<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: June 11, 1996
ARGYLE TELEVISION, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-27000 74-2717523
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
200 Concord Plaza, Suite 700, San Antonio, Texas 78216
(Address of principal executive offices)
(210) 828-1700
(Registrant's Telephone No.)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
------------------------------------
On June 11, 1996, the Company completed the acquisition of KHBS-TV and
its S-2 satellite KHOG-TV, which serve as ABC affiliates in Fort Smith and
Fayetteville, Arkansas, respectively (the "Arkansas Stations"), from Sigma
Broadcasting, Inc. ("Sigma"). The acquisition was accomplished through the
merger of Sigma into KHBS Argyle Television, Inc., a newly created, wholly-owned
subsidiary of the Company. Pursuant to the merger, the Company issued to the
Sigma stockholders (i) 227,654 shares of the Company's Series A Common Stock and
(ii) shares of newly created preferred stock of the Company having a stated
value of $20,876,000. The Company also paid an additional $4 million, $3 million
of which was paid in cash and the balance of which was paid in shares of newly
created preferred stock, for certain real estate associated with the Arkansas
Stations and for a non-competition covenant in connection with this acquisition.
The preferred stock pays a cash dividend at 6.5% annually, and 50% of the
preferred stock, designated as Series A Preferred Stock, is convertible at the
option of the holders into Series A Common Stock of the Company at a conversion
price of $35 per share of Series A Common Stock. In the event the holders do not
convert the Series A Preferred Stock into shares of Series A Common Stock by
June 11, 2001, the Company may redeem such Series A Preferred Stock at its
stated value. The other 50% of the preferred stock, designated as Series B
Preferred Stock, is redeemable by the Company at its stated value at any time
after June 11, 2001. In the event the Company does not redeem the Series B
Preferred Stock by July 11, 2001, then from and after that date the holders may
convert the Series B Preferred Stock into shares of Series A Common Stock at a
conversion price equal to the then fair market value of the Series A Common
Stock.
The assets that were acquired pursuant to the transaction include the
FCC licenses, equipment, real estate, programming inventory, contracts and other
assets related to the operations of the Arkansas Stations. The Company presently
intends to continue the use of the physical assets acquired pursuant to the
transaction. The $4 million in cash used in the transaction was obtained from
the Company's existing amended and restated credit agreement, which agreement
was further amended in connection with the transaction.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
------------------------------------------------------------------
a. Financial Statements.
--------------------
INDEX TO HISTORICAL FINANCIAL STATEMENTS
PAGE
----
SIGMA BROADCASTING, INC.
Report of Independent Auditors............................................ 3
Balance Sheet as of December 31, 1995..................................... 4
Statement of Income for the Year Ended December 31, 1995.................. 6
Statement of Shareholders' Equity for the Year Ended December 31, 1995.... 7
Statement of Cash Flows for the Year Ended December 31, 1995.............. 8
Notes to Financial Statements............................................. 9
Condensed Balance Sheet as of March 31, 1996 (Unaudited).................. 14
Condensed Statements of Operations for the Three Months Ended
March 31, 1995 and 1996 (Unaudited)............................... 15
Condensed Statements of Cash Flows for the Three Months Ended
March 31, 1995 and 1996 (Unaudited)............................... 16
-2-
<PAGE>
NORRIS TAYLOR & CO.
Certified Public Accountants
THE SHAREHOLDERS AND BOARD OF DIRECTORS
SIGMA BROADCASTING, INC.
FORT SMITH, ARKANSAS
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Sigma Broadcasting, Inc. as
of December 31, 1995, and the related statements of income, shareholders'
equity and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sigma Broadcasting, Inc. as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
CERTIFIED PUBLIC ACCOUNTANTS
FORT SMITH, ARKANSAS
JANUARY 25, 1996
-3-
<PAGE>
SIGMA BROADCASTING, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
------
CURRENT ASSETS
<S> <C> <C>
Cash $ 83,166
Cash - Interest bearing accounts 60,758
Accounts receivable - Trade 1,407,047
Accounts receivable - Other 650
Broadcast license agreements - Current 253,969
Prepaid expenses 157,811
----------
TOTAL CURRENT ASSETS $1,963,401
PROPERTY, PLANT AND EQUIPMENT, at cost
Land improvements 39,938
Tower and antenna 147,858
Equipment 7,662,344
Furniture and fixtures 97,319
Vehicles 332,624
Leasehold improvements 405,705
Construction in progress 8,081
----------
8,693,869
Less accumulated depreciation 6,619,986
----------
NET PROPERTY, PLANT AND EQUIPMENT 2,073,883
OTHER ASSETS
Broadcast license agreements - noncurrent 265,680
Investments at cost 12,600
Deposits 1,618
Goodwill, net of accumulated amortization
of $523,921 450,788
----------
TOTAL OTHER ASSETS 730,686
----------
TOTAL ASSETS $4,767,970
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $1,986,577
Accounts payable - Trade 126,460
Commissions and wages payable 61,330
Contracts payable - Broadcast license agreements 253,969
Accrued expenses:
Payroll taxes 13,325
Insurance 2,000
----------
TOTAL CURRENT LIABILITIES $2,443,661
LONG-TERM DEBT, less current maturities (Note 4)
Notes payable 481,158
Notes payable - Stockholders 1,814,003
Contracts payable - Broadcast license agreements -
long-term 265,680
2,560,841
----------
Less current maturities of long-term debt 1,986,577
----------
NET LONG-TERM DEBT 574,264
STOCKHOLDERS' EQUITY
Common stock, Authorized 5,000 shares at
$1 par value, issued and outstanding 1,000 shares 1,000
Additional paid-in capital 226,106
Retained earnings 1,522,939
----------
TOTAL STOCKHOLDERS' EQUITY 1,750,045
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,767,970
==========
</TABLE>
-5-
<PAGE>
SIGMA BROADCASTING, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INCOME
Sales $8,958,426
OPERATING EXPENSES
Rogers Bureau expense $ 146,673
Commissions - Agency, national and other 1,063,664
Bad debts 24,558
Depreciation 765,998
Amortization of goodwill 48,738
Program Department 394,039
Data Operations 124,651
Production - Art Department 228,040
News Department 1,207,572
Technical Department 549,270
Promotion Department 232,255
Sales Department 942,698
Operations Department 458,482
Building and Land Department 247,188
Corporate and Overhead Department 152,345
General and Administrative 1,140,376
----------
TOTAL OPERATING EXPENSES 7,726,547
----------
OPERATING INCOME 1,231,879
OTHER INCOME OR (EXPENSE)
Interest income 8,394
Miscellaneous income 16,533
Gain on sale of assets 16,502
Interest expense (203,292)
----------
TOTAL OTHER INCOME OR (DEDUCTIONS) (161,863)
----------
NET INCOME BEFORE INCOME TAXES 1,070,016
PROVISION FOR INCOME TAXES 435,554
----------
NET INCOME $ 634,462
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
SIGMA BROADCASTING, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE - January 1, 1995 $1,000 $226,106 $ 888,477 $1,115,583
Net income - - 634,462 634,462
------ -------- ---------- ----------
BALANCE - December 31, 1995 $1,000 $226,106 $1,522,939 $1,750,045
====== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
SIGMA BROADCASTING, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 634,462
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization $ 814,736
Decrease in accounts receivable
and other receivables 122,276
Gain on sale of assets (16,502)
(Increase) in prepaid expenses (90,680)
(Decrease) in accounts payable (55,303)
(Decrease) in accrued commissions, wages
payable and expenses (129,638)
(Decrease) in income taxes payable (119,381)
---------
TOTAL ADJUSTMENTS 525,508
---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,159,970
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 2,400
Increase in investments (12,600)
Purchases of depreciable assets (623,316)
---------
NET CASH USED BY INVESTING ACTIVITIES (633,516)
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions (payments) on long-term debt
and shareholders' notes payable (542,022)
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES (542,022)
---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (15,568)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 159,492
---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 143,924
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE>
SIGMA BROADCASTING, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------
NATURE OF BUSINESS
------------------
The company is in the business of commercial television broadcasting.
ACCOUNTING POLICY
-----------------
For purposes of the statements of cash flows, the company considers
all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
ACCOUNTS RECEIVABLE
-------------------
It is the policy of the company to charge uncollectible accounts
receivable to expense at the time management determines the account
to be uncollectible. Bad debts written off totaled $24,558 for the
year ended December 31, 1995. The company feels that the direct write
off method approximates the allowance method of accounting for bad
debts expense. It is the opinion of management that all accounts
receivable at December 31, 1995 are substantially collectible.
PROPERTY AND EQUIPMENT
----------------------
All items of property of the company are recorded on the books at
cost. The cost of such items retired or replaced is removed from the
appropriate asset account and the accumulated depreciation thereon is
removed from the accumulated depreciation account. Any resulting gain
or loss, representing the difference between the sales price and
depreciated cost, is credited or charged to income.
Depreciation expense using primarily the accelerated cost recovery
system and modified accelerated cost recovery system methods for book
purposes was $765,998 for the year ended December 31, 1995. Book and
tax depreciation was based on the following estimated useful lives:
<TABLE>
<CAPTION>
ASSET CATEGORY YEARS
-------------- ---------
<S> <C>
Tower and antenna 5 - 7
Equipment 5 - 7
Furniture and fixtures 5 - 7
Vehicles 3 - 5
Leasehold improvements 10 - 31
</TABLE>
-9-
<PAGE>
SIGMA BROADCASTING, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 2: INCOME TAXES
- -----------------------
Income tax expense was $435,554 for the current year as follows:
<TABLE>
<CAPTION>
<S> <C>
Federal $361,616
Arkansas 73,938
--------
$435,554
========
</TABLE>
The company's effective income tax rate was 40.7% computed as
follows:
<TABLE>
<CAPTION>
1995 PERCENT
-------- -------
<S> <C> <C>
Federal income tax at statutory
tax rates $363,805 34.0%
State income tax net of federal
tax benefit 48,799 4.6%
Effect of nondeductible expenses 22,950 2.1%
Effect of allocation of surtax
exemption among controlled
group of corporations 0 0.0%
-------- -------
$435,554 40.7%
======== =======
</TABLE>
Income taxes paid during the current year totaled $555,529.
NOTE 3: RELATED PARTY TRANSACTIONS
------------------------------------
The company leases certain operating facilities from Sigma
Properties, a related party by virtue of common officers and owners.
Rentals paid by the company to Sigma Properties was $130,800 for the
year ended December 31, 1995 (see Note 7).
The majority stockholder is paid $11,000 per month consulting fee for
consulting services rendered. Total consulting fees paid totaled
$132,000 for the year ended December 31, 1995.
The stockholders have made various loans to the company for equipment
and working capital needs (see Note 4).
The company makes a monthly note payment totaling $14,678, including
interest, to the father of the stockholders of the company. This note
was for the initial purchase of the company's primary broadcast tower
(see Note 4).
Management of the company is of the opinion that these related party
transactions are comparable to those which would be incurred with
independent third parties for similar facilities and services.
-10-
<PAGE>
SIGMA BROADCASTING, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 4: LONG-TERM DEBT
- -------------------------
Long-term debt at December 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
Notes payable - Stockholder, unsecured, with
principal payments of $25,000 per month and
interest paid annually at 7.19% $1,422,041
Note payable - Stockholder, unsecured, with
principal payments of $5,000 per month and
interest paid annually at 7.19% 377,561
Note payable - Stockholder, unsecured, bearing
interest at 9% with monthly payments, including
interest of $1,661 14,401
Note payable - Individual, secured by certain
equipment with interest at 6.01% per year and
monthly payments, including interest,
of $14,638 481,158
----------
2,295,161
Less current portion 1,986,577
----------
$ 308,584
==========
</TABLE>
Long-term debt is scheduled to mature as follows:
<TABLE>
<S> <C>
1996 $1,986,577
1997 160,195
1998 148,389
----------
$2,295,161
==========
</TABLE>
The company paid interest totaling $203,292 for the year ended
December 31, 1995.
NOTE 5: GOODWILL
- -------------------
On March 16, 1985, the partnership purchased the operating assets of
KHBS and KTVP television stations. The excess of purchase price above
the fair market value of the assets purchased was charged to goodwill
in the amount of $974,709. This amount is being amortized over twenty
years using the straight line method. Amortization expense was
$48,738 for the current year.
NOTE 6: RETIREMENT PLAN
- --------------------------
The company has established a 401(k) plan for the benefit of its
employees. The company's contributions to the plan were $39,038 for
the year ended December 31, 1995. The company expenses these
contributions as they are actually incurred.
-11-
<PAGE>
SIGMA BROADCASTING, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 7: LEASES
- -----------------
The company has entered into various operating leases as follows:
The company leases its real estate, buildings and operating
facilities from Sigma Properties Partnership, a related party (see
Note 3). The monthly lease amount is $10,900 per month. The lease is
a one year lease including automatic one year renewals each January
1. Either party may cancel the lease for the subsequent year with
written notice served to the other party by December 1, annually.
The company leases land for four different tower sites. The current
monthly lease amount is approximately $746 per month with scheduled
increases through 2014.
Following is a summary of future minimum payments under operating
lease agreements that have remaining noncancelable lease terms in
excess of one year at December 31, 1995.
