<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1996
REGISTRATION NO. 333-09529
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
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
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1)
<S> <C> <C> <C>
13 1/4% Senior Subordinated Discount Notes
due 2006........................................... $170,000,000 53.046% $90,178,200
<CAPTION>
TITLE OF EACH CLASS OF SECURITIES AMOUNT OF
TO BE REGISTERED REGISTRATION FEE(1)
<S> <C>
13 1/4% Senior Subordinated Discount Notes
due 2006........................................... $ 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 OCTOBER 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 June 30,
1996, the Company had outstanding approximately $263.6 million of Senior Debt.
The Existing Notes are, and the Exchange Securities will be, effectively
subordinated to creditors of subsidiaries of the Company. At June 30, 1996, the
total liabilities of the Company's subsidiaries were $346.5 million, including
$263.6 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 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 may not be subject to the reporting requirements
of the Exchange Act in future fiscal years pursuant to Section 15(d) of the
Exchange Act; however, the Indenture governing the Notes 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 this Prospectus 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, $52.4 million and $50.5 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 has a long-term
strategy 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. The Company does not have any agreements or understandings
with respect to any acquisition or local marketing agreement.
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 $4.686 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 $4.161 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) and (v)
implementation at the Acquired Stations of operating strategies currently
utilized at the Benedek Stations ($0.194 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
as of June 6, 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 REPRESENATION]
- ------------
(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 the consummation of the Transactions (including 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 June 30, 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 June 30,
</TABLE>
13
<PAGE>
<PAGE>
<TABLE>
<S> <C>
1996, the Company 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 had $263.6 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 4, 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 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 six months
ended June 30, 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 six months ended June 30, 1996 give effect to the
Transactions as if the Transactions had been consummated on January 1, 1996. The
pro forma financial statements do not purport to represent what the Company's
results 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 the Company, 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
-----------------------------------------------------------------------
HISTORICAL ADJUSTMENTS THE COMPANY
THE COMPANY --------------------- 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(f) $ 121,345
132(g)
284(h)
64(i)
Operating expenses:
Station operating expenses................ 30,139 13,534 27,515 (1,894)(j) 69,294
Depreciation and amortization............. 5,467 2,229 6,252 13,677(k) 27,625
--------------- -------- --------- ------------ -----------
Station operating income (loss)......... 16,366 1,554 17,559 (11,053) 24,426
Corporate expenses........................ 1,576(e) -- 2,307 (1,983)(l) 1,900
--------------- -------- --------- ------------ -----------
Operating income (loss)....................... 14,790 1,554 15,252 (9,070) 22,526
Financial expense, net:
Interest expense, net:
Cash interest, net...................... (15,779) -- (20,837) 9,401(m) (27,215)
Other interest.......................... (620) -- (549) (12,602)(m) (13,771)
--------------- -------- --------- ------------ -----------
Total interest, net................... (16,399) -- (21,386) (3,201) (40,986)
Other, net................................ -- -- (354) 354(n) --
Provision for income taxes.................... -- -- (147) 147(o) --
--------------- -------- --------- ------------ -----------
Net income (loss) from continuing
operations.................................. (1,609) 1,554 (6,635) (11,770) (18,460)
--------------- -------- --------- ------------ -----------
Exchangeable Preferred Stock dividends........ -- -- -- (9,519)(p) (9,519)
Seller Junior Discount Preferred Stock
dividends................................... -- -- -- (3,672)(q) (3,672)
--------------- -------- --------- ------------ -----------
Net income (loss) from continuing operations
available to common stockholders............ $ (1,609) $ 1,554 $ (6,635) $(24,961) $ (31,651)
--------------- -------- --------- ------------ -----------
--------------- -------- --------- ------------ -----------
Ratio of earnings to fixed charges(b)......... -- --
CERTAIN FINANCIAL DATA:
Broadcast cash flow(c)........................ $ 21,863 $ 4,000 $ 23,856 $ 2,703 $ 52,422
Broadcast cash flow margin.................... 42.1% 23.1% 46.5% 43.2%
Operating cash flow(c)........................ $ 20,287 $ 4,000 $ 21,549 $ 4,686 $ 50,522
Operating cash flow margin.................... 39.0% 23.1% 42.0% 41.6%
Amortization of program broadcast rights...... $ 2,183 $ 1,025 $ 1,684 $ -- $ 4,892
Payments for program broadcast rights......... 2,153 808 1,639 (79)(r) 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 1.86x
Operating cash flow to total interest
expense, net................................ 1.24x 1.23x
Operating cash flow less capital expenditures
to cash interest expense, net............... 1.15x 1.66x
Operating cash flow less capital expenditures
to total interest expense, net.............. 1.11x 1.10x
Net Senior Debt to operating cash flow(d)..... 6.2x 5.1x
Net debt to operating cash flow(d)............ 6.2x 6.8x
</TABLE>
16
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FOR THE PERIOD
JUNE 30, 1996 JANUARY 1, 1996
--------------- TO JUNE 6, 1996 ADJUSTMENTS THE COMPANY
THE --------------------- FOR PRO
COMPANY STAUFFER BRISSETTE TRANSACTIONS FORMA
--------------- -------- --------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.................................... $30,115 $7,341 $22,439 $ 64(h) $ 59,959
Operating expenses:
Station operating expenses.................. 18,236 6,094 12,875 (900)(j) 36,305
Depreciation and amortization............... 4,069 974 2,954 5,258(k) 13,255
--------------- -------- --------- ------------ -----------
Station operating income (loss)........... 7,810 273 6,610 (4,294) 10,399
Corporate expenses.......................... 1,087 -- 3,303 (3,440)(l) 950
--------------- -------- --------- ------------ -----------
Operating income (loss)......................... 6,723 273 3,307 (854) 9,449
Financial expense, net:
Interest expense, net:
Cash interest, net........................ (8,668) -- (8,209) 3,238(m) (13,639)
Other interest............................ (1,098) -- (275) (6,103)(m) (7,476)
--------------- -------- --------- ------------ -----------
Total interest, net..................... (9,766) -- (8,484) (2,865) (21,115)
Other, net.................................. -- -- (190) 190(n) --
Provision for income taxes...................... -- -- (114) 114(o) --
--------------- -------- --------- ------------ -----------
Net income (loss) from continuing operations.... (3,043) 273 (5,481) (3,415) (11,666)
--------------- -------- --------- ------------ -----------
Exchangeable Preferred Stock dividends.......... -- -- -- (4,630)(p) (4,630)
Seller Junior Discount Preferred Stock
dividends..................................... -- -- -- (1,809)(q) (1,809)
--------------- -------- --------- ------------ -----------
Net income (loss) from continuing operations
available to common stockholders.............. $(3,043) $ 273 $(5,481) $ (9,854) $ (18,105)
--------------- -------- --------- ------------ -----------
--------------- -------- --------- ------------ -----------
Ratio of earnings to fixed charges(b)........... -- --
CERTAIN FINANCIAL DATA:
Broadcast cash flow(c).......................... $11,995 $1,390 $ 9,441 $ 964 $ 23,790
Broadcast cash flow margin...................... 39.8% 18.9% 42.1% 39.7%
Operating cash flow(c).......................... $10,908 $1,390 $ 6,138 $ 4,404 $ 22,840
Operating cash flow margin...................... 36.2% 18.9% 27.4% 38.1%
Amortization of program broadcast rights........ $ 1,302 $ 491 $ 865 $ 2,658
Payments for program broadcast rights........... 1,186 348 988 2,522
Capital expenditures............................ 1,334 93 935
Cash payments for Federal income taxes.......... -- -- -- --
</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 'The Company as Adjusted' for the year
ended December 31, 1995 are derived from the pro forma consolidated
financial statements of the Company 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 'The Company
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 'The Company 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 $18.5 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 the Company for the six months ended
June 30, 1996, earnings were insufficient to cover fixed charges by $3.0
million. The net income (loss) for the Company includes certain non-cash
charges as follows: non-cash interest of $1.1 million and depreciation and
amortization of $4.1 million. For the 'The Company Pro Forma' for the six
months ended June 30, 1996, earnings were insufficient to cover fixed
charges by $11.7 million. The net income (loss) for 'The Company Pro Forma'
includes certain non-cash charges as follows: non-cash interest of $7.5
million and depreciation and amortization of $13.3 million.
(c) 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.
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.
Operating cash flow and broadcast cash flow data are used throughout the
document and 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 the Company, the Financial Statements of Stauffer or the Consolidated
Financial Statements of Brissette, are not measures of financial
performance under GAAP and should not be considered in isolation or as
substitutes for measures of performance prepared in accordance with GAAP.
(d) Net Senior Debt and net debt are defined as Senior Debt or total debt (as
defined in footnote (s)), 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.
(e) Includes $0.1 million in one-time expenses incurred in connection with
potential acquisitions which were not entered into by the Company.
(f) 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.
(g) 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.
(h) The adjustment reflects the annualized effect of reduced commission rates
payable to national sales representative firms under new agreements
negotiated by the Company.
(i) 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.
(j) The adjustment reflects cost savings resulting from the following:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
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 $673
(ii) Adjustments to certain employee benefits and compensation practices
at the Acquired Stations............................................. 355 177
(iii) Implementation at the Acquired Stations of operating strategies
currently utilized at the Benedek Stations........................... 194 50
------------ -----
$1,894 $900
------------ -----
------------ -----
</TABLE>
18
<PAGE>
<PAGE>
The employees of Stauffer that were hired by the Company became participants
in the Company's employee benefit plans as of the closing on June 6, 1996 and
were credited with prior service to Stauffer. The benefit plans for Brissette
(401(k) and health plans) were left intact by the Company after the closing
of the Brissette acquisition.
The pro forma cost savings as allocated among departments are summarized in
the table below:
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED JANUARY 1, 1996
DECEMBER 31, 1995 TO JUNE 6, 1996
------------------------------- ----------------------------------------------
STAUFFER BRISSETTE TOTAL STAUFFER BRISSETTE TOTAL
-------- --------- ------ ------------ -------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Selling expenses.............. $ 94 $ 53 $ 147 $ 47 $ 26 $ 73
Programming and technical..... 489 502 839 245 252 497
Advertising and promotions.... 69 -- 221 35 -- 35
General and administrative.... 449 238 687 224 71 295
-------- --------- ------ ----- ----- -----
Total..................... $1,101 $ 793 $1,894 $551 $349 $900
-------- --------- ------ ----- ----- -----
-------- --------- ------ ----- ----- -----
</TABLE>
(k) 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.
(l) 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,
(ii) the addition of certain corporate management personnel by the Company
and related costs and (iii) elimination of severance compensation paid to
the officers of Brissette under terms of their employment agreements upon
sale to the Company.
(m) Interest expense has been adjusted to reflect the net effect of the change
in outstanding debt and deferred financing costs as though the Transactions
had occurred on January 1, 1995 for the year ended December 31, 1995 and
January 1, 1996 for the six months ended June 30, 1996. The following table
details the calculation of the adjustment:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 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) $ -- $ (5,974) $(5,974)
Term Loan Facilities at an
assumed blended rate of 8.73%.. (11,039) -- (11,039) (4,759) -- (4,759)
Interest on existing Brissette
notes.......................... 20,837 -- 20,837 8,209 -- 8,209
Reduction in interest income..... (397) -- (397) (212) -- (212)
Increase in amortization of
deferred financing costs....... -- (807) (807) -- (404) (404)
Reduction of amortization on
deferred financing costs on
Brissette debt................. -- 549 549 -- 275 275
-------- -------------- -------- -------- -------------- -------
Net adjustment............... $ 9,401 $(12,602) $ (3,201) $ 3,238 $ (6,103) $(2,865)
-------- -------------- -------- -------- -------------- -------
-------- -------------- -------- -------- -------------- -------
</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 $80,000 for the six months ended June 30, 1996.
(n) The adjustment reflects the elimination of certain legal and investment
advisory fees paid by Brissette in connection with the sale to the Company.
(o) The adjustment reflects the elimination of income tax expense. The Company
is not expected to have income tax expense on a pro forma basis.
(p) 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.
(q) 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.
(r) The adjustment reflects a reduction in program payments and the related
amortization to be consistent with the Company's historical program
purchase practices.
(s) 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) the
Company (including the Transactions as of June 6, 1996), (ii) Stauffer and
(iii) Brissette. The following financial information should be read in
conjunction with the Consolidated Financial Statements of the Company, the
Financial Statements of Stauffer and the Consolidated Financial Statements of
Brissette included elsewhere in this Prospectus.
THE COMPANY (INCLUDING THE TRANSACTIONS AS OF JUNE 6, 1996)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- ---------------------
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 $ 24,059 $ 30,115
Operating expenses:
Station operating
expenses.................. 20,309 21,511 22,805 24,810 29,049 13,837 18,236
Depreciation and
amortization.............. 5,871 4,428 3,721 3,403 5,041 2,124 4,069
------- ------- ------- ------- -------- -------- --------
Station operating
income................ 7,428 10,372 11,826 16,008 16,239 8,098 7,810
Corporate expenses.......... 887 1,288 1,249 1,309 1,576 698 1,087
Special bonus, officer-
stockholder............... -- -- 1,400 -- -- -- --
------- ------- ------- ------- -------- -------- --------
Operating income................ 6,541 9,084 9,177 14,699 14,663 7,400 6,723
------- ------- ------- ------- -------- -------- --------
Interest expense, net(b):
Cash interest, net.......... (9,856) (6,605) (8,194) (7,740) (14,763) (6,891) (8,668)
Other interest.............. (3,923) (7,774) (6,161) (4,905) (712) (337) (1,098)
------- ------- ------- ------- -------- -------- --------
Total interest, net..... (13,779) (14,379) (14,355) (12,645) (15,475) (7,228) (9,766)
------- ------- ------- ------- -------- -------- --------
Extraordinary item(c)........... -- -- -- -- 6,864 6,864 --
Net income (loss)(d)............ (8,143) (5,605) (5,034) 2,044 6,052 7,036 (3,043)
Ratio of earnings to fixed
charges(e).................... -- -- -- 1.2x -- 1.0x --
CERTAIN FINANCIAL DATA:
Broadcast cash flow............. $13,531 $14,728 $15,546 $19,627 $ 21,310 $ 10,266 $ 11,995
Broadcast cash flow margin...... 40.3% 40.6% 40.5% 44.4% 42.3% 42.7% 39.8%
Operating cash flow............. $12,644 $13,440 $14,297 $18,318 $ 19,734 $ 9,568 $ 10,908
Operating cash flow margin...... 37.6% 37.0% 37.3% 41.4% 39.2% 39.8% 36.2%
Amortization of program
broadcast rights.............. $ 2,131 $ 1,996 $ 2,179 $ 2,104 $ 2,162 $ 1,082 $ 1,302
Payments for program broadcast
rights........................ 1,899 2,068 2,180 1,888 2,132 1,038 1,186
Capital expenditures............ 1,581 1,458 1,278 1,161 2,008 917 1,334
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------ JUNE 30,
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 $496,668
Working capital (deficit)....... 1,997 (71) 3,684 1,611 13,665 8,109
Total debt(e)................... 107,350 109,439 112,874 107,607 135,767 263,643
Stockholder's equity
(deficit)..................... (35,296) (41,004) (44,660) (42,615) (36,563) 149,883
</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) The Company 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 six
months ended June 30, 1995 the ratio of earnings to fixed charges was 1.0
to 1.0. For the six months ended June 30, 1996, earnings were insufficient
to cover fixed charges by $3.0 million. The Company's net income (loss)
includes certain non-cash charges as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------- ----------------
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 $ 337 $1,098
Depreciation and amortization............... 5,871 4,428 3,721 3,403 5,041 2,124 4,069
Provision for loss on note receivable....... 905 310 -- -- -- -- --
Special bonus, officer-stockholder.......... -- -- 1,400 -- -- -- --
------- ------- ------- ------ ------ ------ ------
$10,699 $12,512 $11,282 $8,308 $5,753 $2,461 $5,167
------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------ ------ ------ ------
</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>
PERIOD
JANUARY 1,
YEAR ENDED DECEMBER 31, SIX MONTHS 1996 TO
----------------------------- ENDED JUNE JUNE 6,
1993 1994 1995 30, 1995 1996
------- ------- ------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.......................................... $16,661 $19,081 $17,317 $ 8,624 $ 7,341
Operating expenses:
Station operating expenses........................ 13,327 13,422 13,534 6,501 6,094
Depreciation and amortization..................... 2,264 2,304 2,229 1,136 974
------- ------- ------- ---------- ----------
Station operating income...................... 1,070 3,355 1,554 987 273
Corporate expenses................................ -- -- -- -- --
------- ------- ------- ---------- ----------
Operating income (loss)............................... $ 1,070 $ 3,355 $ 1,554 $ 987 $ 273
------- ------- ------- ---------- ----------
------- ------- ------- ---------- ----------
CERTAIN FINANCIAL DATA:
Broadcast cash flow................................... $ 3,285 $ 5,623 $ 4,000 $ 2,168 $ 1,390
Broadcast cash flow margin............................ 19.7% 29.5% 23.1% 25.1% 18.9%
Operating cash flow................................... $ 3,285 $ 5,623 $ 4,000 $ 2,168 $ 1,390
Operating cash flow margin............................ 19.7% 29.5% 23.1% 25.1% 18.9%
Amortization of program broadcast rights.............. $ 1,277 $ 1,045 $ 1,025 $ 496 $ 491
Payments for program broadcast rights................. 1,326 1,081 808 451 348
Capital expenditures.................................. 1,182 934 406 290 93
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with the Company.
BRISSETTE(a)
<TABLE>
<CAPTION>
PERIOD
JANUARY 1,
YEAR ENDED DECEMBER 31, SIX MONTHS 1996 TO
--------------------------------------------------- ENDED JUNE JUNE 6,
1991 1992 1993 1994 1995 30, 1995 1996
------- ------- ------- ------- ------- ---------- ----------
(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 $ 25,427 $ 22,439
Operating expenses:
Station operating expenses..... 23,470 23,791 23,511 25,667 27,515 12,970 12,875
Depreciation and
amortization................. 13,334 12,881 8,116 6,551 6,252 3,147 2,954
------- ------- ------- ------- ------- ---------- ----------
Station operating income... 7,013 9,742 12,777 17,312 17,559 9,310 6,610
Management fee paid to
affiliate(b)................. 2,650 4,365 -- -- -- -- --
Corporate expenses............. 2,204 1,655 1,487 1,895 2,307 954 3,303
------- ------- ------- ------- ------- ---------- ----------
Operating income................... $ 2,159 $ 3,722 $11,290 $15,417 $15,252 $ 8,356 $ 3,307
------- ------- ------- ------- ------- ---------- ----------
------- ------- ------- ------- ------- ---------- ----------
CERTAIN FINANCIAL DATA:
Broadcast cash flow................ $20,688 $22,613 $20,927 $24,065 $23,856 $ 12,455 $ 9,441
Broadcast cash flow margin......... 47.2% 48.7% 47.1% 48.6% 46.5% 49.0% 42.1%
Operating cash flow(b)............. $18,484 $20,958 $19,440 $22,170 $21,549 $ 11,501 $ 6,138
Operating cash flow margin(b)...... 42.2% 45.1% 43.8% 44.8% 42.0% 45.2% 27.4%
Amortization of program broadcast
rights........................... $ 2,709 $ 1,987 $ 1,743 $ 1,757 $ 1,684 $ 758 $ 865
Payments for program broadcast
rights........................... 2,368 1,997 1,709 1,555 1,639 760 988
Capital expenditures............... 2,466 1,280 2,217 1,559 2,748 913 935
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with the Company.
(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
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing such forward-looking statements may be
found in the material set forth under 'Prospectus Summary,' 'Risk Factors,' 'Pro
Forma Financial Statements,' 'Management's Discussion and Analysis of Financial
Condition and Results of Operations,' 'Business -- General,' 'Business --
Strategy,' 'Business -- Competition,' 'Business -- Federal Regulation of
Television Broadcasting,' as well as in the Prospectus generally. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth in the following risk factors and elsewhere in the Prospectus.
Accordingly, holders of Existing Notes should consider carefully the following
risk factors, in addition to all of the other information concerning the Company
and its business contained in this Prospectus, 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 June 30, 1996,
the Company had outstanding total indebtedness of approximately $354.6 million,
redeemable Exchangeable Preferred Stock with a liquidation preference of
approximately $60.6 million and redeemable Seller Junior Discount Preferred
Stock with a liquidation preference of $45.2 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
23
<PAGE>
<PAGE>
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.'
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 six months ended June 30,
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 $18.5
million and $11.7 million, respectively, and earnings would have been
insufficient to cover fixed charges and preferred stock dividends by $31.6
million and $18.1 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 six months ended
June 30, 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. The Company's debt
service obligations, including scheduled principal amortization, in the 12 month
period beginning May 15, 2001 would be approximately $58.0 million (assuming
that there will not have been any mandatory or voluntary prepayments of any
indebtedness prior to that time and assuming a blended interest rate on the
amounts then outstanding under the Credit Agreement comparable to the rate the
Company is currently paying). The Company's cash dividend payments during such
period on the Exchangeable Preferred Stock and the Seller Junior Discount
Preferred Stock would be approximately $27.0 million. 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.
24
<PAGE>
<PAGE>
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 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 the
consummation of the Transactions (including 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 June 30, 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 June 30, 1996, the Company had Senior
Debt of $263.6 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, were $346.5
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
25
<PAGE>
<PAGE>
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 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.
UNCERTAINTIES REGARDING LICENSE RENEWALS; POSSIBLE NEED TO DIVEST STATIONS
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
26
<PAGE>
<PAGE>
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, 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 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 'Business -- Federal Regulation of Television Broadcasting -- Multiple
Ownership Restrictions.'
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
27
<PAGE>
<PAGE>
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 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
28
<PAGE>
<PAGE>
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 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.
29
<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 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.
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.'
30
<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
as of June 6, 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.
31
<PAGE>
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements (the 'Pro Forma
Financial Statements') are based on the Consolidated Financial Statements of the
Company, 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
during 1995 in connection with or as a result of the transactions (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 six months ended June 30, 1996 are derived from
the unaudited consolidated statement of operations of the Company for the six
months ended June 30, 1996, the unaudited statement of operations of Stauffer
for the period January 1, 1996 to June 6, 1996, and the unaudited statement of
operations of Brissette for the period January 1, 1996 to June 6, 1996, all of
which are included elsewhere in this Prospectus, and assume that the
Transactions were consummated as of January 1, 1996.
The Pro Forma Financial Statements do not purport to represent what the
Company's results of operations 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.
32
<PAGE>
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
DOTHAN
JANUARY 1,
1995 TO ADJUSTMENTS HISTORICAL
MARCH 31, FOR DOTHAN THE COMPANY AS --------------------
THE COMPANY 1995 ACQUISITION 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)(f) 30,139 13,534 27,515
Depreciation and amortization... 5,041 389 37(g) 5,467 2,229 6,252
------------- ------------- ----------- -------------- -------- ---------
Station operating income
(loss)...................... 16,239 (186) 313 16,366 1,554 17,559
Corporate expenses.............. 1,576(e) 182 (182)(h) 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)(i) (15,779) -- (20,837)
Other interest................ (712) -- 92(j) (620) -- (549)
------------- ------------- ----------- -------------- -------- ---------
Total interest, net......... (15,475) (209) (715) (16,399) -- (21,386)
------------- ------------- ----------- -------------- -------- ---------
Other, net...................... -- -- -- -- -- (354)
Provision for income taxes........ -- 208 (208)(k) -- -- (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(c)............ $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(c)............ $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)(l) 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(d)......................... 6.4x 6.2x
Net debt to operating cash
flow(d)......................... 6.4x 6.2x
<CAPTION>
THE
ADJUSTMENTS COMPANY
FOR PRO
TRANSACTIONS FORMA
------------ -------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues...................... $ 250(m) $ 121,345
132(n)
284(o)
64(p)
Operating expenses:
Station operating expenses...... (1,894)(q) 69,294
Depreciation and amortization... 13,677(r) 27,625
------------ -------------
Station operating income
(loss)...................... (11,053) 24,426
Corporate expenses.............. (1,983)(s) 1,900
------------ -------------
Operating income (loss)........... (9,070) 22,526
------------ -------------
Financial expense, net:
Interest expense, net:
Cash interest, net............ 9,401(t) (27,215)
Other interest................ (12,602)(t) (13,771)
------------ -------------
Total interest, net......... (3,201) (40,986)
------------ -------------
Other, net...................... 354(u) --
Provision for income taxes........ 147(v) --
------------ -------------
Net income (loss) from continuing
operations...................... (11,770) (18,460)
Exchangeable Preferred Stock
dividends....................... (9,519)(w) (9,519)
Seller Junior Discount Preferred
Stock dividends................. (3,672)(x) (3,672)
------------ -------------
Net income (loss) from continuing
operations available to common
stockholders.................... $(24,961) $ (31,651)
------------ -------------
------------ -------------
Ratio of earnings to fixed
charges(b)...................... --
CERTAIN FINANCIAL DATA:
Broadcast cash flow(c)............ $ 2,703 $ 52,422
Broadcast cash flow margin........ 43.2%
Operating cash flow(c)............ $ 4,686 $ 50,522
Operating cash flow margin........ 41.6%
Amortization of program broadcast
rights.......................... $ -- $ 4,892
Payments for program broadcast
rights.......................... (79)(y) 4,521
Capital expenditures.............. -- 5,280
Cash payments for Federal income
taxes........................... --
CERTAIN RATIOS:
Operating cash flow to cash
interest expense, net........... 1.86x
Operating cash flow to total
interest expense, net........... 1.23x
Operating cash flow less capital
expenditures to cash interest
expense, net.................... 1.66x
Operating cash flow less capital
expenditures to total interest
expense, net.................... 1.10x
Net Senior Debt to operating cash
flow(d)......................... 5.1x
Net debt to operating cash
flow(d)......................... 6.8x
</TABLE>
33
<PAGE>
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED JANUARY 1, 1996 TO THE
JUNE 30, 1996 JUNE 6, 1996 ADJUSTMENTS COMPANY
--------------- --------------------- FOR PRO
THE COMPANY STAUFFER BRISSETTE TRANSACTIONS FORMA
--------------- -------- --------- ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................... $30,115 $7,341 $22,439 $ 64(o) $59,959
Operating expenses:
Station operating expenses........... 18,236 6,094 12,875 (900)(q) 36,305
Depreciation and amortization........ 4,069 974 2,954 5,258(r) 13,255
--------------- -------- --------- ------------ --------
Station operating income (loss).... 7,810 273 6,610 (4,294) 10,399
Corporate expenses................... 1,087 -- 3,303 (3,440)(s) 950
--------------- -------- --------- ------------ --------
Operating income (loss)................ 6,723 273 3,307 (854) 9,449
--------------- -------- --------- ------------ --------
Financial expense, net:
Interest expense, net:
Cash interest, net................. (8,668) -- (8,209) 3,238(t) (13,639 )
Other interest..................... (1,098) -- (275) (6,103)(t) (7,476 )
--------------- -------- --------- ------------ --------
Total interest, net.............. (9,766) -- (8,484) (2,865) (21,115 )
--------------- -------- --------- ------------ --------
Other, net........................... -- -- (190) 190(u) --
Provision for income taxes............. -- -- (114) 114(v) --
--------------- -------- --------- ------------ --------
Net income (loss) from continuing
operations........................... (3,043) 273 (5,481) (3,415) (11,666 )
Exchangeable Preferred Stock
dividends............................ -- -- -- (4,630)(w) (4,630 )
Seller Junior Discount Preferred
Stock dividends...................... -- -- -- (1,809)(x) (1,809 )
--------------- -------- --------- ------------ --------
Net income (loss) from continuing
operations available to common
stockholders......................... $(3,043) $ 273 $(5,481) $ (9,854) $(18,105)
--------------- -------- --------- ------------ --------
--------------- -------- --------- ------------ --------
Ratio of earnings to fixed
charges(b)........................... -- --
CERTAIN FINANCIAL DATA:
Broadcast cash flow(c)................. $11,995 $1,390 $ 9,441 $ 964 $23,790
Broadcast cash flow margin............. 39.8% 18.9% 42.1% 39.7 %
Operating cash flow(c)................. $10,908 $1,390 $ 6,138 $ 4,404 $22,840
Operating cash flow margin............. 36.2% 18.9% 27.4% 38.1 %
Amortization of program broadcast
rights............................... $ 1,302 $ 491 $ 865 $ 2,658
Payments for program broadcast
rights............................... 1,186 348 988 2,522
Capital expenditures................... 1,334 93 935
Cash payments for Federal income
taxes................................ -- -- -- --
</TABLE>
34
<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 'The Company as Adjusted' for
the year ended December 31, 1995 are derived from the pro forma
consolidated financial statements of the Company 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 'The Company 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 'The Company 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 $18.5 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 the Company for the six months ended June 30, 1996, earnings
were insufficient to cover fixed charges by $3.0 million. The net income
(loss) for the Company includes certain non-cash charges as follows: non
cash interest of $1.1 million and depreciation and amortization of $4.1
million. For the 'The Company Pro Forma,' for the six months ended June
30, 1996, earnings were insufficient to cover fixed charges by $11.7
million. The net income (loss) for 'The Company Pro Forma' includes
certain non-cash charges as follows: non-cash interest of $7.5 million and
depreciation and amortization of $13.3 million.
(c) 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.
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.
Operating cash flow and broadcast flow data are used throughout the
document and 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 the Company, the Financial Statements of Stauffer, or the Consolidated
Financial Statements of Brissette, are not measures of financial
performance under GAAP and should not be considered in isolation or as
substitutes for measures of performance prepared in accordance with GAAP.
(d) 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.
(e) Includes $0.1 million one-time expenses incurred in connection with
potential acquisitions which were not entered into by the Company
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
(l) The adjustment reflects a reduction in program payments and the related
amortization to be consistent with the Company's historical programming
purchasing.
(m) 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
35
<PAGE>
<PAGE>
of $500,000 per year over the ten-year term of the affiliation agreements,
of which $250,000 was recognized in the Company's statement of operations
for 1995.
