<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997.
REGISTRATION NO. 333-36659
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
HEARST-ARGYLE TELEVISION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
74-2717523
DELAWARE (I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) DEAN H. BLYTHE
SENIOR VICE PRESIDENT--CORPORATE
888 SEVENTH AVENUE DEVELOPMENT,
NEW YORK, NEW YORK 10106 SECRETARY AND GENERAL COUNSEL
(212) 649-2000 HEARST-ARGYLE TELEVISION, INC.
(ADDRESS, INCLUDING ZIP CODE, AND 888 SEVENTH AVENUE
TELEPHONE NEW YORK, NEW YORK 10106
NUMBER, INCLUDING AREA CODE, OF (212) 649-2000
REGISTRANT'S PRINCIPAL EXECUTIVE (NAME, ADDRESS, INCLUDING ZIP CODE,
OFFICES) AND
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF
AGENT FOR SERVICE)
WITH COPIES TO:
STEVEN A. HOBBS, ESQ. STUART A. SHELDON, ESQ.
ROGERS & WELLS DOW, LOHNES & ALBERTSON, PLLC
200 PARK AVENUE 1200 NEW HAMPSHIRE AVENUE N.W.,
NEW YORK, NEW YORK 10166-0153 SUITE 800
(212) 878-8000 WASHINGTON, D.C. 20036-6802
(202) 776-2000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effectiveness of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If the only securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
Debt Securities......... $600,000,000(2)(3) 100% $600,000,000 $181,818(4)
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Series A Common Stock, 11,500,000 shares
$.01 par value per (5) $29.625 $340,687,500 $103,239(7)
share.................. 791,705 shares (6) $30.875 $24,443,892 $7,407
</TABLE>
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*Filing fee previously paid
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Or, if any Debt Securities are issued at an original issue discount, such
greater amount as shall result in an aggregate public purchase price for
all Debt Securities of $600,000,000 or the equivalent thereof in foreign
denominated currencies or composite currencies.
(3) In United States dollars or the equivalent thereof in foreign denominated
currencies or composite currencies.
(4) The Registrant has previously paid a registration fee in the amount of
$151,515 and pays $30,303 herewith.
(5) Includes 1,500,000 shares issuable upon exercise of an overallotment
option which may be granted to underwriters.
(6) Represents shares to be sold by certain selling stockholders of the
Company.
(7) Previously paid.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
PROSPECTUS
HEARST-ARGYLE TELEVISION, INC.
$600,000,000
DEBT SECURITIES
---------------
10,000,000 SHARES
SERIES A COMMON STOCK
---------------
Hearst-Argyle Television, Inc., a Delaware corporation (the "Company"), may
issue, from time to time, together or separately, (i) up to an initial
aggregate offering price or purchase price of $600,000,000 (or the equivalent
thereof if any of the Debt Securities are denominated in a foreign currency or
composite currency such as the European Currency Unit ("ECU")) of its
unsecured debt securities ("Debt Securities"), in one or more series,
consisting of debentures, notes or other evidences of indebtedness and having
such prices and terms as are determined at the time of sale and (ii) shares of
Series A Common Stock, par value $.01 per share ("Series A Common Stock"). The
Debt Securities and the Series A Common Stock are collectively referred to
herein as "Securities." The Securities may be issued as units and in any
combination.
Specific terms of the Securities ("Offered Securities") in respect of which
this Prospectus is being delivered will be set forth in an applicable
Prospectus Supplement ("Prospectus Supplement"), together with the terms of
the offering of the Offered Securities and the initial price and net proceeds
to the Company from the sale thereof. The Prospectus Supplement will set forth
with regard to the particular Offered Securities, without limitation, the
following: (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, purchase price, authorized denomination, maturity,
rate or rates of interest (or method of calculation thereof) and dates for
payment thereof, dates from which interest shall accrue, any exchangeability,
conversion, redemption, prepayment or sinking fund provisions, the currency or
currencies or currency unit or currency units in which principal, premium, if
any, or interest, if any, is payable, and any listing on a national securities
exchange; and (ii) in the case of the Series A Common Stock, the number of
shares of Series A Common Stock and the terms of the offering and sale thereof
and any listing on a national securities exchange. The Series A Common Stock
is quoted on the Nasdaq National Market. The Company contemplates making an
application for the quotation of any additional issuances of Series A Common
Stock on the Nasdaq National Market or on any other national securities
exchange on which the Series A Common Stock may then be listed.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Securities may be sold by the Company directly to purchasers, through
agents designated from time to time, or to or through underwriters or dealers.
If underwriters or agents are involved in the offering of Securities, the
names of the underwriters or agents will be set forth in the Prospectus
Supplement. If an underwriter, agent or dealer is involved in the offering of
any Securities, the underwriter's discount, agent's commission or dealer's
purchase price will be set forth in, or may be calculated from the information
set forth in, the Prospectus Supplement, and the net proceeds to the Company
from such offering will be the public offering price of the Securities less
such discount, in the case of an offering through an underwriter, or the
purchase price of the Securities less such commission, in the case of an
offering through an agent, and less, in each case, the other expenses of the
Company associated with the issuance and distribution of the Securities. See
"Plan of Distribution."
---------------
Prior to issuance there will have been no market for the Debt Securities,
and there can be no assurance that a secondary market for any such Debt
Securities will develop. This Prospectus may not be used to consummate sales
of any Offered Securities unless accompanied by a Prospectus Supplement.
---------------
The date of this Prospectus is October 17, 1997.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE OFFERED
SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center,
New York, New York 10048. Copies of such materials can be obtained upon written
request from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Series A Common
Stock is listed on the Nasdaq National Market. In addition, such materials may
also be inspected and copied at the offices of the Nasdaq Stock Market, Inc.
Listing Section, 1735 K Street, N.W., Washington, DC 20006, where copies may be
obtained at prescribed rates. Copies of reports, proxy statements and other
information electronically filed with the Commission by the Company may be
inspected by accessing the Commission's World Wide Web site at
http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form S-
3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. Such
additional information may be obtained from the Commission's principal office
in Washington, D.C. Statements contained in this Prospectus as to the contents
of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or such other document. A copy of the Registration Statement and the
exhibits and schedules thereto may be examined without charge at the
Commission's principal offices at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and copies of such materials can be obtained from the
Public Reference Section of the Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No. 0-
27000) pursuant to the Exchange Act are incorporated herein by reference: (i)
Annual Report on Form 10-K for the year ended December 31, 1996; (ii) Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997; (iii) Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997; (iv) Current Report on
Form 8-K dated January 31, 1997, filed on February 14, 1997, as amended by
Current Report on Form 8-K/A dated January 31, 1997, filed on April 15, 1997;
(v) Proxy Statement/Prospectus filed on July 31, 1997; (vi) Form 8-A/A filed on
September 4, 1997; (vii) Current Report on Form 8-K dated August 29, 1997,
filed on September 15, 1997, as amended by Current Report on Form 8-K/A dated
August 29, 1997, filed on September 26, 1997; (viii) Current Report on Form 8-K
dated August 29, 1997, filed on October 16, 1997; and (ix) all documents filed
by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the termination of
the offering of the Securities.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents which are incorporated
2
<PAGE>
herein by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Hearst-Argyle Television, Inc., 888 Seventh
Avenue, New York, New York 10106, Attention: Corporate Secretary (tel. (212)
649-2300).
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement
so superseded shall not be deemed to constitute part of this Prospectus.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular Offered
Securities in any jurisdiction shall not constitute an offer in the
jurisdiction of any other securities covered by this Prospectus.
3
<PAGE>
THE COMPANY
The Company owns or manages 15 television stations reaching approximately
11.5% of U.S. television households. The Company is the largest "pure-play"
publicly owned television broadcast company in the U.S. and is the third-
largest, non-network owned television group in terms of audience delivered.
Formed as a Delaware corporation in 1994 under the name Argyle Television,
Inc. ("Argyle"), the Company is the successor to the combined operations of
Argyle and the television broadcast group of The Hearst Corporation ("Hearst")
pursuant to a merger transaction that was consummated on August 29, 1997 (the
"Hearst Transaction"). In that transaction, Hearst contributed its television
broadcast group and related broadcast operations (the "Hearst Broadcast
Group") to Argyle and merged a wholly-owned subsidiary of Hearst with and into
Argyle, with Argyle as the surviving corporation (renamed "Hearst-Argyle
Television, Inc.").
The Company owns 12 television stations, and manages three additional
television stations and two radio stations that are owned or operated by
Hearst. The Company has an option to acquire one of the managed television
stations and Hearst's interests in another of the managed television stations,
and has a right of first refusal with respect to the third managed television
station. Under Federal Communications Commission ("FCC") regulations, the
Company must divest two of its television stations (WNAC in Providence, Rhode
Island; and WDTN-TV in Dayton, Ohio). A letter of intent has been signed for
the divestiture of WNAC-TV and the Company is negotiating with a third party
for the divestiture of WDTN.
The following table sets forth certain information for each of the Company's
owned and managed television stations:
<TABLE>
<CAPTION>
PERCENTAGE OF
MARKET NETWORK U.S. TELEVISION
MARKET RANK(1) STATION AFFILIATION CHANNEL HOUSEHOLDS(2)
------ ------- --------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C>
*Boston, MA.............. 6 WCVB ABC 5 2.22%
*Tampa, FL(3)............ 15 WWWB WB 32 1.47%
*Pittsburgh, PA.......... 19 WTAE ABC 4 1.16%
*Baltimore, MD........... 23 WBAL NBC 11 1.01%
Cincinnati, OH.......... 30 WLWT NBC 5 0.81%
*Kansas City, MO......... 31 KMBC ABC 9 0.81%
*Kansas City, MO(3)...... 31 KCWB WB 29 ***
*Milwaukee, WI........... 32 WISN ABC 12 0.81%
*West Palm Beach, FL(3).. 43 WPBF ABC 25 0.61%
Oklahoma City, OK....... 44 KOCO ABC 5 0.61%
Providence, RI(4)....... 49 WNAC FOX 64 0.57%
*Dayton, OH(4)........... 53 WDTN ABC 2 0.52%
Honolulu, HI............ 71 KITV ABC 4 0.39%
Jackson, MS............. 90 WAPT ABC 16 0.30%
Fort Smith/Fayetteville,
AR...................... 116 KHBS/KHOG ABC/ABC 40/29 0.22%
-----
Total................ 11.51%
-----
Total................ 11.51%
=====
</TABLE>
- --------
*Denotes a station owned or operated by the Company as a consequence of the
Hearst Transaction.
(1) Market rank is based on the relative size of the Designated Market Area
defined by A.C. Nielsen Co. ("Nielsen") as geographic markets for the sale
of national "spot" and local advertising time ("DMA") among the 211
generally recognized DMAs in the U.S., based on Nielsen estimates for the
1997-98 season.
(2) Based on Nielsen estimates for the 1997-98 season.
(3) WWWB-TV and WPBF-TV are managed by the Company under a management
agreement with Hearst. In addition, the Company provides certain
management services to Hearst in order to allow Hearst to fulfill its
obligations under a Program Services and Time Brokerage Agreement with
KCWB-TV, Inc., the permittee of KCWB.
(4) WNAC-TV's (Providence, RI) broadcast signal overlaps with WCVB-TV's
(Boston, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal. Under FCC
rules, a single entity cannot own stations with overlapping signals. The
Company will divest WNAC and WDTN, and has entered into a letter of intent
to divest WNAC.
(5)Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.,
4
<PAGE>
As a result of the Hearst Transaction, Hearst currently owns approximately
38.6 million shares of the Company's Series B Common Stock, comprising
approximately 82% of the total outstanding common stock of the Company. In
connection with the Hearst Transaction and related transactions, Hearst may
receive up to an additional 2.7 million shares of Series B Common Stock which
would result in Hearst's ownership of approximately 83% of the Company's total
outstanding common stock. Through its ownership of the Company's Series B
Common Stock, Hearst has the right to elect nine of the 11 members of the
Company's Board of Directors. The remaining common stock of the Company is in
the form of Series A Common Stock, which is quoted on the Nasdaq National
Market under the symbol "HATV."
The principal executive offices of the Company are located at 888 Seventh
Avenue, New York, New York 10106; its telephone number is 212-649-2300.
USE OF PROCEEDS
Except as may be set forth in an accompanying Prospectus Supplement, the
Company expects to add substantially all of the net proceeds from the sale of
the Securities to its funds to be used for general corporate purposes, which
may include repayment of long-term and short-term debt, capital expenditures,
working capital and the financing of acquisitions. Funds not required
immediately may be invested in short-term marketable securities.
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
(i) the Company and its consolidated subsidiaries on a pro forma basis
(Hearst-Argyle) giving effect to the consummation of the Hearst Transaction
for each of the periods indicated, (ii) the Hearst Broadcast Group (the
accounting acquiror in the Hearst Transaction) on a historical basis for each
of the periods indicated and (iii) Argyle and its consolidated subsidiaries on
a historical basis. The ratios for the Company on a pro forma basis giving
effect to the Hearst Transaction for the periods indicated were derived from
the unaudited pro forma combined condensed financial statements of the
Company. The ratios for the Hearst Broadcast Group were derived from the
audited historical combined financial statements of the Hearst Broadcast group
for the years ended December 31, 1994, 1995 and 1996, and from the unaudited
combined financial statements for the years ended December 31, 1992 and 1993
and the six months ended June 30, 1996 and 1997. The ratios for Argyle on a
historical basis for the periods indicated were derived from Argyle's audited
and unaudited historical financial statements.
<TABLE>
<CAPTION>
PRO FORMA
-----------------------
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------
<S> <C> <C>
The Company Pro Forma Ratio of Earnings to Fixed
Charges.............................................. 2.66x 2.73x
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------- ------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Hearst Broadcast Group Ratio of
Earnings to Fixed Charges........ 2.01x 2.21x 3.51x 4.06x 4.43x 3.56x 3.98x
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED ENDED
DECEMBER 31, JUNE 30,
------------ ------------
1995(1) 1996 1996 1997
------- ---- ----- -----
<S> <C> <C> <C> <C>
Argyle Ratio of Earnings to Fixed Charges............ (2) (2) (2) (2)
</TABLE>
- --------
(1) Argyle was formed in August 1994.
(2) Argyle's earnings are inadequate to cover fixed charges by $7,965 and
$14,560 for the years ended December 31, 1995 and 1996, respectively and by
$7,118 and $8,295 for six months ended June 30, 1996 and 1997, respectively.
For purposes of computing the foregoing ratios: (i) Earnings consist of
income from continuing operations before income tax expense plus Fixed Charges
(excluding capitalized interest); and (ii) Fixed Charges consist of interest,
whether expended or capitalized, and the portion of operating rental expenses
estimated to represent an interest component.
6
<PAGE>
GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS'
The Company may offer shares of Series A Common Stock or Debt Securities
individually or as units consisting of one or more Securities under this
Prospectus.
CERTAIN OF THE SECURITIES TO BE OFFERED HEREBY THEMSELVES MAY INVOLVE A
SIGNIFICANT DEGREE OF RISK. SUCH RISKS WILL BE SET FORTH IN THE PROSPECTUS
SUPPLEMENT RELATING TO SUCH SECURITY, IF APPLICABLE.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities will be issued under an Indenture, as supplemented from
time to time in accordance with its terms (the "Indenture"), to be entered
into between the Company and a trustee to be appointed (the "Trustee"). The
following brief summary of the Indenture and the Debt Securities is subject to
the detailed provisions of the Indenture, a copy of which is an exhibit to the
Registration Statement. Wherever references are made to particular provisions
of the Indenture, such provisions are incorporated by reference as a part of
the statements made herein and such statements are qualified in their entirety
by such reference. Certain defined terms in the Indenture are capitalized
herein. Italicized references appearing in parenthesis are to section numbers
of the Indenture.
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder. It provides that Debt Securities may be issued from time to
time in series. The Debt Securities will be unsecured obligations of the
Company and will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company. Reference is made to the Prospectus Supplement
for a description of the following additional terms of the Debt Securities in
respect of which this Prospectus is being delivered: (i) the title of such
Debt Securities; (ii) the limit, if any, upon the aggregate principal amount
of such Debt Securities; (iii) the dates on which or periods during which such
Debt Securities may be issued and the date or dates on which the principal of
(and premium, if any, on) such Debt Securities will be payable; (iv) the rate
or rates, if any, or the method of determination thereof, at which such Debt
Securities will bear interest, if any; the date or dates from which such
interest will accrue; the dates on which such interest will be payable; and
the regular record dates for the interest payable on such interest payment
dates; (v) the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provisions or
at the option of a holder and the periods within which or the dates on which,
the prices at which and the terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation; (vi) the periods within which or the dates on
which, the prices, if any, at which and the terms and conditions upon which
such Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (vii) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which such Debt Securities will be
issuable; (viii) whether such Debt Securities are to be issued at less than
the principal amount thereof and the amount of discount with which such Debt
Securities will be issued; (ix) provisions, if any, for the defeasance of such
Debt Securities; (x) if other than United States dollars, the currency or
composite currency in which such Debt Securities are to be denominated, or in
which payment of the principal of (and premium, if any) and interest on such
Debt Securities will be made and the circumstances, if any, when such currency
of payment may be changed; (xi) if the principal of (and premium, if any) or
interest on such Debt Securities are to be payable, at the election of the
Company or a holder, in a currency or composite currency other than that in
which such Debt Securities are denominated or stated to be payable, the
periods within which, and the terms and conditions upon which, such election
may be made and the time and the manner of determining the exchange rate
between the currency or composite currency in which such Debt Securities are
denominated or stated to be payable and the currency in which such Debt
Securities are to be paid pursuant to such election; (xii) if the amount of
payments of principal of (and premium, if any) or interest on the Debt
Securities may be determined with reference to an index including, but not
limited to an index based on a currency or currencies other than that in which
such Debt
7
<PAGE>
Securities are stated to be payable, the manner in which such amounts shall be
determined; (xiii) whether such Debt Securities will be issued in the form of
one or more Global Securities and, if so, the identity of the depository for
such Global Securities; (xiv) any additions to or changes in the Events of
Default or covenants relating solely to such Debt Securities or any Events of
Default or covenants generally applicable to Debt Securities which are not to
apply to the particular series of Debt Securities in respect of which the
Prospectus Supplement is being delivered; (xv) if the Company will pay
additional amounts on any of the Debt Securities of any series to any Holder
who is a United States Alien, in respect of any tax or assessment withheld,
under what circumstances and with what procedures the Company will pay such
amounts; (xvi) any terms applicable to original issue discount, if any,
including the rate or rates at which such original issue discount, if any,
shall accrue; (xvii) the exchange or conversion of the Securities of that
series, at the option of the Holders thereof, for or into new Securities of a
different series or other securities or other property, including shares of
capital stock of the Company or any subsidiary of the Company or securities
directly or indirectly convertible into or exchangeable for any such shares;
and (xviii) any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture. (Section 3.1) Unless otherwise indicated in the
Prospectus Supplement, the Indenture does not afford the holder of any series
of Debt Securities the right to tender such Debt Securities to the Company for
repurchase, or provide for any increase in the rate or rates of interest per
annum at which such Debt Securities will bear interest, in the event the
Company should become involved in a highly leveraged transaction.
The Debt Securities may be issued under the Indenture bearing no interest or
interest at a rate below the prevailing market rate at the time of issuance,
to be offered and sold at a discount below their stated principal amount.
Federal income tax consequences and other special considerations applicable to
any such discounted Debt Securities or to other Debt Securities offered and
sold at par which are treated as having been issued at a discount for federal
income tax purposes will be described in the Prospectus Supplement relating
thereto.
A substantial portion of the assets of the Company is held by subsidiaries.
The Company's right and the rights of its creditors, including the holders of
Debt Securities, to participate in the assets of any subsidiary upon its
liquidation or recapitalization would be subject to the prior claims of such
subsidiary's creditors, except to the extent that the Company may itself be a
creditor with recognized claims against such subsidiary. There is no
restriction in the Indenture against subsidiaries of the Company incurring
unsecured indebtedness.
Unless otherwise described in the Prospectus Supplement, the Debt Securities
will be issued only in registered form without coupons, in denominations of
$1,000 and multiples of $1,000, and will be payable only in United States
dollars. (Section 3.2) In addition, all or a portion of the Debt Securities of
any series may be issued as permanent registered Global Securities which will
be exchangeable for definitive Debt Securities only under certain conditions.
(Section 2.3) The Prospectus Supplement indicates the denominations to be
issued, the procedures for payment of interest and principal thereon, and
other matters. No service charge will be made for any registration of transfer
or exchange of the Debt Securities, but the Company may, in certain instances,
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Section 3.5)
The Company shall deliver Debt Securities of any series, duly executed by
the Company, to the Trustee for authentication, together with an order for the
authentication and delivery of such Debt Securities. The Trustee, in
accordance with such order, shall authenticate and deliver such Debt
Securities. No Debt Securities of any series shall be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose unless there
appears thereon a certificate of authentication substantially in the form
provided for in the Indenture and manually executed by the Trustee or an
authenticating agent duly appointed by the Trustee. Such certificate shall be
conclusive evidence, and the only evidence, that such Debt Securities have
been duly authenticated and delivered under, and are entitled to the benefits
of, the Indenture. (Section 3.3)
GLOBAL SECURITIES
The Debt Securities of a particular series may be issued in the form of one
or more Global Securities which will be deposited with a depository (the
"Depositary"), or its nominee, each of which will be identified in the
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Prospectus Supplement relating to such series. Unless and until exchanged, in
whole or in part, for Debt Securities in definitive registered form, a Global
Security may not be transferred except as a whole by the Depositary for such
Global Security to a nominee of such Depositary, by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor. (Section 2.3) The specific terms of the depository
arrangement with respect to any portion of a particular series of Debt
Securities to be represented by a Global Security will be described in the
Prospectus Supplement relating to such series. The Company anticipates that
the following provisions will apply to all depository arrangements.
Upon the issuance of a Global Security, the Depositary therefor or its
nominee will credit, on its book entry and registration system, the respective
principal amounts of the Debt Securities represented by such Global Security
to the accounts of such persons having accounts with such Depositary
("participants") as shall be designated by the underwriters or agents
participating in the distribution of such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership
of beneficial interests in a Global Security will be limited to participants
or persons that may hold beneficial interests through participants. Ownership
of beneficial interests in a Global Security will be shown on, and the
transfer of such ownership will be effected only through, records maintained
by the Depositary therefor or its nominee (with respect to beneficial
interests of participants) or by participants or persons that hold through
participants (with respect to interests of persons other than participants).
The laws of some states require certain purchasers of securities to take
physical delivery thereof in definitive form. Such depository arrangements and
such laws may impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner thereof, such Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Debt Securities represented
by such Global Security for all purposes under the Indenture. Except as
provided below, owners of beneficial interests in a Global Security will not
be entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in definitive form and
will not be considered the owners or holders thereof under the Indenture for
any other purpose.
Principal, premium, if any, and interest payments on a Global Security
registered in the name of a Depositary or its nominee will be made to such
Depositary or nominee, as the case may be, as the registered owner of such
Global Security. None of the Company, the Trustee or any paying agent for Debt
Securities of the series represented by such Global Security will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in such Global Security or
for maintaining, supervising or reviewing any records relating to such
beneficial interests.
The Company expects that the Depositary for a Global Security or its
nominee, upon receipt of any payment of principal, premium or interest, will
immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such Depositary or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers registered in
"street name," and will be the responsibility of such participants.
If the Depositary for a Global Security representing Debt Securities of a
particular series is at any time unwilling or unable to continue as Depositary
and a successor Depositary is not appointed by the Company within 90 days, the
Company will issue Debt Securities of such series in definitive form in
exchange for such Global Security. In addition, the Company may at any time
and in its sole discretion determine not to have the Debt Securities of a
particular series represented by one or more Global Securities and, in such
event, will issue Debt Securities of such series in definitive form in
exchange for all of the Global Securities representing Debt Securities of such
series.
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CERTAIN COVENANTS OF THE COMPANY
Limitation on Indebtedness Secured by a Mortgage. The Indenture provides that
neither the Company nor any Restricted Subsidiary will create, assume,
guarantee or suffer to exist any Indebtedness secured by any mortgage, pledge,
lien, security interest, conditional sale or other title retention agreement or
other similar encumbrance ("Mortgage") on any assets of the Company or a
Restricted Subsidiary unless the Company secures or causes such Restricted
Subsidiary to secure the Debt Securities equally and ratably with, or prior to,
such secured Indebtedness. This restriction will not apply to Indebtedness
secured by (i) Mortgages on the property of any corporation which Mortgages
existed at the time such corporation became a Restricted Subsidiary; (ii)
Mortgages in favor of the Company or a Restricted Subsidiary; (iii) Mortgages
on property of the Company or a Restricted Subsidiary in favor of the United
States of America or any state or political subdivision thereof, or in favor of
any other country or any political subdivision thereof, to secure payment
pursuant to any contract or statute or to secure any indebtedness incurred for
the purpose of financing all or part of the purchase price or the cost of
construction or improvement of the property subject to such Mortgages; (iv)
Mortgages on any property subsequently acquired by the Company or any
Restricted Subsidiary, contemporaneously with such acquisition or within 120
days thereafter, to secure or provide for the payment of any part of the
purchase price, construction or improvement of such property, or Mortgages
assumed by the Company or any Restricted Subsidiary upon any property
subsequently acquired by the Company or any Restricted Subsidiary which were
existing at the time of such acquisition, provided that the amount of any
Indebtedness secured by any such Mortgage created or assumed does not exceed
the cost to the Company or Restricted Subsidiary, as the case may be, of the
property covered by such Mortgage; (v) Mortgages on the property of the Company
or a Restricted Subsidiary existing at the date of issuance of the first series
of Debt Securities under the Indenture; (vi) Mortgages representing the
extension, renewal or refunding of any Mortgage referred to in the foregoing
clauses (i) through (v), inclusive, or of any Indebtedness secured thereby; and
(vii) any other Mortgage, other than Mortgages referred to in the foregoing
clauses (i) through (vi), inclusive, so long as the aggregate of all
Indebtedness secured by Mortgages pursuant to this clause (vii) and the
aggregate Value of the Sale and Lease-Back Transactions in existence at that
time (not including those in connection with which the Company has voluntarily
retired funded Indebtedness as provided in the Indenture) does not exceed 15%
of Consolidated Net Tangible Assets. (Section 10.7)
Limitation on Sale and Lease-Back Transactions. The Indenture provides that
neither the Company nor any Restricted Subsidiary will enter into any Sale and
Lease-Back Transaction with respect to any Principal Property unless either (i)
the Company or such Restricted Subsidiary would be entitled, pursuant to the
foregoing covenant relating to "Limitation on Indebtedness Secured by a
Mortgage," to create, assume, guarantee or suffer Indebtedness in a principal
amount equal to or exceeding the Value of such Sale and Lease-Back Transaction
secured by a Mortgage on the property to be leased without equally and ratably
securing the Debt Securities or (ii) the Company or such Restricted Subsidiary,
within four months after the effective date of such transaction, applies an
amount equal to the greater of (x) the net proceeds of the sale of the property
subject to the Sale and Lease-Back Transaction and (y) the Value of such Sale
and Lease-Back Transaction, to the voluntary retirement of the Debt Securities
or other unsubordinated funded Indebtedness of the Company or such Restricted
Subsidiary. (Section 10.8)
Certain Definitions. "Consolidated Net Tangible Assets" is defined in the
Indenture to mean total consolidated assets of the Company and its Restricted
Subsidiaries, less (i) current liabilities of the Company and its Restricted
Subsidiaries, and (ii) the net book amount of all intangible assets of the
Company and its Restricted Subsidiaries. (Section 10.7)
"Consolidated Subsidiary" is defined in the Indenture to mean a Subsidiary
the accounts of which are consolidated with those of the Company for public
financial reporting purposes. (Section 1.1)
"Designated Subsidiaries" is defined in the Indenture to mean any Subsidiary
of the Company (other than a Subsidiary holding any Station Licenses or the
operating assets of any Stations) designated by the Company as a "Designated
Subsidiary" for purposes of the Indenture, by delivery to the Trustee of a
certificate of a senior
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officer of the Company identifying such Subsidiary, stating that such
Subsidiary shall be treated as a "Designated Subsidiary" for all purposes
under the Indenture and certifying that, after giving effect to such
designation, the Company will be in compliance with the provisions of the
Indenture applicable to such Designated Subsidiary, and such designation will
not result in an Event of Default under the Indenture; provided that the value
of the capital stock, partnership or other ownership interest directly or
indirectly held by the Company in all Designated Subsidiaries shall not exceed
at any one time an aggregate amount in excess of $250,000,000. Any Subsidiary
of a Designated Subsidiary is deemed to be a "Designated Subsidiary". (Section
10.11)
"Indebtedness" is defined in the Indenture to mean (i) all items which in
accordance with generally accepted accounting principles would be included in
determining long-term liabilities representing borrowed money or purchase
money obligations as shown on the liability side of a balance sheet (other
than liabilities evidenced by obligations under leases and contracts payable
for broadcast rights); (ii) to the extent not included in (i) above,
indebtedness secured by any Mortgage existing on property owned subject to
such Mortgage, whether or not such secured indebtedness has been assumed; and,
(iii) to the extent not included in (i) or (ii) above, contingent obligations
in respect of, or to purchase or otherwise acquire, any such indebtedness of
others described in the foregoing clauses (i) or (ii) above, including
guarantees and endorsements (other than for purposes of collection in the
ordinary course of business of any such indebtedness). (Section 10.7)
"Principal Property" is defined in the Indenture to mean any office
building, television station or transmission facility owned by the Company or
any Restricted Subsidiary or any other property or right owned by or granted
to the Company or any Restricted Subsidiary and used or held for use in the
television business conducted by the Company or any Restricted subsidiary,
except for any such property or right which, in the opinion of the Board of
Directors of the Company as set forth in a Board Resolution adopted in good
faith, is not material to the total business conducted by the Company and its
Restricted Subsidiaries considered as one enterprise. (Section 1.1)
"Restricted Subsidiary" is defined in the Indenture to mean any Subsidiary
of the Company other than a Designated Subsidiary. (Section 10.7)
"Sale and Lease-Back Transaction" is defined in the Indenture as the leasing
by the Company or a Subsidiary for a period of more than three years of any
principal property which has been sold or is to be sold or transferred by the
Company or any such subsidiary to any party (other than the Company or a
Subsidiary). (Section 10.8)
"Significant Subsidiary" is defined in the Indenture to mean any Subsidiary
(i) which, as of the close of the fiscal year of the Company immediately
preceding the date of determination, contributed more than 10% of the
consolidated net operating revenues of the Company and its Consolidated
Subsidiaries for such year or (ii) the total assets of which as of the close
of such immediately preceding fiscal year exceeded 10% of the Consolidated Net
Tangible Assets of the Company and its Consolidated Subsidiaries. (Section
5.1)
"Stations" is defined in the Indenture to mean the television broadcasting
stations from time to time owned by the Company or any of its Restricted
Subsidiaries. (Section 10.11)
"Station Licenses" is defined in the Indenture to mean all authorization,
licenses or permits issued by the FCC and granted or assigned to the Company
or any Restricted Subsidiary thereof, or under which the Company or any
Restricted Subsidiary thereof has the right to operate any Station, together
with any extensions or renewals thereof. (Section 10.11)
"Subsidiary" is defined in the Indenture to mean (i) a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by the Company or by one or more other Subsidiaries or by the Company and one
or more other Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which the Company or one or more Subsidiaries of
the Company has more than a 50% equity interest at the time or as to which the
Company or one or more of its Subsidiaries has the power to direct or cause
the direction
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of the management and policies of such entity by contract or otherwise. For
the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors or other governing body of such
corporation, whether at all times or only so long as no senior class of stock
has such voting power by reason of any contingency. (Section 1.1)
"Value" is defined in the Indenture to mean, with respect to any particular
Sale and Lease-Back Transaction, as of any particular time, the amount equal
to the greater of (i) the net proceeds of the sale or transfer of the property
leased pursuant to such Sale and Lease-Back Transaction or (ii) the fair value
in the opinion of the Board of Directors of the Company of such property at
the time of the Company's entering into such Sale and Lease-Back Transaction,
subject to adjustment at any particular time for the length of the remaining
initial lease term. (Section 10.8)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company may not consolidate with or merge
into any other corporation, or convey, transfer or lease its properties and
assets substantially as an entirety to any other party, unless, among other
things, (i) the corporation formed by such consolidation or into which the
Company is merged or the party which acquires by conveyance or transfer, or
which leases the properties and assets of the Company substantially as an
entirety, is organized and existing under the laws of the United States, any
State thereof or the District of Columbia and expressly assumes the Company's
obligations on the Debt Securities and under the Indenture by means of an
indenture supplemental to the Indenture and (ii) immediately after giving
effect to such transaction no Event of Default, and no event which, after
notice or lapse of time, or both, would become an Event of Default, shall have
occurred and be continuing. (Section 8.1)
EVENTS OF DEFAULT, WAIVER AND NOTICE
With respect to the Debt Securities of any series, an Event of Default is
defined in the Indenture as being (i) default for 30 days in payment of any
interest upon the Debt Securities of such series; (ii) default in payment of
the principal of or premium, if any, on the Debt Securities of such series
when due either at maturity or upon acceleration, redemption or otherwise;
(iii) default by the Company in the performance of any other of the covenants
or warranties in the Indenture for the benefit of such series applicable to
the Company which shall not have been remedied for a period of 60 days after
Notice of Default; (iv) the failure to pay when due any indebtedness for money
borrowed (including indebtedness under Debt Securities other than that series)
with a principal amount then outstanding in excess of $20,000,000 under any
mortgage, indenture or instrument under which any such indebtedness is issued
or secured (including the Indenture), or any other default which results in
the acceleration of maturity of such indebtedness, unless such indebtedness or
acceleration shall have been discharged or annulled within 10 days after due
notice by the Trustee or by Holders of at least 10% in principal amount of the
Outstanding Debt Securities of that series; (v) certain events of bankruptcy,
insolvency or reorganization of the Company or any Significant Subsidiary;
(vi) default in the deposit of any sinking fund payment when and as due by the
terms of any Debt Securities of such series; and (vii) any other Event of
Default provided in the supplemental indenture under which such series of Debt
Securities is issued or in the form of security for such series. (Section 5.1)
Within 90 days after the occurrence of any default under the Indenture with
respect to Debt Securities of any series, the Trustee is required to notify
the Holders of Debt Securities of any default unless, in the case of any
default other than a default in the payment of principal of or premium, if
any, or interest on any Debt Securities, a trust committee of the Board of
Directors or Responsible Officers of the Trustee in good faith considers it in
the interest of the Holders of Debt Securities not to do so. (Section 6.2)
The Indenture provides that if an Event of Default, other than an Event of
Default as described in clauses (iv) or (v) in the above paragraph with
respect to Debt Securities of any series shall have occurred and be
continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount of the Debt Securities of that series then outstanding may
declare the entire principal and accrued interest of all Debt Securities of
such series (or, if any of the Debt Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such Debt
Securities as may be specified by the terms thereof) to be due and payable
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immediately. If an Event of Default described in clauses (iv) or (v) in the
above paragraph with respect to any series of Debt Securities Outstanding
under the Indenture occurs and is continuing, the principal amount (or, if any
of the Debt Securities of that series are Original Issue Discount Securities,
such portion of the principal amount of such Debt Securities as may be
specified by the terms thereof) shall automatically, and without any
declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable. Any time after acceleration with respect to the
Debt Securities of any series has been made, but before a judgment or decree
for the payment of money based on such acceleration has been obtained by the
Trustee, the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series, may, under certain circumstances, rescind and annul
such acceleration. The Holders of a majority in principal amount of the
Outstanding Debt Securities of any series may waive any past defaults under
the Indenture with respect to the Debt Securities of such series, except
defaults in payment of principal of or premium, if any (other than by a
declaration of acceleration), or interest on the Debt Securities or provisions
of such series that may not be modified or amended without the consent of the
Holders of all Outstanding Debt Securities of such series. (Sections 5.2 and
5.13)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of its covenants and agreements under the
Indenture. (Section 10.9)
Subject to certain conditions set forth in the Indenture, the Holders of a
majority in principal amount of the then Outstanding Debt Securities of any
series with respect to which an Event of Default has occurred shall have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee under the Indenture in respect of such
series. No Holder of any Debt Securities shall have any right to cause the
Trustee to institute any proceedings, judicial or otherwise, with respect to
the Indenture or any remedy thereunder unless, among other things, the Holder
or Holders of Debt Securities shall have offered to the Trustee indemnity
satisfactory to it against costs, expenses and liabilities relating to such
proceedings. (Sections 5.12 and 5.7)
The Indenture provides that, in determining whether the Holders of the
requisite aggregate principal amount of the Outstanding Debt Securities have
given, made or taken any request, demand, authorization, direction, notice,
consent, waiver or other action thereunder as of any date, (a) the principal
amount of an Original Issue Discount Security which shall be deemed to be
Outstanding shall be the amount of the principal thereof which would be due
and payable as of such date upon acceleration of the Maturity thereof to such
date, (b) if, as of such date, the principal amount payable at the Stated
Maturity of a Debt Security is not determinable, the principal amount of such
Debt Security which shall be deemed to be Outstanding shall be the amount as
established in or pursuant to a Board Resolution and set forth, or determined
in the manner provided, in an Officers' Certificate, or established in one or
more supplemental indentures, prior to the issuance of such Debt Securities,
(c) the principal amount of a Debt Security denominated in one or more foreign
currencies or currency units which shall be deemed to be Outstanding shall be
the U.S. dollar equivalent, determined as of such date in the manner as
described in clause (b) above, of the principal amount of such Debt Security
(or, in the case of a Debt Security described in clause (a) or (b) above, of
the amount determined as provided in such clause), and (d) Debt Securities
owned by the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Debt Securities which
the Trustee knows to be so owned shall be so disregarded. Debt Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Debt Securities and that the pledgee is not the
Company or any other obligor upon the Debt Securities or any Affiliate of the
Company or of such other obligor. (Section 1.1)
MODIFICATION OF THE INDENTURE
The Indenture provides that the Company and the Trustee may, without the
consent of the Holders, modify or amend the Indenture in order to (i) evidence
the succession of another corporation to the Company and the
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assumption by any such successor corporation of the covenants of the Company
in the Indenture and in the Debt Securities; (ii) add to the covenants,
agreements and obligations of the Company for the benefit of the Holders of
all or any series of Debt Securities; (iii) add any additional Events of
Default to the Indenture; (iv) add to or change any of the provisions of the
Indenture necessary to permit the issuance of Debt Securities in bearer form,
registrable as to principal, and with or without interest coupons; (v) add to,
change or eliminate any of the provisions of the Indenture, in respect of one
or more series of Debt Securities, provided that any such addition, change or
elimination may not apply to any Debt Security of any series created prior to
such addition, change or elimination; (vi) establish the form or terms of Debt
Securities of any series as permitted under the Indenture; (vii) evidence and
provide for the acceptance of appointment under the Indenture by a successor
Trustee with respect to the Debt Securities of one or more series; or, (viii)
cure any ambiguity, or correct or supplement any provision of the Indenture
which may be inconsistent with any other provision of the Indenture, provided
such action does not adversely affect the interest of the Holders of Debt
Securities of any series. (Section 9.1)
With respect to the Debt Securities of any series, modification or amendment
of the Indenture may be made by the Company and the Trustee with the consent
of the Holders of a majority in aggregate principal amount of the Debt
Securities of such series, except that no such modification or amendment may,
without the consent of the Holders of all then Outstanding Debt Securities of
such series (i) change the due date of the principal of, or any installment of
principal of or interest on, any Debt Securities of such series; (ii) reduce
the principal amount of, or any installment of principal or interest or rate
of interest on, or any premium payable on redemption of any Debt Securities of
such series; (iii) reduce the principal amount of any Debt Securities of such
series payable upon acceleration of the maturity thereof; (iv) change the
place or the currency of payment of principal of, or any premium or interest
on, any Debt Securities of such series; (v) impair the right to institute suit
for the enforcement of any payment on or with respect to any Debt Securities
of such series on or after the due date thereof (or, in the case of
redemption, on or after the redemption date thereof); (vi) reduce the
percentage in principal amount of Debt Securities of such series then
outstanding, the consent of whose holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain defaults; or, (vii) modify certain
provisions of the Indenture regarding the amendment or modification of, or
waiver with respect to, any provision of the Indenture or the Debt Securities.
