<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BENEDEK COMMUNICATIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 6719 36-4076007
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
100 PARK AVENUE
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
100 PARK AVENUE
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. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]__________________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ___________________
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(1)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 1/2% Senior Exchangeable Preferred Stock... $100,000,000 100.0% $100,000,000 $29,500
- ------------------------------------------------------------------------------------------------------------------------
11 1/2% Exchange Debentures due 2007(2)...... -- -- -- --
========================================================================================================================
</TABLE>
(1) Calculated pursuant to Rule 457(f).
(2) No separate consideration will be received for the exchange debentures.
------------------------
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 JUNE 9, 1998
PROSPECTUS
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS SHARES OF
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING SHARES
OF 11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM,
NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED
------------------------
Benedek Communications Corporation, a Delaware corporation (the 'Company'),
hereby offers to exchange shares of its 11 1/2% Senior Exchangeable Preferred
Stock (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 an equal number
of outstanding shares of its 11 1/2% Senior Exchangeable Preferred Stock (the
'Existing Exchangeable Preferred Stock'), of which 100,000 shares are
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
Exchangeable Preferred Stock are collectively hereinafter referred to as the
'Exchangeable Preferred Stock.' The terms of the Exchange Securities are
identical in all material respects to those of the Existing Exchangeable
Preferred Stock except (i) for certain transfer restrictions and registration
rights relating to the Existing Exchangeable Preferred Stock and (ii) that, if
by September 11, 1998, neither an Exchange Offer with respect to the Existing
Exchangeable Preferred Stock has been consummated nor a Shelf Registration
Statement (as defined) with respect to such Existing Exchangeable Preferred
Stock has been declared effective, additional cash dividends will accumulate on
each share of Existing Exchangeable Preferred Stock from and including September
12, 1998 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 Certificate of Designation for the Exchangeable
Preferred Stock.
Dividends on the Exchange Securities will accumulate from the date of the
last payment (or deemed payment) of dividends on the Existing Exchangeable
Preferred Stock or, if no such payment has been made (or deemed to have been
made), from the date of original issuance of the Existing Exchangeable Preferred
Stock, and will be payable quarterly commencing , at a rate per
annum of 11 1/2% of the then effective liquidation preference per share.
Dividends may be paid, at the Company's option, on any dividend payment date
occurring on or prior to May 15, 2003, either in cash or by adding such
dividends to the then effective liquidation preference of the Exchange
Securities. The initial liquidation preference per share of the Exchange
Securities will be the liquidation preference per share of the Existing
Exchangeable Preferred Stock on the date of exchange therefor. The Exchangeable
Preferred Stock is not redeemable until May 15, 2003. Thereafter, the
Exchangeable Preferred Stock is redeemable at the Company's option, in whole or
in part, at the redemption prices set forth herein plus accumulated and unpaid
dividends to the date of redemption. The Company is required, subject to certain
conditions, to redeem all of the Exchangeable Preferred Stock outstanding on May
15, 2008, at a redemption price equal to 100% of the then effective liquidation
preference thereof plus accumulated and unpaid dividends to the date of
redemption.
(Cover continued on next page)
------------------------
Prior to the Exchange Offer, there has been no public market for the
Existing Exchangeable Preferred Stock. If a market for the Exchange Securities
should develop, such Exchange Securities could trade at a discount from the then
effective liquidation preference per share. 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 number of shares of
Existing Exchangeable Preferred Stock being tendered for exchange pursuant to
the Exchange Offer.
SEE 'RISK FACTORS' ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS WHICH
HOLDERS OF SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK 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 , 1998.
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)
Subject to certain conditions, the Exchangeable Preferred Stock is
exchangeable in whole, but not in part, at the option of the Company, for the
Company's 11 1/2% Exchange Debentures due 2008 ('the Exchange Debentures').
Interest on the Exchange Debentures will be payable at a rate of 11 1/2% per
annum and will accrue from the Exchange Date (as defined). Interest on the
Exchange Debentures will be payable semiannually in cash or, at the option of
the Company with respect to interest payment dates occurring on or prior to May
15, 2003, in additional Exchange Debentures, in arrears on each May 15 and
August 15, commencing on the first such date after the issuance of the Exchange
Debentures. The Exchange Debentures mature on May 15, 2003. Thereafter, the
Exchange Debentures 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.
The Company will accept for exchange any and all shares of Existing
Exchangeable Preferred Stock validly tendered and not withdrawn prior to the
Expiration Date. The term 'Expiration Date' shall mean 5:00 pm, New York City
time, on , 1998, 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 pm, 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.'
The Exchange Securities are being offered hereunder in order to satisfy
certain obligations of the Company contained in the Exchange and Registration
Rights Agreement (the 'Registration Rights Agreement') dated as of May 7, 1998
among the Company and TD Securities (USA) Inc. and BT Alex. Brown Incorporated,
as the initial purchasers (the 'Initial Purchasers'), with respect to the
initial sale of the Existing Exchangeable Preferred Stock. 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 Exchangeable Preferred Stock 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 shares of Exchange Securities received in exchange
for shares of Existing Exchangeable Preferred Stock where such shares of
Existing Exchangeable Preferred Stock 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
shares of Existing Exchangeable Preferred Stock pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date. In the event the
Company terminates the Exchange Offer and does not accept for exchange any
shares of Existing Exchangeable Preferred Stock with respect to the Exchange
Offer, the Company will promptly return such shares of Existing Exchangeable
Preferred Stock to the holders thereof. See 'The Exchange Offer.'
2
<PAGE>
<PAGE>
[Chart of Stations]
3
<PAGE>
<PAGE>
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 thereto, 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 thereto 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, DC 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 60661-2551. 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, DC
20549 at prescribed rates. Such material may also be accessed electronically by
means of the SEC's home page on the Internet at http://www.sec.gov.
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 Certificate of Designation governing the Exchangeable
Preferred Stock 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.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES 'FORWARD-LOOKING STATEMENTS' WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS
PROSPECTUS, INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S
FUTURE FINANCIAL POSITION, BUSINESS STRATEGY, BUDGETS, PROJECTED COSTS AND PLANS
AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, ARE FORWARD-LOOKING
STATEMENTS. IN ADDITION, FORWARD-LOOKING STATEMENTS GENERALLY CAN BE IDENTIFIED
BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS 'MAY,' 'WILL,' 'EXPECT,'
'INTEND,' 'ESTIMATE,' 'ANTICIPATE,' 'BELIEVE,' OR 'CONTINUE' OR THE NEGATIVE
THEREOF OR VARIATIONS THEREON OR SIMILAR TERMINOLOGY. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE
REASONABLE IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE
BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE COMPANY'S EXPECTATIONS ('CAUTIONARY STATEMENTS') ARE
DISCLOSED UNDER 'RISK FACTORS' AND ELSEWHERE IN THIS PROSPECTUS, INCLUDING,
WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED
IN THIS PROSPECTUS. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY, OR PERSONS ACTING ON ITS BEHALF, ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
4
<PAGE>
<PAGE>
CERTAIN DEFINITIONS
As used in the Prospectus, unless the context otherwise requires:
Acquired Stations refers collectively to the Stauffer Stations and the
Brissette Stations;
Acquisitions refers collectively to the acquisitions of the Acquired
Stations;
Adjusted EBITDA 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;
Adjusted EBITDA margin refers to Adjusted EBITDA divided by net revenues;
Benedek Broadcasting refers to Benedek Broadcasting Corporation, a Delaware
corporation which is a wholly-owned subsidiary of the Company, and its
subsidiary (BLC);
Benedek Stations refers to the nine network-affiliated television stations
owned by Benedek Broadcasting prior to consummation of the Acquisitions on June
6, 1996;
BLC refers to Benedek License Corporation, a Delaware corporation which is
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;
Brissette refers to Brissette Broadcasting Corporation and its wholly-owned
subsidiaries;
Brissette Stations refers to the eight network-affiliated television
stations owned by Brissette prior to June 6, 1996 when such stations were
acquired by Benedek Broadcasting;
Broadcast cash flow or BCF 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;
Broadcast cash flow margin refers to broadcast cash flow divided by net
revenues;
Commission or SEC refers to the Securities and Exchange Commission;
Company refers to Benedek Communications Corporation, a Delaware
corporation which is the sole stockholder of Benedek Broadcasting;
Contingent Warrants refers to 888,000 warrants, each to purchase one share
of Class A Common Stock of the Company;
Credit Agreement refers to the Amended and Restated Credit Agreement, dated
as of December 17, 1997, as amended, among Benedek Broadcasting, as borrower,
the Company, the Lenders referred to therein and Bankers Trust Company, as
agent, pursuant to which Benedek Broadcasting borrowed $110.8 million in term
loans (the 'Term Loan Facilities') and may borrow up to $15.0 million in
revolving credit loans (the 'Revolving Credit Facility');
Exchange Securities refers to the exchange shares of 11 1/2% Senior
Exchangeable Preferred Stock being offered in the Exchange Offer;
Exchangeable Preferred Stock refers collectively to the Exchange Securities
and the Existing Exchangeable Preferred Stock;
Existing Exchangeable Preferred Stock refers to the 11 1/2% Senior
Exchangeable Preferred Stock issued by the Company on May 14, 1998;
FCC refers to the Federal Communications Commission;
GECC refers to General Electric Capital Corporation;
Initial Warrants refers to 600,000 warrants, each to purchase one share of
Class A Common Stock of the Company;
Offering refers to the offering of the Existing Exchangeable Preferred
Stock which was consummated on May 14, 1998;
Old Exchangeable Preferred Stock refers to the 15.0% Exchangeable
Redeemable Senior Preferred Stock issued by the Company on June 5, 1996 and
redeemed on June 8, 1998;
5
<PAGE>
<PAGE>
Same Station data refers to the historical results of operations of all the
Stations currently owned by the Company as if such Stations were owned by the
Company throughout the periods with pro forma adjustments only for corporate
expenses, depreciation and amortization;
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;
Senior Secured Notes refers to the 11 7/8% Senior Secured Notes due 2005 of
Benedek Broadcasting;
Senior Subordinated Discount Notes refers to the 13 1/4% Senior
Subordinated Discount Notes due 2006 of the Company;
Stations refers collectively to the Benedek Stations, the Acquired Stations
and the two low-power stations acquired by Benedek Broadcasting in August 1997;
Stauffer refers to Stauffer Communications, Inc.;
Stauffer Stations refers to the five network-affiliated television stations
(and four satellite stations) owned by Stauffer prior to June 6, 1996 when such
stations were acquired by 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;
Warrants refers to the Initial Warrants and the Contingent Warrants; and
Warrant Shares refers to the shares of the Company's Class A Common Stock
issuable upon exercise of the Warrants.
Adjusted EBITDA 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. Adjusted EBITDA and broadcast cash flow do not purport to
represent cash provided by operating activities as reflected in the Consolidated
Financial Statements of the Company 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 1998
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, according to the February 1998 Nielsen Station Index reports,
except that for purposes of the Columbia, Missouri DMA the Company's two
low-power stations are treated as one commercial station;
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
rating during the May, July and November 1997 and February 1998 ratings periods,
Sunday through Saturday, 6:00 am to 2:00 am, 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 rating during the May, July and November 1997 and
February 1998 ratings periods, Sunday through Saturday, 6:00 am to 2:00 am,
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 share during the May, July and November 1997 and February 1998 ratings
periods, Sunday through Saturday, 6:00 am to 2:00 am, 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 1998
Nielsen Station Index reports.
All rank, rating and share information set forth in the Prospectus refers
to the measurement periods May, July and November 1997 and February 1998 unless
otherwise specified. See 'Business -- Rating Service Data.'
6
<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 data, including
the financial statements and the notes thereto, included elsewhere in this
Prospectus. As used herein, unless the context otherwise requires, the 'Company'
means Benedek Communications Corporation and its subsidiaries. Certain
capitalized terms used in this Prospectus are defined herein under the captions
'Certain Definitions' and 'Description of the Exchangeable Preferred Stock and
Exchange Debentures -- Certain Definitions.'
THE COMPANY
The Company owns and operates 23 network-affiliated television stations in
the United States. The Stations owned by the Company 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 Inc. ('CBS'), six are affiliated with the American
Broadcasting Company ('ABC'), four are affiliated with the National Broadcasting
Company ('NBC') and one is affiliated with the Fox Television Network ('Fox').
Additionally, the Company has entered into agreements with The Warner Bros.
Television Network to develop a local cable affiliate called the 'WeB' in each
of the Company's 20 markets which are outside of the 100 largest in the U.S., as
measured by Nielsen.
The Stations are located in markets ranked in size from 84 to 200 out of
the 211 markets surveyed by Nielsen. The Company's broadcast signals reach
approximately 2.9 million households, representing more than 20% of all
television households in the markets which rank above 100. The Company believes
that broadcast television stations in small to medium-sized markets offer an
opportunity to generate more attractive and stable Adjusted EBITDA than in large
markets 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 levels 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. The Company believes that network affiliations with one of
the four established networks provide each of its Stations with an established
audience and reputation for national news, sports and entertainment programming.
With the established audiences provided by network affiliations, management
seeks to enhance the ratings of its local news and non-network programming and
increase revenues while maintaining strict cost controls.
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. This trend is likely to accelerate due to 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.
The Company's growth strategy is to become one of the leading group owners of
small to medium-sized market television stations in the United States. In
connection therewith, in June 1996 the Company acquired five network-affiliated
television stations from Stauffer and all of the capital stock of Brissette,
which owned eight network-affiliated television stations. The Company believes
that the Acquisitions have created economies of scale which have (i) improved
its ability to negotiate more favorable arrangements with program suppliers,
national sales representation firms, equipment vendors and television networks,
(ii) enabled it to exploit joint programming opportunities for regional news and
sports programming and (iii) enhanced its ability to attract and retain strong
Station management and on-air talent.
7
<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(A) AFFILIATION MARKET MARKET PENETRATION
- --------------- -------- ---------- ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Madison, 84 WMTV(TV) 15 NBC 4 2 62%
Wisconsin
Youngstown, 97 WYTV 33 ABC 3 2 72%
Ohio
Springfield and 103 WWLP(TV) 22 NBC 2 1 82%
Holyoke,
Massachusetts
Lansing, 105 WILX-TV 10 NBC 4 2 66%
Michigan
Peoria and 110 WHOI(TV) 19 ABC 4 3 71%
Bloomington,
Illinois
Santa Barbara, 115 KCOY-TV 12 CBS 3 2 82%
Santa Maria
and
San Luis
Obispo,
California
Duluth, 134 KDLH-TV 3 CBS 3 1 50%
Minnesota and
Superior,
Wisconsin
Rockford, 135 WIFR-TV 23 CBS 4 1 69%
Illinois
Wausau and 136 WSAW-TV 7 CBS 3 1 53%
Rhinelander,
Wisconsin
Wheeling, West 138 WTRF-TV 7 CBS 2 2 77%
Virginia and
Steubenville,
Ohio
Topeka, Kansas 139 WIBW-TV 13 CBS 3 1 73%
Wichita Falls, 144 KAUZ-TV 6 CBS 4 1 68%
Texas and
Lawton,
Oklahoma
Columbia and 145 KMIZ(TV) 17 ABC 5 3 61%
Jefferson
City,
Missouri
Columbia and 145 K02NQ(b) 2(b) FOX 5(b) 4(b) 61%
Jefferson 145 K11TB(b) 11(b) FOX 5(b) 4(b) 61%
City,
Missouri
Odessa and 150 KOSA-TV 7 CBS 4 2 73%
Midland,
Texas
Quincy, 160 KHQA-TV 7 CBS 2 1 61%
Illinois,
Hannibal,
Missouri
and Keokuk,
Iowa
Dothan, Alabama 173 WTVY-TV 4 CBS 3 1 69%
Panama City, 157 WTVY-TV 4 CBS 4 3 67%
Florida
Harrisonburg, 177 WHSV-TV 3 ABC 1 1 74%
Virginia
Bowling Green, 182 WBKO-TV 13 ABC 2 1 55%
Kentucky
Meridian, 183 WTOK-TV 11 ABC 3 1 53%
Mississippi
Parkersburg, 186 WTAP-TV 15 NBC 1 1 78%
West Virginia
Cheyenne, 195 KGWN-TV 5 CBS 3 1(f) 73%(f)
Wyoming and 195 KSTF-TV(c) 10 CBS (e) (f) (f)
Scottsbluff, 195 KTVS-TV(c) 3 CBS (e) (f) (f)
Nebraska
Casper and 200 KGWC-TV 14 CBS 3 2(g) 64%(g)
Riverton, 200 KGWL-TV(d) 5 CBS (e) (g) (g)
Wyoming 200 KGWR-TV(d) 13 CBS (e) (g) (g)
</TABLE>
- ------------
(a)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.
(b)K02NQ and K11TB are low-power broadcast television stations operated by
KMIZ(TV) and distributed primarily via cable television. These two Stations
began operating in September 1997 as a single entity operating from one
facility and offering an identical programming schedule. Additionally, such
Stations are treated as one station for purposes of determining the number of
commercial stations in the market and rank in the market.
(c)Satellite station of KGWN-TV.
(d)Satellite station of KGWC-TV.
(e)Satellite stations are not considered distinct stations in this market for
Nielsen purposes.
(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.
(g)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.
8
<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. In addition, the Company is supported by a strong team of
senior vice presidents, who directly oversee the day-to-day operations of the
Stations. The Company's primary operating strategy is to maximize each Station's
advertising revenue through the production of 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 the
Company'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 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. In February 1998, 15 of the 23 Stations were
the number one or two ranked news stations in their respective markets with
respect to early news. During the same period, 17 of the 23 Stations were
ranked number one or two with respect to late news in their respective
markets. Since the Acquisitions in June 1996, the Company has added 59.5
total hours of local news programming per week to the Acquired Stations'
programming schedules.
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,
cash programming expense as a percentage of net revenues for the Stations
was 3.4% and 4.7% in 1996 and 1997, respectively, as compared to
approximately 7.6% for all network-affiliated stations in 1996, the latest
year for which information is available. In addition, since the
Acquisitions, the Company has made significant changes to the Acquired
Stations' syndicated programming schedules, including adding some of the
most highly-rated programs to their current broadcast schedules, as well as
obtaining the rights to several of the most highly sought after newly
syndicated programs for the 1998 broadcast season.
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 advertiser 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, the Company has entered into 10-year
agreements with The Warner Bros. Television Network to develop a local
cable affiliate called the 'WeB' in each of the Company's 20 markets which
are outside of the 100 largest in the U.S., as measured by Nielsen. The WeB
is scheduled to begin service in September 1998. The Company does not have
any agreements or understandings with respect to any acquisition as of the
date of this Prospectus.
9
<PAGE>
<PAGE>
CORPORATE STRUCTURE
The following is a summary of the Company's capital structure as of June
30, 1998.
[Chart]
10
<PAGE>
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
SECURITIES OFFERED..................... Up to 100,000 shares of 11 1/2% Exchangeable Preferred Stock. The terms
of the Exchange Securities and Existing Exchangeable Preferred Stock are
identical in all material respects, except for certain transfer
restrictions and registration rights relating to the Existing
Exchangeable Preferred Stock and except for certain dividend provisions
relating to the Existing Exchangeable Preferred Stock described below
under ' -- Terms of the Exchange Securities.'
THE EXCHANGE OFFER..................... The Exchange Securities are being offered in exchange for an equal
number of shares of Existing Exchangeable Preferred Stock. The issuance
of the Exchange Securities is intended to satisfy obligations of the
Company contained in the Registration Rights Agreement.
EXPIRATION DATE; WITHDRAWAL OF
TENDER............................... The Exchange Offer will expire at 5:00 pm, New York City time, on
, 1998, 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 pm, New York City time, on the date 60 days from
the date of this Prospectus. The tender of shares of Existing
Exchangeable Preferred Stock pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date. Any shares of
Existing Exchangeable Preferred Stock 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.'
EXCHANGE OFFER PROCEDURES.............. Each holder of Existing Exchangeable Preferred Stock 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
Exchangeable Preferred Stock and any other required documentation, to
the Exchange Agent (as defined) at one of the addresses 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 and (iii) such holder has no arrangement or understanding with
any person to participate in a distribution of such Exchange Securities.
See 'The Exchange Offer -- Exchange Offer Procedures.' Pursuant to the
Registration Rights 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 Exchangeable Preferred Stock 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
Exchangeable Preferred Stock registered under the Securities Act.
USE OF PROCEEDS........................ There will be no proceeds to the Company from the exchange of Existing
Exchangeable Preferred Stock for Exchange Securities pursuant to the
Exchange Offer. Approximately $92.8 million of the proceeds received by
the Company from the sale of the Existing Exchangeable Preferred Stock
was used to redeem the Old Exchangeable Preferred Stock.
</TABLE>
11
<PAGE>
<PAGE>
<TABLE>
<S> <C>
EXCHANGE AGENT......................... IBJ Schroder Bank & Trust Company is serving as the Exchange Agent (the
'Exchange Agent') in connection with the Exchange Offer.
FEDERAL INCOME TAX
CONSEQUENCES......................... The exchange of Existing Exchangeable Preferred Stock 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 THE EXCHANGE SECURITIES
The terms of the Exchange Securities are identical in all material respects
to the Existing Exchangeable Preferred Stock, except (i) for certain transfer
restrictions and registration rights relating to the Existing Exchangeable
Preferred Stock and (ii) that, if by September 11, 1998 neither the Exchange
Offer has been consummated nor a Shelf Registrations Statement has been declared
effective, additional cash dividends will accumulate on each share of Existing
Exchangeable Preferred Stock from and including September 12, 1998, 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 Exchangeable Preferred Stock and Exchange Debentures.'
<TABLE>
<S> <C>
EXCHANGEABLE PREFERRED STOCK:
Securities Offered................ 100,000 shares of 11 1/2% Exchangeable Preferred Stock.
Issuer............................ Benedek Communications Corporation.
Dividends......................... Dividends on the Exchange Securities will accumulate from the date of
the last payment (or deemed payment) of dividends on the Existing
Exchangeable Preferred Stock or, if no such payment has been made (or
deemed to have been made), from the date of original issuance of the
Existing Exchangeable Preferred Stock, and will be payable quarterly
commencing , at a rate per annum of 11 1/2% of the then effective
liquidation preference per share. The Company, at its option, may pay
dividends on any dividend payment date occurring on or before May 15,
2003 either in cash or by adding such dividends to the then effective
liquidation preference of the Exchangeable Preferred Stock.
Liquidation Preference............ Initially equal to the liquidation preference per share of Existing
Exchangeable Preferred Stock at the date of exchange, plus, without
duplication, accumulated and unpaid dividends to the date of exchange.
Optional Redemption............... The Exchangeable Preferred Stock is not redeemable until May 15, 2003.
Thereafter, the Exchangeable Preferred Stock is redeemable at the option
of the Company, in whole or in part, at the redemption prices set forth
herein, plus, without duplication, accumulated and unpaid dividends to
the date of redemption.
In addition, prior to May 15, 2001, the Company may, at its option,
redeem up to 25% of the aggregate of (i) the liquidation preference of
the Exchangeable Preferred Stock issued less the liquidation preference
of Exchangeable Preferred Stock exchanged for Exchange Debentures and
(ii) the principal amount of Exchange Debentures issued, at 111.50% of
the then effective liquidation preference or principal amount, as
applicable, with the net proceeds of one or more Public Equity Offerings
(as defined) or Strategic Investments (as defined) or a Required
Disposition (as defined); provided that at least $75,000,000 in
liquidation preference or principal amount, as applicable, of such
securities remains outstanding immediately after such redemption.
Mandatory Redemption.............. The Company is required, subject to certain conditions, to redeem the
Exchangeable Preferred Stock outstanding on May 15, 2008 at a redemption
price equal to 100% of the then effective liquidation
</TABLE>
12
<PAGE>
<PAGE>
<TABLE>
<S> <C>
preference thereof plus accumulated and unpaid dividends to the date of
redemption.
Ranking........................... The Exchangeable Preferred Stock will, with respect to dividend rights
and rights on liquidation, winding up and dissolution, rank senior to
all Junior Stock (as defined), including the Seller Junior Discount
Preferred Stock, pari passu with all future Parity Stock (as defined)
and junior to all future Senior Stock (as defined). See 'Risk
Factors -- Ranking of Exchangeable Preferred Stock and Subordination of
Exchange Debentures' and 'Description of the Exchangeable Preferred
Stock and Exchange Debentures -- Exchangeable Preferred
Stock -- Ranking.'
Change of Control................. In the event of a Change of Control (as defined), holders of
Exchangeable Preferred Stock will have the right to require the Company
to repurchase their Exchangeable Preferred Stock, in whole or in part,
at a price equal to 101% of the then effective liquidation preference
thereof plus all accumulated and unpaid dividends to the date of
repurchase. There can be no assurance that the Company will have
sufficient funds or be allowed under contractual limitations to
repurchase all of the Exchangeable Preferred Stock in the event of a
Change of Control or that the Company would be able to obtain financing
for such purpose on favorable terms, if at all. See 'Risk
Factors -- Control by Majority Stockholder; Change of Control Could
Result in Default' and 'Description of the Exchangeable Preferred Stock
and Exchange Debentures -- Exchangeable Preferred Stock -- Change of
Control.'
Voting Rights..................... The Exchangeable Preferred Stock will be non-voting, except as otherwise
required by law and except in certain circumstances described herein,
including (i) amending certain rights of the holders of Exchangeable
Preferred Stock and (ii) the issuance of any class of equity securities
that ranks senior to the Exchangeable Preferred Stock. In addition, if
the Company (i) fails to pay dividends in respect of six or more
quarters in the aggregate, (ii) fails to make a mandatory redemption or
a Change of Control Offer (as defined) or (iii) fails to comply with
certain covenants or make certain payments on its Indebtedness (as
defined), then holders of a majority of the outstanding shares of
Exchangeable Preferred Stock, voting as a class, will be entitled to
elect the lesser of two directors and that number of directors
constituting 25% of the Company's Board of Directors.
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, (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 the Company's assets. See 'Description of the Exchangeable Preferred
Stock and Exchange Debentures -- Exchangeable Preferred Stock -- Certain
Covenants.'
Exchange Provision................ The Exchangeable Preferred Stock is exchangeable into the Exchange
Debentures, at the Company's option, subject to certain conditions, in
whole, but not in part, on any scheduled dividend payment date (the
'Exchange Date').
EXCHANGE DEBENTURES:
Debentures Which May Be Issued.... 11 1/2% Exchange Debentures due 2008, issuable in exchange for the
Exchangeable Preferred Stock in an initial aggregate principal amount
equal to the then effective liquidation preference of Exchangeable
Preferred Stock being exchanged, plus, without duplication, accumulated
and unpaid dividends, if any, to the Exchange Date.
Maturity.......................... May 15, 2008.
</TABLE>
13
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Interest Payment Dates............ Interest will accrue from the Exchange Date and be payable semiannually
in cash (or, at the option of the Company, on or prior to May 15, 2003,
in additional Exchange Debentures) in arrears on each May 15 and
November 15, commencing with the first such date after the Exchange
Date.
Optional Redemption............... The Exchange Debentures are not redeemable until May 15, 2003.
Thereafter, the Exchange Debentures 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 redemption date.
In addition, prior to May 15, 2001, the Company may, at its option,
redeem up to 25% of the aggregate of (i) the liquidation preference of
the Exchangeable Preferred Stock issued less the liquidation preference
of Exchangeable Preferred Stock exchanged for Exchange Debentures and
(ii) the principal amount of Exchange Debentures issued, at 111.50% of
the then effective liquidation preference or principal amount, as
applicable, with the net proceeds of one or more Public Equity Offerings
or Strategic Investments or a Required Disposition; provided that at
least $75,000,000 in liquidation preference or principal amount, as
applicable, of such securities remains outstanding immediately after
such redemption.
Ranking........................... The Exchange Debentures will be unsecured obligations of the Company,
subordinate to all existing and future senior debt and senior
subordinated debt of the Company, including the obligations of the
Company under its guarantee of the Credit Agreement and the Senior
Secured Notes and its obligations with respect to the Senior
Subordinated Discount Notes. The Exchange Debentures will in all
respects rank pari passu with all other subordinated debt of the Company
and senior to all capital stock of the Company, including the Seller
Junior Discount Preferred Stock. See 'Risk Factors -- Ranking of
Exchangeable Preferred Stock and Subordination of Exchange Debentures'
and 'Description of the Exchangeable Preferred Stock and Exchange
Debentures -- Exchange Debentures -- Ranking.'
Change of Control................. In the event of a Change of Control, the holders of the Exchange
Debentures will have the right to require the Company to repurchase
their Exchange Debentures at a price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase. There can be no assurance that the Company will
have sufficient funds or be allowed under contractual limitations to
repurchase all of the Exchange Debentures in the event of a Change of
Control or that the Company would be able to obtain financing for such
purpose on favorable terms, if at all. See 'Risk Factors -- Control by
Majority Stockholder; Change of Control Could Result in Default' and
'Description of the Exchangeable Preferred Stock and Exchange
Debentures -- Exchange Debentures -- Change of Control.'
Certain Covenants................. The indenture pursuant to which the Exchange Debentures will be issued
(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, (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 substantially all of the
Company's assets. See 'Description of the Exchangeable Preferred Stock
and Exchange Debentures -- Exchange Debentures -- Certain Covenants.'
REGISTRATION REQUIREMENTS: The Company has agreed to use its best efforts to consummate the
Exchange Offer by September 11, 1998. 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
</TABLE>
14
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Offer is not consummated by September 11, 1998, 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 Exchangeable Preferred Stock and to keep the
Shelf Registration Statement effective until three years after the date
of the original issuance of the Existing Exchangeable Preferred Stock.
If the Company does not comply with its obligations with respect to the
Exchange Offer or the Shelf Registration Statement, additional cash
dividends will accumulate on each share of Existing Exchangeable
Preferred Stock at a rate of 0.50% per annum until such obligations are
satisfied. See 'The Exchange Offer -- Acceptance of Existing
Exchangeable Preferred Stock for Exchange; Delivery of Exchange
Securities.'
</TABLE>
For additional information regarding the Exchangeable Preferred Stock and
Exchange Debentures, see 'Description of the Exchangeable Preferred Stock and
Exchange Debentures.'
RISK FACTORS
Holders of shares of Existing Exchangeable Preferred Stock 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
18.
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 100 Park Avenue, Rockford, Illinois 61101.
The telephone number at the executive offices is (815) 987-5350.
15
<PAGE>
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following tables present summary historical financial information and
operating information for the Company. The summary historical financial
information for each year in the five-year period ended December 31, 1997 and as
of and for the three-month periods ended March 31, 1997 and 1998 has been
derived from the consolidated financial statements of the Company. The
consolidated financial statements as of December 31, 1997 and 1996 and for each
of the three years in the period ended December 31, 1997 are included elsewhere
herein (the 'Consolidated Financial Statements'). The summary historical
information for the three months ended March 31, 1997 and 1998 has been derived
from the Company's Unaudited Consolidated Financial Statements (the 'Unaudited
Consolidated Financial Statements'), included elsewhere herein, which have not
been audited, but which reflect, in the opinion of management, all adjustments
that include only normal recurring adjustments necessary to present fairly the
information contained herein. Interim results are not necessarily indicative of
results to be expected for any full year. This information should be read in
conjunction with 'Management's Discussion and Analysis of Financial Condition
and Results of Operations' and the Consolidated Financial Statements of the
Company, including the notes thereto, included elsewhere in this Prospectus. The
pro forma information for the 12 months ended March 31, 1998, giving effect to
the issuance of the Exchangeable Preferred Stock and the redemption of the Old
Exchangeable Preferred Stock, has been derived from the Unaudited Consolidated
Financial Statements for the three months ended March 31, 1998 and the unaudited
consolidated financial statements for the nine months ended December 31, 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- ----------------------
1993 1994 1995(A) 1996(B) 1997 1997 1998
-------- -------- -------- -------- -------- --------- ---------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(c).......................... $ 38,352 $ 44,221 $ 50,329 $ 96,386 $127,073 $ 28,078 $ 30,695
Operating expenses:
Station operating expenses........... 22,805 24,810 29,049 58,602 80,003 19,406 20,633
Depreciation and amortization........ 3,721 3,403 5,041 20,220 31,380 7,747 7,788
-------- -------- -------- -------- -------- --------- ---------
Station operating income................. 11,826 16,008 16,239 17,564 15,690 925 2,274
Corporate................................ 1,249 1,309 1,576 2,696 3,787 696 1,377
Special bonus, officer-
stockholder............................ 1,400 -- -- -- -- -- --
-------- -------- -------- -------- -------- --------- ---------
Operating income......................... 9,177 14,699 14,663 14,868 11,903 229 897
-------- -------- -------- -------- -------- --------- ---------
Financial expenses, net:
Interest expense, net(d):
Cash interest, net(e)................ (8,194) (7,740) (14,763) (22,559) (28,866) (7,036 ) (6,817)
Other interest....................... (6,161) (4,905) (712) (8,130) (19,374) (3,608 ) (4,021)
-------- -------- -------- -------- -------- --------- ---------
(14,355) (12,645) (15,475) (30,689) (48,240) (10,644 ) (10,838)
Extraordinary item(f).................... -- -- 6,864 -- -- -- --
Net income (loss)........................ (5,034) 2,044 6,052 (11,157) (24,310) (6,639 ) (6,131)
Old Exchangeable Preferred Stock
dividends and accretion................ -- -- -- 7,462 15,198 3,444 4,202
Premiums paid upon redemption of the Old
Exchangeable Preferred Stock........... -- -- -- -- -- -- --
Exchangeable Preferred Stock
dividends(e)........................... -- -- -- -- -- -- --
Seller Junior Discount Preferred Stock
dividends.............................. -- -- -- 2,057 3,839 932 1,008
Net income (loss) applicable to
common stock(e)........................ $ (5,034) $ 2,044 $ 6,052 $(20,676) $(43,347) $(11,015 ) $(11,341)
-------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- --------- ---------
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON
SHARE:
Earnings (loss) before extraordinary
item................................... $ (0.72) $ 0.29 $ (0.12) $ (2.94) $ (6.17) $ (1.57 ) $ (1.53)
Extraordinary item....................... -- -- 0.98 -- -- -- --
-------- -------- -------- -------- -------- --------- ---------
Earnings (loss) per common share......... $ (0.72) $ 0.29 $ 0.86 ($ (2.94) $ (6.17) $ (1.57 ) $ (1.53)
-------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- --------- ---------
Weighted average common shares
outstanding............................ 7,030,000 7,030,000 7,030,000 7,030,000 7,030,000 7,030,000 7,400,000
--------- --------- --------- --------- --------- ---------- ---------
--------- --------- --------- --------- --------- ---------- ---------
STATEMENT OF CASH FLOW DATA:
Net cash provided by (used in) operating
activities............................. $ 4,926 $ 10,493 $ 3,250 $ 17,843 $ 8,471 $ (2,070 ) $ 96
Net cash (used in) investing
activities............................. (864) (2,507) (30,972) (326,632) (6,282) (570 ) (1,961)
Net cash provided by (used in) financing
activities............................. (6,951) (7,037) 32,773 307,212 (7,632) (587 ) 2,312
<CAPTION>
PRO FORMA
TWELVE MONTHS
ENDED
MARCH 31,
1998
-------------
(UNAUDITED)
<S> <<C>
STATEMENT OF OPERATIONS DATA:
Net revenues(c).......................... $ 129,690
Operating expenses:
Station operating expenses........... 81,230
Depreciation and amortization........ 31,421
-------------
Station operating income................. 17,039
Corporate................................ 4,468
Special bonus, officer-
stockholder............................ --
-------------
Operating income......................... 12,571
-------------
Financial expenses, net:
Interest expense, net(d):
Cash interest, net(e)................ (28,192)
Other interest....................... (19,787)
-------------
(47,979)
Extraordinary item(f).................... --
Net income (loss)........................ (23,347)
Old Exchangeable Preferred Stock
dividends and accretion................ --
Premiums paid upon redemption of the Old
Exchangeable Preferred Stock........... 12,350
Exchangeable Preferred Stock
dividends(e)........................... 12,025
Seller Junior Discount Preferred Stock
dividends.............................. 3,915
Net income (loss) applicable to
common stock(e)........................ $ (51,637)
-------------
-------------
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON
SHARE:
Earnings (loss) before extraordinary
item................................... $ (7.25)
Extraordinary item....................... --
-------------
Earnings (loss) per common share......... $ (7.25)
-------------
-------------
Weighted average common shares
outstanding............................ 7,123,000
-------------
-------------
STATEMENT OF CASH FLOW DATA:
Net cash provided by (used in) operating
activities............................. $ 11,092
Net cash (used in) investing
activities............................. (7,673)
Net cash provided by (used in) financing
activities............................. (4,733)
</TABLE>
(table continued on next page)
16
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(table continued from previous page)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- ----------------------
1993 1994 1995(A) 1996(B) 1997 1997 1998
-------- -------- -------- -------- -------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
OTHER DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Broadcast cash flow(g)................... $ 15,546 $ 19,627 $ 21,310 $ 38,865 $ 47,534 $ 8,809 $ 10,008
Broadcast cash flow margin(h)............ 40.5% 44.4% 42.3% 40.3% 37.4% 31.4 % 32.6%
Adjusted EBITDA(i)....................... $ 14,297 $ 18,318 $ 19,734 $ 36,169 $ 43,747 $ 8,113 $ 8,631
Adjusted EBITDA margin(j)................ 37.3% 41.4% 39.2% 37.5% 34.4% 28.9 % 28.1%
Amortization of program broadcast
rights................................. $ 2,179 $ 2,104 $ 2,162 $ 4,399 $ 6,401 $ 1,559 $ 1,698
Payment for program broadcast rights..... 2,180 1,888 2,132 3,318 5,937 1,422 1,752
Capital expenditures..................... 1,278 1,161 2,008 5,393 10,833 1,355 2,817
Adjusted EBITDA to interest expense...... 1.0x 1.4x 1.3x 1.2x 0.9x 0.8 x 0.8x
Adjusted EBITDA to interest expense plus
Exchangeable Preferred Stock
dividends.............................. -- -- -- -- -- -- --
Total debt to Adjusted EBITDA(k)......... 7.9x 5.9x 6.9x 9.9x 8.5x -- --
Total debt plus Exchangeable Preferred
Stock to Adjusted EBITDA(k)............ -- -- -- -- -- -- --
Earnings to fixed charges................ -- 1.2x -- -- -- -- --
Earnings to fixed charges and preferred
dividends.............................. -- -- -- -- -- -- --
<CAPTION>
PRO FORMA
TWELVE MONTHS
ENDED
MARCH 31,
1998
-------------
(UNAUDITED)
OTHER DATA:
<S> <<C>
Broadcast cash flow(g)................... $ 48,733
Broadcast cash flow margin(h)............ 37.6%
Adjusted EBITDA(i)....................... $ 44,265
Adjusted EBITDA margin(j)................ 34.1%
Amortization of program broadcast
rights................................. $ 6,540
Payment for program broadcast rights..... 6,267
Capital expenditures..................... 12,295
Adjusted EBITDA to interest expense...... 0.9x
Adjusted EBITDA to interest expense plus
Exchangeable Preferred Stock
dividends.............................. 0.7x
Total debt to Adjusted EBITDA(k)......... 8.4x
Total debt plus Exchangeable Preferred
Stock to Adjusted EBITDA(k)............ 10.7x
Earnings to fixed charges................ --
Earnings to fixed charges and preferred
dividends.............................. --
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31, 1998
---------------------------------------------------- ------------------------
1993 1994 1995(A) 1996(B) 1997 ACTUAL AS ADJUSTED
-------- -------- -------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 3,667 $ 4,617 $ 9,668 $ 8,091 $ 2,648 $ 3,095 $ 3,095
Total assets........................... 72,818 73,621 114,453 495,015 468,495 458,047 458,047
Total debt(k).......................... 112,874 107,607 135,767 358,234 370,917 377,528 372,241
Old Exchangeable Preferred Stock....... -- -- -- 58,462 73,660 77,863 --
Exchangeable Preferred Stock........... -- -- -- -- -- -- 100,000
Seller Junior Discount Preferred
Stock................................ -- -- -- 47,057 50,896 51,904 51,904
Stockholders' (deficit)................ (44,660) (42,615) (36,563) (51,561) (94,908) (106,248) (123,098)
</TABLE>
- ------------
(a) On March 31, 1995 the Company acquired WTVY-TV serving Dothan, Alabama and
Panama City, Florida. The statement of operations and other data does not
include information with respect to WTVY-TV prior to the date of
acquisition.
(b) On June 6, 1996 the Company acquired the Stauffer Stations and the
Brissette Stations. The statement of operations and other data does not
include information with respect to the Acquired Stations prior to the date
of acquisition.
(c) Net revenues reflect deductions from gross revenues for agency and national
sales representative commissions.
(d) Cash interest expense, net of interest income, includes cash interest paid
and normal adjustments to accrued interest. Other interest expense includes
accrued interest with respect to the Warrants, accrued interest with
respect to the contingent equity value of the Company and long-term
deferred interest, accrued interest added to long-term debt balances,
deferred loan amortization and accretion of discounts.
(e) The following adjustments have been applied to the financial data for the
12 months ended March 31, 1998 to reflect the Offering as if the Existing
Exchangeable Preferred Stock was issued and the Old Exchangeable Preferred
Stock was redeemed on April 1, 1997 with respect to the Statement of
Operations Data and as of March 31, 1998 for the Balance Sheet Data:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
MARCH 31, 1998
-------------------
<S> <C>
Statement of Operations Data:
Reduction in cash interest due to the application of $5,287 of net proceeds to reduce the outstanding
Revolving Credit Facility balance.................................................................... $ (455)
Preferred stock dividends and accretion eliminated on the Old Exchangeable Preferred Stock............ (15,198)
Preferred stock dividends on the Exchangeable Preferred Stock with a dividend rate of 11 1/2% per
annum................................................................................................ 12,025
</TABLE>
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998
-------------------
<S> <C>
Balance Sheet Data:
Reduction of Revolving Credit Facility balance due to the net proceeds of the Offering................ $ 5,287
Increase in redeemable preferred stock due to the Offering............................................ 22,137
Increase in stockholders' deficit due to premiums paid and accretion upon redemption of the Old
Exchangeable Preferred Stock......................................................................... (12,350)
Decrease in additional paid-in capital due to payment of fees associated with the Offering............ (4,500)
</TABLE>
(f) 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.
(g) Broadcast cash flow is defined as operating income before financial income
as derived from the consolidated statements of operations plus depreciation
and amortization, amortization of program broadcast rights, corporate
expenses and non-cash compensation less payments for program broadcast
rights. The Company has included broadcast cash flow data because such data
is used by certain investors to measure a company's ability to service
debt. Broadcast 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 GAAP and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP.
(h) Broadcast cash flow margin is defined as broadcast cash flow divided by net
revenues.
(i) Adjusted EBITDA is defined as operating income before financial income as
derived from the consolidated statements of operations plus depreciation
and amortization, amortization of program broadcast rights and non-cash
compensation less payments for program broadcast rights. The Company has
included Adjusted EBITDA data because such data is used by certain
investors to measure a company's ability to service debt. Adjusted EBITDA
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 GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with GAAP.
(j) Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net
revenues.
(k) Total debt is defined as notes payable and capital leases payable
(including the current portion thereof), net of discount.
17
<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 'Summary,' 'Risk Factors,' 'Selected
Financial Data,' '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 this 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 this Prospectus. Accordingly, holders of
Existing Exchangeable Preferred Stock 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
Exchangeable Preferred Stock in the Exchange Offer, although the risk factors
(other than the first risk factor) are generally applicable to the Existing
Exchangeable Preferred Stock as well as the Exchange Securities.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of shares of Existing Exchangeable Preferred Stock who do not
exchange their Existing Exchangeable Preferred Stock for Exchange Securities
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Existing Exchangeable Preferred Stock as set forth in the
legend thereon as a consequence of the issuance of the Existing Exchangeable
Preferred Stock 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 Exchangeable Preferred Stock 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 Exchangeable Preferred Stock 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
The Company has substantial indebtedness. As of March 31, 1998, the Company
had outstanding total indebtedness of approximately $377.5 million, Old
Exchangeable Preferred Stock with a liquidation preference of approximately
$78.4 million and redeemable Seller Junior Discount Preferred Stock with a
liquidation preference of $51.9 million. On May 14, 1998, the Company issued the
Existing Exchangeable Preferred Stock with an initial liquidation preference of
$100.0 million and used approximately $92.8 million of the net proceeds
therefrom to redeem the Old Exchangeable Preferred Stock (including
approximately $12.1 million representing premiums relating to the redemption) on
June 8, 1998. The Company could incur additional indebtedness and issue
additional preferred stock in the future, although the Certificate of
Designation with respect to the Exchangeable Preferred Stock (the 'Certificate
of Designation'), the Exchange Indenture, the Certificate of Designation with
respect to the Seller Junior Discount Preferred Stock (together with the
Certificate of Designation, the 'Certificates of Designation'), the Senior
Subordinated Discount Note Indenture and the Credit Agreement limit the
incurrence of additional indebtedness and the issuance of redeemable preferred
stock by the Company and its subsidiaries and the Senior Secured Note Indenture
(as defined) limits the incurrence of additional indebtedness by Benedek
Broadcasting.
The Company's high degree of leverage will have important consequences to
holders of the Exchangeable Preferred Stock, including the following: (i) the
ability of the Company to obtain additional financing for working capital,
capital expenditures, debt service requirements or other purposes may be
impaired; (ii) a substantial portion of the Company's Adjusted EBITDA will be
required to fund the payment of the Company's
18
<PAGE>
<PAGE>
interest expense and principal repayment obligations; (iii) the Company may be
more highly leveraged than competing companies, 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 AND PREFERRED STOCK DIVIDENDS
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, 1997 and the three months ended March 31,
1998, the Company's earnings would have been insufficient to cover fixed charges
by $36.3 million and $10.0 million, respectively, and earnings would have been
insufficient to cover fixed charges and preferred stock dividends by $55.4
million and $15.2 million, respectively. For the 12 months ended March 31, 1998,
on a pro forma basis after giving effect to the Offering and the application of
the proceeds therefrom, the Company's earnings would have been insufficient to
cover fixed charges and dividends on the Exchangeable Preferred Stock by $39.3
million. If non-cash charges to income for depreciation and amortization and
non-cash interest were excluded, the Company's earnings from continuing
operations for 1997 and the three months ended March 31, 1998 would have been
sufficient to cover its fixed charges for such periods.
The Senior Subordinated Discount Notes and the Senior Secured Notes are
each scheduled to mature prior to the maturity date of the Exchangeable
Preferred Stock. In order to repay the Senior Subordinated Discount Notes and
the Senior Secured Notes at maturity, the Company will need to refinance all or
a portion of the Senior Subordinated Discount 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 Senior Subordinated Discount 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 Senior Subordinated Discount 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 Senior Subordinated Discount Notes do not bear interest until May 15,
2001, and the Company is not obligated to pay cash interest on the Senior
Subordinated Discount 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 May 15, 2003, 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. The Credit Agreement currently prohibits
the Company from making cash payments with respect to dividends on the
Exchangeable Preferred Stock and interest on the Exchange Debentures at any
time. Accordingly, the Company currently intends not to pay cash dividends on
the Exchangeable Preferred Stock or cash interest on the Exchange Debentures, as
applicable, prior to May 15, 2003. In order for the Company to pay required cash
dividends with respect to the Exchangeable Preferred Stock or cash interest on
the Exchange Debentures, as the case may be, after May 15, 2003, the Company
will need to amend the Credit Agreement or refinance the Term Loan Facilities
and Revolving Credit Facility thereunder as well as need to substantially
increase broadcast cash flow at the Stations. 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 cash interest after May 15, 2001 with respect to the Senior
Subordinated Discount Notes, and cash dividends 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 $62.8
million (assuming that there will not have been any mandatory or voluntary
prepayments of any indebtedness prior to that time, assuming no incurrence of
additional indebtedness and assuming a blended interest rate on the amounts then
outstanding under the Credit
19
<PAGE>
<PAGE>
Agreement comparable to the rate the Company is currently paying). The Company's
cash dividend payments during such period with respect to the Seller Junior
Discount Preferred Stock would be approximately $10.1 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 that the proceeds which the Company could
realize therefrom would be adequate to meet the obligations then due.
Additionally, there can be no assurance that prior to May 15, 2003, the Company
will be able to refinance the Credit Agreement or amend the terms thereof in
order to permit cash dividends on the Exchangeable Preferred Stock or cash
interest on the Exchange Debentures, as applicable.
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
value of the Exchangeable Preferred Stock.
RANKING OF EXCHANGEABLE PREFERRED STOCK AND SUBORDINATION OF EXCHANGE DEBENTURES
The Exchangeable Preferred Stock ranks: (i) junior in right of payment to
all existing and future liabilities and obligations (whether or not for borrowed
money) of the Company (other than the common stock and any preferred stock
issued by the Company which by its terms is on parity with or junior to the
Exchangeable Preferred Stock); (ii) pari passu with each other class or series
of preferred stock issued by the Company after the Offering that specifically
provides that such class or series will rank on a parity with the Exchangeable
Preferred Stock; and (iii) senior in right of payment to the Seller Junior
Discount Preferred Stock and all common stock and to each other class or series
of preferred stock issued by the Company after the Offering that specifically
provides that such series will rank junior to the Exchangeable Preferred Stock.
The holders of the Exchangeable Preferred Stock have limited voting rights. See
'Description of the Exchangeable Preferred Stock and Exchange
Debentures -- Exchangeable Preferred Stock -- Ranking -- Voting Rights.'
The Exchange Debentures will be unsecured obligations of the Company and
will be subordinated in right of payment to all existing and future senior debt
and senior subordinated debt of the Company, including the obligations of the
Company under its guarantees of the Credit Agreement and the Senior Secured
Notes and with respect to the Senior Subordinated Discount Notes. As of March
31, 1998, the aggregate principal amount of such Senior Debt (as defined) was
approximately $372.3 million. In the event of bankruptcy, liquidation or
reorganization of the Company, the assets of the Company will be available to
pay obligations on the Exchange Debentures only after all such Senior Debt of
the Company has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on the Exchange Debentures then outstanding.
Additional indebtedness, including Senior Debt, may be incurred by the Company
from time to time, subject to the terms of the Exchange Indenture. In addition,
the Exchange Debentures will be structurally subordinated to any liabilities or
obligations of the Company's subsidiaries, including Benedek Broadcasting. As of
March 31, 1998, the aggregate debt of the Company's subsidiaries was $258.4
million. See 'Description of the Exchangeable Preferred Stock and Exchange
Debentures -- Exchange Debentures -- Ranking.'
HOLDING COMPANY STRUCTURE
The Company is a holding company that derives 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 ability to pay cash dividends on the Exchangeable
Preferred Stock and to redeem the Exchangeable Preferred Stock or pay cash
interest on the Exchange
20
<PAGE>
<PAGE>
Debentures and to redeem the Exchange Debentures, as applicable, whether upon
the mandatory redemption date of May 15, 2008, upon a Change of Control or
otherwise, or to pay interest on the Company's Senior Subordinated Discount
Notes, 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.
Under Delaware law the Company is permitted to pay dividends on its capital
stock, including the Exchangeable Preferred Stock, only out of its surplus or,
in the event that it has no surplus, out of its net profits for the year in
which a dividend is declared or for the immediately preceding fiscal year.
Surplus is defined as the excess, if any, of the net assets of a company over
the amount determined to be capital of such company. In order to pay dividends
in cash, the Company must have surplus or net profits equal to the full amount
of the cash dividend at the time such dividend is declared. In determining the
Company's ability to pay dividends, Delaware law permits the board of directors
of the Company to revalue the Company's assets and liabilities from time to time
to their fair market values in order to create surplus. The Company cannot
predict what the value of its assets or the amount of its liabilities will be in
the future and, accordingly, there can be no assurance that the Company will be
able to pay cash dividends on the Exchangeable Preferred Stock.
Although the Credit Agreement does not limit the ability of Benedek
Broadcasting to pay dividends or make other payments to the Company, it does
limit the Company's ability to pay dividends on the Exchangeable Preferred Stock
and interest on the Exchange Debentures, as applicable. Additionally, the Senior
Secured Note Indenture limits Benedek Broadcasting from paying dividends or
making other payments to the Company. As of March 31, 1998, Benedek Broadcasting
could have distributed approximately $188 million to the Company under such
limitations.
TAX CONSEQUENCES OF DISTRIBUTIONS WITH RESPECT TO THE EXCHANGEABLE PREFERRED
STOCK AND EXCHANGE OF EXCHANGE DEBENTURES
Distributions on the Exchangeable Preferred Stock will be taxable for
Federal income tax purposes as ordinary dividend income (potentially eligible
for the dividends-received deduction for certain U.S. corporate holders) only to
the extent paid out of current or accumulated earnings and profits of the
Company as determined for Federal income tax purposes. To the extent that the
amount of such distributions exceeds the current or accumulated earnings and
profits of the Company, such excess will reduce the holder's basis in the stock
with respect to which the distribution is made (to the extent thereof), with any
remaining excess treated as gain from the sale or exchange of such stock. The
Company does not currently have any accumulated earnings and profits and there
can be no assurance regarding the amount of current or accumulated earnings and
profits of the Company in the future. As a result, there can be no assurance
that the dividends-received deduction will apply to distributions on the
Exchangeable Preferred Stock.
The Company may, at its option and under certain circumstances, exchange
Exchange Debentures for the Exchangeable Preferred Stock. Any such exchange will
be a taxable event to holders of the Exchangeable Preferred Stock. Furthermore,
the Exchange Debentures may be treated as having been issued with original issue
discount ('OID') for Federal income tax purposes. Holders of Exchange Debentures
may be required to include such OID (as ordinary income) in income over the life
of the Exchange Debentures, in advance of the receipt of the cash attributable
to such income.
The Exchange Debentures may be subject to the rules for 'Applicable High
Yield Discount Obligations' in which case the Company's deduction for OID on the
Exchange Debentures will be substantially deferred, and a portion of such
deduction may be disallowed.
For a discussion of these and other relevant tax issues, see 'Certain
Federal Income Tax Consequences.'
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.'
21
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<PAGE>
COMPETITION WITHIN THE TELEVISION INDUSTRY; DIGITAL ADVANCED TELEVISION
The television broadcast industry faces competition for market share and
advertising revenues from a variety of alternative media, including cable
television, 'wireless' cable systems, direct broadcast satellite systems,
telephone company video systems, radio, newspapers, computer on-line services,
periodicals and other entertainment and advertising media.
The ability of television broadcast stations to generate advertising
revenues depends to a significant degree upon audience ratings. Technological
innovation and the resulting proliferation of programming alternatives, such as
independent broadcast stations, cable television and other multi-channel
competitors, pay-per-view and VCRs, have fragmented 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 has recently assigned licenses to permit television broadcasters to
provide digital advanced television ('DTV') services. DTV 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 decided to issue a second channel to each television
broadcaster to permit it to provide DTV over a transition period. Although in
some cases a DTV channel may provide a station with a smaller geographic service
area than its current channel, most stations are expected to obtain DTV service
areas that are consistent with their current service areas. At the end of a
transition period, each broadcaster is 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 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, the Balanced Budget Act of 1997 requires (unless the FCC finds
that certain conditions have not been met) broadcasters to return their analog
channels on an expedited basis by 2006 to permit them to be reauctioned to new
licensees. 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 DTV-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 licenses expiring on various dates
from 1998 to 2006. Currently, WIBW-TV, serving Topeka, Kansas; KAUZ-TV, serving
Wichita Falls, Texas; KOSA-TV, serving Odessa, Texas; KGWN-TV, serving Cheyenne,
Wyoming; and KGWC-TV, serving Casper, Wyoming, and its satellite stations
KGWR-TV, serving Rock Springs, Wyoming, and KGWL-TV, serving Lander, Wyoming,
have pending applications for license renewal. Pursuant to recent legislation,
the term of each of these licenses will be extended to eight years upon ordinary
course renewal. The United States Congress and the FCC currently have under
consideration and may in the future adopt new laws, regulations and policies
regarding a wide variety of
22
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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's duopoly rule currently bars an entity from having an attributable
interest in television stations in the same market or with overlapping Grade B
service contours. However, pending resolution of an FCC proceeding that may
result in the liberalization of this rule, the FCC may allow an entity to
acquire an attributable interest in two stations in different markets with
overlapping Grade B contours provided the stations' Grade A contours do not
overlap. Based on this interim policy, the FCC has permitted common ownership by
the Company of WTRF-TV, serving Wheeling, West Virginia and Steubenville, Ohio,
and WYTV, serving Youngstown, Ohio, and of WTRF-TV and WTAP-TV, serving
Parkersburg, West Virginia, subject to the outcome of the pending proceeding. In
1996, the FCC granted the Company authority to acquire WMTV(TV), serving
Madison, Wisconsin, despite the overlap of Grade B and Grade A contours of that
station with the Company's WIFR-TV, serving Rockford, Illinois, pursuant to a
temporary waiver of the duopoly rule. Prior to the end of the waiver period in
December 1996, the Company requested an extension of the waiver subject to the
outcome of the pending proceeding, but has been informed that such relief is not
currently available because of the partially overlapping Grade A contours. As an
alternative, the Company has filed an application to transfer WMTV(TV) to a
trust, which application is pending. The Company may be required to dispose of
one of the two Stations to a third party within six months after the processing
and the grant of the application. 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, NBC or Fox.
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 Stations' network affiliation agreements currently runs for a
period of two to ten 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. 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. WHOI(TV), an ABC affiliate, operates under an affiliation
agreement which expires in 2005 and which does not provide for renewals. Each of
KDLH-TV, WIFR-TV, KHQA-TV, WTVY-TV, KGWN-TV, KGWC-TV, KCOY-TV, WIBW-TV, WSAW-TV,
WTRF-TV, KAUZ-TV and KOSA-TV, all of which are CBS affiliates, has 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. Each of
WMTV(TV), WWLP(TV) and WILX-TV, all of which are NBC affiliates, 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. WTAP-TV, an
NBC affiliate, 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. K02NQ and K11TB, two low-power broadcast television stations
operated by KMIZ(TV), are Fox affiliates. The low-power Stations' affiliation
agreement expires July 31, 1999, and automatically continues until terminated by
either party upon 120 days' advance notice.
The Company has entered into 10-year agreements with The Warner Bros.
Television Network to develop a local cable affiliate called the 'WeB' in each
of the Company's 20 markets which are outside the 100 largest in the U.S., as
measured by Nielsen. The Company will be responsible for all local sales efforts
for the new channel 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 the WeB, although there can be no assurance made with respect to
the foregoing. Additionally, once implemented, there is no assurance that the
WeB project will be successful in generating additional revenue for the Company.
Although the Company expects to be able to renew these affiliation
agreements, no assurance can be given that such renewals will be obtained. The
non-renewal or termination of one or more of the network affiliation
23
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<PAGE>
agreements would likely have a material adverse effect on the Company's results
of operations. See 'Business -- Network Affiliation of the Stations.'
DEPENDENCE ON KEY PERSONNEL
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 comparable business experience.
CONTROL BY MAJORITY STOCKHOLDER; CHANGE OF CONTROL COULD RESULT IN DEFAULT
A. Richard Benedek owns 87.4% 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 the
Certificates of Designation) could require the Company and Benedek Broadcasting
to refinance substantial amounts of their indebtedness and preferred stock,
including the Senior Subordinated Discount Notes, the Senior Secured Notes, the
Term Loan Facilities and the Exchangeable Preferred Stock or Exchange
Debentures, as the case may be. The Company's failure to refinance such
indebtedness and preferred stock when required would result in a default under
the Senior Subordinated Discount Note Indenture (as defined), 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 Exchangeable Preferred Stock or Exchange Debentures, as
the case may be, upon a Change of Control. See 'Description of
Indebtedness -- Credit Agreement' and ' -- Senior Secured Notes.'
FRAUDULENT CONVEYANCE
Various state and Federal fraudulent conveyance laws have been enacted for
the protection of creditors and may be utilized by a court to subordinate or
avoid the Exchange Debentures in favor of other existing or future creditors of
the Company. If a court in a lawsuit commenced on behalf of any unpaid creditor
of the Company, or by the Company as a Chapter 11 debtor in possession, or by a
representative of the Company's creditors with standing were to find that, at
the time the Company issued the Exchange Debentures, the Company (x) intended to
hinder, delay or defraud any existing or future creditor or (y) did not receive
fair consideration or reasonably equivalent value for issuing such Exchange
Debentures and the Company (i) was insolvent, (ii) was rendered insolvent by
reason of such issuance, (iii) was engaged or about to engage in a business or
transactions for which its remaining assets constituted unreasonably small
capital or (iv) intended to incur, or believed that it would incur, debts beyond
its ability to pay such debts as they matured, the court may, upon appropriate
proof, void the Company's obligations under the Exchange Debentures and void
such transactions. In such event, claims of the holders of such Exchange
Debentures could be subordinated to claims of the other creditors of the
Company.
LACK OF PUBLIC MARKET FOR THE EXCHANGEABLE PREFERRED STOCK
The Exchange Securities are being offered to the holders of shares of
Existing Exchangeable Preferred Stock. The Offering of the Existing Exchangeable
Preferred Stock was consummated on May 14, 1998 to a small number of
institutional investors and is 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
24
<PAGE>
<PAGE>
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.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The
Company used approximately $92.8 million of the net proceeds from the Offering
to redeem the Old Exchangeable Preferred Stock (including approximately $12.1
million representing premiums relating to the redemption) on June 8, 1998 and
the balance for general corporate purposes, including the reduction of a portion
of the Company's debt under the Revolving Credit Facility.
25
<PAGE>
<PAGE>
SELECTED FINANCIAL DATA
The following tables present selected historical financial information and
operating information for the Company. The selected historical financial
information for each year in the five-year period ended December 31, 1997 and as
of and for the three-month periods ended March 31, 1997 and 1998 has been
derived from the Consolidated Financial Statements of the Company. The
Consolidated Financial Statements as of December 31, 1997 and 1996 and for each
of the three years in the period ended December 31, 1997 are included elsewhere
herein. The selected historical information for the three-month periods ended
March 31, 1998 and 1997 has been derived from the Company's Unaudited
Consolidated Financial Statements, included elsewhere herein, which have not
been audited, but which reflect, in the opinion of management, all adjustments
that include only normal recurring adjustments necessary to present fairly the
information contained herein. Interim results are not necessarily indicative of
results to be expected for any full year. This information should be read in
conjunction with 'Management's Discussion and Analysis of Financial Condition
and Results of Operations' and the Consolidated Financial Statements of the
Company, including the notes thereto, included elsewhere in this Prospectus. The
pro forma information for the 12 months ended March 31, 1998, giving effect to
the issuance of the Exchangeable Preferred Stock and the redemption of the Old
Exchangeable Preferred Stock, has been derived from the Unaudited Consolidated
Financial Statements for the three months ended March 31, 1998, and the
unaudited consolidated financial statements for the nine months ended December
31, 1997.
<TABLE>
<CAPTION>
PRO FORMA
THREE MONTHS ENDED TWELVE MONTHS
YEAR ENDED DECEMBER 31, MARCH 31, ENDED
------------------------------------------------------------- ---------------------- MARCH 31,
1993 1994 1995(A) 1996(B) 1997 1997 1998 1998
--------- --------- --------- --------- --------- --------- --------- -------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues(c)...... $ 38,352 $ 44,221 $ 50,329 $ 96,386 $ 127,073 $ 28,078 $ 30,695 $ 129,690
Operating expenses:
Station operating
expenses....... 22,805 24,810 29,049 58,602 80,003 19,406 20,633 81,230
Depreciation and
amortization... 3,721 3,403 5,041 20,220 31,380 7,747 7,788 31,421
--------- --------- --------- --------- --------- --------- --------- -------------
Station operating
income............. 11,826 16,008 16,239 17,564 15,690 925 2,274 17,039
Corporate........ 1,249 1,309 1,576 2,696 3,787 696 1,377 4,468
Special bonus,
officer-stockholder... 1,400 -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- -------------
Operating income..... 9,177 14,699 14,663 14,868 11,903 229 897 12,571
--------- --------- --------- --------- --------- --------- --------- -------------
Financial expenses,
net:
Interest expense,
net(d):
Cash interest,
net(e)......... (8,194) (7,740) (14,763) (22,559) (28,866) (7,036 ) (6,817) (28,192)
Other interest... (6,161) (4,905) (712) (8,130) (19,374) (3,608 ) (4,021) (19,787)
--------- --------- --------- --------- --------- --------- --------- -------------
(14,355) (12,645) (15,475) (30,689) (48,240) (10,644 ) (10,838) (47,979)
Other, net........... 144 (10) -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- -------------
(14,211) (12,655) (15,475) (30,689) (48,240) (10,644 ) (10,838) (47,979)
--------- --------- --------- --------- --------- --------- --------- -------------
Income (loss) before
income tax
benefit and
extraordinary
item(e)............ (5,034) 2,044 (812) (15,821) (36,337) (10,415 ) (9,941) (35,408)
Income tax
benefit(f)......... -- -- -- 4,664 12,027 3,776 3,810 12,061
--------- --------- --------- --------- --------- --------- --------- -------------
Income (loss) before
extraordinary
item(e)............ (5,034) 2,044 (812) (11,157) (24,310) (6,639 ) (6,131) (23,347)
Extraordinary
item(g)............ -- -- 6,864 -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- -------------
Net income (loss).... (5,034) 2,044 6,052 (11,157) (24,310) (6,639 ) (6,131) (23,347)
Old Exchangeable
Preferred Stock
dividends and
accretion.......... -- -- -- 7,462 15,198 3,444 4,202 --
Premiums paid upon
redemption of the
Old Exchangeable
Preferred Stock.... -- -- -- -- -- -- -- 12,350
Exchangeable
Preferred Stock
dividends(e)....... -- -- -- -- -- -- -- 12,025
Seller Junior
Discount Preferred
Stock dividends.... -- -- -- 2,057 3,839 932 1,008 3,915
Net income (loss)
applicable to
common stock(e).... $ (5,034) $ 2,044 $ 6,052 $ (20,676) $ (43,347) $(11,015 ) $ (11,341) $ (51,637)
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
BASIC AND DILUTED
EARNINGS (LOSS) PER
COMMON SHARE:
Earnings (loss)
before
extraordinary
item............... $ (0.72) $ 0.29 $ (0.12) $ (2.94) $ (6.17) $ (1.57 ) $ (1.53) $ (7.25)
Extraordinary item... -- -- 0.98 -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- -------------
Earnings (loss) per
common share....... $ (0.72) $ 0.29 $ 0.86 $ (2.94) $ (6.17) $ (1.57 ) $ (1.53) $ (7.25)
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
Weighted average
common shares
outstanding........ 7,030,000 7,030,000 7,030,000 7,030,000 7,030,000 7,030,000 7,400,000 7,123,000
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
STATEMENT OF CASH FLOW
DATA:
Net cash provided by
(used in) operating
activities......... $ 4,926 $ 10,493 $ 3,250 $ 17,843 $ 8,471 $ (2,070 ) $ 96 $ 11,092
Net cash (used in)
investing
activities......... (864) (2,507) (30,972) (326,632) (6,282) (570 ) (1,961) (7,673)
Net cash provided by
(used in) financing
activities......... (6,951) (7,037) 32,773 307,212 (7,632) (587 ) 2,312 (4,733)
</TABLE>
(table continued on next page)
26
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(table continued from previous page)
<TABLE>
<CAPTION>
PRO FORMA
THREE MONTHS ENDED TWELVE MONTHS
YEAR ENDED DECEMBER 31, MARCH 31, ENDED
------------------------------------------------------------- ---------------------- MARCH 31,
1993 1994 1995(A) 1996(B) 1997 1997 1998 1998
--------- --------- --------- --------- --------- --------- --------- -------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Broadcast cash
flow(h)............ $ 15,546 $ 19,627 $ 21,310 $ 38,865 $ 47,534 $ 8,809 $ 10,008 $ 48,733
Broadcast cash flow
margin(i).......... 40.5% 44.4% 42.3% 40.3% 37.4% 31.4 % 32.6% 37.6%
Adjusted EBITDA(j)... $ 14,297 $ 18,318 $ 19,734 $ 36,169 $ 43,747 $ 8,113 $ 8,631 $ 44,265
Adjusted EBITDA
margin(k).......... 37.3% 41.4% 39.2% 37.5% 34.4% 28.9 % 28.1% 34.1%
Amortization of
program broadcast
rights............. $ 2,179 $ 2,104 $ 2,162 $ 4,399 $ 6,401 $ 1,559 $ 1,698 $ 6,540
Payment for program
broadcast rights... 2,180 1,888 2,132 3,318 5,937 1,422 1,752 6,267
Capital
expenditures....... 1,278 1,161 2,008 5,393 10,833 1,355 2,817 12,295
Adjusted EBITDA to
interest expense... 1.0x 1.4x 1.3x 1.2x 0.9x 0.8 x 0.8x 0.9x
Adjusted EBITDA to
interest expense
plus Exchangeable
Preferred Stock
dividends.......... -- -- -- -- -- -- -- 0.7x
Total debt to
Adjusted
EBITDA(l).......... 7.9x 5.9x 6.9x 9.9x 8.5x -- -- 8.4x
Total debt plus
Exchangeable
Preferred Stock to
Adjusted
EBITDA(l).......... -- -- -- -- -- -- -- 10.7x
Earnings to fixed
charges............ -- 1.2x -- -- -- -- -- --
Earnings to fixed
charges and
preferred
dividends.......... -- -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31, 1998
-------------------------------------------------------- ---------------------------
1993 1994 1995(A) 1996(B) 1997 ACTUAL AS ADJUSTED(E)
-------- -------- -------- -------- -------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents...... $ 3,667 $ 4,617 $ 9,668 $ 8,091 $ 2,648 $ 3,095 $ 3,095
Total assets................... 72,818 73,621 114,453 495,015 468,495 458,047 458,047
Total debt(l).................. 112,874 107,607 135,767 358,234 370,917 377,528 372,241
Old Exchangeable Preferred
Stock........................ -- -- -- 58,462 73,660 77,863 --
Exchangeable Preferred Stock... -- -- -- -- -- -- 100,000
Seller Junior Discount
Preferred Stock.............. -- -- -- 47,057 50,896 51,904 51,904
Stockholders' (deficit)........ (44,660) (42,615) (36,563) (51,561) (94,908) (106,248) (123,098)
</TABLE>
- ------------
(a) On March 31, 1995 the Company acquired WTVY-TV serving Dothan, Alabama and
Panama City, Florida. The statement of operations and other data does not
include information with respect to WTVY-TV prior to the date of
acquisition.
(b) On June 6, 1996 the Company acquired the Stauffer Stations and the
Brissette Stations. The statement of operations and other data does not
include information with respect to the Acquired Stations prior to the date
of acquisition.
(c) Net revenues reflect deductions from gross revenues for agency and national
sales representative commissions.
(d) Cash interest expense, net of interest income, includes cash interest paid
and normal adjustments to accrued interest. Other interest expense includes
accrued interest with respect to the Warrants, accrued interest with
respect to the contingent equity value of the Company and long-term
deferred interest, accrued interest added to long-term debt balances,
deferred loan amortization and accretion of discounts.
(e) The following adjustments have been applied to the financial data for the
12 months ended March 31, 1998 to reflect the Offering as if the Existing
Exchangeable Preferred Stock was issued and the Old Exchangeable Preferred
Stock was redeemed on April 1, 1997 with respect to the Statement of
Operating Data and as of March 31, 1998 for the Balance Sheet Data:
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED MARCH 31, 1998
--------------------
<S> <C>
Statement of Operations Data:
Reduction in cash interest due to the application of $5,287 of net proceeds to reduce the
outstanding Revolving Credit Facility balance............................................ $ (455)
Preferred stock dividends and accretion eliminated on the Old Exchangeable Preferred
Stock.................................................................................... (15,198)
Preferred stock dividends on the Exchangeable Preferred Stock with a dividend rate of
11 1/2% per annum........................................................................ 12,025
</TABLE>
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998
--------------------
<S> <C>
Balance Sheet Data:
Reduction of Revolving Credit Facility balance working capital due to the net proceeds of
the Offering............................................................................. $ 5,287
Increase in redeemable preferred stock due to the Offering................................ 22,137
Increase in stockholders' deficit due to premiums paid and accretion upon redemption of
the Old Exchangeable Preferred Stock..................................................... (12,350)
Decrease in additional paid-in capital due to payment of fees associated with the
Offering................................................................................. (4,500)
</TABLE>
(f) The Company had historically elected to be taxed as an S Corporation for
Federal and state income tax purposes. The Company's election to be taxed
as an S Corporation terminated automatically concurrently with the
consummation of the Acquisitions on June 6, 1996. Accordingly, the then
sole stockholder of the Company is responsible for the payment of income
taxes on the Company's taxable income for any time prior to June 6, 1996.
Net income (loss) does not include a pro forma adjustment for income taxes
prior to June 6, 1996 due to the availability of net operating loss
carryforwards and a valuation allowance. The Company is subject to Federal
and state income taxes after June 6, 1996.
(g) 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.
(h) Broadcast cash flow is defined as operating income before financial income
as derived from the consolidated statements of operations plus depreciation
and amortization, amortization of program broadcast rights, corporate
expenses and non-cash compensation less payments for program broadcast
rights. The Company has included broadcast cash flow data because such data
is used by certain
(footnotes continued on next page)
27
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(footnotes continued from previous page)
investors to measure a company's ability to service debt. Broadcast 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 GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with GAAP.
(i) Broadcast cash flow margin is defined as broadcast cash flow divided by net
revenues.
(j) Adjusted EBITDA is defined as operating income before financial income as
derived from the consolidated statements of operations plus depreciation
and amortization, amortization of program broadcast rights and non-cash
compensation less payments for program broadcast rights. The Company has
included Adjusted EBITDA data because such data is used by certain
investors to measure a company's ability to service debt. Adjusted EBITDA
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 GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with GAAP.
(k) Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net
revenues.
(l) Total debt is defined as notes payable and capital leases payable
(including the current portion thereof), net of discount.
28
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The operating revenues of the Company are derived primarily from the sale
of local, regional and national advertising time and, to a lesser extent, from
compensation paid by the networks for broadcasting network programming and
barter transactions for goods and services. Revenues depend on the ability of
the Company to provide popular programming which attracts audiences in the
demographic groups targeted by advertisers, thereby allowing the Company to sell
advertising time at competitive rates. Revenues also depend significantly on
factors such as the national and local economy and the level of competition for
advertising revenues.
In 1997, the Company reported net revenues of $127.1 million compared to
net revenues of $96.4 million in 1996 and $50.3 million in 1995. The increase in
1997 net revenues was due largely to the Acquisitions. The Company had a net
loss of $24.3 million for 1997 compared to a net loss of $11.2 million for 1996
and net income of $6.0 million (after an extraordinary gain of $6.9 million) for
1995. Adjusted EBITDA for the year ended December 31, 1997 was $43.7 million as
compared to $36.2 million for the year ended December 31, 1996 and $19.7 million
for the year ended December 31, 1995.
For the three months ended March 31, 1998, the Company reported net
revenues of $30.7 million compared to net revenues of $28.1 million for the
three months ended March 31, 1997. The Company had a net loss of $6.1 million
for the three months ended March 31, 1998 compared to a net loss of $6.6 million
for the three months ended March 31, 1997. Adjusted EBITDA for the three months
ended March 31, 1998 was $8.6 million as compared to $8.1 million for the three
months ended March 31, 1997.
Time sales to local/regional advertisers and national advertisers
constitute the largest concentration of the Company's operating revenues and
represent approximately 85% of gross revenues in 1997 as compared to 80% in
1996. Excluding political advertising revenue, however, the percentage of gross
revenues attributable to local/regional advertising and national advertising of
the Company in 1995, 1996 and 1997 was 87.4%, 86.6% and 85.9%, respectively.
Approximately 56.1% of the gross revenues of the Company in 1997 was generated
from local and regional advertising, which is sold primarily by the Stations'
sales staff, and the remainder of the advertising revenues is comprised
primarily of national advertising, which is sold by national sales
representatives retained by the Company. The Company 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.
To a lesser extent, the Company receives revenues from other sources,
including network compensation, barter revenue and rental income. These revenues
collectively made up 14.0% of gross revenues in 1997, 12.3% in 1996 and 12.4% in
1995.
In December 1995, the Company entered into new long-term affiliation
agreements with CBS with respect to the 12 Stations affiliated with CBS. 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 are being recognized as revenue by the Company at the rate
of $0.5 million per year over the ten-year term of the affiliation agreements.
The Company'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. The Company purchases
first run and off-network syndicated programming on an ongoing basis. Under its
contract with the network, a network-affiliated station receives approximately
two-thirds of its daily programming from its network and in turn is compensated,
in most cases, by its network for carrying such programming with the network's
commercial content intact. Depreciation and amortization expense has increased
as assets purchased at fair market value in connection with the Acquisitions
have begun to depreciate. Barter expense generally offsets barter revenue and
reflects the fair market value of goods and services received. The Company's
operating expenses (excluding depreciation and amortization) represent
approximately 66% of net revenues for 1997 as compared to 64% for 1996 and 61%
for 1995. During the 18 months following the consummation of the Acquisitions,
the Company implemented significant personnel, operational and programming
changes at the
29
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Acquired Stations, which management believes will result in improvements in
operating revenues and broadcast cash flow.
On March 31, 1995, the Company acquired, for a cash purchase price of $28.7
million, substantially all of the assets of WTVY-TV (the 'Dothan Station') which
is the CBS affiliate serving both Dothan, Alabama and Panama City, Florida.
On June 6, 1996, the Company acquired substantially all of the broadcast
television assets 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 these
Stations are affiliated with CBS, except for KMIZ-(TV), Columbia, Missouri,
which is affiliated with ABC.
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. 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. 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 of the Seller Junior Discount Preferred Stock
to GECC and Mr. Paul Brissette.
The Company has included Adjusted EBITDA and broadcast cash flow data
because such data is used by certain investors to measure a company's ability to
service debt. Adjusted EBITDA is used to pay principal and interest on long-term
debt and to fund capital expenditures. Adjusted EBITDA and broadcast cash flow
do 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 GAAP and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with GAAP.