<TABLE>
<CAPTION>
<S> <C>
1996 $ 139,752
1997 139,752
1998 140,752
1999 140,812
2000 140,872
Years subsequent to 2000 1,972,208
----------
Total minimum lease payments $2,674,148
==========
</TABLE>
NOTE 8: CONTRACTS PAYABLE FOR BROADCAST RIGHTS
- -------------------------------------------------
FAS 63 requires a broadcaster (licensee) to account for a license
agreement for program material as a purchase of a right or group of
rights. FAS 63 requires the licensee to report an asset and a
liability for the rights acquired and obligations incurred under the
license agreements. Furthermore, "the asset shall be segregated on
the balance sheet between current and noncurrent based on estimated
time of usage. The liability shall be segregated between current and
noncurrent based on the payment terms." The asset and liability has
been presented on the balance sheet of the company at the gross
amount of the liability.
NOTE 9: BARTER TRANSACTIONS
- ------------------------------
APB Opinion 29 - Accounting for Nonmonetary Transactions requires
barter (trade out) transactions to be reported at the estimated fair
market value of the product or service received. The barter revenue
is reported when commercials are broadcast and merchandise or
services received are reported when received or used. To the extent
that merchandise or services are received prior to the broadcast of
the commercial, a liability is reported. Likewise, if the commercial
is broadcast first, a receivable is reported. At December 31, 1995
the company had recorded a trade receivable of $3,360. This amount is
disclosed on the balance sheet in the accounts receivable - trade
category.
-12-
<PAGE>
SIGMA BROADCASTING, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 10: NETWORK AFFILIATION AGREEMENTS
- -----------------------------------------
The company has not acquired any network affiliation agreements that
require amortization under the provisions of FAS 63.
-13-
<PAGE>
Argyle Television, Inc.
Sigma Broadcasting, Inc.
Condensed Balance Sheet
<TABLE>
<CAPTION>
March 31, 1996
(Unaudited)
---------------
<S> <C>
Assets
Current assets:
Cash and cash equivalents $391,527
Accounts receivable, net 1,341,229
Program rights 253,969
Other 72,699
----------
Total current assets 2,059,424
Property, plant, and equipment, net 1,999,347
Other assets:
Goodwill, net 434,543
Program rights, noncurrent 214,030
Other 14,218
----------
Total assets $4,721,562
==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $238,456
Current portion of long-term debt 1,999,602
Program rights payable 253,969
----------
Total current liabilities 2,492,027
Program rights payable 214,030
Long-term debt 163,984
Stockholders' equity:
Common stock, par value $1.00 per share, 5,000 shares
authorized, 1,000 shares issued and outstanding 1,000
Additional paid-in capital 226,106
Retained earnings 1,624,415
----------
Total stockholders' equity 1,851,521
Total liabilities and stockholders' equity $4,721,562
==========
</TABLE>
-14-
<PAGE>
Argyle Television, Inc.
Sigma Broadcasting, Inc.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
1995 1996
-------------------------
<S> <C> <C>
Total revenues $1,825,095 $1,889,748
Station operating expenses 1,302,257 1,398,501
Amortization of program rights 28,809 51,650
Depreciation and amortization 204,185 168,450
-------------------------
Station operating income 289,844 271,147
Corporate general and administrative expenses 37,730 58,892
-------------------------
Operating income 252,114 212,255
Interest expense, net 86,773 43,131
-------------------------
Net income before income taxes 165,341 169,124
Income taxes 66,136 67,648
-------------------------
Net income $99,205 $101,476
=========================
</TABLE>
-15-
<PAGE>
Argyle Television, Inc.
Sigma Broadcasting, Inc.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------
1995 1996
-----------------------
<S> <C> <C>
Operating Activities
Net Income $99,205 $101,476
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 192,000 152,205
Amortization of intangible assets 12,185 16,245
Amortization of program rights 28,809 51,650
Program payments (28,809) (51,650)
Changes in operating assets and
liabilities, net 99,819 191,814
-----------------------
Net cash provided by operating activities 403,209 461,740
Investing Activities
Purchases of property, plant and equipment (73,245) (82,564)
Proceeds from sale of property, plant and
equipment 2,400
-----------------------
Net cash (used in) investing activities (70,845) (82,564)
Financing Activities
Payment of long-term debt (129,488) (131,573)
-----------------------
Net cash (used in) financing activities (129,488) (131,573)
Increase in cash and cash equivalents 202,876 247,603
Cash at beginning of period 159,492 143,924
-----------------------
Cash and cash equivalents at end of period $362,368 $391,527
=======================
</TABLE>
-16-
<PAGE>
b. Pro Forma Financial Information.
-------------------------------
PRO FORMA CONSOLIDATED FINANCIAL DATA
The unaudited Pro Forma Consolidated Statements of Operations of the
Company for the year ended December 31, 1995 and for the three months ended
March 31, 1995 and 1996, and the unaudited Pro Forma Consolidated Balance Sheets
of the Company as of December 31, 1995 and March 31, 1996 (collectively, the
"Pro Forma Statements") have been prepared as if the acquisitions of the
Northstar Stations, the Hawaii Stations and the Buffalo Station (Five Stations)
and the Arkansas Stations (Six Stations) had been completed in the case of the
statements of operations as of the beginning of the periods presented and as of
December 31, 1995 and March 31, 1996 in the case of the balance sheet data. The
acquisitions of the Stations are accounted for using the purchase method of
accounting. The Pro Forma Statements presented herein are not necessarily
indicative of the Company's financial condition or results of operations that
might have occurred had such transactions been completed at the beginning of the
period indicated or as of the date specified and do not purport to indicate the
Company's consolidated financial position or results of operations for any
future date or period. The Pro Forma Statements and accompanying notes should be
read in conjunction with the Historical Consolidated Financial Statements and
related notes thereto appearing elsewhere herein.
INDEX TO PRO FORMA FINANCIAL STATEMENTS
PAGE
----
ARGYLE TELEVISION, INC.
Pro Forma Statement of Operations for the Year Ended
December 31, 1995 (Unaudited)................................ 18
Pro Forma Balance Sheet as of December 31, 1995 (Unaudited).......... 20
Pro Forma Statements of Operations for the Three Months Ended
March 31, 1995 and 1996 (Unaudited).......................... 22,24
Pro Forma Balance Sheet as of March 31, 1996 (Unaudited)............. 26
-17-
<PAGE>
Argyle Television, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
Hawaii Station Acquisition & Four Buffalo Station Buffalo
The Company January 1 to Offerings Stations January 1 to Acquisition
Historical (a) June 12, 1995 Adjustments Pro Forma Dec. 4, 1995 Adjustments
------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues $46,944 $5,767 $488 (b) $53,199 $16,880 $(2,670)(c)
497 (b)
Station operating expenses 23,603 3,878 (707)(d) 26,774 8,076 (195)(d)
Amortization of program rights 3,961 261 4,222 663
Depreciation and amortization 12,294 960 953 (e) (f) 14,207 4,947 1,651 (e) (f)
------------------------------------------- -------------------------------------------
Station operating income 7,086 668 242 7,996 3,194 (3,629)
Corporate general and
administrative expenses 2,999 2,999
------------------------------------------- -------------------------------------------
Operating income (loss) 4,087 668 242 4,997 3,194 (3,629)
Interest expense, net 12,052 5,926 (h) 17,978
------------------------------------------- -------------------------------------------
Income (loss) before income taxes (7,965) 668 (5,684) (12,981) 3,194 (3,629)
Income taxes 111 (111)(i)
------------------------------------------- -------------------------------------------
Income (loss) from continuing
operations $(7,965) $668 $(5,684) $(12,981) $3,083 $(3,518)
=========================================== ===========================================
</TABLE>
<TABLE>
<CAPTION>
Five Arkansas
Stations Arkansas Acquisition The Company
Pro Forma Stations Adjustment Pro Forma
---------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $67,906 $7,894 $75,800
Station operating expenses 34,655 5,532 (410)(d) 39,777
Amortization of program rights 4,885 163 5,048
Depreciation and amortization 20,805 815 1,775 (e)(f) 23,395
------------------------------------------- ------------
Station operating income 7,561 1,384 (1,365) 7,580
Corporate general and
administrative expenses 2,999 152 (152)(g) 2,999
------------------------------------------- ------------
Operating income (loss) 4,562 1,232 (1,213) 4,581
Interest expense, net 17,978 162 318 (h) 18,458
------------------------------------------- ------------
Income (loss) before income taxes (13,416) 1,070 (1,531) (13,877)
Income taxes 436 (436)(i)
------------------------------------------- ------------
Income (loss) from continuing
operations $(13,416) $634 $(1,095) $(13,877)
=========================================== ===========
</TABLE>
See explanations on the following page.
-18-
<PAGE>
Acquisition Adjustments
(a) Includes the results of operations of the Company, the results of operations
of the acquired Northstar Stations for the full period, the results of
operations of the acquired Hawaii Stations from June 13, 1995 and the acquired
Buffalo station from December 5, 1995.
(b) Reflects increased network compensation resulting from renegotiated network
affiliation agreements for WZZM, KITV, WAPT, and WGRZ.
(c) Reflects the elimination of management fees for the Buffalo Station for six
months which are included in the Company's historical results of operations.
(d) Reflects the elimination of certain expenses relating to employees who have
either been terminated or will be terminated and not replaced under the
Company's management and certain other expenses which would have been eliminated
under the Company's management.
(e) Reflects the change in depreciation expense due to purchase accounting
adjustments to equipment and buildings, net of depreciation already recorded in
the historical financial statements. The estimated useful lives used for
equipment range from 5 to 25 years and the estimated useful life used for
buildings range from 25 to 39 years.
(f) Reflects amortization of intangible assets resulting from purchase
accounting adjustments, net of amortization already recorded in the historical
financial statements. The estimated useful lives used for these intangible
assets were as follows: FCC licenses - 15 years; network affiliation
agreements - 15 years; other intangible assets - 2 - 5 years.
(g) Reflects the change in corporate expenses associated with the Company's
organizational structure.
(h) Reflects interest expense recorded in conjunction with FASB Statement No.
119 relating to interest rate protection agreements, interest expense on the pro
forma debt and the amortization of deferred financing costs over the period of
the related financings:
<TABLE>
<CAPTION>
Five The Company
Stations Pro Forma
Pro Forma Six Stations
--------------------------
<S> <C> <C>
Fair value adjustments of interest rate
protection agreements - non-cash $1,478 $1,478
Bank Credit Agreement at an assumed interest
rate of 8.5% 1,075 1,555
The Notes at an interest rate of 9.75% 14,625 14,625
Amortization of deferred financing costs 800 800
--------------------------
$17,978 $18,458
==========================
</TABLE>
(i) Reflects the elimination of taxes as a result of the pro forma losses for
the period presented.
-19-
<PAGE>
Argyle Television, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
as of December 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
Arkansas
The Company Arkansas Acquisition The Company
Historical Stations Adjustments Pro Forma
------------------------------------------------ -----------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $2,206 $144 - $2,350
Accounts receivable, net 11,362 1,407 - 12,769
Barter program rights 5,102 - - 5,102
Program rights 4,611 254 - 4,865
Other 1,139 158 - 1,297
------------------------------------------------ -----------
Total current assets 24,420 1,963 - 26,383
Property, plant, and equipment, net 32,634 2,074 4,126 (a) 38,834
Intangible assets, net 220,375 451 37,618 (a) 258,444
Other:
Deferred acquisition and financing costs, net 6,250 - - 6,250
Barter program rights, noncurrent 2,249 - - 2,249
Program rights, noncurrent 3,299 266 - 3,565
Other assets 1,913 14 - 1,927
------------------------------------------------ -----------
Total assets $291,141 $4,768 $41,744 $337,652
=============================================== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,792 $126 - $1,918
Current portion of long-term debt - 1,987 (1,987)(a) -
Accrued liabilities 5,227 77 - 5,304
Barter program rights payable 5,270 - - 5,270
Program rights payable 3,658 254 - 3,912
Other current liabilities 647 - 1,241 (a) 1,888
------------------------------------------------ -----------
Total current liabilities 16,595 2,444 (746) 18,292
Barter program rights payable, noncurrent 2,249 - - 2,249
Program rights payable, noncurrent 3,650 266 - 3,916
Other liabilities 2,354 - 11,053 (a) 13,407
Long-term debt, net 150,000 308 5,898 (b) 155,898
(308)(a)
Stockholders' equity:
Common stock 111 1 (1)(c) 113
2 (b)
Preferred stock 1 (b) 1
Additional paid-in capital 132,039 226 (226)(c) 159,633
27,594 (b)
Retained earnings (deficit) (15,857) 1,523 (1,523)(c) (15,857)
------------------------------------------------ -----------
Total stockholders' equity 116,293 1,750 25,847 143,890
Total liabilities and stockholders' equity $291,141 $4,768 $41,744 $337,652
=============================================== ==========
</TABLE>
See explanations on the following page.
-20-
<PAGE>
Arkansas Acquisition Adjustments
(a) Reflects the Arkansas Acquisition. The acquisition will be accounted for
using the purchase method of accounting. The Company has not yet determined the
final allocation of the purchase price and, accordingly, the amounts shown below
may differ from the amounts ultimately determined.
