandatory Redemption has
occurred. Goldman Sachs and the Company acknowledge and agree that Goldman Sachs
is acting on behalf of the Company in connection with related aspects of the
financing for the Acquisitions, and that an appropriate allocation among such
aspects of its reasonable out-of-pocket expenses shall be made. The Placement
Agents shall be entitled to their full fees pursuant to the first sentence of
this paragraph in the event that at any time prior to the expiration of a
12-month period following the right of termination by the Company or any of its
affiliates completes a financing transaction for the Acquisitions on terms
similar to the terms of this proposed transaction with any investor contacted by
any Placement Agents or any affiliate of such investor.
5. In connection with engagements such as this,
it is the policy of the Placement Agents to receive
indemnification. The Company agrees to the provisions with
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<PAGE>
10
respect to the indemnity and other matters set forth in Annex A, which is
incorporated by reference herein.
6. The Company and the Placement Agents shall have the right
to approve (a) every form of letter, circular, notice or other written
communication from the Company or any other person acting on their behalf
(including the Placement Agents) to any offeree or Purchaser in connection with
the Offering and (b) the persons to whom the Company sends any such
communication.
7. This authorization may be terminated by the Company or,
with respect to a Placement Agent, by such Placement Agent at any time with or
without cause, effective upon receipt of written notice to that effect by the
other parties.
8. Neither this Agreement nor any advice (written or oral)
rendered by any Placement Agent in connection with this Agreement may be
disclosed to any third party or circulated or referred to publicly without the
prior written consent of such Placement Agent.
9. The respective agreements, representations, warranties and
other statements of the Company and the Placement Agents as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of any investigation
(or any statement as to the results thereof) made by or on behalf of the
Placement Agents or any controlling person of the Placement Agents, or the
Company or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Securities. In addition, the
provisions of the second sentence of paragraph 4, and all of the paragraphs 5,
7, and 9 shall survive any termination of this Agreement.
10. All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Placement Agents shall be delivered or sent
by mail, telex or facsimile transmission to Goldman Sachs at 85 Broad Street,
New York, New York 10004, Attention: Registration Department; and if to the
Company shall be delivered or sent by mail, telex or facsimile transmission to
the Company at 308 West State Street, Rockford, Illinois 61101, Attention:
Secretary. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
<PAGE>
<PAGE>
11
11. This Agreement shall be binding upon, and inure solely to
the benefit of, the Placement Agents, the Company, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No Purchaser
shall be deemed a successor or assign by reason merely of such purchase.
12. Time shall be of the essence of this
Agreement.
13. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
14. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such respective counterparts shall together constitute
one and the same instrument.
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<PAGE>
12
If the foregoing is in accordance with your understanding,
please sign and return to us four counterparts hereof, and upon the acceptance
hereof by you this letter and such acceptance hereof shall constitute a binding
agreement between the Placement Agents and the Company.
Very truly yours,
BENEDEK COMMUNICATIONS
CORPORATION,
by /s/ Ronald L. Lindwall
-------------------------------------------
Name: RONALD L. LINDWALL
Title: SECRETARY
SENIOR VICE PRESIDENT--FINANCE
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.,
by /s/ Goldman, Sachs & Co.
------------------------
(Goldman, Sachs & Co.)
BT SECURITIES CORPORATION,
by /s/ Gregory Paul
----------------------------
(BT Securities Corporation)
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION
15.0% Exchangeable Redeemable Senior
Preferred Stock Due 2007
Exchange And Registration Rights Agreement
June 5, 1996
Goldman, Sachs & Co. BT Securities Corporation
85 Broad Street One Bankers Trust Plaza
New York, New York 10004 New York, New York 10006
Ladies and Gentlemen:
Benedek Communications Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell privately (the "Offering") 600,000
shares of its 15.0% Exchangeable Redeemable Senior Preferred Stock Due 2007 (the
"Exchangeable Preferred Stock") subject to the terms and conditions of
commitment letters (collectively, the "Commitment Letters") entered into between
the Company and each purchaser (collectively, the "Purchasers"). Subject to the
terms and conditions of a placement agreement dated the date hereof (the
"Placement Agreement") among the Company, Goldman, Sachs & Co. ("Goldman Sachs")
and BT Securities Corporation ("BT" and, together with Goldman Sachs, the
"Placement Agents"), the Placement Agents have agreed to serve as exclusive
placement agents in connection with the issuance and sale of the Exchangeable
Preferred Stock. Capitalized terms used but not specifically defined herein are
defined in the Commitment Letters. As an inducement to the Purchasers to enter
into the Commitment Letters and in satisfaction of conditions to the obligations
of the Purchasers thereunder the Company agrees with you, for the benefit of the
Purchasers and each holder of the Securities
<PAGE>
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2
and of the Exchange Securities (each as defined below) (collectively the
"Holders"), as follows:
1. Registered Exchange Offer. The Company (a) shall prepare
and, not later than October 1, 1996, shall file with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Exchange Offer
Registration Statement") on Form S-1 or Form S-4 under the Securities Act with
respect to a proposed offer (the "Exchange Offer") to the Holders of Transfer
Restricted Securities (as defined in Section 3), who are not prohibited by any
law or policy of the Commission from participating in the Exchange Offer, to
issue and deliver to such Holders, in exchange for shares of Exchangeable
Preferred Stock or Exchange Debentures, as the case may be (the "Securities"), a
like aggregate liquidation preference of Exchangeable Preferred Stock or a like
aggregate principal amount of Exchange Debentures, as the case may be, of the
Company (the "Exchange Securities") identical in all material respects to the
Securities, except for the transfer restrictions relating to the Exchangeable
Preferred Stock or Exchange Debentures, as the case may be, that would be
registered under the Securities Act, (b) shall use its best efforts to cause the
Exchange Offer Registration Statement to become effective under the Securities
Act no later than December 1, 1996, and shall keep the Exchange Offer
Registration Statement effective for not less than 20 Business Days (or longer,
if required by applicable law) after the date notice of the Exchange Offer is
mailed to the Holders (such period being called the "Exchange Offer Registration
Period").
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Exchange Offer, it being the
objective of such Exchange Offer to enable each Holder of Transfer Restricted
Securities (as defined in Section 3) electing to exchange Securities for
Exchange Securities (assuming that such Holder is not an affiliate of the
Company within the meaning of the Securities Act, acquires the Exchange
Securities in the ordinary course of such Holder's business, has no arrangements
with any person to participate in the distribution of the Exchange Securities
and is not prohibited by any law or policy of the Commission from participating
in the Exchange Offer) to trade such Exchange Securities from and after their
receipt without any limitations or restrictions under the Securities Act and
without material restrictions under the securities laws of the several states of
the United States. The Company
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3
acknowledges that, pursuant to current interpretations by the Commission's staff
of Section 5 of the Securities Act, each Holder which is a broker-dealer
electing to exchange Securities, acquired for its own account as a result of
market making activities or other trading activities, for Exchange Securities
(an "Exchanging Dealer"), is required to deliver a prospectus containing the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section, and in Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Securities received by
such Exchanging Dealer pursuant to the Exchange Offer.
In connection with the Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Exchange Offer open for not less than 20 Business
Days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law);
(c) utilize the services of a Depositary for the
Exchange Offer with an address in the Borough of
Manhattan, the City of New York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all
applicable laws.
As soon as practicable after the close of the Exchange Offer,
the Company shall:
(a) accept for exchange all Securities tendered
and not validly withdrawn pursuant to the Exchange
Offer;
(b) deliver to the Transfer Agent for cancellation
all Securities so accepted for exchange; and
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4
(c) cause the Transfer Agent promptly to authenticate and
deliver to each Holder of Securities Exchange Securities equal in
principal amount to the Securities of such Holder so accepted for
exchange.
The Company shall make available for a period of 90 days after
the consummation of the Exchange Offer a copy of the prospectus forming part of
the Exchange Offer Registration Statement to any broker-dealer for use in
connection with any resale of any Exchange Securities.
Each Holder participating in the Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Exchange Offer (i) any Exchange Securities received by such Holder will be
acquired in the ordinary course of business, (ii) such Holder will have no
arrangements or understanding with any person to participate in the distribution
of the Securities or the Exchange Securities within the meaning of the
Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405
of the Securities Act, of the Company or if it is an affiliate, such Holder will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not include an untrue statement of a
material fact or omit to state a material
<PAGE>
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5
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
2. Shelf Registration. If, because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines that it is not permitted to effect the Exchange Offer as contemplated
by Section 1 hereof, or if for any other reason the Exchange Offer is not
consummated by December 31, 1996, or if a Holder so requests with respect to
Securities not eligible to be exchanged for Exchange Securities in a Exchange
Offer and held by it following consummation of the Exchange Offer or if any
Holder (other than an Exchanging Dealer) is not eligible to participate in the
Exchange Offer or, if any Holder that participates in the Exchange Offer (other
than an Exchanging Dealer), does not receive freely tradeable Exchange
Securities in exchange for tendered Securities, the following provisions shall
apply:
(a) The Company shall as promptly as practicable file with the
Commission and thereafter shall use its best efforts to cause to be declared
effective a registration statement on an appropriate form under the Securities
Act relating to the offer and sale of the Transfer Restricted Securities (as
defined below) by the Holders from time to time in accordance with the methods
of distribution elected by such Holders and set forth in such registration
statement (hereafter, a "Shelf Registration Statement" and, together with any
Exchange Offer Registration Statement, a "Registration Statement"); provided,
however, that no Holder shall be entitled to have Securities held by it covered
by such Shelf Registration Statement unless such Holder agrees in writing to be
bound by all the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
forming part thereof to be usable by Holders for a period of three years from
the consummation of the Offering or such shorter period that will terminate when
all the Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration Period"). The Company shall be deemed not
to have used its best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would result
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6
in Holders of Securities covered thereby not being able to offer and sell such
Securities during that period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any prospectus forming part
of any Shelf Registration Statement, and any supplement to such prospectus, does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) If (i) the applicable Registration
Statement is not filed with the Commission on or prior to October 1, 1996 (ii)
unless the Exchange Offer would not be permitted by a policy of the Commission,
the Exchange Offer Registration Statement is not declared effective by December
1, 1996, (iii) neither the Exchange Offer is consummated nor the Shelf
Registration Statement is declared effective by December 31, 1996, or (iv) after
a Registration Statement is declared effective, such Registration Statement
thereafter ceases to be effective or such Registration Statement or the related
prospectus ceases to be usable (except as permitted by the following paragraph)
in connection with resales of Transfer Restricted Securities (as defined below)
during the periods specified herein (each such event referred to in clauses (i)
through (iv), a "Registration Default"), then additional cash dividends will
accrue on the Exchangeable Preferred Stock at a rate of 0.50% per annum from and
including the date on which any Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured calculated
on the liquidation preference of the Exchangeable Preferred Stock, or additional
cash interest will accrue on the Exchange Debentures at a rate of 0.50% per
annum from and including the date on which any Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured
calculated on the principal amount of the Exchange Debentures, as the case may
<PAGE>
<PAGE>
7
be ("Liquidated Damages"). All accrued Liquidated Damages will be paid by the
Company in cash on each scheduled dividend payment date for the Exchangeable
Preferred Stock, or on the date interest is payable for the Exchange Debentures,
as the case may be (the "Damages Payment Date"), to any holder of Transfer
Restricted Securities who has given wire transfer instructions to the Company at
least ten Business Days prior to the Damages Payment Date by wire transfer of
immediately available funds and to all other holders of Transfer Restricted
Securities by mailing checks to their registered addresses. Following the cure
of all Registration Defaults, the accrual of Liquidated Damages will cease.
A Registration Default described in clause (iv) of the
immediately preceding paragraph shall be deemed not to have occurred and be
continuing by reason of a Shelf Registration Statement or the related prospectus
ceasing to be usable if (i) such Shelf Registration Statement or prospectus has
ceased to be usable solely as a result of (A) the filing of a post-effective
amendment thereto to incorporate annual audited financial information with
respect to the Company where such post-effective amendment is not yet effective
and needs to be declared effective to permit Holders to use the related
prospectus or (B) other material events, with respect to the Company, that would
need to be described in such Shelf Registration Statement or the related
prospectus and (ii) in the case of clause (B), the Company is proceeding
promptly and in good faith to amend or supplement such Shelf Registration
Statement and related prospectus to describe such events; provided, however,
that in any case if such Shelf Registration Statement or prospectus is not
usable for a continuous period in excess of 30 days, a Registration Default
shall be deemed to have occurred on the day following such 30-day period and to
be continuing until such Registration Default is cured.
"Transfer Restricted Securities" means each Security or
Exchange Security until (i) the date on which such Transfer Restricted Security
has been exchanged by a person other than a broker-dealer for a freely
transferrable Exchange Security in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of a Transfer Restricted
Security for an Exchange Security, the date on which such Exchange Security is
sold to a purchaser who receives from such broker-dealer on or prior to the date
of such sale a copy of the prospectus contained in the
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8
Exchange Offer Registration Statement, (iii) the date on which such Transfer
Restricted Security has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date
on which such Transfer Restricted Security is distributed to the public pursuant
to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k)
under the Securities Act.
Notwithstanding anything to the contrary in this Section 3(a),
the Company shall not be required to include in the Shelf Registration Statement
Transfer Restricted Securities of a Holder if such Holder fails to provide the
information required to be provided by it, if any, pursuant
to Section 4(n).
(b) The Company shall notify the Transfer Agent under the
Certificate of Designation or the Trustee under Exchange Indenture, as the case
may be, immediately upon the happening of each and every Registration Default.
4. Registration Procedures. In connection with
any Registration Statement, the following provisions shall
apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and shall use its best efforts to reflect in each such document, when so
filed with the Commission, such comments as you reasonably may propose; (ii)
include the information set forth in Annex A hereto on the cover, in Annex B
hereto in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section and in Annex C hereto in the "Plan of Distribution"
section of the prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in the letter
of transmittal delivered pursuant to the Exchange Offer; and (iii) in the case
of a Shelf Registration Statement, include the name of a Holder who proposes to
sell Securities pursuant to the Shelf Registration Statement as a selling
securityholder.
(b) The Company shall advise you and the Holders (if
applicable), and, if requested by you or any such Holder, confirm such advice in
writing (which advice pursuant to clauses (ii)-(v) hereof shall be accompanied
by
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9
an instruction to suspend the use of the prospectus until the requisite changes
have been made):
(i) when the Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any actions or proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of the Securities or the Exchange Securities for sale in
any jurisdiction or the initiation or threatening of any action or
proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in the Registration Statement or the prospectus (or
documents incorporated or deemed incorporated therein by reference) so
that, as of such date, the statements therein are not misleading and do
not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(c) The Company will make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of any Registration
Statement or the lifting of any suspension of the qualification or exemption
from qualification of any Securities or Exchange Securities for sale in any
jurisdiction in the United States, at the earliest possible time.
(d) The Company will furnish to each Holder of Securities
included within the coverage of any Shelf Registration Statement, without
charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
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10
schedules, and, if the Holder so requests in writing, all exhibits (including
those incorporated by reference).
(e) The Company will deliver to each Holder of Securities
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the prospectus (including each preliminary prospectus)
included in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and the Company consents to the
use of the prospectus or any amendment or supplement thereto by each of the
selling Holders of Securities in connection with the offering and sale of the
Securities covered by the prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Exchanging Dealer or a
Holder, as applicable, which so requests, without charge, at least one copy of
the Exchange Offer Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Exchanging
Dealer or such Holder, as applicable, so requests in writing, all exhibits
(including those incorporated by reference).
(g) The Company will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly deliver to each
Exchanging Dealer or the Holder, as applicable, without charge, as many copies
of the prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer or the Holder, as
applicable, may reasonably request for delivery by such Exchanging Dealer in
connection with a sale of Exchange Securities received by it pursuant to the
Exchange Offer.
(h) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company will use its best
efforts to register or qualify or cooperate with the Holders of Securities
included therein and their respective counsel in connection with the
registration or qualification of such securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holder reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Securities
or Exchange Securities covered by such Registration Statement; provided,
however, that the Company will not be required to qualify generally to do
business in
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11
any jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(i) The Company will cooperate with the Holders of Securities
to facilitate the timely preparation and delivery of certificates representing
Securities or Exchange Securities to be sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders or the Managing Underwriters, if any, may
request in writing prior to sales of Securities or Exchange Securities pursuant
to such Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 4(b) hereof during the period for which
the Company is required to maintain an effective Registration Statement, the
Company will promptly prepare a post-effective amendment to the Registration
Statement or a supplement to the related prospectus or file any other required
document so that, as thereafter delivered to purchasers of the Securities or
purchasers of Exchange Securities from an Exchanging Dealer or a Holder, as
applicable, the prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities or Exchange Securities, as the case may be, and provide the Transfer
Agent with printed certificates for the Securities or Exchange Securities, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its security
holders as soon as practicable but in any event not later than eighteen months
after the effective date of the applicable Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act.
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12
(m) The Company will cause the Exchange Indenture to be
qualified under the Trust Indenture Act as required by applicable law in a
timely manner. In the event that such qualification would require the
appointment of a new trustee under the Exchange Indenture, the Company shall
appoint a new trustee thereunder pursuant to the applicable provisions of the
Indenture.
(n) The Company may require each Holder of Securities to be
sold pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such Securities as the
Company may from time to time reasonably require for inclusion in such
Registration Statement, and the Company may exclude from such registration the
Securities of any Holder that unreasonably fails to furnish such information
within a reasonable time after receiving such request.
(o) The Company shall enter into such customary agreements
(including if requested an underwriting agreement in customary form) and take
all such other action, if any, as Holders of a majority in aggregate liquidation
preference or principal amount, as applicable, of Securities or Exchange
Securities being sold or the managing underwriters (if any) shall reasonably
request in order to facilitate the disposition of Securities pursuant to any
Shelf Registration Statement; provided, however, that the Company shall have no
obligation to pay any discounts or underwriting commission.
(p) In the case of a Shelf Registration Statement, the Company
shall (i) make reasonably available upon reasonable notice and during reasonable
business hours for inspection by a representative of, and Special Counsel (as
defined in Section 5 hereof) acting for, a majority in aggregate liquidation
preference or principal amount, as applicable, of the Holders, and any
underwriter participating in any disposition pursuant to a Shelf Registration
Statement, all relevant financial and other records, pertinent corporate
documents and properties of the Company and each subsidiary of the Company and
(ii) cause each of the Company's (and each of the Company's subsidiary's)
officers, directors, employees, accountants and auditors to supply all relevant
information reasonably requested by such representative, counsel or any such
underwriter (an "Inspector") in connection with any such Registration Statement,
in each case, as shall be reasonably necessary, in the judgment of the Special
Counsel referred to in this paragraph, to conduct a reasonable investigation
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13
within the meaning of Section 11 of the Securities Act; provided, however, that
each such party shall be required to maintain in confidence and not to disclose
to any other person any information or records reasonably designated by the
Company in writing as being confidential, until such time as (A) such
information becomes a matter of public record (whether by virtue of its
inclusion in such registration statement or otherwise), (B) such person shall be
required to disclose such information pursuant to a subpoena or order of any
court or other governmental agency or body having jurisdiction over the matter
(subject to the requirements of such order, and only after such person shall
have given the Company prompt prior written notice of such requirement) or (C)
such information is required to be set forth in such Shelf Registration
Statement or the prospectus included therein or in an amendment to such Shelf
Registration Statement or an amendment or supplement to such prospectus in order
that such Shelf Registration Statement, prospectus, amendment or supplement, as
the case may be, does not contain an untrue statement of a material fact or omit
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing;
(q) In the case of a Shelf Registration Statement, the
Company, if requested by Holders of a majority in aggregate liquidation
preference or principal amount, as applicable, of the Securities and Exchange
Securities being sold, their Special Counsel (as defined in Section 5 below), or
the managing underwriters (if any) in connection with any Shelf Registration
Statement, shall use its best efforts to cause (i) its counsel to deliver an
opinion relating to the Shelf Registration Statement and the Securities or the
Exchange Securities, as applicable, in customary form addressed to such Holders
and the managing underwriters, if any, thereof and dated the effective date of
such Shelf Registration Statement (it being agreed that the matters to be
covered by such opinion shall include, without limitation, the due incorporation
and good standing of the Company and its subsidiaries; the qualification of the
Company and its subsidiaries to transact business as foreign corporations; the
due authorization, execution and delivery of the relevant agreements of the type
referred to in Section 4(o) hereof; the due authorization, execution,
authentication and issuance, and the nonassessibility or validity and
enforceability, as the case may be, of the Securities or the Exchange
Securities, as applicable; the absence of material legal or governmental
proceedings
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14
involving the Company; the absence of governmental approvals required to be
obtained in connection with the Shelf Registration Statement, the offering and
sale of the Securities or the Exchange Securities, as applicable, or any
agreement of the type referred to in Section 4(o) hereof; the compliance as to
form of such Shelf Registration Statement and any documents incorporated by
reference therein and of the Indenture with the requirements of the Securities
Act and the Trust Indenture Act, respectively; and, as of the date of the
opinion and of the Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, the absence from such Shelf Registration
Statement and the prospectus included therein, as then amended or supplemented,
and from the documents incorporated by reference therein of an untrue statement
of a material fact or the omission to state therein a material fact necessary to
make the statements therein not misleading (in the case of such documents, in
light of the circumstances existing at the time such documents were filed with
the Commission under the Securities Exchange Act of 1934 (the "Exchange
Act")));, (ii) its officers to execute and deliver all customary documents and
certificates requested by Holders of a majority in aggregate liquidation
preference or principal amount, as applicable, of the Securities and Exchange
Securities being sold, their Special Counsel or the managing underwriters (if
any) and (iii) its independent public accountants to provide a comfort letter in
customary form, subject to receipt of appropriate documentation as contemplated,
and only if permitted, by Statement of Auditing Standards No. 72.
(r) The Company will use its best efforts to cause the
Securities or the Exchange Securities, as applicable, covered by a Registration
Statement to be rated with the appropriate rating agencies, if so requested by
Holders of a majority in aggregate liquidation preference or principal amount,
as applicable, of Securities covered by such Registration Statement or the
Exchange Securities, as the case may be, or by the managing underwriters, if
any.
(s) The Company will use its best efforts to cause the
Securities or the Exchange Securities, as applicable, relating to such
Registration Statement to be listed on each securities exchange, if any, on
which preferred stock or debt securities, as applicable, issued by the Company
are then listed, if so requested by Holders of a majority in aggregate
liquidation preference or principal
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15
amount, as applicable, of Securities covered by such Registration Statement or
the Exchange Securities, as the case may be, or by the managing underwriters, if
any.
(t) In the case of a Shelf Registration Statement, each Holder
of Securities agrees by acquisition of such Securities that, upon receipt of any
notice of the Company pursuant to paragraphs (ii) through (v) of Section 4(b)
hereof, such Holder will discontinue disposition of such Securities covered by
such Registration Statement until such Holder's receipt of copies of the
supplemental or amended prospectus contemplated by Section 4(j) hereof, or until
advised in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed. If the Company shall give any notice under Sections
4(b)(ii) through (v) during the period that the Company is required to maintain
an effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Securities covered by such Registration Statement shall
have received (x) the copies of the supplemental or amended prospectus
contemplated by Section 4(j) (if an amended or supplemental prospectus is
required) or (y) the Advice (if no amended or supplemental prospectus is
required).
(u) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or Exchange Securities or
participate as a member of an underwriting syndicate or selling group or "assist
in the distribution" (within the meaning of the Rules of Fair Practice and the
By-Laws of the National Association of Securities Dealers, Inc. ("NASD"))
thereof, whether as a Holder of such Securities or Exchange Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise assist such broker-dealer in complying with the
requirements of such Rules and By-Laws, including, without limitation, by (A) if
such Rules or By-Laws, including Schedule E thereto, shall so require, engaging
a "qualified independent underwriter" (as defined in such Schedule) to
participate in the preparation of the Registration Statement relating to such
Securities or Exchange Securities, to exercise usual standards of due diligence
in respect thereto and, if any portion of the offering contemplated by such
Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Securities or
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16
Exchange Securities, (B) indemnifying any such qualified independent underwriter
to the extent of the indemnification of underwriters provided in Section 7
hereof and (C) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements of the
Rules of Fair Practice of the NASD.
5. Registration Expenses. The Company will bear all expenses
incurred in connection with the performance of its obligations under Sections 1,
2, 3 and 4 hereof and the Company will reimburse the Holders for the reasonable
fees and disbursements of one firm of attorneys (in addition to local counsel)
chosen by the Holders of a majority in aggregate liquidation preference or
principal amount, as applicable, of the Securities and the Exchange Securities
to be sold pursuant to a Registration Statement (the "Special Counsel") acting
for the Holders in connection therewith.
6. Representations and Warranties. The Company represents and
warrants to, and agrees with, the Placement Agents and each of the Holders from
time to time of Securities or Exchange Securities that:
(a) Each Registration Statement covering Securities or
Exchange Securities and each prospectus (including any preliminary or summary
prospectus) contained therein or furnished pursuant to Section 4(e) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as the
case may be, and, in the case of an underwritten offering of Securities or
Exchange Securities, at the time of the closing under the underwriting agreement
relating thereto, will conform in all material respects to the requirements of
the Securities Act and the Trust Indenture Act and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
at all times subsequent to the date on which such Registration Statement becomes
effective, when a prospectus would be required to be delivered under the
Securities Act, each such Registration Statement and each prospectus (including
any summary prospectus) concerned therein or furnished pursuant to Section 4(e)
hereof, as then amended or supplemented, will conform in all material respects
to the requirements of the Securities Act and the Trust Indenture Act and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or
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17
necessary to make the statements therein not misleading in the light of the
circumstances then existing; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by a
Holder of Securities or Exchange Securities expressly for use therein.
(b) The compliance by the Company with all of the provisions
of this Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is bound or to
which any of the property or assets of the Company or any subsidiary is subject
nor create or give rise to a right in any other party to or beneficiary of any
such indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to take security in assets of the Company or any of its subsidiaries,
nor will such action result in any violation of the provisions of the
Certificate of Incorporation, as amended, or the By-laws of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any subsidiary or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the consummation by the Company of the transactions contemplated by
this Agreement, except the registration under the Securities Act of the
Securities or the Exchange Securities, qualification of the Exchange Indenture
under the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities or
blue sky laws in connection with the offering and distribution of the Securities
or the Exchange Securities.
7. Indemnification. (a) Indemnification by the Company. Upon
the registration of the Securities or Exchange Securities pursuant to Section 1
or 2 hereof, and in consideration of the agreements of the Holders contained
herein, and as an inducement to the Purchasers and the Holders to purchase the
Securities, the Company shall indemnify and hold harmless each of the Holders of
Securities or Exchange Securities to be included in such registration, and each
person who participates as a
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18
placement or sales agent or as an underwriter in any offering or sale of such
Securities or Exchange Securities against any losses, claims, damages or
liabilities, joint or several, to which such Holder, agent or underwriter may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement under which such Securities or
Exchange Securities were registered under the Securities Act, or any
preliminary, final or summary prospectus contained therein or furnished by the
Company to any such Holder, agent or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company agrees to reimburse such
Holder, such agent and such underwriter for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable to any such person in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, or preliminary, final or summary
prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by such person
expressly for use therein.
(b) Indemnification by the Holders and any Agents and
Underwriters. The Company may require, as a condition to including any
Securities or Exchange Securities in any Registration Statement filed pursuant
to Sections 1 or 2 hereof and to entering into any underwriting agreement with
respect thereto, that the Company shall have received an undertaking reasonably
satisfactory to it from the Holder of such Securities or Exchange Securities and
from each underwriter named in any such underwriting agreement, severally and
not jointly, to (i) indemnify and hold harmless the Company, and all other
Holders of Securities or Exchange Securities, against any losses, claims,
damages or liabilities to which the Company or such other Holders of Securities
or Exchange Securities may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement
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19
or alleged untrue statement of a material fact contained in such Registration
Statement, or any preliminary, final or summary prospectus contained therein or
furnished by the Company to any such Holder, agent or underwriter, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such Holder
or underwriter expressly for use therein and (ii) reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that no such Holder shall be required to undertake
liability to any person under this Section 7(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such Holder from the sale of
such Holder's Securities or Exchange Securities pursuant to such registration.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of this Section 7, notify such indemnifying party in
writing of the commencement of such action; provided, however, that the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party other than under the indemnification
provisions of Section 7(a) or 7(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, such indemnifying party shall
not be liable to such indemnified party for any legal expenses of other counsel
or any other expenses, in each case
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20
subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation.
(d) Contribution. Each party hereto agrees that, if for any
reason the indemnification provisions of Section 7(a) or Section 7(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 7(d) was determined by pro rata allocation (even if the Holders or any
agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7(d), no Holder shall
be required to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such Holder from the sale of any Securities
or Exchange Securities (after deducting any fees, discounts and commissions
applicable thereto) exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or
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21
alleged omission, and no underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Securities or
Exchange Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' and any underwriters' obligations in
this Section 7(d) to contribute shall be several in proportion to the
liquidation preference or principal amount, as applicable, of Securities or
Exchange Securities registered or underwritten, as the case may be, by them and
not joint.
(e) Miscellaneous. The obligations of the Company under this
Section 7 shall be in addition to any liability that the Company may otherwise
have and shall extend, upon the same terms and conditions, to each officer,
director and partner of each Holder, agent and underwriter and each person, if
any, who controls any Holder, agent or underwriter within the meaning of the
Securities Act; and the obligations of the Holders and any underwriters
contemplated by this Section 7 shall be in addition to any liability which the
respective Holder or underwriter may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his consent, is named in any Registration
Statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Securities Act.
8. Rules 144 and 144A. The Company shall use its best efforts
to file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder of Transfer
Restricted Securities, make publicly available other information so long as
necessary to permit sales of their securities pursuant to Rules 144 and 144A.
The Company covenants that it will take such further action as any Holder of
Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Transfer Restricted
Securities without registration under the Securities Act within the
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22
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). The Company will provide a copy of this
Agreement to prospective purchasers of Securities identified to the Company by
the Placement Agents upon request. Upon the request of any Holder of Transfer
Restricted Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements. Notwithstanding
the foregoing, nothing in this Section 8 shall be deemed to require the Company
to register any of its securities pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing Underwriters") will be
selected by the Holders of a majority in aggregate liquidation preference or
principal amount, as applicable, of such Transfer Restricted Securities included
in such offering.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
liquidation preference or principal amount, as applicable, of the Securities and
the Exchange Securities, taken as a single class. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of the Holders whose Securities or
Exchange Securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of a majority in aggregate liquidation preference or principal
amount, as applicable, of the Securities or
<PAGE>
<PAGE>
23
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
9(b), which address initially is, with respect to each Purchaser, the
address of such Purchaser given in the Commitment Letters; and
(2) if to the Company at 308 West State Street,
Rockford, Illinois 61101, Attention: Secretary.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; three business
days after being delivered to a next-day air courier; when answered back, if
faxed; and when receipt is acknowledged by the recipient's telecopier machine,
if telecopied.
(c) Successors and Assigns. This Agreement shall
be binding upon the Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopies) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(f) Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
<PAGE>
<PAGE>
24
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF
THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A TRANSFER
RESTRICTED SECURITY TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
(g) Remedies. In the event of a breach by the Company, or by a
Holder of Transfer Restricted Securities, of any of their obligations under this
Agreement, each Holder of Transfer Restricted Securities or the Company, as the
case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company and each Holder of Transfer
Restricted Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(h) No Inconsistent Agreements. The Company has not entered,
nor shall the Company on or after the date of this Agreement enter, into any
agreement that is inconsistent with the rights granted to the Holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. With the exception of the Exchange and Registration Rights
Agreement dated March 3, 1995 among BBC, BLC (formerly known as LLC) and Goldman
Sachs in connection with the issuance and sale of $135,000,000 11-7/8% Senior
Secured Notes Due 2005 and the Exchange and Registration Rights Agreement dated
May 30, 1996 between the Company and Goldman Sachs in connection with the
issuance and sale of $170 million 13-1/4% Senior Subordinated Discount Notes Due
2006, neither the Company nor its subsidiaries has previously entered into any
<PAGE>
<PAGE>
25
agreement granting any registration rights with respect to any of its preferred
stock or debt securities to any person. Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in aggregate
liquidation preference or principal amount, as applicable, of the then
outstanding Transfer Restricted Securities, the Company shall not grant to any
person the right to request the Company to register any of its preferred stock
or debt securities under the Securities Act unless the rights so granted are
subject in all respects to the prior rights of the Holders of Transfer
Restricted Securities set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of the Agreement.
(i) No Piggyback on Registrations. Neither the Company nor any
of its securityholders (other than the Holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Registration Statement other than Transfer Restricted Securities.
(j) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(k) Third-Party Beneficiaries. The Company agrees that the
representations, warranties and covenants of the Company contained herein are
intended for the benefit of Holders from time to time of the Warrants and the
Registrable Securities, and each such Holder shall be deemed to be a third-party
beneficiary with respect thereto, entitled to enforce directly and in its own
name any rights
<PAGE>
<PAGE>
26
or claims the Placement Agents may have against the Company with respect
thereto.
<PAGE>
<PAGE>
27
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
BENEDEK COMMUNICATIONS
CORPORATION,
by /s/ Ronald L. Lindwall
----------------------------------
Name: Ronald L. Lindwall
Title: Secretary
Senior Vice President--Finance
Accepted as of the date hereof:
GOLDMAN SACHS & CO.,
by /s/ Dirk Leasure
---------------------------
Name: Dirk Leasure
Title: V.P.
BT SECURITIES CORPORATION,
by /s/ Gregory R. Paul
---------------------------
Name: Gregory R. Paul
Title: V.P.
Managing Director
<PAGE>
<PAGE>
ANNEX A
to the Exchange and
Registration Rights Agreement
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. The
letter of transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
<PAGE>
ANNEX B
to the Exchange and
Registration Rights Agreement
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
<PAGE>
ANNEX C
to the Exchange and
Registration Rights Agreement
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 199 ,
all dealers effecting transactions in the Exchange Securities may be required
to deliver a prospectus.*/
The Company will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or negotiated prices. Any such resale may be made directly to purchasers
or to or through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer or the purchasers of any
such Exchange Securities. Any broker-dealer that resells Exchange Securities
that were received by it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of such Exchange
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Securities and any
commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer
- --------
*/ In addition, the legend required by Item 502(e) of Regulation S-K will appear
on the back cover page of the Exchange Offer prospectus.
<PAGE>
<PAGE>
2
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of 90 days after the Expiration Date the Company
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
<PAGE>
ANNEX D
to the Exchange and
Registration Rights Agreement
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND
10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ____________________________________________
Address: _________________________________________
_________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
<PAGE>
CONTINGENT WARRANT ESCROW AGREEMENT
This Contingent Warrant Escrow Agreement
(this "Agreement") is made this 5th day of June,
1996, by and between BENEDEK COMMUNICATIONS
CORPORATION, a Delaware corporation (the "Company"),
and IBJ SCHRODER BANK & TRUST COMPANY, a New York
banking corporation (the "Contingent Warrant Escrow
Agent").
SECTION 1. Deposit. Pursuant to the terms of the Warrant
Agreement dated as of the date hereof (the "Warrant Agreement"), delivered in
connection with the offer and sale (the "Offering") of 60,000 Units (the
"Units") consisting of $60,000,000 aggregate liquidation preference of 15.0%
Exchangeable Redeemable Senior Preferred Stock Due 2007 (the "Exchangeable
Preferred Stock"), 600,000 Initial Warrants (the "Initial Warrants") to purchase
600,000 shares of Class A Common Stock (the "Common Stock") of the Company and
888,000 Contingent Warrants (the "Contingent Warrants" and, together with the
Initial Warrants, the "Warrants") to purchase 888,000 shares of Common Stock,
the Company shall deliver to the Contingent Warrant Escrow Agent for deposit in
a designated account (the "Contingent Warrant Escrow Account"), on behalf of
each purchaser of the Units (collectively, the "Purchasers") (a) on the date of
initial issuance of the Warrants (the "Issue Date"), all the Contingent Warrants
and (b) on the trading day immediately following the day of a tender offer or
exchange offer for shares of Class A Common Stock described in Section 4.05 of
the Warrant Agreement, such an amount as calculated in Section 4.05 of the
Warrant Agreement (collectively, such Contingent Warrants and such amount are
referred to herein as the "Contingent Warrant Escrow Property"). At all times
from the deposit with the Contingent Warrant Escrow Agent in the Contingent
Warrant Escrow Account until the Contingent Warrant Release Date, the Contingent
Warrants will be considered to be a part of the Units. The Contingent Warrant
Escrow Agent hereby agrees that upon receipt thereof such Contingent Warrant
Escrow Property shall be released from escrow hereunder only in conformity with
the purposes of, and upon the terms and conditions set forth in, this Agreement
and the Contingent Warrant Escrow Agent agrees to hold such Contingent Warrant
Escrow Property. Capitalized terms used and not defined herein shall have the
meanings assigned to such terms in the Warrant Agreement.
<PAGE>
<PAGE>
2
SECTION 2. Release from Escrow. The Contingent Warrant Escrow
Agent shall release from escrow and deliver the Contingent Warrant Escrow
Property to the Company, upon the Contingent Warrant Escrow Agent's receipt of
and in accordance with a certificate of the Company, substantially in the form
of Exhibit A, stating that (i) all the Units, including the Contingent Warrants,
have been mandatorily redeemed pursuant to the terms set forth in the Warrant
Agreement or (ii) as of the date of such certificate, no shares of Exchangeable
Preferred Stock or principal amount of Exchange Debentures, as the case may be,
are outstanding. If as of the Contingent Warrant Release Date, the Contingent
Warrant Escrow Agent has not theretofor received a certificate of the Company of
the type described in the preceding sentence, then on the Contingent Warrant
Release Date, unless otherwise provided in a certificate delivered by the
Company pursuant to Section 3.10(b) of the Warrant Agreement one Business Day
prior to the Contingent Warrant Release Date providing for the release to the
Holders of less than all the Contingent Warrants (in which event the Contingent
Warrant Escrow Agent shall release on the Contingent Warrant Release Date only
the aggregate number of Contingent Warrants set forth in such certificate), the
Contingent Warrant Escrow Agent shall release the Contingent Warrant Escrow
Property to the Holders of record on such date of the then outstanding shares of
Exchangeable Preferred Stock or then outstanding Exchange Debentures, as the
case may be, in the form of certificated Contingent Warrants representing each
such Holder's pro rata portions of all the then outstanding shares of
Exchangeable Preferred Stock or then outstanding Exchange Debentures, as the
case may be, as shown on the security register for the Exchangeable Preferred
Stock or the Exchange Debentures, as applicable, provided, however, that if on
the Contingent Warrant Release Date all shares of Exchangeable Preferred Stock
are represented by a Global Exchangeable Preferred Stock certificate, then the
Contingent Warrant Escrow Agent shall release the Contingent Warrant Escrow
Property in the form of a Global Contingent Warrant certificate. The Contingent
Warrant Escrow Agent shall be entitled, in releasing the Contingent Warrant
Escrow Property in accordance with the previous sentence, to rely upon such
security register or certificate, as the case may be, for purposes of making
such distribution and shall have no liability or duty to inquire further as to
the identity of the Holders, their respective holdings, the number of Contingent
Warrants to which they are entitled or the addresses to which Contingent
Warrants shall be sent. Upon distribution of all the Contingent Warrant Escrow
<PAGE>
<PAGE>
3
Property pursuant to such instructions, the Contingent Warrant Escrow Agent
shall be discharged from all obligations under this Agreement and shall have no
further duties or responsibilities in connection herewith.
SECTION 3. Compensation and Reimbursement of Contingent
Warrant Escrow Agent. The Company shall pay to the Contingent Warrant Escrow
Agent fees and expenses in accordance with the letter agreement between them.
SECTION 4. Responsibilities of the Contingent Warrant Escrow
Agent. (a) The Contingent Warrant Escrow Agent shall be obligated to perform
only such duties as are expressly set forth in this Agreement. No implied
covenants or obligations shall be inferred from this Agreement against the
Contingent Warrant Escrow Agent, nor shall the Escrow Agent be bound by the
provisions of any agreement of the Company beyond the specific terms hereof.
(b) The Contingent Warrant Escrow Agent shall not be liable
hereunder except for its own gross negligence, bad faith or willful misconduct
and the Company agrees to indemnify the Contingent Warrant Escrow Agent for and
hold it harmless as to any loss, liability or expenses, including attorney fees,
incurred without gross negligence or willful misconduct on the part of the
Contingent Warrant Escrow Agent and arising out of or in connection with the
Contingent Warrant Escrow Agent's duties under this Agreement. In no event shall
the Contingent Warrant Escrow Agent be liable (i) for acting in good faith in
accordance with instructions from the Company or any of its agents, (ii) for
special or consequential damages, (iii) for the acts or omissions of its
nominees, correspondents, designees, sub-agents or sub-custodians or (iv) for
any amount in excess of the value of the Contingent Warrant Escrow Property.
(c) The Contingent Warrant Escrow Agent shall (in the absence
of bad faith) be entitled to rely upon any order, judgment, certification,
instruction, notice, opinion or other writing delivered to it in compliance with
the provisions of this Agreement without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of service thereof. The Contingent Warrant Escrow Agent may (in the
absence of bad faith) act in reliance upon any instrument comporting with the
provisions of this Agreement or signature believed by it to be genuine and
assume that any person
<PAGE>
<PAGE>
4
purporting to give notice or receipt or advice or make any statement or execute
any document in connection with the provisions hereof has been duly authorized
to do so.
The Contingent Warrant Escrow Agent may at any time request in
writing written instructions from the Company, and may at its option include in
such request the course of action it proposes to take, and the date on which it
proposes to act, regarding any matter arising in connection with its duties and
obligations hereunder. The Contingent Warrant Escrow Agent shall not be liable
for acting without the consent of the Company in accordance with such a proposal
on or after the date specified therein, provided that the specified date shall
be at least five business days after the Company receives the Contingent Warrant
Escrow Agent's request for instructions and its proposed course of action, and
provided further that, prior to so acting, the Contingent Warrant Escrow Agent
has not received the written instructions requested.
(d) The Contingent Warrant Escrow Agent may act in accordance
with advice of counsel chosen by it with respect to any matter relating to this
Agreement and shall not be liable for any action taken or omitted to be taken in
good faith in accordance with such advice.
(e) The Contingent Warrant Escrow Agent does not have any
interest in the Contingent Warrant Escrow Property deposited hereunder but is
serving as escrow holder only and has only possession thereof.
(f) The Contingent Warrant Escrow Agent makes no
representation as to the validity, value, genuineness or collectability of any
security or other document or instrument held by or delivered to it by the
Company or any Purchaser.
(g) The Contingent Warrant Escrow Agent shall not be called
upon to advise any party as to selling or retaining, or taking or refraining
from taking any action with respect to, any securities or other property
deposited hereunder.
(h) In the event of any ambiguity in the provisions of this
Agreement or any dispute between or conflicting claims by or between the
undersigned or any other person or entity with respect to any property deposited
hereunder, the Contingent Warrant Escrow Agent shall be entitled, at
<PAGE>
<PAGE>
5
its sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property so long as such dispute or conflict
shall continue, and the Contingent Warrant Escrow Agent shall not be or become
liable in any way to the undersigned for its failure or refusal to comply with
such conflicting claims, demands or instructions. The Contingent Warrant Escrow
Agent shall be entitled to refuse to act until, at its sole option, either such
conflicting or adverse claims or demands shall have been finally determined by a
court of competent jurisdiction or settled by agreement between the conflicting
parties as evidenced in writing, satisfactory to the Contingent Warrant Escrow
Agent or the Contingent Warrant Escrow Agent shall have received security or an
indemnity satisfactory to the Contingent Warrant Escrow Agent sufficient to save
the Contingent Warrant Escrow Agent harmless from and against any and all loss,
liability or expense which the Contingent Warrant Escrow Agent may incur by
reason of its acting. The Contingent Warrant Escrow Agent may in addition elect
in its sole option to commence an interpleader action or seek other judicial
relief or orders as the Contingent Warrant Escrow Agent may deem necessary.
(i) No provision of this Agreement shall require the
Contingent Warrant Escrow Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder.
(j) The Contingent Warrant Escrow Agent shall not be required
to invest any amounts held as part of the Contingent Warrant Escrow Property.
SECTION 5. Resignation or Removal of Contingent Warrant Escrow
Agent. (a) The Contingent Warrant Escrow Agent may resign at any time by giving
at least 30 days' written notice to the Company and the Warrant Agent. During
such 30 days, the Company shall appoint a successor Contingent Warrant Escrow
Agent at which time the Contingent Warrant Escrow Agent shall hold such property
or funds, pending distribution, until all fees, costs and expenses or other
obligations owed to the Contingent Warrant Escrow Agent are paid. If a successor
Contingent Warrant Escrow Agent has not been appointed or has not accepted such
appointment by the end of the 30-day period, the Contingent Warrant Escrow Agent
may apply to a court of competent jurisdiction for the appointment of a
successor Contingent Warrant Escrow Agent, or for other appropriate relief and
the costs, expenses and reasonable attorney's fees and
<PAGE>
<PAGE>
6
expenses which the Contingent Warrant Escrow Agent incurs in connection with
such a proceeding shall be paid by the Company.
(b) The Company may remove the Contingent Warrant Escrow Agent
upon 30 days written notice to the Contingent Warrant Escrow Agent. Such removal
shall take effect upon delivery of the Contingent Warrant Escrow Property to a
successor Contingent Warrant Escrow Agent designated in writing by the Company,
and the Contingent Warrant Escrow Agent shall thereupon be discharged from all
obligations under this Agreement and shall have no further duties or
responsibilities in connection herewith. The Contingent Warrant Escrow Agent
shall deliver the Contingent Warrant Escrow Property without unreasonable delay
after receiving notice from the Company of its designation of a successor
Contingent Warrant Escrow Agent and upon receipt of all fees and reimbursement
for all costs and other expenses or other obligations owed to the Contingent
Warrant Escrow Agent.
(c) If after 45 days from the date of delivery of its written
notice of intent to resign or of the Company's notice of removal the Contingent
Warrant Escrow Agent has not received a written designation of a successor
Contingent Warrant Escrow Agent, the Contingent Warrant Escrow Agent's sole
responsibility shall be in its sole discretion either to retain custody of the
Contingent Warrant Escrow Property without any obligation to invest or reinvest
any such Contingent Warrant Escrow Property until it receives such designation,
or to apply to a court of competent jurisdiction for appointment of a successor
Contingent Warrant Escrow Agent and after such appointment to have no further
duties or responsibilities in connection herewith.
(d) The provisions of Sections 2, 3, 4, and 6 shall survive
termination of this Agreement and/or the resignation or removal of the
Contingent Warrant Escrow Agent.
SECTION 6. Choice of Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
(b) The parties to this Agreement hereby agree that
jurisdiction over such parties and over the subject matter of any action or
proceeding arising under this Agreement may be exercised by a competent court of
the State
<PAGE>
<PAGE>
7
of New York or by a United States Federal Court, in either case located in The
Borough of Manhattan, The City of New York. Each of the parties hereto hereby
submits to the personal jurisdiction of such courts, hereby waives personal
service of process upon it and consents that any such service of process may be
made by certified or registered mail, return-receipt requested, directed to it
at its address last specified for notices hereunder, and service so made shall
be deemed completed five (5) days after the same shall have been so mailed, and
hereby waives the right to a trial by jury in any action or proceedings relating
to or arising from, directly or indirectly, this Agreement.
SECTION 7. Benefits and Assignment. Nothing in this Agreement,
expressed or implied, shall give or be construed to give any person, firm or
corporation, other than the parties hereto and their successors and assigns, any
legal claim under any covenant, condition or provision hereof, all the
covenants, conditions and provisions contained in this Agreement being for the
sole benefit of the parties hereto and their successors and assigns. No party
may assign any of its rights or obligations under this Agreement without the
written consent of all the other parties, which consent may be withheld in the
sole discretion of the party whose consent is sought.
SECTION 8. Third Party Beneficiaries. The Contingent Warrant
Escrow Agent agrees that the representations, warranties and covenants of the
Contingent Warrant Escrow Agent and of the Company contained herein are intended
for the benefit of Holders from time to time of shares of Exchangeable Preferred
Stock and each shall be deemed to be a third party beneficiary with respect
thereto, entitled to enforce directly and in its own name any rights or claims
such Holders may have against the Contingent Warrant Escrow Agent and of the
Company with respect thereto.
SECTION 9. Amendment and Waiver. This Agreement may be
modified only by a written amendment signed by each of the parties hereto, and
no waiver of any provision hereof shall be effective unless expressed in a
writing signed by the party to be charged.
SECTION 10. Use of the Contingent Warrant Escrow Agent's
Name. No printed or other material in any language, including prospectuses,
notices, reports and promotional material which mentions the Contingent Warrant
Escrow Agent
<PAGE>
<PAGE>
8
by name or the rights, powers or duties of the Contingent Warrant Escrow Agent
under this Agreement shall be issued by or on behalf of the Company without the
prior consent of the Contingent Warrant Escrow Agent.
SECTION 11. Headings. The headings contained in this
Agreement are for convenience of reference only and shall have no effect on the
interpretation or operation thereof.
SECTION 12. Notices. All notices, instructions, reports and
other written communications to be given or made under this Agreement shall be
sufficiently given or made if, unless otherwise indicated, delivered personally,
by facsimile (receipt confirmed by telephone) or sent by first-class mail,
postage prepaid:
(a) To the Contingent Warrant Escrow Agent at:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attn: Corporate Trust Department
Telephone No.: (212) 858-2952
Facsimile No.: (212) 858-2000
(b) To the Company at:
Benedek Communications Corporation
308 West State Street
Rockford, Illinois 61101
Attn: Mr. Ronald L. Lindwall
Telephone No.: (815) 987-5350
Facsimile No.: (815) 987-5335
with a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attn: Paul S. Goodman, Esq.
Telephone No.: (212) 782-0705
Facsimile No.: (212) 730-1964
SECTION 13. Separability. The invalidity, illegality or
unenforceability of any provision of this Agreement shall in no way affect the
validity, legality or enforceability of any other provision; and if any
provision
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9
is held to be unenforceable as a matter of law, the other provisions shall not
be affected thereby and shall remain in full force and effect.
SECTION 14. Entire Agreement. This Agreement shall constitute
the entire agreement of the parties with respect to the subject matter and
supersedes all prior oral or written agreements in regard thereto.
SECTION 15. Rights and Remedies. The rights and remedies
conferred upon the parties hereto shall be cumulative, and the exercise or
waiver of any such right or remedy shall not preclude or inhibit the exercise of
any additional rights or remedies. The waiver of any right or remedy shall not
preclude or inhibit the subsequent exercise of such right or remedy.
SECTION 16. Representations and Warranties. (a) The Company
hereby represents and warrants that this Agreement has been duly authorized,
executed and delivered on its behalf and constitutes the legal, valid and
binding obligation of the Company. The execution, delivery and performance of
this Agreement by the Company does not violate any applicable law or regulation
to which the Company is subject, except for such consents and approvals as have
been obtained and are in full force and effect.
(b) The Contingent Warrant Escrow Agent hereby represents and
warrants that this Agreement has been duly authorized, executed and delivered on
its behalf and constitutes the legal, valid and binding obligation of the
Contingent Warrant Escrow Agent. The execution, delivery and performance of this
Agreement by the Contingent Warrant Escrow Agent does not violate any applicable
law or regulation to which it is subject and does not require the consent of any
governmental or other regulatory body to which it is subject, except for such
consents and approvals as have been obtained and are in full force and effect.
SECTION 17. Counterparts. This Agreement may be executed by
each of the parties hereto in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all such counterparts shall together constitute one and the same agreement.
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10
IN WITNESS WHEREOF, the parties have caused this Contingent
Warrant Escrow Agreement to be executed by duly authorized representatives as of
the day and year first written above.
BENEDEK COMMUNICATIONS
CORPORATION,
by /s/ Ronald L. Lindwall
--------------------------
Name: Ronald L. Lindwall
Title: Secretary
Senior Vice President-Finance
IBJ SCHRODER BANK & TRUST
COMPANY, as Contingent Warrant
Escrow Agent,
by /s/ Thomas J. Bogert
--------------------------
Name: Thomas J. Bogert
Title: Assistant Vice President
<PAGE>
<PAGE>
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
(this "Agreement") dated as of June 5, 1996, by and
among BENEDEK COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company"), Goldman Sachs & Co.
("Goldman Sachs") and BT Securities Corporation ("BT"
and, together with Goldman Sachs, the "Placement
Agents").
The Company is offering for sale (the "Offering") 60,000 Units
(the "Units"), each consisting of ten shares of the Company's 15.0% Exchangeable
Redeemable Senior Preferred Stock due 2007 (the "Exchangeable Preferred Stock")
and ten initial warrants (the "Initial Warrants") and 14.8 contingent warrants
(the "Contingent Warrants" and, together with the Initial Warrants, the
"Warrants"), each Warrant to purchase one share of the Company's Class A Common
Stock (the "Class A Common Stock");
In connection with the Offering, each of the purchasers of the
Units (each, a "Securityholder" and, collectively, the "Securityholders") has
entered into a commitment letter (the "Commitment Letter") with the Company to
purchase the number of shares of Exchangeable Preferred Stock, Initial Warrants
and Contingent Warrants indicated on the notification delivered by the Company
to each Holder pursuant to the Commitment Letter; and
In consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Company, and the Placement Agents acting for the
benefit of the Securityholders, hereby agree as follows:
SECTION 1. Definitions. As used in this
Agreement, the following terms shall have the meanings set
forth below:
"Business Day" shall mean a day, other than a Saturday or
Sunday, on which banking institutions and securities exchanges in New York are
required to be open.
"Certificate of Designation" means the Certificate of
Designation with respect to the Exchangeable Preferred Stock.
"Contingent Warrant Release Date" shall mean July 1, 2000;
provided, however, that if on June 30, 1999,
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2
the ratio (which shall be calculated on a pro forma basis in the same manner as
is the term "Cash Flow Leverage Ratio" in the Certificate of Designation) of (i)
the sum of the aggregate amount outstanding of all Debt (as defined in the
Certificate of Designation) (net of cash and cash equivalents) of the Company
and the Restricted Subsidiaries (as defined in the Certificate of Designation)
and the aggregate liquidation preference of the Exchangeable Preferred Stock, in
each case as of June 30, 1999 to (ii) Operating Cash Flow (as defined in the
Certificate of Designation) for the four fiscal quarters ending on June 30,
1999, exceeds 8.0 to 1.0, then the Contingent Warrant Release Date will be
August 16, 1999.
"Effective Date" shall mean the day on which a Registration
Statement shall be declared effective by the SEC.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"Holder" shall mean the registered holders from time to time
of the Warrants and the Registrable Securities.
"Issue Date" shall mean the date of the
consummation of the Offering.
"Person" shall mean an individual, partnership, corporation,
limited liability company, joint venture, association, joint-stock company,
trust or unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Prospectus" shall mean the prospectus included in the
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities and by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated by reference
in such prospectus.
"Registrable Securities" shall mean the Class A Common Stock
of the Company issued or issuable to Holders upon exercise of the Warrants,
whether or not such exercise has been effected. Each such security shall cease
to be a Registrable Security when (i) it has been disposed of pursuant to a
Registration Statement declared effective by
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3
the SEC, (ii) it has been distributed pursuant to Rule 144 (or any similar
provisions under the Securities Act then in effect) or is eligible to be
transferred without restriction pursuant to Rule 144(k) under the Securities Act
(or any successor provision) or (iii) it has been otherwise transferred and may
be resold without registration under the Securities Act.
"Registration Expenses" shall mean any and all costs, fees and
expenses incident to the Company's performance of or compliance with this
Agreement, including (i) all SEC registration and filing fees, (ii) all fees and
expenses of complying with state securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with the blue sky
qualification of the Registrable Securities), (iii) all printing expenses, (iv)
the fees and disbursements of counsel for the Company and of its independent
public accountants (including expenses of any cold comfort letters required in
connection with this Agreement), (v) the fees and expenses of any special
experts retained by the Company in connection with the Registration Statement,
(vi) the Company's internal expenses (including all salaries and expenses of its
officers and employees performing legal or accounting duties), (vii) fees and
disbursements of one counsel selected by Holders of a majority of the
Registrable Securities to represent all Holders and (viii) fees and
disbursements of underwriters customarily paid by the issuers or sellers of
securities; provided, however, that Registration Expenses shall not include (x)
underwriting discounts, commissions, brokers' fees and transfer taxes, if any,
in respect of the Registrable Securities and (y) any fees or disbursements of
additional counsel to the Holders.
"Registration Period" with respect to a Demand Registration
Statement shall mean a period commencing on the Effective Date of such
Registration Statement and ending on the earlier of the (i) first day on which
all Registrable Securities included in such Demand Registration Statement have
been sold as described therein and (ii) the first day after the Effective Date.
"Registration Statement" shall mean any registration statement
filed by the Company with the SEC under the Securities Act (including a
registration statement filed in connection with a Demand Registration or a
Piggyback Registration) which covers some or all Registrable Securities, and any
amendments or supplements thereto,
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4
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all documents and other materials
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933 and the
rules and regulations of the SEC promulgated thereunder.
SECTION 2. Demand Registrations. (a) Subject to the provisions
of this Section 2, the Holder or Holders of Registrable Securities (i)
representing 20% or more of the total number of shares of Class A Common Stock
issuable upon the exercise of all Initial Warrants at the time outstanding or
(ii) representing 20% or more of the total number of shares of Class A Common
Stock issuable upon the exercise of Contingent Warrants at the time outstanding,
shall have the right (the Holders exercising such right being herein called the
"Demand Holders"), upon written demand given to the Company (the "Demand
Notice") to request the Company to register their Registrable Securities (a
"Demand Registration") under and in accordance with the provisions of the
Securities Act by filing and having declared effective a registration statement
(a "Demand Registration Statement"), covering the issuance by the Company of
such Registrable Securities upon the exercise by the Demand Holders of the
Initial Warrants or the Contingent Warrants, as the case may be, held by them
or, if such registration is prohibited by any law or by any applicable
interpretation of the Staff of the SEC, covering the resale by the Demand
Holders of such Registrable Securities.
(b) Within 45 days of receipt of a Demand Notice, the Company
shall file with the SEC a Registration Statement on the appropriate form for the
registration and sale, in accordance with the intended method or methods of
distribution, of the total number of Registrable Securities specified by the
Demand Holders in such Demand Notice, together will all other Registrable
Securities that other Holders request be included in such Demand Registration in
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5
writing given to the Company within 20 days after receipt of a notice from the
Company to the effect that it has received a Demand Notice; provided, however,
that:
(i) in the case of Demand Holders representing shares of Class
A Common Stock issuable upon exercise of Initial Warrants,
(A) the Company shall not be obligated to effect any
Demand Registrations prior to the earlier of (x) the second
anniversary of the Issue Date and (y) 180 days after the
initial public offering of any of the Company's common stock;
and
(B) the Company shall not be obligated to
effect a total of more than two Demand
Registrations; and
(C) no less than six months shall elapse
between the first and second Demand Registrations;
and
(ii) in the case of Demand Holders representing shares of Class A
Common Stock issuable upon exercise of Contingent Warrants,
(A) the Company shall not be obligated to effect any
Demand Registrations prior to the Contingent Warrant Release
Date;
(B) the Company shall not be obligated to
effect a total of more than two Demand
Registrations; and
(C) no less than six months shall elapse between the
first and second Demand Registrations.
(c) The Company shall use its reasonable best efforts to cause
such Demand Registration Statement to be declared effective by the SEC and to
keep such Demand Registration Statement continuously effective throughout the
Registration Period.
(d) In connection with any Demand Registration in which more
than one Demand Holder participates or in which other Holders of Registrable
Securities elect to include all or a portion of such Registrable Securities in
such Demand Registration (such Holders being collectively referred to
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6
with the Demand Holders as the "Selling Securityholders"), and in the event that
such Demand Registration involves an underwritten offering and the managing
underwriter or underwriters participating in such offering (collectively, the
"Underwriter") shall advise the Company and the Selling Securityholders in
writing that, in the judgment of the Underwriter, the inclusion in such Demand
Registration pursuant to this Section 2 of some of the Registrable Securities
sought to be registered by the Selling Securityholders creates a substantial
risk that the proceeds or price per unit the Selling Securityholders will derive
from such registration will be materially reduced or the number of securities
included in the offering to be registered is too large a number to be reasonably
sold, or the Underwriter shall inform the Company and the Selling
Securityholders in writing of its opinion that the number of securities
requested to be included in such offering would materially adversely affect its
ability to effect such offering (such opinion shall state the reasons therefor
and the approximate number of securities that may be included in such offering
without such effect), then the amount of Registrable Securities to be registered
in such offering shall be reduced pro rata on the basis of the number of
Registrable Securities to be registered by each such Selling Securityholders. No
securities other than Registrable Securities shall be included in such Demand
Registration Statement without the written consent of Selling Securityholders
representing a majority of the Registrable Securities to be included in such
Demand Registration Statement.