(Section 9.2)
DISCHARGE OF THE INDENTURE
The Indenture, with respect to the Debt Securities of any series (if all
series issued under the Indenture are not to be affected), shall upon the
written request or order of the Company cease to be of further effect (except
as to any surviving rights of registration of transfer or exchange of Debt
Securities therein expressly provided for), when (i) either (A) all Debt
Securities theretofore authenticated and delivered (other than (1) Debt
Securities which have been destroyed, lost or stolen and which have been
replaced or paid and (2) Debt Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust)
have been delivered to the Trustee for cancellation or (B) all such Debt
Securities not theretofore delivered to the Trustee for cancellation (1) have
become due and payable, (2) will become due and payable at their stated
maturity within one year or (3) if the Debt Securities of such series are
denominated and payable only in United States dollars and such Debt Securities
are to be called for redemption within one year, and the Company in the case
of (1), (2) or (3) above, has deposited or caused to be deposited with the
Trustee an amount in United States dollars sufficient to pay and discharge the
entire indebtedness on such Debt Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and interest to
the date of such deposit (in the case of Debt Securities which have become due
and payable) or to the stated maturity or any redemption date, as the case may
be; (ii) the Company has paid or caused to be paid all other sums payable
under the Indenture by the Company; and (iii) the Company has delivered to the
Trustee an officers' certificate and an opinion of counsel, each stating that
all conditions precedent provided for in the Indenture relating to the
satisfaction and discharge of the Indenture have been complied with. (Section
4.1)
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DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise specified in the Prospectus Supplement, the following
provisions relating to defeasance and discharge of indebtedness, or relating
to defeasance of certain covenants in the Indenture, will apply to the Debt
Securities of any series, or to any specified part of a series. (Section 13.1)
Defeasance and Discharge. The Indenture provides that the Company will be
discharged from all its obligations with respect to such Debt Securities
(except for certain obligations to exchange or register the transfer of Debt
Securities, to replace stolen, lost or mutilated Debt Securities, to maintain
paying agencies and to hold moneys for payment in trust) upon the deposit in
trust for the benefit of the Holders of such Debt Securities of money or U.S.
Government Obligations, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay any installment of principal of and any premium
and interest on and any mandatory sinking fund payments in respect of such
Debt Securities on the respective Stated Maturities in accordance with the
terms of the Indenture and such Debt Securities. Such defeasance or discharge
may occur only if, among other things, the Company has delivered to the
Trustee an opinion of counsel to the effect that the Company has received
from, or there has been published by, the United States Internal Revenue
Service a ruling, or there has been a change in tax law, in either case to the
effect that Holders of such Debt Securities will not recognize gain or loss
for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred. (Sections 13.1 and 13.2)
Defeasance of Certain Covenants. The Indenture provides that the Company may
omit to comply with certain restrictive covenants described under the captions
"Certain Covenants of the Company--Limitation on Indebtedness Secured by a
Mortgage" and "Certain Covenants of the Company--Limitation on Sale and
Leaseback Transactions" above and any that may be described in the Prospectus
Supplement, and that such omission will be deemed not to be or result in an
Event of Default, in each case with respect to such Debt Securities. In order
to do so, the Company will be required to deposit, in trust for the benefit of
the Holders of such Debt Securities, money or U.S. Government Obligations, or
both, which through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount sufficient to
pay any installment of the principal of and any premium and interest on and
any mandatory sinking fund payments in respect of such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indenture and
such Debt Securities. The Company will also be required, among other things,
to deliver to the Trustee an opinion of counsel to the effect that Holders of
such Debt Securities will not recognize gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred. In the event the Company exercises this option
with respect to any Debt Securities and such Debt Securities are declared due
and payable because of the occurrence of any Event of Default, the amount of
money and U.S. Government Obligations so deposited in trust will be sufficient
to pay amounts due on such Debt Securities at the time of their respective
Stated Maturities but may not be sufficient to pay amounts due on such Debt
Securities upon any acceleration resulting from such Event of Default. In such
case, the Company will remain liable for such payments. (Sections 13.1 and
13.2)
THE DEBT TRUSTEE
Prior to the offering of any Debt Securities, a trustee will be appointed by
the Company to serve as Trustee under the Indenture. The Trustee may be a
depository for funds of and perform other services for and transact other
banking business with the Company in the normal course of business.
The Trustee may serve as a trustee under other indentures entered into by
the Company. Upon the occurrence of an Event of Default under the Indenture or
an event which, after notice or lapse of time or both, would become such an
Event of Default, or upon the occurrence of a default under any such other
indenture, the Trustee may be deemed to have a conflicting interest with
respect to the Debt Securities for purposes of the Trust
15
<PAGE>
Indenture Act and, unless the Trustee is able to eliminate any such
conflicting interest, the Trustee may be required to resign as Trustee under
the Indenture. In that event, the Company would be required to appoint a
successor Trustee for the Indenture.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 1.12)
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Set forth below is a description of the capital stock of the Company
pursuant to the Company's Amended and Restated Certificate of Incorporation.
Common Stock. The Company has 200 million shares of authorized common stock,
par value $.01 per share, with 100 million shares designated as Series A
Common Stock and 100 million shares designated as Series B Common Stock.
Except as otherwise described below, the issued and outstanding shares of
Series A Common Stock and Series B Common Stock will vote together as a single
class on all matters submitted to a vote of stockholders, with each issued and
outstanding share of Series A Common Stock and Series B Common Stock entitling
the holder thereof to one vote on all such matters. With respect to any
election of directors, (i) the holders of the shares of Series A Common Stock
will be entitled to vote separately as a class to elect two members of the
Company's Board of Directors (the Series A Directors) and (ii) the holders of
the shares of Series B Common Stock will be entitled to vote separately as a
class to elect the balance of the Company's Board of Directors (the Series B
Directors); provided, however, that the number of Series B Directors shall not
constitute less than a majority of the Company's Board of Directors. Any
director may resign at any time upon giving written notice to the Company. The
directors may only be removed for cause by a vote of the holders of a majority
of the Company's Common Stock voting together as a class. Any Series A
Director who resigns or is removed may be replaced only by the remaining
Series A Director or, if there are no remaining Series A Directors, by a vote
of the holders of a majority of the Series A Common Stock voting separately as
a class. Similarly, any Series B Director who resigns or is removed may be
replaced only by the remaining Series B Directors or, if there are no
remaining Series B Directors, by a vote of the holders of a majority of the
Series B Common Stock voting separately as a class. If no shares of Series A
Common Stock are issued and outstanding at any given time, then the holders of
shares of Series B Common Stock will elect all of the Company's directors.
Conversely, if no shares of Series B Common Stock are issued and outstanding,
then the holders of the shares of Series A Common Stock will elect all of the
Company's directors.
All of the outstanding shares of Series B Common Stock are required to be
held by Hearst or a Permitted Transferee (as defined below). No holder of
shares of Series B Common Stock may transfer any such shares to any person
other than to (i) Hearst; (ii) any corporation into which Hearst is merged or
consolidated or to which all or substantially all of Hearst's assets are
transferred; or (iii) any entity controlled by Hearst (each a "Permitted
Transferee"). Series B Common Stock, however, may be converted at any time
into Series A Common Stock and freely transferred, subject to the terms and
conditions of the Company's Amended and Restated Certificate of Incorporation
and to applicable securities laws limitations. If at any time the Permitted
Transferees first hold in the aggregate less than 20% of all shares of the
Company's Common Stock that are then issued and outstanding, then each issued
and outstanding share of Series B Common Stock automatically will be converted
into one fully-paid and nonassessable share of Series A Common Stock, and the
Company will not be authorized to issue any additional shares of Series B
Common Stock. Notwithstanding any other provision to the contrary, no holder
of Series B Common Stock shall (i) transfer any shares of Series B Common
Stock; (ii) convert Series B Common Stock; or (iii) be entitled to receive any
cash, stock, other securities or other property with respect to or in exchange
for any shares of Series B Common Stock in connection with any merger or
consolidation or sale or conveyance of all or substantially all of the
property or business of the Company as an entity, unless all necessary
approvals of the Federal Communications Commission ("FCC") as required by the
Communications Act of 1934, as amended (the "Communications Act"), and the
rules and regulations thereunder have been obtained or waived.
Preferred Stock. The Company has one million shares of authorized preferred
stock, par value $.01 per share. Under the Company's Amended and Restated
Certificate of Incorporation, the Company has two issued and outstanding
series of preferred stock, Series A Preferred Stock and Series B Preferred
Stock (collectively, the "Preferred Stock"). Each series of Preferred Stock
has 10,938 shares issued and outstanding. The Preferred Stock has a cash
dividend feature whereby each share will accrue $65 per share annually, to be
paid quarterly. The Series A Preferred Stock is convertible at the option of
the holders, at any time, into Series A Common
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<PAGE>
Stock at a conversion price of (i) on or before December 31, 2000, $35; (ii)
during the calendar year December 31, 2001, the product of 1.1 times $35; and
(iii) during each calendar year after December 31, 2001, the product of 1.1
times the preceding year's conversion price. The Company has the option to
redeem all or a portion of the Series A Preferred Stock at any time after June
11, 2001 at a price equal to $1,000 per share plus any accrued and unpaid
dividends.
The holders of Series B Preferred Stock have the option to convert such
Series B Preferred Stock into shares of Series A Common Stock at any time
after June 11, 2001 at the average of the closing prices for the Series A
Common Stock for each of the 10 trading days prior to such conversion date.
The Company has the option to redeem all or a portion of the Series B
Preferred Stock at any time on or after June 11, 2001, at a price equal to
$1,000 per share plus any accrued and unpaid dividends.
The issued and outstanding shares of Series A Preferred Stock and Series B
Preferred Stock are entitled to vote on all matters submitted to a vote of
holders of Series A Common Stock, with such shares of Series A Preferred Stock
and Series B Preferred Stock voting together as a single class with the shares
of Series A Common Stock. Each share of Series A Preferred Stock is entitled
to the number of votes (rounded up to the next whole number) equal to the
number of shares of Series A Common Stock into which such share is
convertible. Each share of Series B Preferred Stock is entitled to (i) 29
votes, if the record date for the stockholder meeting at which such votes are
to be cast is before July 11, 2001 or (ii) thereafter, the number of votes
(rounded up to the next whole number) equal to the number of shares of Series
A Common Stock into which such share is convertible. Except with respect to
any proposal to amend the Company's Amended and Restated Certificate of
Incorporation that may adversely affect the rights of the respective series of
Preferred Stock and except as may be required by Delaware General Corporation
Law ("DGCL"), neither the Series A Preferred Stock nor the Series B Preferred
Stock is entitled to vote separately as a class.
FOREIGN OWNERSHIP
Pursuant to the Company's Amended and Restated Certificate of Incorporation
and in order to comply with FCC rules and regulations, the Company will not be
permitted to issue any shares of capital stock of the Company to (i) a person
who is a citizen of a country other than the U.S.; (ii) any entity organized
under the laws of a government other than the government of the U.S. or any
state, territory or possession of the U.S.; (iii) a government other than the
government of the U.S. or any state, territory or possession of the U.S.; (iv)
a representative of, or an individual or entity controlled by, any of the
foregoing; or (v) any other person or entity whose alien status would be
cognizable under the Communications Act (individually, an "Alien;"
collectively, "Aliens"), any shares of capital stock of the Company if such
issuance would result in the total number of shares of such capital stock held
or voted by Aliens exceeding 25% of (x) the capital stock outstanding at any
time and from time to time or (y) the total voting power of all shares of such
capital stock outstanding and entitled to vote at any time and from time to
time. In addition, the Company will not be permitted to transfer on the books
of the Company any capital stock to any Alien that would result in the total
number of shares of such capital stock held or voted by Aliens exceeding such
25% limits. The Company's Amended and Restated Certificate of Incorporation
also provides that no Alien or Aliens, individually or collectively, will be
entitled to vote or direct or control the vote of more than 25% of (i) the
total number of all shares of capital stock of the Company outstanding at any
time and from time to time or (ii) the total voting power of all shares of
capital stock of the Company outstanding and entitled to vote at any time and
from time to time (or such limits greater or lesser than 25% as may be
subsequently imposed by statute or regulation). The Company's Board of
Directors will have the right to redeem any shares determined to be owned by
an Alien or Aliens, at the fair market value of the shares to be redeemed, if
the Board of Directors determines such redemption is necessary to comply with
these Alien ownership restrictions of the Communications Act and rules of the
FCC.
CERTAIN ANTI-TAKEOVER MATTERS
General. Certain provisions of the Company's Amended and Restated
Certificate of Incorporation and the DGCL may have the effect of impeding the
acquisition of control of the Company by means of a tender offer, a
18
<PAGE>
proxy fight, open market purchases or otherwise in a transaction not approved
by the Company's Board of Directors.
The provisions of the Company's Amended and Restated Certificate of
Incorporation and the DGCL described below are designed to reduce, or have the
effect of reducing, the vulnerability of the Company to an unsolicited proposal
for the restructuring or sale of all or substantially all of the assets of the
Company or an unsolicited takeover attempt that is unfair to the Company's
stockholders. The summary of such provisions set forth below does not purport
to be complete and is subject to and qualified in its entirety by reference to
the Company's Amended and Restated Certificate of Incorporation, the Company's
bylaws and the DGCL.
The Company's Board of Directors has no present intention to introduce
additional measures that might have an anti-takeover effect. The Company's
Board of Directors, however, expressly reserves the right to introduce such
measures in the future.
Classified Board; Removal of Directors. The Company's Amended and Restated
Certificate of Incorporation provides that the Company's Board of Directors
shall consist of not less than seven directors, with the exact number of
directors to be determined from time to time by the Company's Board of
Directors and designated in the bylaws. The Company's bylaws provide that the
number of directors will be 11 and thereafter the minimum number of directors
will be seven and the maximum number of directors will be 15. The Company's
Amended and Restated Certificate of Incorporation further provides that the
Company's Board of Directors will be divided into two classes, as long as there
are no more than two Series A Directors, and that, after an initial term, each
director will be elected for a two-year term. The Company's Amended and
Restated Certificate of Incorporation also provides that, in the event there
are three or more Series A directors, the Company's Board of Directors will be
divided into three classes, and that, after an initial term, each director will
be elected for a three-year term. Whether there are two or three classes of
directors, the Series A Directors are to be divided among the classes as
equally as possible. A classified Board of Directors is intended to assure the
continuity and stability of the Company's Board of Directors and the Company's
business strategies and policies. The classified board provision could increase
the likelihood that, in the event of a takeover of the Company, incumbent
directors will retain their positions. In addition, the classified board
provision helps ensure that the Company's Board of Directors, if confronted
with an unsolicited proposal from a third party that has acquired a block of
the voting stock of the Company, will have sufficient time to review the
proposal and appropriate alternatives and to seek the best available result for
all stockholders. The directors may only be removed for cause by a vote of the
holders of a majority of the Company's Common Stock voting together as a class.
Business Combinations. The Company, as a Delaware corporation, is subject to
Section 203 ("Section 203") of the DGCL. In general, subject to certain
exceptions, Section 203 prohibits a Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years following the date that such stockholder became an interested
stockholder, unless (i) prior to such date the Board approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder; (ii) upon consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding for
purposes of determining the number of shares outstanding those shares owned by
(x) persons who are directors and also officers and (y) employee stock plans in
which employee participants do not have the right to determine confidentially
whether or not shares held subject to the plan will be tendered in a tender or
exchange offer); or (iii) at or subsequent to such time, the business
combination is approved by the Board and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of
at least 66% of the outstanding voting stock that is not owned by the
interested stockholder. Section 203 defines a "business combination" to include
certain mergers, consolidations, asset sales and stock issuances and certain
other transactions resulting in a financial benefit to an "interested
stockholder." In addition, Section 203 defines an "interested stockholder" to
include any entity or person beneficially owning 15% or more of the outstanding
voting stock of the corporation and any entity or person affiliated with such
an entity or person.
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<PAGE>
Controlling Stockholder. Hearst currently owns 100% of the Company's issued
and outstanding Series B Common Stock, initially constituting in excess of 80%
of the outstanding shares of the Company's Common Stock. The holders of the
shares of Series A Common Stock are entitled to vote to elect two members of
the Company's Board of Directors. As the holder of all of the Company's
outstanding shares of Series B Common Stock, Hearst is entitled to vote to
elect the balance of the members of the Company's Board of Directors (the
Series B Directors); provided, however, that the Series B Directors shall not
constitute less than a majority of the Company's Board of Directors. Hearst's
ownership of the Series B Common Stock may have the effect of impeding the
acquisition of control of the Company.
REGISTRATION RIGHTS
The Company has executed a Registration Rights Agreement for the benefit of
certain holders of Series A Common Stock that are former partners of Argyle
Television Investors, L.P. (collectively, the "ATI Holders"). The Registration
Rights Agreement provides that the ATI Holders will have the right, subject to
certain limitations and conditions, to require the Company to register for
distribution through a firm commitment underwriting all or any portion of
Series A Common Stock issued to them in the Merger. In addition, the ATI
Holders also will have piggyback registration rights with respect to any
proposed offering of Series A Common Stock for cash through a firm commitment
underwriting sought by the Company.
LIMITATIONS ON DIRECTOR LIABILITY
The Company's Amended and Restated Certificate of Incorporation provides
that, to the fullest extent permitted by the DGCL, a director or former
director of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar of Series A Common Stock is Harris Trust and
Savings Bank.
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<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Securities in any one or more of the following
three ways: (i) to or through underwriters or dealers; (ii) through agents; or
(iii) directly to one or more purchasers. With respect to each series of
Securities being offered hereby, the terms of the offering of the Securities
of such series, including the name or names of any underwriters, dealers or
agents, the purchase price of such Securities and the proceeds to the Company
from such sale, any underwriting discounts, selling commissions and other
items constituting underwriters', dealers' or agents' compensation, any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers or agents, and any securities exchanges on which
the Securities of such series may be listed, will be set forth in, or may be
calculated from the information set forth in, the Prospectus Supplement. Only
underwriters so named in the Prospectus Supplement will be deemed to be
underwriters in connection with the Securities offered thereby.
If underwriters are used to sell any of the Securities, the Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time
of sale. The Securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Unless otherwise set forth in the Prospectus
Supplement, the obligations of the underwriters to purchase Securities will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all the Securities offered by the Prospectus Supplement if any of
such Securities are purchased. In connection with the sale of Securities,
underwriters may be deemed to have received compensation from the Company in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Securities for whom they may act as agent.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions (which may be changed from time to time)
from the purchasers for whom they may act as agent. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid
to dealers may be changed from time to time.
The Company may grant an option to the underwriters named in the Prospectus
Supplement, exercisable during a fixed period after the date of the Prospectus
Supplement, to purchase in the aggregate up to a maximum of 1,500,000
additional shares of Series A Common Stock to cover overallotments, if any, at
the same price per share as the initial shares to be purchased by the
underwriters. The underwriters may purchase such shares only to cover the
overallotments made in connection with an offering of Series A Common Stock.
Securities may also be sold directly by the Company or through agents (which
may also act as principals) designated by the Company from time to time. Any
agent involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth in, or may be calculated from the
information set forth in, the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a
best efforts basis for the period of its appointment. In the case of sales
made directly by the Company, no commission will be payable.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a future date specified in the
Prospectus Supplement. Such contracts will be subject to the conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement will set
forth the commissions payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that the agents or underwriters may be
required to make in respect
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<PAGE>
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for the Company or its affiliates in the ordinary
course of business.
The Company's Series A Common Stock is currently quoted on the Nasdaq
National Market under the symbol "HATV." The Debt Securities may or may not be
listed on a national securities exchange or a foreign securities exchange. The
Debt Securities will be a new issue of securities with no established trading
market. In the event that the Debt Securities are not listed on a national
securities exchange, certain broker-dealers may make a market in the Debt
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given that any broker-
dealer will make a market in the Debt Securities or as to the liquidity of the
trading market for the Debt Securities. The Prospectus Supplement with respect
to the Debt Securities of any series will state, if known, whether or not any
broker-dealer intends to make a market in such Securities. If no such
determination has been made, the Prospectus Supplement will so state.
LEGAL MATTERS
Certain legal matters relating to the Securities will be passed upon for the
Company by Rogers & Wells, New York, New York. Certain legal matters relating
to the Securities will be passed upon for any underwriters, dealers or agents
by Dow, Lohnes & Albertson, PLLC, Washington, D.C.
EXPERTS
The consolidated financial statements of Argyle appearing in the Argyle's
Form 10-K for the year ended December 31, 1996 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon
such reports given upon the authority of such firm as experts in accounting
and auditing.
The combined financial statements of the Selected Gannett Television
Stations and the financial statements of Multimedia Entertainment, Inc.
(d.b.a. WLWT-TV) a subsidiary of Multimedia, Inc., appearing in Argyle
Television Inc.'s Proxy Statement/Prospectus filed on July 31, 1997 and
appearing in the Argyle Television, Inc. Current Report on Form 8-K/A filed on
April 15, 1997, and incorporated by reference in this Prospectus, have been so
incorporated in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The combined financial statements as of December 31, 1995 and 1996 and for
each of the three years in the period ended December 31, 1996 of the Hearst
Broadcast Group of The Hearst Corporation appearing in the Company's Proxy
Statement/Prospectus filed on July 31, 1997 and the related financial
statement schedule included elsewhere therein have been audited by Deloitte &
Touche LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. Such combined financial
statements and financial statement schedule are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PRO-
SPECTUS AND ANY PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PRO-
SPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DE-
SCRIBED HEREIN OR THEREIN OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLE-
MENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFER-
ENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 4
Use of Proceeds............................................................ 5
Ratio of Earnings to Fixed Charges......................................... 6
General Description of Securities and Risk Factors......................... 7
Description of Debt Securities............................................. 7
Description of Capital Stock............................................... 17
Plan of Distribution....................................................... 21
Legal Matters.............................................................. 22
Experts.................................................................... 22
</TABLE>
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$600,000,000
DEBT SECURITIES
LOGO
10,000,000 SHARES
SERIES A COMMON STOCK
----------------
PROSPECTUS
----------------
OCTOBER 17, 1997
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table indicates the expenses to be incurred in connection with
the offerings described in this Registration Statement. All expenses are
estimated except the Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........... $ 274,754
Blue sky fees (including counsel fees)........................ 5,000
Accounting fees............................................... 150,000
Legal fees and expenses....................................... 400,000
Printing and engraving fees................................... 125,000
Miscellaneous................................................. 245,246
----------
Total....................................................... $1,200,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the Delaware General Corporation Law (the
"DGCL") empowers a corporation to indemnify any director or officer, or former
director or officer, who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation), against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding provided that such
director or officer acted in good faith and in a manner reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, provided that such director or
officer had no cause to believe his or her conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of
the capacities set forth above, against expenses actually and reasonably
incurred in connection with the defense or settlement of such action or suit
provided that such director or officer acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of any
claim, issue or matter as to which such director or officer shall have been
adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action was brought shall
determine that despite the adjudication of liability such director or officer
is fairly and reasonably entitled to indemnity for such expenses as the court
shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to in subsections (a) and (b) or in the defense of
any claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
or her in connection therewith; that indemnification provided for in Section
145 shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled; and that the corporation shall have power to purchase
and maintain insurance on behalf of a director or officer of the corporation
against any liability asserted against him or her or incurred by him or her in
any such capacity or arising out of his or her status as such whether or not
the corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Article Seven of the Company's Certificate of Incorporation, as amended and
restated, provides that the Company shall indemnify any and all of its
directors and officers, or former directors and officers, or any person
II-1
<PAGE>
who may have served at the Company's request as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise.
Article Eight of the Company's Certificate of Incorporation, as amended and
restated, provides that no director or former director of the Company shall be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director to the fullest extent permitted by Delaware Law.
The Company maintains liability insurance insuring its officers and
directors against liabilities that they may incur in such capacities,
including liabilities arising under the Federal securities laws other than
liabilities arising out of the filing of a registration statement with the
Securities and Exchange Commission.
ITEM 16. EXHIBITS.
The following is a list of all exhibits filed as a part of this Registration
Statement on Form S-3:
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement (for equity securities).*
1.2 Form of Underwriting Agreement (for debt securities).*
2.1 Amended and Restated Agreement and Plan of Merger, dated as of March 26,
1997, by and among The Hearst Corporation, HAT Merger Sub, Inc., HAT
Contribution Sub, Inc. and the Company (incorporated by reference to
Exhibit 2.1 of the Company's Registration Statement on Form S-4
(Registration No. 333-32487)).
4.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Appendix C of the Company's Registration
Statement on Form S-4 (File No. 333-32487)).
4.2 Amended and Restated Bylaws of the Company (incorporated by reference to
Exhibit 4.2 of the Company's Form 8-A/A).
4.3 Form of Indenture for Debt Securities (included in Exhibit 4.3).
4.4 Form of Debt Securities (included in Exhibit 4.3).
4.5 Form of specimen certificate representing shares of Series A Common Stock
(incorporated by reference to Exhibit 4.3 of the Company's Form 8-A/A).
4.6 Form of Indenture relating to the Senior Subordinated Notes due 2005
(including form of security) (incorporated by reference to Exhibit 4.1 of
the Company's Form 10-K for the fiscal year ending December 31, 1996).
4.7 First Supplemental Indenture dated as of June 1, 1996 among KHBS Argyle
Television, Inc. and Arkansas Argyle Television, Inc. and United States
Trust Company of New York (incorporated by reference to the Company's
Current Report on Form 8-K dated June 11, 1996).
4.8 Second Supplemental Indenture dated as of August 29, 1997 among KMBC
Hearst-Argyle Television, Inc., WBAL Hearst-Argyle Television, Inc., WCVB
Hearst-Argyle Television, Inc., WISN Hearst-Argyle Television, Inc., WTAE
Hearst-Argyle Television, Inc. and United States Trust Company of New
York.**
4.9 Form of Note (included in Exhibit 4.6).
4.10 Form of Registration Rights Agreement among the Company and the Holders
(incorporated by reference to Exhibit B to Exhibit 2.1 of the Company's
Registration Statement on Form S-4 (File No. 333-32487)).
5.1 Opinion of Rogers & Wells as to legality of the securities registered
hereby.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Price Waterhouse LLP.
23.4 Consent of Rogers & Wells (set forth in its opinion filed as Exhibit
5.1).
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
24.1 Powers of attorney (previously included on the signature pages to this
Registration Statement as originally filed).
25.1 Statement of Eligibility and Qualification on Form T-1 of Trustee under
the Indenture.
99.1 Form of Prospectus Supplement relating to shares of Series A Common
Stock.
99.2 Form of Prospectus Supplement relating to Senior Notes due 2007 and
Debentures due 2027.
</TABLE>
- --------
* To be filed by amendment, by incorporation by reference or by filing of a
Current Report on Form 8-K in connection with the offering of the
Securities.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
II-3
<PAGE>
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act ("Act") in accordance
with the rules and regulations prescribed by the Commission under section
305(b)(2) of the Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of New York, State of New York, on the 16th day of October, 1997.
HEARST-ARGYLE TELEVISION, INC.
/s/ Bob Marbut
By: _________________________________
Bob Marbut
Chairman of the Board and
Co-Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Chairman of the Board and
____________________________________ Co-Chief Executive Officer
Bob Marbut (Principal Executive Officer)
* President and Co-Chief Executive
____________________________________ Officer (Principal Executive
John G. Conomikes Officer)
* Executive Vice President, Chief
____________________________________ Operating Officer and Director
David J. Barrett
* Chief Financial Officer
____________________________________ Senior Vice President and (Principal
Harry T. Hawks Financial Officer)
* Controller (Principal Accounting
____________________________________ Officer)
Teresa Lopez
* Director
____________________________________
Frank A. Bennack, Jr.
* Director
____________________________________
Victor F. Ganzi
* Director
____________________________________
George R. Hearst, Jr.
* Director
____________________________________
William R. Hearst III
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Director
____________________________________
Gilbert C. Maurer
* Director
____________________________________
David Pulver
* Director
____________________________________
Virginia H. Randt
* Director
____________________________________
Caroline L. Williams
</TABLE>
* By Dean H. Blythe, Attorney-in-fact.
/s/ Dean H. Blythe
-------------------------------
Attorney-in-fact
October 16, 1997
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement (for equity
securities).*
1.2 Form of Underwriting Agreement (for debt securities).*
2.1 Amended and Restated Agreement and Plan of Merger,
dated as of March 26, 1997, by and among The Hearst
Corporation, HAT Merger Sub, Inc., HAT Contribution
Sub, Inc. and the Company (incorporated by reference to
Exhibit 2.1 of the Company's Registration Statement on
Form S-4 (Registration No. 333-32487)).
4.1 Amended and Restated Certificate of Incorporation of
the Company (incorporated by reference to Appendix C of
the Company's Registration Statement on Form S-4 (File
No. 333-32487)).
4.2 Amended and Restated Bylaws of the Company
(incorporated by reference to Exhibit 4.2 of the
Company's Form 8-A/A).
4.3 Form of Indenture for Debt Securities.
4.4 Form of Debt Securities (included in Exhibit 4.3).
4.5 Form of specimen certificate representing shares of
Series A Common Stock (incorporated by reference to
Exhibit 4.3 of the Company's Form 8-A/A).
4.6 Form of Indenture relating to the Senior Subordinated
Notes due 2005 (including form of security)
(incorporated by reference to Exhibit 4.1 of the
Company's Form 10-K for the fiscal year ending December
31, 1996).
4.7 First Supplemental Indenture dated as of June 1, 1996
among KHBS Argyle Television, Inc. and Arkansas Argyle
Television, Inc. and United States Trust Company of New
York (incorporated by reference to the Company's
Current Report on Form 8-K dated June 11, 1996).
4.8 Second Supplemental Indenture dated as of August 29,
1997 among KMBC Hearst-Argyle Television, Inc., WBAL
Hearst-Argyle Television, Inc., WCVB Hearst-Argyle
Television, Inc., WISN Hearst-Argyle Television, Inc.,
WTAE Hearst-Argyle Television, Inc. and United States
Trust Company of New York.**
4.9 Form of Note (included in Exhibit 4.6).
4.10 Form of Registration Rights Agreement among the Company
and the Holders (incorporated by reference to Exhibit B
to Exhibit 2.1 of the Company's Registration Statement
on Form S-4 (File No. 333-32487)).
5.1 Opinion of Rogers & Wells as to legality of the
securities registered hereby.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Price Waterhouse LLP.
23.4 Consent of Rogers & Wells (set forth in its opinion
filed as Exhibit 5.1).
24.1 Powers of attorney (previously included on the
signature pages to this Registration Statement as
originally filed).