RESULTS OF OPERATIONS
The following table sets forth certain historical results of the operations
and operating data for the periods indicated. The table includes the results of
operations of the Acquired Stations only from the closing date of June 6, 1996.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- ------------------
1995 1996 1997 1997 1998
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating income................................. $14,663 $14,868 $11,903 $ 229 $ 897
Add:
Amortization of program broadcast
rights............................... 2,162 4,399 6,401 1,559 1,698
Depreciation and amortization.......... 5,042 20,220 31,380 7,747 7,788
Corporate expenses..................... 1,575 2,696 3,787 696 1,377
Less:
Payment for program broadcast rights... (2,132) (3,318) (5,937) (1,422) (1,752)
------- ------- ------- ------- -------
Broadcast cash flow.............................. $21,310 $38,865 $47,534 $ 8,809 $10,008
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
30
<PAGE>
<PAGE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
The following table provides historical financial information for the three
months ended March 31, 1998 as compared to the three months ended March 31,
1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1998 % CHANGE
------- ------- --------
(IN THOUANDS)
<S> <C> <C> <C>
Net revenues................................................................ $28,078 $30,695 9.3%
Operating expenses:
Selling, technical and program expenses................................ 14,690 15,400 4.8
General and administrative............................................. 4,716 5,233 11.0
Depreciation and amortization.......................................... 7,747 7,788 0.5
Corporate.............................................................. 696 1,377 97.8
------- ------- --------
27,849 29,798 7.0
------- ------- --------
Operating income.................................................. $ 229 $ 897 291.7%
------- ------- --------
------- ------- --------
Broadcast cash flow......................................................... $ 8,809 $10,008 13.6%
Broadcast cash flow margin.................................................. 31.4% 32.6%
Adjusted EBITDA............................................................. $ 8,113 $ 8,631 6.4%
Adjusted EBITDA margin...................................................... 28.9% 28.1%
</TABLE>
Net revenues for the three months ended March 31, 1998 increased $2.6
million or 9.3% to $30.7 million from $28.1 million for the three months ended
March 31, 1997. Gross revenues excluding political advertising revenue increased
$2.7 million or 8.3% from the three months ended March 31, 1997.
Net revenues during the three months ended March 31, 1998 showed an
improvement in advertising revenue for the Company's ABC, CBS and NBC affiliated
Stations. Net revenues increased 11.2% at the Company's CBS affiliated stations,
4.7% at the Company's ABC affiliated stations and 11.0% at the Company's NBC
affiliated stations. The increases seen at the Company's 12 CBS affiliated
stations were largely influenced by the Winter Olympics covered in February
1998. Based on Nielsen ratings reports in November 1997 and February 1998, CBS
programming generally experienced increased ratings and shares, while ABC and
NBC programming showed slight decreases in ratings and shares. The Company
generally expects these higher ratings and shares for CBS to continue to have a
positive impact on net revenues.
Operating expenses for the three months ended March 31, 1998 increased $2.0
million or 7.0% to $29.8 million from $27.8 million for the three months ended
March 31, 1997. As a percentage of net revenues, operating expenses decreased to
97.1% from 99.2% for the three months ended March 31, 1998. The increase in
expenses was due to increased compensation expense as the Company expanded the
news operations at the Acquired Stations, an increase in medical insurance
costs, and an expansion of corporate management effective after the first
quarter of 1997.
Operating income for the three months ended March 31, 1998 increased $0.7
million to $0.9 million from $0.2 million for the three months ended March 31,
1997.
Financial (expenses), net for the Company for the three months ended March
31, 1998 increased $0.2 million or 1.8% to $10.8 million from $10.6 million for
the three months ended March 31, 1997.
Income tax benefit for the Company for each of the three month periods
ended March 31, 1998 and March 31, 1997 was $3.8 million. The tax effect of the
excess of book depreciation over tax depreciation and a current period net
operating loss for tax purposes were the primary factors resulting in the income
tax benefit for the three months ended March 31, 1998.
Net loss for the Company for the three months ended March 31, 1998 was $6.1
million as compared to a net loss of $6.6 million for the three months ended
March 31, 1997.
Broadcast cash flow for the three months ended March 31, 1998 increased
$1.2 million or 13.6% to $10.0 million from $8.8 million for the three months
ended March 31, 1997. As a percentage of net revenues, broadcast cash flow
margin increased to 32.6% for the three months ended March 31, 1998 from 31.4%
for the three months ended March 31, 1997.
31
<PAGE>
<PAGE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
The following table provides both historical and Same Station information.
The Same Station information gives effect to the Acquisitions as if such
transactions were consummated on January 1, 1996. The Same Station information
for the year ended December 31, 1996 does not purport to represent what the
Company's results of operations would have been if such transactions had been
effected at such date and does not purport to project results of operations of
the Company in any future period.
<TABLE>
<CAPTION>
HISTORICAL SAME STATION
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------- % -------------------- %
1996 1997 CHANGE 1996 1997 CHANGE
------- -------- ------ -------- -------- ------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net revenues................................. $96,386 $127,073 31.8 % $126,165 $127,073 0.7 %
Operating expenses:
Selling, technical and program
expenses.............................. 43,759 60,385 38.0 57,332 60,385 5.3
General and administrative.............. 14,844 19,618 32.2 20,239 19,618 (3.1 )
Depreciation and amortization........... 20,220 31,380 55.2 29,955 31,380 4.8
Corporate............................... 2,695 3,787 40.5 3,700 3,787 2.4
------- -------- ------ -------- -------- ------
81,518 115,170 41.3 111,226 115,170 3.5
------- -------- ------ -------- -------- ------
Operating income................... $14,868 $ 11,903 (19.9 )% $ 14,939 $ 11,903 (20.3 )%
------- -------- ------ -------- -------- ------
------- -------- ------ -------- -------- ------
Broadcast cash flow.......................... $38,865 $ 47,534 22.3 % $ 49,741 $ 47,534 (4.4 )%
Broadcast cash flow margin................... 40.3% 37.4% 39.4% 37.4%
Adjusted EBITDA.............................. $36,169 $ 43,747 20.9 % $ 46,041 $ 43,747 (5.0 )%
Adjusted EBITDA margin....................... 37.5% 34.4% 36.5% 34.4%
</TABLE>
Net revenues for the year ended December 31, 1997 increased $30.7 million
or 31.8% to $127.1 million from $96.4 million for the year ended December 31,
1996 primarily as a result of the Acquisitions. On a Same Station basis, net
revenues for the year ended December 31, 1997 increased $1.0 million or 0.7%
from the year ended December 31, 1996. Gross revenues on a Same Station basis
excluding political advertising revenue increased $8.8 million or 6.5% from the
year ended December 31, 1996.
Net revenues during the year ended December 31, 1997 continued to be
adversely affected by weakness in advertising revenue for the Company's 12 CBS
affiliated stations and six ABC affiliated stations. On a Same Station basis,
net revenues of the Company's CBS affiliated stations decreased by 1.6% and net
revenues of the Company's ABC affiliated stations increased 0.6%, while net
revenues of the Company's NBC affiliated stations increased by 4.1%.
Operating expenses for the year ended December 31, 1997 increased $33.7
million or 41.3% to $115.2 million from $81.5 million for the year ended
December 31, 1996. The increase in operating expenses was attributable to the
Acquisitions. As a percentage of net revenues, operating expenses for the
Stations increased to 90.6% from 84.6% in the year ended December 31, 1996,
primarily as a result of an increase of $11.2 million in depreciation and
amortization expense. On a Same Station basis, operating expenses for the year
ended December 31, 1997 increased $4.0 million or 3.5% from the year ended
December 31, 1996. Such operating expenses were $115.2 million for the year
ended December 31, 1997 as compared to $111.2 million for the year ended
December 31, 1996. Operating expenses as a percentage of net revenues on a Same
Station basis increased from 88.2% for the year ended December 31, 1996 to 90.6%
for the year ended December 31, 1997. The increase in expenses on a Same Station
basis was due to increased compensation expense as the Company expanded the news
operations at the Acquired Stations, increased programming expense as the
Company revamped programming schedules at certain of the Acquired Stations and,
to a lesser extent, increased depreciation and amortization.
Operating income for the year ended December 31, 1997 decreased $3.0
million or 20.1% to $11.9 million from $14.9 million for the year ended December
31, 1996.
Financial (expenses), net increased $17.5 million or 57.0% to $48.2 million
from $30.7 million for the year ended December 31, 1996. For the year ended
December 31, 1997, the increases were due to the Company's higher debt level
following the completion of the financing of the purchase price of the
Acquisitions.
32
<PAGE>
<PAGE>
Loss on investment of $0.6 million was the result of uncertainty as to the
future realization of a 1995 investment in a start-up operation in a television
production business. The Company acquired a minority interest in the business
which has experienced losses since that date. The Company has reflected this
investment as a non-operating loss.
Income tax benefit for the year ended December 31, 1997 was $12.0 million
compared to $4.7 million for the year ended December 31, 1996. The tax effect of
the excess of book depreciation over tax depreciation and a current period net
operating loss for tax purposes were the primary factors resulting in the income
tax benefit for the year ended December 31, 1997.
Net loss for the year ended December 31, 1997 was $24.3 million as compared
to a net loss of $11.2 million for the year ended December 31, 1996.
Broadcast cash flow for the year ended December 31, 1997 increased $8.6
million or 22.3% to $47.5 million from $38.9 million for the year ended December
31, 1996 primarily as a result of the addition of the Acquired Stations. As a
percentage of net revenues, broadcast cash flow margin decreased to 37.4% for
the year ended December 31, 1997 from 40.3% for the year ended December 31,
1997. On a Same Station basis, broadcast cash flow for the year ended December
31, 1997 decreased $2.2 million or 4.4% to $47.5 million from $49.7 million for
the year ended December 31, 1996. As a percentage of net revenues, broadcast
cash flow margin on a Same Station basis decreased to 37.4% for the year ended
December 31, 1997 from 39.4% for the year ended December 31, 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
The following table provides both historical and Same Station information.
The Same Station information gives effect to the acquisition of the Dothan
Station and the Acquired Stations as if such transactions were consummated on
January 1, 1995. The Same Station information for the years ended December 31,
1995 and 1996 does not purport to represent what the Company's results of
operations would have been if such transactions had been effected at such date
and does not purport to project results of operations of the Company in any
future period.
<TABLE>
<CAPTION>
HISTORICAL SAME STATION
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------ % -------------------- %
1995 1996 CHANGE 1995 1996 CHANGE
------- ------- ------ -------- -------- ------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net revenues.................................... $50,329 $96,386 91.5 % $120,617 $126,165 4.6 %
------- ------- ------ -------- -------- ------
Operating expenses:
Selling, technical and program expenses.... 21,199 43,759 106.4 51,842 57,332 10.6
General and administrative................. 7,850 14,844 89.1 19,683 20,239 2.8
Depreciation and amortization.............. 5,042 20,220 301.1 28,138 29,955 6.4
Corporate.................................. 1,575 2,695 71.0 3,200 3,700 15.6
------- ------- ------ -------- -------- ------
35,666 81,518 128.4 102,863 111,226 8.1
------- ------- ------ -------- -------- ------
Operating income................................ $14,663 $14,868 1.4 % $ 17,754 $ 14,939 (15.8 )%
------- ------- ------ -------- -------- ------
------- ------- ------ -------- -------- ------
Broadcast cash flow............................. $21,310 $38,865 82.4 % $ 49,292 $ 49,741 1.0 %
Broadcast cash flow margin...................... 42.3% 40.3% 40.9% 39.4%
Adjusted EBITDA................................. $19,734 $36,169 83.3 % $ 46,092 $ 46,041 (0.1 )%
Adjusted EBITDA margin.......................... 39.2% 37.5% 38.2% 36.5%
</TABLE>
Net revenues for the year ended December 31, 1996 increased $46.1 million
or 91.5% to $96.4 million from $50.3 million for the year ended December 31,
1995 primarily as a result of the Acquisitions which increased net revenues by
$43.9 million. On a Same Station basis, net revenues for the year ended December
31, 1996 increased $5.5 million or 4.6% from the year ended December 31, 1995.
On a Same Station basis, political advertising revenue for the year ended
December 31, 1996 increased by $8.4 million to $9.8 million. Gross revenues on a
Same Station basis excluding political advertising revenue decreased $1.4
million or 1.0% from the year ended December 31, 1995.
Net revenues during the year ended December 31, 1996 were adversely
affected by an unexpected weakness in advertising revenues for the Company's 12
CBS affiliated stations and six ABC affiliated stations
33
<PAGE>
<PAGE>
which experienced a decline in audience shares relative to NBC affiliates. On a
Same Station basis, net revenues of the Company's CBS affiliated stations
increased by 0.9% and net revenues of the Company's ABC affiliated stations
increased by 5.2%, while net revenues of the Company's NBC affiliated stations
increased by 10.4%.
Operating expenses for the year ended December 31, 1996 increased $45.9
million or 128.5% to $81.5 million from $35.7 million for the year ended
December 31, 1995. Of the increase in operating expenses, $40.4 million was
attributable to the Acquisitions and $2.8 million was attributable to
depreciation and amortization at the Benedek Stations owned by the Company for
all of 1996. As a percentage of net revenues, operating expenses for the
Stations increased to 84.6% from 70.9% in the year ended December 31, 1995,
primarily as a result of an increase of $15.2 million in depreciation and
amortization expense. On a Same Station basis, operating expenses for the year
ended December 31, 1996 increased $8.4 million or 8.1% from the year ended
December 31, 1995. Such operating expenses were $111.2 million for the year
ended December 31, 1996 as compared to $102.9 million for the year ended
December 31, 1995. The increase was primarily caused by expansion of
locally-produced news programs and increased depreciation and amortization.
Operating expenses as a percentage of net revenues on a Same Station basis
increased from 85.3% for the year ended December 31, 1995 to 88.2% for the year
ended December 31, 1996.
Operating income for the year ended December 31, 1996 increased $0.2
million or 1.4% to $14.9 million from $14.7 million for the year ended December
31, 1995.
Financial (expenses), net for the year ended December 31, 1996 increased
$15.2 million or 98.3% to $30.7 million from $15.5 million in the year ended
December 31, 1995, due to the Company's higher debt level following the
completion of the financing of the purchase price for the Acquisitions.
Income tax benefit for the year ended December 31, 1996 was $4.7 million
compared to none for the year ended December 31, 1995. Reductions in the
deferred tax liabilities related to the Acquisitions and the creation of
deferred tax assets generated the income tax benefit for the year ended December
31, 1996. For the year ended December 31, 1995, the Company recognized no income
tax benefit due to its Subchapter S Corporation status.
Net loss for the year ended December 31, 1996 was $11.2 million as compared
to net income of $6.1 million for the year ended December 31, 1995. The year
ended December 31, 1995 included an extraordinary gain of $6.9 million on the
early extinguishment of debt.
Broadcast cash flow for the year ended December 31, 1996 increased $17.6
million or 82.4% to $38.9 million from $21.3 million for the year ended December
31, 1995 primarily as a result of the Acquisitions. As a percentage of net
revenues, broadcast cash flow margin decreased to 40.3% for the year ended
December 31, 1996 from 42.3% for the year ended December 31, 1995. On a Same
Station basis, broadcast cash flow for the year ended December 31, 1996
increased $0.4 million or 1.0% to $49.7 million from $49.3 million for the year
ended December 31, 1995. As a percentage of net revenues, broadcast cash flow
margin on a Same Station basis decreased to 39.4% for the year ended December
31, 1996 from 40.9% for the year ended December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operating Activities is the primary source of liquidity for
the Company and were $8.5 million for the year ended December 31, 1997 compared
to $17.8 million for the year ended December 31, 1996. Cash flows from operating
activities included cash payments of interest expense which totaled $29.0
million for the year ended December 31, 1997 as compared to $22.8 million for
the year ended December 31, 1996. The increase in payments of interest expense
of $6.2 million was due to the Company's higher debt level following the
Acquisitions. For the year ended December 31, 1996, cash flows from operating
activities included $2.5 million from the bonus payment from CBS and $2.2
million of collections on net accounts receivable provided by Stauffer.
Cash flows from operating activities were $0.1 million for the three months
ended March 31, 1998 compared to $(2.1) million for the three months ended March
31, 1997. Cash flows from operating activities included cash payments of
interest expense which totaled $10.8 million for the three months ended March
31, 1998 as compared to $11.4 million for the three months ended March 31, 1997.
Cash Flows from Financing Activities were $(7.6) million for the year ended
December 31, 1997 compared to $307.2 million for the year ended December 31,
1996. For the year ended December 31, 1997, cash flows from financing activities
included principal payments on notes and capital leases payable of $14.9 million
funded in part by aggregate draw downs on Benedek Broadcasting's revolving
credit facility of $10.0 million.
34
<PAGE>
<PAGE>
For the year ended December 31, 1996, cash flows from financing activities
resulted from the proceeds of financing the Acquisitions.
Cash flows from financing activities were $2.3 million for the three months
ended March 31, 1998 as compared to $(0.6) million for the three months ended
March 31, 1997. For the three months ended March 31, 1998, cash flows from
financing activities included principal payments on notes and capital leases
payable of $2.3 million funded by aggregate draw downs on the Revolving Credit
Facility of $4.6 million.
At March 31, 1998, Benedek Broadcasting had available to it a maximum of
$15.0 million under the Revolving Credit Facility of the Credit Agreement of
which $2.4 million was unused. From time to time throughout 1997, Benedek
Broadcasting's cash needs required the use of the revolving credit facility
under the 1996 Credit Agreement (as defined) for general working capital
purposes and to fund capital expenditures. During the year ended December 31,
1997, the highest outstanding balance under such revolving credit facility was
$11.2 million, and during the three months ended March 31, 1998, the highest
outstanding balance under the Revolving Credit Facility was $14.6 million.
The Company implemented a 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 Senior Subordinated
Discount Notes to generate gross proceeds of $90.2 million, (ii) the sale by the
Company of Units consisting of the Old Exchangeable Preferred Stock, the Initial
Warrants and the Contingent Warrants to generate gross proceeds of $60.0
million, (iii) Benedek Broadcasting borrowing $128.0 million pursuant to the
term loan facilities of a credit agreement (the '1996 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 outstanding $135.0 million of Senior
Secured Notes which were issued in 1995 to refinance outstanding indebtedness
and finance the acquisition of the Dothan Station.
The Company believes that the financing plan, together with the Offering,
provides for a long-term financing structure that allows management to
concentrate its efforts on maximizing results of operations. The Company
anticipates that Adjusted EBITDA of Benedek Broadcasting will be sufficient to
finance the operating requirements of the Stations, debt service requirements in
respect of the Senior Secured Notes and Term Loan Facilities and presently
anticipated capital expenditures until such time that the debt matures or
requires payment in full and for at least the period until the Company is
required to make cash payments in respect of the Senior Subordinated Discount
Notes, the Exchangeable Preferred Stock and the Seller Junior Discount Preferred
Stock. The Company anticipates that capital expenditures of approximately $9.0
million will be made in 1998. Such capital expenditures will be financed either
from cash provided by operations, borrowings under the Revolving Credit Facility
or purchase money financing.
The Senior Subordinated Discount Notes do not bear interest until May 15,
2001, and the Company is not obligated to pay cash interest on the Senior
Subordinated Discount 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 May 15, 2003, 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. The Credit Agreement currently prohibits
the Company from making cash payments with respect to dividends on the
Exchangeable Preferred Stock and interest on the Exchange Debentures at any
time. Accordingly, the Company currently intends not to pay cash dividends on
the Exchangeable Preferred Stock or cash interest on the Exchange Debentures, as
applicable, prior to May 15, 2003. In order for the Company to pay required cash
dividends with respect to the Exchangeable Preferred Stock or cash interest on
the Exchange Debentures, as the case may be, after May 15, 2003, the Company
will need to amend the Credit Agreement or refinance the Term Loan Facilities
and Revolving Credit Facility thereunder as well as need to substantially
increase broadcast cash flow at the Stations. 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 cash interest after May 15, 2001 with respect to the Senior
Subordinated Discount Notes, and cash dividends 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 $62.8
million (assuming that there will not have been any mandatory or voluntary
prepayments of any indebtedness prior to that time, assuming no incurrence of
35
<PAGE>
<PAGE>
additional indebtedness 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 with
respect to the Seller Junior Discount Preferred Stock would be approximately
$10.1 million. See 'Risk Factors -- Ability to Service Debt and Preferred Stock
Dividends.'
The Senior Secured Notes are senior secured obligations of Benedek
Broadcasting and 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 guaranteed by BLC and the Company and secured by the common
stock of BLC. The Senior Secured Notes will mature on March 1, 2005 and are
redeemable at Benedek Broadcasting's option, in whole or in part, at any time
after March 1, 2000.
In order to repay the Senior Subordinated Discount 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 Senior Subordinated
Discount 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.
The Company is a holding company that will derive all of its operating
income and Adjusted EBITDA 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
Senior Subordinated Discount 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, as of March 31, 1998, Benedek Broadcasting could have
distributed approximately $188 million to the Company under such limitations.
The 1996 Credit Agreement entered into by the Company as part of the
financing plan included term loan facilities totaling $128.0 million and a
revolving credit facility. The Company did not meet certain financial ratios
contained in the 1996 Credit Agreement at September 30 and December 31, 1996 due
to lower than expected Adjusted EBITDA (as defined in the 1996 Credit
Agreement). The lenders under the 1996 Credit Agreement agreed to waive such
noncompliance and during February 1997, amended certain covenants applicable to
1997 and the first half of 1998. The amendment provided that for so long as the
ratio of debt to Adjusted EBITDA (as defined in the 1996 Credit Agreement)
exceeded certain levels, the term loan facilities would bear interest at varying
additional spreads from that originally provided for in the 1996 Credit
Agreement. The amendment further reduced the revolving credit facility from
$15.0 million to $10.0 million and increased the percentage of excess cash flow
to be applied as prepayments of the term loan facilities from 50% to 75% until
Benedek Broadcasting's ratio of debt to Adjusted EBITDA (as defined in the 1996
Credit Agreement) was at 6.75 to 1.0 or lower.
The Credit Agreement was amended and restated as of December 17, 1997 to
convert existing term loans to new term loans, to modify certain financial
convenants and ratios, to increase the Revolving Credit Facility to $15.0
million and to replace certain parties to the agreement. As of December 17,
1997, the outstanding principal balance of the existing term loans which totaled
$110.8 million were converted to (1) Term Loan Series A of $77.0 million and (2)
Term Loan Series B of $33.8 million. The Term Loan Facilities generally provide
for quarterly amortization until final maturity on December 31, 2004. The
Company is required to make scheduled amortization payments on the Term Loan
Facilities, on an aggregate basis for Series A and Series B Facilities, as
follows: during 1998, $2.5 million; during 1999, $11.0 million; during 2000,
$13.0 million; during 2001, $13.0 million; during 2002, $14.0 million; during
2003, $15.0 million; and during 2004, $42.3 million.
In addition, the Company will be required to make prepayments on the Term
Loan Facilities under certain circumstances, including upon certain asset sales
and the issuance of certain debt or equity securities. The Company will also be
required to make prepayments on the Term Loan Facilities in an amount equal to
50% of excess cash flow (as defined in the Credit Agreement). These mandatory
prepayments will be applied to prepay, on a pro rata basis, the Term Loan Series
A and Term Loan Series B.
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The Term Loan Series A bears interest, at the Company's option, at a base
rate plus a spread or at a Eurodollar rate plus a spread. The Term Loan Series B
bears interest, at the Company's option, at a base rate plus a spread or at a
Eurodollar rate plus a spread. The margins above the base rate and the
Eurodollar rate at which the Term Loans and Revolving Credit Facility will bear
interest are subject to reductions at such times as certain leverage ratio
performance tests are satisfied.
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 expiring December 31, 2003
and is fully revolving until final maturity. The Revolving Credit Facility bears
interest, at Benedek Broadcasting's option, at a base rate plus a spread or at a
Eurodollar rate plus a spread.
The Term Loans and the Revolving Credit Facility are secured by certain of
Benedek Broadcasting's present and future property and assets. The Term Loans
are also guaranteed by BLC, a wholly-owned subsidiary of Benedek Broadcasting
that holds the FCC licenses and authorizations for the Stations, and is secured
by all of the common stock of BLC.
The Term Loans and the Revolving Credit Facility contain certain financial
covenants, including, but not limited to, covenants related to cash interest
coverage, maximum leverage ratio and minimum Consolidated Adjusted EBITDA (as
defined in the Credit Agreement). In addition, the Term Loans and the Revolving
Credit Facility 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, guarantees and
investments. The Term Loans and the Revolving Credit Facility contain customary
events of default for highly-leveraged financings, including certain changes in
ownership or control of Benedek Broadcasting or the Company.
The net proceeds of the Offering were approximately $95.5 million. The
Company used approximately $92.8 million of such net proceeds to redeem the Old
Exchangeable Preferred Stock (including approximately $12.1 million representing
premiums relating to the redemption) on June 8, 1998 and the balance for general
corporate purposes, including the reduction of a portion of the Company's debt
under the Revolving Credit Facility.
INCOME TAXES
For the year ended December 31, 1997, the Company had a tax benefit of
$12.0 million consisting of a $12.3 million benefit related to the net reduction
of deferred income tax liabilities and $0.3 million of taxes currently due.
Under the provisions of the Internal Revenue Code of 1986, as amended, the
Company has approximately $18.4 million of actual net operating loss
carryforwards available to offset future tax liabilities. These net operating
loss carryforwards expire between 2007 through 2011.
INFLATION
The Company does not believe that inflation has had a significant impact on
the Company's operations.
YEAR 2000
The Company has assessed and continues to assess the impact of the Year
2000 issue on its reporting systems and operations. The Year 2000 issue exists
because many computer systems and applications currently use two-digit fields to
designate a year. When the century date occurs, date-sensitive systems may
recognize the year 2000 as 1900 or not at all. This inability to recognize or
properly treat the year 2000 may cause systems to process critical financial and
operational information incorrectly. Based on the review of the Company's
computer system, management does not believe the cost of remediation will be
material to the Company's operations.
SEASONALITY
Net revenues and operating cash flow of the Company are generally higher
during the fourth quarter of each year, primarily due to increased expenditures
by advertisers in anticipation of holiday season consumer
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spending and an increase in viewership during this period, and, to a lesser
extent, during the second quarter of each year.
RECENTLY PROMULGATED ACCOUNTING STANDARDS
The Financial Accounting Standards Board ('FASB') has issued two new
pronouncements that the Company will be required to adopt by December 31, 1998.
These pronouncements are not expected to have a significant impact on the
Company's financial statements.
FASB Statement No. 130 'Reporting Comprehensive Income' establishes
standards for reporting and display of comprehensive income and its components
in the financial statements. This statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. This statement requires that
a company (a) classify terms of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. The Company
currently has no items of comprehensive income.
FASB Statement No. 131 'Disclosures about Segments of an Enterprise and
Related Information' establishes standards for reporting information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial reports
issued to stockholders. Operating segments are components of an enterprise about
which separate financial information is available and evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. The Company does not divide its business into operating
segments.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no material exposure to market risks associated with
activities in derivative financial instruments, other financial instruments, or
derivative commodity instruments (as those terms are defined in Item 305 of
Regulation S-K promulgated under the Securities Act and the Exchange Act).
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Existing Exchangeable Preferred Stock was originally issued and sold on
May 14, 1998. The offer and sale of the Existing Exchangeable Preferred Stock
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 Exchangeable Preferred Stock, the Company agreed to file
with the SEC a registration statement relating to an exchange offer pursuant to
which new shares of senior exchangeable preferred stock of the Company covered
by such registration statement and containing terms identical in all material
respects to the terms of the Existing Exchangeable Preferred Stock would be
offered in exchange for Existing Exchangeable Preferred Stock 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 Existing
Exchangeable Preferred Stock and to use all reasonable efforts to have such
Shelf Registration Statement declared effective and kept effective until three
years after the date of original issuance of the Existing Exchangeable Preferred
Stock.
The purpose of the Exchange Offer is to fulfill certain of the Company's
obligations under the Registration Rights Agreement. This Prospectus may not be
used by any holder of shares of Existing Exchangeable Preferred Stock 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 Exchangeable Preferred Stock or Exchange Securities.
See ' -- Terms of the Exchange Offer; Period for Tendering Existing Exchangeable
Preferred Stock.'
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING EXCHANGEABLE
PREFERRED STOCK
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 shares of Existing
Exchangeable Preferred Stock 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 pm, New York City time, on , 1998;
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
pm, New York City time, on the date 60 days from the date of this Prospectus.
As of the date of this Prospectus, 100,000 shares of Existing Exchangeable
Preferred Stock were outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about , 1998, to all holders of
Existing Exchangeable Preferred Stock known to the Company. The Company's
obligation to accept shares of Existing Exchangeable Preferred Stock 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 Exchangeable Preferred
Stock, by giving oral or written notice of such extension to the holders thereof
and the Exchange Agent. During any such extension, all shares of Existing
Exchangeable Preferred Stock previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company. Any shares of
Existing Exchangeable Preferred Stock 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 shares of Existing Exchangeable
Preferred Stock 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
shares of Existing Exchangeable Preferred Stock and the Exchange Agent as
promptly as practicable, such notice in the case of any extension to be issued
no later than 9:00 am, New York City time, on the next business day after the
previously scheduled Expiration Date.
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EXCHANGE OFFER PROCEDURES
The tender to the Company of shares of Existing Exchangeable Preferred
Stock 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 shares of Existing Exchangeable Preferred
Stock 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 IBJ Schroder Bank & Trust Company,
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 shares of Existing Exchangeable Preferred Stock 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
Exchangeable Preferred Stock, 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 SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK, 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 SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK 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 shares of Existing Exchangeable
Preferred Stock surrendered for exchange pursuant thereto are tendered (i) by a
registered holder of Existing Exchangeable Preferred Stock 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 shares of Existing Exchangeable Preferred Stock are
registered in the name of a person other than a signatory of the Letter of
Transmittal, the shares of Existing Exchangeable Preferred Stock surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered holder with the
signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of shares of Existing Exchangeable Preferred Stock
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 shares of
Existing Exchangeable Preferred Stock not properly tendered or to not accept any
shares of particular Existing Exchangeable Preferred Stock 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 shares of Existing
Exchangeable Preferred Stock either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender shares of Existing Exchangeable Preferred Stock in the Exchange Offer).
The interpretation of the terms and conditions of the Exchange Offer as to any
particular shares of Existing Exchangeable Preferred Stock 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
shares of Existing Exchangeable Preferred Stock 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
shares of Existing Exchangeable Preferred Stock 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 shares of Existing Exchangeable Preferred
Stock, such shares of Existing Exchangeable Preferred Stock must be
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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 certificates representing the Existing Exchangeable Preferred
Stock.
If the Letter of Transmittal or any shares of Existing Exchangeable
Preferred Stock 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 shares of Existing Exchangeable Preferred Stock where such shares
of Existing Exchangeable Preferred Stock 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 EXCHANGEABLE PREFERRED STOCK 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 shares of
Existing Exchangeable Preferred Stock properly tendered and will issue the
Exchange Securities promptly after acceptance of such shares of Existing
Exchangeable Preferred Stock. See ' -- Certain Conditions to the Exchange
Offer.' For purposes of the Exchange Offer, the Company shall be deemed to have
accepted properly tendered shares of Existing Exchangeable Preferred Stock for
exchange when, as and if the Company has given oral (promptly followed in
writing) or written notice thereof to the Exchange Agent.
For each share of Existing Exchangeable Preferred Stock accepted for
exchange, the holder thereof will receive one Exchange Security. If by September
11, 1998, neither the Exchange Offer is consummated nor a Shelf Registration
Statement is declared effective, additional cash dividends will accumulate on
each share of Existing Exchangeable Preferred Stock from and including September
12, 1998, until but excluding the earlier of the date of consummation of the
Exchange Offer and the effective date of the Shelf Registration Statement at a
rate of 0.50% per annum. Holders of shares of Existing Exchangeable Preferred
Stock accepted for exchange will be deemed to have waived the right to receive
any other payments or accumulated dividends on such Existing Exchangeable
Preferred Stock.
In all cases, issuance of Exchange Securities for shares of Existing
Exchangeable Preferred Stock 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 shares of Existing Exchangeable Preferred Stock or a
timely Book-Entry Confirmation of such shares of Existing Exchangeable Preferred
Stock 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 shares of Existing Exchangeable Preferred
Stock are not accepted for any reason set forth in the terms and conditions of
the Exchange Offer or if a certificate representing a greater number of shares
of Existing Exchangeable Preferred Stock than the holder desires to exchange is
submitted, such unaccepted or non-exchanged shares of Existing Exchangeable
Preferred Stock will be returned without expense to the tendering holder thereof
(or, in the case of shares of Existing Exchangeable Preferred Stock 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 shares of Existing Exchangeable Preferred Stock 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 Exchangeable Preferred Stock at the Book-Entry Transfer Facility
for purposes of the Exchange Offer within two business
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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 shares of Existing Exchangeable Preferred Stock by causing the
Book-Entry Transfer Facility to transfer such shares of Existing Exchangeable
Preferred Stock 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 shares of Existing Exchangeable
Preferred Stock may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal or a 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 shares of Existing Exchangeable Preferred Stock
desires to tender such shares of Existing Exchangeable Preferred Stock and the
shares of Existing Exchangeable Preferred Stock are not immediately available,
or time will not permit such holder's shares of Existing Exchangeable Preferred
Stock 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
Exchangeable Preferred Stock and the number of shares of Existing Exchangeable
Preferred Stock 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 shares of Existing Exchangeable
Preferred Stock, 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 shares of Existing Exchangeable
Preferred Stock, 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 shares of Existing Exchangeable Preferred Stock may be withdrawn
at any time prior to the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
' -- Exchange Agent.' Any such notice of withdrawal must specify the name of the
person having tendered the Existing Exchangeable Preferred Stock to be
withdrawn, identify the shares of Existing Exchangeable Preferred Stock to be
withdrawn (including the number of shares of such Existing Exchangeable
Preferred Stock) and (where certificates for Existing Exchangeable Preferred
Stock have been transmitted) specify the name in which such shares of Existing
Exchangeable Preferred Stock are registered, if different from that of the
withdrawing holder. If certificates for shares of Existing Exchangeable
Preferred Stock 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 shares of
Existing Exchangeable Preferred Stock have been tendered pursuant to the
procedures 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 shares of Existing
Exchangeable Preferred Stock 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 shares of Existing
Exchangeable Preferred Stock so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the Exchange Offer. Any shares of
Existing Exchangeable Preferred Stock 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
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(or, in the case of shares of Existing Exchangeable Preferred Stock 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 shares of Existing Exchangeable Preferred Stock will be credited to an
account maintained with such Book-Entry Transfer Facility for the shares of
Existing Exchangeable Preferred Stock) as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
shares of Existing Exchangeable Preferred Stock 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 shares of Existing Exchangeable Preferred Stock and may
terminate or amend the Exchange Offer if at any time before the acceptance of
such shares of Existing Exchangeable Preferred Stock for exchange or the
exchange of the Exchange Securities for such shares of Existing Exchangeable
Preferred Stock 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
Exchangeable Preferred Stock 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/or
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, 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 shares of
Existing Exchangeable Preferred Stock tendered, and no Exchange Securities will
be issued in exchange for any such shares of Existing Exchangeable Preferred
Stock, 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.
EXCHANGE AGENT
IBJ Schroder Bank & Trust Company 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:
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THE EXCHANGE AGENT
IBJ SCHRODER BANK & TRUST COMPANY
(212) 858-2103
By Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, NY 10274-0084
Attention: Reorganization Operations Department
By Facsimile:
IBJ Schroder Bank & Trust Company
Attention: Reorganization Operations Department
Facsimile No.: (212) 858-2611
To confirm facsimile transmission call (212) 858-2103
By Hand or Overnight Courier:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Securities Processing Window, Subcellar One (SC-1)
DELIVERY OF DOCUMENTS TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$250,000 which includes fees and expenses of the Exchange Agent and accounting,
legal, printing and related fees and expenses.
TRANSFER TAXES
Holders who tender their shares of Existing Exchangeable Preferred Stock
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 shares of Existing Exchangeable
Preferred Stock 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 Exchangeable Preferred Stock who do not exchange their
Existing Exchangeable Preferred Stock for Exchange Securities pursuant to the
Exchange Offer will continue to be subject to the restrictions on transfer of
such Existing Exchangeable Preferred Stock as set forth in the legend thereon as
a consequence of the issuance of the Existing Exchangeable Preferred Stock
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, shares of Existing Exchangeable Preferred Stock 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 Exchangeable Preferred Stock 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
44
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<PAGE>
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 Rights 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 may be
necessary to enable the holders thereof to dispose of such securities.
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BUSINESS
GENERAL
The Company owns and operates 23 network-affiliated television stations in
the United States. The Stations owned by the Company 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, four are affiliated with NBC
and one is affiliated with Fox. Additionally, the Company has entered into
agreements with The Warner Bros. Television Network to develop a local cable
affiliate called the 'WeB' in each of the Company's 20 markets which are outside
of the 100 largest in the U.S., as measured by Nielsen.
The Stations are located in markets ranked in size from 84 to 200 out of
the 211 markets surveyed by Nielsen. The Company's broadcast signals reach
approximately 2.9 million households, representing more than 20% of all
television households in the markets which rank above 100. The Company believes
that broadcast television stations in small to medium-sized markets offer an
opportunity to generate more attractive and stable Adjusted EBITDA than in large
markets 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 levels 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. The Company believes that network affiliations with one of
the four established networks provide each of its Stations with an established
audience and reputation for national news, sports and entertainment programming.
With the established audiences provided by network affiliations, management
seeks to enhance the ratings of its local news and non-network programming and
increase revenues while maintaining strict cost controls.
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. This trend is likely to accelerate due to 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.
The Company's growth strategy is to become one of the leading group owners of
small to medium-sized market television stations in the United States. In
connection therewith, in June 1996 the Company acquired five network-affiliated
television stations from Stauffer and all of the capital stock of Brissette,
which owned eight network-affiliated television stations. The Company believes
that the Acquisitions have created economies of scale which have (i) improved
its ability to negotiate more favorable arrangements with program suppliers,
national sales representation firms, equipment vendors and television networks,
(ii) enabled it to exploit joint programming opportunities for regional news and
sports programming and (iii) enhanced its ability to attract and retain strong
Station management and on-air talent.
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, in connection with the
Acquisitions and the financing thereof, 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 majority
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. In September 1997, Benedek Broadcasting acquired K02NQ and
K11TB, two low-power broadcast television stations operated by KMIZ(TV).
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STRATEGY
The Company's senior management team, led by A. Richard Benedek, Chairman
and Chief Executive Officer, and K. James Yager, President and Chief Operating
Officer, has extensive experience in acquiring and improving the operations of
television stations. In addition, the Company is supported by a team of senior
vice presidents, who directly oversee the day-to-day operations of the Stations.
Terrance F. Hurley, Raymond P. Maselli and Raymond J. Schonbak who manage nine,
seven and seven of the Stations, respectively, each have significant experience
operating and managing broadcast television stations. The Company's primary
operating strategy is to maximize each Station's advertising revenue through the
production of 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 the Company'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
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 Stations broadcast in time
periods adjacent to regularly scheduled local newscasts and local news
specials.
The Company has focused on maintaining and building each 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 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 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
Station's local identity.
In February 1998, 15 of the 23 Stations were the number one or two
ranked news stations in their respective markets with respect to early
news. During the same period, 17 of the 23 Stations were ranked number one
or two with respect to late news in their respective markets. Since the
Acquisitions in June 1996, the Company has added 59.5 total hours of local
news programming per week to the Acquired Stations' programming schedules.
SYNDICATED PROGRAMMING. The Company selectively purchases first run
and off-network syndicated programming designed to reach specific
demographic groups attractive to advertisers. Currently, the five most
highly-rated syndicated programs are 'Wheel of Fortune,' 'Jeopardy,' 'Home
Improvement,' 'Seinfeld' and 'The Oprah Winfrey Show.' The Company
broadcasts 'Wheel of Fortune' on 13 of the Stations, 'Jeopardy' on eight of
the Stations, 'Home Improvement' on eight of the Stations, 'Seinfeld' on
five of the Stations and 'The Oprah Winfrey Show' on eight of the Stations.
Additionally, the Company broadcasts other highly-rated first run
syndicated programs on several of the Stations including 'Live with Regis &
Kathie Lee,' 'Montel Williams,' 'The Rosie O'Donnell Show,' 'Entertainment
Tonight' and 'Sally Jessy Raphael.' A number of the Stations also broadcast
other highly-rated off-network syndicated programs including 'Mad About
You' and 'Frasier.' Further, the Company has acquired the rights to
broadcast the newly syndicated programs 'The Roseanne Show,' 'Friends' and
'Hollywood Squares' beginning in the fall of 1998.
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
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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, cash programming expense as a percentage of net revenues for the
Stations was 3.4% and 4.7% in 1996 and 1997, respectively, as compared to
approximately 7.6% for all network-affiliated stations in 1996, the latest
year for which information is available.
In addition, since the Acquisitions, the Company has made significant
changes to the Acquired Stations' syndicated programming schedules,
including adding some of the most highly-rated programs to their current
broadcast schedules, as well as obtaining the rights to several of the most
highly sought after newly syndicated programs for the 1998 broadcast
season.
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 Adjusted EBITDA.
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 advertiser appeal and sponsoring or co-promoting local events
and activities that give local advertisers unique value-added community
identity. Approximately 56.1% of the Company's gross revenues in 1997 were
generated from local and regional advertisers.
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. The Company intends to continue to
identify opportunities to increase Adjusted EBITDA 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, the Company has entered into agreements
with The Warner Bros. Television Network to develop a local cable affiliate
called the 'WeB' in each of the Company's 20 markets which are outside of
the 100 largest in the U.S., as measured by Nielsen. The WeB is scheduled
to begin service in September 1998. The Company does not have any
agreements or understandings with respect to any acquisitions as of the
date of this Prospectus.
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THE STATIONS
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 CABLE
MARKET AREA RANK LETTERS CHANNEL(A) AFFILIATION MARKET MARKET RATING PENETRATION
- --------------- -------- --------- ---------- ------------ ---------- ------------ --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Madison, 84 WMTV(TV) 15 NBC 4 2 4 62%
Wisconsin
Youngstown, 97 WYTV 33 ABC 3 2 4 72%
Ohio
Springfield and 103 WWLP(TV) 22 NBC 2 1 6 82%
Holyoke,
Massachusetts
Lansing, 105 WILX-TV 10 NBC 4 2 4 66%
Michigan
Peoria and 110 WHOI(TV) 19 ABC 4 3 4 71%
Bloomington,
Illinois
Santa Barbara, 115 KCOY-TV 12 CBS 3 2 5 82%
Santa Maria
and
San Luis
Obispo,
California
Duluth, 134 KDLH-TV 3 CBS 3 1 7 50%
Minnesota and
Superior,
Wisconsin
Rockford, 135 WIFR-TV 23 CBS 4 1 7 69%
Illinois
Wausau and 136 WSAW-TV 7 CBS 3 1 9 53%
Rhinelander,
Wisconsin
Wheeling, West 138 WTRF-TV 7 CBS 2 2 7 77%
Virginia and
Steubenville,
Ohio
Topeka, Kansas 139 WIBW-TV 13 CBS 3 1 7 73%
Wichita Falls, 144 KAUZ-TV 6 CBS 4 1 6 68%
Texas and
Lawton,
Oklahoma
Columbia and 145 KMIZ(TV) 17 ABC 5 3 3 61%
Jefferson
City,
Missouri
Columbia and 145 K02NQ(b) 2(b) FOX 5(b) 4(b) N/A 61%
Jefferson 145 K11TB(b) 11(b) FOX 5(b) 4(b) N/A 61%
City,
Missouri
Odessa and 150 KOSA-TV 7 CBS 4 2 5 73%
Midland,
Texas
Quincy, 160 KHQA-TV 7 CBS 2 1 8 61%
Illinois,
Hannibal,
Missouri and
Keokuk, Iowa
Dothan, Alabama 173 WTVY-TV 4 CBS 3 1 9 69%
Panama City, 157 WTVY-TV 4 CBS 4 3 4 66%
Florida
Harrisonburg, 177 WHSV-TV 3 ABC 1 1 6 74%
Virginia
Bowling Green, 182 WBKO-TV 13 ABC 2 1 9 55%
Kentucky
Meridian, 183 WTOK-TV 11 ABC 3 1 8 53%
Mississippi
Parkersburg, 186 WTAP-TV 15 NBC 1 1 9 78%
West Virginia
Cheyenne, 195 KGWN-TV 5 CBS 3 1(f) 7(f) 73%(f)
Wyoming and 195 KSTF-TV(c) 10 CBS (e) (f) (f) (f)
Scottsbluff, 195 KTVS-TV(c) 3 CBS (e) (f) (f) (f)
Nebraska
Casper and 200 KGWC-TV 14 CBS 3 2(g) 4(g) 64%(g)
Riverton, 200 KGWL-TV(d) 5 CBS (e) (g) (g) (g)
Wyoming 200 KGWR-TV(d) 13 CBS (e) (g) (g) (g)
</TABLE>
- ------------
(a) Channels 2 through 13 are broadcast over the VHF band of the broadcast
spectrum and channels 14 through 69 are broadcast over the UHF band of the
broadcast spectrum.
(b) K02NQ and K11TB are low-power broadcast television stations operated by
KMIZ(TV) and distributed primarily via cable television. These two Stations
began operating in September 1997 as a single entity operating from one
facility and offering an identical programming schedule. Additionally, such
Stations are treated as one station for purposes of determining the number
of commercial stations in the market and rank in the market.
(c) Satellite station of KGWN-TV.
(d) Satellite station of KGWC-TV.
(e) Satellite stations are not considered distinct stations in this market for
Nielsen purposes.
(f) Station Rank, Station Rating 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.
(g) Station Rank, Station Rating 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.
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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 84th largest market
in 1998. 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, dairy products and
agricultural production of corn, alfalfa, tobacco, oats, eggs, cattle and hogs
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 Company 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 84th in the
United States, with approximately 316,370 television households and a population
of approximately 823,000. This market has a cable penetration rate of 62%.
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. In addition, a UPN affiliate broadcasting on a UHF channel is
scheduled to begin operations in mid to late 1998.
Station Performance. According to the Nielsen ratings reports, WMTV(TV) was
ranked number two in its market with a 4 rating and a 15% share of households
viewing television. WMTV(TV) is currently the number three ranked news station
in the Madison market. Since being acquired in June 1996 by the Company, the
Station has expanded its weekday morning newscast from 30 to 90 minutes and
added a weekly local sports program on Sunday evening. Currently, the Station
airs 19 hours and five minutes of local news programming per week as opposed to
13 hours and 35 minutes it broadcast each week prior to being acquired by the
Company. WMTV(TV)'s special value-added local sales efforts in 1997 included
'Neighborhood WeatherNet,' placing fully-automated weather monitoring systems at
local schools, 'Kids Matter,' a program promoting the accomplishments of
children, 'Help-A-Thons,' special events mobilizing the community towards a
common cause, and 'Share Your Holiday,' Madison's largest annual food drive.
Further, the Station provides extensive local coverage of University of
Wisconsin and other Big Ten conference basketball and football games. Since
being acquired by the Company, the Station has added 'Jeopardy' to its
syndicated programming schedule. WMTV(TV)'s first run syndicated programming
also includes 'Wheel of Fortune' and 'Live with Regis & Kathie Lee.' In
addition, beginning in the fall of 1998, the Station will air 'Hollywood
Squares' and 'Donny and Marie.'
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 75 miles of Cleveland, Ohio to the northwest and 60 miles of Pittsburgh,
Pennsylvania to the southeast. The Youngstown economy is historically based on
the processing of steel and allied industries. While still part of a major steel
producing area, Youngstown's economy has diversified and is now primarily
manufacturing based. Some of the major employers in the area include the Buick,
Oldsmobile and Cadillac Division of General Motors Corporation, the Delphi
Packard Electric Corporation Division of General Motors Corporation, St.
Elizabeth's Health 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 12,000 students.
Station History and Characteristics. WYTV was originally licensed in 1953
to serve Youngstown, Ohio. The Youngstown market is ranked 97th in the United
States, with approximately 273,960 television households and a population of
approximately 725,000. This market has a cable penetration rate of 72%. 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.
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Station Performance. According to the Nielsen ratings reports, WYTV was
ranked number two in its market with a 5 rating and a 14% share of households
viewing television. WYTV currently is the number three ranked news station in
this market and broadcasts 16 hours of local news programming per week. WYTV's
special value-added local sales efforts in 1997 included 'LiveLine,' a program
focusing on issues ranging from health care to legal concerns, 'Success By Six,'
a project encouraging educational growth in young children, 'WeatherSchool,' an
educational project undertaken with area schools to build interest in weather
and science, and 'Hot Fun in the Summertime,' a sales promotion targeting
non-traditional advertisers. WYTV's first run and off-network syndicated
programming includes 'Wheel of Fortune,' 'Jeopardy,' 'Home Improvement' and 'The
Rosie O'Donnell Show.' Additionally, beginning in the fall of 1998, the Station
will add 'Friends' to its off-network syndicated programming schedule.
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 west 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 and Baystate Medical Center.
Many universities and colleges are located in this region, including, the
University of Massachusetts, with a student population of approximately 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 103rd
largest market in the United States, with approximately 243,020 television
households and a population of approximately 666,000. This market has a cable
penetration rate of 82%. WWLP(TV) is broadcast on UHF channel 22 and is an NBC
affiliate. The Company acquired WWLP(TV) in June 1996. 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 Nielsen ratings reports, WWLP(TV) was
ranked number one in its market with a 6 rating and 20% share of households
viewing television. WWLP(TV) is currently the number one ranked news station in
this market and currently broadcasts 24 hours of local news programming per
week. WWLP(TV)'s special value-added local sales efforts in 1997 included 'As
Schools Match Wits,' the nation's longest running locally produced quiz show in
which area high school students compete academically, participation in the
Easter Seals and Children's Miracle Network Telethons, and various community
projects run in conjunction with organizations such as The Ronald McDonald
House, The Girl Scouts, Alzheimers Association, and The United Way. WWLP(TV)'s
first run syndicated programming includes 'Wheel of Fortune,' 'Jeopardy' and
'Live with Regis & Kathie Lee.' Additionally, beginning in the fall of 1998, the
Station will add 'The Roseanne Show' to its first run syndicated programming
schedule.
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 is
diversified among the manufacturing, education and service industries. Prominent
employers in the area include General Motors Corporation, 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. Moreover, KieKert AG and Swedish Plannja HardTeck plan on
constructing new plants in the Lansing area. 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 105th in the United
States, with approximately 236,150 television households and a population of
approximately 638,000. This market has a cable penetration rate of 66%. WILX-TV
is broadcast on VHF channel 10 and is an NBC affiliate. WILX-TV competes with
three other commercial stations in this
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<PAGE>
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 Nielsen ratings reports, WILX-TV was
ranked number two in its market with a 4 rating and a 14% share of households
viewing television. WILX-TV is currently the number two ranked news station in
this market. Since being acquired in June 1996 by the Company, the Station has
expanded its weekday morning newscast from 60 to 90 minutes. Currently, the
Station airs 21 hours and 10 minutes of local news programming per week as
opposed to 18 hours and 40 minutes it broadcast each week prior to being
acquired by the Company. Additionally, WILX-TV airs the only weekend morning
newscast in its market. WILX-TV's special value-added local sales efforts in
1997 included 'Kids Count,' a campaign to reach mentors for children, 'Route
10,' a series of human interest reports from Mid-Michigan and 'First Class,' a
project saluting successes in the educational arena. Since being acquired by the
Company, the Station has added 'Sally Jessy Raphael' to its syndicated
programming schedule. WILX-TV's first run and off-network syndicated programming
also includes 'Wheel of Fortune,' 'Jeopardy,' 'Seinfeld' and 'Live with Regis &
Kathie Lee.' In addition, the Station has added 'The Roseanne Show' to its
syndicated programming schedule for the fall of 1998.
WHOI(TV) (ABC) PEORIA AND BLOOMINGTON, ILLINOIS
Market Description. The Peoria-Bloomington DMA consists of nine 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 110th in
the United States, with approximately 225,370 television households and a
population of approximately 600,000. This market has a cable penetration rate of
71%. 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 Nielsen ratings reports, WHOI(TV) was
ranked number three in its market with a 4 rating and a 13% share of households
viewing television. WHOI(TV) currently is the number three ranked news station
in this market. Since being acquired in June 1996 by the Company, the Station
has added a weekday newscast at 5:00 pm and expanded its morning newscast from
60 to 90 minutes. Currently, the Station airs 18 hours and 30 minutes of local
news programming per week as opposed to 13 hours and 30 minutes it broadcast
each week prior to being acquired by the Company. WHOI(TV)'s special value-added
local sales efforts in 1997 included 'Foodshare Canathon,' a community food
drive, 'Touch-A-Topic,' a free phone service allowing viewers access to hundreds
of useful topics and 'First Warn,' providing weather information on a 24-hour
basis. In addition WHOI(TV) sponsors community events such as 'The Peoria Art
Guild Fine Art Fair,' 'The John Keets March for AIDS Research and Education' and
'The Jingle Bell Run for Arthritis.' WHOI(TV)'s first run and off-network
syndicated programming includes 'Home Improvement,' 'Live with Regis & Kathie
Lee,' 'Entertainment Tonight' and 'Married . . . With Children.' Additionally,
beginning in the fall of 1998, the Station will add 'The Roseanne Show' to its
first run syndicated programming schedule.
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 two counties on the southcentral coast of California. Santa Maria is
located 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 Corporation. The area is also site
of the Vandenberg United States Air Force Base with approximately 9,000
military, civil service and civilian
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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
216,820 television households and a population of approximately 630,000. This
market has a cable penetration rate of 82%. KCOY-TV is broadcast on VHF channel
12 and is a CBS affiliate. There are two other commercial stations in this
market, ABC and NBC affiliates which broadcast on VHF channels. 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 Nielsen ratings reports, KCOY-TV was
ranked number two in its market with a 3 rating and a 12% share of households
viewing television. KCOY-TV currently is the number two ranked news station in
this market. Since being acquired in June 1996 by the Company, the Station has
added an hour-long weekday morning newscast and a weekday newscast at 5:00 pm.
Currently, the Station airs 23 hours of local news programming per week as
opposed to 11 hours and 35 minutes it broadcast each week prior to being
acquired by the Company. KCOY-TV's special value-added local sales efforts in
1997 included 'Health and Fitness Drive,' a campaign to promote health and
fitness in the community, 'Santa Maria Symphony Drive,' a project to create
awareness and support of the arts, 'WeatherNet,' placing fully-automated weather
monitoring systems at local schools and 'The Crystal Apple Awards,' saluting
area teachers. Further KCOY-TV sponsors local events such as 'The Santa Barbara
Autumn Arts & Wine Festival' and 'Danish Days.' KCOY-TV's first run syndicated
programming includes 'Montel Williams,' 'Martha Stewart Living,' 'Entertainment
Tonight' and 'Real TV.' Additionally, beginning in the fall of 1998, the Station
will add 'Hollywood Squares' to its first run syndicated programming schedule.
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 Range Railway 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
169,270 television households and a population of approximately 431,000. This
market has a cable penetration rate of 50%. 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 Nielsen ratings reports, KDLH-TV was
ranked number one in its market with a 6 rating and a 19% share of households
viewing television. KDLH-TV currently is the number three ranked news station in
this market and broadcasts 16 hours and 30 minutes of local news programming per
week. KDLH-TV's special value-added local sales efforts in 1997 included 'Safe
Kids Expo,' an event promoting and teaching child safety, 'Our Town,' programs
providing one week salutes to area communities,
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'Zoo Year's Eve,' an annual family event held at the Lake Superior Zoo, the
exclusive television sponsorship of the Duluth Bayfront Blues Fest which had
attendance of approximately 75,000 and various projects under the 'Volunteer 3'
banner. KDLH-TV's first run and off-network syndicated programming includes
'Seinfeld,' 'Montel Williams,' 'Martha Stewart Living' and 'Frasier.' In
addition, the Station will begin airing 'The Roseanne Show' and 'Donny & Marie'
in the fall of 1998.
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 healthcare,
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, Elco Industries, Inc. and
Warner-Lambert Company. Additionally, Chrysler Corporation recently announced a
$150 million investment to retool its Neon plant, which is located within the
Rockford market. One of the largest employers in the service industry in this
area is Rockford Memorial Hospital. Other service industry employers in the area
include AMCORE Bank N.A., 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 135th
largest market in the United States, with approximately 166,510 television
households and a population of approximately 438,000. This market has a cable
penetration rate of 69%. 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 Nielsen ratings reports, WIFR-TV was
ranked number one in its market with a 5 rating and a 18% share of households
viewing television. WIFR-TV currently is the number one ranked news station in
this market. The Station has recently expanded its weekday morning newscast from
60 to 90 minutes and airs 21 hours and 30 minutes of local news programming per
week. WIFR-TV's special value-added local sales efforts in 1997 included a
summer long promotion called 'Celebrate Rockford,' and a fourth quarter
promotion called 'Kids Checks,' which generated local revenue and raised money
for local schools. In January 1998, WIFR-TV broadcast a two hour telethon in
prime-time and raised over $100,000 for a local homeless shelter. WIFR-TV is
also this market's Big Ten Football and Basketball network station. WIFR-TV's
first run syndicated programming includes 'The Oprah Winfrey Show,' 'Inside
Edition' and 'Martha Stewart Living.' Additionally, beginning in the fall of
1998, the Station will add 'The Roseanne Show' to its first run syndicated
programming schedule.
WSAW-TV (CBS) WAUSAU AND RHINELANDER, WISCONSIN
Market Description. The Wausau-Rhinelander DMA consists of 11 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 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.
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Station History and Characteristics. WSAW-TV was originally licensed in
1954 to serve Wausau, Wisconsin. The Wausau-Rhinelander market is ranked 136th
in the United States, with approximately 162,820 television households and a
population of approximately 438,000. This market has a cable penetration rate of
53%. 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 Nielsen ratings reports, WSAW-TV was
ranked number one in its market with a 7 rating and a 25% share of households
viewing television. WSAW-TV currently is the number one ranked news station in
the market. Since being acquired in June 1996 by the Company, the Station has
expanded its weekday morning newscast and added a weekday newscast at 5:00 pm.
Currently, the Station airs 23 hours and 15 minutes of local news programming
per week as opposed to 16 hours and 45 minutes it broadcast each week prior to
being acquired by the Company. WSAW-TV's special value-added local sales efforts
in 1997 included 'WeatherSchool,' an educational project undertaken with area
schools to build interest in weather and science, 'WeatherNet,' placing
fully-automated weather monitoring systems at local schools and 'Behind The
Headlines,' a weekly news magazine designed to inform and educate viewers about
current local issues. WSAW-TV's first run and off-network syndicated programming
includes 'Home Improvement,' 'Live with Regis & Kathie Lee,' 'Montel Williams'
and 'Martha Stewart Living.' In addition, the Station will begin airing 'The
Roseanne Show' in the fall of 1998.
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, Bayer
Pharmaceutical, 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 157,770
television households and a population of approximately 409,000. This market has
a cable penetration rate of 77%. 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 Nielsen ratings reports, WTRF-TV was
ranked number two in its market with a 7 rating and an 18% share of households
viewing television. WTRF-TV currently is the number two ranked news station in
this market. Since being acquired in June 1996 by the Company, the Station has
added an hour-long weekday morning newscast at 5:00 am. Currently, the Station
airs 24 hours and 53 minutes of local news programming per week as opposed to 19
hours and 53 minutes it broadcast prior to being acquired by the Company.
WTRF-TV's special value-added local sales efforts in 1997 included 'HealthLine,'
a live program offering information and seminars to seniors and 'Best of the
Class,' a program recognizing accomplished students. In addition, the Station
produces 'Call It Home,' one week salutes to area communities and 'The Santa
Claus Program,' which provides children the opportunity to write letters to
Santa c/o WTRF-TV as part of a long-running holiday event. WTRF-TV's first run
and off-network syndicated programming includes 'Home Improvement,' 'Live with
Regis & Kathie Lee,' 'Martha Stewart Living,' 'Grace Under Fire' and 'Frasier.'
In addition, the Station will begin airing 'Hollywood Squares' in the fall of
1998.
WIBW-TV (CBS) TOPEKA, KANSAS
Market Description. The Topeka DMA consists of 15 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
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Goodyear Tire & Rubber Company, Payless ShoeSource, Jostens 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 139th in the United
States with approximately 156,800 television households and a population of
414,000. This market has a cable penetration rate of 73%. 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 Nielsen ratings reports, WIBW-TV was
ranked number one in its market with a 6 rating and a 22% share of households
viewing television. WIBW-TV currently is the number one ranked news station in
this market. Since being acquired in June 1996 by the Company, the Station has
expanded its weekday morning newscast from 60 minutes to one hour and 45
minutes. Currently, the Station airs 24 hours of local news programming per week
as opposed to 20 hours it broadcast each week prior to being acquired by the
Company. WIBW-TV's special value-added local sales efforts in 1997 included
'WeatherSchool,' an educational project undertaken with area schools to build
interest in weather and science, 'WeatherNet,' placing fully-automated weather
monitoring systems at local schools, and participation in such events as 'The
MDA Telethon,' 'The Great Topeka Duck Race' and 'The Bridal Fair.' Further
WIBW-TV produces the long-running quiz show 'High Q' and presents the annual
'CBS-13 Christmas Parade.' WIBW-TV's first run syndicated programming includes
'Wheel of Fortune,' 'Montel Williams' and 'Martha Stewart Living.' Additionally,
beginning in the fall of 1998, the Station will add 'The Roseanne Show' to its
first run syndicated programming schedule.
KAUZ-TV (CBS) WICHITA FALLS, TEXAS AND LAWTON, OKLAHOMA
Market Description. The Wichita Falls-Lawton DMA consists of 17 counties,
11 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
Company. 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
144th in the United States, with approximately 152,400 television households and
a population of approximately 418,000. This market has a cable penetration rate
of 68%. 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 Nielsen ratings reports, KAUZ-TV was
ranked number one in its market with a 5 rating and a 16% share of households
viewing television. KAUZ-TV currently is the number three ranked news station in
this market. Currently, the Station airs 15 hours of local news programming per
week as opposed to 14 hours and 30 minutes it broadcast each week prior to being
acquired by the Company. KAUZ-TV's special value-added local sales efforts in
1997 included 'Safe Kids Safari,' an event promoting and teaching child safety,
'The Texoma Farm and Ranch Show,' a program presenting the latest agricultural
products and services and 'Race For The Cure,' an annual event to benefit cancer
research. In addition, KAUZ-TV presents 'Friday Night High School Football
Update' and a local sports program focusing on Midwestern State University
Football. Since being acquired in June 1996 by the Company, the Station has
added
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'Jeopardy' and 'Sally Jessy Raphael' to its first run syndicated programming
schedule. KAUZ-TV's first run syndicated programming also includes 'Wheel of
Fortune,' 'The Oprah Winfrey Show' and 'The Jerry Springer Show.'
KMIZ(TV) (ABC) COLUMBIA AND JEFFERSON CITY, MISSOURI
K02NQ (FOX) COLUMBIA, MISSOURI
K11TB (FOX) JEFFERSON CITY, MISSOURI
Market Description. The Columbia-Jefferson City DMA consists of 14 counties
in central Missouri. Columbia and Jefferson City, approximately 30 miles apart,
are situated in the center of Missouri within 125 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, Columbia
Foods, Scholastic Books, ABB Power T&D Company, Dana Corporation, 3M 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 145th in the United States, with approximately 147,850
television households and a population of approximately 395,000. This market has
a cable penetration rate of 61%. KMIZ(TV) is broadcast on UHF channel 17 and is
an ABC affiliate. KMIZ(TV) competes with three full power commercial stations,
affiliates of CBS and NBC, which broadcast on VHF channels, and a Warner Bros.
affiliate, which broadcasts on a UHF channel.
Station Performance. According to the Nielsen ratings reports, KMIZ(TV) was
ranked number three in its market with a 3 rating and a 11% share of households
viewing television. KMIZ(TV) currently is the number three ranked news station
in this market. Since being acquired in June 1996 by the Company, the Station
has added a weekday 5:00 pm newscast and a rebroadcast of its 10:00 pm newscast.
In addition, KMIZ(TV) has added an hour-long weekday morning newscast.
Currently, the Station airs 20 hours and 27 minutes of local news programming
per week as opposed to 8 hours and 51 minutes it broadcast each week prior to
being acquired by the Company. KMIZ(TV)'s special value-added local sales
efforts in 1997 included the sponsorship and live broadcast of the 'Fire in the
Sky' Fourth of July fireworks celebration, 'Partners in Education' and
'Excellence in Mid-Missouri,' two campaigns to recognize and encourage
educational development, and numerous events benefiting area charities such as
The American Heart Association, Central Missouri Food Bank, The Leukemia Society
and The March of Dimes. Since being acquired by the Company, the Station has
added 'The Rosie O'Donnell Show' to its first run syndicated programming
schedule. KMIZ(TV)'s first run and off-network syndicated programming also
includes 'Home Improvement,' 'Seinfeld,' 'Live with Regis & Kathie Lee' and 'Mad
About You.' In addition, KMIZ(TV) will begin airing 'The Roseanne Show' in the
fall of 1998.
During August 1997, the Company completed the purchase of the television
broadcasting licenses and certain equipment of two low-power television stations
located in Columbia and Jefferson City, Missouri for a purchase price of $0.2
million. One-half of the purchase price was paid at closing with the remainder
due in two installments during 1998 and 1999. Concurrently with such purchase,
the Company entered into network affiliation agreements for such Stations with
the Fox Television Network. These two Stations began operating in September 1997
as a single entity operating from one facility and offering an identical
programming schedule. K02NQ is broadcast on VHF channel 2 and K11TB is broadcast
on VHF channel 11. However, these Stations are jointly known as 'Fox 11' based
on their channel position on most area cable systems which provide the primary
means of distribution. This market has a cable penetration rate of 61%.
Additionally, for purposes of all Nielsen statistics, these Stations are treated
as one entity. Fox 11's first run and off-network programming includes
'Frasier,' 'Hard Copy,' 'Judge Judy' and 'Star Trek: The Next Generation.'
Additionally, these Stations have acquired the rights to broadcast 'The Nanny'
beginning in the fall of 1998.
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KOSA-TV (CBS) ODESSA AND MIDLAND, TEXAS
Market Description. The Odessa-Midland DMA consists of 19 counties, 18 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 300 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 150th in the
United States, with approximately 133,740 television households and a population
of approximately 383,000. This market has a cable penetration rate of 73%.
KOSA-TV is broadcast on VHF channel 7 and is a CBS affiliate. The Company
acquired KOSA-TV in June 1996. 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 Nielsen ratings reports, KOSA-TV was
ranked number two in its market with a 4 rating and a 14% share of households
viewing television. KOSA-TV currently is the number two ranked news station in
the market and broadcasts 11 hours of local news programming each week. The
Station plans to expand its weekend news coverage and add a one hour weekday
morning news program later this year. KOSA-TV's special value-added local sale
efforts in 1997 included 'The Ector County Foodbank Telethon,' 'The Permian
Basin Fair' and 'Cop of the Week,' a sponsored project saluting excellence in
local law enforcement. In addition, KOSA-TV produces sports programs focusing on
area high school football teams and the local minor league hockey team.
KOSA-TV's first run and off-network syndicated programming includes 'Live With
Regis & Kathie Lee,' 'Montel Williams,' 'Grace Under Fire' and 'Married . . .
With Children.' Additionally, beginning in the fall of 1998, the Station will
add 'The Roseanne Show' to its first run syndicated programming schedule.
KHQA-TV (CBS) QUINCY, ILLINOIS, HANNIBAL, MISSOURI AND KEOKUK, IOWA
Market Description. The Quincy-Hannibal-Keokuk DMA consists of 17 counties,
eight of which are in western Illinois, eight 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. Keokuk, Iowa is also
located along the Mississippi River approximately 40 miles north of the
Quincy-Hannibal area. The local 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, Archer-Daniels
Midland, Pillsbury, Inc., Quincy Soybean Co., Harris Corporation, Shaeffer Pen
Company 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-Keokuk market is ranked 160th in the United States, with
approximately 111,400 television households and a population of approximately
309,000. This market has a cable penetration rate of 61%. KHQA-TV is broadcast
on VHF channel 7 and is a CBS affiliate. The Company acquired KHQA-TV in 1986.
There is one other commercial station in this market, an NBC affiliate carried
on a VHF channel. In January 1998, KHQA-TV relocated to a new 18,000 square foot
state-of-the-art digital television facility in Quincy, Illinois.
Station Performance. According to the Nielsen ratings reports, KHQA-TV was
ranked number one in its market with a 7 rating and a 24% share of households
viewing television. KHQA-TV currently is the number two ranked news station in
this market and broadcasts 13 hours and 30 minutes of local news programming
each week. KHQA-TV's special value-added local sales efforts in 1997 included '7
Who Care,' a program saluting area volunteers, 'Kids Who Care,' a campaign to
teach and promote child safety, 'Made in the Tri-States' and 'Beyond the Book,'
news projects focusing on area businesses and schools, and 'The Holiday Shopping
Show,'
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a sales promotion presenting holiday shopping ideas. KHQA-TV's first run and
off-network syndicated programming includes 'Wheel of Fortune,' 'Jeopardy,'
'Seinfeld,' 'The Oprah Winfrey Show' and the recently acquired 'The Rosie
O'Donnell Show.'
WTVY-TV (CBS) DOTHAN, ALABAMA AND PANAMA CITY, FLORIDA
Market Description. WTVY-TV is one of the few television 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 90 miles southeast of Montgomery,
Alabama and 80 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, light manufacturing and agricultural sectors.
Dothan is known as the 'Peanut Capital of the World,' producing 25% of all
peanuts grown in the United States. 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 173rd in
the United States, with approximately 86,390 television households and a
population of approximately 230,000, while the Panama City market is ranked
157th with approximately 117,220 television households and a population of
approximately 303,000. The Dothan market has a cable penetration rate of 69% and
the Panama City market has a cable penetration rate of 66%. 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 Nielsen ratings reports, WTVY-TV was
ranked number one in the Dothan market with an 8 rating and a 25% share of
households viewing television. It was also ranked third in the Panama City
market with a 4 rating and a 12% share of households viewing television. WTVY-TV
currently is the number one ranked news station in the Dothan market and
broadcasts 16 hours of local news programming each week. WTVY-TV's special
value-added local sales efforts in 1997 included 'Hometown Salutes,' saluting
area communities, 'LiveLine,' live call-in programs focusing on issues such as
health, 'Energy for Education,' a campaign to recognize superior students and
teachers and 'WeatherSchool,' an educational project undertaken with area
schools to build interest in weather and science. WTVY-TV's first run syndicated
programming includes 'Wheel of Fortune,' 'Live with Regis & Kathie Lee,' 'Martha
Stewart Living' and the recently acquired 'The Oprah Winfrey Show.'
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WHSV-TV (ABC) HARRISONBURG, VIRGINIA
Market Description. The Harrisonburg DMA consists of four counties, two of
which are in northwestern Virginia and two of which are in northeastern West
Virginia. Harrisonburg is located in the Shenandoah Valley between the Allegheny
and Blue Ridge Mountains, approximately 110 miles west of Washington, D.C. and
110 miles northwest of Richmond, Virginia. The Harrisonburg economy 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 12,000 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 177th in the United States, with
approximately 81,120 television households and a population of approximately
218,000. This market has a cable penetration rate of 74%. 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 Nielsen ratings reports, WHSV-TV had
a 6 rating and a 23% share of households viewing television. WHSV-TV currently
broadcasts 15 hours and 20 minutes of local news programming each week.
WHSV-TV's special value-added local sales efforts in 1997 included 'Toys for
Tots,' an annual holiday toy drive, 'Children First,' a campaign to raise
awareness of children's needs and issues and 'WeatherSchool,' an educational
project undertaken with area schools to build interest in weather and science.
In addition, WHSV-TV supports 'Celebrate Smart,' a project to combat drunk
driving, and 'First Night Harrisonburg,' an annual New Year's celebration.
WHSV-TV's first run and off-network syndicated programming includes 'Wheel of
Fortune,' 'Jeopardy,' 'Home Improvement,' 'The Oprah Winfrey Show' and 'Live
with Regis & Kathie Lee.' Additionally, beginning in the fall of 1998, the
Station will add 'Hollywood Squares' to its first run syndicated programming
schedule.
WBKO-TV (ABC) BOWLING GREEN, KENTUCKY
Market Description. The Bowling Green DMA consists of eight 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, Country Oven Bakery Division of Kroger
Stores, Inc. and Hills Pet Products. Bowling Green is also the home of Western
Kentucky University with approximately 15,000 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 182nd in
the United States, with approximately 74,740 television households and a
population of approximately 185,000. This market has a cable penetration rate of
55%. WBKO-TV is broadcast on VHF channel 13 and is an ABC affiliate. The Company
acquired WBKO-TV in 1983. There is one other commercial station in this market,
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 Nielsen ratings reports, WBKO-TV was
ranked number one in its market with an 8 rating and a 28% share of households
viewing television. WBKO-TV currently is the number one ranked news station in
this market and broadcasts 19 hours and 30 minutes of local news programming
each week, including 30 minutes recently added to the Station's daily 'AM
Kentucky' program. WBKO-TV's special value-added local sales efforts in 1997
included 'Children First,' a campaign to raise awareness of children's needs and
issues, 'Home and Garden Expo,' and 'Bikes for Kids for Christmas' projects.
Further, WBKO-TV supports events such as 'Relay for Life,' which benefits The
American Cancer Society, 'The Glasgow Highland Games,' and 'The TransFinancial
Balloon Classic.' WBKO-TV's first run and off-network syndicated
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programming includes 'Home Improvement,' 'The Oprah Winfrey Show,' 'Live with
Regis & Kathie Lee' and 'Martha Stewart Living.'
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. Additionally, the opening of a regional shopping mall in 1997 has
generated approximately 2,000 jobs. 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.
Station History and Characteristics. WTOK-TV was originally licensed in
1953 to serve Meridian, Mississippi. The Meridian market is ranked 183rd in the
United States, with approximately 67,030 television households and a population
of approximately 185,000. This market has a cable penetration rate of 53%.
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 manages the NBC affiliate.
Station Performance. According to the Nielsen ratings reports, WTOK-TV was
ranked number one in its market with an 8 rating and a 25% share of households
viewing television. WTOK-TV currently is the number one ranked news station in
this market and broadcasts 13 hours and 55 minutes of local news programming
each week. WTOK-TV's special value-added local sales efforts in 1997 included
'Coats for Kids,' a program to provide for area children in need, 'Children's
First Day,' an annual information and entertainment festival and 'Toy-a-thon,'
an annual holiday toy drive. In addition, WTOK-TV presents significant local
political coverage, including debates, forums and town meetings. WTOK-TV's first
run syndicated programming includes 'The Oprah Winfrey Show,' 'Montel Williams,'
'Sally Jessy Raphael' and 'Live with Regis & Kathie Lee.'
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 State College with
an aggregate student population of approximately 5,500.
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 186th in the United States,
with approximately 61,730 television households and a population of
approximately 160,000. This market has a cable penetration rate of 78%. 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.
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Station Performance. According to the Nielsen ratings reports, WTAP-TV had
a 9 rating and a 28% share of households viewing television. WTAP-TV currently
broadcasts 15 hours of local news programming each week. WTAP-TV's special
value-added local sales efforts in 1997 included 'Coats for Kids,' a program to
provide for area children in need, and 'Back to School Safety Tips' and 'Hunter
Safety Tips,' campaigns to teach and promote safety concerns. Further, WTAP-TV
presents significant local election coverage, including debates. WTAP-TV's first
run and off-network syndicated programming includes 'Wheel of Fortune,'
'Jeopardy,' 'Home Improvement,' 'Seinfeld,' 'The Oprah Winfrey Show,' 'Montel
Williams' and 'Live with Regis & Kathie Lee.'
KGWN-TV (CBS) CHEYENNE, WYOMING
KSTF-TV (CBS) SCOTTSBLUFF, NEBRASKA
KTVS-TV (CBS) STERLING, COLORADO
Market Description. The Cheyenne-Scottsbluff 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
4,200 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 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. 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 market is ranked
195th in the United States with approximately 49,940 television households and a
population of approximately 129,000. This market has a cable penetration rate of
73%. 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 Nielsen ratings reports, KGWN-TV was
ranked number one in its market with a 5 rating and a 18% share of households
viewing television. KGWN-TV currently is the number one news station in this
market. Since being acquired in June 1996 by the Company, the Station has added
weekday newscasts at 6:30 am, 12:00 noon and 5:00 pm, as well as expanded
coverage during the 7:00 to 9:00 am time period. Currently, the Station airs 14
hours and 20 minutes of local news programming per week as opposed to 6 hours
and 50 minutes it broadcast each week prior to being acquired by the Company.
KGWN-TV's special value-added local sales efforts in 1997 included live and
promotional coverage of Cheyenne Frontier Days, a 10-day western celebration
featuring the world's largest outdoor rodeo, the live broadcast of the 'Fire in
the Sky' Fourth of July celebration and 'Motorsports Shootout,' a car and bike
show and festival. Further, KGWN-TV presents the 'Cheyenne Christmas Parade,'
'Christmas Choral Festival' and 'Holiday Shopper,' a direct mail campaign. Since
being acquired by the Company, the Station has added 'The Rosie O'Donnell Show'
to its first run syndicated programming schedule. KGWN-TV's first run and off-
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network syndicated programming also includes 'Live with Regis & Kathie Lee,'
'Mad About You' and 'Martha Stewart Living.'
KGWC-TV (CBS) CASPER, WYOMING
KGWL-TV (CBS) LANDER, WYOMING
KGWR-TV (CBS) ROCK SPRINGS, WYOMING
Market Description. The Casper-Riverton DMA consists of five counties in
central Wyoming. Casper is located approximately 280 miles southeast of
Billings, Montana and 275 miles north of Denver, Colorado. The Casper economy,
historically centered on oil and agriculture, has recently diversified with the
growth of its service sector. Major employers in the area include the Wyoming
Medical Center, Wotco, Inc, Union Pacific Railroad, Safecard and Frontier Oil
Refinery. 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 200th in the United States, with approximately
47,820 television households and a population of approximately 125,000. This
market has a cable penetration rate of 64%. 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. In November
1997, KGWC-TV relocated to a 10,000 square foot leased facility in downtown
Casper. The new location includes significant technological improvements in
order to better serve the market.
Station Performance. According to the Nielsen ratings reports, KGWC-TV was
ranked number two in its market with a 3 rating and a 10% share of households
viewing television. KGWC-TV currently is the number two ranked news station in
this market. Currently, the Station airs 6 hours of local news programming per
week. KGWC-TV's special value-added local sales efforts in 1997 included
sponsorship of the local and state-wide 'Catch a Rising Star' talent contest,
'Celebrate Casper,' a local art festival, and 'The Central Wyoming Fair and
Rodeo.' In addition, KGWC-TV produces the annual 'Christmas Parade' and provides
coverage of the Wyoming State Wrestling and Basketball tournaments. Since being
acquired by the Company, the Station has added 'Wheel of Fortune' and 'The Rosie
O'Donnell Show' to its first run syndicated programming schedule and has
acquired the rights to air 'The Roseanne Show' beginning in the fall of 1998.
KGWC-TV's first run and off-network syndicated programming also includes 'Live
with Regis & Kathie Lee,' 'Mad About You' and 'Martha Stewart Living.'