(n) 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.
(o) The adjustment reflects the annualized effect of reduced commission rates
payable to national sales representative firms under new agreements
negotiated by the Company.
(p) 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.
(q) The adjustment reflects cost savings resulting from the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 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 $673
(ii) Adjustments to certain employee benefits and compensation
practices at the Acquired Stations........................ 355 117
(iii) Implementation at the Acquired Stations of operating
strategies currently utilized at the Benedek Stations..... 194 50
------- -----
$ 1,894 $900
------- -----
------- -----
</TABLE>
The employees of Stauffer that were hired by the Company became
participants in the Company's employee benefit plans as of the closing on
June 6, 1996 and were credited with prior service to Stauffer. The benefit
plans for Brissette (401(k) and health plans) were left intact by the
Company after the closing of the Brissette acquisition.
The pro forma cost savings as allocated among departments are summarized in
the table below:
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED JANUARY 1, 1996
DECEMBER 31, 1995 TO JUNE 6, 1996
------------------------------- --------------------------
STAUFFER BRISSETTE TOTAL STAUFFER BRISSETTE TOTAL
-------- --------- ------ ------------ -------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Selling expenses............... $ 94 $ 53 $ 147 $ 47 $ 26 $ 73
Programming and technical...... 489 502 839 245 252 497
Advertising and promotions..... 69 -- 221 35 -- 35
General and administrative..... 449 238 687 224 71 295
-------- --------- ------ ----- ----- ---------
Total...................... $1,101 $ 793 $1,894 $551 $349 $ 900
-------- --------- ------ ----- ----- ---------
-------- --------- ------ ----- ----- ---------
</TABLE>
(r) 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.
(s) 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,
(ii) the addition of certain corporate management personnel by the Company
and related costs and (iii) the elimination of severance compensation paid
to the officers of Brissette under terms of their employment agreements
upon sale to the Company.
(t) Interest expense has been adjusted to reflect the net effect of the change
in outstanding debt and deferred financing costs as though the
Transactions had occurred on January 1, 1995 for the year ended December
31, 1995 and January 1, 1996 for the six months ended June 30, 1996. The
following table details the calculation of the adjustment:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, 1995 JUNE 30, 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) $ -- $ (5,974) $(5,974)
Term Loan Facilities at an
assumed blended rate of
8.73%...................... (11,039) -- (11,039) (4,759) -- (4,759)
Interest on existing
Brissette notes............ 20,837 -- 20,837 8,209 -- 8,209
Reduction in interest
income..................... (397) -- (397) (212) -- (212)
Increase in amortization of
deferred financing costs... -- (807) (807) -- (404) (404)
Reduction of amortization of
deferred financings costs
on Brissette debt.......... -- 549 549 -- 275 275
-------- -------------- -------- ------- ------- -------
Net adjustment........... $ 9,401 $(12,602) $ (3,201) $ 3,238 $ (6,103) $(2,865)
-------- -------------- -------- ------- ------- -------
-------- -------------- -------- ------- ------- -------
</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
36
<PAGE>
<PAGE>
expense by approximately $160,000 for the year ended December 31, 1995 and
by approximately $80,000 for the six months ended June 30, 1996.
(u) The adjustment reflects the elimination of certain legal and investment
advisory fees paid by Brissette in connection with the sale to the
Company.
(v) The adjustment reflects the elimination of income tax expense. The Company
is not expected to have income tax expense on a pro forma basis.
(w) 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%.
(x) 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%.
(y) The adjustment reflects a reduction in program payments and the related
amortization to be consistent with the Company's historical program
purchase practices.
37
<PAGE>
<PAGE>
SELECTED FINANCIAL DATA
The following tables present selected financial data of (i) the Company
(including to the Transactions as of June 6, 1996), (ii) Stauffer and (iii)
Brissette. The following financial information should be read in conjunction
with the Consolidated Financial Statements of the Company, the Financial
Statements of Stauffer and the Consolidated Financial Statements of Brissette
included elsewhere in this Prospectus.
THE COMPANY (INCLUDING THE TRANSACTIONS AS OF JUNE 6, 1996)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------------------- -------------------
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 $24,059 $ 30,115
Operating expenses:
Station operating expenses................ 20,309 21,511 22,805 24,810 29,049 13,837 18,236
Depreciation and amortization............. 5,871 4,428 3,721 3,403 5,041 2,124 4,069
-------- -------- -------- -------- -------- ------- --------
Station operating income................ 7,428 10,372 11,826 16,008 16,239 8,098 7,810
Corporate expenses........................ 887 1,288 1,249 1,309 1,576 698 1,087
Special bonus, officer-stockholder........ -- -- 1,400 -- -- -- --
-------- -------- -------- -------- -------- ------- --------
Operating income.............................. 6,541 9,084 9,177 14,699 14,663 7,400 6,723
-------- -------- -------- -------- -------- ------- --------
Financial expenses, net:
Interest expense, net(b):
Cash interest, net........................ (9,856) (6,605) (8,194) (7,740) (14,763) (6,891) (8,668)
Other interest............................ (3,923) (7,774) (6,161) (4,905) (712) (337) (1,098)
-------- -------- -------- -------- -------- ------- --------
Total interest, net..................... (13,779) (14,379) (14,355) (12,645) (15,475) (7,228) (9,766)
Other, net.................................. (905) (310) 144 (10) -- -- --
-------- -------- -------- -------- -------- ------- --------
Total financial expenses, net........... (14,684) (14,689) (14,211) (12,655) (15,475) (7,228) (9,766)
-------- -------- -------- -------- -------- ------- --------
Net income (loss) before extraordinary item... (8,143) (5,605) (5,034) 2,044 (812) 172 (3,043)
Extraordinary item(c)......................... -- -- -- -- 6,864 6,864 --
-------- -------- -------- -------- -------- ------- --------
Net income (loss)(d).......................... $ (8,143) $ (5,605) $ (5,034) $ 2,044 $ 6,052 $ 7,036 $ (3,043)
-------- -------- -------- -------- -------- ------- --------
-------- -------- -------- -------- -------- ------- --------
Ratio of earnings to fixed charges(e)......... -- -- -- 1.2x -- 1.0x --
CERTAIN FINANCIAL DATA:
Broadcast cash flow........................... $ 13,531 $ 14,728 $ 15,546 $ 19,627 $ 21,310 $10,266 $ 11,995
Broadcast cash flow margin.................... 40.3% 40.6% 40.5% 44.4% 42.3% 42.7% 39.8%
Operating cash flow........................... $ 12,644 $ 13,440 $ 14,297 $ 18,318 $ 19,734 $ 9,568 $ 10,908
Operating cash flow margin.................... 37.6% 37.0% 37.3% 41.4% 39.2% 39.8% 36.2%
Amortization of program broadcast rights...... $ 2,131 $ 1,996 $ 2,179 $ 2,104 $ 2,162 $ 1,082 $ 1,302
Payment for program broadcast rights.......... 1,899 2,068 2,180 1,888 2,132 1,038 1,186
Capital expenditures.......................... 1,581 1,458 1,278 1,161 2,008 917 1,334
Cash payments for Federal income taxes........ -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------- JUNE 30,
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 $496,662
Working capital (deficit)..................... 1,997 (71) 3,684 1,611 13,665 8,109
Total debt(f)................................. 107,350 109,439 112,874 107,607 135,767 354,575
Stockholder's equity (deficit)................ (35,296) (41,004) (44,660) (42,615) (36,563) (34,553)
</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) The Company 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 six
months ended June 30, 1995, the ratio of earnings to fixed charges was 1.0
to 1.0.
38
<PAGE>
<PAGE>
For the six months ended June 30, 1996, earnings were insufficient to cover
fixed charges by $3.0 million. The Company's net income (loss) includes
certain non-cash charges as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------- ----------------
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 $ 337 $1,098
Depreciation and amortization of intangibles.................. 5,871 4,428 3,721 3,403 5,041 2,124 4,069
Provision for loss on note receivable......................... 905 310 -- -- -- -- --
Special bonus, officer-stockholder............................ -- -- 1,400 -- -- -- --
------- ------- ------- ------ ------ ------ ------
$10,699 $12,512 $11,282 $8,308 $5,753 $2,461 $5,167
------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------ ------ ------ ------
</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>
PERIOD
JANUARY 1,
YEAR ENDED DECEMBER 31, SIX MONTHS 1996 TO
----------------------------- ENDED JUNE JUNE 6,
1993 1994 1995 30, 1995 1996
------- ------- ------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................................... $16,661 $19,081 $17,317 $8,624 $7,341
Operating expenses:
Station operating expenses......................... 13,327 13,422 13,534 6,501 6,094
Depreciation and amortization...................... 2,264 2,304 2,229 1,136 974
------- ------- ------- ---------- ----------
Station operating income....................... 1,070 3,355 1,554 987 273
Corporate expenses................................. -- -- -- -- --
------- ------- ------- ---------- ----------
Operating income....................................... $ 1,070 $ 3,355 $ 1,554 $ 987 $ 273
------- ------- ------- ---------- ----------
------- ------- ------- ---------- ----------
CERTAIN FINANCIAL DATA:
Broadcast cash flow.................................... $ 3,285 $ 5,623 $ 4,000 $2,168 $1,390
Broadcast cash flow margin............................. 19.7% 29.5% 23.1% 25.1% 18.9%
Operating cash flow.................................... $ 3,285 $ 5,623 $ 4,000 $2,168 $1,390
Operating cash flow margin............................. 19.7% 29.5% 23.1% 25.1% 18.9%
Amortization of program broadcast rights............... $ 1,277 $ 1,045 $ 1,025 $ 496 $ 491
Payments for program broadcast rights.................. 1,326 1,081 808 451 348
Capital expenditures................................... 1,182 934 406 290 93
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with the Company.
BRISSETTE(a)
<TABLE>
<CAPTION>
PERIOD
JANUARY 1,
YEAR ENDED DECEMBER 31, SIX MONTHS 1996 TO
-------------------------------------------------------- ENDED JUNE JUNE 6,
1991 1992 1993 1994 1995 30, 1995 1996
-------- -------- -------- -------- -------- ---------- ----------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................ $ 43,817 $ 46,414 $ 44,404 $ 49,530 $ 51,326 $ 25,427 $ 22,439
Operating expenses:
Station operating expenses...... 23,470 23,791 23,511 25,667 27,515 12,970 12,875
Depreciation and amortization... 13,334 12,881 8,116 6,551 6,252 3,147 2,954
-------- -------- -------- -------- -------- ---------- ----------
Station operating income.... 7,013 9,742 12,777 17,312 17,559 9,310 6,610
Management fee paid to
affiliate(b).................. 2,650 4,365 -- -- -- -- --
Corporate expenses.............. 2,204 1,655 1,487 1,895 2,307 954 3,305
-------- -------- -------- -------- -------- ---------- ----------
Operating income.................... $ 2,159 $ 3,722 $ 11,290 $ 15,417 $ 15,252 $ 8,356 $ 3,307
-------- -------- -------- -------- -------- ---------- ----------
-------- -------- -------- -------- -------- ---------- ----------
CERTAIN FINANCIAL DATA:
Broadcast cash flow................. $ 20,688 $ 22,613 $ 20,927 $ 24,065 $ 23,856 $ 12,455 $ 9,441
Broadcast cash flow margin.......... 47.2% 48.7% 47.1% 48.6% 46.5% 49.0% 42.1%
Operating cash flow................. $ 18,484 $ 20,958 $ 19,440 $ 22,170 $ 21,549 $ 11,501 $ 6,138
Operating cash flow margin.......... 42.2% 45.1% 43.8% 44.8% 42.0% 45.2% 27.4%
Amortization of program broadcast
rights............................ $ 2,709 $ 1,987 $ 1,743 $ 1,757 $ 1,684 $ 758 $ 865
Payments for program broadcast
rights............................ 2,368 1,997 1,709 1,555 1,639 760 988
Capital expenditures................ 2,466 1,280 2,217 1,559 2,748 913 935
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with the Company.
(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.
39
<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
40
<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.
The Company 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 the Company'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 six months
ended June 30, 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 six months ended June 30, 1996:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- --------------------------
PRO FORMA PRO FORMA
----------------- --------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues:
Local/regional................................................. $ 78,769 56.7% $ 38,126 55.3%
National....................................................... 42,316 30.5 20,708 30.0
Political...................................................... 1,389 1.0 1,647 2.4
Network........................................................ 9,689 7.0 5,044 7.3
Barter......................................................... 4,046 2.9 1,963 2.9
Other.......................................................... 2,661 1.9 1,426 2.1
-------- ----- ----------- ------
Gross revenues..................................................... 138,870 100.0% 68,914 100.00%
----- ------
----- ------
Agency and national sales representative commissions........... 17,525 8,955
-------- -----------
Net revenues....................................................... 121,345 59,959
-------- -----------
Operating expenses:
Compensation expense and payroll taxes(a)...................... 39,198 21,148
Amortization of program broadcast rights....................... 4,853 2,658
Depreciation and amortization.................................. 27,625 14,287
Barter......................................................... 3,574 1,399
Other(b)....................................................... 21,669 10,068
-------- -----------
96,919 49,560
-------- -----------
Station operating income........................................... 24,426 10,399
Corporate expenses............................................. 1,900 950
-------- -----------
Operating income................................................... 22,526 9,449
Financial (expense), net........................................... (40,986) (21,115)
-------- -----------
Net income (loss) before extraordinary item........................ (18,460) (11,666)
Extraordinary item, gain (loss) on early extinguishment of debt.... 6,864 --
-------- -----------
Net income (loss).................................................. $(11,596) $ (11,666)
-------- -----------
-------- -----------
Broadcast cash flow................................................ $ 52,422 $ 23,790
Broadcast cash flow margin......................................... 43.2% 39.7%
Operating cash flow................................................ $ 50,522 $ 22,840
Operating cash flow margin......................................... 41.6% 38.1%
</TABLE>
- ------------
(a) Does not include corporate overhead.
(b) Includes utilities, insurance and other general and administrative
expenses.
41
<PAGE>
<PAGE>
The following table sets forth certain historical financial and operating
data for the periods indicated:
THE COMPANY (INCLUDING THE TRANSACTIONS AS OF JUNE 6, 1996)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------------------- -----------------------------------
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% $16,431 59.6% $19,560 56.9%
National................. 12,164 27.4 13,406 26.3 15,456 26.8 7,692 27.9 9,355 27.2
Political................ 394 0.9 2,662 5.2 923 1.6 221 0.8 849 2.5
Network.................. 2,280 5.1 2,320 4.5 3,166 5.5 1,378 5.0 2,372 6.9
Barter................... 1,829 4.1 2,076 4.1 2,943 5.1 1,362 4.9 1,602 9.7
Other.................... 817 1.9 940 1.8 1,035 1.8 506 1.8 638 1.8
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Gross revenues............... 44,328 100.0% 51,026 100.0% 57,634 100.0% 27,590 100.0% 34,376 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Agency and national sales
representative
commissions............ 5,976 6,805 7,305 3,531 4,261
------- ------- ------- ------- -------
Net revenues................. 38,352 44,221 50,329 24,059 30,115
------- ------- ------- ------- -------
Operating expenses:
Compensation expense and
payroll taxes(a)....... 12,106 13,165 15,410 7,362 9,881
Amortization of program
broadcast rights....... 2,179 2,104 2,162 1,082 1,303
Depreciation and
amortization........... 3,721 3,403 5,041 2,124 4,069
Special bonus, officer-
stockholder............ 1,400 -- -- -- --
Barter................... 1,737 1,766 2,414 1,037 1,105
Other(b)................. 6,783 7,775 9,063 4,356 5,947
------- ------- ------- ------- -------
27,926 28,213 34,090 15,961 22,305
------- ------- ------- ------- -------
Station operating income..... 10,426 16,008 16,239 8,098 7,810
Corporate expenses....... 1,249 1,309 1,576 698 1,087
------- ------- ------- ------- -------
Operating income............. 9,177 14,699 14,663 7,400 6,723
Financial (expenses), net.... (14,211) (12,655) (15,475) (7,228) ((9,766)
------- ------- ------- ------- -------
Net income (loss) before
extraordinary item......... (5,034) 2,044 (812) (172) (3,043)
Extraordinary item, gain on
early extinguishment of
debt....................... -- -- 6,864 6,864 --
------- ------- ------- ------- -------
Net income (loss)............ $(5,034) $ 2,044 $ 6,052 $ 7,036 $(3,043)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Broadcast cash flow.......... $15,546 $19,627 $21,310 $10,266 $11,995
Broadcast cash flow margin... 40.5% 44.4% 42.3% 42.7% 39.8%
Operating cash flow.......... $14,297 $18,318 $19,734 $ 9,568 $10,908
Operating cash flow margin... 37.3% 41.4% 39.2% 39.8% 36.2%
</TABLE>
- ------------
(a) Does not include corporate overhead or special bonus.
(b) Includes utilities, insurance and other general and administrative
expenses.
42
<PAGE>
<PAGE>
The following table contains a summary of the Company's historical
operations as a percentage of net revenues and the percentage change in the
dollar amounts as compared to prior periods:
<TABLE>
<CAPTION>
PERIOD TO PERIOD
PERCENTAGE OF NET REVENUES PERCENTAGE CHANGES
----------------------------------------- ----------------------------------
YEAR SIX MONTHS
ENDED SIX MONTHS FISCAL YEARS ENDED
DECEMBER 31, ENDED JUNE 30, ------------------ JUNE 30,
----------------------- -------------- 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% 25.2%
----- ----- ----- ----- -----
Operating expenses:
Compensation expense and payroll
taxes.......................... 31.6 29.8 30.6 30.6 32.8 8.7 17.1 34.2
Amortization of program broadcast
rights......................... 5.7 4.8 4.3 4.5 4.3 (3.4 ) 2.8 20.4
Depreciation and amortization.... 9.7 7.7 10.0 8.8 13.5 (8.5 ) 48.2 91.6
Special bonus,
officer-stockholder............ 3.7 -- -- -- -- (100.0 ) -- --
Barter........................... 4.5 4.0 4.8 4.3 3.7 1.7 36.7 6.6
Other............................ 17.7 17.6 18.1 18.1 19.8 14.6 16.6 36.5
----- ----- ----- ----- -----
72.9 63.9 67.8 66.3 74.1 1.0 20.8 39.7
----- ----- ----- ----- -----
Station operating income............. 27.1 36.2 32.2 33.7 25.9 53.5 1.4 (3.6)
Corporate expenses............... 3.2 3.0 3.1 2.9 3.6 4.8 20.4 55.7
----- ----- ----- ----- -----
Operating income..................... 23.9 33.2 29.1 30.8 22.3 60.2 (0.3) (9.1)
Financial (expenses), net............ (37.0) (28.6) (30.7) (30.1) (32.4) (10.9 ) 22.3 35.1
----- ----- ----- ----- -----
Net income (loss).................... (13.1)% 4.6% (1.6)% 0.7% (10.1)% -- -- --
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Broadcast cash flow.................. 40.5% 44.4% 42.3% 42.7% 39.8% 26.2 % 8.6% 16.8%
Operating cash flow.................. 37.3% 41.4% 39.2% 39.8% 36.2% 28.1 % 7.7% 14.0%
</TABLE>
The following tables set forth certain historical financial and operating
data for Stauffer and Brissette for the periods indicated:
<TABLE>
<CAPTION>
STAUFFER(a)
PERIOD
SIX MONTHS JANUARY 1,
YEAR ENDED DECEMBER 31, ENDED 1996 TO
------------------------------------------------------- JUNE 30, JUNE 6,
1993 1994 1995 1995 1996
--------------- --------------- --------------- -------------- --------------
(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% $6,029 60.6% $4,890 57.9%
National.................... 5,220 27.3 6,042 27.2 5,646 28.3 2,933 29.4 2,363 28.0
Political................... 78 0.4 2,223 10.0 87 0.4 5 -- 209 2.5
Network..................... 1,292 6.8 1,305 5.9 1,492 7.5 694 7.0 688 8.1
Barter...................... -- -- -- -- -- -- -- --
Other....................... 730 3.8 706 3.2 652 3.3 296 3.0 295 3.5
------- ----- ------- ----- ------- ----- ------ ----- ------ -----
Gross revenues.................. 19,115 100.0% 22,220 100.0% 19,938 100.0% 9,957 100.0% 8,445 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Agency and national sales
representative
commissions............... 2,454 3,139 2,621 1,333 1,104
------- ------- ------- ------ ------
Net revenues.................... 16,661 19,081 17,317 8,624 7,341
------- ------- ------- ------ ------
Operating expenses:
Compensation expense and
payroll taxes(b).......... 7,542 7,718 7,904 3,775 3,461
Amortization of program
broadcast rights.......... 1,277 1,045 1,025 496 491
Depreciation and
amortization.............. 2,264 2,304 2,229 1,136 974
Barter...................... -- -- -- -- --
Other(c).................... 4,508 4,659 4,606 2,230 2,142
------- ------- ------- ------ ------
15,591 15,726 15,763 7,637 7,068
------- ------- ------- ------ ------
Station operating income
(loss)........................ 1,070 3,355 1,554 987 273
Corporate expenses.......... -- -- -- -- --
------- ------- ------- ------ ------
Operating Income (loss)......... $ 1,070 $ 3,355 $ 1,554 $ 987 $ 273
------- ------- ------- ------ ------
------- ------- ------- ------ ------
Broadcast cash flow............. $ 3,285 $ 5,623 $ 4,000 $2,168 $1,390
Broadcast cash flow margin...... 19.7% 29.5% 23.1% 25.1% 18.9%
Operating cash flow............. $ 3,285 $ 5,623 $ 4,000 $2,168 $1,390
Operating cash flow margin...... 19.7% 29.5% 23.1% 25.1% 18.9%
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with the Company.
(b) Does not include corporate overhead.
(c) Includes utilities, insurance and other general and administrative
expenses.
43
<PAGE>
<PAGE>
BRISSETTE(a)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS PERIOD JANUARY
------------------------------------------------------- ENDED JUNE 30, 1, 1996 TO JUNE
1993 1994 1995 1995 6, 1996
--------------- --------------- --------------- --------------- ---------------
(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% $15,435 52.9% $13,676 52.4%
National................. 17,730 34.5 19,391 33.6 20,617 34.9 10,623 36.4 8,991 34.4
Political................ 403 0.8 3,536 6.1 379 0.6 149 0.5 589 2.3
Network.................. 3,163 6.2 3,094 5.4 4,589 7.8 2,144 7.4 1,984 7.6
Barter................... 569 1.1 686 1.2 903 1.5 329 1.1 360 1.4
Other.................... 1,273 2.5 941 1.6 990 1.7 483 1.7 493 1.9
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Gross revenues............... 51,352 100.0% 57,739 100.0% 59,053 100.0% 29,163 100.0% 26,093 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Agency and national sales
representative
commissions............ 6,948 8,209 7,727 3,736 3,654
------- ------- ------- ------- -------
Net revenues................. 44,404 49,530 51,326 25,427 22,439
------- ------- ------- ------- -------
Operating expenses:
Compensation expense and
payroll taxes(b)....... 13,855 15,494 16,647 7,937 7,629
Amortization of program
broadcast rights....... 1,743 1,757 1,684 758 865
Depreciation and
amortization........... 8,116 6,551 6,252 3,147 2,954
Special deferred
compensation........... 44 196 616 -- --
Barter................... 495 877 903 355 294
Other(c)................. 7,374 7,343 7,665 3,920 4,087
------- ------- ------- ------- -------
31,627 32,218 33,767 16,117 15,829
------- ------- ------- ------- -------
Station operating income..... 12,777 17,312 17,559 9,310 6,610
Corporate expenses....... 1,487 1,895 2,307 954 3,303
------- ------- ------- ------- -------
Operating income............. $11,290 $15,417 $15,252 $ 8,356 $ 3,307
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Broadcast cash flow.......... $20,927 $24,065 $23,856 $12,455 $ 9,441
Broadcast cash flow margin... 47.1% 48.6% 46.5% 49.0% 42.0%
Operating cash flow.......... $19,440 $22,170 $21,549 $11,501 $ 6,138
Operating cash flow margin... 43.8% 44.8% 42.0% 45.2% 27.4%
</TABLE>
- ------------
(a) Reclassification entries have been made to the financial statements for
consistent presentation with the Company.
(b) Does not include corporate overhead.
(c) Includes utilities, insurance and other general and administrative
expenses.
44
<PAGE>
<PAGE>
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Net revenues for the three months ended June 30, 1996 increased $4.5
million or 32.5% to $18.4 million from $13.9 million for the three months ended
June 30, 1995 primarily as a result of the acquisition on June 6, 1996 of the
Acquired Stations which increased net revenue by $5.0 million. On a proforma
basis, giving effect to the acquisition ('Same Station') net revenues for the
three months ended June 30, 1996 remained flat from the three months ended June
30, 1995. On a Same Station basis, political advertising revenue for the three
months ended June 30, 1996 increased by $0.4 million to $0.7 million. Gross
revenues on a Same Station basis excluding political advertising revenue
decreased $0.3 million or 0.7% from the three months ended June 30, 1995.
Operating expenses for the three months ended June 30, 1996 increased $4.8
million or 52.8% to $14.0 million from $9.2 million for the three months ended
June 30, 1995. Of the increase in operating expenses, $2.7 million was
attributable to the acquisition of the Acquired Stations. As a percentage of net
revenues, operating expenses increased to 75.9% from 65.8% in the three months
ended June 30, 1995, primarily as a result of an increase of $1.4 million in
depreciation and amortization expense. On a Same Station basis, operating
expenses for the three months ended June 30, 1996 increased $1.6 million or 6.5%
from the three months ended June 30, 1995. Operating expenses as a percentage of
net revenues on a Same Station basis increased from 76.5% for the three months
ended June 30, 1995 to 81.4% in the three months ended June 30, 1996.
Operating income for the three months ended June 30, 1996 decreased $0.3
million or 6.5% to $4.4 million from $4.7 million for the three months ended
June 30, 1995.
Financial (expenses), net for the three months ended June 30, 1996
increased $1.5 million or 36.8% to $5.7 million from $4.2 million in the three
months ended June 30, 1995, due to the Company's higher debt level following the
offering of the Senior Secured Notes in March 1995.
Net loss for the three months ended June 30, 1996 was $1.3 million as
compared to net income of $0.6 million for the three months ended June 30, 1995.
Broadcast cash flow for the three months ended June 30, 1996 increased $1.5
million or 23.8% to $7.8 million from $6.3 million for the three months ended
June 30, 1995 primarily as a result of the acquisition of the Acquired Stations.
As a percentage of net revenues, broadcast cash flow margin decreased to 42.2%
for the three months ended June 30, 1996 from 45.6% for the three months ended
June 30, 1995. On a Same Station basis, broadcast cash flow for the three months
ended June 30, 1996 decreased $1.7 million or 11.3% to $13.2 million from $14.7
million for the three months ended June 30, 1995. As a percentage of net
revenues, broadcast cash flow margin decreased to 40.8% for the three months
ended June 30, 1996 from 46.1% for the three months ended June 30, 1995. The
decrease in broadcast cash flow and broadcast cash flow margin for the three
month period ended June 30, 1996 was primarily related to an increase in
operating expenses used in determining broadcast cash flow. Such expenses
increased by $1.3 million or 12.8% at the Acquired Stations for the three months
ended June 30, 1996 from the comparable period in 1995 and by $0.4 million or
5.4% at the Company's previously owned stations.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Net revenues for the six months ended June 30, 1996 increased $6.1 million
or 25.2% to $30.1 million from $24.0 million for the six months ended June 30,
1995 primarily as a result of the acquisition on June 6, 1996 of the Acquired
Stations which increased net revenue by $5.0 million. On a Same Station basis,
net revenues for the six months ended June 30, 1996 increased $0.1 million or
0.2% from the six months ended June 30, 1995. Political advertising revenue for
the six months ended June 30, 1996 increased by $1.3 million to $1.6 million.
Gross revenues on a Same Station basis excluding political advertising revenue
decreased $1.0 million or 1.5% from the six months ended June 30, 1995. For the
Benedek Stations, net revenues declined from the six months ended June 30, 1995
primarily as a result of the performance of the Benedek Stations affiliated with
the CBS network. The share of viewers of such CBS affiliates also declined
during such period. As a group, the net revenues of the Company's CBS-affiliated
Benedek Stations decreased 8.8% from the six months ended June 30, 1995 and the
net revenue of the Benedek Stations affiliated with ABC and NBC increased 2.8%.
45
<PAGE>
<PAGE>
Operating expenses for the six months ended June 30, 1996 increased $6.7
million or 40.4% to $23.4 million from $16.7 million for the six months ended
June 30, 1995. As a percentage of net revenues, operating expenses increased to
77.8% from 69.2% in the six months ended June 30, 1995, as a result of the
acquisition of the Acquired Stations. On a Same Station basis, operating
expenses for the six months ended June 30, 1996 increased $2.5 million or 5.2%
from the six months ended June 30, 1995. Operating expenses as a percentage of
net revenues on a Same Station basis increased from 82.1% for the six months
ended June 30, 1995 to 86.2% in the six months ended June 30, 1996.
Operating income for the six months ended June 30, 1996 decreased $0.7
million or 9.1% to $6.7 million from $7.4 million for the six months ended June
30, 1995.
Financial (expenses), net for the six months ended June 30, 1996 increased
$2.5 million or 35.1% to $9.8 million from $7.2 million in the six months ended
June 30, 1995 due to the Company's higher debt level following the offering of
the Senior Secured Notes in March 1995.
Net loss for the six months ended June 30, 1996 was $3.0 million as
compared to net income of $7.0 million for the six months ended June 30, 1995
primarily as a result of an extraordinary gain of $6.9 million on the early
extinguishment of debt.