25.1 Statement of Eligibility and Qualification on Form T-1
of Trustee under the Indenture.
99.1 Form of Prospectus Supplement relating to shares of
Series A Common Stock.
99.2 Form of Prospectus Supplement relating to Senior Notes
due 2007 and Debentures due 2027.
</TABLE>
- --------
* To be filed by amendment, by incorporation by reference or by filing of a
Current Report on Form 8-K in connection with the offering of the
Securities.
** Previously filed.
<PAGE>
EXHIBIT 4.3
================================================================================
HEARST-ARGYLE TELEVISION, INC.
AND
BANK OF MONTREAL TRUST COMPANY,
TRUSTEE
_______________________________________
FORM OF
INDENTURE
DATED AS OF OCTOBER __, 1997
_______________________________________
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Certain Terms Defined......................................... 1
SECTION 1.2 Compliance Certificates and Opinions.......................... 9
SECTION 1.3 Form of Documents Delivered to Trustee........................ 9
SECTION 1.4 Acts of Holders...............................................10
SECTION 1.5 Notices, Etc., to Trustee and Company.........................11
SECTION 1.6 Notice to Holders; Waiver.....................................12
SECTION 1.7 Conflict with Trust Indenture Act.............................13
SECTION 1.8 Effect of Headings and Table of Contents......................13
SECTION 1.9 Successors and Assigns........................................13
SECTION 1.10 Separability Clause...........................................13
SECTION 1.11 Benefits of Indenture.........................................13
SECTION 1.12 Governing Law.................................................13
SECTION 1.13 Legal Holidays................................................13
SECTION 1.14 Incorporators, Stockholders, Officers and
Directors Exempt from Individual Liability....................14
SECTION 1.15 Counterparts..................................................14
ARTICLE II
SECURITY FORMS
SECTION 2.1 Forms Generally...............................................14
SECTION 2.2 Form of Trustee's Certificate of
Authentication................................................15
SECTION 2.3 Securities Issuable in the Form of a Global
Security. ....................................................15
ARTICLE III
THE SECURITIES
SECTION 3.1 Amount Unlimited; Issuable in Series..........................19
SECTION 3.2 Denominations.................................................22
SECTION 3.3 Execution, Authentication, Delivery and
Dating........................................................22
SECTION 3.4 Temporary Securities..........................................24
SECTION 3.5 Registration; Registration of Transfer and
Exchange. ....................................................25
SECTION 3.6 Mutilated, Destroyed, Lost and Stolen
Securities....................................................26
SECTION 3.7 Payment of Interest; Interest Rights
Preserved.....................................................27
SECTION 3.8 Persons Deemed Owners.........................................27
SECTION 3.9 Cancellation..................................................28
SECTION 3.10 Computation of Interest.......................................28
SECTION 3.11 Currency of Payments in Respect of Securities.................28
SECTION 3.12 Judgments.....................................................29
<PAGE>
Page
----
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture.......................29
SECTION 4.2 Application of Trust Money....................................31
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default.............................................31
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment............33
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee. ......................................35
SECTION 5.4 Trustee May File Proofs of Claim..............................36
SECTION 5.5 Trustee May Enforce Claims Without Possession
of Securities........ ........................................37
SECTION 5.6 Application of Money Collected................................37
SECTION 5.7 Limitation on Suits...........................................37
SECTION 5.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest. ...........................38
SECTION 5.9 Restoration of Rights and Remedies............................38
SECTION 5.10 Rights and Remedies Cumulative................................39
SECTION 5.11 Delay or Omission Not Waiver..................................39
SECTION 5.12 Control by Holders............................................39
SECTION 5.13 Waiver of Past Defaults.......................................40
SECTION 5.14 Undertaking for Costs.........................................40
SECTION 5.15 Waiver of Stay or Extension Laws..............................40
SECTION 5.16 Duty to Accelerate............................................41
ARTICLE VI
THE TRUSTEE
SECTION 6.1 Certain Duties and Responsibilities...........................41
SECTION 6.2 Notice of Defaults............................................42
SECTION 6.3 Certain Rights of Trustee.....................................43
SECTION 6.4 Not Responsible for Recitals or Issuance of
Securities. ..................................................44
SECTION 6.5 May Hold Securities...........................................44
SECTION 6.6 Money Held in Trust...........................................44
SECTION 6.7 Compensation and Reimbursement................................45
SECTION 6.8 Disqualification; Conflicting Interests. .....................45
SECTION 6.9 Corporate Trustee Required; Eligibility. .....................45
SECTION 6.10 Resignation and Removal; Appointment of
Successor.....................................................46
SECTION 6.11 Acceptance of Appointment by Successor........................48
SECTION 6.12 Merger, Conversion, Consolidation or Succession to
Business. ....................................................49
SECTION 6.13 Preferential Collection of Claims Against Company.............49
SECTION 6.14 Appointment of Authenticating Agent...........................50
<PAGE>
Page
----
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 Company to Furnish Trustee Names and Addresses of
Holders. .....................................................52
SECTION 7.2 Preservation of Information; Communications to
Holders.......................................................52
SECTION 7.3 Reports by Trustee............................................54
SECTION 7.4 Reports by Company............................................55
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1 Company May Consolidate, Etc., Only on Certain
Terms. .......................................................56
SECTION 8.2 Successor Corporation Substituted.............................57
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of
Holders. .....................................................57
SECTION 9.2 Supplemental Indentures with Consent of Holders...............58
SECTION 9.3 Execution of Supplemental Indentures..........................59
SECTION 9.4 Effect of Supplemental Indentures.............................60
SECTION 9.5 Conformity with Trust Indenture Act...........................60
SECTION 9.6 Reference in Securities to Supplemental
Indentures. ..................................................60
ARTICLE X
COVENANTS
SECTION 10.1 Payment of Principal, Premium and Interest....................60
SECTION 10.2 Maintenance of Office or Agency...............................60
SECTION 10.3 Money for Securities Payments To Be Held in Trust.............61
SECTION 10.4 Corporate Existence...........................................62
SECTION 10.5 Maintenance of Properties.....................................63
SECTION 10.6 Payment of Taxes and Other Claims.............................63
SECTION 10.7 Limitation on Indebtedness Secured by a Mortgage..............63
SECTION 10.8 Limitation on Sale and Lease-Back.............................65
SECTION 10.9 Statement as to Compliance....................................66
SECTION 10.10 Waiver of Certain Covenants...................................66
SECTION 10.11 Designated Subsidiaries.......................................67
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1 Applicability of Article......................................68
<PAGE>
Page
----
SECTION 11.2 Election to Redeem; Notice to Trustee.........................68
SECTION 11.3 Selection by Trustee of Securities to Be Redeemed ............68
SECTION 11.4 Notice of Redemption..........................................69
SECTION 11.5 Deposit of Redemption Price...................................69
SECTION 11.6 Securities Payable on Redemption Date.........................70
SECTION 11.7 Securities Redeemed in Part...................................70
ARTICLE XII
SINKING FUNDS
SECTION 12.1 Applicability of Article......................................70
SECTION 12.2 Satisfaction of Sinking Fund Payments with Securities.........71
SECTION 12.3 Redemption of Securities for Sinking Fund.....................71
ARTICLE XIII
DEFEASANCE
SECTION 13.1 Applicability of Article......................................72
SECTION 13.2 Defeasance upon Deposit of Moneys or U.S.
Government Obligations........................................72
SECTION 13.3 Deposited Moneys and U.S. Government Obligations
to Be Held in Trust...........................................74
SECTION 13.4 Reinstatement.................................................74
SECTION 13.5 Repayment to Company..........................................75
- --------------------------------------------------------------------------------
NOTE: This Table of Contents shall not, for any purpose, be deemed
to be a part of the Indenture.
<PAGE>
INDENTURE
THIS INDENTURE, is dated as of October __, 1997 between Hearst-Argyle
Television, Inc., a Delaware corporation (herein called the "Company"), and Bank
of Montreal Trust Company, a _________________________, as Trustee (herein
called the "Trustee").
RECITALS:
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein collectively called
the "Securities" or in the singular, a "Security"), to be issued in one or more
series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series thereof,
as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Certain Terms Defined.
---------------------
For all purposes of this Indenture and any indenture supplemental
hereto, except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein as of the date of this Indenture;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted
<PAGE>
hereunder shall mean such accounting principles as are generally accepted at the
date of such computation; and
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act," when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means, with respect to the Securities of any series,
any Person authorized by the Trustee to act on behalf of the Trustee to
authenticate the Securities of such series.
"Board of Directors" means either the board of directors of the Company or
a duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the City of New York, State
of New York, are authorized or obligated by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor corporation shall have become such pursuant to
the applicable provisions of
2
<PAGE>
this Indenture, and thereafter "Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Controller,
an Assistant Controller, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Subsidiary" means at any date any Subsidiary the accounts of
which are consolidated with those of the Company as of such date for public
financial reporting purposes.
"Consolidated Net Tangible Assets" has the meaning specified in Section
10.7.
"Corporate Trust Office" means the principal office of the Trustee in
________, New York, New York _______ at which at any particular time its
corporate trust business shall be administered, which office at the date of
execution of this Indenture is located at _________, New York, New York ______.
"Corporation" includes corporations, associations, business trusts, joint-
stock companies, limited liability companies, joint ventures, general
partnerships and limited partnerships.
"Currency" means Dollars or Foreign Currency.
"Depository" means unless otherwise specified by the Company pursuant to
either Sections 2.3 or 3.1, with respect to Securities of any series issuable or
issued as a Global Security, The Depository Trust Company, New York, New York,
or any successor thereto registered as a clearing agency under Section 17A of
the Securities Exchange Act of 1934, as amended, or other applicable statute or
regulation.
"Designated Subsidiary" has the meaning specified in Section 10.11.
"Discharged" has the meaning specified in Section 13.2.
"Dollar" or "$" means the currency of the United States that at the time of
payment is legal tender for the payment of public and private debts.
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
3
<PAGE>
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 5.1.
"Fixed Rate Security" means a Security which provides for the payment of
interest at a fixed rate.
"Floating Rate Security" means a Security which provides for the payment of
interest at a variable rate determined periodically by reference to an interest
rate index specified pursuant to Section 3.1.
"Foreign Currency" means a currency issued by the government of any country
other than the United States or a composite currency the value of which is
determined by reference to the values of the currencies of any group of
countries.
"Funded Debt" has the meaning specified in Section 10.8.
"Global Security" means a Security issued to evidence all or a part of any
series of Securities which is executed by the Company and authenticated and
delivered by the Trustee to the Depository or pursuant to the Depository's
instruction, all in accordance with this Indenture and pursuant to a Company
Order, which shall be registered as to principal and interest in the name of the
Depository or its nominee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" has the meaning specified in Section 10.7.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 3.1.
"Maturity," when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal or, in the case of
an Original Issue Discount Security, the principal amount payable upon a
declaration of acceleration pursuant to Section 5.2, becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Mortgage" has the meaning specified in Section 10.7.
4
<PAGE>
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount" shall have the same meaning as such term is given
in Section 1273 of the Internal Revenue Code of 1986, as amended, or any
successor provision thereto.
"Original Issue Discount Security" means (i) any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
the declaration of acceleration of the Maturity thereof pursuant to Section 5.2,
and (ii) any other Security deemed an Original Issue Discount Security for
United States Federal income tax purposes.
"Outstanding", when used with respect to Securities or any series of
Securities, means, as of the date of determination, all Securities or all
Securities of such series, as the case may be, theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
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provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (a) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 5.2; (b)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, then the principal amount of such Security which
shall be deemed to be Outstanding shall be the amount as specified or determined
as contemplated by Section 3.1; (c) the principal amount of a Security
denominated in one or more foreign currencies or currency units which shall be
deemed to be Outstanding shall be the U.S. dollar equivalent, determined as of
such date in the manner provided as contemplated by Section 3.1, of the
principal amount of such Security, (or, in the case of a Security described in
clause (a) or (b) above, of the amount determined as provided in such clause);
and (d) Securities owned by the Company or any other obligor upon the Securities
or any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, waiver or other action, only
Securities which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security, and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
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"Principal Property" means any office building, television station or
transmission facility owned by the Company or any Restricted Subsidiary or any
other property or right owned by or granted to the Company or any Restricted
Subsidiary and used or held for use in the television business conducted by the
Company or any Restricted Subsidiary, except for any such property or right
which in the opinion of the Board of Directors of the Company, as set forth in a
Board Resolution adopted in good faith, is not of material importance to the
total business conducted by the Company and its Restricted Subsidiaries
considered as one enterprise.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Subsidiary" has the meaning specified in Section 10.7.
"Sale and Lease-Back Transaction" has the meaning specified in Section
10.8.
"Securities" or "Security" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities or Security
authenticated and delivered under this Indenture.
"Security Register" has the meaning specified in Section 3.5.
"Significant Subsidiary" has the meaning specified in Section 5.1.
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"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which an amount equal to the principal of
such Security or an installment of principal thereof or interest thereon is due
and payable.
"Subsidiary" means (i) a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other Subsidiaries
and (ii) any partnership, association, joint venture or other entity (a) in
which the Company or one or more Subsidiaries of the Company has more than a 50%
equity interest at the time or (b) as to which the Company or one or more of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise. For the purposes of this
definition, "voting stock" means stock which ordinarily has voting power for the
election of directors or other governing body of such corporation, whether at
all times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such with respect to
one or more series of Securities pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean and include each Person who is
then a Trustee hereunder, and if at any time there is more than one such Person,
"Trustee" shall mean and include each such Person, and "Trustee," as used with
respect to the Securities of any series, shall mean the Trustee with respect to
Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as provided in Section
9.5.
"United States" means the United States of America (including the District
of Columbia), its territories, its possessions and other areas subject to its
jurisdiction.
"United States Alien" means any person who, for United States Federal
income tax purposes, is a foreign corporation, a nonresident alien individual, a
nonresident fiduciary of a foreign estate or trust, or a foreign partnership one
or more members of which is, for United States Federal income tax purposes, a
foreign corporation, a nonresident alien individual or a nonresident alien
fiduciary of a foreign estate or trust.
"U.S. Government Obligations" has the meaning specified in Section 13.2.
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"Value" has the meaning set forth in Section 10.8.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 1.2 Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate (other than any Officers' Certificate delivered pursuant
to Section 10.9) or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3 Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person
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may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Any certificate or opinion of an officer or opinion of counsel may be
based, insofar as it relates to any accounting matters, upon a certificate or
opinion of, or representations by, an accountant or firm of accountants in the
employ of the Company, unless such officer or counsel, as the case may be,
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such accounting matters are
erroneous. Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by a
specified percentage of Holders of one or more series of Securities then
Outstanding may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such specified percentage of Holders in
person or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments is or are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or
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instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and, subject to Section 6.1, conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) The Company may fix a record date for the purpose of determining
the identity of the Holders entitled to participate in any Act authorized or
permitted under this Indenture, which record date shall be the later of (i) 10
days prior to the first solicitation of the written instruments required for
such Act or (ii) the date of the most recent list of Holders furnished to the
Trustee prior to such solicitation pursuant to Section 7.1. If such a record
date is fixed, the Persons who were the Holders of the Securities of the
affected series at the close of business on such record date (or their duly
authorized proxies) shall be the only Persons entitled to execute written
instruments with respect to such Act, or to revoke any written instrument
previously delivered, whether or not such Persons shall continue to be Holders
of the Securities of such series after such record date. No such written
instrument shall be valid or effective for more than 150 days after such record
date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
SECTION 1.5 Notices, Etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of Holders or other document
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provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with,
(a) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office, or
(b) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to the
attention of its Secretary at 888 Seventh Avenue, New York, New York 10106, or
at any other address previously furnished in writing to the Trustee by the
Company.
Any such Act or other document shall be in the English language.
SECTION 1.6 Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice provided, however, that, in any case, any notice to
Holders of Floating Rate Securities regarding the determination of a periodic
rate of interest, if such notice is required pursuant to Section 3.1, shall be
sufficiently given if given in the manner specified pursuant to Section 3.1. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
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SECTION 1.7 Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with the duties
imposed by the Trust Indenture Act, the Trust Indenture Act shall control. If
any provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provisions shall
be deemed to apply to this Indenture as so modified or excluded, as the case may
be.
SECTION 1.8 Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.9 Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.10 Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11 Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 1.12 Governing Law.
-------------
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York except as may be otherwise
required by mandatory provisions of law.
SECTION 1.13 Legal Holidays.
--------------
Unless otherwise specified pursuant to Section 3.1, in any case where the
due date of interest on or principal of any Security or the date fixed for
redemption of any Security shall not be a Business Day then, notwithstanding any
other provision of this Indenture or of the Securities, payment of interest or
principal (and premium, if any) need not be made on such date,
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but may be made on the next succeeding Business Day with the same force and
effect as if made on such due date or Redemption Date; provided that no interest
shall accrue for the period from and after such prior date.
SECTION 1.14 Incorporators, Stockholders, Officers and Directors Exempt from
---------------------------------------------------------------
Individual Liability.
--------------------
No recourse under or upon any obligation, covenant or agreement contained
in this Indenture, or in any Security, or because of any indebtedness evidenced
thereby, shall be had against any incorporator, as such, or against any past,
present or future stockholder, officer or director, as such, of the Company or
of any successor, either directly or through the Company or any successor, under
any rule of law, statute or constitutional provision or by the enforcement of
any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities by the Holders thereof and as part of the consideration for the issue
of the Securities.
SECTION 1.15 Counterparts.
------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
ARTICLE II
SECURITY FORMS
SECTION 2.1 Forms Generally.
---------------
The Securities of each series shall be in substantially the form or forms
(including global form) as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with any law or with any rules made pursuant
thereto or with any rules of any securities exchange or all as may, consistently
herewith, be determined by the officers executing such Securities to be
necessary or appropriate, as evidenced by their execution of the Securities. If
the form of Securities of any series is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action together with
a true and correct copy of the form of the
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Securities of such series approved by or pursuant to such Board Resolution shall
be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.3 for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed, or engraved on
steel engraved borders, or word processed or may be produced in any other
manner, provided, that such method is permitted by the rules of any securities
exchange on which such securities may be listed, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 2.2 Form of Trustee's Certificate of Authentication.
-----------------------------------------------
The Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
This is one of the Securities of the series designated pursuant to the
within-mentioned Indenture.
------------------------------
as Trustee
OR
By:___________________________
as Authenticating Agent
By:___________________________
Authorized Officer
SECTION 2.3 Securities Issuable in the Form of a Global Security.
----------------------------------------------------
(a) If the Company shall establish pursuant to Section 3.1 that the
Securities of a particular series are to be issued in whole or in part in the
form of one or more Global Securities, then the Company shall execute and the
Trustee shall, in accordance with Section 3.3 and the Company Order delivered to
the Trustee thereunder, authenticate and deliver, such Global Security or
Securities, which (i) shall represent, and shall be denominated in an amount
equal to the aggregate principal amount of, the Outstanding Securities of such
series to be represented by such Global Security or Securities, (ii) shall be
registered in the name of the Depository for such Global Security or Securities
or its nominee, (iii) shall be delivered by the Trustee to the Depository or
pursuant to the Depository's
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instruction and (iv) shall bear a legend substantially to the following effect:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
(b) Notwithstanding any other provision of this Section 2.3 or of
Section 3.5, unless otherwise provided in the Global Security, a Global Security
may be transferred, in whole but not in part and in the manner provided in
Section 3.5, only to the Depository or another nominee of the Depository for
such Global Security, or to a successor Depository for such Global Security
selected or approved by the Company or to a nominee of such successor
Depository. Except as provided below, owners solely of beneficial interests in a
Global Security shall not be entitled to receive physical delivery of the
Securities represented by such Global Security and will not be considered the
Holders thereof for any purpose under the Indenture.
(c) (i) If at any time the Depository for a Global Security notifies
the Company that it is unwilling or unable to continue as Depository for such
Global Security or if at any time the Depository for the Securities for such
series shall no longer be eligible or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, the
Company shall appoint a successor Depository with respect to such Global
Security. If a successor Depository for such Global Security is not appointed by
the Company within 90 days after the Company receives such notice or becomes
aware of such ineligibility, the Company's election pursuant to Section 3.1(p)
shall no longer be effective with respect to such Global Security and the
Company will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of individual Securities of such series in exchange
for such Global Security, will authenticate and deliver individual Securities of
such series of like tenor and terms in definitive form in an aggregate principal
amount equal to the principal amount of the Global Security in exchange for such
Global Security.
(ii) The Company may at any time and in its sole discretion determine
that the Securities of any series issued or issuable in the form of one or more
Global Securities shall no longer be represented by such Global Security or
Securities. In such event the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of individual
Securities of such series in exchange in whole or in part for such Global
Security, will authenticate and deliver individual Securities of such series of
like tenor and terms in
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definitive form in an aggregate principal amount equal to the principal amount
of such Global Security or Securities representing such series in exchange for
such Global Securities or Securities.
(iii) A Global Security will also be exchangeable if there shall
have occurred and is continuing an Event of Default or an event which, with the
giving of notice or lapse of time or both, would constitute an Event of Default
with respect to the Securities of such series represented by such Global
Security. In such event the Company will execute, and the Trustee, upon receipt
of a Company Order for the authentication and delivery of individual Securities
of such series in exchange in whole or in part for such Global Security, will
authenticate and deliver individual Securities of such series of like tenor and
terms in definitive form in an aggregate principal amount equal to the principal
amount of such Global Security or Securities representing such series in
exchange for such Global Securities or Securities.
(iv) If specified by the Company pursuant to Section 3.1 with respect
to Securities issued or issuable in the form of a Global Security, the
Depository for such Global Security may surrender such Global Security in
exchange in whole or in part for individual Securities of such series of like
tenor and terms in definitive form on such terms as are acceptable to the
Company and such Depository. Thereupon the Company shall execute, and the
Trustee shall authenticate and deliver, without service charge, (1) to each
Person specified by such Depository a new Security or Securities of the same
series of like tenor and terms and of any authorized denominations as requested
by such Person or the Depository in aggregate principal amount equal to and in
exchange for such Person's beneficial interest in the Global Security; and (2)
to such Depository a new Global Security of like tenor and terms and in a
denomination equal to the difference, if any, between the principal amount of
the surrendered Global Security and the aggregate principal amount of Securities
delivered to Holders thereof.
(v) Upon issuance, all Securities with identical terms and held by the
Depository on behalf of its participants will be represented by one Global
Security and be deposited with the Depository and registered in the name of a
nominee of the Depository. The Company may request the Trustee at any time to
consolidate two or more outstanding Global Securities having identical terms and
for which interest has been paid to the same date.
(vi) In any exchange provided for in any of the preceding five
paragraphs, the Company will execute and the Trustee will authenticate and
deliver individual fully registered Securities in authorized denominations,
provided that the
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definitive Securities so issued in exchange for a Global Security shall be in
denominations of $100,000 and any aggregate principal amount and tenor as the
portion of such Global Security to be exchanged, and provided further that,
unless the Company agrees otherwise, Securities in certificated registered form
will be issued in exchange for a Global Security, or any portion thereof, only
if such Securities in certificated registered form were requested by written
notice to the Trustee or the Securities Registrar by or on behalf of a person
who is beneficial owner of an interest thereof given through the Holder hereof.
Except as provided above, owners of beneficial interest in a Global Security
will not be entitled to receive physical delivery of Securities in certificated
registered form and will not be considered the Holders thereof for any purpose
under the Indenture. No service charge shall be made for any such registration
of transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Upon the exchange of a Global Security for individual Securities, such Global
Security shall be cancelled by the Trustee. Securities issued in exchange for a
Global Security pursuant to this Section 2.3 shall be registered in such names
and in such authorized denominations as the Depository for such Global Security,
pursuant to the instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities
to the persons in whose names such Securities are so registered.
(vii) Members in and participants of the Depository shall have
no rights under the Indenture with respect to any Global Security held on their
behalf by a Depository, and such Depository may be treated by the Company, the
trustee and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever.
(d) Any Company Order delivered pursuant to Section 3.3 by the Company
with respect to the authentication, exchange, endorsement or delivery or
redelivery of a Global Security shall be in writing, signed by any one of the
officers enumerated under the definition of "Company Order" contained in Section
1.1 or by any officer authorized by a previously delivered Company Order, but
need not comply with Section 1.2 and need not be accompanied by an Opinion of
Counsel.
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ARTICLE III
THE SECURITIES
SECTION 3.1 Amount Unlimited; Issuable in Series.
------------------------------------
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the initial issuance of Securities of any series:
(a) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(b) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture, except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Sections 2.3, 3.4, 3.5, 3.6, 9.6 or 11.7 and except for Securities which,
pursuant to Section 3.3, are deemed never to have been authenticated and
delivered;
(c) the date or dates on which or periods during which the Securities
of the series may be issued and the date or dates on which or the range of dates
within which the principal of (and premium, if any, on) the Securities of the
series are or may be payable;
(d) the rate or rates or the methods of determination thereof at which
the Securities of the series shall bear interest, if any, the date or dates from
which such interest shall accrue and the dates on which such interest shall be
payable and the record date for the interest payable on any such interest date;
(e) the place or places, if any, in addition to the City of New York,
where, subject to Section 10.2, the principal of (and premium, if any) and
interest on Securities of the series shall be payable, any Securities of the
series may be surrendered for registration of transfer, Securities of the series
may be surrendered for exchange and notices and demands to or upon the Company
in respect of the Securities of the series and this Indenture may be served;
(f) the period or periods within which or the dates on which, the price
or prices at which and the terms and conditions
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upon which Securities of the series may be redeemed, in whole or in part, at the
option of the Company and/or the method by which such period or periods, dates,
price or prices and terms and conditions shall be determined;
(g) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which Securities of
the series shall be redeemed or purchased or repaid, in whole or in part,
pursuant to such obligation and/or the method by which such period or periods,
price or prices or terms and conditions shall be determined;
(h) provisions, if any, for the defeasance of Securities of the series;
(i) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be issuable;
(j) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 5.2 or
the method by which such portion shall be determined; and
(k) if other than Dollars, the Foreign Currency in which Securities of
the series shall be denominated, or in which payment of the principal of (and
premium, if any) and interest on the Securities of the series may be made or the
method by which such Foreign Currency shall be determined;
(l) if the principal of (and premium, if any) or interest on Securities
of the series are to be payable, at the election of the Company or a Holder
thereof, in a Currency other than that in which the Securities are denominated
or stated to be payable without such election, the periods within which and the
terms and conditions upon which, such election may be made and the time and the
manner of determining the exchange rate between the Currency in which the
Securities are denominated or payable without such election and the Currency in
which the Securities are to be paid if such election is made;
(m) if the amount of payments of principal of (and premium, if any) or
interest on the Securities of the series may be determined with reference to an
index including, but not limited to, an index based on a Currency or Currencies
other than that in which the Securities are payable, or any other type of index,
the manner in which such amounts shall be determined;
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(n) if the Securities of the series are denominated or payable in a
Foreign Currency, any other terms concerning the payment of principal of (and
premium, if any) or any interest on such Securities (including the Currency or
Currencies of payment thereof);
(o) any additions to or changes in the Events of Default or covenants
provided for with respect to Securities of the series or any Events of Default
or covenants herein specified which shall not be applicable to the Securities of
the series;
(p) whether the Securities of the series shall be issued in whole or in
part in the form of a Global Security or Securities; the terms and conditions,
if any, upon which such Global Security or Securities may be exchanged in whole
or in part for other individual Securities or for other Global Securities; and
the Depository for such Global Security or Securities;
(q) whether the Securities of the series are to be issuable in
definitive form (whether upon original issuance or upon exchange of a temporary
Security of the series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, and, if so, the form and terms of
such certificates, documents or conditions;
(r) if the Company will pay additional amounts on any of the Securities
and coupons, if any, of the series to any Holder who is a United States Alien
(including any modification in the definition of such term), in respect of any
tax, assessment or governmental charge withheld or deducted, under what
circumstances and with what procedures and documentation the Company will pay
such additional amounts, whether such additional amount will be treated as
interest or principal pursuant to this Indenture, and whether the Company will
have the option to redeem such Securities rather than pay additional amounts
(and the terms of any such option);
(s) any terms applicable to Original Issue Discount, if any, including
the rate or rates at which such Original Issue Discount, if any, shall accrue;
(t) the exchange or conversion of the Securities of that series, at the
option of the Holders thereof, for or into new Securities of a different series
or other securities or other property, including shares of capital stock of the
Company or any subsidiary of the Company or securities directly or indirectly
convertible into or exchangeable for any such shares; and
(u) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
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All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
Board Resolution and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. All Securities of any series need not be issued
at the same time and may be issued from time to time, consistent with the terms
of this Indenture, if so provided by or pursuant to such Board Resolution and
set forth in such Officers' Certificate or in any such indenture supplemental
hereto.
At the option of the Company, interest on the Securities of any series that
bears interest may be paid by mailing a check to the address of the person
entitled thereto as such address shall appear in the Security Register.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 3.2 Denominations.
-------------
The Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified as contemplated by Section
3.1. In the absence of any such provisions with respect to the Securities of
any series, the Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof and shall be payable only in Dollars.
SECTION 3.3 Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents, under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
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authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order and subject to the provisions hereof shall authenticate
and deliver such Securities. If the form or terms of the Securities of the
series have been established in or pursuant to one or more Board Resolutions as
permitted by Sections 2.1 and 3.1, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and, subject to
Section 6.1, shall be fully protected in relying upon, an Opinion of Counsel
stating that:
(a) all instruments furnished by the Company to the Trustee in
connection with the authentication and delivery of such Securities conform to
the requirements of this Indenture and constitute sufficient authority hereunder
for the Trustee to authenticate and deliver such Securities;
(b) the form of such Securities has been established in conformity with
the provisions of this Indenture;
(c) the terms of such Securities have been established in conformity
with the provisions of this Indenture;
(d) in the event that the form or terms of such Securities have been
established in a supplemental indenture, the execution and delivery of such
supplemental indenture have been duly authorized by all necessary corporate
action of the Company, such supplemental indenture has been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
by the Trustee, is a valid and binding obligation enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(e) the execution and delivery of such Securities have been duly
authorized by all necessary corporate action of the Company and such Securities
have been duly executed by the Company and, assuming due authentication by the
Trustee and delivery by the Company, are the valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
entitled to the benefit of the Indenture, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law); and
(f) the amount of Outstanding Securities of such series, together with
the amount of such Securities, does not exceed any
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limit established under the terms of this Indenture on the amount of Securities
of such series that may be authenticated and delivered.
In the event that all Securities of a series are not issued at the same
time, the Trustee shall authenticate and deliver the Securities of such series
executed and delivered by the Company for original issuance upon receipt of an
order of the Company (which need not comply with Section 1.2 hereof), signed by
an officer or employee of the Company identified to the Trustee in an Officers'
Certificate, if the Trustee has previously received the Company Order and
Opinion of Counsel referred to in the third paragraph of this Section 3.3 with
respect to the issuance of any Securities of such series.
The Trustee shall not be required to authenticate such Securities if the
issue of such Securities pursuant to this Indenture will affect the Trustee's
own rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.
SECTION 3.4 Temporary Securities.
--------------------
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed,
word processed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company for that series,
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without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations. Until so
exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series.
SECTION 3.5 Registration; Registration of Transfer and Exchange.
---------------------------------------------------
The Company or the Trustee shall keep a register (the "Security Register")
in which, subject to such reasonable regulations as the Company or the Trustee
may prescribe, the Company or the Trustee shall provide for the registration of
Securities and of transfers of Securities.
Upon surrender for registration of transfer of any Security of any series
at the office or agency designated by the Company for that series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of the same
series, of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, subject to Section 2.3, Securities of any
series may be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount, upon
surrender of the Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company or any registrar with respect to such series of Securities, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax
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or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of,
or exchange Securities of any series during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 11.3 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
None of the Company, the Trustee, any Paying Agent or the Securities
Registrar will have any responsibility or liability for any aspect of the
Depository's records relating to or payment made on account of beneficial
ownership interests in a Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
If any mutilated Security is surrendered to the Company or to the Trustee,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon the Company's written request the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
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Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7 Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any interest payment date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the record date (as hereinafter defined) for such interest
notwithstanding the cancellation of such Security upon the registration of
transfer or exchange subsequent to the record date and prior to such interest
payment date; provided, however, that if and to the extent that the Company
shall default in the payment of the interest due on such interest payment date,
such defaulted interest shall be paid to the Persons in whose names outstanding
Securities are registered at the close of business on a subsequent record date
established by notice given by mail by and on behalf of the Company to the
Holders of Securities not less than fifteen days preceding such subsequent
record date, such record date to be not less than ten days preceding the date of
payment of such defaulted interest. The term "record date" as used in this
Section 3.7 with respect to any regular interest payment date shall mean such
day preceding such interest payment date as may have been established as the
record date with respect to an interest payment date for Securities of such
series in a Board Resolution in accordance with Section 3.1 hereof. The Company
may also make payment of any defaulted interest in any other lawful manner not
inconsistent with the requirements of any securities exchange in which the
Securities may be listed, and upon such notice as may be required by such
exchange if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this sentence, such manner of payment shall be deemed
practicable by the Trustee.
SECTION 3.8 Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security
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is registered as the owner of such Security for the purpose of receiving payment
of principal of (and premium, if any) and, subject to Section 3.7, interest on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
SECTION 3.9 Cancellation.
------------
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it; provided, however, that if surrendered to
any Authenticating Agent, such Securities shall be promptly cancelled by such
Authenticating Agent and forwarded to the Trustee. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities held by the Trustee shall be
disposed of as directed by a Company Order; provided that the Trustee shall not
be required to dispose of Securities in a manner deemed impracticable by the
Trustee.
SECTION 3.10 Computation of Interest.
-----------------------
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a year of twelve 30-day months.
SECTION 3.11 Currency of Payments in Respect of Securities.
---------------------------------------------
(a) Except as otherwise specified pursuant to Section 3.1, payment of
the principal of (and premium, if any) and interest on Securities of any series
will be made in Dollars.
(b) For purposes of any provision of the indenture where the Holders of
Outstanding Securities may perform an Act which requires that a specified
percentage of the Outstanding Securities of all series perform such Act and for
purposes of any decision or determination by the Trustee of amounts due and
unpaid for the principal (and premium, if any) and interest on the Securities of
all series in respect of which moneys are to be disbursed ratably, the principal
of (and premium, if any) and interest on the Outstanding Securities denominated
in a Foreign Currency will be the amount in Dollars based upon exchange rates
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determined as specified pursuant to Section 3.1 for Securities of such series,
as of the date for determining whether the Holders entitled to perform such Act
have performed it, or as of the date of such decision or determination by the
Trustee, as the case may be.
SECTION 3.12 Judgments.