The preliminary pro forma allocation of the purchase price is as follows:
<TABLE>
<S> <C>
Purchase price and estimated acquisition costs $ 33,495
Less historical net assets (1,750)
--------
Excess to be allocated $ 31,745
========
Allocation of excess purchase price based on preliminary estimated values:
Property, plant, and equipment $ 4,126
Deferred tax liability (11,053)
Obligations paid at closing 2,295
Additional obligations assumed (1,241)
Intangible assets 37,618
--------
$ 31,745
========
(b) Financing for the Arkansas Acquisition is to be provided as follow:
Issuance of Preferred Stock $ 21,876
Issuance of Common Stock 5,721
Borrowings under Bank Credit Agreement 5,898
--------
$ 33,495
========
</TABLE>
(c) Reflects the elimination of the remaining historical capital structure of
the Arkansas Stations.
-21-
<PAGE>
Argyle Television, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
Three Months Ended March 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
The Company Hawaii Buffalo Arkansas Acquisition The Company
Historical Stations Station Stations Adjustments Pro Forma
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues $8,487 $2,988 $3,849 $1,825 $246 (a) $17,395
Station operating expenses 4,875 1,862 2,053 1,302 (246)(b) 9,846
Amortization of program rights 912 156 185 29 1,282
Depreciation and amortization 1,872 539 1,353 204 1,881 (c)(d) 5,849
-------------------------------------------------------- ------------
Station operating income 828 431 258 290 (1,389) 418
Corporate general and
administrative expenses 506 38 390 (e) 934
-------------------------------------------------------- ------------
Operating income (loss) 322 431 258 252 (1,779) (516)
Interest expense, net 1,909 87 2,226 (f) 4,222
-------------------------------------------------------- ------------
Income (loss) before income taxes (1,587) 431 258 165 (4,005) (4,738)
Income taxes 66 (66)(g)
-------------------------------------------------------- ------------
Net income (loss) $(1,587) $431 $258 $99 $(3,939) $(4,738)
======================================================== ============
</TABLE>
See explanations on the following page.
-22-
<PAGE>
ACQUISITION ADJUSTMENTS
(a) Reflects increased network compensation resulting from renegotiated network
affiliation agreements.
(b) Reflects the elimination of certain expenses relating to employees who have
either been terminated or will be terminated and not replaced under the
Company's management and certain other expenses which would have been
eliminated under the Company's management.
(c) Reflects depreciation of equipment and buildings resulting from the
purchase accounting adjustments, net of depreciation already recorded in
historical financial statements. The estimated useful lives used for
equipment range from 5 to 25 years and the estimated useful life used for
buildings range from 25 to 39 years.
(d) Reflects amortization of intangible assets resulting from purchase
accounting adjustments, net of amortization already recorded in the
historical financial statements. The estimated useful lives used for these
intangible assets were as follows: FCC licenses - 15 years; network
affiliation agreements - 15 years; other intangible assets - 2 to 5 years.
(e) Reflects the change in corporate expenses associated with the Company's
organizational structure.
(f) Reflects interest expense on the pro forma debt and the amortization of
deferred financing costs over the period of the related financings.
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Senior Subordinated Notes at an interest rate of 9.75% $3,656
Amortization of deferred financing costs 177
Bank Credit Agreement at an assumed interest rate of 8.5%, net 389
--------
$4,222
========
</TABLE>
(g) Reflects the elimination of taxes as a result of the pro forma losses for
the period presented.
-23-
<PAGE>
Argyle Television, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
Three Months Ended March 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
Arkansas
The Company Arkansas Acquisition The Company
Historical Stations Adjustments Pro Forma
----------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $15,495 $1,890 $17,385
Station operating expenses 8,898 1,399 $(73)(a) 10,224
Amortization of program rights 1,289 52 1,341
Depreciation and amortization 4,986 168 518 (b)(c) 5,672
------------------------------------ ----------------
Station operating income 322 271 (445) 148
Corporate general and
administrative expenses 983 59 (59)(d) 983
Non-cash compensation expense 169 169
------------------------------------ ----------------
Operating income (loss) (830) 212 (386) (1,004)
Interest expense, net 3,500 43 99 (e) 3,642
------------------------------------ ----------------
Income (loss) before income taxes (4,330) 169 (485) (4,646)
Income taxes 68 (68)(f)
------------------------------------ ----------------
Net income (loss) $(4,330) $101 $(417) $(4,646)
=================================== ================
</TABLE>
See explanation on the following page.
-24-
<PAGE>
Argyle Television, Inc.
Arkansas Acquisition Adjustments
(a) Reflects the elimination of certain expenses relating to employees who have
either been terminated or will be terminated and not replaced under the
Company's management and certain other expenses which would have been
eliminated under the Company's management.
(b) Reflects depreciation of equipment and buildings resulting from the
purchase accounting adjustments, net of depreciation already recorded in
historical financial statements. The estimated useful lives used for
equipment range from 5 to 25 years and the estimated useful life used for
buildings range from 25 to 39 years.
(c) Reflects amortization of intangible assets resulting from purchase
accounting adjustments, net of amortization already recorded in the
historical financial statements. The estimated useful lives used for these
intangible assets were as follows: FCC licenses - 15 years; network
affiliation agreements - 15 years; other intangible assets - 2 to 5 years.
(d) Reflects the change in corporate expenses associated with the Company's
organizational structure.
(e) Reflects a credit to interest expense recorded in conjunction with FASB
Statement No. 119 relating to interest rate protection agreements,
interest expense on the pro forma debt, and the amortization of deferred
financing costs over the period of the related financings.
<TABLE>
<CAPTION>
1996
------
<S> <C>
Senior Subordinated Notes at an interest rate of 9.75% $3,656
Fair value adjustments of interest rate protection
agreements - non-cash (580)
Amortization of deferred financing costs 177
Bank Credit Agreement at an assumed interest rate of 8.5%, net 389
------
$3,642
======
</TABLE>
(f) Reflects the elimination of taxes as a result of the pro forma losses for
the period presented.
-25-
<PAGE>
Argyle Television, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
as of March 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
Arkansas
The Company Arkansas Acquisition The Company
Historical Stations Adjustments Pro Forma
------------------------------------------- -----------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $2,369 $392 - $2,761
Accounts receivable, net 11,951 1,341 - 13,292
Barter program rights 4,453 - - 4,453
Program rights 3,643 254 - 3,897
Other 594 73 - 667
------------------------------------------ --------
Total current assets 23,010 2,059 - 25,070
Property, plant, and equipment, net 32,781 1,999 4,126 (a) 38,906
Intangible assets, net 217,707 435 37,648 (a) 255,790
Other:
Deferred acquisition and financing costs, net 6,173 - - 6,173
Barter program rights, noncurrent 2,608 - - 2,608
Program rights, noncurrent 3,198 214 - 3,412
Other assets 2,460 14 - 2,474
------------------------------------------ --------
Total assets $287,937 $4,722 $41,774 $334,433
========================================== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $9,959 $238 - $10,197
Current portion of long-term debt - 2,000 (2,000) (a) -
Barter program rights payable 4,652 - - 4,652
Program rights payable 3,638 254 - 3,892
Other current liabilities 448 - 1,241 (a) 1,689
------------------------------------------ --------
Total current liabilities 18,697 2,492 (759) 20,430
Barter program rights payable, noncurrent 2,608 - - 2,608
Program rights payable, noncurrent 3,093 214 - 3,307
Other liabilities 1,431 - 11,053 (a) 12,484
Long-term debt, net 150,000 164 5,898 (b) 155,898
(164) (a)
Stockholders' equity:
Common stock 111 1 (1) (c) 113
2 (b)
Preferred stock 1 (b) 1
Additional paid-in capital 132,184 226 (226) (c) 159,778
27,594 (b)
Retained earnings (deficit) (20,187) 1,624 (1,624) (c) (20,187)
------------------------------------------ --------
Total stockholders' equity 112,108 1,851 25,746 139,705
Total liabilities and stockholders' equity $287,937 $4,722 $41,774 $334,433
========================================== ========
</TABLE>
See explanations on the following page.
-26-
<PAGE>
Arkansas Acquisition Adjustments
(a) Reflects the Arkansas Acquisition. The acquisition will be accounted for
using the purchase method of accounting. The Company has not yet determined the
final allocation of the purchase price and, accordingly, the amounts shown below
may differ from the amounts ultimately determined.
The preliminary pro forma allocation of the purchase price is as follows:
<TABLE>
<S> <C>
Purchase price and estimated acquisition costs $33,495
Less historical net assets (1,851)
-------
Excess to be allocated $31,644
=======
Allocation of excess purchase price based on preliminary estimated values:
Property, plant, and equipment $4,126
Deferred tax liability (11,053)
Obligations paid at closing 2,164
Additional obligations assumed (1,241)
Intangible assets 37,648
-------
$31,644
=======
(b) Financing for the Arkansas Acquisition is to be provided as follow:
Issuance of Preferred Stock $21,876
Issuance of Common Stock 5,721
Borrowings under Bank Credit Agreement 5,898
-------
$33,495
=======
</TABLE>
(c) Reflects the elimination of the remaining historical capital structure of
the Arkansas Stations.
-27-
<PAGE>
c. Exhibits.
--------
2.1 Agreement and Plan of Reorganization by and among the Company,
KHBS Argyle Television, Inc., Sigma Broadcasting, Inc. and the
stockholders thereof (incorporated by referenced to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995).
4.1 Certificate of Designation of the Company's Series A Preferred
Stock.
4.2 Certificate of Designation of the Company's Series B Preferred
Stock.
4.3 First Supplemental Indenture dated as of June 1, 1996 among KHBS
Argyle Television, Inc., Arkansas Argyle Television, Inc. and
United States Trust Company of New York.
10.1 Form of Amendment No. 3 to Amended and Restated Credit Agreement
dated June 11, 1996.
20 Press Release issued June 11, 1996.
-28-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ARGYLE TELEVISION, INC.
Dated: June 26, 1996 By: /s/ HARRY T. HAWKS
----------------------------------------
Harry T. Hawks, Chief Financial Officer
Assistant Secretary and Treasurer
(Principal Financial Officer)
-29-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----
<C> <S>
2.1 Agreement and Plan of Reorganization by and among the Company, KHBS
Argyle Television, Inc., Sigma Broadcasting, Inc. and the stockholders
thereof (incorporated by referenced to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995).
4.1 Certificate of Designation of the Company's Series A Preferred Stock.
4.2 Certificate of Designation of the Company's Series B Preferred Stock.
4.3 First Supplemental Indenture dated as of June 1, 1996 among KHBS Argyle
Television, Inc., Arkansas Argyle Television, Inc. and United States Trust
Company of New York.
10.1 Form of Amendment No. 3 to Amended and Restated Credit Agreement dated June
11, 1996.
20 Press Release issued June 11, 1996.
</TABLE>
-30-
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION
OF THE
SERIES A PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
(LIQUIDATION PREFERENCE $1,000 PER SHARE)
OF
ARGYLE TELEVISION, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
THE UNDERSIGNED, being, respectively, the Chairman and the Secretary of
Argyle Television, Inc., a Delaware corporation (the "Corporation"), DO HEREBY
CERTIFY that, pursuant to the provisions of Section 151 of the Delaware General
Corporation Law and pursuant to authority conferred upon the Board of Directors
by the provisions of the Certificate of Incorporation, as amended and restated,
of the Corporation (the "Certificate of Incorporation"), the Board of Directors
of the Corporation, at a meeting duly held on June 5, 1996, adopted resolutions
providing for the issuance of a series of its preferred stock and fixing the
designation, preferences, qualifications, voting rights and powers, limitations
and relative rights thereof. These resolutions are as follows:
RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation, the issuance of a series of preferred stock,
par value $.01 per share, which shall consist of 12,500 of the 1,000,000
shares of preferred stock that the Corporation now has authority to issue,
be, and the same hereby is, authorized, and the Board hereby fixes the
designation, preferences, qualifications, voting rights and powers,
limitations and relative rights of the shares of such series as follows:
1. Designation. 12,500 shares of the preferred stock, par value $.01 per
-----------
share, of the Corporation are hereby constituted as a series of the preferred
stock designated as "Series A Preferred Stock" (the "Series A Preferred Stock").
2. Dividends.
---------
(a) Dividends on Series A Preferred Stock. An annual, cumulative cash
-------------------------------------
dividend of $65 accruing from and after June 1, 1996 shall be declared and paid
on each share of the Series A Preferred Stock, payable at the end of each
calendar quarter in equal quarterly amounts, provided that at such times (i)
there are assets of the Corporation legally
<PAGE>
available for the payment of such dividends and (ii) the payment of such
dividends is permitted under the terms of the governing documents for the
Corporation's then existing borrowing arrangements with third-party lenders.
Any such dividend that cannot be paid when due shall be paid to the extent
permissible at the time that the payment of such dividend becomes permissible.