Broadcast cash flow for the six months ended June 30, 1996 increased $1.7
million or 16.9% to $12.0 million from $10.3 million for the six months ended
June 30, 1995 primarily as a result of the acquisition on June 6, 1996 of the
Acquired Stations. As a percentage of net revenues, broadcast cash flow margin
decreased to 39.8% for the six months ended June 30, 1996 from 42.7% for the six
months ended June 30, 1995. On a Same Station basis, broadcast cash flow for the
six months ended June 30, 1996 decreased $2.2 million or 8.6% to $22.9 million
from $25.0 million for the six months ended June 30, 1995. As a percentage of
net revenues, broadcast cash flow margin decreased to 38.1% for the six months
ended June 30, 1996 from 41.8% for the six months ended June 30, 1995.
The decrease in broadcast cash flow and broadcast cast flow margin for the
six month period ended June 30, 1996 was primarily related to an increase in
operating expense used in determining broadcast cash flow. Such expenses
increased by $2.2 million or 11.2% at the Acquired Stations for the six month
period ended June 30, 1996 from the comparable period in 1995, while such
operating expenses at the Company's previously owned stations remained flat.
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. In addition, for such Benedek Stations, net revenues
increased slightly and the related station share of viewers generally declined
from the year ended December 31, 1994 primarily as a result of the performance
of the Benedek Stations affiliated with the CBS network. As a group, the
CBS-affiliated Benedek Stations decreased 1.7% from the year ended December 31,
1994 and the net revenues of the Benedek Stations affiliated with ABC and NBC
increased 4.8%.
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 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
46
<PAGE>
<PAGE>
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.
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
47
<PAGE>
<PAGE>
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 $(7.6) million for the six months ended June 30,
1996 compared to $(0.8) million for the six months ended June 30, 1995. For the
six months ended June 30, 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 six months ended June 30, 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 $(323.7) million for the six
months ended June 30, 1996, compared to $(27.2) million for the six months ended
June 30, 1995. For the six months ended June 30, 1996, cash flows from investing
activities primarily resulted from the payment of $321.5 million for the
Acquired Stations. For the six months ended June 30, 1995 cash flows used in
investing activities included $26.7 million paid to acquire the Dothan Station.
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 $312.1 million for the six months
ended June 30, 1996 compared to $33.2 million for the six months ended June 30,
1995. For the six months ended June 30, 1996, cash flows from financing
activities resulted from the proceeds of the Financing Plan. For the three
months ended June 30, 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 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
48
<PAGE>
<PAGE>
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 ACQUISITIONS
The completion of the Acquisitions increased the number of television
stations owned by the Company from nine to 22. As a result, the future results
of operations of the Company will vary materially from the Company's historical
results. The substantial indebtedness incurred by the Company to finance the
Acquisitions and the terms of the agreements pursuant to which such indebtedness
is evidenced limit the Company's capital resources. In the absence of any future
equity financing, the Company's capital resources will be limited to available
borrowings under the Revolving Credit Facility and the cash provided by
operations to the extent not utilized in discharging the Company's debt service
requirements. Since a significant portion of the financing for the Acquisitions
was through the issuance of the Notes, the Exchangeable Preferred Stock and the
Seller Junior Discount Preferred Stock, none of which require cash payments for
approximately five years, the Company aniticpates that cash provided by
operations will be sufficient to meet its debt service obligations and
anticipated capital expenditures during that period.
The Stauffer Stations experienced a decline in net revenues from 1994 to
1995. The Company believes that this decrease was primarily attributable to the
fact that the Stauffer Stations were the subject of two separate sale
transactions during this period and that four of the five Stauffer Stations are
CBS affiliates which were affected by the performance of CBS network programming
particularly during 1995. The Company acquired the Stauffer Stations from
Stauffer which itself had been acquired by Morris Communications in June 1995.
During the second half of 1994 and the first half of 1995, the transfer to
Morris was pending and the then owners did not invest substantial amounts for
either capital expenditures or programming for the Stauffer Stations. The
Company does not believe that the decline in net revenues of Stauffer from 1994
to 1995, or the performance of the Stauffer Stations in the first half of 1996
when the sale of the Company was pending, are indicative of any material trend.
The Stauffer Stations that are CBS affiliates, together with the remaining CBS
affiliated Stations, will continue to be affected, as are all network
affiliates, by the relative performance of the network with which it is
affiliated.
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, which has not been drawn upon.
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 until such time that the debt matures or
requires payment in full for at least the period until the Company is required
to make cash payments in respect of the Notes, the Exchangeable Preferred Stock
and the Seller Junior Discount Preferred Stock (approximately five years). The
Company anticipates that capital expenditures of approximately $6.0 million will
be required in the aggregate at the Acquired Stations. Such capital expenditures
will be financed either from cash provided by operations, borrowings under the
Revolving Credit Facility or purchase money financing.
49
<PAGE>
<PAGE>
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. The
Company's debt service obligations, including scheduled principal amortization,
in the 12 month period beginning May 15, 2001 would be approximately $58.0
million (assuming that there will not have been any mandatory or voluntary
prepayments of any indebtedness prior to that time and assuming a blended
interest rate on the amounts then outstanding under the Credit Agreement
comparable to the rate the Company is currently paying). The Company's cash
dividend payments during such period on the Exchangeable Preferred Stock and the
Seller Junior Discount Preferred Stock would be approximately $27.0 million.
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, 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 the
consummation of the Transactions (including 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 June 30, 1996, Benedek Broadcasting could have
distributed approximately $188.5 million to the Company under such limitations.
RECENT DEVELOPMENTS
In September 1996, the Company announced that it had reached an agreement
in principle with the Warner Bros. Network to develop a local cable affiliate
called the 'WeB' in each of the Company's 20 markets which rank above 100. The
WeB is intended to be a 24 hour, seven day a week television channel which will
broadcast Warner Bros. Network prime time programming, WB Kids programming and
syndicated programming of Warner Bros. and others. The WeB is scheduled to
begin service in September 1997 in most 100-plus markets. The Company will be
responsible for all local sales efforts for the new channels in its markets.
The Company does not anticipate that it will be required to make any significant
capital expenditures in connection with the development of its WeB affiliates.
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.
50
<PAGE>
<PAGE>
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 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.
51
<PAGE>
<PAGE>
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.
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
52
<PAGE>
<PAGE>
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.'
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
53
<PAGE>
<PAGE>
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 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
54
<PAGE>
<PAGE>
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, 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
55
<PAGE>
<PAGE>
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.
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.
56
<PAGE>
<PAGE>
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 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.
57
<PAGE>
<PAGE>
BUSINESS
GENERAL
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.
58
<PAGE>
<PAGE>
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.'
59
<PAGE>
<PAGE>
BACKGROUND OF THE COMPANY
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. On June 6, 1996 as part of the
Transactions, Benedek Broadcasting became a wholly-owned subsidiary of the
Company. On March 10, 1995, Blue Grass Television, Inc. ('Blue Grass') and
Youngstown Broadcasting Co., Inc. ('Youngstown') were merged into Benedek
Broadcasting (the 'Merger'). Prior to the Merger, all of the outstanding common
stock of Benedek Broadcasting, Blue Grass and Youngstown was owned by Mr. A.
Richard Benedek, the sole stockholder of the Company.
Benedek Broadcasting acquired WTAP-TV in October 1979; WIFR-TV, WHSV-TV and
KHQA-TV in December 1986; WTOK-TV in June 1988; and WTVY-TV in March 1995. Blue
Grass acquired WBKO-TV in April 1983; and KDLH-TV in July 1995. Youngstown
acquired WYTV in June 1983.
On June 6, 1996, the Company became the sole stockholder of Benedek
Broadcasting and simultaneously therewith Benedek Broadcasting acquired the
Acquired Stations.
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.
60
<PAGE>
<PAGE>
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
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
61
<PAGE>
<PAGE>
continue to identify opportunities to increase operating cash flow through
its on-going strategic planning and budgeting process.
FUTURE ACQUISITIONS AND OPPORTUNITIES. The Company has a long-term
strategy 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. The Company does not have any agreements or understandings
with respect to any acquisition or local marketing agreement.
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 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
62
<PAGE>
<PAGE>
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 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
63
<PAGE>
<PAGE>
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.
64
<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 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.
65
<PAGE>
<PAGE>
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
66
<PAGE>
<PAGE>
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
67
<PAGE>
<PAGE>
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
68
<PAGE>
<PAGE>
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
69
<PAGE>
<PAGE>
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.'
70
<PAGE>
<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.'
71
<PAGE>
<PAGE>
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
<PAGE>
<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
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
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
75
<PAGE>
<PAGE>
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.
76
<PAGE>
<PAGE>
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>
77
<PAGE>
<PAGE>
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
78
<PAGE>
<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.'
79
<PAGE>
<PAGE>
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
80
<PAGE>
<PAGE>
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
81
<PAGE>
<PAGE>
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.
82
<PAGE>
<PAGE>
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
83
<PAGE>
<PAGE>
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. Three DBS companies provide nationwide
service 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
84
<PAGE>
<PAGE>
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
85
<PAGE>
<PAGE>
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 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. It is currently anticipated
that the FCC will propose revised duopoly rules during the fourth quarter of
1996 with the expectation that, after considering public comments, new rules
would become effective during the first half of 1997. As a result of the limited
waiver provided by the FCC, the Company has had discussions concerning
exchanging or selling Stations which would eliminate the duopoly overlap. No
agreement or understanding currently exists with respect to any such sale or
exchange. If necessary, the Company intends to request an extension of the
waiver period and believes the FCC will grant an extension of the waiver period,
although the duration thereof is uncertain. 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 -- Uncertainties Regarding License Renewals;
Possible Need to Divest Stations.' 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
86
<PAGE>
<PAGE>
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 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
87
<PAGE>
<PAGE>
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.
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. 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 Company recently elected retransmission consent with those cable systems
with which the prior agreements expired. 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.
88
<PAGE>
<PAGE>
EMPLOYEES
The Company currently employs approximately 1,277 full-time and 252
part-time employees, of which 14 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 WYTV collective bargaining agreement expired in July 1996 and is
currently being renegotiated. The KDLH-TV, WMTV(TV), WILX-TV, WHOI(TV) and
WTRF-TV collective bargaining agreements expire at various times from 1996
through 1999. 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.
89
<PAGE>
<PAGE>
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>
90
<PAGE>
<PAGE>
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>
91
<PAGE>
<PAGE>
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.
92
<PAGE>
<PAGE>
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.
93
<PAGE>
<PAGE>
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...................... 41 Senior Vice President-Planning and Technology of Benedek
Broadcasting
Mary L. Flodin...................... 41 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 and Youngstown from their
formation in January 1980, and September 1982, respectively, until 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, 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,
94
<PAGE>
<PAGE>
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 $100,000 during the fiscal years
ended December 31, 1995 and December 31, 1994. The amounts set forth in the
following table for 1994 include amounts paid to the listed executive officers
by Benedek Group, Inc., which was owned by Messrs. Benedek, Yager and Lindwall
and which provided management and accounting services to the Company during part
of 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ALL
---------------------- OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) 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.
95
<PAGE>
<PAGE>
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 IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR-END FISCAL YEAR-END
-------------------------------------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------------------------- ----------------------------- ----------- -------------
<S> <C> <C> <C> <C>
A. Richard Benedek.............. -- -- -- --
K. James Yager.................. 7.78 -- $ 3,982,000(a) --
Ronald L. Lindwall.............. -- -- -- --
</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.
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.
96
<PAGE>
<PAGE>
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.
Commencing in November 1993, the Company retained Benedek Group, Inc.
('BGI') to manage the Benedek Stations and provide accounting and general
corporate services. BGI is wholly owned by Messrs. Benedek, Yager and Lindwall
and was paid approximately $208,000 in 1993 (for two months) and $1.3 million in
1994 for such services. The Company believes that the terms of its arrangements
with BGI were as fair and reasonable as if the arrangements were with a
non-affiliate. The management arrangements with BGI were terminated effective
December 31, 1994 and Messrs. Benedek, Yager and Lindwall are employed by the
Company.
In December 1994, Benedek Acquisition Corporation ('BAC'), a company
wholly-owned by Mr. Benedek, entered into an agreement to acquire the Dothan
Station. In conjunction with the agreement, Benedek Broadcasting advanced $2.0
million, without interest, to BAC which was used as a deposit on the purchase of
the Dothan Station. In February 1995, BAC assigned to Benedek Broadcasting its
rights under the agreement to acquire the Dothan Station in exchange for
cancellation of all obligations with respect to the aforementioned advance.
In November 1995, BAC entered into the Stauffer Agreement. In conjunction
with the Stauffer Agreement, Benedek Broadcasting advanced $3.0 million, with
interest at the prime rate in effect from time to time, to BAC which was used as
a deposit on the purchase of the Stauffer Stations. In December 1995, BAC
assigned to Benedek Broadcasting its rights under the Stauffer Agreement in
exchange for cancellation of all obligations with respect to the aforementioned
advance.
In March 1995, in connection with the formation of the LLC, Mr. Benedek
acquired a 1% membership interest in the LLC in exchange for a non-interest
bearing promissory note in the principal amount of $581,200. Mr. Benedek entered
into this transaction as an accommodation to Benedek Broadcasting in conjunction
with its issuance of the Senior Secured Notes. In connection with the
Transactions, the LLC was merged into BLC, and Mr. Benedek was issued one share
of BLC common stock in exchange for his 1% interest in the LLC, which share was
redeemed in exchange for cancellation of the promissory note.
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 $1.2 million. 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.
The Contingent Warrants will initially be held in escrow pursuant to a
warrant escrow agreement and will be released from escrow, subject to certain
conditions described below, on the Contingent Warrant Release Date. The
'Contingent Warrant Release Date' shall mean 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 is 'Cash Flow Leverage Ratio' in the Certification
of Designation with respect to the Exchangeable Preferred Stock) of (i) the sum
of the aggregate amount outstanding of all Debt (as defined) (net of cash and
cash equivalents) of the Company and the Restricted Subsidiaries (as defined)
and the aggregate liquidation preference of the Exchangeable Preferred Stock, in
each case
97
<PAGE>
<PAGE>
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. If
on the Contingent Warrant Release Date no Exchangeable Preferred Stock or
Exchange Debentures are outstanding, the Contingent Warrants will not be
delivered to holders of the Exchangeable Preferred Stock or Exchange Debentures
but will be returned to the Company for cancellation. The Contingent Warrants
were issued on June 5, 1996 but are not deemed to be outstanding until delivered
following the Contingent Warrant Release Date to holders of record of the
Exchangeable Preferred Stock or Exchange Debentures on the Contingent Warrant
Release Date. Unless earlier exercised, the Warrants will expire on July 1, 2007
(the 'Expiration Date'). The Company will give notice of expiration not less
than 90 nor more than 120 days prior to the Expiration Date to the registered
holders of the then outstanding Warrants. Even if the Company does not give such
notice, the Warrants will still terminate and become void on the Expiration
Date.
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 AXELsSM Series A Facility of
$70.0 million and (ii) an AXELsSM 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
AXELsSM Series A Facility will mature five years and the AXELsSM 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 AXELsSM 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 basis, the AXELsSM Series A and Series B Facilities. The AXELsSM
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
98
<PAGE>
<PAGE>
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) 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
99
<PAGE>
<PAGE>
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.
100
<PAGE>
<PAGE>
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 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
101
<PAGE>
<PAGE>
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
102
<PAGE>
<PAGE>
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
103
<PAGE>
<PAGE>
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 June 30, 1996, the Company's Senior Debt was approximately $263.6
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.'
The Notes are not senior to any Debt of the Company, although the Notes
will be Senior to Subordinated Obligations (as defined), if any, that the
Company may incur in the future. The Company has no present intention to incur
any indebtedness junior to the Notes.
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 June 30, 1996, the total liabilities of the Company's subsidiaries were
$346.5 million, including trade payables and $263.6 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
104
<PAGE>
<PAGE>
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 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):
105
<PAGE>
<PAGE>
(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 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
106
<PAGE>
<PAGE>
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 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
107
<PAGE>
<PAGE>
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) $128.0
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
108
<PAGE>
<PAGE>
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 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.
109
<PAGE>
<PAGE>
(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 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.
110
<PAGE>
<PAGE>
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, 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
111
<PAGE>
<PAGE>
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 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
112
<PAGE>
<PAGE>
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 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 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 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
113
<PAGE>
<PAGE>
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 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
114
<PAGE>
<PAGE>
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
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
115
<PAGE>
<PAGE>
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 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.
116
<PAGE>
<PAGE>
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
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
- --------------------------------------------------------------------------- --------------
<C> <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.
117
<PAGE>
<PAGE>
'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 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.
118
<PAGE>
<PAGE>
'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 (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
119
<PAGE>
<PAGE>
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 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
120
<PAGE>
<PAGE>
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.
'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);
121
<PAGE>
<PAGE>
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.
'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
122
<PAGE>
<PAGE>
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 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.
123
<PAGE>
<PAGE>
'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.
124
<PAGE>
<PAGE>
'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
125
<PAGE>
<PAGE>
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
126
<PAGE>
<PAGE>
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. SSSS77aaa-77bbbb) as
in effect on the Issue Date.
127
<PAGE>
<PAGE>
'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 4, 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 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 by the provisions of
its Certificate of Incorporation. A copy of the
128
<PAGE>
<PAGE>
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 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
129
<PAGE>
<PAGE>
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.
130
<PAGE>
<PAGE>
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 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 Company, the terms of which expressly provide that such class
or series will rank on a parity with the
131
<PAGE>
<PAGE>
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 the
liquidation value per share redeemed plus an amount equal to all accumulated and
unpaid dividends per share to the date of redemption.
132
<PAGE>
<PAGE>
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. See 'Stock
Ownership.'
133
<PAGE>
<PAGE>
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.
134
<PAGE>
<PAGE>
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.
135
<PAGE>
<PAGE>
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. The aforementioned statement
is based upon an opinion of Whitman Breed Abbott & Morgan, tax counsel to the
Company, a copy of which is filed as an exhibit to the Registration Statement to
which this Prospectus is a part. 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.
136
<PAGE>
<PAGE>
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. Certain tax matters with respect to the
Notes will be passed on for the Company by Whitman Breed Abbott & Morgan, tax
counsel to the Company.
EXPERTS
The Consolidated Financial Statements of the Company 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.
137
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Benedek Communications Corporation and Subsidiary
Independent Auditor's Report..................................................................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995..................................................... F-3
Consolidated Statements of Operations for the Three Years Ended December 31, 1995................................ F-4
Consolidated Statements of Stockholder's Deficit for the Years Ended
December 31, 1993, 1994 and 1995............................................................................... F-5
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 1995................................ F-6
Notes to Consolidated Financial Statements....................................................................... F-7
Consolidated Balance Sheet as of June 30, 1996 (Unaudited)....................................................... F-18
Consolidated Statements of Operations for the Six Months Ended
June 30, 1995 and 1996 (Unaudited)............................................................................. F-19
Consolidated Statement of Stockholder's Deficit for the Six Months Ended June 30, 1996........................... F-20
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1995 and 1996 (Unaudited)............................................................................. F-21
Notes to Consolidated Financial Statements (Unaudited)........................................................... F-22
TV Division of Stauffer Communications, Inc.
Report of Independent Public Accountants......................................................................... F-28
Balance Sheets as of December 31, 1994 and 1995.................................................................. F-29
Statements of Income for the Three Years Ended December 31, 1995................................................. F-30
Statements of Division Equity for the Years Ended December 31, 1993, 1994 and 1995............................... F-31
Statements of Cash Flows for the Three Years Ended December 31, 1995............................................. F-32
Notes to Financial Statements.................................................................................... F-33
Balance Sheet as of June 6, 1996 (Unaudited)..................................................................... F-36
Statements of Income for the Six Months Ended June 30, 1995 and the Period January 1, 1996 to June 6, 1996
(Unaudited)..................................................................................................... F-37
Statement of Division Equity for the Period January 1, 1996 to June 6, 1996 (Unaudited).......................... F-38
Statements of Cash Flows for the Six Months Ended June 30, 1995 and the Period January 1, 1996 to June 6, 1996
(Unaudited)..................................................................................................... F-39
Notes to Financial Statements (Unaudited)........................................................................ F-40
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 June 6, 1996 (Unaudited)........................................................ F-54
Consolidated Statements of Operations for the Twenty Six Weeks Ended June 30, 1995 and the Period January 1, 1996
to June 6, 1996 (Unaudited)..................................................................................... F-55
Consolidated Statements of Cash Flows for the Twenty Six Weeks Ended June 30, 1995 and the Period January 1, 1996
to June 6, 1996 (Unaudited)..................................................................................... F-56
Consolidated Statements of Stockholder's Investment for the Period January 1, 1996 to June 6, 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 AND SUBSIDIARY
Rockford, Illinois
We have audited the accompanying consolidated balance sheets of Benedek
Communications 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
Communications 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 Notes A, L and M as to
which the date is June 6, 1996.
F-2
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS 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
------------ ------------
Redeemable Preferred Stock (Note L) --
Commitments (Note I, K)
Stockholder's Deficit (Note E)
Common Stock, Class A $0.01 par value 25,000,000 authorized, none issued
or outstanding......................................................... -- --
Common Stock, Class B $0.01 par value 250,000,000 authorized, 7,030,000
issued and outstanding................................................. 70,300 70,300
Additional paid-in capital............................................... 2,253,229 2,253,229
Accumulated deficit...................................................... (44,938,734) (38,886,616)
------------ ------------
(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-3
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS 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-4
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS 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 RECEIVABLE,
STOCK CAPITAL DEFICIT STOCKHOLDER TOTAL
------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992....................... $70,300 $2,253,229 $(40,944,866) $(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....................... 70,300 2,253,229 (46,983,093) -- (44,659,564)
Net income.................................... -- -- 2,044,359 -- 2,044,359
------- ---------- ------------ ----------- ------------
Balance at December 31, 1994....................... 70,300 2,253,229 (44,938,734) -- (42,615,205)
Net income.................................... -- -- 6,052,118 -- 6,052,118
------- ---------- ------------ ----------- ------------
Balance at December 31, 1995....................... $70,300 $2,253,229 $(38,886,616) $ -- $(36,563,087)
------- ---------- ------------ ----------- ------------
------- ---------- ------------ ----------- ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS 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-6
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS 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 Communications Corporation (the 'Company') is a
holding company that derives its operating income and cash flow from its
subsidiary, Benedek Broadcasting Corporation ('Benedek Broadcasting') which owns
and operates 22 television stations located throughout the United States. These
stations operate under network affiliation contracts, which 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 the Company and its wholly owned subsidiary Benedek Broadcasting.
The accounts of Benedek License Corporation ('BLC'), a wholly owned subsidiary
of Benedek Broadcasting, are included in the financial statements of Benedek
Broadcasting. All significant intercompany items and transactions have been
eliminated in the consolidated financial statements.
In 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 method of accounting.
On April 10, 1996, the sole stockholder of Benedek Broadcasting formed the
Company in conjunction with the acquisitions described in Note M.
On April 18, 1996, Benedek Broadcasting formed BLC for the purpose of
holding the licenses and authorizations issued by the Federal Communications
Commission (the 'FCC'), in connection with the operations of the stations.
Concurrent with the acquisitions described in Note M, Benedek Broadcasting
Company, L.L.C. (the 'LLC'), which had been formed in 1995 for the same purpose
and was holding the licenses of Benedek Broadcasting's stations, was merged into
BLC with the result that all licenses of the acquired stations were transferred
to BLC. This was accounted for in a manner similar to that in
pooling-of-interests method of accounting.
On June 6, 1996, the Company acquired all of the outstanding common stock
of Benedek Broadcasting from the sole stockholder in exchange for the issuance
to him of 7,030,000 shares of Class B common stock of the Company, representing
all of the outstanding common stock of the Company. For accounting purposes,
this recapitalization has been treated in a manner similar to a
pooling-of-interests. The historical consolidated financial statements are those
of Benedek Broadcasting recast to reflect the difference in par value of the
Company's and Benedek Broadcasting's stock. As a result of recasting the
financial statements, the 'Company' hereafter will refer to Benedek
Communications Corporation and its wholly owned subsidiary Benedek Broadcasting
and its wholly owned subsidiary BLC.
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:
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
F-7
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At various times during the periods, the Company 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, the Company 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 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.
F-8
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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>
The Company 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.
In accordance with Statement of Financial Accounting Standard No. 121
'Accounting for the Impairment of Long-lived Assets and Long-lived Assets to be
Disposed of,' the Company 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.
(10) INCOME TAXES:
The Company, 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.
(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:
The Company has a defined contribution plan covering all eligible
employees. The contribution is at the discretion of the Board of Directors.
The Company 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.
F-9
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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. 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.
(NOTE B) -- ACQUISITION
On March 31, 1995, the Company 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. The Company 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, the Company 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:
The Company 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.
F-10
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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, the Company advanced $2,000,000 to Benedek Acquisition
Corporation which was used as a deposit on the purchase. In 1995, Benedek
Acquisition Corporation assigned to the Company its rights under the purchase
agreement to acquire the television station. (See Note B).
(4) STOCK OPTION AGREEMENTS:
A key employee holds options, expiring in 1998 and 2004, to purchase
370,000 shares of common stock of the Company for an aggregate purchase price of
$1,192,539.
The foregoing options in the aggregate will entitle the key employee to
acquire shares representing 5% of the outstanding common stock of the Company
after giving effect to the issuance thereof. The options were issued at fair
market value on the date of grant.
(5) LEASES:
In 1993, the Company 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, the Company 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 the Company.
(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>
F-11
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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.
(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 100%
interest in BLC, certain agreements and contract rights related to the stations
which includes network affiliation agreements and certain general intangibles.
F-12
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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, the Company recorded contingent interest of $1,000,000 relating to
certain note agreements, which were paid in 1995 in connection with the
refinancing.
(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:
The Company 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%.
F-13
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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>
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, the Company has entered into noncancelable commitments for
future program rights aggregating approximately $4,745,800 as of December 31,
1995.
F-14
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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
The Company 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.
The Company 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
Profits and losses of the Company are reported in the individual income tax
returns of the stockholder under provisions of Subchapter S of the Internal
Revenue Code. In conjunction with the financing and acquisitions described in
Note M, the Company's income tax status will change and the Company will be
required to pay income taxes on its earnings subsequent to June 6, 1996,
including deferred taxes existing at the time that the S Corporation status
terminates. At that time, the Company intends to adopt Statement of Financial
Accounting Standards No. 109, 'Accounting for Income Taxes.' Deferred income
taxes resulting from temporary differences arising prior to termination will be
recorded as a component of current income tax expense in the period of adoption.
F-15
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The deferred tax asset and liabilities that would exist if the Company
terminated its S Corporation status 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, the Company 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 and are available to the Company. These net
operating loss carryforwards will only be available to offset future tax
liabilities of the Company if it terminates the 'S' Corporation status.
No pro forma adjustment to reflect income taxes was needed in the
accompanying statement of operations, assuming the Company had been subject to
corporate income taxes, due to the net operating loss carryforwards and a
valuation allowance.
F-16
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(NOTE K) -- PROGRAMMING COMMITMENTS
The Company 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>
(NOTE L) -- PREFERRED STOCK
The Board of Directors of the Company has authorized 2,500,000 shares of
preferred stock, of which no shares have been issued as of December 31, 1995.
The Board has the right and ability to set the terms and preferences of the
preferred stock. In conjunction with the acquisitions described in Note M, the
Company issued 600,000 shares of 15% exchangeable redeemable senior preferred
stock due 2007 with an initial liquidation preference equal to $60,000,000 and
issued 450,000 shares of seller junior discount preferred stock due 2008 with an
initial liquidation preference equal to $45,000,000. The Board has not set the
terms and preferences of the remaining shares of preferred stock at June 6,
1996.
(NOTE M) -- ACQUISITIONS AND SUBSEQUENT EVENTS
On November 22, 1995, the Company 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, the Company 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 transactions consisting of (i) the Company issuing (a) senior
subordinated discount notes, (b) units, consisting of exchangeable preferred
stock and warrants to acquire common stock of the Company, 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.