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
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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. Television 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 1998 Television & Cable Factbook, cable television currently passes
approximately 93% of all television households nationwide and approximately 69%
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, 70% of all prime time television viewing time
during the 1997-1998 broadcast season through February 1998 was spent viewing
ABC, CBS, NBC, Fox, Warner Bros. or UPN 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. Television 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 satellite
services ('DBS') to homes from satellites became available on a nationwide basis
during 1994. See ' -- Competition.'
NETWORK AFFILIATION OF THE STATIONS
Each of the Stations is affiliated with either ABC, CBS, NBC or Fox
pursuant to 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 Stations' network affiliation agreements currently runs for a
period of two to ten 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. 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. WHOI(TV), an ABC affiliate, operates under an affiliation
agreement which expires in 2005 and which does not provide for renewals. Each of
KDLH-TV,
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WIFR-TV, KHQA-TV, WTVY-TV, KGWN-TV, KGWC-TV, KCOY-TV, WIBW-TV, WSAW-TV, WTRF-TV,
KAUZ-TV and KOSA-TV, all of which are CBS affiliates, has 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. Each of WMTV(TV), WWLP(TV)
and WILX-TV, all of which are NBC affiliates, 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. WTAP-TV, an NBC affiliate, 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.
In December 1995, the Company entered into new long-term affiliation
agreements with CBS effective retroactive to July 1, 1995 on behalf of KDLH-TV,
WIFR-TV and KHQA-TV and agreed to extend the term of the affiliation agreement
for WTVY-TV from 2004 to 2005. In connection with such arrangements, CBS paid
the Company bonus payments of $2.5 million in the fourth quarter of 1995 and
$2.5 million in the first quarter of 1996. These payments will be recognized as
revenue by the Company at the rate of $0.5 million per year over the ten-year
period of the affiliation agreements. The Company also agreed with CBS that,
upon the consummation of the Acquisitions, the term of the affiliation
agreements of the Stauffer Stations that are CBS affiliates would be extended
from 2000 to 2005 and the term of the affiliation agreements of the Brissette
Stations that are CBS affiliates would be extended from 2004 to 2005.
During August 1997, the Company completed the purchase of the television
broadcasting licenses and certain equipment of K02NQ and K11TB, two low-power
television stations located in Columbia and Jefferson City, Missouri and jointly
known as 'Fox 11.' Concurrently with such purchase, the Company entered into a
network affiliation agreement for such Stations with Fox which expires July 31,
1999, and automatically continues until terminated by either party upon 120
days' advance notice. These two Stations began operating in September 1997. The
primary means of distribution for these Stations is via cable television.
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 1996 and 1997 broadcast seasons.
The Company has had similar arrangements with Fox since 1994. In 1997, the
Company broadcast the NFC football games and other Fox programming on KHQA-TV,
KDLH-TV, WYTV and Fox 11. The Company will broadcast NFC football games in 1998
only on Fox 11.
Beginning in the fall of 1998, CBS will broadcast football games of the
American Football Conference ('AFC') of the National Football League and NBC
will no longer broadcast such games. All of the Stations which are CBS
affiliates will broadcast AFC football games. CBS and its affiliates (including
the Company) recently announced an agreement in principle whereby the affiliates
will contribute to CBS's costs for the rights to AFC football games. CBS
affiliated stations will forego a portion of their network compensation in
exchange for additional commercial inventory during AFC football games and
during prime time. The Company believes that the amounts it will realize from
the sale of additional commercial inventory are likely to substantially offset
or exceed the reduced network compensation from CBS and, as a result, the
Company does not believe that this arrangement will have a material adverse
effect on the Company.
In the third quarter of 1997, the Company entered into 10-year agreements
with The Warner Bros. Television Network to develop a local cable affiliate
called the 'WeB' in each of the Company's 20 markets which are outside of the
100 largest in the U.S., as measured by Nielsen. The WeB is intended to be a 24
hour, seven day a week television channel which will broadcast The Warner Bros.
Television Network prime time programming, Warner Bros. children's programming
and syndicated programming of Warner Bros. and others. The Company recently
entered into an agreement with Tele-Communications, Inc., the largest cable
system operator in the United States, for the carriage of WeB programming on
Tele-Communications, Inc.'s cable systems in the Company's WeB markets. The
Company is currently in negotiations with other cable systems in its markets for
the carriage of WeB programming. The WeB is scheduled to begin service by the
fall of 1998 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 a significant effect on operations during 1998 nor does it anticipate
that significant capital expenditures will be required in connection with the
development of its WeB affiliates.
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ADVERTISING SALES
Television station revenues are derived primarily from local, regional and
national advertising time and, to a lesser extent, from compensation paid by the
networks for broadcasting network programming and barter transactions for goods
and services. 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 56.1% of the gross revenues of the Stations in
1997 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 Stations on a
weekly basis.
National Sales. Approximately 29.1% of the gross revenues of the Stations
in 1997 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
the Company. Nine of the Stations are represented by Katz Communications, Inc.,
six Stations are represented by Petry Television, Inc., five Stations are
represented by Harrington, Righter & Parsons, L.L.P. and three Stations are
represented by TeleRep, Inc. The 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.
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 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 eight markets, the Company owns one of three local television
stations. In six markets, the Company owns one of four local television
stations. In the Columbia and Jefferson City, Missouri market the Company owns
two of five stations, one of the owned stations being the jointly operated
low-power stations known in the market as Fox-11. In addition, 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 development of methods of television transmission of video programming
other than over-the-air broadcasting, and in particular the growth of cable
television and DBS, have 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
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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 in small and medium-sized markets.
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. Fox has announced
plans to sell its DBS license to a coalition of cable companies.
Several DBS companies provide signals of out-of-market network affiliated
stations to 'unserved households' in the Stations' markets. The legal definition
of an 'unserved household' is one that, among other things, cannot receive a
specific grade of service from a local broadcast station. Many stations have
alleged in litigation that satellite carriers sell these signals to households
that are served by local stations. In addition, DBS provider Echostar began
providing transmission of local television stations to viewers in the markets in
which those stations are licensed and has asked for a change in legislation to
permit that service to be provided to 'served' households.
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 authorized a 28 GHz microwave cable service that will have
the potential to provide up to 100 channels or more 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
digital television or DTV, with the most advanced type of transmission system
being high definition television. Intensive research and development efforts
have achieved forms of DTV 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 DTV system, and these efforts resulted in technical standards that were
submitted to the FCC in 1995. In late 1996, the FCC adopted a technical standard
for DTV. The standard will involve the broadcast of DTV on a separate television
channel from that used for conventional broadcasting. This separate channel may
also be used by broadcasters for data transmission and multi-channel
transmission. The FCC has recently assigned licenses to permit television
broadcasters to provide DTV services. Although in some cases a DTV channel may
provide a station with a smaller geographic service area than its current
channel, most stations are expected to obtain DTV service areas that are
consistent with their current service areas. At the end of a transition period,
each broadcaster is 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 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, the Balanced Budget Act of 1997 requires (unless the FCC finds
that certain requirements have not been met) broadcasters to return their analog
channels on an expedited basis by 2006 to permit them to be reauctioned to new
licensees. 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 DTV-compatible reception
equipment. See 'Risk Factors -- Competition Within the Television Industry;
Digital Advanced Television.'
Programming. Competition for programming involves negotiating with national
program distributors or syndicators which sell first run and off-network rerun
packages of programming. The Stations compete against other 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 'Mad About You') in their respective markets.
Cable systems generally do not compete with local stations for
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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.
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. Nielsen periodically publishes reports on the
estimated audience for the television stations in the various television markets
throughout the country. The audience estimates are expressed in terms of the
percentage of the total potential audience in a market viewing a particular
station (the station's 'rating') and of the percentage of households actually
viewing television (the station's 'share'). The ratings reports provide data on
the basis of total television households and selected demographic groupings in
15-minute or half-hour increments for a particular market. Each specific
geographic market is called a DMA. Every county in the continental United States
is assigned to a DMA 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.
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 eight years. Prior to March
1996, the maximum allowable term was five years. 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 denial of the application. Additionally, if an
incumbent licensee fails to meet the renewal standard, and if it 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 licenses
expiring on various dates from 1998 to 2006. Currently, WIBW-TV, serving Topeka,
Kansas; KAUZ-TV, serving Wichita Falls, Texas; KOSA-TV, serving Odessa, Texas;
KGWN-TV, serving Cheyenne, Wyoming; and KGWC-TV, serving Casper, Wyoming, and
its satellite stations KGWR-TV, serving Rock Springs, Wyoming, and KGWL-TV,
serving Lander, Wyoming, have pending applications for license renewal. The
Company is not
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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 WIBW-TV, KAUZ-TV, KOSA-TV, KGWN-TV,
KGWC-TV, KGWR-TV or KGWL-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. The FCC's duopoly rule currently bars an entity
from having an attributable interest in television stations in the same market
with overlapping Grade B service contours. However, pending resolution of an FCC
proceeding that may result in the liberalization of this rule, the FCC may allow
an entity to acquire an attributable interest in two stations in different
markets with overlapping Grade B contours provided the stations' Grade A
contours do not overlap. Based on this interim policy, the FCC has permitted
common ownership by the Company of WTRF-TV, serving Wheeling, West Virginia and
Steubenville, Ohio, and WYTV, serving Youngstown, Ohio, and of WTRF-TV and
WTAP-TV, serving Parkersburg, West Virginia, subject to the outcome of the
pending proceeding. In 1996, the FCC granted the Company authority to acquire
WMTV(TV), serving Madison, Wisconsin, despite the overlap of Grade B and Grade A
contours of that station with the Company's WIFR-TV, serving Rockford, Illinois,
pursuant to a temporary waiver of the duopoly rule. Prior to the end of the
waiver period in December 1996, the Company requested an extension of the waiver
subject to the outcome of the pending proceeding, but has been informed that
such relief is not currently available because of the partially overlapping
Grade A contours. As an alternative, the Company has filed an application to
transfer WMTV(TV) to a trust, which application is pending. The Company may be
required to dispose of one of the two Stations to a third party within six
months after the processing and the grant of the application. 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 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 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 FCC has initiated an inquiry into
modifying several of these attribution standards. It is likely that this inquiry
will be concluded in 1998; however, 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.
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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.
Qualified 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 qualified 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 election campaign, stations may not charge political candidates
rates any higher than the rate being charged to the most favored commercial
advertiser for a spot of the same length and class in 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 the needs of children 16 years of age or younger.
The FCC recently enacted rules which provide that television stations must
generally air approximately three hours of core children's programs per week in
order to assure routine staff-level approval of FCC license renewals. Core
children's programs are defined as regularly scheduled, weekly (or more
frequent) programs at least 30 minutes long which air between 7:00 am and 10:00
pm and which have as a significant purpose the educational and informational
needs of children 16 years old or younger. Additionally, the FCC recently
promulgated rules governing the publicizing of children's programming by
broadcasters. Since 1992, FCC rules have limited the amount of commercial matter
to no more than 10.5 minutes per hour on weekends and 12 minutes per hour on
weekdays in 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
(6:00 am to 10:00 pm). 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.
In all of the foregoing areas, as well as in other matters that affect
operations and competition in the television broadcast industry, regulatory
policies are subject to change over time and cannot be fully predicted.
Proposed Legislation and Regulation. The Congress and the FCC currently
have under consideration, and may in the future adopt, new rules, regulations
and policies regarding a wide variety of matters which could, directly or
indirectly, affect the operation and ownership of the Stations. In addition to
the proposed changes set forth above, examples of such matters include policies
concerning eliminating certain cross-ownership restrictions, political
advertising and programming practices, flexible use of broadcast spectrum,
spectrum use fees, the standards to govern evaluation of television programming
directed toward children and violent and indecent programming. Other matters
that could affect the Company's broadcast properties include technological
innovations and developments generally affecting competition in the mass
communications industry, such as the continued establishment of DBS and wireless
cable systems and low-power television stations and the participation of
telephone companies in the provision of video programming.
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.
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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' 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. In its March 31, 1997 decision, the Supreme
Court, by a 5 to 4 vote, affirmed the judgment of the district court. The Court
concluded that the record supports Congress' judgment that the must-carry
provisions serve significant governmental interests, namely preserving the
benefits of free, over-the-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.
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. By
October 1, 1996, stations were required to make their second election, covering
the three-year period from January 1, 1997 to December 31, 1999.
The Company has entered into agreements for the Stations with substantially
all of the local cable system operators which carry the Stations' signals. All
of these agreements grant such cable system operators consent to retransmit the
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 six months to five years. The Stations are currently
negotiating with these operators to enter into longer term agreements. The
Company cannot predict the outcome of these negotiations. In addition, although
the Company expects to be able to renew its current retransmission agreements
when such agreements expire, there can be no assurance that such renewals will
be obtained.
EMPLOYEES
The Company currently has approximately 1,300 full-time employees.
Approximately 230 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 collective bargaining agreements expire at
various times from 1998 through 2000. 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.
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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.
<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 --
Youngstown, Ohio
WYTV
Office and Studio................ Owned 18,964 sq. ft. -- --
Tower/Transmitter Site........... Owned (b) 642 ft./550 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........... Leased 5,000 sq. ft. 994 ft./309 kw 10/18/98
Peoria and Bloomington, Illinois
WHOI(TV)
Office and Studio................ Owned 16,900 sq. ft. -- --
Tower/Transmitter Site........... Owned (b) 640 ft./2,240 kw --
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 12/31/17(c)
Duluth, Minnesota and Superior,
Wisconsin
KDLH-TV
Office and Studio................ Owned 25,000 sq. ft.(d) -- --
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 --
Wausau and Rhinelander, Wisconsin
WSAW-TV
Office and Studio................ Owned 24,400 sq. ft. -- --
Tower/Transmitter Site........... Leased(e) 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.(f) -- --
Tower/Transmitter Site........... Owned 2,000 sq. ft. 741 ft. /316 kw --
</TABLE>
(table continued on next page)
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<TABLE>
<CAPTION>
MARKET AREA, STATION AND USE OWNED OR LEASED APPROXIMATE SIZE(A) HEIGHT/POWER EXPIRATION OF LEASE
- -------------------------------------- --------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Topeka, Kansas
WIBW-TV
Office and Studio................ Leased 18,774 sq. ft.(g) -- 08/31/98
Tower/Transmitter Site........... Leased 2,338 sq. ft. 1,249 ft./316 kw 02/14/62
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 --
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 --
Columbia and Jefferson City, Missouri
K02NQ (low-power)
Tower/Transmitter................ Leased (h) 60 ft./30 w 09/03/02
K11TB (low-power)
Tower/Transmitter................ Leased (i) 100 ft./10 w 05/15/00
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 10/31/03
Quincy, Illinois,
Hannibal, Missouri and Keokuk, Iowa
KHQA-TV
Office and Studio................ Owned 18,000 sq. ft. -- --
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 --
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(c)
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(j)
Tower/Transmitter Site........... Owned 3,600 sq. ft. 439 ft./208 kw --
</TABLE>
(table continued on next page)
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<TABLE>
<CAPTION>
MARKET AREA, STATION AND USE OWNED OR LEASED APPROXIMATE SIZE(A) HEIGHT/POWER EXPIRATION OF LEASE
- -------------------------------------- --------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Cheyenne, Wyoming
KGWN-TV
Office and Studio................ Owned 7,500 sq. ft. -- --
Tower/Transmitter Site........... (k) 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
Casper and Riverton,
Wyoming
KGWC-TV
Office and Studio................ Leased 10,000 sq. ft. -- 03/04/07(l)
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
</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) Occupied pursuant to a Special Use Permit granted by the United States
Department of Agriculture Forest Service.
(d) 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.
(e) Leased together with TAK Communications from the Wisconsin Educational
Board.
(f) 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.
(g) 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 Stauffer, which owns and operates radio stations
WIBW AM and FM.
(h) The Company leases rooftop space for its tower/transmitter.
(i) The Company leases space on a tower on which it has mounted a broadcasting
antenna.
(j) The Company has an option to purchase the premises on each of May 1, 2000
and 2005 for $650,000 and $750,000, respectively.
(k) This property is utilized subject to an easement granted by the State of
Wyoming.
(l) The Company has an option to purchase the premises during the term of the
lease at an initial price of $343,721, subject to adjustments.
LEGAL PROCEEDINGS
In June 1997, an action was commenced in United States District Court in
the Southern District of New York against Benedek Broadcasting, along with NBC,
ABC, CBS, Fox, the National Association of Broadcasters and another broadcast
company and others, alleging violations of Federal antitrust laws. The
plaintiff, PrimeTime 24 Joint Venture, is a provider of network programming to
satellite home viewers. The plaintiff alleges that Benedek Broadcasting and
other defendants illegally misused their market power to insulate themselves
from new competition. Plaintiff is seeking recovery of an amount approved at
trial, treble damages thereon and reimbursement of its legal fees and expenses.
Benedek Broadcasting believes that the plaintiff's claims against it are without
merit, and does not anticipate that the lawsuit will have a material effect on
the Company's financial condition or results of operations.
Additionally, the Company currently and from time to time is involved in
litigation incidental to the conduct of its business. The Company (including in
its capacity as successor to Brissette) is not currently a party to any lawsuit
or proceeding which, in the opinion of the Company, is likely to have a material
adverse effect on the Company.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to each
director and executive officer of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ ------- -----------------------------------------------------------
<S> <C> <C>
A. Richard Benedek.................. 59 Chairman, Chief Executive Officer and Director
K. James Yager...................... 63 President, Chief Operating Officer and Director
Ronald L. Lindwall.................. 52 Senior Vice President-Finance, Chief Financial Officer,
Treasurer, Secretary and Director
Terrance F. Hurley.................. 42 Senior Vice President of Benedek Broadcasting
Raymond P. Maselli.................. 57 Senior Vice President of Benedek Broadcasting
Clyde G. Payne...................... 62 Senior Vice President of Benedek Broadcasting
Raymond J. Schonbak................. 55 Senior Vice President of Benedek Broadcasting
Keith L. Bland...................... 42 Senior Vice President-Planning and Technology of Benedek
Broadcasting
Mary L. Flodin...................... 42 Vice President and Controller of Benedek Broadcasting
Jay Kriegel......................... 57 Director
Paul S. Goodman..................... 44 Director
</TABLE>
Mr. A. Richard Benedek has been engaged in the television broadcasting
industry for over 18 years. Mr. Benedek is the Chairman and Chief Executive
Officer of the Company, positions he has held since the formation of the Company
in 1996. 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 Broadcasting from their
formation in January 1980 and September 1982, respectively, until both were
merged into Benedek Broadcasting on March 10, 1995 in 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. Benedek currently
serves on the board of directors of the ABC Affiliates Association.
Mr. K. James Yager has been engaged in the television broadcasting industry
for over 38 years. Mr. Yager
is the President, Chief Operating Officer and a director of the Company,
positions he has held since the formation of the Company in 1996. Mr. Yager has
served as President and Chief Operating Officer 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 been a director of Benedek
Broadcasting since 1986. 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, most
recently 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. Yager
currently serves on the board of directors of each of the National Association
of Broadcasters, Broadcast Music, Inc. and the Television Bureau of Advertising.
Mr. Ronald L. Lindwall is the Senior Vice President-Finance, Chief
Financial Officer, Secretary and Treasurer and a director of the Company,
positions he has held since the formation of the Company in 1996. 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 been a
director of Benedek Broadcasting since 1994. Mr. Lindwall has also served as
Senior Vice President, Chief Financial Officer and Treasurer of each of Blue
Grass and Youngstown from 1990 until the Merger. From 1982 to 1990, Mr. Lindwall
was a partner at the accounting firm of McGladrey & Pullen.
Mr. Terrance F. Hurley has served as Senior Vice President of Benedek
Broadcasting since May 1996. From December 1995 until he became Senior Vice
President, 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
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serving Quincy, Illinois and Hannibal, Missouri from May 1993 until October
1994. From 1991 until May 1993, Mr. Hurley was employed by Dix Communications as
the General Sales Manager of KAAL-TV serving Rochester-Austin, Minnesota. Mr.
Hurley currently serves on the 100 Plus Committee of the National Association of
Broadcasters.
Mr. Raymond P. Maselli has been Senior Vice President of Benedek
Broadcasting since March 1997. Mr. Maselli has been with Benedek Broadcasting as
Vice President, General Manager of WYTV in Youngstown, Ohio since 1989. He was
the President and General Manager for WGRZ-TV of Buffalo, New York from 1988 to
1989 and Vice President of Sales and Programming for WGRZ-TV from 1983 to 1988.
Mr. Maselli started his broadcast career in 1965.
Mr. Clyde G. Payne has been engaged in the television broadcasting industry
for over 30 years. Mr. Payne was promoted to Senior Vice President of Benedek
Broadcasting effective March 1997. From March 1995 until February 1997, he
served as Divisional Vice President of Benedek Broadcasting. Mr. Payne also
served as General Manager of WBKO-TV serving Bowling Green, Kentucky from 1970
until 1997. Mr. Payne was also part owner of WBKO-TV from 1976 until the Station
was acquired by Blue Grass in 1983. Mr. Payne has served as chairman of the
Arbitron Television Advisory Council and the ABC Affiliates Association, as well
as Vice Chairman of the Television Board of the National Association of
Broadcasters.
Mr. Raymond J. Schonbak was hired effective April 1997 to serve as a Senior
Vice President of Benedek Broadcasting. Mr. Schonbak was the founder and
President of US Broadcast Group LLP of Shelton, Connecticut from 1995 to 1997.
He served as the Chief Executive Officer of Triad Communications of San
Francisco, California from 1991 to 1995. Prior to that time, Mr. Schonbak held a
variety of management positions in the broadcast field beginning in 1970.
Mr. Keith L. Bland has been engaged in the television broadcasting industry
for over 23 years. Mr. Bland has served as Senior 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 has served as Vice President and Controller of the
Company since its formation in 1996. 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 counselor with the public
relations firm of Abernathy MacGregor Frank and its predecessor firm. 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 formation in 1996.
Mr. Paul S. Goodman has been corporate counsel to Benedek Broadcasting
since 1983 and the Company since its formation in 1996. 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 formation in 1996.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid to the Company's Chief Executive Officer and the other five
most highly-compensated executives during the fiscal years ended December 31,
1997, December 31, 1996 and December 31, 1995.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------
OTHER ALL
ANNUAL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)(a)
- ------------------------------------------ ---- --------- -------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
A. Richard Benedek, Chairman 1997 750,000 -- -- 11,218
and Chief Executive Officer 1996 525,000 -- -- 9,598
1995 475,000 -- -- 8,378
K. James Yager, President and Chief 1997 415,500 -- -- 14,875
Operating Officer 1996 406,586 -- -- 15,465
1995 344,950 -- -- 17,826
Ronald L. Lindwall, Senior Vice 1997 174,327 25,000 -- 4,555
President-Finance, Chief Financial 1996 149,530 25,000 -- 4,458
Officer, Secretary and Treasurer 1995 107,652 55,000 -- 3,649
Terrance F. Hurley, Senior Vice President 1997 174,327 -- -- 3,530
1996 125,538 25,000 -- 2,573
Raymond P. Maselli, Senior Vice President 1997 174,352 -- -- 7,703
Raymond J. Schonbak, Senior Vice President 1997 182,693 -- 99,561(b) 5,544
</TABLE>
- ------------
(a) Represents the amount of the Company's contribution under its 401(k) plan
and life insurance premiums.
(b) Represents relocation expenses ($63,554), amounts reimbursed for the
payment of taxes ($31,116), personal use of Company vehicle and medical
insurance.
------------------------
The following table sets forth the value, at December 31, 1997, of options
to purchase common stock of the Company held by the executive officers named in
the Summary Compensation Table above.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR-END(#) FISCAL YEAR-END($)
------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
A. Richard Benedek.......................... -- -- -- --
K. James Yager.............................. 370,000(a) -- -- --
Ronald L. Lindwall.......................... -- -- -- --
Terrance F. Hurley.......................... -- -- -- --
Raymond P. Maselli.......................... -- -- -- --
Raymond J. Schonbak......................... -- -- -- --
</TABLE>
- ------------
(a) The Company believes the options were not in-the-money as of December 31,
1997. The Options were exercised on January 1, 1998.
DIRECTOR COMPENSATION
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. In 1997, 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.
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
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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. Lindwall is employed by Benedek Broadcasting pursuant to an employment
agreement that expires May 31, 1999. During the term of the agreement, Mr.
Lindwall is to be paid at a rate per annum of not less than $150,000. The
employment agreement requires Mr. Lindwall to devote his full time to the
business of Benedek Broadcasting.
Mr. Hurley is employed by Benedek Broadcasting pursuant to an employment
agreement that expires May 31, 1999. During the term of the agreement, Mr.
Hurley is to be paid at a rate per annum of not less than $150,000. The
employment agreement requires Mr. Hurley to devote his full time to the business
of Benedek Broadcasting and precludes Mr. Hurley from engaging in activities
competitive with the business of Benedek Broadcasting throughout the term of the
employment agreement and for a period of one year thereafter with respect to
designated market areas then served by a television station owned by Benedek
Broadcasting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Benedek, Yager and Lindwall, all of whom are executive officers of
the Company, serve as directors of the Company. Presently, the Company does not
have a compensation committee. Compensation for executive officers is
recommended to the Board of Directors by the Chief Executive Officer. In making
his compensation recommendations, the Chief Executive Officer considers several
criteria, including the Company's performance and growth, industry standards for
similarly situated companies and experience and qualitative performance of such
executive officers.
On January 1, 1998, Mr. K. James Yager, the President, Chief Operating
Officer and a director of the Company, exercised options to purchase 370,000
shares of Class B Common Stock of the Company for an aggregate exercise price of
$555,000. Mr. Yager borrowed the funds necessary to pay the exercise price from
the Company, which loan is evidenced by a promissory note which bears interest
at the rate of 5.93% per annum and is payable as and when any such shares are
sold and in any event no later than December 31, 2007.
STOCK OWNERSHIP
Mr. A. Richard Benedek, the Chairman and Chief Executive Officer of the
Company, owns 6,467,600 shares of Class B Common Stock of the Company,
representing 87.4% of its outstanding common stock.
Mr. Stephen Benedek, the son of Mr. A. Richard Benedek, owns 562,400 shares
of Class B Common Stock of the Company, representing 7.6% of its outstanding
common stock. Mr. Stephen Benedek is not an officer, director or employee of the
Company.
Mr. K. James Yager, the President, Chief Operating Officer and a director
of the Company, owns 370,000 shares of Class B Common Stock of the Company,
representing 5.0% of its outstanding common stock.
See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources' and 'Description of
Indebtedness -- Credit Agreement' and ' -- Senior Secured Notes' for a
discussion with respect to arrangements which may result in a change in control
of Benedek Broadcasting and/or BLC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 1, 1998, Mr. K. James Yager, the President, Chief Operating
Officer and a director of the Company, exercised options to purchase 370,000
shares of Class B Common Stock of the Company for an aggregate exercise price of
$555,000. Mr. Yager borrowed the funds necessary to pay the exercise price from
the Company, which loan is evidenced by a promissory note which bears interest
at the rate of 5.93% per annum and is payable as and when any such shares are
sold and in any event no later than December 31, 2007.
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Paul S. Goodman, a member of the law firm of Shack & Siegel, P.C., is a
director of the Company. During the fiscal year ended December 31, 1997, the
Company paid approximately $222,000 for legal services to Shack & Siegel, P.C.
DESCRIPTION OF INDEBTEDNESS
CREDIT AGREEMENT
The Credit Agreement was amended and restated as of December 17, 1997. The
material terms of the Credit Agreement are described below.
As of March 31, 1998, the Term Loans consisted of (i) Term Loan Series A of
$77.0 million and (ii) Term Loan Series B of $33.8 million. The Term Loan
Facilities provide for quarterly amortization until final maturity on December
31, 2004 (except in 1998 during which amortization will not begin until
September 30). Benedek Broadcasting is required to make scheduled amortization
payments on the Term Loan Facilities, on an aggregate basis for Series A and
Series B Facilities, as follows: during 1998, $2.5 million; during 1999, $11.0
million; during 2000, $13.0 million; during 2001, $13.0 million; duirng 2002,
$14.0 million; during 2003, $15.0 million; and during 2004, $42.3 million.
In addition, Benedek Broadcasting is required to make prepayments on the
Term Loans 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, Series A and Series B Facilities. The Term Loan Series A bears
interest, at Benedek Broadcasting's option, at a customary base rate plus a
spread or at a Eurodollar rate plus a spread. The Term Loan Series B bears
interest, at Benedek Broadcasting's option, at a customary base rate plus a
spread of 2.25% or at a Eurodollar rate plus a spread of 3.25%. The margins
above the customary base rate and the Eurodollar rate at which the Term Loan
Series A and Revolving Credit Facility bear interest are 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 expiring December 31, 2003
and is fully revolving until final maturity. The Revolving Credit Facility bears
interest, at Benedek Broadcasting's option, at a customary base rate plus a
spread or at a Eurodollar rate plus a spread.
The Term Loans 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 Loans are also guaranteed by
BLC and are secured by all of the stock of BLC.
The Term Loans and the Revolving Credit Facility contain certain financial
covenants applicable to the Company and Benedek Broadcasting, including, but not
limited to, covenants related to cash interest coverage, maximum leverage ratio
and minimum Consolidated Adjusted EBITDA (as defined in the Credit Agreement).
In addition, the Term Loans and the Revolving Credit Facility 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, guarantees and investments. The Term Loans and
the Revolving Credit Facility contain customary events of default for
highly-leveraged financings, including certain changes in ownership or control
of Benedek Broadcasting or 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, as of March 31,
1998, Benedek Broadcasting could have distributed approximately $188 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, as supplemented by
79
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the First Supplemental Indenture dated as of June 6, 1996, among Benedek
Broadcasting, BLC, as successor by merger to Benedek Broadcasting Company,
L.L.C., and The Bank of New York, as trustee. The Senior Secured Notes are
senior secured obligations of Benedek Broadcasting and rank pari passu in right
of payment with the Term Loans and Revolving Credit Facility under the Credit
Agreement. The Senior Secured Notes are currently 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, 100.000%.
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.
All of the obligations of Benedek Broadcasting under the Senior Secured
Notes and the Senior Secured Note Indenture are unconditionally guaranteed by
the Company.
SENIOR SUBORDINATED DISCOUNT NOTES
On June 6, 1996, the Company issued the Senior Subordinated Discount Notes
due 2006 for gross proceeds of approximately $90.2 million. Although for Federal
income tax purposes a significant amount of OID, taxable as ordinary income,
will be recognized by a holder thereof as such discount accretes, no interest
will accrue on the Senior Subordinated Discount Notes prior to May 15, 2001. The
Senior Subordinated Discount Notes were issued pursuant to an indenture (the
'Senior Subordinated Discount Note Indenture'), among the Company and United
States Trust Company of New York, as trustee. The Senior Subordinated Discount
Notes are senior subordinated, unsecured obligations of the Company. The payment
of principal, premium (if any), interest and all other obligations in respect of
the Senior Subordinated Discount Notes are subordinated in right of payment to
the prior payment in full in cash or cash equivalents of all Senior Debt of the
Company, including the Company's guarantee of the obligations of Benedek
Broadcasting under the Credit Agreement and the Senior Secured Notes. The Senior
Subordinated Discount Notes will rank pari passu with all other senior
subordinated indebtedness of the Company which may be incurred in the future.
The Senior Subordinated Discount Notes will mature on May 15, 2006 and will be
redeemable at the Company's option, in whole or in part, at any time after May
15, 2000, at specified redemption prices. In addition, at any time prior to May
15, 1999, the Company may redeem the Senior Subordinated Discount Notes in part
and from time to time, with the net proceeds of certain equity offerings or
investments; provided, that at least 75% of the initial aggregate principal
amount of the Senior Subordinated Discount Notes remains outstanding after each
such redemption.
The Senior Subordinated Discount Note Indenture contains covenants that,
among other things, limit (i) the issuance of additional indebtedness by the
Company and its subsidiaries, (ii) the Company and its subsidiaries from
entering into sale and leaseback transactions, (iii) the payment of dividends
on, and redemption of, capital stock of the Company and its subsidiaries and the
redemption of certain subordinated obligations of the Company, (iv) investments
in certain affiliates, (v) the creation of limitations on the payment of
dividends and other distributions on the capital stock of its subsidiaries, (vi)
sales of assets and subsidiary stock and (vii) transactions with affiliates. The
Senior Subordinated Discount Note Indenture also prohibits certain
consolidations and mergers and contains customary events of default, which
include the failure to pay interest and principal, the failure to comply with
certain covenants, acceleration of certain indebtedness, the imposition of
certain final judgments and certain bankruptcy events.
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DESCRIPTION OF THE EXCHANGEABLE PREFERRED
STOCK AND EXCHANGE DEBENTURES
EXCHANGEABLE PREFERRED STOCK
The summary contained herein of certain provisions of the Existing
Exchangeable Preferred Stock and the Exchange Securities to be issued by the
Company does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Certificate of
Designation for the Exchangeable Preferred Stock. A copy of the Certificate of
Designation has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The definitions of certain capitalized terms used in
the following summary are set forth under ' -- Certain Definitions' below. Other
capitalized terms used herein and not otherwise defined under ' -- Certain
Definitions' below are defined in the Certificate of Designation.
GENERAL
At the consummation of the Exchange Offer, the Company will issue up to
100,000 shares of preferred stock, $0.01 par value per share, designated as
'11 1/2% Senior Exchangeable Preferred Stock'. Subject to certain conditions,
the Exchangeable Preferred Stock will be exchangeable for the Exchange
Debentures at the option of the Company on any dividend payment date on or after
the Issue Date. The Exchange Securities, when issued in accordance with the
Exchange Offer, will be fully paid and nonassessable and the holders thereof
will not have any subscription or preemptive rights in connection therewith.
Additionally, the Certificate of Designation authorizes the issuance of
additional shares of Exchangeable Preferred Stock (the 'Additional Shares') from
time to time to the extent the Company is permitted to do so in accordance with
the 'Limitation on Debt' covenant described below (for purposes of this section,
references to 'Exchangeable Preferred Stock' include any such Additional
Shares). To the extent the Company issues any Additional Shares, such issuance
shall be made in increments of not less than 25,000 shares.
RANKING
The Exchangeable Preferred Stock, with respect to dividend rights and
rights on liquidation, winding-up and dissolution, ranks (i) senior to all
classes of common stock and to each other class of Capital Stock or series of
Preferred Stock established hereafter by the Board of Directors of the Company
the terms of which do not expressly provide that it ranks senior to, or on a
parity with, the Exchangeable Preferred Stock as to dividend rights and rights
on liquidation, winding-up and dissolution of the Company (collectively referred
to, together with all classes of common stock of the Company, as 'Junior
Stock'); (ii) 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 Exchangeable Preferred Stock as
to dividend rights and rights on liquidation, winding-up and dissolution
(collectively referred to as 'Parity Stock'); and (iii) subject to certain
conditions, junior to each class of Capital Stock or series of Preferred Stock
established hereafter by the Board of Directors of the Company, the terms of
which expressly provide that such class or series will rank senior to the
Exchangeable Preferred Stock as to dividend rights and rights upon liquidation,
winding-up and dissolution of the Company (collectively referred to as 'Senior
Stock'). The Company may not authorize any new class of Senior Stock without the
approval of the holders of at least two-thirds of the shares of Exchangeable
Preferred Stock then outstanding, voting or consenting, as the case may be, as
one class. All claims of the holders of the Exchangeable Preferred Stock,
including without limitation, claims with respect to dividend payments,
redemption payments, mandatory repurchase payments or rights upon liquidation,
winding-up or dissolution, shall rank junior to the claims of the holders of any
debt of the Company and all other creditors of the Company.
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 11 1/2% of the then
effective liquidation preference per share of Exchangeable Preferred Stock,
payable quarterly (each such quarterly period being herein called a 'Dividend
Period'). In the event that, after May 15, 2003, dividends on the Exchangeable
Preferred Stock are in arrears and unpaid for six or more Dividend Periods
(whether or not consecutive), holders of Exchangeable
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Preferred Stock will be entitled to certain voting rights. See ' -- Voting
Rights' below. All dividends will be cumulative, whether or not earned or
declared, on a daily basis from the Issue Date and will be payable quarterly in
arrears on February 15, May 15, August 15, and November 15 of each year (each a
'Dividend Payment Date'), commencing on August 15, 1998 to holders of record on
the February 1, May 1, August 1, and November 1 immediately preceding the
relevant Dividend Payment Date.
If any dividend payable on any Dividend Payment Date on or before May 15,
2003, is not declared or paid in full in cash on such Dividend Payment Date, the
amount payable as dividends on such Dividend Payment Date that is not paid in
cash 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. All
dividends paid with respect to shares of the Exchangeable Preferred Stock
pursuant to the foregoing shall be paid pro rata to the holders entitled
thereto.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Stock for any period unless full cumulative
dividends shall have been or contemporaneously are declared and paid (or are
deemed declared and paid) in full or declared and, if payable in cash, a sum in
cash sufficient for such payment 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 Parity
Stock. No dividends may be paid or set apart for such payment on Junior Stock
(except dividends on Junior Stock payable in additional shares of Junior Stock)
and no Junior Stock or Parity Stock may be repurchased, redeemed or otherwise
retired nor may funds be set apart for payment with respect thereto, if full
cumulative dividends have not been paid in full (or deemed paid) on the
Exchangeable Preferred Stock. Dividends on account of arrears for any past
Dividend Period and dividends in connection with any optional redemption may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, not more than 45 days prior to the
payment thereof, as may be fixed by the Board of Directors of the Company. So
long as any shares of the Exchangeable Preferred Stock are outstanding, the
Company shall not make any payment on account of, or set apart for payment money
for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any Parity Stock or Junior Stock or any warrants, rights, calls
or options exercisable for or convertible into any Parity Stock or Junior Stock,
and shall not permit any corporation or other entity directly or indirectly
controlled by the Company to purchase or redeem any Parity Stock or Junior Stock
or any such warrants, rights, calls or options unless full cumulative dividends
determined in accordance herewith on the Exchangeable Preferred Stock have been
paid (or are deemed paid) in full.
OPTIONAL REDEMPTION
Except as set forth below, the Exchangeable Preferred Stock will not be
redeemed by the Company prior to May 15, 2003. Thereafter, 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, an amount in cash equal to all
accrued and unpaid dividends to the redemption date (including an amount in cash
equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the redemption date to the redemption date), if redeemed
during the 12-month period beginning on May 15 of each of the years set forth
below at the following redemption prices plus, without duplication, in each
case, an amount in cash equal to all accrued and unpaid dividends to the
redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- ----------
<S> <C>
2003.............................................................................. 105.750%
2004.............................................................................. 103.833
2005.............................................................................. 101.917
2006 and thereafter............................................................... 100.000
</TABLE>
In the event of a redemption of only a portion of the then outstanding
shares of the Exchangeable Preferred Stock, the Company shall effect such
redemption on a pro rata basis, except that the Company may redeem such shares
held by holders of fewer than 1,000 shares (or shares held by holders who would
hold less than 1,000 shares as a result of such redemption), as may be
determined by the Company.
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The Credit Agreement and the Senior Subordinated Discount Note Indenture
restrict the ability of the Company to redeem the Exchangeable Preferred Stock
and the Senior Secured Note Indenture restricts the ability of Benedek
Broadcasting to make cash dividends and other transfers to 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, as of March 31, 1998, Benedek
Broadcasting could have distributed approximately $188 million to the Company
under such limitations. See 'Description of Indebtedness.'
Notwithstanding the foregoing, until May 15, 2001, the Company may, at its
option, redeem up to 25% of the aggregate of (i) the liquidation preference of
the Exchangeable Preferred Stock issued less the liquidation preference of
Exchangeable Preferred Stock exchanged for Exchange Debentures and (ii) the
principal amount of Exchange Debentures issued, at 111.50% of the then effective
liquidation preference or principal amount, as applicable, with the net proceeds
of one or more Public Equity Offerings or Strategic Investments or a Required
Disposition if at least $75,000,000 in liquidation preference or principal
amount, as applicable, of such securities remains outstanding after each such
redemption; provided, however, that such redemption occurs within 60 days of the
date of closing of each such Public Equity Offering, Strategic Investment or
Required Disposition.
MANDATORY REDEMPTION
The Exchangeable Preferred Stock is subject to mandatory redemption
(subject to the legal availability of funds therefor) in whole on May 15, 2008,
at a price equal to 100.000% of the then effective liquidation preference
thereof, plus, without duplication, all accrued and unpaid dividends to the date
of redemption. Future agreements of the Company may restrict or prohibit the
Company from redeeming the Exchangeable Preferred Stock.
PROCEDURE FOR REDEMPTION
On and after the redemption date, unless the Company defaults in the
payment of the applicable redemption price, dividends will cease to accumulate
on shares of Exchangeable Preferred Stock called for redemption and all rights
of holders of such shares will terminate except for the right to receive the
redemption price, without interest; provided, however, that if a notice of
redemption shall have been given as provided in the succeeding sentence and the
funds necessary for redemption (including an amount in respect of all dividends
that will accrue to the redemption date) shall have been segregated and
irrevocably set apart by the Company, in trust for the benefit of the holders of
the shares called for redemption, then dividends shall cease to accumulate on
the redemption date on the shares to be redeemed and, at the close of business
on the day or when such funds are segregated and set apart, the holders of the
shares to be redeemed shall cease to be stockholders of the Company and shall be
entitled only to receive the redemption price for such shares. The Company will
send a written notice of redemption by first-class mail to each holder of record
of shares of Exchangeable Preferred Stock, not fewer than 30 days nor more than
60 days prior to the date fixed for such redemption at its registered address.
Shares of Exchangeable Preferred Stock issued and reacquired will, upon
compliance with the applicable requirements of Delaware law, have the status of
authorized but unissued shares of preferred stock of the Company undesignated as
to series and may, with any and all other authorized but unissued shares of
preferred stock of the Company, be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred stock of the
Company, except that any issuance or reissuance of shares of Exchangeable
Preferred Stock must be in compliance with the Certificate of Designation.
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; provided, however, that: (i)
on the date of such exchange there are no accumulated and unpaid dividends on
the Exchangeable Preferred Stock (including the dividend payable on such date)
or other contractual impediment to such exchange; (ii) there shall be funds
legally available sufficient therefor; (iii) immediately before and immediately
after giving effect to such exchange, no Default (as defined in the Exchange
Indenture) shall have occurred and be continuing; and (iv) the Company shall
have delivered to the Trustee under the Exchange Indenture an opinion of counsel
with respect to the due authorization and issuance of the Exchange Debentures.
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The exchange of the Exchange Debentures is limited by covenants contained in the
Senior Subordinated Discount Note Indenture and the Credit Agreement, in each
case, relating to, among other things, the incurrence of debt.
Upon any exchange pursuant to the preceding paragraph, holders of
outstanding shares of Exchangeable Preferred Stock will be entitled to receive,
subject to the second succeeding sentence, $1.00 principal amount of Exchange
Debentures for each $1.00 liquidation preference of Exchangeable Preferred Stock
held by them. The Exchange Debentures will be issued in registered form, without
coupons. Exchange Debentures issued in exchange for Exchangeable Preferred Stock
will be issued in principal amounts of $1,000 and integral multiples thereof to
the extent possible, and will also be issued in principal amounts less than
$1,000 so that each holder of Exchangeable Preferred Stock will receive
certificates representing the entire amount of Exchange Debentures to which such
holder's shares of Exchangeable Preferred Stock entitle such holder; provided,
however, that the Company may pay cash in lieu of issuing an Exchange Debenture
in a principal amount less than $1,000. The Company will send a written notice
of exchange by mail to each holder of record of shares of Exchangeable Preferred
Stock not fewer than 30 days nor more than 60 days before the date fixed for
such exchange. On and after the date of exchange, dividends will cease to accrue
on the outstanding shares of Exchangeable Preferred Stock, and all rights of the
holder of Exchangeable Preferred Stock (except the right to receive the Exchange
Debentures, an amount in cash, to the extent applicable, equal to the
accumulated and unpaid dividends to the exchange date and, if the Company so
elects, cash in lieu of any Exchange Debenture that is in a principal amount
that is not an integral multiple of $1,000) will terminate. The person entitled
to receive the Exchange Debentures issuable upon such exchange will be treated
for all purposes as the registered holder of such Exchange Debentures. See
' -- Exchange Debentures.'
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, holders of Exchangeable Preferred Stock will be entitled to be
paid, out of the assets of the Company available for distribution to
stockholders, the then effective liquidation preference per share of
Exchangeable Preferred Stock, plus, without duplication, an amount in cash equal
to all accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding-up (including an amount equal to a prorated
dividend for the period from the last Dividend Payment Date to the date fixed
for liquidation, dissolution or winding-up and including an amount equal to the
redemption premium that would have been payable had the Exchangeable Preferred
Stock been the subject of an optional redemption on such date or a redemption
premium of 5.750% had the Exchangeable Preferred Stock not been subject to an
optional redemption on such date), before any distribution is made on any Junior
Stock, including, without limitation, common stock of the Company. If, upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the amounts payable with respect to the Exchangeable Preferred Stock and all
other Parity Stock are not paid in full, the holders of the Exchangeable
Preferred Stock and the Parity Stock will share equally and ratably in any
distribution of assets of the Company in proportion to the full liquidation
preference to which each is entitled. After payment of the full amount of the
liquidation preference and accumulated and unpaid dividends to which they are
entitled, the holders of shares of Exchangeable Preferred Stock will not be
entitled to any further participation in any distribution of assets of the
Company. However, neither the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property or assets of the Company nor the consolidation or merger of the
Company with one or more entities shall be deemed to be a liquidation,
dissolution or winding-up of the Company.
The Certificate of Designation does not contain any provision requiring
funds to be set aside to protect the liquidation preference of the Exchangeable
Preferred Stock, although such liquidation preference will be substantially in
excess of the par value of such shares of Exchangeable Preferred Stock. In
addition, the Company is not aware of any provision of Delaware law or any
controlling decision of the courts of the State of Delaware (the state of
incorporation of the Company) that requires a restriction upon the surplus of
the Company solely because the liquidation preference of the Exchangeable
Preferred Stock will exceed its par value. Consequently, there is no restriction
upon the surplus of the Company solely because the liquidation preference of the
Exchangeable Preferred Stock will exceed its par value, and there are no
remedies available to holders of the Exchangeable Preferred Stock before or
after the payment of any dividend, other than in connection with the liquidation
of the Company, solely by reason of the fact that such dividend would reduce the
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surplus of the Company to an amount less than the difference between the
liquidation preference of the Exchangeable Preferred Stock and its par value.
VOTING RIGHTS
The holders of Exchangeable Preferred Stock, except as otherwise required
under Delaware law or as set forth below, are not entitled or permitted to vote
on any matter required or permitted to be voted upon by the stockholders of the
Company.
The Certificate of Designation provides that if (i) after May 15, 2003,
dividends on the Exchangeable Preferred Stock are in arrears and unpaid for six
or more Dividend Periods (whether or not consecutive); (ii) the Company fails to
redeem the Exchangeable Preferred Stock on May 15, 2008, or fails to otherwise
discharge any redemption obligation with respect to the Exchangeable Preferred
Stock; (iii) the Company fails to make a Change of Control Offer if such offer
is required by the provisions set forth under ' -- Change of Control' below or
fails to purchase shares of Exchangeable Preferred Stock from holders who elect
to have such shares purchased pursuant to the Change of Control Offer; (iv) a
breach or violation of any of the provisions described under the caption
' -- Certain Covenants' occurs and the breach or violation continues for a
period of 30 days or more after the Company receives notice thereof specifying
the default from the holders of at least 25% of the shares of Exchangeable
Preferred Stock then outstanding; or (v) the Company fails to pay at the final
stated maturity (giving effect to any extensions thereof) the principal amount
of any Indebtedness of the Company or any Subsidiary of the Company, or the
final stated maturity of any such Indebtedness is accelerated, or the Company
fails to observe any covenant with respect to any such Indebtedness (which
failure is not waived by the holders of such Indebtedness within 30 days
thereof), if the aggregate principal amount of such Indebtedness, together with
the aggregate principal amount of any other such Indebtedness in default for
failure to pay principal at the final stated maturity (giving effect to any
extensions thereof) or which has been accelerated or which is the subject of
such non-waived default, aggregates $5.0 million or more at any time, in each
case, after a 10-day period during which such default shall not have been cured
or such acceleration rescinded, then the number of directors constituting the
Board of Directors of the Company will be adjusted to permit the holders of a
majority of the then outstanding shares of Exchangeable Preferred Stock, voting
separately and as a class, to elect the lesser of two directors and that number
of directors constituting 25% of the members of the Board of Directors of the
Company. Such voting rights will continue until such time as, in the case of a
dividend default, all dividends in arrears on the Exchangeable Preferred Stock
are paid in full in cash and, in all other cases, any failure, breach or default
giving rise to such voting rights is remedied or waived by the holders of at
least a majority of the shares of Exchangeable Preferred Stock then outstanding,
at which time the term of any directors elected pursuant to the provisions of
this paragraph shall terminate. Each such event described in clauses (i) through
(v) above is referred to herein as a 'Voting Rights Triggering Event.'
The Certificate of Designation also provides that the Company will not
authorize any class of Senior Stock without the affirmative vote or consent of
holders of at least two-thirds of the shares of Exchangeable Preferred Stock
then outstanding, voting or consenting, as the case may be, as one class. The
Certificate of Designation further provides that the Company may not amend its
Certificate of Incorporation so as to affect adversely the specified rights,
preferences, privileges or voting rights of the holders of shares of
Exchangeable Preferred Stock without the affirmative vote or consent of holders
of at least two-thirds of the shares of Exchangeable Preferred Stock then
outstanding, voting or consenting, as the case may be, as one class.
Additionally, the Certificate of Designation authorizes the issuance of
Additional Shares to the extent the Company is permitted to do so in accordance
with the 'Limitation on Debt' covenant described below. The Certificate of
Designation also provides that, notwithstanding the foregoing, (a) the creation,
authorization or issuance of any shares of Junior Stock, Parity Stock or Senior
Stock, including the designation of a series thereof within the existing class
of Exchangeable Preferred Stock, or (b) the increase or decrease in the amount
of authorized Capital Stock of any class, including any preferred stock, shall
not require the consent of the holders of Exchangeable Preferred Stock and shall
not be deemed to affect adversely the rights, preferences, privileges or voting
rights of shares of Exchangeable Preferred Stock.
Under Delaware law, holders of preferred stock are entitled to vote as a
class upon a proposed amendment to the certificate of incorporation, whether or
not entitled to vote thereon by the certificate of incorporation, if the
amendment would increase or decrease the par value of the shares of such class,
or alter or change the powers, preferences or special rights of the shares of
such class so as to affect them adversely.
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CHANGE OF CONTROL
The Certificate of Designation provides that, upon the occurrence of a
Change of Control, each holder will have the right to require that the Company
purchase all or a portion of such holder's Exchangeable Preferred Stock in cash
pursuant to the offer described below (the 'Change of Control Offer'), at a
purchase price equal to 101% of the then effective liquidation preference
thereof, plus, without duplication, all accrued and unpaid dividends per share
to the Change of Control Payment Date (as defined below), including an amount in
cash equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Change of Control Payment Date to the Change of Control
Payment Date.
The Certificate of Designation provides that, prior to the mailing of the
notice referred to below, but in any event within 30 days following the date on
which the Company becomes aware that a Change of Control has occurred, the
Company covenants that if the purchase of the Exchangeable Preferred Stock would
violate or constitute a default under the Credit Agreement, the Senior
Subordinated Discount Note Indenture or other indebtedness of the Company, then
the Company shall either (i) repay all such indebtedness and terminate all
commitments outstanding thereunder or (ii) obtain the requisite consents, if
any, under the Credit Agreement, the Senior Subordinated Discount Note Indenture
or such indebtedness required to permit the purchase of the Exchangeable
Preferred Stock as provided below. The Company will first comply with the
covenant in the preceding sentence before it will be required to make the Change
of Control Offer or purchase the Exchangeable Preferred Stock pursuant to the
provisions described below.
Within 30 days following the date on which the Company becomes aware that a
Change of Control has occurred, the Company must send, by first-class mail,
postage prepaid, a notice to each holder of Exchangeable Preferred Stock, which
notice shall govern the terms of the Change of Control Offer. Such notice shall
state, among other things, the purchase date, which must be no earlier than 30
days nor later than 45 days from the date such notice is mailed, other than as
may be required by law (the 'Change of Control Payment Date'). Holders electing
to have any shares of Exchangeable Preferred Stock purchased pursuant to a
Change of Control Offer will be required to surrender such shares of
Exchangeable Preferred Stock, properly endorsed for transfer, together with such
other customary documents as the Company and the transfer agent may reasonably
request, to the transfer agent and registrar for the Exchangeable Preferred
Stock at the address specified in the notice prior to the close of business on
the Business Day prior to the Change of Control Payment Date.
A 'Change of Control' is defined as one 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 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 (iii),
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
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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 two-thirds 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 Exchangeable Preferred Stock as a result of a Change of
Control may be waived or modified with the written consent of the holders of a
majority of the outstanding shares of the Exchangeable Preferred Stock.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control, 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 covenant described
under 'Certain Covenants -- Limitation on Debt.' Such restrictions can only be
waived with the consent of the holders of two-thirds of the outstanding shares
of the Exchangeable Preferred Stock. Except for the limitations contained in
such covenant, however, the Certificate of Designation does not contain any
covenants or provisions that may afford holders of the outstanding shares of the
Exchangeable Preferred Stock protection in the event of a highly leveraged
transaction.
The Senior Secured Note Indenture, the Credit Agreement and the Senior
Subordinated Discount Note Indenture 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 Exchangeable Preferred
Stock 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
Exchangeable Preferred Stock 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 Exchangeable Preferred Stock, the Company could seek the consent of
its lenders to the purchase of Exchangeable Preferred Stock 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 Exchangeable Preferred Stock. In such case, the
Company's failure to purchase Exchangeable Preferred Stock would constitute a
Voting Rights Triggering Event.
The Company will comply with any tender offer rules under the Exchange Act
which may then be applicable, including Rules 13e-4 and 14e-1, in connection
with any offer required to be made by the Company to repurchase the Exchangeable
Preferred Stock as a result of a Change of Control. To the extent that the
provisions of any securities laws or regulations conflict with provisions of the
Certificate of Designation, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Certificate of Designation by virtue thereof.
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CERTAIN COVENANTS
Set forth below are certain covenants in the Certificate of Designation:
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 8.75 to 1.0.
(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 Revolving Credit Facility under 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 determined in accordance with GAAP
as of the end of the most recent fiscal quarter prior to the date of
determination; (2) Debt of the Company or Benedek Broadcasting (including
Guarantees thereof and any letters of credit issued thereunder) issued pursuant
to the Bank Credit Agreement (other than the Revolving Credit Facility) 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) $110.8 million less (B) the
lesser of (i) the aggregate amount of all principal repayments of any 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 Exchangeable Preferred Stock issued in the Offering, the
Exchange Debentures and Refinancing Debt of the Company Issued in respect of (A)
any Debt permitted by this clause (4) and (B) any Debt relating to the issuance
of any Additional Shares pursuant to paragraph (a) above (including the
accretion of any original issue discount associated with Debt permitted by this
clause (4) and the increase in liquidation preference with respect to any Debt
permitted by this clause (4)); (5) Debt (other than Debt described in clause
(1), (2), (3) or (4) of this covenant but including the Debt represented by the
Company Pledge Agreement) outstanding on the Issue Date, and Refinancing Debt in
respect of any Debt permitted by this clause (5) or by paragraph (a) above; (6)
Debt or Preferred Stock of a Subsidiary Issued and outstanding on or prior to
the date on which such Subsidiary became a Subsidiary or was acquired by the
Company (other than Debt or Preferred Stock Issued in connection with, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was acquired by the Company) and
Refinancing Debt of such Subsidiary Issued in respect of any Debt of such
Subsidiary permitted by this clause (6); provided, however, that after giving
effect thereto, except in the case of any Refinancing Debt, the Company and any
Restricted Subsidiary could Issue an additional $1.00 of Debt pursuant to
paragraph (a) above; (7) Debt consisting of Guarantees by BLC of Permitted
Acquisition Debt; and (8) Debt of the Company or any Restricted Subsidiary (in
addition to the Debt permitted to be Issued pursuant to paragraph (a) above or
in any other clause of this paragraph (b)) in an aggregate principal amount on
the date of Issuance which, when added to all other Debt Issued pursuant to this
clause (8) and then outstanding, shall not exceed $15.0 million.
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, in the case of the Company, any Junior Stock
or, in the case of any Restricted Subsidiary, any Capital Stock (including any
payment in connection with any merger or consolidation involving the Company) or
to the direct or indirect holders of any such stock (except dividends or
distributions payable solely in its Non-Convertible Common Stock or in options,
warrants or other rights to purchase its Non-Convertible Common Stock and except
dividends or distributions payable to the Company or a Restricted Subsidiary
and, if a Restricted Subsidiary is not wholly owned, to the
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other stockholders on a pro rata basis), (ii) purchase, redeem or otherwise
acquire or retire for value any Junior Stock of the Company or any Capital Stock
of any Restricted Subsidiary (except any such purchases, redemptions,
acquisitions or retirements of Capital Stock of a Restricted Subsidiary held by
the Company or another Restricted Subsidiary), or (iii) make any Investment in
any Affiliate of the Company other than a Restricted Subsidiary or a person
which will become a Restricted Subsidiary as a result of any such Investment
(any such dividend, distribution, purchase, redemption, other acquisition,
retirement or Investment being herein referred to as a 'Restricted Payment') if
at the time the Company or such Restricted Subsidiary makes such Restricted
Payment: (1) a Voting Rights Triggering Event 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; (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 the Exchangeable 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 (v) 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, 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 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 (i) any Senior Stock
or Parity Stock prior to May 15, 2003 or (ii) any Junior Stock (including the
Seller Junior Discount Preferred Stock and its Common Stock) prior to October 1,
2001.
(b) The provisions of the preceding paragraph shall not prohibit: (i) any
purchase or redemption of Junior Stock of the Company made by exchange for, or
out of the proceeds of the substantially concurrent sale of, Junior Stock (other
than Redeemable Stock or Exchangeable Stock and other than Excluded Stock);
provided, however, that (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 Seller Junior Discount Preferred
Stock out of the proceeds of the sale of any Additional Shares; provided,
however, that without limiting the Company's ability to so purchase or redeem
the Seller Junior Discount Preferred Stock, such purchase or redemption shall be
included in any subsequent calculation of the amount of Restricted Payments;
(iii) dividends paid within 60 days after the date of declaration thereof if at
such date of declaration such dividend would have complied with this covenant;
provided, however, that at any time of payment of such dividend, no other
Default shall have occurred and be continuing (or result therefrom); provided
further, however, that such dividend shall be included in the calculation of the
amount of Restricted Payments; (iv) Investments in Non-Recourse Affiliates made
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) from the
Issue Date not to exceed $10.0 million; provided, however, that the amount of
such Investments shall be excluded in the calculation of the amount of
Restricted Payments; or (v) loans or advances to officers and directors of the
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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, Exchangeable Stock, Senior Stock or Parity Stock); provided,
however, that such loans and advances shall be excluded in the calculation of
the amount of Restricted Payments.
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 other than an encumbrance or restriction with respect
to dividends or distributions by Benedek Broadcasting in connection with a
senior bank financing, (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 such
Refinancing agreement or amendment are no less favorable to the holders 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 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 Debt) to prepay, repay or purchase Debt (other than Redeemable
Stock) of the Company or Debt (other than Redeemable Stock) of a Wholly Owned
Subsidiary (in each case other than Debt owed to the Company or an Affiliate of
the Company) within 60 days after the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; (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 or
distributions from the relevant Restricted Subsidiary and to the extent of the
balance of such Net Available Cash after application in accordance with clauses
(A) and (B), to make an offer pursuant to and subject to the conditions
contained in the Certificate of Designation to the holders of the Exchangeable
Preferred Stock (and to holders of any Parity Stock designated by the Company)
to purchase Exchangeable Preferred Stock (and such Parity Stock) at a purchase
price of 100% of the liquidation preference thereof (without premium) plus
accrued
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and unpaid dividends (or in respect of such Parity Stock such lesser price, if
any, as may be provided for by the terms of such other Parity Stock); 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 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 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
Exchangeable Preferred Stock (and other Parity Stock) pursuant to clause (ii)(C)
above, the Company will be required to purchase Exchangeable Preferred Stock
tendered pursuant to an offer by the Company for the Exchangeable Preferred
Stock (and other Parity Stock at the purchase price set forth above) in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in the Certificate of Designation. The Company shall
not be required to make such an offer to purchase Exchangeable Preferred Stock
if the Net Available Cash available therefor is less than $5.0 million for any
particular Asset Disposition (which lesser amount shall be carried forward for
purposes of determining whether such offer is required with respect to any
subsequent Asset Disposition; provided, however, that any such Asset Disposition
the proceeds of which do not exceed $1.0 million shall be excluded from the
aforementioned calculation).
The Company shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Exchangeable Preferred Stock
pursuant to this covenant. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this covenant, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this clause by virtue thereof.
Limitation on Transactions with Affiliates.
The Company may not, and may 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
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 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
Transfer Agent 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 Transfer Agent an
opinion from an investment banking firm of national prominence that is not an
Affiliate of the Company to the effect that such business, transaction or
transactions are fair to the Company or such Restricted Subsidiary from a
financial point of view.
The provisions of the preceding paragraph shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the provisions of the
covenant described under ' -- Limitation on Restricted Payments,' (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, indemnity
agreements, 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
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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 $5.0 million at any one time outstanding 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.
SEC Reports and Other Information.
Notwithstanding that the Company may not be required to be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall file with the SEC and thereupon provide the Transfer Agent and holders of
the Exchangeable Preferred Stock 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 shares of Exchangeable
Preferred Stock are outstanding, the Company will make available to any
prospective purchaser of the shares of Exchangeable Preferred Stock or
beneficial owner of the shares of Exchangeable Preferred Stock in connection
with any sales thereof the information required by Rule 144A(d)(4) under the
Securities Act.
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 the Exchangeable Preferred Stock shall be
converted into or exchanged for and shall become shares of such resulting,
surviving or transferee person, having in respect of such resulting, surviving
or transferee person the same powers, preference and relative participating,
optional or other special rights and the qualifications, limitations or
restrictions thereon, that the Exchangeable Preferred Stock had immediately
prior to such transaction; (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 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 Transfer
Agent an Officers' Certificate and an Opinion of Counsel stating that such
consolidation, merger or transfer complies with the Certificate of Designation.
The resulting, surviving or transferee person will be the successor company.
Benedek Broadcasting 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 Benedek
Broadcasting) is organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia; (ii) immediately prior
to and after giving effect to such transaction (and treating any Debt which
becomes an obligation of the resulting, surviving or transferee person or any
Subsidiary as a result of such transaction as having been incurred by such
person or such Subsidiary at the time of such transaction), no Default has
occurred and is continuing; (iii) immediately after giving effect to such
transaction, the Company would 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) all of the Capital Stock of the
resulting, surviving or transferee person is owned by the Company; and (v) the
Company delivers to the Transfer Agent an Officers' Certificate and an Opinion
of Counsel stating that such consolidation, merger or transfer complies with the
Certificate of Designation.
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TRANSFER AGENT AND REGISTRAR
IBJ Schroder Bank & Trust Company is the transfer agent (the 'Transfer
Agent') and registrar for the Exchangeable Preferred Stock.
EXCHANGE DEBENTURES
The Exchange Debentures, if issued, will be issued under the Exchange
Indenture by and between the Company and IBJ Schroder Bank & Trust Company, as
Trustee (the 'Trustee'). A copy of the Exchange Indenture is available from the
Company upon request. The following summary of certain provisions of the
Exchange Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the TIA and to all the provisions of
the Exchange Indenture, including the definitions of certain terms therein and
those terms made a part of the Exchange Indenture by reference to the TIA as in
effect on the date of the Exchange Indenture. The definitions of certain terms
used in the following summary are set forth below under ' -- Certain
Definitions.' The Credit Agreement and the Senior Subordinated Discount Note
Indenture limit the Company's ability to issue the Exchange Debentures.
The Exchange Debentures will be general unsecured obligations of the
Company and will be limited in the aggregate principal amount to the liquidation
preference of the Exchangeable Preferred Stock, plus, without duplication,
accumulated and unpaid dividends, on the Exchange Date of the Exchangeable
Preferred Stock into Exchange Debentures (plus any additional Exchange
Debentures issued in lieu of cash interest as described herein). The Exchange
Debentures will be issued in fully registered form only in denominations of
$1,000 and integral multiples thereof (other than as described in
' -- Exchangeable Preferred Stock -- Exchange' or with respect to additional
Exchange Debentures issued in lieu of cash interest as described herein). The
Exchange Debentures will be subordinated to all existing and future senior debt
and senior subordinated debt of the Company, including the Senior Subordinated
Discount Notes.
Principal of, and premium, if any, and interest on the Exchange Debentures
will be payable, and the Exchange Debentures may be presented for registration
of transfer or exchange, at the office of the Paying Agent and Registrar. The
Trustee will initially act as Paying Agent and Registrar. The Company may change
any Paying Agent and Registrar without prior notice to holders of the Exchange
Debentures. Holders of the Exchange Debentures must surrender Exchange
Debentures to the Paying Agent to collect principal payments.
The Exchange Debentures will mature on May 15, 2008. Each Exchange
Debenture will bear interest at the rate of 11 1/2% per annum 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. Interest will be payable semiannually in cash (or, on or prior to
May 15, 2003, in additional Exchange Debentures, at the option of the Company)
in arrears on each May 15 and November 15 commencing with the first such date
after the Exchange Date. Interest on the Exchange Debentures will be computed on
the basis of a 360-day year comprised of twelve 30-day months and the actual
number of days elapsed.
OPTIONAL REDEMPTION
Except as set forth below, the Exchange Debentures will not be redeemed by
the Company prior to May 15, 2003. Thereafter, the Exchange Debentures will be
redeemable, at the Company's option, in a whole at any time or in part from time
to time at the redemption prices (expressed as percentages of the principal
amount thereof) set forth below, plus, without duplication, accrued and unpaid
interest thereon to the date of redemption, if redeemed during the 12-month
period beginning on May 15 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:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- ----------
<S> <C>
2003.............................................................................. 105.750%
2004.............................................................................. 103.833
2005.............................................................................. 101.917
2006 and thereafter............................................................... 100.000
</TABLE>
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The Senior Subordinated Discount Note Indenture and the Credit Agreement
restrict the ability of the Company to optionally redeem the Exchange Debentures
and the Senior Secured Note Indenture restricts the ability of Benedek
Broadcasting to make cash dividends and other transfers to 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, as of March 31, 1998, Benedek
Broadcasting could have distributed approximately $188 million to the Company
under such limitations. See 'Description of Indebtedness.'
Notwithstanding the foregoing, until May 15, 2001, the Company may, at its
option, redeem up to 25% of the aggregate of (i) the liquidation preference of
the Exchangeable Preferred Stock issued less the liquidation preference of
Exchangeable Preferred Stock exchanged for Exchange Debentures and (ii) the
principal amount of Exchange Debentures issued, at 111.50% of the then effective
liquidation preference or principal amount, as applicable, with the net proceeds
of one or more Public Equity Offerings or Strategic Investments or a Required
Disposition if at least $75,000,000 in liquidation preference or principal
amount, as applicable, of such securities remains outstanding after each such
redemption; provided, however, that such redemption occurs within 60 days of the
date of the closing of each such Public Equity Offering, Strategic Investment or
Required Disposition.
CHANGE OF CONTROL
The Exchange Indenture will provide that upon the occurrence of a Change of
Control (as defined above under ' -- Exchangeable Preferred Stock -- Change of
Control'), each holder will have the right to require that the Company
repurchase all or a portion of such holder's Exchange Debentures pursuant to the
offer described below (the 'Debenture Change of Control Offer'), at a purchase
price equal to 101% of the principal amount thereof plus, without duplication,
accrued interest, if any, to the date of repurchase.
The Exchange Indenture will provide that, prior to the mailing of the
notice referred to below, but in any event within 30 days following the date on
which the Company becomes aware that a Change of Control has occurred, the
Company covenants that if the purchase of the Exchange Debentures would violate
or constitute a default under the Credit Agreement, the Senior Subordinated
Discount Note Indenture or other indebtedness of the Company, then the Company
shall either (i) repay all such indebtedness and terminate all commitments
outstanding thereunder or (ii) obtain the requisite consents under the Credit
Agreement, the Senior Subordinated Discount Note Indenture and any other
agreement governing such other indebtedness to permit the repurchase of the
Exchange Debentures as provided below. The Company will first comply with the
covenant in the preceding sentence before it will be required to repurchase
Exchange Debentures pursuant to the provisions described below; provided,
however, that the Company's failure to comply with the covenant described in the
preceding sentence shall constitute an Event of Default described under clause
(iii) under ' -- Default' below.
Within 30 days following the date upon which the Company becomes aware that
a Change of Control has occurred, the Company must send, by first-class mail,
postage prepaid, a notice to each holder of Exchange Debentures, with a copy to
the Trustee, which notice shall govern the terms of the Debenture Change of
Control Offer. Such notice will state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 45 days from the date such
notice is mailed, other than as may be required by law (the 'Debenture Change of
Control Payment Date'). Holders electing to have an Exchange Debenture purchased
pursuant to a Debenture Change of Control Offer will be required to surrender
the Exchange Debenture, properly endorsed for transfer together with such other
customary documents as the Company may reasonably request, to the paying agent
at the address specified in the notice prior to the close of business on the
Business Day prior to the Debenture Change of Control Payment Date.
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) of the definition of Change of Control contained in
' -- Exchangeable Preferred Stock -- Change of Control' 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 Exchange Debentures 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 Exchange Debentures.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the limitations
discussed
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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 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 covenant described under ' -- Certain
Covenants -- Limitation on Debt.' Such restrictions can only be waived with the
consent of the holders of a majority in principal amount of the Exchange
Debentures. Except for the limitations contained in such covenant, however, the
Exchange Indenture will not contain any covenants or provisions that may afford
holders of the the Exchange Debentures protection in the event of a highly
leveraged transaction.
The Senior Secured Note Indenture, the Senior Subordinated Discount 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 Exchange Debentures 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 Exchange Debentures
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 Exchange
Debentures, the Company could seek the consent of its lenders to the purchase of
Exchange Debentures 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 Exchange
Debentures. In such case, the Company's failure to offer to purchase or to
purchase tendered Exchange Debentures would constitute an Event of Default under
the Exchange Indenture and could, in turn, constitute a default under the Credit
Agreement and any future indebtedness. In such circumstances, the subordination
provisions in the Exchange Indenture would restrict payments to the holders of
the Exchange Debentures.
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 Exchange Debentures 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 Exchange
Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
Exchange Indenture by virtue thereof.
RANKING
The indebtedness evidenced by the Exchange Debentures will be subordinated,
unsecured obligations of the Company. The payment of the principal of, premium
(if any), interest on and all other obligations in respect of the Exchange
Debentures is subordinate in right of payment, as set forth in the Exchange
Indenture, 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 Senior Subordinated Discount
Notes and the guarantee of Benedek Broadcasting's obligations under the Credit
Agreement and with respect to the Senior Secured Notes.
As of March 31, 1998, the Company's Senior Debt, which includes the Senior
Subordinated Discount Notes, would have been approximately $372.3 million.
Although the Exchange 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.'
Only Debt of the Company that is Senior Debt will rank senior to the
Exchange Debentures in accordance with the provisions of the Exchange Indenture.
The Exchange Debentures will in all respects rank pari passu with all other
subordinated debt of the Company. Unsecured debt is not deemed to be
subordinated or junior to secured 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 Exchange Debentures or make any deposit
pursuant to the provisions described under 'Defeasance' below and may not
repurchase, redeem or otherwise retire any Exchange Debentures (collectively,
'pay the Exchange
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Debentures') 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 Exchange Debentures without
regard to the foregoing if the Company and the Trustee receive written notice
approving such payment from the Representative of the Designated Senior Debt
with respect to which either of the events set forth in clause (i) or (ii) of
the immediately preceding sentence has occurred and is continuing. Upon the
occurrence and during the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Designated Senior Debt pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Exchange Debentures 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 the Designated Senior
Debt 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 if at such time any
Bank Debt is outstanding or (ii) if no Bank Debt is 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 Exchange Debentures after the end of such Payment Blockage
Period. The Exchange Debentures 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 holders of the Exchange Debentures 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 holders of the Exchange Debentures would be
entitled but for the subordination provisions of the Exchange Indenture will be
made to holders of such Senior Debt as their interests may appear. The foregoing
shall not prohibit the receipt by holders of the Exchange Debentures 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 Exchange Debentures. If a distribution is made to holders of the Exchange
Debentures that, due to the subordination provisions, should not have been made
to them, such holders of the Exchange Debentures 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 Exchange Debentures 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 Exchange 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 Exchange
Indenture, in the event of insolvency, creditors of the Company who are holders
of Senior Debt may recover more, ratably, than the holders of the Exchange
Debentures, 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 holders of the Exchange Debentures.
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CERTAIN COVENANTS
Set forth below are certain covenants in the Exchange 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
or its Restricted Subsidiaries may Issue Debt if at the date of such Issuance
the Cash Flow Leverage Ratio does not exceed 8.75 to 1.0.
(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 Revolving Credit Facility under 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, determined in accordance with GAAP
as of the end of the most recent fiscal quarter prior to the date of
determination; (2) Debt of the Company or Benedek Broadcasting (including any
letters of credit) Issued pursuant to the Bank Credit Agreement (other than the
Revolving Credit Facility) 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) $110.8 million less (B) the lesser of (i) the aggregate amount of all
principal repayments of any 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 Exchange Debentures
(including any Exchange Debentures issued in lieu of cash interest payments with
respect to Exchange Debentures), the Exchangeable Preferred Stock issued in the
Offering and Refinancing Debt of the Company Issued in respect of (A) any Debt
permitted by this clause (4) and (B) any Debt relating to the issuance of any
Additional Shares pursuant to paragraph (a) above (including the accretion of
any original issue discount associated with Debt permitted by this clause (4)
and the increase in liquidation preference with respect to any Debt permitted by
this clause (4)); (5) Debt (other than Debt described in clause (1), (2), (3) or
(4) of this covenant but including the Debt represented by the Company Pledge
Agreement) outstanding on the Issue Date, and Refinancing Debt in respect of any
Debt permitted by this clause (5) or by paragraph (a) above; (6) Debt or
Preferred Stock of a Subsidiary Issued and outstanding on or prior to the date
on which such Subsidiary became a Subsidiary or was acquired by the Company
(other than Debt or Preferred Stock Issued in connection with, or to provide all
or any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Subsidiary
became a Subsidiary or was acquired by the Company) and Refinancing Debt of such
Subsidiary Issued in respect of any Debt of such Subsidiary permitted by this
clause (6); provided, however, that after giving effect thereto, except in the
case of any Refinancing Debt, the Company or any Restricted Subsidiary could
Issue an additional $1.00 of Debt pursuant to paragraph (a) above; (7) Debt
consisting of Guarantees by BLC of Permitted Acquisition Debt; and (8) Debt of
the Company or any Restricted Subsidiary (in addition to the Debt permitted to
be Issued pursuant to paragraph (a) above or in any other clause of this
paragraph (b)) in an aggregate principal amount on the date of Issuance which,
when added to all other Debt Issued pursuant to this clause (8) and then
outstanding, shall not exceed $15.0 million.
(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 Exchange Debentures to at least the same extent as such Subordinated
Obligations.
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
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effective provision is made for securing the Exchange Debentures 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 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 receives consideration from
such Sale/Leaseback Transaction at least equal to the fair market value of the
property subject thereto (which shall be determined in good faith by the Board
of Directors and evidenced by a resolution of the Board of Directors) and elects
to treat the assets subject to such Sale/Leaseback Transaction as an Asset
Disposition subject to 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 Restricted
Subsidiary and, if a Restricted 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 Restricted
Subsidiary (except any such purchases, redemptions, acquisitions or retirements
of Capital Stock of a Restricted Subsidiary held by the Company or another
Restricted Subsidiary), (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 occurred 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;
(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 the Exchange 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, 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 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
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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 (i) Senior Stock or Parity Stock prior
to May 15, 2003 or (ii) any Junior Stock (including the Seller Junior Discount
Preferred Stock and its Common Stock) prior to October 1, 2001.
(b) The provisions of the preceding paragraph 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 Seller Junior Discount Preferred Stock out of the
proceeds of the sale of any Additional Shares; provided, however, that without
limiting the Company's ability to so purchase or redeem the Seller Junior
Discount Preferred Stock, such purchase or redemption shall be included in any
subsequent calculation of the amount of Restricted Payments; (iii) 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 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; (iv) 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; (v) dividends paid within 60 days after the date
of declaration thereof if at such date of declaration such dividend would have
complied with this covenant; provided, however, that at any time of payment of
such dividend, no other Default shall have occurred and be continuing (or result
therefrom); provided further, however, that such dividend shall be included in
the calculation of the amount of Restricted Payments; (vi) Investments in
Non-Recourse Affiliates made 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) from the Issue Date not to exceed $10.0 million;
provided, however, that the amount of such Investments 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
further, however, that such loans or 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 Exchange
Debentures; provided, however, the amount thereof shall be excluded in the
calculation of the amount of Restricted Payments.
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 other than an encumbrance or restriction with respect
to dividends or distributions by Benedek Broadcasting in connection with a
senior bank financing, (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 such
Refinancing agreement or
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amendment are no less favorable to the Debentureholders 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 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 Debt) to prepay, repay or purchase Senior Debt or Debt (other than
Redeemable Stock) of a Wholly Owned Subsidiary (in each case other than Debt
owed to the Company or an Affiliate of the Company) within 60 days after the
later of the date of such Asset Disposition or the receipt of such Net Available
Cash; (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 or distributions from the relevant Restricted Subsidiary and
to the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to make an offer pursuant to and subject to
the conditions contained in the Exchange Indenture to the holders of the
Exchange Debentures (and to holders of Debt designated by the Company that is
pari passu with the Exchange Debentures) to purchase Exchange Debentures (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 Available
Cash after application in accordance with clauses (A), (B) and (C), to 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 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 Exchange
Debentures (and other Debt that is pari passu with the Exchange Debentures)
pursuant to clause (ii)(C) above, the Company will be required to purchase
Exchange Debentures tendered pursuant to an offer by the Company for the
Exchange Debentures (and other Debt at the purchase price set forth above) in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in the Exchange Indenture. The Company shall not be
required to make
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such an offer to purchase Exchange Debentures 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 offer is required with respect to any subsequent Asset
Disposition; provided, however, that any such Asset Disposition the proceeds of
which do not exceed $1.0 million shall be excluded from the aforementioned
calculation).