(b) Limitation on Dividends, Repurchases and Redemptions. So long as
----------------------------------------------------
any shares of Series A Preferred Stock shall be outstanding, the Corporation
shall not declare or pay or set apart for payment any dividends or make any
other distributions on any Junior Securities, whether in cash, property or
otherwise (other than dividends or distributions payable in shares of the class
or series upon which such dividends or distributions are declared or paid), nor
shall the Corporation or any of its Subsidiaries purchase, redeem or otherwise
acquire for any consideration or make payment on account of the purchase,
redemption, or other retirement of any Parity Securities or Junior Securities,
nor shall any monies be paid or made available for a sinking fund for the
purchase or redemption of any Parity Securities or Junior Securities, unless
with respect to all of the foregoing all dividends or other distributions to
which the holders of Series A Preferred Stock shall have been entitled, pursuant
to Section 2(a) hereof, shall have been paid or declared and a sum of money has
been set apart for the full payment thereof.
(c) Pro Rata Payments. In the event that full dividends are not paid
-----------------
or made available to the holders of all outstanding shares of Series A Preferred
Stock and of any Parity Securities and funds available for a payment of
dividends shall be insufficient to permit payment in full to holders of all such
stock of the full preferential amounts to which they are then entitled, then the
entire amount available for payment of dividends shall be distributed ratably
among all such holders of Series A Preferred Stock and of any Parity Securities
in proportion to the full amount to which they would otherwise be respectively
entitled.
3. Preference on Liquidation.
-------------------------
(a) Liquidation Preference for Series A Preferred Stock. In the event
---------------------------------------------------
that the Corporation shall commence a voluntary case under the federal
bankruptcy laws or any other applicable federal or state bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of the Corporation or
of any substantial part of its property, or make an assignment for the benefit
of its creditors, or admit in writing its inability to pay its debts generally
as they become due, or if a decree or order for relief in respect of the
Corporation shall be entered by a court having jurisdiction in the premises in
an involuntary case under the federal bankruptcy laws or any other applicable
federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and on account of any
such event the Corporation shall liquidate, dissolve or wind up, or if the
Corporation shall otherwise liquidate, dissolve or wind up, no
-2-
<PAGE>
distribution of the assets of the Corporation shall be made to the holders of
shares of Common Stock or other Junior Securities (and no monies shall be set
apart for such purpose) unless prior thereto, the holders of shares of Series A
Preferred Stock shall have received from the assets of the Corporation an amount
per share equal to the sum of (x) $1,000, plus (y) all accrued but unpaid
dividends thereon through the date of distribution, whether or not earned or
declared (collectively, the "Series A Liquidation Preference").
(b) Pro Rata Payments. If, upon any such liquidation, dissolution or
-----------------
other winding up of the affairs of the Corporation, the assets of the
Corporation shall be insufficient to permit the payment in full of the Series A
Liquidation Preference for each share of Series A Preferred Stock then
outstanding and the full liquidating payments on all Parity Securities, then the
assets of the Corporation remaining after the distribution to holders of any
Senior Securities of the full amounts to which they may be entitled shall be
ratably distributed among the holders of Series A Preferred Stock and of any
Parity Securities in proportion to the full amounts to which they would
otherwise be respectively entitled if all amounts thereon were paid in full.
The Corporation shall not issue any Senior Securities without the written
consent of the holders of a majority of the Series A Preferred Stock issued and
outstanding.
(c) Sale Not a Liquidation. Neither the voluntary sale, conveyance,
----------------------
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Corporation nor the consolidation, merger or other business combination of the
Corporation with or into one or more corporations shall be deemed to be a
liquidation, dissolution or winding-up, voluntary or involuntary, of the
Corporation.
(d) Notice of Liquidation. Written notice of any liquidation,
---------------------
dissolution or winding up of the Corporation, stating the payment date or dates
when and the place or places where amounts distributable in such circumstances
shall be payable, shall be given by first class mail, postage prepaid, not less
than 30 days prior to any payment date specified therein, to the holders of
record of the Series A Preferred Stock at their respective addresses as shall
appear on the records of the Corporation.
4. Voting.
------
(a) General. Except as set forth in Section 4(b), the Series A
-------
Preferred Stock shall not be entitled to vote on any matter subject to vote of
the Corporation's stockholders, except as otherwise provided by applicable law.
(b) Class Vote. At any time when shares of Series A Preferred Stock
----------
are outstanding, without the approval of the holders representing at least a
majority of the shares of Series A Preferred Stock then outstanding, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class, the Corporation shall not amend or repeal any provision
of, or add any provision to, this Certificate of Designation, or the Certificate
of Incorporation of the Corporation if such action would alter, change or
-3-
<PAGE>
affect adversely the rights, preferences, privileges or powers of, or the
restrictions provided for the benefit of, the Series A Preferred Stock.
5. Redemption
----------
(a) Redemption Price. Any redemption of the Series A Preferred Stock
----------------
pursuant to this Section 5 shall be at a price equal to $1,000 per share, plus
in each case an amount equal to accrued and unpaid dividends, if any, to (and
including) the redemption date, whether or not earned or declared (the
"Redemption Price").
(b) Redemption at Corporation's Option. At any time after June 11,
----------------------------------
2001 (the "First Redemption Date"), the Corporation may, at its option (subject
to the other provisions of this Section 5), redeem all, or any portion of the
outstanding shares of Series A Preferred Stock.
(c) Procedures for Redemption. In the event the Corporation shall
-------------------------
elect to redeem shares of Series A Preferred Stock pursuant to Section 5(b), the
Corporation shall give written notice of such redemption by facsimile, hand
delivery, overnight courier, or first class mail, postage prepaid, mailed or
transmitted not less than 30 nor more than 90 days prior to the redemption date,
to each holder of record of the shares to be redeemed, at such holder's address
as the same appears on the stock records of the Corporation. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of Series A
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (iii) the Redemption Price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the Redemption Price; (v)
that payment will be made upon presentation and surrender of such Series A
Preferred Stock; (vi) that dividends on the shares to be redeemed shall cease to
accrue following such redemption date; (vii) that such redemption is mandatory;
and, (viii) that dividends accrued to and including the date fixed for
redemption will be paid as specified in such notice. Notice having been mailed
as aforesaid, from and after the redemption date, unless the Corporation shall
be in default in the payment of the Redemption Price (including any accrued and
unpaid dividends to (and including) the date fixed for redemption, (A) dividends
on the shares of the Series A Preferred Stock so called for redemption shall
cease to accrue; (B) such shares shall be deemed no longer outstanding; and, (C)
all rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation any moneys payable upon redemption without
interest thereon) shall cease. Notwithstanding the foregoing, if the average of
the closing price for the Corporation's Series A Common Stock as reported by
NASDAQ (or such other principal exchange on which the Series A Common Stock is
then listed) for the 10 trading days prior to the date of the redemption notice
equals or exceeds the Conversion Price (defined in Section 6(a) below) on such
date, any holder that has received such a redemption notice shall have the right
to convert the shares of Series A Preferred Stock subject to redemption by
complying with the conversion procedures set forth in Section 6 at any time
prior to 20 days after the date of receipt of such redemption notice.
-4-
<PAGE>
Notwithstanding the foregoing, any holder that has received such a
redemption notice shall have the right by providing written notification to the
Corporation not less than 20 days after receipt of the redemption notice from
the Corporation, to specify up to three redemption dates, the latest of which
shall be January 1 of the second year following the date the Corporation
specified for redemption, on which the redemption shall occur. Such notice
shall specify the date or dates on which the redemption shall occur, and, if
more than one redemption date is specified, the number of shares to be redeemed
on each such date; provided, however, that the total of the number of shares
specified by such holder to be redeemed must equal the number of shares
originally specified by the Corporation for redemption. In the event the holder
exercises the right outlined above to specify a different date or dates for
redemption than stated in the redemption notice from the Corporation, dividends
shall continue to accrue and be paid as provided herein until such time as the
shares are redeemed.
Upon surrender in accordance with such notice of the certificates for
any such shares so redeemed (properly endorsed or assigned for transfer, if the
Board of Directors shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the applicable Redemption Price. If
fewer than all the outstanding shares of Series A Preferred Stock are to be
redeemed, shares to be redeemed shall be selected by the Corporation from
holders of outstanding shares of Series A Preferred Stock not previously called
for redemption in proportion to the respective number of shares held by each
holder. If fewer than all the shares represented by a certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(d) Repurchases of Series A Preferred Stock by the Corporation.
----------------------------------------------------------
Neither the Corporation nor any of its subsidiaries shall repurchase any
outstanding shares of Series A Preferred Stock unless the Corporation on the
same terms either (i) offers to purchase all of the then outstanding shares of
Series A Preferred Stock or (ii) offers to purchase shares of Series A Preferred
Stock from the holders in proportion to the respective number of shares of
Series A Preferred Stock held by each holder. In any such repurchase by the
Corporation, if all shares of Series A Preferred Stock are not being
repurchased, then the number of shares of Series A Preferred Stock to be
repurchased shall be allocated among all shares of Series A Preferred Stock held
by holders that accept the Corporation's repurchase offer so that the shares of
Series A Preferred Stock are repurchased from such holders in proportion to the
respective number of shares of Series A Preferred Stock held by each such holder
that accepts the Corporation's offer (or in such other proportion as agreed by
all such holders who accept the Corporation's offer). Nothing in this Section
5(d) shall (i) obligate a holder of shares of Series A Preferred Stock to accept
the Corporation's repurchase offer or (ii) prevent the Corporation from
redeeming shares of Series A Preferred Stock in accordance with the terms of
Sections 5(a) through (c) hereof.
-5-
<PAGE>
6. Conversion.
----------
(a) Right to Convert. The holder of each share of Series A Preferred
----------------
Stock shall have the right at any time, or from time to time, at such holder's
option, to convert such share into a number of shares of fully paid and
nonassessable shares of Series A Common Stock equal to a quotient determined by
dividing $1,000 by the "Conversion Price" (defined below), on and subject to the
terms and conditions hereinafter set forth.
The "Conversion Price" shall be (i) on or before December 31, 2000, $35;
and (ii) during each calendar year after December 31, 2000, the product of 1.1
times the Conversion Price for the immediately preceding calendar year. (For
example, during 2001, the Conversion Price shall be $38.50; during 2002 the
Conversion Price shall be $42.35; etc.) Notwithstanding the foregoing, if after
the First Redemption Date a holder elects to exercise its conversion right under
this Section 6(a), and, (i) the Corporation has not given written notice of
redemption and (ii) the average of the closing price for the Corporation's
Series A Common Stock as reported by NASDAQ (or such other principal exchange on
which the Series A Common Stock is then listed) for the 10 trading days prior to
the Conversion Date (defined in Section 6(b) below) (the "10 Day Average Price")
is less than the Conversion Price on the Conversion Date, then the Conversion
Price shall be equal to the 10 Day Average Price.
(1) If the Series A Common Stock issuable upon the conversion of
the Series A Preferred Stock shall be changed into the same or a different
number of shares of any class or classes of stock, whether by capital
reorganization, reclassification or otherwise, then and in each such event
the holder of each share of Series A Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such
reorganization, reclassification or other change by holders of the number
of shares of Series A Common Stock into which such shares of Series A
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification or change.
(2) If at any time or from time to time there shall be a merger
or consolidation of the Corporation with or into another corporation, or
the sale of substantially all of the Corporation's properties and assets to
any other person, then, as a part of such merger, consolidation or sale,
provision shall be made so that the holders of the Series A Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series A
Preferred Stock, the number of shares of stock or other securities or
properties of the Corporation, or of the successor corporation resulting
from such merger, consolidation or sale, to which such holder would have
been entitled if such holder had converted its shares of Series A Preferred
Stock immediately prior to such capital reorganization, merger,
consolidation or sale. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Section 6 with respect to
the rights of the holders of the Series A Preferred Stock after the merger,
consolidation or sale to the end that the provisions
-6-
<PAGE>
of this Section 6 shall be applicable after that event in as nearly
equivalent a manner as may be practicable.
(b) Method of Conversion. In order to exercise the conversion
--------------------
privilege, the holder of any shares of Series A Preferred Stock to be converted
shall present and surrender the certificate or certificates representing such
shares during usual business hours at any office or agency of the Corporation
maintained for the transfer of Series A Preferred Stock and shall deliver a
written notice of the election of the holder to convert the shares represented
by such certificate or any portion thereof specified in such notice. Such
notice shall also state the name or names (with address) in which the
certificate or certificates for shares of Series A Common Stock issuable on such
conversion shall be registered. If required by the Corporation, any certificate
for shares surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the holder
of such shares or its duly authorized representative. Each conversion of shares
of Series A Preferred Stock shall be deemed to have been effected on the date
(the "Conversion Date") on which the certificate or certificates representing
such shares shall have been surrendered and such notice and any required
instruments of transfer shall have been received as aforesaid, and the person or
persons in whose name or names any certificate or certificates for shares of
Series A Common Stock shall be issuable on such conversion shall be, for the
purpose of receiving dividends and for all other corporate purposes whatsoever,
deemed to have become the holder or holders of record of the shares of Series A
Common Stock represented thereby on the Conversion Date.