F-17
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JUNE 30,
1996
------------
(UNAUDITED)
<S> <C>
Current Assets
Cash and cash equivalents.................................................................. $ 5,691,476
Accounts receivable, net................................................................... 20,812,960
Due from sellers........................................................................... 1,799,144
Current portion of program broadcast rights................................................ 2,605,440
Prepaid expenses........................................................................... 1,377,192
------------
Total current assets.................................................................. 32,286,212
------------
Property and Equipment.......................................................................... 91,197,864
------------
Intangible Assets............................................................................... 359,759,417
------------
Other Assets:
Program broadcast rights, less current portion............................................. 2,521,725
Deferred loan costs........................................................................ 13,211,447
Other...................................................................................... 760,537
------------
16,493,709
------------
$499,737,202
------------
------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Current maturities of notes and leases payable............................................. $ 6,295,564
Current maturities of program broadcast rights payable..................................... 3,282,547
Deferred revenue........................................................................... 694,668
Accounts payable and accrued expenses...................................................... 13,904,094
------------
Total current liabilities............................................................. 24,176,873
------------
Long-Term Obligations:
Notes and capital leases payable........................................................... 348,279,540
Program broadcast rights payable........................................................... 1,866,062
Deferred revenue........................................................................... 4,515,933
Deferred income taxes...................................................................... 58,559,983
------------
413,221,518
------------
Senior Redeemable Preferred Stock............................................................... 51,654,094
------------
Junior Redeemable Preferred Stock............................................................... 45,237,600
------------
Stockholder's Deficit:
Common stock............................................................................... 70,300
Additional paid-in capital................................................................. (32,875,111)
Accumulated deficit........................................................................ (1,748,072)
------------
(34,552,883)
------------
$499,737,202
------------
------------
</TABLE>
F-18
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
1995 1996
----------- -----------
<S> <C> <C>
Net revenues............................. $24,058,657 $30,115,028
----------- -----------
Operating expenses:
Selling, technical and program
expenses.......................... 10,044,707 13,541,029
General and administrative.......... 3,791,915 4,693,851
Depreciation and amortization....... 2,124,505 4,069,293
Corporate........................... 697,759 1,087,434
----------- -----------
16,658,886 23,391,607
----------- -----------
Operating income............... 7,399,771 6,723,421
----------- -----------
Financial income (expense)
Interest expense:
Cash interest.................. (7,099,895) (8,879,980)
Other interest................. (337,006) (1,098,513)
----------- -----------
(7,436,901) (9,978,493)
Interest income..................... 209,692 212,433
----------- -----------
(7,227,209) (9,766,060)
----------- -----------
Net income (loss) before income taxes and
extrordinary item...................... 172,562 (3,042,639)
Income taxes............................. -- --
----------- -----------
Net income (loss before extraordinary
item................................... 172,562 (3,042,639)
Extraordinary item:
Gain on early extinguishment of debt..... 6,863,762 --
----------- -----------
Net income (loss)................... ----------- -----------
----------- -----------
</TABLE>
F-19
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIT
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
--------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995................... $ 70,300 $ 2,253,229 $(38,886,616) $(36,563,087)
Allocation of proceeds from sale of redeemable
senior preferred stock to initial warrants... -- 9,000,000 -- 9,000,000
Financing costs related to the sale of
redeemable preferred stock................... -- (3,055,463) -- (3,055,463)
Reclassification of accumulated deficit due to
change in income tax status.................. -- (41,072,877) 41,072,877 --
Dividends payable on redeemable preferred
stock........................................ -- -- (891,694) (891,694)
Net (loss)..................................... -- -- (3,042,639) (3,042,639)
--------- ------------ ------------ ------------
Balance at June 30, 1996....................... $ 70,300 $(32,875,111) $ (1,748,072) $(34,552,883)
--------- ------------ ------------ ------------
--------- ------------ ------------ ------------
</TABLE>
F-20
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1996
------------ -------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss).............................................................. $ 7,036,324 $ (3,042,639)
Adjustments to reconcile net income (loss) to net cash (used in) provided by
operating activities:
Amortization of program broadcast rights................................... 1,081,647 1,302,515
Depreciation and amortization.............................................. 1,345,668 2,701,736
(Gain) on early extinguishment of debt..................................... (6,863,762) --
Amortization of intangibles and deferred loan costs........................ 1,101,504 1,719,984
Amortization of note discount.............................................. -- 753,517
(Gain) on sale of property and equipment................................... (17,357) (7,428)
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 station acquisitions:
Receivables.................................................................... (1,574,109) 2,631,367
Due from sellers............................................................... -- 863,371
Prepaid expenses............................................................... (204,103) (232,727)
Payments on program broadcast rights payable................................... (1,037,876) (1,185,741)
Accounts payable and accrued expenses.......................................... 4,861,661 2,316,000
Deferred income................................................................ -- (261,810)
Contingent and deferred interest payable....................................... 567,533 --
------------ -------------
Net cash provided by (used in) operating activities.................... (825,821) 7,558,145
------------ -------------
Cash Flows From Investing Activities
Purchase of property and equipment............................................. (556,992) (1,250,886)
Proceeds from sale of equipment................................................ 25,502 10,300
Payment for acquisition of stations, net of cash............................... (26,683,772) (321,542,152)
Reimbursement for equipment purchases.......................................... -- 79,198
Purchase of securities......................................................... -- (651,535)
Payment of acquisition costs................................................... -- (316,528)
Other.......................................................................... 2,587 (1,729)
------------ -------------
Net cash (used in) investing activities................................ (27,212,675) (323,673,332)
------------ -------------
Cash Flows From Financing Activities
Principal payments on notes, including capital lease payables.................. (96,170,752) (53,226)
Proceeds from issuance of redeemable preferred stock........................... -- 105,000,000
Proceeds from long term borrowing.............................................. 135,000,000 218,178,200
Payment of debt acquisition costs.............................................. (5,586,680) (10,986,642)
------------ -------------
Net cash provided by financing activities.............................. 33,242,568 312,138,332
------------ -------------
Net increase (decrease) in cash and cash equivalents................... 5,204,072 (3,976,855)
Cash and cash equivalents:
Beginning...................................................................... 4,617,242 9,668,331
------------ -------------
Ending......................................................................... $ 9,821,314 $ 5,691,476
------------ -------------
------------ -------------
Supplemental Disclosures of Cash Flow Information
Cash payments for interest..................................................... $ 5,995,139 $ 8,049,422
------------ -------------
------------ -------------
Supplemental Schedule of Noncash Investing and Financing Activities
Acquisition of program broadcast rights........................................ $ 712,095 $ 368,751
Note payable and capital lease obligation incurred for purchase of equipment... 197,288 44,100
Equipment acquired by barter transactions...................................... 162,685 38,719
Dividends accrued on redeemable preferred stock................................ -- 891,694
------------ -------------
------------ -------------
Acquisitions of stations
Cash purchase price............................................................ $ 26,683,772 $ 321,542,152
------------ -------------
------------ -------------
Net working capital, acquired, net of cash $535,810............................ $ -- $ 10,061,537
Property and equipment acquired at fair market value........................... 6,500,000 72,533,059
Intangible assets acquired..................................................... 22,313,385 301,026,581
Deferred income taxes assumed.................................................. -- (58,872,778)
Other, net..................................................................... (129,613) 19,112
------------ -------------
28,683,772 324,767,511
Less: Application of deposit................................................... (2,000,000) (3,225,359)
------------ -------------
$ 26,683,772 $ 321,542,152
------------ -------------
------------ -------------
</TABLE>
F-21
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE A) -- NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business: Benedek Communications Corporation (the Company) was
formed on April 10, 1996. The Company is a holding company that derives its
operating income and cash flow from its subsidiary, Benedek Broadcasting
Corporation (Benedek Broadcasting) which owns and operates twenty-two television
stations located throughout the United States. These stations operate under
network affiliation contracts, which 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 the Company and its wholly owned subsidiary Benedek Broadcasting.
The accounts of Benedek License Corporation (BLC), a wholly owned subsidiary of
Benedek Broadcasting, are included in the financial statements of Benedek
Broadcasting. All significant intercompany items and transactions have been
eliminated in the consolidated financial statements. Since Benedek Broadcasting
and the Company have identical stock ownership, these financial statements
include the operating results of Benedek Broadcasting accounted for in a manner
similar to that of a pooling-of-interests method of accounting. 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 June 30, 1996 and the results
of operations and cash flows for the six months ended June 30, 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 and six month periods ended June 30, 1995
and 1996 and for the fiscal year ended 1995 are not necessarily indicative of
the results that may be expected for the fiscal year ended December 31, 1996.
(NOTE B) -- ACQUISITIONS AND CONTRIBUTION OF CAPITAL
The Company was formed by the sole stockholder of Benedek Broadcasting. On
June 6, 1996, two acquisition agreements entered into during 1995 by Benedek
Broadcasting were consummated. These agreements were to acquire (i) the assets
of the television broadcasting division of Stauffer Communications, Inc., which
owned five television stations (the 'Stauffer Stations') for a total purchase
price of $54,500,000 and (ii) all the issued and outstanding capital stock of
Brissette Broadcasting Corporation ('Brissette') which owned and operated eight
television stations for a purchase price of $270,000,000. At the closing of
these acquisitions, the sole stockholder of Benedek Broadcasting contributed all
of the outstanding shares of common stock of Benedek Broadcasting to the Company
in exchange for the issuance to him all of the outstanding shares of common
stock of the Company.
The pro forma results of operations for the three months ended June 30,
1995 and 1996 and the six months ended June 30, 1995 and 1996 assuming the
acquisitions had taken place on January 1, 1995 are as follows:
F-22
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(NOTE B) -- ACQUISITIONS AND CONTRIBUTION OF CAPITAL--(CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
1995 1996
----------- ------------
<S> <C> <C>
Net revenue.................................. $59,753,871 $ 59,894,169
Operating expenses........................... 49,087,596 52,952,526
Financial expenses........................... 20,969,181 21,115,439
----------- ------------
(Loss) before extraordinary item........ (10,302,906) (14,173,796)
Extraordinary item........................... 6,863,762 --
----------- ------------
Net (loss).............................. (3,439,144) $(14,173,796)
----------- ------------
----------- ------------
Broadcast cash flow.......................... $24,994,055 $ 22,332,643
----------- ------------
----------- ------------
</TABLE>
(NOTE C) -- REDEEMABLE EQUITY SECURITIES AND DISCOUNT NOTES
Concurrent with the acquisitions described in Note (B) the Company entered
into the following financing transactions, the net proceeds of which were
contributed to Benedek Broadcasting.
(1) The Company sold 60,000 Units in a private placement, which
generated proceeds of $60,000,000. Each Unit consists of (i) ten shares of
Exchangeable Senior Preferred Stock (ii) ten Initial Warrants, and (iii)
14.8 Contingent Warrants.
(i) Exchangeable Redeemable Senior Preferred Stock -- The Company
issued 600,000 shares of 15% Exchangeable Redeemable Senior Preferred
Stock due 2007, with an initial liquidation preference equal to the
proceeds received of $60,000,000. Of these proceeds, $9,000,000 was
allocated to the initial warrants described in (ii). Dividends are
payable to holders of the outstanding shares at the rate of 15% per
annum of the then effective liquidation preference per share, payable
quarterly beginning July 1, 1996 and accruing from June 6, 1996. The
Company has the option to pay dividends on any dividend payment date
occurring on or before July 1, 2001 either in cash or by adding such
dividends to the then effective liquidation preference. The Company also
has the option to immediately redeem these shares, in whole or in part,
at predetermined redemption prices. The Company is required to redeem
the outstanding shares on July 1, 2007 at a redemption price equal to
100% of the then effective liquidation preference plus any accrued and
unpaid dividends to the date of redemption. The Exchangeable Redeemable
Senior Preferred Stock is exchangeable into debentures at the Company's
option, subject to certain conditions, in whole on any scheduled
dividend payment date. If the Company does not comply with certain
obligations with respect to the registration of these securities with
the Securities and Exchange Commission, additional cash dividends will
accrue on each share at a rate of 0.50% per annum until the effective
date of registration.
(ii) Initial Warrants -- The Company issued 600,000 Initial
Warrants each of which entitles the holder thereof to purchase one share
of Class A Common Stock at a price of $0.01 per share. The value of the
warrants at date of issuance was $9,000,000 which was allocated to
paid-in capital and is being amortized at a rate of 15% per annum
through July 1, 2007, the mandatory redemption date of the Exchangeable
Redeemable Senior Preferred Stock. Accordingly, this amount is being
accreted to the Exchangeable Redeemable Senior Preferred Stock on the
same basis.
(iii) Contingent Warrants -- The Company issued 888,000 Contingent
Warrants, each warrant to acquire one share of Class A Common Stock at
an exercise price of $0.01 per share. The Contingent Warrants were
issued to an escrow agent and are not outstanding. The Contingent
Warrants are not separable from the Exchangeable Redeemable Senior
Preferred Stock and will not be delivered out of escrow unless the
Exchangeable Redeemable Senior
F-23
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(NOTE C) -- REDEEMABLE EQUITY SECURITIES AND DISCOUNT NOTES--(CONTINUED)
Preferred Stock is not redeemed on or prior to a specified future date.
Since it is management's intention to redeem the Exchangeable Redeemable
Senior Preferred Stock prior to any release of the Contingent Warrants
from escrow, no allocation of the proceeds was made to the Contingent
Warrants.
(2) Seller Junior Discount Preferred Stock -- The Company issued
450,000 shares of Seller Junior Discount Preferred Stock due 2008 with an
aggregate liquidation preference equal to the proceeds of $45,000,000.
Dividends are payable to the holders of the Seller Junior Discount
Preferred Stock at 7.92% per annum until the fith anniversary of the
issuance thereof and thereafter at increasing rates up to 18%. Since the
Company intends to redeem the Seller Junior Discount Preferred Stock prior
to the fifth anniversary, dividends are being accrued at the initial rate.
The dividends on the Seller Junior Discount Preferred Stock are cumulative
from date of issuance. Until the fifth anniversary of the issuance thereof,
dividend payments on the Seller Junior Discount Preferred Stock may not be
made in cash and instead will be added automatically to the liquidation
preference and as a result will be deemed paid in full and will not
accumulate. The Seller Junior Discount Preferred Stock is subject to
mandatory redemption in whole on July 1, 2008 and the Company has the
option to redeem these shares in whole or in part 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.
(3) 13 1/4% Senior Subordinated Discount Notes due 2006 -- The Company
issued Senior Subordinated Discount Notes with a principal amount of
$170,000,000. These Notes were issued at a discount of $79,821,800 which
generated gross proceeds of $90,178,200. The Notes mature on May 15, 2006
and yield 13.25% per annum with no cash interest accruing prior to May 15,
2001. Thereafter, cash interest will accrue until maturity payable
semi-annually, commencing November 15, 2001. On or after May 15, 2000, the
Notes are redeemable at the option of the Company, in whole or in part, at
predetermined redemption prices and under specified conditions. The Notes
are subordinated to all Senior Debt of the Company. These Notes contain
various restrictive covenants, all of which the Company was in compliance
with at June 30, 1996.
The following table summarizes these activities as follows:
<TABLE>
<CAPTION>
SELLER 13 1/4%
EXCHANGEABLE JUNIOR SENIOR
REDEEMABLE DISCOUNT SUBORDINATED
PREFERRED INITIAL PREFERRED DISCOUNT
STOCK WARRANTS STOCK NOTES
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Issuance of preferred stock..................... $51,000,000 $9,000,000 $45,000,000 $ --
Issuance of senior subordinated discount
notes......................................... -- -- -- 90,178,200
Accrued dividends............................... 654,094 -- 237,600 --
Amortization of note discount................... -- -- -- 753,517
----------- ---------- ----------- -----------
Balance at June 30, 1996........................ $51,654,094 $9,000,000 $45,237,600 $90,931,717
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
</TABLE>
Since the Company derives all of its operating income and cash flow from
Benedek Broadcasting, the Company's ability to pay its obligations including (i)
interest on and principal of the senior subordinated discount notes (ii)
redemption of and cash dividends on the exchangeable preferred stock and (iii)
redemption of and cash dividends on the seller junior discount preferred stock
will be dependent primarily upon receiving dividends and other payments on
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.
F-24
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(NOTE D) -- LONG TERM DEBT
As part of the financing transactions described in Note C, on June 6, 1996,
Benedek Broadcasting entered into a new credit agreement which includes two Term
Loan Facilities consisting of (i) a Series A Facility of $70,000,000 at a
fluctuating rate per annum (currently 8.5%) and (ii) a Series B Facility of
$58,000,000 at a fluctuating rate per annum (currently 9.0%). The Term Loan
Facilities provide for quarterly principal payments until final maturity (except
in the first year during which principal payments will be on a semi-annual
basis). The Series A Facility and the Series B Facility will mature five years
and six and one-half years, respectively, after the closing. Benedek
Broadcasting will be required to make scheduled aggregate amortization payments
on the Series A and Series B Facilities, as follows: during the first year after
closing, $6.0 million; during the second year after closing, $11.0 million;
during the third year after closing, $14.5 million; during the fourth year after
closing, $16.0 million; during the fifth year after closing, $27.5 million;
during the sixth year after closing, $15.0 million; and during the first half of
the seventh year after closing, $38.0 million.
The credit agreement also includes a Revolving Credit Facility of
$15,000,000, which bears interest at a customary base rate plus a spread. There
were no borrowings on the revolver as of June 30, 1996.
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 secured by all of the stock of BLC. The Term Loan
Facilities contain various restrictive covenants and requires compliance with
certain financial ratios and covenants. The Company was in compliance with these
covenants at June 30, 1996.
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. Benedek Broadcasting was in complinace with these
covenants at June 30, 1996.
The Senior Secured Notes are collateralized by Benedek Broadcasting's 100%
interest in BLC, certain agreements and contract rights related to the stations
which includes network affiliation agreements and certain general intangibles.
F-25
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(NOTE D) -- LONG TERM DEBT--(CONTINUED)
Notes payable consist of the following:
<TABLE>
<CAPTION>
JUNE 30,
1996
------------
<S> <C>
Senior Secured Notes.............................................. $135,000,000
Term loan Series A................................................ 70,000,000
Term loan Series B................................................ 58,000,000
Senior Subordinated Discount Notes................................ 90,931,717
Capital leases and other.......................................... 643,387
------------
354,575,104
Less current maturities........................................... 6,295,564
------------
$348,279,540
------------
------------
</TABLE>
(NOTE E) -- INCOME TAX MATTERS AND CHANGE IN TAX STATUS
Prior to the consummation of the acquisitions and the related financing,
Benedek Broadcasting, with the consent of its stockholder, elected to be taxed
under sections of federal and state income tax law, which provided that, in lieu
of corporation income taxes, the stockholder separately account for Benedek
Broadcasting's income, deductions, losses and credits. Due to the structure of
the financing for the acquisitions, the election to be taxed as an 'S'
Corporation automatically terminated and Benedek Broadcasting became subject to
federal and state income taxes. As a result, Benedek Broadcasting recorded a net
deferred tax asset of approximately $3,550,000 which was offset by a valuation
allowance of the same amount.
Under the provision of Statement of Financial Accounting Standards (SFAS)
No. 109, the deferred tax assets and liabilities, resulting principally from the
acquisitions explained in Note B consist of the following components:
<TABLE>
<CAPTION>
JUNE 30,
1996
------------
<S> <C>
Deferred tax assets:
Loss Carryforwards............................................ $ 2,365,600
Nondeductible allowances and other............................ 976,400
Network agreememt............................................. 1,800,000
Original issue discount....................................... 312,795
------------
5,454,795
------------
Deferred tax liabilities:
Property and equipment........................................ 15,898,378
Intangibles................................................... 48,116,400
------------
64,014,778
------------
Net deferred tax liability......................................... $(58,559,983)
------------
------------
</TABLE>
At June 30, 1996 a valuation allowance has not been established since in
the opinion of management, it is more likely than not that the deferred tax
assets, including the net deferred tax asset which resulted from the change in
tax status of Benedek Broadcasting, will be realized.
Under the provisions of the Internal Revenue Code, Benedek Broadcasting has
approximately $5,900,000 of actual net operating loss carryforwards available to
offset future tax liabilities of Benedek Broadcasting.
F-26
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(NOTE F) -- COMMON STOCK AND OTHER SECURITIES
Common stock consists of the following numbers of shares.
<TABLE>
<CAPTION>
AUTHORIZED ISSUED OUTSTANDING
---------- --------- -----------
<S> <C> <C> <C>
Class A common $.01 par value......................................... 25,000,000 -- --
Class B common $.01 par value......................................... 25,000,000 7,030,000 7,030,000
</TABLE>
In addition, the Board of Directors of the Company has authorized 2,500,000
shares of preferred stock, 1,050,000 of which have been issued as described in
Note C above.
F-27
<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-28
<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-29
<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-30
<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-31
<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-32
<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-33
<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-34
<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.
6. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited pro forma financial information is provided to show the
significant effects on the historical financial information had the TV Division
provided income taxes on its earnings. Income taxes have been computed at an
estimated effective rate of 51, 43, and 47 percent for the years 1993, 1994, and
1995, respectively. The primary difference between the provision for taxes at
the rates shown and the federal statutory rate of 35 percent is state taxes and
nondeductible intangibles amortization.
<TABLE>
<CAPTION>
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
Unaudited pro forma information --
Income before provision for income taxes....................... $1,069,808 $3,355,034 $1,554,004
Provision for income taxes..................................... (540,000) (1,454,000) (733,000)
---------- ---------- ----------
Net income................................................ $ 529,808 $1,901,034 $ 821,004
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
F-35
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JUNE 30,1995 JUNE 6,1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Current Assets:
Cash...................................................................... $ 125,388 $ 32.270
Accounts receivable, net.................................................. 3,848,114 3,146,538
Current portion of deferred film costs.................................... 1,105,057 825,502
Prepayments............................................................... 93,434 89,547
------------ ------------
Total current assets................................................. 5,171,993 4,093,857
Plant and Equipment, at cost:
Land...................................................................... 867,937 867,937
Buildings................................................................. 3,929,046 3,929,046
Equipment................................................................. 22,530,509 22,400,692
------------ ------------
27,327,492 27,197,675
------------ ------------
Less -- Accumulated depreciation.......................................... (15,918,803) (17,090,482)
------------ ------------
11,408,689 10,107,193
Other Assets:
Excess of cost over net assets of acquired companies...................... 7,647,869 7,032,372
Long-term portion of deferred film costs.................................. 1,061,721 793,130
Other..................................................................... 37,005 5,507
------------ ------------
8,746,595 7,831,009
------------ ------------
$ 25,327,277 $ 22,032,059
------------ ------------
------------ ------------
LIABILITIES AND DIVISION EQUITY
Current Liabilities:
Current maturities of film contract obligations........................... $ 739,418 $ 648,004
Accounts payable.......................................................... 164,750 126,109
Accrued expenses.......................................................... 588,983 437,433
------------ ------------
Total current liabilities............................................ 1,493,151 1,211,546
Film Contract Obligations, less current maturities............................. 903,732 791,986
Division Equity................................................................ 22,930,394 20,028,527
------------ ------------
$ 25,327,277 $ 22,032,059
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to the financial statements should be read in conjunction
with these balance sheets.
F-36
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
STATEMENTS OF INCOME
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1995 AND FOR THE PERIOD JANUARY 1, 1996
TO JUNE 6, 1996
<TABLE>
<CAPTION>
1995 1996
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Broadcast Operating Revenues:
Local......................................................................... $6,029,378 $4,890,227
National...................................................................... 2,933,133 2,362,784
Political..................................................................... 5,340 209,644
Network programming........................................................... 694,408 687,671
Other......................................................................... 215,997 202,172
---------- ----------
9,878,256 8,352,498
Less --
Agency commissions....................................................... 1,064,221 893,196
Representative's commissions............................................. 269,247 210,918
---------- ----------
Net broadcast revenue............................................... 8,544,788 7,248,384
Operating Expenses:
News-editorials............................................................... 1,160,702 1,172,462
Technical..................................................................... 621,343 600,413
Program....................................................................... 1,447,088 1,386,709
Depreciation and amortization................................................. 1,135,845 974,093
Rent expense, net of sublease income.......................................... 65,613 52,184
Sales and promotions.......................................................... 1,422,696 1,262,170
General and administrative.................................................... 1,710,606 1,523,226
---------- ----------
Total operating expenses................................................. 7,563,893 6,971,257
---------- ----------
(Loss) income from operations............................................ 980,895 277,127
Other Nonoperating Income (Expense)................................................ 6,515 (4,444)
---------- ----------
Division -- Net income............................................................. $ 987,410 $ 272,683
---------- ----------
---------- ----------
</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.
STATEMENTS OF DIVISION EQUITY
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1995 AND THE PERIOD JANUARY 1, 1996 TO
JUNE 6, 1996
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Balance, beginning of period..................................................... $24,081,566 $21,536,872
Division net (loss) income.................................................. 987,410 272,683
Cash transfers to parent, net............................................... (2,138,582) (1,781,028)
----------- -----------
Balance, end of period........................................................... $22,930,394 $20,028,527
----------- -----------
----------- -----------
</TABLE>
The accompanying notes to the financial statements should be read in conjunction
with these statements.
F-38
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1995 AND THE PERIOD JANUARY 1, 1996 TO
JUNE 6, 1996
<TABLE>
<CAPTION>
1995 1996
----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income.................................................................... $ 987,410 $ 272,683
Adjustments to reconcile net income to cash provided by operating
activities --
Depreciation............................................................. 761,999 732,442
Amortization of intangibles.............................................. 373,846 241,651
Amortization of deferred film costs...................................... 495,694 499,614
(Increase) decrease in other assets...................................... 72,960 (5,968)
(Increase) Decrease in accounts receivable............................... (97,393) 368,919
Increase (decrease) in liabilities....................................... (60,976) (150,906)
Payments for film contract obligations................................... (431,200) (347,791)
Other.................................................................... -- 85,523
----------- ----------
Total adjustments................................................... 1,114,930 1,423,484
----------- ----------
Net cash provided by operating activities..................................... 2,102,340 1,696,167
Cash Flows from Investing Activities:
Property, plant and equipment, net............................................ (303,798) (92,856)
----------- ----------
Net cash (used in) provided by financing activities........................... (303,798) (92,856)
Cash Flows from Financing Activities:
Cash transfers to Parent, net................................................. (2,138,582) (1,781,028)
----------- ----------
Net cash used in financing activities......................................... (2,138,582) (1,781,028)
----------- ----------
Net (Decrease) in Cash............................................................. (340,040) (177,717)
Cash, beginning of period.......................................................... 465,428 209,987
----------- ----------
Cash, end of period................................................................ $ 125,388 $ 32,270
----------- ----------
----------- ----------
</TABLE>
The accompanying notes to the financial statements should be read in conjunction
with these statements.
F-39
<PAGE>
<PAGE>
TV DIVISION OF STAUFFER COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE A) NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business: The TV Division of Stauffer Communications, Inc.
operates five principal television stations and five satellite 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 arrangement s are determined on an
individual customer basis.
Basis of Presentations: In June 1995, Stauffer Communications, Inc. was
acquired by Morris Communications Corporation and has continued to operate as a
wholly owned subsidiary under the name Stauffer Communications, Inc. (the
'Parent'). The accompanying financial statements include the accounts of the TV
Division of Stauffer Communications, Inc. (the 'TV Division'). The TV Division
includes the following principal television stations: KMIZ-TV in Columbia,
Missouri; KGWN-TV in Cheyenne, Wyoming; KGWC-TV in Casper, Wyoming; KCOY-TV in
Santa Maria, California; and WIBW-TV in Topeka, Kansas.
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.
(NOTE B) SALE AGREEMENT
On June 6, 1996, substantially all assets and liabilities of the TV
Division were sold to Benedek Broadcasting Corporation.
(NOTE C) PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial information is provided to show the
significant effects on the historical financial information had the TV Division
provided income taxes on its earnings. Income taxes have been computed at an
estimated effective rate 47 percent for the six months ended June 30, 1995 and
the period from January 1, 1996 to June 6, 1996. The primary difference between
the provision for taxes at the rates shown and the federal statutory rate of 35
percent is state taxes and nondeductible intangible amortization.
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Unaudited pro forma information --
Income before provision for income taxes........................................... $987,410 $272,683
Provision for income taxes......................................................... (464,083) (128,161)
-------- --------
Net income.................................................................... $523,327 $144,522
-------- --------
-------- --------
</TABLE>
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
JUNE 30, 1995 AND JUNE 6, 1996
<TABLE>
<CAPTION>
JUNE 30, JUNE 6,
1995 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................................ $ 1,917,178 $ 534,411
Receivables.............................................................. 11,098,920 10,878,904
Film contract rights..................................................... 1,376,143 1,954,049
Prepaid expenses and other current assets................................ 677,992 538,793
------------ ------------
Total current assets................................................ 15,070,233 13,906,157
------------ ------------
Film contract rights.......................................................... 2,596,866 3,023,417
------------ ------------
Property and Equipment:
Land..................................................................... 1,838,406 1,782,748
Buildings and improvements............................................... 9,387,426 9,161,977
Broadcasting equipment................................................... 30,856,730 33,146,662
Furniture and fixtures................................................... 2,855,944 3,084,255
Vehicles and other....................................................... 1,894,269 1,873,075
------------ ------------
46,832,775 49,048,657
Less -- Accumulated depreciation and amortization............................. (34,853,927) (37,222,702)
------------ ------------
Net property and equipment............................................... 11,978,848 11,825,955
------------ ------------
Intangible assets, net........................................................ 79,440,609 75,566,501
------------ ------------
$109,086,556 $104,322,030
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENTS
Current Liabilities:
Current maturities of long-term debt..................................... $ -- $200,215,334
Accounts payable......................................................... 663,576 620,701
Accrued expenses......................................................... 2,579,764 1,816,202
Accrued interest......................................................... 1,436,082 324,447
Film contract obligations................................................ 1,446,823 2,146,139
Deferred revenue......................................................... -- 142,779
Deferred compensation payable............................................ -- 2,988,096
Taxes payable............................................................ 106,300 46,872
------------ ------------
Total current liabilities........................................... 6,232,545 208,300,570
Long-term debt................................................................ 196,948,355 --
Film contract obligations, less current portion............................... 2,325,996 2,525,188
Retiree Benefits payable...................................................... 277,988 266,184
Deferred Revenue, less current portion........................................ -- 500,434
Other noncurrent liabilities.................................................. 576,250 152,520
------------ ------------
Total liabilities................................................... 206,361,134 211,744,896
------------ ------------
Stockholder's Investment:
Preferred stock, Series A, B, C and D, $.001 par value, 500 shares
authorized, issued and outstanding for each series..................... 66,500,000 66,500,000
Common stock, $.001 par value, 2,000 shares authorized, issued and
outstanding............................................................ -- --
Additional paid-in capital............................................... 35,837,158 35,837,158
Deficit.................................................................. (199,611,736) (209,760,026)
------------ ------------
Total stockholder's investment...................................... (97,274,578) (107,422,866)
------------ ------------
$109,086,556 $104,322,030
------------ ------------
------------ ------------
</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 TWENTY SIX WEEK PERIOD ENDED JUNE 25, 1995 AND THE YEAR-TO-DATE ENDED
JUNE 6, 1996
<TABLE>
<CAPTION>
1995 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Broadcast Operating Revenues:
Local..................................................................... $ 15,434,809 $ 13,676,518
National.................................................................. 10,623,336 8,990,700
Political................................................................. 149,695 588,878
Network programming....................................................... 2,144,271 1,984,341
Barter.................................................................... 328,766 359,918
Other..................................................................... 482,831 492,420
------------ ------------
29,163,708 26,092,775
Less --
Agency commissions................................................... 3,458,051 3,122,256
Representatives' commissions......................................... 278,279 531,948
------------ ------------
Net broadcast revenue........................................... 25,427,378 22,438,571
------------ ------------
Broadcast Operating Expenses:
Engineering............................................................... 1,257,975 1,249,767
Programming............................................................... 2,545,431 2,541,125
News...................................................................... 3,119,903 3,131,641
Promotion................................................................. 227,761 288,606
Sales..................................................................... 2,271,655 2,192,610
General and administrative................................................ 3,192,737 3,177,301
Amortization of intangibles............................................... 2,041,505 1,809,582
Depreciation.............................................................. 1,106,826 1,048,886
Corporate expense......................................................... 953,755 1,518,934
Long-term incentive....................................................... -- 1,700,000
Barter.................................................................... 355,351 293,557
Other..................................................................... (1,697) 95,041
------------ ------------
Total broadcast operating expenses.............................. 17,071,202 19,047,050
------------ ------------
Broadcast Operating Profit..................................................... 8,356,176 3,391,521
------------ ------------
Other (Expense) Income:
Interest income........................................................... 35,057 21,097
Interest expense.......................................................... (10,246,473) (8,505,243)
Other..................................................................... -- (273,702)
------------ ------------
Total other expense............................................. (10,211,416) (8,757,848)
------------ ------------
Loss Before Income Taxes....................................................... (1,855,240) (5,366,327)
Income Taxes, state............................................................ 112,044 114,379
------------ ------------
Net Loss....................................................................... $ (1,967,284) $ (5,480,706)
------------ ------------
------------ ------------
</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 TWENTY-SIX WEEK PERIOD ENDED JUNE 25, 1995 AND THE YEAR-TO-DATE ENDED
JUNE 6, 1996
<TABLE>
<CAPTION>
1995 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss..................................................................... $(1,967,284) $(5,480,706)
Adjustments to reconcile net loss to net cash provided by operating
activities --
Depreciation............................................................ 1,106,926 1,048,886
Amortization of intangibles............................................. 2,041,505 1,809,582
Amortization of film contract rights.................................... 757,707 865,154
Net trade/barter expense (income)....................................... 26,585 (66,361)
(Gain) loss on sale of assets........................................... (1,697) 95,041
(Increase) decrease in assets --
Accounts receivable, net........................................... (957,920) (336,069)
Other assets....................................................... (290,992) 184,640
Increase (decrease) in liabilities --
Accounts payable and accrued expenses.............................. 33,434 (1,313,905)
Accrued interest................................................... 75,082 (1,417,426)
Taxes payable...................................................... (34,700) (17,828)
Other liabilities.................................................. 238 1,895,451
Payments for film contract obligations............................. (760,315) (988,062)
----------- -----------
Net cash provided by (used by) operating activities........... 28,569 (3,721,603)
----------- -----------
Cash Flows from Investing Activities:
Capital expenditures......................................................... (894,044) (908,654)
Proceeds from sale of assets................................................. 1,708 195,905
----------- -----------
Net cash used in investing activities......................... 892,336 (712,749)
----------- -----------
Cash Flows from Financing Activities:
Payments on long-term debt................................................... -- --
Proceeds (payments) from borrowings on line of credit, net................... 1,900,000 2,866,979
----------- -----------
Net cash provided by financing activities..................... 1,900,000 2,866,979
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............................. 1,036,233 (1,567,373)
CASH AND CASH EQUIVALENTS, beginning of year...................................... 880,945 2,101,784
----------- -----------
CASH AND CASH EQUIVALENTS, end of year............................................ $ 1,917,178 $ 534,411
----------- -----------
----------- -----------
</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 PERIODS ENDED JUNE 25, 1995 AND JUNE 6, 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 $35,837,158 $(197,644,452) $ (95,307,294)
6/25/96 Net loss (unaudited)...... 1,967,284
------ ------ ------ ----------- ----------- ------------- -------------
BALANCE, March 26, 1995 (unaudited)... 2,000 $ -- 2,000 $66,500,000 $35,837,158 $ $
BALANCE, December 31, 1995............ 2,000 $ -- 2,000 $66,500,000 $35,837,158 $(204,279,320) $(101,942,162)
6/6/96 Net loss (unaudited)....... (5,480,706) (5,480,706)
------ ------ ------ ----------- ----------- ------------- -------------
BALANCE, June 30, 1996 (unaudited).... 2,000 $ -- 2,000 $66,500,000 $35,837,158 $(209,760,026) $(107,422,868)
------ ------ ------ ----------- ----------- ------------- -------------
------ ------ ------ ----------- ----------- ------------- -------------
</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
(NOTE A) NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business: Brissette Broadcasting Corporation operates eight
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 unaudited consolidated financial statements
include the accounts of Brissette Broadcasting and its subsidiaries including
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. Significant intercompany accounts have been
eliminated.