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 Exchange Debentures 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 may not, and may 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
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 transactions in arm's length
dealings with an unrelated third person; provided, however, that in the case of
any transaction or series of related transactions involving aggregate payments
or other transfers by the Company and its Restricted Subsidiaries in excess of
(i) $1.0 million, the Company shall deliver an Officers' Certificate to the
Trustee certifying that the terms of such business, transaction or series of
transactions (x) comply with this covenant, (y) have been set forth in writing
and (z) have been determined in good faith by the disinterested members of the
Board of Directors to satisfy the criteria set forth in this covenant, and (ii)
$5.0 million, the Company shall also deliver to the Trustee an opinion from an
investment banking firm of national prominence that is not an Affiliate of the
Company to the effect that such business, transaction or transactions are fair
to the Company or such Restricted Subsidiary from a financial point of view.
The provisions of the preceding paragraph shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the provisions of the
covenant described under ' -- Limitation on Restricted Payments,' (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, indemnity
agreements, 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 $5.0 million at any
one time outstanding 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.
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 holders of the
Exchange Debentures 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 Exchange Debentures are outstanding, the
Company will make available to any prospective purchaser of the Exchange
Debentures or beneficial owner of the Exchange Debentures in connection with any
sales thereof the information required by Rule 144A(d)(4) under the Securities
Act.
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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 Exchange Indenture and the
Exchange Debentures; (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
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 Exchange
Indenture. The resulting, surviving or transferee person will be the successor
company.
Benedek Broadcasting 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 Benedek
Broadcasting) is organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia; (ii) immediately prior
to and after giving effect to such transaction (and treating any Debt which
becomes an obligation of the resulting, surviving or transferee person or any
Subsidiary as a result of such transaction as having been incurred by such
person or such Subsidiary at the time of such transaction), no Default has
occurred and is continuing; (iii) immediately after giving effect to such
transaction, the Company would 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) all of the Capital Stock of the
resulting, surviving or transferee person is owned by the Company; and (v) the
Company delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel stating that such consolidation, merger or transfer complies with the
Exchange Indenture.
DEFAULTS
An Event of Default is defined in the Exchange Indenture as (i) a default
in payment of interest on the Exchange Debentures when due, continued for 30
days, (ii) a default in the payment of principal of any Exchange Debenture when
due at its Stated Maturity, upon optional redemption, upon required repurchase,
upon declaration or otherwise, (iii) 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
Exchange Debentures), (iv) 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 Exchange Indenture, (v) 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'), (vi) certain events of bankruptcy, insolvency or reorganization of
the Company, BLC or a Significant Subsidiary (the 'bankruptcy provisions'),
(vii) 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 (viii) 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 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 or Television Stations exceeds 10% of the Operating Cash Flow
of the Company for such period (the 'license maintenance provision'). The notice
provided for in clause (iii), (iv) or (v) shall be given to the Company by the
Trustee or the holders of 25% in principal amount of the outstanding Exchange
Debentures.
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If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Exchange Debentures may
declare the principal amount and accrued but unpaid interest on all the Exchange
Debentures (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 Exchange Debentures.
Under certain circumstances, the holders of a majority in principal amount of
the outstanding Exchange Debentures may rescind any such acceleration with
respect to the Exchange Debentures and its consequences. In addition, if an
Event of Default occurs within 12 calendar months after the issuance of the
Exchange Debentures and so long as such Event of Default is continuing, the
holders of the Exchange Debentures will have the voting rights described under
'Exchangeable Preferred Stock -- Voting Rights.'
Subject to the provisions of the Exchange 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 Exchange Indenture at the request or direction of any of the holders
of the Exchange Debentures 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 Exchange Debenture may pursue any remedy with
respect to the Exchange Indenture or the Exchange Debentures 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
Exchange Debentures 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 10 days after the receipt thereof and the offer of security or indemnity
and (v) the holders of a majority in principal amount of the outstanding
Exchange Debentures have not given the Trustee a direction inconsistent with
such request within such 10-day period. Subject to certain restrictions, the
holders of a majority in principal amount of the outstanding Exchange Debentures
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 Exchange Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other holder of an
Exchange Debenture or that would involve the Trustee in personal liability.
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 if the Company then had elected to redeem the Exchange Debentures
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 Exchange Debentures.
The Exchange 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
Exchange Debentures 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 a
Default, their status and what action the Company is taking or proposes to take
in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Exchange Indenture may be amended with
the consent of the holders of two-thirds in principal amount of the Exchange
Debentures then outstanding and any past default or compliance with any
provisions may be waived with the consent of the holders of two-thirds in
principal amount of the Exchange Debentures then outstanding. However, without
the consent of each holder of an outstanding Exchange Debenture, no amendment
may, among other things, (i) reduce the amount of Exchange Debentures whose
holders must consent to an amendment, (ii) reduce the rate of or extend the time
for payment of interest on any Exchange Debenture, (iii) reduce the principal of
or extend the Stated Maturity of any Exchange Debenture, (iv) reduce the premium
payable upon the redemption of any Exchange Debenture or change the
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time at which any Exchange Debenture may be redeemed as described under
' -- Optional Redemption' above, (v) make any Exchange Debenture payable in
money other than that stated in the Exchange Debenture, (vi) impair the right of
any holder of the Exchange Debentures to receive payment of principal of and
interest on such holder's Exchange Debentures 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 Exchange Debentures, (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 Exchange
Indenture.
Without the consent of any holder of the Exchange Debentures, the Company
and the Trustee may amend or supplement the Exchange Indenture to cure any
ambiguity, omission, defect or inconsistency, to provide for the assumption by a
successor corporation of the obligations of the Company under the Exchange
Indenture, to provide for uncertificated Exchange Debentures in addition to or
in place of certificated Exchange Debentures (provided that the uncertificated
Exchange Debentures are issued in registered form for purposes of Section 163(f)
of the Code or in a manner such that the uncertificated Exchange Debentures are
described in Section 163(f)(2)(B) of the Code), to add Guarantees with respect
to or secure the Exchange Debentures, to add to the covenants of the Company for
the benefit of the holders of the Exchange Debentures 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 Exchange Debentures or to
comply with any requirements of the SEC in connection with the qualification of
the Exchange Indenture under the TIA. However, no amendment may be made to the
subordination provisions of the Exchange Indenture that adversely affects the
rights of any holder of Debt then outstanding unless the holders of such Debt
(or their Representative) consents to such change.
The consent of the holders of the Exchange Debentures is not necessary
under the Exchange 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 Exchange Indenture becomes effective, the
Company is required to mail to holders of the Exchange Debentures a notice
briefly describing such amendment. However, the failure to give such notice to
all holders of the Exchange Debentures, 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
Exchange Debentures and the Exchange Indenture ('legal defeasance'), except for
certain obligations, including those respecting the defeasance trust and
obligations to register the transfer or exchange of the Exchange Debentures, to
replace mutilated, destroyed, lost or stolen Exchange Debentures and to maintain
a registrar and paying agent in respect of the Exchange Debentures. 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 Exchange Debentures may not be
accelerated because of an Event of Default with respect thereto. If the Company
exercises its covenant defeasance option, payment of the Exchange Debentures may
not be accelerated because of an Event of Default specified in clause (iii),
(v), (vi) (with respect only to Significant Subsidiaries) (vii) or (viii) 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 cash in U.S. dollars,
U.S. Government Obligations, or a combination thereof that, through the payment
of interest and principal in respect thereof in accordance with their terms,
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay principal, premium (if any) and interest
on the Exchange Debentures 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 Exchange Debentures will
not recognize income, gain or loss for Federal income tax
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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
IBJ Schroder Bank & Trust Company is to be the Trustee under the Exchange
Indenture and has been appointed by the Company as Registrar and Paying Agent
with regard to the Exchange Debentures.
The Exchange 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 Exchange Indenture or in the TIA), it
must eliminate such conflict or resign.
GOVERNING LAW
The Exchange Indenture provides that it and the Exchange Debentures will be
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
'Acquired Station' means any Television Station acquired by the Company
after the Issue Date.
'Affiliate' of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person or (ii) any other person who is a director or
officer (A) of such specified person, (B) of any subsidiary of such specified
person or (C) of any person described in clause (i) above. For purposes of the
covenants described under 'Certain Covenants -- Limitation on Restricted
Payments,' ' -- Limitation on Transactions with Affiliates' and ' -- Limitation
on Sales of Assets and Subsidiary Stock,' (a) control of a person means the
power, direct or indirect, to direct or cause the direction of the management
and policies of such person whether by contract or otherwise and (b) beneficial
ownership of 5% or more of the voting common equity (on a fully diluted basis)
or warrants to purchase such equity (whether or not currently exercisable) of a
person shall be deemed to be control of such person; and the terms 'controlling'
and 'controlled' have meanings correlative to the foregoing.
'Asset Disposition' means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) of shares of
Capital Stock of a Subsidiary (other than directors' qualifying shares),
property or other assets (each referred to for the purposes of this definition
as a '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,' (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.
'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 Exchange Debentures, 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).
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'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 December 17,
1997, as amended, among the Company, Benedek Broadcasting, as borrower, the
Lenders referred to therein, and Bankers Trust Company, as agent, and all
promissory notes, guarantees, security agreements, pledge agreements, deeds of
trust, mortgages, letters of credit and other instruments, agreements and
documents executed pursuant thereto or in connection therewith, in each case as
the same may be amended, supplemented, restated, renewed, refinanced, replaced
or otherwise modified (in whole or in part and without limitation as to amount,
terms, conditions, covenants or other provisions) from time to time.
'Bank Debt' means all Senior Debt outstanding under the Bank Credit
Agreement.
'BLC' means Benedek License Corporation, a corporation organized under the
laws of the State of Delaware, and any successor company.
'Board of Directors' means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
'Business Day' means each day which is not a Legal Holiday.
'Capital Lease Obligations' of a person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
'Capital Stock' of any person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such 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
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acquisition occurred on the first day of such period and (4) if since the
beginning of such period any person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such period, Operating Cash Flow (including Consolidated
Interest Expense) for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition or Investment occurred on the first
day of such period. For purposes of this definition, whenever pro forma effect
is to be given to an acquisition of assets, the amount of income or earnings
relating thereto, and the amount of Consolidated Interest Expense associated
with any Debt Issued in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company. If any Debt bears a floating rate of interest and is being given
pro 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.
'Company Pledge Agreement' means the Amended and Restated Company Pledge
Agreement dated as of December 17, 1997 between the Company and Bankers Trust
Company.
'Consolidated Interest Expense' means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such interest expense, (i) interest expense
attributable to capital leases, (ii) amortization of debt discount and debt
Issuance cost, (iii) capitalized interest, (iv) non-cash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) interest actually paid by the
Company or any such Restricted Subsidiary under any Guarantee of Debt or other
obligation of any other person, (vii) net costs associated with Hedging
Obligations (including amortization of fees), (viii) Preferred Stock dividends
in respect of all Preferred Stock of Restricted Subsidiaries and Redeemable
Stock of the Company held by persons other than the Company or a Wholly Owned
Subsidiary and (ix) the cash contributions to any employee stock ownership plan
or similar trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any person (other than the Company) in connection
with loans incurred by such plan or trust to purchase newly issued or treasury
shares of the Company.
'Consolidated Net Income' means, for any period, the net income of the
Company and its consolidated 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 covenants described under ' -- Exchangeable
Preferred Stock -- Certain Covenants -- Limitation on Restricted Payments' and
' -- Exchange Debentures -- Certain Covenants -- Limitation on Restricted
Payments' only, there shall be excluded from Consolidated Net Income any
dividends, repayments of
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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
covenants pursuant to clauses (iv) and (vi), respectively, of paragraph (b) of
the applicable covenant.
'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.
'Debentureholder' or 'holder' means the person in whose name an Exchange
Debenture is registered on the Registrar's books.
'Debt' of any person means, without duplication, (i) the principal of and
premium (if any) in respect of (A) indebtedness of such person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is responsible or
liable; (ii) all Capital Lease Obligations and all Attributable Debt of such
person; (iii) all obligations of such person Issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such person and
all obligations of such person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(iv) all obligations of such person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (i) through (iii) above) entered into in the ordinary
course of business of such person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such person of a demand
for reimbursement following payment on the letter of credit); (v) the amount of
all obligations of such person with respect to the redemption, repayment or
other repurchase of, in the case of a Subsidiary, any Preferred Stock and, in
the case of any other person, any Redeemable Stock (but excluding any accrued
dividends); (vi) all obligations of the type referred to in clauses (i) through
(v) of other persons and all dividends of other persons for the payment of
which, in either case, such person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including any Guarantees of such
obligations and dividends; and (vii) all obligations of the type referred to in
clauses (i) through (vi) of other persons secured by any Lien on any property or
asset of such person (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, in the case of the Exchangeable Preferred Stock, a Voting Rights
Triggering Event and, in the case of the Exchange Debentures, an Event of
Default.
'Designated Senior Debt' means (i) the Bank Debt and the Senior
Subordinated Discount Notes and (ii) any other 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 Debt as 'Designated Senior Debt'
for purposes of the Exchange Debentures.
'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
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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 Exchange Debentures are
exchanged for the Exchangeable Preferred Stock.
'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 23 Television Stations owned by
the Company as of the Issue Date and (ii) each other Television Station acquired
by the Company after the Issue Date and the License for which is owned by BLC.
'Guarantee' means any obligation, contingent or otherwise, of any person
directly or indirectly guaranteeing any Debt or other obligation of any person
and any obligation, direct or indirect, contingent or otherwise, of such person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation of such person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term 'Guarantee' shall not include
endorsements for collection or deposit in the ordinary course of business. The
term 'Guarantee' used as a verb has a corresponding meaning.
'Hedging Obligations' of any person means the obligations of such person
pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement designed to protect such person against changes
in interest rates or foreign exchange rates.
'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 Exchangeable Preferred Stock is
initially issued.
'Legal Holiday' means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.
'License' means, with respect to any Television Station, any and all
licenses and authorizations issued by the Federal Communications Commission with
respect to such Television Station.
'Lien' means any mortgage, pledge, security interest, conditional sale or
other title retention agreement or other similar lien.
'Maximum Amount' as of any date of determination means, with respect to any
Acquired Station, the product of (i) the Operating Cash Flow of such Acquired
Station for the four recent fiscal quarters ending at least 45 days prior to
such date of determination and (ii) the number 5.0; provided, however, that if
such Acquired Station is acquired by the Company in connection with an Asset
Disposition of an Existing Station, the amount in clause (i) above shall be
reduced by the Operating Cash Flow for such period of such Existing Station.
'Net Available Cash' from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or
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otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring person of Debt or other
obligations relating to such properties or assets or received in any other
noncash form) therefrom, in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required to be accrued as a liability
under generally accepted accounting principles, as a consequence of such Asset
Disposition, (ii) all payments made on any Debt which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any lien upon
or other security agreement of any kind with respect to such assets, or which
must by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition and (iv) the deduction of appropriate amounts to be provided
by the seller as a reserve in accordance with generally accepted accounting
principles, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Subsidiary after such
Asset Disposition.
'Net Cash Proceeds' with respect to any Issuance or sale of Capital Stock,
means the cash proceeds of such Issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such Issuance or sale and net of taxes paid or payable as a
result thereof.
'Non-Convertible Common Stock' means, with respect to any corporation, any
non-convertible Capital Stock of such corporation and any Capital Stock of such
corporation convertible solely into non-convertible common stock of such
corporation; provided, however, that Non-Convertible Common Stock shall not
include any Redeemable Stock or Exchangeable Stock or, in the case of the
Company, any Senior Stock or Parity Stock.
'Non-Recourse Affiliate' means a Non-Recourse Subsidiary or any other
Affiliate of the Company or a Restricted Subsidiary which (i) has not acquired
any assets (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.
'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 Restriced
Subsidiary Issued to finance all or any portion of the cost of the acquisition
of an Acquired Station, where the License for such Acquired Station is owned by
BLC, and Refinancing Debt in respect of such Debt; provided, however, that the
aggregate amount of such Permitted Acquisition Debt with respect to any Acquired
Station shall not exceed the Maximum Amount with respect to such Acquired
Station.
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'Permitted Holders' shall mean (i) A. Richard Benedek; (ii) family members
or relatives of A. Richard Benedek; (iii) any trusts created for the benefit of
the persons described in clauses (i), (ii) or (iv) of this paragraph or any
trust for the benefit of any trust; (iv) in the event of the death or
incompetence of any person described in clauses (i) or (ii) of this paragraph
such person's estate, executor, administrator, committee or other personal
representative or beneficiaries; or (v) any Affiliate of A. Richard Benedek.
'Permitted Investments' shall mean (i) investments in direct obligations of
the United States of America maturing within 90 days of the date of acquisition
thereof, (ii) investments in certificates of deposit maturing within 90 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States or any state thereof having
capital, surplus and undivided profits aggregating in excess of $500.0 million,
and (iii) investments in commercial paper given the highest rating by two
established national credit rating agencies and maturing not more than 90 days
from the date of acquisition thereof.
'person' means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
'Preferred Stock' as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
'principal' of any debt security means the principal amount of such 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 Restricted Subsidiaries during such period with respect to, or on
account of, Program Obligations.
'Program Obligations' means the obligations of the Company and the
Restricted Subsidiaries with respect to the acquisition of the right to
broadcast films and other programming material, payable in a form other than
barter.
'Public Equity Offering' means an underwritten public offering of common
stock of the Company pursuant to an effective registration statement under the
Securities Act.
'Redeemable Stock' means the Exchangeable Preferred Stock and any Capital
Stock that by its terms or otherwise is required to be redeemed on or prior to
the first anniversary of the Stated Maturity of the Exchangeable Preferred Stock
or the Exchange Debentures, as the case may be or is redeemable at the option of
the holder thereof at any time on or prior to the first anniversary of the
Stated Maturity of the Exchangeable Preferred Stock or the Exchange Debentures,
as the case may be.
'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 Certificate of Designation or, after the Exchange Date, the Exchange
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 (plus the amount of any premium or penalty paid, whether
pursuant to terms of the instrument governing such Debt or by reason of any
tender premium therefor, and plus the amount of any expenses incurred by the
Company or any Subsidiary in connection with such Refinancing (including without
limitation underwriting discounts or commissions)); 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 Debt of the Company.
'Required Disposition' means the disposition of either WMTV(TV), serving
Madison, Wisconsin, or WIFR-TV, serving Rockford, Illinois, as such disposition
may be required pursuant to an order of the FCC.
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'Restricted Holder' means a Permitted Holder or a person (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act and will be deemed to
include each person included in such person) that owns, directly or indirectly,
10% or more of the total voting power of the Voting Stock of the Company;
provided, however, that for purposes of this definition a person shall be deemed
to have ownership of all shares (a) that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time and (b) of a corporation held by any other corporation (the 'parent
corporation') if such person is the owner, directly or indirectly, of more than
10% of the total voting power of the Voting Stock of such parent corporation.
'Restricted Subsidiary' shall mean any Subsidiary that is not a
Non-Recourse Subsidiary.
'Sale/Leaseback Transaction' means any arrangement relating to a property
owned as of the date of the Exchange Indenture whereby the Company or a
Restricted Subsidiary transfers such property to a person and leases it back
from such person.
'SEC' means the Securities and Exchange Commission.
'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 accrued and unpaid interest thereon (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 Exchange Debentures; provided, however, that 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 the Exchange Indenture.
'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 (vi), (vii) or (viii) of the first paragraph under ' -- Defaults' 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
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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 that is, or is a controlled
Affiliate of any person that is, engaged in the broadcasting 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 Exchange Indenture or thereafter Issued) which is
expressly subordinate or junior in right of payment to the Exchange Debentures.
'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.
'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. 77aaa-77bbbb) as in
effect on the date of the Exchange Indenture.
'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 Rights
Agreement, the Company has agreed to use its best efforts to consummate the
Exchange Offer by September 11, 1998 for the benefit of the Holders of shares of
Existing Exchangeable Preferred Stock. The Company will keep the Exchange Offer
open for not less than 20 business days (or longer if required by applicable
law) after the date notice of the Exchange Offer is mailed to the Holders of
shares of Existing Exchangeable Preferred Stock.
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 any Holder of shares of Existing Exchangeable Preferred Stock 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 shares of Existing Exchangeable Preferred Stock 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 Exchangeable Preferred Stock. 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 shares of Existing Exchangeable Preferred Stock or the
Exchange Securities, as the case may be. A Holder that sells such shares of
Exchangeable Preferred Stock 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
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liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement which are
applicable to such a Holder.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified by
reference to, all the provisions of the Registration Rights Agreement, a copy of
which has been 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 $0.01 per share, and 2,500,000 shares of preferred
stock, par value $0.01 per share. The Company currently has outstanding
7,400,000 shares of Class B Common Stock, 100,000 shares of Existing
Exchangeable Preferred Stock and 450,000 shares of Seller Junior Discount
Preferred Stock. In addition, the Company has 600,000 shares of Class A Common
Stock reserved for issuance upon exercise of the Initial Warrants. For a
description of the Exchangeable Preferred Stock, see 'Description of the
Exchangeable Preferred Stock and Exchange Debentures.'
COMMON STOCK
The following description of the Common Stock of the Company does not
purport to be complete and is subject to, and is qualified in its entirety by
the provisions of its Certificate of Incorporation. A copy of the Certificate of
Incorporation has been 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.
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SELLER JUNIOR DISCOUNT PREFERRED STOCK
The following description of the Seller Junior Discount Preferred Stock
does not purport to be complete and is subject to, and is qualified in its
entirety by the Certificate of Designation therefor. A copy of the Certificate
of Designation for the Seller Junior Discount Preferred Stock has been 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 Existing Exchangeable Preferred Stock and each class of Capital
Stock or series of Preferred Stock established after the issuance of the Seller
Junior Discount Preferred Stock by the Board of Directors of the Company
(including the Exchangeable Preferred Stock), 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
after the issuance of the Seller Junior Discount Preferred Stock 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 after the
issuance of the Seller Junior Discount Preferred Stock 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 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 when issued, the Existing 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
issuance thereof on June 6, 1996 (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 are 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 when issued had an
aggregate liquidation preference of $45.0 million. As of March 31, 1998, the
aggregate liquidation preference of the Seller Junior Discount Preferred Stock
was $51.9 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, $115.34 per share as
of March 31, 1998, and 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
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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 is
redeemable (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.
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, shall
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,
incur any indebtedness (other than Refinancing indebtedness which includes any
redemption premium and transaction expenses in connection therewith) 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 (which includes any Preferred Stock of a subsidiary of the Company) 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 Seller Junior
Discount Preferred Stock is not considered indebtedness for purposes of the
foregoing limitation. The Exchangeable Preferred Stock, when issued, will be
considered indebtedness for purposes of the foregoing limitation. 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 Existing Exchangeable
Preferred Stock or, when issued, 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, each Warrant to
acquire one share of Class A Common Stock of the Company, at an initial exercise
price of $0.01 per share. Upon the redemption of the Old Exchangeable Preferred
Stock, the Contingent Warrants which were then outstanding were required to be
returned to the Company for cancellation and they have no further force or
effect.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE PURSUANT TO THE EXCHANGE OFFER,
OWNERSHIP AND DISPOSITION OF EXCHANGEABLE PREFERRED STOCK AND EXCHANGE
DEBENTURES
The following discussion sets forth the material anticipated Federal income
tax consequences of the exchange pursuant to the Exchange Offer, ownership and
disposition of the Exchangeable Preferred Stock and the Exchange Debentures (for
purposes of this tax discussion, collectively, the 'Securities') by a person
that is a 'U.S. holder' and that obtains such Securities pursuant to the
Exchange Offer and by holders that receive Exchange Debentures upon an exchange
by the Company of such Debentures for Exchangeable Preferred Stock. A 'U.S.
holder' is (i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized under the laws of the United States or any
State thereof (including the District of Columbia), (iii) an estate, the income
of which is subject to United States Federal income taxation regardless of its
source or (iv) a trust if both a United States court is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust.
This summary is based upon the provisions of the Internal Revenue Code of 1986,
as amended (the 'Code'), the final, temporary and proposed regulations
promulgated thereunder, and administrative rulings and judicial decisions now in
effect, all of which are subject to change (possibly with retroactive effect) or
different interpretations. This summary does not purport to deal with all
aspects of Federal income taxation that may be relevant to a holder's decision
to participate in the Exchange Offer and it is not intended to be applicable to
all categories of holders, some of which, such as dealers in securities, banks,
insurance companies, tax-exempt organizations, persons holding securities as
part of a hedging or conversion transaction or straddle and foreign persons, may
be subject to special rules. In addition, the summary is limited to persons that
will hold the Securities as 'capital assets' (generally, property held for
investment) within the meaning of Section 1221 of the Code and is not applicable
to holders who own, directly or through attribution, stock in the Company.
Holders should note that this discussion is not binding on the Internal Revenue
Service (the 'Service') and there can be no assurance that the Service will take
a similar view with respect to the tax consequences described below. No ruling
has been or will be requested by the Company from the Service on any tax matters
relating to the Securities.
ALL PROSPECTIVE PARTICIPANTS IN THE EXCHANGE OFFER (IN PARTICULAR, HOLDERS
THAT ARE NOT U.S. HOLDERS) ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
EXCHANGE, PURCHASE, OWNERSHIP AND DISPOSITION OF THE SECURITIES.
EXCHANGEABLE PREFERRED STOCK
DISTRIBUTIONS IN GENERAL
Dividends on the Exchangeable Preferred Stock will be taxable for Federal
income tax purposes as ordinary dividend income to the extent paid out of the
current or accumulated earnings and profits of the Company as determined for
Federal income tax purposes. To the extent that the amount of such a
distribution exceeds the current and accumulated earnings and profits of the
Company, such excess will be treated as a nontaxable recovery of the holder's
basis in the stock in respect of which the distribution is made (to the extent
thereof), with any remaining excess treated as gain from the sale or exchange of
such stock.
Although it is possible that cash dividends will be paid on or prior to May
15, 2003, it is not expected that the Company will pay any dividends on the
Exchangeable Preferred Stock in cash for any period ending on or prior to May
15, 2003. Any unpaid dividends will accrue and compound and will be payable upon
the optional or mandatory redemption of the Exchangeable Preferred Stock or the
exchange of Exchange Debentures for Exchangeable Preferred Stock. The tax
treatment of such accruing and compounding dividends ('Accrued Dividends') is
not free from doubt. Under current law, it would appear that Accrued Dividends
would not be treated as having been received by holders of the Exchangeable
Preferred Stock until such Accrued Dividends were actually paid in cash (and
would then be taxable for Federal income tax purposes as a dividend to the
extent of the Company's current and accumulated earnings and profits at such
time). The legislative history to the 1990 amendments to Section 305(c) of the
Code, however, grants the Service authority to issue regulations (possibly with
retroactive effect) which would treat such Accrued Dividends as part of the
redemption price of the stock. If Accrued Dividends were included in the
redemption price of the Exchangeable Preferred Stock, a
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holder would be required to take such Accrued Dividends into account in
determining the amount that constitutes an excessive redemption price for
purposes of Section 305(c) of the Code. It is possible that the Service may
interpret existing law as requiring that Accrued Dividends be included in the
redemption price of the Exchangeable Preferred Stock. The effect of such
treatment could be to treat such holder as having received such Accrued
Dividends as constructive distributions at the time they accrue, rather than at
the time they are paid in cash. Until regulations requiring such treatment with
respect to accrued Dividends are issued, however, the Company intends to take
the position that Accrued Dividends on Exchangeable Preferred Stock need not be
treated as received by a holder until such time as such Accrued Dividends are
actually paid to such holder in cash and will report to the Service on that
basis. Until such time as the Company has earnings and profits, any constructive
distribution would be nontaxable and from an overall standpoint would not affect
the U.S. holder's tax basis in his or her Exchangeable Preferred Stock.
The Company intends to take the position that the Company's option to
redeem the Exchangeable Preferred Stock or the mandatory redemption of the
Exchangeable Preferred Stock does not give rise to constructive distributions.
PROSPECTIVE PARTICIPANTS IN THE EXCHANGE OFFER ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE TAX TREATMENT OF ACCRUED DIVIDENDS.
DIVIDENDS TO CORPORATE STOCKHOLDERS
In general, an actual or constructive distribution that is treated as a
dividend for Federal income tax purposes and that is made to a corporate
stockholder with respect to the Exchangeable Preferred Stock will (subject to
certain holding period or other limitations contained in Section 246A of the
Code) qualify for the 70% dividends-received deduction. Holders should note,
however, that the Company does not currently have any accumulated earnings and
profits and that there can be no assurance regarding the amount of current or
accumulated earnings and profits of the Company in the future. As a result,
there can be no assurance that the dividends received deduction will apply to
distributions on the Exchangeable Preferred Stock (including Accrued Dividends).
Under Section 1059 of the Code, the tax basis of Exchangeable Preferred
Stock that has been held by a corporate stockholder for two years or less
(ending on the earliest of the date on which the Company declares, announces or
agrees to the payment of such actual or constructive dividend) is reduced (but
not below zero) by the nontaxed portion of an 'extraordinary dividend' for which
a dividends-received deduction is allowed. In addition, such holder will
recognize gain (generally treated as gain from a sale or exchange of the
underlying stock) immediately to the extent that such non-taxed portion of any
extraordinary dividend exceeds the holder's adjusted tax basis for the stock.
Generally, an 'extraordinary dividend' is a dividend that (1) equals or exceeds
5% of the holder's adjusted basis in the Exchangeable Preferred Stock (treating
all dividends having ex-dividend dates within an 85-day dividend period as a
single dividend) or (2) exceeds 20% of the holder's basis in the Exchangeable
Preferred Stock (treating all dividends having ex-dividend dates within a
365-day period as a single dividend). If an election is made by the holder,
under certain circumstances the fair market value of the Exchangeable Senior
Preferred Stock as of the day before the ex-dividend date may be substituted for
the holder's basis in applying these tests.
CORPORATE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE POSSIBLE APPLICATION OF SECTION 1059 TO THEIR OWNERSHIP AND
DISPOSITION OF THE EXCHANGEABLE PREFERRED STOCK.
A corporate stockholder's liability for alternative minimum tax may be
affected by the portion of dividends received which such corporate stockholder
deducts (pursuant to the dividends-received deduction) in computing taxable
income. This results from the fact that corporate stockholders are required to
increase alternative minimum taxable income by 75% of the excess of current
earnings and profits (with certain adjustments, but determined without regard to
the dividends-received deduction), over alternative minimum taxable income
(determined without regard to this earnings and profits adjustment or the
alternative tax net operating loss deduction, but taking into account the
dividends-received deduction).
SALE, REDEMPTION OR OTHER TAXABLE DISPOSITION
Upon a sale, redemption or other taxable disposition of Exchangeable
Preferred Stock (including an exchange of Exchange Debentures for Exchangeable
Preferred Stock), a holder generally will recognize capital
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gain or loss for Federal income tax purposes (except to the extent of cash
payments received on the disposition that are attributable to declared
dividends, which will be treated in the same manner as distributions described
above under 'Distributions in General') in an amount equal to the difference
between (1) the sum of the amount of cash and the fair market value of any
property received upon such sale, redemption or other taxable disposition (the
'amount realized') and (2) the holder's adjusted tax basis in the stock being
disposed of. Such capital gain or loss will be long-term capital gain or loss if
the stock had been held by the holder for more than one year at the time of the
disposition. This discussion assumes that a redemption for cash or exchange of
Exchange Debentures for Exchangeable Preferred Stock will not be treated as a
dividend for Federal income tax purposes. Pursuant to recently enacted
legislation, in the case of a holder who is an individual, any capital gain
recognized on the disposition of the Exchangeable Preferred Stock will generally
be subject to United States Federal income tax at a rate of (i) 20%, if the
holder's holding period in such Exchangeable Preferred Stock was more than 18
months at the time of such sale or exchange, or (ii) 28%, if the holder's
holding period in such Exchangeable Preferred Stock was more than one year, but
not more than 18 months, at the time of such sale or exchange. Notwithstanding
the foregoing, it is possible that the Service may require a holder to treat
amounts received upon the redemption of Exchangeable Preferred Stock or the
exchange of Exchange Debentures for Exchangeable Preferred Stock that are
attributable to Accrued Dividends (and not previously treated as received by a
holder as a constructive distribution as described above under 'Distributions in
General') as a constructive distribution, regardless of whether the Company
declares a dividend of such Accrued Dividends in connection with such redemption
or exchange. In such case, such amount would be taxable for Federal income tax
purposes as ordinary dividend income to the extent of the Company's current and
accumulated earnings and profits for Federal income tax purposes at such time
(and any amounts in excess thereof would be taxable as described above under
'Distributions in General').
A holder's initial tax basis in the Exchangeable Preferred Stock will equal
the purchase price of the Exchangeable Preferred Stock. Thereafter, such initial
tax basis will be (i) increased by the amount (if any) of any constructive
distributions the holder is treated as having received pursuant to the rules
described above under 'Distributions in General,' and (ii) decreased by the
portion of any (actual or constructive) distribution that is treated as a
tax-free recovery of basis as described above under 'Distributions in General'
and 'Dividends to Corporate Stockholders.'
If the Company elects to exchange Exchange Debentures for Exchangeable
Preferred Stock on a dividend date, the amount realized on the exchange will
depend on whether the Exchange Debentures and/or the Exchangeable Preferred
Stock is traded on an established market (as defined in applicable Treasury
Regulations) at the time of the exchange. The amount realized will equal (i) the
fair market value of the Exchange Debentures as of the exchange date if the
Exchange Debentures are traded on an established market at such time or (ii) the
fair market value of the Exchangeable Preferred Stock as of the exchange date if
such Exchangeable Preferred Stock is traded on an established market at such
time but the Exchange Debentures are not. If neither the Exchangeable Preferred
Stock nor the Exchange Debentures are so traded, the amount realized will equal
the stated principal amount of the Exchange Debentures provided that the yield
on the Exchange Debentures is equal to or greater than the relevant 'applicable
Federal rate.' (The applicable Federal rate is a rate announced monthly by the
Treasury that is intended to reflect the average yield of United States
government obligations.) If neither the Exchange Debentures nor the Exchangeable
Preferred Stock is so traded and the yield on the Exchange Debentures is less
than the applicable Federal rate, the amount realized will equal the present
value as of the exchange date of all payments to be made on the Exchange
Debentures, discounted at the applicable Federal rate. It cannot be determined
at the present time whether the Exchangeable Preferred Stock or the Exchange
Debentures will be, at the relevant time, traded on an established market within
the meaning of the Treasury Regulations.
Depending upon a holder's particular circumstances, the tax consequences of
holding Exchange Debentures (described below) may be less advantageous than the
tax consequences of holding Exchangeable Preferred Stock because, for example,
payments of interest on the Exchange Debentures will not be eligible for any
dividends-received deduction that may be available to corporate holders and
because, as discussed below, since the Exchange Debentures permit the
distribution of Additional Exchange Debentures (as defined) in lieu of the
payment of interest in cash, such Exchange Debentures will be issued with OID
(as defined).
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HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
LIKELIHOOD OF CAPITAL GAIN TREATMENT (IN WHOLE OR PART) ON THE REDEMPTION OF
EXCHANGEABLE PREFERRED STOCK OR THE EXCHANGE OF EXCHANGEABLE PREFERRED STOCK FOR
EXCHANGE DEBENTURES.
EXCHANGE DEBENTURES
CONSEQUENCES OF OWNING EXCHANGE DEBENTURES
The consequences of owning Exchange Debentures will depend in part upon the
facts existing at the time of issuance, as described below. Accordingly, the
ultimate Federal income tax treatment of the ownership of the Exchange
Debentures may differ substantially from that described below. If any Exchange
Debentures are issued, the Company will report to holders on a timely basis the
reportable amount of original issue discount ('OID') and interest income with
respect to the Exchange Debentures, based on its understanding of then
applicable law.
INTEREST
Stated interest payable on the Exchange Debentures will, subject to the
discussion below related to stated interest on the Exchange Debentures issued
prior to May 15, 2003, generally be taxable to a U.S. holder as ordinary
interest income at the time it is paid or accrued, in accordance with the U.S.
holder's method of accounting for Federal income tax purposes.
PROSPECTIVE PARTICIPANTS IN THE EXCHANGE OFFER ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE CONSEQUENCES OF OWNING EXCHANGE DEBENTURES.
ORIGINAL ISSUE DISCOUNT
For Federal income tax purposes, when a debt instrument is issued at a
discount, the amount of such discount ('original issue discount' or OID) is
treated as interest income, and the holder of such instrument must include such
OID in his income for the period during which the OID accrues even if no cash
attributable to such OID income is received until maturity, redemption or other
disposition of the debt instrument.
The amount of OID, if any, on a debt instrument, such as the Exchange
Debentures, is the difference between its 'issue price' and its 'stated
redemption price at maturity' (subject, generally, to a de minimis exception).
The portion of any such OID that is to be accrued (and included in income) with
respect to a debt instrument with a maturity of more than one year generally
will be determined for each accrual period during the term of such debt
instrument under the constant yield method, applied by (i) multiplying the
adjusted issue price of the debt instrument at the beginning of the accrual
period by its yield to maturity, and (ii) subtracting from that product the
amount of any interest payments made during that accrual period that are based
on a single fixed rate and are payable unconditionally in cash or in property
(other than debt instruments of the issuer) at intervals of one year or less
during the entire term of the debt instrument ('qualified stated interest'). The
resulting amount is allocated ratably to each day in the accrual period, and the
amount includible in a holder's income (whether on the cash or accrual method of
accounting) with respect to the debt instrument is the sum of the resulting
daily portions of OID for each day of the taxable year during which the holder
held the debt instrument. Under these rules, a U.S. holder will generally have
to include in income increasingly greater amounts of OID in successive accrual
periods.
The 'issue price' of each debt instrument in a particular offering will
generally be the first price at which a substantial amount of that particular
offering is sold (other than to an underwriter, placement agent or wholesaler).
The 'stated redemption price at maturity' of a debt instrument equals the sum of
all payments to be made on such debt instrument other than qualified stated
interest. The 'adjusted issue price' of a debt instrument at the beginning of
any accrual period is equal to its issue price increased by all previously
accrued OID and reduced by the amount of all previous payments made on such debt
instrument (other than payments of qualified stated interest). Generally, the
tax basis of the debt instrument in the hands of the holder will be increased
and decreased, respectively, by the same amounts.
In the case of a debt instrument, such as the Exchange Debentures, issued
for property, such as the Exchangeable Preferred Stock, the issue price for such
debt instrument will depend on whether such property or the debt instrument is
publicly traded. In general, the issue price of such a debt instrument will be
determined in
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<PAGE>
the same manner that the amount realized is determined on such exchange (see
discussion above under ' -- Exchangeable Preferred Stock -- Sale, Redemption or
Other Taxable Disposition').
Because interest on the Exchange Debentures issued prior to May 15, 2003
can, at the option of the Company, be paid in cash or in Additional Exchange
Debentures, such Exchange Debentures will not be treated as having qualified
stated interest and will therefore be treated, for Federal income tax purposes,
as having been issued with OID. Under the provisions of the Treasury Regulations
dealing with OID (the 'OID Regulations') (i) the distribution of additional
Exchange Debentures in lieu of the payment of interest in cash ('Additional
Exchange Debentures') will not be treated as the payment of interest and,
accordingly, (ii) an Exchange Debenture and all Additional Exchange Debentures
that could be issued with respect thereto (if all interest payments that could
be satisfied in Additional Exchange Debentures were satisfied in Additional
Exchange Debentures) will be treated as a single OID obligation. Accordingly,
under the provisions of the OID Regulations (i) the stated redemption price at
maturity of an Exchange Debenture will be equal to the sum of all cash payments
due on such Exchange Debenture and on all Additional Exchange Debentures that
could be issued with respect to such Exchange Debenture or Additional Exchange
Debentures (if all interest payments that could be satisfied in Additional
Exchange Debentures were satisfied in Additional Exchange Debentures), (ii) each
Exchange Debenture will be issued with OID in an amount equal to the excess of
such stated redemption price at maturity over the issue price of such Exchange
Debenture and (iii) no interest payment on the Exchange Debenture or on any
Additional Exchange Debentures distributed with respect thereto will be treated
as qualified stated interest and therefore no such interest will be included in
income when paid (because equivalent amounts will be included in income as OID).
In addition, special rules may apply in determining the yield to maturity of
such Exchange Debentures which may affect the amount of OID reported. The amount
of such OID, if any, on the Exchange Debentures will depend on numerous factors,
including the period of time during which the Company may pay interest on such
debentures through the issuance of Additional Exchange Debentures, and therefore
will not be able to be calculated prior to the time such Exchange Debentures are
issued.
In addition, an Exchange Debenture (including an Exchange Debenture issued
on or after May 15, 2003) will be treated as having OID (subject to the possible
application of the statutory de minimis rule discussed above) if the issue price
for such Exchange Debenture is less than its stated redemption price at
maturity. As discussed above, the issue price for the Exchange Debentures will
depend upon certain factors which may not be determinable until their issuance.
As a result, the Company cannot now accurately determine whether, and to what
extent, the Exchange Debentures will be treated as having OID under this
principle.
The Company is required to furnish to the Service, and will furnish
annually to the record holders of the Exchange Debentures (other than
corporations and other exempt recipients), certain information returns with
respect to OID accruing during the calendar year. Because this information will
be based upon the adjusted issue price of the Exchange Debentures as if the
holder were the original holder of the Exchange Debentures, subsequent holders
who purchase Exchange Debentures for an amount other than the adjusted issue
price for such Exchange Debentures or on a date other than the end of an accrual
period for the Exchange Debentures will be required to determine for themselves
the amount of OID, if any, that they are required to report.
POTENTIAL PARTICIPANTS IN THE EXCHANGE OFFER ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE POTENTIAL APPLICATION OF THE OID RULES TO THEIR
OWNERSHIP OF THE EXCHANGE DEBENTURES.
APPLICABLE HIGH YIELD DISCOUNT OBLIGATIONS
Pursuant to Section 163 of the Code, a portion of the OID accruing on
certain debt instruments will be treated as a dividend eligible for the
dividends-received deduction, and the corporation issuing such debt instrument
will not be entitled to deduct such portion of the OID and will be allowed to
deduct the remainder of the OID only when paid.
This treatment would apply to 'applicable high yield discount obligations'
('AHYDO'), that is, debt instruments that have a term of more than five years,
have a yield to maturity that equals or exceeds five percentage points over the
'applicable Federal rate' and have 'significant' OID. A debt instrument is
treated as having 'significant' OID if the aggregate amount that would be
includible in gross income with respect to such debt instrument for periods
before the close of any accrual period ending after the date five years after
the date of issue exceeds the sum of (i) the aggregate amount of interest to be
paid in cash under the debt instrument
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before the close of such accrual period and (ii) the product of the initial
issue price of such debt instrument and its yield to maturity. Because the
amount of OID attributable to the Exchange Debentures will be determined at the
time such Exchange Debentures are issued and the applicable Federal rate at the
time the Exchange Debentures are issued is not predictable, it is impossible to
determine at the present time whether the Exchange Debentures will be treated as
an AHYDO.
If the Exchange Debentures are treated as AHYDO's, a holder would be
treated as receiving dividend income (to the extent of the Company's current and
accumulated earnings and profits) solely for purposes of the dividends-received
deduction in an amount equal to the 'disqualified portion' of the OID of such
AHYDO. The 'disqualified portion' of the OID is equal to the lesser of (i) the
amount of the OID or (ii) the portion of the 'total return' (the excess of all
payments to be made with respect to the Exchange Debenture obligation over its
issue price) on the Exchange Debenture that bears the same ratio to the Exchange
Debenture's total return as the 'disqualified yield' (the extent to which the
yield exceeds the applicable Federal rate plus 6%) bears to the Exchange
Debenture's yield to maturity. To the extent that the Company's earnings and
profits are insufficient, any portion of the OID that otherwise would have been
recharacterized as a dividend for purposes of the dividends-received deduction
will continue to be taxed as ordinary OID income in accordance with the rules
described above. The Company's deduction for OID will be substantially deferred
with respect to an Exchange Debenture that is treated as an AHYDO. In addition,
such deduction will be disallowed to the extent that yield on such AHYDO exceeds
the applicable Federal rate by more than 6%.
SALE, REDEMPTION OR OTHER TAXABLE DISPOSITION OF EXCHANGE DEBENTURES
Generally, any sale, redemption or other taxable disposition of Exchange
Debentures by a holder will result in taxable gain or loss equal to the
difference between (i) the sum of the amount of cash and the fair market value
of any property received upon such sale, redemption or disposition and (ii) the
holder's adjusted tax basis in such Exchange Debentures. The adjusted tax basis
of a holder in such Exchange Debentures will equal the issue price of such
Exchange Debentures, increased by any OID on the Exchange Debentures previously
included in such holder's income, and reduced by any payments (other than
qualified stated interest) previously made on the Exchange Debentures. Such gain
or loss will be capital gain or loss, and will be long-term capital gain or loss
if the Exchange Debentures had been held by the holder for more than one year at
a time of the sale, redemption or disposition and subject to tax as described
above under ' -- Exchangeable Preferred Stock -- Sale, Redemption or Other
Taxable Disposition.'
NON-U.S. HOLDERS
The following is a summary of certain Federal income tax consequences that
may be relevant to a beneficial owner of the Exchangeable Preferred Stock or the
Exchange Debentures that is not a U.S. holder (a 'Non-U.S. holder'). This
summary deals only with Non-U.S. holders that are holders of the Exchangeable
Preferred Stock or the Exchange Debentures and that hold the Exchangeable
Preferred Stock or the Exchange Debentures as capital assets. It does not
address the tax considerations applicable to Non-U.S. holders if income or gain
in respect of the Exchangeable Preferred Stock or the Exchange Debentures is
effectively connected with the conduct of a trade or business in the United
States.
EXCHANGEABLE PREFERRED STOCK
Distributions received by a Non-U.S. holder in respect of the Exchangeable
Preferred Stock, to the extent considered dividends for United States Federal
income tax purposes (see ' -- Exchangeable Preferred Stock -- Distributions in
General'), generally will be subject to United States Federal withholding tax at
a 30% rate (or a lower rate prescribed by an applicable income tax treaty). In
the event that withholding tax is collected on distributions that are not
considered dividends because the Company has no earnings and profits, Non-U.S.
holders may obtain a refund of any excess amounts withheld by timely filing an
appropriate claim for refund.
Constructive distributions on the Exchangeable Preferred Stock (see
' -- Exchangeable Preferred Stock -- Distributions in General') may be subject
to United States Federal withholding tax in each of the years in which the
distributions are deemed to have occurred and in advance of the receipt of cash
attributable to such distributions. Prospective participants in the Exchange
Offer are urged to consult their own tax advisors with respect to the
application of the withholding tax rules to constructive distributions on the
Exchangeable Preferred Stock.
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<PAGE>
EXCHANGE DEBENTURES
Generally, payments of interest (which for purposes of this discussion
includes OID) made with respect to the Exchange Debentures to a Non-U.S. holder
will not be subject to United States Federal income or withholding tax, provided
that (i) the Non-U.S. holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of the Company
entitled to vote, (ii) the Non-U.S. holder is not a controlled foreign
corporation for United States tax purposes that is directly or indirectly
related to the Company through stock ownership and (iii) the Non-U.S. holder
complies with certain applicable certification requirements.
SALE, EXCHANGE OR OTHER DISPOSITION OF THE EXCHANGEABLE PREFERRED STOCK OR THE
EXCHANGE DEBENTURES
Any capital gain realized on the sale, exchange, retirement or other
disposition of Exchangeable Preferred Stock or an Exchange Debenture by a
Non-U.S. holder will not be subject to United States Federal income or
withholding taxes unless such Non-U.S. holder is an individual who is present in
the United States for 183 days or more in the taxable year of such sale,
exchange, retirement or other disposition and meets certain additional
requirements.
Non-U.S. holders to whom the above exemptions do not apply may nonetheless
be able to avail themselves of an applicable income tax exemption from United
States Federal income and withholding tax. Such persons should consult with
their tax advisors regarding the potential applicability to them of an income
tax treaty exemption.
BACKUP WITHHOLDING
In general, a noncorporate holder of Securities will be subject to backup
withholding at the rate of 31% with respect to reportable payments of dividends,
interest or OID accrued with respect to, or the proceeds of a sale, exchange or
redemption of, Securities, as the case may be, if the holder fails to provide a
taxpayer identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income. Amounts paid as
backup withholding do not constitute an additional tax and will be credited
against the holder's Federal income tax liabilities.
Non-U.S. holders should consult their tax advisors regarding the
application of backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption, if available. Any amounts withheld from a payment to a Non-U.S.
holder under the backup withholding rules will be allowed as a credit against
such holder's United States Federal income tax liability and may entitle such
holder to a refund, provided that the required information is furnished to the
Service.
EXCHANGE OFFER
The exchange of Exchange Securities for shares of Existing Exchangeable
Preferred Stock 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
Exchangeable Preferred Stock. Rather, the Exchange Securities received by a
holder will be treated as a continuation of the Existing Exchangeable Preferred
Stock in the hands of such holder. As a result, there will be no Federal income
tax consequences to holders exchanging the Existing Exchangeable Preferred Stock
for the Exchange Securities pursuant to the Exchange Offer. The aforementioned
statement is based upon an opinion of Whitman Breed Abbott & Morgan LLP, tax
counsel to the Company, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. If, however, the
exchange of the Existing Exchangeable Preferred Stock 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 the Existing Exchangeable Preferred Stock pursuant to such
recapitalization would not recognize any gain or loss upon the exchange.
THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, EACH HOLDER OF EXCHANGEABLE PREFERRED STOCK SHOULD CONSULT WITH ITS
OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE
EXCHANGE PURSUANT TO THE EXCHANGE OFFER, OWNERSHIP AND DISPOSITION OF
EXCHANGEABLE PREFERRED STOCK, INCLUDING THE APPLICATION AND EFFECT OF STATE,
LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
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<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
GENERAL
The Exchange Securities will be issued in the form of one or more shares of
Exchange Securities in global form ('Global Exchangeable Preferred Stock'). If
Exchange Debentures are issued, the Company intends to have the Exchange
Debentures issued in the form of one or more registered Exchange Debentures in
global form ('Global Exchange Debentures'). The Global Exchangeable Preferred
Stock and Global Exchange Debentures are sometimes referred to herein as the
'Global Securities.' Exchange Securities or Exchange Debentures in definitive
form ('Certificated Exchangeable Preferred Stock' and 'Certificated Global
Debentures,' respectively, and sometimes referred to collectively as
'Certificated Securities') will not be issued except in the circumstances
described below when Certificated Securities are distributed to the beneficial
owners of the Global Securities.
Upon issuance of the Global Exchangeable Preferred Stock, The Depository
Trust Company ('DTC') or its nominee will credit, on its book-entry registration
and transfer system, the number of shares of Exchange Securities represented by
such Global Exchangeable Preferred Stock to the accounts of institutions that
have accounts with DTC or its nominee ('participants'). Ownership of beneficial
interests in the Global Securities will be limited to participants or persons
that may hold interests through participants. Ownership of beneficial interests
in such Global Securities will be shown on, and the transfer of that ownership
will be effected only through, records maintained by DTC or its nominee (with
respect to participants' interests) for such Global Securities, or by
participants or persons that hold interests through participants (with respect
to interests of persons other than participants). The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to transfer
beneficial interests in the Global Securities.
So long as DTC is the registered holder of any Global Securities, DTC will
be considered the sole owner and holder of the Securities, represented by such
Global Securities for all purposes under the Certificate of Designation and the
Exchange Indenture, as the case may be. No beneficial owner of an interest in
any Global Securities will be able to transfer that interest except in
accordance with DTC's applicable procedures (in addition to those under the
Certificate of Designation and the Exchange Indenture, as applicable).
Except in the circumstances referred to below, owners of beneficial
interests in Global Securities will not be entitled to have such Global
Securities or any Securities represented thereby registered in their names, will
not receive or be entitled to receive physical delivery of Certificated
Securities in exchange therefor and will not be considered to be the owners or
holders of such Global Securities or any Securities represented thereby for any
purpose under the Certificate of Designation or the Exchange Indenture.
Global Securities shall be exchangeable for corresponding Certificated
Securities registered in the name of persons other than DTC or its nominee only
if (A) DTC (i) notifies the Company that it is unwilling or unable to continue
as depository for any of the Global Securities or (ii) at any time ceases to be
a clearing agency registered under the Exchange Act, (B) with respect to the
Global Exchangeable Preferred Stock only, there shall have occurred and be
continuing a Voting Rights Triggering Event (as defined in the Certificate of
Designation), (C) with respect to the Global Exchange Debentures only, there
shall have occurred and be continuing an Event of Default (as defined in the
Exchange Indenture) or (D) the Company executes and delivers, in the case of the
Global Exchangeable Preferred Stock, the Transfer Agent and Registrar therefor,
or in the case of the Global Exchange Debentures, the Trustee under the Exchange
Indenture, an order that the Global Exchangeable Preferred Stock or Global
Exchange Debentures, as the case may be, shall be so exchangeable. Any
Certificated Securities will be issued only in fully registered form. Any
Certificated Securities so issued will be registered in such names and in such
denominations as DTC shall request.
Any payment on or in respect of the Exchange Securities or the Exchange
Debentures will be made available by the Company to DTC or its nominee, as the
case may be, as the registered owner of the Global Exchangeable Preferred Stock
and the Global Exchange Debentures. The Company expects that DTC or its nominee,
upon receipt of any payment on or in respect of any Global Security, will credit
immediately the accounts of the related participants with payments in amounts
proportionate to their respective beneficial interests therein as shown on the
records of DTC. The Company also expects that payments by participants to owners
of beneficial interests in the Global Securities held through such participants
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of
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<PAGE>
customers in bearer form or registered in 'street name,' and will be the
responsibility of such participants. Neither the Company nor any of its agents
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Unless and until exchanged in whole or in part for Certificated Securities
in definitive form, the Global Securities may not be transferred except as a
whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC as depository of any such nominee to a successor of DTC
or a nominee of such successor.
THE CLEARING SYSTEM
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System, a 'clearing corporation' within the meaning of the
New York Uniform Commercial Code and a 'clearing agency' registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movements of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own DTC. Indirect access to DTC's book-entry system is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly. DTC agrees with and represents to its
participants that it will administer its book-entry system in accordance with
its rules and by-laws and requirements of law.
SETTLEMENT
Investors electing to hold their shares of Exchange Securities through DTC
will follow settlement practices applicable to United States corporate debt
obligations. The securities custody accounts of investors will be credited with
their holdings against payment in same-day funds on the settlement date.
All payments with respect to the Exchange Securities and the Exchange
Debentures, as the case may be, will be made by the Company by wire transfer in
same-day funds. The Global Securities will trade in the Same-Day Funds
Settlement System of DTC until maturity. Secondary market trading between DTC
participants (other than the depositaries) will be settled in same-day funds
using the procedures applicable to United States corporate debt obligations.
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 Exchangeable Preferred Stock where such shares of Existing
Exchangeable Preferred Stock 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 , 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
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<PAGE>
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 other than commissions or concessions of any brokers or dealers
and will indemnify holders of the Exchangeable Preferred Stock (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Exchange Securities 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, Benedek Broadcasting and BLC. Certain tax matters with respect to the
Exchange Securities will be passed on for the Company by Whitman Breed Abbott &
Morgan LLP, tax counsel to the Company.
EXPERTS
The Consolidated Financial Statements and Schedule of the Company included
in this Prospectus have been audited by McGladrey & Pullen, LLP, independent
accountants to the extent and for the periods indicated in their reports
appearing elsewhere herein, and are included in reliance upon such reports and
upon the authority of such firm as experts in accounting and auditing.
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<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Benedek Communications Corporation and Subsidiaries
Independent Auditor's Report.......................................................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997.......................................... F-3
Consolidated Statements of Operations for the Three Years Ended December 31, 1997..................... F-4
Consolidated Statements of Stockholder's Deficit for the Three Years Ended December 31, 1997.......... F-5
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 1997..................... F-6
Notes to Consolidated Financial Statements............................................................ F-8
Consolidated Balance Sheets as of March 31, 1998 (Unaudited).......................................... F-24
Consolidated Statements of Operations for the Three Months Ended March 31, 1998 (Unaudited)........... F-25
Consolidated Statement of Stockholders' Deficit for the Three Months Ended
March 31, 1998 (Unaudited).......................................................................... F-26
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1998 (Unaudited).......................................................................... F-27
Notes to Consolidated Financial Statements (Unaudited)................................................ F-28
</TABLE>
F-1
<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Rockford, Illinois
We have audited the accompanying consolidated balance sheets of Benedek
Communications Corporation and subsidiaries as of December 31, 1996 and 1997 and
the related consolidated statements of operations, stockholder's deficit, and
cash flows for the years ended December 31, 1995, 1996 and 1997. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Benedek
Communications Corporation and subsidiaries as of December 31, 1996 and 1997 and
the results of their operations and their cash flows for the years ended
December 31, 1995, 1996 and 1997, in conformity with generally accepted
accounting principles.
MCGLADREY & PULLEN, LLP
Rockford, Illinois
February 7, 1998
F-2
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
-------- --------
(IN THOUSANDS, EXCEPT
SHARE AND PER SHARE
DATA)
<S> <C> <C>
ASSETS (Note G)
Current Assets
Cash and cash equivalents......................................................... $ 8,091 $ 2,648
Receivables
Trade, less allowance for doubtful accounts of $484 and $472 for 1996 and
1997....................................................................... 23,744 25,004
Due from seller.............................................................. 474 --
Other........................................................................ 385 1,729
Current portion of program broadcast rights....................................... 4,428 4,869
Prepaid expenses.................................................................. 1,453 1,659
Deferred income taxes............................................................. 1,333 1,004
-------- --------
Total current assets......................................................... 39,908 36,913
-------- --------
Property and equipment (Note D)........................................................ 84,021 73,811
-------- --------
Intangible assets (Note E)............................................................. 354,622 345,588
-------- --------
Other Assets
Program broadcast rights, less current portion (Note H)........................... 2,298 1,796
Deferred loan costs............................................................... 13,386 10,216
Land held for sale................................................................ 109 109
Other............................................................................. 671 62
-------- --------
16,464 12,183
-------- --------
$495,015 $468,495
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Current maturities of notes payable............................................... $ 14,015 $ 13,480
Current program broadcast rights payable.......................................... 6,120 6,762
Accounts payable and accrued expenses (Note I).................................... 15,369 13,477
Deferred revenue.................................................................. 707 683
-------- --------
Total current liabilities............................................... 36,211 34,402
-------- --------
Long-Term Obligations
Notes and leases payable (Note G)................................................. 344,219 357,437
Program broadcast rights payable (Note H)......................................... 1,592 1,353
Deferred revenue.................................................................. 4,435 3,760
Deferred income taxes (Note K).................................................... 54,600 41,895
-------- --------
404,846 404,445
-------- --------
Exchangeable redeemable senior preferred stock liquidation preference 1996 $65,257,
1997 $75,610 (Note F)................................................................ 58,462 73,660
-------- --------
Seller junior discount preferred stock (Note F)........................................ 47,057 50,896
-------- --------
Commitments (Note H, J)
Stockholder's Deficit (Note C, F, L)
Common stock, Class A $0.01 par value 25,000,000 authorized none issued or
outstanding...................................................................... -- --
Common stock, Class B $0.01 par value 25,000,000 authorized, 7,030,000 issued and
outstanding...................................................................... 70 70
Additional paid-in capital........................................................ (35,347) (40,192)
Accumulated deficit............................................................... (16,284) (54,786)
-------- --------
(51,561) (94,908)
-------- --------
$495,015 $468,495
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1995 1996 1997
-------- -------- --------
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE DATA)
<S> <C> <C> <C>
Net revenues.................................................................. $ 50,329 $ 96,386 $127,073
-------- -------- --------
Operating expenses:
Selling, technical and program expenses.................................. 21,199 43,759 60,385
General and administrative............................................... 7,850 14,844 19,618
Depreciation and amortization............................................ 5,042 20,220 31,380
Corporate................................................................ 1,575 2,695 3,787
-------- -------- --------
35,666 81,518 115,170
-------- -------- --------
Operating income.................................................... 14,663 14,868 11,903
-------- -------- --------
Financial income (expense):
Interest expense: (Note A)
Cash interest....................................................... (15,160) (22,841) (28,996)
Other interest...................................................... (712) (8,130) (19,374)
-------- -------- --------
(15,872) (30,971) (48,370)
Interest income.......................................................... 397 282 130
-------- -------- --------
(15,475) (30,689) (48,240)
-------- -------- --------
(Loss) before income tax benefit and extraordinary item............. (812) (15,821) (36,337)
Income tax benefit (Note K)................................................... -- 4,664 12,027
-------- -------- --------
(Loss) before extraordinary item.................................... (812) (11,157) (24,310)
Extraordinary item, gain on early extinguishment of debt (Note G)............. 6,864 -- --
-------- -------- --------
Net income (loss)................................................... 6,052 (11,157) (24,310)
Preferred stock dividends and accretion....................................... -- (9,519) (19,037)
-------- -------- --------
Net income (loss) applicable to common stock.................................. $ 6,052 $(20,676) $(43,347)
-------- -------- --------
-------- -------- --------
Basic and diluted earnings (loss) per common share:
Loss before extraordinary item........................................... $ (0.12) $ (2.94) $ (6.17)
Extraordinary item....................................................... 0.98 -- --
-------- -------- --------
Earnings (loss) per common share.............................................. $ 0.86 $ (2.94) $ (6.17)
-------- -------- --------
-------- -------- --------
Weighted-average common shares outstanding.................................... 7,030,000 7,030,000 7,030,000
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------ ---------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at December 31, 1994..................................... $ 70 $ 2,253 $ (44,939) $(42,616)
Net income.................................................. -- -- 6,052 6,052
------ ---------- ----------- --------
Balance at December 31, 1995..................................... $ 70 $ 2,253 $ (38,887) $(36,564)
Allocation of proceeds from sale of exchangeable redeemable
senior preferred stock to initial warrants................ -- 9,000 -- 9,000
Accretion to exchangeable redeemable senior preferred stock
(Note F).................................................. -- (2,205) -- (2,205)
Financial costs related to the sale of preferred stock...... -- (3,322) -- (3,322)
Reclassification of accumulated deficit due to change in
income tax status......................................... -- (41,073) 41,073 --
Dividends on preferred stock................................ -- -- (7,313) (7,313)
Net (loss).................................................. -- -- (11,157) (11,157)
------ ---------- ----------- --------
Balance at December 31, 1996..................................... $ 70 $(35,347) $ (16,284) $(51,561)
Accretion to exchangeable redeemable senior preferred stock
(Note F).................................................. -- (4,845) -- (4,845)
Dividends on preferred stock................................ -- -- (14,192) (14,192)
Net (loss).................................................. -- -- (24,310) (24,310)
------ ---------- ----------- --------
Balance at December 31, 1997..................................... $ 70 $(40,192) $ (54,786) $(94,908)
------ ---------- ----------- --------
------ ---------- ----------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1995 1996 1997
-------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating
activities
Net income (loss)........ $ 6,052 $ (11,157) $(24,310)
Adjustments to
reconcile net
income (loss) to
net cash provided
by operating
activities:
Amortization of
program
broadcast
rights....... 2,162 4,399 6,401
Depreciation
and
amortization... 3,297 13,839 20,971
(Gain) on early
extinguishment
of debt...... (6,864) -- --
Amortization
and write-off
of
intangibles
and deferred
loan costs... 2,425 7,617 15,779
Amortization of
note
discount..... -- 6,870 13,275
Payment of
deferred and
contingent
interest..... (4,406) -- --
Payment of
prepayment
premiums..... (2,749) -- --
Deferred income
taxes........ -- (4,759) (12,376)
Other.......... 32 -- 610
Changes in operating
assets and liabilities,
net of effects of
acquisitions:
Receivables.... (4,574) (722) (2,603)
Due to
sellers...... -- 2,188 (153)
Prepaid
expenses and
other........ (48) (266) (206)
Payments on
program
broadcast
rights
payable...... (2,132) (3,318) (5,937)
Accounts
payable and
accrued
expenses..... 4,738 3,566 (2,281)
Deferred
revenue...... 4,750 (414) (699)
Deferred and
contingent
interest
payable...... 567 -- --
-------------- -------------- --------------
Net cash
provided
by
operating
activities.. 3,250 17,843 8,471
-------------- -------------- --------------
Cash flows from investing
activities
Purchase of property and
equipment.............. (1,479) (4,165) (6,174)
Proceeds from sale of
equipment.............. 426 207 103
Payment for acquisition
of stations............ (26,699) (322,082) --
Deposit on acquisition
and acquisition
costs.................. (3,225) -- --
Purchase of other
assets................. -- (671) (211)
Other.................... 5 79 --
-------------- -------------- --------------
Net cash
(used
in)
investing
activities.. (30,972) (326,632) (6,282)
-------------- -------------- --------------
Cash flows from financing
activities
Principal payments on
notes payable.......... (96,351) (3,647) (14,864)
Proceeds from issuance of
preferred stock........ -- 105,000 --
Proceeds from long-term
borrowing.............. 135,000 218,178 10,000
Payment of debt and
preferred stock
acquisition costs...... (5,876) (12,319) (2,768)
-------------- -------------- --------------
Net cash
provided
by (used
in) financing
activities... 32,773 307,212 (7,632)
-------------- -------------- --------------
Increase (decrease) in cash
and cash equivalents........ $ 5,051 $ (1,577) $ (5,443)
Cash and cash equivalents:
Beginning................ 4,617 9,668 8,091
-------------- -------------- --------------
Ending................... $ 9,668 $ 8,091 $ 2,648
-------------- -------------- --------------
-------------- -------------- --------------
(Continued)
</TABLE>
F-6
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1995 1996 1997
-------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Supplemental Disclosure of
Cash Flow Information:
Cash payments for
interest............... $ 13,654 $ 20,945 $ 30,489
Cash payments for income
taxes.................. -- -- 432
-------------- -------------- --------------
-------------- -------------- --------------
Supplemental Schedule of
Noncash Investing and
Financing Activities:
Acquisition of program
broadcast rights....... $ 2,558 $ 4,630 $ 6,340
Notes payable incurred
for purchase of
equipment.............. 197 1,067 4,271
Equipment acquired by
barter transactions.... 332 161 388
Dividends accrued on
redeemable preferred
stock.................. -- 7,313 14,192
Accretion to exchange
redeemable senior
preferred stock........ -- 2,205 4,845
-------------- -------------- --------------
-------------- -------------- --------------
Acquisition of stations:
Cash purchase
price............. $ 26,699 $ 322,082 $--
-------------- -------------- --------------
-------------- -------------- --------------
Net working capital
acquired,
excluding cash of
$536 in 1996...... $-- $ 9,982 $--
Property and
equipment acquired
at fair market
value............. 7,533 72,578 --
Intangible assets
acquired.......... 21,306 300,559 --
Deferred income
taxes assumed..... -- (58,026) --
Other, net.......... (140) 214 --
-------------- -------------- --------------
28,699 325,307 --
Less: Application of
advance to
affiliate......... (2,000) -- --
Less: Amount paid in
1995.............. -- (3,225) --
-------------- -------------- --------------
$ 26,699 $ 322,082 $--
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
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
with minimal operations other than from its wholly-owned subsidiary, Benedek
Broadcasting Corporation ('Benedek Broadcasting'). Benedek Broadcasting owns and
operates twenty-three television stations (the 'Stations') located throughout
the United States. The operating revenues of the Stations 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 barter
transactions for goods and services. 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 of the Company include the accounts
of the Company and its wholly-owned subsidiary, Benedek Broadcasting and its
wholly-owned subsidiary, Benedek License Corporation ('BLC'). All significant
intercompany items and transactions have been eliminated in consolidation.
The Company was formed on April 10, 1996. Benedek Broadcasting and the
Company had identical stock ownership, so the capitalization of the Company by
the stockholder of Benedek Broadcasting was accounted for in a manner similar to
pooling-of-interests accounting. These consolidated financial statements include
the consolidated financial statements of Benedek Broadcasting for the period
prior to June 6, 1996 recast to reflect the difference in par value of the
Company's and Benedek Broadcasting's stock.
SIGNIFICANT ACCOUNTING POLICIES
(1) Accounting estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in 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.
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 limits. The Company 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 revenues primarily relate to compensation due from the network and
national sales representatives at the inception of the network affiliation
agreement and the national sales representative agreements, respectively. These
revenues are recognized over the life of the agreement on a straight-line
method. Since these payments are earned over the life of the respective
agreements, the network affiliation payment is recognized over ten years and the
national sales representative payments are recognized over five 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
F-8
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 amortized 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 assets 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.
(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. Costs incurred in connection with the issuance of
preferred stock are included in stockholder's deficit as a permanent reduction
of additional paid-in capital.
Acquisition costs are amounts incurred in connection with acquiring
additional television stations. Costs incurred in connection with acquisitions
which are not consummated are expensed at the point of time when the negotiation
on the acquisition ceases. The acquisition costs related to successful
acquisitions are treated as part of the purchase price and are allocated to the
assets purchased.
(7) Property and equipment and intangible assets
(a) 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....................................................................... 1-5
</TABLE>
Gains and losses on the disposition of property and equipment are
insignificant and included in depreciation and amortization on the consolidated
statement of operations.
(b) 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.
(c) The Company reviews its property and equipment and intangibles annually
to determine potential impairment by comparing the carrying value of the assets
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 assets to the appraisal value if the appraisal value is
less than the carrying value.
(8) Other interest expense
Other interest expense includes interest due to the increase in the
warrants to purchase Benedek Broadcasting common stock (which were redeemed in
1995), contingent equity value, accrued interest added to long-term debt
balances, deferred loan cost amortization and write offs, financing costs not
consummated, and accretion of discounts.
F-9
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(9) Income taxes
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences, operating losses and
tax credit carryforwards. Deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment. Reference
should also be made to (Note K) regarding a change in tax status in 1996 and the
recording of deferred taxes upon change in status.
The Company and its subsidiaries file a consolidated federal income tax
return.
(10) Interest rate cap agreement
Interest rate cap agreements are used to manage interest rate exposure by
hedging certain liabilities. Income and expense are accrued under the terms of
the agreement based on the expected settlement payments and are recorded as a
component of interest income or expense. The premium paid for the interest rate
cap is being amortized on a straight line method.
(11) Employee benefits
The Company has a defined contribution plan covering all eligible
employees. The Company's 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. Insurance coverage is
maintained by the Company for claims in excess of specific and annual aggregate
limits.
Benedek Broadcasting has elected to continue accounting for stock-based
compensation under Accounting Principles Board Opinion No. 25.
(12) Earnings (loss) per common share
The FASB has issued Statement No. 128, Earnings per Share, which supersedes
APB Opinion No. 15. Statement No. 128 requires the presentation of earnings per
share by all entities that have common stock or potential common stock, such as
options, warrants and convertible securities, outstanding that trade in a public
market. Those entities that have only common stock outstanding are required to
present basic earnings per-share amounts. Basic per-share amounts are computed
by dividing income before extraordinary items and net income adjusted for
dividends declared on preferred stock (the numerator) by the weighted-average
number of common shares outstanding (the denominator). All other entities are
required to present basic and diluted per-share amounts. Diluted per-share
amounts assume the conversion, exercise or issuance of all potential common
stock instruments unless the effect is to reduce the loss or increase the income
per common share from continuing operations.
The Company initially applied Statement No. 128 for the year ended December
31, 1997. The Statement requires restatement of prior years per share
information, however, the adoption of this Statement did not have any effect on
the computation in prior years. The Company has no present dilutive per share
amounts as the effect of the potential stock instruments consisting of the stock
options, initial warrants and contingent warrants would be anti-dilutive.
(NOTE B) -- ACQUISITIONS, RELATED PARTY AND BUSINESS COMBINATIONS
On June 6, 1996, the Company completed two acquisitions. These acquisitions
included (i) the assets of the television broadcasting division of Stauffer
Communications, Inc., consisting of five television stations for a
F-10
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
total purchase price of $54,500,000 and (ii) all the issued and outstanding
capital stock of Brissette Broadcasting Corporation which owned and operated
eight television stations for a purchase price of $270,000,000.
On March 31, 1995, the Company acquired substantially all the assets of
WTVY-TV, a television station serving Dothan, Alabama and Panama City, Florida,
for an aggregate purchase price of approximately $28,699,000.
These acquisitions have been accounted for under the purchase method of
accounting. Accordingly, the results of operations of the acquired stations are
included in the consolidated financial statements since the date of the
respective acquisitions. The purchase price has been allocated to the acquired
assets and liabilities based on their relative fair values as of the closing
date. The excess of the purchase price over the net assets received from these
acquisitions is being amortized on a straight-line method over a period of 40
years.
The pro forma results of operations and earnings per share for the year
ended December 31, 1996 assuming the acquisitions had taken place on January 1,
1996, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
(IN THOUSANDS,
EXCEPT SHARE AND
PER SHARE DATA)
<S> <C>
Net revenue.......................................................................... $ 126,165
Operating expenses................................................................... 111,226
Financial expenses................................................................... 41,334
-----------------
(Loss) before income tax benefit and extraordinary item......................... (26,395)
Income tax benefit................................................................... 8,809
-----------------
Net (loss)...................................................................... $ (17,586)
Preferred stock dividends and amortization........................................... 17,345
-----------------
Net (loss) applicable to common shares.......................................... $ 34,931
-----------------
-----------------
Basic and diluted earnings (loss) per common share:
Loss before extraordinary item.................................................. $ (4.97)
-----------------
Extraordinary item.............................................................. --
Loss per common share........................................................... $ (4.97)
-----------------
-----------------
Weighted-average common shares outstanding........................................... 7,030,000
</TABLE>
(NOTE C) -- RELATED PARTY TRANSACTIONS AND SUBSEQUENT EVENT
(1) Benedek License Corporation
On April 18, 1996, Benedek Broadcasting formed BLC for the purpose of
holding the licenses and authorizations issued by the FCC in connection with the
operations of the Stations. Concurrently with the acquisitions described in
(Note B), Benedek Broadcasting Company, L.L.C., which had been formed in 1995
for the same purposes and which was holding the licenses of the nine Stations
then owned by Benedek Broadcasting, was merged into BLC with the result that all
licenses of the Stations after the merger and acquisitions discussed in (Note B)
are owned by BLC. This was accounted for in a manner similar to that in
pooling-of-interests accounting.
(2) Stock option agreements
In 1988 and 1995, the Company granted options whereby a key employee could
exercise these options to purchase 130,784 shares and 239,216 shares of common
stock, Class B, at exercise prices of $1.58 per share and $4.12 per share,
respectively, which was the fair market values on the respective grant dates.
These options entitled the key employee to shares representing 5% of the
outstanding common stock, Class B, of the Company after giving effect to the
issuance thereof and before the conversion of the initial or the contingent
warrants. The
F-11
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1988 and 1995 options were exercisable at any time and expire in 1998 and 2004,
respectively. As permitted under generally accepted accounting principles, the
Company accounts for the options under the provisions of APB Opinion No. 25 and
its related interpretations. Accordingly, no compensation cost has been
recognized for the grant of the options. Had compensation cost been determined
based on the fair value method proscribed in FASB Statement No. 123, the
reported net income (loss) and basic earnings (loss) per common share would have
been as follows:
<TABLE>
<CAPTION>
NET INCOME
(LOSS) BASIC
APPLICABLE EARNINGS
YEAR ENDED TO COMMON (LOSS)
DECEMBER 31, STOCK PER SHARE
- --------------------------------------------------------- -------------- ---------
(IN THOUSANDS)
<S> <C> <C>
1995.................................................. $ 5,668 $ 0.81
1996.................................................. (20,676) (2.94)
1997.................................................. (43,347) (6.17)
</TABLE>
In determining the pro forma amounts, the fair value per share for each
option for the 1995 grant was estimated to be $2.68 per share at the grant date
by using the Black-Scholes option-pricing model with the following assumptions:
no dividends will be paid on the common stock, Class B; a risk-free interest
rate of 6.3%; an expected life of nine years; and an expected price volatility
of 45%.
No options had been exercised prior to January 1, 1998 and all options
granted were outstanding at December 31, 1997. The following summarizes the
options outstanding, exercisable and the average exercise prices at the end of
each year.
<TABLE>
<CAPTION>
WEIGHTED
YEAR ENDED OPTIONS OPTIONS AVERAGE
DECEMBER 31, OUTSTANDING EXERCISABLE EXERCISE PRICE
- ------------------------------------------ ----------- ----------- --------------
<S> <C> <C> <C>
1994................................... 130,784 130,784 $ 1.58
1995................................... 370,000 370,000 3.22
1996................................... 370,000 370,000 3.22
1997................................... 370,000 370,000 3.22
</TABLE>
On January 1, 1998, the Company changed the exercise price for the options
to $1.50 per share based upon a method of valuation chosen by the Company.
Additionally, on January 1, 1998, the key employee exercised options to purchase
370,000 shares of common stock, Class B, of the Company for an aggregate
exercise price of $555,000. The key employee borrowed the funds necessary to pay
the exercise price from the Company, which loan is evidenced by a promissory
note which bears interest at the rate of 5.93% per annum and is payable on
December 31, 2007.
(3) Director Fees
The Company paid fees of approximately $567,000, $1,062,000 and $222,000
during the years ended December 31, 1995, 1996 and 1997, respectively, to the
law firm of Shack & Siegel, P.C., a partner of which serves as a director to the
Company, Benedek Broadcasting and BLC.
F-12
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(NOTE D) -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land and improvements........................................................... $ 5,823 $ 5,820
Buildings and improvements...................................................... 25,243 25,834
Towers.......................................................................... 14,772 15,058
Transmission and studio equipment............................................... 68,157 70,252
Office equipment................................................................ 7,026 8,139
Records and tapes............................................................... 144 145
Transportation equipment........................................................ 2,236 2,640
Construction in progress........................................................ 470 4,106
-------- --------
123,871 131,994
Less accumulated depreciation and amortization.................................. 39,850 58,183
-------- --------
$ 84,021 $ 73,811
-------- --------
-------- --------
</TABLE>
(NOTE E) -- INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Goodwill........................................................................ $167,631 $163,774
FCC licenses.................................................................... 123,539 120,525
Network affiliations............................................................ 61,508 59,857
Other........................................................................... 1,944 1,432
-------- --------
$354,622 $345,588
-------- --------
-------- --------
</TABLE>
Intangible assets are recorded net of accumulated amortization of
$19,729,000 and $29,569,000 as of December 31, 1996 and 1997, respectively.
(NOTE F) -- 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 by the Company to Benedek Broadcasting to finance the acquisitions.
(1) The Company sold 60,000 Units in a private placement, which generated
proceeds of $60,000,000. Each Unit consisted of (i) ten shares of Exchangeable
Redeemable Senior Preferred Stock, (ii) ten Initial Warrants, and (iii) 14.8
Contingent Warrants.
(i) Senior Preferred Stock -- The Company issued 600,000 shares of 15%
Exchangeable Redeemable Senior Preferred Stock due 2007 (the 'Senior
Preferred Stock'), 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) below. The Senior
Preferred Stock is being accreted to its initial liquidation preference of
$60,000,000 using the effective interest method from June 5, 1996 to July
1, 2000. The Company has the option to pay dividends quarterly at 15% of
the then effective liquidation preference 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. If redeemed prior to July 1, 2000, the
redemption
F-13
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
price is 115% of the then effective liquidation preference. Since it is
management's intention to redeem the Senior Preferred Stock prior to such
date, the amount of the redemption premium payable at such time is being
accreted as a constructive distribution from June 5, 1996 to July 1, 2000.