(e) Notwithstanding the foregoing, the Company shall be
entitled to postpone, for a period of not more than 90 days after receipt of a
Demand Notice, the filing of any Registration Statement otherwise required to be
prepared and filed by it pursuant to Section 2(a) hereof if, at the time the
Company receives a Demand Notice, the Board of Directors of the Company
determines in its reasonable judgment that such registration and offering would
interfere with any material financing, acquisition, corporate reorganization or
other material transaction or development involving the Company and promptly
gives the Holders demanding registration written notice of such determination;
provided that (i) upon such postponement by the Company, the Company shall be
required to file such Registration Statement as soon as practicable after the
Board of Directors of the Company shall determine, in its reasonable business
judgment, that such registration and offering will not
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7
interfere with the aforesaid material financing, acquisition, corporate
reorganization or other material transaction or development involving the
Company, (ii) no more than one such postponement shall occur in any 360 day
period and (iii) the Holders who made such written request to effect such
registration, may, at any time in writing, withdraw such request for such
registration and therefore preserve the right provided in Section 2(b)(ii)
hereof for such Holders to again request such registration.
(f) Demand Holders of a majority of Registrable Securities to
be included in a Demand Registration pursuant to this Section 2 may, at any time
prior to the Effective Date of such Demand Registration, revoke such demand by
providing written notice to the Company, in such event, such Demand Holders
shall reimburse the Company for its out-of-pocket expenses incurred in the
preparation, filing and processing of the Demand Registration; provided,
however, that no such reimbursement shall be required with respect to a
revocation based on the Company's failure to comply in any material respect with
its obligations hereunder; provided further, however, that upon such revocation,
such Demand Registration will no longer be treated as a Demand Registration
pursuant to paragraph (b) above.
(g) The provisions of this Section 2 shall not apply to the
Contingent Warrants prior to the Contingent Warrant Release Date.
SECTION 3. Piggyback Registrations. (a) If the Company files a
registration statement under the Securities Act with respect to a public
offering of any class of common stock (other than on a registration statement on
Form S-8 or S-4 or any successor forms thereto or filed solely in connection
with an employee stock option plan, stock purchase or similar plan or pursuant
to a merger, exchange offer or a transaction of the type specified in Rule 144
or Rule 144A under the Securities Act), whether for its own account or for the
account of the Company's securityholders (other than Holders of Registrable
Securities), then the Company shall give prompt written notice of such filing to
the Holders (which notice shall include the anticipated date of the initial sale
of securities in such offering (the "Sale Date") and the number of shares of
common stock proposed to be included in such Registration Statement) at least 30
days prior to the Sale Date, which notice will offer such Holders the
opportunity to include in such
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8
registration statement such number of Registrable Securities as each such Holder
may request (each such Holder being a "Piggyback Holder"). Upon the written
request of the Piggyback Holders delivered to the Company within 15 days after
such notice shall have been given to the Piggyback Holders (which request shall
specify the number of shares of Registrable Securities intended to be disposed
of by the Piggyback Holders pursuant to their election hereunder and the
intended method of disposition thereof), the Company shall use its commercially
reasonable efforts to effect the registration (a "Piggyback Registration") under
the Securities Act of the sale of all such Registrable Securities that the
Company has been so requested to register by the Piggyback Holders and to
include all such Registrable Securities in such offering.
(b) Notwithstanding the provisions set forth in paragraph (a)
above, in the event that such Piggyback Registration involves an underwritten
offering and the underwriter shall advise the Company in writing that, in the
judgment of the underwriter, the inclusion in any Registration Statement
pursuant to this Section 3 of some or all of the Registrable Securities sought
to be registered by the Piggyback Holders creates a substantial risk that the
proceeds or price per unit the Company, other selling securityholders, if any,
or the Piggyback Holders will derive from such registration will be materially
reduced or the number of securities included in the offering to be registered
(including those sought to be included by the Company) is too large a number to
be reasonably sold, or the underwriter shall inform the Company in writing of
its opinion that the number of securities requested to be included in such
offering would materially adversely affect its ability to effect such offering
(such opinion shall state the reasons therefor and the approximate number of
securities that may be included in such offering without such effect), the
Company shall, in each case, register an offering of, and shall subsequently
offer, that number of securities that the Company is so advised can be sold in
such offering, which shall be allocated as follows: (A) first, to the Company
and any other selling securityholders, if any, that initiated the process
pursuant to which such Registration Statement is to be filed, as applicable, for
securities being sold for its own or their accounts; and (B) second, to the
Piggyback Holders exercising Piggyback Registration rights, pro rata among them
on the basis of the number of Registrable Securities
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9
requested by them to be included in such Registration
Statement.
(c) Nothing in this Section 3 shall create any liability on
the part of the Company to the Piggyback Holders if the Company for any reason
should decide not to complete the offering proposed under this Section 3 or to
withdraw its Registration Statement subsequent to its filing, regardless of any
action whatsoever that the Piggyback Holders may have taken, whether as a result
of the issuance by the Company of any notice hereunder or otherwise.
(d) The Piggyback Holders may elect to withdraw from
participation in a Piggyback Registration by written notice to the Company no
later than the seventh day prior to the Effective Date of such Registration
Statement.
(e) The provisions of this Section 3 shall not apply to the
Contingent Warrants prior to the Contingent Warrant Release Date.
SECTION 4. Holdback Agreements. If (i) during the Registration
Period, the Company or any of its subsidiaries shall file a registration
statement with the SEC under the Securities Act (other than in connection with
the registration of securities issuable pursuant to an employee stock option,
stock purchase or similar plan or pursuant to a merger, exchange offer or a
transaction of the type specified in Rule 144 under the Securities Act) with
respect to its common stock or similar securities or securities convertible
into, or exchangeable or exercisable for, such securities and (ii) with
reasonable prior notice, the Company (in the case of a non-underwritten offering
by the Company pursuant to such registration statement) advises the Holders in
writing that a public sale or distribution of Registrable Securities would
materially adversely affect such offering or the underwriter (in the case of an
underwritten offering by the Company pursuant to such registration statement)
advises the Company in writing (in which case the Company shall notify the
Holders) that a public sale or distribution of Registrable Securities would
adversely impact such offering, then each Holder shall not, to the extent not
inconsistent with applicable law, effect any public sale or distribution of
Registrable Securities or otherwise dispose of any securities of the Company of
the same type of securities to be so registered during the 15-day period prior
to the effective date of such registration
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10
statement and until the earliest of (A) 90 days from the effective date of such
registration statement, (B) the abandonment of such offering, and (C) if such
offering is an underwritten offering, the termination in whole or in part of any
"holdback" period obtained by the underwriter in such offering from the Company
in connection therewith (each such period, a "Holdback Period").
SECTION 5. Registration Procedures. In connection with the
registration of any Registrable Securities pursuant to Sections 2 or 3 hereof,
the following provisions shall apply:
(a) The Company shall prepare and file with the SEC, and
furnish to the Holders and their counsel prior to the filing thereof, a copy of
any Registration Statement (including any preliminary Prospectus contained
therein) for the sale of Registrable Securities, and each amendment (including
post-effective amendments) thereto and each amendment or supplement, if any, to
the Prospectus included therein and shall reflect in each such document, when so
filed with the SEC, such comments as the Holders reasonably may propose.
(b) The Company shall use its reasonable best efforts to
ensure that (i) any Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto complies
as to form in all material respects with the Securities Act, (ii) any
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading and (iii) any Prospectus forming part of any
Registration Statement, and any amendment or supplement to such Prospectus, does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading; provided, however,
that the Company shall have no liability under clauses (ii) or (iii) of this
paragraph (b) with respect to any such untrue statement or omission made therein
in reliance upon and conformity with information furnished to the Company by or
on behalf of the Holders for inclusion therein.
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11
(c) The Company shall promptly advise the Holders and, if
requested by the Holders, promptly confirm such advice in writing:
(i) when any Registration Statement or Prospectus and
any amendment or supplement thereto has been filed with the
SEC and when any such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the SEC for amendments
or supplements to any Registration Statement or
the Prospectus included therein or for additional
information;
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of any Registration Statement or
the initiation of any actions or proceedings for that purpose;
(iv) of the receipt by the Company of any
notification with respect to the suspension of the
qualification or exemption from qualification of the
Registrable Securities included in any Registration Statement
for sale in any jurisdiction or the initiation or threatening
of any action or proceeding for such purpose; and
(v) of the happening of any event that requires the
amendment or supplementation of any such Registration
Statement or Prospectus (or documents incorporated or deemed
to be incorporated therein by reference) so that, as of such
date, the statements therein are not misleading and do not
contain any untrue statement of material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements contained therein (in the case of the
Prospectus, in light of the circumstances under which they
were made) not misleading.
(d) The Company shall use its reasonable best efforts to
obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement or the lifting of any suspension of the qualification or
exemption from qualification of any Registrable Securities for sale in any
jurisdiction in the United States, at the earliest possible time.
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12
(e) The Company shall furnish to the Holders and their counsel
and the Underwriter, if any, and its counsel, without charge, a conformed copy
of each Registration Statement and any and all post-effective amendments
thereto, including financial statements and schedules, and all exhibits thereto
(including those incorporated therein by reference).
(f) The Company shall, subject to the proviso in Section 5(h)
hereof, use its reasonable best efforts to cause the Registrable Securities
covered by the relevant Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to enable
the Holders to consummate the disposition of such Registrable Securities.
(g) The Company shall, during the Registration Period, deliver
to the Holders, without charge, as many copies of the Prospectus included in any
Registration Statement and any amendment or supplement thereto as the Holders
shall reasonably request; and subject to Section 6 hereof, the Company consents
to the use of the Prospectus or any amendment or supplement thereto by the
Holders in connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities pursuant
to any Registration Statement, the Company shall use its reasonable best efforts
to register or qualify or cooperate with the Holders and its counsel in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities laws, blue sky laws or similar laws of
such jurisdictions as the Holders reasonably request, and the Company shall use
its reasonable best efforts to do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by such Registration Statement; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(i) The Company shall cooperate with the Holders to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold
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13
pursuant to any Registration Statement in such denominations and registered in
such names as the Holders may reasonably request at least two Business Days
prior to such sales.
(j) At any time and from time to time upon the occurrence of
any event contemplated by paragraph (c)(v) above, the Company shall use its
reasonable best efforts to prepare and file with the SEC as soon as reasonably
practicable a post-effective amendment to any Registration Statement or an
amendment or supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to purchasers of the Registrable
Securities offered thereby, the Prospectus will not include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements contained therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.
(k) The Company shall use commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC, and make available
to the Holders, as soon as reasonably practicable (but not more than eighteen
months) after the Effective Date of any Registration Statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the Securities
Act; provided, however, that the Company shall be deemed to have complied with
this paragraph if it has complied with Rule 158 under the Securities Act.
(l) Each Holder shall furnish to the Company such information
regarding such Holder and its affiliates and the distribution of the Registrable
Securities, including with respect to the name and address of, and the amount of
Registrable Securities held by such Holder, as the Company may from time to time
reasonably require for inclusion in any Registration Statement. Such information
at the time any Registration Statement and any amendment thereto becomes
effective, and at the time any Prospectus or supplement thereto previously
reviewed by such Holder forming a part of any Registration Statement is
delivered in any offering of Registrable Securities, shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein (in the
case of the Prospectus, in light of the circumstances under which they were
made) not misleading. Each Holder shall advise the Company and, if requested by
the Company, confirm such advice in writing in the event that such Holder
becomes aware of the happening
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14
of any event that requires the making of any changes in a Registration Statement
or Prospectus so that as of such dates the statements therein provided by such
Holder specifically for inclusion therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(m) The Company shall make reasonably available for inspection
during normal business hours by the Holders and any attorney, accountant or
other agent retained by the Holders (collectively, the "Inspectors"), all
financial and other records and other information, pertinent corporate documents
and properties of any of the Company and its subsidiaries and affiliates
(collectively, the "Records"), as shall be reasonably necessary to enable the
Inspectors to exercise their due diligence responsibility; provided, however,
that the Records that the Company determines, in good faith, to be confidential
and which it notifies any Inspectors are confidential shall not be disclosed to
any Inspector unless such Inspector signs a confidentiality agreement reasonably
satisfactory to the Company.
SECTION 6. Agreements by Demand Holders. (a) Prior to any
disposition of Registrable Securities by the Selling Securityholders pursuant to
a Demand Registration, the Selling Securityholders shall provide prior written
notice to the Company at least 48 hours prior to the completion of such sale. If
within 48 hours of receiving such notice the Company determines that there is in
existence an event of the kind described in Section 5(c)(v), the Company shall
provide the Selling Securityholders with notice specifying that the Registration
Statement or related Prospectus may contain an untrue statement or omit to state
a material fact required to be stated therein or necessary to make the
statements contained therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(b) The Selling Securityholders agree that, upon receipt of a
notice from the Company pursuant to Sections 5(c)(v) or 6(a), the Selling
Securityholders shall not dispose of Registrable Securities and shall
discontinue use of the Prospectus and Registration Statement until such Selling
Securityholders' receipt of the copies of the supplemented or amended Prospectus
contemplated by Section
<PAGE>
<PAGE>
15
5(j) or notification by the Company that events described in Section 5(c)(v) no
longer exist, as the case may be.
(c) Upon receipt of any notice from the Company pursuant to
Section 6(a), the Selling Securityholders shall be entitled to obtain such
information from the Company as it may reasonably request regarding the facts
and circumstances surrounding such notice; provided, however, that each Selling
Securityholder signs a confidentiality agreement reasonably satisfactory to the
Company.
SECTION 7. Registration Expenses. The Company
will pay all Registration Expenses in connection with the
registration of Registrable Securities pursuant to
Sections 2 or 3 hereof.
SECTION 8. Indemnification. (a) Indemnification by the
Company. Upon the registration of the Registrable Securities pursuant to
Sections 2 or 3 hereof, and in consideration of the agreements of the Holders
contained herein, the Company hereby agrees to indemnify and hold harmless each
of the Holders of Registrable Securities to be included in such registration,
and each person who participates as a placement or sales agent or as an
underwriter in any offering or sale of such Registrable Securities against any
losses, claims, damages or liabilities, joint or several, to which such Holder,
agent or underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such Registrable Securities were registered under the Securities Act, or any
preliminary, final or summary prospectus contained therein or furnished by the
Company to any such Holder, agent or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company hereby agrees to
reimburse such Holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable to any such person in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue
<PAGE>
<PAGE>
16
statement or omission or alleged omission made in such registration statement,
or preliminary, final or summary prospectus, or amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by such person expressly for use therein.
(b) Indemnification by the Holders and Underwriters. The
Company may require, as a condition to including any Registrable Securities in
any Registration Statement filed pursuant to Sections 2 or 3 hereof and to
entering into any underwriting agreement with respect thereto, that the Company
shall have received an undertaking reasonably satisfactory to it from each
Holder and from each underwriter named in any such underwriting agreement,
severally and not jointly, to (i) indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in such registration statement, or any preliminary, final or
summary prospectus contained therein or furnished by the Company to any such
Holder or underwriter, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Holder or underwriter expressly for use therein and (ii)
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that no such Holder shall be
required to undertake liability to any person under this Section 8(b) for any
amounts in excess of the dollar amount of the proceeds to be received by such
Holder from the sale of such Holder's securities pursuant to such registration.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of this Section 8, notify such
<PAGE>
<PAGE>
17
indemnifying party in writing of the commencement of such action; provided,
however, that the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party other than
under the indemnification provisions of Section 8(a) or 8(b) hereof. In case any
such action shall be brought against any indemnified party and it shall notify
an indemnifying party of the commencement thereof, such indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation.
(d) Contribution. Each party hereto agrees that, if for any
reason the indemnification provisions of Section 8(a) or Section 8(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 8(d) was determined by
<PAGE>
<PAGE>
18
pro rata allocation (even if the Holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 8(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Holder shall be required to contribute any
amount in excess of the amount by which the dollar amount of the proceeds
received by such Holder from the sale of any Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Miscellaneous. The obligations of the Company and its
subsidiaries under this Section 8 shall be in addition to any liability which
the Company and its subsidiaries may otherwise have and shall extend, upon the
same terms and conditions, to each officer, director and partner of each Holder,
agent and underwriter and each person, if any, who controls any Holder, agent or
underwriter within the meaning of the Securities Act; and the obligations of the
Holders and any underwriters contemplated by this Section 8 shall be in addition
to any liability which the respective Holder or underwriter may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company (including any person who, with his consent, is named in
any Registration Statement as about to become a director of the Company) and to
each person, if any, who controls the Company within the meaning of the
Securities Act.
<PAGE>
<PAGE>
19
SECTION 9. Rule 144. The Company shall take such action as any
Holder may reasonably request, to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under the
Securities Act within the limitations of the exemption provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC. Upon request of any
Holder of Registrable Securities, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
SECTION 10. Underwritten Registrations. (a) If any of the
Registrable Securities covered by any Demand Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Registrable Securities included
in such offering.
(b) No Person may participate in any underwritten registration
hereunder unless such Person (i) agrees to sell such Person's Registrable
Securities on the basis reasonably provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
SECTION 11. Miscellaneous. (a) Remedies. The
Holders, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this
Agreement.
(b) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, without the written consent of the Company and the Holders.
(c) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given (i) on
the first Business Day following the date received, if delivered personally or
by telecopy (with telephonic confirmation of receipt by the addressee), (ii) on
the Business Day following timely deposit with an overnight courier service, if
sent by overnight courier specifying next day delivery and (iii) on the first
Business Day that is at least five days following
<PAGE>
<PAGE>
20
deposit in the mails, if sent by first class mail, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
11(c), which address initially is, with respect to each Holder, the
address of such Holder given in the Commitment Letter.
(ii) if to the Company, at:
Benedek Communications Corporation
308 West State Street
Rockford, IL 61101
Attention: Mr. Ronald L. Lindwall
Telephone: (815) 987-5350
Facsimile: (815) 987-5335
with a copy (which shall not constitute
notice) to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, NY 10036
Attention: Paul S. Goodman, Esq.
Telephone: (212) 782-0705
Facsimile: (212) 730-1964
(d) Successors and Assigns. This Agreement shall
be binding on the Company and its successors and assigns.
(e) Third-Party Beneficiaries. The Company agrees that the
representations, warranties and covenants of the Company contained herein are
intended for the benefit of the Holders from time to time of the Warrants and
the Registrable Securities, and each such Holder shall be deemed to be a
third-party beneficiary with respect thereto, entitled to enforce directly and
in its own name any rights or claims the Placement Agents may have against the
Company with respect thereto.
(f) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
(g) Descriptive Headings. The descriptive
headings used herein are inserted for convenience of
<PAGE>
<PAGE>
21
reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all remaining provisions contained
herein shall not be in any way impaired thereby.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression and a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter hereof. There are no restrictions, promises, warranties or undertakings
with respect to the subject matter hereof, other than those set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
<PAGE>
<PAGE>
22
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
BENEDEK COMMUNICATIONS
CORPORATION,
by /s/ RONALD L. LINDWALL
-------------------------------------
Name: RONALD L. LINDWALL
Title: SECRETARY
SENIOR VICE PRESIDENT--FINANCE
GOLDMAN, SACHS & CO., on
behalf of the Securityholders
by /s/ DIRK LEASURE
-------------------------------------
Name: DIRK LEASURE
Title: V.P.
BT SECURITIES CORPORATION, on
behalf of the Securityholders
by /s/ GARY R. PAUL
-------------------------------------
Name: GARY R. PAUL
Title: V.P.
MANAGING DIRECTOR
<PAGE>
<PAGE>
EXECUTION
________________________________________________________________________________
CREDIT AGREEMENT
DATED AS OF JUNE 6, 1996
AMONG
BENEDEK COMMUNICATIONS CORPORATION,
BENEDEK BROADCASTING CORPORATION,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
PEARL STREET L.P.,
AS ARRANGING AGENT,
GOLDMAN, SACHS & CO.,
AS SYNDICATION AGENT,
AND
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY,
AS ADMINISTRATIVE AGENT
AND
COLLATERAL AGENT
________________________________________________________________________________
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
----
SECTION 1.
DEFINITIONS.............................. 2
1.1 Certain Defined Terms.................................................. 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement........................................................ 38
1.3 Other Definitional Provisions and Rules of Construction................ 38
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS............................. 39
2.1 Commitments; Making of Loans; the Register; Notes...................... 39
2.2 Interest on the Loans.................................................. 44
2.3 Fees................................................................... 47
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of
Collateral and Payments Under Guaranties............................... 48
2.5 Use of Proceeds........................................................ 58
2.6 Special Provisions Governing Eurodollar Rate Loans..................... 58
2.7 Increased Costs; Taxes; Capital Adequacy............................... 61
2.8 Obligation of Lenders to Mitigate...................................... 65
SECTION 3.
CONDITIONS TO LOANS........................... 65
3.1 Conditions to AXELs.................................................... 65
3.2 Conditions to All Loans................................................ 74
SECTION 4.
REPRESENTATIONS AND WARRANTIES...................... 75
4.1 Organization, Powers, Qualification, Good Standing, Business,
Subsidiaries and FCC and Station Matters............................... 76
4.2 Authorization of Borrowing, etc........................................ 78
4.3 Financial Condition.................................................... 80
(i)
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Page
----
4.4 No Material Adverse Change; No Restricted Junior Payments.............. 80
4.5 Title to Properties; Liens; Real Property.............................. 80
4.6 Litigation; Adverse Facts.............................................. 81
4.7 Payment of Taxes....................................................... 82
4.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts.............................................................. 82
4.9 Governmental Regulation................................................ 82
4.10 Securities Activities.................................................. 82
4.11 Employee Benefit Plans................................................. 83
4.12 Certain Fees........................................................... 83
4.13 Environmental Protection............................................... 84
4.14 Employee Matters....................................................... 84
4.15 Solvency............................................................... 85
4.16 Matters Relating to Collateral......................................... 85
4.17 Representations and Warranties in Acquisition Agreements............... 86
4.18 Applicable Law......................................................... 86
4.19 Disclosure............................................................. 86
SECTION 5.
AFFIRMATIVE COVENANTS.................... 87
5.1 Financial Statements and Other Reports................................. 87
5.2 Corporate Existence; Board of Directors; etc........................... 93
5.3 Payment of Taxes and Claims; Tax Consolidation......................... 93
5.4 Maintenance of Properties; Insurance; Application of Net
Insurance/Condemnation Proceeds........................................ 94
5.5 Inspection Rights; Audits of Accounts Receivable; Lender Meeting....... 96
5.6 Compliance with Laws, etc.; Maintenance of FCC Licenses; etc........... 96
5.7 Environmental Review and Investigation, Disclosure, Etc.; Company's
Actions Regarding Hazardous Materials Activities, Environmental
Claims and Violations of Environmental Laws............................ 97
5.8 Matters Relating to Additional Real Property Collateral................ 99
5.9 Maintenance of Key Man Life Insurance Policies......................... 101
5.10 Maintenance of Network Affiliations.................................... 102
5.11 Ownership Reports...................................................... 102
5.12 Determination of Borrowing Base........................................ 102
5.13 Future Capital Contributions; Cash and Cash Equivalents of BCC......... 102
(ii)
<PAGE>
<PAGE>
Page
----
SECTION 6.
COMPANY'S NEGATIVE COVENANTS............. 103
6.1 Indebtedness........................................................... 103
6.2 Liens and Related Matters.............................................. 104
6.3 Investments; Joint Ventures............................................ 105
6.4 Contingent Obligations................................................. 106
6.5 Restricted Junior Payments............................................. 107
6.6 Financial Covenants.................................................... 108
6.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions....... 111
6.8 Consolidated Capital Expenditures...................................... 113
6.9 Sales and Lease-Backs.................................................. 114
6.10 Sale or Discount of Receivables........................................ 114
6.11 Transactions with Shareholders and Affiliates.......................... 115
6.12 Disposal of Subsidiary Stock........................................... 115
6.13 Conduct of Business.................................................... 115
6.14 Amendments or Waivers of Certain Related Agreements; Payments on
Existing Senior Notes; Designation of "Designated Senior Debt"........ 116
6.15 Fiscal Year............................................................ 117
6.16 Limitation on Creation of Subsidiaries................................. 117
SECTION 7.
EVENTS OF DEFAULT............................ 117
7.1 Failure to Make Payments When Due...................................... 117
7.2 Default in Other Agreements............................................ 117
7.3 Breach of Certain Covenants............................................ 118
7.4 Breach of Warranty..................................................... 118
7.5 Other Defaults Under Loan Documents.................................... 118
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc................... 118
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc..................... 119
7.8 Judgments and Attachments.............................................. 119
7.9 Dissolution............................................................ 119
7.10 Employee Benefit Plans................................................. 119
7.11 Material Adverse Effect................................................ 119
7.12 Change in Executive Officers of Company................................ 120
7.13 Change in Control...................................................... 120
7.14 FCC Licenses........................................................... 120
7.15 Invalidity of Guaranties; Failure of Security; Repudiation of
Obligations............................................................ 120
7.16 Subordinated Indebtedness.............................................. 121
SECTION 8.
(iii)
<PAGE>
<PAGE>
Page
----
AGENTS................................... 122
8.1 Appointment............................................................ 122
8.2 Powers and Duties; General Immunity.................................... 123
8.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness....................................................... 125
8.4 Right to Indemnity..................................................... 125
8.5 Successor Administrative Agent and Collateral Agent.................... 125
8.6 Collateral Documents and Guaranties.................................... 126
SECTION 9.
MISCELLANEOUS.............................. 128
9.1 Assignments and Participations in Loans................................ 128
9.2 Expenses............................................................... 130
9.3 Indemnity.............................................................. 131
9.4 Set-Off; Security Interest in Deposit Accounts......................... 132
9.5 Ratable Sharing........................................................ 133
9.6 Amendments and Waivers................................................. 133
9.7 Independence of Covenants.............................................. 135
9.8 Notices................................................................ 135
9.9 Survival of Representations, Warranties and Agreements................. 135
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative.................. 135
9.11 Marshalling; Payments Set Aside........................................ 136
9.12 Severability........................................................... 136
9.13 Obligations Several; Independent Nature of Lenders' Rights............. 136
9.14 Headings............................................................... 136
9.15 Applicable Law......................................................... 136
9.16 Successors and Assigns................................................. 137
9.17 Consent to Jurisdiction and Service of Process......................... 137
9.18 Waiver of Jury Trial................................................... 137
9.19 Confidentiality........................................................ 138
9.20 Maximum Amount......................................................... 138
9.21 Counterparts; Effectiveness............................................ 139
Signature pages S-1
(iv)
<PAGE>
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF AXEL SERIES A NOTE
IV FORM OF AXEL SERIES B NOTE
V FORM OF REVOLVING NOTE
VI FORM OF COMPLIANCE CERTIFICATE
VII FORM OF BORROWING BASE CERTIFICATE
VIII FORM OF OPINION OF SHACK & SIEGEL, P.C.
IX FORM OF OPINION OF COVINGTON & BURLING
X FORM OF OPINION OF O'MELVENY & MYERS LLP
XI FORM OF ASSIGNMENT AGREEMENT
XII FORM OF CERTIFICATE RE NON-BANK STATUS
XIII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIV FORM OF COMPANY ACCOUNTS RECEIVABLE SECURITY AGREEMENT
XV FORM OF COMPANY ACQUIRED ASSETS SECURITY AGREEMENT
XVI FORM OF COMPANY TANGIBLE ASSETS SECURITY AGREEMENT
XVII FORM OF BCC GUARANTY
XVIII FORM OF LICENSE SUB GUARANTY
XIX FORM OF BCC PLEDGE AGREEMENT
XX FORM OF BCC SECURITY AGREEMENT
XXI FORM OF MORTGAGE
XXII FORM OF LANDLORD CONSENT AND ESTOPPEL
(v)
<PAGE>
<PAGE>
SCHEDULES
1.1 ESTIMATED TAX AMOUNTS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
3.1H CLOSING DATE MORTGAGED PROPERTIES
3.1J CLOSING DATE ENVIRONMENTAL REPORTS
4.1A LOAN PARTIES; SUBSIDIARIES OF COMPANY
4.1E STATIONS AND FCC LICENSES
4.3 CERTAIN LIABILITIES
4.5 REAL PROPERTY
4.11 CERTAIN EMPLOYEE BENEFIT PLANS
4.13 ENVIRONMENTAL MATTERS
4.14 EMPLOYEE MATTERS
6.1 CERTAIN EXISTING INDEBTEDNESS
6.2 CERTAIN EXISTING LIENS
6.3 CERTAIN EXISTING INVESTMENTS
6.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
6.6 STIPULATED CONSOLIDATED ADJUSTED EBITDA
(vi)
<PAGE>
<PAGE>
BENEDEK BROADCASTING CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of June 6, 1996, and entered into by and
among BENEDEK COMMUNICATIONS CORPORATION, a Delaware corporation ("BCC"),
BENEDEK BROADCASTING CORPORATION, a Delaware corporation ("Company"), PEARL
STREET L.P., as arranging agent (in such capacity, "Arranging Agent"), GOLDMAN,
SACHS & CO., as syndication agent (in such capacity, "Syndication Agent"), THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually
referred to herein as a "Lender" and collectively as "Lenders"), and CANADIAN
IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY ("CIBC-NYA"), as administrative agent
for Lenders (in such capacity, "Administrative Agent") and as collateral agent
for Lenders (in such capacity, "Collateral Agent").
R E C I T A L S
- - - - - - - -
WHEREAS, Benedek (this and other terms used in these recitals without
definition being used as defined in subsection 1.1) owns 100% of the outstanding
common stock of Company;
WHEREAS, on or before the Closing Date, Benedek will contribute all of the
outstanding common stock of Company to BCC in exchange for all of the
outstanding common stock of BCC;
WHEREAS, on or before the Closing Date, BCC will (i) (a) issue and sell
the Seller Preferred Stock to GE Capital for aggregate cash proceeds of
$45,000,000, and (b) issue and sell the Exchangeable Preferred Stock and the
Warrants for aggregate cash proceeds of not less than $60,000,000, and (ii)
contribute the proceeds from the sale of such Seller Preferred Stock,
Exchangeable Preferred Stock and Warrants to Company;
WHEREAS, on or before the Closing Date, BCC will issue and sell the Senior
Subordinated Notes for aggregate gross proceeds of $90,178,000 and contribute
such proceeds to Company;
WHEREAS, on the Closing Date, (i) pursuant to the Brissette Acquisition
Agreement, Company will acquire 100% of the outstanding capital stock of
Brissette for consideration of approximately $270,000,000 in cash, and (ii)
pursuant to the Stauffer Acquisition Agreement, Company will acquire
substantially all of the assets used in connection with the business and
operations of the Stauffer Stations for consideration of approximately
$54,500,000 in cash;
1
<PAGE>
<PAGE>
WHEREAS, immediately upon the consummation of the Brissette Acquisition,
Brissette and all of its Subsidiaries will be merged with and into Company, with
Company being the surviving corporation in such merger;
WHEREAS, Lenders have agreed to extend certain credit facilities hereunder
to Company, the proceeds of which will be used together with cash on hand of
Company and the proceeds of the issuance and sale of the Seller Preferred Stock,
the Exchangeable Preferred Stock and the Warrants and the Senior Subordinated
Notes described above, (i) to fund the cash portion of the purchase price of the
Acquisitions, (ii) to pay Transaction Costs and (iii) to provide financing for
working capital and other general corporate purposes of Company;
WHEREAS, Company desires (i) to secure all of the Obligations relating to
the AXELs by granting to Collateral Agent, on behalf of Lenders holding
outstanding AXELs, a first priority Lien on (a) all of the collateral under the
Existing Pledge Agreement, shared on an equal and ratable basis with the holders
of the Existing Senior Notes, and (b) all of the real property and tangible
personal property acquired in the Acquisitions, (ii) to secure all of the
Obligations by granting to Collateral Agent, on behalf of Lenders, a first
priority Lien on all other real property and tangible personal property of
Company, shared on an equal and ratable basis with the holders of the Existing
Senior Notes, and (iii) to secure all of the Obligations (up to a maximum amount
not to exceed the greater of $5,000,000 and 75% of Accounts Receivable) by
granting to Collateral Agent, on behalf of Lenders, a first priority Lien on
substantially all of Company's accounts receivable; and
WHEREAS, (i) License Sub has agreed to guarantee all Obligations related
to the AXELs and (ii) BCC has agreed to guarantee all Obligations and to secure
such guarantee by granting to Collateral Agent, (a) on behalf of Lenders and the
holders of the Existing Senior Notes on an equal and ratable basis, a first
priority pledge of all of the outstanding capital stock of Company and (b) on
behalf of Lenders, a first priority pledge of all other assets of BCC;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, BCC, Lenders and Agents
agree as follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Accounts Receivable" means any right to payment that is due within
one year from any invoice date for goods sold or leased or for services
rendered no matter how evidenced, including, but not limited to accounts
receivable, contracts rights, notes, drafts, acceptances, and other forms
of obligations and receivables, all as determined in conformity with GAAP.
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"Acquired Stations" means the Brissette Stations and the Stauffer
Stations acquired by Company pursuant to the Brissette Acquisition
Agreement and the Stauffer Acquisition Agreement, respectively.
"Acquisitions" means, collectively, the Brissette Acquisition and
the Stauffer Acquisition.
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar
Rate Loan, the rate per annum obtained by dividing (i) the arithmetic
average (rounded upward to the nearest 1/16 of one percent) of the offered
quotations, if any, to first class banks in the interbank Eurodollar
market by Reference Lender for U.S. dollar deposits of amounts in same day
funds comparable to the respective principal amounts of the Eurodollar
Rate Loans of Reference Lender for which the Adjusted Eurodollar Rate is
then being determined (which principal amount shall be deemed to be
$1,000,000 in the case of Reference Lender not making, converting to or
continuing such a Eurodollar Rate Loan) with maturities comparable to such
Interest Period as of approximately 10:00 A.M. (New York time) on such
Interest Rate Determination Date by (ii) a percentage equal to 100% minus
the stated maximum rate of all reserve requirements (including any
marginal, emergency, supplemental, special or other reserves) applicable
on such Interest Rate Determination Date to any member bank of the Federal
Reserve System in respect of "Eurocurrency liabilities" as defined in
Regulation D (or any successor category of liabilities under Regulation
D).
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 8.5A.
"Affected Lender" has the meaning assigned to that term in
subsection 2.6C.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agent" means, individually, each of Arranging Agent, Syndication
Agent, Administrative Agent and Collateral Agent and "Agents" means
Arranging Agent, Syndication Agent, Administrative Agent and Collateral
Agent, collectively.
"Agreement" means this Credit Agreement dated as of June 6, 1996, as
it may be amended, supplemented or otherwise modified from time to time.
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"Applicable Margin" means, for each AXEL Series A, AXEL Series B and
Revolving Loan, as of any date of determination, a percentage per annum as
set forth below less the Pricing Reduction, if any:
<TABLE>
<CAPTION>
==============================================================================================================
AXELs Series A AXELs Series B Revolving Loans
- --------------------------------------------------------------------------------------------------------------
Base Rate Eurodollar Base Rate Eurodollar Base Rate Eurodollar
Loans Loans Loans Loans Loans Loans
==============================================================================================================
<S> <C> <C> <C> <C> <C>
2.00% 3.00% 2.50% 3.50% 2.00% 3.00%
==============================================================================================================
</TABLE>
"Arranging Agent" has the meaning assigned to that term in the
introduction to this Agreement.
"Asset Sale" means the sale by BCC or any of its Subsidiaries to any
Person other than BCC or any of its wholly owned Subsidiaries of (i) any
of the stock of any of BCC's Subsidiaries, (ii) substantially all of the
assets of any division or line of business of BCC or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible)
of BCC or any of its Subsidiaries other than any such other assets to the
extent that the aggregate fair market value of such assets sold in any
single transaction or related series of transactions is equal to or less
than $10,000.
"Assignment Agreement" means an Assignment Agreement in
substantially the form of Exhibit XI annexed hereto.
"Auditor's Letter" means a letter, acknowledged and agreed to by
Company and McGladrey & Pullen, LLP and delivered to Arranging Agent and
Administrative Agent pursuant to subsection 3.1Q.
"AXEL" or "AXELs" means one or more of the AXELs Series A or AXELs
Series B or any combination thereof.
"AXEL Commitment" means an AXEL Series A Commitment or an AXEL
Series B Commitment of a Lender, and "AXEL Commitments" means such
commitments of all Lenders in the aggregate.
"AXEL Exposure" means, with respect to any Lender as of any date of
determination, the aggregate AXEL Series A Exposure and AXEL Series B
Exposure of that Lender.
"AXEL Notes" means one or more of the AXEL Series A Notes or AXEL
Series B Notes or any combination thereof.
"AXEL Series A" or "AXELs Series A" means a Loan or Loans,
respectively, made by Lenders to Company as amortization extended loans
pursuant to subsection 2.1A(i).
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"AXEL Series A Commitment" means the commitment of a Lender to make
an AXEL Series A to Company pursuant to subsection 2.1A(i), and "AXEL
Series A Commitments" means such commitments of all Lenders in the
aggregate.
"AXEL Series A Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the AXELs Series A, that
Lender's AXEL Series A Commitment and (ii) after the funding of the AXELs
Series A, the outstanding principal amount of the AXEL Series A of that
Lender.
"AXEL Series A Notes" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E(i) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of
subsection 9.1B(i) in connection with assignments of the AXEL Series A
Commitments or AXELs Series A of any Lenders, in each case substantially
in the form of Exhibit III annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
"AXEL Series B" or "AXELs Series B" means a Loan or Loans,
respectively, made by Lenders to Company as amortization extended loans
pursuant to subsection 2.1A(ii).
"AXEL Series B Commitment" means the commitment of a Lender to make
an AXEL Series B to Company pursuant to subsection 2.1A(ii), and "AXEL
Series B Commitments" means such commitments of all Lenders in the
aggregate.
"AXEL Series B Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the AXELs Series B, that
Lender's AXEL Series B Commitment and (ii) after the funding of the AXELs
Series B, the outstanding principal amount of the AXEL Series B of that
Lender.
"AXEL Series B Notes" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of
subsection 9.1B(i) in connection with assignments of the AXEL Series B
Commitments or AXELs Series B of any Lenders, in each case substantially
in the form of Exhibit IV annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, at any time, the higher of (i) the rate that
CIBC-NYA announces from time to time as its "base lending rate" at its
domestic lending office, as in effect from time to time or (ii) the rate
which is 1/2 of 1% in excess of the Federal Funds Effective Rate. The base
lending rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer, and CIBC-NYA or
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any Lender may make commercial loans or other loans at rates of interest
at, above or below such rate.
"Base Rate Loans" means Loans bearing interest at rates determined
by reference to the Base Rate as provided in subsection 2.2A.
"BCC" means Benedek Communications Corporation, a Delaware
corporation which as of the Closing Date will own 100% of the outstanding
common stock of Company.
"BCC Guaranty" means the BCC Guaranty executed and delivered by BCC
on the Closing Date, substantially in the form of Exhibit XVII annexed
hereto, as such BCC Guaranty may thereafter be amended, supplemented or
otherwise modified from time to time.
"BCC Pledge Agreement" means the BCC Pledge Agreement executed and
delivered by BCC on the Closing Date, substantially in the form of Exhibit
XIX annexed hereto, as such BCC Pledge Agreement may thereafter be
amended, supplemented or otherwise modified from time to time.
"BCC Security Agreement" means the BCC Security Agreement executed
and delivered by BCC on the Closing Date, substantially in the form of
Exhibit XX annexed hereto, as such BCC Security Agreement may thereafter
be amended, supplemented or otherwise modified from time to time.
"Benedek" means A. Richard Benedek.
"Borrowing Base" means, as of any date of determination, an amount
equal to 75% of the Dollar book value of all Accounts Receivable of
Company minus the Dollar book value of any Accounts Receivable which have
not been paid in full within 120 days of the invoice date thereof, as
calculated pursuant to the most recent Borrowing Base Certificate
delivered pursuant to subsection 5.12.
"Borrowing Base Certificate" means a certificate substantially in
the form of Exhibit VII annexed hereto delivered to Administrative Agent
by Company pursuant to subsection 5.12.
"Brissette" means Brissette Broadcasting Corporation, a Delaware
corporation.
"Brissette Acquisition" means the transactions contemplated by the
Brissette Acquisition Agreement, including the Brissette License Transfer.
"Brissette Acquisition Agreement" means that certain Stock Purchase
Agreement dated December 15, 1995, as amended by that certain letter
agreement dated April 11, 1996 and by that certain letter agreement dated
April 24, 1996, by and among
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GE Capital, Paul Brissette, Brissette and Company, in the form delivered
to Arranging Agent, Administrative Agent and Lenders prior to their
execution of this Agreement and as such agreement may be amended from time
to time thereafter to the extent permitted under subsection 6.14A.
"Brissette FCC Consent" means the initial written action or actions
of the FCC approving the transfer of control of the Brissette Stations
from Brissette to Company and the Brissette License Transfer.
"Brissette License Transfer" means the transfer to License Sub of
the FCC Licenses used in connection with the ownership and operation of
the Brissette Stations.
"Brissette Stations" means, collectively, the following television
broadcast stations: KAUZ-TV licensed to serve Wichita Falls, Texas;
KOSA-TV licensed to serve Odessa, Texas; WHOI(TV) licensed to serve
Peoria, Illinois; WILX-TV licensed to serve Onondaga, Michigan; WMTV(TV)
licensed to serve Madison, Wisconsin; WSAW-TV licensed to serve Wausau,
Wisconsin; WTRF-TV licensed to serve Wheeling, West Virginia; and WWLP(TV)
licensed to serve Springfield, Massachusetts.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or
required by law or other governmental action to close, and (ii) with
respect to all notices, determinations, fundings and payments in
connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans,
any day that is a Business Day described in clause (i) above and that is
also a day for trading by and between banks in Dollar deposits in the
interbank Eurodollar market.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States Government or
(b) issued by any agency of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case
maturing within one year after such date; (ii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one year after such date and having,
at the time of the acquisition thereof, the highest rating obtainable from
either Standard & Poor's Ratings Group ("S&P") or Moody's Investors
Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than
one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1
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from S&P or at least P-1 from Moody's; (iv) certificates of deposit or
bankers' acceptances maturing within one year after such date and issued
or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District
of Columbia that (a) is at least "adequately capitalized" (as defined in
the regulations of its primary Federal banking regulator) and (b) has Tier
1 capital (as defined in such regulations) of not less than $100,000,000;
and (v) shares of any money market mutual fund that (a) has at least 95%
of its assets invested continuously in the types of investments referred
to in clauses (i), (ii) and (iii) above, (b) has net assets of not less
than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's.
"Certificate re Non-Bank Status" means a certificate substantially
in the form of Exhibit XII annexed hereto delivered by a Lender to
Administrative Agent pursuant to subsection 2.7B(iii).
"CIBC-NYA" has the meaning assigned to that term in the introduction
to this Agreement.
"Closing Date" means the date on or before July 31, 1996, on which
the initial Loans are made.
"Collateral" means, collectively, all of the real, personal and
mixed property (including capital stock) in which Liens are purported to
be granted pursuant to the Collateral Documents as security for the
Obligations.
"Collateral Account" has the meaning assigned to that term in the
Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account
Agreement executed and delivered by BCC and Collateral Agent on the
Closing Date, substantially in the form of Exhibit XIII annexed hereto, as
such Collateral Account Agreement may hereafter be amended, supplemented
or otherwise modified from time to time.
"Collateral Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Collateral Agent appointed pursuant to subsection 8.5B.
"Collateral Documents" means the Existing Pledge Agreement, the BCC
Pledge Agreement, the BCC Security Agreement, the Company Security
Agreements, the Collateral Account Agreement, the Mortgages and all other
instruments or documents delivered by any Loan Party pursuant to this
Agreement or any of the other Loan Documents in order to grant to
Collateral Agent, on behalf of Lenders, a Lien on any real, personal or
mixed property of that Loan Party as security for the Obligations.
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"Commitments" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"Communications Act" means the Communications Act of 1934, as
amended (including, without limitation, the Telecommunications Act of
1996), or any successor statute or statutes thereto, and all FCC
Regulations, in each case as from time to time in effect.
"Communications Regulatory Authority" means the FCC and any future
communications regulatory commission, agency, department, board or
authority.
"Company" has the meaning assigned to that term in the introduction
to this Agreement.
"Company Accounts Receivable Security Agreement" means the Accounts
Receivable Security Agreement executed and delivered by Company on the
Closing Date, substantially in the form of Exhibit XIV annexed hereto, as
such Accounts Receivable Security Agreement may thereafter be amended,
supplemented or otherwise modified from time to time.
"Company Acquired Assets Security Agreement" means the Acquired
Assets Security Agreement executed and delivered by Company on the Closing
Date, substantially in the form of Exhibit XV annexed hereto, as such
Acquired Assets Security Agreement may thereafter be amended, supplemented
or otherwise modified from time to time.
"Company Security Agreements" means the Company Accounts Receivable
Security Agreement, the Company Acquired Assets Security Agreement and the
Company Tangible Assets Security Agreement.
"Company Tangible Assets Security Agreement" means the Tangible
Assets Security Agreement executed and delivered by Company on the Closing
Date, substantially in the form of Exhibit XVI annexed hereto, as such
Tangible Assets Security Agreement may thereafter be amended, supplemented
or otherwise modified from time to time.
"Compensation Limit" has the meaning assigned to that term in
subsection 6.11.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit VI annexed hereto delivered to Administrative Agent and
Lenders by Company pursuant to subsection 5.1(iv).
"Confidential Information Memorandum" means that certain
Confidential Information Memorandum and supplement thereto prepared by
Goldman, Sachs & Co. relating to the AXELs and Revolving Loans dated April
1996.
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"Consolidated Adjusted EBITDA" means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense (to the extent deducted in calculating Consolidated Net
Income), (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense (including, without
duplication, the amortization of Program Obligations), (vi) the TeleRep
Bonus Payment when actually received and (vii) other non-cash items
reducing Consolidated Net Income less (a) Program Payments and (b) other
non-cash items increasing Consolidated Net Income (including the
amortization of (1) the bonus payments in an aggregate amount of
$5,000,000 paid by CBS, Inc. to Company in December 1995 and March 1996
and (2) the TeleRep Bonus Payment, but excluding barter), all of the
foregoing as determined on a consolidated basis for BCC and its
Subsidiaries in conformity with GAAP except to the extent the express
provisions of this definition require a calculation other than in
accordance with GAAP.
"Consolidated Capital Expenditures" means, for any period, the sum
of (i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of
Capital Leases which is capitalized on the consolidated balance sheet of
BCC and its Subsidiaries) by BCC and its Subsidiaries during that period
that, in conformity with GAAP, are included in "additions to property,
plant or equipment" or comparable items reflected in the consolidated
statement of cash flows of BCC and its Subsidiaries plus (ii) to the
extent not covered by clause (i) of this definition, the aggregate of all
expenditures by BCC and its Subsidiaries during that period to acquire (by
purchase or otherwise) the business, property or fixed assets of any
Person, or the stock or other evidence of beneficial ownership of any
Person that, as a result of such acquisition, becomes a Subsidiary of BCC;
provided that Consolidated Capital Expenditures shall not include (a)
expenditures made in connection with (1) the Acquisitions, (2) any
Investment permitted by subsection 6.3(x), and (3) the replacement,
substitution or restoration of assets (x) to the extent financed from
insurance proceeds paid on account of the loss of or damage to the assets
being replaced or restored or (y) with awards of compensation arising from
the taking by eminent domain or condemnation of the assets being replaced,
(b) for purposes of subsection 6.8 only, amounts which would otherwise
constitute Consolidated Capital Expenditures hereunder as a result of (1)
the receipt by Company of a satellite news gathering truck from CBS, Inc.
or the purchase of a satellite news gathering truck from funds received
from CBS, Inc. pursuant to that certain agreement between Company and CBS,
Inc. dated December 1995 and (2) the renovations to the studio and
corporate offices of KDLH-TV in Duluth, Minnesota to the extent such
renovations are paid for or reimbursed by the city of Duluth or (c) for
purposes of subsection 6.8 and the definitions of "Fixed Charge Coverage
Ratio" and "Pro Forma Capital Expenditures", LMA Capital Expenditures and
expenditures made in connection with Permitted Acquisitions.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense for such period excluding, however, any
interest expense not payable in Cash (including amortization of discount
and amortization of debt issuance costs).
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"Consolidated Credit Facilities Debt" means, as at any date of
determination, the aggregate stated balance sheet amount of all
Indebtedness of BCC and its Subsidiaries under this Agreement and the Loan
Documents, determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Assets" means, as at any date of
determination, the total assets of BCC and its Subsidiaries on a
consolidated basis which may properly be classified as current assets in
conformity with GAAP, excluding Cash and Cash Equivalents.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of BCC and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities
in conformity with GAAP.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for
such period of (a) Consolidated Adjusted EBITDA and (b) the Consolidated
Working Capital Adjustment minus (ii) the sum, without duplication, of the
amounts for such period of (a) voluntary and scheduled repayments of
Consolidated Total Debt (excluding repayments of Revolving Loans except to
the extent the Revolving Loan Commitments are permanently reduced in
connection with such repayments), (b) Consolidated Capital Expenditures
(net of any proceeds of any related financings with respect to such
expenditures) to the extent permitted under this Agreement, (c)
Consolidated Cash Interest Expense, and (d) the provision for current
taxes based on income of BCC and its Subsidiaries and payable in cash with
respect to such period.
"Consolidated Interest Expense" means, for any period, total
interest expense (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of BCC and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of
BCC and its Subsidiaries, including Liquidated Damages, if any, and all
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under
Interest Rate Agreements, but excluding, however, any amounts referred to
in subsection 2.3 payable to Agents and Lenders on or before the Closing
Date.
"Consolidated Net Income" means, for any period, the net income (or
loss) of BCC and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP;
provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of BCC) in which any other Person (other
than BCC or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
BCC or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary of BCC or is merged into or consolidated with BCC or any of its
Subsidiaries or that Person's assets are acquired by BCC or any of its
Subsidiaries, (iii) the income of any Subsidiary of
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BCC to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or
losses attributable to Asset Sales or returned surplus assets of any
Pension Plan, and (v) (to the extent not included in clauses (i) through
(iv) above) any net extraordinary gains or net non-cash extraordinary
losses.
"Consolidated Rental Payments" means, for any period, the aggregate
amount of all rents paid or payable by BCC and its Subsidiaries on a
consolidated basis during that period under all Capital Leases and
Operating Leases to which BCC or any of its Subsidiaries is a party as
lessee (net of sublease income).
"Consolidated Total Debt" means, as at any date of determination,
the aggregate stated balance sheet amount of all Indebtedness (other than
Indebtedness with respect to Program Obligations) of BCC and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital" means, as at any date of
determination, the excess of Consolidated Current Assets over Consolidated
Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds
(or is less than) Consolidated Working Capital as of the end of such
period.
"Contingent Obligation", as applied to any Person, means any direct
or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of
another if the primary purpose or intent thereof by the Person incurring
the Contingent Obligation is to provide assurance to the obligee of such
obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof, (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, or (iii) under Hedge
Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse
or sale with recourse by such Person of the obligation of another, (b) the
obligation to make take-or-pay or similar payments if required regardless
of non-performance by any other party or parties to an agreement, and (c)
any liability of such Person for the obligation of another through any
agreement (contingent or otherwise) (1) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form
of loans, advances, stock purchases, capital contributions or otherwise)
or (2) to maintain the solvency or any balance sheet item, level of income
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or financial condition of another if, in the case of any agreement
described under subclauses (1) or (2) of this sentence, the primary
purpose or intent thereof is as described in the preceding sentence. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if less, the amount to
which such Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Credit Facilities Leverage Ratio" means the ratio of (i)
Consolidated Credit Facilities Debt as of the last day of any Fiscal
Quarter to (ii) Consolidated Adjusted EBIDTA for the four-Fiscal Quarter
period then ended, in each case as set forth in the most recent Compliance
Certificate delivered by Company to Administrative Agent pursuant to
clause (iv) of subsection 5.1 or the certificate delivered by Company
pursuant to subsection 3.1Q.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement to which BCC or any of its Subsidiaries
is a party.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate
of deposit.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Eligible Assignee" means (i)(a) a commercial bank organized under
the laws of the United States or any state thereof; (b) a savings and loan
association or savings bank organized under the laws of the United States
or any state thereof; (c) a commercial bank organized under the laws of
any other country or a political subdivision thereof; provided that (1)
such bank is acting through a branch or agency located in the United
States or (2) such bank is organized under the laws of a country that is a
member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (d) any other entity which is
an "accredited investor" (as defined in Regulation D under the Securities
Act) which extends credit or buys loans as one of its businesses including
insurance companies, mutual funds and lease financing companies; and (ii)
any Lender and any Affiliate of any Lender; provided that no Affiliate of
Company shall be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was maintained or contributed to by
BCC, any of its Subsidiaries or any of their respective ERISA Affiliates.
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"Employment Agreements" means, collectively, (i) the Employment
Agreement dated as of June 1, 1996 between Company and Benedek, (ii) the
Employment Agreement dated as of June 1, 1996 between Company and K. James
Yager, (iii) the Employment Agreement dated as of June 1, 1996 between
Company and Terry Hurley, and (iv) the Employment Agreement dated as of
March 8, 1996 between Company and Douglas E. Gealy, in each case providing
for the exclusive employment of such Person by Company, in the form
provided to Arranging Agent and Administrative Agent pursuant to
subsection 3.1T on or prior to the Closing Date.
"Environmental Claim" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or
other order or directive (conditional or otherwise), by any governmental
authority or any other Person, arising (i) pursuant to or in connection
with any actual or alleged violation of any Environmental Law, (ii) in
connection with any Hazardous Materials or any actual or alleged Hazardous
Materials Activity, or (iii) in connection with any actual or alleged
damage, injury, threat or harm to health, safety, natural resources or the
environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of governmental
authorities relating to (i) environmental matters, including those
relating to any Hazardous Materials Activity, (ii) the generation, use,
storage, transportation or disposal of Hazardous Materials, or (iii)
occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner
applicable to BCC or any of its Subsidiaries or any Facility, including
the Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. 'SS' 9601 et seq.), the Hazardous Materials Transportation Act
(49 U.S.C. 'SS' 1801 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. 'SS' 6901 et seq.), the Federal Water Pollution Control Act (33
U.S.C. 'SS' 1251 et seq.), the Clean Air Act (42 U.S.C. 'SS' 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. 'SS' 2601 et seq.),
the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 'SS'136
et seq.), the Occupational Safety and Health Act (29 U.S.C. 'SS' 651 et
seq.), the Oil Pollution Act (33 U.S.C. 'SS' 2701 et seq) and the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. 'SS' 11001
et seq.), each as amended or supplemented, any analogous present or
future state or local statutes or laws, and any regulations promulgated
pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor thereto.
"ERISA Affiliate" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations within
the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is a member; (ii) any trade or business (whether or not
incorporated) which is a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Internal
Revenue Code of which that Person is a member; and (iii) any member of an
affiliated
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service group within the meaning of Section 414(m) or (o) of the Internal
Revenue Code of which that Person, any corporation described in clause (i)
above or any trade or business described in clause (ii) above is a member.
Any former ERISA Affiliate of BCC or any of its Subsidiaries shall
continue to be considered an ERISA Affiliate of BCC or such Subsidiary
within the meaning of this definition with respect to the period such
entity was an ERISA Affiliate of BCC or such Subsidiary and with respect
to liabilities arising after such period for which BCC or such Subsidiary
could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect
to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to
meet the minimum funding standard of Section 412 of the Internal Revenue
Code with respect to any Pension Plan (whether or not waived in accordance
with Section 412(d) of the Internal Revenue Code) or the failure to make
by its due date a required installment under Section 412(m) of the
Internal Revenue Code with respect to any Pension Plan or the failure to
make any required contribution to a Multiemployer Plan; (iii) the
provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by BCC, any of its Subsidiaries or any of their respective
ERISA Affiliates from any Pension Plan with two or more contributing
sponsors or the termination of any such Pension Plan resulting in
liability pursuant to Section 4063 or 4064 of ERISA; (v) the institution
by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which would be reasonably likely to
constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of
liability on BCC, any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal of BCC,
any of its Subsidiaries or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by BCC, any of its Subsidiaries or any
of their respective ERISA Affiliates of notice from any Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA, or that it intends to terminate or has terminated under
Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or
omission which would be reasonably likely to give rise to the imposition
on BCC, any of its Subsidiaries or any of their respective ERISA
Affiliates of fines, penalties, taxes or related charges under Chapter 43
of the Internal Revenue Code or under Section 409, Section 502(c), (i) or
(l), or Section 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for
benefits) against any Employee Benefit Plan other than a Multiemployer
Plan or the assets thereof, or against BCC, any of its Subsidiaries or any
of their respective ERISA Affiliates in connection with any Employee
Benefit Plan; (x) receipt from the Internal Revenue Service of notice of
the failure of any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the
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Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any Pension Plan
to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code; or (xi) the imposition of a Lien pursuant to
Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to
ERISA with respect to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in Section 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Exchange Debenture Indenture" means the indenture pursuant to which
the Exchange Debentures may be issued, as such indenture may be amended
from time to time to the extent permitted under subsection 6.14B.
"Exchange Debentures" means the 15% Exchange Debentures due 2007 of
BCC issuable pursuant to the Exchange Debenture Indenture in exchange for
the Exchangeable Preferred Stock.
"Exchangeable Preferred Certificate of Designation" means the
provisions of BCC's Certificate of Designation, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof relating to the
Exchangeable Preferred Stock, in the form delivered to Arranging Agent,
Administrative Agent and Lenders prior to their execution of this
Agreement and as such provisions may be amended from time to time
thereafter to the extent permitted under subsection 6.14A.
"Exchangeable Preferred Stock" means the 15% Exchangeable Redeemable
Senior Preferred Stock due 2007 of BCC, par value $0.01 per share, with a
liquidation preference of $100 per share and with the other terms set
forth in the Exchangeable Preferred Certificate of Designation.
"Existing Company Pledge Agreement" means that certain Company
Pledge and Security Agreement by and between Company and The Bank of New
York, a New York banking corporation, as agent for and representative of
the trustee under the Existing Senior Note Indenture, the holders of the
Existing Senior Notes and the holders of Permitted Pari Passu Debt (as
defined therein), dated as of March 10, 1995, as amended from time to time
to the extent permitted under subsection 6.14B.
"Existing LLC Pledge Agreement" means that certain LLC Pledge
Agreement by and between Benedek and The Bank of New York, a New York
banking corporation, as agent for and representative of the trustee under
the Existing Senior Note Indenture,
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the holders of the Existing Senior Notes and the holders of Permitted Pari
Passu Debt (as defined therein), dated as of March 10, 1995, as amended
from time to time to the extent permitted under subsection 6.14B, which
shall be terminated upon the consummation of the Reorganization.
"Existing Pledge Agreement" means, collectively, the Existing
Company Pledge Agreement and the Existing LLC Pledge Agreement prior to
the Reorganization, and upon consummation of the Reorganization, the
Existing Company Pledge Agreement.
"Existing Senior Note Indenture" means that certain Indenture by and
among Company, as issuer, License Sub, as guarantor, and The Bank of New
York, a New York banking corporation, as trustee, dated as of March 1,
1995, pursuant to which the Existing Senior Notes were issued, as amended
from time to time to the extent permitted under subsection 6.14B.
"Existing Senior Notes" means Company's $135,000,000 in initial
aggregate principal amount of 11-7/8% Senior Secured Notes due 2005 issued
pursuant to the Existing Senior Note Indenture.
"Facilities" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now, hereafter
or heretofore owned, leased, operated or used by BCC or any of its
Subsidiaries or any of their respective predecessors or Affiliates.
"FCC" means the Federal Communications Commission and any successor
or substitute governmental commission, agency, department, board or
authority performing functions similar to those performed by the Federal
Communications Commission on the date hereof.
"FCC Consents" means (i) the Brissette FCC Consent, (ii) the
Stauffer FCC Consent, and (iii) with respect to any television broadcast
station acquired by Company after the Closing Date, the initial written
action or actions of the FCC approving the transfer or assignment of the
FCC Licenses used in connection with the ownership and operation of such
station from the holder thereof immediately prior to giving effect to such
acquisition to License Sub, in form and in substance reasonably
satisfactory to Administrative Agent, Arranging Agent and Requisite
Lenders.