(NOTE B) SALE AGREEMENT
On June 6, 1996, the Company was sold to Benedek Broadcasting under a stock
purchase agreement to acquire all the issued and outstanding shares of capital
stock of the Company for a purchase price of $270,000,000.
(NOTE C) NOTES PAYABLE
Notes payable consist of the following at June 6, 1996:
<TABLE>
<S> <C>
Revolving Credit Note................................... $ 7,166,979
Term Note............................................... 193,048,355
------------
$200,215,334
------------
------------
</TABLE>
The above notes were paid upon consummation of the sales discussed in Note
B above.
(NOTE D) INCOME TAX MATTERS
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 June 6, 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 June 6, 1996, financial statements reflect taxes due to those
states, if applicable.
As of June 6, 1996, Brissette Broadcasting has a net operating tax loss
carryforward of approximately $5,574,000 which begins to expire in 2007.
F-58
<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
Pro Forma Financial Statements...................... 32
Selected Financial Data............................. 38
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 40
The Exchange Offer.................................. 51
Business............................................ 58
Management.......................................... 94
Stock Ownership..................................... 97
Description of Other Indebtedness................... 98
Description of the Notes............................ 101
Description of Capital Stock........................ 128
Certain Federal Income Tax Consequences ............ 134
Plan of Distribution................................ 137
Legal Matters....................................... 137
Experts............................................. 137
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.
</TABLE>
II-1
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<C> <S>
4.8 -- Form of Exchange Debenture relating to the 15.0% Exchange Debentures which may be issued, under certain
circumstances, in exchange for the 15.0% Exchangeable Redeemable Senior Preferred Stock of the
Registrant.
5 -- Opinion of Shack & Siegel, P.C., counsel for Registrant.
8 -- Opinion of Whitman Breed Abbott & Morgan, tax 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 due 2006 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 -- Intentionally left blank.
10.16 -- Employment Agreement dated as of June 6, 1996 between the Registrant and A. Richard Benedek.
10.17 -- Employment Agreement dated as of June 6, 1996 between the Registrant and K. James Yager.
10.18 -- Employment Agreement dated as of March 8, 1996 between the Registrant and Douglas E. Gealy.
10.19 -- Employment Agreement dated as of June 6, 1996 between the Registrant and Ronald L. Lindwall.
10.20 -- Employment Agreement dated as of June 6, 1996 between the Registrant and Terrance F. Hurley.
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.
23.5 -- Consent of Whitman Breed Abbott & Morgan (included in Exhibit 8 hereof).
*24.1 -- Power of Attorney of the Registrant.
*25 -- Statement of Eligibility of Trustee on Form T-1 related to the Notes.
27 -- Financial Data Schedule.
</TABLE>
II-2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<C> <S>
*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>
- ------------
* Previously filed.
(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
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the 'Calculation of Registration
Fee' table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(g)(1) The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called for
by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3)
II-3
<PAGE>
<PAGE>
of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(h) 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 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-4
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement (333-09529)
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on October 1, 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
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement (333-09529) 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 October 1, 1996
- ------------------------------------------ Executive Officer) and Director
A. RICHARD BENEDEK
/S/ K. JAMES YAGER* President and Director October 1, 1996
- ------------------------------------------
K. JAMES YAGER
/S/ RONALD L. LINDWALL Senior Vice President-Finance, Chief October 1, 1996
- ------------------------------------------ Financial Officer, Treasurer (Principal
RONALD L. LINDWALL Financial and Principal Accounting
Officer) and Director
/S/ JAY KRIEGEL* Director October 1, 1996
- ------------------------------------------
JAY KRIEGEL
/S/ PAUL S. GOODMAN* Director October 1, 1996
- ------------------------------------------
PAUL S. GOODMAN
*By: /s/ RONALD L. LINDWALL October 1, 1996
- ------------------------------------------
RONALD L. LINDWALL
Attorney-In-Fact
</TABLE>
II-5
<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 COMMUNICATIONS CORPORATION AND SUBSIDIARY
Rockford, Illinois
Our audit of the consolidated financial statements of Benedek
Communications 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, except for Notes A, L and M as to
which the date is June 6, 1996
S-2
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS 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..........
4.8 -- Form of Exchange Debenture relating to the 15.0% Exchange Debentures which may be
issued, under certain circumstances, in exchange for the 15.0% Exchangeable
Redeemable Senior Preferred Stock of the Registrant.
5 -- Opinion of Shack & Siegel, P.C., counsel for Registrant..............................
8 -- Opinion of Whitman Breed Abbot & Morgan, tax 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 due 2006 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....................................................
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NO. DESCRIPTION NUMBERING SYSTEM
- ------- --------------------------------------------------------------------------------------- -------------------
<C> <S> <C>
*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 -- Intentionally left blank.............................................................
10.16 -- Employment Agreement dated as of June 6, 1996 between the Registrant and A. Richard
Benedek.
10.17 -- Employment Agreement dated as of June 6, 1996 between the Registrant and K. James
Yager.
10.18 -- Employment Agreement dated as of March 8, 1996 between the Registrant and Douglas E.
Gealy.
10.19 -- Employment Agreement dated as of June 6, 1996 between the Registrant and Ronald L.
Lindwall.
10.20 -- Employment Agreement dated as of June 6, 1996 between the Registrant and Terrance F.
Hurley.
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..........................................................................
23.5 -- Consent of Whitman Breed Abbott & Morgan (included in Exhibit 8 hereof).
*24.1 -- Power of Attorney of the Registrant..................................................
*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>
- ------------
* Previously filed.
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION
Issuer
IBJ SCHRODER BANK & TRUST COMPANY
Trustee
$[ ]
[ ]% Exchange Debentures Due 2007
EXCHANGE INDENTURE
Dated as of , 199
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions And Incorporation by Reference
<TABLE>
<CAPITON>
Page
<S> <C> <C>
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 II
The Securities
SECTION 2.01. Form and Dating......................................................................... 27
SECTION 2.02. Execution and Authentication............................................................ 29
SECTION 2.03. Registrar and Paying Agent.............................................................. 30
SECTION 2.04. Paying Agent To Hold Money in Trust..................................................... 31
SECTION 2.05. Securityholder Lists.................................................................... 31
SECTION 2.06. Transfer and Exchange................................................................... 32
SECTION 2.07. Replacement Securities.................................................................. 40
SECTION 2.08. Outstanding Securities.................................................................. 40
SECTION 2.09. Temporary Securities.................................................................... 41
SECTION 2.10. Cancelation............................................................................. 42
SECTION 2.11. Defaulted Interest...................................................................... 42
SECTION 2.12. CUSIP Numbers........................................................................... 42
SECTION 2.13. Computation of Interest................................................................. 43
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee...................................................................... 43
SECTION 3.02. Selection of Securities To Be Redeemed ............................................ 43
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
</TABLE>
<PAGE>
<PAGE>
ARTICLE IV
Covenants
<TABLE>
<S> <C> <C>
SECTION 4.01. Payment of Securities....................................................................... 45
SECTION 4.02. SEC Reports................................................................................. 46
SECTION 4.03. Limitation on Debt.......................................................................... 46
SECTION 4.04. Limitation on Restricted Payments........................................................... 49
SECTION 4.05. Limitation on Restrictions on Distributions from Restricted Subsidiaries.................... 53
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.......................................... 54
SECTION 4.07. Limitation on Transactions with Affiliates ................................................ 58
SECTION 4.08. Change of Control........................................................................... 60
SECTION 4.09. Limitation on Liens......................................................................... 62
SECTION 4.10. Limitation on Sale/Leaseback Transactions .................................................. 62
SECTION 4.11. Compliance Certificate...................................................................... 62
SECTION 4.12. Further Instruments and Acts................................................................ 62
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets................................................... 63
SECTION 5.02. When Benedek Broadcasting May Merge or Transfer Assets...................................... 64
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default........................................................................... 64
SECTION 6.02. Acceleration................................................................................ 67
SECTION 6.03. Other Remedies.............................................................................. 68
SECTION 6.04. Waiver of Past Defaults..................................................................... 68
SECTION 6.05. Control by Majority......................................................................... 68
SECTION 6.06. Limitation on Suits......................................................................... 69
SECTION 6.07. Rights of Holders To Receive Payment........................................................ 69
SECTION 6.08. Collection Suit by Trustee.................................................................. 69
</TABLE>
-ii-
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6.09. Trustee May File Proofs of Claim............................................................ 70
SECTION 6.10. Priorities.................................................................................. 70
SECTION 6.11. Undertaking for Costs....................................................................... 71
SECTION 6.12. Waiver of Stay or Extension Laws ........................................................... 71
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee........................................................................... 71
SECTION 7.02. Rights of Trustee........................................................................... 73
SECTION 7.03. Individual Rights of Trustee................................................................ 73
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.................................................................. 74
SECTION 7.08. Replacement of Trustee...................................................................... 75
SECTION 7.09. Successor Trustee by Merger................................................................. 76
SECTION 7.10. Eligibility; Disqualification............................................................... 77
SECTION 7.11. Preferential Collection of Claims Against Company........................................... 77
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance............................................ 77
SECTION 8.02. Conditions to Defeasance.................................................................... 79
SECTION 8.03. Application of Trust Money.................................................................. 80
SECTION 8.04 Repayment to Company........................................................................ 80
SECTION 8.05. Indemnity for Government Obligations........................................................ 81
SECTION 8.06. Reinstatement............................................................................... 81
ARTICLE IX
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
</TABLE>
-iii-
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 9.04. Revocation and Effect of Consents and Waivers............................................... 83
SECTION 9.05. Notation on or Exchange of Securities....................................................... 84
SECTION 9.06. Trustee To Sign Amendments.................................................................. 84
SECTION 9.07. Payment for Consent......................................................................... 84
ARTICLE X
Subordination
SECTION 10.01. Agreement To Subordinate.................................................................... 85
SECTION 10.02. Liquidation, Dissolution, Bankruptcy........................................................ 85
SECTION 10.03. Default on Senior Debt...................................................................... 86
SECTION 10.04. Acceleration of Payment of Securities....................................................... 87
SECTION 10.05. When Distribution Must Be Paid Over......................................................... 87
SECTION 10.06. Subrogation................................................................................. 88
SECTION 10.07. Relative Rights............................................................................. 88
SECTION 10.08. Subordination May Not Be Impaired by Company................................................ 88
SECTION 10.09. Rights of Trustee and Paying Agent.......................................................... 89
SECTION 10.10. Distribution or Notice of Representative.................................................... 90
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right To Accelerate................... 90
SECTION 10.12. Trustee Entitled To Rely.................................................................... 90
SECTION 10.13. Trustee To Effectuate Subordination......................................................... 91
SECTION 10.14. Trustee Not Fiduciary for Holders of Senior Debt............................................ 91
SECTION 10.15. Reliance by Holders of Senior Debt on Subordination Provisions.............................. 91
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls............................................................... 92
SECTION 11.02. Notices.................................................................................... 92
SECTION 11.03. Communication by Holders with Other Holders ............................................... 93
</TABLE>
-iv-
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 11.04. Certificate and Opinion as to Conditions Precedent......................................... 93
SECTION 11.05. Statements Required in Certificate or Opinion.............................................. 93
SECTION 11.06. When Securities Disregarded................................................................ 94
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar............................................... 94
SECTION 11.08. Legal Holidays............................................................................. 94
SECTION 11.09. Governing Law.............................................................................. 94
SECTION 11.10. No Recourse Against Others................................................................. 94
SECTION 11.11. Successors................................................................................. 94
SECTION 11.12. Multiple Originals......................................................................... 95
SECTION 11.13. Table of Contents; Headings................................................................ 95
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security
</TABLE>
-v-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE
<S> <C>
TIA Section Indenture 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; 10.02
(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.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C>
317(a)(1) ........................................................................... 6.08
317(a)(2) ........................................................................... 6.09
</TABLE>
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 , 199 ,
between BENEDEK COMMUNICATIONS CORPORATION,
a Delaware corporation (the "Company") and
IBJ SCHRODER BANK & TRUST COMPANY, 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 [ ]% Exchange Debentures Due 2007 (the "Initial Securities") and, if
and when issued in exchange for Initial Securities, the Company's [ ]% Exchange
Debentures Series A Due 2007 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 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.
<PAGE>
<PAGE>
2
"Asset Disposition" means any sale, lease, trans-
fer 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 Section 4.06 only, a disposition subject to Section 4.04, (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 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 determina-
tion, 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>
3
"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.
"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.
"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 pay-
<PAGE>
<PAGE>
4
ment 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 (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
<PAGE>
<PAGE>
5
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, when-
ever 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, the Permitted Holders cease to be the "beneficial
owner" (as defined in Rules 13d-3 and
<PAGE>
<PAGE>
6
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 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
<PAGE>
<PAGE>
7
(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 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" 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.
<PAGE>
<PAGE>
8
"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)
<PAGE>
<PAGE>
9
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.
"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
<PAGE>
<PAGE>
10
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 (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.
<PAGE>
<PAGE>
11
"Depository" means The Depository Trust Company,
its nominees and their respective successors.
"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 Date" means the date on which the
Securities are exchanged for Exchanged Securities.
"Exchange Securities" means the 15.0% Exchange
Debentures Series A Due 2007 to be issued Debentures 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.
<PAGE>
<PAGE>
12
"Exchangeable Preferred Stock" means the
Company's 15.0% Exchangeable Redeemable Senior Preferred Stock Due 2007
outstanding on the Issue Date.
"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 date of this Indenture and
(ii) each other Television Station acquired by the Company after the date of
this Indenture 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.
"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.
<PAGE>
<PAGE>
13
"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.
"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 inter-
est, 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
<PAGE>
<PAGE>
14
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, 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
<PAGE>
<PAGE>
15
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 (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.
<PAGE>
<PAGE>
16
"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 Secu-
rity 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 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
<PAGE>
<PAGE>
17
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 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.
"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
<PAGE>
<PAGE>
18
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 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 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
Exchangeable Preferred Stock Exchange and Registration
Rights Agreement, dated June 5, 1996, among the Company
Goldman, Sachs & Co. and BT Securities Corporation.
<PAGE>
<PAGE>
19
"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.
"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
<PAGE>
<PAGE>
20
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) or
(iv) that portion of any Debt which at the time of Issuance is Issued in
violation of this Indenture.
"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.
"Senior Subordinated Discount Notes" means
13-1/4% Senior Subordinated Discount Notes Due 2006 of the Company.
"Senior Subordinated Discount Note Indenture"
means the Indenture dated as of May 15, 1996 among the Company, Benedek
Broadcasting, BLC and United States Trust Company of New York, as trustee,
governing the Senior Subordinated Discount Notes.
<PAGE>
<PAGE>
21
"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 (other
than a Non-Recourse Subsidiary) with respect to which an event described under
clause (5), (6), (7) or (8) 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
<PAGE>
<PAGE>
22
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"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
<PAGE>
<PAGE>
23
Broadcasting which could be realized by Benedek Broadcasting'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) 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
<PAGE>
<PAGE>
24
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,
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.
<PAGE>
<PAGE>
25
"Uniform Commercial Code" means the New York
Uniform Commercial Code as in effect from time to time.
"Units" means the Units offered by the Company on
or about the Issue Date, each Unit 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.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"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
</TABLE>
<PAGE>
<PAGE>
26
<TABLE>
<S> <C>
"Restricted Payment" ................ 4.04
"Rule 144A" ......................... 2.01
</TABLE>
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;
<PAGE>
<PAGE>
27
(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 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.
(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
<PAGE>
<PAGE>
28
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 beneficial interests in
Global Securities will not be
<PAGE>
<PAGE>
29
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.
<PAGE>
<PAGE>
30
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 $[ ] 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 $60,000,000 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-
<PAGE>
<PAGE>
31
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 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
<PAGE>
<PAGE>
32
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
<PAGE>
<PAGE>
33
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
<PAGE>
<PAGE>
34
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
<PAGE>
<PAGE>
35
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
<PAGE>
<PAGE>
36
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
<PAGE>
<PAGE>
37
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 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."
(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
<PAGE>
<PAGE>
38
(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) Cancelation 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
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, 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
<PAGE>
<PAGE>
39
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.
(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
<PAGE>
<PAGE>
40
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 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 obli-
gation 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 cancelation
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.
<PAGE>
<PAGE>
41
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 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.
<PAGE>
<PAGE>
42
(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. Cancelation. The Company at any
time may deliver Securities to the Trustee for cancelation.
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
cancelation to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancelation.
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
<PAGE>
<PAGE>
43
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.
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 or
is required to redeem Securities pursuant to paragraph 6 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.
<PAGE>
<PAGE>
44
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 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
<PAGE>
<PAGE>
45
the notice shall not affect the validity of the succeedings for the redemption
of any Security.
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 cancelation.
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.
<PAGE>
<PAGE>
46
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, 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 other 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 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>
<PAGE>
<PAGE>
47
(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 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
(including any letters of credit Issued thereunder) Issued pursuant
to the Bank Credit Agreement 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 (including any Securities issued in
lieu of cash interest payments with respect to the Securities), the
Exchangeable Preferred Stock, the Senior Subordinated Discount Notes
and Refinancing Debt of the Company Issued in respect of any Debt
permitted by this clause (4), (including the accretion
<PAGE>
<PAGE>
48
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 Section 4.03(b) (but including 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 the provisions of Section 4.03(a);
(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 or any Restricted Subsidiary 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; and
(8) 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 date of Issuance which, when added
to all other Debt Issued pursuant to this clause (8) 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 subordinated to the Securities to at least the same extent as such
Subordinated Obligations.
<PAGE>
<PAGE>
49
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 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
<PAGE>
<PAGE>
50
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, Exchangeable Stock,
Senior Stock or Parity 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, 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 (3), the value of any such Restricted Payment, if other than cash, shall
be evidenced
<PAGE>
<PAGE>
51
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 Capital Stock
(including the Seller Junior Discount Preferred Stock and its Common Stock)
prior to October 1, 2001.
(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
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);
<PAGE>
<PAGE>
52
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
$6,000,000; 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; or
(viii) the retirement of the Exchangeable Preferred Stock
through the issuance of the Securities; provided further, however,
the amount thereof shall be excluded
<PAGE>
<PAGE>
53
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 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 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 relat- ing to any
Debt Issued by such Restricted Subsidiary on or prior to the date on
which such Restricted Subsidi- ary 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;
<PAGE>
<PAGE>
54
(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 or 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 extent the
Company elects (or is required by the terms of any 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
<PAGE>
<PAGE>
55
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
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
the conditions contained in this Indenture to the Holders (and to holders of
other Debt designated by the Company that is pari passu with the Securities) to
purchase Securities (and such other 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 Debt such lesser price, if any, as may be provided for
by the terms of such other Debt); and (D) fourth, to the extent of the balance
of such Net Avail- able 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 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
<PAGE>
<PAGE>
56
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 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 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 Debt that is pari passu with the
Securities) pursuant to Section 4.06(a)(ii)(C), the Company will be required to
pur- chase Securities tendered pursuant to an offer by the Com- pany for the
Securities (and other 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 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 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
<PAGE>
<PAGE>
57
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.
(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
<PAGE>
<PAGE>
58
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 at maturity 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 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 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
<PAGE>
<PAGE>
59
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 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
<PAGE>
<PAGE>
60
(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 principal amount thereof plus, without duplication,
accrued and unpaid interest, if any, to the date of repurchase, in accordance
with the terms contemplated in Sections 4.08(b) and (c) (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
(b) Prior to the mailing of notice referred to
in Section 4.08(c), 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 repurchase of Securities would violate or constitute a
default under the Bank Credit Agreement, the Senior Subordinated Discount Note
Indenture or other indebtedness of the Company, then the Company shall (i) repay
all such indebtedness and terminate all commitments outstanding thereunder or
(ii) obtain the requisite consents under the Bank Credit Agreement, the Senior
Subordinated Discount Note Indenture and any other agreement governing such
other indebtedness to permit repurchase of the Securities as provided in this
Section. The Company must comply with this Section 4.08(b) before it will be
required to repurchase Securities pursuant to Section 4.08(c).
(c) Within 45 days following the date upon which
the Company becomes aware that a Change of Control has occurred, the Company
shall send, by first-class mail, postage pre-paid, 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
<PAGE>
<PAGE>
61
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 45 days from the date such notice is mailed,
other than as required by law); and
(iv) the instructions determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Securities repurchased.
(d) Holders electing to have a Security repurchased
pursuant to this Section will be required to surrender the Security, with the
form set forth on the reverse of the Security duly completed, to the Paying
Agent at the address specified in the notice on the Business Day prior to the
repurchase date.
(e) On the repurchase date, all Securities repurchased
by the Company under this Section shall be delivered to the Trustee for
cancelation, and the Company shall pay the repurchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
(f) The Company shall 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 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 4.08 by virtue thereof.
(g) The provisions of this Section 4.08 cannot
be waived by the Board of Directors (except that the Board of Directors may
approve a new group of directors as described in Section 4.08(c) and thereby
prevent the occurrence of such Change of Control). The provisions relative to
the Company's obligation to make an offer to repurchase the Securities as a
result of a Change of Control may be waived
<PAGE>
<PAGE>
62
or modified with the written consent of the Holders of two-thirds in principal
amount of the Securities.
SECTION 4.09. Limitation on Liens. The Company
shall not 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 not
Senior Debt, 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 Senior Debt will be so secured.
SECTION 4.10. Limitation on Sa Leaseback Transactions.
The Company shall not enter into a Sa Leaseback Transaction unless (i) the
Company would be able to incur Debt in an amount equal to the Attributable Debt
with respect to such Sa Leaseback Transaction secured by a Lien pursuant to
Section 4.03 and Section 4.09 or (ii) the Company receives consideration from
such Sa 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 assets subject to such Sa Leaseback Transaction as an
Asset Disposition subject to Section 4.06.
SECTION 4.11. 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 4.12. 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.
<PAGE>
<PAGE>
63
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 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
(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
<PAGE>
<PAGE>
64
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.
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
<PAGE>
<PAGE>
65
payable at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise;
(3) the Company fails to comply with Section 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09 or 4.10 (in each case, other than
a failure to purchase Securities) and such failure continues for 30
days after the notice specified below;
(4) the Company fails to comply with any of its other
agreements or covenants in the Securities or this Indenture (other
than those referred to in (1), (2), or (3) above) and such failure
continues for 60 days after the notice specified below;
(5) 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;
(6) 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;
(7) 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;
<PAGE>
<PAGE>
66
(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;
(8) 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; or
(9) 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 or Licenses are necessary for the continued
transmission of such Television Station or 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; provided, however, that a Default under
clause (3), (4), (5) or (7) 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
<PAGE>
<PAGE>
67
form of an Officers' Certificate of an Event of Default under clause (8) and of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (3), (4) or (5), 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 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 principal amount of and
accrued but unpaid 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(5) or (6) 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 any such acceleration with respect to the
Securities 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. In addition, if an Event of Default
occurs within 12 calendar months after the issuance of the Securities and so
long as such Event of Default is continuing, the Holders will have voting
rights, 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 will be adjusted to permit the Holders of a majority of
the then outstanding Securities 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. Such voting rights shall continue until such
time as any failure, breach or Default giving rise to such voting rights is
remedied or waived by Holders of at least a majority of the Securities then
outstanding, at which time the term of any directors elected pursuant to the
provisions set forth above shall terminate.
<PAGE>
<PAGE>
68
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.
SECTION 6.04. Waiver of Past Defaults. The
Holders of two-thirds 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
<PAGE>
<PAGE>
69
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 Security-
holder 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;
(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
10 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 10-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
<PAGE>
<PAGE>
70
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, disburse- ments 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 col-
lects 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 Securi-
ties 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.
<PAGE>
<PAGE>
71
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.
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
<PAGE>
<PAGE>
72
(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 liabil-
ity 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
<PAGE>
<PAGE>
73
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.
(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.
<PAGE>
<PAGE>
74
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. 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 three fiscal quarters of each year, written notice in the form of an
Officer's Certificate indicating whether the signers thereof know of any Default
that occurred during the previous year. 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 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
<PAGE>
<PAGE>
75
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, disburse- ments 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.
When the Trustee incurs expenses after the occur-
rence of a Default specified in Section 6.01(6) or (7) 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 Secur-
ities 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;
<PAGE>
<PAGE>
76
(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 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.
<PAGE>
<PAGE>
77
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.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securi-
ties; Defeasance. (a) When (i) the Company delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to Section 2.07)
for cancelation 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
<PAGE>
<PAGE>
78
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,
5.01(iii), 5.01(iv) or 5.02(iii) and the operation of Sections 6.01(5), 6.01(6)
(only with respect to Significant Subsidiaries), 6.01(7) (only with respect to
Significant Subsidiaries), 6.01(8) and 6.01(9) ("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(5) and 6.01(6) (only with respect to
Significant Subsidiaries), 6.01(7) and 6.01(8) or because of the failure of the
Company to comply with Section 5.01(iii), Section 5.01(iv) or Section 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.
<PAGE>
<PAGE>
79
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(5) or (6)
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
<PAGE>
<PAGE>
80
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 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 deposit
and 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.
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.
<PAGE>
<PAGE>
81
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 IX
Amendments
SECTION 9.01. Without Consent of Holders. The
Company and the Trustee may amend or supplement 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;
<PAGE>
<PAGE>
82
(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.
Notwithstanding the foregoing, no amendment may
be made to Article 10 of this Indenture that adversely affects the rights of any
holder of any Debt then outstanding unless the holders of such Debt (or
Representatives therefor) 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
or an amendment under this Section 9.01.
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 two-thirds 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;
<PAGE>
<PAGE>
83
(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, 6.06 or 6.07
or the second sentence of this Section; or
(7) make any change to Article 11 of this Indenture that
adversely affects the rights of any Securityholder under Article 10.
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.
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 therefore authorized to give a consent) consent to such
change.