The Senior Preferred Stock is exchangeable into debentures (the 'Exchange
Debentures') at the Company's option, subject to certain conditions, in
whole on any scheduled dividend payment date. The Senior Preferred Stock
has been registered with the Securities and Exchange Commission pursuant to
a registration statement declared effective in October 1996.
(ii) Initial Warrants -- The Company issued 600,000 initial warrants
(the 'Initial Warrants') which expire on July 1, 2007. Each Initial Warrant
entitles the holder thereof to purchase one share of Class A Common Stock
at an exercise price of $0.01 per share. The value of the Initial Warrants
at the date of issuance was $9,000,000 which was allocated to paid-in
capital.
(iii) Contingent Warrants -- The Company issued 888,000 contingent
warrants (the '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 Senior Preferred Stock
and will not be delivered out of escrow unless the Senior Preferred Stock
is not redeemed on or prior to July 1, 2000. Since it is management's
intention to redeem the 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) Junior Preferred Stock -- The Company issued 450,000 shares of Seller
Junior Discount Preferred Stock due July 1, 2008 (the 'Junior Preferred Stock')
with an aggregate liquidation preference equal to the proceeds of $45,000,000.
Dividends are payable to the holders of the Junior Preferred Stock at 7.92% per
annum, cumulative until the fifth anniversary of the issuance thereof and
thereafter at increasing rates up to 18%. Since the Company intends to redeem
the Junior Preferred Stock prior to the fifth anniversary, dividends are being
accrued at the initial rate. The dividends on the Junior Preferred Stock are
cumulative. Prior to June 1, 2001, dividend payments on the Junior Preferred
Stock are not permitted to 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 Junior 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) Discount Notes -- The Company issued Senior Subordinated Discount Notes
due 2006 (the 'Discount Notes') in the principal amount of $170,000,000. These
Discount Notes were issued at a discount of $79,822,000 which generated gross
proceeds of $90,178,000. The Discount 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 semiannually,
commencing November 15, 2001. On or after May 15, 2000, the Discount Notes are
redeemable at the option of the Company, in whole or in part, at predetermined
redemption prices and under specified conditions. The Discount Notes are
subordinated to all Senior Debt of the Company. The Discount Notes contain
various restrictive covenants. The Discount Notes have been registered with the
Securities and Exchange Commission pursuant to a registration statement declared
effective in October 1996.
F-14
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes these activities from June 5, 1996 through
December 31, 1997 as follows:
<TABLE>
<CAPTION>
SENIOR JUNIOR
PREFERRED PREFERRED DISCOUNT
STOCK STOCK NOTES
--------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Issuance of preferred stock........................................... $51,000 $45,000 $ --
Issuance of Discount Notes............................................ -- -- 90,178
Accrued dividends..................................................... 5,257 2,057 --
Accretion of initial discount and redemption prepayment premium....... 2,205 -- --
Accretion of note discount............................................ -- -- 6,870
--------- --------- --------
Balance at December 31, 1996.......................................... 58,462 47,057 97,048
Accrued dividends..................................................... 10,353 3,839 --
Accretion of initial discount and redemption prepayment premium....... 4,845 -- --
Accretion of note discount............................................ -- -- 13,275
--------- --------- --------
Balance at December 31, 1997.......................................... $73,660 $50,896 $110,323
--------- --------- --------
--------- --------- --------
</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 Discount Notes, (ii) redemption of and cash
dividends on the Senior Preferred Stock, and (iii) redemption of and cash
dividends on the Junior Preferred Stock 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.
NOTE G -- NOTES PAYABLE, INTEREST RATE CAP AND GAIN ON EXTINGUISHMENT OF DEBT
(1) Notes payable
(a) Term Loans and Revolver. As part of the financing transactions
described in Note F on June 6, 1996, Benedek Broadcasting entered into a new
credit agreement which included two Term Loan Facilities in an initial aggregate
principal amount of $128,000,000. This agreement was amended and restated as of
December 17, 1997 to convert the existing Term Loans to new Term Loans, to
modify certain financial covenants and ratios, to increase the revolving credit
facility to $15,000,000 and to replace certain parties to the agreement.
Associated with this amendment and change in lead banks, fees of $3,631,000 were
written off to other interest expense.
The outstanding principal balance at December 17, 1997 of $100,817,000 was
converted to (1) Term Loan (A) of $77,000,000 at the bank's base rate plus the
Applicable Margin or the Eurodollar rate plus the Applicable Margin (currently
8.69%) and (ii) Term Loan (B) of $33,817,000 at the bank's base rate plus 2.25%
per annum or the Eurodollar rate plus 3.25% per annum (currently 9.19%).
Applicable Margin is determined as a per annum percentage ranging from 0.75% to
2.75% by reference to the Leverage Ratio on such date. Interest is payable, at
Benedek Broadcasting's option, on either a one, two, three or six month period,
subject to certain conditions. Each Term Loan Facility provides for quarterly
principal payments until final maturity on December 31, 2004.
The credit agreement also includes a Revolving Credit Facility of
$15,000,000 which bears interest at the bank's base rate plus the Applicable
Margin or the Eurodollar rate plus the Applicable Margin. At December 31, 1997,
the outstanding balance on the revolver was $10,000,000 at 8.69%. The unused
portion of the Revolving Credit Facility bears interest at 0.5% per annum, paid
quarterly.
The credit agreement contains several mandatory principal prepayment or
permanent reductions of Revolving Loan Commitment provisions of which none were
applicable at December 31, 1997. The Term Loan
F-15
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Facilities also contain various restrictive covenants and require compliance
with certain financial ratios and covenants.
The Credit Agreement currently prohibits the Company from making cash
payments with respect to dividends on the Senior Preferred Stock and interest on
the Exchange Debentures, as applicable, at any time.
The Term Loan Facilities and the Revolving Credit Facility are guaranteed
by the Company and 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 collateralized by all of the stock of BLC
which is also collateral on the Senior Secured Notes which have an equal
position in the stock of BLC to the Term Loan Facilities.
(b) Senior Secured Notes. 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 ('the Dothan Station'), 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 the sales
of assets, among others.
The Senior Secured Notes are collateralized by all of the stock of BLC,
which is also collateral on the Term Loan Facilities which have an equal
position in the stock of BLC to the Senior Secured Notes. The Senior Secured
Notes are also collateralized by certain agreements and contract rights related
to the Stations which includes network affiliation agreements and certain
general intangibles.
(c) Other Notes. Other notes payable consist of multiple financing
agreements requiring monthly payments including interest ranging from 2.9% to
15.8% maturing from 1998 through 2002 collateralized by various assets of
Benedek Broadcasting.
Notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Senior Secured Notes............................................................ $135,000 $135,000
Revolving Credit Facility....................................................... -- 10,000
Term Loan A..................................................................... 67,500 77,000
Term Loan B..................................................................... 57,500 33,817
Discount Notes -- see (Note F) for terms........................................ 97,048 110,323
Other........................................................................... 1,186 4,777
-------- --------
358,234 370,917
Less current maturities......................................................... 14,015 13,480
-------- --------
$344,219 $357,437
-------- --------
-------- --------
</TABLE>
F-16
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1997, the notes provide for annual reductions as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (IN THOUSANDS)
- -----------------------------------------------------------------------------------------
<S> <C>
1998............................................................................ $ 13,480
1999............................................................................ 11,870
2000............................................................................ 13,787
2001............................................................................ 13,825
2002............................................................................ 15,315
Thereafter...................................................................... 302,640
--------------
$370,917
--------------
--------------
</TABLE>
(2) Interest rate cap
The Company entered into an interest rate cap agreement which matures in
May 1998, to reduce the impact of changes in interest rates on its floating-rate
long-term debt. That agreement effectively entitles the Company to receive from
a financial institution the amount, if any, by which the London Interbank Offer
Rate (LIBOR) exceeds 7.36% on a notional amount totaling $125,000,000 subject to
an amortization schedule. The $207,000 premium paid for this interest rate cap
is being amortized ratably to interest expense over the 18-month term of the
cap, and is reported as an other asset in the accompanying consolidated balance
sheets. LIBOR at December 31, 1997 was 5.94%.
Although the Company is exposed to credit loss in the event of
nonperformance by the counterparty on the interest rate cap, management does not
expect nonperformance by the counterparty. (Note M) describes the methods and
assumptions used in estimating the fair value of these instruments, and provides
a summary of the carrying amount and fair values of all of the Company's
financial instruments.
(3) Gain on early extinguishment of debt
In 1995, the Company recognized an extraordinary gain on early
extinguishment of debt consisting of subordinated capital notes issued in 1986
with detachable stock purchase warrants. The extraordinary gain of approximately
$11,128,000 was reduced by losses of approximately $1,140,000 from unrecognized
deferred loan costs, approximately $2,749,000 of prepayment premiums and
contingent payments, and $375,000 of unamortized debt discount, related to the
existing debt.
(NOTE H) -- PROGRAM BROADCAST RIGHTS PAYABLE
(1) Program broadcast rights and program broadcast rights payable consist of the
following:
<TABLE>
<CAPTION>
PROGRAM PROGRAM
BROADCAST BROADCAST
RIGHTS RIGHTS PAYABLE
--------- --------------
(IN THOUSANDS)
<S> <C> <C>
Balance at December 31, 1995................................................. $ 2,263 $ 2,675
Contracts acquired...................................................... 8,862 8,355
Amortization............................................................ (4,399) --
Payments................................................................ -- (3,318)
--------- --------------
Balance at December 31, 1996................................................. $ 6,726 $ 7,712
Contracts acquired...................................................... 6,340 6,340
Amortization............................................................ (6,401) --
Payments................................................................ -- (5,937)
--------- --------------
Balance at December 31, 1997................................................. $ 6,665 $ 8,115
--------- --------------
--------- --------------
</TABLE>
F-17
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(2) The current maturities of program broadcast rights payable consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Program contracts, due in varying installments through 2000................ $7,712 $8,115
Less current maturities.................................................... 6,120 6,762
------ ------
Long-term portion.......................................................... $1,592 $1,353
------ ------
------ ------
</TABLE>
The maturities of the program contracts are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- --------------------------------------------------------------------- (IN THOUSANDS)
<S> <C>
1998........................................................ $6,762
1999........................................................ 960
2000........................................................ 383
2001........................................................ 10
-------
$8,115
-------
-------
</TABLE>
In addition, the Company has entered into noncancellable commitments for
future program broadcast rights aggregating approximately $12,822,000 as of
December 31, 1997 with future payments as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (IN THOUSANDS)
- --------------------------------------------------------------------- --------------
<S> <C>
1998........................................................ $ 1,410
1999........................................................ 4,449
2000........................................................ 3,320
2001........................................................ 2,129
2002........................................................ 1,514
--------------
$ 12,822
--------------
--------------
</TABLE>
(NOTE I) -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Trade payables.......................................................... $ 1,364 $ 1,754
Barter, net............................................................. 443 85
Compensation and benefits............................................... 4,329 4,084
Interest................................................................ 7,240 5,747
Other................................................................... 1,993 1,807
------- -------
$15,369 $13,477
------- -------
------- -------
</TABLE>
(NOTE J) -- LEASES
The Company leases land, office space and office and transportation
equipment under agreements which expire from 1998 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. The Company 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.
F-18
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The approximate total minimum rental commitments at December 31, 1997 under
these leases are due as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (IN THOUSANDS)
- --------------------------------------------------------------------- --------------
<S> <C>
1998........................................................ $1,060
1999........................................................ 754
2000........................................................ 467
2001........................................................ 368
2002........................................................ 348
Thereafter.................................................. 507
-------
$3,504
-------
-------
</TABLE>
Total rental expense under these agreements and other monthly rentals for
the years ended 1995, 1996 and 1997 was approximately $626,000, $1,064,000 and
$1,416,000, respectively.
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
1995, 1996 and 1997 was approximately $324,000, $680,000 and $1,030,000,
respectively.
(NOTE K) -- INCOME TAX MATTERS AND CHANGE IN TAX STATUS
Prior to the consummation of the acquisitions and the related financing in
1996, 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 accounted 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 recognized
a net deferred tax asset of approximately $3,550,000. Concurrent with the change
in tax status the accumulated deficit of $41,073,000 which existed on that date
was reclassified to additional paid-in capital.
The deferred tax assets and liabilities, resulting primarily from the
acquisitions explained in (Note B) consist of the following components:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Loss carryforwards.......................................................... $ 3,769 $ 7,360
Receivable allowances and accruals.......................................... 1,050 1,003
Network agreements.......................................................... 2,057 1,777
Original issue discount..................................................... 2,722 8,058
-------- --------
9,598 18,198
-------- --------
Deferred tax liabilities:
Property and equipment...................................................... 14,307 11,748
Intangibles................................................................. 48,558 47,341
-------- --------
62,865 59,089
-------- --------
Net deferred tax liability.................................................. $(53,267) $(40,891)
-------- --------
-------- --------
</TABLE>
F-19
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The income tax benefit consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1997
------ -------
(IN THOUSANDS)
<S> <C> <C>
Current tax expense................................................................ $ (95) $ (349)
Deferred tax benefit............................................................... 4,759 12,376
------ -------
$4,664 $12,027
------ -------
------ -------
</TABLE>
Under the provisions of the Internal Revenue Code, the Company and its
subsidiaries have approximately $18,400,000 of actual net operating loss
carryforwards available to offset future tax liabilities which expire in 2007
through 2011.
A reconciliation of the statutory federal income tax rate to the Company's
effective tax rate is as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Computed 'expected' income tax benefit.................................... (35.0)% (35.0)% (35.0)%
Increase (decrease) resulting from:
State income taxes, net of federal effect............................ -- (5.0) (5.0)
(Income) loss allocated to stockholder due to 'S' corporation
status............................................................. (36.2) 5.2 --
Nondeductible amortization and expenses.............................. 71.2 7.1 5.1
Other, net........................................................... -- (1.8) 1.8
------ ------ ------
Effective tax rate........................................................ -- (29.5)% (33.1)%
------ ------ ------
------ ------ ------
</TABLE>
(NOTE L) -- PREFERRED STOCK
The Board of Directors of the Company has authorized 2,500,000 shares of
preferred stock of which 1,050,000 was issued in conjunction with the financing
discussed in (Note F). The Board has the right and ability to set the terms and
preferences of the preferred stock. The Board has not set the terms and
preferences of the remaining 1,450,000 unissued shares.
(NOTE M) -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been estimated by the
Company using available market information and appropriate valuation
methodologies as discussed below. Considerable judgment was required, however,
to interpret market data to develop the estimates of fair value. Accordingly,
the estimates presented below are not necessarily indicative of the amounts the
Company could realize in a current market exchange.
Cash and cash equivalents, current receivables, current payables, the
interest rate cap agreement have carrying values which approximate fair value
because of the short-term nature of those instruments. The floating rate
long-term debt carrying amount approximates fair value because the interest rate
fluctuates with the bank's lending rate.
F-20
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table shows the carrying amounts and estimated fair values of
other financial instrument liabilities and other off-balance sheet activities at
December 31, 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Program broadcast rights payable.................. $ 7,712 $ 7,552 $ 8,115 $ 7,967
Other notes payable............................... 1,186 1,186 4,777 4,777
Senior Secured Notes.............................. 135,000 138,375 135,000 153,900
Discount Notes.................................... 97,048 97,750 110,323 130,475
Senior Preferred Stock............................ 58,462 58,462 73,660 73,660
Junior Preferred Stock............................ 47,057 31,711 50,896 37,306
Initial Warrants.................................. 7,826 2,800 6,874 900
</TABLE>
The fair value of program broadcast rights payable and other notes payable
were estimated using the discounted cash flow method.
The fair value of the Discount Notes and Senior Secured Notes was estimated
using readily available quoted market prices.
The fair value of the Senior Preferred Stock approximates carrying value
based upon discounting the contractual cash flows including the redemption
prepayment premium related to the optional redemption right that the Company
intends to exercise, using estimated market discount rates which reflect the
interest rate and other risks inherent in the instrument.
The fair value of the Junior Preferred Stock is estimated using discounted
cash flow analyses, based on the interest rate, preferences and other risks
inherent in the instrument.
The fair value of the Initial Warrants as of December 31, 1996 was
estimated as 7.5% of the multiple of the broadcast cash flow less interest
bearing debt. The fair value of the Initial Warrants as of December 31, 1997 was
estimated based on a method of valuation chosen by the Company.
The fair value of the Contingent Warrants was not estimated because it is
management's intention to redeem the Senior Preferred Stock prior to any release
of the Contingent Warrants from escrow.
The above fair value estimates were made at a discrete point in time based
on relevant market information and other assumptions about the financial
instruments. As no active market exists for a significant portion of the
Company's financial instruments, fair value estimates were based on judgments
regarding current economic conditions, future expected cash flows, risk
characteristics and other factors. These estimates are subjective in nature and
involve uncertainties and, therefore, cannot be calculated with precision.
Changes in assumptions could significantly affect these estimates.
(NOTE N) -- YEAR 2000 ISSUE
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 Issue, and is
developing an implementation plan to resolve the issue. The issue is whether
computer systems will properly recognize date-sensitive information when the
year changes to 2000. Systems that do not properly recognize such information
could generate erroneous data or cause a system to fail.
Based on the review of the computer systems, management does not believe
the cost of remediation will be material to the Company's financial statements.
F-21
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(NOTE O) -- PENDING ADOPTION OF ACCOUNTING STANDARDS
The FASB (Financial Accounting Standards Board) has issued two new
pronouncements that the Company will be required to adopt for its year ending
December 31, 1998. These pronouncements are not expected to have a significant
impact on the Company's financial statements.
FASB Statement No. 130 'Reporting Comprehensive Income' establishes
standards for reporting and display of comprehensive income and its components
in the financial statements. This statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. This statement requires that
a company (a) classify terms of other comprehensive income by their nature in a
financial statement, and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. The Company
currently has no items of comprehensive income.
FASB Statement No. 131 'Disclosures about Segments of an Enterprise and
Related Information' establishes standards for reporting information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial reports
issued to stockholders. Operating segments are components of an enterprise about
which separate financial information is available and evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance.
F-22
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED FINANCIAL INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 1998
F-23
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, 1998
-----------------------------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE DATA)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................. $ 3,095
Receivables
Trade, net........................................................... 21,705
Other................................................................ 875
Current portion of program broadcast rights............................... 3,644
Prepaid expenses.......................................................... 2,199
Deferred income taxes..................................................... 1,000
-----------
Total current assets................................................. 32,518
-----------
Property and equipment......................................................... 71,200
-----------
Intangible assets.............................................................. 342,893
-----------
Other assets
Program broadcast rights, less current portion............................ 1,477
Deferred loan costs....................................................... 9,772
Land held for sale........................................................ 109
Other..................................................................... 78
-----------
11,436
-----------
$ 458,047
-----------
-----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of notes payable....................................... $ 18,888
Current program broadcast rights payable.................................. 5,419
Accounts payable and accrued expenses..................................... 8,141
Deferred revenue.......................................................... 681
-----------
Total current liabilities............................................ 33,129
-----------
Long-term obligations
Notes and leases payable.................................................. 358,640
Program broadcast rights payable.......................................... 1,099
Deferred revenue.......................................................... 3,586
Deferred income taxes..................................................... 38,074
-----------
401,399
-----------
Exchangeable redeemable senior preferred stock................................. 77,863
-----------
Seller junior discount preferred stock......................................... 51,904
-----------
Stockholders' deficit:
Common stock, Class A $0.01 par value, 25,000,000 authorized none issued
or outstanding.......................................................... --
Common stock, Class B $0.01 par value, 25,000,000 authorized, 7,400,000
issued and outstanding for 1998......................................... 74
Additional paid-in capital................................................ (40,999)
Accumulated deficit....................................................... (64,760)
Stockholder's note receivable (Note B).................................... (563)
-----------
(106,248)
-----------
$ 458,047
-----------
-----------
</TABLE>
F-24
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
1997 1998
-------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
SHARE AND PER SHARE
DATA)
<S> <C> <C>
Net revenues............................................................................ $ 28,078 $ 30,695
-------- --------
Operating expenses:
Selling, technical and program expenses............................................ 14,690 15,400
General and administrative......................................................... 4,716 5,233
Depreciation and amortization...................................................... 7,747 7,788
Corporate.......................................................................... 696 1,377
-------- --------
27,849 29,798
-------- --------
Operating income.............................................................. 229 897
-------- --------
Financial income (expense):
Interest expense:
Cash interest................................................................. (7,076) (6,851)
Other interest................................................................ (3,608) (4,021)
-------- --------
(10,684) (10,872)
Interest income.................................................................... 40 34
-------- --------
(10,644) (10,838)
-------- --------
(Loss) before income tax benefit.............................................. (10,415) (9,941)
Income tax benefit...................................................................... 3,776 3,810
-------- --------
Net (loss)............................................................... (6,639) (6,131)
Preferred stock dividends and accretion................................................. (4,376) (5,210)
-------- --------
Net (loss) applicable to common stock................................................... $(11,015) $(11,341)
-------- --------
-------- --------
Basic and diluted (loss) per common share:
(Loss) per common share............................................................ $(1.57) $(1.53)
------ ------
------ ------
Weighted-average common shares outstanding.............................................. 7,030,000 7,400,000
--------- ---------
--------- ---------
</TABLE>
F-25
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
ADDITIONAL STOCKHOLDER'S
COMMON PAID-IN ACCUMULATED NOTE
STOCK CAPITAL DEFICIT RECEIVABLE TOTAL
------ ---------- ----------- ------------ ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997...................... $ 70 $(40,192) $ (54,786) $ -- $ (94,908)
Accretion to exchangeable redeemable senior
preferred stock............................ -- (1,366) -- -- (1,366)
Dividends on preferred stock................. -- -- -- -- (3,843)
Stock options exercised in exchange for note
(Note B)................................... 4 559 -- (563) --
Net (loss)................................... -- -- (6,131) -- (6,131)
------ ---------- ----------- ------------ ---------
Balance at March 31, 1998......................... $ 74 $(40,999) $ (64,760) $ (563) $(106,248)
------ ---------- ----------- ------------ ---------
------ ---------- ----------- ------------ ---------
</TABLE>
F-26
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------
1997 1998
------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities
Net (loss)............................................................................. $(6,639) $(6,131)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating
activities:
Amortization of program broadcast rights..................................... 1,559 1,698
Depreciation and amortization................................................ 5,290 5,357
Amortization and write-off of intangibles and deferred loan costs............ 2,948 2,924
Amortization of note discount................................................ 3,117 3,543
Deferred income taxes........................................................ (4,005) (3,817)
Other........................................................................ (18) (83)
Changes in operating assets and liabilities:
Receivables.................................................................. 3,558 4,153
Due to sellers............................................................... (52) --
Prepaid expenses and other................................................... (620) (540)
Payments on program broadcast rights payable................................. (1,422) (1,752)
Accounts payable and accrued expenses........................................ (5,597) (5,081)
Deferred revenue............................................................. (189) (175)
------- -------
Net cash provided by (used in) operating activities..................... (2,070) 96
------- -------
Cash flows from investing activities
Purchase of property and equipment..................................................... (572) (2,015)
Proceeds from sale of equipment........................................................ 4 54
Other.................................................................................. (2) --
------- -------
Net cash (used in) investing activities................................................ (570) (1,961)
------- -------
Cash flows from financing activities
Principal payments on notes payable.................................................... (108) (2,255)
Net financing fees incurred by parent.................................................. -- --
Proceeds from long-term borrowing...................................................... -- 4,601
Payment of debt and preferred stock acquisition costs.................................. (479) (34)
------- -------
Net cash provided by (used in) financing activities..................... (587) 2,312
------- -------
Increase (decrease) in cash and cash equivalents........................ (3,227) 447
Cash and cash equivalents:
Beginning.................................................................... 8,091 2,648
------- -------
Ending....................................................................... $ 4,864 $ 3,095
------- -------
------- -------
Supplemental disclosure of cash flow information:
Cash payments for interest............................................................. $11,373 $10,785
Cash payments for income taxes......................................................... 254 15
------- -------
------- -------
Supplemental schedule of noncash investing and financing activities:
Acquisition of program broadcast rights................................................ $ 219 $ 155
Notes payable incurred for purchase of equipment....................................... 759 722
Equipment acquired by barter transactions.............................................. 24 80
Dividends accrued on redeemable preferred stock........................................ 3,379 3,843
Accretion to exchange redeemable senior preferred stock................................ 997 1,366
Stock options exercised in exchange for note receivable..................................... -- 563
------- -------
------- -------
</TABLE>
F-27
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE A) -- NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS:
Benedek Communications Corporation (the 'Company') is a holding company
with minimal operations other than from its wholly-owned subsidiary, Benedek
Broadcasting Corporation ('Benedek Broadcasting'). Benedek Broadcasting owns and
operates twenty-three television stations (the 'Stations') located throughout
the United States. The operating revenues of the Stations 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 barter
transactions for goods and services. 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 of the Company include the accounts
of the Company and its wholly-owned subsidiary, Benedek Broadcasting and its
wholly-owned subsidiary, Benedek License Corporation ('BLC'). All significant
intercompany items and transactions have been eliminated in consolidation.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for the fair presentation of the
financial position as of March 31, 1998 and the results of operations for the
three months ended March 31, 1998 have been included. Operating results for the
three months ended March 31, 1998 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Annual Report on Form 10-K of the Company for the year
ended December 31, 1997.
(NOTE B) -- STOCK OPTION AGREEMENTS
In 1988 and 1995, the Company granted options whereby a key employee could
exercise these options to purchase 130,784 shares and 239,216 shares of common
stock, Class B, at exercise prices of $1.58 per share and $4.12 per share,
respectively, which was the fair market values on the respective grant dates.
These options entitled the key employee to shares representing 5% of the
outstanding common stock, Class B, of the Company after giving effect to the
issuance thereof and before the conversion of the initial or the contingent
warrants. The 1988 and 1995 options were exercisable at any time and expire in
1998 and 2004, respectively. As permitted under generally accepted accounting
principles, the Company accounts for the options under the provisions of APB
Option No. 25 and its related interpretations. Accordingly, no compensation cost
has been recognized for the grant of the options.
On January 1, 1998, the Company changed the exercise price for the options
to $1.50 per share based upon a method of valuation chosen by the Company.
Additionally, on January 1, 1998, the key employee exercised options to purchase
370,000 shares of common stock, Class B, of the Company for an aggregate
exercise price of $555,000. The key employee borrowed the funds necessary to pay
the exercise price from the Company, which loan is evidenced by a promissory
note which bears interest at the rate of 5.93% per annum, is payable as and when
such shares are sold and in any event no later than on December 31, 2007, and is
included as an addition to paid-in capital.
F-28
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(NOTE C) -- PENDING ADOPTION OF ACCOUNTING STANDARDS
The FASB (Financial Accounting Standards Board) has issued two new
pronouncements that the Company will be required to adopt for its year ending
December 31, 1998. These pronouncements are not expected to have a significant
impact on the Company's financial statements.
FASB Statement No. 130 'Reporting Comprehensive Income' establishes
standards for reporting and display of comprehensive income and its components
in the financial statements. This statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. This statement requires that
a company (a) classify terms of other comprehensive income by their nature in a
financial statement, and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. The Company
currently has no items of comprehensive income.
FASB Statement No. 131 'Disclosures about Segments of an Enterprise and
Related Information' establishes standards for reporting information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial reports
issued to stockholders. Operating segments are components of an enterprise about
which separate financial information is available and evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance.
F-29
<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................................ 4
Disclosure Regarding Forward-Looking Statements...... 4
Certain Definitions.................................. 5
Market and Industry Data............................. 6
Summary.............................................. 7
Risk Factors......................................... 18
Use of Proceeds...................................... 25
Selected Financial Data.............................. 26
Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 29
The Exchange Offer................................... 39
Business............................................. 46
Management........................................... 75
Stock Ownership...................................... 78
Certain Relationships and Related Transactions....... 78
Description of Indebtedness.......................... 79
Description of the Exchangeable Preferred Stock and
Exchange Debentures................................ 81
Description of Capital Stock......................... 114
Certain Federal Income Tax Consequences.............. 117
Book-Entry; Delivery and Form........................ 124
Plan of Distribution................................. 125
Legal Matters........................................ 126
Experts.............................................. 126
Index to Financial Statements........................ F-1
</TABLE>
UNTIL , 1998 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.
_____________________________________ _____________________________________
OFFER TO EXCHANGE
ALL OUTSTANDING
11 1/2% SENIOR EXCHANGEABLE
PREFERRED STOCK
FOR
11 1/2% SENIOR EXCHANGEABLE
PREFERRED STOCK
OF
BENEDEK COMMUNICATIONS
CORPORATION
------------------
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 persons.
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 Benedek Communications Corporation, as amended, incorporated by reference
to Exhibit 3.1 to Benedek Communications Corporation's Registration Statement on Form S-4, File No.
333-09529, filed on August 2, 1996 (the 'S-4 Registration Statement').
3.2 -- By-laws of Benedek Communications Corporation, incorporated by reference to Exhibit 3.2 to the S-4
Registration Statement.
3.3 -- Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 11 1/2% Senior Exchangeable Preferred Stock 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,
incorporated by reference to Exhibit 3.4 to the S-4 Registration Statement.
4.1 -- Indenture dated as of May 15, 1996 between Benedek Communications Corporation and United States Trust
Company of New York, relating to the 13 1/4% Senior Subordinated Discount Notes due 2006, incorporated by
reference to Exhibit 4.1 to the S-4 Registration Statement.
4.2 -- Form of 13 1/4% Senior Subordinated Discount Note due 2006 (included in Exhibit 4.1 hereof), incorporated
by reference to Exhibit 4.2 to the S-4 Registration Statement.
4.3 -- Indenture dated as of March 1, 1995 between Benedek Broadcasting Corporation and The Bank of New York,
relating to the 11 7/8% Senior Secured Notes due 2005 of Benedek Broadcasting Corporation, incorporated by
reference to Exhibit 4.3 to the S-4 Registration Statement.
4.4 -- Form of 11 7/8% Senior Secured Note due 2005 of Benedek Broadcasting Corporation (included in Exhibit 4.3
hereof), incorporated by reference to Exhibit 4.4 to the S-4 Registration Statement.
4.5 -- First Supplemental Indenture dated as of June 6, 1996 among Benedek Broadcasting Corporation, Benedek
License Corporation and The Bank of New York, incorporated by reference to Exhibit 4.3 to Benedek
Broadcasting Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996.
4.6 -- Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 11 1/2% Senior Exchangeable Preferred Stock and Qualifications, Limitations and
Restrictions thereof (filed as Exhibit 3.3 hereof).
</TABLE>
II-1
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<C> <S>
4.7 -- 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), incorporated by reference to Exhibit 4.6 to the S-4 Registration Statement.
4.8 -- 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, incorporated by reference to Exhibit 4.7 to the
S-4 Registration Statement.
4.9 -- Form of Exchange Debenture relating to the 11 1/2% Exchange Debentures which may be issued, under certain
circumstances, in exchange for the 11 1/2% Senior Exchangeable Preferred Stock of Benedek Communications
Corporation.
5 -- Opinion of Shack & Siegel, P.C., counsel for Benedek Communications Corporation.
8 -- Opinion of Whitman Breed Abbott & Morgan LLP, tax counsel for Benedek Communications Corporation.
10.1 -- Purchase Agreement dated as of May 7, 1998 among Benedek Communications Corporation, TD Securities (USA)
Inc. and BT Alex. Brown Incorporated.
10.2 -- Exchange and Registration Rights Agreement dated as of May 7, 1998 among Benedek Communications
Corporation, TD Securities (USA) Inc. and BT Alex. Brown Incorporated with respect to the 11 1/2% Senior
Exchangeable Preferred Stock of Benedek Communications Corporation.
10.3 -- Warrant Agreement dated as of June 5, 1996 between Benedek Communications Corporation and IBJ Schroder
Bank & Trust Company (filed as Exhibit 4.8 hereof), incorporated by reference to Exhibit 10.5 to the S-4
Registration Statement.
10.4 -- Common Stock Registration Rights Agreement dated as of June 5, 1996 among Benedek Communications
Corporation, Goldman, Sachs & Co. and BT Securities Corporation, incorporated by reference to Exhibit 10.7
to the S-4 Registration Statement.
10.5 -- Amended and Restated Credit Agreement dated as of December 17, 1997 among Benedek Communications
Corporation, Benedek Broadcasting Corporation, the Lenders listed therein and Bankers Trust Company, as
Agent, incorporated by reference to Exhibit 10.8 to Benedek Communications Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 (the '1997 10-K').
10.6 -- Amended and Restated Guaranty dated as of December 17, 1997 by Benedek Communications Corporation in
favor of Bankers Trust Company, incorporated by reference to Exhibit 10.9 to the 1997 10-K.
10.7 -- Amended and Restated Guaranty dated as of December 17, 1997 by Benedek License Corporation in favor of
Bankers Trust Company, incorporated by reference to Exhibit 10.10 to the 1997 10-K.
10.8 -- Amended and Restated Pledge Agreement dated as of December 17, 1997 between Benedek Communications
Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.11 to the 1997 10-K.
10.9 -- Amended and Restated Security Agreement dated as of December 17, 1997 between Benedek Communications
Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.12 to the 1997 10-K.
10.10 -- Amended and Restated Accounts Receivable Security Agreement dated as of December 17, 1997 between Benedek
Broadcasting Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.13 to the 1997
10-K.
10.11 -- Amended and Restated Acquired Assets Security Agreement dated as of December 17, 1997 between Benedek
Broadcasting Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.14 to the 1997
10-K.
10.12 -- Amended and Restated Tangible Assets Security Agreement dated as of December 17, 1997 between Benedek
Broadcasting Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.15 to the 1997
10-K.
10.13 -- Amended and Restated Collateral Account Agreement dated as of December 17, 1997 between Benedek
Communications Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.16 to the
1997 10-K.
10.14 -- Master Assignment Agreement dated as of December 17, 1997 among Benedek Communications Corporation,
Benedek Broadcasting Corporation, Canadian Imperial Bank of Commerce, New York Agency, and the Financial
Institutions listed therein, incorporated by reference to Exhibit 10.17 to the 1997 10-K.
10.15 -- Form of Indemnity Agreement between Benedek Communications Corporation and each of its executive officers
and directors, incorporated by reference to Exhibit 10.14 to the S-4 Registration Statement.
</TABLE>
II-2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<C> <S>
10.16 -- Employment Agreement dated as of June 6, 1996 between Benedek Broadcasting Corporation and A. Richard
Benedek, incorporated by reference to Exhibit 10.16 to the S-4 Registration Statement.
10.17 -- Employment Agreement dated as of June 6, 1996 between Benedek Broadcasting Corporation and K. James
Yager, incorporated by reference to Exhibit 10.17 to the S-4 Registration Statement.
10.18 -- Employment Agreement dated as of June 6, 1996 between Benedek Broadcasting Corporation and Ronald L.
Lindwall, incorporated by reference to Exhibit 10.19 to the S-4 Registration Statement.
10.19 -- Employment Agreement dated as of June 6, 1996 between Benedek Broadcasting Corporation and Terrance F.
Hurley, incorporated by reference to Exhibit 10.20 to the S-4 Registration Statement.
12 -- Statement of computation of ratio of earnings to fixed charges.
21 -- Subsidiaries of Benedek Communications Corporation.
23.1 -- Consent of Shack & Siegel, P.C. (included in Exhibit 5 hereof).
23.2 -- Consent of McGladrey & Pullen, LLP.
23.3 -- Consent of Whitman Breed Abbott & Morgan LLP (included in Exhibit 8 hereof).
24.1 -- Power of Attorney of Benedek Communications Corporation (included on page II-5 hereof).
99.1 -- Form of Letter of Transmittal relating to the 11 1/2% Senior Exchangeable Preferred Stock.
99.2 -- Form of Notice of Guaranteed Delivery relating to the 11 1/2% Senior Exchangeable Preferred Stock.
99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees relating to the
11 1/2% Senior Exchangeable Preferred Stock.
99.4 -- Form of Letter to Clients relating to the 11 1/2% Senior Exchangeable Preferred Stock.
</TABLE>
(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.
II-3
<PAGE>
<PAGE>
(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) 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 Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on June 9, 1998.
BENEDEK COMMUNICATIONS CORPORATION
(Registrant)
By: ______/s/ RONALD L. LINDWALL______
RONALD L. LINDWALL,
SENIOR VICE PRESIDENT-FINANCE, CHIEF
FINANCIAL OFFICER AND TREASURER
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby appoints K. James Yager and Ronald L. Lindwall, and each of them acting
singly, as his attorney-in-fact to sign in his behalf individually and in the
capacity as stated below and to file all amendments and post-effective
amendments to the Registration Statement, which amendment or amendments may make
such changes and additions to the Registration Statement as such
attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ --------------------------------------------- -------------------
<C> <S> <C>
/s/ A. RICHARD BENEDEK Chairman, Chief Executive Officer (Principal June 9, 1998
- ------------------------------------------ Executive Officer) and Director
A. RICHARD BENEDEK
/s/ K. JAMES YAGER President, Chief Operating Officer and June 9, 1998
- ------------------------------------------ Director
K. JAMES YAGER
/s/ RONALD L. LINDWALL Senior Vice President-Finance, Chief June 9, 1998
- ------------------------------------------ Financial Officer, Treasurer (Principal
RONALD L. LINDWALL Financial and Principal Accounting Officer)
and Director
/s/ JAY KRIEGEL Director June 9, 1998
- ------------------------------------------
JAY KRIEGEL
/s/ PAUL S. GOODMAN Director June 9, 1998
- ------------------------------------------
PAUL S. GOODMAN
</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 Subsidiaries
Rockford, Illinois
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The consolidated
supplemental schedule is presented for purposes of complying with the Securities
and Exchange Commission's rules and are not a part of the basic consolidated
financial statements. These schedules have been subjected to the auditing
procedures applied in our audits of the basic consolidated financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic consolidated financial statements taken as a whole.
/s/ McGLADREY & PULLEN, LLP
Rockford, Illinois
February 7, 1998
S-2
<PAGE>
<PAGE>
SCHEDULE II
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT BALANCES CHARGED TO BALANCE AT
BEGINNING ACQUIRED IN COSTS AND DEDUCTIONS END OF
OF PERIOD ACQUISITIONS EXPENSES DESCRIBED(1) PERIOD
---------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Deducted from asset account -- allowance for
doubtful accounts:
Year ended December 31, 1995................ $ 100,268 $-- $201,382 $ 52,627 $ 249,023
Year ended December 31, 1996................ 249,023 86,458 403,843 255,804 483,519
Year ended December 31, 1997................ 483,519 -- 231,479 243,347 471,652
</TABLE>
- ------------
(1) Uncollectible accounts written off, net of recoveries
S-3
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<C> <S>
3.1 -- Certificate of Incorporation of Benedek Communications Corporation, as amended, incorporated by reference
to Exhibit 3.1 to Benedek Communications Corporation's Registration Statement on Form S-4, File No.
333-09529, filed on August 2, 1996 (the 'S-4 Registration Statement').
3.2 -- By-laws of Benedek Communications Corporation, incorporated by reference to Exhibit 3.2 to the S-4
Registration Statement.
3.3 -- Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 11 1/2% Senior Exchangeable Preferred Stock 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,
incorporated by reference to Exhibit 3.4 to the S-4 Registration Statement.
4.1 -- Indenture dated as of May 15, 1996 between Benedek Communications Corporation and United States Trust
Company of New York, relating to the 13 1/4% Senior Subordinated Discount Notes due 2006, incorporated by
reference to Exhibit 4.1 to the S-4 Registration Statement.
4.2 -- Form of 13 1/4% Senior Subordinated Discount Note due 2006 (included in Exhibit 4.1 hereof), incorporated
by reference to Exhibit 4.2 to the S-4 Registration Statement.
4.3 -- Indenture dated as of March 1, 1995 between Benedek Broadcasting Corporation and The Bank of New York,
relating to the 11 7/8% Senior Secured Notes due 2005 of Benedek Broadcasting Corporation, incorporated by
reference to Exhibit 4.3 to the S-4 Registration Statement.
4.4 -- Form of 11 7/8% Senior Secured Note due 2005 of Benedek Broadcasting Corporation (included in Exhibit 4.3
hereof), incorporated by reference to Exhibit 4.4 to the S-4 Registration Statement.
4.5 -- First Supplemental Indenture dated as of June 6, 1996 among Benedek Broadcasting Corporation, Benedek
License Corporation and The Bank of New York, incorporated by reference to Exhibit 4.3 to Benedek
Broadcasting Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996.
4.6 -- Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 11 1/2% Senior Exchangeable Preferred Stock and Qualifications, Limitations and
Restrictions thereof (filed as Exhibit 3.3 hereof).
4.7 -- 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), incorporated by reference to Exhibit 4.6 to the S-4 Registration Statement.
4.8 -- 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, incorporated by reference to Exhibit 4.7 to the
S-4 Registration Statement.
4.9 -- Form of Exchange Debenture relating to the 11 1/2% Exchange Debentures which may be issued, under certain
circumstances, in exchange for the 11 1/2% Senior Exchangeable Preferred Stock of Benedek Communications
Corporation.
5 -- Opinion of Shack & Siegel, P.C., counsel for Benedek Communications Corporation.
8 -- Opinion of Whitman Breed Abbott & Morgan LLP, tax counsel for Benedek Communications Corporation.
10.1 -- Purchase Agreement dated as of May 7, 1998 among Benedek Communications Corporation, TD Securities (USA)
Inc. and BT Alex. Brown Incorporated.
10.2 -- Exchange and Registration Rights Agreement dated as of May 7, 1998 among Benedek Communications
Corporation, TD Securities (USA) Inc. and BT Alex. Brown Incorporated with respect to the 11 1/2% Senior
Exchangeable Preferred Stock of Benedek Communications Corporation.
10.3 -- Warrant Agreement dated as of June 5, 1996 between Benedek Communications Corporation and IBJ Schroder
Bank & Trust Company (filed as Exhibit 4.8 hereof), incorporated by reference to Exhibit 10.5 to the S-4
Registration Statement.
10.4 -- Common Stock Registration Rights Agreement dated as of June 5, 1996 among Benedek Communications
Corporation, Goldman, Sachs & Co. and BT Securities Corporation, incorporated by reference to Exhibit 10.7
to the S-4 Registration Statement.
10.5 -- Amended and Restated Credit Agreement dated as of December 17, 1997 among Benedek Communications
Corporation, Benedek Broadcasting Corporation, the Lenders listed therein and Bankers Trust Company, as
Agent, incorporated by reference to Exhibit 10.8 to Benedek Communications Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 (the '1997 10-K').
10.6 -- Amended and Restated Guaranty dated as of December 17, 1997 by Benedek Communications Corporation in
favor of Bankers Trust Company, incorporated by reference to Exhibit 10.9 to the 1997 10-K.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<S> <C>
10.7 -- Amended and Restated Guaranty dated as of December 17, 1997 by Benedek License Corporation in favor of
Bankers Trust Company, incorporated by reference to Exhibit 10.10 to the 1997 10-K.
10.8 -- Amended and Restated Pledge Agreement dated as of December 17, 1997 between Benedek Communications
Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.11 to the 1997 10-K.
10.9 -- Amended and Restated Security Agreement dated as of December 17, 1997 between Benedek Communications
Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.12 to the 1997 10-K.
10.10 -- Amended and Restated Accounts Receivable Security Agreement dated as of December 17, 1997 between Benedek
Broadcasting Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.13 to the 1997
10-K.
10.11 -- Amended and Restated Acquired Assets Security Agreement dated as of December 17, 1997 between Benedek
Broadcasting Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.14 to the 1997
10-K.
10.12 -- Amended and Restated Tangible Assets Security Agreement dated as of December 17, 1997 between Benedek
Broadcasting Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.15 to the 1997
10-K.
10.13 -- Amended and Restated Collateral Account Agreement dated as of December 17, 1997 between Benedek
Communications Corporation and Bankers Trust Company, incorporated by reference to Exhibit 10.16 to the
1997 10-K.
10.14 -- Master Assignment Agreement dated as of December 17, 1997 among Benedek Communications Corporation,
Benedek Broadcasting Corporation, Canadian Imperial Bank of Commerce, New York Agency, and the Financial
Institutions listed therein, incorporated by reference to Exhibit 10.17 to the 1997 10-K.
10.15 -- Form of Indemnity Agreement between Benedek Communications Corporation and each of its executive officers
and directors, incorporated by reference to Exhibit 10.14 to the S-4 Registration Statement.
10.16 -- Employment Agreement dated as of June 6, 1996 between Benedek Broadcasting Corporation and A. Richard
Benedek, incorporated by reference to Exhibit 10.16 to the S-4 Registration Statement.
10.17 -- Employment Agreement dated as of June 6, 1996 between Benedek Broadcasting Corporation and K. James
Yager, incorporated by reference to Exhibit 10.17 to the S-4 Registration Statement.
10.18 -- Employment Agreement dated as of June 6, 1996 between Benedek Broadcasting Corporation and Ronald L.
Lindwall, incorporated by reference to Exhibit 10.19 to the S-4 Registration Statement.
10.19 -- Employment Agreement dated as of June 6, 1996 between Benedek Broadcasting Corporation and Terrance F.
Hurley, incorporated by reference to Exhibit 10.20 to the S-4 Registration Statement.
12 -- Statement of computation of ratio of earnings to fixed charges.
21 -- Subsidiaries of Benedek Communications Corporation.
23.1 -- Consent of Shack & Siegel, P.C. (included in Exhibit 5 hereof).
23.2 -- Consent of McGladrey & Pullen, LLP.
23.3 -- Consent of Whitman Breed Abbott & Morgan LLP (included in Exhibit 8 hereof).
24.1 -- Power of Attorney of Benedek Communications Corporation (included on page II-5 hereof).
99.1 -- Form of Letter of Transmittal relating to the 11 1/2% Senior Exchangeable Preferred Stock.
99.2 -- Form of Notice of Guaranteed Delivery relating to the 11 1/2% Senior Exchangeable Preferred Stock.
99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees relating to the
11 1/2% Senior Exchangeable Preferred Stock.
99.4 -- Form of Letter to Clients relating to the 11 1/2% Senior Exchangeable Preferred Stock.
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF 11 1/2% SENIOR
EXCHANGEABLE PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
Benedek Communications Corporation (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation (hereinafter referred to as the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors, by unanimous
written consent dated May 6, 1998, duly approved and adopted the following
resolution (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors
does hereby create, authorize and provide for the issuance of 11 1/2%
Series A Senior Exchangeable Preferred Stock, par value $.01 per share,
with a stated value initially of $1,000 per share, consisting of 100,000
shares, and 11 1/2% Series B Senior Exchangeable Preferred Stock, par
value $.01 per share, with a stated value initially of $1,000 per share,
consisting of 100,000 shares (collectively, the "Exchangeable Preferred
Stock") having the designations, preferences, relative, participating,
optional and other special rights and the qualifications, limitations
and restrictions thereof that are set forth in the Certificate of
Incorporation and in this Resolution as follows:
(a) Designation. There is hereby created out of the authorized
and unissued shares of Preferred Stock of the Company (i) a series of Preferred
Stock designated as the "11 1/2% Series A Senior Exchangeable Preferred Stock"
(the "Class A Stock") and (ii) a series of Preferred Stock designated as the "11
1/2% Series B Senior Exchangeable Preferred Stock" (the "Class B Stock"). The
number of shares constituting the Class A Stock shall be 100,000, and the number
of shares constituting the Class B Stock shall be 100,000. The Class A Stock and
the Class B Stock are referred to as the "Exchangeable Preferred Stock". The
liquidation preference of the Exchangeable Preferred Stock shall be $1,000 per
share (the "Liquidation Preference").
(b) Rank. The Exchangeable Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, rank
(i) senior to all classes of
<PAGE>
<PAGE>
2
common stock and to each other class of Capital Stock or series of Preferred
Stock established hereafter by the Board of Directors of the Company, the terms
of which do not expressly provide that it ranks senior to, or on a parity with,
the Exchangeable Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Company (collectively referred
to, together with all classes of common stock of the Company, as "Junior
Stock"); (ii) on a parity with each other class of Capital Stock or series of
Preferred Stock established hereafter by the Board of Directors of the Company,
the terms of which expressly provide that such class or series will rank on a
parity with the Exchangeable Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution (collectively referred to as "Parity
Stock"); and (iii) junior to each class of Capital Stock or series of Preferred
Stock established hereafter by the Board of Directors of the Company, the terms
of which expressly provide that such class or series will rank senior to the
Exchangeable Preferred Stock as to dividend rights and rights on liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Stock"). The Company may not authorize any new class of Senior Stock without the
approval of the holders of at least two-thirds of the shares of Exchangeable
Preferred Stock then outstanding, voting or consenting, as the case may be, as
one class. All claims of the holders of the Exchangeable Preferred Stock,
including, without limitation, claims with respect to dividend payments,
redemption payments, mandatory repurchase payments or rights upon liquidation,
winding-up or dissolution, shall rank junior to the claims of the holders of any
debt of the Company and all other creditors of the Company.
(c) Dividends. (i) Holders of the outstanding shares of
Exchangeable Preferred Stock will be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds legally
available therefor, cash dividends on the Exchangeable Preferred Stock at a rate
per annum equal to 11 1/2% of the Specified Amount payable quarterly (each such
quarterly period being herein called a "Dividend Period"). In addition to the
dividends described in the preceding sentence, holders of outstanding shares of
Exchangeable Preferred Stock will be entitled to Liquidated Damages if and to
the extent provided for in the Exchange and Registration Rights Agreement. All
dividends will be cumulative, whether or not earned or declared, on a daily
basis from the Issue Date and shall be payable quarterly in arrears on February
15, May 15, August 15 and November 15 of each year (each a "Dividend Payment
Date"), commencing on August 15, 1998 to holders of record on the February 1,
May 1, August 1 and November 1 immediately preceding the relevant Dividend
Payment Date. If any dividend (other than any Liquidated Damages) payable on any
Dividend Payment Date on or before May 15, 2003 is not declared or paid in full
in cash on such Dividend Payment Date, the amount payable as dividends on such
Dividend Payment Date (other than any Liquidated Damages) that is not paid in
cash on such Dividend Payment Date will be added automatically to the Specified
Amount of the Exchangeable Preferred Stock on such Dividend Payment Date and
will be deemed paid in full (such dividends being herein called the "Accumulated
Dividends"). Except as provided herein, accrued and unpaid dividends, if any,
will not bear interest or bear dividends thereon.
<PAGE>
<PAGE>
3
(ii) All dividends paid with respect to shares of the
Exchangeable Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata
to the holders entitled thereto.
(iii) No full dividends may be declared or paid or set apart for
the payment of dividends by the Company on any Parity Stock for any period
unless full cumulative dividends shall have been or contemporaneously are
declared and paid (or are deemed declared and paid) in full or declared and, if
payable in cash, a sum in cash sufficient for such payment 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 Parity
Stock.
(iv) No dividends may be paid or set apart for such payment on
Junior Stock (except dividends on Junior Stock payable in additional shares of
Junior Stock) and no Junior Stock or Parity Stock may be repurchased, redeemed
or otherwise retired nor may funds be set apart for payment with respect
thereto, if full cumulative dividends have not been paid in full (or deemed
paid) on the Exchangeable Preferred Stock.
(v) Dividends on account of arrears for any past Dividend Period
and dividends in connection with any optional redemption may be declared and
paid at any time, without reference to any regular Dividend Repayment Date, to
holders of record on such date, not more than 45 days prior to the payment
thereof, as may be fixed by the Board of Directors of the Company.
(vi) So long as any shares of the Exchangeable Preferred Stock
are outstanding, the Company shall not make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any Parity Stock or Junior Stock or any
warrants, rights, calls or options exercisable for or convertible into any
Parity Stock or Junior Stock, and shall not permit any corporation or other
entity directly or indirectly controlled by the Company to purchase or redeem
any Parity Stock or Junior Stock, or any such warrants, rights, calls or options
unless full cumulative dividends determined in accordance herewith on the
Exchangeable Preferred Stock have been paid (or are deemed paid) in full.
(vii) Dividends payable on the Exchangeable Preferred Stock for
any period less than a year shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in the period for
which payable.
(d) Liquidation Preference. (i) Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, holders of Exchangeable
Preferred Stock will be entitled to be paid, out of the assets of the Company
available for distribution to its stockholders, the Specified Amount, plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding-up
(including an amount equal to a prorated dividend for the period from the last
Dividend Payment Date to the
<PAGE>
<PAGE>
4
date fixed for liquidation, dissolution or winding-up and including an amount
equal to the redemption premium that would have been payable had the
Exchangeable Preferred Stock been the subject of an optional redemption on such
date or a redemption premium of 5.750% had the Exchangeable Preferred Stock not
been subject to an optional redemption on such date) before any distribution is
made on any Junior Stock, including, without limitation, common stock of the
Company. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the amounts payable with respect to the Exchangeable
Preferred Stock and all Parity Stock are not paid in full, the Exchangeable
Preferred Stock and the Parity Stock will share equally and ratably in any
distribution of assets of the Company to which each is entitled. After payment
of the full amount of the Specified Amount (and, if applicable, an amount equal
to a prorated dividend and redemption premium), the holders of shares of
Exchangeable Preferred Stock will not be entitled to any further participation
in any distribution of assets of the Company.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
entities shall be deemed to be a liquidation, dissolution or winding-up of the
Company.
(e) Redemption. (i) Optional Redemption. (A) Except as set forth
in paragraph (e)(i)(C) below, the Exchangeable Preferred Stock will not be
redeemed by the Company prior to May 15, 2003. Thereafter, the Exchangeable
Preferred Stock may be redeemed (subject to the legal availability of funds
therefor) at any time, in whole or in part, at the option of the Company, at the
redemption prices (expressed as a percentage of the Specified Amount) set forth
below, plus, without duplication, an amount in cash equal to all accrued and
unpaid Liquidated Damages and dividends to the date fixed for redemption (the
"Optional Redemption Date") (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to the
Optional Redemption Date to the Optional Redemption Date) (the "Optional
Redemption Price"). If redeemed during the 12-month period beginning May 15 of
each of the years set forth below, the Optional Redemption Price shall be a
percentage of the Specified Amount plus, without duplication, in each case, an
amount in cash equal to all accrued and unpaid Liquidated Damages and dividends
(including an amount equal to a prorated dividend from the immediately preceding
Dividend Payment Date to the Optional Redemption Date), if any, to the Optional
Redemption Date:
<PAGE>
<PAGE>
5
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003......................................... 105.750%
2004......................................... 103.833%
2005......................................... 101.917%
2006 and thereafter.......................... 100.000%
</TABLE>
(B) In the event of a redemption of only a portion of the then
outstanding shares of Exchangeable Preferred Stock, the Company shall effect
such redemption on a pro rata basis, except that the Company may redeem such
shares held by holders of fewer than 1,000 shares (or shares held by holders who
would hold less than 1,000 shares as a result of such redemption), as may be
determined by the Company.
(C) Notwithstanding the foregoing, until May 15, 2001, the
Company may, at its option, redeem up to 25% of the aggregate of (i) the
liquidation preference of the Exchangeable Preferred Stock issued less the
liquidation preference of Exchangeable Preferred Stock exchanged for Exchange
Debentures and (ii) the principal amount of Exchange Debentures issued, at
111.500% of the then effective liquidation preference or principal amount, as
applicable, with the net proceeds of one or more Public Equity Offerings or
Strategic Investments or a Required Disposition if at least $75,000,000 in
liquidation preference or principal amount, as applicable, of such securities
remains outstanding after each such redemption; provided, however, that such
redemption occurs within 60 days of the date of closing of each such Public
Equity Offering, Strategic Investment or Required Disposition.
(ii) Mandatory Redemption. The Exchangeable Preferred Stock will
be subject to mandatory redemption (subject to the legal availability of funds
therefor) in whole on May 15, 2008 (the "Mandatory Redemption Date") at a price
equal to 100.000% of the Specified Amount, plus, without duplication, all
accrued and unpaid Liquidated Damages and dividends (including an amount equal
to a prorated dividend from the immediately preceding Dividend Payment Date to
the Mandatory Redemption Date, if any, to the Mandatory Redemption Date (the
"Mandatory Redemption Price").
(iii) Procedure for Redemption. (A) On and after the Optional
Redemption Date or the Mandatory Redemption Date as the case may be (the
"Redemption Date"), unless the Company defaults in the payment of the applicable
redemption price, dividends will cease to accumulate on shares of Exchangeable
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the Optional Redemption Price or
the Mandatory Redemption Price, as the case may be, without interest; provided,
however, that if a notice of redemption shall have been given as provided in
paragraph (iii)(B) and the funds necessary for redemption (including an amount
in respect of all dividends that will accrue to the Redemption Date) shall have
been segregated and irrevocably set apart by the Company, in trust for the
benefit of the holders of the shares called for redemption, then dividends
<PAGE>
<PAGE>
6
shall cease to accumulate on the Redemption Date on the shares to be redeemed
and, at the close of business on the day on which such funds are segregated and
set apart, the holders of the shares to be redeemed shall cease to be
stockholders of the Company and shall be entitled only to receive the Optional
Redemption Price or the Mandatory Redemption Price, as the case may be, for such
shares.
(B) The Company will send a written notice of redemption by first
class mail to each holder of record of shares of Exchangeable Preferred Stock,
not fewer than 30 days nor more than 60 days prior to the Redemption Date at its
registered address (the "Redemption Notice"); provided, however, that no failure
to give such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Exchangeable Preferred Stock to be
redeemed except as to the holder or holders to whom the Company has failed to
give said notice or except as to the holder or holders whose notice was
defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph (e)(i) or
(e)(ii) hereof;
(2) the Optional Redemption Price or the Mandatory Redemption
Price, as the case may be;
(3) whether all or less than all the outstanding shares of the
Exchangeable Preferred Stock are to be redeemed and the total number of
shares of the Exchangeable Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the holder is to surrender to the Company, in the
manner, at the place or places and at the price designated, his
certificate or certificates representing the shares of Exchangeable
Preferred Stock to be redeemed; and
(6) that dividends on the shares of the Exchangeable Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date
unless the Company defaults in the payment of the Optional Redemption
Price or the Mandatory Redemption Price, as the case may be.
(C) Each holder of Exchangeable Preferred Stock shall surrender
the certificate or certificates representing such shares of Exchangeable
Preferred Stock to the Company, duly endorsed (or otherwise in proper form for
transfer, as determined by the Company), in the manner and at the place
designated in the Redemption Notice, and on the Redemption Date the full
Optional Redemption Price or Mandatory Redemption Price, as the case may be, for
such shares shall be payable in cash to the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that
<PAGE>
<PAGE>
7
less than all of the shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares.
(f) Voting Rights. (i) The holders of Exchangeable Preferred
Stock, except as otherwise required under Delaware law or as set forth in
paragraphs (ii) and (iii) below, shall not be entitled or permitted to vote on
any matter required or permitted to be voted upon by the stockholders of the
Company.
(ii) (A) If (1) after May 15, 2003, dividends on the Exchangeable
Preferred Stock are in arrears and unpaid for six or more Dividend Periods
(whether or not consecutive) (a "Dividend Default"); (2) the Company fails to
redeem the Exchangeable Preferred Stock on May 15, 2008, or fails to otherwise
discharge any redemption obligation with respect to the Exchangeable Preferred
Stock; (3) the Company fails to make a Change of Control Offer if such Change of
Control Offer is required by paragraph (h) hereof or fails to purchase shares of
Exchangeable Preferred Stock from holders who elect to have such shares
purchased pursuant to the Change of Control Offer; (4) a breach or violation of
any of the provisions set forth in paragraph (l) hereof occurs and the breach or
violation continues for a period of 30 days or more after the Company receives
notice thereof specifying the default from the holders of at least 25% of the
shares of Exchangeable Preferred Stock then outstanding; or (5) the Company
fails to pay at the final stated maturity (giving effect to any extensions
thereof) the principal amount of any Indebtedness of the Company or any
Subsidiary of the Company, or the final stated maturity of any such Indebtedness
is accelerated or a default occurs as a result of the Company's failure to
observe any covenant with respect to any such Indebtedness (which default is not
waived by the holders of such Indebtedness within 30 days thereof), if the
aggregate principal amount of such Indebtedness, together with the aggregate
principal amount of any other such Indebtedness in default for failure to pay
principal at the final stated maturity (giving effect to any extensions thereof)
or which has been accelerated or which is subject to such non-waived default,
aggregates $5,000,000 or more at any time, in each case, after a 10-day period
during which such default shall not have been cured or such acceleration
rescinded, then the number of directors constituting the Board of Directors of
the Company will be adjusted to permit the holders of a majority of the then
outstanding shares of Exchangeable Preferred Stock, voting separately and as a
class, to elect the lesser of two directors and that number of directors
constituting 25% of the members of the Board of Directors. Each such event
described in clauses (1), (2), (3), (4) and (5) above is a "Voting Rights
Triggering Event".
(B) The voting rights set forth in subparagraph (f)(ii)(A) above
will continue until such time as (x) in the case of a Dividend Default, all
dividends in arrears on the Exchangeable Preferred Stock are paid in full in
cash, and (y) in all other cases, any failure, breach or default giving rise to
such Voting Rights Triggering Event is remedied or waived by the holders of at
least a majority of the shares of Exchangeable Preferred Stock then outstanding,
at which time the term of any directors elected pursuant to the provisions of
subparagraph (f)(ii)(A) above shall terminate. At any time after voting power to
elect directors shall have become vested
<PAGE>
<PAGE>
8
and be continuing in the holders of Exchangeable Preferred Stock pursuant to
subparagraph (f)(ii)(A) hereof, or if vacancies shall exist in the offices of
directors elected by the holders of Exchangeable Preferred Stock, a proper
officer of the Company may, and upon the written request of the holders of
record of at least 25% of the shares of Exchangeable Preferred Stock then
outstanding addressed to the secretary of the Company shall, call a special
meeting of the holders of Exchangeable Preferred Stock for the purpose of
electing the directors which such holders are entitled to elect. If such meeting
shall not be called by a proper officer of the Company within 20 days after
personal service to the secretary of the Company at its principal executive
offices, then the holders of record of at least 25% of the outstanding shares of
Exchangeable Preferred Stock may designate in writing one of their number to
call such meeting at the expense of the Company, and such meeting may be called
by the person so designated upon the notice required for the annual meetings of
stockholders of the Company and shall be held at the place for holding the
annual meetings of stockholders. Any holder of Exchangeable Preferred Stock so
designated shall have, and the Company shall provide, access to the lists of
stockholders to be called pursuant to the provisions hereof.
(C) At any meeting held for the purposes of electing directors at
which the holders of Exchangeable Preferred Stock shall have the right, voting
together as a separate class, to elect directors as aforesaid, the presence in
person or by proxy of the holders of at least a majority of the outstanding
shares of Exchangeable Preferred Stock shall be required to constitute a quorum
of such Exchangeable Preferred Stock.
(D) Any vacancy occurring in the office of a director elected by
the holders of Exchangeable Preferred Stock may be filled by the remaining
directors elected by the holders of Exchangeable Preferred Stock unless and
until such vacancy shall be filled by the holders of Exchangeable Preferred
Stock. The director to be elected by the holders of Exchangeable Preferred Stock
shall agree, prior to his election to office, to resign upon any termination of
the right of the holders of Exchangeable Preferred Stock to vote as a class for
a director as herein provided, and upon any such termination the director then
in office elected by the holders of Exchangeable Preferred Stock shall forthwith
resign.
(iii) (A) So long as any shares of the Exchangeable Preferred
Stock are outstanding, the Company will not authorize any class of Senior Stock
without the affirmative vote or consent of holders of at least two-thirds of the
shares of Exchangeable Preferred Stock then outstanding, voting or consenting,
as the case may be, as one class, given in person or by proxy, either in writing
or by resolution adopted at an annual or special meeting. Subject to the
provisions of paragraph (l)(i) below, the Company may authorize and issue
Additional Shares from time to time after the Issue Date. To the extent the
Company issues any Additional Shares, such issuance shall be made in increments
of no less than 25,000 shares.
(B) So long as any shares of the Exchangeable Preferred Stock are
outstanding, the Company will not amend this Certificate of Designation so as to
affect adversely the specified
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9
rights, preferences, privileges or voting rights of holders of shares of
Exchangeable Preferred Stock without the affirmative vote or consent of holders
of at least two-thirds of the issued and outstanding shares of Exchangeable
Preferred Stock, voting or consenting, as the case may be, as one class, given
in person or by proxy, either in writing or by resolution adopted at an annual
or special meeting.
(C) Except as set forth in paragraph (f)(iii)(A) above, (x) the
creation, authorization or issuance of any shares of any Junior Stock, Parity
Stock or Senior Stock, including the designation of a series of Exchangeable
Preferred Stock, or (y) the increase or decrease in the amount of authorized
Capital Stock of any class, including Preferred Stock, shall not require the
consent of holders of Exchangeable Preferred Stock and shall not be deemed to
affect adversely the rights, preferences, privileges or voting rights of shares
of Exchangeable Preferred Stock.
(D) Prior to the exchange of Exchangeable Preferred Stock for
Exchange Debentures, the Company shall not amend or modify the Exchange
Indenture (except as expressly provided therein in respect of amendments without
the consent of holders of Exchange Debentures) without the affirmative vote or
consent of holders of at least a majority of the shares of Exchangeable
Preferred Stock then outstanding, voting or consenting, as the case may be, as
one class, given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting.
(iv) In any case in which the holders of Exchangeable Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or pursuant to
Delaware law, each holder of Exchangeable Preferred Stock entitled to vote with
respect to such matters shall be entitled to one vote for each share of
Exchangeable Preferred Stock held.
(g) Exchange. (i) Exchange for Debentures. (A) The Company may,
at its option, on any scheduled Dividend Payment Date, exchange the Exchangeable
Preferred Stock, in whole but not in part, for the Exchange Debentures; provided
however, that (1) on the date of such exchange there are no accumulated and
unpaid dividends on the Exchangeable Preferred Stock (including the dividends
payable on such date) or other contractual impediment to such exchange; (2)
there shall be funds legally available sufficient therefor; (3) immediately
before and immediately after giving effect to such exchange, no Default (as
defined in the Exchange Indenture) shall have occurred and be continuing, and
(iv) the Company shall have delivered to the Trustee under the Exchange
Indenture an opinion of counsel with respect to the due authorization and
issuance of the Exchange Debentures.
(B) Upon any exchange pursuant to this paragraph (g)(i), holders
of outstanding shares of Exchangeable Preferred Stock will be entitled to
receive $1.00 principal amount of Exchange Debentures for each $1.00 of
Specified Amount of Exchangeable Preferred Stock held by them. Exchange
Debentures issued in exchange for Exchangeable Preferred Stock
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10
will be issued in principal amounts of $1,000 and integral multiples thereof to
the extent possible, and will also be issued in principal amounts less than
$1,000 so that each holder of Exchangeable Preferred Stock will receive
certificates representing the entire amount of Exchange Debentures to which such
holder's shares of Exchangeable Preferred Stock entitle such holder; provided,
however, that the Company may pay cash in lieu of issuing an Exchange Debenture
in a principal amount less than $1,000.
(ii) Procedures. (A) The Company will send a written notice of
exchange (the "Exchange Notice") by mail to each holder of record of shares of
Exchangeable Preferred Stock not fewer than 30 days nor more than 60 days before
the date fixed for such exchange (the "Exchange Date"); provided, however, that
no failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the exchange of any shares of Exchangeable
Preferred Stock to be exchanged except as to the holder or holders to whom the
Company has failed to give said notice or except as to the holder or holders
whose notice was defective. The Exchange Notice shall state:
(1) the Exchange Date;
(2) that the holder is to surrender to the Company, in the manner
and at the place or places designated, his certificate or certificates
representing the shares of Exchangeable Preferred Stock to be exchanged;
(3) that dividends on the shares of Exchangeable Preferred Stock
to be exchanged shall cease to accrue on such Exchange Date whether or
not certificates for shares of Exchangeable Preferred Stock are
surrendered for exchange on such Exchange Date unless the Company shall
default in the delivery of Exchange Debentures; and
(4) that interest on the Exchange Debentures shall accrue from
the Exchange Date whether or not certificates for shares of Exchangeable
Preferred Stock are surrendered for exchange on such Exchange Date.
(B) On and after the Exchange Date, dividends will cease to
accrue on the outstanding shares of Exchangeable Preferred Stock, and all rights
of the holders of Exchangeable Preferred Stock (except the right to receive
Exchange Debentures, an amount in cash, to the extent applicable, equal to the
accumulated and unpaid dividends to the Exchange Date and, if the Company so
elects, cash in lieu of any Exchange Debenture that is in a principal amount
that is not an integral multiple of $1,000) will terminate. The person entitled
to receive the Exchange Debentures issuable upon such exchange will be treated
for all purposes as the registered holder of such Exchange Debentures.
(C) On or before the Exchange Date, each holder of Exchangeable
Preferred Stock shall surrender the certificate or certificates representing
such shares of Exchangeable
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11
Preferred Stock, in the manner and at the place designated in the Exchange
Notice. The Company shall cause the Exchange Debentures to be executed on the
Exchange Date and, upon surrender in accordance with the Exchange Notice of the
certificates for any shares of Exchangeable Preferred Stock so exchanged, duly
endorsed (or otherwise in proper form for transfer, as determined by the
Company), such shares shall be exchanged by the Company into Exchange
Debentures. The Company shall pay interest on the Exchange Debentures at the
rate and on the dates specified therein from the Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the foregoing
provisions of this paragraph (g), the Company shall not be entitled to exchange
the Exchangeable Preferred Stock for Exchange Debentures if such exchange, or
any term or provision of the Exchange Indenture or the Exchange Debentures, or
the performance of the Company's obligations under the Exchange Indenture or the
Exchange Debentures, shall materially violate or conflict with any applicable
law or agreement or instrument then binding on the Company or if, at the time of
such exchange, the Company is insolvent or if it would be rendered insolvent by
such exchange.
(iv) Exchange of Series A Stock for Series B Stock. The Series B
Stock will be issued by the Company only in connection with an exchange offer,
on a share for share basis, for the Series A Stock as required pursuant to the
Exchange and Registration Rights Agreement. Each share of Series B Stock issued
in exchange for a share of Series A Stock will be deemed to have the same
Specified Amount as the share of Series A Stock so exchanged.
(h) Change of Control. (i) Upon the occurrence of a Change of
Control (the date of such occurrence being the "Change of Control Date"), each
holder of Exchangeable Preferred Stock will have the right to require that the
Company purchase all or a portion of such holder's Exchangeable Preferred Stock
in cash pursuant to the offer described in paragraph (h)(iii) below (the "Change
of Control Offer") at a purchase price equal to 101% of the Specified Amount,
plus, without duplication, all accrued and unpaid Liquidated Damages and
dividends, if any, to the Change of Control Payment Date, including an amount in
cash equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Change of Control Payment Date to the Change of Control
Payment Date.
(ii) Prior to the mailing of the notice referred to in
subparagraph (h)(iii) below, but in any event within 30 days following the date
on which the Company becomes aware that a Change of Control has occurred, the
Company covenants that if the purchase of the Exchangeable Preferred Stock would
violate or constitute a default under the Bank Credit Agreement, the Senior
Subordinated Discount Note Indenture or other Debt of the Company, then the
Company shall either (A) repay in full all such Debt and terminate all
commitments outstanding thereunder or (B) obtain the requisite consents, if any,
under the Bank Credit Agreement, the Senior Subordinated Discount Note Indenture
or such Debt required to permit the purchase of Exchangeable Preferred Stock
required by subparagraph (h)(i) above. The Company will first comply with the
covenant in the immediately preceding sentence before it will be required to
make
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12
the Change of Control Offer or purchase the Exchangeable Preferred Stock
pursuant to the provisions described herein; provided, however, that the
Company's failure to comply with the provisions of this paragraph (h)(ii) shall
constitute a Voting Rights Triggering Event.
(iii) Within 30 days following the date on which the Company
becomes aware that a Change of Control has occurred, the Company must send, by
first-class mail, postage prepaid, a notice to each holder of Exchangeable
Preferred Stock. Such notice shall contain all instructions and materials
necessary to enable such holders to tender Exchangeable Preferred Stock pursuant
to the Change of Control Offer. Such notice shall state:
(A) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this paragraph (h) and that all
Exchangeable Preferred Stock validly tendered and not withdrawn will be
accepted for payment;
(B) the purchase price (including the amount of accrued
dividends, if any) and the purchase date (which must be no earlier than
30 days nor later than 45 days from the date such notice is mailed,
other than as may be required by law) (the "Change of Control Payment
Date");
(C) that any shares of Exchangeable Preferred Stock not tendered
will continue to accrue dividends;
(D) that, unless the Company defaults in making payment therefor,
any share of Exchangeable Preferred Stock accepted for payment pursuant
to the Change of Control Offer shall cease to accrue dividends after the
Change of Control Payment Date;
(E) that holders electing to have any shares of Exchangeable
Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender such shares of Exchangeable Preferred Stock,
properly endorsed for transfer, together with such other customary
documents as the Company and the Transfer Agent may reasonably request
to the Transfer Agent and registrar for the Exchangeable Preferred Stock
at the address specified in the notice prior to the close of business on
the Business Day prior to the Change of Control Payment Date;
(F) that holders will be entitled to withdraw their election if
the Company receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, a telex, facsimile
transmission or letter setting forth the name of the holder, the number
of shares of Exchangeable Preferred Stock the holder delivered for
purchase and a statement that such holder is withdrawing his election to
have such shares of Exchangeable Preferred Stock purchased;
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13
(G) that holders whose shares of Exchangeable Preferred Stock are
purchased only in part will be issued a new certificate representing the
unpurchased shares of Exchangeable Preferred Stock; and
(H) the circumstances and relevant facts regarding such Change of
Control.
(iv) The Company will comply with any tender offer rules under
the Exchange Act which then may be applicable, including Rules 13e-4 and 14e-1,
in connection with any offer required to be made by the Company to repurchase
the shares of Exchangeable Preferred Stock as a result of a Change of Control.
To the extent that the provisions of any securities laws or regulations conflict
with provisions of this Certificate of Designation, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Certificate of Designation by virtue
thereof.
(v) On the Change of Control Payment Date the Company shall (A)
accept for payment the shares of Exchangeable Preferred Stock validly tendered
pursuant to the Change of Control Offer, (B) pay to the holders of shares so
accepted the purchase price therefor in cash and (C) cancel and retire each
surrendered certificate. Unless the Company defaults in the payment for the
shares of Exchangeable Preferred Stock tendered pursuant to the Change of
Control Offer, dividends will cease to accrue with respect to the shares of
Exchangeable Preferred Stock tendered and all rights of holders of such tendered
shares will terminate, except for the right to receive payment therefor, on the
Change of Control Payment Date.
(i) Conversion or Exchange. The holders of shares of Exchangeable
Preferred Stock shall not have any rights hereunder to convert such shares into
or exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Company.
(j) Reissuance of Exchangeable Preferred Stock. Shares of
Exchangeable Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall (upon compliance with
any applicable provisions of the laws of Delaware) have the status of authorized
and unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock; provided,
however, that so long as any shares of Exchangeable Preferred Stock are
outstanding, any issuance of such shares must be in compliance with the terms
hereof.
(k) Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(l) Certain Additional Provisions. The Company covenants and
agrees for the benefit of the Holders as follows:
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14
(i) 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 8.75 to 1.0.
(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 Revolving Credit Facility
under 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 determined in
accordance with GAAP as of the end of the most recent fiscal quarter prior to
the date of determination; (2) Debt of the Company or Benedek Broadcasting
Issued pursuant to the Bank Credit Agreement (other than the Revolving Credit
Facility) 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) $110.8
million less (B) the lesser of (i) the aggregate amount of all principal
repayments of any 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 Exchangeable Preferred Stock issued on the
Issue Date, the Exchange Debentures and Refinancing Debt of the Company Issued
in respect of (A) any Debt permitted by this clause (4) and (B) any Debt
relating to the issuance of any Additional Shares pursuant to paragraph
(l)(i)(A) above (including the accretion of any original issue discount
associated with Debt permitted by this clause (4) and the increase in
liquidation preference with respect to any Debt permitted by this clause (4));
(5) Debt (other than Debt described in clause (1), (2), (3) or (4) of this
covenant but including the Debt represented by the Company Pledge Agreement)
outstanding on the Issue Date, and Refinancing Debt in respect of any Debt
permitted by this clause (5) or by paragraph (l)(i)(A) above; (6) Debt or
Preferred Stock of a Subsidiary Issued and outstanding on or prior to the date
on which such Subsidiary became a Subsidiary or was acquired by the Company
(other than Debt or Preferred Stock Issued in connection with, or to provide all
or any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Subsidiary
became a Subsidiary or was acquired by the Company) and Refinancing Debt of such
Subsidiary Issued in respect of any Debt of such Subsidiary permitted by this
clause (6); provided, however, that after giving effect thereto, except
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15
in the case of any Refinancing Debt, the Company and any Restricted Subsidiary
could Issue an additional $1.00 of Debt pursuant to paragraph (l)(i)(A) above;
(7) Debt consisting of Guarantees by BLC of Permitted Acquisition Debt; and (8)
Debt of the Company or any Restricted Subsidiary (in addition to the Debt
permitted to be Issued pursuant to paragraph (l)(i)(A) above or in any other
clause of this paragraph (B)) in an aggregate principal amount on the date of
Issuance which, when added to all other Debt Issued pursuant to this clause (8)
and then outstanding, shall not exceed $15.0 million.