(c) Issuance of Certificates Upon Conversion. As promptly as
----------------------------------------
practicable after the presentation and surrender for conversion, as herein
provided, of any certificate for shares of Series A Preferred Stock, the
Corporation shall issue and deliver at such office or agency, to or upon the
written order of the holder thereof, certificates for the number of whole shares
of Series A Common Stock issuable upon such conversion and cash for any
fractional shares. In case any certificate for shares of Series A Preferred
Stock shall be surrendered for conversion of only a part of the shares
represented thereby, the Corporation shall deliver at such office or agency, to
or upon the written order of the holder thereof, a certificate or certificates
for the number of shares of Series A Preferred Stock represented by such
surrendered certificate that are not being converted. The issuance of
certificates for shares of Series A Common Stock issuable upon the conversion of
shares of Series A Preferred Stock by the registered holder thereof shall be
made without charge to the converting holder for any tax imposed on the
Corporation in respect of the issue thereof. The Corporation shall not,
however, be required to pay any tax that may be payable with respect to any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of the shares being converted, and the
Corporation shall not be required to issue or deliver any such certificate
unless and until the person requesting the issue thereof shall have paid to the
Corporation the amount of such tax or has established to the satisfaction of the
Corporation that such tax has been paid.
(d) Payment of Dividends on Converted Shares. Upon any conversion of
----------------------------------------
shares of Series A Preferred Stock into shares of Series A Common Stock pursuant
hereto,
-7-
<PAGE>
no adjustment with respect to dividends shall be made; only those dividends
shall be payable on the shares so converted as have been declared and are
payable to holders of record of shares of Series A Preferred Stock on a date
prior to the Conversion Date with respect to the shares so converted; and only
those dividends shall be payable on shares of Series A Common Stock issued upon
such conversion as have been declared and are payable to holders of record of
shares of Series A Common Stock on or after such Conversion Date.
(e) Reservation of Shares. Such number of shares of Series A Common
---------------------
Stock as may from time to time be required for such purpose shall be reserved
for issuance upon conversion of outstanding shares of Series A Preferred Stock.
7. Shares to be Retired. Any share of Series A Preferred Stock redeemed,
--------------------
repurchased, converted or otherwise acquired by the Corporation shall be retired
and canceled and shall upon cancellation be restored to the status of authorized
but unissued shares of preferred stock, subject to reissuance by the Board of
Directors as shares of preferred stock of one or more other series but not as
shares of Series A Preferred Stock.
8. Definitions. As used herein, the following terms shall have the
-----------
respective meanings set forth below:
"Business Day" means any day that is not a Saturday, a Sunday or a day
------------
on which banks are required or permitted to be closed in the State of Delaware,
the State of Texas or the State of New York.
"Common Stock" means the Series A Common Stock, $.01 par value per
------------
share, of the Corporation.
"Conversion Date" shall have the meaning set forth in Section 6(b).
---------------
"Junior Securities" means the Common Stock and any other class of
-----------------
capital stock or series of preferred stock created by the Corporation that does
not expressly provide that it ranks senior to or pari passu with the Series A
---- -----
Preferred Stock as to dividends, other distributions, liquidation preference or
otherwise.
"Parity Securities" means the Corporation's Series B Preferred Stock,
-----------------
$.01 par value per share, and any other class of capital stock or series or
preferred stock created by the Corporation which expressly provides that it
ranks pari passu with the Series A Preferred Stock as to dividends, other
---- -----
distributions, liquidation preference or otherwise.
"Person" or "person" shall mean an individual, partnership,
------ ------
corporation, trust, unincorporated organization, joint venture or any other
entity of any kind.
"Redemption Price" shall have the meaning set forth in Section 5(a).
----------------
-8-
<PAGE>
"Senior Securities" means any class or series of capital stock of the
-----------------
Corporation other than Parity Securities or Junior Securities.
"Series A Common Stock" means the Series A Common Stock, $.01 par
---------------------
value per share, of the Corporation.
"Series A Liquidation Preference" shall have the meaning set forth in
-------------------------------
Section 3(a).
"Series A Preferred Stock" shall have the meaning set forth in
------------------------
Section 1.
9. Notices. Except as may otherwise be provided for in this Certificate
-------
of Designation, all notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of (i)
receipt of such notice; (ii) three Business Days after the mailing of such
notice; or, (iii) the Business Day following sending of such notice by overnight
courier, in any case with postage or delivery charges prepaid, addressed: if to
the Corporation, to its offices at 200 Concord Plaza, Suite 700, San Antonio,
Texas 78216, Attention: Secretary, or to an agent of the Corporation designated
as permitted by this Certificate of Designation, or, if to any holder of the
Series A Preferred Stock, to such holder at the address of such holder of the
Series A Preferred Stock as listed in the stock record books of the Corporation;
or to such other address as the Corporation or holder, as the case may be, shall
have designated by notice similarly given.
IN WITNESS WHEREOF, this Certificate of Designation has been signed by
the Chairman, and attested to by the Secretary, of the Corporation, all as of
the 11th day of June, 1996.
Argyle Television, Inc.
By: /s/ Bob Marbut
--------------------------
Bob Marbut, Chairman
Attest:
By: /s/ Dean H. Blythe
-------------------------
Dean H. Blythe, Secretary
-9-
<PAGE>
EXHIBIT 4.2
CERTIFICATE OF DESIGNATION
OF THE
SERIES B PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
(LIQUIDATION PREFERENCE $1,000 PER SHARE)
OF
ARGYLE TELEVISION, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
THE UNDERSIGNED, being, respectively, the Chairman and the Secretary of
Argyle Television, Inc., a Delaware corporation (the "Corporation"), DO HEREBY
CERTIFY that, pursuant to the provisions of Section 151 of the Delaware General
Corporation Law and pursuant to authority conferred upon the Board of Directors
by the provisions of the Certificate of Incorporation, as amended and restated,
of the Corporation (the "Certificate of Incorporation"), the Board of Directors
of the Corporation, at a meeting duly held on June 5, 1996, adopted resolutions
providing for the issuance of a series of its preferred stock and fixing the
designation, preferences, qualifications, voting rights and powers, limitations
and relative rights thereof. These resolutions are as follows:
RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation, the issuance of a series of preferred stock,
par value $.01 per share, which shall consist of 12,500 of the 1,000,000
shares of preferred stock that the Corporation now has authority to issue,
be, and the same hereby is, authorized, and the Board hereby fixes the
designation, preferences, qualifications, voting rights and powers,
limitations and relative rights of the shares of such series as follows:
1. Designation. 12,500 shares of the preferred stock, par value $.01 per
-----------
share, of the Corporation are hereby constituted as a series of the preferred
stock designated as "Series B Preferred Stock" (the "Series B Preferred Stock").
2. Dividends.
---------
(a) Dividends on Series B Preferred Stock. An annual, cumulative cash
-------------------------------------
dividend of $65 accruing and after from June 1, 1996 shall be declared and paid
on each share of the Series B Preferred Stock, payable at the end of each
calendar quarter in equal quarterly amounts, provided that at such times (i)
there are assets of the Corporation legally
<PAGE>
available for the payment of such dividends and (ii) the payment of such
dividends is permitted under the terms of the governing documents for the
Corporation's then existing borrowing arrangements with third-party lenders.
Any such dividend that cannot be paid when due shall be paid to the extent
permissible at the time that the payment of such dividend becomes permissible.
(b) Limitation on Dividends, Repurchases and Redemptions. So long as
----------------------------------------------------
any shares of Series B Preferred Stock shall be outstanding, the Corporation
shall not declare or pay or set apart for payment any dividends or make any
other distributions on any Junior Securities, whether in cash, property or
otherwise (other than dividends or distributions payable in shares of the class
or series upon which such dividends or distributions are declared or paid), nor
shall the Corporation or any of its Subsidiaries purchase, redeem or otherwise
acquire for any consideration or make payment on account of the purchase,
redemption, or other retirement of any Parity Securities or Junior Securities,
nor shall any monies be paid or made available for a sinking fund for the
purchase or redemption of any Parity Securities or Junior Securities, unless
with respect to all of the foregoing all dividends or other distributions to
which the holders of Series B Preferred Stock shall have been entitled, pursuant
to Section 2(a) hereof, shall have been paid or declared and a sum of money has
been set apart for the full payment thereof.
(c) Pro Rata Payments. In the event that full dividends are not paid
-----------------
or made available to the holders of all outstanding shares of Series B Preferred
Stock and of any Parity Securities and funds available for a payment of
dividends shall be insufficient to permit payment in full to holders of all such
stock of the full preferential amounts to which they are then entitled, then the
entire amount available for payment of dividends shall be distributed ratably
among all such holders of Series B Preferred Stock and of any Parity Securities
in proportion to the full amount to which they would otherwise be respectively
entitled.
3. Preference on Liquidation.
-------------------------
(a) Liquidation Preference for Series B Preferred Stock. In the event
---------------------------------------------------
that the Corporation shall commence a voluntary case under the federal
bankruptcy laws or any other applicable federal or state bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of the Corporation
or of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the federal bankruptcy laws or any other applicable
federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and on account of any
such event the Corporation shall liquidate, dissolve or wind up, or if the
Corporation shall otherwise liquidate, dissolve
-2-
<PAGE>
or wind up, no distribution of the assets of the Corporation shall be made to
the holders of shares of Common Stock or other Junior Securities (and no monies
shall be set apart for such purpose) unless prior thereto, the holders of shares
of Series B Preferred Stock shall have received from the assets of the
Corporation an amount per share equal to the sum of (x) $1,000, plus (y) all
accrued but unpaid dividends thereon through the date of distribution, whether
or not earned or declared (collectively, the "Series B Liquidation Preference").
(b) Pro Rata Payments. If, upon any such liquidation, dissolution or
-----------------
other winding up of the affairs of the Corporation, the assets of the
Corporation shall be insufficient to permit the payment in full of the Series B
Liquidation Preference for each share of Series B Preferred Stock then
outstanding and the full liquidating payments on all Parity Securities, then the
assets of the Corporation remaining after the distribution to holders of any
Senior Securities of the full amounts to which they may be entitled shall be
ratably distributed among the holders of Series B Preferred Stock and of any
Parity Securities in proportion to the full amounts to which they would
otherwise be respectively entitled if all amounts thereon were paid in full.
The Corporation shall not issue any Senior Securities without the written
consent of the holders of a majority of the Series A Preferred Stock issued and
outstanding.
(c) Sale Not a Liquidation. Neither the voluntary sale, conveyance,
----------------------
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Corporation nor the consolidation, merger or other business combination of the
Corporation with or into one or more corporations shall be deemed to be a
liquidation, dissolution or winding-up, voluntary or involuntary, of the
Corporation.
(d) Notice of Liquidation. Written notice of any liquidation,
---------------------
dissolution or winding up of the Corporation, stating the payment date or dates
when and the place or places where amounts distributable in such circumstances
shall be payable, shall be given by first class mail, postage prepaid, not less
than 30 days prior to any payment date specified therein, to the holders of
record of the Series B Preferred Stock at their respective addresses as shall
appear on the records of the Corporation.
4. Voting.
------
(a) General. Except as set forth in Section 4(b), the Series B
-------
Preferred Stock shall not be entitled to vote on any matter subject to vote of
the Corporation's stockholders, except as otherwise provided by applicable law.
(b) Class Vote. At any time when shares of Series B Preferred Stock
----------
are outstanding, without the approval of the holders representing at least a
majority of the shares of Series B Preferred Stock then outstanding, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class, the Corporation shall not amend or repeal any provision
of, or add any provision to, this Certificate of Designation, or the Certificate
of Incorporation of the Corporation if such action would alter, change or
-3-
<PAGE>
affect adversely the rights, preferences, privileges or powers of, or the
restrictions provided for the benefit of, the Series B Preferred Stock.
5. Redemption
----------
(a) Redemption Price. Any redemption of the Series B Preferred Stock
----------------
pursuant to this Section 5 shall be at a price equal to $1,000 per share, plus
in each case an amount equal to accrued and unpaid dividends, if any, to (and
including) the redemption date, whether or not earned or declared (the
"Redemption Price").
(b) Redemption at Corporation's Option. At any time after June 11,
----------------------------------
2001, the Corporation may, at its option (subject to the other provisions of
this Section 5), redeem all, or any portion of the outstanding shares of Series
B Preferred Stock.
(c) Procedures for Redemption. In the event the Corporation shall
-------------------------
elect to redeem shares of Series B Preferred Stock pursuant to Section 5(b), the
Corporation shall give written notice of such redemption by facsimile, hand
delivery, overnight courier, or first class mail, postage prepaid, mailed or
transmitted not less than 30 nor more than 90 days prior to the redemption date,
to each holder of record of the shares to be redeemed, at such holder's address
as the same appears on the stock records of the Corporation. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of Series B
Preferred Stock to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (iii) the Redemption Price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the Redemption Price; (v)
that payment will be made upon presentation and surrender of such Series B
Preferred Stock; (vi) that dividends on the shares to be redeemed shall cease to
accrue following such redemption date; (vii) that such redemption is mandatory;
and, (viii) that dividends accrued to and including the date fixed for
redemption will be paid as specified in such notice. Notice having been mailed
as aforesaid, from and after the redemption date, unless the Corporation shall
be in default in the payment of the Redemption Price (including any accrued and
unpaid dividends to (and including) the date fixed for redemption, (A) dividends
on the shares of the Series B Preferred Stock so called for redemption shall
cease to accrue; (B) such shares shall be deemed no longer outstanding; and, (C)
all rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation any moneys payable upon redemption without
interest thereon) shall cease. Notwithstanding the foregoing, any holder that
has received such a redemption notice shall have the right by providing written
notification to the Corporation not less than 20 days after receipt of the
redemption notice from the Corporation, to specify up to three redemption dates,
the latest of which shall be January 1 of the second year following the date the
Corporation specified for redemption, on which the redemption shall occur. Such
notice shall specify the date or dates on which the redemption shall occur, and,
if more than one redemption date is specified, the number of shares to be
redeemed on each such date; provided, however, that the total of the number of
shares specified by such holder to be redeemed must equal the number of shares
originally specified by the Corporation for redemption. In the event the holder
exercises the
-4-
<PAGE>
right outlined above to specify a different date or dates for redemption than
stated in the redemption notice from the Corporation, dividends shall continue
to accrue and be paid as provided herein until such time as the shares are
redeemed.