"FCC Licenses" means all licenses, authorizations, waivers and
permits required under the Communications Act or from any Communications
Regulatory Authority.
"FCC Regulations" means all rules, regulations, written policies,
orders and decisions of the FCC under the Communications Act.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted
average of the rates on
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overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
such day on such transactions received by Administrative Agent from three
Federal funds brokers of recognized standing selected by Administrative
Agent.
"Final Order" means a written order, consent or other action of the
FCC (i) which shall not have been reversed, stayed, enjoined, set aside,
annulled or suspended and (ii) in respect of which either (a) the time for
filing a request for administrative or judicial relief, or for instituting
administrative review thereof sua sponte, shall have expired without any
such filing having been made or notice of such review having been issued,
or (b) any filing of a request for administrative or judicial relief, or
administrative review thereof sua sponte, shall have been disposed of
favorably with respect to confirmation of such order or action or the
grant of such consent and the time for seeking further relief with respect
thereto shall have expired without any request for such further relief
having been filed.
"Financial Plan" has the meaning assigned to that term in subsection
5.1(xiv).
"First Priority" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i)
such Lien has priority over any other Lien on such Collateral (other than
Liens permitted pursuant to subsection 6.2A(iii) and (ii) such Lien is the
only Lien (other than Permitted Encumbrances and Liens permitted pursuant
to subsection 6.2) to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of BCC and its Subsidiaries
ending on December 31 of each calendar year.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of
(i) (a) Consolidated Adjusted EBITDA less (b) Consolidated Capital
Expenditures less (c) taxes actually paid and payable in cash by BCC and
its Subsidiaries plus (d) the aggregate amount of all rents paid and
payable by BCC and its Subsidiaries under all Operating Leases, in each
case during such period, to (ii) the sum of (a) Consolidated Cash Interest
Expense plus (b) total scheduled principal amortization of all outstanding
Consolidated Total Debt plus (c) Consolidated Rental Payments, in each
case during such period.
"Flood Hazard Property" means a Mortgaged Property located in an
area designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards.
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"Funding and Payment Office" means (i) the office of Administrative
Agent located at 425 Lexington Avenue, New York, New York 10017 or (ii)
such other office of Administrative Agent as may from time to time
hereafter be designated as such in a written notice delivered by
Administrative Agent to Company and each Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a significant
segment of the accounting profession, in each case as the same are
applicable to the circumstances as of the date of determination.
"GE Capital" means General Electric Capital Corporation, a New York
corporation.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from
any federal, state or local governmental authority, agency or court.
"Guaranties" means the BCC Guaranty and the License Sub Guaranty.
"Hazardous Materials" means (i) any chemical, material or substance
at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", "acutely hazardous waste", "radioactive waste",
"biohazardous waste", "pollutant", "toxic pollutant", "contaminant",
"restricted hazardous waste", "infectious waste", "toxic substances", or
any other term or expression intended to define, list or classify
substances by reason of properties harmful to health, safety or the indoor
or outdoor environment (including harmful properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity,
"TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids,
produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal
resources; (iv) any flammable substances or explosives; (v) any
radioactive materials; (vi) any asbestos-containing materials; (vii) urea
formaldehyde foam insulation; (viii) electrical equipment which contains
any oil or dielectric fluid containing polychlorinated biphenyls; (ix)
pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority or
which may or could pose a hazard to the health and safety of the owners,
occupants or any Persons in the vicinity of any Facility or to the indoor
or outdoor environment.
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"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous
Materials, including the use, manufacture, possession, storage, holding,
presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, construction,
treatment, abatement, removal, remediation, disposal, disposition or
handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.
"Hedge Agreement" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or
currency values, respectively.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to
Capital Leases that is properly classified as a liability on a balance
sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations
for borrowed money, (iv) any obligation owed for all or any part of the
deferred purchase price of property or services (excluding any such
obligations incurred under ERISA), which purchase price is (a) due more
than six months from the date of incurrence of the obligation in respect
thereof or (b) evidenced by a note or similar written instrument, (v) to
the extent not otherwise included above, all liabilities of that Person
with respect to Program Obligations, and (vi) all indebtedness secured by
any Lien on any property or asset owned or held by that Person regardless
of whether the indebtedness secured thereby shall have been assumed by
that Person or is nonrecourse to the credit of that Person. Obligations
under Interest Rate Agreements and Currency Agreements constitute (1) in
the case of Hedge Agreements, Contingent Obligations, and (2) in all other
cases, Investments, and in neither case constitute Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection
9.3.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for
the conduct of the business of BCC and its Subsidiaries as currently
conducted that are material to the condition (financial or otherwise),
business or operations of BCC and its Subsidiaries, taken as a whole.
"Interest Payment Date" means (i) with respect to any Base Rate
Loan, each February 1, May 1, August 1 and November 1 of each year,
commencing on the first such date to occur after the Closing Date, and
(ii) with respect to any Eurodollar Rate Loan, the last day of each
Interest Period applicable to such Loan; provided that in the case of each
Interest Period of six months, "Interest Payment Date" shall also include
the date that is three months after the commencement of such Interest
Period.
"Interest Period" has the meaning assigned to that term in
subsection 2.2B.
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"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement to which BCC or any of its Subsidiaries
is a party.
"Interest Rate Determination Date" means, with respect to any
Interest Period, the second Business Day prior to the first day of such
Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any
successor statute.
"Investment" means (i) any direct or indirect purchase or other
acquisition by BCC or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary
of BCC), (ii) any direct or indirect redemption, retirement, purchase or
other acquisition for value, by any Subsidiary of BCC from any Person
other than BCC or any of its Subsidiaries, of any equity Securities of
such Subsidiary, (iii) any direct or indirect loan, advance (other than
advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by BCC or any of its Subsidiaries to any
other Person, including all indebtedness and accounts receivable from that
other Person that are not current assets or did not arise from sales to
that other Person in the ordinary course of business, or (iv) Interest
Rate Agreements or Currency Agreements not constituting Hedge Agreements.
The amount of any Investment shall be the original cost of such Investment
plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"Key Man Life Insurance Policies" means, collectively, key man life
insurance policies in form and substance satisfactory to Arranging Agent
and Administrative Agent obtained and maintained by Company on the lives
of Benedek and K. James Yager, naming Company as the sole beneficiary and
Administrative Agent as collateral assignee.
"Landlord Consent and Estoppel" means, with respect to any Leasehold
Property, a letter, certificate or other instrument in writing from the
lessor under the related lease, satisfactory in form and substance to
Collateral Agent, pursuant to which such lessor agrees, for the benefit of
Collateral Agent, that without any further consent of such lessor or any
further action on the part of the Loan Party holding such Leasehold
Property, such Leasehold Property may be encumbered pursuant to a Mortgage
and may be assigned to the purchaser at a foreclosure sale or in a
transfer in lieu of such a sale (and to a subsequent third party assignee
if Collateral Agent, any Lender, or an Affiliate
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of either so acquires such Leasehold Property) and to such other matters
relating to such Leasehold Property as Collateral Agent may reasonably
request.
"Leasehold Property" means any leasehold interest of any Loan Party
as lessee under any lease of real property.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their
successors and permitted assigns pursuant to subsection 9.1; provided that
the term "Lenders", when used in the context of a particular Commitment,
shall mean Lenders having that Commitment.
"Leverage Ratio" means the ratio of (i) Consolidated Total Debt as
of the last day of any Fiscal Quarter to (ii) Consolidated Adjusted EBITDA
for the four-Fiscal Quarter period then ended, in each case as set forth
in the most recent Compliance Certificate delivered by Company to
Administrative Agent pursuant to clause (iv) of subsection 5.1 or the
certificate delivered by Company pursuant to subsection 3.1Q.
"License Sub" means, prior to the Reorganization, Benedek
Broadcasting Company, L.L.C., a Delaware limited liability company, and
upon and after the Reorganization, Benedek License Corporation, a Delaware
corporation, and any other Person established solely for the purpose of
holding the FCC Licenses now or hereafter acquired or owned by Company,
which Person shall be a wholly owned Subsidiary of Company.
"License Sub Guaranty" means the License Sub Guaranty executed and
delivered by License Sub on the Closing Date, substantially in the form of
Exhibit XVIII annexed hereto, as such License Sub Guaranty may thereafter
be amended, supplemented or otherwise modified from time to time.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof,
and any agreement to give any security interest) and any option, trust or
other preferential arrangement having the practical effect of any of the
foregoing.
"Liquidated Damages" means additional dividends or interest payable
at the rate of 0.50% per annum on the Senior Subordinated Notes or the
Exchangeable Preferred Stock, as the case may be, as a result of BCC's
failure to comply with the registration rights granted in connection
therewith.
"LMA" means a local marketing arrangement, sale agreement, time
brokerage agreement, management agreement or similar agreement pursuant to
which a Person, subject to customary preemption rights and other
limitations, (i) obtains the right to sell the advertising inventory of a
television broadcast station of which another Person is the licensee, (ii)
obtains the right to exhibit programming and sell advertising time of such
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television broadcast station or (iii) manages the selling operations of
such television broadcast station with respect to advertising inventory of
such station.
"LMA Capital Expenditure" means all expenditures (whether paid in
cash or other consideration or accrued as a liability and including that
portion of Capital Leases which is capitalized on the consolidated balance
sheet of BCC and its Subsidiaries) by Company pursuant to, in connection
with or in respect of an LMA which, in conformity with GAAP, would be
included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of BCC and its
Subsidiaries.
"Loan" or "Loans" means one or more of the AXELs Series A, AXELs
Series B or Revolving Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Guaranties,
the Collateral Documents and any Interest Rate Agreement entered into by
Company with a Lender or an Affiliate of any Lender.
"Loan Party" means each of BCC, Company, License Sub and any of
BCC's other Subsidiaries, if any, from time to time executing a Loan
Document, and "Loan Parties" means all such Persons, collectively.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from
time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets, condition (financial or
otherwise) or prospects of BCC and its Subsidiaries, taken as a whole, or
(ii) the material impairment of the ability of any Loan Party to perform,
or of Administrative Agent, Collateral Agent or Lenders to enforce, the
Loan Documents or the Obligations.
"Material Contract" means any of the Network Affiliation Agreements,
the Employment Agreements with Benedek and K. James Yager, any LMA or
acquisition agreement entered into by Company as permitted hereunder, any
Program Contract pursuant to which Company's aggregate Program Obligations
thereunder are equal to or greater than $500,000 (calculated as the
unamortized amount of such Program Obligations on any date of
determination), and any other contract or other arrangement to which BCC
or any of its Subsidiaries is a party (other than the Loan Documents) for
which breach, nonperformance, cancellation or failure to renew would
reasonably be expected to have a Material Adverse Effect.
"Material Fee Property" means any fee interest in real property
reasonably determined by Administrative Agent to be of material value as
Collateral or of material importance to the operations of BCC or any of
its Subsidiaries.
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"Material Leasehold Property" means a Leasehold Property reasonably
determined by Administrative Agent to be of material value as Collateral
or of material importance to the operations of BCC or any of its
Subsidiaries.
"Mortgage" means (i) a security instrument (whether designated as a
deed of trust or a mortgage or by any similar title) executed and
delivered by any Loan Party, substantially in the form of Exhibit XXI
annexed hereto or in such other form as may be approved by Collateral
Agent in its sole discretion, in each case with such changes thereto as
may be recommended by Collateral Agent's local counsel based on local laws
or customary local mortgage or deed of trust practices, or (ii) at
Collateral Agent's option, in the case of an Additional Mortgaged Property
(as defined in subsection 5.8), an amendment to an existing Mortgage, in
form satisfactory to Collateral Agent, adding such Additional Mortgaged
Property to the Real Property Assets encumbered by such existing Mortgage,
in either case as such security instrument or amendment may be amended,
supplemented or otherwise modified from time to time. "Mortgages" means
all such instruments, including the Closing Date Mortgages (as defined in
subsection 3.1H) and any Additional Mortgages (as defined in subsection
5.8), collectively.
"Mortgaged Property" means a Closing Date Mortgaged Property (as
defined in subsection 3.1H) or an Additional Mortgaged Property (as
defined in subsection 5.8).
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale,
Cash payments (including any Cash received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received) received from such Asset Sale, net of any
bona fide direct costs incurred in connection with such Asset Sale,
including (i) income taxes reasonably estimated to be actually payable
within two years of the date of such Asset Sale as a result of any gain
recognized in connection with such Asset Sale and (ii) payment of the
outstanding principal amount of, premium or penalty, if any, and interest
on any Indebtedness (other than the Loans) that is secured by a Lien on
the stock or assets in question and that is required to be repaid under
the terms thereof as a result of such Asset Sale.
"Net Insurance/Condemnation Proceeds" means any Cash payments or
proceeds received by BCC or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of BCC or any
of its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net
of any actual and reasonable documented costs incurred by BCC or any of
its Subsidiaries in connection with the adjustment or settlement of any
claims of BCC or such Subsidiary in respect thereof.
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"Net Life Insurance Proceeds" means any Cash payments or proceeds
received by BCC or any of its Subsidiaries, or by Collateral Agent as
collateral assignee, under any Key Man Life Insurance Policy.
"Network" means one or more of National Broadcasting Company
Incorporated, American Broadcasting Company, CBS, Inc. or Fox Broadcasting
Company, as the context requires.
"Network Affiliation" means a relationship under a Network
Affiliation Agreement in full force and effect between a Network and the
applicable Station or between a Network and Company in respect of the
applicable Station.
"Network Affiliation Agreements" means, collectively, the
Affiliation Agreements between Company or any Station, as the case may be,
and any of the Networks, as any such agreement may be amended,
supplemented or otherwise modified from time to time, and including any
replacement agreement.
"Nielsen" means A.C. Nielsen Company.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness (i) as to which neither BCC nor its Subsidiaries (a) provide
credit support (including any undertaking, agreement or instrument which
would constitute Indebtedness), (b) is directly or indirectly liable or
(c) constitute the lender and (ii) no default with respect to which would
permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of BCC or its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.
"Notes" means one or more of the AXEL Series A Notes, AXEL Series B
Notes or Revolving Notes or any combination thereof.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent
pursuant to subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to
Administrative Agent pursuant to subsection 2.2D with respect to a
proposed conversion or continuation of the applicable basis for
determining the interest rate with respect to the Loans specified therein.
"Obligations" means all obligations of every nature of each Loan
Party from time to time owed to Agents, Lenders or their respective
Affiliates or any of them under the Loan Documents, whether for principal,
interest, fees, expenses, indemnification or otherwise.
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"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or its president or one of its vice presidents and
by its chief financial officer or its treasurer; provided that every
Officers' Certificate with respect to the compliance with a condition
precedent to the making of any Loans hereunder shall include (i) a
statement that the officer or officers making or giving such Officers'
Certificate have read such condition and any definitions or other
provisions contained in this Agreement relating thereto, (ii) a statement
that, in the opinion of the signers, they have made or have caused to be
made such examination or investigation as is necessary to enable them to
express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"Operating Lease" means, as applied to any Person, any lease
(including leases that may be terminated by the lessee at any time) of any
property (whether real, personal or mixed) that is not a Capital Lease
other than any such lease under which that Person is the lessor.
"Ownership Reports" means, with respect to any Station, the reports
and certifications filed with the FCC pursuant to 47 C.F.R. 'SS' 73.3615,
or any comparable reports filed pursuant to any successor regulation
thereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal
Revenue Code or Section 302 of ERISA.
"Permitted Acquisition" means an acquisition, whether through the
purchase of the assets thereof or of the stock or other equity interests
of an entity owning such assets and whether pursuant to the exercise of a
purchase option under a Permitted LMA or otherwise, by Company or a
Special Purpose Subsidiary of a Television Station Asset Group, within a
market in which Company owns and operates a Station or Stations as of the
date hereof; provided, however, that to the extent such acquisition is
made through the acquisition of stock or other equity interests of any
Person, such Person shall, immediately following the consummation of such
acquisition, be merged with and into Company, with Company being the
surviving corporation in such merger.
"Permitted Encumbrances" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n)
of the Internal Revenue Code or by ERISA and any such Lien relating to or
imposed in connection with any Environmental Claim):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by
subsection 5.3;
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(ii) statutory Liens of landlords, statutory Liens of banks
and rights of set-off, statutory Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens
imposed by law, in each case incurred in the ordinary course of
business (a) for amounts not yet overdue or (b) for amounts that are
overdue and that (in the case of any such amounts overdue for a
period in excess of 10 days) are being contested in good faith by
appropriate proceedings, so long as (1) such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall
have been made for any such contested amounts, and (2) in the case
of a Lien with respect to any portion of the Collateral, such
contest proceedings conclusively operate to stay the sale of any
portion of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money), so
long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account
thereof;
(iv) any attachment or judgment Lien not constituting an Event
of Default under subsection 7.8;
(v) leases or subleases granted to third parties permitted
hereunder and not interfering in any material respect with the
ordinary conduct of the business of Company or any of its
Subsidiaries or resulting in a material diminution in the value of
any Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments,
and other minor defects or irregularities in title, in each case
which do not and will not interfere in any material respect with the
ordinary conduct of the business of Company or any of its
Subsidiaries or result in a material diminution in the value of any
Collateral as security for the Obligations and any exceptions to
title expressly set forth in the Closing Date Mortgage Policies or
any Additional Mortgage Policy;
(vii) any (a) interest or title of a lessor or sublessor under
any lease permitted hereunder, (b) restriction or encumbrance that
the interest or title of such lessor or sublessor may be subject to,
or (c) subordination of the interest of the lessee or sublessee
under such lease to any restriction or encumbrance referred to in
the preceding clause (b), so long as the holder of such restriction
or encumbrance agrees to recognize the rights of such lessee or
sublessee under such lease; and
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(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement.
"Permitted LMA" means an LMA entered into by Company or a Special
Purpose Subsidiary with an unaffiliated Person with respect to a
television broadcast station (i) which, immediately prior to the time the
LMA is entered into, is not owned or operated by Company or any of its
Affiliates and (ii) which is located in a market in which Company owns and
operates a Station or Stations as of the date hereof.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments (whether federal, state or local, domestic or foreign, and
including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.
"Pledged Collateral" means, collectively, the "Pledged Collateral"
as defined in the BCC Pledge Agreement and the Existing Company Pledge
Agreement.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Pricing Reduction" means, if at any time after the first
anniversary of the Closing Date, as of the end of any Fiscal Quarter, the
Leverage Ratio is equal to or less than 5.75:1.00, a pricing reduction
equal to .25%. The Pricing Reduction shall be determined by reference to
the Leverage Ratio set forth in the most recent financial statements
delivered by Company to Administrative Agent and Lenders pursuant to
clauses (ii) or (iii) of subsection 5.1 (accompanied by a Compliance
Certificate delivered by Company pursuant to clause (iv) of subsection
5.1). Any changes in the Pricing Reduction shall become effective on the
day following delivery of the relevant Compliance Certificate to
Administrative Agent and Lenders and shall remain in effect through the
next scheduled date for delivery of a Compliance Certificate.
Notwithstanding anything herein to the contrary, (i) from the Closing Date
to and including the date of the first anniversary of the Closing Date,
the Pricing Reduction shall be zero and (ii) at any time an Event of
Default shall have occurred and be continuing, the Pricing Reduction shall
be zero.
"Pro Forma Capital Expenditures" means, as of any date of
determination, the greater of (i) 90% of Consolidated Capital Expenditures
for the 12-month period ending on such date and (ii) Company's good faith
estimate of Consolidated Capital Expenditures for the 12-month period
succeeding the date of determination.
"Pro Forma Fixed Charge Coverage Ratio" means, as of any date of
determination, with respect to any LMA Capital Expenditures in an
aggregate amount in excess of $1,000,000 or any Permitted Acquisition, the
ratio of (i) (a) the sum of Cash
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and Cash Equivalents on the consolidated balance sheet of BCC and its
Subsidiaries as of last day of the most recently ended Fiscal Quarter plus
Consolidated Adjusted EBITDA for the most recently ended four-Fiscal
Quarter period minus (b) the sum of $2,000,000 plus Pro Forma Capital
Expenditures plus taxes actually paid in cash by BCC and its Subsidiaries
during the most recently ended four-Fiscal Quarter period plus the amount
of the applicable LMA Capital Expenditure or aggregate expenditures to be
made in connection with the applicable Permitted Acquisition to (ii) the
aggregate amount of all regularly scheduled payments of principal and
interest due on all outstanding Consolidated Total Debt (excluding any
purchase money Indebtedness to be incurred in accordance with subsection
6.1(viii), the proceeds of which are to be used to make all or a portion
of the applicable LMA Capital Expenditure) during the 12-month period
succeeding the date of determination.
"Program Contracts" means all contracts for the acquisition of the
right to broadcast films, series and other programming material.
"Program Obligations" means all obligations of the Company under
Program Contracts payable in a form other than barter.
"Program Payments" means, for any period of determination, the
aggregate cash payments actually made or required to be made by or on
behalf of Company and its Subsidiaries during such period with respect to
or on account of Program Obligations.
"Pro Rata Share" means (i) with respect to all payments,
computations and other matters relating to the AXEL Series A Commitment or
the AXEL Series A of any Lender, the percentage obtained by dividing (x)
the AXEL Series A Exposure of that Lender by (y) the aggregate AXEL Series
A Exposure of all Lenders, (ii) with respect to all payments, computations
and other matters relating to the AXEL Series B Commitment or the AXEL
Series B of any Lender, the percentage obtained by dividing (x) the AXEL
Series B Exposure of that Lender by (y) the aggregate AXEL Series B
Exposure of all Lenders, (iii) with respect to all payments, computations
and other matters relating to the Revolving Loan Commitment or the
Revolving Loans of any Lender, the percentage obtained by dividing (x) the
Revolving Loan Exposure of that Lender by (y) the aggregate Revolving Loan
Exposure of all Lenders, and (iv) for all other purposes with respect to
each Lender, the percentage obtained by dividing (x) the sum of the AXEL
Series A Exposure of that Lender plus the AXEL Series B Exposure of that
Lender plus the Revolving Loan Exposure of that Lender by (y) the sum of
the aggregate AXEL Series A Exposure of all Lenders plus the aggregate
AXEL Series B Exposure of all Lenders plus the aggregate Revolving Loan
Exposure of all Lenders, in any such case as the applicable percentage may
be adjusted by assignments permitted pursuant to subsection 9.1. The
initial Pro Rata Share of each Lender for purposes of each of clauses (i),
(ii), (iii) and (iv) of the preceding sentence is set forth opposite the
name of that Lender in Schedule 2.1 annexed hereto.
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"Recorded Leasehold Interest" means a Leasehold Property with
respect to which a Record Document (as hereinafter defined) has been
recorded in all places necessary or desirable, in Collateral Agent's
reasonable judgment, to give constructive notice of such Leasehold
Property to third-party purchasers and encumbrancers of the affected real
property. For purposes of this definition, the term "Record Document"
means, with respect to any Leasehold Property, (a) the lease evidencing
such Leasehold Property or a memorandum thereof, executed and acknowledged
by the owner of the affected real property, as lessor, or (b) if such
Leasehold Property was acquired or subleased from the holder of a Recorded
Leasehold Interest, the applicable assignment or sublease document,
executed and acknowledged by such holder, in each case in form sufficient
to give such constructive notice upon recordation and otherwise in form
reasonably satisfactory to Collateral Agent.
"Real Property Asset" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
"Reference Lender" means Canadian Imperial Bank of Commerce.
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Related Agreements" means, collectively, the Brissette Acquisition
Agreement, the Stauffer Acquisition Agreement, the Exchangeable Preferred
Certificate of Designation, the Seller Preferred Certificate of
Designation, the Existing Senior Note Indenture, the Senior Subordinated
Note Indenture, the Warrant Agreement, the Exchange Debentures and the
Exchange Debenture Indenture.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or
outdoor environment (including the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous
Materials), including the movement of any Hazardous Materials through the
air, soil, surface water or groundwater.
"Reorganization" means, collectively, (i) the merger of Brissette
and all of its Subsidiaries with and into Company, with Company being the
surviving corporation, such that all of the operating assets of the
Brissette Stations will be owned directly by Company, and (ii) the merger
of Benedek Broadcasting Company, L.L.C., a Delaware limited liability
company, with and into Benedek License Corporation, a Delaware corporation
and a wholly owned Subsidiary of Company, with Benedek License Corporation
being the surviving corporation.
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"Requisite Lenders" means, except as otherwise provided in
subsection 8.6, (i) Lenders having or holding 51% or more of the aggregate
AXEL Series A Exposure of all Lenders plus the aggregate AXEL Series B
Exposure of all Lenders and (ii) Lenders having or holding 51% or more of
the aggregate Revolving Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of BCC or its Subsidiaries, now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock to the holders of
that class, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of BCC or its Subsidiaries, now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of BCC or its Subsidiaries, now or hereafter
outstanding, and (iv) any payment or prepayment of principal of, premium,
if any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar
payment with respect to, any Subordinated Indebtedness.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(iii), and
"Revolving Loan Commitments" means such commitments of all Lenders in the
aggregate.
"Revolving Loan Commitment Termination Date" means May 1, 2001.
"Revolving Loan Exposure" means, with respect to any Lender as of
any date of determination (i) prior to the termination of the Revolving
Loan Commitments, that Lender's Revolving Loan Commitment and (ii) after
the termination of the Revolving Loan Commitments, the aggregate
outstanding principal amount of the Revolving Loans of that Lender.
"Revolving Loans" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(iii).
"Revolving Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(iii) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of
subsection 9.1B(i) in connection with assignments of the Revolving Loan
Commitments and Revolving Loans of any Lenders, in each case substantially
in the form of Exhibit V annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
"Satellite Stations" means, collectively, the following television
broadcast stations: KGWL-TV licensed to serve Lander, Wyoming; KGWR-TV
licensed to serve Rock Springs, Wyoming; KSTF(TV) licensed to serve
Scottsbluff, Nebraska; and KTVS(TV) licensed to serve Sterling, Colorado.
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"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates
for the purchase or acquisition of, or any right to subscribe to, purchase
or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Seller Preferred Certificate of Designation" means the provisions
of BCC's Certificate of Designation, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof relating to the
Seller Preferred Stock, in the form delivered to Arranging Agent,
Administrative Agent and Lenders prior to their execution of this
Agreement and as such provisions may be amended from time to time
thereafter to the extent permitted under subsection 6.14A.
"Seller Preferred Stock" means the preferred stock of BCC issued to
GE Capital with the terms set forth in the Seller Preferred Certificate of
Designation.
"Senior Note Trustee" means The Bank of New York, a New York banking
corporation, in its capacity as trustee under the Existing Senior Note
Indenture and as agent for and representative of the holders of the
Existing Senior Notes, and any successor trustee appointed in accordance
with the Existing Senior Note Indenture.
"Senior Subordinated Note Indenture" means the indenture pursuant to
which the Senior Subordinated Notes are issued, in the form delivered to
Arranging Agent, Administrative Agent and Lenders prior to their execution
of this Agreement and as such indenture may be amended from time to time
to the extent permitted under subsection 6.14B.
"Senior Subordinated Notes" means $90,178,000 in aggregate principal
amount of the 13.25% Senior Subordinated Discount Notes due 2006 of BCC
issued pursuant to the Senior Subordinated Note Indenture.
"Solvent" means, with respect to any Person, that as of the date of
determination both (i)(a) the then fair saleable value of the property of
such Person is (1) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (2) not less than the amount
that will be required to pay the probable liabilities on such Person's
then existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to
such Person; (b) such Person's capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction;
and (c) such Person does not intend to incur, or believe (nor
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should it reasonably believe) that it will incur, debts beyond its ability
to pay such debts as they become due; and (ii) such Person is "solvent"
within the meaning given that term and similar terms under applicable laws
relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Special Purpose Subsidiary" means a direct Subsidiary of BCC or of
Company (i) which has not acquired any assets (other than Cash to the
extent permitted under subsection 6.3(x)) directly from BCC or any of its
Subsidiaries, (ii) no more than 90% of the capital stock or other equity
interests of which are owned by BCC, Company and any of their Affiliates
(unless such Subsidiary is party to a Permitted LMA or has made a
Permitted Acquisition in accordance with subsection 6.7(ix) in which case
such Subsidiary may be 100% owned by BCC or Company), (iii) the capital
stock or other equity interests of which, to the extent owned by BCC,
Company or any of their Affiliates, is subject to a First Priority Lien of
Collateral Agent for the benefit of Lenders, and (iv) which, except as
otherwise provided in subsection 6.7(ix), has no Indebtedness other than
Non-Recourse Indebtedness.
"Stations" means, collectively, (i) each of the television broadcast
stations owned and operated by Company and its Subsidiaries on the Closing
Date as set forth in Schedule 4.1E annexed hereto, including the Brissette
Stations and the Stauffer Stations, and (ii) any television broadcast
station acquired after the Closing Date by Company or any of its
Subsidiaries.
"Stauffer" means Stauffer Communications, Inc., a Delaware
corporation.
"Stauffer Acquisition" means the transactions contemplated by the
Stauffer Acquisition Agreement, including the Stauffer License Transfer.
"Stauffer Acquisition Agreement" means that certain Assets Purchase
and Sale Agreement dated November 22, 1995, by and among Stauffer, Morris
Communications Corporation, a Georgia corporation, and Benedek Acquisition
Corporation, a Delaware corporation, as amended by that certain letter
agreement dated March 28, 1996 by and among Stauffer, Morris
Communications Corporation and Company, in the form delivered to Arranging
Agent, Administrative Agent and Lenders prior to their execution of this
Agreement and as such agreement may be amended from time to time
thereafter to the extent permitted under subsection 6.14A.
"Stauffer FCC Consent" means the initial written action or actions
of the FCC approving the Stauffer License Transfer.
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"Stauffer License Transfer" means the transfer (whether directly or
through Company) to License Sub of the FCC Licenses used in connection
with the ownership and operation of the Stauffer Stations.
"Stauffer Stations" means, collectively, the following television
broadcast stations: WIBW-TV licensed to serve Topeka, Kansas; KCOY-TV
licensed to serve Santa Maria, California; KMIZ(TV) licensed to serve
Columbia-Jefferson City, Missouri; KGWN-TV licensed to serve Cheyenne,
Wyoming; KSTF(TV) licensed to serve Scottsbluff, Nebraska; KTVS(TV)
licensed to serve Sterling, Colorado; KGWC-TV licensed to serve Casper,
Wyoming; KGWR-TV licensed to serve Rock Springs, Wyoming; and KGWL-TV
licensed to serve Lander, Wyoming.
"Subordinated Indebtedness" means (i) the Indebtedness of BCC
evidenced by the Senior Subordinated Notes, (ii) any Indebtedness of BCC
evidenced by the Exchange Debentures and (iii) any Indebtedness of BCC or
its Subsidiaries subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material
terms in form and substance satisfactory to Administrative Agent and
Requisite Lenders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or
other business entity of which more than 50% of the total voting power of
shares of stock or other ownership interests entitled (without regard to
the occurrence of any contingency) to vote in the election of the Person
or Persons (whether directors, managers, trustees or other Persons
performing similar functions) having the power to direct or cause the
direction of the management and policies thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof; provided,
however, that with respect to BCC or Company, references to Subsidiaries
shall not be deemed to include any Special Purpose Subsidiaries except for
purposes of subsections 4.6, 4.7, 4.11, 4.13, 4.18, 5.3, 5.6, 5.7 and 6.2D
and any defined terms used in the foregoing subsections.
"Supermajority Lenders" means (i) Lenders having or holding 75% or
more of the aggregate AXEL Series A Exposure of all Lenders plus the
aggregate AXEL Series B Exposure of all Lenders and (ii) Lenders having or
holding 75% of more of the aggregate Revolving Loan Exposure of all
Lenders.
"Supplemental Collateral Agent" has the meaning assigned to that
term in subsection 8.1D.
"Syndication Agent" has the meaning assigned to that term in the
introduction to this Agreement.
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"Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; provided that "Tax on the overall net
income" of a Person shall be construed as a reference to a tax imposed by
the jurisdiction in which that Person is organized or in which that
Person's principal office (and/or, in the case of a Lender, its lending
office) is located or in which that Person (and/or, in the case of a
Lender, its lending office) is deemed to be doing business on all or part
of the net income, profits or gains (whether worldwide, or only insofar as
such income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that Person (and/or, in the case
of a Lender, its lending office).
"Tax Amounts" with respect to any calendar year means the sum of (i)
an amount equal to the product of (a) the Federal taxable income of
Company for such year as determined in good faith by the Board of
Directors and as certified by a nationally recognized tax accounting firm
and without taking into account the deductibility of state income taxes
for Federal income tax purposes multiplied by (b) the State Tax Percentage
(as defined below) plus (ii) the greater of (1) the product of (w) the
Federal taxable income of Company for such year as determined in good
faith by the Board of Directors and as certified by a nationally
recognized tax accounting firm and taking into account the deductibility
of the amount determined in clause (i) above as a state income tax for
Federal income tax purposes multiplied by (x) the Federal Tax Percentage
(as defined below) and (2) the product of (y) the alternative minimum
taxable income attributable to Company's stockholder(s) by reason of the
income of Company for such year as determined in good faith by the Board
of Directors and as certified by a nationally recognized tax accounting
firm multiplied by (z) the Federal Tax Percentage; provided, however, the
amount as calculated above shall be reduced by the amount of any income
tax benefit attributable to Company which could be realized by Company's
stockholder(s) in the current or a prior taxable year (including tax
losses, alternative minimum tax credits, other tax credits and
carryforwards or carrybacks thereof) to the extent not previously taken
into account. The amount of any such income tax benefit described in the
proviso to the preceding sentence shall be determined in a manner
consistent with the calculation of the Tax Amount for the relevant year.
The term "State Tax Percentage" shall mean the highest applicable
statutory marginal rate of state and local income tax to which an
individual resident of the Relevant Jurisdiction (as defined below) would
be subject in the relevant year of determination as a result of being a
stockholder of a corporation taxable as an S Corporation in such
jurisdiction (as certified to Administrative Agent by a nationally
recognized tax accounting firm). The term "Relevant Jurisdiction" shall
mean the jurisdiction in which, during the relevant taxable year, (i)
Company is doing business for state and local income tax purposes, (ii)
Company derives the first, second, third or fourth highest percentage of
its gross income as calculated for Federal income tax purposes (excluding
therefrom any gain or loss from the sale or other disposition of any
television station then owned by Company) and (iii) Company is taxable as
an S Corporation for state and local income tax purposes that imposes the
highest aggregate marginal rate of state and local income tax on
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individuals (as certified to Administrative Agent by a
nationally recognized tax accounting firm). The term "Federal
Tax Percentage" shall mean the highest applicable statutory marginal
rate of Federal income tax or, in the case of clause (ii)(2) above,
alternative minimum tax, to which an individual resident of the
United States would be subject in the relevant year of
determination (as certified to Administrative Agent by a nationally
recognized tax accounting firm); provided, however, that, for any year in
which Company is not taxable as an S Corporation for Federal income tax
purposes, the Federal Tax Percentage shall be zero. Notwithstanding the
foregoing, the sum of the State Tax Percentage and the Federal Tax
Percentage (the "Total Tax Percentage") shall not exceed the percentage
(the "Maximum Tax Percentage") equal to the lesser of (i) the highest
applicable statutory marginal rate of Federal, state, local income tax or,
when applicable, alternative minimum tax, to which a corporation doing
business in any state in which Company is doing business at the time of
determination would be subject in the relevant year of determination (as
certified to Administrative Agent by a nationally recognized tax
accounting firm) plus 5% and (ii) 55%. If the Total Tax Percentage exceeds
the Maximum Tax Percentage, the Federal Tax Percentage shall be reduced to
the extent necessary to cause the Total Tax Percentage to equal the
Maximum Tax Percentage. Distributions of Tax Amounts may be made from time
to time with respect to a tax year based on reasonable estimates, with
reconciliation within 40 days of the earlier of (i) Company's filing of
the Internal Revenue Service Form 1120S for the applicable taxable year
and (ii) the last date such form is required to be filed. Benedek will
enter into a binding agreement with Company to reimburse Company for
certain positive differences between the distributed amount and the Tax
Amount, which difference must be paid at the time of such reconciliation.
Estimated distributions of Tax Amounts are set forth on Schedule 1.1
annexed hereto.
"TeleRep Bonus Payment" means the signing bonus payment of $700,000
by TeleRep, Inc., the national sales representative firm for the Brissette
Stations, to Brissette, a pro rata portion of which shall be payable to
Company following the consummation of the Brissette Acquisition pursuant
to the Brissette Acquisition Agreement.
"Television Station Asset Group" means any group of assets which
constitute all or substantially all of the assets which would be necessary
to carry on the business of a television broadcast station and which, when
purchased by a single purchaser, would (together with any necessary FCC
Licenses, authorizations, working capital and operating location) be
substantially sufficient to allow such purchaser to carry on such
business.
"Title Company" means, collectively, Stewart Title and/or one or
more other title insurance companies reasonably satisfactory to Arranging
Agent and Collateral Agent.
"Total Utilization of Revolving Loan Commitments" means, as at any
date of determination, the aggregate principal amount of all outstanding
Revolving Loans.
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"Transaction Costs" means the fees, costs and expenses payable by
BCC and its Subsidiaries in connection with (i) the transactions
contemplated by the Loan Documents, (ii) the issuance of the Senior
Subordinated Notes, the Seller Preferred Stock, the Exchangeable Preferred
Stock and the Warrants, and (iii) the Acquisitions.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"Unutilized Compensation Amount" means, as of any date of
determination, (i) the sum of the Compensation Limits for each Fiscal Year
ended after the Closing Date and prior to the date of determination minus
(ii) the sum of (a) the aggregate amount of cash compensation paid or
accrued to Benedek during such Fiscal Years plus (b) the aggregate amount
expended by Company or BCC to repurchase or redeem Warrants prior to the
date of determination.
"Warrants" means the 600,000 initial warrants and 888,000 contingent
warrants issued by BCC pursuant to the Warrant Agreement to the purchasers
of the Exchangeable Preferred Stock.
"Warrant Agreement" means the warrant agreement pursuant to which
the Warrants are issued, in the form delivered to Arranging Agent,
Administrative Agent and Lenders prior to their execution of this
Agreement and as such warrant agreement may be amended from time to time
to the extent permitted under subsection 6.14A.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii), (iii) and (xiv)
of subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 5.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 4.3.
1.3 Other Definitional Provisions and Rules of Construction.
Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
References to "Sections" and "subsections" shall be to Sections and subsections,
respectively, of this Agreement unless otherwise specifically provided. The use
herein of the word "include" or "including", when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as "without limitation" or
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"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to make the Loans described in subsections
2.1A(i), 2.1A(ii) and 2.1A(iii).
(i) AXELs Series A. Each Lender severally agrees to lend to Company
on the Closing Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the AXEL Series A Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's AXEL
Series A Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate amount of the AXEL Series A Commitments is
$70,000,000; provided that the AXEL Series A Commitments of Lenders shall
be adjusted to give effect to any assignments of the AXEL Series A
Commitments pursuant to subsection 9.1B. Each Lender's AXEL Series A
Commitment shall expire immediately and without further action on July 31,
1996 if the AXELs Series A are not made on or before that date. Company
may make only one borrowing under the AXEL Series A Commitments. Amounts
borrowed under this subsection 2.1A(i) and subsequently repaid or prepaid
may not be reborrowed.
(ii) AXELs Series B. Each Lender severally agrees to lend to Company
on the Closing Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the AXEL Series B Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's AXEL
Series B Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate amount of the AXEL Series B Commitments is
$58,000,000; provided that the AXEL Series B Commitments of Lenders shall
be adjusted to give effect to any assignments of the AXEL Series B
Commitments pursuant to subsection 9.1B. Each Lender's AXEL Series B
Commitment shall expire immediately and without further action on July 31,
1996 if the AXELs Series B are not made on or before that date. Company
may make only one borrowing under the AXEL Series B Commitments. Amounts
borrowed under this subsection 2.1A(ii) and subsequently repaid or prepaid
may not be reborrowed.
(iii) Revolving Loans. Each Lender having a Revolving Loan
Commitment severally agrees, subject to the limitations set forth below
with respect to the maximum amount of Revolving Loans permitted to be
outstanding from time to time, to lend to Company from time to time during
the period from the Closing Date to but excluding
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the Revolving Loan Commitment Termination Date an aggregate amount not
exceeding its Pro Rata Share of the aggregate amount of the Revolving Loan
Commitments to be used for the purposes identified in subsection 2.5B. The
original amount of each Lender's Revolving Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate
original amount of the Revolving Loan Commitments is $15,000,000; provided
that the Revolving Loan Commitments of Lenders shall be adjusted to give
effect to any assignments of the Revolving Loan Commitments pursuant to
subsection 9.1B; and provided, further that the amount of the Revolving
Loan Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsections 2.4B(ii) and 2.4B(iii).
Each Lender's Revolving Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Revolving Loans and all other amounts
owed hereunder with respect to the Revolving Loans and the Revolving Loan
Commitments shall be paid in full no later than that date; provided that
each Lender's Revolving Loan Commitment shall expire immediately and
without further action on July 31, 1996 if the AXELs are not made on or
before that date. Amounts borrowed under this subsection 2.1A(iii) may be
repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments
shall be subject to the following limitations in the amounts and during
the periods indicated:
(a) in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the lesser of (1) the Revolving Loan
Commitments then in effect and (2) the Borrowing Base as then in
effect; and
(b) no more than $1,000,000 in Revolving Loans shall be made
on the Closing Date.
B. Borrowing Mechanics. AXELs or Revolving Loans made on any Funding Date
shall be in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount. Whenever Company desires that Lenders make
AXELs it shall deliver to Administrative Agent a Notice of Borrowing no later
than 10:00 A.M. (New York City time) at least three Business Days in advance of
the proposed Funding Date (in the case of a Eurodollar Rate Loan) or at least
one Business Day in advance of the proposed Funding Date (in the case of a Base
Rate Loan). Whenever Company desires that Lenders make Revolving Loans it shall
deliver to Administrative Agent a Notice of Borrowing no later than 10:00 A.M.
(New York City time) at least three Business Days in advance of the proposed
Funding Date (in the case of a Eurodollar Rate Loan) or on the proposed Funding
Date (in the case of a Base Rate Loan). The Notice of Borrowing shall specify
(i) the proposed Funding Date (which shall be a Business Day), (ii) the amount
and type of Loans requested, (iii) in the case of any Loans made on the Closing
Date, that such Loans shall be Base Rate Loans, (iv) in the case of Revolving
Loans, whether such Loans shall be Base Rate Loans or Eurodollar Rate Loans, and
(v) in the case of any Loans requested to be made as Eurodollar Rate Loans, the
initial Interest Period requested therefor. AXELs and Revolving Loans may be
continued as or converted into
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Base Rate Loans and Eurodollar Rate Loans in the manner provided in subsection
2.2D. In lieu of delivering the above-described Notice of Borrowing, Company may
give Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All AXELs and Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender of the proposed
borrowing. Each Lender shall make the amount of its Loan available to
Administrative Agent not later than 12:00 Noon (New York City time) on the
applicable Funding Date, in same day funds in Dollars, at the Funding and
Payment Office. Upon satisfaction or waiver of the conditions precedent
specified in subsections 3.1 (in the case of Loans made on the Closing Date) and
3.2 (in the case of all Loans), Administrative Agent shall make the proceeds of
such Loans available to Company on the applicable Funding Date by causing an
amount of same day funds in Dollars equal to the proceeds of all such Loans
received by Administrative Agent from Lenders to be credited to the account of
Company at such account as Company shall specify in writing to Administrative
Agent.
Unless Administrative Agent shall have been notified by any Lender prior
to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent
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the amount of such Lender's Loan requested on such Funding Date, Administrative
Agent may assume that such Lender has made such amount available to
Administrative Agent on such Funding Date and Administrative Agent may, in its
sole discretion, but shall not be obligated to, make available to Company a
corresponding amount on such Funding Date. If such corresponding amount is not
in fact made available to Administrative Agent by such Lender, Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Funding Date until
the date such amount is paid to Administrative Agent, at the customary rate set
by Administrative Agent for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon Administrative Agent's demand therefor,
Administrative Agent shall promptly notify Company and Company shall immediately
pay such corresponding amount to Administrative Agent together with interest
thereon, for each day from such Funding Date until the date such amount is paid
to Administrative Agent, at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Company may have against any Lender as a result of any default by
such Lender hereunder.
D. The Register.
(i) Administrative Agent shall maintain, at its address referred to
in subsection 9.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "Register"). The Register shall be available for
inspection by Company or any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the AXEL
Series A Commitment, AXEL Series B Commitment and Revolving Loan
Commitment and the AXEL Series A, AXEL Series B and Revolving Loans from
time to time of each Lender, and each repayment or prepayment in respect
of the principal amount of the AXEL Series A, AXEL Series B or Revolving
Loans of each Lender. Any such recordation shall be conclusive and binding
on Company and each Lender, absent manifest error; provided that failure
to make any such recordation, or any error in such recordation, shall not
affect any Lender's Commitments or Company's Obligations in respect of any
applicable Loans.
(iii) Each Lender shall record on its internal records (including
the Notes held by such Lender) the amount of the AXEL Series A, AXEL
Series B and each Revolving Loan made by it and each payment in respect
thereof. Any such recordation shall be conclusive and binding on Company,
absent manifest error; provided that failure to make any such recordation,
or any error in such recordation, shall not affect any Lender's
Commitments or Company's Obligations in respect of any applicable Loans;
and provided, further that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register shall
govern.
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(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in
subsection 9.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof, and any request, authority or
consent of any Person who, at the time of making such request or giving
such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee of
the corresponding Commitments or Loans.
(v) Company hereby designates CIBC-NYA to serve as Company's agent
solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent CIBC-NYA
serves in such capacity, CIBC-NYA and its officers, directors, employees,
agents and affiliates shall constitute Indemnitees for all purposes under
subsection 9.3.
E. Notes. Company shall execute and deliver on the Closing Date to each
Lender (or to Administrative Agent for that Lender) (i) an AXEL Series A Note
substantially in the form of Exhibit III annexed hereto to evidence that
Lender's AXEL Series A, in the principal amount of that Lender's AXEL Series A
and with other appropriate insertions, (ii) an AXEL Series B Note substantially
in the form of Exhibit IV annexed hereto to evidence that Lender's AXEL Series
B, in the principal amount of that Lender's AXEL Series B and with other
appropriate insertions, and (iii) a Revolving Note substantially in the form of
Exhibit V annexed hereto to evidence that Lender's Revolving Loans, in the
principal amount of that Lender's Revolving Loan Commitment and with other
appropriate insertions.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7,
each AXEL and each Revolving Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the Adjusted
Eurodollar Rate. The applicable basis for determining the rate of interest with
respect to any AXEL or any Revolving Loan shall be selected by Company initially
at the time a Notice of Borrowing is given with respect to such Loan pursuant to
subsection 2.1B, and the basis for determining the interest rate with respect to
any AXEL or any Revolving Loan may be changed from time to time pursuant to
subsection 2.2D; provided that Company may not select the Adjusted Eurodollar
Rate until the earlier of (i) the date the Arranging Agent advises Company that
the AXELs have been fully syndicated and (ii) the date which is two weeks after
the Closing Date. If on any day an AXEL or Revolving Loan is outstanding with
respect to which notice has not been delivered to Administrative Agent in
accordance with the terms of this Agreement specifying the applicable
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basis for determining the rate of interest, then for that day that Loan shall
bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the AXELs Series
A, AXEL Series B and the Revolving Loans shall bear interest through maturity as
follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Margin in effect from time to time; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Margin in effect from time to time
during the applicable Interest Period.
B. Interest Periods. In connection with each Eurodollar Rate Loan, Company
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a
Loan initially made as a Eurodollar Rate Loan, or on the date specified in
the applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on the
last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the AXELs
Series A shall extend beyond May 1, 2001, no Interest Period with respect
to any portion of the AXELs Series B shall extend beyond November 1, 2002,
and no Interest Period with respect to any portion of the Revolving Loans
shall extend beyond the Revolving Loan Commitment Termination Date;
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(vi) no Interest Period with respect to any portion of the AXELs
Series A or AXELs Series B shall extend beyond a date on which Company is
required to make a scheduled payment of principal of the AXELs Series A or
AXELs Series B, as the case may be, unless the sum of (a) the aggregate
principal amount of AXELs Series A or AXELs Series B, as the case may be,
that are Base Rate Loans plus (b) the aggregate principal amount of AXELs
Series A or AXELs Series B, as the case may be, that are Eurodollar Rate
Loans with Interest Periods expiring on or before such date equals or
exceeds the principal amount required to be paid on the AXELs Series A or
AXELs Series B, as the case may be, on such date;
(vii) there shall be no more than seven Interest Periods outstanding
at any time; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice
of Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Revolving Loans that are Base Rate
Loans are prepaid pursuant to subsection 2.4B(i), interest accrued on such
Revolving Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding AXELs Series A, AXELs Series B or Revolving Loans equal to
$1,000,000 and integral multiples of $500,000 in excess of that amount from
Loans bearing interest at a rate determined by reference to one basis to Loans
bearing interest at a rate determined by reference to an alternative basis or
(ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate
Loan, to continue all or any portion of such Loan equal to $1,000,000 and
integral multiples of $500,000 in excess of that amount as a Eurodollar Rate
Loan; provided, however, that a Eurodollar Rate Loan may only be converted into
a Base Rate Loan on the expiration date of an Interest Period applicable
thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion
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to, or a continuation of, a Eurodollar Rate Loan, that no Potential Event of
Default or Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of Conversion/Continuation, Company may
give Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date. Upon receipt of written or telephonic notice of
any proposed conversion/continuation under this subsection 2.2D, Administrative
Agent shall promptly transmit such notice by telefacsimile or telephone to each
Lender.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed on the
basis of a 360-day year, for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted
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from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate
Loan, as the case may be, shall be excluded; provided that if a Loan is repaid
on the same day on which it is made, one day's interest shall be paid on that
Loan.
2.3 Fees.
A. Commitment Fees. Company agrees to pay to Administrative Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share of the
Revolving Loan Commitments, commitment fees for the period from and including
the Closing Date to and excluding the Revolving Loan Commitment Termination Date
equal to the average of the daily excess of the Revolving Loan Commitments over
the aggregate principal amount of outstanding Revolving Loans, multiplied by 1/2
of 1% per annum, such commitment fees to be calculated on the basis of a 360-day
year and the actual number of days elapsed and to be payable quarterly in
arrears on February 1, May 1, August 1 and November 1 of each year, commencing
on the first such date to occur after the Closing Date, and on the Revolving
Loan Commitment Termination Date.
B. Other Fees. Company agrees to pay to Arranging Agent and Administrative
Agent such other fees in the amounts and at the times separately agreed upon
between Company, Arranging Agent and Administrative Agent.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of Collateral
and Payments Under Guaranties.
A. Scheduled Payments of AXELs.
(i) Scheduled Payments of AXELs Series A. Company shall make
principal payments on the AXELs Series A in installments on the dates and
in the amounts set forth below:
====================================================
(A) (B)
Scheduled
Payment Repayment of
Date AXELs Series A
====================================================
11/01/96 $2,500,000
----------------------------------------------------
05/01/97 $2,500,000
----------------------------------------------------
08/01/97 $2,500,000
----------------------------------------------------
11/01/97 $2,500,000
----------------------------------------------------
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====================================================
(A) (B)
Scheduled
Payment Repayment of
Date AXELs Series A
====================================================
----------------------------------------------------
02/01/98 $2,500,000
----------------------------------------------------
05/01/98 $2,500,000
----------------------------------------------------
08/01/98 $3,375,000
----------------------------------------------------
11/01/98 $3,375,000
----------------------------------------------------
02/01/99 $3,375,000
----------------------------------------------------
05/01/99 $3,375,000
----------------------------------------------------
08/01/99 $3,750,000
----------------------------------------------------
11/01/99 $3,750,000
----------------------------------------------------
02/01/00 $3,750,000
----------------------------------------------------
05/01/00 $3,750,000
----------------------------------------------------
08/01/00 $6,625,000
----------------------------------------------------
11/01/00 $6,625,000
----------------------------------------------------
02/01/01 $6,625,000
----------------------------------------------------
05/01/01 $6,625,000
----------------------------------------------------
TOTAL $70,000,000
====================================================
; provided that the scheduled installments of principal of the AXELs
Series A set forth above shall be reduced in connection with any voluntary
or mandatory prepayments of the AXELs Series A in accordance with
subsection 2.4B(iv); and provided, further that the AXELs Series A and all
other amounts owed hereunder with respect to the AXELs Series A shall be
paid in full no later than May 1, 2001, and the final installment payable
by Company in respect of the AXELs Series A on such date shall be in an
amount, if such amount is different from that specified above, sufficient
to repay all amounts owing by Company under this Agreement with respect to
the AXELs Series A.
(ii) Scheduled Payments of AXELs Series B. Company shall make
principal payments on the AXELs Series B in installments on the dates and
in the amounts set forth below:
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<PAGE>
==============================================================
(A) (B)
Scheduled
Payment Repayment of
Date AXELs Series B
==============================================================
11/01/96 $500,000
--------------------------------------------------------------
05/01/97 $500,000
--------------------------------------------------------------
08/01/97 $250,000
--------------------------------------------------------------
11/01/97 $250,000
--------------------------------------------------------------
02/01/98 $250,000
--------------------------------------------------------------
05/01/98 $250,000
--------------------------------------------------------------
08/01/98 $250,000
--------------------------------------------------------------
11/01/98 $250,000
--------------------------------------------------------------
02/01/99 $250,000
--------------------------------------------------------------
05/01/99 $250,000
--------------------------------------------------------------
08/01/99 $250,000
--------------------------------------------------------------
11/01/99 $250,000
--------------------------------------------------------------
02/01/00 $250,000
--------------------------------------------------------------
05/01/00 $250,000
--------------------------------------------------------------
08/01/00 $250,000
--------------------------------------------------------------
11/01/00 $250,000
--------------------------------------------------------------
02/01/01 $250,000
--------------------------------------------------------------
05/01/01 $250,000
--------------------------------------------------------------
08/01/01 $3,750,000
--------------------------------------------------------------
11/01/01 $3,750,000
--------------------------------------------------------------
02/01/02 $3,750,000
--------------------------------------------------------------
05/01/02 $3,750,000
--------------------------------------------------------------
08/01/02 $19,000,000
--------------------------------------------------------------
11/01/02 $19,000,000
--------------------------------------------------------------
TOTAL $58,000,000
==============================================================
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; provided that the scheduled installments of principal of the AXELs
Series B set forth above shall be reduced in connection with any voluntary
or mandatory prepayments of the AXELs Series B in accordance with
subsection 2.4B(iv); and provided, further that the AXELs Series B and all
other amounts owed hereunder with respect to the AXELs Series B shall be
paid in full no later than November 1, 2002, and the final installment
payable by Company in respect of the AXELs Series B on such date shall be
in an amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by Company under this Agreement with
respect to the AXELs Series B.
B. Prepayments and Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments.
(a) Company may, upon not less than one Business Day's prior
written or telephonic notice, in the case of Base Rate Loans, and
three Business Days' prior written or telephonic notice, in the case
of Eurodollar Rate Loans, in each case given to Administrative Agent
by 12:00 Noon (New York City time) on the date required and, if
given by telephone, promptly confirmed in writing to Administrative
Agent (which original written or telephonic notice Administrative
Agent will promptly transmit by telefacsimile or telephone to each
Lender), at any time and from time to time prepay any AXELs Series
A, AXELs Series B or Revolving Loans on any Business Day in whole or
in part in an aggregate minimum amount of $1,000,000 and integral
multiples of $500,000 in excess of that amount. Notice of prepayment
having been given as aforesaid, the principal amount of the Loans
specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment
shall be applied as specified in subsection 2.4B(iv).
(b) Prepayment Fees. If any portion of the AXELs Series A or
AXELs Series B is prepaid (1) pursuant to clause (a) of subsection
2.4B(i), (2) pursuant to clause (d) or (g) of subsection 2.4B(iii),
or (3) from Net Asset Sale Proceeds (excluding the proceeds of any
Asset Sale required by order or other action of the FCC) in an
aggregate amount in excess of $25,000,000 pursuant to clause (a) of
subsection 2.4B(iii), (4) pursuant to an acceleration upon the
occurrence of an Event of Default under subsection 7.13, in each
case on or prior to the second anniversary of the Closing Date,
Company shall pay to Administrative Agent, for distribution to the
holders of the AXELs so prepaid in accordance with their Pro Rata
Shares, a fee equal to (x) 2% of the principal amount of AXELs so
prepaid during the period commencing on the Closing Date and ending
on the day prior to the first anniversary of the Closing Date and
(y) 1% of the principal amount of AXELs so prepaid during the period
commencing on the first anniversary of the Closing Date and ending
on the second anniversary of the Closing Date.
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(ii) Voluntary Reductions of Revolving Loan Commitments. Company
may, upon not less than three Business Days' prior written or telephonic
notice confirmed in writing to Administrative Agent (which original
written or telephonic notice Administrative Agent will promptly transmit
by telefacsimile or telephone to each Lender), at any time and from time
to time terminate in whole or permanently reduce in part, without premium
or penalty, the Revolving Loan Commitments in an amount up to the amount
by which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount. Company's notice
to Administrative Agent shall designate the date (which shall be a
Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving Loan
Commitments shall be effective on the date specified in Company's notice
and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share of the Revolving Loan Commitments.
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving
Loan Commitments. The Loans shall be prepaid and/or the Revolving Loan
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments to be applied as set
forth below or as more specifically provided in subsection 2.4B(iv):
(a) Prepayments and Reductions From Net Asset Sale Proceeds.
No later than the first Business Day following the date of receipt
by BCC or any of its Subsidiaries of any Net Asset Sale Proceeds in
respect of any Asset Sale, Company shall prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to such Net Asset Sale Proceeds.
Notwithstanding the foregoing, Company shall not be required to make
a prepayment pursuant to this subsection 2.4B(iii)(a) (1) if the
aggregate Net Asset Sale Proceeds received (x) upon any single Asset
Sale or series of related Asset Sales are less than $2,000,000 and
(y) are less than $5,000,000 in the aggregate for all Asset Sales
(excluding for purposes of calculating such $5,000,000 aggregate
amount any single Asset Sale or series of related Asset Sales for
which the Net Asset Sale Proceeds received are less than $250,000)
or (2) if the Net Asset Sale Proceeds are reinvested in assets of
substantially equivalent value within 60 days of receipt thereof,
which assets are pledged on a First Priority basis to the Collateral
Agent for the benefit of the secured parties under the Collateral
Documents in accordance with the terms thereof; provided, however,
that the total Net Asset Sale Proceeds which may be so reinvested,
together with the aggregate amount of Net Asset Sale Proceeds not
applied to mandatory prepayments pursuant clause (1) of this
subsection 2.4B(iii)(a), shall not exceed $10,000,000.
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(b) Prepayments and Reductions from Net Insurance/Condemnation
Proceeds. No later than the second Business Day following the date
of receipt by Administrative Agent or by BCC or any of its
Subsidiaries of any Net Insurance/Condemnation Proceeds that are
required to be applied to prepay the Loans and/or reduce the
Revolving Loan Commitments pursuant to the provisions of subsection
5.4C, Company shall prepay the Loans and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount
equal to the amount of such Net Insurance/Condemnation Proceeds.
(c) Prepayments and Reductions Due to Reversion of Surplus
Assets of Pension Plans. On the date of return to BCC or any of its
Subsidiaries of any surplus assets of any pension plan of BCC or any
of its Subsidiaries, Company shall prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount (such amount being the "Net Pension Proceeds")
equal to 100% of such returned surplus assets, net of transaction
costs and expenses incurred in obtaining such return, including
incremental taxes payable as a result thereof.
(d) Prepayments and Reductions Due to Issuance of Equity
Securities. No later than the first Business Day following the date
of receipt by Company at any time after the Closing Date of the Cash
proceeds (any such proceeds, net of underwriting discounts and
commissions and other reasonable costs and expenses associated
therewith, including reasonable legal fees and expenses, being "Net
Securities Proceeds") from the issuance of any equity Securities of
Company, Company shall prepay the Loans and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount
equal to such Net Securities Proceeds.
(e) Prepayments and Reductions from Consolidated Excess Cash
Flow. In the event that there shall be Consolidated Excess Cash Flow
for any Fiscal Year (commencing with Fiscal Year 1996, provided that
Consolidated Excess Cash Flow for Fiscal Year 1996 shall be
calculated with respect to the last two Fiscal Quarters of 1996
only), Company shall, no later than 100 days after the end of such
Fiscal Year, prepay the Loans and/or the Revolving Loan Commitments
shall be permanently reduced in an aggregate amount equal to 50% of
such Consolidated Excess Cash Flow.