(ii) Limitation on Restricted Payments. (A) The Company shall
not, and shall not permit any Restricted Subsidiary, directly or indirectly, to
(1) declare or pay any dividend or make any distribution on or in respect of, in
the case of the Company, any Junior Stock or, in the case of any Restricted
Subsidiary, any Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or to the direct or indirect
holders of any such stock (except dividends or distributions payable solely in
its Non-Convertible Common Stock or in options, warrants or other rights to
purchase its Non-Convertible Common Stock and except dividends or distributions
payable to the Company or a Restricted Subsidiary and, if a Restricted
Subsidiary is not wholly owned, to the other stockholders on a pro rata basis),
(2) purchase, redeem or otherwise acquire or retire for value any Junior Stock
of the Company or any Capital Stock of any Restricted Subsidiary (except any
such purchases, redemptions, acquisitions or retirements of Capital Stock of a
Restricted Subsidiary held by the Company or another Restricted Subsidiary) or
(3) make any Investment in any Affiliate of the Company other than a Restricted
Subsidiary or a person which will become a Restricted Subsidiary as a result of
any such Investment (any such dividend, distribution, purchase, redemption,
other acquisition, retirement or Investment being herein referred to as a
"Restricted Payment") if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment: (I) a Voting Rights Triggering Event shall have
occurred and be continuing (or would result therefrom); (II) the Company is not
able to Issue an additional $1.00 of Debt pursuant to subparagraph (A) of
paragraph (l)(i) above; or (III) the aggregate amount of such Restricted Payment
and all other Restricted Payments since the Issue Date would exceed the sum of:
(x) the cumulative Operating Cash Flow (whether positive or negative) accrued
during the period (treated as one accounting period) from the beginning of the
fiscal quarter during which the Issue Date occurs to the end of the most recent
fiscal quarter ending at least 45 days prior to the date of such Restricted
Payment less the product of 1.4 multiplied by the cumulative Consolidated
Interest Expense during such period; (y) the aggregate Net Cash Proceeds
received by the Company from the Issue or sale of its Capital Stock (other than
Redeemable Stock, Exchangeable Stock, Senior Stock or Parity Stock and other
than the Exchangeable Preferred Stock) 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 (5) of subparagraph (B) below or clause (3) of
paragraph (B)(5) (all such excluded Capital Stock being herein collectively
called "Excluded Stock")); and (z) the amount by which indebtedness of the
Company is reduced on the
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16
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary), subsequent to the Issue Date, of any Debt of the Company that is by
its original terms convertible or exchangeable for Capital Stock (other than
Redeemable Stock, Exchangeable Stock, Senior Stock or Parity Stock) of the
Company (less the amount of any cash, or other property, distributed by the
Company upon such conversion or exchange); provided, however, that, for the
purposes of the calculation required by this clause (III), the value of any such
Restricted Payment, if other than cash, shall be evidenced by a resolution of
the Board of Directors and determined in good faith by the disinterested members
of the Board of Directors; provided further, however, that, in the case of a
distribution or other disposition by the Company of all or substantially all the
assets of a broadcast station or other business unit, the value of any such
Restricted Payment shall be determined by an investment banking firm of national
prominence that is not an Affiliate of the Company. Notwithstanding the
foregoing, the Company shall not declare or pay any cash dividend or make any
cash distribution on or in respect of (i) any Senior Stock or Parity Stock prior
to May 15, 2003 or (ii) any Junior Stock (including the Seller Junior Discount
Preferred Stock and its Common Stock) prior to October 1, 2001.
(B) The provisions of the preceding paragraph (A) shall not
prohibit: (1) any purchase or redemption of Junior Stock of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Junior Stock (other than Redeemable Stock or Exchangeable Stock and other than
Excluded Stock); provided, however, that (I) such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments and (II) the
Net Cash Proceeds from such sale shall be excluded from clauses (III)(y) and
(III)(z) of the previous paragraph (A); (2) any purchase or redemption of Seller
Junior Discount Preferred Stock out of the proceeds of the sale of any
Additional Shares; provided, however, that without limiting the Company's
ability to so purchase or redeem the Seller Junior Discount Preferred Stock,
such purchase or redemption shall be included in any subsequent calculation of
the amount of Restricted Payments, (3) dividends paid within 60 days after the
date of declaration thereof if at such date of declaration such dividend would
have complied with this covenant; provided, however, that at any time of payment
of such dividend, no other Default shall have occurred and be continuing (or
result therefrom); provided further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments; (4)
Investments in Non-Recourse Affiliates made 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) from the Issue Date not to exceed $10.0
million; provided, however, that the amount of such Investments shall be
excluded in the calculation of the amount of Restricted Payments; or (5) loans
or advances to officers and directors of the Company (other than a Restricted
Holder) (I) in the ordinary course of business in an aggregate amount
outstanding not in excess of $1.0 million or (II) the proceeds of which are used
to acquire Capital Stock of the Company (other than Redeemable Stock,
Exchangeable Stock, Senior Stock or Parity Stock); provided, however, that such
loans and advances shall be excluded in the calculation of the amount of
Restricted Payments.
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17
(iii) Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (A) pay dividends or make any other distributions on its Capital
Stock or pay any Debt owed to the Company other than an encumbrance or
restriction with respect to dividends or distributions by Benedek Broadcasting
in connection with a senior bank financing, (B) make any loans or advances to
the Company or (C) transfer any of its property or assets to the Company,
except: (1) any encumbrance or restriction pursuant to an agreement in effect at
or entered into on the Issue Date; (2) any encumbrance or restriction with
respect to a Restricted Subsidiary pursuant to an agreement relating to any Debt
Issued by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company (other than Debt Issued as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Company) and outstanding on such date; (3) any
encumbrance or restriction pursuant to an agreement effecting a Refinancing of
Debt Issued pursuant to an agreement referred to in clause (1) or (2) of this
covenant or contained in any amendment to an agreement referred to in clause (1)
or (2) of this covenant; provided, however, that the encumbrances and
restrictions contained in such Refinancing agreement or amendment are no less
favorable to the Holders than encumbrances or 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
(C) above, restrictions contained in security agreements securing Debt of a
Restricted Subsidiary to the extent such restrictions restrict the transfer of
the property subject to such security agreements; and (6) any restriction with
respect to a Restricted Subsidiary imposed pursuant to an agreement entered into
for the sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary pending the closing of such sale or
disposition.
(iv) Limitation on Sales of Assets and Subsidiary Stock. (A) The
Company shall not, and shall not permit any Restricted Subsidiary to, make any
Asset Disposition unless (1) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Board of Directors (including
as to the value of all non-cash consideration), of the shares and assets subject
to such Asset Disposition and at least 90% of the consideration thereof received
by the Company or such Restricted Subsidiary is in the form of cash and (2) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (I)
first, to the extent the Company elects (or is required by the terms of any
Debt) to prepay, repay or purchase Debt (other than Redeemable Stock) of the
Company or Debt (other than Redeemable Stock) of a Wholly Owned Subsidiary (in
each case other than Debt owed to the Company or an Affiliate of the Company)
within 60 days after the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (II) second,
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18
to the extent of the balance of such Net Available Cash after application in
accordance with clause (I), at the Company's election to the investment by the
Company or any Restricted Subsidiary in assets to replace the assets that were
the subject of such Asset Disposition or in assets that, as determined by the
Board of Directors and evidenced by resolutions of the Board of Directors, will
be used in the businesses of the Company and its Restricted Subsidiaries
existing on the Issue Date or in businesses reasonably related thereto, in all
cases within 270 days after the later of the date of such Asset Disposition or
the receipt of such Net Available Cash; (III) third, to the extent the Company
is entitled pursuant to then existing contractual limitations to receive
dividends or distributions from the relevant Restricted Subsidiary and to the
extent of the balance of such Net Available Cash after application in accordance
with clauses (I) and (II), to make an offer pursuant to and subject to the
conditions contained in this Certificate of Designation to the holders of the
Exchangeable Preferred Stock (and to holders of any Parity Stock designated by
the Company) to purchase Exchangeable Preferred Stock (and such Parity Stock) at
a purchase price of 100% of the Specified Amount plus accrued and unpaid
Liquidated Damages and dividends (including an amount equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to the
date of such Asset Disposition to the date of such Asset Disposition), if any,
on the date of such Asset Disposition (or in respect of such Parity Stock such
lesser price, if any, as may be provided for by the terms of such Parity Stock)
and; (IV) fourth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (I), (II) and (III), to the prepayment,
repayment or purchase of Debt (other than any Redeemable Stock) of the Company
(other than Debt owed to an Affiliate of the Company) or Debt of any Restricted
Subsidiary (other than Debt owned to the Company or an Affiliate of the
Company), in each case within 360 days after the later of the receipt of such
Net Available Cash and the date the offer described in clause (C) is
consummated; provided, however, that in connection with any prepayment,
repayment or purchase of Debt pursuant to clause (I), (III) or (IV) above, the
Company or such Restricted Subsidiary shall retire such Debt and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions of this paragraph, the Company and the Restricted
Subsidiaries shall not be required to apply any Net Available Cash in accordance
with this paragraph except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which are not applied in accordance with this
paragraph exceeds $5.0 million. The Company shall not permit any Non-Recourse
Subsidiary to make any Asset Disposition unless such Non-Recourse Subsidiary
receives consideration at the time of such Asset Disposition at least equal to
the fair market value of the shares or assets so disposed of. Pending
application of Net Available Cash pursuant to this covenant, such Net Available
Cash shall be invested in Permitted Investments.
(B) In the event of an Asset Disposition that requires the
purchase of Exchangeable Preferred Stock (and other Parity Stock) pursuant to
clause (2)(III) above, the Company will be required to purchase Exchangeable
Preferred Stock tendered pursuant to an offer (the "Offer") by the Company for
the Exchangeable Preferred Stock (and other Parity Stock at the purchase price
set forth above) in accordance with the procedures (including prorating in
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the event of oversubscription) set forth in clause (C). The Company shall not be
required to make such an offer to purchase Exchangeable Preferred Stock if the
Net Available Cash available therefor is less than $5.0 million for any
particular Asset Disposition (which lesser amount shall be carried forward for
purposes of determining whether such an offer is required with respect to any
subsequent Asset Disposition, provided, however, that any such Asset Disposition
the proceeds of which do not exceed $1.0 million shall be excluded from the
aforementioned calculation).
(C) (1) Promptly, and in any event within 30 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Transfer Agent and send, by first-class mail to each Holder of
Exchangeable Preferred Stock, a written notice stating that the Holder may elect
to have his Exchangeable Preferred Stock purchased by the Company either in
whole or in part (subject to pro-rating as hereinafter described in the event
the Offer is oversubscribed), at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (ii) a description of material
developments in the Company's business subsequent to the date of the latest of
such Reports, and (iii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender Exchangeable
Preferred Stock pursuant to the Offer, together with the information contained
in clause (3) below.
(2) Not later than the date upon which written notice of an Offer
is delivered to the Transfer Agent as provided below, the Company shall deliver
to the Transfer Agent an Officers' Certificate as to (i) the amount of the Offer
(the "Offer Amount"), (ii) the allocation of the Net Available Cash from the
Asset Dispositions pursuant to which such Offer is being made and (iii) the
compliance of such allocation with the provisions of subparagraph (l)(iv)(A). On
such date, the Company shall also irrevocably deposit with the Transfer Agent or
with a paying agent (or, if the Company is acting as its own paying agent,
aggregate and hold in trust) in immediately available funds an amount equal to
the Offer Amount to be held for payment in accordance with the provisions of
this clause (C). Upon the expiration of the period for which the Offer remains
open (the "Offer Period"), the Company shall deliver to the Transfer Agent the
Exchangeable Preferred Stock or portions thereof which have been properly
tendered to and are to be accepted by the Company. The Transfer Agent shall, on
the Purchase Date, mail or deliver payment to each tendering Holder in the
amount of the purchase price. In the event that the aggregate purchase price of
the Exchangeable Preferred Stock delivered by the Company to the Transfer Agent
is less than the Offer Amount, the Transfer Agent shall deliver the excess to
the Company promptly after the expiration of the Offer Period.
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20
(3) Holders electing to have Exchangeable Preferred Stock
purchased will be required to surrender the Exchangeable Preferred Stock, with
the form set forth on the reverse of the Exchangeable Preferred Stock duly
completed, to the Company at the address specified in the notice at least ten
Business Days prior to the Purchase Date. Holders will be entitled to withdraw
their election if the Transfer Agent receives not later than three Business Days
prior to the Purchase Date, a facsimile transmission (promptly confirmed in
writing) or letter (a copy of which the Transfer Agent shall give to the Company
not later than one Business Day prior to the Purchase Date) setting forth the
name of the Holder, the number of shares of Exchangeable Preferred Stock which
was delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Exchangeable Preferred Stock purchased. If
at the expiration of the Offer Period the aggregate purchase price of the
Exchangeable Preferred Stock surrendered by Holders, together with the aggregate
purchase price of the other Parity Stock surrendered in connection with the
Offer, exceeds the Offer Amount, the Company shall select the Exchangeable
Preferred Stock and such other Parity Stock to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so that no
fractional shares of Exchangeable Preferred Stock shall be purchased). Holders
whose Exchangeable Preferred Stock are purchased only in part will be Issued new
shares of Exchangeable Preferred Stock representing the unpurchased portion of
the shares of Exchangeable Preferred Stock surrendered.
(4) At the time the Company delivers Exchangeable Preferred Stock
to the Transfer Agent which are to be accepted for purchase, the Company will
also deliver an Officers' Certificate stating that such Exchangeable Preferred
Stock are to be accepted by the Company pursuant to and in accordance with the
terms of this clause (C). Exchangeable Preferred Stock shall be deemed to have
been accepted for purchase at the time the Transfer Agent, directly or through
an agent, mails or delivers payment therefor to the surrendering Holder.
(D) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Exchangeable Preferred Stock
pursuant to this covenant. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this covenant, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Certificate of Designation by
virtue thereof.
(v) Limitation on Transactions with Affiliates. (A) The Company
may not, and may 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 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 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
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21
transfers by the Company and its Restricted Subsidiaries in excess of (i) $1.0
million, the Company shall deliver an Officers' Certificate to the Transfer
Agent 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 Transfer Agent an opinion
from an investment banking firm of national prominence that is not an Affiliate
of the Company to the effect that such business, transaction or transactions are
fair to the Company or such Restricted Subsidiary from a financial point of
view.
(B) The provisions of the preceding paragraph shall not prohibit
(1) any Restricted Payment permitted to be paid pursuant to the provisions of
paragraph (l)(ii) above, (2) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, indemnity agreements, stock options and stock
ownership plans approved by the Board of Directors in the ordinary course of
business and consistent with industry practices, (3) loans or advances to
employees of the Company and the Subsidiaries (other than Restricted Holders)
(I) in the ordinary course of business in an aggregate amount outstanding not to
exceed $5.0 million at any one time outstanding or (II) the proceeds of which
are used to acquire from the Company Capital Stock of the Company (other than
Redeemable Stock or Exchangeable Stock); (4) the payment of reasonable fees to
directors of the Company and its Subsidiaries (other than a Restricted Holder)
who are not employees of the Company or its Subsidiaries; (5) salaries to
employees in the ordinary course of business and consistent with industry
practices; and (6) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries; provided, however, that no
portion of the minority interest in any such Restricted Subsidiary is owned by
an Affiliate (other than the Company or a Wholly Owned Subsidiary) of the
Company.
(vi) SEC Reports and Other Information. Notwithstanding that the
Company may not be required to be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC and
thereupon provide the Transfer Agent and the Holders with such annual reports
and such information, documents and other reports as are specified in Sections
13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such Sections, such information, documents and reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections. In addition, for so long as any of the shares
of Exchangeable Preferred Stock are outstanding, the Company will make available
to any prospective purchaser of the shares of Exchangeable Preferred Stock or
beneficial owner of the shares of Exchangeable Preferred Stock in connection
with any sales thereof the information required by Rule 144A(d)(4) under the
Securities Act.
(vii) Limitation on Mergers and Asset Sales. (A) The Company may
not consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any person unless: (1) the resulting, surviving
or transferee person (if not the Company) is
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22
organized and existing under the laws of the United States of America or any
State thereof or the District of Columbia and the Exchangeable Preferred Stock
shall be converted into or exchanged for and shall become shares of such
resulting, surviving or transferee person, having in respect of such resulting,
surviving or transferee person the same powers, preference and relative
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon, that the Exchangeable Preferred Stock had
immediately prior to such transaction; (2) immediately prior to and after giving
effect to such transaction (and treating any Debt which becomes an obligation of
the resulting, surviving or transferee person or any Subsidiary as a result of
such transaction as having been incurred by such person or such Subsidiary at
the time of such transaction), no Default has occurred and is continuing; (3)
immediately after giving effect to such transaction, the resulting, surviving or
transferee person would be able to issue an additional $1.00 of Debt pursuant to
paragraph (l)(i)(A) above; (4) immediately after giving effect to such
transaction, the resulting, surviving or transferee person has Consolidated Net
Worth in an amount which is not less than the Consolidated Net Worth of the
Company prior to such transaction; and (5) the Company delivers to the Transfer
Agent an Officers' Certificate and an Opinion of Counsel stating that such
consolidation, merger or transfer complies with this Certificate of Designation.
The resulting, surviving or transferee person will be the successor company.
(B) The Company shall not permit Benedek Broadcasting to
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any person unless: (1) the resulting, surviving
or transferee person (if not Benedek Broadcasting) is organized and existing
under the laws of the United States of America or any State thereof or the
District of Columbia; (2) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of the resulting,
surviving or transferee person or any Subsidiary as a result of such transaction
as having been incurred by such person or such Subsidiary at the time of such
transaction), no Default has occurred and is continuing; (3) immediately after
giving effect to such transaction, the Company would be able to issue an
additional $1.00 of Debt pursuant to paragraph (l)(i)(A) above; (4) all of the
Capital Stock of the resulting, surviving or transferee person is owned by the
Company; and (5) the Company delivers to the Transfer Agent an Officers'
Certificate and an Opinion of Counsel stating that such consolidation, merger or
transfer complies with this Certificate of Designation.
(m) Certificates. (i) Form and Dating. The Class A Stock and the
Transfer Agent's certificate of authentication shall be substantially in the
form of Exhibit A, which is hereby incorporated in and expressly made a part of
this Certificate of Designation. The Class B Stock and the Transfer Agent's
certificate of authentication shall be substantially in the form of Exhibit B,
which is hereby incorporated by reference and expressly made a part of this
Certificate of Designation. The Exchangeable Preferred Stock certificate may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Exchangeable Preferred Stock certificate shall be dated the date of its
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23
authentication. The terms of the Exchangeable Preferred Stock certificate set
forth in Exhibit A and Exhibit B are part of the terms of this Certificate of
Designation.
(A) Global Exchangeable Preferred Stock. Class A Stock shall be
issued initially in the form of one or more fully registered global certificates
with the global securities legend and restricted securities legend set forth in
Exhibit A hereto (the "Global Exchangeable Preferred Stock"), which shall be
deposited on behalf of the purchasers represented thereby with the Transfer
Agent, at its New York office, as custodian for DTC (or with such other
custodian as DTC may direct), and registered in the name of DTC or a nominee of
DTC, duly executed by the Company and authenticated by the Transfer Agent as
hereinafter provided. The number of shares of Exchangeable Preferred Stock
represented by Global Exchangeable Preferred Stock may from time to time be
increased or decreased by adjustments made on the records of the Transfer Agent
and DTC or its nominee as hereinafter provided.
(B) Book-Entry Provisions. In the event Global Exchangeable
Preferred Stock is deposited with or on behalf of DTC, the Company shall execute
and the Transfer Agent shall authenticate and deliver initially one or more
Global Exchangeable Preferred Stock certificates that (a) shall be registered in
the name of DTC for such Global Exchangeable Preferred Stock or the nominee of
DTC and (b) shall be delivered by the Transfer Agent to DTC or pursuant to DTC's
instructions or held by the Transfer Agent as custodian for DTC.
Members of, or participants in, DTC ("Agent Members") shall have
no rights under this Certificate of Designation with respect to any Global
Exchangeable Preferred Stock held on their behalf by DTC or by the Transfer
Agent as the custodian of DTC or under such Global Exchangeable Preferred Stock,
and DTC may be treated by the Company, the Transfer Agent and any agent of the
Company or the Transfer Agent as the absolute owner of such Global Exchangeable
Preferred Stock for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Transfer Agent or any agent of the
Company or the Transfer Agent from giving effect to any written certification,
proxy or other authorization furnished by DTC or impair, as between DTC and its
Agent Members, the operation of customary practices of DTC governing the
exercise of the rights of a holder of a beneficial interest in any Global
Exchangeable Preferred Stock.
(C) Certificated Exchangeable Preferred Stock. Except as provided
in this paragraph (i) or in paragraph (iii), owners of beneficial interests in
Global Exchangeable Preferred Stock will not be entitled to receive physical
delivery of certificated Exchangeable Preferred Stock ("Certificated
Exchangeable Preferred Stock").
After a transfer of any Class A Stock during the period of the
effectiveness of a Shelf Registration Statement with respect to such Class A
Stock, all requirements pertaining to legends on such Class A Stock will cease
to apply, the requirements requiring any such Class A Stock issued to Holders be
issued in global form will cease to apply, and Certificated
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24
Exchangeable Preferred Stock without legends will be available to the transferee
of the Holder of such Class A Stock upon exchange of such transferring Holder's
Class A Stock or directions to transfer such Holder's interest in the Global
Exchangeable Preferred Stock, as applicable. Upon the consummation of a
Registered Exchange Offer with respect to the Class A Stock pursuant to which
Holders of such Class A Stock are offered Class B Stock in exchange for their
Class A Stock, all requirements that Class A Stock be issued in global form will
cease to apply and Certificated Exchangeable Preferred Stock with the restricted
securities legend set forth in Exhibit A hereto will be available to Holders of
such Class A Stock that do not exchange their Class A Stock, and Class B Stock
in certificated form will be available to Holders that exchange such Class A
Stock in such Registered Exchange Offer.
(ii) Execution and Authentication. Two Officers, or an Officer
and the Assistant Secretary, shall sign the Exchangeable Preferred Stock for the
Company by manual or facsimile signature. The Company's seal shall be impressed,
affixed, imprinted or reproduced on the Exchangeable Preferred Stock and may be
in facsimile form.
If an Officer or Assistant Secretary whose signature is on
Exchangeable Preferred Stock no longer holds that office at the time the
Transfer Agent authenticates the Exchangeable Preferred Stock, the Exchangeable
Preferred Stock shall be valid nevertheless.
An Exchangeable Preferred Stock shall not be valid until an
authorized signatory of the Transfer Agent manually signs the certificate of
authentication on the Exchangeable Preferred Stock. The signature shall be
conclusive evidence that the Exchangeable Preferred Stock has been authenticated
under this Certificate of Designation.
The Transfer Agent shall authenticate and deliver: (1) 100,000
shares of Class A Stock for original issue and (2) 100,000 shares of Class B
Stock for issue only in a Registered Exchange Offer pursuant to the Exchange and
Registration Rights Agreement, in each case upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the number of
shares of Exchangeable Preferred Stock to be authenticated and the date on which
the original issue of Exchangeable Preferred Stock is to be authenticated and
whether the Exchangeable Preferred Stock is to be Class A Stock or Class B
Stock.
The Transfer Agent may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Exchangeable Preferred Stock.
Unless limited by the terms of such appointment, an authenticating agent may
authenticate Exchangeable Preferred Stock whenever the Transfer Agent may do so.
Each reference in this Certificate of Designation to authentication by the
Transfer Agent includes authentication by such agent. An authenticating agent
has the same rights as the Transfer Agent or agent for service of notices and
demands.
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25
(iii) Transfer and Exchange. (A) Transfer and Exchange of
Certificated Exchangeable Preferred Stock. When Certificated Exchangeable
Preferred Stock is presented to the Transfer Agent with a request to register
the transfer of such Certificated Exchangeable Preferred Stock or to exchange
such Certificated Exchangeable Preferred Stock for an equal number of shares of
Certificated Exchangeable Preferred Stock of other authorized denominations, the
Transfer Agent shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Certificated Exchangeable Preferred Stock surrendered for transfer or
exchange:
(1) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Company and the
Transfer Agent, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(2) in the case of Transfer Restricted Securities that are
Certificated Exchangeable Preferred Stock, are being transferred or
exchanged pursuant to an effective registration statement under the
Securities Act or pursuant to clause (I), (II) or (III) below, and are
accompanied by the following additional information and documents, as
applicable:
(I) if such Transfer Restricted Securities are being
delivered to the Transfer Agent by a Holder for registration in
the name of such Holder, without transfer, a certification from
such Holder to that effect in substantially the form of Exhibit C
hereto; or
(II) if such Transfer Restricted Securities are being
transferred to the Company or to a "qualified institutional
buyer" ("QIB") in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from registration in accordance
with Rule 144 or Regulation S under the Securities Act, a
certification to that effect (in substantially the form of
Exhibit C hereto); or
(III) if such Transfer Restricted Securities are being
transferred to an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act that is acquiring the securities for its own account, or for
the account of such an institutional accredited investor, in each
case in a minimum principal amount of $100,000 for investment
purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities
Act, or in reliance on another exemption from the registration
requirements of the Securities Act: (i) a certification to that
effect in substantially the form of Exhibit C hereto, and if the
Company or the Transfer Agent so requests, evidence reasonably
satisfactory to them as to the compliance with the restrictions
set forth in the legend set forth in paragraph (iii)(G)(1) below.
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26
(B) Restrictions on Transfer of Certificated Exchangeable
Preferred Stock for a Beneficial Interest in Global Exchangeable Preferred
Stock. Certificated Exchangeable Preferred Stock may not be exchanged for a
beneficial interest in Global Exchangeable Preferred Stock except upon
satisfaction of the requirements set forth below. Upon receipt by the Transfer
Agent of Certificated Exchangeable Preferred Stock, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Transfer
Agent, together with:
(1) if such Certificated Exchangeable Preferred Stock is a
Transfer Restricted Security, certification that such Certificated
Exchangeable Preferred Stock is being transferred to a QIB in accordance
with Rule 144A under the Securities Act; and
(2) whether or not such Certificated Exchangeable Preferred Stock
is a Transfer Restricted Security, written instructions directing the
Transfer Agent to make, or to direct DTC to make, an adjustment on its
books and records with respect to such Global Exchangeable Preferred
Stock to reflect an increase in the number of shares of Exchangeable
Preferred Stock represented by the Global Exchangeable Preferred Stock,
then the Transfer Agent shall cancel such Certificated Exchangeable Preferred
Stock and cause, or direct DTC to cause, in accordance with the standing
instructions and procedures existing between DTC and the Transfer Agent, the
number of shares of Exchangeable Preferred Stock represented by the Global
Exchangeable Preferred Stock to be increased accordingly. If no Global
Exchangeable Preferred Stock is then outstanding, the Company shall issue and
the Transfer Agent shall authenticate, upon written order of the Company in the
form of an Officers' Certificate, a new Global Exchangeable Preferred Stock
representing the appropriate number of shares.
(C) Transfer and Exchange of Global Exchangeable Preferred Stock.
The transfer and exchange of Global Exchangeable Preferred Stock or beneficial
interests therein shall be effected through DTC, in accordance with this
Certificate of Designation (including applicable restrictions on transfer set
forth herein, if any) and the procedures of DTC therefor.
(D) Transfer of a Beneficial Interest in Global Exchangeable
Preferred Stock for a Certificated Exchangeable Preferred Stock. (1) Any person
having a beneficial interest in Exchangeable Preferred Stock that is being
transferred or exchanged pursuant to an effective registration statement under
the Securities Act or pursuant to clause (I), (II) or (III) below may upon
request, and if accompanied by the information specified below, exchange such
beneficial interest for Certificated Exchangeable Preferred Stock representing
the same number of shares of Exchangeable Preferred Stock. Upon receipt by the
Transfer Agent of written instructions or such other form of instructions as is
customary for DTC from DTC or its nominee on behalf of any person having a
beneficial interest in Global Exchangeable Preferred Stock and upon receipt by
the Transfer Agent of a written order or such other form of instructions as is
customary for
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27
DTC or the person designated by DTC as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(I) if such beneficial interest is being transferred to the
person designated by DTC as being the owner of a beneficial interest in
Global Exchangeable Preferred Stock, a certification from such person to
that effect (in substantially the form of Exhibit C hereto);
(II) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 or Regulation S
under the Securities Act, a certification to that effect (in
substantially the form of Exhibit C hereto); or
(III) if such beneficial interest is being transferred to an
institutional "accredited investor" as described in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act that is acquiring the security for
its own account, or for the account of such an institutional accredited
investor, in each case in a minimum principal amount of $100,000 for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act, or
in reliance on another exemption from the registration requirements of
the Securities Act: a certification to that effect from the transferor
(in substantially the form of Exhibit C hereto), and if the Company or
the Transfer Agent so requests, evidence reasonably satisfactory to them
as to the compliance with the restrictions set forth in the legend set
forth in paragraph (iii)(G)(1) below.
then, the Transfer Agent or DTC, at the direction of the Transfer Agent, will
cause, in accordance with the standing instructions and procedures existing
between DTC and the Transfer Agent, the number of shares of Exchangeable
Preferred Stock represented by such Global Exchangeable Preferred Stock to be
reduced on its books and records and, following such reduction, the Company will
execute and the Transfer Agent will authenticate and deliver to the transferee
Certificated Exchangeable Preferred Stock.
(2) Certificated Exchangeable Preferred Stock issued in exchange
for a beneficial interest in a Global Exchangeable Preferred Stock pursuant to
this paragraph (iii)(D) shall be registered in such names and in such authorized
denominations as DTC, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Transfer Agent. The Transfer Agent
shall deliver such Certificated Exchangeable Preferred Stock to the persons in
whose names such Exchangeable Preferred Stock are so registered in accordance
with the instructions of DTC.
(E) Restrictions on Transfer and Exchange of Global Exchangeable
Preferred Stock. Notwithstanding any other provisions of this Certificate of
Designation (other than the provisions set forth in paragraph (iii)(F)), Global
Exchangeable Preferred Stock may not be
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28
transferred as a whole except by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC or by DTC or any such nominee to a successor
depository or a nominee of such successor depository.
(F) Authentication of Certificated Exchangeable Preferred Stock.
If at any time:
(1) DTC notifies the Company that DTC is unwilling or unable to
continue as depository for the Global Exchangeable Preferred Stock and a
successor depository for the Global Exchangeable Preferred Stock is not
appointed by the Company within 90 days after delivery of such notice;
(2) DTC ceases to be a clearing agency registered under the
Exchange Act;
(3) there shall have occurred and be continuing a Voting Rights
Triggering Event; or
(4) the Company, in its sole discretion, notifies the Transfer
Agent in writing that it elects to cause the issuance of Certificated
Exchangeable Preferred Stock under this Certificate of Designation,
then the Company will execute, and the Transfer Agent, upon receipt of a written
order of the Company signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of the Company requesting the
authentication and delivery of Certificated Exchangeable Preferred Stock to the
persons designated by the Company, will authenticate and deliver Certificated
Exchangeable Preferred Stock equal to the number of shares of Exchangeable
Preferred Stock represented by the Global Exchangeable Preferred Stock, in
exchange for such Global Exchangeable Preferred Stock.
(G) Legend. (1) Except as permitted by the following paragraph
(2), each certificate evidencing the Global Exchangeable Preferred Stock and the
Certificated Exchangeable Preferred Stock (and all Exchangeable Preferred Stock
issued in exchange therefor or substitution thereof) shall bear a legend in
substantially the following form:
"THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE
INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
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29
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY SUBSEQUENT
INVESTORS, AS SET FORTH IN (A) ABOVE OR TO AN INSTITUTIONAL ACCREDITED
INVESTOR AS DESCRIBED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE (A) AND (B), IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES."
(2) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by Global Exchangeable
Preferred Stock) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
(I) in the case of any Transfer Restricted Security that is a
Certificated Exchangeable Preferred Stock, the Transfer Agent shall
permit the Holder thereof to exchange such Transfer Restricted Security
for a Certificated Exchangeable Preferred Stock that does not bear the
legend set forth above and rescind any restriction on the transfer of
such Transfer Restricted Security;
(II) in the case of any Transfer Restricted Security that is
represented by a Global Exchangeable Preferred Stock, the Transfer Agent
shall permit the Holder thereof to exchange such Transfer Restricted
Security for a Certificated Exchangeable Preferred Stock Security that
does not bear the legend set forth above and rescind any restriction on
the transfer of such Transfer Restricted Security, if the Holder's
request for such exchange was made in reliance on Rule 144 and the
Holder certifies to that effect in writing to the Transfer Agent (such
certification to be in the form set forth on the reverse of the Transfer
Restricted Security); and
(III) in the case of any Transfer Restricted Security that is
represented by a Global Exchangeable Preferred Stock, the Transfer Agent
shall permit the Holder thereof to exchange such Transfer Restricted
Security (in connection with the offer to exchange Class B Stock for
Class A Stock pursuant to the Exchange and Registration Rights
Agreement) for another Global Exchangeable Preferred Stock that does not
bear the legend set forth above.
(H) Cancellation or Adjustment of Global Exchangeable Preferred
Stock. At such time as all beneficial interests in Global Exchangeable Preferred
Stock have either been exchanged for Certificated Exchangeable Preferred Stock,
redeemed, repurchased or canceled,
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30
such Global Exchangeable Preferred Stock shall be returned to DTC for
cancellation or retained and canceled by the Transfer Agent. At any time prior
to such cancellation, if any beneficial interest in Global Exchangeable
Preferred Stock is exchanged for Certificated Exchangeable Preferred Stock,
redeemed, repurchased or canceled, the number of shares of Exchangeable
Preferred Stock represented by such Global Exchangeable Preferred Stock shall be
reduced and an adjustment shall be made on the books and records of the Transfer
Agent with respect to such Global Exchangeable Preferred Stock, by the Transfer
Agent or DTC, to reflect such reduction.
(I) Obligations with Respect to Transfers and Exchanges of
Exchangeable Preferred Stock. (1) To permit registrations of transfers and
exchanges, the Company shall execute and the Transfer Agent shall authenticate
Certificated Exchangeable Preferred Stock and Global Exchangeable Preferred
Stock as required pursuant to the provisions of this paragraph (iii).
(2) All Certificated Exchangeable Preferred Stock and Global
Exchangeable Preferred Stock issued upon any registration of transfer or
exchange of Certificated Exchangeable Preferred Stock or Global Exchangeable
Preferred Stock shall be the valid obligations of the Company, entitled to the
same benefits under this Certificate of Designation, as the Certificated
Exchangeable Preferred Stock or Global Exchangeable Preferred Stock surrendered
upon such registration of transfer or exchange.
(3) Prior to due presentment for registration of transfer of any
Exchangeable Preferred Stock, the Transfer Agent and the Company may deem and
treat the person in whose name any share of Exchangeable Preferred Stock is
registered as the absolute owner of such Exchangeable Preferred Stock and
neither the Transfer Agent nor the Company shall be affected by notice to the
contrary.
(4) No service charge shall be made to a Holder for any
registration of transfer or exchange upon surrender of any Exchangeable
Preferred Stock Certificate at the office of the Transfer Agent maintained for
that purpose. However, the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Exchangeable Preferred Stock
Certificates.
(5) Upon any sale or transfer of shares of Exchangeable Preferred
Stock (including any Exchangeable Preferred Stock represented by a Global
Exchangeable Preferred Stock Certificate) pursuant to an effective registration
statement under the Securities Act, pursuant to Rule 144 under the Securities
Act or pursuant to an opinion of counsel reasonably satisfactory to the Company
that no legend is required:
(A) in the case of any Certificated Exchangeable Preferred Stock,
the Transfer Agent shall permit the holder thereof to exchange such
Exchangeable Preferred Stock for Certificated Exchangeable Preferred
Stock that does not bear the legend set forth in
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31
paragraph (iii)(G) above and rescind any restriction on the transfer of
such Exchangeable Preferred Stock; and
(B) in the case of any Global Exchangeable Preferred Stock, such
Exchangeable Preferred Stock shall not be required to bear the legend
set forth in paragraph (iii)(G) above but shall continue to be subject
to the provisions of paragraph (iii)(D) hereof; provided, however, that
with respect to any request for an exchange of Exchangeable Preferred
Stock that is represented by Global Exchangeable Preferred Stock for
Certificated Exchangeable Preferred Stock that does not bear the legend
set forth in paragraph (iii)(G) above in connection with a sale or
transfer thereof pursuant to Rule 144 (and based upon an opinion of
counsel if the Company so requests), the Holder thereof shall certify in
writing to the Transfer Agent that such request is being made pursuant
to Rule 144 (such certification to be substantially in the form of
Exhibit B hereto).
(iv) Replacement Certificates. If a mutilated Exchangeable
Preferred Stock certificate is surrendered to the Transfer Agent or if the
Holder of a Exchangeable Preferred Stock certificate claims that the
Exchangeable Preferred Stock certificate has been lost, destroyed or wrongfully
taken, the Company shall issue and the Transfer Agent shall countersign a
replacement Exchangeable Preferred Stock certificate if the reasonable
requirements of the Transfer Agent and of Section 8-405 of the Uniform
Commercial Code as in effect in the State of New York are met. If required by
the Transfer Agent or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Transfer Agent to protect the
Company and the Transfer Agent from any loss which either of them may suffer if
an Exchangeable Preferred Stock certificate is replaced. The Company and the
Transfer Agent may charge the Holder for their expenses in replacing a
Exchangeable Preferred Stock certificate. Every replacement Exchangeable
Preferred Stock certificate is an additional obligation of the Company.
(v) Temporary Certificates. Until definitive Exchangeable
Preferred Stock certificates are ready for delivery, the Company may prepare and
the Transfer Agent shall countersign temporary Exchangeable Preferred Stock
certificates. Temporary Exchangeable Preferred Stock certificates shall be
substantially in the form of definitive Exchangeable Preferred Stock
certificates but may have variations that the Company considers appropriate for
temporary Exchangeable Preferred Stock certificates. Without unreasonable delay,
the Company shall prepare and the Transfer Agent shall countersign definitive
Exchangeable Preferred Stock certificates and deliver them in exchange for
temporary Exchangeable Preferred Stock certificates.
(vi) Cancellation. (A) In the event the Company shall purchase or
otherwise acquire Certificated Exchangeable Preferred Stock, the same shall
thereupon be delivered to the Transfer Agent for cancellation.
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32
(B) At such time as all beneficial interests in Global
Exchangeable Preferred Stock have either been exchanged for Certificated
Exchangeable Preferred Stock, redeemed, repurchased or canceled, such Global
Exchangeable Preferred Stock shall thereupon be delivered to the Transfer Agent
for cancellation.
(C) The Transfer Agent and no one else shall cancel and destroy
all Exchangeable Preferred Stock certificates surrendered for transfer,
exchange, replacement or cancellation and deliver a certificate of such
destruction to the Company unless the Company directs the Transfer Agent to
deliver canceled Exchangeable Preferred Stock certificates to the Company. The
Company may not issue new Exchangeable Preferred Stock certificates to replace
Exchangeable Preferred Stock certificates to the extent they evidence
Exchangeable Preferred Stock which the Company has purchased or otherwise
acquired.
(n) Additional Rights of Holders. In addition to the rights
provided to Holders under this Certificate of Designation, Holders shall have
the rights set forth in the Exchange and Registration Rights Agreement.
(o) Certain Definitions. As used in this Certificate of
Designation, the following terms shall have the following meanings (and (1)
terms defined in the singular have comparable meanings when used in the plural
and vice versa, (2) "including" means including without limitation, (3) "or" is
not exclusive and (4) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as in
effect on the Issue Date and all accounting calculations will be determined in
accordance with such principles), unless the content otherwise requires:
"Acquired Station" means any Television Station acquired by the
Company after the Issue Date.
"Acquisitions" means the acquisition by Benedek Broadcasting of
substantially all the television broadcast assets of Stauffer
Communications, Inc. and all the capital stock of Brissette Broadcasting
Corporation and its wholly owned subsidiaries.
"Additional Shares" means additional shares of Exchangeable
Preferred Stock issued 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 paragraphs (l)(ii), (l)(iv) and (l)(v)
above, (a) control of a person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such
person whether by contract or otherwise and
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33
(b) beneficial ownership of 5% or more of the voting common equity (on a
fully diluted basis) or warrants to purchase such equity (whether or not
currently exercisable) of a person shall be deemed to be control of such
person; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or
dispositions) of shares of Capital Stock of a Subsidiary (other than
directors' qualifying shares), property or other assets (each referred
to for the purposes of this definition as a "disposition") by the
Company or any of its Subsidiaries (including any disposition by means
of a merger, consolidation or similar transaction) other than (i) a
disposition by a Subsidiary to the Company or by the Company or a
Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of property
or assets at fair market value in the ordinary course of business, (iii)
a disposition of obsolete assets in the ordinary course of business,
(iv) for purposes of paragraph (l)(iv) above only, a disposition subject
to paragraph (l)(ii) above, (v) a disposition subject to the provisions
set forth in paragraph (l)(vii) above (except to the extent the Company
disposes of substantially all (but not all) of its assets, in which
event the assets not so disposed of shall be deemed as having been sold
by the Company), (vi) a disposition pursuant to the terms of the Company
Pledge Agreement or (vii) a disposition by the Company in which and to
the extent the Company receives as consideration Capital Stock of a
person engaged in, or assets that will be used in, the business of the
Company existing on the Issue Date or in businesses reasonably related
thereto, as determined by the Board of Directors of the Company, the
determination of which will be conclusive and evidenced by a resolution
of the Board of Directors of the Company at the time of such
disposition.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at
the interest rate set forth on the face of the Exchange Debentures,
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
December 17, 1997, as amended, among the Company, Benedek Broadcasting,
as borrower, the Lenders referred to therein, and Bankers Trust Company,
as agent, and all promissory notes, guarantees, security agreements,
pledge agreements, deeds of trust, mortgages, letters of
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34
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.
"Benedek Broadcasting" means Benedek Broadcasting Corporation, a
Delaware corporation and a wholly owned subsidiary of the Company, and
any successor company.
"BLC" means Benedek License Corporation, a Delaware corporation
and a wholly owned subsidiary of Benedek Broadcasting, and any successor
company.
"Board of Directors" means the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a person means any obligation
which is required to be classified and accounted for as a capital lease
on the face of a balance sheet of such person prepared in accordance
with generally accepted accounting principles; the amount of such
obligation shall be the capitalized amount thereof, determined in
accordance with generally accepted accounting principles; and the Stated
Maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such
person, including any Preferred Stock, but excluding any debt securities
convertible into or exchangeable for such equity.
"Cash Flow Leverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount outstanding of all Debt of the
Company and the Restricted Subsidiaries (including any Debt Issued under
paragraph (l)(i)(B)) at the end of the most recent fiscal quarter ending
at least 45 days prior to the date of determination to (ii) Operating
Cash Flow for the four fiscal quarters ending on the last day of such
fiscal quarter; provided; however, that (1) if the Company or any
Restricted Subsidiary has Issued any Debt since the beginning of such
period that remains outstanding or if the transaction giving rise to the
need to calculate the Cash Flow Leverage Ratio is an Issuance of Debt,
or both, Debt as 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,
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35
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).
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36
"Change of Control" means:
(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 Rule 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of a majority in the aggregate of
the total voting power of the Voting Stock of the Company,
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 two-thirds of the directors of the Company
then still in office who
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37
were either directors at the beginning of such period or whose
election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Pledge Agreement" means the Amended and Restated Company
Pledge Agreement dated as of December 17, 1997 between the Company and
Bankers Trust Company.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such interest expense,
(i) interest expense attributable to capital leases, (ii) amortization
of debt discount and debt Issuance cost, (iii) capitalized interest,
(iv) non-cash interest expense, (v) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (vi) interest actually paid by the Company or any
such Restricted Subsidiary under any Guarantee of Debt or other
obligation of any other person, (vii) net costs associated with Hedging
Obligations (including amortization of fees), (viii) Preferred Stock
dividends in respect of all Preferred Stock of Restricted Subsidiaries
and Redeemable Stock of the Company held by persons other than the
Company or a Wholly Owned Subsidiary and (ix) the cash contributions to
any employee stock ownership plan or similar trust to the extent such
contributions are used by such plan or trust to pay interest or fees to
any person (other than the Company) in connection with loans incurred by
such plan or trust to purchase newly issued or treasury shares of the
Company.
"Consolidated Net Income" means, for any period, the net income
of the Company and its consolidated 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
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38
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/Leaseback Transaction) which is not sold
or otherwise disposed of in the ordinary course of business and any gain
(but not loss) realized upon the sale or other disposition of any
Capital Stock of any person and (v) the cumulative effect of a change in
accounting principles. Notwithstanding the foregoing, for the purposes
of paragraph (l)(ii) above only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances
or other transfers of assets from a Non- Recourse Affiliate to the
Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments
permitted under such paragraph pursuant to clause (B)(4) thereof.
"Consolidated Net Worth" of any person means the total of the
amounts shown on the balance sheet of such person and its consolidated
subsidiaries, determined on a consolidated basis in accordance with
generally accepted accounting principles, as of the end of the most
recent fiscal quarter of such person ending at least 45 days prior to
the taking of any action for the purpose of which the determination is
being made, as (i) the par or stated value of all outstanding Capital
Stock of such person plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit, (B) any amounts
attributable to Redeemable Stock and (C) any amounts attributable to
Exchangeable Stock.
"Debt" of any person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such
person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such person is responsible or liable; (ii) all Capital Lease Obligations
and all Attributable Debt of such person; (iii) all obligations of such
person Issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such person and all obligations of such
person under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all
obligations of such person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction
(other than obligations with respect to letters of credit securing
obligations (other than 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
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39
demand for reimbursement following payment on the letter of credit); (v)
the amount of all obligations of such person with respect to the
redemption, repayment or other repurchase of, in the case of a
Subsidiary, any Preferred Stock and, in the case of any other person,
any Redeemable Stock (but excluding any accrued dividends); (vi) all
obligations of the type referred to in clauses (i) through (v) of other
persons and all dividends of other persons for the payment of which, in
either case, such person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including any Guarantees
of such obligations and dividends; and (vii) all obligations of the type
referred to in clauses (i) through (vi) of other persons secured by an
Lien on any property or asset of such person (whether or not such
obligation is assumed by such person), the amount of such obligation
being deemed to be the lesser of the value of such property or assets or
the amount of the obligation so secured. The amount of Debt of any
person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability,
upon the occurrence of the contingency giving rise to the obligation, of
any contingent obligations at such date.
"Default" means any event which is, or after notice or passage of
time or both would be, a Voting Rights Triggering Event.
"DTC" means The Depository Trust Company.
"EBITDA" for any period means the Consolidated Net Income for
such period (but without giving effect to adjustments, accruals,
deductions or entries resulting from purchase accounting, extraordinary
losses or gains and any gains or losses from any Asset Dispositions),
plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expenses, (ii) Consolidated
Interest Expense, (iii) depreciation expense, (iv) amortization expense
(including the amortization of Program Obligations) and (v) all other
noncash charges deducted in the calculation of such Consolidated Net
Income (but excluding (a) any noncash charges related to the items
described in clauses (i) through (v) of the definition of "Consolidated
Net Income" and (b) any noncash charges to the extent that they require
an accrual of or a reserve for cash disbursements for any future period)
and minus, without duplication, all noncash items (but excluding revenue
from barter transactions) that increased such Consolidated Net Income).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange and Registration Rights Agreement" means the Exchange
and Registration Rights Agreement dated as of May 7, 1998 by and among
the Company, TD Securities (USA) Inc. and BT Alex. Brown Incorporated
with respect to the Exchangeable Preferred Stock.
<PAGE>
<PAGE>
40
"Exchange Debentures" means the debentures issuable pursuant to
the Exchange Indenture.
"Exchange Indenture" means the form of Indenture to be entered
into between the Company and IBJ Schroder Bank & Trust Company, as
trustee, in the event the Exchangeable Preferred Stock is exchanged for
Exchange Debentures at the option of the Company, a copy of which form
of Indenture is on file with the Secretary of the Company.
"Exchangeable Stock" means any Capital Stock which is
exchangeable or convertible into another security (other than Capital
Stock of the Company which is neither Exchangeable Stock nor Redeemable
Stock).
"Existing Station" means (i) each of the 23 Television Stations
owned by the Company as of the Issue Date and (ii) each other Television
Station acquired by the Company after the Issue Date and the License for
which is owned by BLC.
"Guarantee" means any obligation, contingent or otherwise, of any
person directly or indirectly guaranteeing any Debt or other obligation
of any person and any obligation, direct or indirect, contingent or
otherwise, of such person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation of
such person (whether arising by virtue of partnership arrangements, or
by agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement conditions
or otherwise) or (ii) entered into for purposes of assuring in any other
manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hedging Obligations" of any person means the obligation of such
person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures
contract or other similar agreement or arrangement designed to protect
such person against changes in interest rates or foreign exchange rates.
"Holders" means the registered holders from time to time of the
Exchangeable Preferred Stock.
"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.
<PAGE>
<PAGE>
41
"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 paragraph
(l)(i) above, if any Debt issued by a Non-Recourse Subsidiary thereafter
ceases to be Non-Recourse Debt of a Non-Recourse Subsidiary, then such
event shall be deemed for the purpose of such covenant to constitute the
issuance of such Debt by the issuer thereof.
"Issue Date" means the date on which the Exchangeable Preferred
Stock is initially issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New
York.
"License" means, with respect to any Television Station, any and
all licenses and authorizations issued by the Federal Communications
Commission with respect to such Television Station.
"Lien" means any mortgage, pledge, security interest, conditional
sale or other title retention agreement or other similar lien.
"Liquidated Damages" means, with respect to any share of
Exchangeable Preferred Stock, the cash dividends then owing on such
shares pursuant to paragraph 3 of the Exchange and Registration Rights
Agreement.
"Maximum Amount" as of any date of determination means, with
respect to any Acquired Station, the product of (i) the Operating Cash
Flow of such Acquired Station for the four recent fiscal quarters ending
at least 45 days prior to such date of determination and (ii) the number
5.0; provided, however, that if such Acquired Station is acquired by the
Company in connection with an Asset Disposition of an Existing Station,
the amount in clause (i) above shall be reduced by the Operating Cash
Flow for such period of such Existing Station.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as and when received, but
<PAGE>
<PAGE>
42
excluding any other consideration received in the form of assumption by
the acquiring person of Debt or other obligations relating to such
properties or assets or received in any other noncash form) therefrom,
in each case net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required to be accrued as a
liability under generally accepted accounting principles, as a
consequence of such Asset Disposition, (ii) all payments made on any
Debt which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any lien upon or other security
agreement of any kind with respect to such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from
such Asset Disposition, (iii) all distributions and other payments
required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Disposition and (iv) the
deduction of appropriate amounts to be provided by the seller as a
reserve in accordance with generally accepted accounting principles,
against any liabilities associated with the assets disposed of in such
Asset Disposition and retained by the Company or any Subsidiary after
such Asset Disposition.
"Net Cash Proceeds" with respect to any Issuance or sale of
Capital Stock, means the cash proceeds of such Issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents'
fees, discounts or commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof.
"Non-Convertible Common Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and
any Capital Stock of such corporation convertible solely into
non-convertible common stock of such corporation; provided, however,
that Non-Convertible Common Stock shall not include any Redeemable Stock
or Exchangeable Stock or, in the case of the Company, any Senior Stock
or Parity Stock.
"Non-Recourse Affiliate" means a Non-Recourse Subsidiary or any
other Affiliate of the Company or a Restricted Subsidiary which (i) has
not acquired any assets (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
<PAGE>
<PAGE>
43
holder of any other Debt of the Company or its Restricted Subsidiaries
to declare a default on such other Debt or cause the payment thereof to
be accelerated or payable prior to its Stated Maturity.
"Non-Recourse Subsidiary" means a Subsidiary which (i) has not
acquired any assets (other than cash) directly or indirectly from the
Company or any Restricted Subsidiary, (ii) only owns properties acquired
after the Issue Date and (iii) has no Debt other that Non-Recourse Debt.
"Officer" means the Chairman of the Board of Directors, the
President, any Vice President, the Treasurer or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Operating Cash Flow" for any period means EBITDA for such period
less Program Obligation Payments for such period; provided, however,
that, when used in the definition of "Maximum Amount" with respect to a
Television Station, all references to the Company and Restricted
Subsidiaries and consolidated subsidiaries used in the definitions of
"EBITDA" and "Program Obligation Payments" and the definitions used
therein shall be deemed to refer to such Television Station.
"Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Transfer Agent. The counsel may be an employee
of or counsel to the Company or the Transfer Agent.
"Parent" means any person that beneficially owns, directly or
indirectly, all the Voting Stock of the Company.
"Permitted Acquisition Debt" means Debt of the Company or any
Restricted Subsidiary Issued to finance all or any portion of the cost
of the acquisition of an Acquired Station, where the License for such
Acquired Station is owned by BLC, and Refinancing Debt in respect of
such Debt; provided, however, that the aggregate amount of such
Permitted Acquisition Debt with respect to any Acquired Station shall
not exceed the Maximum Amount with respect to such Acquired Station.
"Permitted Holders" shall mean (i) A. Richard Benedek; (ii)
family members or relatives of A. Richard Benedek; (iii) any trusts
created for the benefit of the persons described in clauses (i), (ii) or
(iv) of this paragraph or any trust for the benefit of any trust; (iv)
in the event of the death or incompetence of any person described in
clauses (i) or (ii) of this paragraph such person's estate, executor,
administrator, committee or other personal representative or
beneficiaries; or (v) any Affiliate of A. Richard Benedek.
<PAGE>
<PAGE>
44
"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 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 Restricted Subsidiaries during such
period with respect to, or on account of, Program Obligations.
"Program Obligations" means the obligations of the Company and
the Restricted Subsidiaries with respect to the acquisition of the right
to broadcast films and other programming material, payable in a form
other than barter.
"Public Equity Offering" means an underwritten public offering of
common stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Redeemable Stock" means the Exchangeable Preferred Stock and any
Capital Stock that by its terms or otherwise is required to be redeemed
on or prior to the first anniversary of the Stated Maturity of the
Exchangeable Preferred Stock or is redeemable at the option of the
holder thereof at any time on or prior to the first anniversary of the
Stated Maturity of the Exchangeable Preferred Stock.
<PAGE>
<PAGE>
45
"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 Certificate of Designation; provided,
however, that (i) such Refinancing Debt has a Stated Maturity no earlier
than the Stated Maturity of the Debt being Refinanced, (ii) such
Refinancing Debt has an Average Life at the time such Refinancing Debt
is Issued that is equal to or greater than the Average Life of the Debt
being Refinanced and (iii) such Refinancing Debt has an aggregate
principal amount (or if Issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate
principal amount (or if Issued with original issue discount, the
aggregate accreted value) then outstanding or committed under the Debt
being Refinanced (plus the amount of any premium or penalty paid,
whether pursuant to terms of the instrument governing such Debt or by
reason of any tender premium therefor, and plus the amount of any
expenses incurred by the Company or any Subsidiary in connection with
such Refinancing (including without limitation underwriting discounts or
commissions)); provided further, however, that refinancing Debt shall
not include (x) Debt of a Subsidiary that Refinances Debt of the Company
or (y) Debt of the Company or a Restricted Subsidiary that Refinances
Debt of a Non-Recourse Subsidiary.
"Registered Exchange Offer" means a registered exchange offer of
Exchangeable Preferred Stock under the Securities Act pursuant to the
Exchange and Registration Rights Agreement.
"Required Disposition" means the disposition of either WMTV(TV),
serving Madison, Wisconsin, or WIFR-TV, serving Rockford, Illinois, as
such disposition may be required pursuant to an order of the Federal
Communications Commission.
"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.
<PAGE>
<PAGE>
46
"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 Act" means the Securities Act of 1933, as amended.
"Seller Junior Discount Preferred Stock" means the $45,000,000
Preferred Stock issued by the Company to General Electric Capital
Corporation and Mr. Paul Brissette in connection with the Acquisitions.
"Senior Subordinated Discount Notes" means the 13-1/4% Senior
Subordinated Discount Notes due 2007 issued pursuant to the Senior
Subordinated Discount Note Indenture.
"Senior Subordinated Discount Note Indenture" means the Indenture
dated as of May 15, 1996, between the Company and United States Trust
Company of New York, as trustee providing for the issuance of the Senior
Subordinated Discount Notes.
"Shelf Registration Statement" means a shelf registration
statement filed with the SEC to cover resales of Transfer Restricted
Securities by holders thereof.
"Specified Amount" means, on any date with respect to any share
of Exchangeable Preferred Stock, the sum of (i) the liquidation
preference with respect to such share and (ii) the Accumulated Dividends
with respect to such share that are added automatically to the Specified
Amount of such share.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the principal of
such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Strategic Equity Investor" means any person that is, or is a
controlled Affiliate of any person that is, engaged in the broadcasting
business; provided, however, that Strategic Equity Investor shall not
include any Affiliate of the Company.
<PAGE>
<PAGE>
47
"Strategic Investment" means a sale by the Company or Parent of
its common stock to one or more Strategic Equity Investors.
"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.
"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.
"Transfer Agent" means the transfer agent for the Exchangeable
Preferred Stock appointed by the Company, which initially shall be IBJ
Schroder Bank & Trust Company.
"Transfer Restricted Securities" means each share of Class A
Stock until (i) such Class A Stock has been exchanged by a person other
than a broker-dealer for freely transferrable Class B Stock in a
Registered Exchange Offer, (ii) following the exchange by a
broker-dealer in the Registered Exchange Offer of Class A Stock for
Class B Stock, the date on which such Class B Stock is sold to a
purchaser who receives from such broker-dealer or prior to the date of
such sale a copy of the prospectus contained in the Registered Exchange
Offer registration statement, (iii) the date on which such Class A Stock
has been effectively registered under the Securities Act and disposed of
in accordance with a Shelf Registration Statement or (iv) the date on
which such Class A Stock is distributed to the public pursuant to Rule
144 under the Securities Act or is saleable pursuant to Rule 144(k)
under the Securities Act.
"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.
<PAGE>
<PAGE>
48
IN WITNESS WHEREOF, said Benedek Communications Corporation, has
caused this Certificate of Designation to be signed by Ronald L. Lindwall, its
Senior Vice President - Finance, this 13th day of May, 1998.
BENEDEK COMMUNICATIONS CORPORATION,
by /s/ Ronald L. Lindwall
---------------------------------------
Name: Ronald L. Lindwall
Title: Senior Vice President - Finance
<PAGE>
<PAGE>
EXHIBIT A
<PAGE>
<PAGE>
Number _______ _______ SHARES
BENEDEK COMMUNICATIONS CORPORATION
(INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
CUSIP 08170W502
THIS IS TO CERTIFY THAT _________ IS THE OWNER OF _________________ (_______)
FULLY PAID AND NON-ASSESSABLE SHARES OF THE ABOVE COMPANY'S
11 1/2% SERIES A SENIOR EXCHANGEABLE PREFERRED STOCK
(PAR VALUE $0.01 PER SHARE)
TRANSFERABLE ONLY ON THE BOOKS OF THE COMPANY BY THE HOLDER HEREOF OR BY ITS
DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
REFERENCE IS MADE HEREBY TO THE FURTHER PROVISIONS OF THIS CERTIFICATE SET FORTH
ON THE REVERSE HEREOF AND TO THE PROVISIONS OF THE CERTIFICATE OF DESIGNATION
WHICH SET FORTH THE TERMS AND PROVISIONS APPLICABLE TO THE EXCHANGEABLE
PREFERRED STOCK AND SUCH FURTHER PROVISIONS ON THE REVERSE HEREOF AND IN THE
CERTIFICATE OF DESIGNATION SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH AT THIS PLACE.
THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT
AND REGISTERED BY THE REGISTRAR.
WITNESS, THE SEAL OF THE COMPANY AND THE SIGNATURES OR THE FACSIMILE
THEREOF OF ITS DULY AUTHORIZED OFFICERS.
DATED: COUNTERSIGNED AND REGISTERED:
BENEDEK COMMUNICATIONS CORPORATION IBJ SCHRODER BANK & TRUST COMPANY
_____________________________________ AS REGISTRAR AND TRANSFER AGENT
_____________________________________ ---------------------
AUTHORIZED SIGNATURE
<PAGE>
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
[REVERSE OF CERTIFICATE]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR EXCHANGEABLE
PREFERRED STOCK IN DEFINITIVE FORM, THIS EXCHANGEABLE PREFERRED STOCK MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. THE DEPOSITORY TRUST COMPANY ("DTC") (55
WATER STREET, NEW YORK, NEW YORK) SHALL ACT AS THE DEPOSITORY UNTIL A SUCCESSOR
SHALL BE APPOINTED BY THE COMPANY AND THE TRANSFER AGENT. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL
INVESTOR (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES
ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR
(4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE OR TO AN
INSTITUTIONAL ACCREDITED INVESTOR AS DESCRIBED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE (A) AND
(B), IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES.
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OF REGULATIONS:
<TABLE>
<S> <C> <C> <C>
TEN COM - AS TENANTS IN COMMON UNIF GIFT MIN ACT.................. CUSTODIAN............................
(CUST) (MINOR)
TEN ENT - AS TENANTS BY THE ENTIRETIES UNDER UNIFORM GIFTS TO MINORS
ACT................................
(STATE)
JT TEN - AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS
IN COMMON
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST
</TABLE>
FOR VALUE RECEIVED ________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
<TABLE>
<S> <C>
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
- ------------------------------------------------------------------------------------ ATTORNEY
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED COMPANY WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
- ------------------------------------------------------------------------------------
</TABLE>
DATED_________________ 19______
IN PRESENCE OF
- ---------------------------------------
SCHEDULE OF EXCHANGES OF CERTIFICATED EXCHANGEABLE PREFERRED STOCK
The following exchanges of a part of this Global Exchangeable Preferred Stock
for Certificated Exchangeable Preferred Stock have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Amount of decrease in Amount of increase in Liquidation Preference of this
Liquidation Preference of Liquidation Preference of Global Exchangeable Preferred Signature of
this Global Exchangeable this Global Exchangeable Stock following such authorized officer of
Date of Exchange Preferred Stock Preferred Stock decrease (or increase) Transfer Agent
- ---------------- ------------------------- ------------------------- ----------------------------- ---------------------
</TABLE>
As required under Delaware law, the Company shall furnish to any shareholder
upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the board of directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the classes and series of shares of the Company.
<PAGE>
<PAGE>
Number _______ _______ SHARES
BENEDEK COMMUNICATIONS CORPORATION
(INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
CUSIP 08170W502
THIS IS TO CERTIFY THAT _________ IS THE OWNER OF _________________ (_______)
FULLY PAID AND NON-ASSESSABLE SHARES OF THE ABOVE COMPANY'S
11 1/2% SERIES A SENIOR EXCHANGEABLE PREFERRED STOCK
(PAR VALUE $0.01 PER SHARE)
TRANSFERABLE ONLY ON THE BOOKS OF THE COMPANY BY THE HOLDER HEREOF OR BY ITS
DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
REFERENCE IS MADE HEREBY TO THE FURTHER PROVISIONS OF THIS CERTIFICATE SET FORTH
ON THE REVERSE HEREOF AND TO THE PROVISIONS OF THE CERTIFICATE OF DESIGNATION
WHICH SET FORTH THE TERMS AND PROVISIONS APPLICABLE TO THE EXCHANGEABLE
PREFERRED STOCK AND SUCH FURTHER PROVISIONS ON THE REVERSE HEREOF AND IN THE
CERTIFICATE OF DESIGNATION SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH AT THIS PLACE.
THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT
AND REGISTERED BY THE REGISTRAR.
WITNESS, THE SEAL OF THE COMPANY AND THE SIGNATURES OR THE FACSIMILE
THEREOF OF ITS DULY AUTHORIZED OFFICERS.
DATED: COUNTERSIGNED AND REGISTERED:
BENEDEK COMMUNICATIONS CORPORATION IBJ SCHRODER BANK & TRUST COMPANY
AS REGISTRAR AND TRANSFER AGENT
_______________________________________
_______________________________________ --------------------------
AUTHORIZED SIGNATURE
<PAGE>
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
[REVERSE OF CERTIFICATE]
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL
INVESTOR (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES
ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR
(4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE OR TO AN
INSTITUTIONAL ACCREDITED INVESTOR AS DESCRIBED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE (A) AND
(B), IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES.
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OF REGULATIONS:
<TABLE>
<S> <C> <C> <C>
TEN COM - AS TENANTS IN COMMON UNIF GIFT MIN ACT.................. CUSTODIAN............................
(CUST) (MINOR)
TEN ENT - AS TENANTS BY THE ENTIRETIES UNDER UNIFORM GIFTS TO MINORS
ACT................................
(STATE)
JT TEN - AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS
IN COMMON
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST
</TABLE>
FOR VALUE RECEIVED ________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
<TABLE>
<S> <C>
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
- ------------------------------------------------------------------------------------ ATTORNEY
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED COMPANY WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
- ------------------------------------------------------------------------------------
</TABLE>
DATED_________________ 19_____
IN PRESENCE OF
- --------------------------------------
SCHEDULE OF EXCHANGES OF CERTIFICATED EXCHANGEABLE PREFERRED STOCK
The following exchanges of a part of this Global Exchangeable Preferred Stock
for Certificated Exchangeable Preferred Stock have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Amount of decrease in Amount of increase in Liquidation Preference of this
Liquidation Preference of Liquidation Preference of Global Exchangeable Preferred Signature of
this Global Exchangeable this Global Exchangeable Stock following such authorized officer of
Date of Exchange Preferred Stock Preferred Stock decrease (or increase) Transfer Agent
- ---------------- ------------------------- ------------------------- ----------------------------- ---------------------
</TABLE>
As required under Delaware law, the Company shall furnish to any shareholder
upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the board of directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the classes and series of shares of the Company.
<PAGE>
<PAGE>
EXHIBIT B
<PAGE>
<PAGE>
Number _______ _______ SHARES
BENEDEK COMMUNICATIONS CORPORATION
(INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
CUSIP 08170W601
THIS IS TO CERTIFY THAT _________ IS THE OWNER OF _________________ (_______)
FULLY PAID AND NON-ASSESSABLE SHARES OF THE ABOVE COMPANY'S
11 1/2% SERIES B SENIOR EXCHANGEABLE PREFERRED STOCK
(PAR VALUE $0.01 PER SHARE)
TRANSFERABLE ONLY ON THE BOOKS OF THE COMPANY BY THE HOLDER HEREOF OR BY ITS
DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
REFERENCE IS MADE HEREBY TO THE FURTHER PROVISIONS OF THIS CERTIFICATE SET FORTH
ON THE REVERSE HEREOF AND TO THE PROVISIONS OF THE CERTIFICATE OF DESIGNATION
WHICH SET FORTH THE TERMS AND PROVISIONS APPLICABLE TO THE EXCHANGEABLE
PREFERRED STOCK AND SUCH FURTHER PROVISIONS ON THE REVERSE HEREOF AND IN THE
CERTIFICATE OF DESIGNATION SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH AT THIS PLACE.
THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT
AND REGISTERED BY THE REGISTRAR.
WITNESS, THE SEAL OF THE COMPANY AND THE SIGNATURES OR THE FACSIMILE
THEREOF OF ITS DULY AUTHORIZED OFFICERS.
DATED: COUNTERSIGNED AND REGISTERED:
BENEDEK COMMUNICATIONS CORPORATION IBJ SCHRODER BANK & TRUST COMPANY
AS REGISTRAR AND TRANSFER AGENT
_____________________________________
_____________________________________ -------------------------
AUTHORIZED SIGNATURE
<PAGE>
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
[REVERSE OF CERTIFICATE]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR EXCHANGEABLE
PREFERRED STOCK IN DEFINITIVE FORM, THIS EXCHANGEABLE PREFERRED STOCK MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. THE DEPOSITORY TRUST COMPANY ("DTC") (55
WATER STREET, NEW YORK, NEW YORK) SHALL ACT AS THE DEPOSITORY UNTIL A SUCCESSOR
SHALL BE APPOINTED BY THE COMPANY AND THE TRANSFER AGENT. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OF REGULATIONS:
<TABLE>
<S> <C> <C> <C>
TEN COM - AS TENANTS IN COMMON UNIF GIFT MIN ACT.................. CUSTODIAN............................
(CUST) (MINOR)
TEN ENT - AS TENANTS BY THE ENTIRETIES UNDER UNIFORM GIFTS TO MINORS
ACT................................
(STATE)
JT TEN - AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS
IN COMMON
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST
</TABLE>
FOR VALUE RECEIVED ________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
<TABLE>
<S> <C>
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
- ------------------------------------------------------------------------------------ ATTORNEY
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED COMPANY WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
- ------------------------------------------------------------------------------------
</TABLE>
DATED__________________ 19_____
IN PRESENCE OF
SCHEDULE OF EXCHANGES OF CERTIFICATED EXCHANGEABLE PREFERRED STOCK
The following exchanges of a part of this Global Exchangeable Preferred Stock
for Certificated Exchangeable Preferred Stock have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Amount of decrease in Amount of increase in Liquidation Preference of this
Liquidation Preference of Liquidation Preference of Global Exchangeable Preferred Signature of
this Global Exchangeable this Global Exchangeable Stock following such authorized officer of
Date of Exchange Preferred Stock Preferred Stock decrease (or increase) Transfer Agent
- ---------------- ------------------------- ------------------------- ----------------------------- ---------------------
</TABLE>
As required under Delaware law, the Company shall furnish to any shareholder
upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the board of directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the classes and series of shares of the Company.
<PAGE>
<PAGE>
Number__________ _______ SHARES
BENEDEK COMMUNICATIONS CORPORATION
(INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
CUSIP 08170W601
THIS IS TO CERTIFY THAT _________ IS THE OWNER OF _________________ (_______)
FULLY PAID AND NON-ASSESSABLE SHARES OF THE ABOVE COMPANY'S
11 1/2% SERIES B SENIOR EXCHANGEABLE PREFERRED STOCK
(PAR VALUE $0.01 PER SHARE)
TRANSFERABLE ONLY ON THE BOOKS OF THE COMPANY BY THE HOLDER HEREOF OR BY ITS
DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
REFERENCE IS MADE HEREBY TO THE FURTHER PROVISIONS OF THIS CERTIFICATE SET FORTH
ON THE REVERSE HEREOF AND TO THE PROVISIONS OF THE CERTIFICATE OF DESIGNATION
WHICH SET FORTH THE TERMS AND PROVISIONS APPLICABLE TO THE EXCHANGEABLE
PREFERRED STOCK AND SUCH FURTHER PROVISIONS ON THE REVERSE HEREOF AND IN THE
CERTIFICATE OF DESIGNATION SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH AT THIS PLACE.
THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT
AND REGISTERED BY THE REGISTRAR.
WITNESS, THE SEAL OF THE COMPANY AND THE SIGNATURES OR THE FACSIMILE
THEREOF OF ITS DULY AUTHORIZED OFFICERS.
DATED: COUNTERSIGNED AND REGISTERED:
BENEDEK COMMUNICATIONS CORPORATION IBJ SCHRODER BANK & TRUST COMPANY
AS REGISTRAR AND TRANSFER AGENT
______________________________________
______________________________________ ------------------------
AUTHORIZED SIGNATURE
<PAGE>
<PAGE>
[REVERSE OF CERTIFICATE]
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OF REGULATIONS:
<TABLE>
<S> <C> <C> <C>
TEN COM - AS TENANTS IN COMMON UNIF GIFT MIN ACT.................. CUSTODIAN............................
(CUST) (MINOR)
TEN ENT - AS TENANTS BY THE ENTIRETIES UNDER UNIFORM GIFTS TO MINORS
ACT................................
(STATE)
JT TEN - AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS
TENANTS
IN COMMON
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST
</TABLE>
FOR VALUE RECEIVED ________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
<TABLE>
<S> <C>
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
- ------------------------------------------------------------------------------------ ATTORNEY
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED COMPANY WITH FULL
POWER OF SUBSTITUTION IN THE PREMISES.
- ------------------------------------------------------------------------------------
</TABLE>
DATED____________ 19_____
IN PRESENCE OF
__________________________________
SCHEDULE OF EXCHANGES OF CERTIFICATED EXCHANGEABLE PREFERRED STOCK
The following exchanges of a part of this Global Exchangeable Preferred Stock
for Certificated Exchangeable Preferred Stock have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Amount of decrease in Amount of increase in Liquidation Preference of this
Liquidation Preference of Liquidation Preference of Global Exchangeable Preferred Signature of
this Global Exchangeable this Global Exchangeable Stock following such authorized officer of
Date of Exchange Preferred Stock Preferred Stock decrease (or increase) Transfer Agent
- ---------------- ------------------------- ------------------------- ----------------------------- ---------------------
</TABLE>
As required under Delaware law, the Company shall furnish to any shareholder
upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the board of directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the classes and series of shares of the Company.
<PAGE>
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF EXCHANGEABLE PREFERRED STOCK
Re: 11 1/2% Series A and Series B Senior Exchangeable Preferred Stock (the
"Exchangeable Preferred Stock") of Benedek Communications Corporation (the
"Company")
This Certificate relates to ____ shares of Exchangeable Preferred
Stock held in [ ] */ book-entry or [ ] */ definitive form by _______________
(the "Transferor").
The Transferor*:
[ ] has requested the Transfer Agent by written order to deliver in
exchange for its beneficial interest in the Global Exchangeable Preferred Stock
held by the depository shares of Exchangeable Preferred Stock in definitive,
registered form equal to its beneficial interest in such Global Exchangeable
Preferred Stock (or the portion thereof indicated above); or
[ ] has requested the Transfer Agent by written order to exchange or
register the transfer of Exchangeable Preferred Stock.
In connection with such request and in respect of such
Exchangeable Preferred Stock, the Transferor does hereby certify that the
Transferor is familiar with the Certificate of Designation relating to the above
captioned Exchangeable Preferred Stock and that the transfer of this
Exchangeable Preferred Stock does not require registration under the Securities
Act of 1933, as amended (the "Securities Act") because */:
[ ] Such Exchangeable Preferred Stock is being acquired for the
Transferor's own account without transfer.
[ ] Such Exchangeable Preferred Stock is being transferred to the
Company.
[ ] Such Exchangeable Preferred Stock is being transferred (i) to a
qualified institutional buyer (as defined in Rule 144A under the Securities
Act), in reliance on Rule 144A or (ii) pursuant to an exemption from
registration in accordance with Rule 904 under the Securities Act (and, in the
case of clause (ii), based on an opinion of counsel if the Company so requests
and together with a certification in substantially the form of Exhibit E to the
Certificate of Designation).
- --------
* /Please check applicable box.
<PAGE>
<PAGE>
2
[ ] Such Exchangeable Preferred Stock is being transferred to an
institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3)
or (7) under the Securities Act pursuant to a private placement exemption from
the registration requirements of the Securities Act (together with a
certification in substantially the form of Exhibit D to the Certificate of
Designation).
[ ] Such Exchangeable Preferred Stock is being transferred in reliance
on and in compliance with another exemption from the registration requirements
of the Securities Act (and based on an opinion of counsel if the Company so
requests).
_____________________________
[INSERT NAME OF TRANSFEROR]
Date:__________________ by___________________________
<PAGE>
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED BY ACCREDITED INSTITUTIONS
_____________, _____
IBJ Schroder Bank & Trust Company, as Transfer Agent
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed purchase of certain 11 1/2%
Series A and Series B Senior Exchangeable Preferred Stock (the "Exchangeable
Preferred Stock"), of Benedek Communications Corporation, a Delaware corporation
(the "Company"), we represent that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1),(2),(3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act") (an "Institutional Accredited Investor"), or an
entity in which all of the equity owners are Institutional Accredited
Investors;
(ii) any purchase of Exchangeable Preferred Stock will be for our
own account or for the account of one or more other Institutional
Accredited Investors as to which we exercise sole investment discretion;
(iii) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks
of purchasing Exchangeable Preferred Stock and we and any accounts for
which we are acting are able to bear the economic risks of our or their
investment;
(iv) we are not acquiring Exchangeable Preferred Stock with a
view to any distribution thereof in a transaction that would violate the
Securities Act or the securities laws of any State of the United States
or any other applicable jurisdiction; provided that the disposition of
our property and the property of any accounts for which we are acting as
fiduciary shall remain at all times without our control; and
(v) we acknowledge that we have had access to such financial and
other information, and have been afforded the opportunity to ask such
questions of representatives of the Company and receive answers thereto,
as we deem necessary in connection with our decision to purchase
Exchangeable Preferred Stock.
<PAGE>
<PAGE>
2
We understand that the Exchangeable Preferred Stock has not been
registered under the Securities Act, and we agree, on our own behalf and on
behalf of each account for which we acquire any Exchangeable Preferred Stock,
that such Exchangeable Preferred Stock may be offered, resold, pledged or
otherwise transferred only (i) to a person whom we reasonably believe to be a
qualified institutional buyer (as defined in Rule 144A under the Securities Act)
in a transaction meeting the requirements of Rule 144A, in a transaction meeting
the requirements of Rule 144 under the Securities Act, outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904 under
the Securities Act (and, unless such transfer occurs in a transaction meeting
the requirements of Rule 144A, based upon an opinion of counsel, if the Company
so requests), (ii) to the Company or (iii) pursuant to an effective registration
statement, and, in each case, in accordance with any applicable securities laws
of any State of the United States or any other applicable jurisdiction. We
understand that the registrar will not be required to accept for registration of
transfer any shares of Exchangeable Preferred Stock, except upon presentation of
evidence satisfactory to the Company that the foregoing restrictions on transfer
have been complied with. We further understand that the Exchangeable Preferred
Stock purchased by us will bear a legend reflecting the substance of this
paragraph. We further agree to provide to any person acquiring any of the
Exchangeable Preferred Stock from us a notice advising such person that resales
of the Exchangeable Preferred Stock are restricted as stated herein.
We acknowledge that you, the Company and others will rely upon
our confirmations, acknowledgements and agreements set forth herein, and we
agree to notify you promptly in writing if any of our representations or
warranties herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
_____________________________
(Name of Transferee)
by __________________________
Name:
Title:
Address:
<PAGE>
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S
__________, ____
IBJ Schroder Bank & Trust Company, as Transfer Agent
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed sale of certain 11 1/2% Senior
Exchangeable Preferred Stock (the "Exchangeable Preferred Stock") to purchase
___ shares of Benedek Communications Corporation, a Delaware corporation ("the
"Company"), we represent that:
(i) the offer of the Exchangeable Preferred Stock was not made to
a person in the United States;
(ii) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States;
(iii) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act of 1933 (the
"Securities Act"), as applicable; and
(iv) the transaction is not part of a plan or scheme by us to
evade the registration requirements of the Securities Act.