Upon surrender in accordance with such notice of the certificates for
any such shares so redeemed (properly endorsed or assigned for transfer, if the
Board of Directors shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the applicable Redemption Price. If
fewer than all the outstanding shares of Series B Preferred Stock are to be
redeemed, shares to be redeemed shall be selected by the Corporation from
holders of outstanding shares of Series B Preferred Stock not previously called
for redemption in proportion to the respective number of shares held by each
holder. If fewer than all the shares represented by a certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(d) Repurchases of Series B Preferred Stock by the Corporation.
----------------------------------------------------------
Neither the Corporation nor any of its subsidiaries shall repurchase any
outstanding shares of Series B Preferred Stock unless the Corporation on the
same terms either (i) offers to purchase all of the then outstanding shares of
Series B Preferred Stock or (ii) offers to purchase shares of Series B Preferred
Stock from the holders in proportion to the respective number of shares of
Series B Preferred Stock held by each holder. In any such repurchase by the
Corporation, if all shares of Series B Preferred Stock are not being
repurchased, then the number of shares of Series B Preferred Stock to be
repurchased shall be allocated among all shares of Series B Preferred Stock held
by holders that accept the Corporation's repurchase offer so that the shares of
Series B Preferred Stock are repurchased from such holders in proportion to the
respective number of shares of Series B Preferred Stock held by each such holder
that accepts the Corporation's offer (or in such other proportion as agreed by
all such holders who accept the Corporation's offer). Nothing in this Section
5(d) shall (i) obligate a holder of shares of Series B Preferred Stock to accept
the Corporation's repurchase offer or (ii) prevent the Corporation from
redeeming shares of Series B Preferred Stock in accordance with the terms of
Sections 5(a) through (c) hereof.
6. Conversion.
----------
(a) Right to Convert. At any time on or after July 11, 2001, the
----------------
holder of each share of Series B Preferred Stock shall have the right at any
time, or from time to time, at such holder's option, to convert such share into
the number of fully paid and nonassessable shares of Series A Common Stock equal
to a quotient determined by dividing (i) $1,000 by (ii) the average of the
closing prices for the Series A Common Stock as reported by the NASDAQ National
Market System (or such other principal exchange on which the Series A Common
Stock is then listed or traded) for each of the 10 trading days prior to the
Conversion Date, on and subject to the terms and conditions hereinafter set
forth.
-5-
<PAGE>
(1) If the Series A Common Stock issuable upon the conversion of
the Series B Preferred Stock shall be changed into the same or a different
number of shares of any class or classes of stock, whether by capital
reorganization, reclassification or otherwise, then and in each such event
the holder of each share of Series B Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such
reorganization, reclassification or other change by holders of the number
of shares of Series A Common Stock into which such shares of Series B
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification or change.
(2) If at any time or from time to time there shall be a merger
or consolidation of the Corporation with or into another corporation, or
the sale of substantially all of the Corporation's properties and assets to
any other person, then, as a part of such merger, consolidation or sale,
provision shall be made so that the holders of the Series B Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series B
Preferred Stock, the number of shares of stock or other securities or
properties of the Corporation, or of the successor corporation resulting
from such merger, consolidation or sale, to which such holder would have
been entitled if such holder had converted its shares of Series B Preferred
Stock immediately prior to such capital reorganization, merger,
consolidation or sale. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Section 6 with respect to
the rights of the holders of the Series B Preferred Stock after the merger,
consolidation or sale to the end that the provisions of this Section 6
shall be applicable after that event in as nearly equivalent a manner as
may be practicable.
(b) Method of Conversion. In order to exercise the conversion
--------------------
privilege, the holder of any shares of Series B Preferred Stock to be converted
shall present and surrender the certificate or certificates representing such
shares during usual business hours at any office or agency of the Corporation
maintained for the transfer of Series B Preferred Stock and shall deliver a
written notice of the election of the holder to convert the shares represented
by such certificate or any portion thereof specified in such notice. Such
notice shall also state the name or names (with address) in which the
certificate or certificates for shares of Series A Common Stock issuable on such
conversion shall be registered. If required by the Corporation, any certificate
for shares surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the holder
of such shares or its duly authorized representative. Each conversion of shares
of Series B Preferred Stock shall be deemed to have been effected on the date
(the "Conversion Date") on which the certificate or certificates representing
such shares shall have been surrendered and such notice and any required
instruments of transfer shall have been received as aforesaid, and the person or
persons in whose name or names any certificate or certificates for shares of
Series A Common Stock shall be issuable on such conversion shall be, for the
purpose of receiving dividends and for all other corporate
-6-
<PAGE>
purposes whatsoever, deemed to have become the holder or holders of record of
the shares of Series A Common Stock represented thereby on the Conversion Date.
(c) Issuance of Certificates Upon Conversion. As promptly as
----------------------------------------
practicable after the presentation and surrender for conversion, as herein
provided, of any certificate for shares of Series B Preferred Stock, the
Corporation shall issue and deliver at such office or agency, to or upon the
written order of the holder thereof, certificates for the number of whole shares
of Series A Common Stock issuable upon such conversion and cash for any
fractional shares. In case any certificate for shares of Series B Preferred
Stock shall be surrendered for conversion of only a part of the shares
represented thereby, the Corporation shall deliver at such office or agency, to
or upon the written order of the holder thereof, a certificate or certificates
for the number of shares of Series B Preferred Stock represented by such
surrendered certificate that are not being converted. The issuance of
certificates for shares of Series A Common Stock issuable upon the conversion of
shares of Series B Preferred Stock by the registered holder thereof shall be
made without charge to the converting holder for any tax imposed on the
Corporation in respect of the issue thereof. The Corporation shall not,
however, be required to pay any tax that may be payable with respect to any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of the shares being converted, and the
Corporation shall not be required to issue or deliver any such certificate
unless and until the person requesting the issue thereof shall have paid to the
Corporation the amount of such tax or has established to the satisfaction of the
Corporation that such tax has been paid.
(d) Payment of Dividends on Converted Shares. Upon any conversion of
----------------------------------------
shares of Series B Preferred Stock into shares of Series A Common Stock pursuant
hereto, no adjustment with respect to dividends shall be made; only those
dividends shall be payable on the shares so converted as have been declared and
are payable to holders of record of shares of Series B Preferred Stock on a date
prior to the Conversion Date with respect to the shares so converted; and only
those dividends shall be payable on shares of Series A Common Stock issued upon
such conversion as have been declared and are payable to holders of record of
shares of Series A Common Stock on or after such Conversion Date.
(e) Reservation of Shares. Such number of shares of Series A Common
---------------------
Stock as may from time to time be required for such purpose shall be reserved
for issuance upon conversion of outstanding shares of Series B Preferred Stock.
7. Shares to be Retired. Any share of Series B Preferred Stock redeemed,
--------------------
repurchased, converted or otherwise acquired by the Corporation shall be retired
and canceled and shall upon cancellation be restored to the status of authorized
but unissued shares of preferred stock, subject to reissuance by the Board of
Directors as shares of preferred stock of one or more other series but not as
shares of Series B Preferred Stock.
8. Definitions. As used herein, the following terms shall have the
-----------
respective meanings set forth below:
-7-
<PAGE>
"Business Day" means any day that is not a Saturday, a Sunday or a day
------------
on which banks are required or permitted to be closed in the State of Delaware,
the State of Texas or the State of New York.
"Common Stock" means the Series A Common Stock, $.01 par value per
------------
share, of the Corporation.
"Conversion Date" shall have the meaning set forth in Section 6(b).
---------------
"Junior Securities" means the Common Stock and any other class of
-----------------
capital stock or series of preferred stock created by the Corporation that does
not expressly provide that it ranks senior to or pari passu with the Series B
---- -----
Preferred Stock as to dividends, other distributions, liquidation preference or
otherwise.
"Parity Securities" means the Corporation's Series A Preferred Stock,
-----------------
$.01 par value per share, and any other class of capital stock or series or
preferred stock created by the Corporation which expressly provides that it
ranks pari passu with the Series B Preferred Stock as to dividends, other
---- -----
distributions, liquidation preference or otherwise.
"Person" or "person" shall mean an individual, partnership,
------ ------
corporation, trust, unincorporated organization, joint venture or any other
entity of any kind.
"Redemption Price" shall have the meaning set forth in Section 5(a).
----------------
"Senior Securities" means any class or series of capital stock of the
-----------------
Corporation other than Parity Securities or Junior Securities.
"Series A Common Stock" means the Series A Common Stock, $.01 par
---------------------
value per share, of the Corporation.
"Series B Liquidation Preference" shall have the meaning set forth in
-------------------------------
Section 3(a).
"Series B Preferred Stock" shall have the meaning set forth in
------------------------
Section 1.
9. Notices. Except as may otherwise be provided for in this Certificate
-------
of Designation, all notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of (i)
receipt of such notice; (ii) three Business Days after the mailing of such
notice; or, (iii) the Business Day following sending of such notice by overnight
courier, in any case with postage or delivery charges prepaid, addressed: if to
the Corporation, to its offices at 200 Concord Plaza, Suite 700, San Antonio,
Texas 78216, Attention: Secretary, or to an agent of the Corporation designated
as permitted by this Certificate of Designation, or, if to any holder of the
Series B Preferred Stock, to such holder at the address of such holder of the
Series B Preferred Stock as listed
-8-
<PAGE>
in the stock record books of the Corporation; or to such other address as the
Corporation or holder, as the case may be, shall have designated by notice
similarly given.
-9-
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designation has been signed by
the Chairman, and attested to by the Secretary, of the Corporation, all as of
the 11th day of June, 1996.
Argyle Television, Inc.
By: /s/ Bob Marbut
--------------------------
Bob Marbut, Chairman
Attest:
By: /s/ Dean H. Blythe
-------------------------
Dean H. Blythe, Secretary
-10-
<PAGE>
EXHIBIT 4.3
KHBS ARGYLE TELEVISION, INC.
AND
ARKANSAS ARGYLE TELEVISION, INC.,
AS ADDITIONAL GUARANTORS,
AND
UNITED STATES TRUST COMPANY OF NEW YORK, AS TRUSTEE
----------
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 1, 1996
----------
$150,000,000
9 3/4% SENIOR SUBORDINATED NOTES DUE 2005
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as
of June 1, 1996, between KHBS ARGYLE TELEVISION, INC., a corporation duly
organized and existing under the laws of Nevada ("KHBS"), ARKANSAS ARGYLE
TELEVISION, INC., a corporation duly organized and existing under the laws of
the State of Delaware ("AATI" and, together with KHBS, the "Additional
Guarantors"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New York bank and
trust company, as trustee (the "Trustee").
RECITALS OF THE COMPANY
Argyle Television, Inc. (the "Company"), WZZM Argyle Television, Inc., WNAC
Argyle Television, Inc., WAPT Argyle Television, Inc., KITV Argyle Television,
Inc., WGRZ Argyle Television, Inc., Grand Rapids Argyle Television, Inc.,
Providence Argyle Television, Inc., Jackson Argyle Television, Inc., Hawaii
Argyle Television, Inc. and Buffalo Argyle Television, Inc. (the "Original
Guarantors"), and the Trustee entered into an indenture dated as of October 27,
1995 (the "Indenture") providing for the issuance by the Company of $150 million
principal amount of its 9 3/4% Senior Subordinated Notes (the "Securities")
as provided in the Indenture.
Section 1014 of the Indenture requires the Company to cause each Restricted
Subsidiary (as defined in the Indenture), promptly upon becoming a Restricted
Subsidiary, to execute a supplemental indenture to the Indenture providing for a
Guarantee (as defined in the Indenture) on the same terms as the Guarantee of
the Original Guarantors of the Securities.
The Additional Guarantors have become Restricted Subsidiaries of the
Company.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the mutual covenants contained
herein and in the Indenture and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of
the Securities, as follows:
ARTICLE ONE
DEFINITIONS
Section 101. Definitions. For purposes of this Supplemental Indenture,
-----------
the terms defined in the recitals of this Supplemental Indenture shall have the
meanings therein specified; and terms defined in the Indenture and not defined
herein shall have the same meanings herein as set forth in the Indenture.