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
<PAGE>
<PAGE>
84
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 Securi-
ties. 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
<PAGE>
<PAGE>
85
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 in this Article 10, to the prior payment in full in cash or
cash equivalents of all Senior Debt (including Senior Subordinated Debt),
whether outstanding on the Issue Date or thereafter incurred, including the
Company's guarantee of Benedek Broadcasting's obligation under the Bank Credit
Agreement and with respect to the Senior Subordinated Discount Notes and 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
<PAGE>
<PAGE>
86
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 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
<PAGE>
<PAGE>
87
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 36 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
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
10.03, 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
<PAGE>
<PAGE>
88
distribution or 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 pay immediately 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, 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. 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.
SECTION 10.07. Relative Rights. This Article 10
defines the relative rights of Securityholders and holders
of Senior Debt. Nothing in this Indenture shall:
(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
<PAGE>
<PAGE>
89
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, to
the same extent as though such payments had not been made.
SECTION 10.09. Rights of Trustee and Paying
Agent. Notwithstanding Section 10.03, 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.
<PAGE>
<PAGE>
90
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 11 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, except as expressly set forth in
Section 10.04.
SECTION 10.12. 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
<PAGE>
<PAGE>
91
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 10.13. 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
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 10.14. 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 10.15. 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.
<PAGE>
<PAGE>
92
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.
SECTION 11.02. Notices. Any notice or communica-
tion 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:
IBJ Schroder Bank & Trust Company
114 W. 47th Street, 15th Floor
New York, New York 10086
Attention: Corporate Trust Agency Division
The Company or the Trustee by notice to the other
may designate additional or different addresses for subse-
quent notices or communications.
Any notice or communication mailed to a Security-
holder shall be mailed to the Securityholder at the Security- holder's address
as it appears on the registration books of the Registrar and 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.
<PAGE>
<PAGE>
93
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 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 prece- dent 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.
<PAGE>
<PAGE>
94
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 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.
<PAGE>
<PAGE>
95
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 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>
<PAGE>
96
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:
- ----------------------------------
IBJ SCHRODER BANK & TRUST
COMPANY, 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 ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES.
<PAGE>
<PAGE>
98
No. $
CUSIP:
[ ]% Exchange Debenture Due 2007
BENEDEK COMMUNICATIONS CORPORATION, a Delaware
corporation, promises to pay to , or
registered assigns, the principal sum
of Dollars on July 1, 2007.
Interest Payment Dates: January 1 and July 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set
forth on the other side of this Security.
BENEDEK COMMUNICATIONS
CORPORATION,
by
-------------------------
President
-------------------------
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
IBJ Schroder Bank & Trust Company,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
<PAGE>
99
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
BENEDEK COMMUNICATIONS CORPORATION
[ ]% Exchange Debenture due 2007
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 (or, if greater, a percentage equal to the interest rate applicable
to the Senior Subordinated Notes plus 175 basis points); from the Exchange Date
or from the most recent interest payment date to which interest has been paid or
provided for or, if no interest has been paid or provided for, from the Exchange
Date; provided, however, if (i) the applicable Registration Statement is not
filed with the SEC by October 1, 1996, (ii) unless the Exchange Offer would not
be permitted by a policy of the SEC, 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 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"), then additional cash interest will accrue on the Securities 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 Securities ("Liquidated
Damages"). All accrued Liquidated Damages will be paid by the Company in cash on
the date interest is payable for the Securities (the "Damages Payment Date"), to
any holder of Transfer Restricted Securities who has given wire transfer
instructions to the Company at least 10 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
<PAGE>
<PAGE>
100
Registration Defaults, the accrual of Liquidated Damages will cease.
The Company will pay interest semiannually in cash (or,
on or prior to July 1, 2001, in additional Securities at the option of the
Company) in arrears on each January 1 and July 1 commencing with the first such
date after the Exchange Date. 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 15 or November 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 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).
<PAGE>
<PAGE>
101
3. Paying Agent and Registrar.
Initially, IBJ Schroder Bank & Trust Company, 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 to Holders. 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 Exchange
Indenture dated as of _______, 199_ (the "Indenture"), between 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 in the aggregate principal amount at maturity to the liquidation
preference of the Exchangeable Preferred Stock, plus, without duplication,
accumulated and unpaid dividends, on the Exchange Date (plus any additional
Exchange Debentures issued in lieu or cash interest) (subject to Section 2.07 of
the Indenture). The Indenture imposes certain limitations on the issuance of
additional 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, the issuance of debt and
preferred stock by its Restricted Subsidiaries, 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, 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
<PAGE>
<PAGE>
102
certain circumstances, to offer to purchase Securities. The limitations are
subject to a number of important qualifications and exceptions.
5. Optional Redemption.
The Securities will be redeemable at the option of the
Company in whole at any time or in part from time to time at the following
redemption prices (expressed in percentages of the principal amount thereof) set
forth below, plus, without duplication, accrued and unpaid interest (if any)
thereon to the redemption date, if redeemed prior to July 1, 1996 such
redemption price shall equal 115.000% of the principal amount of the Securities,
plus, without duplication, accrued and unpaid interest thereon to the date of
redemption, and if redeemed during the 12-month period beginning on July 1 of
each of the years set forth below, at the following redemption prices, plus,
without duplication, in each case, accrued and unpaid interest thereon 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):
<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>
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
<PAGE>
<PAGE>
103
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 principal
amount thereof plus, without duplication, accrued 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 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 fully registered form with- out
coupons only in principal amounts of $1,000 and integral multiples thereof and
also will 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 the Securities to which such holders of shares of Exchangeable
Preferred Stock entitle such holder; provided, however, that the Company may pay
cash in lieu of issuing a Security in a principal amount less than $1,000,
(other than with respect to additional Securities issued in lieu of cash). 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
<PAGE>
<PAGE>
104
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 two thirds 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 two-thirds 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
<PAGE>
<PAGE>
105
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 46 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
Debt then outstanding unless the holders of such 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 failure by Benedek
Broadcasting to comply with 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, Benedek
Broadcasting, BLC or a Significant Subsidiary; (vii) certain judgments or
decrees for the payment of money in excess of $5,000,000 and (viii) failure by
the Company, Benedek Broadcasting, BLC or a Significant Subsidiary to maintain
any License with respect to any Television Station owned by it which License is
necessary for the 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 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 principal amount and accrued
but unpaid interest on all the Securities to be due and payable immediately.
Certain events of
<PAGE>
<PAGE>
106
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. In addition, if an Event of Default occurs within 12 calendar months
after the issuance of the Securities and so long as such Event of Default is
continuing the Holders will have voting rights, 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 will be
adjusted to permit the Holders of a majority of the then outstanding Securities
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.
Such voting rights shall continue until such time as any failure, breach or
Default giving rise to such voting rights is remedied or waived by Holders of at
least a majority of the Securities then outstanding, at which time the term of
any directors elected pursuant to the provisions set forth above shall
terminate.
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
<PAGE>
<PAGE>
107
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 author- ized
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 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>
108
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>
109
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>
110
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, 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, 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
<PAGE>
<PAGE>
111
(6) |_| transferred pursuant to another avail-
able exemption from the registration
requirements of the Securities Act of
1933, as amended.
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>
112
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>
113
[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>
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
</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)
[ ]% Exchange Debentures Series A Due 2007
BENEDEK COMMUNICATIONS CORPORATION, a Delaware
corporation, promises to pay to , or
registered assigns, the principal sum
of Dollars on July 1, 2007.
Interest Payment Dates: January 1 and July 1.
Record Dates: May 15 and November 15
- --------
(1) This legend should only be added if the Security is issued
in global form.
<PAGE>
<PAGE>
115
Additional provisions of this Security are set
forth on the other side of this Security.
BENEDEK COMMUNICATIONS
CORPORATION,
by
-----------------------
President
-----------------------
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
The IBJ Schroder Bank & Trust Company, as Trustee, certifies that this is one of
the Securities referred to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
<PAGE>
116
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
BENEDEK COMMUNICATIONS CORPORATION
[ ]% Senior Subordinated Discount Note Series A 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 (or, if greater, a percentage equal to the interest rate applicable
to the Senior Subordinated Notes plus 175 basis points); from the Exchange Date
or from the most recent interest payment date to which interest has been paid or
provided for or, if no interest has been paid or provided for, from the Exchange
Date; provided, however, if (i) the applicable Registration Statement is not
filed with the SEC by October 1, 1996, (ii) unless the Exchange Offer would not
be permitted by a policy of the SEC, 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 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"), then additional cash interest will accrue on the Securities 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 Securities ("Liquidated
Damages"). All accrued Liquidated Damages will be paid by the Company in cash on
the date interest is payable for the Securities (the "Damages Payment Date"), to
any holder of Transfer Restricted Securities who has given wire transfer
instructions to the Company at least 10 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
<PAGE>
<PAGE>
117
Registration Defaults, the accrual of Liquidated Damages will cease.
The Company will pay interest semiannually in cash (or,
on or prior to July 1, 2001, in additional Securities at the option of the
Company) in arrears on each January 1 and July 1 commencing with the first such
date after the Exchange Date. 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 15 or November 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 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).
<PAGE>
<PAGE>
118
3. Paying Agent and Registrar.
Initially, IBJ Schroder Bank & Trust Company, 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 to Holders. 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 Exchange
Indenture dated as of _______, 199_ (the "Indenture"), between 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 in the aggregate principal amount at maturity to the
liquidation preference of the Exchangeable Preferred Stock, plus, without
duplication, accumulated and unpaid dividends, on the Exchange Date (plus any
additional Exchange Debentures issued in lieu or cash interest) (subject to
Section 2.07 of the Indenture). The Indenture imposes certain limitations on the
issuance of additional 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, the issuance of debt
and preferred stock by its Restricted Subsidiaries, 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, 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
<PAGE>
<PAGE>
119
certain circumstances, to offer to purchase Securities. The limitations are
subject to a number of important qualifications and exceptions.
5. Optional Redemption.
The Securities will be redeemable at the option
of the Company in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of the principal amount
thereof) set forth below, plus, without duplication, accrued and unpaid interest
(if any) thereon to the redemption date, if redeemed prior to July 1, 1996 such
redemption price shall equal 115.000% of the principal amount of the Securities,
plus, without duplication, accrued and unpaid interest thereon to the date of
redemption, and if redeemed during the 12-month period beginning on July 1 of
each of the years set forth below, at the following redemption prices, plus,
without duplication, in each case, accrued and unpaid interest thereon 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):
<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>
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
<PAGE>
<PAGE>
120
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 principal
amount thereof plus, without duplication, accrued 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 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 fully registered form with- out
coupons only in principal amounts of $1,000 and integral multiples thereof and
also will 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 the Securities to which such holders of shares of Exchangeable
Preferred Stock entitle such holder; provided, however, that the Company may pay
cash in lieu of issuing a Security in a principal amount less than $1,000,
(other than with respect to additional Securities issued in lieu of cash). 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
<PAGE>
<PAGE>
121
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 two thirds 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 two- thirds 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
<PAGE>
<PAGE>
122
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 56 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
Debt then outstanding unless the holders of such 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 failure by Benedek
Broadcasting to comply with 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, Benedek
Broadcasting, BLC or a Significant Subsidiary; (vii) certain judgments or
decrees for the payment of money in excess of $5,000,000 and (viii) failure by
the Company, Benedek Broadcasting, BLC or a Significant Subsidiary to maintain
any License with respect to any Television Station owned by it which License is
necessary for the 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 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 principal amount and accrued
but unpaid interest on all the Securities to be due and payable immediately.
Certain events of
<PAGE>
<PAGE>
123
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. In addition, if an Event of Default occurs within 12 calendar months
after the issuance of the Securities and so long as such Event of Default is
continuing the Holders will have voting rights, 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 will be
adjusted to permit the Holders of a majority of the then outstanding Securities
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.
Such voting rights shall continue until such time as any failure, breach or
Default giving rise to such voting rights is remedied or waived by Holders of at
least a majority of the Securities then outstanding, at which time the term of
any directors elected pursuant to the provisions set forth above shall
terminate.
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
<PAGE>
<PAGE>
124
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 author- ized
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 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>
125
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>
126
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>
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:
$
-----
<PAGE>
<PAGE>
128
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>
EXHIBIT 5
SHACK & SIEGEL, P.C.
530 FIFTH AVENUE
NEW YORK, NY 10036
(212) 782-0700
October 2, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Benedek Communications Corporation - Registration
Statement on Form S-4 (File No. 333-09592)
Dear Sir or Madam:
Reference is made to the Registration Statement on Form S-4 (File No.
333-09592) filed August 2, 1996, as amended on October 2, 1996 (the
"Registration Statement"), with the Securities and Exchange Commission by
Benedek Communications Corporation, a Delaware corporation (the "Company"),
relating to the Company's proposed offer to exchange its $170,000,000 13-1/4%
Senior Subordinate Discount Notes due 2006 outstanding on the date hereof (the
"Existing Notes") for $170,000,000 13-1/4% Senior Subordinate Discount Notes due
2006, which will be registered under the Securities Act of 1933, as amended (the
"Exchange Securities").
The Exchange Securities will be issued pursuant to the provisions of
the Indenture dated as of May 15, 1996 between the Company and United State
Trust Company of New York, as trustee (the "Indenture"). Except as otherwise
defined herein, capitalized terms are used herein as defined in the Registration
Statement.
We advise you that we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Certificate of Incorporation
and By-Laws of the Company, the Indenture, the form of Exchange Securities and
such other documents, instruments and certificates of officers and
representatives of the Company and public officials, and we have made such
examination of law as we have deemed appropriate as the basis for the opinion
hereinafter expressed. In making such examination, we have assumed the
genuineness of all
<PAGE>
<PAGE>
Securities and Exchange Commission - 2 - October 2, 1996
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of documents submitted to us as certified
or photostatic copies.
We have assumed that the definitive terms of the Exchange Securities
shall have been fixed, and such Exchange Securities shall have been duly
executed and delivered, all in accordance with authorizing resolutions of the
Board of Directors of the Company.
Based upon the foregoing, and upon the taking of the actions described
above, it is our opinion that the Exchange Securities will have been duly
authorized, and upon (i) an exchange for the Existing Notes, the due execution,
authentication, issuance and delivery of the Exchange Securities, and (ii) the
delivery of the Exchange Securities, the Exchange Securities will be entitled to
the benefits of the Indenture and the Exchange Securities and the Indenture will
constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms, except as limited by
bankruptcy, insolvency and other laws affecting creditors' rights generally and
by equitable principles limiting the availability of remedies.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and we further consent to the reference made to us under
the caption "Legal Matters" in the Prospectus.
Very truly yours,
SHACK & SIEGEL, P.C.
By:_______________________
Paul S. Goodman, Esq.
<PAGE>
<PAGE>
Exhibit 8
WHITMAN BREED ABBOTT & MORGAN
200 PARK AVENUE
NEW YORK, N.Y. 10166
212-351-3000
September 30, 1996
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
Benedek Communications Corporation
308 West State Street
Rockford, Illinois 61101
Re: Certain Federal Income Tax Consequences
Relating to Exchange of 13.25% Senior
Subordinated Discount Notes Due 2006
Ladies and Gentlemen:
You have requested our opinion that the exchange of Benedek
Communications Corporation's 13.25% Senior Subordinated Discount Notes due 2006,
which have been registered under the Securities Act of 1933, as amended (the
"Exchange Securities") for its 13.25% Senior Subordinated Discount Notes (the
"Existing Notes "), as described in the Form S-4 Registration Statement, dated
as of August 2, 1996 (the "Exchange") will not be a taxable exchange for Federal
income tax purposes. In rendering this opinion, we have reviewed the
Registration Statement and such other information provided by the Company and
instruments and documents as we believed to be relevant.
In our opinion, the Exchange Securities received by a holder
will be treated for Federal income tax purposes as a continuation of the
Existing Notes in the hands of such holder.
<PAGE>
<PAGE>
Benedek Communications - 2 - September 30, 1996
Corporation
As a result, in our opinion there will be no Federal income tax consequences to
holders exchanging Existing Notes for the Exchange Securities pursuant to the
Exchange. Our opinion is based on laws, regulations, rulings and decisions
currently in effect, all of which are subject to change (possibly with
retroactive effect) and reinterpretation, and there can be no assurance the
Internal Revenue Service will take a similar view.
It is understood that you intend to file this opinion as an
exhibit to the Registration Statement and we hereby consent to this use and to
the reference made to us in the Registration Statement.
Very truly yours,
/s/ Whitman Breed Abbott & Morgan
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of June, 1996, by and between BENEDEK
BROADCASTING CORPORATION, a Delaware corporation, with offices at 308 West State
Street, Rockford, Illinois 61101 (hereinafter called the "Company") and A.
RICHARD BENEDEK, residing at 211 Central Park West, New York, New York 10024
(hereinafter called "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive and Executive is willing
to undertake such employment on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive as its Chief Executive
Officer to perform such supervisory or executive duties on behalf of the Company
as the Board of Directors of the Company may from time to time determine.
2. Duties. Executive hereby accepts such employment and agrees that
throughout the period of his employment hereunder, he will devote substantially
all of his business time and his attention, knowledge and skills, faithfully,
diligently and to the best of his ability, in furtherance of the business of the
Company, will perform the duties of the Company's Chief Executive Officer,
subject, at all times, to the direction and control of the Board of Directors of
the Company. Executive shall at all times be subject to, observe and carry out
such rules, regulations, policies, directions and restrictions as the Board of
Directors of the Company shall from time to time establish. During the period of
Executive's employment hereunder, Executive shall not be entitled to additional
compensation for serving in any office of the Company or any of its subsidiaries
to which he is elected.
3. Term. Executive shall be employed for a term of four years commencing as
of the 1st day of June, 1996, and ending on the 31st day of May, 2000. After the
expiration of the term, the employment of the Executive shall continue "at will"
until terminated for any reason by either Executive or the Company upon 90 days'
prior written notice.
4. Compensation. As full compensation for his services hereunder, the
Company will pay to Executive the following:
4.1 Base Salary. A base salary at the rate of $525,000 (the "Initial
Base Salary") per annum during 1996 and such amount not less than the Initial
Base Salary as the Company and Executive may agree upon as to each year
thereafter. The Company shall pay Executive the base salary in accordance with
the Company's normal payroll practices. Executive shall also be eligible to
receive a bonus in respect of each fiscal year of the term of this Agreement in
such amount as the Company may determine.
-1-
<PAGE>
<PAGE>
4.2 Additional Benefits. Executive shall also be entitled to
participate, to the extent he is eligible under the terms and conditions
thereof, in any pension, profit-sharing, retirement, hospitalization, insurance,
medical service, or other employee benefit plan generally available to the
executives of the Company which may be in effect from time to time during the
period of his employment hereunder, it being understood that the Company shall
pay the entire cost of any health insurance or disability insurance maintained
by the Company for Executive in accordance with the Company's policies generally
in effect. Except for such health insurance and disability insurance, the
Company shall be under no obligation to institute or continue the existence of
any such employee benefit plan and may from time to time amend, modify or
terminate any such employee benefit plan.
4.3 Vacations. Executive shall be entitled to a paid vacation (in
addition to Company-wide holiday periods) during the period of his employment by
the Company in accordance with the Company's vacation policies for employees of
comparable level, as in effect from time to time. Executive's employment by the
Company in any year is not a precondition to Executive's entitlement to vacation
time in the year subsequent thereto.
5. Reimbursement. The Company shall reimburse Executive for all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder and the business of the Company, upon the submission to the Company of
appropriate vouchers therefor, provided that such expenses shall in all events
be incurred in accordance with and within applicable limits under the Company's
expense reimbursement policy in effect from time to time.
6. Non-Compete.
6.1 Executive shall not, during the full term of this Agreement, for
himself or on behalf of any other person, partnership, corporation or entity,
directly or indirectly, or by action in concert with others, own, manage,
operate, join, control, participate in, invest in, or otherwise be connected
with, in any manner, whether as an officer, director, employee, partner,
investor or otherwise, any business entity which is engaged in any business in
which the Company or any of its subsidiaries is currently engaged or is engaged
at the time of termination of Executive's employment hereunder. Nothing herein
contained shall be deemed to prohibit Executive from investing his funds in
securities of a company if the securities of such company are listed for trading
on a national stock exchange or traded in the over-the-counter market and
Executive's holdings therein represent less than one (1%) percent of the total
number of shares or principal amount of other securities of such company
outstanding.
6.2 Executive acknowledges that the provisions of this Paragraph 6 are
reasonable and necessary for the protection of the Company, and that each
provision, and the period or periods of time, geographic areas and types and
scope of restrictions on the activities specified herein are, and are intended
to be divisible. In the event that any provision of this Paragraph 6, including
any sentence, clause or part hereof, shall be deemed contrary to law or invalid
or unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall not be affected, but shall, subject to the discretion
of such court, remain in full force and effect and any invalid and unenforceable
provisions shall be deemed, without further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.
7. Confidentiality. Executive shall hold in a fiduciary capacity for the
benefit of the Company all information, knowledge and data relating to or
concerned with its operations, sales,
-2-
<PAGE>
<PAGE>
business and affairs, and he shall not, at any time hereafter, use, disclose or
divulge any such information, knowledge or data to any person, firm or
corporation other than to the Company or its designees or except as may
otherwise be required in connection with the business and affairs of the
Company.
8. Property Rights. Any invention, improvement, design, development or
discovery conceived, developed, created or made by Executive alone or with
others, during the period of his employment hereunder and applicable to the
business of the Company, whether or not patentable or registrable, shall become
the sole and exclusive property of the Company. Executive shall disclose the
same promptly and completely to the Company and shall, during the period of his
employment hereunder and at any time from time to time thereafter (i) execute
all documents requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all documents
requested by the Company for filing and prosecuting such applications for
patents, trademarks and/or copyrights as the Company, in its sole discretion,
may desire to prosecute, and (iii) give the Company all assistance it reasonably
requires, including the giving of testimony in any suit, action or proceeding,
in order to obtain, maintain and protect the Company's right therein and
thereto.
9. Remedies. The parties hereto acknowledge that Executive's services are
unique and that, in the event of a breach or a threatened breach by Executive of
any of his obligations under this Agreement, the Company will not have an
adequate remedy at law. Accordingly, in the event of any such breach or
threatened breach by Executive, the Company shall be entitled to such equitable
and injunctive relief as may be available to restrain Executive and any
business, firm, partnership, individual, corporation or entity participating in
such breach or threatened breach from the violation of the provisions hereof.
Nothing herein shall be construed as prohibiting the Company from pursuing any
other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
10. Executive's Representations and Warranties. Executive represents and
warrants to the Company that (i) Executive has the unfettered right to enter
into this Agreement on the terms and subject to the conditions hereof, and (ii)
neither the execution and delivery of this Agreement by Executive nor the
performance by Executive of any of Executive's obligations hereunder constitute
or will constitute a violation or breach of, or a default under, any Agreement,
arrangement or understanding, or any other restriction of any kind, to which
Executive is a party or by which Executive is bound.
11. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties or any of them. There are
no representations, warranties, agreements or understandings other than
expressly contained herein. No termination, alteration, modification, variation
or waiver of this Agreement or any of the provisions hereof shall be effective
unless in writing and signed by the party against whom enforcement thereof is
sought.
-3-
<PAGE>
<PAGE>
12. Notice. Any notice required, permitted or desired to be given pursuant
to any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if sent by certified or registered
mail, return receipt and postage prepaid, hand delivered, overnight delivery
service or sent by telephone facsimile as follows:
If to the Company, to it at:
308 West State Street
Rockford, Illinois 61101
Attention: President
Facsimile: 815-987-5335
with a copy to:
Paul S. Goodman
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Facsimile: 212-730-1964
If to Executive, to him at:
211 Central Park West
New York, New York 10024
Either of the parties hereto may at any time and from time to time change the
address to which notice shall be sent hereunder by notice to the other party
given under this Paragraph 12. The date of the giving of any notice sent by mail
shall be the date of the posting of the mail.
13. Assignment. Neither this Agreement nor the right to receive any
payments hereunder may be assigned by Executive. It is the intention of the
parties hereto that Executive remain employed pursuant to the provisions hereof
by any successor of the Company, whether by merger, consolidation, acquisition
of all or substantially all of the business or assets, or otherwise, and the
Company shall have the right to assign this Agreement to any such successor in
interest. This Agreement shall be binding upon Executive, his heirs, executors
and administrators and upon the Company, its successors and assigns.
14. Waiver. No course of dealing nor any delay on the part of the Company
in exercising any rights hereunder shall operate as a waiver of any such rights.
No waiver of any default or breach of this Agreement shall be deemed a
continuing waiver or a waiver of any other breach or default.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements
executed and to be performed entirely therein and each party hereto, by their
execution of this Agreement, hereby consents to the personal jurisdiction of the
courts of the State of New York and the Federal courts located within such State
in connection with any dispute arising under or related to this Agreement and
further agrees that service of process in any such action may be made by
certified mail to the address set forth herein.
16. Severability. Should any clause, paragraph or part of this Agreement be
held or declared to be void or illegal for any reason, all other clauses,
paragraphs or parts of this Agreement
-4-
<PAGE>
<PAGE>
which can be effected without such illegal clause, paragraph or part shall
nevertheless remain in full force and effect. If, in the opinion of any court,
any clause, paragraph or part of this Agreement is unreasonable or
unenforceable, such court shall have the right, power and authority to excise or
modify such provisions, or portions thereof, of this Agreement as to the court
shall not be reasonable or enforceable and to enforce the remainder of such
clause, paragraph or part as so excised or modified.
17. Binding Effect. This document is not intended to constitute an
agreement, commitment, or offer of employment binding upon the Company until and
unless executed on behalf of the Company, as provided below, and no
representative of the Company has authority to make any commitment or to give
any assurance to the contrary.
18. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not constitute a part hereof or affect in any way
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
BENEDEK BROADCASTING CORPORATION
By: /s/ K. James Yager
---------------------------
/s/ A. Richard Benedek
---------------------------
A. Richard Benedek
-5-
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of June, 1996, by and between BENEDEK
BROADCASTING CORPORATION, a Delaware corporation, with offices at 308 West State
Street, Rockford, Illinois 61101 (hereinafter called the "Company") and K. JAMES
YAGER, residing at 6767 Woodcrest Parkway, Rockford, Illinois 61109 (hereinafter
called "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive and Executive is willing
to undertake such employment on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive as its President and
Chief Operating Officer to perform such supervisory or executive duties on
behalf of the Company as the Chief Executive Officer or Board of Directors of
the Company may from time to time determine.
2. Duties. Executive hereby accepts such employment and agrees that
throughout the period of his employment hereunder, he will devote his full time,
attention, knowledge and skills, faithfully, diligently and to the best of his
ability, in furtherance of the business of the Company, will perform the duties
assigned to him pursuant to Paragraph 2 hereof, subject, at all times, to the
direction and control of the Chief Executive Officer and the Board of Directors
of the Company. Executive shall at all times be subject to, observe and carry
out such rules, regulations, policies, directions and restrictions as the
Company shall from time to time establish. During the period of his employment
hereunder, Executive shall not, without the written approval of the Board of
Directors first had and obtained in each instance, directly or indirectly accept
employment or compensation from or perform services of any nature for, any
business enterprise other than the Company and its subsidiaries. During the
period of Executive's employment hereunder, Executive shall not be entitled to
additional compensation for serving in any office of the Company or any of its
subsidiaries to which he is elected.
3. Term. Executive shall be employed for a term of four years commencing as
of the 1st day of June, 1996, and ending on the 31st day of May 2000, unless his
employment is terminated prior to the expiration of said term pursuant to the
provisions hereof. After the expiration of the term, the employment of the
Executive shall continue "at will" until terminated for any reason by either
Executive or the Company upon 90 days' prior written notice.
-1-
<PAGE>
<PAGE>
4. Compensation. As full compensation for his services hereunder, the
Company will pay to Executive the following:
4.1 Salary. A base salary at the rate of $400,000 (the "Initial Base
Salary") per annum during 1996 and such amount not less than the Initial Base
Salary as the Company and Executive may agree upon as to each year thereafter.
The Company shall pay Executive the base salary in accordance with the Company's
normal payroll practices. Executive shall also be eligible to receive a bonus in
respect of each fiscal year of the term of this Agreement in such amount as the
Company may determine.
4.2 Additional Benefits. During the term of this Agreement, the
Company shall (i) provide Executive with a suitable car for his use in the
performance of his duties for the Company and for his personal use, (ii)
reimburse Executive for the annual dues for membership in one country club and
such civic organizations as the Company and Executive may agree upon, and (iii)
reimburse Executive for costs incurred in connection with a telephone and fax
machine located in his home. Executive shall also be entitled to participate, to
the extent he is eligible under the terms and conditions thereof, in any
pension, profit-sharing, retirement, hospitalization, insurance, medical
service, or other employee benefit plan generally available to the executives of
the Company which may be in effect from time to time during the period of his
employment hereunder, it being understood that the Company shall pay the entire
cost of any health insurance or disability insurance maintained by the Company
for Executive in accordance with the Company's policies generally in effect.
Except for such health insurance and disability insurance, the Company shall be
under no obligation to institute or continue the existence of any such employee
benefit plan and may from time to time amend, modify or terminate any such
employee benefit plan.
4.3 Vacations. Executive shall be entitled to a paid vacation (in
addition to Company-wide holiday periods) during the period of his employment by
the Company in accordance with the Company's vacation policies for employees of
comparable level, as in effect from time to time, such vacation to be taken at
times consistent with Executive's duties to the Company. Executive's employment
by the Company in any year is not a precondition to Executive's entitlement to
vacation time in the year subsequent thereto.
5. Reimbursement. The Company shall reimburse Executive for all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder and the business of the Company, upon the submission to the Company of
appropriate vouchers therefor, provided that such expenses shall in all events
be incurred in accordance with and within applicable limits under the Company's
expense reimbursement policy in effect from time to time.