<PAGE>
<PAGE>
2
You and the Company are entitled to rely upon this letter and you
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
__________________________________
(Name of Transferor)
by _______________________________
Name:
Title:
Address:
<PAGE>
<PAGE>
EXHIBIT 4.9
================================================================================
BENEDEK COMMUNICATIONS CORPORATION
Issuer
IBJ SCHRODER BANK & TRUST COMPANY
Trustee
------------
$[ ]
11 1/2% Exchange Debentures Due 2008
------------
EXCHANGE INDENTURE
Dated as of , 199
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Other Definitions........................................................................19
SECTION 1.03. Incorporation by Reference of Trust Indenture Act........................................20
SECTION 1.04. Rules of Construction....................................................................20
ARTICLE II
The Securities
SECTION 2.01. Form and Dating..........................................................................21
SECTION 2.02. Execution and Authentication.............................................................23
SECTION 2.03. Registrar and Paying Agent...............................................................24
SECTION 2.04. Paying Agent to Hold Money in Trust......................................................24
SECTION 2.05. Securityholder Lists.....................................................................24
SECTION 2.06. Transfer and Exchange....................................................................25
SECTION 2.07. Replacement Securities...................................................................31
SECTION 2.08. Outstanding Securities...................................................................31
SECTION 2.09. Temporary Securities.....................................................................32
SECTION 2.10. Cancellation.............................................................................33
SECTION 2.11. Defaulted Interest.......................................................................33
SECTION 2.12. CUSIP Numbers............................................................................33
SECTION 2.13. Computation of Interest..................................................................33
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee.......................................................................34
SECTION 3.02. Selection of Securities to Be Redeemed...................................................34
SECTION 3.03. Notice of Redemption.....................................................................34
SECTION 3.04. Effect of Notice of Redemption...........................................................35
SECTION 3.05. Deposit of Redemption Price..............................................................35
SECTION 3.06. Securities Redeemed in Part..............................................................35
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities....................................................................36
SECTION 4.02. SEC Reports..............................................................................36
</TABLE>
<PAGE>
<PAGE>
ii
<TABLE>
<S> <C> <C>
SECTION 4.03. Limitation on Debt.......................................................................36
SECTION 4.04. Limitation on Restricted Payments........................................................38
SECTION 4.05. Limitation on Restrictions on Distributions from Restricted
Subsidiaries..................................................................41
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.......................................42
SECTION 4.07. Limitation on Transactions with Affiliates...............................................45
SECTION 4.08. Change of Control........................................................................46
SECTION 4.09. Limitation on Liens......................................................................48
SECTION 4.10. Limitation on Sale/Leaseback Transactions................................................48
SECTION 4.11. Compliance Certificate...................................................................48
SECTION 4.12. Further Instruments and Acts.............................................................49
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets................................................49
SECTION 5.02. When Benedek Broadcasting May Merge or Transfer Assets...................................50
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default........................................................................50
SECTION 6.02. Acceleration.............................................................................52
SECTION 6.03. Other Remedies...........................................................................53
SECTION 6.04. Waiver of Past Defaults..................................................................53
SECTION 6.05. Control by Majority......................................................................54
SECTION 6.06. Limitation on Suits......................................................................54
SECTION 6.07. Rights of Holders to Receive Payment.....................................................54
SECTION 6.08. Collection Suit by Trustee...............................................................54
SECTION 6.09. Trustee May File Proofs of Claim.........................................................55
SECTION 6.10. Priorities...............................................................................55
SECTION 6.11. Undertaking for Costs....................................................................55
SECTION 6.12. Waiver of Stay or Extension Laws.........................................................56
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee........................................................................56
SECTION 7.02. Rights of Trustee........................................................................57
SECTION 7.03. Individual Rights of Trustee.............................................................58
SECTION 7.04. Trustee's Disclaimer.....................................................................58
SECTION 7.05. Notice of Defaults.......................................................................58
SECTION 7.06. Reports by Trustee to Holders............................................................58
</TABLE>
<PAGE>
<PAGE>
iii
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 7.07. Compensation and Indemnity...............................................................59
SECTION 7.08. Replacement of Trustee...................................................................59
SECTION 7.09. Successor Trustee by Merger..............................................................60
SECTION 7.10. Eligibility; Disqualification............................................................61
SECTION 7.11. Preferential Collection of Claims Against Company........................................61
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance.........................................61
SECTION 8.02. Conditions to Defeasance.................................................................62
SECTION 8.03. Application of Trust Money...............................................................63
SECTION 8.04. Repayment to Company.....................................................................63
SECTION 8.05. Indemnity for Government Obligations.....................................................64
SECTION 8.06. Reinstatement............................................................................64
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders...............................................................64
SECTION 9.02. With Consent of Holders..................................................................65
SECTION 9.03. Compliance with Trust Indenture Act......................................................66
SECTION 9.04. Revocation and Effect of Consents and Waivers............................................66
SECTION 9.05. Notation on or Exchange of Securities....................................................67
SECTION 9.06. Trustee to Sign Amendments...............................................................67
SECTION 9.07. Payment for Consent......................................................................67
ARTICLE X
Subordination
SECTION 10.01. Agreement to Subordinate................................................................67
SECTION 10.02. Liquidation, Dissolution, Bankruptcy....................................................68
SECTION 10.03. Default on Senior Debt..................................................................68
SECTION 10.04. Acceleration of Payment of Securities...................................................69
SECTION 10.05. When Distribution Must Be Paid Over.....................................................69
SECTION 10.06. Subrogation.............................................................................69
SECTION 10.07. Relative Rights.........................................................................70
SECTION 10.08. Subordination May Not Be Impaired by Company or Holders of
Senior Debt...........................................................................70
SECTION 10.09. Rights of Trustee and Paying Agent......................................................71
SECTION 10.10. Distribution or Notice of Representative................................................71
SECTION 10.11. Article 10 Not to Prevent Events of Default or Limit Right to
Accelerate...........................................................................71
</TABLE>
<PAGE>
<PAGE>
iv
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 10.12. Trustee Entitled to Rely................................................................71
SECTION 10.13. Trustee to Effectuate Subordination.....................................................72
SECTION 10.14. Trustee Not Fiduciary for Holders of Senior Debt........................................72
SECTION 10.15. Reliance by Holders of Senior Debt on Subordination
Provisions....................................................................72
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls............................................................73
SECTION 11.02. Notices.................................................................................73
SECTION 11.03. Communication by Holders with Other Holders.............................................73
SECTION 11.04. Certificate and Opinion as to Conditions Precedent......................................74
SECTION 11.05. Statements Required in Certificate or Opinion...........................................74
SECTION 11.06. When Securities Disregarded.............................................................74
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar............................................75
SECTION 11.08. Legal Holidays..........................................................................75
SECTION 11.09. Governing Law...........................................................................75
SECTION 11.10. No Recourse Against Others..............................................................75
SECTION 11.11. Successors..............................................................................75
SECTION 11.12. Multiple Originals......................................................................75
SECTION 11.13. Table of Contents; Headings.............................................................75
</TABLE>
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security
<PAGE>
<PAGE>
v
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Section Indenture Section
- ----------- ------------------
<S> <C>
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>
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
party and for the equal and ratable benefit of the Holders of the Company's 11
1/2% Exchange Debentures Due 2008 (the "Initial Securities") and, if and when
issued in exchange for Initial Securities, the Company's 11 1/2% Exchange
Debentures Series A Due 2008 (the "Exchange Securities" and, together with the
Initial Securities, the "Securities"):
ARTICLE I
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 acquisition by Beredek Broadcasting
of substantially all the television broadcast assets of Stauffer Communications,
Inc. and all the capital stock of Brissette Broadcasting Corporation and its
wholly owned subsidiaries.
"Affiliate" of any specified person means (i) any other person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified person or (ii) any other person who is a
director or officer (A) of such specified person, (B) of any subsidiary of such
specified person or (C) of any person described in clause (i) above. For
purposes of Section 4.04, Section 4.06 and Section 4.07, (a) control of a person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise and (b)
beneficial ownership of 5% or more of the voting common equity (on a fully
diluted basis) or warrants to purchase such equity (whether or not currently
exercisable) of a person shall be deemed to be control of such person; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary (other than directors' qualifying
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
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<PAGE>
2
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 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 December 17, 1997, as amended, among the Company, Benedek Broadcasting, as
borrower, the lenders referred to therein and Bankers Trust Company, as 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.
<PAGE>
<PAGE>
3
"Benedek Broadcasting" means Benedek Broadcasting Corporation,
a Delaware corporation and a subsidiary of the Company and any successor
company.
"BLC" means Benedek License Corporation, a Delaware
corporation and a subsidiary of Benedek Broadcasting and any successor company.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a person means any obligation
which is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such person prepared in accordance with generally
accepted accounting principles; the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any person means any and all shares,
interests, rights to purchase, warrants, options, 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
<PAGE>
<PAGE>
4
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).
"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 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
<PAGE>
<PAGE>
5
(for purposes of this clause (i) and clause (ii) below, the Permitted
Holders shall be deemed to beneficially own any Voting Stock of a
corporation (the "specified corporation") held by any other corporation
(the "parent corporation") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the
parent corporation);
(ii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i) above,
except that such person shall be deemed to have "beneficial ownership"
of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company; provided, however, that the Permitted
Holders "beneficially own" (as defined in clause (i) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company than such other person and do
not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors
(for the purposes of this clause (ii), such other person shall be
deemed to beneficially own any Voting Stock of a specified corporation
held by a parent corporation, if such other person is the beneficial
owner (as defined in this clause (ii)), directly or indirectly, of more
than 35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders "beneficially own" (as defined in
clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such parent
corporation and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the board of directors of such parent corporation); or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of two-thirds 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.
<PAGE>
<PAGE>
6
"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 Amended and Restated
Company Pledge Agreement, dated as of December 17, 1997, between the Company and
Bankers Trust Company.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such interest expense, (i)
interest expense attributable to capital leases, (ii) amortization of debt
discount and debt issuance cost, (iii) capitalized interest, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by the Company or any such Restricted Subsidiary under
any Guarantee of Debt or other obligation of any other person, (vii) net costs
associated with Hedging Obligations (including amortization of fees), (viii)
Preferred Stock dividends in respect of all Preferred Stock of Restricted
Subsidiaries and Redeemable Stock of the Company held by persons other than the
Company or a Wholly Owned Subsidiary and (ix) the cash contributions to any
employee stock ownership plan or similar trust to the extent such contributions
are used by such plan or trust to pay interest or fees to any person (other than
the Company) in connection with loans incurred by such plan or trust to purchase
newly issued or treasury shares of the Company.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated 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;
<PAGE>
<PAGE>
7
(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/Leaseback
Transaction) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (but not loss) realized upon the sale
or other disposition of any Capital Stock of any person; and
(v) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of 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)(vi).
"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,
<PAGE>
<PAGE>
8
bonds or other similar instruments for the payment of which such person
is responsible or liable;
(ii) all Capital Lease Obligations and all Attributable Debt
of such person;
(iii) all obligations of such person Issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(iv) all obligations of such person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i)
through (iii) above) entered into in the ordinary course of business of
such person to the extent such letters of credit are not drawn upon or,
if and to the extent drawn upon, such drawing is reimbursed no later
than the third Business Day following receipt by such person of a
demand for reimbursement following payment on the letter of credit);
(v) the amount of all obligations of such person with respect
to the redemption, repayment or other repurchase of, in the case of a
Subsidiary, any Preferred Stock and, in the case of any other person,
any Redeemable Stock (but excluding any accrued dividends);
(vi) all obligations of the type referred to in clauses (i)
through (v) of other persons and all dividends of other persons for the
payment of which, in either case, such person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
any Guarantees of such obligations and dividends; and
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other persons secured by any Lien on any property or
asset of such person (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.
<PAGE>
<PAGE>
9
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Designated 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 the Exchangeable Preferred Stock.
"Exchange Securities" means the 11 1/2% Exchange Debentures
Series A Due 2008 to be issued pursuant to this Indenture in connection with the
offer to exchange registered Securities for the Initial Securities that may be
made by the Company pursuant to the Registration Rights Agreement.
"Exchangeable Preferred Stock" means the Company's 11 1/2%
Senior Exchangeable Preferred Stock outstanding on the date of this Indenture.
<PAGE>
<PAGE>
10
"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 23 Television
Stations owned by the Company as of the Issue Date and (ii) each other
Television Station acquired by the Company after the Issue Date and the License
for which is owned by BLC.
"Guarantee" means any obligation, contingent or otherwise, of
any person directly or indirectly guaranteeing any Debt or other obligation of
any person and any obligation, direct or indirect, contingent or otherwise, of
such person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation of such person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any person means the obligations of
such person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures contract
or other similar agreement or arrangement designed to protect such person
against changes in interest rates or foreign exchange rates.
"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.
"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.
<PAGE>
<PAGE>
11
"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 Exchangeable
Preferred Stock was 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 interest,
conditional sale or other title retention agreement or other similar lien.
"Maximum Amount" as of any date of determination means, with
respect to any Acquired Station, the product of (i) the Operating Cash Flow of
such Acquired Station for the four most recent fiscal quarters ending at least
45 days prior to such date of determination and (ii) the number 5.0; provided,
however, that if such Acquired Station is acquired by the Company in connection
with an Asset Disposition of an Existing Station, the amount in clause (i) above
shall be reduced by the Operating Cash Flow for such period of such Existing
Station.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of Debt or other obligations
relating to such properties or assets or received in any other noncash form)
therefrom, in each case net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
generally accepted accounting principles, as a consequence of such Asset
Disposition, (ii) all payments made on any Debt which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any lien upon
or other security agreement of any kind with respect to such assets, or which
must by its
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12
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with generally accepted accounting
principles, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Subsidiary after such
Asset Disposition.
"Net Cash Proceeds" with respect to any Issuance or sale of
Capital Stock, means the cash proceeds of such Issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such Issuance or sale and net of taxes paid or
payable as a result thereof.
"Non-Convertible Common Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible common
stock of such corporation; provided, however, that Non-Convertible Common Stock
shall not include any Redeemable Stock or Exchangeable Stock or, in the case of
the Company, any Senior Stock or Parity Stock.
"Non-Recourse Affiliate" means a Non-Recourse Subsidiary or
any other Affiliate of the Company or a Restricted Subsidiary which (i) has not
acquired any assets (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.
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13
"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 Debt; provided, however,
that the aggregate amount of such Permitted Acquisition Debt with respect to any
Acquired Station shall not exceed the Maximum Amount with respect to such
Acquired Station.
"Permitted Holders" shall mean (i) A. Richard Benedek; (ii)
family members or relatives of A. Richard Benedek; (iii) any trusts created for
the benefit of the persons described in clauses (i), (ii) or (iv) of this
paragraph or any trust for the benefit of any trust; (iv) in the event of the
death or incompetence of any person described in clauses (i) or (ii) of this
paragraph such person's estate, executor, administrator, committee or other
personal representative or beneficiaries; or (v) any Affiliate of A. Richard
Benedek.
"Permitted Investments" shall mean (i) investments in direct
obligations of the United States of America maturing within 90 days of the date
of acquisition thereof, (ii) investments in certificates of deposit maturing
within 90 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States or any state
thereof having capital, surplus and undivided profits aggregating in excess of
$500,000,000, 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.
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14
"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 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 Restricted Subsidiaries during such period with
respect to, or on account of, Program Obligations.
"Program Obligations" means the obligations of the Company and
the Restricted Subsidiaries with respect to the acquisition of the right to
broadcast films and other programming material, payable in a form other than
barter.
"Public Equity Offering" means an underwritten public offering
of common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Redeemable Stock" means any Capital Stock that by its terms
or otherwise is required to be redeemed on or prior to the first anniversary of
the Stated Maturity of the Securities or is redeemable at the option of the
holder thereof at any time on or prior to the first anniversary of the Stated
Maturity of the Securities.
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to Issue
indebtedness in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the
Company or any Restricted Subsidiary existing on the 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
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15
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 (plus the amount of any
premium or penalty paid, whether pursuant to terms of the instrument governing
such Debt or by reason of any tender premium therefor, and plus the amount of
any expenses incurred by the Company or any Subsidiary in connection with such
Refinancing (including without limitation underwriting discounts or
commissions)); 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 as of May 7,
1998, among the Company, TD Securities (USA) Inc. and BT Alex. Brown
Incorporated.
"Representative" means any trustee, agent or representative
(if any) for an issue of Debt of the Company.
"Required Disposition" means the disposition of either WMTV
(TV), serving Madison, Wisconsin, or WIFR-TV, serving Rockford, Illinois, as
such disposition may be required pursuant to an order of the Federal
Communications Commission.
"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.
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16
"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 $45,000,000
Preferred Stock issued by the Company to General Electric Capital Corporation
and Mr. Paul Brissette, in connection with the Acquisitions.
"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 and (ii) Debt of the Company, whether outstanding on the Issue Date
or thereafter Issued and accrued and unpaid interest thereon (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.
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17
"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.
"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 repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
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18
"Strategic Equity Investor" means any person that is, or is a
controlled Affiliate of, any person that is engaged in the broadcasting
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 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.
"Television Station" means any group of assets which
constitutes all or substantially all of the assets which would be necessary to
carry on the business of a commercial television broadcast station and which,
when purchased by a single purchaser would (together with any necessary
licenses, authorizations, working capital and operating location) be
substantially sufficient to allow such purchaser to carry on such business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
'SS' 'SS' 77aaa-77bbbb) as in effect on the date of this Indenture, except as
provided in Section 9.03.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.06(g).
"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.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
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19
"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
"Restricted Payment".............................. 4.04
"Rule 144A"....................................... 2.01
</TABLE>
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20
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect on the date of this Indenture and all
accounting calculations will be determined in accordance with such
principles;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured debt shall not be deemed to be subordinate or
junior to secured debt merely by virtue of its nature as unsecured
debt;
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21
(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 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.
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22
(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 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
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23
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.
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 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) 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.
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24
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent to Hold Money in Trust. At least
one Business Day prior to each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest when so becoming due. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Securities and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent (other than the
Trustee) to pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
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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 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
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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 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
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27
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
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
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participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Definitive Securities to the persons in whose names such Securities are so
registered in accordance with the instructions of the Depository.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.06), a Global
Security may not be transferred as a whole except by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities. If at any time:
(i) the Depository notifies the Company that the Depository is
unwilling or unable to continue as Depository for the Global Securities
and a successor Depository for the Global Securities is not appointed
by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive
Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of a written order
of the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company requesting the authentication
and delivery of Definitive Securities to the Persons designated by the Company,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of Global Securities, in exchange for such
Global Securities.
(g) Legend. (i) Except as permitted by the following paragraph
(ii), each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following form:
"THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE
INITIAL INVESTOR (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER
THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
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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
(C) in the case of any Transfer Restricted Security that is
represented by a Global Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security (in connection
with the offer to exchange Exchange Securities for Initial Securities
pursuant to the Registration Rights Agreement) for another Global
Security that does not bear the legend set forth above.
(h) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or canceled, such Global
Security shall be returned to the Depository for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Security is exchanged for Definitive
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30
Securities, redeemed, repurchased or canceled, the principal amount of
Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Securities. (i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or similar
governmental charge payable upon exchange or transfer pursuant to Sections 3.06,
4.08 and 9.05).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security selected for
redemption in whole or in part pursuant to Article 3, except the unredeemed
portion of any Definitive Security being redeemed in part, or (b) any Security
for a period beginning 15 Business Days before the mailing of a notice of an
offer to repurchase or redeem Securities or 15 Business Days before an interest
payment date.
(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,
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31
beneficial owner or other Person (other than the Depository) of any notice
(including any notice of redemption) or the payment of any amount, under or with
respect to such Securities. All notices and communications to be given to the
Holders and all payments to be made to Holders under the Securities shall be
given or made only to or upon the order of the registered Holders (which shall
be the Depository or its nominee in the case of a Global Security). The rights
of beneficial owners in any Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures of the Depository. The
Trustee may rely and shall be fully protected in relying upon information
furnished by the Depository with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depository
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
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If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. (a) Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
(b) A Global Security deposited with the Depository or with
the Trustee as custodian for the Depository pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof only if such transfer complies with
Section 2.06 and (i) the Depository notifies the Company that it is unwilling or
unable to continue as Depository for such Global Security or if at any time such
Depository ceases to be a "clearing agency" registered under the Exchange Act
and a successor depositary is not appointed by the Company within 90 days of
such notice, or (ii) an Event of Default has occurred and is continuing.
(c) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depository
to the Trustee located in the Borough of Manhattan, The City of New York, to be
so transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of each portion of
such Global Security, an equal aggregate principal amount of Initial Securities
of authorized denominations. Any portion of a Global Security transferred
pursuant to this Section shall be executed, authenticated and delivered only in
denominations of $1,000 and any integral multiple thereof and registered in such
names as the Depository shall direct. Any Initial Security delivered in exchange
for an interest in the Global Security shall, except as otherwise provided by
Section 2.06(b), bear the restricted securities legend set forth in Exhibit A
hereto.
(d) Subject to the provisions of Section 2.09(c), the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(e) In the event of the occurrence of either of the events
specified in Section 2.09(b), the Company will promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
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SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and return all Securities surrendered for registration of transfer,
exchange, payment or cancellation to the Company. The Company may not issue new
Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed (or upon the Company's failure to do so the Trustee shall fix)
any such special record date and payment date to the reasonable satisfaction of
the Trustee which specified record date shall not be less than 10 days prior to
the payment date for such defaulted interest (unless the Trustee agrees
otherwise) and shall promptly mail or cause to be mailed to each Securityholder
a notice that states the special record date, the payment date and the amount of
defaulted interest to be paid. The Company shall notify the Trustee in writing
of the amount of defaulted interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
person entitled to such defaulted interest as in this subsection provided.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained 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.
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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 on May 15, 2008, it shall notify the Trustee in writing of the
redemption date and the principal amount at maturity of Securities to be
redeemed.
The Company shall give each notice to the Trustee provided for
in this Section at least 45 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities to Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of 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;
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(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts at maturity of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture interest on Securities
(or portion thereof) called for redemption ceases to accrue on and
after the redemption date;
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities; and
(8) the aggregate principal amount of Securities being
redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
The notice, if mailed in the manner provided herein, shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice shall not affect the validity of the 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 cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount at maturity to the unredeemed portion of the Security
surrendered.
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ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due and the Trustee or the Paying Agent, as the
case may be, is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it 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 8.75 to 1.0.
(b) Notwithstanding Section 4.03(a), the Company and the
Restricted Subsidiaries may Issue the following Debt:
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(1) Debt of the Company or Benedek Broadcasting Issued
pursuant to the Revolving Credit Facility under 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 determined in accordance with GAAP as of the end of the
most recent fiscal quarter prior to the date of determination;
(2) Debt of the Company or Benedek Broadcasting (including any
letters of credit Issued thereunder) Issued pursuant to the Bank Credit
Agreement (other than the Revolving Credit Facility) 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)
$110.8 million less (B) the lesser of (i) the aggregate amount of all
principal repayments of any 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 and Refinancing Debt of the Company Issued
in respect of (A) any Debt permitted by this clause (4) and (B) any
debt relating to the issuance of any Additional Shares pursuant to
Section 4.03(a) (including the accretion of any original issue discount
associated with Debt permitted by this clause (4) and the increase in
liquidation preference with respect to any Debt permitted by this
clause (4));
(5) Debt (other than Debt described in clause (1), (2), (3),
or (4) of this 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);
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38
(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.
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 NonConvertible 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 Restricted Subsidiary and, if a Restricted
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 Restricted Subsidiary (except any such purchases,
redemptions, acquisitions or retirements of Capital Stock of a Restricted
Subsidiary held by the Company or another Restricted Subsidiary, (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
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39
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
the date of such Restricted Payment less the product of 1.4
multiplied by the cumulative Consolidated Interest Expense
during such period;
(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)
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
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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 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 (i) any Senior
Stock or Parity Stock prior to May 15, 2003 or (ii) any Junior 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 Seller Junior Discount
Preferred Stock out of the proceeds of the sale of any Additional
Shares; provided, however, that without limiting the Company's ability
to so purchase or redeem the Seller Junior Discount Preferred Stock,
such purchase or redemption shall be included in any subsequent
calculation of the amount of Restricted Payments;
(iii) 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;
(iv) 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;
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41
(v) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section 4.04; provided, however, that at the
time of payment of such dividend, no other Default shall have occurred
and be continuing (or result therefrom); provided further, however,
that such dividend shall be included in the calculation of the amount
of Restricted Payments;
(vi) Investments in Non-Recourse Affiliates made 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) from the Issue Date not to exceed $10,000,000;
provided, however, that the amount of such Investments 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 in the calculation of the amount of
Restricted Payments.
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 other than an encumbrance
or restriction with respect to dividends or distributions by Benedek
Broadcasting in connection with a senior bank financing, (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
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42
(other than Debt Issued as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired by
the Company) and outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Debt Issued pursuant to an agreement
referred to in clause (1) or (2) of this Section 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 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
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43
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 Available Cash after application in accordance with clauses (A), (B) and
(C), to 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 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 purchase
Securities tendered pursuant to an offer by the Company 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
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44
forward for purposes of determining whether an Offer is required with respect to
any subsequent Asset Disposition; provided, however, that any such Asset
Disposition the proceeds of which do not exceed $1,000,000 shall be excluded
from the aforementioned calculation).
(c) (1) Promptly, and in any event within 30 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (ii) a description of material
developments in the Company's business subsequent to the date of the latest of
such Reports, and (iii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender Securities
pursuant to the Offer, together with the information contained in clause (3)
below.
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (i) the amount of the Offer (the
"Offer Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, aggregate and hold in
trust) in immediately available funds an amount equal to the Offer Amount to be
held for payment in accordance with the provisions of this Section 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,
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to the Company at the address specified in the notice at least ten Business Days
prior to the Purchase Date. Holders will be entitled to withdraw their election
if the Trustee receives not later than three Business Days prior to the Purchase
Date, a facsimile transmission (promptly confirmed in writing) or letter (a copy
of which the Trustee shall give to the Company not later than one Business Day
prior to the Purchase Date) setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Security
purchased. If at the expiration of the Offer Period the aggregate principal
amount 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 may not, and may 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 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
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(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 covenant 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, indemnity agreements, 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 $5,000,000
at any one time outstanding or (B) the proceeds of which are used to
acquire from the Company Capital Stock of the Company (other than
Redeemable Stock or Exchangeable Stock);
(iv) the payment of reasonable fees to directors of the
Company and its Subsidiaries (other than a Restricted Holder) who are
not employees of the Company or its Subsidiaries;
(v) salaries to employees in the ordinary course of business
and consistent with industry practices; and
(vi) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries; provided, however, that
no portion of the minority interest in any such Restricted Subsidiary
is owned by an Affiliate (other than the Company or a Wholly Owned
Subsidiary) of the Company.
SECTION 4.08. Change of Control. (a) Upon a Change of Control,
each Holder shall have the right to require that the Company repurchase all or
any part of such Holder's Securities at a purchase price in cash equal to 101%
of the 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).
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(b) Prior to the mailing of notice referred to in Section
4.08(c), but in any event within 30 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 30 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 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 cancellation,
and the Company shall pay the repurchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
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(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 paragraph (iii) in the definition of Change
of Control contained herein 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 or
modified with the written consent of the Holders of a majority 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 Debt will be so secured.
SECTION 4.10. Limitation on Sale/Leaseback Transactions. The
Company shall not enter into a Sale/Leaseback Transaction unless (i) the Company
would be able to incur Debt in an amount equal to the Attributable Debt with
respect to such Sale/Leaseback Transaction secured by a Lien pursuant to Section
4.03 and Section 4.09 or (ii) the Company receives consideration from such
Sale/Leaseback Transaction at least equal to the fair market value of the
property subject thereto (which shall be determined in good faith by the Board
of Directors and evidenced by a resolution of the Board of Directors) and elects
to treat the disposition assets subject to such Sale/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.
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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.
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
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Company under this Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Securities.
SECTION 5.02. When Benedek Broadcasting May Merge or Transfer
Assets. The Company shall not permit Benedek Broadcasting to consolidate or
merge with or into, or convey, transfer or lease all or substantially all its
assets to, any person, unless:
(i) the resulting, surviving or transferee person (if not
Benedek Broadcasting) shall be organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia;
(ii) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of the
resulting, surviving or transferee person or any Subsidiary as a result
of such transaction as having been incurred by such person or such
Subsidiary at the time of such transaction), no Default has occurred
and is continuing;
(iii) immediately after giving effect to such transaction, the
Company would be able to issue an additional $1.00 of Debt pursuant to
Section 4.03(a);
(iv) all of the Capital Stock of the resulting, surviving or
transferee person is owned by the Company; and
(v) 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 payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise;
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(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;
(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;
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or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(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. The notice provided for in clause (3), (4) or (5) shall be
given to the Company by the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities. Such Notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 10 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any event which would constitute an Event of Default, 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
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53
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 lesser 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.
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.
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SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(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 satisfactory in the judgment of the Trustee
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.
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55
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or principal specified in Section 6.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid (together with interest on such unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Debt to the extent required by
Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess
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56
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
(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
substantially conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
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(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely and
shall be protected in acting or refraining from acting on any document believed
by it to be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the document.
(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.
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(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.
(f) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, upon reasonable notice to the Company, to
examine the books, records, and the premises of the Company, personally or by
agent or attorney and to consult with the officers and representatives of the
Company, including the Company's accountants and attorneys.
(g) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to the Trustee against the costs, expenses and liabilities which
may be incurred by it in compliance with such request, order or direction.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
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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 express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company shall indemnify
each of the Trustee or any predecessor Trustee against any and all loss,
liability, damage, claim or expense (including attorneys' fees and expenses and
including taxes (other than taxes based on the income of the Trustee)) incurred
by it in connection with the acceptance or administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee may have separate
counsel and the Company shall pay the reasonable 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.
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To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture.
When the Trustee incurs expenses after the occurrence of a
Default specified in Section 6.01(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 Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA 'SS' 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
'SS' 310(b); provided, however, that there shall be excluded from the operation
of TIA 'SS' 310(b)(1) any indenture or indentures under which other securities
or certificates of interest or participation in other securities of the Company
are outstanding if the requirements for such exclusion set forth in TIA 'SS'
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA 'SS' 311(a), excluding any creditor
relationship listed in TIA 'SS' 311(b). A Trustee who has resigned or been
removed shall be subject to TIA 'SS' 311(a) to the extent indicated.
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ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Sections 8.01(c) and 8.06, cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company at
any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 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.
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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
cash in U.S. dollars, U.S. Government Obligations or a combination
thereof that, through the payment of interest and prinicpal in respect
thereof in accordance with their terms, will be sufficient to pay
principal, premium (if any) and interest on the Securities to maturity
or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion as to (1) above;
(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 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
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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.
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.
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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;
(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
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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;
(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
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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 the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those persons who were
Securityholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee to Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
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SECTION 9.07. Payment for Consent. Neither the Company, any
Affiliate of the Company nor any Subsidiary shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid or agreed to be paid to all
Holders which so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
ARTICLE 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 Senior
Subordinated Discount Notes and the Company's guarantee of Benedek
Broadcasting's obligation under the Bank Credit Agreement and with respect to
the Senior Secured Notes, and that the subordination is for the benefit of and
enforceable by the holders of Senior Debt. For purposes of this Article 10,
Senior Debt outstanding under the Bank Credit Agreement shall not be deemed paid
in full in cash or cash equivalents at any time unless all letters of credit
outstanding under the Bank Credit Agreement which have not been drawn upon at
such time are fully cash collateralized or returned undrawn. All provisions of
this Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Debt shall be entitled to receive
payment in full in cash or cash equivalents of such Senior Debt before
Securityholders shall be entitled to receive any payment of principal
of, or premium, if any, or interest on the Securities or on any other
Subordinated Payment Obligation; and
(2) until the Senior Debt is paid in full in cash or cash
equivalents, any payment or distribution to which Securityholders would
be entitled but for this Article 10 shall be made to holders of Senior
Debt as their interest may appear, except that so
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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) above has occurred and is continuing. Upon the occurrence
and during the continuance of any default (other than a default described in
clause (i) or (ii) of the preceding sentence) with respect to any Designated
Senior Debt pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Company may not pay the Securities for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice of such default from the Representative of such Designated Senior
Debt specifying an election to effect a Payment Blockage Period (a "Payment
Blockage Notice") and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Representative of such Designated Senior Debt or the Person or
Persons who gave such Payment Blockage Notice, (ii) by repayment in full in cash
or cash equivalents of such Designated Senior Debt or (iii) because the default
giving rise to such Payment Blockage Notice is no longer continuing).
Notwithstanding anything in the foregoing to the contrary, a Payment Blockage
Notice may only be given by and therefore shall only be effective in respect of
the Company and the Trustee if given by (i) the Representative of the Bank Debt
as long as any Bank Debt is outstanding or the Representative of the Senior
Secured Notes as long as any Senior Secured Notes are outstanding and (ii) if no
Bank Debt or Senior Secured Notes are outstanding, any other Representative of
outstanding Designated Senior Debt. Notwithstanding the provisions described in
the immediately preceding sentence, unless the holders of such Designated Senior
Debt or the Representative of such holders shall have accelerated the maturity
of such Designated Senior Debt, the 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,
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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 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
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rights of holders of Senior Debt to receive distributions otherwise
payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company or
Holders of Senior Debt. No right of any present or future holder of any Senior
Debt to enforce the subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Securityholders, without
incurring responsibilities to the Securityholders and without impairing or
releasing the subordination provided in this Article 10 or the obligations
hereunder of the Securityholders to the holders of Senior Debt, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, the Senior Debt, or otherwise
amend or supplement in any manner the Senior Debt or instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, foreclose, release or otherwise deal with any property, pledged,
mortgaged or otherwise securing Senior Debt; (iii) release any Person liable in
any manner for the collection of Senior Debt and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
If at any time any payments with respect to any Senior Debt
are rescinded or must otherwise be returned upon the insolvency, bankruptcy,
reorganization or liquidation of the Company, the provisions of this Article 10
shall continue to be effective or reinstated, as the case may be, 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.
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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
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
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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.
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 communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Benedek Communications Corporation
100 Park Avenue
Rockford, Illinois 61101
Attention: Chief Financial Officer
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if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Finance Trust Services
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given only
when received.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
<PAGE>
<PAGE>
75
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such covenant or condition has been complied with.
SECTION 11.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or 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
<PAGE>
<PAGE>
76
reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 11.13. Table of Contents; Headings. The table of
contents, cross- reference sheet and headings of the Articles and Sections of
this Indenture have been inserted 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>
77
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>
A-1
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
<PAGE>
<PAGE>
A-2
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>
A-3
No. $[ ]
CUSIP:
11 1/2% Exchange Debenture Due 2008
BENEDEK COMMUNICATIONS CORPORATION, a Delaware corporation,
promises to pay to , or registered assigns, the principal sum of
[ ] Dollars on May 15, 2008.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth on the
other side of this Security.
BENEDEK COMMUNICATIONS CORPORATION,
by
-------------------------
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>
A-4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
BENEDEK COMMUNICATIONS CORPORATION
11 1/2% Exchange Debenture due 2008
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; 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 within 45 calendar days after
the Issue Date, (ii) unless the Exchange Offer would not be permitted by a
policy of the SEC, the Exchange Offer Registration Statement is not declared
effective within 90 calendar days after the Issue Date, (iii) neither the
Exchange Offer is consummated nor the Shelf Registration Statement is declared
effective within 120 calendar days after the Issue Date, 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 0.5% 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 Registration Defaults, the accrual of Liquidated Damages will
cease.
The Company will pay interest semiannually in cash (or, on or
prior to May 15, 2003, in additional Securities at the option of the Company) in
arrears on each May 15 and November 15 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.
<PAGE>
<PAGE>
A-5
2. Method of Payment.
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are registered holders of Securities at
the close of business on the May 1 or November 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal and interest) will be made
by wire transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of the
Definitive Securities (including principal and interest), by mailing a check to
the registered address of each Holder thereof; provided, however, that payments
on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar.
Initially, 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.
<PAGE>
<PAGE>
A-6
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 (other than an encumbrance or
restriction with respect to distributions and dividends by Benedek Broadcasting
in connection with a senior bank financing), 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 certain circumstances, to offer to
purchase Securities. The limitations are subject to a number of important
qualifications and exceptions.
5. Optional Redemption.
Except as set forth below, the Securities will not be redeemed
by the Company prior to May 15, 2003. Thereafter, 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 during
the 12-month period beginning on May 15 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>
2003 105.750%
2004 103.833%
2005 101.917%
2006 and thereafter 100.000%
</TABLE>
Notwithstanding the foregoing, until May 15, 2001, the Company
may, at its option, redeem up to 25% of the aggregate of (i) the liquidation
preference of the Exchangeable Preferred Stock issued less the liquidation
preference of Exchangeable Preferred
<PAGE>
<PAGE>
A-7
Stock exchanged for Exchange Debentures and (ii) the principal amount of
Exchange Debentures issued, at 111.50% of the then effective principal amount,
with the net proceeds of one or more Public Equity Offerings or Strategic
Investments or a Required Disposition if at least $75,000,000 in principal
amount of the Securities remains outstanding after each such redemption;
provided, however, that such redemption occurs within 60 days of the date of the
closing of each such Public Equity Offering, Strategic Investment or Required
Disposition.
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities having a principal amount larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
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.
<PAGE>
<PAGE>
A-8
The Securities are in fully registered form without 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 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 cash in U.S. dollars, U.S. Government
Obligations or a combination thereof that, through the payment of interest and
principal in respect thereof, will be sufficient, in the opinion of a nationally
recognized firm of independent public accounts, to pay principal, premium (if
any) and interest on the Securities to redemption or maturity, as the case may
be.
<PAGE>
<PAGE>
A-9
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 holder of Senior Debt (or Representatives therefor) under
Article 10, or to add Guarantees with respect to the Securities or to secure the
Securities, or to add additional covenants of the Company for the benefit of the
Holders or surrender rights and powers conferred on the Company or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act or to make any change that does not adversely affect the rights of any
Securityholder. Notwithstanding the foregoing, no amendment may be made to the
subordination provisions of the Indenture that adversely affects the rights of
any holder of 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 for 30 days after notice thereof with any of its obligations
under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09 or 4.10; (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
<PAGE>
<PAGE>
A-10
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 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 lesser 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 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
<PAGE>
<PAGE>
A-11
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication.
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
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>
A-12
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Benedek Communications Corporation
100 Park Avenue
Rockford, Illinois 61101
Attention: Chief Financial Officer
<PAGE>
<PAGE>
A-13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date: _____________________________ Your Signature: ____________________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guarantee: ___________________________________________________
(Signature must be guaranteed by an "eligible
guarantor institution" that is, a bank,
stockbroker, saving and loan association or
credit union meeting the requirements of the
Registrar, which requirements include
membership or 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>
A-14
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:
<TABLE>
<S> <C> <C>
(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
(6) [ ] transferred pursuant to another available
exemption from the registration requirements of
the Securities Act of 1933, as amended.
</TABLE>
<PAGE>
<PAGE>
A-15
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>
A-16
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>
A-17
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount
Amount of Amount of at Maturity of Signature of
decrease in increase in this Global authorized
Principal Amount Principal Amount Security officer of
at Maturity of at Maturity of following such Trustee or
Date of this Global this Global decrease or Securities
Exchange Security Security increase Custodian
</TABLE>
<PAGE>
<PAGE>
B-1
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)
11 1/2% Exchange Debentures Series A Due 2008
BENEDEK COMMUNICATIONS CORPORATION, a Delaware corporation,
promises to pay to , or registered assigns, the principal sum
of Dollars on May 15, 2008.
- --------
(1) This legend should only be added if the Security is issued in global form.
<PAGE>
<PAGE>
B-2
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1
Additional provisions of this Security are set forth on the
other side of this Security.
BENEDEK COMMUNICATIONS
CORPORATION,
by
-----------------------
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>
B-3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
BENEDEK COMMUNICATIONS CORPORATION
11 1/2% Exchange Debentures Series A due 2008
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; 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 within 45 calendar days after
the Issue Date, (ii) unless the Exchange Offer would not be permitted by a
policy of the SEC, the Exchange Offer Registration Statement is not declared
effective within 90 calendar days after the Issue Date, (iii) neither the
Exchange Offer is consummated nor the Shelf Registration Statement is declared
effective within 120 calendar days after the Issue Date, 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 0.5% 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 Registration Defaults, the accrual of Liquidated Damages will
cease.
The Company will pay interest semiannually in cash (or, on or
prior to May 15, 2003, in additional Securities at the option of the Company) in
arrears on each May 15 and November 15 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.
<PAGE>
<PAGE>
B-4
2. Method of Payment.
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are registered holders of Securities at
the close of business on the May 1 or November 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal and interest) will be made
by wire transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of the
Definitive Securities (including principal and interest), by mailing a check to
the registered address of each Holder thereof; provided, however, that payments
on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar.
Initially, 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.
<PAGE>
<PAGE>
B-5
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 (other than an encumbrance or
restriction with respect to distributions and dividends by Benedek Broadcasting
in connection with a senior bank financing), 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 certain circumstances, to offer to
purchase Securities. The limitations are subject to a number of important
qualifications and exceptions.
5. Optional Redemption.
Except as set forth below, the Securities will not be redeemed
by the Company prior to May 15, 2003. Thereafter, 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 during
the 12-month period beginning on May 15 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>
2003 105.750%
2004 103.833
2005 101.917
2006 and thereafter 100.000
</TABLE>
Notwithstanding the foregoing, until May 15, 2001, the Company
may, at its option, redeem up to 25% of the aggregate of (i) the liquidation
preference of the Exchangeable Preferred
<PAGE>
<PAGE>
B-6
Stock issued less the liquidation preference of Exchangeable Preferred Stock
exchanged for Exchange Debentures and (ii) the principal amount of Exchange
Debentures issued, at 111.50% of the then effective principal amount, with the
net proceeds of one or more Public Equity Offerings or Strategic Investments or
a Required Disposition if at least $75,000,000 in principal amount of the
Securities remains outstanding after each such redemption; provided, however,
that such redemption occurs within 60 days of the date of the closing of each
such Public Equity Offering, Strategic Investment or Required Disposition.
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities having a principal amount larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
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.
<PAGE>
<PAGE>
B-7
The Securities are in fully registered form without 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 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 cash in U.S. dollars, U.S. Government
Obligations or a combination thereof that, through the payment of interest and
principal in respect thereof, will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay principal, premium (if
any) and interest on the Securities to redemption or maturity, as the case may
be.
<PAGE>
<PAGE>
B-8
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 holder of Senior Debt (or Representatives therefor) under
Article 10, or to add Guarantees with respect to the Securities or to secure the
Securities, or to add additional covenants of the Company for the benefit of the
Holders or surrender rights and powers conferred on the Company or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act or to make any change that does not adversely affect the rights of any
Securityholder. Notwithstanding the foregoing, no amendment may be made to the
subordination provisions of the Indenture that adversely affects the rights of
any holder of 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 for 30 days after notice thereof with any of its obligations
under with Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09 or 4.10; (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
<PAGE>
<PAGE>
B-9
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 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 lesser 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 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
<PAGE>
<PAGE>
B-10
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication.
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
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>
B-11
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Benedek Communications Corporation
100 Park Avenue
Rockford, Illinois 61101
Attention: Chief Financial Officer
<PAGE>
<PAGE>
B-12
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>
B-13
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:
[ ]
<PAGE>
<PAGE>
B-14
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.08 of the Indenture, state the
principal amount at maturity and check the box: $
[ ]
Date: ________________________ Your Signature: ______________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:___________________________________________________
(Signature must be guaranteed by an
"eligible guarantor institution", that is, a
bank, stockbroker, saving and loan
association or credit union meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Securities Transfer
Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may
be determined by the Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.)
<PAGE>
<PAGE>
SHACK & SIEGEL, P.C.
530 FIFTH AVENUE
NEW YORK, NEW YORK 10036
(212) 782-0700
June 9, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Benedek Communications Corporation
Registration Statement on Form S-4
----------------------------------
Dear Sir or Madam:
Reference is made to the Registration Statement on Form S-4 (the
"Registration Statement") filed June 9, 1998 with the Securities and Exchange
Commission by Benedek Communications Corporation, a Delaware corporation (the
"Company"), relating to the Company's proposed offer to exchange 100,000 shares
of its 11 1/2% Senior Exchangeable Preferred Stock outstanding on the date
hereof (the "Existing Preferred Stock") for 100,000 shares of its 11 1/2% Senior
Exchangeable Preferred Stock, which will be registered under the Securities Act
of 1933, as amended (the "Exchange Securities" and collectively with the
Existing Preferred Stock, the "Preferred Stock").
The Exchange Securities will be issued pursuant to the provisions of the
Certificate of Designation with respect to the Preferred Stock which was filed
with the Secretary of State of the State of Delaware on May 13, 1998 (the
"Certificate of Designation"). 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 Certificate of Designation, 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 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.
<PAGE>
<PAGE>
Securities and Exchange Commission 2 June 9, 1998
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 Preferred Stock and (ii)
the due execution, authentication, issuance and delivery of the Exchange
Securities, the Exchange Securities will be entitled to the benefits of the
Certificate of Designation and the Exchange Securities and the Certificate of
Designation 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: /s/ Paul S. Goodman
________________________
Paul S. Goodman, Esq.
<PAGE>
<PAGE>
EXHIBIT 8
WHITMAN BREED ABBOTT & MORGAN LLP
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 351-3000
June 9, 1998
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK, WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF ITS
OUTSTANDING SHARES OF 11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
Benedek Communications Corporation
100 Park Avenue
Rockford, Illinois 61101
Re: Certain Federal Income Tax Consequences Relating to Exchange of
11 1/2% Senior Exchangeable Preferred Stock
Ladies and Gentlemen:
You have requested our opinion that the exchange of Benedek
Communications Corporation's 11 1/2% Senior Exchangeable Preferred Stock, which
have been registered under the Securities Act of 1933, as amended (the "Exchange
Securities"), for its 11 1/2% Senior Exchangeable Preferred Stock (the "Existing
Exchangeable Preferred Stock"), as described in the Form S-4 Registration
Statement, dated as of June 9, 1998 (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
Exchangeable Preferred Stock in the hands of such holder. As a result, in our
opinion there will be no Federal income tax consequences to holders exchanging
Existing Exchangeable Preferred Stock for the Exchange Securities pursuant to
the Exchange. Our opinion is based on laws, regulations, rulings and decisions
currently in effect,
<PAGE>
<PAGE>
Benedek Communications Corporation 2 June 9, 1998
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.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and we further consent to the references made to us under
the captions "Certain Federal Income Tax Consequences" and "Legal Matters" in
the Prospectus.
Very truly yours,
/s/ Whitman Breed Abbott & Morgan LLP
Whitman Breed Abbott & Morgan LLP
<PAGE>
<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
PURCHASE AGREEMENT
Dated as of May 7, 1998
By and Among
BENEDEK COMMUNICATIONS CORPORATION,
as Issuer,
and
TD SECURITIES (USA) INC.,
and
BT ALEX. BROWN INCORPORATED,
as Initial Purchasers
- --------------------------------------------------------------------------------
100,000 SHARES
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
<PAGE>
<PAGE>
BENEDEK COMMUNICATIONS CORPORATION
$100,000,000
100,000 SHARES OF 11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
PURCHASE AGREEMENT
May 7, 1998
TD SECURITIES (USA) INC.
31 West 52nd Street
New York, New York 10019-6101
BT ALEX. BROWN INCORPORATED
Bankers Trust Plaza
130 Liberty Street, 30th Floor
New York, New York 10006
Ladies and Gentlemen:
Benedek Communications Corporation, a Delaware corporation (the
"Company") hereby confirms its agreement with you (the "Initial Purchasers"), as
set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell severally to the Initial
Purchasers 100,000 shares (the "Shares") of its 11 1/2% Senior Exchangeable
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), which will
be mandatorily redeemable on May 15, 2008, as set forth in the Certificate of
Designation of the Company relating to the Preferred Stock (the "Certificate of
Designation"), and will be exchangeable, in whole but not in part, at the option
of the Company, into 11 1/2% Exchange Debentures due 2008 (the "Exchange
Debentures") to be issued, if applicable, pursuant to an indenture to be dated
as of the date of such exchange (the "Exchange Indenture").
The Shares will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance on exemptions therefrom or in transactions not
subject to the registration requirements thereof, including sales by the Initial
Purchasers made outside the United States in reliance on Regulation S under the
Securities Act and in the United States to "qualified institutional buyers"
("QIBs") as defined in and in reliance on Rule 144A under the Securities Act.
<PAGE>
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2
In connection with the sale of the Shares, the Company has
prepared a preliminary offering memorandum dated as of April 28, 1998, and a
final offering memorandum dated as of the date hereof (collectively, the
"Offering Memorandum").
The Initial Purchasers and their direct and indirect transferees
of the Shares will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company agrees, among
other things, to file a registration statement (the "Registration Statement")
with the Securities and Exchange Commission (the "Commission") registering the
Shares and the Exchange Debentures (as defined in the Registration Rights
Agreement), as applicable, under the Securities Act.
Capitalized terms not otherwise defined in this Agreement are
used as defined in the Certificate of Designation. The following capitalized
terms are defined as follows: (a) "Material Adverse Effect" means a material
adverse effect upon (i) the business, operations, properties, assets, financial
condition or prospects of the Company or (ii) the ability of the Company to
execute, deliver or perform its obligations under any Transaction Document; and
(b) "Transaction Documents" means this Agreement, the Registration Rights
Agreement, the Certificate of Designation, the Shares, the Exchange Indenture
and the Exchange Debentures.
2. Representations and Warranties. (a) The Company represents and
warrants to and agrees with the Initial Purchasers that:
(i) Neither the Offering Memorandum nor any amendment or
supplement thereto as of the date thereof and at all times
subsequent thereto up to the Closing Date (as defined in Section
3 below) contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the
representations and warranties set forth in this Section 2(a)(i)
do not apply to statements or omissions made in reliance upon and
in conformity with information relating to the Initial Purchasers
furnished to the Company in writing by the Initial Purchasers,
expressly for use in the Offering Memorandum or any amendment or
supplement thereto.
(ii) As of the Closing Date and after giving effect to the
Offering the Company will have the authorized, issued and
outstanding capitalization set forth in the Offering Memorandum.
(iii) All of the outstanding shares of capital stock of
the Company are or will be on the Closing Date fully paid and
nonassessable. The Company does not and will not on the Closing
Date have outstanding any (i) securities
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3
convertible or exchangeable for its capital stock or (ii) rights
to subscribe for or to purchase any of its capital stock or
options providing for the purchase of, or agreements providing
for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital
stock except for warrants to purchase shares of Class A Common
Stock of the Company as described in the Offering Memorandum
under "Description of Capital Stock--Warrants." The Company has
no direct or indirect subsidiaries other than Benedek
Broadcasting Corporation, a Delaware corporation, and its wholly
owned subsidiary, Benedek License Corporation.
(iv) The Company is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. The
Company has all requisite power and authority to own and operate
its properties and to carry on its business as now conducted and
as described in the Offering Memorandum, and is duly qualified as
a foreign corporation in all jurisdictions in which it is doing
business, except where the failure to be so qualified or in good
standing could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(v) The Company has all requisite corporate power and
authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party
and has taken all necessary corporate action to authorize the
execution, delivery and performance of the Transaction Documents
to which it is a party.
(vi) The Shares have been duly authorized by the Company
and, when issued and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable and will not be
subject to any preemptive or similar rights.
(vii) The Exchange Debentures, if issued, will have
substantially the terms set forth in the Offering Memorandum and
will have been duly authorized by the Company and, when executed,
authenticated and delivered in exchange for all, but not less
than all, of the then outstanding Shares in accordance with the
terms of the Certificate of Designation, (x) will be valid and
binding obligations of the Company enforceable against the
Company in accordance with their terms, excepts as the
enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and by
equitable principles of general applicability ("Bankruptcy and
Equity") and (y) will be entitled to the benefits of the Exchange
Indenture.
<PAGE>
<PAGE>
4
(viii) The Certificate of Designation creating the
Preferred Stock, the proposed form of which has been furnished to
you, will have been duly filed with the Secretary of State of the
State of Delaware and with all other offices where such filings
are required, on or before the Closing Date.
(ix) The Exchange Debentures have been duly authorized by
the Company and, when issued and delivered by the Company in
exchange for the Shares, will be validly issued, fully paid and
non-assessable and will not be subject to any preemptive or
similar rights.
(x) When executed and delivered by the Company on the
Closing Date (assuming the due authorization, execution and
delivery by the Initial Purchasers), the Registration Rights
Agreement will constitute a valid and legally binding agreement
of the Company enforceable against the Company in accordance with
its terms, except that (A) the enforcement thereof may be subject
to Bankruptcy and Equity and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state
securities laws. This Agreement has been duly executed and
delivered by the Company.
(xi) The Company is not (i) in violation of its
certificate of incorporation or bylaws, (ii) in breach or
violation of any statute, judgment, decree, order, rule or
regulation applicable to it or any of its properties or assets,
or (iii) in breach of or default under (nor has any event
occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the terms
or provisions of any indenture, mortgage, deed of trust, loan
agreement, note, lease, license, permit, certificate, contract or
other agreement or instrument to which it is a party or to which
its properties or assets are subject (collectively, "Contracts"),
except for any such breach, default, violation or event in each
case of (i), (ii) or (iii) which could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect.
(xii) No consent, approval, authorization or order of any
court or governmental agency or body or any third party is
required for the issuance and sale by the Company of the Shares
to the Initial Purchasers, the execution, delivery and
performance of the Transaction Documents by the Company or the
consummation by the Company of the other transactions
contemplated hereby or thereby, except (i) such as have been
obtained and such as may be required under state securities or
"Blue Sky" laws, or under the laws of any jurisdiction outside
the United States in connection with the purchase and resale of
the Shares by the Initial Purchasers, (ii) the filing of the
Certificate of Designation with the Secretary of State of the
State of Delaware, (iii) the registration of the Shares or the
Exchange Debentures under the Securities Act as contemplated by
<PAGE>
<PAGE>
5
the Registration Rights Agreement or (iv) consents of the lenders
under the Amended and Restated Credit Agreement of the Company to
the execution, delivery and performance of the Exchange Indenture
and the Exchange Debentures. The issuance and sale of the Shares
to the Initial Purchasers, the execution, delivery and
performance by the Company of the Transaction Documents, the
consummation by the Company of the transactions contemplated
hereby and thereby will not conflict with or constitute or result
in a breach of or a default under (or an event which with notice
or passage of time or both would constitute a default under) or
violation of any of (i) the certificate of incorporation or
bylaws of the Company, (ii) the terms or provisions of any
Contract, or (iii) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchasers in
Section 8 hereof) any statute, judgment, decree, order, rule or
regulation applicable to the Company or any of its properties or
assets, except for any such conflict, breach or violation in each
case which could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(xiii) The financial statements of the Company included in
the Offering Memorandum have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis, except as otherwise stated therein. The summary and
selected financial and statistical data in the Offering
Memorandum present fairly in all material respects the
information shown therein and have been prepared and compiled on
a basis consistent with the audited financial statements included
therein, except as otherwise stated therein. McGladrey & Pullen,
LLP (the "Independent Accountants") is an independent public
accounting firm within the meaning of the Securities Act.
(xiv) The pro forma financial statements (including the
notes thereto) of the Company and the other pro forma financial
information of the Company included in the Offering Memorandum
(i) comply as to form in all material respects with the
applicable requirements of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(ii) have been prepared in all material respects in accordance
with the Commission's rules and guidelines with respect to pro
forma financial statements, and (iii) have been properly computed
on the bases described therein; the assumptions used in the
preparation of the pro forma financial data and other pro forma
financial information included in the Offering Memorandum are
reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to
therein.
<PAGE>
<PAGE>
6
(xv) There is not pending or, to the knowledge of the
Company, threatened any action, suit, proceeding, inquiry or
investigation to which the Company, or to which the property or
assets of the Company is subject, before or brought by any court,
arbitrator or governmental agency or body which, if determined
adversely to the Company, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of
the Shares to be sold hereunder or the consummation of the other
transactions described in the Offering Memorandum. There are no
legal or governmental proceedings involving or affecting the
Company or any of its properties or assets which would be
required to be described in a prospectus filed pursuant to the
Securities Act that are not described in the Offering Memorandum,
nor are there any material contracts or other documents which
would be required to be described in a prospectus filed pursuant
to the Securities Act that are not described in the Offering
Memorandum.
(xvi) The Company possesses all licenses, permits,
certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental
authorities (including the Federal Communications Commission),
all self-regulatory organizations and all courts and other
tribunals, presently required or necessary to own or lease, as
the case may be, and to operate its properties and to carry on
its businesses as now or proposed to be conducted as set forth in
the Offering Memorandum ("Permits"), except where the failure to
obtain such Permits could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect; the Company has materially fulfilled and performed all of
its obligations with respect to such Permits and no event has
occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such
Permit; and the Company has not received any notice of any
proceeding relating to revocation or modification of any such
Permit, except where such revocation or modification could not
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
(xvii) Since the date of the most recent financial
statements appearing in the Offering Memorandum, except as
described therein, (i) the Company has not incurred any
liabilities or obligations, direct or contingent, or entered into
or agreed to enter into any transactions or contracts (written or
oral) not in the ordinary course of business which liabilities,
obligations, transactions or contracts would, individually or in
the aggregate, be material to the business, operations,
properties, assets, financial condition or prospects of the
Company, (ii) the Company has not purchased any of its
outstanding capital stock, nor
<PAGE>
<PAGE>
7
declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock and (iii) there has not been any
material change in the capital stock or long-term indebtedness of
the Company.
(xviii) The Company has filed all necessary federal, state
and foreign income and franchise tax returns and has paid all
taxes shown as due thereon; except as to taxes being contested in
good faith, or where the failure to pay any such taxes would not,
individually or in the aggregate, have a Material Adverse Effect,
other than tax deficiencies which the Company is contesting in
good faith and for which the Company has provided adequate
reserves in accordance with generally accepted accounting
principles, there is no tax deficiency that has been asserted
against the Company which would reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.
(xix) The proceeds from the issuance and sale of the
Shares will be used solely for the purposes specified in the
Offering Memorandum. None of such proceeds will be used for the
purpose of purchasing or carrying any Margin Stock with the
meaning of the applicable provisions of Regulation G, T, U or X
or for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry Margin Stock or for
any other purpose which might constitute this transaction a
"purpose credit" within the meaning of the applicable provisions
of Regulation G, T, U or X. The issuance and sale of the Shares
as contemplated in the Offering Memorandum, the application of
the proceeds thereof by the Company will comply with Regulations
G, T, U and X of the Board of Governors of the Federal Reserve
System.
(xx) The Company has good and marketable title to all
personal property described in the Offering Memorandum as being
owned by it and good and marketable title to a leasehold interest
in the personal property described in the Offering Memorandum as
being leased by it, free and clear of all liens, charges,
encumbrances or restrictions, except as described in the Offering
Memorandum or to the extent the failure to have such title or the
existence of such liens, charges, encumbrances or restrictions
could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. All leases,
contracts and agreements to which the Company is a party or by
which any of them is bound are valid and enforceable against the
Company, and, to the Company's knowledge, are valid and
enforceable against the other party or parties thereto and are in
full force and effect with only such exceptions as could not
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect and except as such enforceability may
be limited by Bankruptcy and Equity. The Company owns or
possesses adequate licenses or other rights to use all patents,
trademarks, service marks, trade names,
<PAGE>
<PAGE>
8
copyrights and know-how necessary to materially conduct the
businesses now or proposed to be operated by them as described in
the Offering Memorandum, and the Company has not received any
notice of infringement of (or knows of any such infringement of)
asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how
which, if such assertion of infringement were sustained, could
reasonably be expected, individually or the aggregate, to have a
Material Adverse Effect.
(xxi) Except as described in the Offering Memorandum and
except as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, (A) the Company is
in compliance with and not subject to liability under applicable
Environmental Laws (as defined below), (B) the Company has made
all filings and provided all notices required under any
applicable Environmental Law, and has and is in compliance with
all Permits required under any applicable Environmental Laws and
each of them is in full force and effect, (C) there is no civil,
criminal or administrative action, suit, demand, claim, hearing,
notice of violation, or, to the knowledge of the Company,
investigation, proceeding, notice or demand letter or request for
information pending or, to the knowledge of the Company,
threatened against the Company under any Environmental Law, (D)
no lien, charge, encumbrance or restriction has been recorded
under any Environmental Law with respect to any assets, facility
or property owned, operated, leased or controlled by the Company,
(E) the Company has not received any notice that it has been
identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA") or any comparable state law
and (F) no property or facility of the Company is (i) listed or
proposed for listing on the National Priorities List under CERCLA
or is (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated
pursuant to CERCLA, or on any comparable list maintained by any
state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means
the common law and all applicable federal, state and local laws
or regulations, codes, orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder, relating to
pollution or protection of public or employee health and safety
or the environment, including, without limitation, laws relating
to (i) emissions, discharges, releases or threatened releases of
hazardous materials into the environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal,
transport or handling of hazardous materials, and (iii)
underground and
<PAGE>
<PAGE>
9
above ground storage tanks and related piping, and emissions,
discharges, releases or threatened releases therefrom.
(xxii) There is no strike, labor dispute, slowdown or work
stoppage with the employees of the Company which is pending or,
to the knowledge of the Company, threatened, except for any such
strike, labor dispute, slowdown or work stoppage which could not
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
(xxiii) The Company carries insurance in such amounts and
covering such risks as in its reasonable determination is
adequate for the conduct of its business and the value of its
properties.
(xxiv) Except as described in the Offering Memorandum, the
Company is not liable for any prohibited transaction within the
meaning of Section 4975(c) of the Internal Revenue Code of 1986,
as amended (the "Code") or Part 4, of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or
an accumulated funding deficiency within the meaning of Section
412 of the Code or Section 302 of ERISA or funding deficiency or
any complete or partial withdrawal liability (within the meaning
of Section 4201 of ERISA) with respect to any pension, profit
sharing or other plan which is subject to ERISA, to which the
Company makes or ever has made a contribution and in which any
employee of the Company is or has been a participant which,
individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect. With respect to such plans, the
Company is in compliance in all material respects with all
applicable provisions of ERISA except where the failure to do so
would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(xxv) The Company (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed
in accordance with management's authorization, (B) transactions
are recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable
intervals.
(xxvi) The Company is not an "investment company" or a
company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended,
without taking into account the number of holders of securities
of the Company or any company "controlling" the
<PAGE>
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10
Company. The Company is not a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
(xxvii) The Shares, the Exchange Debentures, the Exchange
Indenture and the Registration Rights Agreement will conform in
all material respects to the descriptions thereof in the Offering
Memorandum.
(xxviii) No holder of securities of the Company will be
entitled to have such securities registered under the
registration statements required to be filed by the Company
pursuant to the Registration Rights Agreement other than as
expressly permitted thereby.
(xxix) Immediately after the consummation of the
transactions contemplated by this Agreement, the fair value and
present fair saleable value of the assets of the Company will
exceed the sum of its stated liabilities and identified
contingent liabilities; the Company is not and will not be, after
giving effect to the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated
hereby, (a) left with unreasonably small capital with which to
carry on its business as it is proposed to be conducted, (b)
unable to pay its debts (contingent or otherwise) as they mature
or (c) otherwise insolvent.
(xxx) Neither the Company nor any of its Affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act)
has directly, or through any agent or other person acting on its
or their behalf (other than the Initial Purchasers or any
Affiliate of either Initial Purchaser, as to which no
representation is made), (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any
"security" (as defined in the Securities Act) which is or could
be integrated with the sale of the Shares in a manner that would
require the registration under the Securities Act of the Shares
or (ii) engaged in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Shares or
in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act. Assuming the accuracy of the
representations and warranties of the Initial Purchasers in
Section 8 hereof and compliance by the Initial Purchasers with
the procedures set forth in Section 4 hereof, it is not necessary
in connection with the offer, sale and delivery of the Shares to
the Initial Purchasers in the manner contemplated by this
Agreement and the Offering Memorandum to register any of the
Shares under the Securities Act.
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11
(xxxi) No securities of the Company are (i) of the same
class (within the meaning of Rule 144A under the Securities Act)
as the Shares and (ii) (a) listed on a national securities
exchange registered under Section 6 of the Exchange Act or (b)
quoted in a U.S. automated inter-dealer quotation system (as such
term is used in the Exchange Act).
(xxxii) None of the Company or any of its Affiliates has
taken, nor will any of them take, directly or indirectly, any
action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of
the Shares.
(xxxiii) None of the Company or any of its Affiliates has
directly or through any agent or other person acting on its or
their behalf (other than the Initial Purchasers or any Affiliate
of either Initial Purchaser, as to which no representation is
made) engaged in any directed selling efforts (as that term is
defined in Regulation S under the Securities Act ("Regulation
S")) with respect to the Shares; the Company and its Affiliates
and any person acting on its or their behalf (other than the
Initial Purchasers or any Affiliate of either Initial Purchaser,
as to which no representation is made) have complied with the
offering restrictions requirement of Regulation S; provided that
no representation is made as to the Initial Purchasers or any
Affiliate of either Initial Purchaser.
(xxxiv) The Company has not engaged or retained any
person, other than the Initial Purchasers as the Initial
Purchasers, to act as a financial advisor, underwriter or
placement agent in connection with the issuance of the Shares
and, except for the discount and expenses payable in connection
with the issuance of the Shares as described in the Offering
Memorandum, no person has the right to receive a material amount
of financial advisory, underwriting, placement, finder's or
similar fees in connection with, or as a result of, the issuance
of the Shares and the purchase of the Shares by the Initial
Purchasers or the consummation of the other transactions
contemplated hereby.
3. Purchase, Sale and Delivery of the Shares. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers, acting
severally and not jointly, agree to purchase the Shares in the respective
numbers of shares set forth on Schedule 1 hereto from the Company at a purchase
price of $1,000 per share, less an underwriting spread of 3.5% per share. One or
more certificates in definitive form for the Shares that the Initial Purchasers
have agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Initial Purchasers request upon notice
to the Company at least one business day
<PAGE>
<PAGE>
12
prior to the Closing Date, shall be delivered by or on behalf of the Company to
the Initial Purchasers, against payment by or on behalf of the Initial
Purchasers of the purchase price therefor by wire transfer (same day funds) to
such account or accounts as the Company shall specify prior to the Closing Date,
or by such means as the parties hereto shall agree prior to the Closing Date.
Such delivery of and payment for the Shares shall be made at the offices of
Shearman & Sterling, 599 Lexington Avenue, New York, New York at 9:00 a.m., New
York time, on May 14, 1998, or at such other place, time or date not later than
June 1, 1998 as the Initial Purchasers, on the one hand, and the Company, on the
other hand, may agree upon, such time and date of delivery against payment being
herein referred to as the "Closing Date." The Company will make such certificate
or certificates for the Shares available for checking and packaging by the
Initial Purchasers at the offices of TD Securities (USA) Inc. in New York, New
York, or at such other place as TD Securities (USA) Inc. may designate, at least
24 hours prior to the Closing Date.
4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Shares at the price and upon the terms set
forth herein and in the Offering Memorandum, as soon as practicable after this
Agreement is entered into and as in the judgment of the Initial Purchasers is
advisable.
5. Covenants of the Company. (a) The Company covenants and agrees
with the Initial Purchasers that:
(i) The Company will not amend or supplement the Offering
Memorandum or any amendment or supplement thereto of which the
Initial Purchasers shall not previously have been advised and
furnished a copy for a reasonable period of time prior to the
proposed amendment or supplement and as to which the Initial
Purchasers shall not have given their consent. The Company will
promptly, upon the reasonable request of the Initial Purchasers
or counsel for the Initial Purchasers, make any amendments or
supplements to the Offering Memorandum that may be necessary or
advisable in connection with the resale of the Shares by the
Initial Purchasers.
(ii) The Company will cooperate with the Initial
Purchasers in arranging for the qualification of the Shares for
offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Initial Purchasers may reasonably designate
and will continue such qualifications in effect for as long as
may be necessary to complete the resale of the Shares; provided,
however, that in connection therewith, the Company shall not be
required to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or to
take any other action that would subject either of them to
service of process in suits in any jurisdiction other than that
arising out of the offering or sale of the Shares in such
jurisdiction, or subject itself to taxation in
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13
excess of a nominal dollar amount in any such jurisdiction where
it is not then so subject.
(iii) At any time prior to the earlier of (i) 365 days
from the Closing Date and (ii) the completion of the distribution
by the Initial Purchasers of the Shares during which a Shelf
Registration Statement for the sale of such Shares is not
effective under the Securities Act pursuant to the Registration
Rights Agreement if any event occurs or information becomes known
as a result of which the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material
fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, or, if for any other reason it is
necessary at any time to amend or supplement the Offering
Memorandum to comply with applicable law, the Company will
promptly notify the Initial Purchasers thereof and will prepare,
at the expense of the Company, an amendment or supplement to the
Offering Memorandum that corrects such statement or omission or
effects such compliance.
(iv) The Company will, without charge, provide to the
Initial Purchasers, and to counsel for the Initial Purchasers, as
many copies of the Offering Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably
request.
(v) The Company will apply the net proceeds from the sale
of the Shares as set forth under the caption "Use of Proceeds" in
the Offering Memorandum.
(vi) For so long as any of the Shares remain outstanding,
the Company will furnish to the Initial Purchasers copies of all
reports and other communications (financial or otherwise)
furnished by the Company to the Transfer Agent or to the holders
of the Shares.
(vii) Prior to the Closing Date, the Company will furnish
to the Initial Purchasers, as soon as they have been prepared, a
copy of any unaudited interim financial statements of the Company
for any period subsequent to the period covered by the most
recent financial statements appearing in the Offering Memorandum.
(viii) None of the Company or any of its Affiliates will
sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the
Securities Act) which could be integrated with the sale of the
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14
Shares in a manner which would require the registration under the
Securities Act of the Shares.
(ix) None of the Company or any of its Affiliates will
directly, or through any agent or other person acting on its or
their behalf, engage in (i) any form of general solicitation or
general advertising (as such terms are used in Regulation D under
the Securities Act) in connection with the offering of the Shares
or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act or (ii) any "directed
selling efforts" (as defined in Regulation S) in respect of the
Shares.
(x) For so long as any of the Shares constitute
"restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, the Company will make available at its
expense, upon request, to any holder of such Shares and any
prospective purchasers thereof the information specified in Rule
144A(d)(4) under the Securities Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act
(xi) The Company will use its best efforts to (i) permit
the Shares to be designated PORTAL securities in accordance with
the rules and regulations adopted by the NASD relating to trading
in the Private Offerings, Resales and Trading through Automated
Linkages market (the "PORTAL Market") and (ii) permit the Shares
to be eligible for clearance and settlement through the
facilities of the Depository.
6. Expenses. The Company agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof including all costs and expenses
incident to (i) the printing, word processing or other production of documents
with respect to the transactions contemplated hereby, including any costs of
printing the Offering Memorandum and any amendment or supplement thereto, and
any "Blue Sky" memoranda, (ii) all arrangements relating to the delivery to the
Initial Purchasers of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation (including printing), issuance and
delivery to the Initial Purchasers of the Shares, (v) the qualification of the
Shares under state securities and "Blue Sky" laws, including filing fees and
reasonable fees and disbursements of counsel for the Initial Purchasers relating
thereto, (vi) expenses in connection with any meetings with prospective
investors in the Shares, (vii) fees and expenses of the Transfer Agent including
reasonable fees and expenses of counsel, (viii) all expenses and listing fees
incurred in connection with the application for quotation of the Shares on the
PORTAL Market, and (ix) any fees charged by investment rating agencies for the
rating of the Shares. If the sale of the Shares provided for herein is not
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15
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchasers of their obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Company agrees to
promptly reimburse the Initial Purchasers upon demand for all reasonable
out-of-pocket expenses (including, without limitation, reasonable fees,
disbursements and charges of Shearman & Sterling, counsel for the Initial
Purchasers) that shall have been incurred by the Initial Purchasers in
connection with the proposed purchase and sale of the Shares; provided, however,
that the Company shall then be under no further liability to the Initial
Purchasers except as provided under this Section 6 and Section 9 hereof.
7. Conditions of the Initial Purchasers' Obligations. The
obligation of the Initial Purchasers to purchase and pay for the Shares shall,
in their sole discretion, be subject to the satisfaction or waiver of the
following conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Shack & Siegel, P.C. ("Company Counsel"), counsel
for the Company, in form and substance reasonably satisfactory to
counsel for the Initial Purchasers. In rendering such opinion, Company
Counsel may rely upon such certificates and other documents and
information as it may reasonably require to pass upon such matters.
(b) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Covington & Burling ("FCC Counsel"), FCC counsel
for the Company, in form and substance reasonably satisfactory to
counsel for the Initial Purchasers. In rendering such opinion, FCC
Counsel may rely upon such certificates and other documents and
information as it may reasonably require to pass upon such matters.
(c) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Whitman Breed Abbott & Morgan ("Tax Counsel"),
tax counsel for the Company, in form and substance reasonably
satisfactory to counsel for the Initial Purchasers. In rendering such
opinion, Tax Counsel may rely upon such certificates and other documents
and information as it may reasonably require to pass upon such matters.
(d) On the Closing Date, the Initial Purchasers shall have
received the opinion, in form and substance satisfactory to the Initial
Purchasers, dated as of the Closing Date and addressed to the Initial
Purchasers, of Shearman & Sterling, counsel for the Initial Purchasers,
with respect to certain legal matters relating to this
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<PAGE>
16
Agreement and such other related manners as the Initial Purchasers may
reasonably require. In rendering such opinion, Shearman & Sterling shall
have received and may rely upon such certificates and other documents
and information as it may reasonably request to pass upon such matters.
(e) The Initial Purchasers shall have received from the
Independent Accountants a comfort letter or letters dated the date
hereof and the Closing Date, in form and substance satisfactory to
counsel for the Initial Purchasers.
(f) The representations and warranties of the Company contained
in this Agreement shall be true and correct on and as of the date hereof
and on and as of the Closing Date as if made on and as of the Closing
Date; the statements of the Company's officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be
true and correct on and as of the date made and on and as of the Closing
Date; the Company shall have performed all covenants and agreements and
satisfied all conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date; and, except as described in
the Offering Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), subsequent to the date of the most
recent financial statements in such Offering Memorandum, there shall
have been no event or development, and no information shall have become
known, that, individually or in the aggregate, has or could reasonably
be expected to have a Material Adverse Effect.
(g) The sale of the Shares hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(h) Subsequent to the date of the most recent financial
statements in the Offering Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), the business or operations of
the Company shall not have been interfered with by fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work stoppage
or from any legal or governmental proceeding, order or decree, and the
Company and its properties shall not have sustained any loss or damage,
whether or not covered by insurance, as a result of any such occurrence,
except any such interference, loss or damage which has not had, and
could not reasonably be expected to have, a Material Adverse Effect.
(i) The Initial Purchasers shall have received certificates of
the Company, dated the Closing Date, signed on behalf of the Company by
any two of its Chairman of the Board, Chief Executive Officer,
President, Chief Financial Officer and any Senior Vice President to the
effect that:
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<PAGE>
17
(A) The representations and warranties of the Company
contained in this Agreement are true and correct on and as of the
date hereof and on and as of the Closing Date, and the Company
has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date;
(B) At the Closing Date, since the date hereof or since
the date of the most recent financial statements in the Offering
Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), no event or development has occurred, and
no information has become known that individually or in the
aggregate, has or could reasonably be expected to have a Material
Adverse Effect;
(C) The sale of the Shares hereunder has not been enjoined
(temporarily or permanently); and
(D) Such other information as the Initial Purchasers may
reasonably request.
(j) On the Closing Date, the Initial Purchasers shall have
received the Registration Rights Agreement executed by the Company and
such agreement shall be in full force and effect at all times from and
after the Closing Date.
On or before the Closing Date, the Initial Purchasers and counsel
for the Initial Purchasers shall have received such further documents, opinions,
certificates, letters and schedules or agreements relating to the business,
corporate, legal and financial affairs of the Company as they shall have
heretofore reasonably requested from the Company.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Company shall
furnish to the Initial Purchasers such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchasers shall reasonably request.
8. Offering of Shares; Restrictions on Transfer. (a) The Initial
Purchasers represent and warrant (as to themselves only) that they are QIBs. The
Initial Purchasers have advised the Company that they propose to offer the
Shares for resale upon the terms and conditions set forth in this Agreement and
in the Offering Memorandum. Each Initial Purchaser acknowledges and agrees that
the Shares have not been and, other than pursuant to the Company's obligations
under the Registration Rights Agreement, will not be, registered under the
Securities Act, and may not be offered or sold within the United States unless
the
<PAGE>
<PAGE>
18
Shares are registered under the Securities Act or an exemption from the
registration requirements of the Securities Act is available. Each of the
Initial Purchasers hereby represents and warrants and agrees with the Company
(as to itself only) that (i) it has not and will not solicit offers for, or
offer or sell, the Shares by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act; and (ii) it has and will solicit offers for the Shares
only from, and will offer the Shares only to (A) in the case of offers inside
the United States, persons whom the Initial Purchasers reasonably believe to be
QIBs or, if any such person is buying for one or more institutional accounts for
which such person is acting as fiduciary or agent, only when such person has
represented to the Initial Purchasers that each such account is a QIB, to whom
notice has been given that such sale or delivery is being made in reliance on
Rule 144A, and, in each case, in transactions under Rule 144A and (B) in the
case of offers outside the United States, to persons other than U.S. persons
("Foreign Purchasers," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)); provided, however, that, in
the case of this clause (B), in purchasing such Shares such persons are deemed
to have represented and agreed as provided under the caption "Notice to
Investors" contained in the Offering Memorandum.
(b) Each of the Initial Purchasers represent and warrant (as to
itself only) with respect to offers and sales outside the United States that (i)
it has and will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Shares or has in
its possession or distributes any Memorandum or any such other material, in all
cases at its own expense; (ii) the Shares have not been and will not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Regulation S under the Act or pursuant to an
exemption from the registration requirements of the Act; (iii) it has offered
the Shares and will offer and sell the Shares (A) as part of its distribution at
any time and (B) otherwise until 40 days after the later of the commencement of
the offering and the Closing Date, only in accordance with Rule 903 of
Regulation S and, accordingly, neither it nor any persons acting on its behalf
have engaged or will engage in any directed selling efforts (within the meaning
of Regulation S) with respect to the Shares, and any such persons have complied
and will comply with the offering restrictions requirement of Regulation S; and
(iv) it agrees that, at or prior to confirmation of sales of the Shares, it will
have sent to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases Shares from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and
may not be offered and sold within the United States or to, or
for the account or benefit of, U.S. persons (i) as part of the
distribution of the Securities at any time or (ii) otherwise
until 40
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<PAGE>
19
days after the later of the commencement of the offering and the
closing date of the offering, except in either case in accordance
with Regulation S (or Rule 144A if available) under the
Securities Act. Terms used above have the meaning given to them
in Regulation S."
Terms used in this Section 8 and not defined in this Agreement have the meanings
given to them in Regulation S.
9. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Initial Purchasers, and their affiliates,
directors, officers, agents, representatives, and employees and each person, if
any, who controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, against any losses, claims,
damages or liabilities to which the Initial Purchasers or any such affiliate,
director, officer, agent, representative, employee or such controlling person
may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as any such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Offering Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the securities or
"Blue Sky" laws thereof or filed with any securities association or
securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in the Offering
Memorandum or any amendment or supplement thereto or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any reasonable legal or other expenses incurred by the
Initial Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the Offering
Memorandum or any amendment or supplement thereto or any Application in reliance
upon and in conformity with written information concerning the Initial
Purchasers furnished to the Company by the Initial Purchasers specifically for
use therein. The Company shall not be liable under this Section 9 for any
settlement of any claim or action effected without its prior written consent,
which shall
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20
not be unreasonably withheld. No Initial Purchaser shall, without the prior
written consent of the Company, effect any settlement or compromise of any
pending or threatened proceeding in respect of which the Company is or could
have been a party, or indemnity could have been sought hereunder by the Company,
unless such settlement (A) includes an unconditional written release of the
Company, in form and substance reasonably satisfactory to the Company, from all
liability on claims that are the subject matter of such proceeding and (B) does
not include any statement as to an admission of fault, culpability or failure to
act by or on behalf of the Company.