---------
The Company may provide pursuant to Section 3.1 for Securities of any
series that the obligation, if any, of the Company to pay the principal of (and
premium, if any) and interest on the Securities of any series in a Foreign
Currency or Dollars (the "Designated Currency") as may be specified pursuant to
Section 3.1 is of the essence and thereby agree that, to the fullest extent
possible under applicable law, judgments in respect of such Securities shall be
given in the Designated Currency. In such event, the obligation of the Company
to make payments in the Designated Currency of the principal of (and premium, if
any) and interest on such Securities shall, notwithstanding any payment in any
other Currency (whether pursuant to a judgment or otherwise), be discharged only
to the extent of the amount of the Designated Currency that the Holder receiving
such payment may, in accordance with normal banking procedures, purchase with
the sum paid in such other Currency (after any premiums and cost of exchange) on
the Business Day in the country of issue of the Designated Currency immediately
following the day on which such Holder receives such payment. If the amount in
the Designated Currency that may be so purchased for any reason falls short of
the amount originally due, the Company shall pay such additional amounts as may
be necessary to compensate for such shortfall, and any obligation of the Company
not discharged by such payment shall be due as a separate and independent
obligation and, until discharged as provided herein, shall continue in full
force and effect.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture, with respect to the Securities of any series (if all series
issued under this Indenture are not to be affected), shall upon Company Request
cease to be of further effect (except as to any surviving rights of registration
of transfer or exchange of Securities herein expressly provided for), and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(a) either
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(i) all Securities theretofore authenticated and delivered (other than
(A) Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6 and (B)Securities for whose payment
money has theretofore been deposited in trust or segregated and held in trust by
the Company and thereafter repaid to the Company or discharged from such trust,
as provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(ii) all such Securities not theretofore delivered to the Trustee for
cancellation
(A) have become due and payable, or
(B) will become due and payable at their stated maturity within
one year, or
(C) if the Securities of such series are denominated and payable
only in Dollars (except as provided pursuant to Section 3.1) and such Securities
are to be called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company, and the Company, in the case of (i),
(ii) or (iii) above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount in Dollars (except as provided
pursuant to Section 3.1) sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for principal (and premium, if any) and interest to the date of such deposit (in
the case of Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(iii) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(iv) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
In the event there are Securities of two or more series hereunder, the Trustee
shall be required to execute an instrument acknowledging satisfaction and
discharge of this Indenture only if requested to do so with respect to
Securities of all series as to which it is Trustee and if the other conditions
thereto are met. In the event there are two or more Trustees hereunder, then the
effectiveness of any such instrument shall be conditioned upon receipt of such
instruments from all Trustees hereunder.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (a) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2 Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default.
-----------------
"Event of Default," wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body),
unless such event is either inapplicable to a particular series or it is
specifically deleted or modified in the supplemental indenture creating such
series of Securities or in the form of Security for such series:
(a) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(b) default in the payment of the principal of (or premium, if any, on)
any Security of that series when due and payable as therein or herein provided
whether at its maturity or upon acceleration, redemption or otherwise; or
(c) default in the deposit of any sinking fund payment, when and as due
by the terms of a Security of that series; or
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(d) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section 5.1 specifically
dealt with or which has expressly been included in this Indenture solely for the
benefit of series of Securities other than that series), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(e) the failure to pay when due any indebtedness for money borrowed
(including indebtedness under Securities other than that series) with a
principal amount then outstanding in excess of $20,000,000 under any mortgage,
indenture or instrument under which any such indebtedness is issued or secured
(including the Indenture), or any other default which results in the
acceleration of maturity of such indebtedness, unless such indebtedness or
acceleration shall have been discharged or annulled within 10 days after due
notice by the Trustee or by Holders of at least 10% in principal amount of the
Outstanding Securities of that series; or
(f) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect or (B) a decree or order adjudging the Company or any
Significant Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Significant Subsidiary under any applicable
Federal or State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or a Significant
Subsidiary or of any substantial part of its property, or ordering the winding
up or liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(g) the commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect or of
any other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company or any Significant Subsidiary to the entry of a decree or
order for relief in an involuntary case or proceeding under any applicable
Federal or State bankruptcy,
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insolvency, reorganization or other similar law now or hereafter in effect or to
the commencement of any bankruptcy or insolvency case or proceeding against the
Company or any Significant Subsidiary, or the filing by the Company or any
Significant Subsidiary of a petition or answer or consent seeking reorganization
or relief under any applicable Federal or State law now or hereafter in effect,
or the consent by the Company or any Significant Subsidiary to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official of the
Company or any Significant Subsidiary or of any substantial part of the property
of the Company or any Significant Subsidiary, or the making by the Company or
any Significant Subsidiary of an assignment for the benefit of creditors, or the
Company or any Significant Subsidiary shall fail generally to pay its debts as
they become due, or the taking of corporate action by the Company or any
Significant Subsidiary in furtherance of any such action; or
(h) any other Event of Default provided in the supplemental indenture
under which such series of Securities is issued or in the form of Security for
such series.
The term "Significant Subsidiary" shall mean any Subsidiary (i) which, as
of the close of the fiscal year of the Company immediately preceding the date of
any determination hereunder, contributed more than 10% of the consolidated net
operating revenues of the Company and its Consolidated Subsidiaries, or (ii) the
total net tangible assets of which as of the close of such immediately preceding
fiscal year exceeded 10% of the Consolidated Net Tangible Assets of the Company
and its Consolidated Subsidiaries.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default with respect to Securities of any series at the time
Outstanding (other than an Event of Default specified in Section 5.1(e) or (f),
occurs and is continuing, then in every such case, unless the principal of all
of the Securities of such series shall have already become due and payable, the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or, in
the case of certain Securities which provide for less than the entire principal
amount thereof to be due and payable upon a declaration of acceleration of the
maturity thereof pursuant to this Section 5.2, such portion of the principal
amount as may be specified in the terms of that series of Securities) and the
interest accrued thereon of all of the Securities of that series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such
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declaration such principal amount (or specified amount) and interest accrued
thereon shall become immediately due and payable. If an Event of Default
specified in Section 5.1(e) or (f) occurs and is continuing, the principal
amount (or portion thereof) of all the Securities of that series shall become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(a) the Company has paid or deposited with the Trustee a sum in the
Currency in which such Securities are denominated (except as otherwise provided
pursuant to Section 3.1) sufficient to pay
(i) all overdue interest on all Securities of that series,
(ii) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such Securities,
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor
in such Securities, and
(iv) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default with respect to Securities of that series,
other than the nonpayment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 5.13. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
For all purposes under this Indenture, if a portion of the principal of
any Original Issue Discount Securities shall have been accelerated and declared
due and payable pursuant to the provisions hereof, then, from and after such
declaration, unless such declaration shall have been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall
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be deemed, for all purposes hereunder, to be such portion of the principal
thereof as shall be due and payable as a result of such declaration; and payment
of the portion of the principal thereof as shall have become due and payable as
a result of such declaration, together with interest, if any, thereon and all
other amounts owing thereunder, shall constitute payment in full of such
Original Issue Discount Securities.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Company covenants that if:
(a) default is made in the payment of any interest on any Security of
any series when such interest becomes due and payable;
(b) default is made in the payment of the principal of (or premium, if
any, on) any Security when due and payable whether at its maturity or upon
acceleration, redemption or otherwise; or
(c) default is made in the deposit of any sinking fund payment when and
as due by the terms of any Security,
and any such default continues for any period of grace provided in connection
with such default with respect to the Securities of such series, the Company
will, upon demand of the Trustee, pay to it, for the benefit of the Holders of
such Securities, the whole amount then due and payable on such Securities for
principal (and premium, if any) and interest, interest on any overdue principal
(and premium, if any) and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and all other amounts due the Trustee under
Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the
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rights of the Holders of Securities of such series by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 5.4 Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Company, or any other obligor upon
the Securities or the property of the Company, or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.7.
Subject to the provisions of Article Eight of this Indenture, nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
In any proceeding brought by the Trustee and also in any proceeding
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party, the Trustee shall be held to represent all the Holders
of the Securities in respect to which action was taken, and it shall not be
necessary to make any Holders of such Securities parties to any such
proceedings.
SECTION 5.6 Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 6.7;
SECOND: To the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest on the Securities in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal (and premium, if any) and interest, respectively;
and
THIRD: To the Company.
SECTION 5.7 Limitation on Suits.
-------------------
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a custodian, liquidator, assignee, sequestrator,
receiver, trustee, or other similar official, or for any other remedy hereunder,
unless:
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(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(b) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee indemnity
satisfactory to it against the costs, expenses and liabilities to be incurred by
the Trustee in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other such
Holder or Holders of any other series, or to obtain or to seek to obtain
priority or preference over any other such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all such Holders.
SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium and
-----------------------------------------------------------------
Interest.
--------
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and, subject to Section 3.7,
interest on such Security on the due dates expressed in such Security (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 5.9 Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder,
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then and in every such case, subject to any determination in such proceeding,
the Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11 Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 5.12 Control by Holders.
------------------
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(a) such direction shall not be in conflict with any rule of law or with
this Indenture,
(b) the Trustee shall have determined that the action so directed would
not be unjustly prejudicial to the Holders of any Securities of any series with
respect to which the Trustee is the Trustee not taking part in such direction,
(c) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
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(d) the Trustee shall be indemnified as hereinafter provided.
SECTION 5.13 Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(a) in the payment of the principal of (or premium, if any) or interest
on any Security of such series, or
(b) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security on
or after the due dates expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
SECTION 5.15 Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any
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stay or extension law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the exercise of any power herein granted to the Trustee, but
will suffer and permit the exercise of every such power as though no such law
had been enacted.
SECTION 5.16 Duty to Accelerate.
------------------
The Trustee shall be under no duty to accelerate the debt hereunder or
to institute any proceedings unless it knows or in the exercise of reasonable
diligence should have known of the existence of an Event of Default hereunder.
ARTICLE VI
THE TRUSTEE
SECTION 6.1 Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of Default with respect to
Securities of any series,
(i) the Trustee undertakes to perform, with respect to
Securities of such series, such duties and only such duties as are specifically
set forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may,
with respect to Securities of such series, conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Securities of any series
has occurred and is continuing, the Trustee shall exercise, with respect to
Securities of such series, such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
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(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(i) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities of any series pursuant to the provisions of
Section 5.12 relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture with
respect to the Securities of such series; and
(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 6.2 Notice of Defaults.
------------------
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series, as their names and addresses appear in
the Security Register, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of (or premium,
if any) or interest on any Security of such series or in the payment of any
sinking fund installment with respect to Securities of such series, the Trustee
shall be protected in withholding such notice if and so long as a trust
committee of directors or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders
of Securities of such series; and
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<PAGE>
provided, further, that in the case of any default of the character specified in
Section 5.1(d) with respect to the Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
SECTION 6.3 Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) before the Trustee acts or refrains from acting, the Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
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Trustee, in its discretion, may make such further inquiry or investigation into
such matters of fact as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) except for (i) a default under Sections 5.1 (a), (b) or (c) hereof
or (ii) any other event of which the Trustee has "actual knowledge" and which
event, with the giving of notice or the passage of time or both, would
constitute an Event of Default under this Indenture, the Trustee shall not be
deemed to have notice of any default or Event of Default with respect to
Securities of any series at the time Outstanding unless specifically notified in
writing of such event by the Company or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series; as used herein,
the term "actual knowledge" means the actual fact or state of knowing, without
any duty to make any investigation with regard thereto.
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, shall be taken as the statements of the
Company, and the Trustee or any Authenticating Agent assumes no responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 6.5 May Hold Securities.
-------------------
The Trustee, any Authenticating Agent, any Paying Agent or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent or such other agent.
SECTION 6.6 Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law and except as otherwise
provided herein. The Trustee shall be
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under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 6.7 Compensation and Reimbursement.
------------------------------
The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation in
Dollars for all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee in Dollars upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Securities.
SECTION 6.8 Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a trustee under this Indenture with
respect to Securities of more than one series.
SECTION 6.9 Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder with respect to each
series of Securities which shall be eligible to serve in
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such capacity under the Trust Indenture Act and having a combined capital and
surplus (with its direct parent) of at least $500,000,000. If such corporation
or other Person publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation or other Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
Neither the Company nor any Person directly or indirectly controlling,
controlled by or under common control with the Company shall serve as Trustee.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 6.9, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.
SECTION 6.10 Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 6.11 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to such
series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security of the series as to which the Trustee has
a conflicting interest for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the
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Trustee or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution
may remove the Trustee with respect to all Securities, or (B) subject to Section
5.14, any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect to
all Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 6.11. If, within one year after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
6.11, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders of Securities of such series and
accepted appointment in the manner required by Section 6.11, any Holder who has
been a bona fide Holder of a Security of such series for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the
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successor Trustee with respect to the Securities of such series and the address
of its Corporate Trust Office.
SECTION 6.11 Acceptance of Appointment by Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (i) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (ii)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(iii) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust, that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee and that no Trustee shall be responsible for any act or
failure to act on the part of any other Trustee hereunder; and upon the
execution and delivery of such supplemental indenture the resignation or removal
of the retiring Trustee shall become effective to the extent provided therein,
such retiring Trustee shall with respect to the Securities of that or those
series to
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which the appointment of such successor Trustee relates have no further
responsibility for the exercise of rights and powers or for the performance of
the duties and obligations vested in the Trustee under this Indenture, and each
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates; but, on request of the Company or
any successor Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such Successor Trustee, to the extent contemplated by such
supplemental indenture, the property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article Six.
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article Six,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion, or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13 Preferential Collection of Claims Against Company.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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SECTION 6.14 Appointment of Authenticating Agent.
-----------------------------------
At any time when any of the Securities remain Outstanding the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 3.6 and Securities
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Whenever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery by an Authenticating Agent and a certificate of authentication executed
by an Authenticating Agent. Each Authenticating Agent shall be acceptable to
the Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having (together with its direct parent) a combined capital and surplus of not
less than $500,000,000 and subject to supervision or examination by Federal or
State authority. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 6.14, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 6.14, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section 6.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 6.14, without the execution or filing of any paper or any
further act on the part of the Trustee or Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time
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such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.14.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.14, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
The provisions of Sections 3.08, 6.04 and 6.05 shall be applicable to each
Authenticating Agent.
Pursuant to each appointment made under this Section 6.14, the Securities
of each series covered by such appointment may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
_____________________________,
as Trustee
By:__________________________
As Authenticating Agent
By:__________________________
Authorized Signatory
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ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each record date with
respect to a regular interest payment date for each series of Securities, a
list, in such form as the Trustee may reasonably require, containing all the
information in the possession and control of the Company or of its paying agents
regarding the names and addresses of the Holders of such series as of such
record date; provided, however, that if Securities of any series shall have more
than two regular interest payment dates in each calendar year or shall not bear
interest, then such list with respect to such series of Securities will be
furnished to the Trustee semi-annually on such dates as may be agreeable to the
Trustee; and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished; except that if the Trustee is the sole registrar with respect to
any series of Securities, no such list need be furnished with respect to such
series.
SECTION 7.2 Preservation of Information; Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as sole Security
Registrar, if so acting. The Trustee may destroy any list furnished to it as
provided in Section 7.1 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Indenture or under the Securities and is accompanied by a copy of the
form of proxy or other
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communication which such applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, at its
election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 7.2(a), or
(ii) inform such applicants as to the approximate number of Holders
whose names and addresses appear in the information preserved at the time by the
Trustee in accordance with Section 7.2(a), and as to the approximate cost of
mailing to such Holders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appears in the information preserved
at the time by the Trustee in accordance with Section 7.2(a) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the Holders
or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, the Commission shall
find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Holders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 7.2(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 7.2(b).
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SECTION 7.3 Reports by Trustee.
------------------
(a) Within 60 days after _________________________ of each year
commencing with the year 199____, the Trustee shall transmit by mail to all
Holders, as their names and addresses appear in the Security Register, a brief
report dated as of such ________________ with respect to any of the following
events which may have occurred within the previous 12 months (but if no such
event has occurred within such period, no report need be transmitted):
(i) any change to its eligibility under Section 6.9 and its
qualifications under Section 6.8, or in lieu thereof, if to the best of its
knowledge it has continued to be eligible and qualified under said Sections, a
written statement to such effect;
(ii) the creation of or any material change to a relationship specified
in Section 310(b)(1) through Section 310(b)(10) of the Trust Indenture Act;
(iii) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made by
the Trustee (as such) which remain unpaid on the date of such report, and for
the reimbursement of which it claims or may claim a lien or charge, prior to
that of the Securities, on the trust estate or on any property or funds held or
collected by it as Trustee, except that the Trustee shall not be required (but
may elect) to report such advances if such advances so remaining unpaid
aggregate not more than 1/2 of 1% of the principal amount of the Securities
Outstanding on the date of such report;
(iv) any change to the amount, interest rate and maturity date of all
other indebtedness owing by the Company (or by any other obligor on the
Securities) to the Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as collateral security
therefor, except an indebtedness based upon a creditor relationship arising in
any manner described in Section 311(b) of the Trust Indenture Act;
(v) the property and funds, if any, physically in the possession of the
Trustee (as such) on the date of such report;
(vi) any additional issue of Securities which the Trustee has not
previously reported; and
(vii) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the
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Securities, or the Securities of any series, except action in respect of a
default, notice of which has been or is to be withheld by the Trustee in
accordance with Section 6.2.
(b) The Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Security Register, a brief report with respect to
the character and amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to subsection (a) of this
Section (or if no such report has yet been so transmitted, since the date of
execution of this instrument) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on the trust estate or
on property or funds held or collected by it as Trustee and which it has not
previously reported pursuant to this subsection, except that the Trustee shall
not be required (but may elect) to report such advances if such advances
remaining unpaid at any time aggregate 10% or less of the principal amount of
the Securities Outstanding at such time, such report to be transmitted within 90
days after such time.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 7.4 Reports by Company.
------------------
The Company shall:
(a) file with the Trustee, within 15 days after the Company is required
to file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then it
shall file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the
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Commission, such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations; and
(c) transmit by mail to all Holders, as their names and addresses appear
in the Security Register, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required to be
filed by the Company pursuant to paragraphs (a) and (b) of this Section as may
be required by rules and regulations prescribed from time to time by the
Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of (and premium, if any) and interest on all
the Securities and the due and punctual performance and observance of every
covenant and obligation of the Company under this Indenture to be performed or
observed;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.
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SECTION 8.2 Successor Corporation Substituted.
---------------------------------
Upon any consolidation of the Company with or merger of the Company into
any other corporation or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
8.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter, except in the
case of a lease of its properties and assets substantially as an entirety, the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(a) to evidence the succession of another corporation to the Company and
the assumption by any such successor of the covenants of the Company herein and
in the Securities; or
(b) to add to the covenants, agreements and obligations of the Company
for the benefit of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the benefit
of such series) or to surrender any right or power herein conferred upon the
Company; or
(c) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series, stating such Events of
Default are expressly being included solely to be applicable to such series); or
(d) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable as to principal, and with or without interest
coupons; or
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(e) to add to, change or eliminate any of the provisions of this
Indenture, in respect of one or more series of Securities, provided that any
such addition, change or elimination (i) shall neither (A) apply to any Security
of any series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (B) modify the rights of the
Holder of any such Security with respect to such provision or (ii) shall become
effective only when there is no such Security Outstanding; or
(f) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 3.1; or
(g) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more series and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.11(b); or
(h) to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Indenture
which shall not be inconsistent with the provisions of this Indenture, provided
such action shall not adversely affect the interest of the Holders of Securities
of any series in any respect.
No supplemental indenture for the purposes identified in paragraphs (b),
(c), (e), (f) and (h) above may be entered into if to do so would adversely
affect the interest of the Holders of Outstanding Securities of any series.
SECTION 9.2 Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of at least a majority in principal amount
of the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(a) change the due date of the principal of, or any installment of
principal of or interest on, any Security, or
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reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon redemption thereof, or reduce the amount of the principal
of any Security that would be due and payable upon a declaration of the maturity
thereof pursuant to Section 5.2, or change the place of payment where, or the
coin or Currency in which, any Security or any premium or the interest thereon
is denominated or payable (or, in the case of certain Securities which provide
for less than the entire principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.2,
reduce the amount of principal payable upon such a declaration of acceleration
of the maturity thereof), or impair the right to institute suit for the
enforcement of any such payment on or after the due date thereof (or, in the
case of redemption, on or after the Redemption Date), or
(b) reduce the percentage of the principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(c) modify any of the provisions of this Section, Section 5.13 or
Section 10.10, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3 Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and, subject to Section 6.1, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may,
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but shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.4 Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article Nine,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.5 Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6 Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
SECTION 10.1 Payment of Principal, Premium and Interest.
------------------------------------------
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture.
SECTION 10.2 Maintenance of Office or Agency.
-------------------------------
The Company will maintain in the City of New York, for any series of
Securities, an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of
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transfer or exchange and where notices to and demands upon the Company in
respect of the Securities of that series and this Indenture may be served.
Unless otherwise designated by the Company in a written notice to the Trustee,
such office or agency for all purposes shall be the Corporate Trust Office of
the Trustee. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee in the City of New York, and the Company hereby appoints
the Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
SECTION 10.3 Money for Securities Payments To Be Held in Trust.
-------------------------------------------------
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities of that series, deposit with a Paying Agent a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Paying Agent will promptly notify the Trustee of the
Company's action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
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(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities of that series) in the making of any payment of
principal (and premium, if any) or interest on the Securities of that series;
and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for three
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 10.4 Corporate Existence.
-------------------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each Restricted Subsidiary and the rights (charter and
statutory) and franchises of the Company and its Restricted Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the
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conduct of the business of the Company and its Restricted Subsidiaries
considered as a whole.
SECTION 10.5 Maintenance of Properties.
-------------------------
The Company will cause all properties used or useful in the conduct of its
business or the business of any Restricted Subsidiary to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation and maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Board of Directors, desirable in the conduct of its business or the
business of any Restricted Subsidiary and not disadvantageous in any respect to
the Holders of any series of Securities.
SECTION 10.6 Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (ii)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and the Company shall have set aside on its books adequate reserves
with respect thereto (segregated to the extent required by generally accepted
accounting principles).
SECTION 10.7 Limitation on Indebtedness Secured by a Mortgage.
------------------------------------------------
So long as the Securities of any series shall remain Outstanding, the
Company covenants and agrees that neither it nor any Restricted Subsidiary will
create, assume, guarantee or suffer to exist any Indebtedness secured by a
Mortgage on any assets of the Company or any Restricted Subsidiary unless the
Company secures or causes such Restricted Subsidiary to secure the Securities of
that series equally and ratably with, or prior to, such secured Indebtedness;
provided, however, that this restriction shall not apply to Indebtedness secured
by:
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(a) Mortgages on the property of any corporation which Mortgages existed
at the time such corporation became a Restricted Subsidiary,
(b) Mortgages in favor of the Company or a Restricted Subsidiary,
(c) Mortgages on property of the Company or a Restricted Subsidiary in
favor of the United States of America or any State or political subdivision
thereof, or in favor of any other country or any political subdivision thereof,
to secure payment pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any part of the
purchase price or the cost of the construction or improvement of the property
subject to such Mortgages,
(d) Mortgages on any property hereafter acquired by the Company or any
Restricted Subsidiary, contemporaneously with such acquisition or within 120
days thereafter, to secure or provide for the payment of any part of the
purchase price, construction or improvement of such property, or Mortgages
assumed by the Company or any Restricted Subsidiary upon any property hereafter
acquired by the Company or any such Restricted Subsidiary which were existing at
the time of such acquisition, provided that the amount of any Indebtedness
secured by any such Mortgage created or assumed shall not exceed the cost to the
Company or such Restricted Subsidiary, as the case may be, of the property
covered by such Mortgage,
(e) Mortgages on the property of the Company or a Restricted Subsidiary
which are in existence on the date of issuance of the first series of Securities
under this Indenture,
(f) any extension, renewal or refunding (or successive extension,
renewal or refunding), in whole or in part, of any Mortgage referred to in the
foregoing clauses (a) through (e), inclusive, or of any Indebtedness secured
thereby, and
(g) any other Mortgage, other than Mortgages referred to in the
foregoing clauses (a) through (f), inclusive, so long as the aggregate of all
Indebtedness secured by Mortgages pursuant to this clause (g) and the aggregate
Value of the Sale and Lease-Back Transactions in existence at such time (not
including Sale and Lease-Back Transactions as to which the Company has complied
with Section 10.8(b)) does not exceed 15% of Consolidated Net Tangible Assets.
For purposes of this Section 10.7 and Section 10.8 the following terms
shall have the following meanings:
(h) "Indebtedness" means (i) all items which in accordance with
generally accepted accounting principles would be included
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in determining long-term liabilities representing borrowed money or purchase
money obligations as shown on the liability side of a balance sheet (other than
liabilities evidenced by obligations under leases and contracts payable for
broadcast rights), (ii) to the extent not included in clause (i) above,
indebtedness secured by any Mortgage existing on property owned subject to such
Mortgage whether or not the indebtedness secured thereby shall have been
assumed, and (iii) to the extent not included in clauses (i) or (ii) above,
contingent obligations in respect of, or to purchase or otherwise acquire, any
indebtedness of others of the character described in clauses (i) and (ii) above
including, but not limited to, guarantees and endorsements (other than for
purposes of collection in the ordinary course of business of any such
indebtedness);
(i) "Mortgage" means and includes any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance;
(j) "Consolidated Net Tangible Assets" means total consolidated assets
of the Company and its Restricted Subsidiaries, less (i) current liabilities of
the Company and its Restricted Subsidiaries, and (ii) the net book amount of all
intangible assets of the Company and its Restricted Subsidiaries.
(k) "Restricted Subsidiary" means any Subsidiary of the Borrower other
than a Designated Subsidiary.
SECTION 10.8 Limitation on Sale and Lease-Back.
---------------------------------
The Company covenants and agrees that neither it nor any Restricted
Subsidiary will enter into any arrangement with any Person (other than the
Company or a Restricted Subsidiary), or to which any Person is a party,
providing for the leasing to the Company, or a Restricted Subsidiary, for a
period, including renewals, of more than three years of any Principal Property
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person (other than the Company or a
Restricted Subsidiary) to which funds have been or are to be advanced by such
Person on the security of such leased property (in this Article Ten called a
"Sale and Lease-Back Transaction") unless either:
(a) The Company or such Restricted Subsidiary would be entitled to
create, assume, guarantee or suffer Indebtedness secured by a Mortgage under any
provision of clauses (a) through (e) of Section 10.7 or, pursuant to the
provisions of Section 10.7, to incur Indebtedness in a principal amount equal to
or exceeding the Value of such Sale and Lease-Back Transaction, secured by a
Mortgage on the property to be leased, without equally and ratably securing the
Securities; or
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(b) The Company or such Restricted Subsidiary within four months after
the effective date of such Sale and Lease-Back Transaction (whether made by the
Company or a Restricted Subsidiary), applies to the voluntary retirement of
Indebtedness of the Company (which may include Securities, provided that any
series of Securities may only be redeemed in accordance with the terms of such
series) maturing by the terms thereof more than one year after the original
creation thereof and ranking at least pari passu with the Securities
(hereinafter in this Section called "Funded Debt") an amount equal to the
greater of (i) the net proceeds of the sale of the property subject to the Sale
and Lease-Back Transaction and (ii) the Value of such Sale and Lease-Back
Transaction, less the principal amount of Securities delivered within four
months after the effective date of such arrangement, to the Trustee for
retirement and cancellation and the principal amount of other Funded Debt
voluntarily retired by the Company within such four-month period, excluding
retirements of Securities and other Funded Debt as a result of conversions or
pursuant to mandatory sinking fund or prepayment provisions or by payment at
maturity.
For purposes of Section 10.7 and this Section 10.8, the term "Value" shall
mean, with respect to a Sale and Lease-Back Transaction, as of any particular
time, the amount equal to the greater of (i) the net proceeds of the sale or
transfer of the property leased pursuant to such Sale and Lease-Back Transaction
or (ii) the fair value in the opinion of the Board of Directors of such property
at the time of entering into such Sale and Lease-Back Transaction, in either
case divided first by the number of full years of the terms of the lease and
then multiplied by the number of the full years of such term remaining at the
time of determination, without regard to any renewal or extension options
contained in the lease.
SECTION 10.9 Statement as to Compliance.
--------------------------
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year, an Officers' Certificate (executed by at least the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company) stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the Company's covenants and agreements contained in this Indenture and if
the Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 10.10 Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 10.4 through 10.8, inclusive, with
respect to the Securities of any
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series if before or after the time for such compliance the Holders of a majority
in principal amount of the Outstanding Securities of such series shall, by Act
of such Holders, either waive such compliance in such instances or generally
waive compliance with such term, provision or condition, but no such waiver
shall extend to or affect such term, provision or condition except to the extent
so expressly waived, and until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
SECTION 10.11 Designated Subsidiaries.
-----------------------
The Company may at any time after the date hereof designate any Subsidiary
(other than a Subsidiary holding any Station Licenses or the operating assets of
any Stations) as a "Designated Subsidiary" for purposes of this Indenture, by
delivering to the Trustee a certificate of a senior officer of the Company
identifying such Subsidiary, stating that such Subsidiary shall be treated as a
"Designated Subsidiary" for all purposes hereof and certifying that, after
giving effect to such designation, the Company will be in compliance with the
provisions of this Indenture applicable to such Designated Subsidiary, and such
designation will not result in an Event of Default hereunder; provided that the
value of the capital stock, partnership or other ownership interest directly or
indirectly held by the Company in Designated Subsidiaries shall not exceed at
any one time an aggregate amount in excess of [$250,000,000]. Any Subsidiary of
a Designated Subsidiary shall be deemed to be a "Designated Subsidiary".
The Company may at any time rescind the designation of any Subsidiary as a
"Designated Subsidiary" for purposes of this Agreement, by delivering to the
Trustee a certificate of a senior officer identifying such Subsidiary, stating
that such Subsidiary shall no longer be treated as a "Designated Subsidiary" for
purposes hereof and certifying that, after giving effect to such rescission, the
Company will be in compliance with the provisions of this Indenture applicable
to Restricted Subsidiaries.
"Station Licenses" means all authorization, licenses or permits issued by
----------------
the FCC and granted or assigned to the Borrower or any Restricted Subsidiary
thereof, or under which the Borrower or any Restricted Subsidiary thereof has
the right to operate any Station, together with any extensions of renewals
thereof.
"Stations" means the television broadcasting stations from time to time
--------
owned by the Borrower or any of its Restricted Subsidiaries.
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ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1 Applicability of Article.
------------------------
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 3.1 for Securities of any series) in
accordance with this Article Eleven.
SECTION 11.2 Election to Redeem; Notice to Trustee.
-------------------------------------
(a) In case of any redemption at the election of the Company of less than
all the Securities of any series, the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed.
(b) In the case of any redemption of Securities (i) prior to the expiration
of any restriction on such redemption provided in the terms of such Securities
or elsewhere in this Indenture, or (ii) pursuant to an election of the Company
which is subject to a condition specified in the terms of such Securities, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
SECTION 11.3 Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denominations for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series. The Trustee shall
promptly notify the Company in writing of the Securities selected for redemption
and, in the case of any Securities selected for partial redemption, the
principal amount thereof to be redeemed. For all purposes of this Indenture,
unless the context otherwise requires, all provisions relating to the redemption
of Securities shall relate, in the case of any Securities redeemed or to be
redeemed only in part, to the portion of the principal amount of such Securities
which has been
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or is to be redeemed.
SECTION 11.4 Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all the Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price will become due and
payable upon each such Security to be redeemed and, if applicable, that interest
thereon will cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price; and
(f) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 11.5 Deposit of Redemption Price.
---------------------------
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.3) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be the date for an installment of interest) accrued interest on, all
the Securities which are to be redeemed on that date.
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SECTION 11.6 Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
due date is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant record date with respect to such
installments of interest according to their terms and the provisions of Section
3.7. If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security. All securities surrendered to the Trustee for redemption shall, upon
payment by the Company of the Redemption Price, be cancelled by the Trustee and
no Securities shall be authenticated in lieu thereof.
SECTION 11.7 Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be surrendered at a
specified place of payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Security or Securities of the same series, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE XII
SINKING FUNDS
SECTION 12.1 Applicability of Article.
------------------------
The provisions of this Article Twelve shall be applicable to any sinking
fund for the retirement of Securities of a series except as otherwise specified
as contemplated by Section 3.1 for Securities of such series.
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The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 12.2. Each sinking fund payment shall be applied to the redemption
of Securities of any series as provided for by the terms of Securities of such
series.
SECTION 12.2 Satisfaction of Sinking Fund Payments with Securities.
-----------------------------------------------------
The Company (a) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (b) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to the Securities of such series required to be made pursuant to the terms of
such Securities as provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 12.3 Redemption of Securities for Sinking Fund.
-----------------------------------------
Not less than 60 days prior to each sinking fund payment date for any
series of Securities (unless a shorter period shall be satisfactory to the
Trustee), the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of the series, the portion thereof, if any, which is to be
satisfied by payment of cash in the Currency in which the Securities of such
series are denominated (except as provided pursuant to Section 3.1) and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Securities of that series pursuant to Section 12.2 and, prior to or concurrently
with the delivery of such Officers' Certificate, will also deliver to the
Trustee any Securities to be so delivered. Not less than 45 days before each
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 11.3 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 11.4. Such notice
having been duly given, the
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redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 11.5, 11.6 and 11.7.
ARTICLE XIII
DEFEASANCE
SECTION 13.1 Applicability of Article.
------------------------
If pursuant to Section 3.1 provision is made for the defeasance of
Securities of a series, and if the Securities of such series are denominated and
payable only in Dollars (except as provided pursuant to Section 3.1) then the
provisions of this Article Thirteen shall be applicable except as otherwise
specified as contemplated by Section 3.1 for Securities of such series.
Defeasance provisions, if any, for Securities denominated in a Foreign Currency
may be specified pursuant to Section 3.1.
SECTION 13.2 Defeasance upon Deposit of Moneys or U.S. Government Obligations.
----------------------------------------------------------------
At the Company's option, either (a) the Company shall be deemed to have
been Discharged (as defined below) from its obligations with respect to
Securities of any series on the 91st day after the applicable conditions set
forth below have been satisfied ("Defeasance") or (b) the Company shall cease to
be under any obligation to comply with any term, provision or condition set
forth in Section 10.4, Section 10.5, Section 10.6, Section 10.7 and Section 10.8
with respect to Securities of any series (and, if so specified pursuant to
Section 3.1, any other restrictive covenant added for the benefit of such
series) ("Covenant Defeasance") at any time after the applicable conditions set
forth below have been satisfied:
(a) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Securities of such series (i) money in an amount, or (ii) U.S. Government
Obligations (as defined below) which through the payment of interest and
principal in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(iii) a combination of (i) and (ii), sufficient in the opinion (with respect to
(ii) and (iii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge each installment of principal (including any
mandatory sinking fund payments) of, and interest on, the Outstanding Securities
of such series on the respective Stated Maturities thereof.
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(b) if the Securities of such series are then listed on the New York
Stock Exchange or any other securities exchange, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Company's
exercise of its option under this Section would not cause such Securities to be
delisted;
(c) no Event of Default or event (including such deposit) which, with
notice or lapse of time, or both, would become an Event of Default with respect
to the Securities of such series shall have occurred and be continuing on the
date of such deposit or, with regard to any such event specified in Sections
5.1(e) and (f), at any time on or prior to the 90th day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until after such 90th day);
(d) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that Holders of the Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result of
the Company's exercise of its option under this Section 13.2 and will be subject
to Federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such option had not been exercised, and, in
the case of the Securities of such series being Discharged, accompanied by a
ruling to that effect received from or published by the Internal Revenue
Service.
(e) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture Act
(assuming all Securities are in default within the meaning of such Act).
(f) Such Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a Default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(g) Such Defeasance or Covenant Defeasance shall not result in the trust
arising from such deposit constituting an investment company within the meaning
of the Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder.
(h) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Securities of such series and to have satisfied all the obligations under this
Indenture relating to the Securities of such series (and the Trustee, at the
expense of
73
<PAGE>
the Company, shall execute proper instruments acknowledging the same), except
(A) the rights of Holders of Securities of such series to receive payment of the
principal of and the interest on such Securities when such payments are due, (B)
the Company's obligations with respect to the Securities of such series under
Sections 3.5, 3.6, 10.2 and 13.3, (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, and (D) this Article Thirteen.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America or the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
SECTION 13.3 Deposited Moneys and U.S. Government Obligations to Be Held in
--------------------------------------------------------------
Trust.