(f) Prepayments from Net Life Insurance Proceeds. Upon receipt
by Company or Collateral Agent of any Net Life Insurance Proceeds
that are required to be applied to prepay the Loans and/or reduce
the Revolving Loan Commitments pursuant to the provisions of
subsection 5.4D, Company shall prepay the Loans and/or the Revolving
Loan Commitments shall be permanently reduced in an aggregate amount
equal to the amount of such Net Life Insurance Proceeds.
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<PAGE>
<PAGE>
(g) Prepayments Upon Receipt of Capital Contributions from
BCC. Upon receipt by Company at any time after the Closing Date of
any capital contribution from BCC of the Cash proceeds (any such
proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including
reasonable legal fees and expenses, being "Net Contribution
Proceeds") from the issuance of any equity or debt Securities of BCC
(other than equity Securities issued upon the exercise of stock
options (1) by directors, officers, employees or independent
contractors of BCC or any of its Subsidiaries other than Benedek or
(2) by Benedek to the extent such proceeds do not exceed
$2,000,000), Company shall prepay the Loans and/or the Revolving
Loan Commitments shall be permanently reduced in an aggregate amount
equal to such Net Contribution Proceeds.
(h) Calculations of Net Proceeds Amounts; Additional
Prepayments and Reductions Based on Subsequent Calculations.
Concurrently with any prepayment of the Loans and/or reduction of
the Revolving Loan Commitments pursuant to subsections
2.4B(iii)(a)-(g), Company shall deliver to Administrative Agent an
Officers' Certificate demonstrating the calculation of the amount
(the "Net Proceeds Amount") of the applicable Net Asset Sale
Proceeds or Net Insurance/Condemnation Proceeds, Net Life Insurance
Proceeds, Net Pension Proceeds, Net Securities Proceeds or Net
Contribution Proceeds (as such terms are defined in subsections
2.4B(iii)(c), (d) and (g), respectively), or the applicable
Consolidated Excess Cash Flow, as the case may be, that gave rise to
such prepayment and/or reduction. In the event that Company shall
subsequently determine that the actual Net Proceeds Amount was
greater than the amount set forth in such Officers' Certificate,
Company shall promptly make an additional prepayment of the Loans
(and/or, if applicable, the Revolving Loan Commitments shall be
permanently reduced) in an amount equal to the amount of such
excess, and Company shall concurrently therewith deliver to
Administrative Agent an Officers' Certificate demonstrating the
derivation of the additional Net Proceeds Amount resulting in such
excess.
(i) Prepayments Due to Reductions or Restrictions of Revolving
Loan Commitments. Company shall from time to time prepay the
Revolving Loans to the extent necessary so that the Total
Utilization of Revolving Loan Commitments shall not at any time
exceed the lesser of (A) the Revolving Loan Commitments then in
effect and (B) the Borrowing Base as then in effect.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of Loans and
Order of Maturity. Any voluntary prepayments pursuant to subsection
2.4B(i) shall be applied as specified by Company in the applicable
notice of prepayment; provided that in the event Company fails to
specify the Loans to which any such prepayment shall be applied,
such prepayment shall be applied first to repay
52
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<PAGE>
outstanding Revolving Loans to the full extent thereof, and second
to repay outstanding AXELs to the full extent thereof. Any voluntary
prepayments of the AXELs pursuant to subsection 2.4B(i) shall be
applied to prepay the AXELs Series A and the AXELs Series B on a pro
rata basis (in accordance with the respective outstanding principal
amounts thereof) and to reduce the scheduled installments of
principal of the AXELs Series A and AXELs Series B set forth in
subsections 2.4A(i) and 2.4A(ii) on a pro rata basis.
(b) Application of Mandatory Prepayments by Type of Loans. Any
amount (the "Applied Amount") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(g) shall be
applied first to prepay the AXELs to the full extent thereof,
second, to the extent of any remaining portion of the Applied
Amount, to prepay the Revolving Loans to the full extent thereof and
to permanently reduce the Revolving Loan Commitments by the amount
of such prepayment, and third, to the extent of any remaining
portion of the Applied Amount, to further permanently reduce the
Revolving Loan Commitments to the full extent thereof.
Notwithstanding the foregoing, upon the occurrence and during the
continuation of an Event of Default, any Applied Amount shall be
applied to prepay on a pro rata basis the AXELs and the Revolving
Loans and to permanently reduce the Revolving Loan Commitments by
the amount of such prepayment of the Revolving Loans.
(c) Application of Mandatory Prepayments of AXELs to AXELs
Series A and AXELs Series B and the Scheduled Installments of
Principal Thereof. Any mandatory prepayments of the AXELs pursuant
to subsection 2.4B(iii) shall be applied to prepay the AXELs Series
A and the AXELs Series B on a pro rata basis (in accordance with the
respective outstanding principal amounts thereof) and shall be
applied to reduce the scheduled installments of principal of the
AXELs Series A or the AXELs Series B, as the case may be, set forth
in subsection 2.4A(i) or 2.4A(ii), respectively, in inverse order of
maturity.
(d) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Considering AXELs Series A, AXELs Series B
and Revolving Loans being prepaid separately, any prepayment thereof
shall be applied first to Base Rate Loans to the full extent thereof
before application to Eurodollar Rate Loans, in each case in a
manner which minimizes the amount of any payments required to be
made by Company pursuant to subsection 2.6D.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense, setoff
or counterclaim, free of any restriction or condition, and delivered to
Administrative Agent not later than 12:00 Noon
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<PAGE>
(New York City time) on the date due at the Funding and Payment Office for
the account of Lenders; funds received by Administrative Agent after that
time on such due date shall be deemed to have been paid by Company on the
next succeeding Business Day.
(ii) Application of Payments to Principal and Interest. Except as
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is
due and payable with respect to such Loan) shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments in respect of AXELs and Revolving Loans shall be apportioned
among all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all such
payments received by Administrative Agent and the commitment fees of such
Lender when received by Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may
be.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
D. Application of Proceeds of Collateral and Payments Under Guaranties.
(i) Application of Proceeds of Collateral. Except as provided in
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds received by Collateral Agent in respect of any sale
of, collection from, or other
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<PAGE>
realization upon all or any part of the Collateral under any Collateral
Document may, in the discretion of Collateral Agent, be held by Collateral
Agent as Collateral for, and/or (then or at any time thereafter) applied
in full or in part by Collateral Agent against, the applicable Secured
Obligations (as defined in such Collateral Document) in the following
order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation
to Collateral Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by Collateral
Agent in connection therewith, and all amounts for which Collateral
Agent is entitled to indemnification under such Collateral Document
and all advances made by Collateral Agent thereunder for the account
of the applicable Loan Party, and to the payment of all costs and
expenses paid or incurred by Collateral Agent in connection with the
exercise of any right or remedy under such Collateral Document, all
in accordance with the terms of this Agreement and such Collateral
Document;
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments received
by Collateral Agent under either Guaranty shall be applied promptly from
time to time by Collateral Agent in the following order of priority:
(a) To the payment of the costs and expenses of any collection
or other realization under such Guaranty, including reasonable
compensation to Collateral Agent and its agents and counsel, and all
expenses, liabilities and advances made or incurred by Collateral
Agent in connection therewith, all in accordance with the terms of
this Agreement and such Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Guarantied Obligations (as defined in such
Guaranty) for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments, to
the payment to BCC or License Sub or to whosoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction
may direct.
55
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(iii) Ratable Sharing of Proceeds of Collateral and License Sub
Guaranty. Any and all amounts received by Collateral Agent in connection
with the enforcement of any of the Collateral Documents or the License Sub
Guaranty or in connection with a distribution in a bankruptcy, insolvency
or similar proceeding to be applied against any of the Obligations
hereunder shall be shared ratably by all Lenders hereunder in accordance
with their Pro Rata Shares (as determined pursuant to clause (iv) of the
definition of "Pro Rata Share"(provided however, that for purposes of such
calculation, the Revolving Loan Exposure of each Lender shall be
determined in accordance with clause (ii) of the definition thereof
whether or not the Revolving Loan Commitments have terminated),
irrespective of whether the Obligations of all Lenders or only the
Obligations of Lenders having outstanding AXELs are secured by the
Collateral with respect to which such amounts are received or guarantied
by the License Sub Guaranty.
2.5 Use of Proceeds.
A. AXELs. The proceeds of the AXELs shall be applied by Company to pay the
cash component of the purchase price in connection with the Acquisitions.
B. Revolving Loans. The proceeds of any Revolving Loans shall be applied
by Company for working capital purposes.
C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board
or to violate the Exchange Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable after
10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate
56
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<PAGE>
and fair means do not exist for ascertaining the interest rate applicable to
such Loans on the basis provided for in the definition of Adjusted Eurodollar
Rate, Administrative Agent shall on such date give notice (by telefacsimile or
by telephone confirmed in writing) to Company and each Lender of such
determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent notifies Company
and Lenders that the circumstances giving rise to such notice no longer exist
and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by
Company with respect to the Loans in respect of which such determination was
made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the interbank Eurodollar market or the position
of such Lender in that market, then, and in any such event, such Lender shall be
an "Affected Lender" and it shall on that day give notice (by telefacsimile or
by telephone confirmed in writing) to Company and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to each
other Lender). Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until
such notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected
Loans") shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Administrative
Agent of such rescission on the date on which the Affected Lender gives notice
of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
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D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment or other principal payment or
any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any other
default by Company in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Company may not elect to have a Loan be made or maintained as, or converted to,
a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the
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event that any Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by such
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that
are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied,
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collected, withheld or assessed by or within the United States of America
or any political subdivision in or of the United States of America or any
other jurisdiction from or to which a payment is made by or on behalf of
Company or by any federation or organization of which the United States of
America or any such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by Company to Administrative Agent
or any Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as
Company becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability
to pay is imposed on Company) for its own account or (if that
liability is imposed on Administrative Agent or such Lender, as the
case may be) on behalf of and in the name of Administrative Agent or
such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, Administrative Agent or
such Lender, as the case may be, receives on the due date a net sum
equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required
by clause (b) above to pay, Company shall deliver to Administrative
Agent evidence satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof to
the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the signature
pages hereof) or after the date of the Assignment Agreement pursuant to
which such Lender became a Lender (in the case of each other Lender) in
any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such
deduction, withholding or payment from that in effect at the date of this
Agreement or at the date of such Assignment Agreement, as the case may be,
in respect of payments to such Lender.
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(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it
becomes a Lender (in the case of each other Lender), and at such
other times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service
Form 1001 or 4224 (or any successor forms), properly completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or
the regulations issued thereunder to establish that such Lender is
not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and
cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue Service Form
W-8 (or any successor form), properly completed and duly executed by
such Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of interest payable
under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby
agrees, from time to time after the initial delivery by such Lender
of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or
other evidence obsolete or inaccurate in any material respect, that
such Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank Status and
two original copies of Internal Revenue Service Form W-8, as the
case may be, properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required in order to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to payments to such Lender under the Loan Documents
or (2) notify Administrative Agent and Company of its inability to
deliver any such forms, certificates or other evidence.
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(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of clause (a)
or (b)(1) of this subsection 2.7B(iii); provided that if such Lender
shall have satisfied the requirements of subsection 2.7B(iii)(a) on
the Closing Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause (c) of
subsection 2.7B(ii) in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or
order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to
deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding
as described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by the National Association of Insurance Commissioners, any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of the National Association of
Insurance Commissioners, any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans or Commitments or
other obligations hereunder with respect to the Loans to a level below that
which such Lender or such controlling corporation could have achieved but for
such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to time, within
five Business Days after receipt by Company from such Lender of the statement
referred to in the next sentence, Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction. Such Lender shall deliver
to Company (with a copy to Administrative Agent) a written statement, setting
forth in reasonable detail the basis of the calculation of such additional
amounts, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
2.8 Obligation of Lenders to Mitigate.
Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Loans of such Lender becomes aware
of the occurrence of an event or the existence of a condition that would cause
such Lender to become an Affected Lender or that would entitle such Lender to
receive payments under subsection 2.7, it will, to the extent not inconsistent
with the internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
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Commitments of such Lender or the affected Loans of such Lender through another
lending office of such Lender, or (ii) take such other measures as such Lender
may deem reasonable, if as a result thereof the circumstances which would cause
such Lender to be an Affected Lender would cease to exist or the additional
amounts which would otherwise be required to be paid to such Lender pursuant to
subsection 2.7 would be materially reduced and if, as determined by such Lender
in its sole discretion, the making, issuing, funding or maintaining of such
Commitments or Loans through such other lending office or in accordance with
such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or the interests of such Lender;
provided that such Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender as a result of utilizing
such other lending office as described in clause (i) above. A certificate as to
the amount of any such expenses payable by Company pursuant to this subsection
2.8 (setting forth in reasonable detail the basis for requesting such amount)
submitted by such Lender to Company (with a copy to Administrative Agent) shall
be conclusive absent manifest error.
SECTION 3.
CONDITIONS TO LOANS
The obligations of Lenders to make Loans hereunder are subject to the
satisfaction of the following conditions.
3.1 Conditions to AXELs.
The obligations of Lenders to make the AXELs and any Revolving Loans to be
made on the Closing Date are, in addition to the conditions precedent specified
in subsection 3.2, subject to prior or concurrent satisfaction of the following
conditions:
A. Loan Party Documents. On or before the Closing Date, Company shall, and
shall cause each other Loan Party to, deliver to Lenders (or to Administrative
Agent for Lenders with sufficient originally executed copies, where appropriate,
for each Lender and its counsel) the following with respect to Company or such
Loan Party, as the case may be, each, unless otherwise noted, dated the Closing
Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Person, together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation and each other
state in which such Person is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary;
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(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as of
the Closing Date by the corporate secretary or an assistant secretary of
such Person as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person is
a party; and
(vi) Such other documents as Arranging Agent or Administrative Agent
may reasonably request.
B. No Material Adverse Change. Since December 31, 1995, no adverse change,
or development giving rise to a prospective adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity or results
of operations of Company and its Subsidiaries or the Acquired Stations which is,
in the sole opinions of Arranging Agent and Administrative Agent, material shall
have occurred.
C. FCC Consents; FCC Licenses; Compliance with Communications Act; Other
Necessary Governmental Authorizations and Consents; Expiration of Waiting
Periods, Etc.
(i) FCC Consents. The Brissette FCC Consent and the Stauffer FCC
Consent shall have been obtained in form and substance reasonably
satisfactory to Arranging Agent and Administrative Agent and either (a)
such FCC Consents and all other Governmental Authorizations from the FCC
required in connection with the Brissette Acquisition and the Stauffer
Acquisition shall have become Final Orders, or (b) if they shall not have
become Final Orders, neither Arranging Agent nor Administrative Agent
shall have notified Company that it has determined, in its sole
discretion, that there is a reasonable basis for concluding that any such
FCC Consent may not become a Final Order in due course.
(ii) FCC Licenses. Each material FCC License with respect to any of
the Acquired Stations or the other Stations shall be in full force and
effect.
(iii) Compliance with Communications Act. Arranging Agent and
Administrative Agent shall be satisfied that the Acquired Stations and all
other Stations and the Acquisitions and the Reorganization are in
compliance with the Communications Act in all material respects.
(iv) Other Necessary Governmental Authorizations and Consents.
Company shall have obtained all other Governmental Authorizations and all
consents of other Persons, in each case that are necessary or advisable in
connection with the Acquisitions
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and the Reorganization, the other transactions contemplated by the Loan
Documents and the Related Agreements, and the continued operation of the
business conducted by Company, Brissette, Stauffer and their respective
Subsidiaries in substantially the same manner as conducted prior to the
consummation of the Acquisitions and the Reorganization, and each of the
foregoing (including the FCC Licenses) shall be in full force and effect,
in each case other than those the failure to obtain or maintain which,
either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
(v) Expiration of Waiting Periods, Etc. All applicable waiting
periods (other than any periods required for the FCC Consents to become
Final Orders) shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the Acquisitions or the
Reorganization or the financing thereof. No action, request for stay,
petition for review or rehearing, reconsideration, or appeal with respect
to any of the foregoing shall be pending, and the time for any applicable
agency to take action to set aside its consent on its own motion shall
have expired.
D. Consummation of Acquisitions and Reorganization.
(i) All conditions to the Acquisitions shall have been satisfied or
the fulfillment of any such conditions shall have been waived with the
consent of Arranging Agent and Administrative Agent;
(ii) Arranging Agent and Administrative Agent shall have received
evidence satisfactory to Arranging Agent and Administrative Agent that (a)
the Acquisitions shall become effective immediately upon the making of the
initial Loans and (b) the Reorganization shall become effective
immediately after consummation of the Acquisitions in form and substance
satisfactory to Arranging Agent and Administrative Agent;
(iii) The aggregate consideration paid by Company to the holders of
equity interests in Brissette in respect of such equity interests in
connection with the Brissette Acquisition shall not exceed $270,000,000 in
cash;
(iv) The aggregate consideration paid to Stauffer to purchase the
assets used in connection with the business and operations of the Stauffer
Stations shall not exceed $54,500,000 in cash;
(v) Transaction Costs shall not exceed $12,000,000, and Arranging
Agent and Administrative Agent shall have received evidence to their
satisfaction to such effect; and
(vi) Arranging Agent and Administrative Agent shall have received an
Officers' Certificate of Company to the effect set forth in clauses
(i)-(v) above and stating that
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Company will proceed to consummate the Acquisitions and the Reorganization
immediately upon the making of the initial Loans.
E. Senior Subordinated Notes. On or prior to the Closing Date, BCC shall
have issued and sold the Senior Subordinated Notes and received gross proceeds
of $90,178,000, and BCC shall have contributed the net proceeds from such sale
of the Senior Subordinated Notes to Company as a contribution to capital. The
Senior Subordinated Notes shall be unsecured and shall have terms, including
without limitation, maturity, interest rates, covenants and subordination
provisions, in form and substance satisfactory to Arranging Agent and
Administrative Agent. Company shall have delivered to Arranging Agent and
Administrative Agent true and complete copies of all documentation relating to
the Senior Subordinated Notes, all of which shall be in form and substance
satisfactory to Arranging Agent and Administrative Agent.
F. Preferred Stock. BCC shall have (i) issued and sold the Seller
Preferred Stock to GE Capital and received net cash proceeds of not less than
$45,000,000; (ii) issued and sold the Exchangeable Preferred Stock and the
Warrants and received proceeds thereof (together with the proceeds of any other
equity securities of BCC (excluding the Seller Preferred Stock) with terms
acceptable to Arranging Agent and Administrative Agent) of not less than
$60,000,000; (iii) BCC shall have contributed the proceeds from the sale of the
Seller Preferred Stock, the Exchangeable Preferred Stock and the Warrants and
such other equity securities of BCC to Company as a contribution to capital;
and (iv) all of the foregoing, including the terms and conditions thereof and
all documentation executed in connection therewith, shall be in form and
substance satisfactory to Arranging Agent and Administrative Agent.
G. Cash On Hand. Arranging Agent and Administrative Agent shall have
received reasonably satisfactory evidence that following the consummation of the
Acquisitions and related transactions, and after giving effect thereto
(including the payment of, or taking reserves for, all Transaction Costs),
Company shall have not less than $2,000,000 cash on its balance sheet.
H. Closing Date Mortgages; Closing Date Mortgage Policies; Etc. Agents
shall have received from or on behalf of Company:
(i) Closing Date Mortgages. Fully executed and notarized Mortgages
(each a "Closing Date Mortgage" and, collectively, the "Closing Date
Mortgages"), in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each Real Property Asset listed in
Schedule 3.1H annexed hereto (each a "Closing Date Mortgaged Property"
and, collectively, the "Closing Date Mortgaged Properties");
(ii) Opinions of Local Counsel. An opinion of counsel (which counsel
shall be reasonably satisfactory to Arranging Agent and Administrative
Agent) in each state in which a Closing Date Mortgaged Property is located
with respect to the enforceability of the forms of Closing Date Mortgages
to be recorded in such state and such other matters as Arranging Agent and
Administrative Agent may reasonably request, in each
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case in form and substance reasonably satisfactory to Arranging Agent and
Administrative Agent;
(iii) Landlord Consents and Estoppels; Recorded Leasehold Interests.
In the case of each Closing Date Mortgaged Property consisting of a
Leasehold Property, (a) a Landlord Consent and Estoppel with respect
thereto and (b) evidence that such Leasehold Property is a Recorded
Leasehold Interest; or the appropriate duly executed documents for
recording to make it a Recorded Leasehold Interest;
(iv) Title Insurance. (a) ALTA mortgagee title insurance policies or
unconditional commitments therefor (the "Closing Date Mortgage Policies")
issued by the Title Company with respect to the Closing Date Mortgaged
Properties listed in Part A of Schedule 3.1H annexed hereto, in amounts
not less than the respective amounts designated therein with respect to
any particular Closing Date Mortgaged Properties, insuring fee simple
title to, or a valid leasehold interest in, each such Closing Date
Mortgaged Property vested in such Loan Party and assuring Administrative
Agent that the applicable Closing Date Mortgages create valid and
enforceable First Priority mortgage Liens on the respective Closing Date
Mortgaged Properties encumbered thereby, subject only to a standard survey
exception, which Closing Date Mortgage Policies (1) shall, if requested by
Administrative Agent, include an endorsement for mechanics' liens and for
future advances under this Agreement and for any other matters reasonably
requested by Arranging Agent or Administrative Agent and (2) shall provide
for affirmative insurance and such reinsurance as Administrative Agent may
reasonably request, all of the foregoing in form and substance reasonably
satisfactory to Arranging Agent and Administrative Agent; and (b) evidence
satisfactory to Arranging Agent and Administrative Agent that such Loan
Party has (i) delivered to the Title Company all certificates and
affidavits required by the Title Company in connection with the issuance
of the Closing Date Mortgage Policies and (ii) paid to the Title Company
or to the appropriate governmental authorities all expenses and premiums
of the Title Company in connection with the issuance of the Closing Date
Mortgage Policies and all recording and stamp taxes (including mortgage
recording and intangible taxes) payable in connection with recording the
Closing Date Mortgages in the appropriate real estate records;
(v) Title Reports. With respect to each Closing Date Mortgaged
Property listed in Part B of Schedule 3.1H annexed hereto, a title report
issued by the Title Company with respect thereto, dated not more than 30
days prior to the Closing Date and satisfactory in form and substance to
Arranging Agent and Administrative Agent;
(vi) Copies of Documents Relating to Title Exceptions. If requested
by Administrative Agent, copies of all recorded documents listed as
exceptions to title or otherwise referred to in the Closing Date Mortgage
Policies or in the title reports delivered pursuant to subsection 3.1H(v);
and
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(vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
which may be in the form of a letter from an insurance broker or a
municipal engineer, as to whether (1) any Closing Date Mortgaged Property
is a Flood Hazard Property and (2) the community in which any such Flood
Hazard Property is located is participating in the National Flood
Insurance Program, (b) if there are any such Flood Hazard Properties,
Company's written acknowledgement of receipt of written notification from
Administrative Agent (1) as to the existence of each such Flood Hazard
Property and (2) as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood
Insurance Program, and (c) in the event any such Flood Hazard Property is
located in a community that participates in the National Flood Insurance
Program, evidence that Company has obtained flood insurance in respect of
such Flood Hazard Property to the extent required under the applicable
regulations of the Board of Governors of the Federal Reserve System.
I. Security Interests in Personal and Mixed Property. To the extent not
otherwise satisfied pursuant to subsection 3.1H, each of Arranging Agent and
Administrative Agent shall have received evidence satisfactory to it that each
Loan Party shall have taken or caused to be taken all such actions, executed and
delivered or caused to be executed and delivered all such agreements, documents
and instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Arranging Agent and
Administrative Agent, desirable in order to create in favor of Collateral Agent,
for the benefit of Lenders, a valid and (upon such filing and recording)
perfected First Priority security interest in the entire personal and mixed
property Collateral. Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Collateral Agent
of accurate and complete schedules to all of the applicable Collateral
Documents;
(ii) Stock Certificates and Instruments. Delivery to Collateral
Agent or Pledgee under the Existing Pledge Agreement of (a) certificates
(which certificates shall be accompanied by irrevocable undated stock
powers, duly endorsed in blank and otherwise satisfactory in form and
substance to Administrative Agent) representing all capital stock pledged
pursuant to the BCC Pledge Agreement and the Existing Company Pledge
Agreement and (b) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Administrative
Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to
Arranging Agent and Administrative Agent of (a) the results of a recent
search, by a Person satisfactory to Arranging Agent and Administrative
Agent, of all effective UCC financing statements and fixture filings and
all judgment and tax lien filings which may have been made with respect to
any personal or mixed property of any Loan Party, together with copies of
all such filings disclosed by such search, and (b) UCC termination
statements duly executed by all applicable Persons for filing in all
applicable jurisdictions as may be necessary to terminate any effective
UCC financing statements or fixture filings
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disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement);
(iv) UCC Financing Statements and Fixture Filings. Delivery to
Collateral Agent of UCC financing statements and, where appropriate,
fixture filings, duly executed by each applicable Loan Party with respect
to all personal and mixed property Collateral of such Loan Party, for
filing in all jurisdictions as may be necessary or, in the opinion of
Arranging Agent and Administrative Agent, desirable to perfect the
security interests created in such Collateral pursuant to the Collateral
Documents;
(v) Existing Pledge Agreement. Company shall have taken such actions
and delivered such documents or instruments as requested by Arranging
Agent or Administrative Agent to evidence that the AXELs are secured on an
equal and ratable basis with the Existing Senior Notes pursuant to the
Existing Pledge Agreement; and
(vi) Opinions of Local Counsel. Delivery to Arranging Agent and
Administrative Agent of an opinion of counsel (which counsel shall be
reasonably satisfactory to Arranging Agent and Administrative Agent) under
the laws of each jurisdiction in which any Loan Party or any personal or
mixed property Collateral is located with respect to the creation and
perfection of the security interests in favor of Collateral Agent in such
Collateral and such other matters governed by the laws of such
jurisdiction regarding such security interests as Arranging Agent or
Administrative Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Arranging Agent and Administrative
Agent.
J. Environmental Reports. Administrative Agent and Arranging Agent and,
upon request, any Lender shall have received reports and other information, in
form, scope and substance satisfactory to Arranging Agent and Administrative
Agent, regarding environmental matters relating to the Facilities, which reports
shall include a Phase I environmental assessment for each of the Facilities
listed in Schedule 3.1J annexed hereto.
K. Financial Statements; Pro Forma Balance Sheet. On or before the Closing
Date, Lenders shall have received (i) the audited financial statements for
Company and its Subsidiaries for the period ended December 31, 1995, (ii)
unaudited financial statements for Company and its Subsidiaries for the quarter
ended March 31, 1996 and (iii) pro forma consolidated and consolidating balance
sheets of BCC and its Subsidiaries as at March 31, 1996, prepared in accordance
with GAAP and reflecting the consummation of the Acquisitions and the
Reorganization, the related financings and the other transactions contemplated
by the Loan Documents and the Related Agreements, all of which financial
statements shall be in form and substance satisfactory to Arranging Agent and
Administrative Agent.
L. Solvency Assurances. On the Closing Date, Arranging Agent,
Administrative Agent and Lenders shall have received a letter from Murray,
Devine & Co., dated the Closing Date and addressed to Arranging Agent,
Administrative Agent and Lenders, in form and
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substance satisfactory to Arranging Agent and Administrative Agent and with
appropriate attachments demonstrating that, after giving effect to the
consummation of the Acquisitions and the Reorganization and the other
transactions contemplated by the Loan Documents and the Related Agreements,
including the contemplated borrowings of the full amounts which will be
available under the Commitments and the Senior Subordinated Notes, each of
Company and BCC and its Subsidiaries on a consolidated basis will be Solvent.
M. Evidence of Insurance. Arranging Agent and Administrative Agent shall
each have received a certificate from Company's insurance broker or other
evidence satisfactory to each that all insurance required to be maintained
pursuant to subsection 5.4, and all Key Man Life Insurance Policies required to
be maintained pursuant to subsection 5.9, are in full force and effect, that
Collateral Agent on behalf of Lenders has been named as additional insured
and/or loss payee thereunder to the extent required under subsection 5.4 and
under the definition of Key Man Life Insurance Policies, and that there has been
a collateral assignment of the Key Man Life Insurance Policies to Collateral
Agent.
N. Opinions of Counsel to Loan Parties and FCC Counsel. Lenders and their
respective counsel shall have received (i) originally executed copies of one or
more favorable written opinions of (a) Shack & Siegel, P.C., counsel for Loan
Parties, and (b) Covington & Burling, FCC counsel for Loan Parties, in each case
in form and substance reasonably satisfactory to Administrative Agent and
Arranging Agent and its counsel, dated as of the Closing Date and setting forth
substantially the matters in the opinions designated in Exhibit VIII and Exhibit
IX, respectively, annexed hereto and as to such other matters as Arranging Agent
or Administrative Agent acting on behalf of Lenders may reasonably request, and
(ii) evidence satisfactory to Arranging Agent and Administrative Agent that
Company has requested each such counsel to deliver such opinions to Lenders.
O. Opinions of Arranging Agent's Counsel. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, counsel to Arranging Agent, dated as of the Closing Date,
substantially in the form of Exhibit X annexed hereto and as to such other
matters as Arranging Agent may reasonably request.
P. Opinions of Counsel Delivered Under Certain Related Agreements.
Administrative Agent and Arranging Agent and its counsel shall have received
copies of each of the opinions of counsel delivered by counsel to the sellers
under each of the Acquisition Agreements and by counsel to Company under the
purchase agreements relating to the Senior Subordinated Notes and Exchangeable
Preferred Stock, together with a letter from each such counsel (other than Kaye,
Scholer, Fierman, Hays & Handler) authorizing Lenders to rely upon such opinion
to the same extent as though it were addressed to Lenders.
Q. Auditor's Letter and Officers' Certificate. Arranging Agent and
Administrative Agent shall have received (i) an executed Auditor's Letter in
form and substance reasonably satisfactory to Arranging Agent and Administrative
Agent and (ii) an Officers' Certificate, dated the Closing Date, demonstrating
that the Leverage Ratio and Credit Facilities Leverage Ratio as of the most
recently ended Fiscal Quarter, calculated, on a pro forma basis after giving
effect
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to all of the transactions consummated on the Closing Date, do not exceed 7.25:1
and 2.65:1, respectively.
R. Fees. Company shall have paid to Arranging Agent and Administrative
Agent the fees payable on the Closing Date referred to in subsection 2.3 and all
other compensation, fees, costs and expenses due and payable hereunder or in
connection herewith to Arranging Agent and Administrative Agent on or prior to
the Closing Date.
S. Representations and Warranties; Performance of Agreements. BCC and
Company shall each have delivered to Arranging Agent and Administrative Agent an
Officers' Certificate, in form and substance satisfactory to Arranging Agent and
Administrative Agent, to the effect that the representations and warranties in
Section 4 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that each
of BCC and Company shall have performed in all material respects all agreements
and satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Arranging Agent, Administrative Agent and Requisite
Lenders.
T. Employment Agreements and Key Man Life Insurance. Administrative Agent
and Arranging Agent shall have received duly executed copies of the Employment
Agreements. The Key Man Life Insurance Policies shall have been obtained by
Company and shall be in full force and effect and satisfactory evidence thereof
shall have been delivered to Administrative Agent and Arranging Agent.
U. Related Agreements. (i) Administrative Agent and Arranging Agent shall
have received executed or conformed copies of each of the Related Agreements and
any amendments thereto on or before the Closing Date, the terms or conditions of
which shall be in all respects satisfactory to Administrative Agent and
Arranging Agent, (ii) the Related Agreements shall be in full force and effect
and no term or condition thereof shall have been amended, modified or waived
after the execution thereof, except as provided in a written amendment thereto
delivered to and approved by Administrative Agent and Arranging Agent, (iii) no
Loan Party shall have failed in any material respect to perform any material
obligation or covenant required by the Related Agreements to be performed or
complied with by it on or before the Closing Date and (iv) Administrative Agent
and Arranging Agent shall have received an Officers' Certificate from BCC and
Company in form and substance satisfactory to Administrative Agent and Arranging
Agent from Company to the effect set forth in clauses (i), (ii) and (iii) above.
V. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, or Arranging Agent and its counsel shall be
satisfactory in form and substance to Administrative Agent and Arranging Agent
and such counsel, and Administrative Agent and Arranging Agent
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and such counsel shall have received all such counterpart originals or certified
copies of such documents as Administrative Agent or Arranging Agent may
reasonably request.
3.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Company or by any executive officer of
Company designated by any of the above-described officers on behalf of Company
in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event
of Default;
(iii) Each Loan Party shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement provides
shall be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of BCC or any of its Subsidiaries that has not been disclosed by
Company in writing to the extent required pursuant to subsection 4.6 or
5.1(xi) prior to the making of the last preceding Loans (or, in the case
of the initial Loans, prior to the execution of this Agreement), and there
shall have occurred no development not so disclosed in any such action,
suit, proceeding,
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governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Administrative Agent or of Requisite Lenders,
would be expected to have a Material Adverse Effect; and no injunction or
other restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to enjoin
or otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, the transactions contemplated by this
Agreement or the making of Loans hereunder.
SECTION 4.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, BCC and Company each represents and warrants to each Lender, on the date
of this Agreement and on each Funding Date, that the following statements are
true, correct and complete:
4.1 Organization, Powers, Qualification, Good Standing, Business, Subsidiaries
and FCC and Station Matters.
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 4.1A annexed hereto. Each
such Loan Party has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents and Related
Agreements to which it is a party and to carry out the transactions contemplated
thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where the nature of the
assets located therein or the conduct of its business and operations make such
qualification necessary, except in jurisdictions where the failure to be so
qualified or in good standing has not had and will not have a Material Adverse
Effect.
C. Conduct of Business. Loan Parties are engaged only in the businesses
permitted to be engaged in pursuant to subsection 6.13 and the Loan Documents.
D. Subsidiaries. All of the Subsidiaries of BCC as of the Closing Date are
identified in Schedule 4.1A annexed hereto. The capital stock of BCC and each of
the Subsidiaries of BCC identified in Schedule 4.1A annexed hereto is duly
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each of the Subsidiaries of BCC
identified in Schedule 4.1A annexed hereto is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation set forth therein, has all requisite corporate
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, and is qualified to
do business and in good standing in every jurisdiction where the nature of the
assets located therein or the conduct of its business and operations make such
qualification necessary, in each case except where failure to be so qualified or
in good standing or a lack of
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such corporate power and authority has not had and will not have singly or in
the aggregate a Material Adverse Effect. Schedule 4.1A annexed hereto correctly
sets forth, as of the Closing Date, the ownership interest of BCC and Company in
each of the Subsidiaries of BCC identified therein.
E. FCC and Station Matters.
(i) Each of BCC and its Subsidiaries has all requisite power and
authority and FCC Licenses to own and operate its properties and to carry
on its businesses as now conducted and as proposed to be conducted (other
than, for the period prior to consummation of the Acquisitions, with
respect to any properties or businesses to be acquired in connection with
the Acquisitions. Schedule 4.1E annexed hereto, as it may be supplemented
pursuant to subsection 5.1(ix), correctly describes each of the Stations
and sets forth all of the FCC Licenses of Company and its Subsidiaries,
including those Stations and FCC Licenses acquired in connection with the
Acquisitions, and correctly sets forth the termination date, if any, of
each such FCC License. A true, correct and complete copy of each material
FCC License has been made available to Administrative Agent. Each material
FCC License was duly and validly issued by the FCC pursuant to procedures
which comply in all material respects with all requirements of applicable
law. As of the initial funding under this Agreement and at all times
thereafter, BCC and its Subsidiaries have the right to use all FCC
Licenses required in the ordinary course of business for all Stations, and
each such FCC License is in full force and effect. Each of BCC and its
Subsidiaries has taken all material actions and performed all of its
material obligations that are necessary to maintain all material FCC
Licenses without adverse modification or impairment. Except as shown on
Schedule 4.1E, no event has occurred which (i) results in, or after notice
or lapse of time or both would result in, revocation, suspension, adverse
modification, non-renewal, impairment, restriction or termination of or
any order of forfeiture with respect to, any material FCC License or (ii)
materially and adversely affects or could reasonably be expected in the
future to materially adversely affect any of the rights of BCC or any of
its Subsidiaries thereunder. Except as set forth on Schedule 4.1E, each
FCC License is held by License Sub. Except as set forth in Schedule 4.1E,
none of the FCC Licenses requires that any present stockholder, director,
officer or employee of BCC or any of its Subsidiaries remain a stockholder
or employee of such Person, or that any transfer of control of such Person
must be approved by any public or governmental body other than the FCC.
(ii) Except as shown on Schedule 4.1E, neither BCC nor any of its
Subsidiaries is a party to or has knowledge of any investigation, notice
of apparent liability, violation, forfeiture or other order or complaint
issued by or before any court or regulatory body, including the FCC, or of
any other proceedings (other than proceedings relating to the radio or
television industries generally) which could in any manner materially
threaten or adversely affect the validity or continued effectiveness of
the FCC Licenses of any such Person. None of BCC nor any of its
Subsidiaries has any reason to believe that any material FCC Licenses
listed and described in Schedule 4.1E will not be renewed in the ordinary
course. Each of BCC and its Subsidiaries, as applicable, (a) has duly
filed in a timely manner all material filings, reports, applications,
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documents, instruments and information required to be filed by it under
the Communication Act or pursuant to FCC Regulations or requests of any
regulatory body having jurisdiction over any of its FCC Licenses, (b) has
submitted to the FCC on a timely basis all required equal employment
opportunity reports, and (c) is in compliance in all material respects
with the Communications Act, including all FCC Regulations relating to the
broadcast of television signals, all FCC Regulations concerning the limits
on the duration of advertising in children's programming and the
recordkeeping obligations relating to such advertising, the Children's
Television Act and all FCC Regulations promulgated thereunder and all
equal employment opportunity-related FCC Regulations. BCC and its
Subsidiaries maintain appropriate public files at the Stations in a manner
that complies in all material respects with all FCC Regulations.
(iii) None of the Facilities (including the transmitter and tower
sites owned or used by Company or any of its Subsidiaries) violates in any
material respect the provisions of any applicable building codes, fire
regulations, building restrictions or other governmental ordinances,
orders, or regulations and each such Facility is zoned so as to permit the
commercial uses intended by the owner or occupier thereof and there are no
outstanding variances or special use permits materially affecting any of
the facilities or the uses thereof.
(iv) BCC and its Subsidiaries and the properties owned and/or
operated by them, including the Stations, are in compliance in all
material respects with all rules, regulations and policies of the Federal
Aviation Administration applicable to any of them.
(v) The operation of the Stations does not cause or result in
exposure to workers or the general public to levels of radio frequency
radiation in excess of the "Radio Frequency Protection Guidelines"
recommended in "American National Standard Safety Levels with Respect to
Human Exposure to Radio Frequency Electromagnetic Fields 300 Khz to 100
gHz" (ANSI C95.1-1982), issued by the American National Standards
Institute.
(vi) The Ownership Reports filed by BCC, Company and its
Subsidiaries with the FCC are true, correct and complete in all material
respects and there have been no changes in the ownership of BCC, Company
or any Subsidiary of Company since the filing of such Ownership Reports
other than as described in information filed with the FCC and made
available for examination by Administrative Agent pursuant to subsection
5.1(viii).
4.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements have been duly authorized by all
necessary corporate action on the part of each Loan Party that is a party
thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties of
the Loan Documents and the Related Agreements to which they are parties and the
consummation
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of the transactions contemplated by the Loan Documents and such Related
Agreements do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to any Loan Party or any of their
respective Subsidiaries, the Certificate or Articles of Incorporation or Bylaws
of BCC or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on any Loan Party or any of their
respective Subsidiaries, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any Contractual
Obligation of BCC or any of its Subsidiaries, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of any
Loan Party or any of their respective Subsidiaries (other than any Liens created
under any of the Loan Documents in favor of Collateral Agent on behalf of
Lenders and Liens permitted under subsection 6.2A(iii)), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of any Loan Party or any of their respective
Subsidiaries, except for such approvals or consents which will be obtained on or
before the Closing Date and disclosed in writing to Lenders.
C. Governmental Consents. The execution, delivery and performance by Loan
Parties of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body, other than the FCC Consents, filings required in connection with the
perfection of security interests granted pursuant to the Collateral Documents
and filings required to be made with the Securities and Exchange Commission in
connection with the Exchangeable Preferred Stock and Senior Subordinated Notes.
D. Binding Obligation. Each of the Loan Documents and Related Agreements
has been duly executed and delivered by each Loan Party that is a party thereto
and is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
E. Valid Issuance of Seller Preferred Stock, Exchangeable Preferred Stock,
Warrants and Senior Subordinated Notes.
(i) Seller Preferred Stock, Exchangeable Preferred Stock and
Warrants. The Seller Preferred Stock, Exchangeable Preferred Stock and
Warrants to be sold on or before the Closing Date, when issued and
delivered, will be duly and validly issued, fully paid and nonassessable.
No stockholder of BCC has or will have any preemptive rights to subscribe
for any additional equity Securities of BCC, except that holders of the
Warrants shall have the right to exchange the Warrants for Class A Common
Stock of BCC in accordance with the terms thereof. The issuance and sale
of such Seller Preferred Stock, Exchangeable Preferred Stock and Warrants,
upon such issuance and sale, will either (a) have been registered or
qualified under applicable federal and state securities laws or (b) be
exempt therefrom.
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(ii) Senior Subordinated Notes . BCC has the corporate power and
authority to issue the Senior Subordinated Notes. The Senior Subordinated
Notes, when issued and paid for, will be the legally valid and binding
obligations of BCC, enforceable against BCC in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability. The subordination provisions of the Senior Subordinated
Notes will be enforceable against the holders thereof and the Loans and
all other monetary Obligations hereunder are and will be within the
definition of "Senior Debt" included in such provisions. The Senior
Subordinated Notes, when issued and sold, will either (a) have been
registered or qualified under applicable federal and state securities laws
or (b) be exempt therefrom.
4.3 Financial Condition.
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheet of Company and its Subsidiaries as at December 31, 1995, and the
related consolidated statements of income, stockholders' equity and cash flows
of Company and its Subsidiaries for the Fiscal Year then ended and (ii) the
unaudited consolidated balance sheet of Company and its Subsidiaries as at March
31, 1996 and the related unaudited consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for the
quarter then ended. All such statements were prepared in conformity with GAAP
and fairly present, in all material respects, the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments. Company does not
(and will not following the funding of the initial Loans) have any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment (other than such obligations under
Program Contracts which have not yet been reflected as accrued in accordance
with GAAP) that is not reflected in the foregoing financial statements or the
notes thereto or on Schedule 4.3 annexed hereto and which in any such case is
material in relation to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company or any of its Subsidiaries.
4.4 No Material Adverse Change; No Restricted Junior Payments.
Since December 31, 1995, no event or change has occurred that has caused
or evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 6.5 or as
contemplated under the Senior Subordinated Note Indenture, the Seller Preferred
Certificate of Designation and the Exchangeable Preferred Certificate of
Designation.
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4.5 Title to Properties; Liens; Real Property.
A. Title to Properties; Liens. Loan Parties have (i) good, sufficient and
legal title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property), or (iii) good title to (in the case of all other personal property),
all of their respective properties and assets reflected in the financial
statements referred to in subsection 4.3 or in the most recent financial
statements delivered pursuant to subsection 5.1, in each case except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 6.7. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.
B. Real Property. As of the Closing Date, Schedule 4.5 annexed hereto
contains a true, accurate and complete list of (i) all fee properties and (ii)
all leases, subleases or assignments of leases (together with all amendments,
modifications, supplements, renewals or extensions of any thereof) affecting
each Real Property Asset of any Loan Party where the annual rental payments
thereunder are greater than $100,000, regardless of whether such Loan Party is
the landlord or tenant (whether directly or as an assignee or successor in
interest) under such lease, sublease or assignment. Except as specified in
Schedule 4.5 annexed hereto, each agreement listed in clause (ii) of the
immediately preceding sentence is in full force and effect and neither BCC nor
Company has knowledge of any default that has occurred and is continuing
thereunder, and each such agreement constitutes the legally valid and binding
obligation of each applicable Loan Party, enforceable against such Loan Party in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles and except in each case
where the default or the failure to be in full force and effect or enforceable
would not, individually or in the aggregate, have a Material Adverse Effect.
Company's good faith estimate of the fair market value of each Material Fee
Property subject to a Closing Date Mortgage is set forth on Schedule 3.1H
annexed hereto.
4.6 Litigation; Adverse Facts.
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Company or any Loan
Party or any of its Subsidiaries) at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign (including any
Environmental Claims) that are pending or, to the knowledge of BCC or Company,
threatened against or affecting any Loan Party or any of its Subsidiaries or any
property of any Loan Party or any of its Subsidiaries and that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. No Loan Party or any of its Subsidiaries (i) is in violation of any
applicable laws (including Environmental Laws) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or (ii) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that,
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individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
4.7 Payment of Taxes.
Except to the extent permitted by subsection 5.3, all tax returns and
reports of BCC or Company and its Subsidiaries required to be filed by any of
them have been timely filed, and all taxes shown on such tax returns to be due
and payable and all assessments, fees and other governmental charges upon BCC
and its Subsidiaries and upon their respective properties, assets, income,
businesses and franchises which are due and payable have been paid when due and
payable. Neither BCC nor Company knows of any proposed tax assessment against
Company or any of its Subsidiaries which is not being actively contested by BCC,
Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.
4.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts.
A. No Loan Party nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. No Loan Party nor any of its Subsidiaries is a party to or is otherwise
subject to any agreements or instruments or any charter or other internal
restrictions which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
C. All Material Contracts are in full force and effect and no material
defaults currently exist thereunder (other than any defaults resulting from the
failure to obtain consents to the transfer of certain Program Contracts relating
to the Acquired Stations prior to the Closing Date).
4.9 Governmental Regulation.
No Loan Party nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
4.10 Securities Activities.
A. No Loan Party is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.
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B. Following application of the proceeds of each Loan, not more than 25%
of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
6.2 or 6.7 or subject to any restriction contained in any agreement or
instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 7.2, will be Margin
Stock.
4.11 Employee Benefit Plans.
A. Each Loan Party and each of their respective ERISA Affiliates are in
material compliance with all applicable provisions and requirements of ERISA and
the regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all of their material obligations
under each Employee Benefit Plan. Each Employee Benefit Plan which is intended
to qualify under Section 401(a) of the Internal Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur which
would have a Material Adverse Effect.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 4.11 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employee of any Loan Party or
any of their respective ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, the amount
of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), does not exceed $1,000,000.
E. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Loan Parties
and their respective ERISA Affiliates for a complete withdrawal from such
Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $1,000,000.
4.12 Certain Fees.
No broker's or finder's fee or commission will be payable with respect to
this Agreement or any of the transactions contemplated hereby, and BCC and
Company, jointly and severally, hereby indemnify Lenders against, and agrees
that it will hold Lenders harmless from, any claim, demand or liability for any
such broker's or finder's fees alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or
liability.
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4.13 Environmental Protection.
(i) Except as set forth on Schedule 4.13 annexed hereto, no Loan
Party nor any of its Subsidiaries nor any of their respective Facilities
or operations are subject to any outstanding written order, consent decree
or settlement agreement with any Person relating to (a) any Environmental
Law, (b) any Environmental Claim, or (c) any Hazardous Materials Activity;
(ii) No Loan Party nor any of its Subsidiaries has received any
letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. 'SS'
9604) or any comparable state law;
(iii) There are no and, to BCC's and Company's knowledge, have been
no conditions, occurrences, or Hazardous Materials Activities which could
reasonably be expected to form the basis of an Environmental Claim against
any Loan Party or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;
(iv) No Loan Party nor any of its Subsidiaries, nor, to Company's
knowledge, any predecessor of any Loan Party has filed any notice under
any Environmental Law indicating past or present treatment of Hazardous
Materials at any Facility, and no Loan Party's nor any of its
Subsidiaries' operations involves the generation, transportation,
treatment, storage or disposal of hazardous waste (other than Hazardous
Materials used in the ordinary course of business, the use of which is
immaterial and not reasonably likely to materially adversely affect the
Facilities or have a Material Adverse Effect), as defined under 40 C.F.R.
Parts 260-270 or any state equivalent; and
(v) Compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 4.13 to the contrary, no event
or condition has occurred or is occurring with respect to any Loan Party
relating to any Environmental Law, any Release of Hazardous Materials, or any
Hazardous Materials Activity which individually or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.
4.14 Employee Matters.
Except as set forth on Schedule 4.14 annexed hereto, no Loan Party nor its
Subsidiaries is party to any collective bargaining agreement and, to the
knowledge of Company, no union representative question exists with respect to
the employees of any Loan Party or its Subsidiaries. There is no strike, work
stoppage, slowdown, lockout or other labor dispute pending, or to the knowledge
of Company, threatened, involving any Loan Party or any of its Subsidiaries that
singly or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
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4.15 Solvency.
Each Loan Party is and, upon the incurrence of any Obligations by such
Loan Party on any date on which this representation is made, will be, Solvent.
4.16 Matters Relating to Collateral.
A. Creation, Perfection and Priority of Liens. The execution and delivery
of the Collateral Documents by Loan Parties, together with (i) the actions taken
on or prior to the date hereof pursuant to subsections 3.1H, 3.1I and 5.8 and
(ii) the delivery to Collateral Agent of any Pledged Collateral not delivered to
Collateral Agent at the time of execution and delivery of the applicable
Collateral Document (all of which Pledged Collateral on the Closing Date will
have been so delivered) are effective to create in favor of Collateral Agent for
the benefit of Lenders, as security for the respective Secured Obligations (as
defined in the applicable Collateral Document in respect of any Collateral), a
valid and perfected First Priority Lien on all of the Collateral, and all
filings and other actions necessary or desirable to perfect and maintain the
perfection and First Priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing of any UCC financing
statements delivered to Collateral Agent for filing (but not yet filed), the
filing of any UCC termination statements delivered to Collateral Agent on the
Closing Date (but not yet filed) and the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on behalf of
Collateral Agent.
B. Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Loan Party of the
Liens purported to be created in favor of Collateral Agent pursuant to any of
the Collateral Documents or (ii) the exercise by Collateral Agent of any rights
or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings contemplated by subsection
4.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities or by the FCC.
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of Collateral Agent as contemplated by subsection 4.16A and in respect of
Liens permitted under subsection 6.2A(iii) hereof or for which duly executed
termination statements have been delivered to Collateral Agent on the Closing
Date (but not yet filed), no effective UCC financing statement, fixture filing
or other instrument similar in effect covering all or any part of the Collateral
is on file in any filing or recording office.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
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E. Information Regarding Collateral. All information supplied to Agents by
or on behalf of any Loan Party with respect to any of the Collateral (in each
case taken as a whole with respect to any particular Collateral) is accurate and
complete in all material respects.
4.17 Representations and Warranties in Acquisition Agreements.
Except to the extent otherwise set forth herein or in the schedules
hereto, each of the representations and warranties given by any seller or
Company in the Brissette Acquisition Agreement or the Stauffer Acquisition
Agreement is true and correct in all material respects as of the date hereof (or
as of any earlier date to which such representation and warranty specifically
relates) and will be true and correct in all material respects as of the Closing
Date (or as of such earlier date, as the case may be), in each case subject to
the qualifications set forth in the schedules to the Brissette Acquisition
Agreement and the Stauffer Acquisition Agreement, respectively. Notwithstanding
anything in the Brissette Acquisition Agreement or the Stauffer Acquisition
Agreement to the contrary, the representations and warranties of Company set
forth in this subsection shall, solely for purposes of this Agreement, survive
the Closing Date for the benefit of Lenders.
4.18 Applicable Law.
Each Loan Party and its Subsidiaries is in compliance with the
requirements of all applicable laws, rules, regulations, orders, applications,
reporting and licensing requirements of all governmental authorities (including
all Communications Regulatory Authorities) except for violations thereof which
could not reasonably be expected to have a Material Adverse Effect; and no Loan
Party nor any of its Subsidiaries is the subject of any outstanding citation
order or investigation by any Communications Regulatory Authority which could
reasonably be expected to have a Material Adverse Effect, and no such citation,
order or investigation (excluding any rule making proceeding of general
applicability) which could reasonably be expected to have a Material Adverse
Effect, to the knowledge of Company, is contemplated by any Communications
Regulatory Authority.
4.19 Disclosure.
No representation or warranty of BCC or Company contained in the
Confidential Information Memorandum or in any Loan Document or Related Agreement
or in any other document, certificate or written statement furnished to Lenders
by or on behalf of BCC or Company for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact (known to Company, in the case of any document
not furnished by it) necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances in which the same were
made. Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by
Company to be reasonable at the time made, it being recognized by Lenders that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. There are no facts known (or which should
upon the reasonable exercise of diligence be known) to Company (other than
matters of a general
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economic nature) that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect and that have not been disclosed
herein or in such other documents, certificates and statements furnished to
Lenders for use in connection with the transactions contemplated hereby.
SECTION 5.
AFFIRMATIVE COVENANTS
Each of BCC and Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations (other than inchoate indemnification obligations
with respect to claims, losses or liabilities which have not yet arisen), unless
Requisite Lenders shall otherwise give prior written consent, each of BCC and
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 5.
5.1 Financial Statements and Other Reports.
BCC will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent (with sufficient copies
for each Lender) for delivery to Lenders;
(i) Monthly Financials: as soon as available and in any event within
30 days after the end of each month ending after the Closing Date, at any
time that the Leverage Ratio exceeds 5.75:1, the consolidated profit and
loss statements of BCC and its Subsidiaries and of the Stations on a
Station-by-Station basis for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month,
setting forth in each case in comparative form the corresponding figures
for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year,
to the extent prepared on a monthly basis, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the profits and losses for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, the consolidated
balance sheet of BCC and its Subsidiaries as at the end of such Fiscal
Quarter and the related consolidated statements of income, stockholders'
equity and cash flows of BCC and its Subsidiaries and of the Stations on a
Station-by-Station basis for such Fiscal Quarter and for the period from
the beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year,
all in reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the financial
condition of BCC and its Subsidiaries as at the dates indicated and the
results of their operations and their
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cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated
balance sheet of BCC and its Subsidiaries as at the end of such Fiscal
Year and the related consolidated statements of income, stockholders'
equity and cash flows of BCC and its Subsidiaries for such Fiscal Year,
setting forth in each case in comparative form the corresponding figures
for the previous Fiscal Year and the corresponding figures from the
Financial Plan for the Fiscal Year covered by such financial statements,
all in reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the financial
condition of BCC and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, (b) a narrative report describing the operations of BCC and its
Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Year, and (c) in the case of such consolidated financial
statements, a report thereon of McGladrey & Pullen, LLP or other
independent certified public accountants of recognized national standing
selected by Company and satisfactory to Administrative Agent, which report
shall be unqualified, shall express no doubts about the ability of BCC and
its Subsidiaries to continue as a going concern, and shall state that such
consolidated financial statements fairly present, in all material
respects, the consolidated financial position of BCC and its Subsidiaries
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) Officers' and Compliance Certificates: (a) together with each
delivery of financial statements of BCC and its Subsidiaries pursuant to
subdivisions (i), (ii) and (iii) above, an Officers' Certificate of
Company stating that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of BCC and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officers' Certificate,
of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action Company has taken, is taking and proposes to take with respect
thereto; and (b) together with each delivery of financial statements of
BCC and its Subsidiaries pursuant to subdivisions (ii) and (iii) above, a
Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
restrictions contained in Section 6;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 4.3, the
consolidated financial statements of BCC and
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its Subsidiaries delivered pursuant to subdivisions (i), (ii), (iii) or
(xiv) of this subsection 5.1 will differ in any material respect from the
consolidated financial statements that would have been delivered pursuant
to such subdivisions had no such change in accounting principles and
policies been made, then (a) together with the first delivery of financial
statements pursuant to subdivision (i), (ii), (iii) or (xiv) of this
subsection 5.1 following such change, consolidated financial statements of
BCC and its Subsidiaries for (y) the current Fiscal Year to the effective
date of such change and (z) the two full Fiscal Years immediately
preceding the Fiscal Year in which such change is made, in each case
prepared on a pro forma basis as if such change had been in effect during
such periods, and (b) together with each delivery of financial statements
pursuant to subdivision (i), (ii), (iii) or (xiv) of this subsection 5.1
following such change, a written statement of the chief accounting officer
or chief financial officer of Company setting forth the differences
(including any differences that would affect any calculations relating to
the financial covenants set forth in subsection 6.6) which would have
resulted if such financial statements had been prepared without giving
effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of BCC and its Subsidiaries pursuant to
subdivision (iii) above, a written statement by the independent certified
public accountants giving the report thereon (a) stating that their audit
examination has included a review of the terms of this Agreement and the
other Loan Documents as they relate to accounting matters, (b) stating
whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default or Potential Event of Default
has come to their attention and, if such a condition or event has come to
their attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their audit
examination, and (c) stating that based on their audit examination nothing
has come to their attention that causes them to believe either or both
that the information contained in the certificates delivered therewith
pursuant to subdivision (iv) above is not correct or that the matters set
forth in the Compliance Certificates delivered therewith pursuant to
clause (b) of subdivision (iv) above for the applicable Fiscal Year are
not stated in accordance with the terms of this Agreement; provided that
such accountants may rely without independent investigation on (1)
Schedule 6.6 annexed hereto with respect to the calculation of
Consolidated Adjusted EBITDA for the third and fourth Fiscal Quarters of
1995 and for the first Fiscal Quarter of 1996 and (2) Company's
calculation of Consolidated Adjusted EBITDA for the second Fiscal Quarter
of 1996 as set forth in the Compliance Certificate delivered with respect
to such Fiscal Quarter.