6. Non-Compete.
6.1 Executive shall not, during the full term of this Agreement, for
himself or on behalf of any other person, partnership, corporation or entity,
directly or indirectly, or by action in concert with others, own, manage,
operate, join, control, participate in, invest in, or otherwise be connected
with, in any manner, whether as an officer, director, employee, partner,
investor or otherwise, any business entity which is engaged in any business in
which the Company or any of its subsidiaries is currently engaged or is engaged
during the period of Executive's employment hereunder. Nothing herein contained
shall be deemed to prohibit Executive from investing his funds in securities of
a company if
-2-
<PAGE>
<PAGE>
the securities of such company are listed for trading on a national stock
exchange or traded in the over-the-counter market and Executive's holdings
therein represent less than one (1%) percent of the total number of shares or
principal amount of other securities of such company outstanding.
6.2 Executive shall not, during the full term of this Agreement and
for a period of one year thereafter, for himself or on behalf of any other
person, partnership, corporation or entity, directly or indirectly, or by action
in concert with others (a) solicit, induce, or encourage any person known to him
to be an employee of the Company or any affiliate of the Company to terminate
his or her employment or other contractual relationship with the Company or any
of its affiliates; (b) solicit, induce or encourage any person known by him to
have a contractual relationship with the Company to discontinue, terminate,
cancel or refrain from entering into any contractual relationship with the
Company or any of its affiliates; or (c) in any way solicit or attempt to
solicit the business or patronage of any person, firm, corporation, partnership,
association or other entity, whose business the Company has enjoyed during
Executive's tenure with the Company ("customers") or otherwise induce such
customers of the Company to reduce, terminate, restrict or otherwise alter their
business relationships with the Company in any fashion.
6.3 Executive acknowledges that the provisions of this Paragraph 6 are
reasonable and necessary for the protection of the Company, and that each
provision, and the period or periods of time, geographic areas and types and
scope of restrictions on the activities specified herein are, and are intended
to be divisible. In the event that any provision of this Paragraph 6, including
any sentence, clause or part hereof, shall be deemed contrary to law or invalid
or unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall not be affected, but shall, subject to the discretion
of such court, remain in full force and effect and any invalid and unenforceable
provisions shall be deemed, without further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.
7. Confidentiality. Executive shall hold in a fiduciary capacity for the
benefit of the Company all information, knowledge and data relating to or
concerned with its operations, sales, business and affairs, and he shall not, at
any time hereafter, use, disclose or divulge any such information, knowledge or
data to any person, firm or corporation other than to the Company or its
designees or except as may otherwise be required in connection with the business
and affairs of the Company.
8. Property Rights. Any invention, improvement, design, development or
discovery conceived, developed, created or made by Executive alone or with
others, during the period of his employment hereunder and applicable to the
business of the Company, whether or not patentable or registrable, shall become
the sole and exclusive property of the Company. Executive shall disclose the
same promptly and completely to the Company and shall, during the period of his
employment hereunder and at any time from time to time thereafter (i) execute
all documents requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all documents
requested by the Company for filing and prosecuting such applications for
patents, trademarks and/or copyrights as the Company, in its sole discretion,
may desire to prosecute, and (iii) give the Company all assistance it reasonably
requires, including the giving of testimony in any suit, action or proceeding,
in order to obtain, maintain and protect the Company's right therein and
thereto.
9. Remedies. The parties hereto acknowledge that Executive's services are
unique and that, in the event of a breach or a threatened breach by Executive of
any of his obligations under this Agreement, the Company will not have an
adequate remedy at law. Accordingly, in the event of any such breach or
threatened breach by Executive, the Company shall be entitled to such equitable
and
-3-
<PAGE>
<PAGE>
injunctive relief as may be available to restrain Executive and any business,
firm, partnership, individual, corporation or entity participating in such
breach or threatened breach from the violation of the provisions hereof. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies available at law or in equity for such breach or threatened breach,
including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
10. Termination.
10.1 For Cause. In addition to any other rights and remedies provided
by law or this Agreement, the Company may terminate Executive's employment
hereunder forthwith upon written notice for "cause". For purposes of this
paragraph, "cause" shall include: (i) commission of any act of material fraud or
gross negligence by Executive in the course of his employment hereunder which,
in the case of gross negligence, has a materially adverse effect on the business
or financial condition of the Company; (ii) willful misrepresentation at any
time during the term hereof by Executive to any superior executive officer of
the Company; (iii) voluntary termination by Executive of his employment or
failure, refusal or neglect by Executive to comply with any of his material
obligations hereunder or failure by Executive to comply with a reasonable
instruction of superior officers of the Company, which failure, refusal or
neglect, if curable, is not fully and completely cured to the reasonable
satisfaction of the Company promptly upon written notice to Executive; (iv)
engagement by Executive in any conduct or the commission by Executive of any act
which is, in the reasonable opinion of the Company, materially injurious or
detrimental to the substantial interest of the Company; (v) engagement by
Executive in any act, whether with respect to his employment or otherwise, which
is in violation of the criminal laws of the United States or any state thereof
or any similar foreign law to which he may be subject involving acts of moral
turpitude; or (vi) death or disability of Executive. In the event of Executive's
death during the term of this Agreement, the Company shall pay to Executive's
surviving spouse, if any, or if Executive does not have a surviving spouse, to
his then living children, if any, in equal shares, a monthly payment in an
aggregate amount equal to Executive's then current monthly Base Salary for a
period of six months after the date of Executive's death; provided, however,
that if Executive does not have a surviving spouse or children, then no such
payments shall be due. Executive shall be deemed disabled if he shall be unable
by reason of mental or physical incapacity from performing his duties hereunder
for a period of 45 consecutive days or an aggregate of 60 days in any
consecutive three-month period. If Executive's employment by the Company shall
be terminated pursuant to this Paragraph, Executive shall be entitled to receive
only the Base Salary actually earned and payable to him through the date of the
termination of his employment, together with any approved unreimbursed expenses
and other accrued employee benefits (as described above) through the date of
termination, and he shall not thereafter be entitled to receive any further
salary, bonus, expenses, benefits or other compensation of any kind hereunder.
10.2 Without Cause. If the Company shall terminate Executive's
employment other than for "cause", as provided in Paragraph above, Executive
shall be entitled to receive, as damages, and as his sole and exclusive right
and remedy on account of such termination, the base salary to which he would
otherwise have been entitled under this Agreement throughout the remaining
portion of the term. Executive shall also be entitled to receive any approved
unreimbursed business expenses and other employee benefits (as described above)
to the date of termination. Amounts payable by the Company under this Paragraph
10.2 shall be payable when and as the same would otherwise have been payable
under the terms hereof and shall be subject to Executive's duty to mitigate his
damages by using reasonable efforts to seek other comparable employment.
Compensation (in whatever form) earned by Executive on account of other
employment during the unexpired portion of the term of this Agreement (without
regard to when such compensation is paid) shall be applied in reduction of the
Company's obligations hereunder. Executive shall not otherwise be entitled to
receive any further salary, bonus,
-4-
<PAGE>
<PAGE>
expenses, benefits or other compensation hereunder. The willful and material
breach by the Company of any of its material obligations under this Agreement,
which breach is not fully cured promptly upon written notice to the Company
shall, at Executive's election, constitute a termination of this Agreement by
the Company without cause pursuant to the provisions of this Paragraph 10.2.
11. Executive's Representations and Warranties. Executive represents and
warrants to the Company that (i) Executive has the unfettered right to enter
into this Agreement on the terms and subject to the conditions hereof, and (ii)
neither the execution and delivery of this Agreement by Executive nor the
performance by Executive of any of Executive's obligations hereunder constitute
or will constitute a violation or breach of, or a default under, any Agreement,
arrangement or understanding, or any other restriction of any kind, to which
Executive is a party or by which Executive is bound.
12. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties or any of them. There are
no representations, warranties, agreements or understandings other than
expressly contained herein. No termination, alteration, modification, variation
or waiver of this Agreement or any of the provisions hereof shall be effective
unless in writing and signed by the party against whom enforcement thereof is
sought.
13. Notice. Any notice required, permitted or desired to be given pursuant
to any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if sent by certified or registered
mail, return receipt and postage prepaid, hand delivered, overnight delivery
service or sent by telephone facsimile as follows:
If to the Company, to it at:
308 West State Street
Rockford, Illinois 61101
Attention: President
Facsimile: 815-987-5335
with a copy to:
Paul S. Goodman
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Facsimile: 212-730-1964
If to Executive, to him at:
6767 Woodcrest Parkway
Rockford, Illinois 61109
Either of the parties hereto may at any time and from time to time change the
address to which notice shall be sent hereunder by notice to the other party
given under this Paragraph 13. The date of the giving of any notice sent by mail
shall be the date of the posting of the mail.
14. Assignment. Neither this Agreement nor the right to receive any
payments hereunder may be assigned by Executive. It is the intention of the
parties hereto that Executive remain
-5-
<PAGE>
<PAGE>
employed pursuant to the provisions hereof by any successor of the Company,
whether by merger, consolidation, acquisition of all or substantially all of the
business or assets, or otherwise, and the Company shall have the right to assign
this Agreement to any such successor in interest. This Agreement shall be
binding upon Executive, his heirs, executors and administrators and upon the
Company, its successors and assigns.
15. Waiver. No course of dealing nor any delay on the part of the Company
in exercising any rights hereunder shall operate as a waiver of any such rights.
No waiver of any default or breach of this Agreement shall be deemed a
continuing waiver or a waiver of any other breach or default.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements
executed and to be performed entirely therein and each party hereto, by their
execution of this Agreement, hereby consents to the personal jurisdiction of the
courts of the State of Illinois and the Federal courts located within such State
in connection with any dispute arising under or related to this Agreement and
further agrees that service of process in any such action may be made by
certified mail to the address set forth herein.
17. Severability. Should any clause, paragraph or part of this Agreement be
held or declared to be void or illegal for any reason, all other clauses,
paragraphs or parts of this Agreement which can be effected without such illegal
clause, paragraph or part shall nevertheless remain in full force and effect.
If, in the opinion of any court, any clause, paragraph or part of this Agreement
is unreasonable or unenforceable, such court shall have the right, power and
authority to excise or modify such provisions, or portions thereof, of this
Agreement as to the court shall not be reasonable or enforceable and to enforce
the remainder of such clause, paragraph or part as so excised or modified.
18. Binding Effect. This document is not intended to constitute an
agreement, commitment, or offer of employment binding upon the Company until and
unless executed on behalf of the Company, as provided below, and no
representative of the Company has authority to make any commitment or to give
any assurance to the contrary.
19. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not constitute a part hereof or affect in any way
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
BENEDEK BROADCASTING CORPORATION
By: /s/ A. Richard Benedek
------------------------
/s/ K. James Yager
----------------------------
K. James Yager
-6-
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 8 day of March, 1996, by and between BENEDEK
BROADCASTING CORPORATION, a Delaware corporation, with offices at 308 West State
Street, Rockford, Illinois 61101 (hereinafter called the "Company") and DOUGLAS
E. GEALY, residing at 7125 Bluffstream Court, Columbus, Ohio 43235(hereinafter
called "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive and Executive is willing
to undertake such employment on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive as an Executive Vice
President to perform such supervisory or executive duties on behalf of the
Company as the President, Chief Executive Officer or Board of Directors of the
Company may from time to time determine.
2. Duties. Executive hereby accepts such employment and agrees that
throughout the period of his employment hereunder, he will devote his full time,
attention, knowledge and skills, faithfully, diligently and to the best of his
ability, in furtherance of the business of the Company, will perform the duties
assigned to him pursuant to Paragraph 2 hereof, subject, at all times, to the
direction and control of the President, Chief Executive Officer and the Board of
Directors of the Company. Executive may render his services in Columbus, Ohio
but will do such traveling as may be reasonably required of him in the
performance of his duties and will be available at the Company's executive
offices in Rockford, Illinois and at the Company's other facilities at such
times as may be required by the Company. The Company acknowledges that Executive
resides with his family in Columbus, Ohio and that Executive will not be
required to relocate to Rockford, Illinois. If during the term of this Agreement
Executive desires to relocate his family to Rockford, Illinois, the Company
shall reimburse Executive for the cost of such relocation in accordance with the
Company's existing relocation policy, a copy of which is annexed hereto as
Exhibit A. Executive shall at all times be subject to, observe and carry out
such rules, regulations, policies, directions and restrictions as the Company
shall from time to time establish. During the period of his employment
hereunder, Executive shall not, without the written approval of the Board of
Directors first had and obtained in each instance, directly or indirectly accept
employment or compensation from or perform services of any nature for, any
business enterprise other than the Company and its subsidiaries. During the
period of Executive's employment hereunder, Executive shall not be entitled to
additional compensation for serving in any office of the Company or any of its
subsidiaries to which he is elected.
3. Term. Executive shall be employed for a term of three years commencing
as of the 1st day of May, 1996, and ending on the 30th day of April 1999, unless
his employment is terminated prior to the expiration of said term pursuant to
the provisions hereof. After the expiration of the term, the employment of the
Executive shall continue "at will" until terminated for any reason by either
-1-
<PAGE>
<PAGE>
Executive or the Company upon 90 days' prior written notice.
4. Compensation. As full compensation for his services hereunder, the
Company will pay to Executive the following:
4.1 Base Salary. A base salary ("Base Salary") at the rate of $235,000
per annum during the first year of the term of this Agreement, $260,000 per
annum during the second year of the term of this Agreement and $285,000 per
annum during the third year of the term of this Agreement. The Company shall pay
Executive the Base Salary in accordance with the Company's normal payroll
practices.
4.2 Performance Bonus. Executive shall be eligible to receive a
performance bonus in respect of each fiscal year during the term of this
Agreement in an amount equal to up to 20% of the Base Salary in effect at the
end of such fiscal year. One-half of such performance bonus shall be determined
based upon the achievement of performance goals established by the Company at or
prior to the beginning of such fiscal year (except for the 1996 fiscal year, the
performance goals for which shall be established by the Company prior to the
commencement of Executive's employment hereunder); and the balance of the
performance bonus shall be determined in the sole discretion of the Company.
4.3 Stock Options and/or Stock Appreciation Rights. Executive shall be
eligible to receive stock options and/or stock appreciation rights in accordance
with the terms of any plan therefor adopted by the Company. Executive
acknowledges that the Company does not currently maintain any such plan and is
under no obligation to institute or continue the existence of any such plan and
may from time to time amend, modify or terminate any such plan.
4.4 Additional Benefits. During the term of this Agreement, the
Company shall (i) provide Executive with a suitable car for his use in the
performance of his duties for the Company and for his personal use, (ii)
reimburse Executive for the annual dues for membership in one country club, and
(iii) reimburse Executive for costs incurred in connection with a telephone and
fax machine located in his home. Executive shall also be entitled to
participate, to the extent he is eligible under the terms and conditions
thereof, in any pension, profit-sharing, retirement, hospitalization, insurance,
medical service, or other employee benefit plan generally available to the
executives of the Company which may be in effect from time to time during the
period of his employment hereunder, it being understood that the Company shall
pay the entire cost of any health insurance or disability insurance maintained
by the Company for Executive in accordance with the Company's policies generally
in effect. Except for such health insurance and disability insurance, the
Company shall be under no obligation to institute or continue the existence of
any such employee benefit plan and may from time to time amend, modify or
terminate any such employee benefit plan.
4.5 Vacations. Executive shall be entitled to a paid vacation (in
addition to Company-wide holiday periods) during the period of his employment by
the Company in accordance with the Company's vacation policies for employees of
comparable level, as in effect from time to time, such vacation to be taken at
times consistent with Executive's duties to the Company and with the prior
approval of the President of the Company. Executive's employment by the Company
in any year is not a precondition to Executive's entitlement to vacation time in
the year subsequent thereto.
-2-
<PAGE>
<PAGE>
5. Reimbursement. The Company shall reimburse Executive for all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder and the business of the Company (including without limitation the cost
of travel to and from his home in Columbus, Ohio to any of the Company's
facilities), upon the submission to the Company of appropriate vouchers
therefor, provided that such expenses shall in all events be incurred in
accordance with and within applicable limits under the Company's expense
reimbursement policy in effect from time to time.
6. Non-Compete.
6.1 In consideration of the Company's entering into this Agreement,
Executive agrees that during the period of his employment hereunder, he will not
(i) directly or indirectly own, manage, operate, join, control, participate in,
invest in, or otherwise be connected with, in any manner, whether as an officer,
director, employee, partner, investor or otherwise, any business entity which is
engaged in any business in which the Company or any of its subsidiaries is
currently engaged or is engaged at the time of termination of Executive's
employment hereunder, or (ii) for himself or on behalf of any other person,
partnership, corporation or entity, call on any customer of the Company for the
purpose of soliciting, diverting or taking away any customer from the Company.
Nothing herein contained shall be deemed to prohibit Executive from investing
his funds in securities of a company if the securities of such company are
listed for trading on a national stock exchange or traded in the
over-the-counter market and Executive's holdings therein represent less than one
(1%) percent of the total number of shares or principal amount of other
securities of such company outstanding.
6.2 Executive shall not, during the full term of his employment by the
Company and for a period of one year thereafter, for himself or on behalf of any
other person, partnership, corporation or entity, directly or indirectly, or by
action in concert with others (a) solicit, induce, or encourage any person known
to him to be an employee of the Company or any affiliate of the Company to
terminate his or her employment or other contractual relationship with the
Company or any of its affiliates; (b) solicit, induce or encourage any person
known by him to have a contractual relationship with the Company to discontinue,
terminate, cancel or refrain from entering into any contractual relationship
with the Company or any of its affiliates; (c) directly or indirectly own,
manage, operate, join, control, participate in, invest in, or otherwise be
connected with, in any manner, whether as an officer, director, employee,
partner, investor or otherwise, any business entity which owns, manages,
operates, controls or is otherwise connected with, in any manner, a television
station in any designated market area (as defined by Nielsen) then served by a
television station then owned by the Company or any of its affiliates; or (d) in
any way solicit or attempt to solicit the business or patronage of any person,
firm, corporation, partnership, association or other entity, whose business the
Company has enjoyed during Executive's tenure with the Company ("customers") or
otherwise induce such customers of the Company to reduce, terminate, restrict or
otherwise alter their business relationships with the Company in any fashion.
6.3 Executive acknowledges that the provisions of this Paragraph 6 are
reasonable and necessary for the protection of the Company, and that each
provision, and the period or periods of time, geographic areas and types and
scope of restrictions on the activities specified herein are, and are intended
to be divisible. In the event that any provision of this Paragraph 6, including
any sentence, clause or part hereof, shall be deemed contrary to law or invalid
or unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall not be affected, but shall, subject to the discretion
of such court, remain in full force and effect and any invalid and unenforceable
provisions
-3-
<PAGE>
<PAGE>
shall be deemed, without further action on the part of the parties hereto,
modified, amended and limited to the extent necessary to render the same valid
and enforceable.
7. Confidentiality. Executive shall hold in a fiduciary capacity for the
benefit of the Company all information, knowledge and data relating to or
concerned with its operations, sales, business and affairs, and he shall not, at
any time hereafter, use, disclose or divulge any such information, knowledge or
data to any person, firm or corporation other than to the Company or its
designees or except as may otherwise be required in connection with the business
and affairs of the Company.
8. Property Rights. Any invention, improvement, design, development or
discovery conceived, developed, created or made by Executive alone or with
others, during the period of his employment hereunder and applicable to the
business of the Company, whether or not patentable or registrable, shall become
the sole and exclusive property of the Company. Executive shall disclose the
same promptly and completely to the Company and shall, during the period of his
employment hereunder and at any time from time to time thereafter (i) execute
all documents requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all documents
requested by the Company for filing and prosecuting such applications for
patents, trademarks and/or copyrights as the Company, in its sole discretion,
may desire to prosecute, and (iii) give the Company all assistance it reasonably
requires, including the giving of testimony in any suit, action or proceeding,
in order to obtain, maintain and protect the Company's right therein and
thereto.
9. Remedies. The parties hereto acknowledge that Executive's services are
unique and that, in the event of a breach or a threatened breach by Executive of
any of his obligations under this Agreement, the Company will not have an
adequate remedy at law. Accordingly, in the event of any such breach or
threatened breach by Executive, the Company shall be entitled to such equitable
and injunctive relief as may be available to restrain Executive and any
business, firm, partnership, individual, corporation or entity participating in
such breach or threatened breach from the violation of the provisions hereof.
Nothing herein shall be construed as prohibiting the Company from pursuing any
other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
10. Termination.
10.1 For Cause. In addition to any other rights and remedies provided
by law or this Agreement, the Company may terminate Executive's employment
hereunder forthwith upon written notice for "cause". For purposes of this
paragraph, "cause" shall include: (i) commission of any act of material fraud or
gross negligence by Executive in the course of his employment hereunder which,
in the case of gross negligence, has a materially adverse effect on the business
or financial condition of the Company; (ii) willful misrepresentation at any
time during the term hereof by Executive to any superior executive officer of
the Company; (iii) voluntary termination by Executive of his employment or
failure, refusal or neglect by Executive to comply with any of his material
obligations hereunder or failure by Executive to comply with a reasonable
instruction of superior officers of the Company, which failure, refusal or
neglect, if curable, is not fully and completely cured to the reasonable
satisfaction of the Company promptly upon written notice to Executive; (iv)
engagement by Executive in any conduct or the commission by Executive of any act
which is, in the reasonable opinion of the Company, materially injurious or
detrimental to the substantial interest of the Company; (v) engagement by
Executive in any act, whether with respect to his employment or otherwise, which
is in violation of the criminal laws of the United States or any state thereof
or any similar foreign law to which he may be subject involving acts of moral
turpitude; or (vi) death or disability of Executive. In the event of
-4-
<PAGE>
<PAGE>
Executive's death during the term of this Agreement, the Company shall pay to
Executive's surviving spouse, if any, or if Executive does not have a surviving
spouse, to his then living children, if any, in equal shares, a monthly payment
in an aggregate amount equal to Executive's then current monthly Base Salary for
a period of six months after the date of Executive's death; provided, however,
that if Executive does not have a surviving spouse or children, then no such
payments shall be due. Executive shall be deemed disabled if he shall be unable
by reason of mental or physical incapacity from performing his duties hereunder
for a period of 45 consecutive days or an aggregate of 60 days in any
consecutive three-month period. If Executive's employment by the Company shall
be terminated pursuant to this Paragraph, Executive shall be entitled to receive
only the Base Salary actually earned and payable to him through the date of the
termination of his employment, together with any approved unreimbursed expenses
and other accrued employee benefits (as described above) through the date of
termination, and he shall not thereafter be entitled to receive any further
salary, bonus, expenses, benefits or other compensation of any kind hereunder.
10.2 Without Cause. If the Company shall terminate Executive's
employment other than for "cause", as provided in Paragraph above, Executive
shall be entitled to receive, as damages, and as his sole and exclusive right
and remedy on account of such termination, the base salary to which he would
otherwise have been entitled under this Agreement throughout the remaining
portion of the term. Executive shall also be entitled to receive any approved
unreimbursed business expenses and other employee benefits (as described above)
to the date of termination. Amounts payable by the Company under this Paragraph
10.2 shall be payable when and as the same would otherwise have been payable
under the terms hereof and shall be subject to Executive's duty to mitigate his
damages by using reasonable efforts to seek other comparable employment.
Compensation (in whatever form) earned by Executive on account of other
employment during the unexpired portion of the term of this Agreement (without
regard to when such compensation is paid) shall be applied in reduction of the
Company's obligations hereunder. Executive shall not otherwise be entitled to
receive any further salary, bonus, expenses, benefits or other compensation
hereunder. The willful and material breach by the Company of any of its material
obligations under this Agreement, which breach is not fully cured promptly upon
written notice to the Company shall, at Executive's election, constitute a
termination of this Agreement by the Company without cause pursuant to the
provisions of this Paragraph 10.2.
11. Executive's Representations and Warranties. Executive represents and
warrants to the Company that (i) Executive has the unfettered right to enter
into this Agreement on the terms and subject to the conditions hereof, and (ii)
neither the execution and delivery of this Agreement by Executive nor the
performance by Executive of any of Executive's obligations hereunder constitute
or will constitute a violation or breach of, or a default under, any Agreement,
arrangement or understanding, or any other restriction of any kind, to which
Executive is a party or by which Executive is bound.
12. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties or any of them. There are
no representations, warranties, agreements or understandings other than
expressly contained herein. No termination, alteration, modification, variation
or waiver of this Agreement or any of the provisions hereof shall be effective
unless in writing and signed by the party against whom enforcement thereof is
sought.
-5-
<PAGE>
<PAGE>
13. Notice. Any notice required, permitted or desired to be given pursuant
to any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if sent by certified or registered
mail, return receipt and postage prepaid, hand delivered, overnight delivery
service or sent by telephone facsimile as follows:
If to the Company, to it at:
308 West State Street
Rockford, Illinois 61101
Attention: President
Facsimile: 815-987-5335
with a copy to:
Paul S. Goodman
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Facsimile: 212-730-1964
If to Executive, to him at:
7125 Bluffstream Court
Columbus, Ohio 43235
Either of the parties hereto may at any time and from time to time change the
address to which notice shall be sent hereunder by notice to the other party
given under this Paragraph 13. The date of the giving of any notice sent by mail
shall be the date of the posting of the mail.
14. Assignment. Neither this Agreement nor the right to receive any
payments hereunder may be assigned by Executive. It is the intention of the
parties hereto that Executive remain employed pursuant to the provisions hereof
by any successor of the Company, whether by merger, consolidation, acquisition
of all or substantially all of the business or assets, or otherwise, and the
Company shall have the right to assign this Agreement to any such successor in
interest. This Agreement shall be binding upon Executive, his heirs, executors
and administrators and upon the Company, its successors and assigns.
15. Waiver. No course of dealing nor any delay on the part of the Company
in exercising any rights hereunder shall operate as a waiver of any such rights.
No waiver of any default or breach of this Agreement shall be deemed a
continuing waiver or a waiver of any other breach or default.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements
executed and to be performed entirely therein and each party hereto, by their
execution of this Agreement, hereby consents to the personal jurisdiction of the
courts of the State of Illinois and the Federal courts located within such State
in connection with any dispute arising under or related to this Agreement and
further agrees that service of process in any such action may be made by
certified mail to the address set forth herein.
17. Severability. Should any clause, paragraph or part of this Agreement be
held or declared to be void or illegal for any reason, all other clauses,
paragraphs or parts of this Agreement
-6-
<PAGE>
<PAGE>
which can be effected without such illegal clause, paragraph or part shall
nevertheless remain in full force and effect. If, in the opinion of any court,
any clause, paragraph or part of this Agreement is unreasonable or
unenforceable, such court shall have the right, power and authority to excise or
modify such provisions, or portions thereof, of this Agreement as to the court
shall not be reasonable or enforceable and to enforce the remainder of such
clause, paragraph or part as so excised or modified.
18. Binding Effect. This document is not intended to constitute an
agreement, commitment, or offer of employment binding upon the Company until and
unless executed on behalf of the Company, as provided below, and no
representative of the Company has authority to make any commitment or to give
any assurance to the contrary.
19. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not constitute a part hereof or affect in any way
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
BENEDEK BROADCASTING CORPORATION
By: /s/ K. James Yager
----------------------------
/s/ Douglas E. Gealy
----------------------------
Douglas E. Gealy
-7-
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of June, 1996, by and between BENEDEK
BROADCASTING CORPORATION, a Delaware corporation, with offices at 308 West State
Street, Rockford, Illinois 61101 (hereinafter called the "Company") and RONALD
L. LINDWALL, residing at 4815 Crested Butte, Rockford, Illinois 61114
(hereinafter called "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive and Executive is willing
to undertake such employment on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive as its Senior Vice
President-Finance and Chief Financial Officer to perform such supervisory or
executive duties on behalf of the Company as the President, Chief Executive
Officer or Board of Directors of the Company may from time to time determine.
2. Duties. Executive hereby accepts such employment and agrees that
throughout the period of his employment hereunder, he will devote his full time,
attention, knowledge and skills, faithfully, diligently and to the best of his
ability, in furtherance of the business of the Company, will perform the duties
assigned to him pursuant to Paragraph 2 hereof, subject, at all times, to the
direction and control of the President, Chief Executive Officer and the Board of
Directors of the Company. Executive shall at all times be subject to, observe
and carry out such rules, regulations, policies, directions and restrictions as
the Company shall from time to time establish. During the period of his
employment hereunder, Executive shall not, without the written approval of the
Board of Directors first had and obtained in each instance, directly or
indirectly accept employment or compensation from or perform services of any
nature for, any business enterprise other than the Company and its subsidiaries.
During the period of Executive's employment hereunder, Executive shall not be
entitled to additional compensation for serving in any office of the Company or
any of its subsidiaries to which he is elected.
3. Term. Executive shall be employed for a term of three years commencing
as of the 1st day of June, 1996, and ending on the 31st day of May 1999, unless
his employment is terminated prior to the expiration of said term pursuant to
the provisions hereof. After the expiration of the term, the employment of the
Executive shall continue "at will" until terminated for any reason by either
Executive or the Company upon 90 days' prior written notice.
-1-
<PAGE>
<PAGE>
4. Compensation. As full compensation for his services hereunder, the
Company will pay to Executive the following:
4.1 Salary. A base salary at the rate of $150,000 (the "Initial Base
Salary") per annum during 1996 and such amount not less than the Initial Base
Salary as the Company and Executive may agree as to each year thereafter. The
Company shall pay Executive the base salary in accordance with the Company's
normal payroll practices. Executive shall also be eligible to receive a bonus in
respect of each fiscal year of the term of this Agreement in such amount as the
Company may define.
4.2 Stock Options and/or Stock Appreciation Rights. Executive shall be
eligible to receive stock options and/or stock appreciation rights in accordance
with the terms of any plan therefor adopted by the Company. Executive
acknowledges that the Company does not currently maintain any such plan and is
under no obligation to institute or continue the existence of any such plan and
may from time to time amend, modify or terminate any such plan.