(b) The Initial Purchasers agree to indemnify and hold harmless
the Company and its respective affiliates, directors, officers, agents,
representatives, and employees and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such affiliate, director, officer, agent, representative,
employee or controlling person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Offering Memorandum or any amendment or supplement thereto or any
Application, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Offering Memorandum or any amendment
or supplement thereto or any Application, or necessary to make the statements
therein not misleading, in light of the circumstances under which they were made
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Initial
Purchaser, furnished to the Company by the Initial Purchasers specifically for
use therein; and subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any reasonable legal or other expenses
incurred by the Company or any such affiliate, director, officer, agent,
representative, employee or controlling person in connection with investigating
or defending against or appearing as a third-party witness in connection with
any such loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability that the Initial
Purchasers may otherwise have to the indemnified parties. The Initial Purchasers
shall not be liable under this Section 9 for any settlement of any claim or
action effected without their consent, which shall not be unreasonably withheld.
The Company shall not, without the prior written consent of the Initial
Purchasers, effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Initial Purchaser is or could have been a
party, or indemnity could have been sought hereunder by any Initial Purchaser,
unless such settlement (A) includes an unconditional written release of the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers, from all liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any Initial Purchaser.
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21
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve the indemnifying party from any liability under paragraph (a)
or (b) above unless and to the extent such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraphs (a) and (b) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that if (i) the use of counsel chosen
by the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, or
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Initial Purchasers
in the case of paragraph (a) of this Section 9 or the Company in the case of
paragraph (b) of this Section 9, representing the indemnified parties under such
paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such
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22
action effected by such indemnified party without the prior written consent of
the indemnifying party (which consent shall not be unreasonably withheld),
unless such indemnified party waived in writing its rights under this Section 9,
in which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to, hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Shares or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company, on
the one hand, and any Initial Purchaser, on the other, shall be deemed to be in
the same proportion as the total proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts received by such
Initial Purchaser. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or such Initial
Purchaser, on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omissions or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Initial Purchasers agree
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under this
Agreement, less the aggregate amount of any damages that the Initial Purchasers
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each affiliate, director, officer, agent, representative or
employee of an Initial Purchaser and each person, if any, who controls an
Initial Purchaser with the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
the Initial Purchasers, and each affiliate, director, officer, agent,
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23
representative or employee of the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, shall have the same rights to contribution as the
Company.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company and their
respective officers and the Initial Purchasers set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of their officers or directors, the Initial Purchasers or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6, 9 and 15 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Company given prior to the
Closing Date in the event that the Company shall have failed, refused or been
unable to perform all obligations and satisfy all conditions on their part to be
performed or satisfied hereunder at or prior thereto or, if at or prior to the
Closing Date:
(i) the Company shall have sustained any loss or interference
with respect to its businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work stoppage
or any legal or governmental proceeding, which loss or interference, in
the judgment of the Initial Purchasers individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse
Effect, or there shall have been, in the judgment of the Initial
Purchasers, any event or development that, individually or in the
aggregate, has had or could reasonably be likely to have a Material
Adverse Effect, except in each case as described in the Offering
Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or the
NASDAQ National Market shall have been suspended or minimum or maximum
prices shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New York
or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or
<PAGE>
<PAGE>
24
international calamity or emergency, or (C) any material change in the
financial markets of the United States which, in the case of (A), (B) or
(C) above and in the judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Shares as contemplated by the Offering Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The
statements set forth in the last paragraph on the front cover page and in the
third and fourth sentences of the third paragraph and in the seventh paragraph
under the heading "Plan of Distribution" in the Offering Memorandum constitute
the only information furnished by the Initial Purchasers to the Company for the
purposes of Sections 2(a)(i) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchasers, shall be mailed or delivered to TD
Securities (USA) Inc., 31 West 52nd Street, New York, New York 10019-6101,
Attention: Thomas W. Regan, Jr., Managing Director with a copy to Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022, Attention: Rohan S.
Weerasinghe, Esq.; if sent to the Company, shall be mailed or delivered to the
Company at 100 Park Avenue, Rockford, Illinois 61101, Attention: K. James Yager,
with a copy to Shack & Siegel, P.C., 530 Fifth Avenue, New York, New York 10036,
Attention: Paul S. Goodman, Esq.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; and one business
day after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchasers, the Company and their successors and
legal representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any provisions herein
contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company contained in Section 9 of this Agreement shall also be for the benefit
of each director, officer, agent, representative or employee of an Initial
Purchaser and any person or persons who control the Initial Purchasers
<PAGE>
<PAGE>
25
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Initial Purchasers contained in
Section 9 of this Agreement shall also be for the benefit of director, officer,
agent, representative or employee of the Company, their officers and any person
or persons who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act. No purchaser of Shares from
the Initial Purchasers will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Initial Purchasers.
Very truly yours,
BENEDEK COMMUNICATIONS CORPORATION
By: /s/ Ronald L. Lindwall
______________________________________
Name: Ronald L. Lindwall
Title: Senior Vice President--Finance
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
TD SECURITIES (USA) INC.
By: /s/ Thomas W. Regan, Jr.
_______________________________
Name: Thomas W. Regan, Jr.
Title: Managing Director
BT ALEX. BROWN INCORPORATED
By: /s/ Douglas Clarisse
_______________________________
Name: Douglas Clarisse
Title: Vice President
<PAGE>
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Initial Purchasers Number of Shares
- ------------------ ----------------
<S> <C>
TD Securities (USA) Inc.......................................... 75,000
BT Alex. Brown Incorporated...................................... 25,000
------------------
Total.................................................... 100,000
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 10.2
- --------------------------------------------------------------------------------
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Dated as of May 7, 1998
By and Among
BENEDEK COMMUNICATIONS CORPORATION,
as Issuer,
and
TD SECURITIES (USA) INC.,
and
BT ALEX. BROWN INCORPORATED,
as Initial Purchasers
- --------------------------------------------------------------------------------
$100,000,000
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions..........................................................................1
2. Exchange Offer.......................................................................5
3. Shelf Registration...................................................................8
4. Additional Interest.................................................................10
5. Registration Procedures.............................................................11
6. Registration Expenses...............................................................20
7. Indemnification.....................................................................21
8. Rules 144 and 144A..................................................................24
9. Underwritten Registrations..........................................................24
10. Miscellaneous.......................................................................25
(a) No Inconsistent Agreements...................................................25
(b) Adjustments Affecting Transfer Restricted Securities.........................25
(c) Amendments and Waivers.......................................................25
(d) Notices......................................................................26
(e) Successors and Assigns.......................................................27
(f) Counterparts.................................................................27
(g) Headings.....................................................................27
(h) GOVERNING LAW................................................................27
(i) Severability.................................................................27
(j) Notes Held by the Company or its Affiliates..................................27
(k) Third Party Beneficiaries....................................................28
</TABLE>
<PAGE>
<PAGE>
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This Exchange and Registration Rights Agreement (the "Agreement")
is dated as of May 7, 1998, by and among BENEDEK COMMUNICATIONS CORPORATION, a
corporation organized under the laws of the State of Delaware (the "Company"),
TD SECURITIES (USA) INC. and BT ALEX. BROWN INCORPORATED (the "Initial
Purchasers").
This Agreement is being entered into in connection with the
Purchase Agreement, dated as of May 7, 1998, by and among the Company and the
Initial Purchasers (the "Purchase Agreement"), which provides for the sale by
the Company to the Initial Purchasers of $100,000,000 aggregate liquidation
preference of the Company's 11 1/2% Senior Exchangeable Preferred Stock (the
"Exchangeable Preferred Stock"). In order to induce the Initial Purchasers to
enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement for the benefit of the Initial
Purchasers and their direct and indirect transferees. The execution and delivery
of this Agreement is a condition to the obligation of the Initial Purchasers to
purchase the Exchangeable Preferred Stock under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
"Additional Interest" has the meaning ascribed to such term in
Section 4(a) hereof.
"Advice" has the meaning ascribed to such term in Section 5
hereof.
"Agreement" has the meaning ascribed to such term in the
introductory paragraph hereto.
"Applicable Period" has the meaning ascribed to such term in
Section 2(b) hereof.
"Certificate of Designation" means the Certificate of Designation
of the Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of the 11 1/2% Senior Exchangeable Preferred Stock
and Qualifications, Limitations and Restrictions Thereof.
<PAGE>
<PAGE>
2
"Closing Date" has the meaning ascribed to such term in the
Purchase Agreement.
"Company" has the meaning ascribed to such term in the first
introductory paragraph hereto.
"Damages Payment Date" has the meaning ascribed to such term in
Section 4(a) hereof.
"Effectiveness Date" means the 90th day after the Issue Date.
"Effectiveness Period" has the meaning ascribed to such term in
Section 3(a) hereof.
"Exchangeable Preferred Stock" has the meaning ascribed to such
term in the second introductory paragraph hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated
thereunder, all as the same shall be in effect from time to time.
"Exchange Debentures" means the 11 1/2% Exchange Debentures due
2008 to be issued in exchange for the Exchangeable Preferred Stock in
accordance with the provisions of the Certificate of Designation.
"Exchange Indenture" means the Indenture to be entered into by
the Company and IBJ Schroder Bank & Trust Company, as trustee, pursuant
to which the Exchange Debentures may be issued in exchange for the
Exchangeable Preferred Stock.
"Exchange Offer" has the meaning ascribed to such term in Section
2(a) hereof.
"Exchange Offer Registration Statement" has the meaning ascribed
to such term in Section 2(a) hereof.
"Exchange Securities" means a second series of Exchangeable
Preferred Stock or Exchange Debentures, as the case may be, identical in
all material respects to the Exchangeable Preferred Stock or Exchange
Debentures, as the case may be, except that the Exchange Securities
shall have been registered pursuant to an effective Registration
Statement under the Securities Act and shall contain no restrictive
legend thereon.
<PAGE>
<PAGE>
3
"Filing Date" means (A) if no Registration Statement has been
filed by the Company pursuant to this Agreement, the 45th day after the
Issue Date; provided, however, that if a Shelf Notice is given within 10
days of the Filing Date, then the Filing Date with respect to the Shelf
Registration shall be the 15th calendar day after the date of the giving
of such Shelf Notice; or (B) in each other case (which may be applicable
notwithstanding the consummation of the Exchange Offer), the 30th day
after the delivery of a Shelf Notice.
"Holder" means any holder of a Transfer Restricted Security or
Transfer Restricted Securities.
"Indemnified Person" has the meaning ascribed to such term in
Section 7(c) hereof.
"Indemnifying Person" has the meaning ascribed to such term in
Section 7(c) hereof.
"Initial Purchasers" has the meaning ascribed to such term in the
first introductory paragraph hereto.
"Inspectors" has the meaning ascribed to such term in Section
5(o) hereof.
"Issue Date" means the date of original issuance of the
Exchangeable Preferred Stock sold to the Initial Purchasers pursuant to
the Purchase Agreement.
"Liquidated Damages" has the meaning ascribed to such term in
Section 4(a) hereof.
"NASD" has the meaning ascribed to such term in Section 5(s)
hereof.
"Participant" has the meaning ascribed to such term in Section
7(a) hereof.
"Participating Broker-Dealer" has the meaning ascribed to such
term in Section 2(b) hereof.
"Person" means any individual, firm, trustee, corporation,
partnership, limited liability company, joint venture, joint stock
company, trust or trustee, incorporated or unincorporated association,
union, business association, government (or any department, agency or
political subdivision thereof), firm or other entity of any kind, and
shall include any successor (by merger or otherwise) of such entity.
<PAGE>
<PAGE>
4
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities
Act), as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to the Prospectus, with respect to the
terms of the offering of any portion of the Transfer Restricted
Securities covered by such Registration Statement including
post-effective amendments, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
"Purchase Agreement" has the meaning provided in the second
introductory paragraph hereto.
"Records" has the meaning ascribed to such term in Section 5(o)
hereof.
"Registration Default" has the meaning ascribed to such term in
Section 4(a) hereof.
"Registration Statement" means any registration statement of the
Company, including, but not limited to, the Exchange Offer Registration
Statement and all amendments and supplements to such registration
statement, including post-effective amendments, that covers any of the
Transfer Restricted Securities filed with the SEC under the Securities
Act, including the Prospectus included in such registration statement,
all exhibits thereto and all material incorporated by reference therein.
"Rule 144" means Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule
(other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance
therewith resulting in offers and sales by subsequent holders that are
not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act,
all as the same shall be in effect from time to time.
"Rule 144A" means Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule
(other than Rule 144) or regulation hereafter adopted by the SEC, all as
the same shall be in effect from time to time.
<PAGE>
<PAGE>
5
"Rule 415" means Rule 415 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder, all as
the same shall be in effect from time to time.
"Shelf Notice" has the meaning ascribed to such term in Section
2(c) hereof.
"Shelf Registration" has the meaning ascribed to such term in
Section 3(a) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company which covers all of the Transfer Restricted
Securities on an appropriate form for an offering to be made on a
continuous basis under Rule 415, and all amendments and supplements to
such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"TIA" means the Trust Indenture Act of 1939, as amended, and the
rules and regulations promulgated thereunder, all as the same shall be
in effect from time to time.
"Transfer Agent" means the transfer agent under the Certificate
of Designation.
"Transfer Restricted Securities" means each share of Exchangeable
Preferred Stock, Exchange Debenture or Exchange Security until (i) the
date on which such Transfer Restricted Security has been exchanged by a
person other than a broker-dealer for a freely transferrable Exchange
Security in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of a Transfer Restricted Security
for an Exchange Security, the date on which such Exchange Security is
sold to a purchaser who receives from such broker-dealer on or prior to
the date of such sale a copy of the Prospectus contained in the Exchange
Offer Registration Statement, (iii) the date on which such Transfer
Restricted Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement
or (iv) the date on which such Transfer Restricted Security is
distributed to the public pursuant to Rule 144 under the Securities Act
or is saleable pursuant to Rule 144(k) under the Securities Act.
<PAGE>
<PAGE>
6
"Underwritten Registration or Underwritten Offering" means a
registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
2. Exchange Offer.
(a) The Company agrees to file with the SEC no later than the
Filing Date an offer to exchange (the "Exchange Offer") any and all of the
Transfer Restricted Securities for a like aggregate liquidation preference or
aggregate principal amount, as the case may be, of Exchange Securities. The
Exchange Offer shall be registered under the Securities Act on Form S-1 or Form
S-4 (the "Exchange Offer Registration Statement") and shall comply with all
applicable tender offer rules and regulations under the Exchange Act. The
Company agrees to (x) use its best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act on or
before the Effectiveness Date; (y) keep the Exchange Offer open for at least 20
business days (or longer if required by applicable law) after the date that
notice of the Exchange Offer is mailed to Holders; and (z) use its best efforts
to consummate the Exchange Offer on or prior to the 120th day following the
Issue Date. If after such Exchange Offer Registration Statement is declared
effective by the SEC, the Exchange Offer or the issuance of the Exchange
Securities thereunder is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Exchange Offer Registration Statement shall be deemed not to have become
effective for purposes of this Agreement.
Each Holder that participates in the Exchange Offer will be
required to represent that any Exchange Securities received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Securities in violation of the provisions of the Securities Act, and that such
Holder is not an affiliate of the Company within the meaning of the Securities
Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the Company shall have no further obligation to register Transfer
Restricted Securities other than in respect of any Exchange Securities as to
which clause 2(c)(v) hereof applies) pursuant to Section 3 hereof. No securities
other than the Exchange Securities shall be included in the Exchange Offer
Registration Statement.
(b) The Company shall include within the Prospectus included in
the Exchange Offer Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the Staff
of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a
<PAGE>
<PAGE>
7
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the Staff of the SEC or such positions or policies, in
the reasonable judgment of the Initial Purchasers, represent the prevailing
views of the Staff of the SEC. Such "Plan of Distribution" section shall also
expressly permit the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating BrokerDealers may resell the Exchange Securities. The
Company shall consent to the use of the Prospectus forming part of the Exchange
Offer Registration Statement or any amendment or supplement thereto, by any
broker-dealer in connection with the sale or transfer of the Exchange Securities
covered by the Prospectus or any amendment or supplement thereto in accordance
with the Securities Act. The Company shall include in the transmittal letter or
similar documentation to be executed by an exchange offeree in order to
participate in the Exchange Offer a provision substantially as follows:
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Securities. If the undersigned is a
broker-dealer, the undersigned represents that it will receive Exchange
Securities for its own account in exchange for Transfer Restricted
Securities and that the Transfer Restricted Securities to be exchanged
for Exchange Securities were acquired by it as a result of market-making
activities or other trading activities and acknowledges that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Securities pursuant to the
Exchange Offer; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein for a period of 90 days after consummation of the Exchange
Offer (or such longer period if extended pursuant to the last paragraph of
Section 5 hereof) (the "Applicable Period"), in order to permit such Prospectus
to be lawfully delivered by any Participating Broker-Dealer subject to the
prospectus delivery requirements of the Securities Act for such period of time
as is necessary to comply with applicable law in connection with any resale of
the Exchange Securities.
Interest on the Exchange Securities will accrue from either (i)
the last interest payment date on which interest was paid on the Transfer
Restricted Securities surrendered in exchange therefor or (ii) if no interest
has been paid on the Transfer Restricted Securities, from the Issue Date.
<PAGE>
<PAGE>
8
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) keep the Exchange Offer open for at least 20 business days
(or longer if required by applicable law) after the date that notice of
the Exchange Offer is mailed to the Holders;
(3) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York;
(4) permit Holders to withdraw tendered Exchangeable Preferred
Stock or Exchange Debentures, as the case may be, at any time prior to
the close of business, New York time, on the last business day on which
the Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer, as
the case may be, the Company shall:
(1) accept for exchange all Transfer Restricted Securities
validly tendered and not validly withdrawn pursuant to the Exchange
Offer;
(2) deliver to the Transfer Agent for cancellation all Transfer
Restricted Securities so accepted for exchange; and
(3) cause the Transfer Agent to authenticate and deliver promptly
to each Holder that has validly tendered and not validly withdrawn such
tender Exchange Securities equal in liquidation preference or principal
amount, as applicable, to the Transfer Restricted Securities of such
Holder so accepted for exchange.
The Exchange Offer shall not be subject to any conditions, other
than that the Exchange Offer, or the making of any exchange by a Holder, does
not violate applicable law or any applicable interpretation of the Staff of the
SEC. The Company shall instruct the exchange agent for the Exchange Offer to
inform the Initial Purchasers of the names and addresses of the Holders to whom
the Exchange Offer is made, and the Initial Purchasers shall
<PAGE>
<PAGE>
9
have the right to contact such Holders and otherwise facilitate the tender of
Transfer Restricted Securities in the Exchange Offer.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the Staff of the SEC, the Company is not permitted
to effect an Exchange Offer, (ii) the Exchange Offer is not consummated within
180 days after the Issue Date, (iii) a Holder so requests with respect to
Exchangeable Preferred Stock or Exchange Debentures not eligible to be exchanged
for Exchange Securities in an Exchange Offer and held by it following completion
of the Exchange Offer, (iv) any Holder (other than the Initial Purchasers) gives
the Company written notice that it is not eligible to participate in the
Exchange Offer, or (v) in the case of any Holder that participates in the
Exchange Offer, such Holder does not receive Exchange Securities on the date of
the exchange that may be sold without restriction under state and federal
securities laws (other than due solely to the status of the Holder as an
affiliate of the Company within the meaning of the Securities Act and other than
the obligation of a broker-dealer to deliver the Prospectus contained in the
Exchange Offer Registration Statement), then the Company shall promptly deliver
written notice thereof (the "Shelf Notice") to, in the case of clauses (i) and
(ii) above, all Holders, and in the case of clauses (iii), (iv) and (v) above,
the affected Holder and shall file a Shelf Registration Statement pursuant to
Section 3 hereof.
3. Shelf Registration.
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration. The Company shall, at its cost, as
promptly as practicable file with the SEC a shelf registration statement
(the "Shelf Registration" and a "Shelf Registration Statement"). If the
Company shall not have yet filed an Exchange Offer Registration
Statement, the Company shall use its best efforts to file with the SEC
the Shelf Registration on or prior to the applicable Filing Date. The
Shelf Registration shall be on an appropriate form permitting
registration of such Transfer Restricted Securities for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company shall not
permit any securities other than the Transfer Restricted Securities to
be included in the Shelf Registration.
The Company shall use its best efforts to ensure that (1) any
Shelf Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules and
regulations thereunder, (2) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary
<PAGE>
<PAGE>
10
to make the statements therein, in light of the circumstances under
which they were made, not misleading and (3) any Prospectus forming part
of any Shelf Registration Statement, and any supplement to such
Prospectus (as amended or supplemented from time to time), does not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
The Company shall use its best efforts to cause the Shelf
Registration to be declared effective under the Securities Act on or
prior to the Effectiveness Date and to keep the Shelf Registration
continuously effective under the Securities Act until the date which is
three years from the Issue Date, subject to extension pursuant to the
last paragraph of Section 5 hereof (the "Effectiveness Period"), or such
shorter period ending when all Transfer Restricted Securities covered by
the Shelf Registration have been sold in the manner set forth and as
contemplated in the Shelf Registration.
(b) Withdrawal of Stop Orders. If the Shelf Registration ceases
to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities
registered thereunder), the Company shall use its best efforts to obtain
the prompt withdrawal of any order suspending the effectiveness thereof.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate
liquidation preference or principal amount, as applicable, of the
Transfer Restricted Securities covered by such Shelf Registration
Statement or by any underwriter of such Transfer Restricted Securities.
4. Additional Interest.
(a) The Company and the Initial Purchasers agree that the Holders
of Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations under Sections 2 or 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay, as liquidated damages, additional dividends on the
Exchangeable Preferred Stock or interest on the Exchange Debentures, as the case
may be ("Additional Interest"), under the circumstances and to the extent set
forth below:
(i) if the applicable Registration Statement is not filed with
the Commission within 45 days after the Issue Date;
<PAGE>
<PAGE>
11
(ii) unless the Exchange Offer would not be permitted by a policy
of the SEC, the Exchange Offer is not declared effective on or before
the Effectiveness Date;
(iii) neither the Exchange Offer is consummated nor the Shelf
Registration Statement is declared effective within 120 days after the
Issue Date;
(iv) after a Registration Statement is declared effective, such
Registration Statement thereafter ceases to be effective or such
Registration Statement or the related prospectus ceased to be usable
(except as permitted by the following paragraph) in connection with
resales of Transfer Restricted Securities during the periods specified
herein (each such event referred to in clauses (i) through (iv), a
"Registration Default"),
then (A) additional cash dividends will accrue on the Exchangeable Preferred
Stock at a rate of 0.5% per annum from and including the date on which any
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured calculated on the liquidation preference
of the Exchangeable Preferred Stock or (B) additional cash interest will accrue
on the Exchange Debentures at a rate of 0.5% per annum from and including the
date on which any Registration Default shall occur to but excluding the date on
which all Registration Defaults have been cured calculated on the principal
amount of the Exchange Debentures, as the case may be ("Liquidated Damages").
All accrued Liquidated Damages will be paid by the Company in cash on each
scheduled dividend payment date for the Exchangeable Preferred Stock, or on the
date interest is payable for the Exchange Debentures, as the case may be (the
"Damages Payment Date"), to any holder of Transfer Restricted Securities who has
given wire transfer instructions to the Company at least 10 business days prior
the Damages Payment Date by wire transfer of immediately available funds and to
all other holders of Transfer Restricted Securities by mailing checks to their
registered addresses. Following the cure of all Registration Defaults, the
accrual of Liquidated Damages will cease.
A Registration Default described in clause (iv) of the
immediately preceding paragraph shall be deemed not to have occurred and be
continuing by reason of a Shelf Registration Statement or prospectus ceasing to
be usable if (i) such Shelf Registration Statement or prospectus has ceased to
be usable solely as a result of (A) the filing of a post-effective amendment
thereto to incorporate annual audited financial information with respect to the
Company where such post-effective amendment is not yet effective and needs to be
declared effective to permit Holders to use the related prospectus or (B) other
material events, with respect to the Company, that would need to be described in
such Shelf Registration Statement or the related prospectus and (ii) in the case
of clause (B), the Company is proceeding promptly and in good faith to amend or
supplement such Shelf Registration Statement and related prospectus to describe
such events; provided, however, that in any case if such Shelf Registration
Statement or prospectus is not usable for a continuous period in
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12
excess of 30 days, a Registration Default shall be deemed to have occurred on
the day following such 30-day period and to be continuing until such
Registration Default is cured.
5. Registration Procedures.
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Company shall effect such registrations
to permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Company hereunder, the
Company shall:
(a) Prepare and file with the SEC on or prior to the applicable
Filing Date a Registration Statement or Registration Statements as
prescribed by Sections 2 or 3 hereof, and use its best efforts to cause
each such Registration Statement to become effective and remain
effective as provided herein; provided, however, that, if (1) such
filing is pursuant to Section 3 hereof, or (2) a Prospectus contained in
an Exchange Offer Registration Statement filed pursuant to Section 2
hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer that seeks to sell Exchange Securities
during the Applicable Period, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Company
shall, if requested, furnish to and afford the Holders of the Transfer
Restricted Securities covered by such Registration Statement or each
such Participating BrokerDealer, as the case may be, their counsel and
the managing underwriters, if any, a reasonable opportunity to review
copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to
be filed (in each case at least five business days prior to such
filing). The Company shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect of which
the Holders have not been afforded an opportunity to review prior to the
filing of such document, if the Holders of a majority in aggregate
liquidation preference or principal amount, as applicable, of the
Transfer Restricted Securities covered by such Registration Statement,
or any such Participating Broker-Dealer, as the case may be, their
counsel, or the managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement or
Exchange Offer Registration Statement, as the case may be, as may be
necessary to keep such Registration Statement continuously effective for
the Effectiveness Period or the Applicable Period or until consummation
of the Exchange Offer, as the case may be, cause the related Prospectus
to be supplemented by any Prospectus supplement required by applicable
law, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force)
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13
under the Securities Act, and comply with the provisions of the
Securities Act and the Exchange Act applicable to it with respect to the
disposition of all securities covered by such Registration Statement as
so amended or in such Prospectus as so supplemented and with respect to
the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Company shall be
deemed not to have used its best efforts to keep a Registration
Statement effective during the Applicable Period if it voluntarily takes
any action that would result in selling Holders of the Transfer
Restricted Securities covered thereby or Participating Broker-Dealers
seeking to sell Exchange Securities not being able to sell such Transfer
Restricted Securities or such Exchange Securities during that period
unless such action is required by applicable law or unless the Company
complies with this Agreement, including without limitation, the
provisions of paragraph 5(k) hereof and the last paragraph of this
Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer that seeks
to sell Exchange Securities during the Applicable Period, notify the
selling Holders of Transfer Restricted Securities, or each such
Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, promptly (but in any event within two
business days), and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Company,
one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits),
(ii) of the issuance by the SEC of any stop order or any state
securities authority suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of the Transfer
Restricted Securities or resales of Exchange Securities by Participating
Broker-Dealers upon written notice by any such Participating
Broker-Dealer of a resale the representations and warranties of the
Company contained in any agreement (including any underwriting
agreement), contemplated by Section 5(n) hereof cease to be true and
correct, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Transfer
Restricted Securities or the Exchange Securities to be sold by any
Participating BrokerDealer for offer or sale in any jurisdiction, or the
initiation or threatening of any
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14
proceeding for such purpose, (v) of the happening of any event, the
existence of any condition or any information becoming known that makes
any statement made in such Registration Statement or related Prospectus
or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of
any changes in or amendments or supplements to such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
and (vi) of the determination by the Company that a post-effective
amendment and supplement to a Registration Statement or Prospectus would
be appropriate, or a request by the SEC or any state securities
authority for such an amendment or for additional information after the
Registration Statement has become effective.
(d) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Transfer
Restricted Securities or the Exchange Securities for sale in any
jurisdiction, and, if any such order issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any), or the
Holders of a majority in liquidation preference or principal amount, as
applicable, of the Transfer Restricted Securities being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as
the managing underwriter or underwriters (if any), such Holders, or
counsel for any of them reasonably request to be included therein, (ii)
make all required filings of such prospectus supplement or such
post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and (iii) supplement
or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer that seeks
to sell Exchange Securities during the Applicable Period, furnish to
each selling Holder of Transfer Restricted Securities and to each such
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15
Participating Broker-Dealer who so requests and to their respective
counsel and each managing underwriter, if any, at the sole expense of
the Company, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all
documents incorporated or deemed to be incorporated therein by reference
and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer that seeks
to sell Exchange Securities during the Applicable Period, deliver to
each selling Holder of Transfer Restricted Securities, or each such
Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, at the sole expense of the
Company, as many copies of the Prospectus or Prospectuses (including
each form of preliminary prospectus) and each amendment or supplement
thereto and any documents incorporated by reference therein as such
Persons may reasonably request; and, subject to the last paragraph of
this Section 5, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the
selling Holders of Transfer Restricted Securities or each such
Participating Broker-Dealer, as the case may be, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering
and sale of the Transfer Restricted Securities covered by, or the sale
by Participating Broker-Dealers of the Exchange Securities pursuant to,
such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Transfer Restricted
Securities or any delivery of a Prospectus contained in the Exchange
Offer Registration Statement by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable Period, use its
best efforts to register or qualify such Transfer Restricted Securities
(and to cooperate with selling Holders of Transfer Restricted Securities
or each such Participating Broker-Dealer, as the case may be, the
managing underwriter or underwriters, if any, and their respective
counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Transfer
Restricted Securities) for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as any selling
Holder, Participating BrokerDealer, or the managing underwriter or
underwriters reasonably request in writing; provided, however, that
where Exchange Securities held by Participating BrokerDealers or
Transfer Restricted Securities are offered other than through an
underwritten offering, the Company agrees to cause its counsel to
perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep
each such registration or qualification (or exemption therefrom)
effective
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16
during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary
or advisable to enable the disposition in such jurisdictions of the
Exchange Securities held by Participating Broker-Dealers or the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or
(C) subject themselves to taxation in excess of a nominal dollar amount
in any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Transfer Restricted
Securities and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and enable
such Transfer Restricted Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if
any, or Holders may reasonably request.
(j) Use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with
or approved by such other federal or state governmental agencies or
authorities as may be necessary to enable the Holders thereof or the
underwriter or underwriters, if any, to dispose of such Transfer
Restricted Securities, except as may be required solely as a consequence
of the nature of a selling Holder's business, in which case the Company
will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer that seeks
to sell Transfer Restricted Securities during the Applicable Period,
upon the occurrence of any event contemplated by paragraph 5(c)(v) or
5(c)(vi) hereof, as promptly as practicable prepare and (subject to
Section 5(a) hereof) file with the SEC, at the sole expense of the
Company, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file
any other required document so that, as thereafter delivered to the
purchasers of the Transfer Restricted Securities being sold thereunder
or to the purchasers of the Exchange Securities to whom such Prospectus
will be delivered by a
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17
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, the Company shall not be
required to amend or supplement a Registration Statement, any related
Prospectus or any document incorporated therein by reference, in the
event that, and for a period not to exceed an aggregate of 60 days in
any calendar year if (i) an event occurs and is continuing as a result
of which the Shelf Registration would, in the Company's good faith
judgment, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make statements therein, in
light of the circumstances under which they were made, not misleading
and (ii) (A) the Company determines in its good faith judgment that the
disclosure of such event at such time would have a material adverse
effect on the business, operations or prospects of the Company or (B)
the disclosure otherwise relates to a pending material business
transaction that has not yet been publicly disclosed.
(l) Use its best efforts to cause the Transfer Restricted
Securities covered by a Registration Statement or the Exchange
Securities, as the case may be, to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
liquidation preference or principal amount, as applicable, of Transfer
Restricted Securities covered by such Registration Statement or the
Exchange Securities, as the case may be, or the managing underwriter or
underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, (i) provide
the Transfer Agent with certificates for the Transfer Restricted
Securities or Exchange Securities, as the case may be, in a form
eligible for deposit with The Depository Trust Company and (ii) provide
a CUSIP number for the Transfer Restricted Securities or Exchange
Securities, as the case may be.
(n) In connection with any underwritten offering of Transfer
Restricted Securities pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings of
securities similar to the Exchangeable Preferred Stock or the Exchange
Debentures, as the case may be, and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in
order to facilitate the registration or the disposition of such Transfer
Restricted Securities and, in such connection, (i) make such
representations and warranties to, and covenants with, the underwriters
with respect to the business of the Company and its subsidiaries and the
Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten offerings of
securities similar to the
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18
Exchangeable Preferred Stock or the Exchange Debentures, as the case may
be, and confirm the same in writing if and when requested; (ii) obtain
the written opinion of counsel to the Company and written updates
thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in
underwritten offerings of securities similar to the Exchangeable
Preferred Stock or the Exchange Debentures, as the case may be, and such
other matters as may be reasonably requested by the managing underwriter
or underwriters; (iii) use its reasonable best efforts to obtain "cold
comfort" letters and updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters from
the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to
be, included or incorporated by reference in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings of
securities similar to the Exchangeable Preferred Stock or the Exchange
Debentures, as the case may be; (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof
(or such other provisions and procedures acceptable to Holders of a
majority in aggregate liquidation preference or principal amount, as
applicable, of Transfer Restricted Securities covered by such
Registration Statement and the managing underwriter or underwriters or
agents) with respect to all parties to be indemnified pursuant to said
Section; and (v) deliver such documents and certificates as may be
reasonably requested in writing and as are customarily delivered in
similar offerings. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer that seeks
to sell Exchange Securities during the Applicable Period, make available
for inspection by any selling Holder of such Transfer Restricted
Securities being sold, or each such Participating Broker-Dealer, as the
case may be, any underwriter participating in any such disposition of
Transfer Restricted Securities, if any, and any attorney, accountant or
other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and instruments of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably
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19
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the
Company and its subsidiaries to supply all information reasonably
requested by any such Inspector in connection with such Registration
Statement and Prospectus. Records that the Company determines, in good
faith, to be confidential and any Records that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or
correct a material misstatement or material omission in such
Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction, (iii) disclosure of such information is, in the reasonable
opinion of counsel for any Inspector, necessary or advisable in
connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and
arising out of, based upon, relating to, or involving this Agreement, or
any transactions contemplated hereby or arising hereunder, or (iv) the
information in such Records has been made generally available to the
public. Each selling Holder of such Transfer Restricted Securities and
each such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company unless and until
such information is generally available to the public. Each selling
Holder of such Transfer Restricted Securities and each such
Participating Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction, give notice to the Company and allow the
Company to undertake appropriate action to prevent disclosure of the
Records deemed confidential at the Company's sole expense.
(p) The Company will cause the Exchange Indenture to be qualified
under the TIA as required by applicable law in a timely manner. In the
event that such qualification would require the appointment of a new
trustee under the Exchange Indenture, the Company shall appoint a new
trustee thereunder pursuant to the applicable provisions of the Exchange
Indenture.
(q) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Transfer Restricted Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods.
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20
(r) If an Exchange Offer is to be consummated, upon delivery of
the Transfer Restricted Securities by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange
Securities, the Company shall mark, or cause to be marked, on such
Transfer Restricted Securities that such Transfer Restricted Securities
are being canceled in exchange for the Exchange Securities; in no event
shall such Transfer Restricted Securities be marked as paid or otherwise
satisfied.
(s) Cooperate with each seller of Transfer Restricted Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Transfer Restricted Securities
and their respective counsel in connection with any filings required to
be made with the National Association of Securities Dealers, Inc. (the
"NASD").
(t) To the extent any Participating Broker-Dealer notifies the
Company in writing that it is participating in the Exchange Offer, use
its reasonable best efforts to cause to be delivered at the request of
an entity stating that it represents the Participating Broker-Dealers
(which entity shall be TD Securities (USA) Inc., unless it elects not to
act as such representative) only one, if any, "cold comfort" letter with
respect to the Prospectus in the form existing on the last date for
which exchanges are accepted pursuant to the Exchange Offer and with
respect to each subsequent amendment or supplement, if any, effected
during the Applicable Period.
(u) Use its best efforts to take all other steps necessary or
advisable to effect the registration of the Transfer Restricted
Securities covered by a Registration Statement contemplated hereby.
The Company may require each seller of Transfer Restricted
Securities as to which any Registration Statement is being filed to furnish to
the Company such information regarding such seller and the distribution of such
Transfer Restricted Securities as the Company may, from time to time, reasonably
request. The Company may exclude from such registration the Transfer Restricted
Securities of any seller who unreasonably fails to furnish such information
within a reasonable time after receiving such request. Each seller as to which
any Shelf Registration is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Each Holder of Transfer Restricted Securities and each
Participating BrokerDealer agrees by acquisition of such Transfer Restricted
Securities or Exchange Securities to be sold by such Participating
Broker-Dealer, as the case may be, that, upon actual receipt of any notice from
the Company of the happening of any event of the kind described in Section
5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will forthwith
discontinue disposition
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21
of such Transfer Restricted Securities covered by such Registration Statement or
Prospectus or Exchange Securities to be sold by such Holder or Participating
Broker-Dealer, as the case may be, until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Company shall give any such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Transfer Restricted Securities covered by
such Registration Statement or Exchange Securities to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof or (y) the Advice.
6. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Transfer Restricted Securities or Exchange
Securities and determination of the eligibility of the Transfer Restricted
Securities or Exchange Securities for investment under the laws of such
jurisdictions (x) where the holders of Transfer Restricted Securities are
located, in the case of the Exchange Securities, or (y) as provided in Section
5(h) hereof, in the case of Transfer Restricted Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Transfer Restricted Securities or Exchange Securities
in a form eligible for deposit with The Depository Trust Company and of printing
Prospectuses if the printing of Prospectuses is requested by the managing
underwriter or underwriters, if any, by the Holders of a majority in aggregate
liquidation preference or principal amount, as applicable, of the Transfer
Restricted Securities included in any Registration Statement or sold by any
Participating Broker-Dealer, as the case may be, (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company, (v)
fees and disbursements of all independent certified public accountants referred
to in Section 5(n)(iii) hereof (including, without limitation, the expenses of
any special audit and "cold comfort" letters required by or incident to such
performance), (vi) rating agency fees, if any, and any fees associated with
making the Transfer Restricted Securities or Exchange Securities eligible for
trading through The Depository Trust Company, (vii) Securities Act
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22
liability insurance, if the Company desires such insurance, (viii) fees and
expenses of all other Persons retained by the Company, (ix) internal expenses of
the Company (including, without limitation, all salaries and expenses of
officers and employees of the Company performing legal or accounting duties),
(x) the expense of any annual audit of the Company and its subsidiaries, (xi)
the fees and expenses incurred in connection with the listing of the securities
to be registered on any securities exchange, if applicable, and (xii) the
expenses relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, indentures and any other documents
necessary in order to comply with this Agreement. Notwithstanding the foregoing,
if any of the Transfer Restricted Securities covered by any Shelf Registration
are to be sold in an underwritten offering, the Company shall have no obligation
to pay any discounts or underwriting commission.
(b) The Company shall reimburse the Holders for the reasonable
fees and disbursements of one counsel chosen by the Holders of a majority in
aggregate liquidation preference or principal amount, as applicable, of the
securities to be included in a Registration Statement and reimburse reasonable
out-of-pocket expenses (other than legal expenses) of Holders incurred in
connection with the registration and sale of Transfer Restricted Securities
pursuant to such Registration Statement.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Holder
of Transfer Restricted Securities offered pursuant to a Shelf Registration
Statement and each Participating Broker-Dealer selling Exchange Securities
during the Applicable Period, the affiliates, directors, officers, agents,
representatives and employees of each such Person, and each other Person, if
any, who controls, any such Person or its affiliates within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act (each,
a "Participant"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which the offering of such Transfer Restricted Securities
or Exchange Securities, as the case may be, is registered (or any amendment
thereto) or related Prospectus (or any amendments or supplements thereto) or any
related preliminary prospectus, or caused by, arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company will not be required to indemnify a Participant if (i) such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Company
in writing by or on behalf of such Participant expressly for use
<PAGE>
<PAGE>
23
therein or (ii) if such Participant sold to the person asserting the claim the
Transfer Restricted Securities or Exchange Securities that are the subject of
such claim and such untrue statement or omission or alleged untrue statement or
omission was contained or made in any preliminary prospectus and corrected in
the Prospectus or any amendment or supplement thereto and the Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and it is established by the Company in the related proceeding that
such Participant failed to deliver or provide a copy of the Prospectus (as
amended or supplemented) to such Person with or prior to the confirmation of the
sale of such Transfer Restricted Securities or Exchange Securities sold to such
Person if required by applicable law, unless such failure to deliver or provide
a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Company, its affiliates, directors, officers,
agents, representatives and employees and each Person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each Participant, but only (i) with reference to information relating to such
Participant furnished to the Company in writing by or on behalf of such
Participant expressly for use in any Registration Statement or Prospectus, any
amendment or supplement thereto, or any preliminary prospectus or (ii) with
respect to any untrue statement or representation made by such Participant in
writing to the Company. The liability of any Participant under this paragraph
shall in no event exceed the proceeds received by such Participant from sales of
Transfer Restricted Securities or Exchange Securities giving rise to such
obligations.
(c) If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted
against any Person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such Person (the "Indemnified Person")
shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in the loss or compromise of any material rights or defenses by
the Indemnifying Person and the Indemnifying Person was not otherwise aware of
such action or claim). In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually
<PAGE>
<PAGE>
24
agreed in writing to the contrary, (ii) the Indemnifying Person shall have
failed within a reasonable period of time to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that, unless there exists a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with any
one such proceeding or separate but substantially similar related proceeding in
the same jurisdiction arising out of the same general allegations, be liable for
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed promptly as they are incurred. Any such separate firm for the
Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Transfer Restricted
Securities and Exchange Securities sold by all such Participants and any such
separate firm for the Company, its directors, its officers and such control
Persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its prior written consent, but if settled with such consent or
if there be a final non-appealable judgment for the plaintiff for which the
Indemnified Person is entitled to indemnification pursuant to this Agreement,
the Indemnifying Person agrees to indemnify and hold harmless each Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for reasonable fees and expenses actually incurred by counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and (ii)
such Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Person is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party, and indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement (A) includes an unconditional written release of
such Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in paragraphs (a) and (b)
of this Section 7 is for any reason unavailable to, or insufficient to hold
harmless, an Indemnified
<PAGE>
<PAGE>
25
Person in respect of any losses, claims, damages or liabilities referred to
therein, then each Indemnifying Person under such paragraphs, in lieu of
indemnifying such Indemnified Person thereunder and in order to provide for just
and equitable contribution, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Transfer
Restricted Securities or Exchange Securities or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the Indemnifying Person or
Persons on the one hand and the Indemnified Person or Persons on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof). The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or such
Participant or such other Indemnified Person, as the case may be, on the other,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Transfer Restricted
Securities or Exchange Securities, as the case may be, exceeds the amount of any
damages that such Participant has otherwise been required to pay or has paid by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A.
<PAGE>
<PAGE>
26
The Company covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner in accordance with
the requirements of the Securities Act and the Exchange Act and, if at any time
the Company is not required to file such reports, it will, upon the request of
any Holder of Transfer Restricted Securities, make publicly available annual
reports and such information, documents and other reports of the type specified
in Sections 13 and 15(d) of the Exchange Act. The Company further covenants, for
so long as any Transfer Restricted Securities remain outstanding, to make
available to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A.
9. Underwritten Registrations.
If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in liquidation preference or aggregate
principal amount, as applicable, of such Transfer Restricted Securities included
in such offering and reasonably acceptable to the Company.
No Holder of Transfer Restricted Securities may participate in
any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered, as
of the date hereof, and the Company will not, after the date of this Agreement,
enter into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company has not entered and the Company will not enter into any agreement
with respect to any of its securities which will grant to any Person piggy-back
registration rights with respect to any Registration Statement, other than the
Common Stock Registration Rights Agreement, dated as of June 5, 1996, among the
Company, Goldman Sachs & Co. and BT Securities Corporation.
<PAGE>
<PAGE>
27
(b) Adjustments Affecting Transfer Restricted Securities. The
Company will not, directly or indirectly, take any action with respect to the
Transfer Restricted Securities as a class that would adversely affect the
ability of the Holders of Transfer Restricted Securities to include such
Transfer Restricted Securities in a registration undertaken pursuant to this
Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, otherwise than with the prior
written consent of the Holders of not less than a majority in aggregate
liquidation preference or principal amount, as applicable, of the then
outstanding Transfer Restricted Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Transfer Restricted
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Transfer Restricted Securities may be given by
Holders of at least a majority in aggregate liquidation preference or principal
amount, as applicable, of the Transfer Restricted Securities being sold by such
Holders pursuant to such Registration Statement; provided, however, that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Transfer Restricted Securities or any
Participating Broker-Dealer, at the most current address of such Holder
or Participating BrokerDealer, as the case may be, given by such Holder
or Participating Broker-Dealer to the Company in accordance with this
Section 10(d)(i) with a copy to the Initial Purchasers as follows:
TD Securities (USA) Inc.
31 West 52nd Street
New York, New York 10019-6101
Facsimile No: (212) 581-5795
Attention: Thomas W. Regan, Jr.
with a copy to:
Shearman & Sterling
599 Lexington Avenue
<PAGE>
<PAGE>
28
New York, New York 10022
Facsimile No: (212) 848-7179
Attention: Rohan S. Weerasinghe, Esq.
(ii) if to the Initial Purchasers, at the address specified in
Section 10(d)(i);
(iii) if to the Company, as follows:
Benedek Communications Corporation
100 Park Avenue
Rockford, Illinois 61101
Facsimile No: (815) 987-5335
Attention: Senior Vice President-Finance
with a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Facsimile No: (212) 730-1964
Attention: Paul S. Goodman, Esq.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto; provided, however, that this Agreement shall not inure to the benefit of
or be binding upon a successor or assign of a Holder unless and to the extent
such successor or assign holds Transfer Restricted Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
<PAGE>
29
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Transfer Restricted Securities Held by the Company or its
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Transfer Restricted Securities is required hereunder, Transfer
Restricted Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third Party Beneficiaries. Holders of Transfer Restricted
Securities and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement and this Agreement may be enforced by such
Persons.
<PAGE>
<PAGE>
30
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
BENEDEK COMMUNICATIONS CORPORATION
By: /s/ K. James Yager
___________________________________
Name: K. James Yager
Title: President
TD SECURITIES (USA) INC.
By: /s/ Thomas W. Regan, Jr.
___________________________________
Name: Thomas W. Regan, Jr.
Title: Managing Director
BT ALEX. BROWN INCORPORATED
By: /s/ Douglas Clarisse
___________________________________
Name: Douglas Clarisse
Title: Vice President
<PAGE>
<PAGE>
EXHIBIT 12
BENEDEK COMMUNICATIONS CORPORATION AND SUBSIDIARY
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDENDS
<TABLE>
<CAPTION>
PRO FORMA
THREE MONTHS TWELVE MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
----------------------------------------------------- MARCH 31, MARCH 31,
1993 1994 1995 1996 1997 1998 1998
------- ------- ------- -------- -------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL
Net income (loss) before extraordinary item
and income taxes per statement of
operations................................. $(5,034) $ 2,044 $ (812) $(15,820) $(36,337) $ (9,941) $ (23,347)
Add:
Interest on indebtedness................ 14,210 11,359 15,192 29,758 42,431 10,394 42,558
Amortization on deferred loan costs..... 309 1,451 680 1,213 5,939 478 6,040
Portion of rents representative of the
interest factor....................... 151 153 209 355 472 74 464
------- ------- ------- -------- -------- ------------ -------------
Income as adjusted................. 9,636 15,007 15,269 15,506 12,505 1,005 25,715
------- ------- ------- -------- -------- ------------ -------------
Preferred dividend requirements.............. -- -- -- 9,519 19,037 5,210 15,940
Fixed charges:
Interest on indebtedness................ 14,210 11,359 15,192 29,758 42,431 10,394 42,558
Amortization on deferred loan costs..... 309 1,451 680 1,213 5,939 478 6,040
Portion of rents representative of the
interest factor....................... 151 153 209 355 472 74 464
------- ------- ------- -------- -------- ------------ -------------
Fixed charges and preferred
dividends........................ 14,670 12,963 16,081 40,845 67,879 16,156 65,002
------- ------- ------- -------- -------- ------------ -------------
Ratio of earnings to fixed charges and
preferred dividends........................ N/A 1.2x N/A N/A N/A N/A N/A
------- ------- ------- -------- -------- ------------ -------------
------- ------- ------- -------- -------- ------------ -------------
(Deficiency)................................. $(5,034) N/A $ (812) $(25,339) $(55,374) $(15,151) $ (39,287)
------- ------- ------- -------- -------- ------------ -------------
------- ------- ------- -------- -------- ------------ -------------
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION OF
SUBSIDIARY INCORPORATION
- -------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Benedek Broadcasting Corporation.................................................................. Delaware
Benedek License Corporation....................................................................... Delaware
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of our
report dated February 7, 1998, on the consolidated financial statements of
Benedek Communications Corporation and Subsidiaries as of December 31, 1997 and
1996 and for each of the three years ended December 31, 1997, 1996 and 1995. We
also consent to the reference to our firm under the caption 'Experts' in the
Prospectus.
MCGLADREY & PULLEN, LLP
Rockford, Illinois
June 9, 1998
<PAGE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS SHARES OF
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK, WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING SHARES OF
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM, NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED (THE 'EXPIRATION DATE'). TENDERS MAY
BE WITHDRAWN PRIOR TO 5:00 PM, NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery to: IBJ Schroder Bank & Trust Company, Exchange Agent
By Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, NY 10274-0084
Attention: Reorganization Operations Department
By Facsimile:
IBJ Schroder Bank & Trust Company
Attention: Reorganization Operations Department
Facsimile No.: (212) 858-2611
By Hand or Overnight Delivery:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Securities Transfer Window, Subcellar One (SC-1)
For information or to confirm facsimile transmission call: (212) 858-2103
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute valid delivery.
The undersigned acknowledges that he or she has received the Prospectus,
dated , 1998 (the 'Prospectus'), of Benedek Communications
Corporation, a Delaware corporation (the 'Company'), and this Letter of
Transmittal (the 'Letter'), which together constitute the Company's offer (the
'Exchange Offer') to exchange shares of its 11 1/2% Senior Exchangeable
Preferred Stock (the 'Exchange Securities'), which have been registered under
the Securities Act of 1933, as amended (the 'Securities Act'), for an equal
number of outstanding shares of its 11 1/2% Senior Exchangeable Preferred Stock
(the 'Existing Exchangeable Preferred Stock') from the holders thereof.
For each share of Existing Exchangeable Preferred Stock accepted for
exchange, the holder of such Existing Exchangeable Preferred Stock will receive
an Exchange Security. If by September 11, 1998, neither the Exchange Offer has
been consummated nor a shelf registration statement with respect to the Existing
Exchangeable Preferred Stock has been declared effective, additional cash
dividends will accumulate on each share of Existing Exchangeable Preferred
Stock, from and including September 12, 1998 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. Holders of shares of
Existing Exchangeable Preferred Stock accepted for exchange will be deemed to
have waived the right to receive any other payments or accumulated dividends on
the Existing Exchangeable Preferred Stock. The Company reserves the right, at
any time or from time to time, to extend the Exchange Offer at its discretion,
in which event the term 'Expiration Date' shall mean the latest time and date to
which the Exchange Offer is extended. The Company shall notify holders of shares
of Existing Exchangeable Preferred Stock of any extension by means of a press
release or other public announcement prior to 9:00 am, New York City time, on
the next business day after the previously scheduled Expiration Date.
This Letter is to be completed by a holder of shares of Existing
Exchangeable Preferred Stock either if certificates are to be forwarded herewith
or if a tender of certificates for Existing Exchangeable Preferred Stock, if
available, is to be made by book-entry transfer to the account maintained by the
<PAGE>
<PAGE>
Exchange Agent at The Depositary Trust Company (the 'Book-Entry Transfer
Facility') pursuant to the procedures set forth in 'The Exchange
Offer -- Book-Entry Transfer' section of the Prospectus. Holders of shares of
Existing Exchangeable Preferred Stock whose certificates are not immediately
available, or who are unable to deliver their certificates or confirmation of
the book-entry tender of their Existing Exchangeable Preferred Stock into the
Exchange Agent's account at the Book-Entry Transfer Facility (a 'Book-Entry
Confirmation') and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, must tender their shares of Existing
Exchangeable Preferred Stock according to the guaranteed delivery procedures set
forth in 'The Exchange Offer -- Guaranteed Delivery Procedures' section of the
Prospectus. (See Instruction 1). Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the shares of Existing Exchangeable Preferred Stock to which
this Letter relates. If the space provided below is inadequate, the certificate
numbers and number of shares of Existing Exchangeable Preferred Stock should be
listed on a separate signed schedule affixed hereto.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF EXISTING EXCHANGEABLE PREFERRED STOCK 1 2 3
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE
NUMBER
OF SHARES
OF EXISTING NUMBER
EXCHANGEABLE OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE* PREFERRED SHARES
(PLEASE FILL IN, IF BLANK) NUMBER(S) STOCK TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------
*Need not be completed if shares of Existing Exchangeable Preferred Stock are being tendered by book-entry transfer.
**Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL shares of Existing
Exchangeable Preferred Stock represented by the number of shares of Existing Exchangeable Preferred Stock indicated
in column 2. See Instruction 2. Existing Exchangeable Preferred Stock tendered hereby must be in denominations of
100 shares and any integral multiple thereof. See Instruction 1.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK
ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT
MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________________________
Account Number ________________ Transaction Code Number ________________
[ ] CHECK HERE IF TENDERED SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK
ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY
PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) ________________________________________
Window Ticket Number (if any) __________________________________________
Date of Execution of Notice of Guaranteed Delivery _____________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number ________________ Transaction Code Number ________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name ___________________________________________________________________
Address ________________________________________________________________
________________________________________________________________________
<PAGE>
<PAGE>
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer, the undersigned
represents that it will receive Exchange Securities for its own account in
exchange for shares of Existing Exchangeable Preferred Stock and that the
Existing Exchangeable Preferred Stock to be exchanged for Exchange Securities
were acquired as a result of market-making activities or other trading
activities and it acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Securities pursuant to the Exchange Offer; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an 'underwriter' within the meaning of the Securities Act.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Under the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the number of shares of Existing
Exchangeable Preferred Stock indicated above. Subject to, and effective upon,
the acceptance for exchange of the Existing Exchangeable Preferred Stock
tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Company all right, title and interest in and to such shares of
Existing Exchangeable Preferred Stock as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the shares of
Existing Exchangeable Preferred Stock tendered hereby and that the Company will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim when
the same are accepted by the Company. The undersigned hereby further represents
that any Exchange Securities acquired in exchange for shares of Existing
Exchangeable Preferred Stock tendered hereby will have been acquired in the
ordinary course of business of the person receiving such Exchange Securities,
whether or not such person is the undersigned, that neither the holder of such
shares of Existing Exchangeable Preferred Stock nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such Exchange Securities and that neither the holder of such shares of
Existing Exchangeable Preferred Stock nor any such other person is an
'affiliate,' as defined in Rule 405 under the Securities Act, of the Company.
<PAGE>
<PAGE>
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on an interpretation by the staff of the Securities and Exchange
Commission (the 'SEC') in letters issued to third parties that the Exchange
Securities issued in exchange for shares of Existing Exchangeable Preferred
Stock pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder that is an
'affiliate' of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Securities are
acquired in the ordinary course of such holder's business, such holder has no
arrangement or understanding with any person to participate in the distribution
of such Exchange Securities and such holder is not engaged in and does not
intend to engage in a distribution of such Exchange Securities. If the
undersigned is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for shares of Existing Exchangeable
Preferred Stock that were acquired as a result of market-making activities or
other trading activities, it acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Securities; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an 'underwriter' within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the shares of Existing Exchangeable Preferred
Stock tendered hereby. All authority conferred or agreed to be conferred in this
Letter and every obligation of the undersigned hereunder shall be binding upon
the successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned. This
tender may be withdrawn only in accordance with the procedures set forth in 'The
Exchange Offer -- Withdrawal Rights' section of the Prospectus.
Unless otherwise indicated under the box entitled 'Special Issuance
Instructions' below, please deliver the Exchange Securities (and, if applicable,
substitute certificates representing shares of Existing Exchangeable Preferred
Stock for any shares of Existing Exchangeable Preferred Stock not exchanged) in
the name of the undersigned or, in the case of a book-entry delivery of shares
of Existing Exchangeable Preferred Stock, please credit the account indicated
above maintained at the Book-Entry Transfer Facility. Similarly, unless
otherwise indicated under the box entitled 'Special Delivery Instructions'
below, please send the Exchange Securities (and, if applicable, substitute
certificates representing shares of Existing Exchangeable Preferred Stock for
any shares of Existing Exchangeable Preferred Stock not exchanged) to the
undersigned at the address shown above in the box entitled 'Description of
Existing Exchangeable Preferred Stock.'
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED 'DESCRIPTION OF EXISTING
EXCHANGEABLE PREFERRED STOCK' ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO
HAVE TENDERED THE SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK AS SET FORTH
IN SUCH BOX ABOVE.
<PAGE>
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for shares of Existing Exchangeable
Preferred Stock not exchanged and/or Exchange Securities are to be issued
in the name of and sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter below, or if shares of Existing
Exchangeable Preferred Stock delivered by book-entry transfer which are
not accepted for exchange are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account
indicated above.
Issue Exchange Securities and/or shares of Existing Exchangeable Preferred
Stock to:
Name(s) __________________________________________________________________
(PLEASE TYPE OR PRINT)
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Address __________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged shares of Existing Exchangeable Preferred Stock
delivered by book-entry transfer to the Book-Entry Transfer Facility
account set forth below.
__________________________________________________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for shares of Existing Exchangeable
Preferred Stock not exchanged and/or Exchange Securities are to be sent to
someone other than the person or persons whose signature(s) appear(s) on
this Letter below or to such person or persons at an address other than
shown in the box entitled 'Description of Existing Exchangeable Preferred
Stock' on this Letter above.
Mail Exchange Securities and/or shares of Existing Exchangeable Preferred
Stock to:
Name(s) __________________________________________________________________
(PLEASE TYPE OR PRINT)
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Address __________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(ZIP CODE)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATES FOR SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 PM, NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE>
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW)
Dated ____________________________________________________________, 1998
X ______________________________, ______________________________, 1998
X ______________________________, ______________________________, 1998
SIGNATURE(S) OF OWNER(S) DATE
Area Code and Telephone Number _________________________________________
If a holder is tendering any shares of Existing Exchangeable
Preferred Stock, this Letter must be signed by the registered holder(s) as
the name(s) appear(s) on the certificate(s) for the shares of Existing
Exchangeable Preferred Stock or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, please set forth full title. (See Instruction 3).
Name(s)_______________________________________________________
______________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity _____________________________________________________
______________________________________________________________
Address ______________________________________________________
______________________________________________________________
(ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed
by an Eligible Institution ___________________________________
(AUTHORIZED SIGNATURE)
______________________________________________________________
(TITLE)
______________________________________________________________
(NAME AND FIRM)
Dated __________________________________________________, 1998
<PAGE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, IN EXCHANGE FOR THE 11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
OF BENEDEK COMMUNICATIONS CORPORATION
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This letter is to be completed by stockholders either if certificates are
to be forwarded herewith or if tenders are to be made pursuant to the procedures
for delivery by book-entry transfer set forth in 'The Exchange
Offer -- Book-Entry Transfer' section of the Prospectus. Certificates for all
physically tendered shares of Existing Exchangeable Preferred Stock, or
Book-Entry Confirmation, as the case may be, as well as a properly completed and
duly executed Letter (or manually signed facsimile hereof) and any other
documents required by this Letter, must be received by the Exchange Agent at the
address set forth herein on or prior to the Expiration Date, or the tendering
holder must comply with the guaranteed delivery procedures set forth below.
Existing Exchangeable Preferred Stock tendered hereby must be in denominations
of 100 shares and any integral multiple thereof.
Stockholders whose certificates for shares of Existing Exchangeable
Preferred Stock are not immediately available or who cannot deliver their
certificates and all other required documents to the Exchange Agent on or prior
to the Expiration Date, or who cannot complete the procedure for book-entry
transfer on a timely basis, may tender their shares of Existing Exchangeable
Preferred Stock pursuant to the guaranteed delivery procedures set forth in 'The
Exchange Offer -- Guaranteed Delivery Procedures' section of the Prospectus.
Pursuant to such procedures, (i) such tender must be made through an Eligible
Institution (as defined), (ii) prior to the Expiration Date, the Exchange Agent
must receive from such Eligible Institution a properly completed and duly
executed Letter (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by telegram, telex, facsimile
transmission, mail or hand delivery), setting forth the name and address of the
holder of shares of Existing Exchangeable Preferred Stock and the amount of
shares of Existing Exchangeable Preferred Stock 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 shares of
Existing Exchangeable Preferred Stock, in proper form for transfer, or a
Book-Entry Confirmation, and any other documents required by the Letter will be
deposited by the Eligible Institution with the Exchange Agent and (iii) the
certificates for all physically tendered shares of Existing Exchangeable
Preferred Stock, in proper form for transfer, or Book-Entry Confirmation, as the
case may be, and all other documents required by this Letter, are received by
the Exchange Agent within five NYSE trading days after the date of execution of
the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the shares of Existing Exchangeable
Preferred Stock and all other required documents is at the election and risk of
the tendering holders, but the delivery will be deemed made only when actually
received or confirmed by the Exchange Agent. If shares of Existing Exchangeable
Preferred Stock are sent by mail, it is suggested that the mailing be made
sufficiently in advance of the Expiration Date to permit the delivery to the
Exchange Agent prior to 5:00 pm, New York City time, on the Expiration Date.
See 'The Exchange Offer' section in the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the shares of Existing Exchangeable Preferred Stock
evidenced by a submitted certificate are to be tendered, the tendering holder(s)
should fill in the aggregate number of shares of Existing Exchangeable Preferred
Stock to be tendered in the box above entitled 'Description of Existing
Exchangeable Preferred Stock -- Number of Shares Tendered.' A reissued
certificate representing the balance of nontendered shares of Existing
Exchangeable Preferred Stock will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this Letter, promptly after
<PAGE>
<PAGE>
the Expiration Date. All of the shares of Existing Exchangeable Preferred Stock
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
3. SIGNATURES ON THIS LETTER; STOCK POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the shares of Existing
Exchangeable Preferred Stock tendered hereby, the signature must correspond
exactly with the name as written on the face of the certificates without any
change whatsoever.
If any tendered shares of Existing Exchangeable Preferred Stock are owned
of record by two or more joint owners, all such owners must sign this Letter.
If any tendered shares of Existing Exchangeable Preferred Stock are
registered in different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Letter as there are
different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
shares of Existing Exchangeable Preferred Stock specified herein and tendered
hereby, no endorsements of certificates or separate stock powers are required.
If, however, the Exchange Securities are to be issued, or any untendered shares
of Existing Exchangeable Preferred Stock are to be reissued, to a person other
than the registered holder, then endorsements of any certificates transmitted
hereby or separate stock powers are required. Signatures on such certificate(s)
must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or stock powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be submitted.
Endorsements on certificates for shares of Existing Exchangeable Preferred
Stock or signatures on stock powers required by this Instruction 3 must be
guaranteed by a firm which is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc. or
by a commercial bank or trust company having an office or correspondent in the
United States or by such other Eligible Institution within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended (collectively
'Eligible Institutions').
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the shares of Existing Exchangeable Preferred Stock are
tendered: (i) by a registered holder of shares of Existing Exchangeable
Preferred Stock (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such shares of Existing Exchangeable
Preferred Stock) tendered who has not completed the box entitled 'Special
Issuance Instructions' or 'Special Delivery Instructions' on this Letter or (ii)
for the account of an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of shares of Existing Exchangeable Preferred Stock should
indicate in the applicable box the name and address to which Exchange Securities
issued pursuant to the Exchange Offer and/or substitute certificates evidencing
shares of Existing Exchangeable Preferred Stock not exchanged are to be issued
or sent, if different from the name or address of the person signing this
Letter. In the case of issuance in a different name, the employer identification
or social security number of the person named must also be indicated.
Stockholders tendering shares of Existing Exchangeable Preferred Stock by
book-entry transfer may request that shares of Existing Exchangeable Preferred
Stock not exchanged be credited to such account maintained at the Book-Entry
Transfer Facility as such stockholder may designate herein. If no such
instructions are given, such shares of Existing Exchangeable Preferred Stock not
exchanged will be returned to the name and address of the person signing this
Letter.
<PAGE>
<PAGE>
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose
shares of Existing Exchangeable Preferred Stock are accepted for exchange must
provide the Company (as payor) with such holder's correct Taxpayer
Identification Number ('TIN') on Substitute Form W-9 below, which in the case of
a tendering holder who is an individual, is his or her social security number.
If the Company is not provided with the current TIN or an adequate basis for an
exemption, such tendering holder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, delivery to such tendering holder of
Exchange Securities may be subject to backup withholding in an amount equal to
31% of all reportable payments made after the exchange. If withholding results
in an overpayment of taxes, a refund may be obtained.
Exempt holders of shares of Existing Exchangeable Preferred Stock
(including, among others, all corporations and certain foreign individuals) are
not subject to these backup withholding and reporting requirements. See the
enclosed Guidelines of Certification of Taxpayer Identification Number on
Substitute Form W-9 (the 'W-9 Guidelines') for additional instructions.
To prevent backup withholding, each tendering holder of shares of Existing
Exchangeable Preferred Stock must provide its correct TIN by completing the
Substitute Form W-9 set forth below, certifying that the TIN provided is correct
(or that such holder is awaiting a TIN) and that (i) the holder is exempt from
backup withholding, (ii) the holder has not been notified by the Internal
Revenue Service that such holder is subject to a backup withholding as a result
of a failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding. If the tendering holder of shares of Existing Exchangeable
Preferred Stock is a nonresident alien or foreign entity not subject to backup
withholding, such holder must provide the Company with a completed Form W-8,
Certificate of Foreign Status. These forms may be obtained from the Exchange
Agent. If the shares of Existing Exchangeable Preferred Stock are in more than
one name or are not in the name of the actual owner, such holder should consult
the W-9 Guidelines for information on which TIN to report. If such holder does
not have a TIN, such holder should consult the W-9 Guidelines for instructions
on applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and
write 'applied for' in lieu of its TIN. Note: Checking this box and writing
'applied for' on the form means that such holder has already applied for a TIN
or that such holder intends to apply for one in the near future. If such holder
does not provide its TIN to the Company within 60 days, backup withholding will
begin and continue until such holder furnishes its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of shares of Existing Exchangeable Preferred Stock to it or its order pursuant
to the Exchange Order. If however, Exchange Securities and/or substitute shares
of Existing Exchangeable Preferred Stock not exchanged are to be delivered to,
or are to be registered or issued in the name of, any person other than the
registered holder of the shares of Existing Exchangeable Preferred Stock
tendered hereby, or if tendered shares of Existing Exchangeable Preferred Stock
are registered in the name of any person other than the person signing this
Letter, or if a transfer tax is imposed for any reason other than the transfer
of shares of Existing Exchangeable Preferred Stock to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
<PAGE>
<PAGE>
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the shares of Existing Exchangeable
Preferred Stock specified in this Letter.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of shares of Existing Exchangeable Preferred
Stock, by execution of this Letter, shall waive any right to receive notice of
the acceptance of their shares of Existing Exchangeable Preferred Stock for
exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
shares of Existing Exchangeable Preferred Stock nor shall any of them incur any
liability for failure to give any such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED SHARES OF EXISTING EXCHANGEABLE
PREFERRED STOCK.
Any holder whose shares of Existing Exchangeable Preferred Stock have been
mutilated, lost, stolen or destroyed should contact the Exchange Agent at one of
the addresses indicated above for further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at one of the addresses and telephone number indicated above.
<PAGE>
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: BENEDEK COMMUNICATIONS CORPORATION
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN TIN: _______________________
IN THE BOX AT RIGHT AND Social Security Number
CERTIFY BY SIGNING AND or
DATING BELOW Employer Identification
Number
-----------------------------------------------------------------------------
SUBSTITUTE PART 2 -- TIN Applied For [ ]
FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE -----------------------------------------------------------------------------
CERTIFICATION:
UNDER THE PENALTIES OF PERJURY,
I CERTIFY THAT:
PAYOR'S REQUEST (1) the number shown on this form is my correct Taxpayer Identification Number (or
FOR TAXPAYER I
IDENTIFICATION NUMBER am waiting for a number to be issued to me),
('TIN') AND CERTIFICATION (2) I am not subject to backup withholding either because:
(a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue Service (the 'IRS') that I am
subject to backup withholding as a result of a failure to report all
interest or
dividends, or
(c) the IRS has notified me that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE _______________________________________ DATE ____________________________
You must cross out item (2) of the above certification if you have been notified by the IRS that you are subject to
backup withholding because of underreporting of interest or dividends on your tax return and you have not been notified
by the IRS that you are no longer subject to backup withholding.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administrative Office or (b) I intend to mail
or delivery an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide the number.
SIGNATURE ______________________________________________ DATE __________________
- --------------------------------------------------------------------------------
<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 11 1/2% Senior Exchangeable Preferred Stock of
Benedek Communications Corporation (the 'Company') made pursuant to the
Prospectus, dated , 1998 (the 'Prospectus'), if certificates for
shares of Existing Exchangeable Preferred Stock 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 pm, New York City time, on the Expiration Date
of the Exchange Offer. Such form may be delivered or transmitted by mail,
facsimile transmission, hand or overnight delivery to IBJ Schroder Bank & Trust
Company (the 'Exchange Agent') as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender shares of Existing
Exchangeable Preferred Stock pursuant to the Exchange Offer, a completed, signed
and dated Letter of Transmittal relating to the shares of Existing Exchangeable
Preferred Stock (or facsimile thereof) must also be received by the Exchange
Agent prior to 5:00 pm, New York City time, on the Expiration Date. Capitalized
terms not defined herein are defined in the Prospectus.
Delivery to: IBJ Schroder Bank & Trust Company, Exchange Agent
By Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, NY 10274-0084
Attention: Reorganization Operations Department
By Facsimile:
IBJ Schroder Bank & Trust Company
Attention: Reorganization Operations Department
Facsimile No.: (212) 858-2611
By Hand or Overnight Delivery:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Securities Transfer Window, Subcellar One (SC-1)
For information or to confirm facsimile transmission call: (212) 858-2103
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 number of shares of Existing Exchangeable Preferred Stock set forth
below, pursuant to the guaranteed delivery procedure described in 'The Exchange
Offer -- Guaranteed Delivery Procedures' section of the Prospectus.
<TABLE>
<S> <C>
Number of Shares of Existing Exchangeable Preferred Stock Tendered:*
__________________________________________
Certificate Nos. (if available):
__________________________________________ If shares of Existing Exchangeable Preferred Stock will
be delivered by book-entry transfer to The Depositary
Trust Company, provide account number.
Total Number of Shares Represented
by Existing Exchangeable Preferred Stock Certificate(s):
__________________________________________ Account Number ________________________________________
_____________
</TABLE>
* Must be in denominations of 100 shares 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
Area Code and Telephone Number: _________________________________________________________________________
</TABLE>
Must be signed by the holder(s) of the shares of Existing Exchangeable
Preferred Stock as their name(s) appear(s) on certificates for shares of
Existing Exchangeable Preferred Stock 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)
Name(s): _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Capacity: _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Address(es): _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
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 number of shares of Existing Exchangeable
Preferred Stock tendered hereby in proper form for transfer, or timely
confirmation of the book-entry transfer of such shares of Existing Exchangeable
Preferred Stock 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 one of the addresses set forth above, no later than five New
York Stock Exchange trading days after the date of execution hereof.
_____________________________________ ______________________________________
Name of Firm Authorized Signature
_____________________________________ ______________________________________
Address Title
_____________________________________ Name: ________________________________
Zip Code (Please Type or Print)
Area Code and Tel. No.: _____________ Dated: _______________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OF EXISTING EXCHANGEABLE PREFERRED
STOCK WITH THIS FORM. CERTIFICATES FOR SHARES OF EXISTING EXCHANGEABLE
PREFERRED STOCK SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
4
<PAGE>
<PAGE>
EXHIBIT 99.3
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS SHARES OF
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK, WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING SHARES OF
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Benedek Communications Corporation (the 'Company') is offering, upon and
subject to the terms and conditions set forth in the Prospectus, dated
, 1998 (the 'Prospectus'), and the enclosed Letter of Transmittal
(the 'Letter of Transmittal'), to exchange (the 'Exchange Offer') shares of its
11 1/2% Senior Exchangeable Preferred Stock, which have been registered under
the Securities Act of 1933, as amended, for an equal number of outstanding
shares of its 11 1/2% Senior Exchangeable Preferred Stock (the 'Existing
Exchangeable Preferred Stock'). The Exchange Offer is being made in order to
satisfy certain obligations of the Company contained in the Exchange and
Registration Rights Agreement dated as of May 7, 1998, among the Company, TD
Securities (USA) Inc. and BT Alex. Brown Incorporated.
We are requesting that you contact your clients for whom you hold shares of
Existing Exchangeable Preferred Stock, regarding the Exchange Offer. For your
information and for forwarding to your clients for whom you hold shares of
Existing Exchangeable Preferred Stock registered in your name or in the name of
your nominee, or who hold shares of Existing Exchangeable Preferred Stock
registered in their own names, we are enclosing the following documents:
1. Prospectus dated , 1998;
2. The Letter of Transmittal for your use and for the information of
your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for shares of Existing Exchangeable Preferred Stock
are not immediately available or time will not permit all required
documents to reach the Exchange Agent prior to the Expiration Date (as
defined below) or if the procedure for book-entry transfer cannot be
completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
account you hold shares of Existing Exchangeable Preferred Stock registered
in your name or the name of your nominee, with space provided for obtaining
such clients' instructions with regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to IBJ Schroder Bank & Trust Company,
the Exchange Agent for the Existing Exchangeable Preferred Stock.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM,
NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED BY THE COMPANY (THE
'EXPIRATION DATE'). THE SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK TENDERED
PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE
EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the shares of Existing Exchangeable
Preferred Stock should be delivered to the Exchange Agent, all in accordance
with the instructions set forth in the Letter of Transmittal and the Prospectus.
If holders of shares of Existing Exchangeable Preferred Stock wish to
tender, but it is impracticable for them to forward their certificates for
shares of Existing Exchangeable Preferred Stock prior to the
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expiration of the Exchange Offer or to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures described in the Prospectus under 'The Exchange
Offer -- Guaranteed Delivery Procedures.'
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of shares of Existing Exchangeable Preferred Stock held by
them as nominee or in a fiduciary capacity. The Company will pay or cause to be
paid all transfer taxes applicable to the exchange of shares of Existing
Exchangeable Preferred Stock pursuant to the Exchange Offer, except as set forth
in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to IBJ
Schroder Bank & Trust Company, the Exchange Agent for the Existing Exchangeable
Preferred Stock, at one of the addresses and telephone number set forth in the
front of the Letter of Transmittal.
Very truly yours,
Benedek Communications Corporation
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENTS OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
2
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EXHIBIT 99.4
BENEDEK COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS SHARES OF
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK, WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING SHARES OF
11 1/2% SENIOR EXCHANGEABLE PREFERRED STOCK
To Our Clients:
Enclosed for your consideration is a Prospectus, dated , 1998
(the 'Prospectus'), and the related Letter of Transmittal (the 'Letter of
Transmittal'), relating to the offer (the 'Exchange Offer') of Benedek
Communications Corporation (the 'Company') to exchange shares of its 11 1/2%
Senior Exchangeable Preferred Stock, which have been registered under the
Securities Act of 1933, as amended, for an equal number of outstanding shares of
its 11 1/2% Senior Exchangeable Preferred Stock (the 'Existing Exchangeable
Preferred Stock'), upon the terms and subject to the conditions described in the
Prospectus. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Exchange and Registration Rights
Agreement dated as of May 7, 1998, among the Company, TD Securities (USA) Inc.
and BT Alex. Brown Incorporated.
This material is being forwarded to you as the beneficial owner of shares
of Existing Exchangeable Preferred Stock carried by us in your account but not
registered in your name. A TENDER OF SUCH SHARES OF EXISTING EXCHANGEABLE
PREFERRED STOCK MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf shares of Existing Exchangeable Preferred Stock held by us for your
account, pursuant to the terms and conditions set forth in the enclosed
Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender shares of Existing Exchangeable Preferred Stock on
your behalf in accordance with the provisions of the Exchange Offer. The
Exchange Offer will expire at 5:00 pm, New York City time, on ,
1998, unless extended by the Company. Any shares of Existing Exchangeable
Preferred Stock tendered pursuant to the Exchange Offer may be withdrawn at any
time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all shares of Existing
Exchangeable Preferred Stock.
2. The Exchange Offer is subject to certain conditions set forth in
the Prospectus in the section captioned 'The Exchange Offer -- Certain
Conditions to the Exchange Offer.'
3. Any transfer taxes incident to the transfer of shares of Existing
Exchangeable Preferred Stock from the holder to the Company will be paid by
the Company, except as otherwise provided in the Instructions in the Letter
of Transmittal.
4. The Exchange Offer expires at 5:00 pm, New York City time, on
, 1998, unless extended by the Company.
If you wish to have us tender your shares of Existing Exchangeable
Preferred Stock, please so instruct us by completing, executing and returning to
us the instruction form on the back of this letter. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO
TENDER SHARES OF EXISTING EXCHANGEABLE PREFERRED STOCK.
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INSTRUCTIONS WITH RESPECT TO
EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Benedek
Communications Corporation with respect to its shares of Existing Exchangeable
Preferred Stock.
This will instruct you to tender shares of Existing Exchangeable Preferred
Stock held by you for the account of the undersigned, upon and subject to the
terms and conditions set forth in the Prospectus and related Letter of
Transmittal.
Please tender shares of Existing Exchangeable Preferred Stock held by you
for my account as indicated below:
<TABLE>
<S> <C>
Aggregate Number of Shares of
Existing Exchangeable Preferred Stock
11 1/2% Senior Exchangeable Preferred Stock __________________________________________
[ ] Please do not tender any shares of Existing
Exchangeable Preferred Stock held by you for my
account.
Dated: ___________________________________________, 1998 __________________________________________
__________________________________________
Signature(s)
__________________________________________
__________________________________________
Please print name(s) here
__________________________________________
__________________________________________
Address(es)
____________________________________________
____________________________________________
Area Code and Telephone Number
____________________________________________
Tax Identification or Social Security No(s).
</TABLE>
None of the shares of Existing Exchangeable Preferred Stock held by us for
your account will be tendered unless we recieve written instructions from you to
do so. Unless a specific contrary instruction is given in the space provided,
your signature(s) hereon shall constitute an instruction to us to tender all the
shares of Existing Exchangeable Preferred Stock held by us for your account.
2
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