(vii) Accountants' Reports: (a) promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
reports submitted to Company by independent certified public accountants
in connection with each annual, interim or special audit of the financial
statements of BCC and its Subsidiaries made by such accountants, including
any comment letter submitted by such accountants to management in
connection with their annual audit and (b) together with the first
delivery of consolidated financial statements of BCC and its Subsidiaries
pursuant to subdivision (iii)
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above following any change in the independent certified public accountants
of BCC and its Subsidiaries, a letter acknowledged and agreed to by
Company and such new accountants addressed to Administrative Agent and
Lenders, in substance similar to the Auditor's Letter and otherwise in
form and substance reasonably satisfactory to Administrative Agent;
(viii) SEC Filings, FCC Filings and Press Releases: promptly upon
their becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by BCC to
its security holders or by any Subsidiary of BCC to its security holders
other than BCC or another Subsidiary of BCC, (b) all regular and periodic
reports and all registration statements (other than on Form S-8 or a
similar form) and prospectuses, if any, filed by BCC or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
(c) all press releases and other statements made available generally by
BCC or any of its Subsidiaries to the public concerning material
developments in the business of BCC or any of its Subsidiaries, (d) any
material non-routine correspondence or official notices received by BCC or
any of the other Loan Parties from any Communications Regulatory
Authority, and (e) all material information filed by any Loan Party with
the FCC (including all Ownership Reports and amendments or supplements to
any Ownership Report);
(ix) FCC Licenses, etc.: promptly upon (a) receipt of notice of (1)
any forfeiture, non-renewal, cancellation, termination, revocation,
suspension, impairment or material modification of any material FCC
License held by BCC or any of its Subsidiaries, or any notice of default
or forfeiture with respect to any such FCC License, or (2) any refusal by
any governmental agency or authority (including the FCC) to renew or
extend any such FCC License, an Officers' Certificate specifying the
nature of such event, the period of existence thereof, and what action BCC
and its Subsidiaries are taking and propose to take with respect thereto,
and (b) any acquisition of any Station, a written notice setting forth
with respect to such Station all of the data required to be set forth in
Schedule 4.1E under subsection 4.1E with respect to such Stations and the
FCC Licenses required in connection with the ownership and operation of
such Station (it being understood that such written notice shall be deemed
to supplement Schedule 4.1E annexed hereto for all purposes of this
Agreement);
(x) Events of Default, etc.: promptly upon any officer of BCC or
Company obtaining knowledge (a) of any condition or event that constitutes
an Event of Default or Potential Event of Default, or becoming aware that
any Lender has given any notice (other than to Administrative Agent) or
taken any other action with respect to a claimed Event of Default or
Potential Event of Default, (b) that any Person has given any notice to
BCC or any of its Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type referred to in
subsection 7.2, (c) of any condition or event that would be required to be
disclosed in a current report filed by BCC with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
effect on the date hereof) if BCC were required to file such reports under
the Exchange Act, (d) of any condition or event that constitutes a breach
or default
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by BCC or any of its Subsidiaries with respect to any provision of the
Existing Senior Note Indenture, the Existing Senior Notes, the Senior
Subordinated Note Indenture, the Senior Subordinated Notes, the Seller
Preferred Certificate of Designation, the Exchangeable Preferred
Certificate of Designation, the Warrant Agreement or the Warrants or of
the occurrence of any event or change that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action taken
by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action
BCC has taken, is taking and proposes to take with respect thereto;
(xi) Litigation or Other Proceedings: promptly upon any officer of
BCC obtaining knowledge of (a) the institution of, or non-frivolous threat
of, any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or affecting
BCC or any of its Subsidiaries or any property of BCC or any of its
Subsidiaries (collectively, "Proceedings") not previously disclosed in
writing by BCC to Lenders or (b) any material development in any
Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to BCC or Company to enable Lenders and their counsel
to evaluate such matters;
(xii) ERISA Events: promptly upon becoming aware of the occurrence
of or forthcoming occurrence of any material ERISA Event, a written notice
specifying the nature thereof, what action BCC, any of its Subsidiaries or
any of their respective ERISA Affiliates has taken, is taking or proposes
to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the
PBGC with respect thereto;
(xiii) ERISA Notices: with reasonable promptness, copies of (a) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each Pension
Plan; (b) all notices received by BCC, any of its Subsidiaries or any of
their respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
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(xiv) Financial Plans: as soon as practicable and in any event no
later than 30 days after the beginning of each Fiscal Year, a consolidated
financial budget for such Fiscal Year (the "Financial Plan" for such
Fiscal Year), including (a) budgeted consolidated statements of income,
budgeted capital expenditures and Program Payments of BCC and its
Subsidiaries for such Fiscal Year and for each month of such Fiscal Year
on a Station-by-Station basis, together with an explanation of the
assumptions on which such budget is based, and (b) the amount of budgeted
unallocated overhead for such Fiscal Year;
(xv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material insurance coverage maintained
as of the date of such report by BCC and its Subsidiaries and all material
insurance coverage planned to be maintained by BCC and its Subsidiaries in
the immediately succeeding Fiscal Year;
(xvi) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of BCC or Company;
(xvii) Material Contract: promptly, and in any event within ten
Business Days after any Material Contract (other than any Program
Contract) of BCC or any of its Subsidiaries is terminated or amended in a
manner that is materially adverse to BCC or such Subsidiary, as the case
may be, or any new Material Contract (other than any Program Contract) is
entered into, a written statement describing such event with copies of
such material amendments or new contracts, and an explanation of any
actions being taken with respect thereto;
(xviii) UCC Search Report: as promptly as practicable after the date
of delivery to Collateral Agent of any UCC financing statement executed by
any Loan Party pursuant to subsection 3.1I(iv) or 5.8A, copies of
completed UCC searches evidencing the proper filing, recording and
indexing of all such UCC financing statement and listing all other
effective financing statements that name such Loan Party as debtor,
together with copies of all such other financing statements not previously
delivered to Collateral Agent by or on behalf of Company or such Loan
Party; and
(xix) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
5.2 Corporate Existence; Board of Directors; etc.
Except as permitted under subsection 6.7, BCC will, and will cause each of
its Subsidiaries to, at all times preserve and keep in full force and effect its
corporate existence and each of BCC and Company will maintain such number of
directors and elect any new members to its board of directors in such a manner
so as to insure that no "Change of Control" (as such term is defined in the
Existing Senior Note Indenture or the Senior Subordinated Note Indenture) occurs
and that no such "Change of Control" would occur in the event that the holders
of the
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Seller Preferred Stock and/or the Exchangeable Preferred Stock were to become
entitled to elect, and were to elect, additional directors as a result of an
event giving rise to such entitlement pursuant to any document relating to the
Senior Preferred Stock and the Exchangeable Preferred Stock.
5.3 Payment of Taxes and Claims; Tax Consolidation.
A. BCC will, and will cause each of its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if it is
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as (i) such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor and (ii) in the case of a charge or claim which has or may become
a Lien against any of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such charge
or claim.
B. BCC will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than BCC or any of its Subsidiaries).
5.4 Maintenance of Properties; Insurance; Application of Net
Insurance/Condemnation Proceeds.
A. Maintenance of Properties. BCC will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of BCC and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof.
B. Insurance. BCC or Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of BCC and its Subsidiaries as may customarily
be carried or maintained under similar circumstances by corporations of
established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Without limiting the generality
of the foregoing, BCC will maintain or cause to be maintained (i) flood
insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (ii) replacement value casualty insurance on the
Collateral under such policies of
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insurance, with such insurance companies, in such amounts, with such
deductibles, and covering such risks as are at all times satisfactory to
Administrative Agent in its commercially reasonable judgment. Each such policy
of insurance shall, (a) if applicable, name Collateral Agent for the benefit of
Lenders as an additional insured thereunder as its interests may appear and (b)
in the case of each business interruption and casualty insurance policy, contain
a lender's loss payable clause or endorsement, satisfactory in form and
substance to Collateral Agent, that names Collateral Agent for the benefit of
Lenders as the loss payee thereunder for any covered loss in excess of $250,000
and provides for at least 30 days prior written notice to Collateral Agent of
any modification or cancellation of such policy.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Company or any
of its Subsidiaries of any business interruption insurance proceeds
constituting Net Insurance/Condemnation Proceeds, (a) so long as no Event
of Default or Potential Event of Default shall have occurred and be
continuing, Company or such Subsidiary may retain and apply such Net
Insurance/Condemnation Proceeds for working capital purposes, and (b) if
an Event of Default or Potential Event of Default shall have occurred and
be continuing, Company shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the Revolving
Loan Commitments shall be reduced) as provided in subsection 2.4B(iii)(b);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
Company or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds in excess of $250,000 other than from business interruption
insurance, (a) so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, Company shall, or shall
cause one or more of its Subsidiaries to, promptly and diligently apply
such Net Insurance/Condemnation Proceeds to pay or reimburse the costs of
repairing, restoring or replacing the assets in respect of which such Net
Insurance/Condemnation Proceeds were received or, to the extent not so
applied, to prepay the Loans (and/or the Revolving Loan Commitments shall
be reduced) as provided in subsection 2.4B(iii)(b), and (b) if an Event of
Default or Potential Event of Default shall have occurred and be
continuing, Company shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the Revolving
Loan Commitments shall be reduced) as provided in subsection 2.4B(iii)(b).
(iii) Net Insurance/Condemnation Proceeds Received by Collateral
Agent. Upon receipt by Collateral Agent of any Net Insurance/Condemnation
Proceeds as loss payee, (a) if and to the extent Company would have been
required to apply such Net Insurance/Condemnation Proceeds (if it had
received them directly) to prepay the Loans and/or reduce the Revolving
Loan Commitments, Collateral Agent shall, and Company hereby authorizes
Collateral Agent to, apply such Net Insurance/Condemnation Proceeds to
prepay the Loans (and/or the Revolving Loan Commitments shall be reduced)
as provided in subsection 2.4B(iii)(b), and (b) to the extent the
foregoing clause (a) does not apply and Company delivers written notice to
Collateral Agent that it has elected to use such Net
Insurance/Condemnation Proceeds to repair, restore or replace the assets
in
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respect of which they were received, Collateral Agent shall deliver such
Net Insurance/Condemnation Proceeds to Company, and Company shall, or
shall cause one or more of its Subsidiaries to, promptly apply such Net
Insurance/Condemnation Proceeds to the costs of repairing, restoring, or
replacing the assets in respect of which such Net Insurance/Condemnation
Proceeds were received.
D. Application of Key Man Life Insurance Proceeds. Upon receipt of written
notice from Company that it has elected to use all or a portion of any Net Life
Insurance Proceeds to establish a reserve to cover (i) expenses reasonably
estimated by Company to be incurred in connection with engaging a replacement
for the executive subject to the applicable Key Man Life Insurance Policy or
(ii) amounts reasonably determined by Company reflecting adjustments in
Company's Financial Plan as a result of the loss of such executive, Collateral
Agent shall deliver, or shall direct the insurance carrier to deliver, such
portion of such Net Life Insurance Proceeds to Company, and Company shall hold
such Net Life Insurance Proceeds in reserve to be applied against such expenses
and other amounts. Any amount of Net Life Insurance Proceeds delivered to
Company not so applied by Company within one year of their receipt and any Net
Life Insurance Proceeds which Company does not elect to use for the purposes set
forth in the immediately preceding sentence shall be applied by Company or
Collateral Agent, as the case may be, to prepay the Loans (and/or to reduce the
Revolving Loan Commitments) as provided in subsection 2.4B(iii)(f).
5.5 Inspection Rights; Audits of Accounts Receivable; Lender Meeting.
A. Inspection Rights. BCC shall, and shall cause each of its Subsidiaries
to, permit any authorized representatives designated by any Lender to visit and
inspect any of the properties of BCC or of any of its Subsidiaries, to inspect,
copy and take extracts from its and their financial and accounting records, and
to discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants (provided that BCC or Company may,
if it so chooses, be present at or participate in any such discussion), all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may reasonably be requested.
B. Audits of Accounts Receivable. At any time that Revolving Loans are
outstanding, BCC shall, and shall cause each of its Subsidiaries to, permit any
authorized representatives designated by Administrative Agent, upon the request
of Administrative Agent, to conduct one audit of all Accounts Receivable of Loan
Parties during each twelve-month period after the Closing Date, each such audit
to be in scope and substance satisfactory to Administrative Agent, all upon
reasonable notice and at such reasonable times during normal business hours as
may reasonably be requested.
C. Lender Meeting. BCC and Company will, upon the request of Arranging
Agent, Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or at such other location as may be agreed to by
Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
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5.6 Compliance with Laws, etc.; Maintenance of FCC Licenses; etc.
BCC shall comply, and shall cause each of its Subsidiaries to comply, with
the requirements of all applicable laws, rules, regulations and orders
(including all Environmental Laws) of any governmental authority (including any
Communications Regulatory Authority), including the Communications Act,
noncompliance with which could reasonably be expected to cause, individually or
in the aggregate a Material Adverse Effect. BCC shall obtain and maintain in
full force and effect, and cause each of its Subsidiaries to obtain and maintain
in full force and effect, all licenses (including the FCC Licenses), permits,
franchises, certifications or other Governmental Authorizations and approvals
necessary to own, acquire or dispose of their respective properties, to conduct
their respective businesses or to comply with the FCC's or any other
Communications Regulatory Authority's construction, operating and reporting
requirements, the violation of which or the failure to obtain or maintain which
could reasonably be expected to have a Material Adverse Effect.
5.7 Environmental Review and Investigation, Disclosure, Etc.; Company's Actions
Regarding Hazardous Materials Activities, Environmental Claims and
Violations of Environmental Laws.
A. Environmental Review and Investigation. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain, at Company's expense, an independent professional consultant to
review any environmental audits, investigations, analyses and reports relating
to Hazardous Materials prepared by or for Company and (ii) in the event (a)
Administrative Agent reasonably believes that Company has breached any
representation or warranty in subsection 4.13 or that there has been a material
violation of Environmental Laws at any Facility or by Company or any of its
Subsidiaries at any other location or (b) an Event of Default has occurred and
is continuing, conduct its own investigation of any Facility; provided that, in
the case of any Facility no longer owned, leased, operated or used by Company or
any of its Subsidiaries, Company shall only be obligated to use commercially
reasonable efforts to obtain permission for Administrative Agent's professional
consultant to conduct an investigation of such Facility. For purposes of
conducting such a review and/or investigation, Company hereby grants to
Administrative Agent and its agents, employees, consultants and contractors the
right, upon reasonable notice to Company, to enter into or onto any Facilities
currently owned, leased, operated or used by Company or any of its Subsidiaries
and to perform such tests on such property (including taking samples of soil,
groundwater and suspected asbestos-containing materials) as are reasonably
necessary in connection therewith. Any such investigation of any Facility shall
be conducted, unless otherwise agreed to by Company and Administrative Agent,
during normal business hours and, to the extent reasonably practicable, shall be
conducted so as not to interfere with the ongoing operations at such Facility or
to cause any damage or loss to any property at such Facility. Company and
Administrative Agent hereby acknowledge and agree that any report of any
investigation conducted at the request of Administrative Agent pursuant to this
subsection 5.7A will be obtained and shall be used by Administrative Agent and
Lenders for the purposes of Lenders' internal credit decisions, to monitor and
police the Loans and to protect Lenders' security interests, if any, created by
the Loan Documents. Administrative Agent agrees to deliver a copy of any such
report to Company with the understanding that Company
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acknowledges and agrees that (1) it will indemnify and hold harmless
Administrative Agent and each Lender from any costs, losses or
liabilities relating to Company's use of or reliance on such report, (2) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (3) by delivering such report to Company, neither
Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
B. Environmental Disclosure. Company will deliver to Administrative Agent
and Lenders:
(i) Environmental Audits and Reports. As soon as practicable
following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons,
with respect to significant environmental matters at any Facility or with
respect to any Environmental Claims which, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect;
(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly
upon the occurrence thereof, written notice describing in reasonable
detail (a) any Release required to be reported to any federal, state or
local governmental or regulatory agency under any applicable Environmental
Laws, (b) any remedial action taken by Company or any other Person in
response to (1) any Hazardous Materials Activities the existence of which
has a reasonable possibility of resulting in one or more Environmental
Claims having, individually or in the aggregate, a Material Adverse
Effect, or (2) any Environmental Claims that, individually or in the
aggregate, have a reasonable possibility of resulting in a Material
Adverse Effect, and (c) Company's discovery of any occurrence or condition
on any real property adjoining or in the vicinity of any Facility that
could cause such Facility or any part thereof to be subject to any
material restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws.
(iii) Written Communications Regarding Environmental Claims,
Releases, Etc. As soon as practicable following the sending or receipt
thereof by Company or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (b) any Release required to be reported
to any federal, state or local governmental or regulatory agency, and (c)
any request for information from any governmental agency that suggests
such agency is investigating whether Company or any of its Subsidiaries
may be potentially responsible for any Hazardous Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental Impact.
Prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Company or any of its
Subsidiaries that could reasonably be expected to (1) expose Company or
any of its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have, individually or in the
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aggregate, a Material Adverse Effect or (2) affect the ability of Company
or any of its Subsidiaries to maintain in full force and effect
all material Governmental Authorizations required under any Environmental
Laws for their respective operations and (b) any proposed action to be
taken by Company or any of its Subsidiaries to commence manufacturing
or other industrial operations or to modify current operations in a
manner that could reasonably be expected to subject Company or any of its
Subsidiaries to any material additional obligations or requirements
under any Environmental Laws.
(v) Other Information. With reasonable promptness, such other
documents and information as from time to time may be reasonably requested
by Administrative Agent in relation to any matters disclosed pursuant to
this subsection 5.7.
C. Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws.
(i) Remedial Actions Relating to Hazardous Materials Activities.
Company shall promptly undertake, and shall cause each of its Subsidiaries
promptly to undertake, any and all investigations, studies, sampling,
testing, abatement, cleanup, removal, remediation or other response
actions necessary to remove, remediate, clean up or abate any Hazardous
Materials Activity on, under or about any Facility that is in violation of
any Environmental Laws or that presents a material risk of giving rise to
an Environmental Claim. In the event Company or any of its Subsidiaries
undertakes any such action with respect to any Hazardous Materials,
Company or such Subsidiary shall conduct and complete such action in
compliance with all applicable Environmental Laws and in accordance with
the policies, orders and directives of all federal, state and local
governmental authorities except when, and only to the extent that,
Company's or such Subsidiary's liability with respect to such Hazardous
Materials Activity is being contested in good faith by Company or such
Subsidiary.
(ii) Actions with Respect to Environmental Claims and Violations of
Environmental Laws. Company shall promptly take, and shall cause each of
its Subsidiaries promptly to take, any and all actions necessary to (i)
cure any material violation of applicable Environmental Laws by Company or
its Subsidiaries and (ii) make an appropriate response to any
Environmental Claim against Company or any of its Subsidiaries and
discharge any obligations it may have to any Person thereunder where
failure to do so could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
5.8 Matters Relating to Additional Real Property Collateral.
A. Additional Mortgages, Etc. From and after the Closing Date, in the
event that Company acquires any Material Fee Property (other than a Material Fee
Property acquired with purchase money Indebtedness permitted under subsection
6.1(viii)) or any Material Leasehold Property, excluding any such Real Property
Asset the encumbrancing of which requires the consent of any applicable lessor,
where Company is unable to obtain such lessor's consent (any such non-excluded
Real Property Asset being an "Additional Mortgaged Property"), Company
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shall deliver to Collateral Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property, the following:
(i) Additional Mortgage. A fully executed and notarized Mortgage (an
"Additional Mortgage"), in proper form for recording in all appropriate
places in all applicable jurisdictions, encumbering the interest of
Company in such Additional Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel to
Company, in form and substance satisfactory to Collateral Agent and its
counsel, as to the due authorization, execution and delivery by Company of
such Additional Mortgage and such other matters as Collateral Agent may
reasonably request, and (b) if required by Collateral Agent, an opinion of
counsel (which counsel shall be reasonably satisfactory to Collateral
Agent) in the state in which such Additional Mortgaged Property is located
with respect to the enforceability of such Additional Mortgage and such
other matters (including any matters governed by the laws of such state
regarding personal property security interests in respect of any
Collateral) as Collateral Agent may reasonably request, such local counsel
opinion to be substantially in the form of the opinions delivered pursuant
to subsection 3.1H(ii), in each case in form and substance reasonably
satisfactory to Collateral Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold Interest. In
the case of an Additional Mortgaged Property consisting of a Material
Leasehold Property, (a) a Landlord Consent and Estoppel and (b) evidence
that such Material Leasehold Property is a Recorded Leasehold Interest or
the appropriate duly executed documents for recording to make it a
Recorded Leasehold Interest;
(iv) Title Insurance. (a) If required by Administrative Agent, an
ALTA mortgagee title insurance policy or an unconditional commitment
therefor (an "Additional Mortgage Policy") issued by the Title Company
with respect to such Additional Mortgaged Property, in an amount
satisfactory to Collateral Agent, insuring fee simple title to, or a valid
leasehold interest in, such Additional Mortgaged Property vested in
Company and assuring Collateral Agent that such Additional Mortgage
creates a valid and enforceable First Priority mortgage Lien on such
Additional Mortgaged Property, subject only to a standard survey
exception, which Additional Mortgage Policy (1) shall, if requested by
Administrative Agent, include an endorsement for mechanics' liens for
future advances under this Agreement and for any other matters reasonably
requested by Collateral Agent and (2) shall provide for affirmative
insurance and such reinsurance as Collateral Agent may reasonably request,
all of the foregoing in form and substance reasonably satisfactory to
Collateral Agent; and (b) evidence satisfactory to Collateral Agent that
Company has (i) delivered to the Title Company all certificates and
affidavits required by the Title Company in connection with the issuance
of the Additional Mortgage Policy and (ii) paid to the Title Company or to
the appropriate governmental authorities all expenses and premiums of the
Title Company in connection with the issuance of the Additional Mortgage
Policy and all recording and stamp taxes (including
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mortgage recording and intangible taxes) payable in connection with
recording the Additional Mortgage in the appropriate real estate records;
(v) Title Report. If no Additional Mortgage Policy is required with
respect to such Additional Mortgaged Property, a title report issued by
the Title Company with respect thereto, dated not more than 30 days prior
to the date such Additional Mortgage is to be recorded and satisfactory in
form and substance to Collateral Agent;
(vi) Copies of Documents Relating to Title Exceptions. If requested
by Administrative Agent, copies of all recorded documents listed as
exceptions to title or otherwise referred to in the Additional Mortgage
Policy or title report delivered pursuant to clause (v) or (vi) above;
(vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
which may be in the form of a letter from an insurance broker or a
municipal engineer, as to (1) whether such Additional Mortgaged Property
is a Flood Hazard Property and (2) if so, whether the community in which
such Flood Hazard Property is located is participating in the National
Flood Insurance Program, (b) if such Additional Mortgaged Property is a
Flood Hazard Property, Company's written acknowledgement of receipt of
written notification from Administrative Agent (1) that such Additional
Mortgaged Property is a Flood Hazard Property and (2) as to whether the
community in which such Flood Hazard Property is located is participating
in the National Flood Insurance Program, and (c) in the event such
Additional Mortgaged Property is a Flood Hazard Property that is located
in a community that participates in the National Flood Insurance Program,
evidence that Company has obtained flood insurance in respect of such
Flood Hazard Property to the extent required under the applicable
regulations of the Board of Governors of the Federal Reserve System; and
(viii) Environmental Audit. If required by Collateral Agent, reports
and other information, in form, scope and substance satisfactory to
Collateral Agent and prepared by environmental consultants satisfactory to
Collateral Agent, concerning any environmental hazards or liabilities to
which Company or any of its Subsidiaries may be subject with respect to
such Additional Mortgaged Property.
B. Real Estate Appraisals. If required by applicable laws or regulations
as determined by Collateral Agent, Company shall permit an independent real
estate appraiser satisfactory to Collateral Agent, upon reasonable notice, to
visit and inspect any Additional Mortgaged Property for the purpose of preparing
an appraisal of such Additional Mortgaged Property satisfying the requirements
of any applicable laws and regulations (in each case to the extent required
under such laws and regulations as determined by Collateral Agent in its
discretion).
5.9 Maintenance of Key Man Life Insurance Policies.
Company shall maintain Key Man Life Insurance Policies in full force and
effect in an aggregate amount as determined appropriate by Company from time to
time with respect to
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A. Richard Benedek and an aggregate amount of not less than $4,000,000 with
respect to K. James Yager; provided, however, that if at any time the Leverage
Ratio is less than 5.5:1, Company will not thereafter be required to maintain
the Key Man Life Insurance Policies.
5.10 Maintenance of Network Affiliations.
Company shall cause each Station (other than any of the Satellite
Stations) to maintain a Network Affiliation at all times.
5.11 Ownership Reports.
Company shall file Ownership Reports for any Station acquired after the
Closing Date (reflecting such acquisition by Company) with the FCC within a
period of 30 days after the date of consummation of such acquisition.
5.12 Determination of Borrowing Base.
A. Company shall deliver a Borrowing Base Certificate to Administrative
Agent (i) at any time that Revolving Loans are outstanding, upon the request of
Administrative Agent, (ii) together with each delivery to Administrative Agent
of a Notice of Borrowing requesting Revolving Loans, and (iii) at any time any
Revolving Loans are outstanding, as soon as available and in any event no later
than 30 days after the end of each month. Each such Borrowing Base Certificate
shall be dated such date as may be requested by Administrative Agent from time
to time or, in the case of clause (iii), as of the last day of such month.
B. The Accounts Receivable shown on each Borrowing Base Certificate shall
conform to the requirements set forth in the definition of Borrowing Base, and
shall be Company's exclusive property and shall not be subject to any Lien
(other than Liens created under the Collateral Documents and Permitted
Encumbrances).
C. Company will, and will cause each of its Subsidiaries to, keep proper
books of record and account in which full, true and correct entries in
conformity with sound business practices shall be made of all dealings and
transactions in relation to its business and activities (including all dealings
and transactions with respect to the Collateral covered by the Collateral
Documents and Accounts Receivable). Company agrees to furnish to Administrative
Agent, any information which it may reasonably request regarding the
determination and calculation of the Borrowing Base, including correct and
complete copies of any invoices, underlying agreements, instruments, or other
documents and the identity of all obligors.
5.13 Future Capital Contributions; Cash and Cash Equivalents of BCC.
A. Upon receipt by BCC of any Cash proceeds (any such proceeds net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses) from the
issuance of any debt or equity Securities of BCC, BCC shall contribute such net
Cash proceeds to Company as a contribution to capital (provided that if BCC
receives any capital stock as a result of such contribution it shall
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be common stock) to be used by Company in accordance with subsection
2.4B(iii)(g); provided that foregoing shall not apply to proceeds received by
BCC upon the exercise of stock options (i) by directors, officers, employees or
independent contractors (other than Benedek) of BCC or its Subsidiaries or (ii)
by Benedek to the extent the aggregate amount of such proceeds does not exceed
$2,000,000.
B. BCC shall maintain all Cash and Cash Equivalents owned by it in the
Collateral Account in accordance with the terms of the Collateral Account
Agreement.
SECTION 6.
COMPANY'S NEGATIVE COVENANTS
Each of BCC and Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations (other than inchoate indemnification obligations
with respect to claims, losses or liabilities which have not yet arisen), unless
Requisite Lenders shall otherwise give prior written consent, each of BCC and
Company shall perform, and shall cause each of its Subsidiaries, as applicable,
to perform, all covenants in this Section 6.
6.1 Indebtedness.
BCC shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume or guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company may become and remain liable with respect to Contingent
Obligations permitted by subsection 6.4 and, upon any matured obligations
actually arising pursuant thereto, the Indebtedness corresponding to the
Contingent Obligations so extinguished;
(iii) Subject to the limitation contained in subsection
6.1(viii)(c), Company may become and remain liable with respect to
Indebtedness in respect of Capital Leases;
(iv) Company may remain liable with respect to Indebtedness
described in Schedule 6.1 annexed hereto;
(v) Company may become and remain liable with respect to Program
Obligations and deferred employee compensation;
(vi) Company may remain liable with respect to Indebtedness
evidenced by the Existing Senior Notes;
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(vii) BCC may become and remain liable with respect to Indebtedness
evidenced by the Senior Subordinated Notes (and original issue discount
accreted in accordance with the terms thereof); and
(viii) Company may become and remain liable with respect to
Indebtedness, the proceeds of which are used within 180 days of the
incurrence thereof to purchase assets in the ordinary course of business;
provided that (a) the assets purchased with the proceeds of such
Indebtedness are property or equipment relating to the Stations or the
corporate headquarters of Company, (b) at least 75% of the purchase price
of such assets is provided by the proceeds of such Indebtedness, and (c)
the aggregate principal amount of such Indebtedness plus the aggregate
amount of outstanding Indebtedness of Company with respect to Capital
Leases shall not exceed (1) $4,000,000 at any time until the Leverage
Ratio is less than or equal to 5.75:1, and (2) $7,500,000 thereafter.
6.2 Liens and Related Matters.
A. Prohibition on Liens. BCC shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of BCC or any of its Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, or file or permit the filing of,
or permit to remain in effect, any financing statement or other similar notice
of any Lien with respect to any such property, asset, income or profits under
the Uniform Commercial Code of any State or under any similar recording or
notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 6.2 annexed hereto; and
(iv) Liens securing Indebtedness permitted pursuant to subsection
6.1(viii) provided that such Liens relate solely to the assets financed
with such Indebtedness.
B. Equitable Lien in Favor of Lenders. If BCC or any of its Subsidiaries
shall create or assume any Lien upon any of its properties or assets, whether
now owned or hereafter acquired, other than Liens excepted by the provisions of
subsection 6.2A, it shall make or cause to be made effective provision whereby
the Obligations will be secured by such Lien equally and ratably with any and
all other Indebtedness secured thereby as long as any such Indebtedness shall be
so secured; provided that, notwithstanding the foregoing, this covenant shall
not be construed as a consent by Requisite Lenders to the creation or assumption
of any such Lien not permitted by the provisions of subsection 6.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither BCC nor any of
its Subsidiaries shall enter into
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any agreement (other than the Senior Subordinated Note Indenture or any other
agreement prohibiting only the creation of Liens securing Subordinated
Indebtedness) prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein, BCC will not, and will not permit any
of its Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to (i) pay dividends or make any other distributions on
any of such Subsidiary's capital stock owned by Company or any other Subsidiary
of Company, (ii) repay or prepay any Indebtedness owed by such Subsidiary to
Company or any other Subsidiary of Company, (iii) make loans or advances to
Company or any other Subsidiary of Company, or (iv) transfer any of its property
or assets to Company or any other Subsidiary of Company except as provided in
the Existing Senior Note Indenture and the Senior Subordinated Note Indenture.
6.3 Investments; Joint Ventures.
BCC shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, make or own any Investment in any Person, including any Joint
Venture, except:
(i) BCC and Company may make and own Investments in Cash
Equivalents, subject, in the case of BCC, to compliance with the terms of
subsection 5.13;
(ii) Company may continue to own the Investments owned by it as of
the Closing Date in License Sub;
(iii) BCC may continue to own the Investments owned by it in Company
as of the Closing Date;
(iv) Company may make Consolidated Capital Expenditures permitted by
subsection 6.8;
(v) Subject to the limitations contained in subsection 6.7(viii),
Company may make LMA Capital Expenditures;
(vi) Company may continue to own the Investments owned by it and
described in Schedule 6.3 annexed hereto;
(vii) Company may make and own Investments consisting of promissory
notes or other Securities received in connection with Asset Sales
permitted under subsection 6.7(v) limited to an amount not in excess of
10% of the total sales price of the assets sold in such Asset Sale;
(viii) Company may make loans to employees to fund the exercise
price of options to purchase stock of BCC;
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(ix) Company may make and own Investments in Satellite Stations
received in exchange for Satellite Stations as permitted by subsection
6.7(vi);
(x) Company may make and own Investments (in addition to the
Investments set forth on Schedule 6.3 annexed hereto) in Joint Ventures
and Company and BCC may make and own Investments in Special Purpose
Subsidiaries engaging in businesses related to television broadcasting in
an aggregate amount not to exceed $10,000,000 less the aggregate principal
amount of any Existing Senior Notes or Senior Subordinated Notes
repurchased under subsection 6.5(ii); provided that any Special Purpose
Subsidiary which is a direct Subsidiary of BCC and which is a party to a
Permitted LMA or makes a Permitted Acquisition in accordance with
subsection 6.7(ix) shall have (a) executed and delivered to Collateral
Agent a guaranty of the Obligations hereunder substantially in the form of
the License Sub Guaranty and otherwise in form and substance reasonably
satisfactory to Collateral Agent and (b) granted to Collateral Agent, for
the benefit of Lenders, as security for the Obligations, a First Priority
security interest in all Material Fee Properties and Material Leasehold
Properties and all personal property and fixtures of such Special Purpose
Subsidiary pursuant to documentation similar to the security documents
delivered on the Closing Date and otherwise in form and substance
satisfactory to Collateral Agent, unless such Special Purpose Subsidiary
is not 100% owned by BCC and any equity holder which is other than an
Affiliate of BCC refuses to consent to the granting of such guaranty and
security interests after BCC has used its good faith efforts to obtain
such consent; and
(xi) Company may make Investments in connection with a Permitted
Acquisition in the stock or other equity interests of an entity owning the
Television Station Asset Group being acquired, provided that immediately
following the consummation of such acquisition, such entity is merged with
and into Company with Company being the surviving corporation.
6.4 Contingent Obligations.
BCC shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create or become or remain liable with respect to any Contingent
Obligation, except:
(i) License Sub may become and remain liable with respect to
Contingent Obligations in respect of the License Sub Guaranty and the
Existing Senior Note Indenture;
(ii) BCC may become and remain liable with respect to the BCC
Guaranty;
(iii) Company may become and remain liable with respect to
Contingent Obligations under Hedge Agreements; and
(iv) Company may remain liable with respect to Contingent
Obligations described in Schedule 6.4 annexed hereto.
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6.5 Restricted Junior Payments.
BCC shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, declare, order, pay, make or set apart any sum for any Restricted
Junior Payment, except:
(i) BCC may make regularly scheduled payments of interest in respect
of Senior Subordinated Notes after May 15, 2001, and pay any Liquidated
Damages required to be paid, in accordance with the terms of, and only to
the extent required by, and subject to the subordination provisions
contained in, the Senior Subordinated Note Indenture;
(ii) At any time the Leverage Ratio is less than or equal to 5.75:1,
BCC may repurchase Existing Senior Notes and/or Senior Subordinated Notes
in an aggregate principal amount not to exceed $10,000,000 less the
aggregate amount of Investments made pursuant to subsection 6.3(x);
(iii) BCC may pay any Liquidated Damages required to be paid in
connection with the Exchangeable Preferred Stock;
(iv) BCC may, with respect to each period for which Company
qualifies as an S Corporation under the Code or any similar provision of
state law make cash distributions of Tax Amounts to Benedek; provided that
prior to any such distribution (a) Administrative Agent has received an
Officers' Certificate certifying that Company qualified as an S
Corporation for such period under the Code or in the states for which
distributions are being made and Company's most recent audited financial
statements reflect that company was treated as an S Corporation for the
applicable period, (b) Benedek shall have entered into a written agreement
with BCC in form and substance satisfactory to Arranging Agent and
Administrative Agent providing that if any amount distributed to Benedek
pursuant to this clause (iv) is later determined, to have been, as a
result of a change in law or the failure of Company to effect or maintain
a valid S Corporation election or otherwise, in excess of the amount
permitted to be distributed or paid under this clause (iv), such excess
shall be refunded to Company at least five Business Days prior to the next
due date of individual estimated income tax payments and (c) Company shall
have requested and received any excess payments required to be refunded by
Benedek pursuant to the agreement referenced in clause (b) above;
(v) Company may make Cash dividends or Cash distributions to BCC;
and
(vi) BCC or Company may redeem or repurchase Warrants in an amount
not exceeding the Unutilized Compensation Amount as of the date of such
redemption or repurchase.
6.6 Financial Covenants.
A. Minimum Cash Interest Coverage Ratio. BCC and Company shall not permit
the ratio of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Cash Interest
Expense for
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any four-Fiscal Quarter period ending during any of the periods set forth below
to be less than the correlative ratio indicated:
================================================================================
Minimum
Period Cash Interest
Coverage Ratio
================================================================================
07/01/96 through 09/30/96 1.70:1
- --------------------------------------------------------------------------------
10/01/96 through 09/30/97 1.90:1
- --------------------------------------------------------------------------------
10/01/97 through 09/30/98 2.00:1
- --------------------------------------------------------------------------------
10/01/98 through 09/30/99 2.15:1
- --------------------------------------------------------------------------------
10/01/99 through 09/30/2000 2.40:1
- --------------------------------------------------------------------------------
10/01/2000 through 09/30/01 2.80:1
- --------------------------------------------------------------------------------
Thereafter 2.00:1
================================================================================
B. Minimum Fixed Charge Coverage Ratio. BCC and Company shall not permit
the Fixed Charge Coverage Ratio as of the last day of (i) the third Fiscal
Quarter of 1996 for the Fiscal Quarter then ended, (ii) the fourth Fiscal
Quarter of 1996 for the two Fiscal Quarters then ended, (iii) the first Fiscal
Quarter of 1997 for the three Fiscal Quarters then ended or (iv) any Fiscal
Quarter thereafter for the four-Fiscal Quarter period ended on such date, to be
less than 1.15:1.
C. Maximum Leverage Ratio. BCC and Company shall not permit the Leverage
Ratio as of the last day of any Fiscal Quarter ending during any of the periods
set forth below to exceed the correlative ratio indicated:
================================================================================
Maximum
Period Leverage Ratio
================================================================================
- --------------------------------------------------------------------------------
07/01/96 through 09/30/96 7.10:1
- --------------------------------------------------------------------------------
10/01/96 through 09/30/97 6.75:1
- --------------------------------------------------------------------------------
10/01/97 through 09/30/98 6.50:1
- --------------------------------------------------------------------------------
10/01/98 through 09/30/99 5.75:1
- --------------------------------------------------------------------------------
10/01/99 through 09/30/2000 5.75:1
- --------------------------------------------------------------------------------
10/01/2000 through 09/30/01 5.00:1
- --------------------------------------------------------------------------------
Thereafter 4.75:1
================================================================================
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D. Maximum Credit Facilities Leverage Ratio. BCC and Company shall not
permit the Credit Facilities Leverage Ratio as of the last day of any Fiscal
Quarter ending during any of the periods set forth below to exceed the
correlative ratio indicated:
================================================================================
Maximum Credit
Period Facilities
Leverage Ratio
================================================================================
- --------------------------------------------------------------------------------
07/01/96 through 09/30/97 2.45:1
- --------------------------------------------------------------------------------
10/01/97 through 09/30/98 2.20:1
- --------------------------------------------------------------------------------
10/01/98 through 09/30/99 1.95:1
- --------------------------------------------------------------------------------
10/01/99 through 09/30/2000 1.45:1
- --------------------------------------------------------------------------------
10/01/2000 through 09/30/01 0.85:1
- --------------------------------------------------------------------------------
Thereafter 0.50:1
================================================================================
E. Maximum Program Payments. BCC and Company shall not create, incur,
assume or otherwise become or remain liable for any Program Obligations with
respect to which Program Payments are required during any period set forth below
which exceed the correlative maximum amount indicated:
==========================================================================
Fiscal Year Maximum Program
(or other Payments
specified period)
==========================================================================
07/01/96 through
12/31/96 $3,750,000
- --------------------------------------------------------------------------
1997 $7,500,000
- --------------------------------------------------------------------------
1998 $8,000,000
- --------------------------------------------------------------------------
1999 $8,500,000
- --------------------------------------------------------------------------
2000 and each
year thereafter $10,000,000
==========================================================================
F. Minimum Consolidated Adjusted EBITDA. BCC and Company shall not permit
Consolidated Adjusted EBITDA for any Fiscal Year set forth below to be less than
the correlative amount indicated; provided, however, that following an Asset
Sale of a Television Station Asset Group permitted under subsection 6.7(v), each
of the minimum Consolidated Adjusted EBITDA amounts set forth below shall be
adjusted downward by an amount equal to the portion of Consolidated Adjusted
EBITDA attributable to such Television Station Asset Group during the
four-Fiscal Quarter period most recently ended prior to such Asset Sale:
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========================================================================
Minimum
Fiscal Consolidated Adjusted
Year EBITDA
========================================================================
1996 $53,000,000
- ------------------------------------------------------------------------
1997 $55,000,000
- ------------------------------------------------------------------------
1998 $60,000,000
- ------------------------------------------------------------------------
1999 and each
year thereafter $62,000,000
========================================================================
G. Certain Calculations. With respect to calculations of Consolidated
Adjusted EBITDA, Consolidated Interest Expense and Consolidated Cash Interest
Expense for any four-Fiscal Quarter period including the Closing Date, such
calculations shall be made on a pro forma basis assuming, in each case, that the
Closing Date, the Acquisitions, the issuance and sale of the Seller Preferred
Stock and the Exchangeable Preferred Stock and the related borrowings by Company
and BCC pursuant to this Agreement and the Senior Subordinated Note Indenture
occurred on the first day of the applicable four-Fiscal Quarter period and
assuming further, for purposes of calculation of the pro forma interest accrued
on Loans during such periods prior to the Closing Date, that all Loans
outstanding were Eurodollar Rate Loans and that the applicable reference
interest rates were the average effective Adjusted Eurodollar Rates on the Loans
for the period from the Closing Date through the date of determination, all such
calculations to be in form and substance satisfactory to Administrative Agent.
Further, for purposes of such calculations, Consolidated Adjusted EBITDA on a
pro forma basis for the second, third and fourth Fiscal Quarters of 1995 and the
first Fiscal Quarter of 1996 shall be as set forth on Schedule 6.6 annexed
hereto and Consolidated Adjusted EBITDA on a pro forma basis for the second
Fiscal Quarter of 1996 shall be calculated in a manner consistent with the pro
forma calculations of Consolidated Adjusted EBITDA for such prior Fiscal
Quarters of 1995 and 1996 and otherwise on a basis reasonably satisfactory to
Administrative Agent. With respect to calculations of Consolidated Adjusted
EBITDA for purposes of the definitions of "Leverage Ratio", "Credit Facilities
Leverage Ratio" and "Pro Forma Fixed Charge Coverage Ratio" following an Asset
Sale of a Television Station Asset Group in accordance with subsection 6.7(v) or
a Permitted Acquisition in accordance with subsection 6.7(viii), such
calculations shall be made on a pro forma basis as if such Asset Sale or
Permitted Acquisition occurred on the first day of the applicable four-Fiscal
Quarter period, all such calculations to be in form and substance satisfactory
to Administrative Agent.
6.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
BCC shall not, and shall not permit any of its Subsidiaries to, alter the
corporate, capital or legal structure of BCC or any of its Subsidiaries, or
enter into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of,
in one transaction or a series of transactions, all or any part of its business,
property or assets,
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whether now owned or hereafter acquired, or acquire by purchase or otherwise all
or substantially all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person or any division or line of
business of any Person, or enter into any LMA or make any LMA Capital
Expenditures, or permit any Special Purpose Subsidiary to enter into any LMA or
make any acquisition of any Television Asset Group, except:
(i) Company may make the Acquisitions on the Closing Date and
Company, Brissette and Brissette's Subsidiaries may consummate the
Reorganization, in each case subject to the provisions contained herein;
(ii) Company may make Consolidated Capital Expenditures permitted
under subsection 6.8 and Investments permitted under subsection 6.3;
(iii) Company may dispose of obsolete, worn out or surplus property
or other assets reasonably determined by Company as no longer useful or
necessary to the operation of the business in the ordinary course of
business;
(iv) Company may enter into leases as the lessor or sublessor in the
ordinary course of business as long as such leases do not materially
interfere with the operation of the Stations or the conduct of business of
Company or result in a material diminution in the value of any Collateral
as security for the Obligations;
(v) subject to subsection 6.12, Company may make Asset Sales of a
Television Station Asset Group; provided that (a) the consideration
received for such assets shall be in an amount at least equal to the fair
market value thereof and in no event less than the product of (1) eight
multiplied by (2) that portion of Consolidated Adjusted EBITDA (excluding
any allocation of corporate overhead expenses) for the most recently ended
four-Fiscal Quarter period of Company attributable to the assets subject
to such Asset Sale (the "Minimum Amount"); (b) the cash consideration
received shall be equal to the greater of the Minimum Amount and 90% of
the total consideration received; (c) the Net Asset Sale Proceeds shall be
applied as required by subsection 2.4B(iii)(a); (d) on a pro forma basis,
after giving effect to such Asset Sale and related prepayment hereunder,
Company shall be in compliance with all of the covenants hereunder as
evidenced in an Officers' Certificate delivered to Administrative Agent,
and Administrative Agent shall have received evidence reasonably
satisfactory to it that Company will be in compliance with all of the
covenants hereunder through the end of the next full Fiscal Year following
any such Asset Sale; (e) the assets subject to such Asset Sales in any
Fiscal Year did not generate more than 10% of Consolidated Adjusted EBITDA
as of the most recently ended four-Fiscal Quarter period prior to the
sale; and (f) the sum of each of the percentages of Consolidated Adjusted
EBITDA generated by the assets subject to each such Asset Sale occurring
during the period from the Closing Date through the date of determination,
as computed according to the foregoing clause (e), shall not exceed 25%;
(vi) Company may sell or exchange Satellite Stations, provided
Company receives fair market consideration in such sale or exchange;
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(vii) Company may enter into Permitted LMAs;
(viii) Company may make Permitted Acquisitions or LMA Capital
Expenditures; provided that (a) no Event of Default or Potential Event of
Default shall have occurred and be continuing, (b) no Revolving Loans
shall be outstanding, (c) with respect to any LMA Capital Expenditures in
excess of $1,000,000 in the aggregate or any Permitted Acquisition,
Company shall have delivered to Administrative Agent an Officers'
Certificate, in form and substance reasonably satisfactory to
Administrative Agent, demonstrating that (1) BCC and its Subsidiaries, on
a pro forma basis after giving effect to the Permitted Acquisition or LMA
Capital Expenditure, shall be in compliance with all of the covenants
hereunder and (2) the Pro Forma Fixed Charge Coverage Ratio calculated
with respect to such Permitted Acquisition or LMA Capital Expenditure is
equal to or greater than 1.05:1, (d) any assets acquired pursuant to the
Permitted Acquisition or LMA Capital Expenditure (other than assets
subject to a Lien permitted under subsection 6.2A(iv)) shall be subject to
a First Priority Lien of the Collateral Agent pursuant to the Collateral
Documents and (e) the aggregate amount of all LMA Capital Expenditures and
expenditures made by Company in connection with Permitted Acquisitions
shall not exceed $20,000,000 less the sum of (x) the aggregate principal
amount of any Existing Senior Notes and Senior Subordinated Notes
repurchased under subsection 6.5(ii) plus (y) the aggregate amount of
Investments made by Company under subsection 6.3(x);
(ix) any Special Purpose Subsidiary may make Permitted Acquisitions
and enter into Permitted LMAs; provided, however, that (a) notwithstanding
anything in this Agreement to the contrary, such Special Purpose
Subsidiary shall not be liable, and shall not create, incur, assume,
guaranty or otherwise become or remain liable, directly or indirectly,
with respect to any Indebtedness other than any guaranty by such Special
Purpose Subsidiary of the Obligations, (b) prior to entering into any
Permitted LMA, Company and such Special Purpose Subsidiary shall have
entered into an agreement providing for a fair and reasonable allocation
of any shared overhead expenses with respect to such Permitted LMA, which
agreement shall be in form and substance satisfactory to Administrative
Agent, and (c) together with each delivery of financial statements of BCC
and its Subsidiaries pursuant to subsections 5.1(ii) and 5.1(iii), Company
shall provide to Administrative Agent an accounting in reasonable detail
of the allocation of shared overhead expenses for the Fiscal Quarter most
recently ended; and
(x) if as a result of the Brissette Acquisition, Company is required
by the FCC to divest itself of certain Stations in order to comply with
the FCC's duopoly rule and Company desires to swap or exchange such
Stations for other television broadcast stations rather than selling such
Stations, Company may make such swap or exchange with the consent of
Requisite Lenders. Lenders agree to consider any proposal by Company to
enter into to such a swap or exchange in good faith and not to withhold
their consent unless after considering all information submitted by
Company and all factors deemed relevant by Lenders in evaluating the
potential impact of the transaction on the creditworthiness of BCC and
Company, Lenders determine that it would not be prudent to grant such
consent.
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<PAGE>
6.8 Consolidated Capital Expenditures.
BCC shall not, and shall not permit its Subsidiaries to, make or incur
Consolidated Capital Expenditures, in any period indicated below, in an
aggregate amount in excess of the corresponding amount (the "Maximum
Consolidated Capital Expenditures Amount") set forth below opposite such period;
provided that the Maximum Consolidated Capital Expenditures Amount for any such
period shall be increased by an amount equal to (i) the excess, if any, of the
Maximum Consolidated Capital Expenditures Amount for the previous period over
the actual amount of Consolidated Capital Expenditures for such previous period
and/or, (ii) at Company's option, a portion of the amount of Maximum
Consolidated Capital Expenditures Amount for the immediately succeeding period
(which, to the extent of such increase shall reduce the amount of the Maximum
Consolidated Capital Expenditure Amount for such succeeding period), provided
that in no event shall (a) the amount of any increase to the Maximum
Consolidated Capital Expenditures Amount pursuant to the foregoing clause (i) in
any period exceed 50% of the Maximum Consolidated Capital Expenditures Amount
for the previous period and (b) the amount of any increase to the Maximum
Consolidated Capital Expenditures Amount pursuant to the foregoing clause (ii)
in any period exceed 50% of the Maximum Consolidated Capital Expenditures Amount
for the immediately succeeding period.
================================================================================
Fiscal Year (or other
specified period) Maximum Consolidated
Capital Expenditures
================================================================================
Closing Date through
12/31/96 $6,500,000
- --------------------------------------------------------------------------------
1997 $7,500,000
- --------------------------------------------------------------------------------
1998 $8,000,000
- --------------------------------------------------------------------------------
1999 and each
year thereafter $6,500,000
================================================================================
6.9 Sales and Lease-Backs.
BCC shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, become or remain liable as lessee or as a guarantor or other
surety with respect to any lease, whether an Operating Lease or a Capital Lease,
of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease.
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6.10 Sale or Discount of Receivables.
BCC shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, sell with recourse, or discount or otherwise sell for less than
the face value thereof, any of its notes or Accounts Receivable.
6.11 Transactions with Shareholders and Affiliates.
BCC shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of BCC,
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to BCC or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate; provided that the foregoing restriction shall not apply to (i) any
transaction between BCC or Company and any of their respective wholly owned
Subsidiaries or between any of BCC's wholly owned Subsidiaries or between any of
Company's wholly owned Subsidiaries, (ii) reasonable and customary fees paid to
members of the Boards of Directors of BCC or Company and its Subsidiaries, (iii)
annual cash compensation to Benedek in a dollar amount (the "Compensation
Limit") not exceeding (a) in Fiscal Year 1996, $750,000, (b) in Fiscal Year
1997, $1,000,000 and (c) in each Fiscal Year thereafter, 110% of the
Compensation Limit for the prior Fiscal Year or (iv) loans or advances made to
directors, officers, employees or independent contractors to fund the exercise
price of options to purchase stock of BCC or its Subsidiaries or for moving,
entertainment, travel expenses, drawing accounts and similar expenditures made
in the ordinary course of business.
6.12 Disposal of Subsidiary Stock.
BCC and Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except (a) to qualify directors if
required by applicable law and (b) as contemplated by the Collateral
Documents; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including
such Subsidiary), except to BCC, Company or another Subsidiary of Company
(other than License Sub) as permitted by subsection 6.7(v), or to qualify
directors if required by applicable law.
6.13 Conduct of Business.
From and after the Closing Date, Company shall not engage, and shall not
permit any of its Subsidiaries to engage, in any business other than (i) the
businesses engaged in by Company and its Subsidiaries on the Closing Date and
similar or related businesses and (ii) such
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other lines of business as may be consented to by Requisite Lenders. License Sub
shall engage in no business other than the holding of FCC Licenses and the
performance of its obligations under the License Sub Guaranty and its guaranty
of the Existing Senior Notes and shall own no material assets other than FCC
Licenses. None of Company nor any Subsidiary of Company other than License Sub
shall own any FCC License other than as set forth on Schedule 4.1E annexed
hereto. BCC shall engage in no business and have no assets other than (i) owning
the stock of Company, (ii) the issuance of and activities related to the
maintenance and servicing of the Seller Preferred Stock, the Exchangeable
Preferred Stock and Warrants and the Senior Subordinated Notes as permitted
hereunder, including performing its obligations as a reporting company under the
Securities Act and the Exchange Act, (iii) the performance of its obligations
under the BCC Guaranty and (iv) the receipt of Cash dividends or Cash
distributions from Company in accordance with the provisions hereof.
6.14 Amendments or Waivers of Certain Related Agreements; Payments on Existing
Senior Notes; Designation of "Designated Senior Debt".
A. Amendments or Waivers of Certain Related Agreements. Neither BCC nor
any of its Subsidiaries will agree to any amendment to, request any waiver of
(other than a waiver for which no fee is paid and no other concessions or
considerations are granted by BCC or Company), or waive any of their respective
rights under, any of the Related Agreements (other than any amendment or waiver
described in the next succeeding sentence) without in each case obtaining the
prior written consent of Administrative Agent and Requisite Lenders (and giving
notice to Arranging Agent) to such amendment, request or waiver. Notwithstanding
the foregoing, BCC and its Subsidiaries may agree to amend or waive any
provisions of the Related Agreements (i) to cure any ambiguity, to correct or
supplement any provision therein which may be defective or inconsistent with any
other provision therein, or (ii) to comply with the Trust Indenture Act of 1939,
as amended, or (iii) to make modifications of a technical or clarifying nature
or which are no less favorable to the Lenders, in the reasonable opinion of
Administrative Agent and Requisite Lenders, than the provisions of the Related
Agreements as in effect on the Closing (for the purposes of this subsection
6.14, any amendment, modification or change which would extend the maturity or
reduce the amount of any payment of principal on the Existing Senior Notes or
the Subordinated Indebtedness or which would reduce the rate or extend the date
for payment of interest thereon, provided that no fee is payable in connection
therewith, shall be deemed to be an amendment, modification or change that is no
less favorable to the Lenders).
B. Payments on Existing Senior Notes. Except as permitted by subsection
6.5(ii), neither BCC nor any of its Subsidiaries shall make any prepayments,
redemptions or repurchases of the Existing Senior Notes without the prior
written consent of Administrative Agent and Requisite Lenders. Neither BCC nor
any of its Subsidiaries will defease, or make any payments the effect of which
is to defease (whether pursuant to the defeasance provisions of the Existing
Senior Notes or otherwise), the Existing Senior Notes, in whole or in part,
without in each case obtaining the prior written consent of Administrative Agent
and Requisite Lenders.
C. Designation of "Designated Senior Debt". Neither BCC nor Company shall
designate any Indebtedness (other than the Obligations and the Existing Senior
Notes) as "Designated Senior Debt", as defined in the Senior Subordinated Note
Indenture, for purposes
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of the Senior Subordinated Note Indenture without the prior written consent of
Administrative Agent.
6.15 Fiscal Year
Neither BCC nor any of its Subsidiaries shall change its Fiscal Year-end
from December 31.
6.16 Limitation on Creation of Subsidiaries.
BCC will not, and will not permit any of its Subsidiaries to, establish,
create or acquire any new Subsidiary other than a Special Purpose Subsidiary.
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur:
7.1 Failure to Make Payments When Due.
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; or failure by Company to pay
any interest on any Loan or any fee or any other amount due under this Agreement
within three Business Days after the date due; or
7.2 Default in Other Agreements.
(i) Failure of BCC or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
7.1) or Contingent Obligations with an aggregate principal amount of $1,000,000
or more beyond the end of any grace period provided therefor; or (ii) breach or
default by BCC or any of its Subsidiaries with respect to any other material
term of (a) one or more items of Indebtedness or Contingent Obligations in the
aggregate principal amount referred to in clause (i) above or (b) any loan
agreement, mortgage, indenture or other agreement relating to such item(s) of
Indebtedness or Contingent Obligation(s), if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness or
Contingent Obligation(s) (or a trustee on behalf of such holder or holders) to
cause, that Indebtedness or Contingent Obligation(s) to become or be declared
due and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise); or
7.3 Breach of Certain Covenants.
Failure of BCC or any of its Subsidiaries to perform or comply with any
term or condition contained in subsection 2.5 or 5.2 or Section 6 of this
Agreement; or
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7.4 Breach of Warranty.
Any representation, warranty, certification or other statement made by any
Loan Party or any of its Subsidiaries in any Loan Document or in any statement
or certificate at any time given by any Loan Party or any of its Subsidiaries in
writing pursuant hereto or thereto or pursuant to a request of any Agent or
Lenders made pursuant hereto or pursuant to the Collateral Documents shall be
false in any material respect on the date as of which made; or
7.5 Other Defaults Under Loan Documents.
Any Loan Party shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 7, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) an officer of Company or such Loan Party becoming aware of such default
or (ii) receipt by Company and such Loan Party of notice from Administrative
Agent or any Lender of such default; or
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of BCC or any of its Subsidiaries in an involuntary
case under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief shall be granted under any applicable
federal or state law; or (ii) an involuntary case shall be commenced against BCC
or any of its Subsidiaries under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect; or
a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over BCC or any of its Subsidiaries, or over all
or a substantial part of its property, shall have been entered; or there shall
have occurred the involuntary appointment of an interim receiver, trustee or
other custodian of BCC or any of its Subsidiaries for all or a substantial part
of its property; or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of BCC or any of
its Subsidiaries, and any such event described in this clause (ii) shall
continue for 60 days unless dismissed, bonded or discharged; or
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) BCC or any of its Subsidiaries shall have an order for relief entered
with respect to it or commence a voluntary case under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or BCC or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) BCC or any of its Subsidiaries
shall be unable, or shall fail generally, or shall admit in writing its
inability, to pay its debts as such debts become due; or the Board of Directors
of BCC or any of its
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Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to in clause (i)
above or this clause (ii); or
7.8 Judgments and Attachments.
Any money judgment, writ or warrant of attachment or similar process
involving in the aggregate at any time an amount in excess of $1,000,000 shall
be entered or filed against BCC or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 60 days (or in any event later than five days prior to the date
of any proposed sale thereunder); or
7.9 Dissolution.
Any order, judgment or decree shall be entered against BCC or any of its
Subsidiaries decreeing the dissolution or split up of BCC or that Subsidiary and
such order shall remain undischarged or unstayed for a period in excess of 30
days; or
7.10 Employee Benefit Plans.
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
BCC, any of its Subsidiaries or any of their respective ERISA Affiliates in
excess of $1,000,000 during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $1,000,000; or
7.11 Material Adverse Effect.
Any event or change shall occur that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect; or
7.12 Change in Executive Officers of Company.
Either Benedek or K. James Yager, or any successor to either Person
satisfactory to Requisite Lenders hereunder, shall cease, for any reason
whatsoever, to continuously perform their respective present duties as executive
officers of Company, without a successor satisfactory to Requisite Lenders in
their reasonable discretion having commenced to perform the duties of such
executive officer within 120 days after such cessation; or
7.13 Change in Control.
(i) BCC shall cease to own 100% of the capital stock of Company, (ii)
Benedek or his estate or family members or trusts for the benefit of his family
members shall cease to have a presently exercisable right to vote at least 51%
of all issued and outstanding equity Securities of BCC entitled (without regard
to the occurrence of any contingency) to vote for the election
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of members of the Board of Directors of BCC, (iii) Benedek or his estate or
family members or trusts for the benefit of his family members shall cease to
beneficially own at least 51% of the economic value of BCC, or (iv) a "Change of
Control" under the Existing Senior Note Indenture or under the Senior
Subordinated Note Indenture shall occur; or
7.14 FCC Licenses.
Any material FCC License shall be cancelled, terminated, rescinded,
revoked, suspended, impaired, otherwise finally denied renewal, or otherwise
modified in any material adverse respect, or shall be renewed on terms that
materially and adversely affect the economic or commercial value or usefulness
thereof; or any material FCC License shall cease to be in full force and effect;
or the grant of any material FCC License shall have been stayed, vacated or
reversed, or modified in any material adverse respect by judicial or
administrative proceedings; or any administrative law judge or other
representative of the FCC shall have issued an initial decision in any
non-comparative license renewal, license revocation or any comparative (multiple
applicant) proceeding to the effect that any material FCC License should be
revoked or not be renewed; or any other proceeding shall have been instituted by
or shall have been commenced before any court, the FCC or any other regulatory
body that could reasonably be expected to result in (i) cancellation,
termination, rescission, revocation, material impairment, suspension or denial
of renewal of a material FCC License, or (ii) a modification of a material FCC
License in a material adverse respect or a renewal thereof on terms that
materially and adversely affect the economic or commercial value or usefulness
thereof; or
7.15 Invalidity of Guaranties; Failure of Security; Repudiation of Obligations.
At any time after the execution and delivery thereof, (i) any Guaranty for
any reason, other than the satisfaction in full of all Obligations, shall cease
to be in full force and effect (other than in accordance with its terms) or
shall be declared by a court of competent jurisdiction to be null and void, (ii)
any Collateral Document shall cease to be in full force and effect (other than
by reason of a release of Collateral thereunder in accordance with the terms
hereof or thereof, the satisfaction in full of the Obligations or any other
termination of such Collateral Document in accordance with the terms hereof or
thereof) or shall be declared null and void by a court of competent
jurisdiction, or Collateral Agent shall not have or shall cease to have a valid
and perfected First Priority Lien in any Collateral purported to be covered
thereby, in each case for any reason other than the failure of Collateral Agent
or any Lender to take any action within its control, or (iii) any Loan Party
shall contest the validity or enforceability of any Loan Document in writing or
deny in writing that it has any further liability, including with respect to
future advances by Lenders, under any Loan Document to which it is a party; or
7.16 Subordinated Indebtedness.
BCC or any of its Subsidiaries shall fail to comply with the subordination
provisions contained in the Senior Subordinated Note Indenture or any other
agreement governing Subordinated Indebtedness;
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THEN (i) upon the occurrence of any Event of Default described in subsection 7.6
or 7.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans and (b) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by Company, and the obligation of
each Lender to make any Loan, hereunder shall thereupon terminate, and (ii) upon
the occurrence and during the continuation of any other Event of Default,
Administrative Agent shall, upon the written request or with the written consent
of Requisite Lenders, by written notice to Company, declare all or any portion
of the amounts described in clauses (a) and (b) above to be, and the same shall
forthwith become, immediately due and payable, and the obligation of each Lender
to make any Loan hereunder shall thereupon terminate.
Notwithstanding anything contained in the second preceding paragraph, if
at any time within 60 days after an acceleration of the Loans pursuant to clause
(ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 9.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude Administrative Agent or
Lenders from exercising any of the rights or remedies available to them under
any of the Loan Documents, even if the conditions set forth in this paragraph
are met.
SECTION 8.