<PAGE>
ARTICLE TWO
ASSUMPTION OF CERTAIN OBLIGATIONS BY
THE ADDITIONAL GUARANTORS
Section 201. Additional Guarantors' Representations and Warranties.
-----------------------------------------------------
The Additional Guarantors hereby represent and warrant to the Trustee and to the
Holders of the Securities as follows:
(a) KHBS is a corporation duly organized and existing under the
laws of the State of Nevada.
(b) AATI is a corporation duly organized and existing under the
laws of the State of Delaware.
(c) KHBS is a wholly-owned direct subsidiary of the Company.
AATI is a wholly-owned direct subsidiary of KHBS.
Section 202. Assumption of Certain Obligations. Pursuant to Section
---------------------------------
1014 of the Indenture, each Additional Guarantor expressly agrees to become a
"Guarantor" for all purposes of the Indenture. Without limiting the foregoing,
each Additional Guarantor, in accordance with Article Thirteen of the Indenture,
hereby absolutely, unconditionally and irrevocably guarantees, jointly and
severally with the Original Guarantors, to the Trustee and the Holders, as if
the Additional Guarantors were the principal debtor, the punctual payment and
performance when due of all Indenture Obligations (which for purposes of this
Section 202 shall also be deemed to include all commissions, fees, charges,
costs and other expenses (including reasonable legal fees and disbursements of
one counsel) arising out of or incurred by the Trustee or the Holders in
connection with the enforcement of this Section 202).
ARTICLE THREE
MISCELLANEOUS
Section 301. Effect of Supplemental Indenture. This Supplemental
--------------------------------
Indenture supplements the Indenture and shall be subject to all the terms
thereof. Except as supplemented hereby, the Indenture shall continue in full
force and effect.
Section 302. Counterparts. This Supplemental Indenture may be
------------
executed in any number of counterparts, each of which, when so executed and
delivered, shall be an original; such counterparts shall together constitute but
one and the same instrument.
FIRST SUPPLEMENTAL INDENTURE - 2
<PAGE>
Section 303. Effectiveness. This Supplemental Indenture shall be
-------------
effective as of the opening of business on the day and year first above written.
Section 304. Recitals. The recitals contained herein shall be taken
--------
as the statements of the Additional Guarantors. The Trustee assumes no
responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Supplemental Indenture.
Section 305. Governing Law. This Supplemental Indenture shall be
-------------
governed by and construed in accordance with the laws of the jurisdiction that
governs the Indenture and its construction.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the day and year first above written.
KHBS ARGYLE TELEVISION, INC.,
a Nevada corporation
By: /s/ Dean H. Blythe
-------------------------------
Name: Dean H. Blythe
-------------------------
Title: Vice President
-------------------------
Attest: /s/ Harry T. Hawks
--------------------------
Name: Harry T. Hawks
-------------------
Title: Chief Financial
-------------------
Officer, Assistant
-------------------
Secretary and
-------------------
Treasurer
-------------------
ARKANSAS ARGYLE TELEVISION, INC.,
a Delaware corporation
By: /s/ Dean H. Blythe
-------------------------------
Name: Dean H. Blythe
-------------------------
Title: Vice President
-------------------------
Attest: /s/ Harry T. Hawks
--------------------------
Name: Harry T. Hawks
-------------------
Title: Chief Financial
-------------------
Officer, Assistant
-------------------
Secretary and
-------------------
Treasurer
-------------------
FIRST SUPPLEMENTAL INDENTURE - 3
<PAGE>
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: /s/ JOHN C. STOHLMAN
-------------------------------
Name: John C. Stohlman
-------------------------
Title: Authorized Signatory
-------------------------
Attest: /s/ GERARD F. FACENDOLA
---------------------------
Name: Gerard F. Facendola
--------------------
Title: Vice President
--------------------
FIRST SUPPLEMENTAL INDENTURE - 4
<PAGE>
STATE OF Texas ]
----------------------]
COUNTY OF Dallas ]
----------------------]
This instrument was acknowledged before me on June 11 , 1996
---------------
by Dean H. Blythe , Vice President of
---------------------------------- ----------------------------------
KHBS Argyle Television, Inc., a Nevada corporation, on behalf of said
corporation. Given under my hand and official seal this 11th day of
----
June , 1996.
- ------------
/s/ NANCY R. MARTIN
-------------------------------------
Signature
Notary in and for the State of Texas .
--------------
FIRST SUPPLEMENTAL INDENTURE - 5
<PAGE>
STATE OF Texas ]
----------------------]
COUNTY OF Dallas ]
----------------------]
This instrument was acknowledged before me on June 11 , 1996
----------------
by Dean H. Blythe , Vice President
----------------------------------- --------------------------------------
of Arkansas Argyle Television, Inc., a Delaware corporation, on behalf of said
corporation. Given under my hand and official seal this 11th day of
----
June , 1996.
- ----------
/s/ NANCY R. MARTIN
-------------------------------------
Signature
Notary in and for the State of Texas .
--------------
FIRST SUPPLEMENTAL INDENTURE - 6
<PAGE>
STATE OF Texas ]
----------------------]
COUNTY OF Dallas ]
----------------------]
This instrument was acknowledged before me on June 7 , 1996
----------------
by John C. Stohlman , Authorized Signatory
----------------------------------- --------------------------------------
of United States Trust Company of New York, a New York bank and trust company,
and on behalf of said bank and trust company. Given under my hand and official
seal this 11th day of June , 1996.
---- ----------
/s/ PATRICIA A. ROBLES
-------------------------------------
Signature
Notary in and for the State of Texas .
--------------
FIRST SUPPLEMENTAL INDENTURE - 7
<PAGE>
EXHIBIT 10.1
AMENDMENT NO. 3
AMENDMENT NO. 3 dated as of June 7, 1996, between ARGYLE TELEVISION, INC.,
a corporation duly organized and validly existing under the laws of the State of
Delaware (the "Company"); each of the Subsidiaries of the Company identified
-------
under the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto
(individually, a "Subsidiary Guarantor" and, collectively, the "Subsidiary
-------------------- ----------
Guarantors" and, together with the Company, the "Obligors"); each of the lenders
- ---------- --------
that is a signatory hereto (individually, a "Lender" and, collectively, the
------
"Lenders"); THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking
- --------
association, as administrative agent for the Lenders (in such capacity, together
with its successors in such capacity, the "Administrative Agent"); and BANK OF
--------------------
MONTREAL, BANQUE PARIBAS and UNION BANK, as co-agents (in such capacity, the
"Co-Agents").
---------
The Company, the Subsidiary Guarantors, the Lenders, the Administrative
Agent and the Co-Agents are parties to an Amended and Restated Credit Agreement
dated as of June 13, 1995 (as heretofore modified and supplemented by Amendments
No. 1 and 2, and as in effect on the date hereof, the "Credit Agreement"),
----------------
providing, subject to the terms and conditions thereof, for extensions of credit
(by making of loans and issuing letters of credit) to be made by said Lenders to
the Company in an aggregate principal or face amount not exceeding $215,000,000.
The Company has requested that the Credit Agreement be modified in certain
respects and, accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this Amendment No.
-----------
3, terms defined in the Credit Agreement are used herein as defined therein
(including the Credit Agreement as amended by this Amendment No. 3).
Section 2. Amendments. Subject to the execution and delivery of this
----------
Amendment No. 3 by each Obligor, the Administrative Agent and Lenders
constituting the "Majority Lenders" under the Credit Agreement, the Credit
Agreement is hereby amended as follows:
2.01 References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
2.02 References in Sections 1.01 (in the definition of "Permitted
Acquisition Indebtedness"), 9.17 and 9.19 to "Section
Amendment No. 3
---------------
<PAGE>
- 2 -
9.09(e)" are hereby amended to be references to "Section 9.09(f)".
2.03 The definition of "Fixed Charges" in Section 1.01 of the Credit
Agreement is hereby amended in its entirety to read as follows:
"Fixed Charges" shall mean, for any period, the sum, determined
-------------
without duplication, for the Company and its Consolidated Subsidiaries, of
(a) the aggregate amount of Debt Service for such period, plus (b) the
----
aggregate amount of taxes paid or payable in respect of the income or
profit of the Company and its Subsidiaries for such period (excluding,
however, any NTG Tax Payments) plus (c) NTG Tax Payments made during such
----
period to the extent that such NTG Tax Payments, together with all NTG Tax
Payments made in prior periods, shall exceed $2,200,000 in the aggregate
plus (d) Capital Expenditures made by the Company and its Consolidated
----
Subsidiaries during such period (other than any such Capital Expenditures
(x) made from the proceeds of any Subordinated Indebtedness or Special
Equity Issuance, (y) made from Replacement Equipment Proceeds or (z)
constituting Special Capital Expenditures, HDTV Expenditures or Capital
Expenditures permitted under Section 9.11(g) hereof), plus (e) the excess,
----
if any, of Working Investment at the end of such period over Working
Investment at the beginning of such period (or minus the excess, if any, of
-----
Working Investment at the beginning of such period over Working Investment
at the end of such period) plus (f) commitment fees and letter of credit
----
fees paid during such period pursuant to this Agreement plus (g) Dividend
----
Payments and Management Fees paid in cash to Holding during such period.
In calculating "Fixed Charges" for any period, if any portion of such
period shall occur prior to an Acquisition of any Station, Fixed Charges
shall be calculated as if such Station had been acquired by the Company and
its Consolidated Subsidiaries at the beginning of such period.
2.04 Section 1.01 of the Credit Agreement is hereby amended by
inserting the following new definition in the appropriate alphabetical location:
"Fort Smith Preferred Stock" shall mean, collectively, shares of
--------------------------
Series A Preferred Stock of the Company (in an aggregate face amount up to
but not exceeding $12,500,000) and shares of Series B Preferred Stock of
the Company (in an aggregate face amount up to but not exceeding
$12,500,000) issued after the Amendment No. 2 Effective Date in connection
with the acquisition of television stations KHBS-TV, Channel 40, in Fort
Smith, Arkansas, and KHOG-TV, Channel 29, Fayetteville, Arkansas, pursuant
to Certificates
Amendment No. 3
---------------
<PAGE>
- 3 -
of Designation in substantially the form of Annex 1 to Amendment No. 3
hereto.
2.05 The proviso at the end of the definition of "Indebtedness" in
Section 1.01 of the Credit Agreement is hereby amended in its entirety to read
as follows:
"; provided that, such term shall not in any event include (x) Film
--------
Obligations, (y) obligations in respect of letters of credit or surety
bonds issued in connection with fiduciary or fidelity obligations of or
with respect to such Person in the ordinary course of business or (z)
obligations in respect of shares of Fort Smith Preferred Stock."
2.06 The definition of "Interest Expense" in Section 1.01 of the
Credit Agreement is hereby amended by adding a new paragraph at the end thereof
to read as follows:
"Notwithstanding the foregoing provisions of this definition,
"Interest Expense" for any period shall not include any dividends paid in
respect of the Fort Smith Preferred Stock during such period in accordance
with Section 9.09(e) hereof."
2.07 The definition of "Net Company Portion of Excess Cash Flow" in
Section 1.01 of the Credit Agreement is hereby amended in its entirety to read
as follows:
"Net Company Portion of Excess Cash Flow" shall mean, for any fiscal
---------------------------------------
year ending prior to the IPO, 33-1/3% (and for any fiscal year ending after
the IPO, 50%) of Excess Cash Flow for such fiscal year.
2.08 The definition of "Special Equity Issuance" in Section 1.01 of
the Credit Agreement is hereby amended in its entirety to read as follows:
"Special Equity Issuance" shall mean (a) any issuance by the Company
-----------------------
after the Amendment No. 2 Effective Date of (i) any of its capital stock,
(ii) any warrants or options exercisable in respect of its capital stock or
(iii) any other security or instrument representing an equity interest (or
the right to obtain any equity interest) in the Company, or (b) the receipt
by the Company after the Amendment No. 2 Effective Date of any capital
contribution (whether or not evidenced by any equity security issued by the
Company), in each case to the extent that the proceeds received by the
Company shall consist of cash and such proceeds are segregated or reserved
for a particular purpose as provided herein, provided that such term shall
--------
not include any Preferred Stock Issuance.
Amendment No. 3
---------------
<PAGE>
- 4 -
2.09 Section 2.09(b)(ii) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"(ii) Certain Equity Issuances. Upon any Equity Issuance (other than
------------------------
a Preferred Stock Issuance or the IPO) and upon any Special Equity Issuance
(except to the extent that the net proceeds of such Special Equity Issuance
are applied to consummate any one or more of a Subsequent Acquisition, an
Investment or Capital Expenditures, as the case may be, within one year of
the receipt of the net proceeds thereof), the Company shall prepay an
amount of the Revolving Credit Loans equal to the aggregate amount of cash
received by the Company and its Consolidated Subsidiaries in respect of
such Equity Issuance net of reasonable expenses incurred by the Company and
its Consolidated Subsidiaries in connection therewith."