-----
All moneys and U.S. Government Obligations deposited with the Trustee
pursuant to Section 13.2 in respect of Securities of a series shall be held in
trust and applied by it, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon for principal (and premium, if any) and interest, if any, but such money
need not be segregated from other funds except to the extent required by law.
SECTION 13.4 Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article Thirteen with respect to any Securities by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the obligations
under this Indenture and such Securities from which the Company has been
74
<PAGE>
discharged or released pursuant to Section 13.2 shall be revived and reinstated
as though no deposit had occurred pursuant to this Article Thirteen with respect
to such Securities, until such time as the Trustee or Paying Agency is permitted
to apply all money held in trust pursuant to Section 13.3 with respect to such
Securities in accordance with this Article Thirteen; provided, however, that if
the Company makes any payment of principal of or any premium or interest on any
such Security following such reinstatement of its obligations, the Company shall
be subrogated to the rights (if any) of the Holders of such Securities to
receive such payment from the money so held in trust.
SECTION 13.5 Repayment to Company.
--------------------
The Trustee and any Paying Agent shall promptly pay or return to the
Company upon Company Request any money or U.S. Government Obligations held by
them at any time that are not required for the payment of the principal of (and
premium, if any) and interest on the Securities of any series for which money or
U.S. Government Obligations have been deposited pursuant to Section 13.2.
The provisions of the last paragraph of Section 10.3 shall apply to any
money held by the Trustee or any Paying Agent under this Article Thirteen that
remains unclaimed for two years after the Maturity of any series of Securities
for which money or U.S. Government obligations have been deposited pursuant to
Section 13.2.
75
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
HEARST-ARGYLE TELEVISION, INC.
By:___________________________
Name:_________________________
Title:________________________
BANK OF MONTREAL TRUST COMPANY
By:___________________________
Name:_________________________
Title:________________________
76
<PAGE>
EXHIBIT 5.1
Rogers & Wells
200 Park Avenue
New York, NY 10166
(212) 878-8000
Fax: (212) 878-8375
Washington, D.C. . London . Paris . Frankfurt . Hong Kong
October [ ], 1997
Hearst-Argyle Television, Inc.
888 Seventh Avenue
New York, New York 10106
Re: Registration on Form S-3 of up to $600,000,000
of Debt Securities and 10,000,000 Shares of
Series A Common Stock
--------------------------------------------------
Ladies and Gentlemen:
We are acting as counsel to Hearst-Argyle Television, Inc., a Delaware
corporation (the "Company"), in connection with the possible issuance and sale
from time to time by the Company of (i) certain unsecured debt securities of the
Company (the "Debt Securities") and (ii) shares of the Company's Series A Common
Stock, par value $.01 per share (the "Series A Common Stock"), in each case as
contemplated by the Company's Registration Statement on Form S-3 (File No. 333-
36659) (as the same may be amended from time to time, the "Registration
Statement"). The Debt Securities and Series A Common Stock are collectively
referred to herein as the "Securities." Except as otherwise defined herein,
capitalized terms used but not defined herein have the meanings provided in the
Registration Statement.
We have examined such documents, records, and matters of law as we
have deemed necessary for purposes of this opinion. Based on such examination
and on the assumptions set forth below, we are of the opinion that:
1. The Debt Securities, when (a) duly executed by the Company and
authenticated by the applicable Trustee in accordance with the
provisions of the applicable Indenture and issued and sold in
accordance with the Registration Statement and applicable
Prospectus Supplement and (b)
<PAGE>
Hearst-Argyle Television, Inc. 2 October [ ], 1997
delivered to the purchaser or purchasers thereof against receipt
by the Company of such lawful consideration therefor as the
Company's Board of Directors (or a duly authorized committee
thereof or a duly authorized officer of the Company) may
determine, will be valid and binding obligations of the Company
enforceable against the Company in accordance with their
respective terms and entitled to the benefits of the applicable
Indenture, subject to (i) the effect of any applicable
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting creditors' rights generally and (ii) the
effect of general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
2. The Series A Common Stock, when (a) issued and sold in accordance
with the Registration Statement and applicable Prospectus
Supplement and (b) delivered to the purchaser or purchasers
thereof against receipt by the Company of such lawful
consideration therefor as the Company's Board of Directors (or a
duly authorized committee thereof or a duly authorized officer of
the Company) may determine, and assuming that the Company at such
time has a sufficient number of authorized but unissued shares of
Series A Common Stock remaining under its certificate of
incorporation, will be validly issued, fully paid and
nonassessable.
In rendering the foregoing opinions, we have assumed that (i) the
definitive terms of each class and series of the Securities not presently
provided for in the Registration Statement or the Company's certificate of
incorporation will have been established in accordance with all applicable
provisions of law, the Indenture, the Company's certificate of incorporation and
by-laws, and the authorizing resolutions of the Company's Board of Directors,
and reflected in appropriate documentation approved by us and, if applicable,
duly executed and delivered by the Company and any other appropriate party, (ii)
the interest rate on the Debt Securities will not be higher than the maximum
lawful rate permitted from time to time under applicable law, (iii) the
Registration Statement, and any amendments thereto, will have become and at the
time of issuance of the Securities will continue to be effective, (iv) a
Prospectus Supplement describing each class or series of Securities offered
pursuant to the Registration Statement will have been filed with the Commission,
(v) the resolutions authorizing the Company to register, offer, sell, and issue
the Securities will remain in effect and unchanged at all times during which the
Securities are offered, sold, or issued by the Company and (vi) all Securities
will be issued in compliance with applicable federal and state securities laws.
In rendering the foregoing opinions, we have relied as to certain
factual matters upon certificates of officers of the Company, and we have not
independently verified the accuracy of the statements contained therein. In
rendering the foregoing opinions, our examination of matters of law has been
limited to the laws of the State of New York, the
<PAGE>
EXHIBIT 12.1
UNAUDITED PRO FORMA HEARST-ARGYLE
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED MONTH ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
<S> <C> <C>
EARNINGS BEFORE FIXED CHARGES:
Net income........................................... $ 43,099 $22,486
Income tax expense................................... 33,027 17,162
-------- -------
Income from continuing operations before income
taxes............................................... 76,126 39,648
Interest expense..................................... 44,650 22,325
Interest portion of rental expenses.................. 1,169 585
-------- -------
Earnings before fixed charges........................ $121,945 $62,558
======== =======
FIXED CHARGES:
Interest expense..................................... $ 44,650 $22,325
Interest portion of rental expenses.................. 1,169 585
-------- -------
Total fixed charges.................................. $ 45,819 $22,910
======== =======
Ratio of earnings to fixed charges................... 2.66 2.73
======== =======
</TABLE>
<PAGE>
THE HEARST BROADCAST GROUP OF THE HEARST CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993, 1994, 1995 AND 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(UNAUDITED) (UNAUDITED)
--------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS BEFORE FIXED
CHARGES:
Net income.............. $13,029 $11,272 $33,891 $40,795 $44,402 $19,930 $22,722
Income tax expense...... 10,658 17,123 25,265 30,182 31,907 14,244 16,054
------- ------- ------- ------- ------- ------- -------
Income from continuing
operations before
income taxes........... 23,687 28,395 59,156 70,977 76,309 34,174 38,776
Interest expense........ 22,707 22,800 22,769 22,271 21,273 12,856 12,515
Interest portion of
rental expenses........ 719 730 762 918 992 496 496
------- ------- ------- ------- ------- ------- -------
Earnings before fixed
charges................ $47,113 $51,925 $82,687 $94,166 $98,574 $47,526 $51,787
======= ======= ======= ======= ======= ======= =======
FIXED CHARGES:
Interest expense........ $22,707 $22,800 $22,769 $22,271 $21,273 $12,856 $12,515
Interest portion of
rental expenses........ 719 730 762 918 992 496 496
------- ------- ------- ------- ------- ------- -------
Total fixed charges..... $23,426 $23,530 $23,531 $23,189 $22,265 $13,352 $13,011
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to
fixed charges.......... 2.01 2.21 3.51 4.06 4.43 3.56 3.98
======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
ARGYLE TELEVISION, INC.
DEFICIENCY OF EARNINGS TO FIXED CHARGES
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------- -------------------------
1995 1996 1996 1997
------------ ------------ ------------ ------------
(UNAUDITED)
--------------------------
<S> <C> <C> <C> <C>
EARNINGS BEFORE FIXED
CHARGES:
Loss from continuing
operations before
income taxes........... $ (7,965) $ (14,560) $ (7,118) $ (8,295)
Interest expense........ 12,053 16,566 7,304 9,407
Interest portion of
rental expenses........ 103 177 89 89
----------- ------------ ------------ ------------
Earnings before fixed
charges................ $ 4,191 $ 2,183 $ 275 $ 1,201
=========== ============ ============ ============
FIXED CHARGES:
Interest expense........ $ 12,053 $ 16,566 $ 7,304 $ 9,407
Interest portion of
rental expenses........ 103 177 89 89
----------- ------------ ------------ ------------
Total fixed charges..... $ 12,156 $ 16,743 $ 7,393 $ 9,496
=========== ============ ============ ============
Deficiency of earnings
to fixed charges....... $ (7,965) $ (14,560) $ (7,118) $ (8,295)
=========== ============ ============ ============
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Ernst & Young LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Hearst-Argyle
Television, Inc. for the registration of shares of its Series A common stock and
debt securities and to the incorporation by reference therein of our reports
dated February 12, 1997, except for the second paragraph of Note 11, as to which
the date is March 26, 1997, with respect to the consolidated financial
statements and schedule of Argyle Television, Inc., and March 6, 1995, with
respect to the combined financial statements of Northstar Television of Grand
Rapids, Inc., Northstar Television of Jackson, Inc., and Northstar Television of
Providence, Inc., included in Argyle Television, Inc.'s Annual Report (Form
10-K) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
San Antonio, Texas
October 16, 1997
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-36659 of Hearst-Argyle Television, Inc. (formerly
Argyle Television, Inc.) on Form S-3 of our reports dated May 1, 1997, relating
to the combined financial statements and the financial statement schedule of the
Hearst Broadcast Group of The Hearst Corporation, appearing in the Registration
Statement on Form S-4 of Argyle Television, Inc. and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
New York, New York
October 16, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Hearst-Argyle
Television, Inc. of our reports dated February 7, 1997 relating to the combined
financial statements of the Selected Gannett Television Stations and the
financial statements of Multimedia Entertainment, Inc. (d.b.a. WLWT-TV), a
subsidiary of Multimedia, Inc., which appear on pages F-45 and F-37,
respectively, of the Argyle Television, Inc. Proxy Statement/Prospectus filed on
July 31, 1997 and which also appear in the Argyle Television, Inc. Current
Report on Form 8-K/A filed on April 15, 1997. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Washington, DC
October 15, 1997
<PAGE>
EXHIBIT 25.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a trustee Pursuant to
Section 305(b)
BANK OF MONTREAL TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
New York 13-4941093
<S> <C>
(JURISDICTION OF INCORPORATION OR ORGANIZATION (I.R.S. EMPLOYER
IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
88 Pine Street
New York, New York 10005
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
Mark F. McLaughlin
Bank of Montreal Trust Company
88 Pine Street, New York, NY 10005
(212) 701-7602
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
Hearst-Argyle Television, Inc.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
Delaware 74-2717523
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
888 Seventh Avenue
New York, New York 10106
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
----------------
% Senior Notes due 2007
% Senior Notes due 2027
(TITLE OF THE INDENTURE SECURITIES)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York
33 Liberty Street, New York N.Y. 10045
State of New York Banking Department
2 Rector Street, New York, N.Y. 10006
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility.
1. Copy of Organization Certificate of Bank of Montreal Trust Company to
transact business and exercise corporate trust powers; incorporated herein
by reference as Exhibit "A" filed with Form T-1 Statement, Registration No.
33-46118.
2. Copy of the existing By-Laws of Bank of Montreal Trust Company;
incorporated herein by reference as Exhibit "B" filed with Form T-1
Statement, Registration No. 33-80928.
3. The consent of the Trustee required by Section 321(b) of the Act;
incorporated herein by reference as Exhibit "C" with Form T-1 Statement,
Registration No. 33-46118.
4. A copy of the latest report of condition of Bank of Montreal Trust Company
published pursuant to law or the requirements of its supervising or
examining authority, attached hereto as Exhibit "D".
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
Bank of Montreal Trust Company, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of New York, and State of New York, on the 16th day of October,
1997.
BANK OF MONTREAL TRUST COMPANY
/s/ Amy S. Roberts
By: _________________________________
Amy S. Roberts Vice President
2
<PAGE>
EXHIBIT "D"
STATEMENT OF CONDITION
BANK OF MONTREAL TRUST COMPANY
NEW YORK
<TABLE>
<S> <C>
ASSETS
Due From Banks..................................................... $ 594,897
Investment Securities:
State & Municipal................................................ 17,099,800
Other............................................................ 100
-----------
TOTAL SECURITIES............................................... 17,099,900
Loans and Advances
Federal Funds Sold............................................... 2,000,000
Overdrafts....................................................... 17,218
-----------
TOTAL LOANS AND ADVANCES....................................... 2,017,218
-----------
Investment in Harris Trust, NY..................................... 8,036,150
Premises and Equipment............................................. 122,818
Other Assets 2,721,789............................................. 10,880,757
===========
TOTAL ASSETS................................................... $30,592,772
===========
LIABILITIES
Trust Deposits..................................................... $ 6,408,362
Other Liabilities.................................................. 659,021
-----------
TOTAL LIABILITIES.............................................. 7,067,383
-----------
CAPITAL ACCOUNTS
Capital Stock, Authorized, Issued and
Fully Paid--10,000 Shares of $100 Each............................ 1,000,000
Surplus............................................................ 4,222,188
Retained Earnings.................................................. 18,298,208
Equity--Municipal Gain/Loss........................................ 4,993
-----------
TOTAL CAPITAL ACCOUNTS......................................... 23,525,389
-----------
TOTAL LIABILITIES
AND CAPITAL ACCOUNTS........................................... $30,592,772
===========
</TABLE>
I, Mark F. McLaughlin, Vice President, of the above-named bank do hereby
declare that this Report of Condition is true and correct to the best of my
knowledge and belief.
Mark F. McLaughlin
June 30, 1997
We, the undersigned directors, attest to the correctness of this statement
of resources and liabilities. We declared that it has been examined by us, and
to the best of our knowledge and belief has been prepared in conformance with
the instructions and is true and correct.
Sanjiv Tandon
Kevin O. Healey
Steven R. Rothbloom
E-3
<PAGE>
EXHIBIT 99.1
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN DECLARED +
+EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION. A FINAL PROSPECTUS +
+SUPPLEMENT AND PROSPECTUS WILL BE DELIVERED TO PURCHASERS OF THESE +
+SECURITIES. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL +
+NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR +
+SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, +
+SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION +
+UNDER THE SECURITIES LAWS OF SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED , 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
6,791,705 SHARES
[LOGO]
SERIES A COMMON STOCK
----------
Of the 6,791,705 shares of Series A Common Stock, par value $.01 per share
(the "Series A Common Stock"), of Hearst-Argyle Television, Inc., a Delaware
corporation (the "Company"), offered hereby, 6,000,000 shares are being offered
by the Company and 791,705 shares are being offered by certain stockholders of
the Company (the "Selling Stockholders"). See "Principal and Selling
Stockholders." The Company will receive no proceeds from the sale of shares by
the Selling Stockholders. Of the 6,791,705 shares of Series A Common Stock
offered hereby, 5,433,364 shares are being offered initially in the United
States and Canada by the U.S. Underwriters (the "U.S. Offering") and the
remaining 1,358,341 shares of Series A Common Stock are being offered initially
in a concurrent offering outside the United States and Canada by the
International Underwriters (the "International Offering" and, together with the
U.S. Offering, the "Common Stock Offering"). Shares of Series A Common Stock
not exceeding in the aggregate 5% of the Series A Common Stock being offered
hereby are being reserved for sale to certain directors, officers, employees
and other persons associated with the Company or its majority stockholder, The
Hearst Corporation ("Hearst"), at the public offering price. Concurrently with
the Common Stock Offering, the Company is offering to sell $400,000,000
aggregate principal amount of % Senior Notes Due , 2007 and % Debentures
Due , 2027 by a separate prospectus supplement (the "Debt Offering").
Neither the Common Stock Offering nor the Debt Offering is conditioned upon the
completion of the other. The Series A Common Stock is traded on the Nasdaq
National Market under the symbol "HATV." On October 15, 1997, the last reported
sale price of the Series A Common Stock as reported by Nasdaq was $30 1/8 per
share.
The Company's authorized and outstanding capital stock consists of Series A
Common Stock, Series B Common Stock, Series A Preferred Stock and Series B
Preferred Stock. Hearst owns all of the outstanding shares of Series B Common
Stock, currently representing approximately 82% of the common stock of the
Company. Upon consummation of the Common Stock Offering, Hearst will own
approximately 73% of the Company's Common Stock (assuming the Underwriters'
over-allotment option is not exercised.) See "The Company--The Hearst
Transaction." The rights of the Series A Common Stock and the Series B Common
Stock are substantially similar except that the holders of the Series A Common
Stock as a class have the right to elect two members of the Company's Board of
Directors and Hearst, as the holder of the Series B Common Stock, has the right
to elect the remaining nine of the 11 members of the Company's Board of
Directors. Each share of Series B Common Stock is convertible at any time, at
the option of the holder, into a share of Series A Common Stock. Each share of
Series A Preferred Stock is convertible at any time, at the option of the
holder, into Series A Common Stock and each share of Series B Preferred Stock
is convertible, at anytime after June 11, 2001, at the option of the holder,
into Series A Common Stock. See "Description of Capital Stock" in the
accompanying Prospectus.
SEE "RISK FACTORS" BEGINNING ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF SERIES A COMMON STOCK OFFERED HEREBY.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2) SELLING STOCKHOLDERS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
- --------------------------------------------------------------------------------
Total(3)................ $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Underwriters (collectively, the
"Underwriters") against certain liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deduction of expenses payable by the Company estimated at $600,000.
(3) The Company has granted the U.S. Underwriters and the International
Underwriters options exercisable within 30 days after the date hereof to
purchase up to an aggregate of 800,000 shares and 200,000 shares,
respectively, of Series A Common Stock solely to cover over-allotments, if
any. If all such 1,000,000 shares are purchased, the total Price to Public,
Underwriting Discount, Proceeds to the Company and Proceeds to Selling
Stockholders will be $ , $ , $ and $ , respectively. See
"Underwriting."
----------
The shares of Series A Common Stock are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if accepted by
them, subject to approval of certain legal matters by counsel for the
Underwriters and certain other conditions. The Underwriters reserve the right
to withdraw, cancel or modify such offer and to reject orders in whole or in
part. It is expected that delivery of the shares of Series A Common Stock will
be made in New York, New York on or about November , 1997.
----------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
----------
The date of this Prospectus Supplement is , 1997
<PAGE>
[INSERT ARTWORK/MAP]
- --------
(1) WWWB-TV and WPBF-TV are managed by the Company under a management
agreement with Hearst. In addition, the Company provides certain
management services to Hearst in order to allow Hearst to fulfill its
obligations under the Missouri LMA (as defined below) with KCWB.
(2) Hearst has a Program Services and Time Brokerage Agreement (the "Missouri
LMA") with KCWB-TV, Inc., the permittee of KCWB.
(3) WNAC-TV's (Providence, RI) broadcast signal overlaps with WCVB-TV's
(Boston, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal. Under FCC
rules, a single entity cannot own stations with overlapping signals. The
Company will divest WNAC and WDTN, and the Company has entered into a
letter of intent to divest WNAC.
(4) Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES A COMMON
STOCK. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF SERIES A COMMON
STOCK PRIOR TO THE PRICING OF THE SERIES A COMMON STOCK OFFERING FOR THE
PURPOSE OF MAINTAINING THE PRICE OF THE SERIES A COMMON STOCK, THE PURCHASE OF
SHARES OF SERIES A COMMON STOCK FOLLOWING THE PRICING OF THE COMMON STOCK
OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE SERIES A COMMON STOCK OR
FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE SERIES A COMMON STOCK, AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN PASSIVE MARKET-
MAKING TRANSACTIONS IN THE SERIES A COMMON STOCK ON THE NASDAQ STOCK MARKET'S
SMALLCAP MARKET, THE NASDAQ NATIONAL MARKET, IN THE OVER-THE COUNTER MARKET OR
OTHERWISE IN ACCORDANCE WITH REGULATION M UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. SEE "UNDERWRITING."
S-2
<PAGE>
THE COMMON STOCK OFFERING
Series A Common Stock
Offered:
Shares Offered by the
Company...................... 6,000,000 shares(1)
Shares Offered by Selling
Stockholders................. 791,705 shares
Total Shares Offered......... 6,791,705 shares(1)
U.S. Offering............... 5,433,364 shares
International Offering...... 1,358,341 shares
Common Stock to be
outstanding immediately
after this Offering:
Series A Common Stock, $.01
par value.................... 14,291,204 shares
Series B Common Stock......... 38,611,002 shares(2)
Total Common Stock........... 52,902,206 shares(2)
Nasdaq National Market Symbol... HATV
Use of Proceeds............ The Company expects to utilize the net
proceeds from this Common Stock Offering and
the concurrent Debt Offering described below
to repay outstanding indebtedness. All of the
net proceeds initially will be used to repay
borrowings under its Credit Facility (as
defined herein). After such repayment, the
Company may repurchase its Subordinated Notes
(as defined herein). The Company will not
receive any of the net proceeds from the sale
of the shares by the Selling Stockholders.
See "Use of Proceeds."
Relative Rights of Series A
Common Stock and Series B
Common Stock................... The Series A Common Stock and Series B Common
Stock (collectively, the "Common Stock") vote
together as a single class on all matters
submitted to a vote of stockholders, except
that with respect to any election of
directors, (i) the holders of the shares of
Series A Common Stock are entitled to vote
separately as a class to elect two members of
the Company's Board of Directors (the "Series
A Directors") and (ii) the holders of the
shares of Series B Common Stock are entitled
to vote separately as a class to elect the
balance of the Company's Board of Directors
(the "Series B Directors"); provided,
however, that the number of Series B
Directors shall not constitute less than a
majority of the Company's Board of Directors.
As the holder of all of the issued and
outstanding shares of Series B Common Stock,
Hearst has the right to elect nine of the 11
members of the Company's Board of Directors.
All of the outstanding shares of Series B
Common Stock are required to be held by
Hearst or its permitted transferees. The
shares of Series B Common Stock are
convertible at any time at the option of the
holder on a share-for-share basis into shares
of Series A Common Stock. The shares of
Series B Common Stock automatically convert
into shares of Series A Common Stock at such
time as Hearst and any permitted transferee
hold less than 20% of all shares of the
Common Stock that are then issued and
outstanding.
S-3
<PAGE>
Concurrent Debt Offering......
$ million aggregate principal amount of %
Senior Notes due 2007 and $ million
aggregate principal amount of % Debentures
due 2027. The sale of the shares of Series A
Common Stock offered hereby is not contingent
on the completion of the Debt Offering. See
"Recent Developments--Concurrent Debt
- -------- Offering."
(1) Does not include 800,000 shares and 200,000 shares of Series A Common Stock
that may be issued by the Company to the U.S. Underwriters and the
International Underwriters, respectively, upon the exercise of the
Underwriters' over-allotment option.
(2) Does not include the Adjustment Shares (as defined herein). See "The
Company--The Hearst Transaction."
S-4
<PAGE>
THE COMPANY
General. The Company owns or manages 15 network-affiliated television
stations reaching approximately 11.5% of U.S. Television households. The
Company is the largest, "pure-play" publicly owned television broadcast group
in the U.S., and is the third-largest, non-network owned television group in
terms of audience delivered.
The Hearst Transaction. The Company was formed in 1994 as a Delaware
corporation under the name Argyle Television, Inc. ("Argyle"), and its business
operations began in January 1995 with the consummation of its acquisition of
three television stations. The Company is the successor to the combined
operations of Argyle and the television broadcast group of The Hearst
Corporation ("Hearst") pursuant to a merger transaction that was consummated on
August 29, 1997 (the "Hearst Transaction"). In that transaction, Hearst
contributed its television broadcast group and related broadcast operations
(the "Hearst Broadcast Group") to Argyle and merged a wholly-owned subsidiary
of Hearst with and into Argyle, with Argyle as the surviving corporation
(renamed "Hearst-Argyle Television, Inc."). As a result of the Hearst
Transaction, Hearst currently owns approximately 38.6 million shares of the
Company's Series B Common Stock, comprising approximately 82% of the total
outstanding common stock of the Company. In connection with the Hearst
Transaction and related transactions, Hearst may receive up to an additional
2.7 million shares of Series B Common Stock (the "Adjustment Shares"), which
would result in Hearst's ownership of approximately 83% of the Company's total
outstanding Common Stock. Upon consummation of the Common Stock Offering,
Hearst will own approximately 73% (and up to approximately 74% after giving
effect to the issuance of the Adjustment Shares) of the Company's Common Stock
(in each case assuming the Underwriters' over-allotment option is not
exercised). Through its ownership of the Company's Series B Common Stock,
Hearst has the right to elect nine of the 11 members of the Company's Board of
Directors.
The Hearst Corporation. Hearst, one of the nation's largest privately-held
companies, is a diversified communications company engaged in a broad range of
publishing, broadcasting, cable television networks and other communications
activities. Hearst publishes 14 monthly consumer magazines that include
Cosmopolitan, Harper's Bazaar, Town & Country, Red Book, Good Housekeeping,
Country Living, Esquire and Popular Mechanics, among others. Hearst's 12 daily
and seven weekly newspapers include The Houston Chronicle, The San Francisco
Examiner, The Seattle Post-Intelligencer, The San Antonio Express-News and The
Albany Times Union. Hearst was a founding partner in Lifetime, A&E and The
History Channel cable networks. Hearst and The Walt Disney Company, through
ABC, Inc., wholly own the Lifetime network as equal partners, and are equal
partners in the A&E network, in which NBC owns a 25% interest. Hearst also owns
20% of ESPN, which includes ESPN2 and ESPNews. Hearst's book publishing
businesses include William Morrow and Avon Books, and its entertainment
activities include the production of made-for-television movies and television
series, as well as the syndication and licensing of cartoon characters and
features.
The Stations. The Company owns 12 television stations, eight of which are in
the top 50 of the 211 generally recognized geographic designated market areas
("DMAs") according to A.C. Nielsen Co. ("Nielsen"). In addition, the Company
manages two television stations and two radio stations that are owned by
Hearst: WWWB-TV in Tampa, Florida, WPBF-TV in West Palm Beach, Florida and
WBAL(AM) and WIYY(FM) in Baltimore, Maryland. The Company also provides
management services to Hearst in order to allow Hearst to fulfill its
obligations under a program services and time brokerage agreement between
Hearst and the permittee of KCWB-TV in Kansas City, Missouri (the "Missouri
LMA"). For the year ended December 31, 1996, on a pro forma basis after giving
effect to the consummation of the Hearst Transaction, the Company's total
revenues and broadcast cash flow were $370.2 million and $160.0 million,
respectively, of which approximately 28% and 26%, respectively, were
attributable to WCVB-TV in Boston, Massachusetts, the nation's 6th largest DMA.
Under the order of the Federal Communications Commission (the "FCC")
approving the Hearst Transaction, because of signal overlaps the Company must
divest two of its television stations (WNAC-TV in Providence, Rhode Island, and
WDTN-TV in Dayton, Ohio) and file by February 28, 1998 an application with
S-5
<PAGE>
the FCC for the transfer of ownership of such stations. A letter of intent has
been signed for the divestiture of WNAC, and the Company is negotiating with a
third party for the divestiture of WDTN. The Company is seeking to complete
these divestitures through a tax-deferred exchange of such stations for one or
more television stations of a third party, although there can be no assurance
that the Company will be able to accomplish such exchange on a fully tax-
deferred basis, if at all.
The following table sets forth certain information for each of the Company's
owned and managed television stations:
<TABLE>
<CAPTION>
PERCENTAGE OF
MARKET NETWORK U.S. TELEVISION
MARKET RANK(1) STATION AFFILIATION CHANNEL HOUSEHOLDS(2)
------ ------- --------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C>
*Boston, MA.............. 6 WCVB ABC 5 2.22%
*Tampa, FL(3)............ 15 WWWB WB 32 1.47%
*Pittsburgh, PA.......... 19 WTAE ABC 4 1.16%
*Baltimore, MD........... 23 WBAL NBC 11 1.01%
Cincinnati, OH.......... 30 WLWT NBC 5 0.81%
*Kansas City, MO......... 31 KMBC ABC 9 0.81%
*Kansas City, MO(3)...... 31 KCWB WB 29 ***
*Milwaukee, WI........... 32 WISN ABC 12 0.81%
*West Palm Beach, FL(3).. 43 WPBF ABC 25 0.61%
Oklahoma City, OK....... 44 KOCO ABC 5 0.61%
Providence, RI(4)....... 49 WNAC FOX 64 0.57%
*Dayton, OH(4)........... 53 WDTN ABC 2 0.52%
Honolulu, HI............ 71 KITV ABC 4 0.39%
Jackson, MS............. 90 WAPT ABC 16 0.30%
Fort Smith/Fayetteville,
AR...................... 116 KHBS/KHOG ABC/ABC 40/29 0.22%
-----
Total................. 11.51%
=====
</TABLE>
- --------
* Denotes a station owned or operated by the Company as a consequence of the
Hearst Transaction.
(1) Market rank is based on the relative size of the DMA among the 211
generally recognized DMAs in the U.S., based on Nielsen estimates for the
1997-98 season.
(2) Based on Nielsen estimates for the 1997-98 season.
(3) WWWB-TV and WPBF-TV are managed by the Company under a management agreement
with Hearst. In addition, the Company provides certain management services
to Hearst in order to allow Hearst to fulfill its obligations under the
Missouri LMA with KCWB.
(4) WNAC-TV's (Providence, RI) broadcast signal overlaps with WCVB-TV's
(Boston, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal. Under FCC rules,
a single entity cannot own stations with overlapping signals. The Company
will divest WNAC and WDTN, and has entered into a letter of intent to
divest WNAC.
(5) Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.
The Company has an option to acquire WWWB-TV and Hearst's interests and
option with respect to KCWB-TV (together with WWWB-TV, the "Option
Properties"), as well as a right of first refusal until approximately August
2000 with respect to WPBF-TV (if such station is proposed by Hearst to be sold
to a third party). The option period for each Option Property commences in
February 1999 and terminates in August 2000 and the purchase price is the fair
market value of the station as determined by the parties, or an independent
third-party appraisal, subject to certain specified parameters. If Hearst
elects to sell an Option Property prior to the commencement of, or during, the
option period, the Company will have a right of first refusal to acquire such
Option Property. The exercise of the option and the right of first refusal will
be by action of the independent directors of the Company, and any option
exercise may be withdrawn by the Company after receipt of the third-party
appraisal.
Business Strategy. The Company's strategic objective is to maintain and build
on its position as the largest, "pure-play" publicly owned television broadcast
group in the United States. To facilitate this strategy, the Company focuses on
the following key areas:
S-6
<PAGE>
. Size and Market Presence. The Company's newly-expanded station group
provides the Company with the critical mass necessary to remain
competitive with other station group owners. The Company intends to take
advantage of the benefits of scale to obtain attractive programming
pricing and terms, strengthen relationships with networks and national
advertising sales representatives, attract and retain talent and obtain
timely performance and satisfactory service from equipment suppliers.
. Growth. As a consequence of the consolidation of ownership occurring in
the television broadcast industry, the Company believes continued growth
is necessary in order to achieve its strategic objective. The Company
intends to generate growth both internally through continuous
improvement of existing operations, as well as externally through
acquisitions of television station groups and individual stations. The
Company intends to finance such acquisitions through a combination of
debt and equity in a manner that will permit continued growth in the
Company's business and provide flexibility in its capital structure. In
combination with such financing, the Company will seek to complete
acquisitions at price levels that will increase after-tax cash flow per
share.
. Geographic and Network Diversity. Ten of the Company's existing stations
are affiliated with ABC, two with NBC, two with the WB Network and one
with Fox. The stations are located in several distinct regions of the
United States, mitigating any potential adverse effect on the Company of
any regional economic fluctuations. In pursuing external growth
opportunities, the Company intends to focus on network-affiliated
television stations in the top 100 markets, with a view to enhancing the
geographic and network diversity of its stations.
. Strong News and Local Station Identities. The Company positions each of
its stations within the station's market to create and enhance a local
"brand" with which viewers and advertisers can identify, thereby seeking
to build the franchise value of the station and attain the number one or
strong number two position in the market in terms of audience delivery,
revenue share and profitability. The Company considers strong news and
local events programming to be critical in station branding.
. Cost Control. The Company closely monitors costs and implements cost
controls at each station it operates in a manner consistent with
building each station's market position. The Company also intends to
capitalize on its newly-expanded station group to generate cost savings
through the group acquisition of programming, equipment and services.
Principal Offices. The principal executive offices of the Company are located
at 888 Seventh Avenue, New York, New York 10106; its telephone number is 212-
649-2300.
RECENT DEVELOPMENTS
Concurrent Debt Offering. Concurrently with the Common Stock Offering, the
Company is offering to sell $400,000,000 aggregate principal amount of %
Senior Notes Due 2007 and % Debentures Due 2027 by a separate prospectus
supplement (collectively, the "Senior Notes"). The Senior Notes will be
redeemable in whole or in part, at the option of the Company at any time at the
prices described in the Prospectus Supplement pursuant to which the Senior
Notes are being offered. The sale of the shares of Series A Common Stock
pursuant to this Prospectus Supplement is not contingent on the completion of
the Debt Offering. See "Use of Proceeds."
Recent Financial Results. The information set forth below is based on
preliminary, unaudited data prepared by the Company and is subject to
adjustments and the completion by the Company of its financial statements with
respect to the quarter ended September 30, 1997. There can be no assurance that
actual results, when finalized, will not vary from the financial data set forth
below. The following financial data gives effect to the Hearst Transaction as
if it occurred at the beginning of the periods presented.
For the nine months ended September 30, 1997, total revenues on a pro forma
basis are estimated to have increased by approximately $7.4 million, or 2.8%,
to approximately $274.9 million from $267.5 million for the
S-7
<PAGE>
comparable period ended September 30, 1996. Broadcast cash flow (station
operating income, plus depreciation and amortization and write down of
intangible assets, plus amortization of program rights, minus program payments)
on a pro forma basis for the nine months ended September 30, 1997 is estimated
to have increased by approximately $12.4 million, or 11.5%, to approximately
$120.2 million from $107.8 million for the comparable period ended September
30, 1996. For the three months ended September 30, 1997, total revenues on a
pro forma basis are estimated to have increased by approximately $3.7 million,
or 4.3%, to approximately $89.6 million from $85.9 million for the comparable
period ended September 30, 1996. Broadcast cash flow on a pro forma basis for
the three months ended September 30, 1997 is estimated to have increased by
approximately $4.9 million, or 15.2%, to $37.1 million from $32.2 million for
the comparable period ended September 30, 1996. The Company is currently
reviewing whether or not the Hearst Transaction will result in a one-time
restructuring charge to the Company, which could amount to approximately $10.0
million.