AGENTS
8.1 Appointment.
A. Appointment of Agents. Pearl Street L.P. is hereby appointed Arranging
Agent and Goldman, Sachs & Co. is hereby appointed Syndication Agent hereunder,
and each Lender hereby authorizes Arranging Agent and Syndication Agent to act
as its agent in accordance with the terms of this Agreement and the other Loan
Documents. CIBC-NYA is hereby appointed Administrative Agent hereunder and under
the other Loan Documents and Collateral Agent under the Collateral Documents and
each Lender hereby authorizes Administrative Agent and Collateral Agent to act
as its agent in accordance with the terms of this Agreement and the other Loan
Documents. Each Agent hereby agrees to act upon the express conditions contained
in this Agreement and the other Loan Documents, as applicable. The provisions of
this Section 8 are solely for the benefit of Agents and Lenders and Company
shall have no rights as a third party
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beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Company or any of its
Subsidiaries. Each of Arranging Agent and Syndication Agent, without consent of
or notice to any party hereto, may assign any and all of its rights or
obligations hereunder to any of its Affiliates. As of the Closing Date, all
obligations of Arranging Agent and Syndication Agent hereunder shall terminate.
B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case Collateral Agent deems that by reason
of any present or future law of any jurisdiction it may not exercise any of the
rights, powers or remedies granted herein or in any of the other Loan Documents
or take any other action which may be desirable or necessary in connection
therewith, it may be necessary that Collateral Agent appoint an additional
individual or institution as a separate trustee, co-trustee, collateral agent or
collateral co-agent (any such additional individual or institution being
referred to herein individually as a "Supplemental Collateral Agent" and
collectively as "Supplemental Collateral Agents").
In the event that Collateral Agent appoints a Supplemental Collateral
Agent with respect to any Collateral, (i) each and every right, power, privilege
or duty expressed or intended by this Agreement or any of the other Loan
Documents to be exercised by or vested in or conveyed to Collateral Agent with
respect to such Collateral shall be exercisable by and vest in such Supplemental
Collateral Agent to the extent, and only to the extent, necessary to enable such
Supplemental Collateral Agent to exercise such rights, powers and privileges
with respect to such Collateral and to perform such duties with respect to such
Collateral, and every covenant and obligation contained in the Loan Documents
and necessary to the exercise or performance thereof by such Supplemental
Collateral Agent shall run to and be enforceable by either Collateral Agent or
such Supplemental Collateral Agent, and (ii) the provisions of this Section 8
and of subsections 9.2 and 9.3 that refer to Collateral Agent shall inure to the
benefit of such Supplemental Collateral Agent and all references therein to
Collateral Agent shall be deemed to be references to Collateral Agent and/or
such Supplemental Collateral Agent, as the context may require.
Should any instrument in writing from Company or any other Loan Party be
required by any Supplemental Collateral Agent so appointed by Collateral Agent
for more fully and certainly vesting in and confirming to him or it such rights,
powers, privileges and duties, Company shall, or shall cause such Loan Party to,
execute, acknowledge and deliver any and all such instruments promptly upon
request by Collateral Agent. In case any Supplemental Collateral Agent, or a
successor thereto, shall die, become incapable of acting, resign or be removed,
all the rights, powers, privileges and duties of such Supplemental Collateral
Agent, to the extent permitted by law, shall vest in and be exercised by
Collateral Agent until the appointment of a new Supplemental Collateral Agent.
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8.2 Powers and Duties; General Immunity.
A. Powers; Duties Specified. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement and the other Loan Documents. Each Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees. No Agent shall have, by reason of this Agreement or any
of the other Loan Documents, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon any Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
B. No Responsibility for Certain Matters. No Agent shall be responsible to
any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any of Agent to Lenders or by or on behalf of
Company to any Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall any Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or as to the existence or possible existence of any Event
of Default or Potential Event of Default.
C. Exculpatory Provisions. None of Agents nor any of their respective
officers, directors, partners, employees or agents shall be liable to Lenders
for any action taken or omitted by any Agent under or in connection with any of
the Loan Documents except to the extent caused by such Agent's gross negligence
or willful misconduct. Each Agent shall be entitled to refrain from any act or
the taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until such Agent shall have received instructions in respect thereof from
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 9.6) and, upon receipt of such instructions from
Requisite Lenders (or such other Lenders, as the case may be), such Agent shall
be entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional
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advisors selected by it; and (ii) no Lender shall have any right of action
whatsoever against any Agent as a result of such Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of Requisite Lenders (or such
other Lenders as may be required to give such instructions under subsection
9.6).
D. Agents Entitled to Act as Lenders. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans, each Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include each Agent in its individual
capacity. Any Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
8.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
8.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent such Agent shall not have been reimbursed by
Company, for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including counsel fees
and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against such Agent in exercising its
powers, rights and remedies or performing its duties hereunder or under the
other Loan Documents or otherwise in its capacity as Agent in any way relating
to or arising out of this Agreement or the other Loan Documents; provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent's gross negligence or willful
misconduct. Subject to the proviso to the immediately preceding sentence, if any
indemnity furnished to any
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Agent for any purpose shall, in the opinion of such Agent, be insufficient or
become impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
8.5 Successor Administrative Agent and Collateral Agent.
A. Successor Administrative Agent. Administrative Agent may resign at any
time by giving 30 days' prior written notice thereof to Lenders and Company, and
Administrative Agent may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to Company and
Administrative Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Administrative
Agent. Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Section 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
B. Successor Collateral Agent. Collateral Agent may resign at any time by
giving 30 days' prior notice thereof to Lenders, Company and Administrative
Agent and Collateral Agent may be removed at any time with or without cause by
an instrument or concurrent instruments in writing delivered to Company and
Administrative Agent, and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
consultation with Company, to appoint a successor Collateral Agent. Upon the
acceptance of any appointment as Collateral Agent hereunder by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
or removed Collateral Agent and the retiring or removed Collateral Agent shall
be discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Section 8 shall inure to its benefit as
to any actions taken or omitted to be taken while it was Collateral Agent under
this Agreement.
8.6 Collateral Documents and Guaranties.
Each Lender hereby further authorizes (i) Collateral Agent, on behalf of
and for the benefit of Lenders, to enter into each Collateral Document as
secured party and to be the agent for and representative of Lenders under each
Guaranty, and each Lender agrees to be bound by the terms of each Collateral
Document and Guaranty; provided that Collateral Agent shall not (i) enter into
or consent to any material amendment, modification, termination or waiver of any
provision contained in any Collateral Document or Guaranty or (ii) release any
Collateral (except as otherwise expressly permitted or required pursuant to the
terms of this Agreement or the applicable Collateral Document), in each case
without the prior consent of Requisite Lenders (or, if required pursuant to
subsection 9.6, Supermajority Lenders). Each Lender having AXEL
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Commitments hereunder hereby authorizes Collateral Agent to execute and deliver,
on behalf of and for the benefit of such Lenders, an acknowledgment to the
Existing Company Pledge Agreement as required by Section 18 thereof. In the
event Collateral is sold in an Asset Sale permitted hereunder or otherwise
consented to by Requisite Lenders, Collateral Agent may, without further consent
or authorization from Lenders, release the Liens granted under the Collateral
Documents on the Collateral that is the subject of such Asset Sale concurrently
with the consummation of such Asset Sale; provided that Collateral Agent shall
have received (i) reasonable, and in any event not less than 30 days', prior
written notice of such Asset Sale from Company; (ii) an Officers' Certificate
(1) certifying that no Event of Default or Potential Event of Default shall have
occurred and be continuing as of the date of such release of Collateral, (2)
setting forth a detailed description of the Collateral subject to such Asset
Sale, and (3) certifying such Asset Sale is permitted under this Agreement and
that all conditions precedent to such Asset Sale under this Agreement have been
met; and (iii) evidence satisfactory to it that Administrative Agent shall have
received all Net Cash Proceeds of Asset Sale required to be applied to repay
Secured Obligations under this Agreement. Upon payment in full of all of the
Obligations (other than inchoate indemnification obligations with respect to
claims, losses or liabilities which have not yet arisen) and termination of the
Commitments, Collateral Agent shall release the Liens on such Collateral granted
pursuant to the Collateral Documents. Upon any release of Collateral pursuant to
the foregoing, Collateral Agent shall, at Company's expense, execute and deliver
such documents (without recourse or representation or warranty) as reasonably
requested to evidence such release. Notwithstanding anything herein to the
contrary, upon the occurrence and during the continuation of an Event of
Default, for purposes of any decisions relating to (including decisions relating
to exercising or refraining from exercising remedies under the Collateral
Documents), or taking any actions with respect to, the Collateral Documents or
the Collateral, "Requisite Lenders" shall mean the holders of 51% or more the
aggregate outstanding principal amount of the AXELs and Revolving Loans.
Collateral Agent shall exercise or refrain from exercising remedies under the
Collateral Documents in accordance with the directions of Requisite Lenders (as
defined in the preceding sentence); provided, however, that Lenders acknowledge
and agree that, with respect to the Collateral that is shared on an equal and
ratable basis with the holders of the Existing Senior Notes, decisions relating
to the exercise and manner of exercise of remedies are to be made by Collateral
Agent at the direction of "Requisite Obligees" (as defined in the applicable
Collateral Document) and, therefore, Requisite Lenders may give directions to
Collateral Agent with respect to the exercise of remedies but may not hold a
sufficient amount of secured obligations to constitute Requisite Obligees under
the applicable Collateral Document, in which case Collateral Agent shall follow
the directions of Requisite Obligees. Anything contained in any of the Loan
Documents to the contrary notwithstanding, Company, Collateral Agent and each
Lender hereby agree that (x) no Lender shall have any right individually to
realize upon any of the Collateral under any Collateral Document or to enforce
any Guaranty, it being understood and agreed that all powers, rights and
remedies under the Collateral Documents and the Guaranties may be exercised
solely by Collateral Agent for the benefit of Lenders in accordance with the
terms thereof, and (y) in the event of a foreclosure by Collateral Agent on any
of the Collateral pursuant to a public or private sale, Collateral Agent or any
Lender may be the purchaser of any or all of such Collateral at any such sale
and Collateral Agent, as agent for and representative of Lenders (but not any
Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and
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making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by
Collateral Agent at such sale.
SECTION 9.
MISCELLANEOUS
9.1 Assignments and Participations in Loans.
A. General. Subject to subsection 9.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or any other interest herein or in any other
Obligations owed to it; provided that no such sale, assignment, transfer or
participation shall, without the consent of Company, require Company to file a
registration statement with the Securities and Exchange Commission or apply to
qualify such sale, assignment, transfer or participation under the securities
laws of any state; and provided, further that no such sale, assignment or
transfer described in clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have been
accepted by Administrative Agent and recorded in the Register as provided in
subsection 9.1B(ii). Except as otherwise provided in this subsection 9.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitments or the Loans
or the other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan or other
Obligation may (a) be assigned in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender, with the giving of
notice to Company and Administrative Agent or (b) be assigned in an
aggregate amount of not less than $5,000,000 (or such lesser amount as
shall constitute the aggregate amount of the Commitments, Loans and other
Obligations of the assigning Lender) to any other Eligible Assignee with
the consent of Administrative Agent (which consent shall not be
unreasonably withheld or delayed). To the extent of any such assignment in
accordance with either clause (a) or (b) above, the assigning Lender shall
be relieved of its obligations with respect to its Commitments, Loans or
other Obligations or the portion thereof so assigned. The parties to each
such assignment shall execute and deliver to Administrative Agent, for its
acceptance and recording in the Register, an Assignment Agreement,
together with a processing and recordation fee of $3,500 and such forms,
certificates or other evidence, if any, with respect to United States
federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery,
acceptance and recordation, from and after the effective date specified in
such Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it
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pursuant to such Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and (z) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment Agreement, relinquish its
rights (other than any rights which survive the termination of this
Agreement under subsection 9.9B) and be released from its obligations
under this Agreement (and, in the case of an Assignment Agreement covering
all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto. The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment of such assigning
Lender and, if any such assignment occurs after the issuance of the Notes
hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its
applicable Notes to Administrative Agent for cancellation, and thereupon
new Notes shall be issued to the assignee and to the assigning Lender,
substantially in the form of Exhibit III, Exhibit IV or Exhibit V annexed
hereto, as the case may be, with appropriate insertions, to reflect the
new Commitments and/or outstanding AXELs Series A and/or AXELs Series B,
as the case may be, of the assignee and the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
Upon its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee,
together with the processing and recordation fee referred to in subsection
9.1B(i) and any forms, certificates or other evidence with respect to
United States federal income tax withholding matters that such assignee
may be required to deliver to Administrative Agent pursuant to subsection
2.7B(iii)(a), Administrative Agent shall, if Administrative Agent has
consented to the assignment evidenced thereby (to the extent such consent
is required pursuant to subsection 9.1B(i)), (a) accept such Assignment
Agreement by executing a counterpart thereof as provided therein (which
acceptance shall evidence any required consent of Administrative Agent to
such assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 9.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the regularly scheduled maturity of any
portion of the principal amount of or interest on any Loan allocated to such
participation or (ii) a reduction of the principal amount of or the rate of
interest payable on any Loan allocated to such participation, and all amounts
payable by Company hereunder (including amounts payable to such Lender pursuant
to subsections 2.6D and 2.7) shall be determined as if such Lender had not sold
such participation. Company and each Lender hereby acknowledge and agree that,
solely for purposes of subsections 9.4 and 9.5, (a) any participation will give
rise to a direct obligation of Company to the participant and (b) the
participant shall be considered to be a "Lender".
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D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Information. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 9.19.
F. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (i) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 9.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
9.2 Expenses.
Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all the actual and reasonable costs and
expenses of preparation of the Loan Documents and any consents, amendments,
waivers or other modifications thereto; (ii) all the costs of furnishing all
opinions by counsel for Company (including any opinions requested by Lenders as
to any legal matters arising hereunder) and of Company's performance of and
compliance with all agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents including with
respect to confirming compliance with environmental, insurance and solvency
requirements; (iii) the reasonable fees, expenses and disbursements of counsel
to Arranging Agent and counsel to Administrative Agent (including allocated
costs of internal counsel) in connection with the negotiation, preparation,
execution and administration of the Loan Documents and any consents, amendments,
waivers or other modifications thereto and any other documents or matters
requested by Company; (iv) all the actual costs and reasonable expenses of
creating and perfecting Liens in favor of Collateral Agent on behalf of Lenders
pursuant to any Collateral Document, including filing and recording fees,
expenses and taxes, stamp or documentary taxes, search fees, title insurance
premiums, and reasonable fees, expenses and disbursements of counsel to
Arranging Agent and counsel to Administrative Agent and of counsel providing any
opinions that Arranging Agent, Administrative Agent, Collateral Agent or
Requisite Lenders may request in respect of the
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Collateral Documents or the Liens created pursuant thereto; (v) all the actual
costs and reasonable expenses (including the reasonable fees, expenses and
disbursements of any auditors, accountants or appraisers and any environmental
or other consultants, advisors and agents employed or retained by Administrative
Agent or Arranging Agent or its counsel) of obtaining and reviewing any
environmental audits or reports provided for under subsection 3.1J or 5.7 and
any audits or reports provided for under subsection 5.5B with respect to
Accounts Receivable of Company and its Subsidiaries; (vi) all the actual costs
and reasonable expenses (including the reasonable fees, expenses and
disbursements of any consultants, advisors and agents employed or retained by
Collateral Agent or its counsel) in connection with the custody or preservation
of any of the Collateral; (vii) all other actual and reasonable costs and
expenses incurred by Syndication Agent, Arranging Agent or Administrative Agent
in connection with the syndication of the Commitments and the negotiation,
preparation and execution of the Loan Documents and any consents, amendments,
waivers or other modifications thereto and the transactions contemplated
thereby; and (viii) after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Arranging Agent,
Collateral Agent, Administrative Agent and Lenders in enforcing any Obligations
of or in collecting any payments due from any Loan Party hereunder or under the
other Loan Documents by reason of such Event of Default (including in connection
with the sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Guaranties) or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings. As long as no Event of Default shall have occurred and
be continuing, Company shall not be responsible for expenses incurred by Lenders
to attend Lender meetings or exercise inspection rights pursuant to subsection
5.5.
9.3 Indemnity.
In addition to the payment of expenses pursuant to subsection 9.2, whether
or not the transactions contemplated hereby shall be consummated, Company agrees
to defend (subject to Indemnitees' selection of counsel), indemnify, pay and
hold harmless Agents and Lenders, and the officers, directors, partners,
employees, agents and affiliates of any of Agents and Lenders (collectively
called the "Indemnitees"), from and against any and all Indemnified Liabilities
(as hereinafter defined); provided that Company shall not have any obligation to
any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
costs (including the costs of any investigation, study, sampling, testing,
abatement, cleanup, removal, remediation or other response action necessary to
remove, remediate, clean up or abate any Hazardous Materials Activity), expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses incurred by
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Indemnitees in enforcing this indemnity), whether direct, indirect or
consequential and whether based on any federal, state or foreign laws, statutes,
rules or regulations (including securities and commercial laws, statutes, rules
or regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of (i) this
Agreement or the other Loan Documents or the Related Agreements or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
any enforcement of any of the Loan Documents (including any sale of, collection
from, or other realization upon any of the Collateral or the enforcement of the
Guaranties)), (ii) any commitment letter delivered by Arranging Agent,
Administrative Agent or any Lender to Company with respect to the credit
facilities provided hereunder, or (iii) any Environmental Claim or any Hazardous
Materials Activity relating to or arising from, directly or indirectly, any past
or present activity, operation, land ownership, or practice of Company or any of
its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 9.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
9.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by BCC and Company at any time
or from time to time subject to the consent of Administrative Agent, without
notice to BCC or Company or to any other Person (other than Administrative
Agent), any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts), including deposits in the Collateral Account,
and any other Indebtedness at any time held or owing by that Lender to or for
the credit or the account of BCC or Company against and on account of the
obligations and liabilities of BCC or Company to that Lender under this
Agreement and the other Loan Documents, including all claims of any nature or
description arising out of or connected with this Agreement or any other Loan
Document, irrespective of whether or not (i) that Lender shall have made any
demand hereunder or (ii) the principal of or the interest on the Loans or any
other amounts due hereunder shall have become due and payable pursuant to
Section 7 and although said obligations and liabilities, or any of them, may be
contingent or unmatured. Each of BCC and Company hereby further assigns, pledges
and grants to Administrative Agent, Collateral Agent and each Lender a security
interest in all deposits and accounts maintained with Administrative Agent,
Collateral Agent or such Lender as security for the Obligations.
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9.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of them shall, whether
by voluntary payment (other than a voluntary prepayment of Loans made and
applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, fees and other
amounts then due and owing to that Lender hereunder or under the other Loan
Documents (collectively, the "Aggregate Amounts Due" to such Lender) which is
greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations or other similar interests (which it shall be
deemed to have purchased from each seller of a participation or such other
interest simultaneously upon the receipt by such seller of its portion of such
payment) in the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion
to the Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations or such other interests shall be returned to such purchasing
Lender ratably to the extent of such recovery, but without interest. Company
expressly consents to the foregoing arrangement and agrees that any holder of a
participation or such other interest so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation or such other interest held by
that holder.
9.6 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of this
Agreement or of the Notes, and no consent to any departure by any Loan Party
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; changes in any manner the
definition of "Pro Rata Share" or the definition of "Supermajority Lenders" or
the definition of "Requisite Lenders"; changes in any manner any provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of all Lenders; postpones the scheduled final maturity date (but not
the date of any scheduled installment of principal or prepayment) of any of the
Loans; postpones the date on which any interest or any fees are payable;
decreases the interest rate borne by any of the Loans (other than any waiver of
any increase in the interest rate applicable to any of the Loans pursuant to
subsection 2.2E) or the amount of any fees payable hereunder; increases the
maximum duration of Interest Periods permitted hereunder; releases BCC from its
obligations under the BCC Guaranty or releases License Sub from its obligations
under the License Sub Guaranty, in each case other than in
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accordance with the terms of the Loan Documents; or changes in any manner the
provisions contained in subsection 7.1 or this subsection 9.6 shall be effective
only if evidenced by a writing signed by or on behalf of all Lenders. In
addition, (i) any amendment, modification, termination or waiver of any of the
provisions contained in Section 3 shall be effective only if evidenced by a
writing signed by or on behalf of Administrative Agent and Requisite Lenders,
(ii) no amendment, modification, termination or waiver of any provision of any
Note shall be effective without the written concurrence of the Lender which is
the holder of that Note, (iii) no amendment, modification, termination or waiver
of any provision of Section 8 or of any other provision of this Agreement which,
by its terms, expressly requires the approval or concurrence of Arranging Agent,
Administrative Agent and Collateral Agent shall be effective without the written
concurrence of Arranging Agent, Administrative Agent and Collateral Agent, (iv)
no amendment, modification, termination or waiver of any provision of this
Agreement or the Collateral Documents and no consent to any departure by any
Loan Party therefrom which has the effect of releasing any material portion of
the Collateral (other than as permitted in accordance with the express
provisions of subsection 8.6 or the Collateral Documents) or changing any
scheduled installment of principal, shall be effective without the written
concurrence of Supermajority Lenders; provided that any amendment, modification,
termination or waiver of any provision of subsection 2.4 which has the effect of
postponing or reducing the aggregate scheduled installments of principal
applicable to AXELs Series A or AXELs Series B (each being a "Class") in a
manner that is proportionately greater than the corresponding postponement or
reduction applicable to the other Class shall not be effective without the
written concurrence of the holders of 75% of each Class. Administrative Agent
may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on Company
in any case shall entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 9.6 shall be binding upon
each Lender at the time outstanding, each future Lender and, if signed by BCC
and Company, on BCC and Company. Notwithstanding anything herein to the
contrary, if any Lender fails to fund any Loan required to be funded by such
Lender hereunder, the aggregate AXEL Series A Exposure, AXEL Series B Exposure
and Revolving Loan Exposure of such Lender shall not be counted for purposes of
determining "Requisite Lenders" or "Supermajority Lenders" or the percentage of
a Class required to approve any amendment, modification, termination or waiver
of any provision of this Agreement.
9.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
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9.8 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Arranging Agent or
Administrative Agent shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or (i) as to BCC, Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.
9.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 9.2, 9.3
and 9.4 and the agreements of Lenders set forth in subsections 8.2C, 8.4 and 9.5
shall survive the payment of the Loans and the termination of this Agreement.
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Collateral Agent, Administrative Agent
or any Lender in the exercise of any power, right or privilege hereunder or
under any other Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement and the other Loan Documents
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
9.11 Marshalling; Payments Set Aside.
None of Collateral Agent, Administrative Agent nor any Lender shall be
under any obligation to marshal any assets in favor of Company or any other
party or against or in payment of any or all of the Obligations. To the extent
that Company makes a payment or payments to Collateral Agent, Administrative
Agent or Lenders (or to Collateral Agent or Administrative Agent for the benefit
of Lenders), or Collateral Agent, Administrative Agent or Lenders enforce any
security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law,
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common law or any equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor or related thereto, shall be revived and continued
in full force and effect as if such payment or payments had not been made or
such enforcement or setoff had not occurred.
9.12 Severability.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
9.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
9.14 Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
9.15 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
9.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 9.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
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9.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BCC OR COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH OF BCC AND COMPANY, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO BCC OR COMPANY, AS APPLICABLE, AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 9.8; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE
(III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER BCC OR COMPANY IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT LENDERS RETAIN THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST BCC OR COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES
THAT THE PROVISIONS OF THIS SUBSECTION 9.17 RELATING TO JURISDICTION AND VENUE
SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW
YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
9.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP OR OTHER RELATIONSHIP THAT IS BEING ESTABLISHED.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party hereto acknowledges
that this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this Agreement, and
that each will continue to rely on this waiver in their related future dealings.
Each party hereto further warrants and represents that it has reviewed this
waiver with its legal counsel and that it knowingly and voluntarily waives its
jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
9.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL
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APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
9.19 Confidentiality.
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that in any event a
Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process or
disclosures required by the National Association of Insurance Commissioners;
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further, that in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
9.20 Maximum Amount.
A. It is the intention of Company and Lenders to conform strictly to the
usury and similar laws relating to interest from time to time in force, and all
agreements between Company, Administrative Agent and Lenders, whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of maturity hereof or otherwise, shall the amount paid or agreed to be paid in
the aggregate to Lenders or to Administrative Agent on behalf of Lenders as
interest hereunder or under the other Loan Documents or in any other security
agreement given to secure the Obligations, or in any other document evidencing,
securing or pertaining to the indebtedness evidenced hereby or thereby, exceed
the maximum amount permissible under applicable usury or such other laws (the
"Maximum Amount"). If under any circumstances whatsoever fulfillment of any
provision hereof, or of any of the other Loan Documents, at the time performance
of such provision shall be due, shall involve exceeding the Maximum Amount,
then, ipso facto, the obligation to be fulfilled shall be reduced to the Maximum
Amount. For the purposes of calculating the actual amount of interest paid
and/or payable hereunder in respect of laws pertaining to usury or such other
laws, all sums paid or agreed to be paid to Lenders for the use, forbearance or
detention of the indebtedness of Company evidenced hereby, outstanding from time
to time shall, to the extent permitted by applicable law, be amortized, pro
rated, allocated and spread from the date of disbursement of the proceeds of the
Loans until payment in full of all of such indebtedness, so that the actual rate
of interest on account of such
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indebtedness is uniform throughout the term hereof. The terms and provisions of
this subsection shall control and supersede every other provision of all
agreements between Company, Administrative Agent and Lenders.
B. If under any circumstances Lenders shall receive an amount which would
exceed the Maximum Amount, such amount shall be deemed a payment in reduction of
the principal amount of the Loans and shall be treated as a voluntary prepayment
under subsection 2.4B(i), and shall be so applied in accordance with subsection
2.4B(iv) hereof, or if such amount exceeds the unpaid balance of the Loans and
any other indebtedness of Company in favor of Lenders, the excess shall be
deemed to have been a payment made by mistake and shall be refunded to Company.
9.21 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY AND BCC:
BENEDEK BROADCASTING CORPORATION,
a Delaware corporation
By: /s/ Ronald L. Lindwall
-------------------------------------
Ronald L. Lindwall
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
BENEDEK COMMUNICATIONS CORPORATION,
a Delaware corporation
By: /s/ Ronald L. Lindwall
-------------------------------------
Ronald L. Lindwall
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
Notice Address:
Benedek Broadcasting Corporation
Stewart Square, Suite 210
308 West State Street
Rockford, Illinois 61101
Attention: A. Richard Benedek
Telecopy: (815) 987-5335
with a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attention: Paul S. Goodman, Esq.
Telecopy: (212) 730-1964
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AGENTS AND LENDERS:
PEARL STREET L.P.,
individually and as Arranging Agent
By: /s/ Richard Katz
--------------------------------
Authorized Signatory
Notice Address:
Pearl Street L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Richard Katz
Telecopy: (212) 902-2417
with a copy to:
Pearl Street L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Jennifer Perry
Telecopy: (212) 902-3000
S-2
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GOLDMAN, SACHS & CO.,
as Syndication Agent
/s/ Goldman, Sachs & Co.
-----------------------------------------
Notice Address:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Richard Katz
Telecopy: (212) 902-2417
with a copy to:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Jennifer Perry
Telecopy: (212) 902-3000
S-3
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CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY,
individually and as Administrative Agent
and Collateral Agent
By: /s/ Martin W. Friedman
-------------------------------------
Martin W. Friedman
Authorized Signatory
Notice Address:
Canadian Imperial Bank of Commerce,
New York Agency
425 Lexington Avenue
New York, New York 10017
Attention: Arlene Tellerman
Telecopy: (212) 856-3799
Telephone: (212) 856-3695
CIBC INC.
By: /s/ Martin W. Friedman
-------------------------------------
Martin W. Friedman
Managing Director
Notice Address:
CIBC Inc.
425 Lexington Avenue
New York, New York 10017
Attention: Arlene Tellerman
Telecopy: (212) 856-3799
Telephone: (212) 856-3695
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EXECUTION
BCC GUARANTY
THIS GUARANTY is entered into as of June 6, 1996 by BENEDEK
COMMUNICATIONS CORPORATION, a Delaware corporation ("Guarantor"), in favor of
and for the benefit of CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
("CIBC-NYA"), as agent for and representative of (in such capacity herein called
"Collateral Agent") the Beneficiaries (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Benedek Broadcasting Corporation, a Delaware corporation and wholly
owned subsidiary of Guarantor ("Company"), and Guarantor have entered into a
Credit Agreement, dated as of June 6, 1996 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement"; capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined), with the
financial institutions listed therein ("Lenders"), Pearl Street L.P., as
Arranging Agent, Goldman, Sachs & Co., as Syndication Agent, and CIBC- NYA, as
Administrative Agent and Collateral Agent, pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company, and it is desired
that such obligations be guarantied hereunder.
B. Company has entered into that certain Indenture, dated as of March
1, 1995 (said Indenture, as amended, supplemented, or otherwise modified from
time to time, being the "Existing Senior Note Indenture") with Benedek
Broadcasting Company, L.L.C., a Delaware limited liability company and
subsidiary of Company ("License Sub"), and The Bank of New York, as trustee (the
"Senior Note Trustee"), pursuant to which Company has issued $135,000,000
aggregate principal amount of 11-7/8% Senior Secured Notes due 2005 (the
"Existing Senior Notes"), and it is desired that such obligations be guarantied
hereunder.
C. Company may from time to time enter into one or more Interest Rate
Agreements (collectively, the "Lender Interest Rate Agreements") with or one or
more Lenders or Affiliates of Lenders (in such capacity, collectively, "Interest
Rate Exchangers") in accordance with the terms of the Credit Agreement, and it
is desired that the obligations of Company under the Lender Interest Rate
Agreements, including without limitation the obligation of Company to make
payments thereunder in the event of early termination thereof (all such
obligations being the "Interest Rate Obligations") be guarantied hereunder.
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D. It is a condition precedent to the making of the initial Loans under
the Credit Agreement that Company's Obligations thereunder and under the other
Loan Documents be guarantied by Guarantor.
E. Guarantor is willing irrevocably and unconditionally to guaranty all
obligations of Company under the Credit Agreement and other Loan Documents, the
Existing Senior Notes and any Lender Interest Rate Agreements.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lenders and Collateral Agent to enter into the Credit
Agreement and to make Loans and other extensions of credit thereunder, Guarantor
hereby agrees as follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
As used in this Guaranty, the following terms shall have the following
meanings unless the context otherwise requires:
"Beneficiaries" means Agents, Lenders, any Interest Rate
Exchangers and the holders of the Existing Senior Notes (the
"Noteholders").
"Event of Default" means (i) an Event of Default as defined
under the Credit Agreement or under the Existing Senior Note Indenture
or (ii) the occurrence of an Early Termination Date (as defined in a
Master Agreement or an Interest Rate Swap Agreement or Interest Rate
and Currency Exchange Agreement in the form prepared by the
International Swap and Derivatives Association Inc. or a similar event
under any similar swap agreement) under any Lender Interest Rate
Agreement.
"Guarantied Obligations" has the meaning assigned to that term
in subsection 2.1.
"Guaranty" means this Guaranty, dated as of June 6, 1996, as
it may be amended, supplemented or otherwise modified from time to
time.
"License Sub Guaranty" means, collectively, (a) the guaranty
by License Sub of the Existing Senior Notes set forth in Article 10 of
the Existing Senior Note Indenture and (b) the License Sub Guaranty (as
defined in the Credit Agreement), as each may be amended, supplemented
or otherwise modified from time to time.
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"payment in full", "paid in full" or any similar term means
payment in full of the Guarantied Obligations (other than inchoate
indemnification obligations with respect to claims, losses or
liabilities which have not yet arisen), including without limitation
all principal, interest, costs, fees and expenses (including, without
limitation, reasonable legal fees and expenses) of Beneficiaries as
required under the Loan Documents, the Existing Senior Note Indenture
and the Lender Interest Rate Agreements.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Guaranty unless otherwise specifically
provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions of this
Guaranty shall prevail.
SECTION 2.
THE GUARANTY
2.1 Guaranty of the Guarantied Obligations.
Guarantor hereby irrevocably and unconditionally guaranties, as primary
obligor and not merely as surety, the due and punctual payment in full of all
Guarantied Obligations when the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under section 362(a) of the Bankruptcy Code, 11 U.S.C. 'SS' 362(a)). The
term "Guarantied Obligations" is used herein in its most comprehensive sense and
includes:
(a) any and all obligations and liabilities of every nature of
Company and any and all Interest Rate Obligations, in each case now or
hereafter made, incurred or created, whether absolute or contingent,
liquidated or unliquidated, whether due or not due, and however arising
under or in connection with (i) the Credit Agreement, the Notes and all
other Loan Documents, (ii) the Existing Senior Note Indenture and the
Existing Senior Notes and (iii) the Lender Interest Rate Agreements,
whether for principal or interest, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect,
whether or not jointly owed with others, and whether or not from time
to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided
or recovered directly or indirectly from Collateral Agent or any
Beneficiary as a preference, fraudulent transfer or otherwise and all
obligations of every nature of Guarantor under this Guaranty, including
those arising under successive borrowing transactions under the Credit
Agreement which shall either continue
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the Obligations of Company or from time to time renew them after they
have been satisfied and including interest which, but for the filing of
a petition in bankruptcy with respect to Company, would have accrued on
any Guarantied Obligations, whether or not a claim is allowed against
Company for such interest in the related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 Contribution by Guarantor.
Guarantor under this Guaranty and License Sub under the License Sub
Guaranty, together desire to allocate among themselves (collectively, the
"Contributing Guarantors"), in a fair and equitable manner, their obligations
arising under this Guaranty and the License Sub Guaranty. Accordingly, in the
event any payment or distribution is made on any date by Guarantor under this
Guaranty or License Sub under the License Sub Guaranty (each of Guarantor and
License Sub being a "Funding Guarantor") that exceeds its Fair Share (as defined
below) as of such date, that Funding Guarantor shall be entitled to a
contribution from the other Contributing Guarantor in the amount of such other
Contributing Guarantor's Fair Share Shortfall (as defined below) as of such
date, with the result that all such contributions will cause each Contributing
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share as of
such date. "Fair Share" means, with respect to a Contributing Guarantor as of
any date of determination, an amount equal to (a) the ratio of (i) the Fair
Share Contribution Amount (as defined below) with respect to such Contributing
Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with
respect to all Contributing Guarantors multiplied by (b) the aggregate amount
paid or distributed on or before such date by all Funding Guarantors under this
Guaranty and the License Sub Guaranty in respect of the obligations guarantied.
"Fair Share Shortfall" means, with respect to a Contributing Guarantor as of any
date of determination, the excess, if any, of the Fair Share of such
Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. "Fair Share Contribution Amount" means, with respect to a
Contributing Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Contributing Guarantor under this Guaranty or
the License Sub Guaranty, as applicable, that would not render its obligations
hereunder or thereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law; provided that, solely for
purposes of calculating the "Fair Share Contribution Amount" with respect to any
Contributing Guarantor for purposes of this subsection 2.2, any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder or under any similar section of the License Sub Guaranty
shall not be considered as assets or liabilities of such Contributing Guarantor.
"Aggregate Payments" means, with respect to a Contributing Guarantor as of any
date of determination, an amount equal to (1) the aggregate amount of all
payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty or the License Sub Guaranty, as applicable
(including, without limitation, in respect of this subsection 2.2 or any similar
section of the License Sub Guaranty),
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minus (2) the aggregate amount of all payments received on or before such date
by such Contributing Guarantor from the other Contributing Guarantor as
contributions under this subsection 2.2 or any similar section of the License
Sub Guaranty. The amounts payable as contributions hereunder and under any
similar section of the License Sub Guaranty shall be determined as of the date
on which the related payment or distribution is made by the applicable Funding
Guarantor. The allocation among Contributing Guarantors of their obligations as
set forth in this subsection 2.2 and any similar section of the License Sub
Guaranty shall not be construed in any way to limit the liability of any
Contributing Guarantor hereunder or under the License Sub Guaranty. License Sub
is a third party beneficiary to the contribution agreement set forth in this
subsection 2.2.
2.3 Payment by Guarantor; Application of Payments.
(a) Guarantor hereby agrees, in furtherance of the foregoing and not in
limitation of any other right which any Beneficiary may have at law or in equity
against Guarantor by virtue hereof, that upon the failure of Company to pay any
of the Guarantied Obligations when and as the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. 'SS'
362(a)), Guarantor will upon demand pay, or cause to be paid, in cash, to
Collateral Agent for the ratable benefit of Beneficiaries, an amount equal to
the sum of the unpaid principal amount of all Guarantied Obligations then due as
aforesaid, accrued and unpaid interest on such Guarantied Obligations
(including, without limitation, interest which, but for the filing of a petition
in bankruptcy with respect to Company, would have accrued on such Guarantied
Obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding) and all other Guarantied Obligations then
owed to Beneficiaries as aforesaid.
(b) All such payments received by Collateral Agent under this Guaranty
shall be applied promptly from time to time:
FIRST: To the payment of all costs and expenses incurred by
Collateral Agent in connection with the failure of Company to pay the
Guarantied Obligations when and as due, including all compensation due
to Collateral Agent and its agents and counsel, and all other expenses,
liabilities, and advances made or incurred by Collateral Agent in
connection therewith, and all amounts for which Collateral Agent is
entitled to indemnification hereunder and all advances made by
Collateral Agent for the account of Company, and to the payment of all
costs and expenses paid or incurred by Collateral Agent in connection
with the exercise of any right or remedy hereunder, all in accordance
with Section 2.8 of this Guaranty;
SECOND: To the payment of interest due and payable on, and
fees, if any, with respect to the Guarantied Obligations on an equal
and ratable basis;
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THIRD: To the payment of the unpaid principal amount due and
payable on all Guarantied Obligations on an equal and ratable basis;
FOURTH: To the payment of all other amounts due and payable
with respect to the Guarantied Obligations on an equal and ratable
basis; and
FIFTH: To the payment to or upon the order of Guarantor, or to
whosever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
(c) Payments by Collateral Agent to Lenders in respect of Obligations
shall be made to Administrative Agent for distribution to Lenders in accordance
with the Credit Agreement; any payments in respect of any Interest Rate
Obligations shall be made as directed by the Interest Rate Exchanger to which
such Interest Rate Obligations are owed; and any payments in respect of any
obligations of Grantor under the Existing Senior Note Indenture and the Existing
Senior Notes shall be made to the Senior Note Trustee for the benefit of the
Noteholders.
2.4 Liability of Guarantor Absolute.
Guarantor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or
surety other than payment in full of the Guarantied Obligations. In furtherance
of the foregoing and without limiting the generality thereof, Guarantor agrees
as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Collateral Agent may enforce this Guaranty upon the
occurrence of an Event of Default notwithstanding the existence of any
dispute between Company and any Beneficiary with respect to the
existence of such Event of Default.
(c) The obligations of Guarantor hereunder are independent of
the obligations of Company under the Loan Documents, the Existing
Senior Note Indenture, the Existing Senior Notes or the Lender Interest
Rate Agreements and the obligations of any other guarantor (including
License Sub under the License Sub Guaranty) of the obligations of
Company under the Loan Documents, the Existing Senior Note Indenture,
the Existing Senior Notes or the Lender Interest Rate Agreements, and a
separate action or actions may be brought and prosecuted against
Guarantor whether or not any action is brought against Company or any
of such other guarantors and whether or not Company is joined in any
such action or actions.
(d) Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge
Guarantor's liability for any
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portion of the Guarantied Obligations which has not been paid. Without
limiting the generality of the foregoing, if Collateral Agent is
awarded a judgment in any suit brought to enforce Guarantor's
covenant to pay a portion of the Guarantied Obligations, such judgment
shall not be deemed to release Guarantor from its covenant to pay the
portion of the Guarantied Obligations that is not the subject of such
suit.
(e) Any Beneficiary, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any reduction,
limitation, impairment, discharge or termination of Guarantor's
liability hereunder, from time to time may (i) renew, extend,
accelerate, increase the rate of interest on, or otherwise change the
time, place, manner or terms of payment of the Guarantied Obligations,
(ii) settle, compromise, release or discharge, or accept or refuse any
offer of performance with respect to, or substitutions for, the
Guarantied Obligations or any agreement relating thereto and/or
subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guaranties of the
Guarantied Obligations and take and hold security for the payment of
this Guaranty or the Guarantied Obligations; (iv) release, surrender,
exchange, substitute, compromise, settle, rescind, waive, alter,
subordinate or modify, with or without consideration, any security for
payment of the Guarantied Obligations, any other guaranties (including
the License Sub Guaranty) of the Guarantied Obligations, or any other
obligation of any Person with respect to the Guarantied Obligations;
(v) enforce and apply any security now or hereafter held by or for the
benefit of such Beneficiary in respect of this Guaranty or the
Guarantied Obligations and direct the order or manner of sale thereof,
or exercise any other right or remedy that such Beneficiary may have
against any such security, in each case as such Beneficiary in its
discretion may determine consistent with the Loan Documents, Existing
Senior Note Indenture and the applicable Lender Interest Rate
Agreement, the Indenture and any applicable security agreement,
including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable, and even though such action operates
to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of Guarantor against Company or any security for
the Guarantied Obligations; and (vi) exercise any other rights
available to it under the Loan Documents, the Existing Senior Note
Indenture or the Lender Interest Rate Agreements.
(f) This Guaranty and the obligations of Guarantor hereunder
shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guarantied Obligations),
including without limitation the occurrence of any of the following,
whether or not Guarantor shall have had notice or knowledge of any of
them: (i) any failure or omission to assert or enforce or agreement or
election not to assert or enforce, or the stay or enjoining, by order
of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Loan Documents, the Existing Senior Note
Indenture, the Existing Senior
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Notes or the Lender Interest Rate Agreements, at law, in equity or
otherwise) with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to the License Sub Guaranty or any
other guaranty of or security for the payment of the Guarantied
Obligations; (ii) any rescission, waiver, amendment or modification of,
or any consent to departure from, any of the terms or provisions
(including without limitation provisions relating to events of default)
of the Credit Agreement, any of the other Loan Documents, the Existing
Senior Note Indenture, the Existing Senior Notes, any of the Lender
Interest Rate Agreements or any agreement or instrument executed
pursuant thereto, or of the License Sub Guaranty or any other guaranty
or security for the Guarantied Obligations, in each case whether or not
in accordance with the terms of the Credit Agreement or such Loan
Document, the Existing Senior Note Indenture, the Existing Senior
Notes, such Lender Interest Rate Agreement or any agreement relating to
the License Sub Guaranty or such other guaranty or security; (iii) the
Guarantied Obligations, or any agreement relating thereto, at any time
being found to be illegal, invalid or unenforceable in any respect;
(iv) the application of payments received from any source (other than
payments received pursuant to the other Loan Documents, the Existing
Senior Note Indenture, the Existing Senior Notes or any of the Lender
Interest Rate Agreements or from the proceeds of any security for the
Guarantied Obligations, except to the extent such security also serves
as collateral for indebtedness other than the Guarantied Obligations)
to the payment of indebtedness other than the Guarantied Obligations,
even though any Beneficiary might have elected to apply such payment to
any part or all of the Guarantied Obligations; (v) any Beneficiary's
consent to the change, reorganization or termination of the corporate
structure or existence of Company or any of its Subsidiaries and to any
corresponding restructuring of the Guarantied Obligations; (vi) any
failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations; (vii) any
defenses, set-offs or counterclaims which Company may allege or assert
against any Beneficiary in respect of the Guarantied Obligations,
including but not limited to failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord
and satisfaction and usury; and (viii) any other act or thing or
omission, or delay to do any other act or thing, which may or might in
any manner or to any extent vary the risk of Guarantor as an obligor in
respect of the Guarantied Obligations.
2.5 Waivers by Guarantor.
Guarantor hereby waives, for the benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition of
payment or performance by Guarantor, to (i) proceed against Company,
any other guarantor (including License Sub) of the Guarantied
Obligations or any other Person, (ii) proceed against or exhaust any
security held from Company, any such other guarantor or any other
Person, (iii) proceed against or have resort to any balance of any
deposit account or credit on the books of any Beneficiary in favor of
Company or any other Person, or (iv) pursue any other remedy in the
power of any Beneficiary whatsoever;
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(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including,
without limitation, any defense based on or arising out of the lack of
validity or the unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the cessation
of the liability of Company from any cause other than payment in full
of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
(d) any defense based upon any Beneficiary's errors or
omissions in the administration of the Guarantied Obligations, except
behavior which amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations
affecting Guarantor's liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that any Beneficiary protect,
secure, perfect or insure any security interest or lien or any property
subject thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the
Credit Agreement, the Existing Senior Note Indenture, the Lender
Interest Rate Agreements or any agreement or instrument related
thereto, notices of any renewal, extension or modification of the
Guarantied Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters
referred to in subsection 2.4 and any right to consent to any thereof;
and
(g) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.
2.6 Guarantor's Rights of Subrogation, Contribution, Etc.
Until the Guarantied Obligations shall have been paid in full and the
Commitments shall have terminated, Guarantor hereby waives any claim, right or
remedy, direct or indirect, that Guarantor now has or may hereafter have against
Company or any of its assets in connection with this Guaranty or the performance
by Guarantor of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under common law
or otherwise and including without limitation (a) any right of subrogation,
reimbursement
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or indemnification that Guarantor now has or may hereafter have against Company,
(b) any right to enforce, or to participate in, any claim, right or remedy that
any Beneficiary now has or may hereafter have against Company, and (c) any
benefit of, and any right to participate in, any collateral or security now or
hereafter held by any Beneficiary. In addition, until the Guarantied Obligations
shall have been paid in full and the Commitments shall have terminated,
Guarantor shall withhold exercise of any right of contribution Guarantor may
have against any other guarantor of the Guarantied Obligations (including
without limitation any such right of contribution under the License Sub Guaranty
as contemplated by subsection 2.2). Guarantor further agrees that, to the extent
the waiver or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification Guarantor may have
against Company or against any collateral or security, and any rights of
contribution Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any Beneficiary may have against Company,
to all right, title and interest any Beneficiary may have in any such collateral
or security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Collateral Agent on behalf of Beneficiaries and shall
forthwith be paid over to Collateral Agent for the benefit of Beneficiaries to
be credited and applied against the Guarantied Obligations, whether matured or
unmatured, in accordance with the terms hereof.
2.7 Subordination of Other Obligations.
Any indebtedness of Company now or hereafter held by Guarantor is
hereby subordinated in right of payment to the Guarantied Obligations, and any
such indebtedness of Company to Guarantor collected or received by Guarantor
after an Event of Default has occurred and is continuing shall be held in trust
for Collateral Agent on behalf of Beneficiaries and shall forthwith be paid over
to Collateral Agent for the benefit of Beneficiaries to be credited and applied
against the Guarantied Obligations but without affecting, impairing or limiting
in any manner the liability of Guarantor under any other provision of this
Guaranty.
2.8 Expenses.
Guarantor agrees to pay, or cause to be paid, on demand, and to save
Beneficiaries harmless against liability for, any and all costs and expenses
(including fees and disbursements of counsel and allocated costs of internal
counsel) incurred or expended by any Beneficiary in connection with the
enforcement of or preservation of any rights under this Guaranty.
2.9 Continuing Guaranty; Termination of Guaranty.
This Guaranty is a continuing guaranty and shall remain in effect until
all of the Guarantied Obligations under the Credit Agreement shall have been
paid in full and the
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Commitments thereunder shall have terminated. Guarantor hereby irrevocably
waives any right to revoke this Guaranty as to future transactions giving rise
to any Guarantied Obligations. This Guaranty may be terminated by Collateral
Agent at any time at the direction of Lenders in accordance with the terms of
the Credit Agreement. The Noteholders hereby agree, by their acceptance of the
benefits of this Guaranty, that this Guaranty may be terminated by Collateral
Agent pursuant to this Section 2.9 without the consent or the approval of any
Noteholder.
2.10 Authority of Guarantor or Company.
It is not necessary for any Beneficiary to inquire into the capacity or
powers of Guarantor or Company or the officers, directors or any agents acting
or purporting to act on behalf of any of them.
2.11 Financial Condition of Company.
Any Loans may be granted to Company or continued from time to time, and
any Lender Interest Rate Agreements may be entered into from time to time, in
each case without notice to or authorization from Guarantor regardless of the
financial or other condition of Company at the time of any such grant or
continuation or at the time such Lender Interest Rate Agreement is entered into,
as the case may be. No Beneficiary shall have any obligation to disclose or
discuss with Guarantor its assessment, or Guarantor's assessment, of the
financial condition of Company. Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Loan
Documents, the Existing Senior Note Indenture, the Existing Senior Notes and the
Lender Interest Rate Agreements and Guarantor assumes the responsibility for
being and keeping informed of the financial condition of Company and of all
circumstances bearing upon the risk of nonpayment of the Guarantied Obligations.
Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary
to disclose any matter, fact or thing relating to the business, operations or
conditions of Company now known or hereafter known by any Beneficiary.
2.12 Rights Cumulative.
The rights, powers and remedies given to Beneficiaries by this Guaranty
are cumulative and shall be in addition to and independent of all rights, powers
and remedies given to Beneficiaries by virtue of any statute or rule of law or
in any of the other Loan Documents, the Existing Senior Note Indenture, any of
the Lender Interest Rate Agreements or any agreement between Guarantor and any
Beneficiary or Beneficiaries or between Company and any Beneficiary or
Beneficiaries. Any forbearance or failure to exercise, and any delay by any
Beneficiary in exercising, any right, power or remedy hereunder shall not impair
any such right, power or remedy or be construed to be a waiver thereof, nor
shall it preclude the further exercise of any such right, power or remedy.
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2.13 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty.
(a) So long as any Guarantied Obligations remain outstanding, Guarantor
shall not, without the prior written consent of Collateral Agent acting pursuant
to the directions of Requisite Lenders, commence or join with any other Person
in commencing any bankruptcy, reorganization or insolvency proceedings of or
against Company. The obligations of Guarantor under this Guaranty shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Company or by any
defense which Company may have by reason of the order, decree or decision of any
court or administrative body resulting from any such proceeding.
(b) Guarantor acknowledges and agrees that any interest on any portion
of the Guarantied Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Guarantied Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantor and Beneficiaries that the Guarantied Obligations which
are guarantied by Guarantor pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guarantied Obligations. Guarantor will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Collateral Agent, or allow the claim of
Collateral Agent in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations
are paid by Company, the obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guarantied Obligations for all purposes under this Guaranty.
2.14 Set Off.
In addition to any other rights any Beneficiary may have under law or
in equity, if after the occurrence and during the continuation of an Event of
Default any amount shall at any time be due and owing by Guarantor to any
Beneficiary under this Guaranty, such Beneficiary is authorized at any time or
from time to time, subject to the consent of Collateral Agent, without notice
(any such notice being hereby expressly waived) other than to Collateral Agent,
to set off and to appropriate and to apply any and all deposits (general or
special, including but not limited to indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness of such
Beneficiary owing to Guarantor and any other property of Guarantor held by any
Beneficiary to or for the credit or the account of Guarantor against and on
account of the Guarantied Obligations and liabilities of Guarantor to any
Beneficiary under this Guaranty.
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SECTION 3.
MISCELLANEOUS
3.1 Survival of Warranties.
All agreements, representations and warranties made herein shall
survive the execution and delivery of this Guaranty and the other Loan Documents
and the Lender Interest Rate Agreements and any increase in the Commitments
under the Credit Agreement.
3.2 Notices.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier and shall be deemed to have been
given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Collateral Agent shall not be effective
until received. For purposes hereof the address of each party shall be as set
forth under such party's name on the signature pages hereof or of the Credit
Agreement or such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
3.3 Severability.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
3.4 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of
this Guaranty, and no consent to any departure by Guarantor therefrom, shall in
any event be effective without the written concurrence of Collateral Agent and,
in the case of any such amendment or modification, Guarantor. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. Collateral Agent may execute amendments and
waivers to this Guaranty if directed to do so in writing by Requisite Lenders or
Supermajority Lenders as required in accordance with the terms of the Credit
Agreement. The Noteholders hereby agree, by acceptance by the benefits of this
Guaranty, that no consent or approval of any Noteholder shall be required for
any such amendment or waiver as long as, after giving effect to such amendment
or waiver, the Existing Senior Notes continue to be guaranteed on an equal and
ratable basis with the Obligations under the Credit Agreement under this
Guaranty.
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3.5 Headings.
Section and subsection headings in this Guaranty are included herein
for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
3.6 Applicable Law.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND
BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
3.7 Successors and Assigns.
This Guaranty is a continuing guaranty and shall be binding upon
Guarantor and its successors and assigns. This Guaranty shall inure to the
benefit of Beneficiaries and their respective successors and assigns. Guarantor
shall not assign this Guaranty or any of the rights or obligations of Guarantor
hereunder without the prior written consent of Collateral Agent at the direction
of required Lenders in accordance with the Credit Agreement. Any Beneficiary
may, without notice or consent, assign its interest in this Guaranty in whole or
in part. The terms and provisions of this Guaranty shall inure to the benefit of
any transferee or assignee of any Loan, and in the event of such transfer or
assignment the rights and privileges herein conferred upon such Beneficiary
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
3.8 No Other Writing.
This writing is intended by Guarantor and Beneficiaries as the final
expression of this Guaranty and is also intended as a complete and exclusive
statement of the terms of their agreement with respect to the matters covered
hereby. No course of dealing, course of performance or trade usage, and no parol
evidence of any nature, shall be used to supplement or modify any terms of this
Guaranty. There are no conditions to the full effectiveness of this Guaranty.
3.9 Further Assurances.
At any time or from time to time, upon the request of Collateral Agent,
Guarantor shall execute and deliver such further documents and do such other
acts and things as Collateral Agent may reasonably request in order to effect
fully the purposes of this Guaranty.
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3.10 Collateral Agent.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders under the Credit Agreement. The Noteholders and the
Interest Rate Exchangers, by their acceptance of the benefits hereunder, hereby
appoint Collateral Agent to act as Collateral Agent hereunder in accordance with
the provisions of Section 8 of the Credit Agreement, including without
limitation the provisions of subsection 8.2 of the Credit Agreement, and the
Noteholders and the Interest Rate Exchangers further hereby agree to indemnify
Collateral Agent on a ratable basis in accordance with subsection 8.4 of the
Credit Agreement. Collateral Agent shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Guaranty and the Credit Agreement; provided that Collateral
Agent shall exercise, or refrain from exercising, any remedies hereunder in
accordance with the directions of Requisite Lenders. Each Beneficiary, by
acceptance of the benefits of this Guaranty, hereby agrees that no Beneficiary
shall have any liability to any other Beneficiary for any such direction by
Requisite Lenders. In furtherance of the foregoing provisions of this subsection
3.10, each Beneficiary, by its acceptance of the benefits hereof, agrees that it
shall have no right individually to enforce this Guaranty, it being understood
and agreed by Beneficiaries that all rights and remedies hereunder may be
exercised solely by Collateral Agent, for the benefit of the Beneficiaries, in
accordance with the terms of this subsection 3.10.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to subsection 8.5 of the Credit Agreement shall also
constitute notice of resignation as Collateral Agent under this Guaranty;
removal of Collateral Agent pursuant to subsection 8.5 of the Credit Agreement
shall also constitute removal as Collateral Agent under this Guaranty; and
appointment of a successor Collateral Agent pursuant to subsection 8.5 of the
Credit Agreement shall also constitute appointment of a successor Collateral
Agent under this Guaranty. Upon the acceptance of any appointment as Collateral
Agent under subsection 8.5 of the Credit Agreement by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Guaranty, and the retiring or removed
Collateral Agent under this Guaranty shall promptly (i) transfer to such
successor Collateral Agent all sums held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance
of the duties of the successor Collateral Agent under this Guaranty, and (ii)
take such other actions as may be necessary or appropriate in connection with
the assignment to such successor Collateral Agent of the rights created
hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Collateral Agent hereunder.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
BENEDEK COMMUNICATIONS
CORPORATION
By: /s/ Ronald L. Lindwall
-------------------------------------
Ronald L. Lindwall
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
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EXECUTION
BCC PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is dated as of June 6, 1996
and entered into by and between BENEDEK COMMUNICATIONS CORPORATION, a Delaware
corporation ("Pledgor"), and CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
("CIBC-NYA"), as agent for and representative of (in such capacity herein called
"Collateral Agent") Secured Parties referred to below.
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of the shares of stock
(the "Pledged Shares") described in Schedule I annexed hereto and issued by the
corporations named therein.
B. Benedek Broadcasting Corporation, a Delaware corporation
("Company"), and Pledgor have entered into a Credit Agreement, dated as of June
6, 1996 (said Credit Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined), with the financial institutions listed therein ("Lenders"), Pearl
Street L.P., as Arranging Agent, Goldman, Sachs & Co., as Syndication Agent, and
CIBC-NYA, as Administrative Agent and Collateral Agent, pursuant to which
Lenders have made certain commitments, subject to the terms and conditions set
forth in the Credit Agreement, to extend certain credit facilities to Company.
C. Company has entered into that certain Indenture, dated as of March
1, 1995 (said Indenture, as amended, supplemented, or otherwise modified from
time to time, being the "Existing Senior Note Indenture"), with Benedek
Broadcasting Company, L.L.C., a Delaware limited liability company and
subsidiary of Company, and The Bank of New York, as trustee (the "Senior Note
Trustee"), pursuant to which Company has issued $135,000,000 aggregate principal
amount of 11-7/8% Senior Secured Notes due 2005 (the "Existing Senior Notes").
D. Company may from time to time enter into one or more Interest Rate
Agreements (collectively, the "Lender Interest Rate Agreements") with or one or
more Lenders or Affiliates of Lenders (in such capacity, collectively, "Interest
Rate Exchangers") in accordance with the terms of the Credit Agreement.
E. Pledgor has executed and delivered that certain Guaranty, dated as
of June 6, 1996 (said Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty"), in favor of
Collateral Agent for the benefit of (i) Agents and Lenders, (ii) the holders of
the Existing Senior Notes ("Noteholders") and (iii) any Interest
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Rate Exchangers (each of Agents, Lenders, Noteholders and Interest Rate
Exchangers is hereinafter referred to as a "Secured Party" and collectively,
as "Secured Parties"), pursuant to which Pledgor has guarantied the prompt
payment and performance when due of all obligations of Company under the Credit
Agreement, the Notes and the other Loan Documents, under the Existing Senior
Note Indenture and the Existing Senior Notes, and under the Lender Interest
Rate Agreements (including without limitation the obligation of Company to make
payments thereunder in the event of early termination thereof).
F. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor secure its obligations under the
Guaranty as provided in this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make the initial Loans and other extensions of credit under the
Credit Agreement and to induce Interest Rate Exchangers to enter into the Lender
Interest Rate Agreements, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees
with Collateral Agent as follows:
SECTION 1. Pledge of Security.
Pledgor hereby pledges and assigns to Collateral Agent, and hereby
grants to Collateral Agent a security interest in, all of Pledgor's right, title
and interest in and to the following (the "Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares and any interest of Pledgor in the entries on the books
of any financial intermediary pertaining to the Pledged Shares, and all
dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares;
(b) all additional shares of, and all securities convertible
into and warrants, options and other rights to purchase or otherwise
acquire, stock of the issuer of the Pledged Shares from time to time
acquired by Pledgor in any manner (which shares shall be deemed to be
part of the Pledged Shares), the certificates or other instruments
representing such additional shares, securities, warrants, options or
other rights and any interest of Pledgor in the entries on the books of
any financial intermediary pertaining to such additional shares, and
all dividends, cash, warrants, rights, instruments and other property
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
additional shares, securities, warrants, options or other rights; and
(c) to the extent not covered by clauses (a) and (b) above,
all proceeds of any or all of the foregoing Pledged Collateral. For
purposes of this Agreement, the term
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"proceeds" includes whatever isceivable or received when Pledged
Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, proceeds of any indemnity or guaranty
payable to Pledgor or Collateral Agent from time to time with respect
to any of the Pledged Collateral.
SECTION 2. Security for Obligations.
This Agreement secures, and the Pledged Collateral is collateral
security for, the prompt payment or performance in full when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. 'SS' 362(a)), of all obligations and liabilities of every nature of
Pledgor now or hereafter existing under or arising out of or in connection with
the Guaranty and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), payments for early termination of Lender
Interest Rate Agreements, fees, expenses, indemnities or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Collateral Agent or any Secured Party as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Pledgor now or hereafter existing under this Agreement (all such
obligations of Pledgor being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral.
All certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of Collateral Agent
pursuant hereto and shall be in suitable form for transfer by delivery or, as
applicable, shall be accompanied by Pledgor's endorsement, where necessary, or
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Collateral Agent. Upon the occurrence and during the
continuation of an Event of Default (as defined under the Credit Agreement or
under the Existing Senior Note Indenture) or the occurrence of an Early
Termination Date (as defined in a Master Agreement or an Interest Rate Swap
Agreement or Interest Rate and Currency Exchange Agreement in the form prepared
by the International Swap and Derivatives Association Inc. or a similar event
under any similar swap agreement) under any Lender Interest Rate Agreement (any
such occurrence being an "Event of Default" for purposes of this Agreement),
Collateral Agent shall have the right, without notice to Pledgor, to transfer to
or to register in the name of Collateral Agent or any of its nominees any or all
of the Pledged Collateral, subject only to the revocable rights
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specified in Section 7(a). In addition, Collateral Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. Representations and Warranties.
Pledgor represents and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares have been duly authorized and validly issued and are
fully paid and non-assessable.
(b) Description of Pledged Collateral. The Pledged Shares
constitute all of the issued and outstanding shares of stock of the
issuer thereof, and there are no outstanding warrants, options or other
rights to purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires
the issuance or sale of, any Pledged Shares.
(c) Ownership of Pledged Collateral. Pledgor is the legal,
record and beneficial owner of the Pledged Collateral free and clear
of any Lien except for the security interest created by this Agreement.
SECTION 5. Transfers and Other Liens; Additional Pledged Collateral; etc.
Pledgor shall:
(a) not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral, or (ii) create or suffer to exist any Lien upon or
with respect to any of the Pledged Collateral, except for the security
interest under this Agreement;
(b) (i) cause the issuer of Pledged Shares not to issue any
stock or other securities in addition to or in substitution for the
Pledged Shares issued by the issuer, except to Pledgor and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional shares of stock or other securities of
the issuer of the Pledged Shares;
(c) promptly deliver to Collateral Agent all written notices
received by it with respect to the Pledged Collateral; and
(d) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against,
the Pledged Collateral, except to the
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extent the validity thereof is being contested in good faith;
provided that Pledgor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of
any proposed sale under any judgement, writ or warrant of attachment
entered or filed against Pledgor or any of the Pledged Collateral as a
result of the failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, Pledgor
will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Collateral Agent may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby and
(ii) at Collateral Agent's request, appear in and defend any action or
proceeding that may affect Pledgor's title to or Collateral Agent's security
interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b), promptly (and in any event within five Business Days) deliver
to Collateral Agent a Pledge Amendment, duly executed by Pledgor, in
substantially the form of Schedule II annexed hereto (a "Pledge Amendment"), in
respect of the additional Pledged Shares to be pledged pursuant to this
Agreement. Pledgor hereby authorizes Collateral Agent to attach each Pledge
Amendment to this Agreement and agrees that all Pledged Shares listed on any
Pledge Amendment delivered to Collateral Agent shall for all purposes hereunder
be considered Pledged Collateral; provided that the failure of Pledgor to
execute a Pledge Amendment with respect to any additional Pledged Shares pledged
pursuant to this Agreement shall not impair the security interest of Collateral
Agent therein or otherwise adversely affect the rights and remedies of
Collateral Agent hereunder with respect thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) Pledgor's Rights. So long as no Event of Default shall have
occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the terms of this
Agreement, the Existing Senior Note Indenture or
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the Credit Agreement; provided, however, that Pledgor shall not
exercise or refrain from exercising any such right if Collateral Agent
shall have notified Pledgor that, in Collateral Agent's judgment, such
action would have a material adverse effect on the value of the Pledged
Collateral or any part thereof; and provided, further, that Pledgor
shall give Collateral Agent at least five Business Days' prior written
notice of the manner in which it intends to exercise, or the reasons
for refraining from exercising, any such right. It is understood,
however, that neither (1) the voting by Pledgor of any Pledged Shares
for or Pledgor's consent to the election of directors at a regularly
scheduled annual or other meeting of stockholders or with respect to
incidental matters at any such meeting nor (2) Pledgor's consent to or
approval of any action otherwise permitted under this Agreement, the
Existing Senior Note Indenture and the Credit Agreement shall be deemed
inconsistent with the terms of this Agreement, the Existing Senior Note
Indenture or the Credit Agreement within the meaning of this Section
7(a)(i), and no notice of any such voting or consent need be given to
Collateral Agent;
(ii) Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all
dividends paid in respect of the Pledged Collateral; provided, however,
that any and all
(1) dividends paid or payable other than in cash in
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral,
(2) dividends and other distributions paid or payable
in cash in respect of any Pledged Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(3) cash paid, payable or otherwise distributed in
respect of principal or in redemption of or in exchange for
any Pledged Collateral,
shall be, and shall forthwith be delivered to Collateral Agent to hold
as, Pledged Collateral and shall, if received by Pledgor, be received
in trust for the benefit of Collateral Agent, be segregated from the
other property or funds of Pledgor and be forthwith delivered to
Collateral Agent as Pledged Collateral in the same form as so received
(with all necessary endorsements); and
(iii) Collateral Agent shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies,
dividend payment orders and other instruments as Pledgor may from time
to time reasonably request for the purpose of enabling Pledgor to
exercise the voting and other consensual rights which it is entitled to
exercise pursuant to paragraph (i) above and to receive the dividends
which it is authorized to receive and retain pursuant to paragraph (ii)
above.
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(b) Collateral Agent's Rights. Upon the occurrence and during the
continuation of an Event of Default:
(i) upon written notice from Collateral Agent to Pledgor, all
rights of Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to Section
7(a)(i) shall cease, and all such rights shall thereupon become vested
in Collateral Agent who shall thereupon have the sole right to exercise
such voting and other consensual rights (subject, however, to the prior
approval of the FCC to the extent required by law);
(ii) all rights of Pledgor to receive the dividends which it
would otherwise be authorized to receive and retain pursuant to Section
7(a)(ii) shall cease, and all such rights shall thereupon become vested
in Collateral Agent who shall thereupon have the sole right to receive
and hold as Pledged Collateral such dividends; and
(iii) all dividends which are received by Pledgor contrary to
the provisions of paragraph (ii) of this Section 7(b) shall be received
in trust for the benefit of Collateral Agent, shall be segregated from
other funds of Pledgor and shall forthwith be paid over to Collateral
Agent as Pledged Collateral in the same form as so received (with any
necessary endorsements).
(c) Irrevocable Proxy. In order to permit Collateral Agent to exercise
the voting and other consensual rights which it may be entitled to exercise
pursuant to Section 7(b)(i) and to receive all dividends and other distributions
which it may be entitled to receive under Section 7(a)(ii) or Section 7(b)(ii)
(subject, however, to the prior approval of the FCC to the extent required by
law), (i) Pledgor shall promptly execute and deliver (or cause to be executed
and delivered) to Collateral Agent all such proxies, dividend payment orders and
other instruments as Collateral Agent may from time to time reasonably request
and (ii) without limiting the effect of the immediately preceding clause (i),
Pledgor hereby grants to Collateral Agent an IRREVOCABLE PROXY to vote the
Pledged Shares and to exercise all other rights, powers, privileges and remedies
to which a holder of the Pledged Shares would be entitled (including, without
limitation, giving or withholding written consents of shareholders, calling
special meetings of shareholders and voting at such meetings), which proxy shall
be effective, automatically and without the necessity of any action (including
any transfer of any Pledged Shares on the record books of the issuer thereof) by
any other Person (including the issuer of the Pledged Shares or any officer or
agent thereof), upon the occurrence of an Event of Default and which proxy shall
only terminate upon the payment in full of the Secured Obligations (other than
inchoate indemnification obligations with respect to claims, losses or
liabilities which have not yet arisen).
(d) FCC Consents. Collateral Agent acknowledges that after the
occurrence of an Event of Default, all requisite consents of the FCC must be
obtained prior to the exercise by Collateral Agent or any Secured Party and/or a
purchaser, at a public or private sale, of any rights as an owner of the Pledged
Collateral.
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SECTION 8. Collateral Agent Appointed Attorney-in-Fact.
Pledgor hereby irrevocably appoints Collateral Agent as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Collateral Agent or otherwise, from time to time in
Collateral Agent's discretion to take any action and to execute any instrument
that Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements,
or amendments thereto, relative to all or any part of the Pledged
Collateral without the signature of Pledgor;
(b) upon the occurrence and during the continuation of an
Event of Default, to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Pledged Collateral;
(c) upon the occurrence and during the continuation of an
Event of Default, to receive, endorse and collect any instruments made
payable to Pledgor representing any dividend or other distribution in
respect of the Pledged Collateral or any part thereof and to give full
discharge for the same;
(d) upon the occurrence and during the continuation of an
Event of Default, to file, or cause to be filed, to the extent
permitted by law, such applications for approval and to take all other
and further actions required to obtain any approvals or consents from
the FCC required for the exercise of any right or remedy hereunder; and
(e) upon the occurrence and during the continuation of an
Event of Default, to file any claims or take any action or institute
any proceedings that Collateral Agent may deem necessary or desirable
for the collection of any of the Pledged Collateral or otherwise to
enforce the rights of Collateral Agent with respect to any of the
Pledged Collateral.
SECTION 9. Collateral Agent May Perform.
If Pledgor fails to perform any agreement contained herein, Collateral
Agent may itself perform, or cause performance of, such agreement, and the
expenses of Collateral Agent incurred in connection therewith shall be payable
by Pledgor under Section 14(b).
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SECTION 10. Standard of Care.
(a) The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Pledged Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the exercise of reasonable care
in the custody of any Pledged Collateral in its possession and the accounting
for moneys actually received by it hereunder, Collateral Agent shall have no
duty as to any Pledged Collateral, it being understood that Collateral Agent
shall have no responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relating
to any Pledged Collateral, whether or not Collateral Agent has or is deemed to
have knowledge of such matters, (ii) taking any necessary steps (other than
steps taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Collateral) to preserve rights against any parties
with respect to any Pledged Collateral, (iii) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (iv) initiating any
action to protect the Pledged Collateral against the possibility of a decline in
market value. Collateral Agent shall be deemed to have exercised reasonable care
in the custody and preservation of Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that which
Collateral Agent accords its own property consisting of negotiable securities.
(b) Neither Collateral Agent nor any Secured Party shall be liable to
Pledgor (i) for any loss or damage sustained by it, or (ii) for any loss,
damage, depreciation or other diminution in the value of any of the Collateral
that may occur as a result of, in connection with or that is an any way related
to (1) any exercise by Collateral Agent or any Secured Party of any right or
remedy under this Agreement or (2) any other act of or failure to act by
Collateral Agent or any Secured Party, except to the extent that the same shall
be determined by a final judgment of a court of competent jurisdiction that is
final and not subject to review on appeal, to be the result of acts or omissions
on the part of Collateral Agent or such Secured Party constituting gross
negligence or willful misconduct.
(c) NO CLAIM MAY BE MADE BY PLEDGOR AGAINST COLLATERAL AGENT, ANY
SECURED PARTY OR THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR IS
BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING OUT
OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP
ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH; AND PLEDGOR HEREBY WAIVES, RELEASES AND AGREES NOT TO
SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
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SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Pledged Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether
or not the Code applies to the affected Pledged Collateral), and Collateral
Agent may also in its sole discretion, without notice except as specified below,
sell the Pledged Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange or broker's board or at any of Collateral
Agent's offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as
Collateral Agent may deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Pledged Collateral; provided that
notwithstanding the foregoing, to the extent required by law, any Pledged
Collateral shall be offered for sale in accordance with Section 11(c) below.
Collateral Agent or any Secured Party may be the purchaser of any or all of the
Pledged Collateral at any such sale and Collateral Agent, as agent for and
representative of Secured Parties (but not any Secured Party or Secured Parties
in its or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing), shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Pledged Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any Pledged
Collateral payable by Collateral Agent at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of Pledgor, and Pledgor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to Pledgor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Collateral Agent shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Pledgor hereby waives any claims against Collateral Agent arising
by reason of the fact that the price at which any Pledged Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Collateral Agent accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree.
If the proceeds of any sale or other disposition of the Pledged Collateral are
insufficient to pay all the Secured Obligations (other than inchoate
indemnification obligations with respect to claims, losses or liabilities which
have not yet arisen), Pledgor shall be liable for the deficiency and the
fees of any attorneys employed by Collateral Agent to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Collateral
Agent may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior
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registration or qualification of such Pledged Collateral under the Securities
Act and/or such state securities laws, to limit purchasers to those who will
agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sales may be at prices and
on terms less favorable than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made pursuant to
a registration statement under the Securities Act) and, notwithstanding such
circumstances, Pledgor agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Pledged Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.
(c) If Collateral Agent determines to exercise its right to sell any or
all of the Pledged Collateral, upon written request, Pledgor shall and shall
cause the issuer of any Pledged Shares to be sold hereunder from time to time to
furnish to Collateral Agent all such information as Collateral Agent may request
in order to determine the number of shares and other instruments included in the
Pledged Collateral which may be sold by Collateral Agent in exempt transactions
under the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.
Pledgor agrees to do, or cause to be done, all such other acts and things as may
be necessary to make any sale or sales (whether private or public) of all or any
part of the Pledged Collateral valid and binding and in compliance with
applicable law, including, without limitation, filing, or causing to be filed,
such applications for approval as may be required by the FCC or any other
governmental authority.
(d) Notwithstanding anything to the contrary set forth herein,
Collateral Agent, on behalf of Secured Parties, agrees that to the extent prior
FCC approval is required pursuant to the Communications Act for (i) the
operation and effectiveness of any grant, right or remedy hereunder or under the
other Loan Documents or the Existing Senior Note Indenture or (ii) taking any
action that may be taken by Collateral Agent hereunder or under the other Loan
Documents or the Existing Senior Note Indenture, such grant, right, remedy or
action will be subject to such prior FCC approval having been obtained by or in
favor of Collateral Agent, on behalf of Secured Parties (and Pledgor will use
its best efforts to obtain any such approval as promptly as possible). Pledgor
agrees that, upon the occurrence and during the continuation of an Event of
Default and at Collateral Agent's request, Pledgor will, and will cause its
Subsidiaries to, immediately file, or cause to be filed, such applications for
approval and shall take all other further actions required by Collateral Agent
to obtain such Governmental Authorizations as are necessary to transfer
ownership and control to Collateral Agent on behalf of Secured Parties, or their
successors or assigns, of the FCC Licenses held by it or its Subsidiaries, or
its interest in any Person holding any such FCC License. To enforce the
provisions of this Section 11(d), Collateral Agent is empowered to request the
appointment of a receiver from any court of competent jurisdiction. Such
receiver shall be instructed to seek from the FCC an involuntary transfer of
control of any FCC License for the purpose of seeking a bona fide purchaser to
whom control will ultimately be transferred. Pledgor hereby agrees to
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authorize, and to cause each of its Subsidiaries to authorize, such an
involuntary transfer of control upon the request of the receiver so appointed,
and, if Pledgor shall refuse to authorize or cause any of its Subsidiaries so to
authorize the transfer, its approval may be required by the court. Upon the
occurrence and during the continuation of an Event of Default, Pledgor shall
further use its best efforts to assist in obtaining approval of the FCC, if
required, for any action or transactions contemplated by this Agreement or the
other Loan Documents or the Existing Senior Note Indenture, including, without
limitation, preparation, execution and filing with the FCC of the assignor's or
transferor's portion of any application or applications for consent to the
assignment of any FCC License or transfer of control necessary or appropriate
under FCC Regulations for approval of the transfer or assignment of any portion
of the Collateral, together with any FCC License or other authorization. Pledgor
acknowledges that the assignment or transfer of FCC Licenses is integral to the
Secured Parties' realization of value for the Collateral, that there is no
adequate remedy at law for failure by Pledgor to comply with the provisions of
this Section 11(d) and that such failure would not be adequately compensable in
damages, and therefore agrees that the agreements contained in this Section
11(d) may be specifically enforced.
Notwithstanding anything to the contrary contained in this Agreement or
any other Loan Documents or the Existing Senior Note Indenture, none of
Collateral Agent nor any Secured Party shall, without first obtaining the
approval of the FCC, take any action pursuant to this Agreement, the Credit
Agreement, or any other Loan Document or the Existing Senior Note Indenture
which would constitute or result in any acquisition or transfer of ownership of
Pledgor or its assets, assignment of any FCC License or any change of control of
Pledgor or any other Person if such assignment, acquisition, transfer or change
in control would require, under existing law (including FCC Regulations), the
prior approval of the FCC.
SECTION 12. Decisions Relating to Exercise of Remedies.
Collateral Agent shall exercise, or refrain from exercising, any remedy
provided for in Section 11 in accordance with the directions of Requisite
Lenders. Each Secured Party, by acceptance of the benefits of this Agreement,
hereby agrees that no Secured Party shall have any liability to any other
Secured Party for any such direction by Requisite Lenders. Collateral Agent
shall give prompt notice to all Secured Parties of actions taken pursuant to the
instructions of Requisite Lenders; provided, however, that the failure to give
any such notice shall not impair the right of Collateral Agent to take any such
action or the validity or enforceability under this Agreement of the action so
taken. Collateral Agent may at any time request directions from Requisite
Lenders with respect to any course of action or other matter relating to this
Agreement. In furtherance of the foregoing provisions of this Section 12, each
Secured Party, by its acceptance of the benefits hereof, agrees that it shall
have no right individually to enforce this Agreement, it being understood and
agreed by Secured Parties that all rights and remedies hereunder may be
exercised solely by Collateral Agent, for the benefit of Secured Parties in
accordance with the terms of this Section 12.
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SECTION 13. Application of Proceeds.
(a) Except as expressly provided elsewhere in this Agreement, all
proceeds received by Collateral Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Pledged Collateral may,
in the discretion of Collateral Agent, be held by Collateral Agent as collateral
for, and/or then, or at any time thereafter, applied in full or in part by
Collateral Agent against, the Secured Obligations in the following order of
priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including all compensation due to
Collateral Agent and its agents and counsel, and all other expenses,
liabilities, and advances made or incurred by Collateral Agent in
connection therewith, and all amounts for which Collateral Agent is
entitled to indemnification hereunder and all advances made by
Collateral Agent hereunder for the account of Pledgor, and to the
payment of all costs and expenses paid or incurred by Collateral Agent
in connection with the exercise of any right or remedy hereunder, all
in accordance with Section 14;
SECOND: To the payment of interest on and fees, if any, with
respect to the Secured Obligations on an equal and ratable basis;
THIRD: To the payment of the unpaid principal amount of all
Secured Obligations on an equal and ratable basis;
FOURTH: To the payment of all other amounts due with respect
to, the Secured Obligations on an equal and ratable basis; and
FIFTH: To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
(b) Payments by Collateral Agent to Lenders in respect of Obligations
shall be made to Administrative Agent for distribution to Lenders in accordance
with the Credit Agreement; any payments in respect of any obligations of Grantor
under Lender Interest Rate Agreements shall be made as directed by the Interest
Rate Exchanger to which such obligations are owed; and any payments in respect
of any obligations of Grantor under the Existing Senior Note Indenture and the
Existing Senior Notes shall be made to the Senior Note Trustee for the benefit
of the Noteholders.
SECTION 14. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Collateral Agent and each Secured Party
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without
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limitation, enforcement of this Agreement), except to the extent such claims,
losses or liabilities result from Collateral Agent's or such Secured Party's
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
(b) Pledgor shall pay to Collateral Agent upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (ii) the
exercise or enforcement of any of the rights of Collateral Agent hereunder, or
(iii) the failure by Pledgor to perform or observe any of the provisions hereof.
(c) The obligations of Pledgor under this Section 14 shall survive the
termination of this Agreement and the discharge of Pledgor's other obligations
under this Agreement.
SECTION 15. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (a) remain in full force and effect until the
payment in full of the Secured Obligations (other than inchoate indemnification
obligations with respect to claims, losses or liabilities which have not yet
arisen) existing under or arising out of or in connection with the Credit
Agreement and the other Loan Documents and the cancellation or termination of
the Commitments, (b) be binding upon Pledgor, its successors and assigns, and
(c) inure, together with the rights and remedies of Collateral Agent hereunder,
to the benefit of Collateral Agent and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Noteholder may
assign or otherwise transfer any Existing Senior Notes held by it to any other
Person and, subject to the provisions of subsection 9.1 of the Credit Agreement,
any Lender may assign or otherwise transfer any Loans held by it to any other
Person, and in each case such other Person shall thereupon become vested with
all the benefits in respect thereof granted to the Noteholders or Lenders,
respectively, herein or otherwise. Upon the payment in full of all Secured
Obligations (other than inchoate indemnification obligations with respect to
claims, losses or liabilities which have not yet arisen) existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents and the cancellation or termination of the Commitments, the security
interest granted hereby shall terminate and all rights to the Pledged Collateral
shall revert to Pledgor. Upon any such termination Collateral Agent will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination and Pledgor shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Collateral Agent, of such of the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof.
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SECTION 16. Collateral Agent.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders under the Credit Agreement. The Noteholders and the
Interest Rate Exchangers, by their acceptance of the benefits hereunder, hereby
appoint Collateral Agent to act as Collateral Agent hereunder in accordance with
the provisions of Section 8 of the Credit Agreement, including without
limitation the provisions of subsection 8.2 of the Credit Agreement, and the
Noteholders and the Interest Rate Exchangers further hereby agree to indemnify
Collateral Agent on a ratable basis in accordance with subsection 8.4 of the
Credit Agreement. Collateral Agent shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Agreement and the Credit Agreement; provided that
Collateral Agent shall exercise, or refrain from exercising, any remedies
hereunder in accordance with the directions of Requisite Lenders.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to subsection 8.5 of the Credit Agreement shall also
constitute notice of resignation as Collateral Agent under this Agreement;
removal of Collateral Agent pursuant to subsection 8.5 of the Credit Agreement
shall also constitute removal as Collateral Agent under this Agreement; and
appointment of a successor Collateral Agent pursuant to subsection 8.5 of the
Credit Agreement shall also constitute appointment of a successor Collateral
Agent under this Agreement. Upon the acceptance of any appointment as Collateral
Agent under subsection 8.5 of the Credit Agreement by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Pledged
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the
successor Collateral Agent under this Agreement, and (ii) execute and deliver to
such successor Collateral Agent such amendments to financing statements, and
take such other actions as may be necessary or appropriate in connection with
the assignment to such successor Collateral Agent of the security interests
created hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Collateral Agent hereunder.
SECTION 17. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by
Collateral Agent and, in the case of any such amendment
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or modification, by Pledgor. Any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given.
Collateral Agent may execute amendments and waivers to this Agreement if
directed to do so in writing by Requisite Lenders or Supermajority Lenders as
required in accordance with the terms of the Credit Agreement. The Noteholders
hereby agree, by acceptance of the benefits of this Agreement, that no consent
or approval of any Noteholder shall be required for any such amendment or waiver
as long as, after giving effect to such amendment or waiver, the Existing Senior
Notes continue to be secured on an equal and ratable basis with the Obligations
under the Credit Agreement secured under this Agreement.
SECTION 18. Notices.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier and shall be deemed to have been
given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Collateral Agent shall not be effective
until received. For purposes hereof the address of each party shall be as set
forth under such party's name on the signature pages hereof or of the Credit
Agreement or such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 19. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 20. Headings.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 21. Governing Law; Terms.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF
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NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.
SECTION 22. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Pledgor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
BENEDEK COMMUNICATIONS
CORPORATION
By: /s/ Ronald L. Lindwall
--------------------------------------
Ronald L. Lindwall
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Collateral Agent
By: /s/ Martin W. Friedman
--------------------------------------
Martin W. Friedman
Authorized Signatory
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EXECUTION
BCC SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is dated as of June 6, 1996 and
entered into by and between BENEDEK COMMUNICATIONS CORPORATION, a Delaware
corporation ("Grantor"), and CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
("CIBC-NYA"), as agent for and representative of (in such capacity herein called
"Collateral Agent") Secured Parties referred to below.
PRELIMINARY STATEMENTS
A. Benedek Broadcasting Corporation, a Delaware corporation ("Company"),
and Grantor have entered into a Credit Agreement, dated as of June 6, 1996 (said
Credit Agreement, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined),
with the financial institutions listed therein ("Lenders"), Pearl Street L.P.,
as Arranging Agent, Goldman, Sachs & Co., as Syndication Agent, and CIBC-NYA, as
Administrative Agent and Collateral Agent, pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
B. Company has entered into that certain Indenture, dated as of March 1,
1995 (said Indenture, as amended, supplemented, or otherwise modified from time
to time, being the "Existing Senior Note Indenture"), with Benedek Broadcasting
Company, L.L.C., a Delaware limited liability company and subsidiary of Company,
and The Bank of New York, as trustee, pursuant to which Company has issued
$135,000,000 aggregate principal amount of 11-7/8% Senior Secured Notes due 2005
(the "Existing Senior Notes").
C. Company may from time to time enter into one or more Interest Rate
Agreements (collectively, the "Lender Interest Rate Agreements") with or one or
more Lenders or Affiliates of Lenders (in such capacity, collectively, "Interest
Rate Exchangers") in accordance with the terms of the Credit Agreement.
D. Grantor has executed and delivered that certain Guaranty, dated as of
June 6, 1996 (said Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty"), in favor of
Collateral Agent for the benefit of (i) Agents and Lenders, (ii) the holders of
the Existing Senior Notes and (iii) any Interest Rate Exchangers (each of
Agents, Lenders and Interest Rate Exchangers is hereinafter referred to as a
"Secured Party" and collectively, as "Secured Parties"), pursuant to which
Grantor has guarantied the prompt payment and performance when due of all
obligations of Company under the Credit Agreement, the Notes and the other Loan
Documents, under the Existing Senior Note Indenture
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and the Existing Senior Notes, and under the Lender Interest Rate Agreements
(including without limitation the obligation of Company to make payments
thereunder in the event of early termination thereof).
E. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantor secure its obligations under the
Guaranty with respect to Company's obligations under the Credit Agreement, the
Notes and other Loan Documents and under the Lender Interest Rate Agreements as
provided in this Agreement. It is specifically intended that this Agreement not
secure Grantor's obligations under the Guaranty with respect to Company's
obligations under the Existing Senior Notes or Existing Senior Note Indenture.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make the initial Loans and other extensions of credit under the
Credit Agreement and to induce Interest Rate Exchangers to enter into the Lender
Interest Rate Agreements, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Grantor hereby agrees
with Collateral Agent as follows:
SECTION 1. Grant of Security.
Grantor hereby assigns to Collateral Agent, and hereby grants to
Collateral Agent a security interest in, all of Grantor's right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "Collateral"):
(a) all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being
the "Equipment");
(b) all inventory in all of its forms (including, but not limited
to, (i) all goods held by Grantor for sale or lease or to be furnished
under contracts of service or so leased or furnished, (ii) all raw
materials, work in process, finished goods, and materials used or consumed
in the manufacture, packing, shipping, advertising, selling, leasing,
furnishing or production of such inventory or otherwise used or consumed
in Grantor's business, (iii) all goods in which Grantor has an interest in
mass or a joint or other interest or right of any kind, and (iv) all goods
which are returned to or repossessed by Grantor) and all accessions
thereto and products thereof (all such inventory, accessions and products
being the "Inventory") and all negotiable documents of title (including
without limitation warehouse receipts, dock receipts and bills of lading)
issued by any Person covering any Inventory (any such negotiable document
of title being a "Negotiable Document of Title");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any
kind and all rights in, to and under all security agreements, leases and
other contracts securing or otherwise relating
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to any such accounts, contract rights, chattel paper, documents,
instruments, general intangibles or other obligations (any and all such
accounts, contract rights, chattel paper, documents, instruments, general
intangibles and other obligations being the "Accounts", and any and all
such security agreements, leases and other contracts being the "Related
Contracts");
(d) all agreements and contracts to which Grantor is a party, as
each such agreement may be amended, supplemented or otherwise modified
from time to time (said agreements, as so amended, supplemented or
otherwise modified, being referred to herein individually as an "Assigned
Agreement" and collectively as the "Assigned Agreements"), including
without limitation (i) all rights of Grantor to receive moneys due or to
become due under or pursuant to the Assigned Agreements, (ii) all rights
of Grantor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to the Assigned Agreements, (iii) all claims of
Grantor for damages arising out of any breach of or default under the
Assigned Agreements, and (iv) all rights of Grantor to terminate, amend,
supplement, modify or exercise rights or options under the Assigned
Agreements, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder;
(e) all deposit accounts of Grantor, including without limitation,
the Collateral Account;
(f) all trademarks, tradenames, tradesecrets, business names,
patents, patent applications, licenses, copyrights, registrations and
franchise rights, and all goodwill associated with any of the foregoing;
(g) to the extent not included in any other paragraph of this
Section 1, all other general intangibles (including without limitation tax
refunds, rights to payment or performance, choses in action and judgments
taken on any rights or claims included in the Collateral);
(h) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products
thereof;
(i) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that
at any time evidence or contain information relating to any of the
Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon; and
(j) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Collateral Agent is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term
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"proceeds" includes whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether
such disposition is voluntary or involuntary.
SECTION 2. Security for Obligations.
This Agreement secures, and the Collateral is collateral security for, the
prompt payment or performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
'SS'362(a)), of all obligations and liabilities of every nature of Grantor now
or hereafter existing under or arising out of or in connection with the Guaranty
(and all extensions or renewals thereof) with respect to the obligations of
Company under the Credit Agreement, the Notes and the other Loan Documents and
under the Lender Interest Rate Agreements (but excluding Grantor's obligations
under the Guaranty with respect to Company's obligations under the Existing
Senior Notes and the Existing Senior Note Indenture), whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), payments for early termination of Lender
Interest Rate Agreements, fees, expenses, indemnities or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Collateral Agent or any Secured Party as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Grantor now or hereafter existing under this Agreement (all such
obligations of Grantor being the "Secured Obligations").
SECTION 3. Grantor Remains Liable.
Anything contained herein to the contrary notwithstanding, (a) Grantor
shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Collateral Agent of any of its rights hereunder
shall not release Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Collateral Agent
shall not have any obligation or liability under any contracts and agreements
included in the Collateral by reason of this Agreement, nor shall Collateral
Agent be obligated to perform any of the obligations or duties of Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
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SECTION 4. Representations and Warranties.
Grantor represents and warrants as follows:
(a) Ownership of Collateral. Except for the security interest
created by this Agreement, Grantor owns, or with respect to Collateral
acquired after the date hereof will own, the Collateral free and clear of
any Lien except as permitted by the Credit Agreement.
(b) Location of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, located at places specified in
Schedule I annexed hereto.
(c) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where Grantor keeps its records
regarding the Accounts and all originals of all chattel paper that
evidence Accounts is, and has been for the four month period preceding the
date hereof, located at Stewart Square, Suite 210, 308 West State Street,
Rockford, Illinois 61107. Grantor has not in the past done, and does not
now do, business under any other name (including any trade-name or
fictitious business name).
(d) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have been
delivered to Collateral Agent duly endorsed and accompanied by duly
executed instruments of transfer or assignment in blank.
(e) Perfection. This Agreement, together with the filing of UCC
financing statements describing the Collateral with the filing offices
indicated on Schedule II annexed hereto, creates a valid, perfected and,
except for Liens permitted pursuant to the Credit Agreement, first
priority security interest in all Collateral in which a security interest
may be perfected by the filing of a financing statement, securing the
payment of the Secured Obligations.
SECTION 5. Further Assurances.
(a) Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Grantor will: (i)
at the request of Collateral Agent, mark conspicuously each item of chattel
paper included in the Accounts, each Related Contract and, at the request of
Collateral Agent, each of its records pertaining to the Collateral,
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with a legend, in form and substance satisfactory to Collateral Agent,
indicating that such Collateral is subject to the security interest granted
hereby, (ii) at the request of Collateral Agent, deliver and pledge to
Collateral Agent hereunder all promissory notes and other instruments (including
checks) and all original counterparts of chattel paper constituting Collateral,
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Collateral Agent, (iii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Collateral Agent may request, in order to perfect and preserve
the security interests granted or purported to be granted hereby, (iv) upon
request of Collateral Agent, promptly after the acquisition by Grantor of any
item of Equipment which is covered by a certificate of title under a statute of
any jurisdiction under the law of which indication of a security interest on
such certificate is required as a condition of perfection thereof, execute and
file with the registrar of motor vehicles or other appropriate authority in such
jurisdiction an application or other document requesting the notation or other
indication of the security interest created hereunder on such certificate of
title, (v) within 30 days after the end of each calendar quarter, deliver to
Administrative Agent copies of all such applications or other documents filed
during such calendar quarter and all such certificates of title issued during
such calendar quarter and, if requested by Collateral Agent, indicating the
security interest created hereunder in the items of Equipment covered thereby,
(vi) at any reasonable time, upon request by Collateral Agent, exhibit the
Collateral to and allow inspection of the Collateral by Collateral Agent, or
persons designated by Collateral Agent, and (vii) at Collateral Agent's request,
appear in and defend any action or proceeding that may affect Grantor's title to
or Collateral Agent's security interest in all or any part of the Collateral.
(b) Grantor hereby authorizes Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
(c) Grantor will furnish to Collateral Agent from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Collateral Agent may reasonably
request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantor.
Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the
Collateral;
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(b) notify Collateral Agent of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of any
change in Grantor's chief place of business, chief executive office or
residence or the office where Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
(d) if Collateral Agent gives value to enable Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes;
and
(e) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except
to the extent the validity thereof is being contested in good faith;
provided that Grantor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of
any proposed sale under any judgement, writ or warrant of attachment
entered or filed against Grantor or any of the Collateral as a result of
the failure to make such payment.
SECTION 7. Special Covenants With Respect to Equipment and Inventory.
Grantor shall:
(a) keep the Equipment and Inventory at the places therefor
specified on Schedule I annexed hereto or, upon 30 days' prior written
notice to Collateral Agent, at such other places in jurisdictions where
all action that may be necessary or desirable, or that Collateral Agent
may request, in order to perfect and protect any security interest granted
or purported to be granted hereby, or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder, with respect to
such Equipment and Inventory shall have been taken;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with Grantor's past practices, and shall
forthwith make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to
such end. Grantor shall promptly furnish to Collateral Agent a statement
respecting any material loss or damage to any of the Equipment;
(c) keep correct and accurate records of the Inventory, itemizing
and describing the kind, type and quantity of Inventory, Grantor's cost
therefor and (where applicable) the current list prices for the Inventory;
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(d) if any Inventory is in possession or control of any of Grantor's
agents or processors and in any event upon the occurrence of an Event of
Default (as defined in the Credit Agreement) or the occurrence of an Early
Termination Date (as defined in a Master Agreement or an Interest Rate
Swap Agreement or Interest Rate and Currency Exchange Agreement in the
form prepared by the International Swap and Derivatives Association Inc.
or a similar event under any similar swap agreement) under any Lender
Interest Rate Agreement (either such occurrence being an "Event of
Default" for purposes of this Agreement), instruct such agent or processor
to hold all such Inventory for the account of Collateral Agent and subject
to the instructions of Collateral Agent; and
(e) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title, deliver such Negotiable Document of Title to
Collateral Agent.
SECTION 8. Insurance.
Grantor shall, at its own expense, maintain insurance with respect to the
Equipment and Inventory in accordance with the terms of the Credit Agreement.
SECTION 9. Special Covenants with Respect to Accounts and Related Contracts.
(a) Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Accounts and
Related Contracts, and all originals of all chattel paper that evidence
Accounts, at the location therefor specified in Section 4 or, upon 30 days'
prior written notice to Collateral Agent, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Collateral
Agent to exercise and enforce its rights and remedies hereunder, with respect to
such Accounts and Related Contracts shall have been taken. Grantor will hold and
preserve such records and chattel paper and will permit representatives of
Collateral Agent at any time during normal business hours to inspect and make
abstracts from such records and chattel paper, and Grantor agrees to render to
Collateral Agent, at Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Promptly upon the
request of Collateral Agent, Grantor shall deliver to Collateral Agent complete
and correct copies of each Related Contract.
(b) Grantor shall, for not less than 5 years from the date on which such
Account arose, maintain (i) complete records of each Account, including records
of all payments received, credits granted and merchandise returned, and (ii) all
documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), Grantor shall
continue to collect, at its own expense, all amounts due or to become due to
Grantor under the Accounts and
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Related Contracts. In connection with such collections, Grantor may take such
action as Grantor may deem necessary or advisable to enforce collection of
amounts due or to become due under the Accounts; provided, however, that
Collateral Agent shall have the right at any time, upon the occurrence and
during the continuation of an Event of Default or a Potential Event of Default
and upon written notice to Grantor of its intention to do so, to notify the
account debtors or obligors under any Accounts of the assignment of such
Accounts to Collateral Agent and to direct such account debtors or obligors to
make payment of all amounts due or to become due to Grantor thereunder directly
to Collateral Agent, to notify each Person maintaining a lockbox or similar
arrangement to which account debtors or obligors under any Accounts have been
directed to make payment to remit all amounts representing collections on checks
and other payment items from time to time sent to or deposited in such lockbox
or other arrangement directly to Collateral Agent and, upon such notification
and at the expense of Grantor, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Grantor might have done. After receipt by Grantor of
the notice from Collateral Agent referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including checks and other instruments)
received by Grantor in respect of the Accounts and the Related Contracts shall
be received in trust for the benefit of Collateral Agent hereunder, shall be
segregated from other funds of Grantor and shall be forthwith paid over or
delivered to Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 15, and (ii) Grantor shall not adjust, settle or compromise the amount
or payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 10. Transfers and Other Liens.
Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(b) except for the security interest created by this Agreement,
create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person.
SECTION 11. Collateral Agent Appointed Attorney-in-Fact.
Grantor hereby irrevocably appoints Collateral Agent as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, Collateral Agent or otherwise, from time to time in
Collateral Agent's discretion to take any action and to execute any instrument
that Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
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(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Collateral Agent pursuant to Section 8;
(b) upon the occurrence and during the continuation of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) upon the occurrence and during the continuation of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuation of an Event of
Default, to file any claims or take any action or institute any
proceedings that Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Collateral Agent with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and
the amounts necessary to discharge the same to be determined by Collateral
Agent in its sole discretion, any such payments made by Collateral Agent
to become obligations of Grantor to Collateral Agent, due and payable
immediately without demand;
(f) upon the occurrence and during the continuation of an Event of
Default, to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and
other documents relating to the Collateral;
(g) upon the occurrence and during the continuation of an Event of
Default, to file, or cause to be filed, to the extent permitted by law,
such applications for approval and to take all other and further actions
required to obtain any approvals or consents from the FCC required for the
exercise of any right or remedy hereunder; and
(h) upon the occurrence and during the continuation of an Event of
Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Collateral Agent were the absolute owner thereof for
all purposes, and to do, at Collateral Agent's option and Grantor's
expense, at any time or from time to time, all acts and things that
Collateral Agent deems necessary to protect, preserve or realize upon the
Collateral and Collateral Agent's security interest therein in order to
effect the intent of this Agreement, all as fully and effectively as
Grantor might do.
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SECTION 12. Collateral Agent May Perform.
If Grantor fails to perform any agreement contained herein, Collateral
Agent may itself perform, or cause performance of, such agreement, and the
expenses of Collateral Agent incurred in connection therewith shall be payable
by Grantor under Section 16(b).
SECTION 13. Standard of Care.
(a) The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its own
property.
(b) Neither Collateral Agent nor any Secured Party shall be liable to
Grantor (i) for any loss or damage sustained by it, or (ii) for any loss,
damage, depreciation or other diminution in the value of any of the Collateral
that may occur as a result of, in connection with or that is an any way related
to (1) any exercise by Collateral Agent or any Secured Party of any right or
remedy under this Agreement or (2) any other act of or failure to act by
Collateral Agent or any Secured Party, except to the extent that the same shall
be determined by a final judgment of a court of competent jurisdiction that is
final and not subject to review on appeal, to be the result of acts or omissions
on the part of Collateral Agent or such Secured Party constituting gross
negligence or willful misconduct.
(c) NO CLAIM MAY BE MADE BY GRANTOR AGAINST COLLATERAL AGENT, ANY SECURED
PARTY OR THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS
OR AGENTS FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR IS BASED ON CONTRACT,
TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY
RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND
GRANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR
ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED
TO EXIST IN ITS FAVOR.
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SECTION 14. Remedies.
(a) If any Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether
or not the Code applies to the affected Collateral), and also may (i) require
Grantor to, and Grantor hereby agrees that it will at its expense and upon
request of Collateral Agent forthwith, assemble all or part of the Collateral as
directed by Collateral Agent and make it available to Collateral Agent at a
place to be designated by Collateral Agent that is reasonably convenient to both
parties, (ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Collateral Agent deems appropriate, (iv) take possession of Grantor's
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any of Grantor's equipment for the purpose of
completing any work in process, taking any actions described in the preceding
clause (iii) and collecting any Secured Obligation, and (v) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Collateral Agent may deem
commercially reasonable. Collateral Agent or any Secured Party may be the
purchaser of any or all of the Collateral at any such sale and Collateral Agent,
as agent for and representative of Secured Parties (but not any Secured Party or
Secured Parties in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Collateral Agent at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of Grantor, and Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to Grantor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given. Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Grantor hereby waives any claims against Collateral Agent arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if Collateral Agent accepts the first offer received and does
not offer such Collateral to more than one offeree. If the proceeds of any sale
or other disposition of the Collateral are insufficient to pay all the Secured
Obligations (other than inchoate indemnification obligations with respect to
claims, losses or
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liabilities which have not yet arisen), Grantor shall be liable for the
deficiency and the fees of any attorneys employed by Collateral Agent to collect
such deficiency.
(b) Notwithstanding anything to the contrary set forth herein, Collateral
Agent, on behalf of Secured Parties, agrees that to the extent prior FCC
approval is required pursuant to the Communications Act for (i) the operation
and effectiveness of any grant, right or remedy hereunder or under the other
Loan Documents or (ii) taking any action that may be taken by Collateral Agent
hereunder or under the other Loan Documents, such grant, right, remedy or action
will be subject to such prior FCC approval having been obtained by or in favor
of Collateral Agent, on behalf of Secured Parties (and Grantor will use its best
efforts to obtain any such approval as promptly as possible). Grantor agrees
that, upon the occurrence and during the continuation of an Event of Default and
at Collateral Agent's request, Grantor will, and will cause its Subsidiaries to,
immediately file, or cause to be filed, such applications for approval and shall
take all other further actions required by Collateral Agent to obtain such
Governmental Authorizations as are necessary to transfer ownership and control
to Collateral Agent on behalf of Secured Parties, or their successors or
assigns, of the FCC Licenses held by it or its Subsidiaries, or its interest in
any Person holding any such FCC License. To enforce the provisions of this
Section 14(b), Collateral Agent is empowered to request the appointment of a
receiver from any court of competent jurisdiction. Such receiver shall be
instructed to seek from the FCC an involuntary transfer of control of any FCC
License for the purpose of seeking a bona fide purchaser to whom control will
ultimately be transferred. Grantor hereby agrees to authorize, and to cause each
of its Subsidiaries to authorize, such an involuntary transfer of control upon
the request of the receiver so appointed, and, if Grantor shall refuse to
authorize or cause any of its Subsidiaries so to authorize the transfer, its
approval may be required by the court. Upon the occurrence and during the
continuation of an Event of Default, Grantor shall further use its best efforts
to assist in obtaining approval of the FCC, if required, for any action or
transactions contemplated by this Agreement or the other Loan Documents,
including, without limitation, preparation, execution and filing with the FCC of
the assignor's or transferor's portion of any application or applications for
consent to the assignment of any FCC License or transfer of control necessary or
appropriate under FCC Regulations for approval of the transfer or assignment of
any portion of the Collateral, together with any FCC License or other
authorization. Grantor acknowledges that the assignment or transfer of FCC
Licenses is integral to the Secured Parties' realization of value for the
Collateral, that there is no adequate remedy at law for failure by Grantor to
comply with the provisions of this Section 14(b) and that such failure would not
be adequately compensable in damages, and therefore agrees that the agreements
contained in this Section 14(b) may be specifically enforced.
Notwithstanding anything to the contrary contained in this Agreement or
any other Loan Documents, none of Collateral Agent nor any Secured Party shall,
without first obtaining the approval of the FCC, take any action pursuant to
this Agreement, the Credit Agreement or any other Loan Document which would
constitute or result in any acquisition or transfer of ownership of Grantor or
its assets, assignment of any FCC License or any change of control of Grantor or
any other Person if such assignment, acquisition, transfer or change in control
would require, under existing law (including FCC Regulations), the prior
approval of the FCC.
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SECTION 15. Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Collateral Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied as
provided in subsection 2.4D of the Credit Agreement.
SECTION 16. Indemnity and Expenses.
(a) Grantor agrees to indemnify Collateral Agent and each Secured Party
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result from
Collateral Agent's or such Secured Party's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Collateral Agent upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (ii) the exercise or
enforcement of any of the rights of Collateral Agent hereunder, or (iii) the
failure by Grantor to perform or observe any of the provisions hereof.
(c) The obligations of Grantor under this Section 16 shall survive the
termination of this Agreement and the discharge of Grantor's other obligations
under this Agreement.
SECTION 17. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations (other than inchoate indemnification obligations
with respect to claims, losses or liabilities which have not yet arisen)
existing under or arising out of or in connection with the Credit Agreement and
the other Loan Documents and the cancellation or termination of the Commitments,
(b) be binding upon Grantor, its successors and assigns, and (c) inure, together
with the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), but subject to the provisions of
subsection 9.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and in each case such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations (other than inchoate indemnification obligations with respect to
claims, losses or liabilities which have not yet arisen) and the cancellation or
termination of the Commitments, the security interest granted hereby
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shall terminate and all rights to the Collateral shall revert to Grantor. Upon
any such termination Collateral Agent will, at Grantor's expense, execute and
deliver to Grantor such documents as Grantor shall reasonably request to
evidence such termination.
SECTION 18. Collateral Agent.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders under the Credit Agreement. The Interest Rate Exchangers,
by their acceptance of the benefits hereunder, hereby appoint Collateral Agent
to act as Collateral Agent hereunder in accordance with the provisions of
Section 8 of the Credit Agreement, including without limitation the provisions
of subsection 8.2 of the Credit Agreement, and the Interest Rate Exchangers
further hereby agree to indemnify Collateral Agent on a ratable basis in
accordance with subsection 8.4 of the Credit Agreement. Collateral Agent shall
be obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action, solely in accordance with this Agreement and the
Credit Agreement.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to subsection 8.5 of the Credit Agreement shall also
constitute notice of resignation as Collateral Agent under this Agreement;
removal of Collateral Agent pursuant to subsection 8.5 of the Credit Agreement
shall also constitute removal as Collateral Agent under this Agreement; and
appointment of a successor Collateral Agent pursuant to subsection 8.5 of the
Credit Agreement shall also constitute appointment of a successor Collateral
Agent under this Agreement. Upon the acceptance of any appointment as Collateral
Agent under subsection 8.5 of the Credit Agreement by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent under this Agreement, and (ii) execute and deliver to such
successor Collateral Agent such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Agent of the security interests created
hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Collateral Agent hereunder.
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SECTION 19. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by Grantor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Collateral
Agent and, in the case of any such amendment or modification, by Grantor. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. Collateral Agent may execute
amendments and waivers to this Agreement if directed to do so in writing by
Requisite Lenders or Supermajority Lenders as required in accordance with the
terms of the Credit Agreement.
SECTION 20. Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier and shall be deemed to have been
given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Collateral Agent shall not be effective
until received. For purposes hereof the address of each party shall be as set
forth under such party's name on the signature pages hereof or of the Credit
Agreement or such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 21. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 22. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 23. Governing Law; Terms.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF
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NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.
SECTION 24. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Grantor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
BENEDEK COMMUNICATIONS
CORPORATION
By /s/ Ronald L. Lindwall
-------------------------------------
Ronald L. Lindwall
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Collateral Agent
By /s/ Martin W. Friedman
-------------------------------------
Martin W. Friedman
Authorized Signatory
S - 1
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EXECUTION
COLLATERAL ACCOUNT AGREEMENT
THIS COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated as of
June 6, 1996 and entered into by and between BENEDEK COMMUNICATIONS CORPORATION,
a Delaware corporation ("Pledgor"), and CANADIAN IMPERIAL BANK OF COMMERCE, NEW
YORK AGENCY ("CIBC-NYA"), as agent for and representative of (in such capacity
herein called "Collateral Agent") Secured Parties referred to below.
PRELIMINARY STATEMENTS
A. Benedek Broadcasting Corporation, a Delaware corporation and wholly
owned subsidiary of Pledgor ("Company"), and Pledgor have entered into a Credit
Agreement, dated as of June 6, 1996 (said Credit Agreement, as it may hereafter
be amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement", the terms defined therein and not otherwise defined herein
being used herein as therein defined), with the financial institutions listed
therein ("Lenders"), Pearl Street L.P., as Arranging Agent, Goldman, Sachs &
Co., as Syndication Agent, and CIBC-NYA, as Administrative Agent and Collateral
Agent, pursuant to which Lenders have made certain commitments, subject to the
terms and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
B. Company has entered into that certain Indenture, dated as of March
1, 1995 (said Indenture, as amended, supplemented, or otherwise modified from
time to time, being the "Existing Senior Note Indenture"), with Benedek
Broadcasting Company, L.L.C., a Delaware limited liability company and
subsidiary of Company, and The Bank of New York, as trustee, pursuant to which
Company has issued $135,000,000 aggregate principal amount of 11-7/8% Senior
Secured Notes due 2005 (the "Existing Senior Notes").
C. Company may from time to time enter into one or more Interest Rate
Agreements (collectively, the "Lender Interest Rate Agreements") with or one or
more Lenders or Affiliates of Lenders (in such capacity, collectively, "Interest
Rate Exchangers") in accordance with the terms of the Credit Agreement.
D. Pledgor has executed and delivered that certain Guaranty, dated as
of June 6, 1996 (said Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Guaranty"), in favor of
Collateral Agent for the benefit of (i) Agents and Lenders, (ii) the holders of
the Existing Senior Notes ("Noteholders") and (iii) any Interest Rate Exchangers
(each of Agents, Lenders and Interest Rate Exchangers is hereinafter referred to
as a "Secured Party" and collectively, as "Secured Parties"), pursuant to which
Pledgor has guarantied the prompt payment and performance when due of all
obligations of Company
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under the Credit Agreement, the Notes and the other Loan Documents, under the
Existing Senior Note Indenture and the Existing Senior Notes, and under the
Lender Interest Rate Agreements (including without limitation the obligation of
Company to make payments thereunder in the event of early termination thereof).
E. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor secure its obligations under the
Guaranty with respect to Company's obligations under the Credit Agreement, the
Notes and the other Loan Documents and under the Lender Interest Rate Agreements
as provided in this Agreement. It is specifically intended that this Agreement
not secure Pledgor's obligations under the Guaranty with respect to Company's
obligations under the Existing Senior Notes or Existing Senior Note Indenture.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make the initial Loans and other extensions of credit under the
Credit Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Collateral
Agent as follows:
SECTION 1. Certain Definitions.
The following terms used in this Agreement shall have the following
meanings:
"Collateral" means (i) the Collateral Account, (ii) all amounts on
deposit from time to time in the Collateral Account, (iii) all Investments,
including all securities (whether certificated or uncertificated), instruments,
accounts, general intangibles, and deposits representing any Investments, (iv)
all interest, dividends, cash, instruments, securities and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Collateral, and (v) to the extent not covered by
clauses (i) through (iv) above, all proceeds of any or all of the foregoing
Collateral.
"Collateral Account" means the restricted deposit account established
and maintained with Depository Institution pursuant to Section 2(a) of the
Third-Party Account Agreement.
"Depository Institution" means the financial institution identified as
"Depository Institution" in the Third-Party Account Agreement.
"Event of Default" means (i) an Event of Default (as defined under the
Credit Agreement) or (ii) the occurrence of an Early Termination Date (as
defined in a Master Agreement or an Interest Rate Swap Agreement or Interest
Rate and Currency Exchange Agreement in the form prepared by the International
Swap and Derivatives Association Inc. or a similar event under any similar swap
agreement) under any Lender Interest Rate Agreement.
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"Investments" means those investments made by Depository Institution
with amounts on deposit in the Collateral Account pursuant to Section 4 of the
Third-Party Account Agreement.
"Permitted Investments" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within 60 days
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than 60 days from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within 60
days after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i), (ii) and (iii) above, (b) has net assets of not less
than $500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
"Secured Obligations" means all obligations and liabilities of every
nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Guaranty (and all extensions or renewals thereof) with
respect to the obligations of Company under the Credit Agreement, the Notes and
the other Loan Documents and under the Lender Interest Rate Agreements (but
excluding Pledgor's obligations under the Guaranty with respect to the
obligations of Company under the Existing Senior Notes and Existing Senior Note
Indenture), whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
Company, would accrue on such obligations, whether or not a claim is allowed
against Company for such interest in the related bankruptcy proceeding),
payments for early termination of Lender Interest Rate Agreements, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Collateral
Agent or any Secured Party as a preference, fraudulent transfer or otherwise,
and all obligations of every nature of Pledgor now or hereafter existing under
this Agreement.
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"Third-Party Account Agreement" means the Third-Party Account
Agreement, substantially in the form of Annex A hereto, entered into by and
among Pledgor, Collateral Agent and Depository Institution, as such Third-Party
Account Agreement may be amended, supplemented or otherwise modified from time
to time.
SECTION 2. Establishment and Operation of Collateral Account.
(a) On the date hereof, in accordance with the terms of the Third-Party
Account Agreement, Pledgor shall establish with Depository Institution at its
office at 501 Seventh Street, Rockford, Illinois 61104, as a blocked account in
the name of Collateral Agent and Pledgor but under the sole dominion and control
of Collateral Agent, a restricted deposit account designated as "Canadian
Imperial Bank of Commerce, New York Agency - Benedek Communications Corporation
Collateral Account".
(b) The Collateral Account shall be operated, and all Investments shall
be purchased and registered or held (as applicable), in accordance with the
terms of the Third- Party Account Agreement.
(c) Collateral Agent shall be fully protected and shall suffer no
liability in acting in accordance with any written instructions reasonably
believed by it to have been given by Pledgor with respect to any aspect of the
operation of the Collateral Account (including any such instructions relating to
any Investments of any amounts on deposit therein).
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 3. Pledge of Security for Secured Obligations.
Pledgor hereby pledges and assigns to Collateral Agent, and hereby
grants to Collateral Agent a security interest in, all of Pledgor's right, title
and interest in and to the Collateral as collateral security for the prompt
payment or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. 'SS'.362(a)), of all
Secured Obligations. All amounts at any time held in the Collateral Account
shall be held in the name of Pledgor and of Collateral Agent, for the benefit of
Secured Parties, as collateral security for the Secured Obligations upon the
terms and conditions set forth herein and in the Third-Party Account Agreement.
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SECTION 4. Investment of Amounts in the Collateral Account.
(a) Funds held by Depository Institution in the Collateral Account
shall not be invested or reinvested except as provided in this Section 4 or in
the Third-Party Account Agreement.
(b) So long as no Event of Default or Potential Event of Default shall
have occurred and be continuing, Collateral Agent shall instruct Depository
Institution to invest and reinvest funds on deposit in the Collateral Account in
Permitted Investments, upon receipt from time to time by Depository Institution
(with a copy to Collateral Agent) of, and in accordance with, appropriate
written instructions from Pledgor.
(c) So long as no Event of Default or Potential Event of Default shall
have occurred and be continuing, Collateral Agent shall instruct Depository
Institution to sell any investment that Pledgor instructs Collateral Agent to
sell in writing. In addition, Pledgor agrees that Collateral Agent may sell or
cause the sale of any Investment and, if appropriate, instruct Depository
Institution to transfer the proceeds of such sale or any other cash on deposit
in the Collateral Account to an account established in Collateral Agent's name,
in either case (i) if such sale or transfer is necessary to permit Collateral
Agent to perform its duties under this Agreement or the Credit Agreement or (ii)
as otherwise provided in Section 11.
SECTION 5. Representations and Warranties.
Pledgor represents and warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of transfer
thereof to Depository Institution will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Depository Institution,
free and clear of any Lien except for the security interest created by this
Agreement, the BCC Security Agreement and the Third-Party Account Agreement.
(b) Perfection. The pledge and assignment of the Collateral pursuant to
this Agreement and the Third-Party Account Agreement creates a valid and
perfected first priority security interest in the Collateral, securing the
payment of the Secured Obligations.
(c) Other Information. All information heretofore, herein or hereafter
supplied to Collateral Agent or Depository Institution by or on behalf of
Pledgor with respect to the Collateral is accurate and complete in all respects.
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SECTION 6. Further Assurances.
Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or by the Third-Party Account
Agreement or to enable Collateral Agent or Depository Institution to exercise
and enforce its rights and remedies hereunder or under the Third-Party Account
Agreement with respect to any Collateral. Without limiting the generality of the
foregoing, Pledgor will: (a) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Collateral Agent may request, in order to
perfect and preserve the security interests granted or purported to be granted
hereby and by the Third-Party Account Agreement and (b) at Collateral Agent's
request, appear in and defend any action or proceeding that may affect Pledgor's
beneficial title to or Collateral Agent's security interest in all or any part
of the Collateral.
SECTION 7. Transfers and Other Liens.
Pledgor agrees that it will not (a) sell, assign (by operation of law
or otherwise) or otherwise dispose of any of the Collateral or (b) create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
for the security interest under this Agreement, the BCC Security Agreement and
the Third-Party Account Agreement.
SECTION 8. Collateral Agent Appointed Attorney-In-Fact.
Pledgor hereby irrevocably appoints Collateral Agent as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Collateral Agent or otherwise, from time to time in
Collateral Agent's discretion to take any action and to execute any instrument
that Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement or the Third-Party Account Agreement, including without
limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Collateral without the
signature of Pledgor to the extent permitted by applicable law;
(b) upon the occurrence and during the continuation of an Event of
Default, to file, or cause to be filed, to the extent permitted by law, such
applications for approval and to take all other and further actions required to
obtain any approvals or consents from the FCC required for the exercise of any
right or remedy hereunder; and
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(c) to receive, endorse and collect any instruments or other
Investments made payable to Pledgor representing any dividend, principal or
interest payment or other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same.
SECTION 9. Collateral Agent may Perform.
If Pledgor fails to perform any agreement contained herein, Collateral
Agent may itself perform, or cause performance of, such agreement, and the
expenses of Collateral Agent incurred in connection therewith shall be payable
by Pledgor under Section 13.
SECTION 10. Standard of Care.
(a) The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Collateral Agent shall have no duty as to any
Collateral, it being understood that Collateral Agent shall have no
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Collateral, whether or not Collateral Agent has or is deemed to have knowledge
of such matters, (ii) taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above to maintain possession of
the Collateral) to preserve rights against any parties with respect to any
Collateral, (iii) taking any necessary steps to collect or realize upon the
Secured Obligations or any guarantee therefor, or any part thereof, or any of
the Collateral, (iv) initiating any action to protect the Collateral against the
possibility of a decline in market value, (v) any loss resulting from
Investments made, held or sold pursuant to Section 4, except for a loss
resulting from Collateral Agent's gross negligence or willful misconduct in
complying with Section 4, or (vi) determining (1) the correctness of any
statement or calculation made by Pledgor in any written or telex (tested or
otherwise) instructions or (2) whether any deposit in the Collateral Account is
proper. Collateral Agent shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Collateral Agent accords
its own property of like kind. In addition to the foregoing and without limiting
the generality thereof, Collateral Agent shall not be responsible for any
actions or omissions of Depository Institution.
(b) Neither Collateral Agent nor any Secured Party shall be liable to
Pledgor (i) for any loss or damage sustained by it, or (ii) for any loss,
damage, depreciation or other diminution in the value of any of the Collateral
that may occur as a result of, in connection with or that is an any way related
to (1) any exercise by Collateral Agent or any Secured Party of any right or
remedy under this Agreement or (2) any other act of or failure to act by
Collateral Agent or any Secured Party, except to the extent that the same shall
be determined by a final judgment of a court of competent jurisdiction that is
final and not subject to review on appeal, to be the result
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of acts or omissions on the part of Collateral Agent or such Secured Party
constituting gross negligence or willful misconduct.
(c) NO CLAIM MAY BE MADE BY PLEDGOR AGAINST COLLATERAL AGENT, ANY
SECURED PARTY OR THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES IN
RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR IS BASED
ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING OUT OF OR
IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP ESTABLISHED
BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH; AND PLEDGOR HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY
SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN
OR SUSPECTED TO EXIST IN ITS FAVOR.
SECTION 11. Remedies.
(a) If an Event of Default shall have occurred and be continuing,
Collateral Agent may instruct Depository Institution to (i) sell any of the
Collateral, (ii) transfer any or all of the Collateral to an account established
in the name of Collateral Agent (whether at Collateral Agent or Depository
Institution or otherwise), or (iii) register title to any Collateral in the name
of Collateral Agent or one of its nominees or agents, without reference to any
interest of Pledgor.