2.10 Clause (b)(v)(K)(1) of Section 9.05 of the Credit Agreement is
hereby amended in its entirety to read as follows:
"(1) an amount equal to the cumulative amount of the Net Company
Portion of Excess Cash Flow for all fiscal years, commencing with the
fiscal year ending December 31, 1995, that have ended prior to such date,
provided that the aggregate amount of acquisitions pursuant to this clause
--------
(K)(1) during the period commencing on the Effective Date through and
including the date of such acquisition, together with the aggregate amount
of Investments pursuant to Section 9.08(i) hereof, Restricted Payments
pursuant to Section 9.09(f) hereof and Capital Expenditures pursuant to
9.11(c) hereof during such period, shall not exceed such cumulative amount
of the Net Company Portion of Excess Cash Flow; plus"
----
2.11 Section 9.07(h) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(h) additional Indebtedness of the Company and its Consolidated
Subsidiaries (including, without limitation, Capital Lease Obligations and
other Indebtedness secured by Liens permitted under Section 9.06(h) hereof
and including also any extensions, renewals or refinancings of the same) up
to but not exceeding $10,000,000 in the aggregate at any one time
outstanding".
2.12 Section 9.08(i) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(i) additional Investments on any date up to but not exceeding an
amount equal to the cumulative amount of the Net Company Portion of Excess
Cash Flow for all fiscal
Amendment No. 3
---------------
<PAGE>
- 5 -
years, commencing with the fiscal year ending December 31, 1995, that have
ended prior to such date, provided that the aggregate amount of Investments
--------
pursuant to this Section 9.08(i) during the period commencing on the
Effective Date through and including the date of such Investment, together
with the aggregate amount of acquisitions pursuant to clause (v)(K)(1) of
Section 9.05(b) hereof, Restricted Payments pursuant to Section 9.09(f)
hereof and Capital Expenditures pursuant to 9.11(c) hereof during such
period, shall not exceed such cumulative amount of the Net Company Portion
of Excess Cash Flow; and"
2.13 Section 9.09 of the Credit Agreement is hereby amended by
relettering clause (f) thereof as clause (g) and inserting new clauses (e) and
(f) therein in place of the existing clause (e) to read as follows:
"(e) Preferred Stock. Any Dividend Payment (the "current Dividend
--------------- ----------------
Payment") consisting of regularly-scheduled quarterly coupon payments in an
-------
amount up to but not exceeding 6.5% per annum in respect of shares of Fort
Smith Preferred Stock, so long as (i) at the time thereof and after giving
effect thereto, no Default shall have occurred and be continuing and (ii)
the Company would have been in compliance with Section 9.10(d) hereof as at
the last day of the most recently ended fiscal quarter if (x) Fixed Charges
for the earliest quarter included in the most recent four-quarter period
for which the Fixed Charges Ratio under said Section 9.10(d) is determined
had excluded any Dividend Payments in respect of the Fort Smith Preferred
Stock and (y) Fixed Charges for such four-quarter period had included the
current Dividend Payment and all other Dividend Payments made under this
clause (e) subsequent to such four-quarter period.
(f) Payments from Excess Cash Flow. In addition to the foregoing
------------------------------
provisions of this Section 9.09, the Company may make Restricted Payments
in an amount up to but not exceeding equal to the cumulative amount of the
Net Company Portion of Excess Cash Flow for all fiscal years, commencing
with the fiscal year ending December 31, 1995, that have ended prior to
such date, provided that (i) the aggregate amount of Restricted Payments
--------
pursuant to this Section 9.09(f) during the period commencing on the
Effective Date through and including the date of such Investment, together
with the aggregate amount of acquisitions pursuant to clause (v)(K)(1) of
Section 9.05(b) hereof, Investments pursuant to Section 9.08(i) hereof and
Capital Expenditures pursuant to 9.11(c) hereof during such period, shall
not exceed such cumulative amount of the Net Company Portion of Excess Cash
Flow, (ii) any such Restricted Payments made during any
Amendment No. 3
---------------
<PAGE>
- 6 -
fiscal year shall be applied first to pay any accrued and unpaid Corporate
Overhead from prior fiscal years that has been deferred as described in
clause (a) above and (iii) at the time of any such Restricted Payment and
after giving effect thereto, no Default shall have occurred and be
continuing."
2.14 Section 9.11(c) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(c) The Company and its Consolidated Subsidiaries may, on any date,
make additional Capital Expenditures up to but not exceeding an amount
equal to the cumulative amount of the Net Company Portion of Excess Cash
Flow for all fiscal years, commencing with the fiscal year ending December
31, 1995, that have ended prior to such date, provided that the aggregate
--------
amount of Capital Expenditures pursuant to this Section 9.11(c) during the
period commencing on the Effective Date through and including the date of
such Capital Expenditure, together with the aggregate amount of
acquisitions pursuant to clause (v)(K)(1) of Section 9.05(b) hereof,
Restricted Payments pursuant to Section 9.09(f) hereof and Investments
pursuant to 9.08(i) hereof during such period, shall not exceed such
cumulative amount of the Net Company Portion of Excess Cash Flow."
2.15 Section 9.11 of the Credit Agreement is hereby amended by
inserting a new clause (g) after clause (f) therein, and amending the last
paragraph of said Section 9.11 in its entirety to read, as follows:
"(g) Hawaii Argyle Television, Inc. may make Capital
Expenditures in an aggregate amount up to but not exceeding $9,500,000
in respect of the construction of a new studio and related facilities
in Honolulu, Hawaii.
In determining the amount of Capital Expenditures (other than HDTV
Expenditures) permitted to be made by the Company or any of its
Consolidated Subsidiaries in any fiscal year pursuant to this Section 9.11,
Capital Expenditures made during any fiscal year shall be deemed to have
been made first from the amount permitted under clause (a) above, second
from the amount permitted under clause (b) above, third from the amount
permitted under clause (c) above and last from the amount permitted under
clause (d) above, provided that (x) LMA Capital Expenditures made during
--------
any fiscal year shall be deemed to have been made first from the amount
permitted under clause (f) above, and thereafter in the order provided
above in this sentence and
Amendment No. 3
---------------
<PAGE>
- 7 -
(y) Capital Expenditures made by Hawaii Argyle Television, Inc. in respect
of the studio and related facilities referred to in clause (g) above shall
be deemed to have been made first from the amount permitted under clause
(g) above, and thereafter in the order provided above in this sentence."
2.16 Section 9.17 of the Credit Agreement is hereby amended by
inserting the words "the Joint Marketing and Programming Agreement referred to
in Section 3 of Amendment No. 3 hereto," immediately following "the NTG Tax
Sharing Agreement," in clause (i) thereof.
2.17 Section 10(p) of the Credit Agreement is hereby amended in its
entirety to ready as follows:
"(p) Clear Channel Television, Inc. shall default in the payment of
any of its obligations under the Joint Marketing and Programming Agreement
referred to in Section 3 of Amendment No. 3 hereto, provided that no such
--------
default shall be an Event of Default hereunder if the Company would have
been in compliance with the provisions of this Agreement as at the last day
of the most recently ended fiscal quarter if all revenues associated with
the Providence Station for the four immediately preceding fiscal quarters
were excluded from the determination of EBITDA hereunder;"
Section 3. Consent to Providence Joint Marketing and Programming
-----------------------------------------------------
Agreement. Subject to the execution and delivery of this Amendment No. 3 by
- ---------
each Obligor, the Administrative Agent and Lenders constituting the "Majority
Lenders" under the Credit Agreement, the Lenders hereby consent to the
execution, delivery and performance by WNAC Argyle Television, Inc. and
Providence Argyle Television, Inc. of the Joint Marketing and Programming
Agreement dated as of May 15, 1996 between Clear Channel Television, Inc., WNAC
Argyle Television, Inc. and Providence Argyle Television, Inc., anything in
Sections 9.05, 9 07, 9.08 or 9.13 of the Credit Agreement to the contrary
notwithstanding. For purposes hereof, the Company hereby represents and
warrants that is has delivered a true and complete copy of said Joint Marketing
and Programming Agreement (including any modifications and supplements thereto,
and any related agreements or side letters in respect thereof) as in effect on
the date hereof.
Section 4. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 3 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 3 by signing any such counterpart.
Amendment No. 3
---------------
<PAGE>
- 8 -
This Amendment No. 3 shall be governed by, and construed in accordance with, the
law of the State of New York.
Amendment No. 3
---------------
<PAGE>
- 9 -
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
3 to be duly executed and delivered as of the day and year first above written.
ARGYLE TELEVISION, INC.
By
--------------------------------
Title: Chief Financial Officer,
Assistant Secretary and
Treasurer
SUBSIDIARY GUARANTORS
- ---------------------
WZZM ARGYLE TELEVISION, INC.
KITV ARGYLE TELEVISION, INC.
WAPT ARGYLE TELEVISION, INC.
WNAC ARGYLE TELEVISION, INC.
WGRZ ARGYLE TELEVISION, INC.
HAWAII ARGYLE TELEVISION, INC.
GRAND RAPIDS ARGYLE
TELEVISION, INC.
JACKSON ARGYLE TELEVISION, INC.
PROVIDENCE ARGYLE TELEVISION, INC.
BUFFALO ARGYLE TELEVISION, INC.
By
--------------------------------
Title: Chief Financial Officer,
Assistant Secretary and
Treasurer
Amendment No. 3
---------------
<PAGE>
- 10 -
LENDERS
-------
THE CHASE MANHATTAN BANK BANK OF MONTREAL
(NATIONAL ASSOCIATION)
By By
--------------------------- ---------------------------
Title: Title:
BANQUE PARIBAS UNION BANK
By By
--------------------------- ---------------------------
Title: Title:
By
---------------------------
Title:
BANQUE NATIONALE DE PARIS CHEMICAL BANK
By By
--------------------------- ---------------------------
Title: Title:
By
---------------------------
Title:
CIBC, INC. THE BANK OF NEW YORK
By By
--------------------------- ---------------------------
Title: Title:
FIRST HAWAIIAN BANK THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED, NEW YORK BRANCH
By By
--------------------------- ---------------------------
Title: Title:
Amendment No. 3
---------------
<PAGE>
- 11 -
FLEET NATIONAL BANK BANK OF HAWAII
By By
--------------------------- ---------------------------
Title: Title:
FIRST INTERSTATE BANK OF TEXAS, N.A.
By
---------------------------
Title:
---------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By
---------------------------
Title:
Amendment No. 3
---------------
<PAGE>
Annex 1
[Certificate of Designations for
Fort Smith Preferred Stock]
Amendment No. 3
---------------
<PAGE>
EXHIBIT 20
[ARGYLE TELEVISION, INC. LOGO APPEARS HERE]
News From Argyle Television
- --------------------------------------------------------------------------------
FOR RELEASE: CONTACT:
June 11, 1996 Bob Marbut
210-828-1700
ARGYLE TELEVISION CLOSES ON ACQUISITION OF TELEVISION STATIONS
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KHBS AND KHOG
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San Antonio, TX. Argyle Television, Inc. (NASDAQ: ARGL) today closed its
previously announced acquisition of ABC-affiliated television stations KHBS,
Fort Smith Arkansas, and its satellite KHOG, Fayetteville, Arkansas, from Sigma
Broadcasting.
KHBS and KHOG generated $7.9 million of net revenues in 1995. Argyle has been
supplying substantially all of the programming and selling the commercial air
time on the stations since April under a Time Brokerage Agreement with Sigma.
Through May, advertising revenues for the first five months of 1996 are running
12% above the first five months of 1995.
With this acquisition, Argyle now owns and operates stations in six television
markets.
Bob Marbut, Argyle's chairman and CEO, said, "We are pleased to welcome KHBS and
KHOG to the Argyle family. These are strong stations in a very attractive
market, one that will add to Argyle's geographic diversity."
Argyle president and chief operating officer, Blake Byrne, announced the
appointment of Jeff Rosser as president of KHBS and KHOG. Rosser, 48, was most
recently president and general manager of WNAC, Argyle's Fox-affiliated station
in Providence, Rhode Island. Prior to that, he was president and general
manager of KDFW, the CBS affiliate in Dallas that was owned by the Argyle
predecessor company, Argyle Television Holdings, Inc. Before becoming part of
the Argyle organization in 1993, Rosser held general management jobs in Dallas
and Birmingham and had news management assignments in Boston, New York and
Tulsa.
Byrne said, "Jeff has been with Argyle Television since its creation and is a
founding shareholder as well. He brings a wealth of television station
operating experience to his new assignment."
Rosser replaces Darrel Cunningham, who had been general manager under the
previous ownership. Byrne added, "We want to thank Darrel for his management of
the stations and wish him the very best."
Today, Argyle Television, Inc. owns and operates network-affiliated stations
WZZM-TV, the ABC affiliate in Grand Rapids, MI; WGRZ-TV, the NBC affiliate in
Buffalo, NY; WNAC-TV, the Fox affiliate in Providence, RI; KITV-TV, the ABC
affiliate in Honolulu, HI; WAPT-TV, the ABC affiliate in Jackson, MS; and, KHBS,
the ABC affiliate in Fort Smith, AR, and its satellite KHOG, the ABC affiliate
in Fayetteville, AR. Argyle's Series A Common Stock trades on the Nasdaq
National Market System under the symbol "ARGL".
200 Concord Plaza, Suite 700 San Antonio, Texas 78216
(210) 828-1700 Fax (210) 828-7300