S-8
<PAGE>
RISK FACTORS
The shares of Series A Common Stock offered hereby involve a substantial
degree of risk. In addition to the other information contained or incorporated
by reference in this Prospectus Supplement or the accompanying Prospectus,
prospective investors should carefully consider the following risks and
investment considerations before purchasing shares of Series A Common Stock.
RELIANCE ON ABC TELEVISION NETWORK; BOSTON STATION
Nine of the 12 television stations owned by the Company as of the date of
this Prospectus are ABC affiliates. On a pro forma basis, these nine stations
would have accounted for approximately 73% of the combined revenues and
approximately 76% of the broadcast cash flow from the Company's 12 owned
stations for the year ended December 31, 1996. The television viewership levels
for each of these stations are materially dependent upon network programming.
There can be no assurance that such programming will achieve or maintain
satisfactory viewership levels in the future. Each of these stations is a party
to a network affiliation agreement giving such station the right to rebroadcast
programs transmitted by the network. Five of the six television stations
contributed to the Company by Hearst are affiliated with the ABC network. The
term of each of the Hearst Broadcast Group's affiliation agreements with ABC is
two years, renewable for successive two-year periods, and each affiliation
agreement is subject to cancellation by either party upon six months notice to
the other party, except with respect to WTAE-TV in Pittsburgh, Pennsylvania. In
WTAE's case, the affiliation agreement is not subject to cancellation on six
months notice, and the term of the affiliation agreement will be successively
renewed unless either party gives the other notice of non-renewal six months
prior to the end of the then current term. The Company's current affiliation
agreements between ABC and KOCO, KITV, WAPT and KHBS expire on January 2, 2000,
January 2, 2005, March 6, 2005 and July 1, 1998, respectively. ABC has the
right to terminate its affiliation agreement in the event of a material breach
of such agreement by a station and in certain other circumstances. In 1994,
negotiations commenced to revise Hearst's ABC affiliation agreements to
provide, among other things, for 10-year terms and increased compensation. Such
agreements are still in the process of negotiation and documentation and have
not been finalized, although the Company is receiving its increased
compensation. Although the Company expects to continue to be able to renew its
network affiliation agreements, no assurance can be given that such renewals
will be obtained on as favorable terms or at all. As a result, a material
decline in ABC's ratings or the termination or non-renewal of the network
affiliation agreements with ABC could have a material adverse effect on the
Company.
For the year ended December 31, 1996, on a pro forma basis, after giving
effect to the Hearst Transaction, approximately 26% and 28% of the Company's
broadcast cash flow and total revenues, respectively, were attributable to
WCVB-TV in Boston, Massachusetts. A significant decline in net revenues from
WCVB-TV, as a result of a ratings decline or otherwise, could have a material
adverse effect on the Company's financial position and results of operations.
DEPENDENCE ON ADVERTISING; EFFECT OF ECONOMIC CONDITIONS
Since the Company is significantly dependent upon sales of advertising for
its revenues (on a pro forma basis, giving effect to the Hearst Transaction,
approximately 92% of the Company's revenues for each of the year ended December
31, 1996 and the six months ended June 30, 1997), operating results of the
Company are and will be affected by the relative popularity of its programming,
the activities of competitors, the availability of alternative advertising
media and cyclical changes in the national economy, as well as by regional
economic conditions in each of the markets in which its stations operate,
particularly as such conditions may affect advertising expenditures. In
addition, the advertising revenues of the stations generally are highest in the
second and fourth quarters of each year, due in part to increases in consumer
advertising in the spring and retail advertising in the period leading up to
and including the holiday season. Additionally, advertising revenues in even-
numbered years benefit from advertising placed by candidates for political
offices and demand for
S-9
<PAGE>
advertising time in Olympic broadcasts. Proposals have been advanced in
Congress to require television broadcast stations to provide advertising time
to political candidates at no charge, which would eliminate in whole or in part
advertising revenues from political candidates. Such political advertising
revenues comprised 5.1% of the Company's 1996 pro forma total revenues.
CONTROL BY MAJORITY STOCKHOLDER; CONFLICTS OF INTEREST
Hearst currently owns in excess of 80% of the outstanding shares of all
series of common stock of the Company and, by virtue of its ownership of 100%
of the Series B Common Stock, is entitled to elect as a class all but two
members of the Board of Directors of the Company. As a result, Hearst is able
to control substantially all actions to be taken by the Company's stockholders,
and also is able to maintain control over the operations and business of the
Company. This control, as well as certain provisions of the Company's Amended
and Restated Certificate of Incorporation and Delaware law, may make the
Company a less attractive target for a takeover than it otherwise might be, or
render more difficult or discourage a merger proposal, tender offer or other
transaction involving an actual or potential change of control of the Company.
In addition, the interests of Hearst, which owns or has significant
investments in other businesses, including cable television networks,
newspapers, magazines and electronic media, may from time to time be
competitive with, or otherwise diverge from, the interests of the Company,
particularly with respect to new business opportunities and future
acquisitions. Under the Amended and Restated Merger Agreement dated as of
March 26, 1997, among Hearst, Argyle and certain wholly-owned subsidiaries of
Hearst (the "Merger Agreement") entered into in connection with the Hearst
Transaction, Hearst and the Company have agreed that, without the prior written
consent of the other, neither the Company, on the one hand, nor Hearst, on the
other hand, will make any acquisition or purchase any assets if such an
acquisition or purchase by one party would require the other party to divest or
otherwise dispose of any of its assets because of regulatory or other legal
prohibitions. As a result, under current law and given the newspaper properties
that Hearst currently owns, the Company would be precluded, without Hearst's
agreement to sell newspapers in the corresponding markets and from acquiring
television broadcast stations in Albany, New York; Flint-Saginaw-Bay City,
Michigan; Beaumont, Texas; Houston, Texas; Laredo, Texas; Lubbock, Texas;
Midland-Odessa, Texas; San Antonio, Texas; San Francisco, California; Seattle,
Washington; and St. Louis, Missouri. A proposal to eliminate the rule banning
newspaper-television cross-ownership in the same market has been introduced in
Congress. The FCC separately has been asked to consider altering the cross-
ownership rule. Whether these proposals will be enacted into law is unknown at
this time. Additionally, Hearst is not precluded from purchasing television
stations, newspapers or other assets in other markets, the ownership of which
assets by Hearst could preclude, under FCC rules, the Company from owning
television stations in such markets in the future.
Hearst and the Company also have ongoing relationships that may create
situations where the interests of the two parties could conflict. Hearst and
the Company are parties to a series of agreements with each other, including a
Management Agreement (whereby the Company provides certain management services,
such as sales, news, programming and financial and accounting management
services, with respect to certain Hearst owned or operated television and radio
stations); an Option Agreement (whereby Hearst has granted the Company an
option to acquire certain Hearst owned or operated television stations, as well
as a right of first refusal with respect to another television station if
Hearst proposes to sell such station within 36 months of its acquisition); a
Studio Lease Agreement (whereby Hearst leases from the Company certain premises
for Hearst's radio broadcast stations); a Tax Sharing Agreement (whereby Hearst
and the Company have established the sharing of federal, state and local taxes
after the Company became part of the consolidated tax return of Hearst); a Name
License Agreement (whereby Hearst permits the Company to use the Hearst name in
connection with the Hearst-Argyle name and operation of its business); and a
Services Agreement (whereby Hearst provides the Company certain administrative
services such as accounting, financial, legal, tax, insurance, data processing
and employee benefits). The Company believes that the terms of all these
agreements are reasonable to both sides; there can be no assurance, however,
that more favorable terms would not be available from third parties where
applicable.
S-10
<PAGE>
TELEVISION INDUSTRY COMPETITION AND TECHNOLOGY
The television broadcast industry is highly competitive. Some of the stations
that compete with the Company's stations are owned and operated by large
national or regional companies that have greater resources, including financial
resources, than the Company. Technological innovation, and the resulting
proliferation of programming alternatives such as cable, direct satellite-to-
home services and home video rentals, have fractionalized television viewing
audiences and subjected television broadcast stations to new types of
competition. Over the past decade, cable television has captured an increasing
market share, while the aggregate viewership of the major networks has
declined. In addition, the expansion of cable television and other industry
changes have increased, and may continue to increase, competitive demand for
programming. Such increased demand, together with rising production costs, may
in the future increase the Company's programming costs or impair its ability to
acquire programming. In addition, new television networks such as United
Paramount Network ("UPN") and the WB Network have created additional
competition. The FCC has adopted rules for implementing digital (including
high-definition) television ("DTV") service in the United States.
Implementation of DTV is expected to improve the technical quality of
television. Under certain circumstances, however, conversion to DTV operations
may reduce a station's geographical coverage area or provide a competitive
advantage to one or more competing stations in the market. Implementation of
DTV is expected to impose additional costs that are higher than normal on
television stations providing the new service, due to increased equipment costs
and possible spectrum-related fees. While the Company cannot predict the
implementation costs of DTV, these costs are expected to be significant. The
Company cannot predict the effect the authorization of DTV service will have on
the business of the Company.
In addition to competing with other media outlets for audience share, the
Company's stations also compete for advertising revenues, their primary source
of revenues. The stations compete for such advertising revenues with other
television stations in their respective markets, as well as with other
advertising media, such as newspapers, radio stations, magazines, outdoor
advertising, transit advertising, yellow page directories, direct mail, the
Internet and local cable systems. The stations are located in highly
competitive markets. Accordingly, the Company's results of operations will be
dependent upon the ability of each of its stations to compete successfully for
advertising revenues in its market, and there can be no assurance that any one
of these stations will be able to maintain or increase its current audience
share or revenue share. To the extent that certain of the Company's competitors
have, or may in the future obtain, greater resources than the Company, the
Company's ability to compete successfully in its broadcasting markets may be
impeded.
REGULATORY MATTERS
FCC Licenses. The television operations of the Company are subject to
significant regulation by the FCC under the Communications Act of 1934, as
amended (the "Communications Act"), most recently amended further by the
Telecommunications Act of 1996 (the "Telecommunications Act"). Approval of the
FCC is required for the issuance, renewal and transfer or assignment of
television station operating licenses. In particular, the Company is dependent
upon its continuing ability to maintain broadcasting licenses from the FCC.
License renewals filed after 1996 customarily will be granted for terms of
eight years. While broadcast licenses are typically renewed by the FCC, there
can be no assurance that the licenses for the Company's stations will be
renewed at their expiration dates or, if renewed, that the renewal terms will
be for eight-year periods. The non-renewal or revocation of one or more of the
FCC licenses held by the Company could have a material adverse effect on the
operations of the Company.
Common Ownership. The rules of the FCC include restrictions on the common
ownership or control of interests in television stations and certain other
media interests in the same market, including television and radio broadcast
stations, as well as cable television systems and English language daily
newspapers. In addition, no person is permitted to hold an attributable
interest in television stations collectively reaching more than 35% of all U.S.
television households, subject to a 50% discount for UHF television stations.
If an acquisition results in an acquiror having holdings that conflict with the
common ownership rules, divestiture of one of the common interests is generally
required. The FCC, in certain cases, may grant permanent waivers of such common
S-11
<PAGE>
ownership. The FCC, however, generally only grants temporary waivers of common
ownership in order to afford the acquiror a reasonable period of time following
the consummation of the acquisition to comply with the applicable law and
regulations through disposition of one of the common interests. The Hearst
Transaction resulted in the following combinations prohibited by the FCC's
"television duopoly rule" (which generally proscribes the common ownership of
two or more stations with overlapping signal contours): (i) Argyle's WNAC-TV
(Providence, Rhode Island) and Hearst's WCVB-TV (Boston, Massachusetts) and
(ii) Argyle's WLWT-TV (Cincinnati, Ohio) and Hearst's WDTN-TV (Dayton, Ohio).
On July 15, 1997, the FCC approved the Hearst Transaction and granted a six-
month temporary waiver of its television duopoly rule, permitting the Company
during the waiver period to own television stations with overlapping signals.
Under this waiver, the Company is required to file applications with the FCC
for consent to divest WNAC and WDTN by February 28, 1998. A letter of intent
has been signed to divest WNAC, and the Company currently is negotiating with a
third party to divest WDTN. There can be no assurance that the WNAC divestiture
will be completed, or that the current WDTN negotiations will result in an
agreement to divest WDTN. If such divestitures do not occur within the near
future, subsequently obtaining a buyer for each of the stations to be divested
within the six-month waiver period granted by the FCC could result in the
receipt of a price that is less than could be obtained for such stations if the
Company were not forced to sell the stations within that time frame.
Restrictions on Broadcast Advertising. Advertising of cigarettes and certain
other tobacco products on broadcast stations has been banned for many years.
Various states restrict the advertising of alcoholic beverages. Congress and
the FCC are currently examining proposals that, if adopted, would eliminate or
severely restrict the advertising of hard liquor, as well as beer and wine. The
adoption of such proposals could have an adverse impact on the revenues of the
Company. No prediction can be made as to whether any or all of the present
proposals will be enacted into law.
Proposed Regulations. Among the proposed regulations under consideration by
the FCC in determining whether impermissible cross-ownership exists under its
television duopoly rule (described above) is a proposal to deem as attributable
certain television local marketing agreements ("LMAs") and, if deemed
attributable, the extent to which currently effective agreements of this type
should be exempted from any new FCC rules. Such attribution under the
television duopoly rule, as such rule may be modified, could have a material
adverse effect on the Joint Marketing and Programming Agreement between the
Company and Clear Channel Communications, Inc. relating to WNAC (Providence,
Rhode Island) and the Missouri LMA between Hearst and the licensee of KCWB-TV
(Kansas City, Missouri), as well as on the Company's ability to divest WNAC on
favorable terms, if at all. If the FCC's ultimate decision were to disfavor the
continued validity of such joint operating agreements or LMAs, then these
agreements, in the worst case scenario, might be required to be terminated.
The U.S. Congress and the FCC currently have under consideration, and may in
the future adopt, new laws, regulations and policies regarding a wide variety
of matters that could, directly or indirectly, materially adversely affect the
operation and ownership of the Company. The FCC has not yet fully implemented
the Telecommunications Act. The Company is unable to predict the outcome of
future federal legislation or the impact of any such laws or regulations on the
Company's operations.
RISKS ASSOCIATED WITH INTEGRATION OF THE COMBINED OPERATIONS
As a result of the Hearst Transaction, the Company has experienced
significant expansion, including expansion into new markets in which neither
Argyle nor the Hearst Broadcast Group had previously operated prior to the
Hearst Transaction. As a result, the Company's management will be required to
manage a substantially larger number of television stations than historically
has been the case. There can be no assurance that the Company will be able to
implement effectively the organizational and operational systems necessary for
optimal management and integration of its newly expanded group of television
stations or any television stations to be acquired in the future, or that the
Company will be able to manage its growth successfully. In addition, the
management of the Company is evaluating, and will continue to evaluate, the
nature and scope of its operations and various short-term and long-term
strategic considerations, and will assess to what extent integration,
S-12
<PAGE>
consolidation or other modification of the two separate businesses is
appropriate following the Hearst Transaction. Many operational and strategic
decisions with respect to the Company have not yet been made. Significant
uncertainties and risks relating to the integration of the combined operations
may exist and, therefore, it is difficult to predict or quantify the impact of
such decisions on the results of operations and financial condition of the
Company.
RISKS ASSOCIATED WITH POSSIBLE EXPANSION
As part of its business strategy, the Company intends to pursue possible
further expansion through the acquisition of additional television stations or
television station groups, and intends to continue to evaluate acquisition
opportunities. Such acquisition opportunities, however, may become more limited
as a consequence of the consolidation of ownership occurring in the television
broadcast industry. The Company competes and will continue to compete for the
acquisition of television stations with other prospective purchasers, some of
whom have greater financial resources than the Company. In addition, any such
acquisitions will be subject to FCC approval and limitations on the number and
location of broadcasting properties that any one person or entity may own, and
FCC rules restricting the ownership of television stations and newspapers in
the same market. As a result of these and other factors, there can be no
assurance that future acquisitions will be available on attractive terms, if at
all.
While management expects to realize certain operating synergies and cost
savings as a result of any future acquisition, there can be no assurance that
such synergies and savings will be achieved, that the integration of the
Company and new stations can be accomplished successfully or on a timely basis
or that the Company's business strategy can be implemented. As a result, any
future acquisition may have an adverse effect on the Company's financial
position and results of operations.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Common Stock Offering (assuming the Underwriter's
over-allotment option is not exercised), the Company will have outstanding
14,291,204 shares of Series A Common Stock and 38,611,002 shares of Series B
Common Stock (excluding any Adjustment Shares). The Company also has shares of
Series A Preferred Stock and Series B Preferred Stock outstanding. The Series A
Preferred Stock is convertible at any time, into an aggregate of 312,514 shares
of Series A Common Stock. The Series B Preferred Stock is convertible at any
time after June 11, 2001 into shares of Series A Common Stock at a conversion
rate equal to the then current market price of the Series A Common Stock. In
addition, the Company has outstanding options to purchase 1,794,125 shares of
Series A Common Stock, of which options are currently exercisable for 216,125
shares. All of the shares of Series A Common Stock (including the shares
offered hereby) generally will be freely tradeable without restriction or
further registration under the Securities Act, except that any shares held by
persons who are "affiliates" of the Company, as that term is defined in Rule
144 under the Securities Act, or who were at the time of the Company's
shareholder vote on the Hearst Transaction "affiliates" of the Company pursuant
to Rule 145 under the Securities Act, may be generally sold subject to certain
restrictions as to timing, manner and volume. In this regard, the Company has
in effect a registration statement covering the resale from time to time of
4,599,260 shares of Series A Common Stock received in the Hearst Transaction by
certain former limited partners of a partnership that prior to the Hearst
Transaction owned shares of the Company's common stock in order to permit such
persons to sell their shares without regard to the restrictions discussed in
the preceding sentence. The holders of approximately 4,443,406 shares covered
by such registration statement (which holders include the Selling Stockholders)
have additional rights under that certain Registration Rights Agreement dated
as of August 29, 1997. The Series B Common Stock held by Hearst and the Series
A Common Stock into which the Series B Common Stock is convertible may not be
sold in the absence of registration under the Securities Act or unless an
exemption from registration is available, including the exemption afforded by
Rule 144 under the Securities Act.
The Company, its directors and executive officers, Hearst and certain holders
of the outstanding Series A Common Stock, who will directly or indirectly own
3,683,113 shares of Series A Common Stock and currently
S-13
<PAGE>
exercisable options to purchase 40,000 shares of Series A Common Stock, and, in
the case of Hearst, all of the shares of Series B Common Stock, upon completion
of the Common Stock Offering, have, subject to certain exceptions, agreed not
to directly or indirectly offer for sale, sell or otherwise dispose of, or
announce the offering of, any shares of Series A Common Stock or any securities
convertible into or exercisable or exchangeable for Series A Common Stock for a
period of 90 days after the date of this Prospectus Supplement without the
prior consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The Company can make no prediction as to the effect, if any, that sales of
shares of its Series A Common Stock, or the availability of shares for future
sale, will have on the market price of the Series A Common Stock prevailing
from time to time. Sales of substantial amounts of Series A Common Stock
(including shares owned upon the exercise of options) in the public market, or
the perception that such sales could occur, could depress the prevailing market
price for the Series A Common Stock. Such sales may also make it more difficult
for the Company to sell equity securities or equity-related securities in the
future at a time and price that it deems appropriate. See "Shares Eligible for
Future Sale."
LIMITATIONS ON DIVIDENDS
The Company does not anticipate that it will pay any dividends on its Series
A Common Stock in the foreseeable future. The terms of the Credit Facility and
the indenture pursuant to which the Subordinated Notes (as defined herein) were
issued limit the ability of the Company to pay dividends on the Series A Common
Stock under certain conditions.
S-14
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the Common Stock Offering are estimated
to be approximately $172 million ($200 million if the Underwriters' over-
allotment option is exercised in full), assuming a public offering price of
$30.125 per share (the closing price of the Series A Common Stock on the Nasdaq
National Market on October 15, 1997) and after giving effect to underwriting
discounts and commissions and expenses payable by the Company. The Company will
not receive any of the net proceeds from the sale of Series A Common Stock by
the Selling Stockholders. Concurrently with the Common Stock Offering, the
Company is conducting the Debt Offering (together with the Common Stock
Offering, the "Offerings"), the net proceeds of which are estimated to be
approximately $396 million after giving effect to underwriting discounts and
commissions and expenses payable by the Company. The Company expects to utilize
the net proceeds from the Offerings to repay outstanding indebtedness as
follows:
<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE OF
INDEBTEDNESS DOLLAR AMOUNT NET PROCEEDS
------------ ------------- -------------
<S> <C> <C>
Credit Facility............. $398 million(/1/)(/2/)(/3/) 70.1%(/1/)(/2/)
Subordinated Notes.......... 170 million(/2/) 29.9%(/2/)
------------ ----
Total..................... $568 million 100%
============ ====
</TABLE>
- --------
(1) If only the Common Stock Offering is completed, the approximate dollar
amount of indebtedness the Company expects to repay under the Credit
Facility will be $172 million, or 100% of the net proceeds.
(2) All of the net proceeds initially will be used to repay a portion of
outstanding indebtedness under the Credit Facility. After such repayment,
the Company may make additional borrowings under the Credit Facility to
redeem all or a portion of the Subordinated Notes. The amount indicated
assumes that no Subordinated Notes will be repurchased in the Change of
Control Offer described below and that all of the Subordinated Notes will
be repurchased. See "--Subordinated Notes." Morgan Guaranty Trust Company,
an affiliate of J.P. Morgan Securities Inc., is an agent and a lender under
the Company's Credit Facility and is expected to receive approximately
$57.7 million of repayment under the Credit Facility from the net proceeds
of the Offerings. See "Underwriting."
(3) Assumes that the $275 million principal amount of private placement debt
that was assumed by the Company as part of the Hearst Transaction (the
"Private Placement Debt") and related make-whole premium of approximately
$16 million will have been refinanced using borrowings under the Credit
Facility. The Company expects to refinance the Private Placement Debt on or
about October 31, 1997.
Credit Facility. Upon consummation of the Hearst Transaction, the Company
entered into a $1 billion credit facility with the Chase Manhattan Bank, which
matures on December 31, 2004 (the "Credit Facility"). At October 15, 1997,
outstanding indebtedness under the Credit Facility was approximately $140
million as a result of borrowings made to (i) finance the cash consideration of
approximately $100 million payable in connection with the Hearst Transaction:
(ii) refinance the Company's previous credit facility of approximately $40
million, net of repayments; and, (iii) pay certain fees and expenses associated
with the Hearst Transaction. Such borrowings bear interest at an applicable
margin that varies based on the Company's ratio of total debt to operating cash
flow, plus, at the Company's option, LIBOR or an alternate base rate (such
interest being approximately 6% at October 15, 1997). The Company expects to
use the net proceeds from the Offerings to repay a portion of borrowings under
the Credit Facility.
Subordinated Notes. The Company currently has outstanding $150 million
principal amount of senior subordinated notes, which it issued in October 1995
(the "Subordinated Notes"). The Subordinated Notes are due in 2005 and bear
interest at 9 3/4% payable semiannually. Under the indenture governing the
Subordinated Notes, the consummation of the Hearst Transaction constituted a
"change of control" of Argyle, which required the Company to commence an offer
to repurchase the Subordinated Notes for cash at 101% of their principal amount
plus accrued and unpaid interest to the date of repurchase (the "Change of
Control Offer"). The Change of Control Offer expires on October 27, 1997.
Within 180 days after the completion of the Change of Control Offer, the
Company is permitted under the indenture governing the Subordinated Notes to
redeem Subordinated Notes that are not repurchased in the Change of Control
Offer. After using the net proceeds from the Offerings initially to repay a
portion of outstanding indebtedness under the Credit Facility, the Company may
make additional borrowings under the Credit Facility in such requisite amounts
to repurchase all or a portion of the Subordinated Notes and to pay any
applicable redemption premium and accrued and unpaid interest.
S-15
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Series A Common Stock is quoted on the Nasdaq National Market under the
symbol "HATV." Prior to the consummation of the Hearst Transaction, shares of
the Series A Common Stock of Argyle were traded on the Nasdaq National Market
under the symbol "ARGL." The Company's Series B Common Stock, 100% of which is
held by Hearst, is not publicly traded. The table below sets forth, for the
calendar quarters indicated, the high and the low sales prices of the Series A
Common Stock of Argyle prior to the consummation of the Hearst Transaction on
August 29, 1997, and of the Company's Series A Common Stock subsequent to the
consummation of the Hearst Transaction, in each case as reported by the Nasdaq
National Market:
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
-------------------
HIGH LOW
------- -------
<S> <C> <C>
1995
Fourth Quarter (beginning October 24, 1995)........... 18 1/4 15 1/2
1996
First Quarter......................................... 23 17
Second Quarter........................................ 27 19 1/2
Third Quarter......................................... 29 1/4 22
Fourth Quarter........................................ 28 3/4 23 3/4
1997
First Quarter......................................... 29 1/8 23 7/8
Second Quarter........................................ 25 1/2 22 1/2
Third Quarter......................................... 30 5/8 24 7/8
Fourth Quarter (through October 15, 1997)............. 32 5/8 30
</TABLE>
On August 9, 1996, the last full trading day prior to the public announcement
of Argyle's exploration of strategic alternatives, the closing price of
Argyle's Series A Common Stock on the Nasdaq National Market (as reported in
The Wall Street Journal) was $23.00 per share. On March 26, 1997, the last full
trading day prior to the public announcement of the Hearst Transaction, the
closing price of Argyle's Series A Common Stock on the Nasdaq National Market
(as reported in The Wall Street Journal) was $27.50 per share. On August 28,
1997, the last full trading day prior to the consummation of the Hearst
Transaction, the closing price of Argyle's Series A Common Stock on the Nasdaq
National Market (as reported in The Wall Street Journal) was $27.625 per share.
On October 15, 1997, the closing price of the Company's Series A Common Stock
on the Nasdaq National Market (as reported in The Wall Street Journal) was
$30.125 per share.
The Company has not paid any dividends on its Series A Common Stock since
inception and does not expect to pay any dividends on its Series A Common Stock
in the immediate future. The Credit Facility and the indenture pursuant to
which the Subordinated Notes were issued limit the ability of the Company to
pay dividends on the Series A Common Stock under certain conditions.
S-16
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1997; (i) on a pro forma basis giving effect to the Hearst Transaction;
(ii) on a pro forma basis as adjusted to give effect to the consummation of the
Common Stock Offering and the application of the net proceeds therefrom as
described under "Use of Proceeds;" and, (iii) on a pro forma basis as adjusted
to give effect to the consummation of the Offerings and the application of the
net proceeds therefrom as described under "Use of Proceeds." This table should
be read in conjunction with and is qualified by reference to the selected
historical and pro forma financial data contained in this Prospectus Supplement
and the unaudited pro forma combined condensed financial statements and notes
thereto included in documents incorporated by reference in the accompanying
Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------------------------------------
PRO FORMA
PRO FORMA AS ADJUSTED FOR PRO FORMA AS
HEARST COMMON ADJUSTED FOR
TRANSACTION (1)(2) STOCK OFFERING (3) OFFERINGS (4)
------------------ ------------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt:
Notes.................... $ -- $ -- $400,000
Credit Facility (2)...... 454,000 452,000 56,000
Subordinated Notes....... 150,000 -- --
-------- -------- --------
Total long-term debt... 604,000 452,000 456,000
-------- -------- --------
Shareholders' equity:
Preferred Stock, $.01 par
value; 1,000,000 shares
authorized:
Series A preferred
stock, 10,938 shares
issued and
outstanding........... 1 1 1
Series B preferred
stock, 10,938 shares
issued and
outstanding........... 1 1 1
Series A common stock,
$.01 par value;
100,000,000 shares
authorized; 8,277,054
shares issued and
outstanding prior to
Common Stock Offering;
14,277,054 shares to be
issued and outstanding
after Common Stock
Offering (5)............ 82 142 142
Series B common stock,
$.01 par value;
100,000,000 shares
authorized; 39,611,002
shares issued and
outstanding (6)......... 396 396 396
Additional paid-in
capital................. 183,531 355,471 355,471
Retained earnings
(deficit)............... (17,672) (17,672) (17,672)
-------- -------- --------
Total shareholders'
equity................ 166,339 338,339 338,339
-------- -------- --------
Total capitalization... $770,339 $790,339 $794,339
======== ======== ========
</TABLE>
- --------
(1) The pro forma information gives effect to the Hearst Transaction, does not
give effect to the divestiture of WDTN and WNAC and does not give effect to
the issuance of 1.7 million of the total 2.7 million Adjustment Shares. For
a description of pro forma adjustments, see the Company's unaudited pro
forma combined condensed financial statements incorporated by reference in
the accompanying Prospectus.
(2) Assumes that the Private Placement Debt assumed by the Company in the
Hearst Transaction and related make-whole premium will have been refinanced
from the proceeds of additional borrowings made under the Credit Facility.
(3) The pro forma, as adjusted for the Common Stock Offering, information gives
effect to (i) the Hearst Transaction; (ii) the Common Stock Offering
(assuming the Underwriters' over-allotment option is not exercised),
assuming a public offering price of $30.125 per share; and, (iii) the
application of the net proceeds from the Common Stock Offering. See "Use of
Proceeds."
(4) The pro forma, as adjusted for the Offerings, information gives effect to
(i) the Hearst Transaction; (ii) the Common Stock Offering; (iii) the Debt
Offering; and, (iv) the application of the net proceeds from the Offerings.
See "Use of Proceeds."
(5) Excludes 1,794,125 shares of Series A Common Stock issuable upon exercise
of stock options. Options for 216,125 shares of Series A Common Stock are
currently exercisable.
(6) Includes 1.0 million shares of the total 2.7 million Adjustment Shares to
be issued to Hearst in connection with the working capital adjustments and
pension-related matters associated with the Hearst Transaction.
S-17
<PAGE>
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
The selected unaudited pro forma financial data for the year ended December
31, 1996 have been derived from the unaudited pro forma combined condensed
financial statements of Argyle and the audited historical financial statements
of the assets and properties of Hearst's six network-affiliated television
broadcast stations and Hearst Broadcast Productions contributed by Hearst to
Argyle prior to consummation of the Hearst Transaction (the "Hearst Broadcast
Group"), in each case included in documents incorporated by reference in the
accompanying Prospectus. The selected unaudited pro forma financial data for
the six months ended June 30, 1996 and 1997 have been derived from the
unaudited pro forma combined condensed financial statements of Argyle and the
unaudited historical financial statements of the Hearst Broadcast Group, in
each case included in documents incorporated by reference in the accompanying
Prospectus. The following data should be read in conjunction with the Company's
consolidated financial statements and related notes thereto included in
Argyle's Annual Report on Form 10-K for the year ended December 31, 1996,
Argyle's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997,
and June 30, 1997, Argyle's Current Report on Form 8-K dated January 31, 1997,
filed on February 14, 1997, as amended by Current Report on Form 8-K/A dated
January 31, 1997, filed on April 15, 1997, Argyle's Proxy Statement/Prospectus
filed on July 31, 1997, the Company's Form 8-K/A filed on September 4, 1997,
the Company's Current Report on Form 8-K dated August 29, 1997, filed on
September 15, 1997, as amended by Current Report on Form 8-K/A dated August 29,
1997, filed on September 26, 1997 and, the Company's Current Report on Form 8-K
dated August 29, 1997, filed on October 16, 1997, each of which is incorporated
by reference in the accompanying Prospectus.
S-18
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
HEARST-ARGYLE PRO FORMA(A)
--------------------------------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------ -------------------
1996(A) 1996(A) 1997(A)
------------ -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues.............................. $370,249 $181,571 $ 185,332
Station operating expenses.................. 161,103 79,990 80,947
Amortization of program rights.............. 45,522 23,765 21,187
Depreciation and amortization............... 31,848 16,119 15,725
-------- -------- ---------
Station operating income.................... 131,776 61,697 67,473
Corporate expenses.......................... 11,000 5,500 5,500
-------- -------- ---------
Operating income............................ 120,776 56,197 61,973
Interest expense, net....................... 44,650 22,325 22,325
-------- -------- ---------
Income from continuing operations before
income taxes............................... 76,126 33,872 39,648
Income taxes................................ 33,027 14,799 17,162
-------- -------- ---------
Income from continuing operations........... 43,099 19,073 22,486
Less preferred stock dividends.............. (1,422) (712) (712)
-------- -------- ---------
Earnings applicable to common stock......... $ 41,677 $ 18,361 $ 21,774
======== ======== =========
Earnings per common share................... $ 0.87 $ 0.38 $ 0.45
======== ======== =========
Number of shares used in per share
calculation(b)............................. 47,888 47,888 47,888
OTHER DATA:
Broadcast cash flow, as defined(c).......... $159,952 $ 75,576 $ 83,062
Broadcast cash flow margin(d)............... 43.2% 41.6% 44.8%
Operating cash flow, as defined(e).......... $148,952 $ 70,076 $ 77,562
Operating cash flow margin(f)............... 40.2% 38.6% 41.8%
After tax cash flow (g)..................... $ 74,947 $ 35,192 $ 38,211
Program payments(h)......................... 49,194 26,005 21,323
PRO FORMA
AS OF
JUNE 30,
BALANCE SHEET DATA: 1997
---------
Cash and cash equivalents......................................... $ 7,210
Total assets...................................................... 910,522
Total debt........................................................ 604,000
Stockholders' equity.............................................. 166,339
</TABLE>
See notes on the following page.
S-19
<PAGE>
NOTES TO THE SELECTED UNAUDITED PRO FORMA FINANCIAL DATA OF HEARST-ARGYLE
(DOLLARS IN THOUSANDS)
(a) Includes the unaudited pro forma combined results of operations of Argyle
and the historical results of operations of the Hearst Broadcast Group on a
combined pro forma basis as if the Hearst Transaction had occurred at the
beginning of the periods presented. The data does not include the required
divestiture of WNAC and WDTN. See The Company's unaudited pro forma
combined condensed financial statements incorporated by reference in the
accompanying Prospectus.
(b) Excludes any effect of preferred stock conversion and the effect of any
Company options.
(c) Broadcast cash flow is defined as station operating income, plus
depreciation and amortization and write down of intangible assets, plus
amortization of program rights, minus program payments. Pro forma broadcast
cash flow would be $162,452 for the year ended December 31, 1996 and
$77,076 for the six months ended June 30, 1996 using normalized program
payments for each respective period. (See note (h) below.) Broadcast cash
flow does not present a measure of operating results and does not purport
to represent cash provided by operating activities. Broadcast cash flow
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. This measure may not be comparable to similarly titled measures
used by other companies.
(d) Broadcast cash flow margin is broadcast cash flow divided by total
revenues, expressed as a percentage.
(e) Operating cash flow is defined as operating income, plus depreciation and
amortization, and amortization of program rights, minus program payments
and adjusted for any non-cash compensation expense. Pro forma operating
cash flow would be $151,452 for the year ended December 31, 1996 and
$71,576 for the six months ended June 30, 1996 using normalized program
payments for each respective period. (See note (h) below.) Operating cash
flow is presented here not as a measure of operating results, but rather as
a measure of debt service ability. Operating cash flow does not purport to
represent cash provided by operating activities and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. This
measure may not be comparable to similarly titled measures used by other
companies.
(f) Operating cash flow margin is operating cash flow divided by total
revenues, expressed as a percentage.
(g) After tax cash flow is defined as net income plus depreciation and
amortization. After tax cash flow does not present a measure of operating
results and does not purport to represent cash provided by operating
activities. After tax cash flow should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with
generally accepted accounting principles. This measure may not be
comparable to similarly titled measures used by other companies.