(b) If an Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies otherwise available to it, all the rights and remedies
of a secured party on default under the Uniform Commercial Code as in effect in
any relevant jurisdiction (the "Code") (whether or not the Code applies to the
affected Collateral), and Collateral Agent may also in its sole discretion,
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or at any of Collateral Agent's offices or elsewhere, for cash,
on credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Collateral Agent may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
the Collateral. Collateral Agent or any Secured Party may be the purchaser of
any or all of the Collateral at any such sale and Collateral Agent, as agent for
and representative of Secured Parties (but not any Secured Party or Secured
Parties in its or their respective individual capacities unless Requisite
Lenders shall otherwise agree in writing), shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale, to use and apply any of
the Secured Obligations as a credit on account of the purchase price for any
Collateral payable by Collateral Agent at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of Pledgor, and Pledgor hereby waives (to the extent permitted by
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applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Pledgor hereby agrees that the Collateral is of a
type customarily sold on recognized markets and, accordingly, that no notice to
any Person is required prior to any sale of any of the Collateral pursuant to
the terms of this Agreement; provided that, without prejudice to the foregoing,
Pledgor agrees that, to the extent notice of any such sale shall be required by
law, at least ten days' notice to Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Collateral Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(c) Notwithstanding anything to the contrary set forth herein,
Collateral Agent, on behalf of Secured Parties, agrees that to the extent prior
FCC approval is required pursuant to the Communications Act for (i) the
operation and effectiveness of any grant, right or remedy hereunder or under the
other Loan Documents or (ii) taking any action that may be taken by Collateral
Agent hereunder or under the other Loan Documents, such grant, right, remedy or
action will be subject to such prior FCC approval having been obtained by or in
favor of Collateral Agent, on behalf of Secured Parties (and Pledgor will use
its best efforts to obtain any such approval as promptly as possible). Pledgor
agrees that, upon the occurrence and during the continuation of an Event of
Default and at Collateral Agent's request, Pledgor will, and will cause its
Subsidiaries to, immediately file, or cause to be filed, such applications for
approval and shall take all other further actions required by Collateral Agent
to obtain such Governmental Authorizations as are necessary to transfer
ownership and control to Collateral Agent on behalf of Secured Parties, or their
successors or assigns, of the FCC Licenses held by it or its Subsidiaries, or
its interest in any Person holding any such FCC License. To enforce the
provisions of this Section 11(c), Collateral Agent is empowered to request the
appointment of a receiver from any court of competent jurisdiction. Such
receiver shall be instructed to seek from the FCC an involuntary transfer of
control of any FCC License for the purpose of seeking a bona fide purchaser to
whom control will ultimately be transferred. Pledgor hereby agrees to authorize,
and to cause each of its Subsidiaries to authorize, such an involuntary transfer
of control upon the request of the receiver so appointed, and, if Pledgor shall
refuse to authorize or cause any of its Subsidiaries so to authorize the
transfer, its approval may be required by the court. Upon the occurrence and
during the continuation of an Event of Default, Pledgor shall further use its
best efforts to assist in obtaining approval of the FCC, if required, for any
action or transactions contemplated by this Agreement or the other Loan
Documents, including, without limitation, preparation, execution and filing with
the FCC of the assignor's or transferor's portion of any application or
applications for consent to the assignment of any FCC License or transfer of
control necessary or appropriate under FCC Regulations for approval of the
transfer or assignment of any portion of the Collateral, together with any FCC
License or other authorization. Pledgor acknowledges that the assignment or
transfer of FCC Licenses is integral to the Secured Parties' realization of
value for the Collateral, that there is no adequate remedy at law for failure by
Pledgor to comply with the provisions of this Section 11(c) and that such
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failure would not be adequately compensable in damages, and therefore agrees
that the agreements contained in this Section 11(c) may be specifically
enforced.
Notwithstanding anything to the contrary contained in this Agreement or
any other Loan Documents, none of Collateral Agent nor any Secured Party shall,
without first obtaining the approval of the FCC, take any action pursuant to
this Agreement, the Credit Agreement or any other Loan Document which would
constitute or result in any acquisition or transfer of ownership of Pledgor or
its assets, assignment of any FCC License or any change of control of Pledgor or
any other Person if such assignment, acquisition, transfer or change in control
would require, under existing law (including FCC Regulations), the prior
approval of the FCC.
SECTION 12. Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Collateral Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied as
provided in subsection 2.4D of the Credit Agreement.
SECTION 13. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Collateral Agent and each Secured Party
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result from
Collateral Agent's or such Secured Party's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Pledgor shall pay to Collateral Agent upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (ii) the exercise or
enforcement of any of the rights of Collateral Agent hereunder, or (iii) the
failure by Pledgor to perform or observe any of the provisions hereof.
(c) The obligations of Pledgor under this Section 13 shall survive the
termination of this Agreement and the discharge of Pledgor's other obligations
under this Agreement.
SECTION 14. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations (other than inchoate indemnification obligations
with respect to claims, losses or liabilities which have not
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yet arisen) and the cancellation or termination of the Commitments, (b) be
binding upon Pledgor, its successors and assigns, and (c) inure, together with
the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), but subject to the provisions of
subsection 9.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured Obligations
(other than inchoate indemnification obligations with respect to claims, losses
or liabilities which have not yet arisen) and the cancellation or termination of
the Commitments, the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to Pledgor. Upon any such termination
Collateral Agent shall, at Pledgor's expense, execute and deliver to Pledgor
such documents as Pledgor shall reasonably request to evidence such termination
and Pledgor shall be entitled to the return, upon its request and at its
expense, against receipt and without recourse to Collateral Agent, of such of
the Collateral as shall not have been otherwise applied pursuant to the terms
hereof.
SECTION 15. Collateral Agent.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders under the Credit Agreement. The Interest Rate Exchangers,
by their acceptance of the benefits hereunder, hereby appoint Collateral Agent
to act as Collateral Agent hereunder in accordance with the provisions of
Section 8 of the Credit Agreement, including without limitation, the provisions
of subsection 8.2 of the Credit Agreement, and the Interest Rate Exchangers
further hereby agree to indemnify Collateral Agent on a ratable basis in
accordance with subsection 8.4 of the Credit Agreement. Collateral Agent shall
be obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action, solely in accordance with this Agreement and the
Credit Agreement.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to subsection 8.5 of the Credit Agreement shall also
constitute notice of resignation as Collateral Agent under this Agreement;
removal of Collateral Agent pursuant to subsection 8.5 of the Credit Agreement
shall also constitute removal as Collateral Agent under this Agreement; and
appointment of a successor Collateral Agent pursuant to subsection 8.5 of the
Credit Agreement shall also constitute appointment of a successor Collateral
Agent under this Agreement. Upon the acceptance of any appointment as Collateral
Agent under subsection 8.5 of the Credit Agreement by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums held by Collateral Agent hereunder (which
shall be deposited in a new Collateral Account established and maintained by
such successor Collateral Agent), together with all records and other
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documents necessary or appropriate in connection with the performance of the
duties of the successor Collateral Agent under this Agreement, and (ii) execute
and deliver to such successor Collateral Agent such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Collateral Agent of the
security interests created hereunder, whereupon such retiring or removed
Collateral Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Collateral Agent's resignation or
removal hereunder as Collateral Agent, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Agreement while it was Collateral Agent hereunder.
SECTION 16. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by
Collateral Agent and, in the case of any such amendment or modification, by
Pledgor. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
SECTION 17. Notices.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier and shall be deemed to have been
given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Collateral Agent shall not be effective
until received. For purposes hereof the address of each party shall be as set
forth under such party's name on the signature pages hereof or of the Credit
Agreement or such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 18. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 19. Headings.
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Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 20. Governing Law; Terms.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined.
SECTION 21. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
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IN WITNESS WHEREOF, Pledgor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
BENEDEK COMMUNICATIONS
CORPORATION
By: /s/ Ronald L. Lindwall
------------------------------------
Ronald L. Lindwall
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Collateral Agent
By: /s/ Martin W. Friedman
------------------------------------
Martin W. Friedman
Authorized Signatory
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EXECUTION
THIRD-PARTY ACCOUNT AGREEMENT
THIS THIRD-PARTY ACCOUNT AGREEMENT (this "Agreement") is dated as of
June 6, 1996, and entered into by and among BENEDEK COMMUNICATIONS CORPORATION,
a Delaware corporation ("Pledgor"), AMCORE BANK N.A., ROCKFORD ("Depository
Institution"), and CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
("CIBC-NYA"), as agent for and representative of (in such capacity herein called
"Collateral Agent") Secured Parties (as defined in the Collateral Account
Agreement referred to below).
PRELIMINARY STATEMENTS
A. Benedek Broadcasting Corporation, a Delaware corporation
("Company"), and Pledgor have entered into a Credit Agreement, dated as of June
6, 1996 (said Credit Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined), with the financial institutions listed therein ("Lenders"), Pearl
Street L.P., as Arranging Agent, Goldman, Sachs & Co., as Syndication Agent, and
CIBC-NYA, as Administrative Agent and Collateral Agent, pursuant to which
Lenders have made certain commitments, subject to the terms and conditions set
forth in the Credit Agreement, to extend certain credit facilities to Company.
B. Pursuant to the terms of the Credit Agreement, Pledgor and
Collateral Agent have entered into a Collateral Account Agreement, dated as of
June 6, 1996 (said Collateral Account Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Collateral
Account Agreement"), pursuant to which Pledgor has granted a security interest
in favor of Collateral Agent in the Collateral (as hereinafter defined).
C. In accordance with the terms of Section 2 of the Collateral Account
Agreement, Pledgor wishes to establish a restricted deposit account with
Depository Institution, subject to such security interest in favor of Collateral
Agent.
D. It is a condition precedent to the establishment and maintenance of
such account with Depository Institution that Pledgor, Depository Institution
and Collateral Agent enter into this Agreement setting forth the terms on which
Depository Institution shall establish and operate such account and invest and
reinvest amounts held therein.
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NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Pledgor, Depository Institution and Collateral Agent hereby agree
as follows:
SECTION 1. Certain Definitions.
The following terms used in this Agreement shall have the following
meanings:
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or Illinois or
is a day on which banking institutions located in such state are authorized or
required by law or other governmental action to close.
"Collateral" means (i) the Collateral Account, (ii) all amounts on
deposit from time to time in the Collateral Account, (iii) all Investments,
including all securities (whether certificated or uncertificated), instruments,
accounts, general intangibles, and deposits representing any Investments, (iv)
all interest, cash, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Collateral, and (v) to the extent not covered by clauses (i)
through (iv) above, all proceeds of any or all of the foregoing Collateral.
"Collateral Account" means the restricted deposit account established
and maintained with Depository Institution pursuant to Section 2(a).
"Investments" means those investments, if any, made by Depository
Institution with amounts on deposit in the Collateral Account pursuant to
Section 3.
"Notice of Redirection" means a written notice from Collateral Agent to
Depository Institution directing Depository Institution to (i) sell any
Investments and/or (ii) transfer any or all of the Collateral to an account
established in the name of Collateral Agent (whether at Collateral Agent or
Depository Institution or otherwise) and/or (iii) register title to any
Collateral in the name of Collateral Agent or one of its nominees or agents,
without reference to any interest of Pledgor.
"Permitted Investments" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within 60 days
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than
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60 days from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within 60
days after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i), (ii) and (iii) above, (b) has net assets of not less
than $500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
SECTION 2. Establishment and Operation of Collateral Account.
(a) Pledgor hereby authorizes and directs Depository Institution to
establish and maintain at its office at 501 Seventh Street, Rockford, Illinois
61104, as a blocked account in the name of Collateral Agent and Pledgor but
under the sole dominion and control of Collateral Agent, a restricted deposit
account designated as "Canadian Imperial Bank of Commerce, New York Agency -
Benedek Communications Corporation Collateral Account", account number 0167479.
(b) The Collateral Account shall be operated, and all Investments shall
be purchased and registered or held (as applicable), in accordance with the
terms of this Agreement.
(c) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
(d) Depository Institution shall send Collateral Agent and Pledgor
written account statements with respect to the Collateral Account not less
frequently than monthly. All checks for funds deposited in the Collateral
Account will be microfilmed (on front and back) by Depository Institution and
retained for five years by Depository Institution prior to their destruction.
Copies of any such microfilmed items will be provided to Collateral Agent upon
request within such five-year period.
SECTION 3. Permitted Investments and Transfers of Amounts
in the Collateral Account.
(a) Funds held by Depository Institution in the Collateral Account
shall not be (i) invested or reinvested or (ii) transferred from the Collateral
Account, except as provided in this Section 3 or the Collateral Account
Agreement.
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(b) Collateral Agent hereby delegates to Pledgor the exclusive right,
prior to delivery by Collateral Agent to Depository Institution of a Notice of
Redirection, to instruct Depository Institution with respect to (i) the
withdrawal of funds contained in, the making of payments from, and the debiting
of the Collateral Account, (ii) the investment and reinvestment of amounts held
in the Collateral Account and (iii) matters relating to the operation and
administration of the Collateral Account; provided that all Investments must be
made in Depository Institution's name and as custodian under this Agreement, in
Permitted Investments; and provided further, that upon the delivery by
Collateral Agent to Depository Institution of a Notice of Redirection, the
delegation set forth in this Section 4(b) shall terminate, and Collateral Agent
shall thereafter have the exclusive right with respect to all of the foregoing
matters relating to the Collateral Account and to take all such actions with
respect thereto, unless and until Collateral Agent notifies Depository
Institution to the contrary.
(c) Promptly upon the purchase of any Investment, Depository
Institution shall take all steps that it customarily takes in the ordinary
course of its business to ensure that such Investment is transferred on its
books to Pledgor, subject to a first priority security interest in favor of
Collateral Agent, and to ensure that such Investment is held in the Collateral
Account. Without limiting the generality of the foregoing, Depository
Institution shall promptly (i) send to Pledgor and Collateral Agent a written
confirmation of the purchase of such Investment which expressly acknowledges
that such Investment is subject to a first priority security interest in favor
of Collateral Agent and (ii) identify in its records, by book entry or
otherwise, that such Investment belongs to Pledgor, subject to a first priority
security interest in favor of Collateral Agent.
(d) Anything contained herein to the contrary notwithstanding,
Depository Institution shall, if and as directed in writing by Collateral Agent,
(i) sell any of the Collateral, (ii) transfer any or all of the Collateral to an
account established in Collateral Agent's name (whether at Collateral Agent or
Depository Institution or otherwise), (iii) register title to any Collateral in
the name of Collateral Agent or one of its nominees or agents, without reference
to any interest of Pledgor, or (iv) otherwise deal with the Collateral as
directed by Collateral Agent.
(e) Any interest, cash dividends or other cash distributions received
in respect of any Investments, the net proceeds of any sale or payment of any
Investments and any distribution of property other than cash in respect of any
Investments shall be held in the Collateral Account; provided that, unless
otherwise instructed in writing by Collateral Agent, Depository Institution
shall promptly sell or otherwise liquidate any such property other than cash
that is not a Permitted Investment.
SECTION 4. Acknowledgement of Security Interest in
Favor of Collateral Agent; Waiver of Set-Off.
4
<PAGE>
<PAGE>
(a) Depository Institution hereby confirms that it has received a copy
of the Collateral Account Agreement and acknowledges the security interest
granted by Pledgor in favor of Collateral Agent in the Collateral.
(b) Depository Institution hereby further acknowledges that it holds
the Collateral Account, and all other Collateral registered to or held therein,
as custodian for, for the benefit of, and subject to such security interest in
favor of, Collateral Agent. Depository Institution shall, by book entry or
otherwise, identify the Collateral Account, and all other Collateral registered
to or held therein, as being subject to such security interest in favor of
Collateral Agent.
(c) Pledgor, Depository Institution and Collateral Agent hereby agree
that in the event any dispute arises with respect to the payment, ownership or
right to possession of the Collateral Account or any other Collateral registered
to or held therein, Depository Institution shall take such actions and shall
refrain from taking such actions with respect thereto as may be directed by
Collateral Agent.
(d) Depository Institution shall not exercise any right of set-off,
banker's lien, counterclaim or similar right against any of the Collateral;
provided that Depository Institution may deduct, from any payments or cash
distributions on or with respect to any Investments, any usual and ordinary
transaction and administration fees payable in connection with the
administration and operation of the Collateral Account.
SECTION 5. Exculpation and Indemnification of Depository Institution.
(a) Depository Institution's duties hereunder are only those
specifically provided herein, and Depository Institution shall incur no
liability whatsoever for any actions or omissions hereunder except for any such
liability arising out of or in connection with Depository Institution's gross
negligence or wilful misconduct. Depository Institution shall be fully protected
and shall suffer no liability in acting in accordance with any written
instructions reasonably believed by it to have been given (i) prior to the
receipt by Depository Institution of a Notice of Redirection, by Pledgor with
respect to any aspect of the operation of the Collateral Account (including any
such instructions, to the extent provided in Section 3(b), with respect to any
investments of any amounts on deposit therein), and (ii) by Collateral Agent.
(b) Pledgor agrees to indemnify Depository Institution from and against
any and all claims, losses, liabilities and expenses (including reasonable
attorneys' fees and expenses) in any way relating to, growing out of or
resulting from this Agreement or the performance of its obligations hereunder,
except to the extent arising out of or in connection with Depository
Institution's gross negligence or wilful misconduct.
5
<PAGE>
<PAGE>
SECTION 6. Representations and Warranties by Depository Institution.
Depository Institution hereby represents and warrants to Pledgor and
Collateral Agent as follows:
(a) Depository Institution has all necessary corporate power and
authority to enter into and perform this Agreement.
(b) The execution, delivery and performance of this Agreement by
Depository Institution have been duly authorized by all necessary corporate
action on the part of Depository Institution.
(c) Depository Institution is a "financial intermediary" (as that term
is defined in Section 8-313 of the Uniform Commercial Code as in effect in the
State of New York) and is acting in such capacity for purposes of this
Agreement.
SECTION 7. Termination.
This Agreement shall terminate, and all rights to the Collateral
Account and all other Collateral registered to or held therein shall revert to
Pledgor, upon Depository Institution's receipt of written notice, signed by an
authorized officer of Collateral Agent, that the Collateral Account Agreement
has terminated.
SECTION 8. Resignation and Removal of Depository Institution.
(a) Depository Institution may be removed at any time by written notice
given by Collateral Agent to Depository Institution and Pledgor, but such
removal shall not become effective until a successor Depository Institution
acceptable to Pledgor shall have been appointed by Collateral Agent and shall
have accepted such appointment in writing.
(b) Depository Institution may resign at any time by giving not less
than thirty days' written notice to Collateral Agent and Pledgor, but such
removal shall not become effective until a successor Depository Institution
acceptable to Pledgor shall have been appointed by Collateral Agent and shall
have accepted such appointment in writing. If an instrument of acceptance by a
successor Depository Institution shall not have been delivered to the resigning
Depository Institution within thirty days after the giving of any such notice of
resignation, the resigning Depository Institution may, at the expense of
Pledgor, petition any court of competent jurisdiction for the appointment of a
successor Depository Institution.
(c) Upon the appointment of a successor Depository Institution and its
acceptance of such appointment, the resigning or removed Depository Institution
shall transfer all items of Collateral held by it to such successor (which items
of Collateral shall be deposited in a new
6
<PAGE>
<PAGE>
Collateral Account established and maintained by such successor). Following such
appointment all references herein to Depository Institution shall be deemed a
reference to such successor; provided that the provisions of Section 6 hereof
shall continue to inure to the benefit of the resigning or removed Depository
Institution with respect to any actions taken or omitted to be taken by it under
this Agreement while it was Depository Institution hereunder.
SECTION 9. Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that any notices to Collateral Agent shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or, as to any party, such other address as shall be designated by such
party in a written notice delivered to the other parties hereto.
SECTION 10. Headings.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 11. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
7
<PAGE>
<PAGE>
SECTION 12. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
8
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
BENEDEK COMMUNICATIONS
CORPORATION
By: /s/ Ronald L. Lindwall
------------------------------------
Ronald L. Lindwall
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
Notice Address:
Benedek Broadcasting Corporation
Stewart Square, Suite 210
308 West State Street
Rockford, Illinois 61101
Attention: A. Richard Benedek
Telecopy: (815) 987-5335
with a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attention: Paul S. Goodman, Esq.
Telecopy: (212) 730-1964
S-1
<PAGE>
<PAGE>
AMCORE BANK N.A., ROCKFORD,
as Depository Institution
By: /s/ Ronald E. Fox
--------------------------------
Name: Ronald E. Fox
Title: Vice President
Notice Address:
Amcore Bank N.A., Rockford
501 Seventh Street
Rockford, Illinois 61104
Attention: Ronald E. Fox
Facsimile: (815) 961-7733
S-2
<PAGE>
<PAGE>
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Collateral Agent
By: /s/ Martin W. Friedman
--------------------------------
Martin W. Friedman
Authorized Signatory
Notice Address:
Canadian Imperial Bank of Commerce,
New York Agency
425 Lexington Avenue
New York, New York 10017
Attention: Arlene Tellerman
Telecopy: (212) 856-3799
Telephone: (212) 856-3695
S-3
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION
308 West State Street
Rockford, Illinois 61101
[Date]
[Name]
[Address]
Dear [Name]:
In consideration of your continued service as an officer or
director of Benedek Communications Corporation (the "Company"), the Company
shall to the extent provided herein indemnify you and hold you harmless from and
against any and all "Losses" (as defined below) which you may incur by reason of
your election or service as a director, officer, employee, agent, fiduciary or
representative of the Company or any "Related Entity" (as defined below) to the
fullest extent permitted by law.
1. (a) "Losses" mean all liabilities, "Costs and Expenses" (as
defined below), amounts of judgments, fines, penalties or excise taxes (or other
amounts assessed, surcharged or levied under the Employee Retirement Income
Security Act of 1974, as amended) and amounts paid in settlement of or incurred
in defense of any settlement in connection with any threatened, pending or
completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether brought by or in the right of the
Company or otherwise, and appeals in which you may become involved, as a party
or otherwise, by reason of acts or omissions in your capacity as and while
serving as a director, officer, employee, agent, fiduciary or representative of
the Company or any Related Entity.
(b) A "Related Entity" means any corporation, partnership, joint
venture, trust or other entity or enterprise in which the Company is in any way
interested, or in or as to which you are serving at the Company's request or on
its behalf, as a director, officer, employee, agent, fiduciary or representative
including, but not limited to, any employee benefit plan or any corporation of
which the Company or any Related Entity is, directly or indirectly, a
stockholder or creditor.
(c) "Costs and Expenses" means all reasonable costs and expenses
incurred by you in investigating, defending or appealing any threatened, pending
or completed claim, action, suit or proceeding including, without limitation,
counsel fees and disbursements.
<PAGE>
<PAGE>
2. Costs and Expenses shall be paid promptly by the Company as
they are incurred or shall be advanced on your behalf as may be appropriate
against delivery of invoices therefor (whether or not it may ultimately be
determined that you are entitled to be indemnified by the Company on account
thereof); provided, however, that if it shall ultimately be determined by final
decision of a court of competent jurisdiction that you are not entitled to be
indemnified on account of any Costs or Expenses for which you have theretofore
received payment or reimbursement, you shall promptly repay such amount to the
Company.
3. The Company shall indemnify you and hold you harmless from
and against any and all Losses which you may incur if you are a party to or
threatened to be made a party to or otherwise involved in any proceeding or
action (other than a proceeding or action by or in the right of the Company to
procure a judgment in its favor), unless it is determined that you did not act
in good faith and in a manner reasonably believed by you to be in, or not
opposed to, the best interest of the Company and, in the case of a criminal
proceeding or action, in addition, that you had reasonable cause to believe that
your conduct was unlawful.
4. The Company shall indemnify you and hold you harmless from
and against any and all Losses which you may incur if you are a party to or
threatened to be made a party to any proceeding or action by or in the right of
the Company to procure a judgment in its favor, unless it is determined that you
did not act in good faith and in a manner reasonably believed by you to be in,
or not opposed to, the best interest of the Company, except that no
indemnification for Losses shall be made under this Paragraph 4 in respect of
any claim, issue or matter as to which you shall have been adjudged to be liable
to the Company, unless and only to the extent that any court in which such
action or proceeding was brought shall determine upon application that, despite
the adjudication of liability, but in view of all the circumstances of the
matter, you are fairly and reasonably entitled to indemnity for such expenses as
such court shall deem proper.
5. Anything hereinabove to the contrary notwithstanding,
"Losses" shall not include, and you shall not be entitled to indemnification
under this agreement on account of (i) amounts payable by you to the Company or
any Related Entity in satisfaction of any judgment or settlement in the
Company's or such Related Entity's favor, or any amount payable on account of
profits realized by you in the purchase or sale of securities of the Company or
any Related Entity within the meaning of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar provisions of state law; (ii)
Losses in connection with which it is otherwise determined that you are not
entitled to indemnification as a matter of law or public policy; or (iii) Losses
to the extent you are indemnified by the Company otherwise than pursuant to this
agreement, including any Losses for which payment is made to you under an
insurance policy.
6. Termination of any action, suit or proceeding by judgment,
order, settlement or conviction, upon a plea of nolo contendere or its
equivalent will not, of itself, create any presumption that you did not act in
good faith and in a manner which you reasonably believed to be in or not opposed
to the best interest of the Company or a Related Entity and, with
2
<PAGE>
<PAGE>
respect to any criminal action or proceeding, had no reasonable cause to believe
that your conduct was unlawful. The determination that you are not entitled to
be indemnified for Losses hereunder by reason of the provisions of Paragraphs 3
or 4 or clause (ii) of Paragraph 5 may be made either by the Company's Board of
Directors (by majority vote of disinterested directors or directors who are not
parties to or the subject of the same or any similar claim, action, suit or
proceeding), by independent legal counsel (who may be the outside counsel
regularly employed by the Company) or by the stockholders of the Company, as the
Company's Board of Directors shall determine.
7. The right to indemnification or advances of Costs and
Expenses as provided in this agreement shall be enforceable by you in any court
of competent jurisdiction. The burden of proving that indemnification is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors or independent legal counsel) to have made a
determination prior to the commencement of such action that indemnification is
proper in the circumstances because you have met the applicable standard of
conduct, nor an actual determination by the Company (including its Board of
Directors or independent legal counsel) that you have not met such applicable
standard of conduct shall be a defense to the action or create a presumption
that you have not met the applicable standard of conduct. Costs and expenses,
including counsel fees, reasonably incurred by you in connection with
successfully establishing your right to indemnification, in whole or in part, in
any such action shall also be indemnified by the Company.
8. You agree to give prompt notice to the Company of any claim
with respect to which you seek indemnification and, unless a conflict of
interest shall exist between you and the Company with respect to such claim, you
will permit the Company to assume the defense of such claim with counsel of its
choice. Whether or not such defense is assumed by the Company, the Company will
not be subject to any liability for any settlement made without its consent. The
Company will not consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to you a release from all liability with respect to such
claim or litigation. If the Company is not entitled to, or does not elect to,
assume the defense of a claim, the Company will not be obligated to pay the fees
and expenses of more than one counsel for you and any other directors or
officers of the Company who are indemnified pursuant to similar indemnity
agreements with respect to such claim, unless a conflict of interest shall exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the Company will be obligated to pay the
fees and expenses of an additional counsel for each indemnified party or group
of indemnified parties with whom a conflict of interest exists.
9. The Company's obligation to indemnify you under this
agreement is in addition to any other rights to which you may otherwise be
entitled by operation of law, vote of the Company's stockholders or directors or
otherwise and will be available to you whether or not the claim asserted against
you is based upon matters which occurred before the date of this agreement.
3
<PAGE>
<PAGE>
10. The obligation of the Company to indemnify you with respect
to Losses which you may incur by reason of your service as a director, officer,
employee, agent, fiduciary or representative of the Company or a Related Entity,
as provided under this agreement, shall survive the termination of your service
in such capacities and shall inure to the benefit of your heirs, executors and
administrators.
11. If you are entitled under this agreement or otherwise to
indemnification by the Company for some or a portion of the Losses actually and
reasonably incurred by you but not, however, for the total amount thereof, the
Company shall nevertheless indemnify you for the portion of the Losses to which
you are entitled.
12. It is the intention of the parties to this agreement to
provide for indemnification in all cases and under all circumstances where to do
so would not violate applicable law (and notwithstanding any limitations
permitted, but not required by statute) and the terms and provisions of this
agreement shall be interpreted and construed consistent with that intention.
Nonetheless, if any provision of this agreement or any indemnification made
under this agreement shall for any reason be determined by any court of
competent jurisdiction to be invalid, unlawful or unenforceable under current or
future laws, such provision shall be fully severable and the remaining
provisions of this agreement shall not otherwise be affected thereby, but will
remain in full force and effect and, to the fullest extent possible, shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or nonenforceable.
13. No amendment, modification, termination or cancellation of
this agreement shall be effective unless in writing signed by both the Company
and you.
Your signature below will evidence your agreement and acceptance
with respect to the foregoing.
Very truly yours,
BENEDEK COMMUNICATIONS CORPORATION
By: ______________________________
Name:
Title:
AGREED TO AND ACCEPTED:
________________________________
[Name]
4
<PAGE>
<PAGE>
EXHIBIT 12.1
BENEDEK BROADCASTING CORPORATION AND SUBSIDIARY
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1991 1992 1993 1994 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
HISTORICAL
Net income (loss) before extraordinary item
and income taxes per statement of
operations................................. $(8,143,421) $(5,605,078) $(5,034,414) $ 2,044,359 $ (811,644)
Add:
Interest on indebtedness................ 14,022,008 14,399,727 14,209,747 11,358,588 15,191,457
Amortization on deferred loan costs..... 192,177 192,177 309,160 1,450,776 680,243
Portion of rents representative of the
interest factor....................... 169,667 158,667 151,533 152,790 208,667
----------- ----------- ----------- ----------- -----------
Income as adjusted................. 6,240,431 9,145,493 9,636,026 15,006,513 15,268,723
----------- ----------- ----------- ----------- -----------
Fixed charges:
Interest on indebtedness................ 14,022,008 14,399,727 14,209,747 11,358,588 15,191,457
Amortization on deferred loan costs..... 192,177 192,177 309,160 1,450,776 680,243
Portion of rents representative of the
interest factor....................... 169,667 158,667 151,533 152,790 208,667
----------- ----------- ----------- ----------- -----------
Fixed charges...................... 14,383,852 14,750,571 14,670,440 12,962,154 16,080,367
----------- ----------- ----------- ----------- -----------
Ratio of earnings to fixed charges........... N/A N/A N/A 1.2X N/A
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
(Deficiency)................................. $(8,143,421) $(5,605,078) $(5,034,414) N/A $ (811,644)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<CAPTION>
THREE
MONTHS
ENDED MARCH
31, 1996
-----------
<S> <C>
HISTORICAL
Net income (loss) before extraordinary item
and income taxes per statement of
operations................................. $(1,742,573)
Add:
Interest on indebtedness................ 4,026,253
Amortization on deferred loan costs..... 100,457
Portion of rents representative of the
interest factor....................... 57,175
-----------
Income as adjusted................. 2,441,312
-----------
Fixed charges:
Interest on indebtedness................ 4,026,253
Amortization on deferred loan costs..... 100,457
Portion of rents representative of the
interest factor....................... 57,175
-----------
Fixed charges...................... 4,183,885
-----------
Ratio of earnings to fixed charges........... N/A
-----------
-----------
(Deficiency)................................. $(1,742,573)
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 MARCH 31, 1996
----------------- ------------------
<S> <C> <C>
PRO FORMA FOR ACQUISITIONS AND FINANCING
Net income (loss) before extraordinary item and income taxes per
statement of operations............................................... $ (18,109,000) $ (7,724,000)
Add:
Interest on indebtedness........................................... 39,561,000 9,820,000
Amortization on deferred loan costs................................ 1,487,000 357,000
Portion of rents representative of the interest factor............. 371,000 107,000
----------------- ------------------
Income as adjusted............................................ 23,310,000 2,260,000
----------------- ------------------
Fixed charges:
Interest on indebtedness........................................... 39,561,000 9,820,000
Amortization on deferred loan costs................................ 1,487,000 357,000
Portion of rents representative of the interest factor............. 371,000 107,000
----------------- ------------------
Fixed charges................................................. 41,419,000 10,284,000
----------------- ------------------
Ratio of earnings to fixed charges...................................... N/A N/A
----------------- ------------------
----------------- ------------------
(Deficiency)............................................................ $ (18,109,000) $ (7,724,000)
----------------- ------------------
----------------- ------------------
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION OF
SUBSIDIARY INCORPORATION
- --------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Benedek Broadcasting Corporation................................................................... Delaware
Benedek License Corporation........................................................................ Delaware
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in this Registration Statement on Form S-4 of: (i)
our report, dated April 10, 1996, on the balance sheet of Benedek Communications
Corporation and (ii) our report dated February 9, 1996, except for Note L as to
which the date is June 6, 1996, on the financial statements of Benedek
Broadcasting Corporation. We also consent to the reference to our firm under the
caption 'Experts' in the Prospectus.
MCGLADREY & PULLEN, LLP
Rockford, Illinois
August 1, 1996
<PAGE>
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
on the TV Division of Stauffer Communications, Inc. (and to all references to
our Firm) included in or made a part of this Registration Statement for Benedek
Communications Corporation filed on Form S-4.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
July 31, 1996
<PAGE>
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated March 8, 1996 (and to all references to our Firm), included in or made a
part of this Registration Statement for Benedek Communications Corporation filed
on Form S-4 dated August 2, 1996.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 31, 1996
<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ______
------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification Number)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
</TABLE>
------------------------
Benedek Communications Corporation
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 36-4076007
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identificaton No.)
Stewart Square, Suite 210 61101
308 West State Street (Zip Code)
Rockford, IL
(Address of principal executive offices)
</TABLE>
------------------------
13 1/4% Senior Subordinated Discount Notes due 2006
(Title of the indenture securities)
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
-2-
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3,4,5,6,7,8,9,10,11,12,13,14 and 15.
Benedek Communications Corporation is currently not in default under any of
its outstanding securities for which United States Trust Company of New York
is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
<PAGE>
<PAGE>
-3-
l6. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of New
York Banking Department to transact business as a Trust Company, is
incorporated by reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to the Trust
Indenture Act of 1939, as amended by the Trust Indenture Reform Act
of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York, as amended,
is incorporated by reference to Exhibit T-1.4 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to the Trust
Indenture Act of 1939, as amended by the Trust Indenture Reform Act
of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended by the Trust Indenture Reform Act
of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee pursuant to
law or the requirements of its supervising or examining authority.
NOTE
As of May 9, 1996, the trustee had 2,999,020 shares of Common Stock outstanding,
all of which are owned by its parent company, U. S. Trust Corporation. The term
"trustee" in Item 2, refers to each of United States Trust Company of New York
and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
<PAGE>
<PAGE>
-4-
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 31st day
of July, 1996.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/ Patricia Stermer
-----------------------------------
Patricia Stermer
Assistant Vice President
<PAGE>
<PAGE>
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
-----------------------------------
S/Gerard F. Ganey
Senior Vice President
<PAGE>
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1996
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Cash and Due from Banks $ 47,056
Short-Term Investments 50
Securities, Available for Sale 758,118
Loans 1,221,210
Less: Allowance for Credit Losses 13,113
----------
Net Loans 1,208,097
Premises and Equipment 58,360
Other Assets 125,979
----------
Total Assets $2,197,650
----------
LIABILITIES
Deposits:
Non-Interest Bearing $ 387,509
Interest Bearing 1,446,148
----------
Total Deposits 1,833,657
Short-Term Credit Facilities 82,285
Accounts Payable and Accrued Liabilities 128,745
----------
Total Liabilities $2,044,687
----------
STOCKHOLDER'S EQUIITY
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 96,511
Unrealized Gains on Securities Available
for Sale (Net of Taxes) (937)
----------
Total Stockholder's Equity 152,963
----------
Total Liabilities and
Stockholder's Equity $2,197,650
----------
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkman, SVP & Controller
June 7, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-K AND 10-Q OF BENEDEK BROADCASTING CORPORATION, THE OPERATING SUBSIDIARY OF
THE REGISTRANT. THE REGISTRANT WAS FORMED ON APRIL 10, 1996 AND BECAME THE
PARENT OF BENEDEK BROADCASTING CORPORATION ON JUNE 6, 1996. THE INFORMATION
PRESENTED IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE REFERENCED
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 DEC-31-1995
<CASH> 7,381,555 9,668,331
<SECURITIES> 0 0
<RECEIVABLES> 8,132,628 12,778,719
<ALLOWANCES> 241,883 249,023
<INVENTORY> 0 0
<CURRENT-ASSETS> 17,348,776 24,350,049
<PP&E> 46,995,612 46,340,958
<DEPRECIATION> 27,197,663 26,305,243
<TOTAL-ASSETS> 107,933,248 114,453,321
<CURRENT-LIABILITIES> 6,202,452 10,685,016
<BONDS> 135,377,037 135,448,948
<COMMON> 1,046,500 1,046,500
0 0
0 0
<OTHER-SE> (39,352,160) (37,609,587)
<TOTAL-LIABILITY-AND-EQUITY> 107,933,248 114,453,321
<SALES> 12,023,361 53,433,405
<TOTAL-REVENUES> 13,270,511 57,633,949
<CGS> 1,587,640 7,304,930
<TOTAL-COSTS> 1,587,640 7,304,930
<OTHER-EXPENSES> 9,364,632 35,465,041
<LOSS-PROVISION> 39,957 201,382
<INTEREST-EXPENSE> 4,126,710 15,871,700
<INCOME-PRETAX> (1,742,573) (811,644)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 6,863,762
<CHANGES> 0 0
<NET-INCOME> (1,742,573) 6,052,118
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<PAGE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006, WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
PURSUANT TO THE PROSPECTUS DATED , 1996
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1996, UNLESS EXTENDED (THE 'EXPIRATION DATE'). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON ON THE EXPIRATION DATE.
Delivery to: United States Trust Company of New York, Exchange Agent
By Mail:
United States Trust Company of New York
P.O. Box 844
Cooper Station
New York, NY 10276-0844
By Hand:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, NY 10006
By Overnight Courier:
United States Trust Company of New York
770 Broadway
New York, NY 10003
Attn: Corporate Trust
By Facsimile:
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
For Information Call: (800) 548-6565
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute valid delivery.
The undersigned acknowledges that he or she has received the Prospectus,
dated , 1996 (the 'Prospectus'), of Benedek Communications
Corporation, a Delaware corporation (the 'Company'), and this Letter of
Transmittal (the 'Letter'), which together constitute the Company's offer (the
'Exchange Offer') to exchange an aggregate principal amount at maturity of up to
$170,000,000 of 13 1/4% Senior Subordinated Discount Notes due 2006 (the
'Exchange Securities'), which have been registered under the Securities Act of
1933, as amended (the 'Securities Act'), of the Company for a like principal
amount at maturity of the issued and outstanding 13 1/4% Senior Subordinated
Discount Notes due 2006 (the 'Existing Notes') of the Company from the holders
thereof.
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive an Exchange Security having a principal amount at maturity
equal to that of the surrendered Existing Note. If by November 4, 1996, neither
the Exchange Offer has been consummated nor a shelf registration statement with
respect to the Existing Notes has been declared effective, additional cash
interest will accrue on each Existing Note, from and including November 5, 1996
until but excluding the earlier of the date of consummation of the Exchange
Offer and the effective date of a shelf registration
<PAGE>
<PAGE>
statement at a rate of 0.50% per annum. Holders of Existing Notes accepted for
exchange will be deemed to have waived the right to receive any other payments
or accrued interest on the Existing Notes. The Company reserves the right, at
any time or from time to time, to extend the Exchange Offer at its discretion,
in which event the term 'Expiration Date' shall mean the latest time and date to
which the Exchange Offer is extended. The Company shall notify holders of the
Existing Notes of any extension by means of a press release or other public
announcement prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.
This Letter is to be completed by a holder of Existing Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Existing Notes, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depositary Trust Company (the
'Book-Entry Transfer Facility') pursuant to the procedures set forth in 'The
Exchange Offer -- Book-Entry Transfer' section of the Prospectus. Holders of
Existing Notes whose certificates are not immediately available, or who are
unable to deliver their certificates or confirmation of the book-entry tender of
their Existing Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility (a 'Book-Entry Confirmation') and all other documents required
by this Letter to the Exchange Agent on or prior to the Expiration Date, must
tender their Existing Notes according to the guaranteed delivery procedures set
forth in 'The Exchange Offer -- Guaranteed Delivery Procedures' section of the
Prospectus. (See Instruction 1). Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
2
<PAGE>
<PAGE>
List below the Existing Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount at
maturity of Existing Notes should be listed on a separate signed schedule
affixed hereto.
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF EXISTING NOTES 1 2 3
- -----------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
AMOUNT AT PRINCIPAL
MATURITY AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE* OF EXISTING AT MATURITY
(PLEASE FILL IN, IF BLANK) NUMBER(S) NOTE(S) TENDERED**
- -----------------------------------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Total
- -----------------------------------------------------------------------------------------------------------------------
*Need not be completed if Existing Notes are being tendered by book-entry transfer.
**Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Existing Notes
represented by the Existing Notes indicated in column 2. See Instruction 2. Existing Notes tendered hereby must be
in denominations of principal amount at maturity of $1,000 and any integral multiple thereof. See Instruction 1.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________________________
Account Number ________________ Transaction Code Number ________________
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) ________________________________________
Window Ticket Number (if any) __________________________________________
Date of Execution of Notice of Guaranteed Delivery _____________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number ________________ Transaction Code Number ________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name ___________________________________________________________________
Address ________________________________________________________________
________________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer that will receive
Exchange Securities for its own account in exchange for Existing Notes that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a Prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
Prospectus, the undersigned will not be deemed to admit that it is an
'underwriter' within the meaning of the Securities Act.
3
<PAGE>
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Under the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount at
maturity of Existing Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Existing Notes tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Existing Notes as are being tendered
hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Existing Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any Exchange Securities acquired in
exchange for Existing Notes tendered hereby will have been acquired in the
ordinary course of business of the person receiving such Exchange Securities,
whether or not such person is the undersigned, that neither the holder of such
Existing Notes nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such Exchange Securities
and that neither the holder of such Existing Notes nor any such other person is
an 'affiliate,' as defined in Rule 405 under the Securities Act, of the Company.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on an interpretation by the staff of the Securities and Exchange
Commission (the 'SEC') in letters issued to third parties that the Exchange
Securities issued in exchange for the Existing Notes pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder that is an 'affiliate' of the Company within
the meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Securities are acquired in the ordinary course of such
holder's business, such holder has no arrangement or understanding with any
person to participate in the distribution of such Exchange Securities and such
holder is not engaged in and does not intend to engage in a distribution of such
Exchange Securities. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Securities. If the undersigned is a broker-dealer that
will receive Exchange Securities for its own account in exchange for Existing
Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Securities; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an 'underwriter' within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Existing Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in 'The Exchange
Offer -- Withdrawal Rights' section of the Prospectus.
Unless otherwise indicated under the box entitled 'Special Issuance
Instructions' below, please deliver the Exchange Securities (and, if applicable,
substitute certificates representing Existing Notes for any Existing Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Existing Notes, please credit the account indicated above maintained
at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under
the box entitled 'Special Delivery Instructions' below, please send the Exchange
Securities (and, if applicable, substitute certificates representing Existing
Notes for any Existing Notes not exchanged) to the undersigned at the address
shown above in the box entitled 'Description of Existing Notes.'
4
<PAGE>
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED 'DESCRIPTION OF EXISTING
NOTES' ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
EXISTING NOTES AS SET FORTH IN SUCH BOX ABOVE.
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Existing Notes not exchanged
and/or Exchange Securities are to be issued in the name of and sent to
someone other than the person or persons whose signature(s) appear(s) on
this Letter below, or if Existing Notes delivered by book-entry transfer
which are not accepted for exchange are to be returned by credit to an
account maintained at the Book-Entry Transfer Facility other than the
account indicated above.
Issue Exchange Securities and/or Existing Notes to:
Name(s) __________________________________________________________________
(PLEASE TYPE OR PRINT)
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Address __________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Existing Notes delivered by book-entry transfer to
the Book-Entry Transfer Facility account set forth below.
__________________________________________________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Existing Notes not exchanged
and/or Exchange Securities are to be sent to someone other than the person
or persons whose signature(s) appear(s) on this Letter below or to such
person or persons at an address other than shown in the box entitled
'Description of Existing Notes' on this Letter above.
Mail Exchange Securities and/or Existing Notes to:
Name(s) __________________________________________________________________
(PLEASE TYPE OR PRINT)
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Address __________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(ZIP CODE)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATES FOR EXISTING NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER
REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
5
<PAGE>
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW)
Dated ____________________________________________________________, 1996
X ______________________________, ______________________________, 1996
X ______________________________, ______________________________, 1996
SIGNATURE(S) OF OWNER(S) DATE
Area Code and Telephone Number _________________________________________
If a holder is tendering any Existing Notes, this Letter must be
signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Existing Notes or by any person(s) authorized to
become registered holder(s) by endorsements and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, please set forth full title. (See Instruction 3).
Name(s)_______________________________________________________
______________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity _____________________________________________________
______________________________________________________________
Address ______________________________________________________
______________________________________________________________
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed
by an Eligible Institution ___________________________________
(AUTHORIZED SIGNATURE)
______________________________________________________________
(TITLE)
______________________________________________________________
(NAME AND FIRM)
Dated __________________________________________________, 1996
6
<PAGE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, IN EXCHANGE FOR THE 13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES
DUE 2006 OF BENEDEK COMMUNICATIONS CORPORATION
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This letter is to be completed by noteholders either if certificates are to
be forwarded herewith or if tenders are to be made pursuant to the procedures
for delivery by book-entry transfer set forth in 'The Exchange
Offer -- Book-Entry Transfer' section of the Prospectus. Certificates for all
physically tendered Existing Notes, or Book-Entry Confirmation, as the case may
be, as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Existing Notes tendered hereby must be in
denominations of principal amount at maturity of $1,000 and any integral
multiple thereof.
Noteholders whose certificates for Existing Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Existing Notes pursuant to the guaranteed delivery procedures set
forth in 'The Exchange Offer -- Guaranteed Delivery Procedures' section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined), (ii) prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Existing Notes and the amount of Existing Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within five New York Stock Exchange ('NYSE') trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Existing Notes, in proper form for transfer, or a Book-Entry
Confirmation, and any other documents required by the Letter will be deposited
by the Eligible Institution with the Exchange Agent and (iii) the certificates
for all physically tendered Existing Notes, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and all other documents required by
this Letter, are received by the Exchange Agent within five NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Existing Notes and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Existing Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit the
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
See 'The Exchange Offer' section in the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Existing Notes evidenced by a submitted certificate
are to be tendered, the tendering holder(s) should fill in the aggregate
principal amount at maturity of Existing Notes to be tendered in the box above
entitled 'Description of Existing Notes -- Principal Amount at Maturity
Tendered.' A reissued certificate representing the balance of nontendered
Existing Notes will be sent to such tendering holder, unless otherwise provided
in the appropriate box on this Letter, promptly after the Expiration Date. All
of the Existing Notes delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Existing Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
7
<PAGE>
<PAGE>
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Existing Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
Existing Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the Exchange
Securities are to be issued, or any untendered Existing Notes are to be
reissued, to a person other than the registered holder, then endorsements of any
certificates transmitted hereby or separate bond powers are required. Signatures
on such certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be submitted.
Endorsements on certificates for Existing Notes or signatures on bond
powers required by this Instruction 3 must be guaranteed by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States or by such other Eligible
Institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act
of 1934, as amended (collectively 'Eligible Institutions').
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Existing Notes are tendered: (i) by a registered
holder of Existing Notes (which term, for purposes of the Exchange Offer,
includes any participant in the Book-Entry Transfer Facility system whose name
appears on a security position listing as the holder of such Existing Notes)
tendered who has not completed the box entitled 'Special Issuance Instructions'
or 'Special Delivery Instructions' on this Letter or (ii) for the account of an
Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Existing Notes should indicate in the applicable box
the name and address to which Exchange Securities issued pursuant to the
Exchange Offer and/or substitute certificates evidencing Existing Notes not
exchanged are to be issued or sent, if different from the name or address of the
person signing this Letter. In the case of issuance in a different name, the
employer identification or social security number of the person named must also
be indicated. Noteholders tendering Existing Notes by book-entry transfer may
request that Existing Notes not exchanged be credited to such account maintained
at the Book-Entry Transfer Facility as such noteholder may designate herein. If
no such instructions are given, such Existing Notes not exchanged will be
returned to the name and address of the person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose
Existing Notes are accepted for exchange must provide the Company (as payor)
with such holder's correct Taxpayer Identification Number ('TIN') on Substitute
Form W-9 below, which in the case of a tendering holder who is an individual, is
his or her social security number. If the Company is not provided with the
current TIN or an adequate basis for an exemption, such tendering holder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
delivery to such tendering holder of Exchange Securities may be subject to
backup withholding in an amount equal to 31% of all reportable payments made
after the exchange. If withholding results in an overpayment of taxes, a refund
may be obtained.
Exempt holders of Existing Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed
8
<PAGE>
<PAGE>
Guidelines of Certification of Taxpayer Identification Number on Substitute Form
W-9 (the 'W-9 Guidelines') for additional instructions.
To prevent backup withholding, each tendering holder of Existing Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to a backup withholding as a result of a failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Existing Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must provide the Company with a completed Form W-8,
Certificate of Foreign Status. These forms may be obtained from the Exchange
Agent. If the Existing Notes are in more than one name or are not in the name of
the actual owner, such holder should consult the W-9 Guidelines for information
on which TIN to report. If such holder does not have a TIN, such holder should
consult the W-9 Guidelines for instructions on applying for a TIN, check the box
in Part 2 of the Substitute Form W-9 and write 'applied for' in lieu of its TIN.
Note: Checking this box and writing 'applied for' on the form means that such
holder has already applied for a TIN or that such holder intends to apply for
one in the near future. If such holder does not provide its TIN to the Company
within 60 days, backup withholding will begin and continue until such holder
furnishes its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Existing Notes to it or its order pursuant to the Exchange Order. If however,
Exchange Securities and/or substitute Existing Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Existing Notes tendered hereby, or if tendered
Existing Notes are registered in the name of any person other than the person
signing this Letter, or if a transfer tax is imposed for any reason other than
the transfer of Existing Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Existing Notes specified in this
Letter.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Existing Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Existing
Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Existing Notes nor shall any of them incur any liability for failure to give any
such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES.
Any holder whose Existing Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
9
<PAGE>
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: BENEDEK COMMUNICATIONS CORPORATION
<TABLE>
<S> <C> <C>
PART 1 -- PLEASE PROVIDE YOUR TIN TIN:___________________________
IN THE BOX AT RIGHT AND Social Security Number
CERTIFY BY SIGNING AND or
DATING BELOW Employer Identification
Number
SUBSTITUTE PART 2 -- TIN Applied For [ ]
FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
CERTIFICATION:
UNDER THE PENALTIES OF PERJURY,
I CERTIFY THAT:
PAYOR'S REQUEST (1) the number shown on this form is my correct Taxpayer Identification Number (or
FOR TAXPAYER I am waiting for a number to be issued to me),
IDENTIFICATION NUMBER (2) I am not subject to backup withholding either because:
('TIN') AND CERTIFICATION
(a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue Service (the 'IRS') that I
am subject to backup withholding as a result of a failure to report
all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to backup withholding,
and
(3) any other information provided on this form is true and correct.
SIGNATURE ________________________________________________ DATE ___________________
You must cross out item (2) of the above certification if you have been notified by the IRS that you are subject to
backup withholding because of underreporting of interest or dividends on your tax return and you have not been notified
by the IRS that you are no longer subject to backup withholding.
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administrative Office or (b) I intend to mail
or delivery an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide the number.
SIGNATURE ______________________________________________ DATE __________________
10
<PAGE>
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY FOR
BENEDEK COMMUNICATIONS CORPORATION
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer relating to the 13 1/4% Senior Subordinated Discount Notes due
2006 of Benedek Communications Corporation (the 'Company') made pursuant to the
Prospectus, dated , 1996 (the 'Prospectus'), if certificates for
Existing Notes of the Company are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Company prior to 5:00 p.m., New York
City time, on the Expiration Date of the Exchange Offer. Such form may be
delivered or transmitted by facsimile transmission, mail or hand delivery to
United States Trust Company of New York (the 'Exchange Agent') as set forth
below. In addition, in order to utilize the guaranteed delivery procedure to
tender Existing Notes pursuant to the Exchange Offer, a completed, signed and
dated Letter of Transmittal relating to the Existing Notes (or facsimile
thereof) must also be received by the Exchange Agent prior to 5:00 p.m., New
York City time, on the Expiration Date. Capitalized terms not defined herein are
defined in the Prospectus.
Delivery to: United States Trust Company of New York, Exchange Agent
By Mail:
United States Trust Company of New York
P.O. Box 844
Cooper Station
New York, NY 10276-0844
By Hand:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, NY 10006
By Overnight Courier:
United States Trust Company of New York
770 Broadway
New York, NY 10003
Attn: Corporate Trust
By Facsimile:
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
For Information Call: (800) 548-6565
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute valid delivery.
<PAGE>
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount at maturity of Existing Notes set forth below,
pursuant to the guaranteed delivery procedure described in 'The Exchange
Offer -- Guaranteed Delivery Procedures' section of the Prospectus.
<TABLE>
<S> <C>
Principal Amount at Maturity of Existing Notes Tendered:*
$______________________________________________
Certificate Nos. (if available):
_______________________________________________ If Existing Notes will be delivered by book-entry
transfer to The Depositary Trust Company, provide
account number.
Total Principal Amount at Maturity Represented
by Existing Notes Certificate(s):
$_____________________________________________ Account Number __________________________________
</TABLE>
- ------------
* Must be in denominations and principal amount at maturity of $1,000 and any
integral multiple thereof.
2
<PAGE>
<PAGE>
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH
OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
PLEASE SIGN HERE
<TABLE>
<S> <C>
X____________________________________________________________ ___________________________
X____________________________________________________________ ___________________________
Signature(s) of Owner(s) Date
or Authorized Signatory
</TABLE>
Area Code and Telephone Number: ___________________________________________
Must be signed by the holder(s) of the Existing Notes as their name(s)
appear(s) on certificates for Existing Notes or on a security position listing,
or by person(s) authorized to become registered holder(s) by endorsement and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
set forth his or her full title below.
PLEASE PRINT NAME(S), CAPACITY AND ADDRESS(ES)
<TABLE>
<S> <C>
Name(s): _______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Capacity: _______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Address(es): _______________________________________________________________
_______________________________________________________________
_______________________________________________________________
</TABLE>
3
<PAGE>
<PAGE>
GUARANTEE
The undersigned, an Eligible Institution within the meaning of Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, hereby guarantees that
the certificates representing the principal amount at maturity of Existing Notes
tendered hereby in proper form for transfer, or timely confirmation of the
book-entry transfer of such Existing Notes into the Exchange Agent's account at
The Depositary Trust Company pursuant to the procedures set forth in 'The
Exchange Offer -- Guaranteed Delivery Procedures' section of the Prospectus,
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) with any required signature guarantee and any
other documents required by the Letter of Transmittal, will be received by the
Exchange Agent at the address set forth above, no later than five New York Stock
Exchange trading days after the date of execution hereof.
________________________________________________________________________________
Name of Firm
________________________________________________________________________________
Address
________________________________________________________________________________
Zip Code
Area Code and Tel. No.: ________________________________________________________
________________________________________________________________________________
Authorized Signature
________________________________________________________________________________
Title
Name: __________________________________________________________________________
(Please Type or Print)
Dated: _________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES FOR EXISTING NOTES WITH THIS FORM. CERTIFICATES
FOR EXISTING NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
4
<PAGE>
<PAGE>
EXHIBIT 99.3
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006 WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Benedek Communications Corporation (the 'Company') is offering, upon and
subject to the terms and conditions set forth in the Prospectus, dated
, 1996 (the 'Prospectus'), and the enclosed Letter of Transmittal
(the 'Letter of Transmittal'), to exchange (the 'Exchange Offer') its 13 1/4%
Senior Subordinated Discount Notes due 2006 which have been registered under the
Securities Act of 1933, as amended, for its outstanding 13 1/4% Senior
Subordinated Discount Notes due 2006 (the 'Existing Notes'). The Exchange Offer
is being made in order to satisfy certain obligations of the Company contained
in the Exchange and Registration Rights Agreement dated May 30, 1996, between
the Company and Goldman, Sachs & Co.
We are requesting that you contact your clients for whom you hold Existing
Notes, regarding the Exchange Offer. For your information and for forwarding to
your clients for whom you hold Existing Notes registered in your name or in the
name of your nominee, or who hold Existing Notes registered in their own names,
we are enclosing the following documents:
1. Prospectus dated , 1996;
2. The Letter of Transmittal for your use and for the information of
your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Existing Notes are not immediately available or
time will not permit all required documents to reach the Exchange Agent
prior to the Expiration Date (as defined below) or if the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
account you hold Existing Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to United States Trust Company of New
York, the Exchange Agent for the Existing Notes.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1996, UNLESS EXTENDED BY THE COMPANY
(THE 'EXPIRATION DATE'). THE EXISTING NOTES TENDERED PURSUANT TO THE EXCHANGE
OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the Existing Notes should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
If holders of Existing Notes wish to tender, but it is impracticable for
them to forward their certificates for Existing Notes prior to the expiration of
the Exchange Offer or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under 'The Exchange Offer -- Guaranteed
Delivery Procedures.'
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the
<PAGE>
<PAGE>
Prospectus and the related documents to the beneficial owners of Existing Notes
held by them as nominee or in a fiduciary capacity. The Company will pay or
cause to be paid all transfer taxes applicable to the exchange of Existing Notes
pursuant to the Exchange Offer, except as set forth in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to United
States Trust Company of New York, the Exchange Agent for the Existing Notes, at
its address and telephone number set forth in the front of the Letter of
Transmittal.
Very truly yours,
Benedek Communications Corporation
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENTS OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
2
<PAGE>
<PAGE>
EXHIBIT 99.4
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006 WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING
13 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
To Our Clients:
Enclosed for your consideration is a Prospectus, dated , 1996
(the 'Prospectus'), and the related Letter of Transmittal (the 'Letter of
Transmittal'), relating to the offer (the 'Exchange Offer') of Benedek
Communications Corporation (the 'Company') to exchange its 13 1/4% Senior
Subordinated Discount Notes due 2006 which have been registered under the
Securities Act of 1933, as amended, for its outstanding 13 1/4% Senior
Subordinated Discount Notes due 2006 (the 'Existing Notes'), upon the terms and
subject to the conditions described in the Prospectus. The Exchange Offer is
being made in order to satisfy certain obligations of the Company contained in
the Exchange and Registration Rights Agreement dated May 30, 1996, between the
Company and Goldman, Sachs & Co.
This material is being forwarded to you as the beneficial owner of the
Existing Notes carried by us in your account but not registered in your name. A
TENDER OF SUCH EXISTING NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Existing Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Existing Notes on your behalf in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
5:00 p.m., New York City time, on , 1996, unless extended by the
Company. Any Existing Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Existing Notes.
2. The Exchange Offer is subject to certain conditions set forth in
the Prospectus in the section captioned 'The Exchange Offer -- Certain
Conditions to the Exchange Offer.'
3. Any transfer taxes incident to the transfer of Existing Notes from
the holder to the Company will be paid by the Company, except as otherwise
provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on
, 1996, unless extended by the Company.
If you wish to have us tender your Existing Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER EXISTING NOTES.
<PAGE>
<PAGE>
INSTRUCTIONS WITH RESPECT TO
EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Benedek
Communications Corporation with respect to its Existing Notes.
This will instruct you to tender the Existing Notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and related Letter of Transmittal.
Please tender the Existing Notes held by you for my account as indicated
below:
<TABLE>
<S> <C>
Aggregate Principal Amount at
Maturity of Existing Notes
13 1/4% Senior Subordinated Discount Notes due 2006 _________________________________________
[ ] Please do not tender any Existing Notes held by you for
my account.
Dated: ______________________________________________, 1996 _________________________________________
_________________________________________
Signature(s)
_________________________________________
_________________________________________
Please print name(s) here
_________________________________________
_________________________________________
Address(es)
_________________________________________
Area Code and Telephone Number
_________________________________________
Tax Identification or Social Security No(s).
</TABLE>
None of the Existing Notes held by us for your account will be tendered
unless we recieve written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Existing Notes held by
us for your account.
2
<PAGE>