4.3 Additional Benefits. During the term of this Agreement, the
Company shall (i) provide Executive with a suitable car for his use in the
performance of his duties for the Company and for his personal use, (ii)
reimburse Executive for the annual dues for membership in one country club and
such civic organizations as the Company and Executive may agree upon, and (iii)
reimburse Executive for costs incurred in connection with a telephone and fax
machine located in his home. Executive shall also be entitled to participate, to
the extent he is eligible under the terms and conditions thereof, in any
pension, profit-sharing, retirement, hospitalization, insurance, medical
service, or other employee benefit plan generally available to the executives of
the Company which may be in effect from time to time during the period of his
employment hereunder, it being understood that the Company shall pay the entire
cost of any health insurance or disability insurance maintained by the Company
for Executive in accordance with the Company's policies generally in effect.
Except for such health insurance and disability insurance, the Company shall be
under no obligation to institute or continue the existence of any such employee
benefit plan and may from time to time amend, modify or terminate any such
employee benefit plan.
4.4 Vacations. Executive shall be entitled to a paid vacation (in
addition to Company-wide holiday periods) during the period of his employment by
the Company in accordance with the Company's vacation policies for employees of
comparable level, as in effect from time to time, such vacation to be taken at
times consistent with Executive's duties to the Company and with the prior
approval of the President of the Company. Executive's employment by the Company
in any year is not a precondition to Executive's entitlement to vacation time in
the year subsequent thereto.
5. Reimbursement. The Company shall reimburse Executive for all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder and the business of the Company, upon the submission to the Company of
appropriate vouchers therefor, provided that such expenses shall in all events
be incurred in accordance with and within applicable limits under the Company's
expense reimbursement policy in effect from time to time.
6. Confidentiality. Executive shall hold in a fiduciary capacity for the
benefit of the Company all information, knowledge and data relating to or
concerned with its operations, sales, business and affairs, and he shall not, at
any time hereafter, use, disclose or divulge any such
-2-
<PAGE>
<PAGE>
information, knowledge or data to any person, firm or corporation other than to
the Company or its designees or except as may otherwise be required in
connection with the business and affairs of the Company.
7. Property Rights. Any invention, improvement, design, development or
discovery conceived, developed, created or made by Executive alone or with
others, during the period of his employment hereunder and applicable to the
business of the Company, whether or not patentable or registrable, shall become
the sole and exclusive property of the Company. Executive shall disclose the
same promptly and completely to the Company and shall, during the period of his
employment hereunder and at any time from time to time thereafter (i) execute
all documents requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all documents
requested by the Company for filing and prosecuting such applications for
patents, trademarks and/or copyrights as the Company, in its sole discretion,
may desire to prosecute, and (iii) give the Company all assistance it reasonably
requires, including the giving of testimony in any suit, action or proceeding,
in order to obtain, maintain and protect the Company's right therein and
thereto.
8. Termination.
8.1 For Cause. In addition to any other rights and remedies provided
by law or this Agreement, the Company may terminate Executive's employment
hereunder forthwith upon written notice for "cause". For purposes of this
paragraph, "cause" shall include: (i) commission of any act of material fraud or
gross negligence by Executive in the course of his employment hereunder which,
in the case of gross negligence, has a materially adverse effect on the business
or financial condition of the Company; (ii) willful misrepresentation at any
time during the term hereof by Executive to any superior executive officer of
the Company; (iii) voluntary termination by Executive of his employment or
failure, refusal or neglect by Executive to comply with any of his material
obligations hereunder or failure by Executive to comply with a reasonable
instruction of superior officers of the Company, which failure, refusal or
neglect, if curable, is not fully and completely cured to the reasonable
satisfaction of the Company promptly upon written notice to Executive; (iv)
engagement by Executive in any conduct or the commission by Executive of any act
which is, in the reasonable opinion of the Company, materially injurious or
detrimental to the substantial interest of the Company; (v) engagement by
Executive in any act, whether with respect to his employment or otherwise, which
is in violation of the criminal laws of the United States or any state thereof
or any similar foreign law to which he may be subject involving acts of moral
turpitude; or (vi) death or disability of Executive. In the event of Executive's
death during the term of this Agreement, the Company shall pay to Executive's
surviving spouse, if any, or if Executive does not have a surviving spouse, to
his then living children, if any, in equal shares, a monthly payment in an
aggregate amount equal to Executive's then current monthly base salary for a
period of six months after the date of Executive's death; provided, however,
that if Executive does not have a surviving spouse or children, then no such
payments shall be due. Executive shall be deemed disabled if he shall be unable
by reason of mental or physical incapacity from performing his duties hereunder
for a period of 45 consecutive days or an aggregate of 60 days in any
consecutive three-month period. If Executive's employment by the Company shall
be terminated pursuant to this Paragraph, Executive shall be entitled to receive
only the base salary actually earned and payable to him through the date of the
termination of his employment, together with any approved unreimbursed expenses
and other accrued employee benefits (as described above) through the date of
termination, and he shall not thereafter be entitled to receive any further
salary, bonus, expenses, benefits or other compensation of any kind hereunder.
-3-
<PAGE>
<PAGE>
8.2 Without Cause.
8.2.1 If the Company shall terminate Executive's employment other than
(i) pursuant to Paragraph 8.2.2 or (ii) for "cause" as provided in Paragraph 8.1
above, Executive shall be entitled to receive, as damages, and as his sole and
exclusive right and remedy on account of such termination, the base salary to
which he would otherwise have been entitled under this Agreement throughout the
remaining portion of the term. Executive shall also be entitled to receive any
approved unreimbursed business expenses and other employee benefits (as
described above) to the date of termination. The willful and material breach by
the Company of any of its material obligations under this Agreement, which
breach is not fully cured promptly upon written notice to the Company shall, at
Executive's election, constitute a termination of this Agreement by the Company
without cause pursuant to the provisions of this Paragraph 8.2.1.
8.2.2 In addition to any other rights and remedies provided by law or
in this Agreement, at any time prior to a Change of Control (as defined in the
Indenture dated as of March 1, 1995 with respect to the Company's outstanding
11 7/8% Senior Secured Notes) the Company may terminate Executive's employment
hereunder without cause upon six months' written notice. If the Company shall
terminate Executive's employment pursuant to this Paragraph 8.2.2, Executive
shall be entitled to receive, as damages, and as his sole and exclusive right
and remedy on account of such termination, the base salary to which he would
otherwise have been entitled under this Agreement through the effective date of
termination. Executive shall also be entitled to receive any approved
unreimbursed business expenses and other employee benefits (as described above)
to the date of termination.
8.2.3 Amounts payable by the Company under this Paragraph 8.2 shall be
payable when and as the same would otherwise have been payable under the terms
hereof and shall be subject to Executive's duty to mitigate his damages by using
reasonable efforts to seek other comparable employment. Compensation (in
whatever form) earned by Executive on account of other employment during the
unexpired portion of the term of this Agreement or through the effective date of
termination, as the case may be (without regard to when such compensation is
paid), shall be applied in reduction of the Company's obligations hereunder.
Executive shall not otherwise be entitled to receive any further salary, bonus,
expenses, benefits or other compensation hereunder.
9. Executive's Representations and Warranties. Executive represents and
warrants to the Company that (i) Executive has the unfettered right to enter
into this Agreement on the terms and subject to the conditions hereof, and (ii)
neither the execution and delivery of this Agreement by Executive nor the
performance by Executive of any of Executive's obligations hereunder constitute
or will constitute a violation or breach of, or a default under, any Agreement,
arrangement or understanding, or any other restriction of any kind, to which
Executive is a party or by which Executive is bound.
10. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties or any of them. There are
no representations, warranties, agreements or understandings other than
expressly contained herein. No termination, alteration, modification, variation
or waiver of this Agreement or any of the provisions hereof shall be effective
unless in writing and signed by the party against whom enforcement thereof is
sought.
-4-
<PAGE>
<PAGE>
11. Notice. Any notice required, permitted or desired to be given pursuant
to any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if sent by certified or registered
mail, return receipt and postage prepaid, hand delivered, overnight delivery
service or sent by telephone facsimile as follows:
If to the Company, to it at:
308 West State Street
Rockford, Illinois 61101
Attention: President
Facsimile: 815-987-5335
with a copy to:
Paul S. Goodman
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Facsimile: 212-730-1964
If to Executive, to him at:
4815 Crested Butte
Rockford, Illinois 61114
Either of the parties hereto may at any time and from time to time change the
address to which notice shall be sent hereunder by notice to the other party
given under this Paragraph 11. The date of the giving of any notice sent by mail
shall be the date of the posting of the mail.
12. Assignment. Neither this Agreement nor the right to receive any
payments hereunder may be assigned by Executive. It is the intention of the
parties hereto that Executive remain employed pursuant to the provisions hereof
by any successor of the Company, whether by merger, consolidation, acquisition
of all or substantially all of the business or assets, or otherwise, and the
Company shall have the right to assign this Agreement to any such successor in
interest. This Agreement shall be binding upon Executive, his heirs, executors
and administrators and upon the Company, its successors and assigns.
13. Waiver. No course of dealing nor any delay on the part of the Company
in exercising any rights hereunder shall operate as a waiver of any such rights.
No waiver of any default or breach of this Agreement shall be deemed a
continuing waiver or a waiver of any other breach or default.
-5-
<PAGE>
<PAGE>
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements
executed and to be performed entirely therein and each party hereto, by their
execution of this Agreement, hereby consents to the personal jurisdiction of the
courts of the State of Illinois and the Federal courts located within such State
in connection with any dispute arising under or related to this Agreement and
further agrees that service of process in any such action may be made by
certified mail to the address set forth herein.
15. Severability. Should any clause, paragraph or part of this Agreement be
held or declared to be void or illegal for any reason, all other clauses,
paragraphs or parts of this Agreement which can be effected without such illegal
clause, paragraph or part shall nevertheless remain in full force and effect.
If, in the opinion of any court, any clause, paragraph or part of this Agreement
is unreasonable or unenforceable, such court shall have the right, power and
authority to excise or modify such provisions, or portions thereof, of this
Agreement as to the court shall not be reasonable or enforceable and to enforce
the remainder of such clause, paragraph or part as so excised or modified.
16. Binding Effect. This document is not intended to constitute an
agreement, commitment, or offer of employment binding upon the Company until and
unless executed on behalf of the Company, as provided below, and no
representative of the Company has authority to make any commitment or to give
any assurance to the contrary.
17. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not constitute a part hereof or affect in any way
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
BENEDEK BROADCASTING CORPORATION
By: /s/ K. James Yager
----------------------------
/s/ Ronald L. Lindwall
-----------------------------
Ronald L. Lindwall
-6-
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of June, 1996, by and between BENEDEK
BROADCASTING CORPORATION, a Delaware corporation, with offices at 308 West State
Street, Rockford, Illinois 61101 (hereinafter called the "Company") and TERRANCE
F. HURLEY, residing at 3531 East 1st Street, Duluth, Minnesota 55804
(hereinafter called "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive and Executive is willing
to undertake such employment on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive as its Senior Vice
President to perform such supervisory or executive duties on behalf of the
Company as the President, Chief Executive Officer or Board of Directors of the
Company may from time to time determine.
2. Duties. Executive hereby accepts such employment and agrees that
throughout the period of his employment hereunder, he will devote his full time,
attention, knowledge and skills, faithfully, diligently and to the best of his
ability, in furtherance of the business of the Company, will perform the duties
assigned to him pursuant to Paragraph 2 hereof, subject, at all times, to the
direction and control of the President, Chief Executive Officer and the Board of
Directors of the Company. Executive shall at all times be subject to, observe
and carry out such rules, regulations, policies, directions and restrictions as
the Company shall from time to time establish. During the period of his
employment hereunder, Executive shall not, without the written approval of the
Board of Directors first had and obtained in each instance, directly or
indirectly accept employment or compensation from or perform services of any
nature for, any business enterprise other than the Company and its subsidiaries.
During the period of Executive's employment hereunder, Executive shall not be
entitled to additional compensation for serving in any office of the Company or
any of its subsidiaries to which he is elected.
3. Term. Executive shall be employed for a term of three years commencing
as of the 1st day of June, 1996, and ending on the 31st day of May 1999, unless
his employment is terminated prior to the expiration of said term pursuant to
the provisions hereof. After the expiration of the term, the employment of the
Executive shall continue "at will" until terminated for any reason by either
Executive or the Company upon 90 days' prior written notice.
4. Compensation. As full compensation for his services hereunder, the
Company will pay to Executive the following:
4.1 Salary. A base salary at the rate of $150,000 (the "Initial Base
Salary") per annum during 1996 and such amount not less than the Initial Base
Salary as the Company and Executive may agree upon as to each year thereafter.
The Company shall pay Executive the base salary
-1-
<PAGE>
<PAGE>
in accordance with the Company's normal payroll practices. Executive shall also
be eligible to receive a bonus in respect of each fiscal year of the term of
this Agreement in such amount as the Company may define.
4.2 Stock Options and/or Stock Appreciation Rights. Executive shall be
eligible to receive stock options and/or stock appreciation rights in accordance
with the terms of any plan therefor adopted by the Company. Executive
acknowledges that the Company does not currently maintain any such plan and is
under no obligation to institute or continue the existence of any such plan and
may from time to time amend, modify or terminate any such plan.
4.3 Additional Benefits. During the term of this Agreement, the
Company shall (i) provide Executive with a suitable car for his use in the
performance of his duties for the Company and for his personal use, (ii)
reimburse Executive for the annual dues for membership in one country club and
such civic organizations as the Company and Executive may agree upon, and (iii)
reimburse Executive for costs incurred in connection with a telephone and fax
machine located in his home. Executive shall also be entitled to participate, to
the extent he is eligible under the terms and conditions thereof, in any
pension, profit-sharing, retirement, hospitalization, insurance, medical
service, or other employee benefit plan generally available to the executives of
the Company which may be in effect from time to time during the period of his
employment hereunder, it being understood that the Company shall pay the entire
cost of any health insurance or disability insurance maintained by the Company
for Executive in accordance with the Company's policies generally in effect.
Except for such health insurance and disability insurance, the Company shall be
under no obligation to institute or continue the existence of any such employee
benefit plan and may from time to time amend, modify or terminate any such
employee benefit plan.
4.4 Vacations. Executive shall be entitled to a paid vacation (in
addition to Company-wide holiday periods) during the period of his employment by
the Company in accordance with the Company's vacation policies for employees of
comparable level, as in effect from time to time, such vacation to be taken at
times consistent with Executive's duties to the Company and with the prior
approval of the President of the Company. Executive's employment by the Company
in any year is not a precondition to Executive's entitlement to vacation time in
the year subsequent thereto.
5. Reimbursement. The Company shall reimburse Executive for all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder and the business of the Company, upon the submission to the Company of
appropriate vouchers therefor, provided that such expenses shall in all events
be incurred in accordance with and within applicable limits under the Company's
expense reimbursement policy in effect from time to time.
6. Non-Compete.
6.1 In consideration of the Company's entering into this Agreement,
Executive agrees that during the period of his employment hereunder, he will not
(i) directly or indirectly own, manage, operate, join, control, participate in,
invest in, or otherwise be connected with, in any manner, whether as an officer,
director, employee, partner, investor or otherwise, any business entity which is
engaged in any business in which the Company or any of its subsidiaries is
currently engaged or is engaged at any time during the period of Executive's
employment hereunder, or (ii) for himself or on behalf of any other person,
partnership, corporation or entity, call on any customer of the Company for
-2-
<PAGE>
<PAGE>
the purpose of soliciting, diverting or taking away any customer from the
Company. Nothing herein contained shall be deemed to prohibit Executive from
investing his funds in securities of a company if the securities of such company
are listed for trading on a national stock exchange or traded in the
over-the-counter market and Executive's holdings therein represent less than one
(1%) percent of the total number of shares or principal amount of other
securities of such company outstanding.
6.2 Executive shall not, during the full term of this Agreement and
for a period of one year thereafter, for himself or on behalf of any other
person, partnership, corporation or entity, directly or indirectly, or by action
in concert with others (a) solicit, induce, or encourage any person known to him
to be an employee of the Company or any affiliate of the Company to terminate
his or her employment or other contractual relationship with the Company or any
of its affiliates; (b) solicit, induce or encourage any person known by him to
have a contractual relationship with the Company to discontinue, terminate,
cancel or refrain from entering into any contractual relationship with the
Company or any of its affiliates; (c) directly or indirectly own, manage,
operate, join, control, participate in, invest in, or otherwise be connected
with, in any manner, whether as an officer, director, employee, partner,
investor or otherwise, any business entity which owns, manages, operates,
controls or is otherwise connected with, in any manner, a television station in
any designated market area (as defined by Nielsen) then served by a television
station then owned by the Company or any of its affiliates; or (d) in any way
solicit or attempt to solicit the business or patronage of any person, firm,
corporation, partnership, association or other entity, whose business the
Company has enjoyed during Executive's tenure with the Company ("customers") or
otherwise induce such customers of the Company to reduce, terminate, restrict or
otherwise alter their business relationships with the Company in any fashion.
6.3 Executive acknowledges that the provisions of this Paragraph 6 are
reasonable and necessary for the protection of the Company, and that each
provision, and the period or periods of time, geographic areas and types and
scope of restrictions on the activities specified herein are, and are intended
to be divisible. In the event that any provision of this Paragraph 6, including
any sentence, clause or part hereof, shall be deemed contrary to law or invalid
or unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall not be affected, but shall, subject to the discretion
of such court, remain in full force and effect and any invalid and unenforceable
provisions shall be deemed, without further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.
7. Confidentiality. Executive shall hold in a fiduciary capacity for the
benefit of the Company all information, knowledge and data relating to or
concerned with its operations, sales, business and affairs, and he shall not, at
any time hereafter, use, disclose or divulge any such information, knowledge or
data to any person, firm or corporation other than to the Company or its
designees or except as may otherwise be required in connection with the business
and affairs of the Company.
8. Property Rights. Any invention, improvement, design, development or
discovery conceived, developed, created or made by Executive alone or with
others, during the period of his employment hereunder and applicable to the
business of the Company, whether or not patentable or registrable, shall become
the sole and exclusive property of the Company. Executive shall disclose the
same promptly and completely to the Company and shall, during the period of his
employment hereunder and at any time from time to time thereafter (i) execute
all documents requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all documents
requested by the Company for filing and prosecuting such applications for
patents, trademarks and/or copyrights as the Company, in its sole discretion,
may desire to prosecute, and (iii)
-3-
<PAGE>
<PAGE>
give the Company all assistance it reasonably requires, including the giving of
testimony in any suit, action or proceeding, in order to obtain, maintain and
protect the Company's right therein and thereto.
9. Remedies. The parties hereto acknowledge that Executive's services are
unique and that, in the event of a breach or a threatened breach by Executive of
any of his obligations under this Agreement, the Company will not have an
adequate remedy at law. Accordingly, in the event of any such breach or
threatened breach by Executive, the Company shall be entitled to such equitable
and injunctive relief as may be available to restrain Executive and any
business, firm, partnership, individual, corporation or entity participating in
such breach or threatened breach from the violation of the provisions hereof.
Nothing herein shall be construed as prohibiting the Company from pursuing any
other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
10. Termination.
10.1 For Cause. In addition to any other rights and remedies provided
by law or this Agreement, the Company may terminate Executive's employment
hereunder forthwith upon written notice for "cause". For purposes of this
paragraph, "cause" shall include: (i) commission of any act of material fraud or
gross negligence by Executive in the course of his employment hereunder which,
in the case of gross negligence, has a materially adverse effect on the business
or financial condition of the Company; (ii) willful misrepresentation at any
time during the term hereof by Executive to any superior executive officer of
the Company; (iii) voluntary termination by Executive of his employment or
failure, refusal or neglect by Executive to comply with any of his material
obligations hereunder or failure by Executive to comply with a reasonable
instruction of superior officers of the Company, which failure, refusal or
neglect, if curable, is not fully and completely cured to the reasonable
satisfaction of the Company promptly upon written notice to Executive; (iv)
engagement by Executive in any conduct or the commission by Executive of any act
which is, in the reasonable opinion of the Company, materially injurious or
detrimental to the substantial interest of the Company; (v) engagement by
Executive in any act, whether with respect to his employment or otherwise, which
is in violation of the criminal laws of the United States or any state thereof
or any similar foreign law to which he may be subject involving acts of moral
turpitude; or (vi) death or disability of Executive. In the event of Executive's
death during the term of this Agreement, the Company shall pay to Executive's
surviving spouse, if any, or if Executive does not have a surviving spouse, to
his then living children, if any, in equal shares, a monthly payment in an
aggregate amount equal to Executive's then current monthly base salary for a
period of six months after the date of Executive's death; provided, however,
that if Executive does not have a surviving spouse or children, then no such
payments shall be due. Executive shall be deemed disabled if he shall be unable
by reason of mental or physical incapacity from performing his duties hereunder
for a period of 45 consecutive days or an aggregate of 60 days in any
consecutive three-month period. If Executive's employment by the Company shall
be terminated pursuant to this Paragraph, Executive shall be entitled to receive
only the base salary actually earned and payable to him through the date of the
termination of his employment, together with any approved unreimbursed expenses
and other accrued employee benefits (as described above) through the date of
termination, and he shall not thereafter be entitled to receive any further
salary, bonus, expenses, benefits or other compensation of any kind hereunder.
10.2 Without Cause.
10.2.1 If the Company shall terminate Executive's employment
other than (i) pursuant to Paragraph 10.2.2 or (ii) for "cause" as provided in
Paragraph 10.1 above, Executive shall be entitled to receive, as damages, and as
his sole and exclusive right and remedy on account of such
-4-
<PAGE>
<PAGE>
termination, the base salary to which he would otherwise have been entitled
under this Agreement throughout the remaining portion of the term. Executive
shall also be entitled to receive any approved unreimbursed business expenses
and other employee benefits (as described above) to the date of termination. The
willful and material breach by the Company of any of its material obligations
under this Agreement, which breach is not fully cured promptly upon written
notice to the Company shall, at Executive's election, constitute a termination
of this Agreement by the Company without cause pursuant to the provisions of
this Paragraph 10.2.1.
10.2.2 In addition to any other rights and remedies provided by
law or in this Agreement, at any time prior to a Change of Control (as defined
in the Indenture dated as of March 1, 1995 with respect to the Company's
outstanding 11 7/8% Senior Secured Notes) the Company may terminate Executive's
employment hereunder without cause upon six months' written notice. If the
Company shall terminate Executive's employment pursuant to this Paragraph
10.2.2, Executive shall be entitled to receive, as damages, and as his sole and
exclusive right and remedy on account of such termination, the base salary to
which he would otherwise have been entitled under this Agreement through the
effective date of termination. Executive shall also be entitled to receive any
approved unreimbursed business expenses and other employee benefits (as
described above) to the date of termination.
10.2.3 Amounts payable by the Company under this Paragraph 10.2
shall be payable when and as the same would otherwise have been payable under
the terms hereof and shall be subject to Executive's duty to mitigate his
damages by using reasonable efforts to seek other comparable employment.
Compensation (in whatever form) earned by Executive on account of other
employment during the unexpired portion of the term of this Agreement or through
the effective date of termination, as the case may be (without regard to when
such compensation is paid), shall be applied in reduction of the Company's
obligations hereunder. Executive shall not otherwise be entitled to receive any
further salary, bonus, expenses, benefits or other compensation hereunder.
11. Executive's Representations and Warranties. Executive represents and
warrants to the Company that (i) Executive has the unfettered right to enter
into this Agreement on the terms and subject to the conditions hereof, and (ii)
neither the execution and delivery of this Agreement by Executive nor the
performance by Executive of any of Executive's obligations hereunder constitute
or will constitute a violation or breach of, or a default under, any Agreement,
arrangement or understanding, or any other restriction of any kind, to which
Executive is a party or by which Executive is bound.
12. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties or any of them. There are
no representations, warranties, agreements or understandings other than
expressly contained herein. No termination, alteration, modification, variation
or waiver of this Agreement or any of the provisions hereof shall be effective
unless in writing and signed by the party against whom enforcement thereof is
sought.
-5-
<PAGE>
<PAGE>
13. Notice. Any notice required, permitted or desired to be given pursuant
to any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if sent by certified or registered
mail, return receipt and postage prepaid, hand delivered, overnight delivery
service or sent by telephone facsimile as follows:
If to the Company, to it at:
308 West State Street
Rockford, Illinois 61101
Attention: President
Facsimile: 815-987-5335
with a copy to:
Paul S. Goodman
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Facsimile: 212-730-1964
If to Executive, to him at:
3531 East 1st Street
Duluth, Minnesota 55804
Either of the parties hereto may at any time and from time to time change the
address to which notice shall be sent hereunder by notice to the other party
given under this Paragraph 13. The date of the giving of any notice sent by mail
shall be the date of the posting of the mail.
14. Assignment. Neither this Agreement nor the right to receive any
payments hereunder may be assigned by Executive. It is the intention of the
parties hereto that Executive remain employed pursuant to the provisions hereof
by any successor of the Company, whether by merger, consolidation, acquisition
of all or substantially all of the business or assets, or otherwise, and the
Company shall have the right to assign this Agreement to any such successor in
interest. This Agreement shall be binding upon Executive, his heirs, executors
and administrators and upon the Company, its successors and assigns.
15. Waiver. No course of dealing nor any delay on the part of the Company
in exercising any rights hereunder shall operate as a waiver of any such rights.
No waiver of any default or breach of this Agreement shall be deemed a
continuing waiver or a waiver of any other breach or default.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements
executed and to be performed entirely therein and each party hereto, by their
execution of this Agreement, hereby consents to the personal jurisdiction of the
courts of the State of Illinois and the Federal courts located within such State
in connection with any dispute arising under or related to this Agreement and
further agrees that service of process in any such action may be made by
certified mail to the address set forth herein.
17. Severability. Should any clause, paragraph or part of this Agreement be
held or declared to be void or illegal for any reason, all other clauses,
paragraphs or parts of this Agreement
-6-
<PAGE>
<PAGE>
which can be effected without such illegal clause, paragraph or part shall
nevertheless remain in full force and effect. If, in the opinion of any court,
any clause, paragraph or part of this Agreement is unreasonable or
unenforceable, such court shall have the right, power and authority to excise or
modify such provisions, or portions thereof, of this Agreement as to the court
shall not be reasonable or enforceable and to enforce the remainder of such
clause, paragraph or part as so excised or modified.
18. Binding Effect. This document is not intended to constitute an
agreement, commitment, or offer of employment binding upon the Company until and
unless executed on behalf of the Company, as provided below, and no
representative of the Company has authority to make any commitment or to give
any assurance to the contrary.
19. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not constitute a part hereof or affect in any way
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
BENEDEK BROADCASTING CORPORATION
By: /s/ K. James Yager
----------------------------
/s/ Terrance F. Hurley
---------------------------
Terrance F. Hurley
-7-
<PAGE>
<PAGE>
EXHIBIT 12.1
BENEDEK COMMUNICATIONS 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 7,050,204
----------- ----------- ----------- ----------- -----------
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>
SIX MONTHS
ENDED JUNE
30, 1996
-------------
<S> <C>
HISTORICAL
Net income (loss) before extraordinary item
and income taxes per statement of
operations................................. $(3,042,639)
Add:
Interest on indebtedness................ 8,879,980
Amortization on deferred loan costs..... 1,098,513
Portion of rents representative of the
interest factor....................... 114,350
-------------
Income as adjusted................. 7,050,204
-------------
Fixed charges:
Interest on indebtedness................ 8,879,980
Amortization on deferred loan costs..... 1,098,513
Portion of rents representative of the
interest factor....................... 114,350
-------------
Fixed charges...................... 10,092,843
-------------
Ratio of earnings to fixed charges........... N/A
-------------
-------------
(Deficiency)................................. $(3,042,639)
-------------
-------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
PRO FORMA FOR ACQUISITIONS AND FINANCING
Net income (loss) before extraordinary item and income taxes per statement
of operations........................................................... $ (18,460,000) $(11,666,000)
Add:
Interest on indebtedness............................................. 39,561,000 19,613,000
Amortization on deferred loan costs.................................. 1,487,000 1,502,000
Portion of rents representative of the interest factor............... 371,000 214,000
----------------- ----------------
Income as adjusted.............................................. 22,959,000 9,663,000
----------------- ----------------
Fixed charges:
Interest on indebtedness............................................. 39,561,000 19,613,000
Amortization on deferred loan costs.................................. 1,487,000 1,502,000
Portion of rents representative of the interest factor............... 371,000 214,000
----------------- ----------------
Fixed charges................................................... 41,419,000 21,329,000
----------------- ----------------
Ratio of earnings to fixed charges........................................ N/A N/A
----------------- ----------------
----------------- ----------------
(Deficiency).............................................................. $ (18,460,000) $(11,666,000)
----------------- ----------------
----------------- ----------------
</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 our
report dated February 9, 1996, except for Note A, L and M as to which the date
is June 6, 1996, on the financial statements of Benedek Communications
Corporation and Subsidiary. We also consent to the reference to our firm under
the caption 'Experts' in the Prospectus.
MCGLADREY & PULLEN, LLP
Rockford, Illinois
October 2, 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 (333-09529)
for Benedek Communications Corporation filed on Form S-4.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
October 1, 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 Amendment No. 1 to Form S-4 Registration Statement File No.
333-09529.
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 1, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<CIK> 0001017522
<NAME> BENEDEK COMMUNICATIONS CORPORATION
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-30-1996
<CASH> 5,691,476
<SECURITIES> 0
<RECEIVABLES> 21,173,856
<ALLOWANCES> 360,896
<INVENTORY> 0
<CURRENT-ASSETS> 32,286,212
<PP&E> 120,203,733
<DEPRECIATION> 29,005,869
<TOTAL-ASSETS> 499,737,202
<CURRENT-LIABILITIES> 24,176,873
<BONDS> 348,279,540
<COMMON> 70,300
96,891,694
0
<OTHER-SE> (34,482,583)
<TOTAL-LIABILITY-AND-EQUITY> 499,737,202
<SALES> 33,737,777
<TOTAL-REVENUES> 34,375,998
<CGS> 4,260,970
<TOTAL-COSTS> 4,260,970
<OTHER-EXPENSES> 23,399,038
<LOSS-PROVISION> 100,978
<INTEREST-EXPENSE> 9,978,493
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,042,639)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<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 mail, hand, overnight courier or facsimile
transmission, 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>