(h) Program payments for the year ended December 31, 1996 and the six months
ended June 30, 1996 include $2.5 million and $1.5 million, respectively, of
the last year of Hearst Broadcast Group scheduled program payments for a
program that was replaced during the end of 1995. Without these amounts,
program payments are normalized period to period.
S-20
<PAGE>
SELECTED FINANCIAL DATA OF ARGYLE
The historical financial data for the years ended December 31, 1992, 1993 and
1994 have been derived from the audited combined financial statements
consisting of Northstar Television of Grand Rapids Inc., Northstar Television
of Jackson, Inc. and Northstar Television of Providence, Inc., collectively the
"Northstar Stations," the accounting predecessor to Argyle, included in
documents incorporated by reference in the accompanying Prospectus. The
historical financial data for the years ended December 31, 1995 and 1996 have
been derived from the audited consolidated financial statements of Argyle
included in documents incorporated by reference in the accompanying Prospectus.
The historical financial data for the six months ended June 30, 1996 and 1997
have been derived from the unaudited condensed consolidated financial
statements of Argyle, included in documents incorporated by reference in the
accompanying Prospectus. The pro forma consolidated financial data for the year
ended December 31, 1996 and for the six months ended June 30, 1996 and 1997
have been prepared as if the acquisition of KHBS and KHOG (the "Arkansas
Stations"), which occurred effective June 1, 1996; the Company's Joint
Marketing and Programming Agreement with Clear Channel Communications, Inc.
relating to WNAC (the "Clear Channel Venture"), which occurred effective July
1, 1996; and the exchange of two television stations owned by the Company with
two television stations owned by Gannett, Inc. (the "Gannett Swap"), which
occurred effective January 31, 1997, had been completed at the beginning of the
periods presented. Such pro forma data is not necessarily indicative of the
actual results that would have occurred or of results that may occur.
The historical financial data for the six months ended June 30, 1996 and 1997
are unaudited but, in the opinion of the Company's management, have been
prepared on the same basis as the audited consolidated financial statements and
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial position and results of
operations for those periods. Results for the six month periods ended June 30,
1996 and 1997 are not necessarily indicative of the results for a full year.
S-21
<PAGE>
SELECTED FINANCIAL DATA OF ARGYLE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------------------------- ------------------------------------
ARGYLE ARGYLE
PREDECESSOR HISTORICAL ARGYLE HISTORICAL PRO FORMA ARGYLE HISTORICAL PRO FORMA
-------------------------- ------------------- --------- ------------------ ----------------
1992 1993 1994 1995(A) 1996(B) 1996(C) 1996(B) 1997(D) 1996(C) 1997(C)
-------- ------- ------- --------- -------- --------- -------- -------- ------- -------
STATEMENT OF (IN THOUSANDS) (IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues....... $ 27,103 $28,440 $34,538 $ 46,944 $ 73,294 $ 84,243 $ 34,057 $ 39,765 $41,049 $40,740
Station operating
expenses............ 13,209 14,295 16,430 23,603 37,639 41,772 18,372 21,367 22,497 21,641
Write-down of
intangible assets .. 25,500 -- -- -- -- -- -- -- -- --
Amortization of
program rights...... 4,670 3,876 3,600 3,961 4,725 5,225 2,571 2,119 2,289 2,135
Depreciation and
amortization........ 3,511 2,884 3,126 12,294 23,965 26,075 10,724 12,760 12,378 12,898
-------- ------- ------- --------- -------- -------- -------- -------- ------- -------
Station operating
income (loss)....... (19,787) 7,385 11,382 7,086 6,965 11,171 2,390 3,519 3,885 4,066
Corporate expenses... 786 1,174 1,103 2,324 4,285 4,285 1,867 1,904 1,867 1,904
Non-cash compensation
expense............. -- -- -- 675 675 675 337 503 337 504
-------- ------- ------- --------- -------- -------- -------- -------- ------- -------
Operating income
(loss).............. (20,573) 6,211 10,279 4,087 2,005 6,211 186 1,112 1,681 1,658
Interest expense,
net................. 7,849 5,885 4,745 12,052 16,566 18,119 7,304 9,407 8,376 9,407
-------- ------- ------- --------- -------- -------- -------- -------- ------- -------
Income (loss) from
continuing
operations before
income taxes........ (28,422) 326 5,534 (7,965) (14,561) (11,908) (7,118) (8,295) (6,695) (7,749)
Income taxes......... -- 301 170 -- -- -- -- -- -- --
-------- ------- ------- --------- -------- -------- -------- -------- ------- -------
Income (loss) from
continuing
operations.......... (28,422) 25 5,364 (7,965) (14,561) (11,908) (7,118) (8,295) (6,695) (7,749)
Cumulative effect of
a change in
accounting principle
(e)................. -- (213) -- -- -- -- -- -- -- --
Extraordinary
item(f)............. -- -- (774) (7,842) -- -- -- -- -- --
-------- ------- ------- --------- -------- -------- -------- -------- ------- -------
Net income (loss) ... $(28,422) $ (188) $ 4,590 (15,807) (14,561) (11,908) (7,118) (8,295) (6,695) (7,749)
======== ======= =======
Less preferred stock
dividends (g)....... -- (829) (1,422) (118) (711) (712) (712)
--------- -------- -------- -------- -------- ------- -------
Loss applicable to
common stock........ $ (15,807) $(15,390) $(13,330) $ (7,236) $ (9,006) $(7,407) $(8,461)
========= ======== ======== ======== ======== ======= =======
Loss per common
share............... $ (1.25) $ (1.37) $ (1.17) $ (0.65) $ (0.79) $ (0.65) $ (0.75)
Number of shares used
in per share
calculation......... 6,388 11,246 11,347 11,144 11,347 11,347 11,347
OTHER DATA:
Broadcast cash flow,
as defined(h)....... $ 9,577 $ 9,868 $14,223 $ 20,440 $ 31,889 $ 37,800 $ 13,776 $ 16,060 $16,458 $16,884
Broadcast cash flow
margin(i)........... 35.3% 34.7% 41.2% 43.5% 43.5% 44.8% 40.4% 40.4% 40.1% 41.4%
Operating cash flow,
as defined(j)....... $ 8,791 $ 8,694 $13,120 $ 18,116 $ 27,604 $ 33,515 $ 11,909 $ 14,156 $14,591 $14,980
Operating cash flow
margin(k)........... 32.4% 30.6% 38.0% 38.6% 37.7% 39.7% 35.0% 35.6% 35.5% 36.8%
Cash flow from (used
in) operating
activities.......... $ 9,681 $ 9,734 $12,774 $ 6,859 $ 6,943 N/A $ (260) $ 1,601 N/A N/A
Cash flow used in
investing
activities.......... (666) (1,103) (668) (237,501) (28,745) N/A (10,450) (27,179) N/A N/A
Cash flow from (used
in) financing
activities.......... (9,727) (8,734) (10,887) 232,846 20,545 N/A 11,382 26,789 N/A N/A
Capital
expenditures........ 669 1,136 701 3,767 6,633 3,590 4,091 N/A N/A
Program payments .... 4,317 4,277 3,885 2,901 3,766 $ 4,671 1,909 2,338 $ 2,094 $ 2,215
BALANCE SHEET DATA
(AT PERIOD END):
Cash and cash
equivalents......... 196 93 1,313 2,206 949 736 2,878 2,160 N/A N/A
Total assets......... 79,079 76,015 78,575 291,141 328,608 356,974 322,886 338,468 N/A N/A
Total debt (including
current portion).... 66,635 63,235 42,670 150,000 171,500 191,500 161,500 199,000 N/A N/A
Stockholders' equity
(deficit)(l)........ (3,078) (3,440) 24,513 116,293 129,152 144,082 136,969 120,650 N/A N/A
</TABLE>
See notes on the following page.
S-22
<PAGE>
NOTES TO SELECTED FINANCIAL DATA OF ARGYLE
(a) Includes the results of operations of Argyle, the results of operations of
the acquired WZZM (Grand Rapids, MI), WAPT (Jackson, MS) and WNAC
(Providence, RI) for the full period, the results of operations of the
acquired KITV (Honolulu, HI) from June 13, 1995 and the results of
operations of the acquired WGRZ (Buffalo, NY) from December 5, 1995.
(b) Includes the results of operations of Argyle, the results of operations of
the acquired Arkansas Stations from June 1, 1996 and the Clear Channel
Venture from July 1, 1996.
(c) As to 1996, gives effect to the acquisition of the Arkansas Stations, the
Clear Channel Venture and the Gannett Swap as if all such transactions had
occurred at the beginning of 1996. As to 1997, gives effect to the Gannett
Swap as if such had occurred at the beginning of 1997. The acquisitions
have been accounted for using the purchase method of accounting.
(d) Includes the results of operations of Argyle and the effect on the Gannett
Swap, which occurred effective January 31, 1997.
(e) Represents the cumulative effect of the adoption of SFAS No. 109,
"Accounting for Income Taxes."
(f) Represents the write-offs of unamortized financing costs due to early
extinguishment of bank debt.
(g) Dividends associated with preferred stock related to the acquisition of the
Arkansas Stations.
(h) Broadcast cash flow is defined as station operating income (loss), plus
depreciation and amortization and write down of intangible assets, plus
amortization of program rights, minus program payments. Broadcast cash flow
does not present a measure of operating results and does not purport to
represent cash provided by operating activities. Broadcast cash flow should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. This measure may not be comparable to similarly titled measures
used by other companies.
(i) Broadcast cash flow margin is broadcast cash flow divided by total
revenues, expressed as a percentage.
(j) Operating cash flow is defined as operating income (loss), plus
depreciation and amortization, write down of intangible assets and
amortization of program rights, minus program payments, plus non-cash
compensation expense. Operating cash flow is presented here not as a
measure of operating results, but rather as a measure of debt service
ability. Operating cash flow does not purport to represent cash provided by
operating activities and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. This measure may not be
comparable to similarly titled measures used by other companies.
(k) Operating cash flow margin is operating cash flow divided by total
revenues, expressed as a percentage.
(l) Argyle has not paid any dividends on its common stock since inception. (See
note (g) above.)
S-23
<PAGE>
SELECTED FINANCIAL DATA OF THE HEARST BROADCAST GROUP
The historical financial data for the six months ended June 30, 1996 and 1997
and for the years ended December 31, 1992 and 1993 have been derived from the
unaudited combined financial statements of the Hearst Broadcast Group, included
in documents incorporated by reference in the accompanying Prospectus. The
historical financial data for the years ended December 31, 1994, 1995 and 1996
have been derived from the audited combined financial statements of the Hearst
Broadcast Group, included in documents incorporated by reference in the
accompanying Prospectus.
The historical financial data for the years ended December 31, 1992 and 1993
and for the six months ended June 30, 1996 and 1997 are unaudited but, in the
opinion of management of the Hearst Broadcast Group, have been prepared on the
same basis as the audited combined financial statements and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations for those
periods. Results for the six month periods ended June 30, 1996 and 1997 are not
necessarily indicative of the results for a full year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Total revenues.......... $221,159 $224,067 $259,459 $279,340 $283,971 $139,616 $143,566
Station operating
expenses............... 106,430 103,880 106,281 117,535 121,501 58,594 60,596
Amortization of program
rights................. 36,768 37,087 40,266 38,619 40,297 21,476 19,052
Depreciation and
amortization........... 26,107 26,008 23,071 22,134 16,971 8,584 8,190
-------- -------- -------- -------- -------- -------- --------
Station operating
income................. 51,854 57,092 89,841 101,052 105,202 50,962 55,728
Corporate expenses...... 5,657 5,924 8,007 7,857 7,658 3,965 4,467
-------- -------- -------- -------- -------- -------- --------
Operating income........ 46,197 51,168 81,834 93,195 97,544 46,997 51,261
Interest expense, net... 22,510 22,773 22,678 22,218 21,235 12,823 12,485
-------- -------- -------- -------- -------- -------- --------
Income from continuing
operations before
income taxes........... 23,687 28,395 59,156 70,977 76,309 34,174 38,776
Income taxes............ 10,658 17,123 25,265 30,182 31,907 14,244 16,054
-------- -------- -------- -------- -------- -------- --------
Net income.............. $ 13,029 $ 11,272 $ 33,891 $ 40,795 $ 44,402 $ 19,930 $ 22,722
======== ======== ======== ======== ======== ======== ========
OTHER DATA:
Broadcast cash flow, as
defined(a)............. $ 82,077 $ 82,626 $113,999 $123,038 $117,947 $ 57,111 $ 63,862
Broadcast cash flow
margin(b).............. 37.1% 36.9% 43.9% 44.0% 41.5% 40.9% 44.5%
Operating cash flow, as
defined(c)............. $ 77,891 $ 79,147 $108,749 $117,087 $109,457 $ 50,637 $ 56,017
Operating cash flow
margin(d).............. 35.2% 35.3% 41.9% 41.9% 38.5% 36.3% 39.0%
Cash flows from
Operating Activities... N/A N/A $ 44,460 $ 61,185 $ 65,802 $ 29,116 $ 22,122
Cash flows used in
Investing Activities... N/A N/A (8,430) (8,621) (7,764) (3,185) (1,683)
Cash flows used in
Financing Activities... N/A N/A (33,584) (52,020) (58,145) (24,991) (18,271)
Capital expenditures.... $ 6,398 $ 4,879 8,430 8,621 7,764 3,185 1,683
Program payments ....... 32,652 37,561 39,179 38,767 44,523 23,911 19,108
BALANCE SHEET DATA:
Cash and cash
equivalents............ N/A N/A 2,446 2,990 2,882 3,930 5,050
Total assets............ N/A N/A 387,984 385,406 366,956 355,990 349,836
Due to Parent Company
and Affiliates......... N/A N/A 283,988 272,762 259,020 267,700 263,471
</TABLE>
See notes on the following page.
S-24
<PAGE>
NOTES TO SELECTED FINANCIAL DATA OF THE HEARST BROADCAST GROUP
(a) Broadcast cash flow is defined as station operating income, plus
depreciation and amortization, plus amortization of program rights, minus
program payments. Broadcast cash flow does not present a measure of
operating results and does not purport to represent cash provided by
operating activities. Broadcast cash flow should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles. This measure may
not be comparable to similarly titled measures used by other companies.
(b) Broadcast cash flow margin is broadcast cash flow divided by total
revenues, expressed as a percentage.
(c) Operating cash flow is defined as operating income, plus depreciation and
amortization, plus amortization of program rights, minus program payments,
and adjusted for non-cash compensation expense. Operating cash flow is
presented here not as a measure of operating results, but rather as a
measure of debt service ability. Operating cash flow does not purport to
represent cash provided by operating activities and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. This
measure may not be comparable to similarly titled measures used by other
companies.
(d) Operating cash flow margin is operating cash flow divided by total
revenues, expressed as a percentage.
S-25
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Series A Common Stock as of October 15, 1997 and as
adjusted to reflect the sale of the shares offered hereby (assuming no exercise
of the Underwriters' over-allotment option) by (i) each person who is known by
the Company to own beneficially more than 5% of the outstanding shares of
Common Stock; (ii) each director and executive officer of the Company; (iii)
all directors and executive officers of the Company as a group; and, (iv) each
Selling Stockholder. Unless otherwise indicated below, to the knowledge of the
Company, all persons listed below have sole voting and investment power with
respect to their shares of Common Stock.
<TABLE>
<CAPTION>
SERIES A COMMON STOCK SERIES A COMMON STOCK
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) AFTER OFFERING(1)
------------------------ ---------------------
PERCENT OF NUMBER OF PERCENT OF
NAME (2) NUMBER SERIES SHARES OFFERED NUMBER SERIES
- -------- ---------- ---------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Bob Marbut(3)........... 955,361 11.5% -- 1,005,361 6.7%
John Conomikes.......... -- -- -- -- --
David J. Barrett........ -- * -- 38,333 --
Anthony J. Vinciquerra.. 11,403 * -- 36,403 *
Dean H. Blythe.......... 12,036(4) * -- 28,703 *
Harry T. Hawks.......... 104,649 1.3% -- 121,316 *
Ibra Morales(3)......... 198,300 2.4% -- 214,967 1.4%
Frank A. Bennack, Jr.... -- -- -- -- --
Victor F. Ganzi......... -- -- -- -- --
George R. Hearst, Jr.... -- -- -- -- --
William R. Hearst III... -- -- -- -- --
Gilbert C. Maurer....... -- -- -- -- --
David Pulver............ 81,656(5) 1.0% -- 81,656 *
Virginia H. Randt....... -- -- -- -- --
Caroline L. Williams.... 37,646(5) * -- 37,646 *
All Hearst-Argyle
directors and executive
officers as a group
(15 persons)........... 1,401,051(6) 16.8% -- 1,401,051 9.8%
The Hearst
Corporation(7)......... 38,611,002(8) 82.3% -- 38,611,002 73.0%
Chase Manhattan
Investment Holdings,
L.P.(3)(9)............. 1,157,302 14.0% 300,000 857,302 6.0%
Blake Byrne(3)(10)...... 600,632 7.2% -- 600,632 4.2%
Merchant GP, Inc.(11)... 334,027 4.0% 334,027 -- --
Crescent/Mach I
Partners, L.P.(3)...... 140,487 1.7% 140,487 -- --
Credit Suisse First
Boston Fund Investments
1995, L.P.(11)......... 12,747 * 12,747 -- --
Credit Suisse First
Boston Fund Investments
1994, L.P.(11)......... 4,444 * 4,444 -- --
</TABLE>
- --------
* Represents beneficial ownership of less than 1% of the issued and outstanding
shares of Series A Common Stock.
(1) Number and percent of outstanding Series A Common Stock prior to and after
the Common Stock Offering does not include any shares of Series A Common
Stock issuable upon the conversion of the Series B Common Stock, Series A
Preferred Stock or Series B Preferred Stock into Series A Common Stock or
the issuance of any Adjustment Shares.
(2) Unless otherwise indicated, the address of each person or entity named in
the table is c/o Hearst-Argyle Television, Inc., 888 Seventh Avenue, New
York, New York 10106.
(3) Indicates that such person or entity is a party to a Registration Rights
Agreement with the Company dated as of August 29, 1997. See "Shares
Eligible for Future Sale."
(4) Includes 10,000 shares of Series A Common Stock issuable pursuant to
presently exercisable stock options.
(5) Includes 15,000 shares of Series A Common Stock issuable pursuant to
presently exercisable stock options.
(6) Includes 40,000 shares of Series A Common Stock issuable pursuant to
presently exercisable stock options.
S-26
<PAGE>
(7) The Hearst Family Trust is the sole common stockholder of Hearst. The
address of The Hearst Family Trust is 888 Seventh Avenue, New York, New
York 10106. The address of Hearst is 959 Eighth Avenue, New York, New York
10019.
(8) Indicates the number of shares of Series B Common Stock held by Hearst
(excluding the Adjustment Shares). The shares of Series B Common Stock are
convertible at any time at the option of the holder on a share-for-share
basis into shares of Series A Common Stock.
(9) Chase Manhattan Bank, an affiliate of Chase Manhattan Investment Holdings,
L.P., is the lead bank under the Company's existing Credit Facility and
was the lead bank under the Company's prior credit facility. Frank A.
Bennack, Jr., a director of the Company, is a director of Chase Manhattan
Bank. The address of Chase Manhattan Investment Holdings, L.P. is 380
Madison Avenue, New York, New York 10017.
(10) Mr. Byrne is a former director and executive officer of Argyle. His
address is 9220 Sunset Boulevard, Suite 210, Los Angeles, California
90069.
(11) Credit Suisse First Boston Corporation, one of the Underwriters of the
Offerings, is an affiliate of Merchant GP, Inc., Credit Suisse First
Boston Fund Investments 1995, L.P. and Credit Suisse First Boston Fund
Investments 1994, L.P. The address of Merchant GP, Inc., Credit Suisse
First Boston Fund Investments 1995, L.P. and Credit Suisse First Boston
Fund Investments 1994, L.P. is 11 Madison Avenue, New York, New York
10010.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Common Stock Offering (assuming the Underwriters'
over-allotment option is not exercised), the Company will have outstanding
14,291,204 shares of Series A Common Stock and 38,611,002 shares of Series B
Common Stock (excluding any Adjustment Shares). The Company also has shares of
Series A Preferred Stock and Series B Preferred Stock outstanding. The Series A
Preferred Stock is convertible at any time into an aggregate of 312,514 shares
of Series A Common Stock. The Series B Preferred Stock is convertible at any
time after June 11, 2001 into shares of Series A Common Stock at a conversion
rate equal to the then current market price of the Series A Common Stock. In
addition, the Company has outstanding options to purchase 1,794,125 shares of
Series A Common Stock, of which options are currently exercisable for 216,125
shares. All of the shares of Series A Common Stock (including the shares
offered hereby) generally will be freely tradeable without restriction or
further registration under the Securities Act, except that the sale of any
shares held by persons who are "affiliates" of the Company, as that term is
defined in Rule 144 under the Securities Act, or who were at the time of the
Company's shareholder vote on the Hearst Transaction "affiliates" of the
Company pursuant to Rule 145 under the Securities Act, may be generally sold
subject to certain restrictions as to timing, manner and volume. In this
regard, the Company has in effect a registration statement covering the resale
from time to time of 4,599,260 shares of Series A Common Stock received in the
Hearst Transaction by certain former limited partners of a partnership that
prior to the Hearst Transaction owned shares of the Company's common stock in
order to permit such persons to sell their shares without regard to the
restrictions discussed in the preceding sentence. The holders of approximately
4,443,406 shares covered by such registration statement (which holders include
the Selling Stockholders) have additional rights under that certain
Registration Rights Agreement with the Company dated as of August 29, 1997.
Pursuant to the Registration Rights Agreement such holders of the Company's
Series A Common Stock (the "Holders") have the right, subject to certain
limitations and conditions, to require the Company to register for distribution
through a firm commitment underwriting all or any portion of the Company's
Series A Common Stock issued to such Holders in the Hearst Transaction. Such
Holders also have piggyback registration rights pursuant to the Registration
Rights Agreement with respect to any proposed offering of the Company's Series
A Common Stock for cash through a firm commitment underwriting sought by the
Company. The Series B Common Stock held by Hearst and the Series A Common Stock
into which the Series B Common Stock is convertible may not be sold without
registration under the Securities Act or unless an exemption from registration
is available, including the exemption afforded by Rule 144 under the Securities
Act.
In general, under Rule 144 under the Securities Act as currently in effect a
person (or persons whose shares are aggregated) who has beneficially owned
restricted securities within the meaning of Rule 144 ("Restricted Securities")
for at least one year, and including the holding period of any prior owner
except an affiliate, would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of 1% of the then-outstanding
shares of Series A Common Stock or the average weekly trading volume of the
Series A
S-27
<PAGE>
Common Stock on the Nasdaq National Market during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about the Company. Any person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of the Company at any
time during the three months preceding a sale, and who has beneficially owned
shares for at least two years (including any period of ownership of preceding
non-affiliated holders), would be entitled to sell such shares under Rule
144(k) without regard to the volume limitations, manner of sale provisions,
public information requirements or notice requirements. An "affiliate" is a
person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or under common control with, such issuer.
Rule 144A under the Securities Act as currently in effect generally permits
unlimited resales of certain Restricted Securities of any issuer provided that
the purchaser is a qualified institution that owns and invests on a
discretionary basis at least $100 million in securities (and, in the case of a
bank or savings and loan association has a net worth of at least $25 million)
or is a registered broker-dealer that owns and invests on a discretionary basis
at least $10 million in securities. Rule 144A allows certain existing
shareholders of the Company to sell their shares of Series A Common Stock held
prior to this Common Stock Offering to such institutions and registered broker-
dealers without regard to any volume or other restrictions.
The Company, its directors and executive officers Hearst and certain holders
of the Series A Common Stock, (collectively, the "Restricted Holders") have
agreed not to offer to sell, sell, distribute, grant any option to purchase or
otherwise dispose of directly or indirectly, any shares of Series A Common
Stock or securities convertible into, or exercisable or exchangeable for,
shares of Series A Common Stock owned by them prior to the expiration of 90
days from the date of this Prospectus Supplement, except (i) with the prior
written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated; (ii) in
the case of the Company, (A) for the issuance of shares of Series B Common
Stock, (B) for the issuance of shares of Series A Common Stock in connection
with acquisition transactions in which the recipients of such shares are
restricted from selling such shares until after expiration of 90 days from the
date of this Prospectus Supplement, (C) upon the exercise of outstanding
options or the grant of options under the Company's stock option plans or
compensation arrangements, and (D) upon the conversion of the Company's Series
A Preferred Stock; and, (iii) in the case of the directors and executive
officers of the Company, for the exercise by such individuals of outstanding
options.
The Company can make no prediction as to the effect, if any, that sales of
shares of its Series A Common Stock, or the availability of shares for future
sale, will have on the market price of the Series A Common Stock prevailing
from time to time. Sales of substantial amounts of Series A Common Stock
(including shares owned upon the exercise of options) in the public market, or
the perception that such sales could occur, could depress the prevailing market
price for the Series A Common Stock. Such sales may also make it more difficult
for the Company to sell equity securities or equity-related securities in the
future at a time and price that it deems appropriate.
S-28
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement") among the Company, the Selling Stockholders and each
of the underwriters named below (the "U.S. Underwriters), each of the U.S.
Underwriters has severally agreed to purchase from the Company and the Selling
Stockholders, the aggregate number of shares of Series A Common Stock set forth
opposite its name below (the "U.S. Offering").
<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITERS OF SHARES
----------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................
Credit Suisse First Boston Corporation...........................
J.P. Morgan Securities Inc.......................................
Morgan Stanley & Co. Incorporated................................
----
Total.......................................................
====
</TABLE>
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "International Purchase Agreement") with certain underwriters
outside the United States (the "International Underwriters"), for whom Merrill
Lynch International, Credit Suisse First Boston (Europe) Limited, J.P. Morgan
Securities Ltd. and Morgan Stanley & Co. International Limited are acting as
representatives (the "International Representatives"), providing for the
concurrent offer and sale of 1,358,341 shares of Series A Common Stock outside
of the United States and Canada. The closings with respect to the U.S. Offering
and the International Offering are conditioned upon one another.
The U.S. Purchase Agreement provides that the obligation of the U.S.
Underwriters to pay for and accept delivery of the shares is subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The U.S. Underwriters are obligated to take and pay for all of the
shares if any are purchased.
The U.S. Underwriters have advised the Company and the Selling Stockholders
that the U.S. Underwriters propose to offer the shares of Series A Common Stock
offered hereby to the public initially at the public offering price set forth
on the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession not to exceed $ per share below the public offering
price. The U.S. Underwriters may allow, and such dealers may reallow, a
discount not in excess of $ per share below the public offering price on
sales to certain dealers. After the initial offering, the offering price and
other selling terms may from time to time be varied by the U.S. Underwriters.
The public offering concession and discount per share of Series A Common Stock
are identical under the U.S. Purchase Agreement and the International Purchase
Agreement.
The U.S. Underwriters and the International Underwriters have entered into an
Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
U.S. Underwriters and any dealer to whom they sell shares of Series A Common
Stock will not offer to sell or sell shares of Series A Common Stock to non-
United States or non-Canadian persons or to persons they believe intend to
resell to non-United States or non-Canadian persons, and the International
Underwriters and any dealer to whom they sell shares of Series A Common Stock
will not offer to sell or sell shares of Series A Common Stock to United States
or Canadian persons, except, in each case, for transactions pursuant to the
Intersyndicate Agreement. The Intersyndicate Agreement also provides, among
other things, that sales may be made between the International Underwriters and
the U.S. Underwriters of such number of shares of Series A Common Stock as may
be mutually agreed. The price of any shares of Series A Common Stock so sold
shall be the public offering price, less an amount not greater than the selling
concession.
The Company has granted to the U.S. Underwriters an option to purchase up to
an aggregate of 800,000 additional shares of Series A Common Stock, to cover
over-allotments, if any, at the public offering price set forth on the cover
page of this Prospectus Supplement less the underwriting discount and
commissions. Such option, which will expire 30 days after the date of this
Prospectus Supplement, may be exercised solely to cover over-allotments. To the
extent such option is exercised, each U.S. Underwriter will become obligated,
subject to
S-29
<PAGE>
certain conditions, to purchase approximately the same percentage of such
additional shares as the number of shares set forth opposite each U.S.
Underwriter's name in the preceding table bears to the total number of shares
of Series A Common Stock offered by the U.S. Underwriters hereby. The Company
has granted to the International Underwriters an option to purchase up to an
aggregate of 200,000 additional shares of Series A Common Stock, exercisable in
whole or in part for 30 days after the date of this Prospectus Supplement,
solely to cover over-allotments, if any, on terms similar to those granted to
the U.S. Underwriters. All or a portion of an over-allotment option in either
of the U.S. Offering or the International Offering may be allocated to cover an
over-allotment in the other Offering, in each case in the sole discretion of
the U.S. Underwriters and the International Underwriters.
At the request of the Company, the U.S. Underwriters have reserved for sale,
at the initial public offering price, up to 300,000 of the shares of Series A
Common Stock offered hereby to be sold to certain directors, officers,
employees and other persons associated with the Company or Hearst. The number
of shares of Series A Common Stock available for sale to the general public
will be reduced to the extent such persons purchase such reserved shares. Any
reserved shares which are not orally confirmed for purchase within one day of
the pricing of the Offering will be offered by the U.S. Underwriters to the
general public on the same terms as the other shares offered hereby.
The Company and the Selling Stockholders agreed to indemnify the U.S.
Underwriters against certain liabilities, including liabilities under the
Securities Act and other applicable securities laws, or to contribute to
payments the U.S. Underwriters may be required to make in respect thereof.
Under certain circumstances, the Company will reimburse the U.S. Underwriters
for certain of their expenses.
The Company, its directors and executive officers, Hearst and certain other
holders of Series A Common Stock (the "Restricted Holders") have agreed not to
offer to sell, sell, distribute, grant any option to purchase or otherwise
dispose of directly or indirectly, any shares of Series A Common Stock or
securities convertible into, or exercisable or exchangeable for, shares of
Series A Common Stock owned by them prior to the expiration of 90 days from the
date of this Prospectus Supplement, except (i) with the prior written consent
of Merrill Lynch; (ii) in the case of the Company, (A) for the issuance of
shares of Series B Common Stock, (B) for the issuance of shares of Series A
Common Stock in connection with acquisition transactions in which the
recipients of such shares are restricted from selling such shares until after
expiration of 90 days from the date of this Prospectus Supplement, (C) upon the
exercise of outstanding options or the grant of options under the Company's
stock option plans or compensation arrangements and (D) upon the conversion of
the Company's Series A Preferred Stock; and, (iii) in the case of the directors
and executive officers of the Company, for the exercise by such individuals of
outstanding options.
Until the distribution of Series A Common Stock is completed, rules of the
Securities and Exchange Commission (the "Commission") may limit the ability of
the U.S. Underwriters to bid for and purchase the Series A Common Stock. As an
exception to these rules, the U.S. Underwriters are permitted to engage in
certain transactions that stabilize the price of the Series A Common Stock.
Such transactions consist of bids or purchases for the purposes of pegging,
fixing or maintaining the price of the Series A Common Stock.
In connection with the U.S. Offering and the International Offering, the U.S.
Underwriters and the International Underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of the shares of Series A
Common Stock. Specifically, the U.S. Underwriters and the International
Underwriters may over-allot the offering, creating a short position. In
addition, the U.S. Underwriters and the International Underwriters may bid for
and purchase shares of Series A Common Stock in the open market to cover short
sales or to stabilize the price of the shares of Series A Common Stock.
Finally, the underwriting syndicate may reclaim selling concessions allowed for
distributing the shares of Series A Common Stock in the U.S. Offering and the
International Offering if the syndicate repurchases previously distributed
shares of Series A Common Stock in syndicate covering transactions,
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the shares of Series A Common Stock above
independent market levels. The U.S. Underwriters and the International
Underwriters are not required to engage in these activities and may end any of
these activities at any time.
S-30
<PAGE>
The U.S. Underwriters and the International Underwriters may engage in
passive market making transactions in the Series A Common Stock in accordance
with Rule 103 of Regulation M promulgated by the Commission. In general, a
passive market maker may not bid or purchase the Series A Common Stock at a
price that exceeds the highest independent bid. In addition, the net daily
purchases made by any passive market maker generally may not exceed 30% of its
average daily trading volume in the Series A Common Stock during a specified
two month prior period, or 200 shares, whichever is greater. A passive market
maker must identify passive market making bids on the Nasdaq electronic inter-
dealer reporting system. Passive market making may stabilize or maintain the
market price of the Series A Common Stock above independent market levels.
Underwriters and selling group members are not required to engage in passive
market making and may end passive market making activities at any time.
From time to time certain of the Underwriters or their affiliates engage in
transactions, including commercial banking and investment banking transactions,
with and perform services for the Company and its affiliates in the ordinary
course of business, from which they have received and will continue to receive
customary fees. In addition, in the ordinary course of business the
Underwriters may actively trade securities of the Company for such
Underwriter's own account and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities. For its
advisory services to the Company in connection with the Hearst Transaction, the
Company paid Merrill Lynch a fee of $2.1 million, reimbursed Merrill Lynch for
its out-of-pocket expenses and agreed to indemnify Merrill Lynch and certain
related persons against certain liabilities, including certain liabilities
under the federal securities laws, arising out of its engagement. For its
advisory services to Argyle Television Investors, L.P., the Company's largest
stockholder prior to the Hearst Transaction, the Company paid Credit Suisse
First Boston Corporation a fee of $800,000, reimbursed Credit Suisse First
Boston Corporation for its out-of-pocket expenses and agreed to indemnify
Credit Suisse First Boston Corporation and certain related persons against
certain liabilities, including certain liabilities under the federal securities
laws, arising out of its engagement. For its advisory services to Hearst in
connection with the Hearst Transaction, Hearst paid J.P. Morgan Securities Inc.
a fee of $1.5 million, reimbursed J.P. Morgan Securities Inc. for its out-of-
pocket expenses and agreed to indemnify J.P. Morgan Securities Inc. and certain
related persons against certain liabilities, including certain liabilities
under the federal securities laws, arising out of its engagement. The Company
reimbursed Hearst for amounts paid to J.P. Morgan Securities Inc.
Morgan Guaranty Trust Company of New York, an affiliate of J.P. Morgan
Securities Inc., acts as the documentation agent and a lender under the
Company's Credit Facility, for which it has received and will continue to
receive customary fees. It is expected that Morgan Guaranty Trust Company will
receive approximately $57.7 million of repayment under the Credit Facility from
the net proceeds of the Offerings. Under the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD"), special considerations
apply to a public offering of securities where more than 10% of the net
proceeds thereof will be paid to a participating underwriter or any of its
affiliates. Therefore, this offering is being conducted pursuant to Rule 2710
(c)(8) of the NASD Conduct Rules which establishes certain procedural
safeguards in connection with offerings in such circumstances in which NASD
member firms intend to participate and where more than 10% of the offering
proceeds are to be paid to them or their affiliates. See "Use of Proceeds." See
"Use of Proceeds."
Merchant GP, Inc., Credit Suisse First Boston Fund Investments 1995, L.P. and
Credit Suisse First Boston Fund Investments 1994, L.P., each an affiliate of
Credit Suisse First Boston Corporation (collectively, the "CSFB Funds"),
beneficially own 4.2% of the Company's Series A Common Stock and are parties to
a Registration Rights Agreement with the Company and certain other holders of
the Company's Series A Common Stock providing the CSFB Funds and such other
holders with piggyback registration rights with respect to any proposed
offering of the Company's Series A Common Stock for cash through a firm
commitment underwriting sought by the Company, and, subject to certain
limitations and conditions, with the right to require the Company to register
for distribution through a firm commitment underwriting of all or any portion
of the Company's Series A Common Stock issued to them in the Hearst
Transaction. The CSFB Funds have advised the Company that they intend to
include in the Common Stock Offering the 351,218 shares of the Company's Series
A Common Stock that they hold in aggregate.
S-31
<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES TO
NON-UNITED STATES HOLDERS OF SERIES A COMMON STOCK
The following is a general discussion of certain United States federal income
and estate and gift tax consequences of the ownership and sale or other
disposition of Series A Common Stock by a holder that, for United States
federal income tax purposes, is not a "United States person" (a "Non-United
States Holder"). For purposes of this discussion, a "United States person"
means a citizen or resident (as determined for U.S. federal income tax
purposes) of the United States; a corporation, partnership or other entity
created or organized in the United States or under the laws of the United
States or of any political subdivision thereof; an estate the income of which
is includible in gross income for U.S. federal income tax purposes, regardless
of its source; or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. Resident alien individuals will be subject to United
States federal income tax with respect to the Series A Common Stock as if they
were United States citizens.
THIS DISCUSSION IS BASED ON THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), AND THE ADMINISTRATIVE INTERPRETATIONS THEREOF AS OF THE DATE
HEREOF, ALL OF WHICH MAY BE CHANGED EITHER RETROACTIVELY OR PROSPECTIVELY. THIS
DISCUSSION IS FOR GENERAL INFORMATION ONLY, DOES NOT CONSIDER ANY SPECIFIC
FACTS OR CIRCUMSTANCES THAT MAY APPLY TO A PARTICULAR NON-UNITED STATES HOLDER
AND DOES NOT ADDRESS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE,
MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING JURISDICTION. PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES
FEDERAL TAX CONSEQUENCES OF OWNING AND DISPOSING OF SERIES A COMMON STOCK
(INCLUDING THE INVESTOR'S STATUS AS A UNITED STATES PERSON OR NON-UNITED STATES
HOLDER), AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY
STATE, MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING JURISDICTION.
DIVIDENDS
Dividends, if any, paid to a Non-United States Holder will generally be
subject to the withholding of United States federal income tax at the rate of
30%, unless the dividend is effectively connected with the conduct of a trade
or business (or, if an income tax treaty applies, is attributable to a
"permanent establishment", as defined herein) within the United States of the
Non-United States Holder, in which case the dividend will be subject to the
rules described in the next paragraph. Non-United States Holders should consult
any applicable income tax treaties, which may provide for a reduced withholding
rate or other rules different from those described above. For purposes of
determining whether tax is to be withheld at a 30% rate or a reduced rate as
specified by an income tax treaty, current law permits the Company to presume
that dividends paid to an address in a foreign country are paid to a resident
of such country absent definite knowledge that such presumption was not
warranted (the "address rule"). However, on October 6, 1997, the U.S. Treasury
Department issued final regulations on withholding of income tax on payments to
foreign persons, effective January 1, 1999, which will abolish the address
rule. Under current law, a Non-United States Holder seeking a reduced rate of
withholding under an income tax treaty would be required to provide to the
Company a valid Internal Revenue Service Form 1001 until January 1, 1999, and
after January 1, 1999 the equivalent Form W-8, in each case certifying that
such Non-United States Holder is entitled to benefits under an income tax
treaty. The final regulations also provide special rules for determining
whether, for purposes of assessing the applicability of an income tax treaty,
dividends paid to a Non-United States Holder that is an entity should be
treated as being paid to the entity itself or to the persons holding an
interest in that entity. A Non-United States Holder who is eligible for a
reduced withholding rate may obtain a refund of any excess amounts withheld by
filing an appropriate claim for a refund with the Internal Revenue Service (the
"Service").
S-32
<PAGE>
The Company will not withhold federal income tax upon dividends paid to a
Non-United States Holder if the Company receives the appropriate form of the
Service (currently Form 4224) from that Non-United States Holder, certifying
that such income is effectively connected with the conduct of a trade or
business (or, if an income tax treaty applies, is attributable to a "permanent
establishment", as defined therein) within the United States of the Non-United
States Holder, unless the Company has knowledge to the contrary. Dividends paid
to a Non-United States Holder of Series A Common Stock that are effectively
connected with the conduct of a trade or business (or, if an income tax treaty
applies, are attributable to a "permanent establishment", as defined therein)
within the United States of the Non-United States Holder will generally be
taxed on a net income basis (that is, after allowance for applicable
deductions) at the graduated rates that are applicable to United States
persons. In the case of a Non-United States Holder that is a corporation, such
income may also be subject to the United States federal branch profits tax
(which is generally imposed on a foreign corporation upon the deemed
repatriation from the United States of effectively connected earnings and
profits) at a 30% rate, unless the rate is reduced or eliminated by an
applicable income tax treaty and the Non-United States Holder is a qualified
resident of the treaty country.
GAIN ON SALE OR OTHER DISPOSITION
Subject to special rules applicable to individuals as described below, a Non-
United States Holder will generally not be subject to regular United States
federal income or withholding tax on gain recognized on a sale or other
disposition of Series A Common Stock, unless (i) the gain is effectively
connected with the conduct of a trade or business (or, if an income tax treaty
applies, is attributable to a "permanent establishment", as defined therein)
within the United States of the Non-United States Holder or of a partnership,
trust or estate in which such Non-United States Holder is a partner or
beneficiary, or (ii) the Company has been, is or becomes a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code at any time within the shorter of the five-year period preceding such sale
or other disposition or such Non-United States Holder's holding period for the
Series A Common Stock and certain other conditions are satisfied. The Company
believes that it has not been, is not currently and is not likely to become a
United States real property holding corporation.
Gains realized by a Non-United States Holder of Series A Common Stock that
are effectively connected with the conduct of a trade or business (or, if an
income tax treaty applies, are attributable to a "permanent establishment", as
defined therein) within the United States of the Non-United States Holder will
generally be taxed on a net income basis (that is, after allowance for
applicable deductions) at the graduated rates that are applicable to United
States persons. In the case of a Non-United States Holder that is a
corporation, such income may also be subject to the United States federal
branch profits tax (which is generally imposed on a foreign corporation upon
the deemed repatriation from the United States of effectively connected
earnings and profits) at a 30% rate, unless the rate is reduced or eliminated
by an applicable income tax treaty and the Non-United States Holder is a
qualified resident of the treaty county.
In addition to being subject to the rules described above, an individual Non-
United States Holder who holds Series A Common Stock as a capital asset will
generally be subject to tax at a 30% rate on any gain recognized on the sale or
other disposition of such stock if (i) such gain is not effectively connected
with the conduct of a trade or business (or, if an income tax treaty applies,
is not attributable to a "permanent establishment", as defined therein) within
the United States of the Non-United States Holder, and (ii) such individual is
present in the United States for 183 days or more in the taxable year of the
sale or other disposition and either (A) has a "tax home" in the United States
(as specially defined for purposes of the United States federal income tax), or
(B) maintains an office or other fixed place of business in the United States
and the income from the sale of the stock is attributable to such office or
other fixed place of business. Individual Non-United States Holders may also be
subject to tax pursuant to provisions of United States federal income tax law
applicable to certain United States expatriates (including former long-term
residents of the United States).
In the past years, legislation has been proposed, but never enacted, that
would under certain circumstances have imposed United States federal income tax
on gain realized from the sale or other disposition of Series A Common Stock by
certain Non-United States Holders who owned at or prior to the time of sale or
other
S-33
<PAGE>
disposition 10% or more of the Series A Common Stock. There can be no assurance
that similar legislation will not again be proposed and, if proposed, enacted.
FEDERAL ESTATE AND GIFT TAXES
Series A Common Stock owned or treated as owned by an individual (regardless
of whether such an individual is a citizen or a resident of the United States)
at the date of death will be included in such individual's estate for United
States federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise.
A Non-United States Holder will not be subject to United States federal gift
tax on a transfer of Series A Common Stock, unless such person is a domiciliary
of the United States or such person is an individual subject to provisions of
United States federal gift tax law applicable to certain United States
expatriates (including former long-term residents of the United States).
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Service and to each Non-United States
Holder the amount of dividends paid to, and the tax withheld with respect to,
such Non-United States Holder, regardless of whether tax was actually withheld
and whether withholding was reduced by an applicable income tax treaty.
Pursuant to certain income tax treaties and other agreements, that information
may also be made available to the tax authorities of the country in which the
Non-United States Holder resides.
United States federal backup withholding (which generally is withholding tax
imposed at the rate of 31% on certain payments to persons not otherwise exempt
who fail to furnish certain identifying information) will generally not apply
to (i) dividends paid to a Non-United States Holder that is subject to
withholding at the 30% rate (or that is subject to withholding at a reduced
rate under an applicable income tax treaty), or (ii) under current law,
dividends paid to a Non-United States Holder at an address outside of the
United States (unless the payor has knowledge that the payee is a United States
person). However, under final U.S. Treasury Department regulations, effective
as of January 1, 1999, a Non-United States Holder will generally be subject to
United States withholding tax at a 31% rate, unless certain certification
procedures (or, in the case of payments made outside the United States with
respect to an offshore account, certain documentary evidence procedures) are
satisfied, directly or through a foreign intermediary.
The backup withholding and information reporting requirements also apply to
the gross proceeds paid to a Non-United States Holder upon the sale or other
disposition of Series A Common Stock by or through a United States office of a
United States or foreign broker, unless the Non-United States Holder certifies
to the broker under penalties of perjury as to, among other things, its name,
address and status as a Non-United States Holder by filing the Service's Form
W-8 with the broker, or unless the Non-United States Holder otherwise
establishes an exemption. Information reporting requirements (but not backup
withholding) will generally apply to a payment of the proceeds of a sale or
other disposition of Class A Common Stock effected at a foreign office of (i) a
United States broker, (ii) a foreign broker 50% or more of whose gross income
for certain periods is effectively connected with the conduct of a trade or
business within the United States, (iii) a foreign broker that is a "controlled
foreign corporation" for United States federal income tax purposes, or (iv)
effective January 1, 1999, a foreign broker that is (A) a foreign partnership,
one or more of whose partners are U.S. persons, that in the aggregate hold more
than 50% of the income or capital interest in the partnership at any time
during its tax year, or (B) a foreign partnership engaged at any time during
its tax year in the conduct of a trade or business in the United States, unless
the broker has documentary evidence in its records that the Non-United States
Holder is a Non-United States Holder (and the broker has no knowledge to the
contrary) and certain other conditions are met, or unless the Non-United States
Holder otherwise establishes an exemption. Neither backup withholding nor
information reporting will generally apply to a payment of the proceeds of a
sale or other disposition of Series A Common Stock effected at a foreign office
of a foreign broker not subject to the preceding sentence.
Any amounts withheld under the backup withholding rules will be refunded or
credited against the Non-United States Holder's United States federal income
tax liability, provided that the Non-United States Holder files an appropriate
claim for a refund with the Service.
S-34
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Prospectus Supplement contains forward-looking statements that are
subject to risks and uncertainties. Forward-looking statements include the
information concerning possible or assumed future results of operations of the
Company set forth under "The Company," "Recent Developments," "Risk Factors,"
and those preceded by, followed by or that include the words "believes,"
"expects," "anticipates" or similar expressions. For those statements, the
Company claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. Prospective
purchasers should understand that the following important factors, in addition
to those discussed elsewhere in this Prospectus Supplement and accompanying
Prospectus and in the documents that are incorporated by reference, could
affect the future results of the Company and could cause those results to
differ materially from those expressed in each forward-looking statement:
material adverse changes in economic conditions in the markets served by the
Company; future regulatory actions and conditions in the television stations
operating areas; the possibility that currently unanticipated difficulties may
arise in integrating the operations of the Company's predecessors; and,
competition from others in the broadcast television markets served by the
businesses.
S-35
<PAGE>
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- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PRO-
SPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRE-
SENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY,
THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITA-
TION OF AN OFFER TO BUY, THE SERIES A COMMON STOCK IN ANY JURISDICTION WHERE,
OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
The Common Stock Offering................................................ S-3
The Company.............................................................. S-5
Recent Developments...................................................... S-7
Risk Factors............................................................. S-9
Use of Proceeds.......................................................... S-15
Price Range of Common Stock and
Dividend Policy......................................................... S-16
Capitalization........................................................... S-17
Selected Unaudited Pro Forma
Financial Data.......................................................... S-18
Selected Financial Data of Argyle........................................ S-21
Selected Financial Data of the Hearst Broadcast Group.................... S-24
Principal and Selling Stockholders....................................... S-26
Shares Eligible for Future Sale.......................................... S-27
Underwriting............................................................. S-29
Certain United States Tax Consequences to Non-United States Holders of
Series A Common Stock................................................... S-32
Cautionary Statement Concerning Forward-Looking Statements............... S-35
PROSPECTUS
Available Information.................................................... 2
Incorporation of Certain Documents
by Reference............................................................ 2
The Company.............................................................. 4
Use of Proceeds.......................................................... 5
Ratio of Earnings to Fixed Charges....................................... 6
General Description of Securities and
Risk Factors............................................................ 7
Description of Debt Securities........................................... 7
Description of Capital Stock............................................. 17
Plan of Distribution..................................................... 21
Legal Matters............................................................ 22
Experts.................................................................. 22
</TABLE>
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6,791,705 SHARES
LOGO
SERIES A COMMON STOCK
---------------
PROSPECTUS SUPPLEMENT
---------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[ALTERNATE PAGE]
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN DECLARED +
+EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION. A FINAL PROSPECTUS +
+SUPPLEMENT AND PROSPECTUS WILL BE DELIVERED TO PURCHASERS OF THESE +
+SECURITIES. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL +
+NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR +
+SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED , 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
6,791,705 SHARES
[LOGO]
SERIES A COMMON STOCK
----------
Of the 6,791,705 shares of Series A Common Stock, par value $.01 per share
(the "Series A Common Stock"), of Hearst-Argyle Television, Inc., a Delaware
corporation (the "Company"), offered hereby, 6,000,000 shares are being offered
by the Company and 791,705 shares are being offered by certain stockholders of
the Company (the "Selling Stockholders"). See "Principal and Selling
Stockholders." The Company will receive no proceeds from the sale of shares by
the Selling Stockholders. Of the 6,791,705 shares of Series A Common Stock
offered hereby, 1,358,341 shares are being offered initially outside the United
States and Canada by the International Underwriters (the "International
Offering") and the remaining 5,433,364 shares of Series A Common Stock are
being offered initially in a concurrent offering in the United States and
Canada by the U.S. Underwriters (the "U.S. Offering" and, together with the
International Offering, the "Common Stock Offering"). Shares of Series A Common
Stock not exceeding in the aggregate 5% of the Series A Common Stock being
offered in the U.S. Offering are being reserved for sale to certain directors,
officers, employees and other persons associated with the Company or its
majority stockholder, The Hearst Corporation ("Hearst"), at the public offering
price. Concurrently with the Common Stock Offering, the Company is offering to
sell $400,000,000 aggregate principal amount of % Senior Notes Due , 2007
and % Debentures Due , 2027 by a separate prospectus supplement (the "Debt
Offering"). Neither the Common Stock Offering nor the Debt Offering is
conditioned upon the completion of the other. The Series A Common Stock is
traded on the Nasdaq National Market under the symbol "HATV." On October 15,
1997, the last reported sale price of the Series A Common Stock as reported by
Nasdaq was $30 1/8 per share.
The Company's authorized and outstanding capital stock consists of Series A
Common Stock, Series B Common Stock, Series A Preferred Stock and Series B
Preferred Stock. Hearst owns all of the outstanding shares of Series B Common
Stock, currently representing approximately 82% of the common stock of the
Company. Upon consummation of the Common Stock Offering, Hearst will own
approximately 73% of the Company's Common Stock (assuming the Underwriters'
over-allotment option is not exercised.) See "The Company--The Hearst
Transaction." The rights of the Series A Common Stock and the Series B Common
Stock are substantially similar except that the holders of the Series A Common
Stock as a class have the right to elect two members of the Company's Board of
Directors and Hearst, as the holder of the Series B Common Stock, has the right
to elect the remaining nine of the 11 members of the Company's Board of
Directors. Each share of Series B Common Stock is convertible at any time, at
the option of the holder, into a share of Series A Common Stock. Each share of
Series A Preferred Stock is convertible at any time, at the option of the
holder, into Series A Common Stock and each share of Series B Preferred Stock
is convertible, at anytime after June 11, 2001, at the option of the holder,
into Series A Common Stock. See "Description of Capital Stock" in the
accompanying Prospectus.
SEE "RISK FACTORS" BEGINNING ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF SERIES A COMMON STOCK OFFERED HEREBY.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2) SELLING STOCKHOLDERS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
- --------------------------------------------------------------------------------
Total(3)................ $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
International Underwriters and the U.S. Underwriters (collectively, the
"Underwriters") against certain liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deduction of expenses payable by the Company estimated at $600,000.
(3) The Company has granted the International Underwriters and the U.S.
Underwriters options exercisable within 30 days after the date hereof to
purchase up to an aggregate of 200,000 shares and 800,000 shares,
respectively, of Series A Common Stock solely to cover over-allotments, if
any. If all such 1,000,000 shares are purchased, the total Price to Public,
Underwriting Discount, Proceeds to the Company and Proceeds to Selling
Stockholders will be $ , $ , $ and $ , respectively. See
"Underwriting."
----------
The shares of Series A Common Stock are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if accepted by
them, subject to approval of certain legal matters by counsel for the
Underwriters and certain other conditions. The Underwriters reserve the right
to withdraw, cancel or modify such offer and to reject orders in whole or in
part. It is expected that delivery of the shares of Series A Common Stock will
be made in New York, New York on or about November , 1997.
----------
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY DEAN WITTER
----------
The date of this Prospectus Supplement is , 1997
<PAGE>
[ALTERNATE PAGE]
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"International Purchase Agreement") among the Company, the Selling
Stockholders and each of the underwriters named below (the "International
Underwriters"), each of the International Underwriters has severally agreed to
purchase from the Company and the Selling Stockholders, the aggregate number
of shares of Series A Common Stock set forth opposite its name below (the
"International Offering").
<TABLE>
<CAPTION>
NUMBER
INTERNATIONAL UNDERWRITERS OF SHARES
-------------------------- ---------
<S> <C>
Merrill Lynch International.......................................
Credit Suisse First Boston Corporation (Europe) Limited...........
J.P. Morgan Securities Ltd........................................
Morgan Stanley & Co. International Limited........................
----
Total........................................................
====
</TABLE>
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "U.S. Purchase Agreement") with certain underwriters in the
United States (the "U.S. Underwriters"), for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Credit Suisse First Boston Corporation, J.P.
Morgan Securities Inc. and Morgan Stanley & Co. Incorporated are acting as
representatives (the "U.S. Representatives"), providing for the concurrent
offer and sale of 5,433,364 shares of Series A Common Stock in the United
States and Canada. The closings with respect to the U.S. Offering and the
International Offering are conditioned upon one another.
The International Purchase Agreement provides that the obligation of the
International Underwriters to pay for and accept delivery of the shares is
subject to the approval of certain legal matters by their counsel and to
certain other conditions. The International Underwriters are obligated to take
and pay for all of the shares if any are purchased.
The International Underwriters have advised the Company and the Selling
Stockholders that the International Underwriters propose to offer the shares
of Series A Common Stock offered hereby to the public initially at the public
offering price set forth on the cover page of this Prospectus Supplement, and
to certain dealers at such price less a concession not to exceed $ per share
below the public offering price. The International Underwriters may allow, and
such dealers may reallow, a discount not in excess of $ per share below the
public offering price on sales to certain dealers. After the initial offering,
the offering price and other selling terms may from time to time be varied by
the International Underwriters. The public offering concession and discount
per share of Series A Common Stock are identical under the International
Purchase Agreement and the U.S. Purchase Agreement.
The U.S. Underwriters and the International Underwriters have entered into
an Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, the International Underwriters and any dealer to whom they sell
shares of Series A Common Stock will not offer to sell or sell shares of
Series A Common Stock to United States or Canadian persons or to persons they
believe intend to resell to United States or Canadian persons, and the U.S.
Underwriters and any dealer to whom they sell shares of Series A Common Stock
will not offer to sell or sell shares of Series A Common Stock to non-United
States or non-Canadian persons, except, in each case, for transactions
pursuant to the Intersyndicate Agreement. The Intersyndicate Agreement also
provides, among other things, that sales may be made between the International
Underwriters and the U.S. Underwriters of such number of shares of Series A
Common Stock as may be mutually agreed. The price of any shares of Series A
Common Stock so sold shall be the public offering price, less an amount not
greater than the selling concession.
S-29
<PAGE>
[ALTERNATE PAGE]
The Company has granted to the International Underwriters an option to
purchase up to an aggregate of 200,000 additional shares of Series A Common
Stock, to cover over-allotments, if any, at the public offering price set
forth on the cover page of this Prospectus Supplement less the underwriting
discount and commissions. Such option, which will expire 30 days after the
date of this Prospectus Supplement, may be exercised solely to cover over-
allotments. To the extent such option is exercised, each International
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number of
shares set forth opposite each International Underwriter's name in the
preceding table bears to the total number of shares of Series A Common Stock
offered by the International Underwriters hereby. The Company has granted to
the U.S. Underwriters an option to purchase up to an aggregate of 800,000
additional shares of Series A Common Stock, exercisable in whole or in part
for 30 days after the date of this Prospectus Supplement, solely to cover
over-allotments, if any, on terms similar to those granted to the
International Underwriters. All or a portion of an over-allotment option in
either the U.S. Offering or the International Offering may be allocated to
cover an over-allotment in the other Offering, in each case in the sole
discretion of the U.S. Underwriters and the International Underwriters.
At the request of the Company, the U.S. Underwriters have reserved for sale,
at the initial public offering price, up to 300,000 of the shares of Series A
Common Stock offered hereby to be sold to certain directors, officers,
employees and other persons associated with the Company or Hearst. The number
of shares of Series A Common Stock available for sale to the general public
will be reduced to the extent such persons purchase such reserved shares. Any
reserved shares which are not orally confirmed for purchase within one day of
the pricing of the Offering will be offered by the U.S. Underwriters to the
general public on the same terms as the other shares offered hereby.
The Company and the Selling Stockholders agreed to indemnify the
International Underwriters against certain liabilities, including liabilities
under the Securities Act and other applicable securities laws, or to
contribute to payments the U.S. Underwriters may be required to make in
respect thereof. Under certain circumstances, the Company will reimburse the
International Underwriters for certain of their expenses.
The Company, its directors and executive officers, Hearst and certain other
holders of Series A Common Stock (the "Restricted Holders") have agreed not to
offer to sell, sell, distribute, grant any option to purchase or otherwise
dispose of directly or indirectly, any shares of Series A Common Stock or
securities convertible into, or exercisable or exchangeable for, shares of
Series A Common Stock owned by them prior to the expiration of 90 days from
the date of this Prospectus Supplement, except (i) with the prior written
consent of Merrill Lynch; (ii) in the case of the Company, (A) for the
issuance of shares of Series B Common Stock, (B) for the issuance of shares of
Series A Common Stock in connection with acquisition transactions in which the
recipients of such shares are restricted from selling such shares until after
expiration of 90 days from the date of this Prospectus Supplement, (C) upon
the exercise of outstanding options or the grant of options under the
Company's stock option plans or compensation arrangements and (D) upon the
conversion of the Company's Series A Preferred Stock; and, (iii) in the case
of the directors and executive officers of the Company, for the exercise by
such individuals of outstanding options.
Until the distribution of Series A Common Stock is completed, rules of the
Securities and Exchange Commission (the "Commission") may limit the ability of
the International Underwriters to bid for and purchase the Series A Common
Stock. As an exception to these rules, the International Underwriters are
permitted to engage in certain transactions that stabilize the price of the
Series A Common Stock. Such transactions consist of bids or purchases for the
purposes of pegging, fixing or maintaining the price of the Series A Common
Stock.
In connection with the U.S. Offering and the International Offering, the
U.S. Underwriters and the International Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
shares of Series A Common Stock. Specifically, the U.S. Underwriters and the
International Underwriters may
S-30
<PAGE>
[ALTERNATE PAGE]
over-allot the offering, creating a short position. In addition, the U.S.
Underwriters and the International Underwriters may bid for and purchase
shares of Series A Common Stock in the open market to cover short sales or to
stabilize the price of the shares of Series A Common Stock. Finally, the
underwriting syndicate may reclaim selling concessions allowed for
distributing the shares of Series A Common Stock in the U.S. Offering and the
International Offering if the syndicate repurchases previously distributed
shares of Series A Common Stock in syndicate covering transactions,
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the shares of Series A Common Stock above
independent market levels. The U.S. Underwriters and the International
Underwriters are not required to engage in these activities and may end any of
these activities at any time.
The U.S. Underwriters and the International Underwriters may engage in
passive market making transactions in the Series A Common Stock in accordance
with Rule 103 of Regulation M promulgated by the Commission. In general, a
passive market maker may not bid or purchase the Series A Common Stock at a
price that exceeds the highest independent bid. In addition, the net daily
purchases made by any passive market maker generally may not exceed 30% of its
average daily trading volume in the Series A Common Stock during a specified
two month prior period, or 200 shares, whichever is greater. A passive market
maker must identify passive market making bids on the Nasdaq electronic inter-
dealer reporting system. Passive market making may stabilize or maintain the
market price of the Series A Common Stock above independent market levels.
Underwriters and selling group members are not required to engage in passive
market making and may end passive market making activities at any time.
From time to time certain of the Underwriters or their affiliates engage in
transactions, including commercial banking and investment banking
transactions, with and perform services for the Company and its affiliates in
the ordinary course of business, from which they have received and will
continue to receive customary fees. In addition, in the ordinary course of
business the Underwriters may actively trade securities of the Company for
such Underwriter's own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
For its advisory services to the Company in connection with the Hearst
Transaction, the Company paid Merrill Lynch a fee of $2.1 million, reimbursed
Merrill Lynch for its out-of-pocket expenses and agreed to indemnify Merrill
Lynch and certain related persons against certain liabilities, including
certain liabilities under the federal securities laws, arising out of its
engagement. For its advisory services to Argyle Television Investors, L.P.,
the Company's largest stockholder prior to the Hearst Transaction, the Company
paid Credit Suisse First Boston Corporation a fee of $800,000, reimbursed
Credit Suisse First Boston Corporation for its out-of-pocket expenses and
agreed to indemnify Credit Suisse First Boston Corporation and certain related
persons against certain liabilities, including certain liabilities under the
federal securities laws, arising out of its engagement. For its advisory
services to Hearst in connection with the Hearst Transaction, Hearst paid J.P.
Morgan Securities Inc. a fee of $1.5 million, reimbursed J.P. Morgan
Securities Inc. for its out-of-pocket expenses and agreed to indemnify J.P.
Morgan Securities Inc. and certain related persons against certain
liabilities, including certain liabilities under the federal securities laws,
arising out of its engagement. The Company reimbursed Hearst for amounts paid
to J.P. Morgan Securities Inc.
Morgan Guaranty Trust Company of New York, an affiliate of J.P. Morgan
Securities Inc., acts as the documentation agent and a lender under the
Company's Credit Facility, for which it has received and will continue to
receive customary fees. It is expected that Morgan Guaranty Trust Company will
receive approximately $57.7 million of repayment under the Credit Facility
from the net proceeds of the Offerings. Under the Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD"), special
considerations apply to a public offering of securities where more than 10% of
the net proceeds thereof will be paid to a participating underwriter or any of
its affiliates. Therefore, this offering is being conducted pursuant to Rule
2710 (c)(8) of the NASD Conduct Rules which establishes certain procedural
safeguards in connection with offerings in such circumstances in which NASD
member firms intend to participate and where more than 10% of the offering
proceeds are to be paid to them or their affiliates. See "Use of Proceeds."
See "Use of Proceeds."
S-31
<PAGE>
[ALTERNATE PAGE]
Merchant GP, Inc., Credit Suisse First Boston Fund Investments 1995, L.P.
and Credit Suisse First Boston Fund Investments 1994, L.P., each an affiliate
of Credit Suisse First Boston Corporation (collectively, the "CSFB Funds"),
beneficially own 4.2% of the Company's Series A Common Stock and are parties
to a Registration Rights Agreement with the Company and certain other holders
of the Company's Series A Common Stock providing the CSFB Funds and such other
holders with piggyback registration rights with respect to any proposed
offering of the Company's Series A Common Stock for cash through a firm
commitment underwriting sought by the Company, and, subject to certain
limitations and conditions, with the right to require the Company to register
for distribution through a firm commitment underwriting of all or any portion
of the Company's Series A Common Stock issued to them in the Hearst
Transaction. The CSFB Funds have advised the Company that they intend to
include in the Common Stock Offering the 351,218 shares of the Company's
Series A Common Stock that they hold in aggregate.
S-32
<PAGE>
[ALTERNATE PAGE]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCOR-
PORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPEC-
TUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE AC-
COMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE
SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, THE SERIES A COMMON STOCK IN ANY JURISDICTION WHERE, OR TO
ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
The Common Stock Offering................................................ S-3
The Company.............................................................. S-5
Recent Developments...................................................... S-7
Risk Factors............................................................. S-9
Use of Proceeds.......................................................... S-15
Price Range of Common Stock and
Dividend Policy......................................................... S-16
Capitalization........................................................... S-17
Selected Unaudited Pro Forma
Financial Data.......................................................... S-18
Selected Financial Data of Argyle........................................ S-21
Selected Financial Data of the Hearst Broadcast Group.................... S-24
Principal and Selling Stockholders....................................... S-26
Shares Eligible for Future Sale.......................................... S-27
Underwriting............................................................. S-29
Certain United States Tax Consequences to Non-United States Holders of
Series A Common Stock...................................................
Cautionary Statement Concerning Forward-Looking Statements...............
PROSPECTUS
Available Information.................................................... 2
Incorporation of Certain Documents
by Reference............................................................ 2
The Company.............................................................. 4
Use of Proceeds.......................................................... 5
Ratio of Earnings to Fixed Charges....................................... 6
General Description of Securities and
Risk Factors............................................................ 7
Description of Debt Securities........................................... 7
Description of Capital Stock............................................. 17
Plan of Distribution..................................................... 21
Legal Matters............................................................ 22
Experts.................................................................. 22
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6,791,705 SHARES
LOGO
SERIES A COMMON STOCK
---------------
PROSPECTUS SUPPLEMENT
---------------
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
J.P. MORGAN SECURITIES LTD.
MORGAN STANLEY DEAN WITTER
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.2
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+ THIS PROSPECTUS SUPPLEMENT RELATES TO AN EFFECTIVE REGISTRATION STATEMENT +
+ UNDER THE SECURITIES ACT OF 1933, AND IS SUBJECT TO COMPLETION OR AMENDMENT. +
+ +
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER , 1997
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER , 1997
$400,000,000
[LOGO]
$ % Senior Notes Due 2007
$ % Debentures Due 2027
Interest payable May and November _________________________Due and
--------
The % Senior Notes Due 2007 (the "2007 Notes") and the % Debentures Due
2027 (the "2027 Debentures") (collectively, the "Notes") offered hereby (the
"Debt Offering") are being issued by Hearst-Argyle Television, Inc., a
Delaware corporation (the "Company"). The 2007 Notes and the 2027 Debentures
will be redeemable in whole or in part, at the option of the Company at any
time, at a redemption price equal to the greater of (i) 100% of the
principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
date of redemption on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the applicable Treasury Yield
(as defined below) plus basis points in the case of the 2007 Notes
and basis points in the case of the 2027 Debentures, plus in each
case accrued interest to the date of redemption. See "Description
of Notes--Optional Redemption."
The Notes will be represented by one or more Global Securities registered in
the name of the nominee of The Depository Trust Company (the "Depositary").
Except as described herein and in the accompanying Prospectus, Notes in
definitive form will not be issued. See "Description of Notes--Book-Entry
System" in this Prospectus Supplement and "Description of Debt
Securities--Global Securities" in the accompanying Prospectus.
Concurrently with the Debt Offering, the Company and certain
stockholders of the Company are offering to sell an aggregate of
6,791,705 shares (assuming the Underwriters' over-allotment is not
exercised) of Series A Common Stock, par value $.01 per share, by a
separate prospectus supplement (the "Common Stock Offering").
Neither the Debt Offering nor the Common Stock Offering is
conditioned upon the completion of the other.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
ANDEXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THESECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSIONPASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC (1) COMMISSIONS (2) COMPANY (1) (3)
---------- --------------- ---------------
<S> <C> <C> <C>
Per 2007 Note...................................... % % %
Total.......................................... $ $ $
Per 2027 Debenture................................. % % %
Total.......................................... $ $ $
</TABLE>
- -----
(1)Plus accrued interest, if any, from November , 1997.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $600,000.
The Notes are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes, in book-entry form, will be made on or about November , 1997 through
the facilities of the Depositary against payment in immediately available
funds.
CREDIT SUISSE FIRST BOSTON J.P. MORGAN & CO.
MERRILL LYNCH & CO.
Prospectus Supplement dated , 1997.
<PAGE>
[ART APPEARS HERE]
- --------
(1) WWWB-TV and WPBF-TV are managed by the Company under a management
agreement with Hearst. In addition, the Company provides certain
management services to Hearst in order to allow Hearst to fulfill its
obligations under the Missouri LMA (as defined below) with KCWB.
(2) Hearst has a Program Services and Time Brokerage Agreement (the "Missouri
LMA") with KCWB-TV, Inc., the permittee of KCWB.
(3) WNAC-TV's (Providence, RI) broadcast signal overlaps with WCVB-TV's
(Boston, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal. Under FCC
rules, a single entity cannot own stations with overlapping signals. The
Company will divest WNAC and WDTN, and the Company has entered into a
letter of intent to divest WNAC.
(4) Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED
HEREBY, INCLUDING OVERALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT
COVERING TRANSACTIONS, AND PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE>
THE COMPANY
General. The Company owns or manages 15 network-affiliated television
stations reaching approximately 11.5% of U.S. Television households. The
Company is the largest, "pure-play" publicly owned television broadcast group
in the U.S., and is the third-largest, non-network owned television group in
terms of audience delivered.
The Hearst Transaction. The Company was formed in 1994 as a Delaware
corporation under the name Argyle Television, Inc. ("Argyle"), and its
business operations began in January 1995 with the consummation of its
acquisition of three television stations. The Company is the successor to the
combined operations of Argyle and the television broadcast group of The Hearst
Corporation ("Hearst") pursuant to a merger transaction that was consummated
on August 29, 1997 (the "Hearst Transaction"). In that transaction, Hearst
contributed its television broadcast group and related broadcast operations
(the "Hearst Broadcast Group") to Argyle and merged a wholly-owned subsidiary
of Hearst with and into Argyle, with Argyle as the surviving corporation
(renamed "Hearst-Argyle Television, Inc."). As a result of the Hearst
Transaction, Hearst currently owns approximately 38.6 million shares of the
Company's Series B Common Stock, comprising approximately 82% of the total
outstanding common stock of the Company. In connection with the Hearst
Transaction and related transactions, Hearst may receive up to an additional
2.7 million shares of Series B Common Stock (the "Adjustment Shares"), which
would result in Hearst's ownership of approximately 83% of the Company's total
outstanding common stock. Upon consummation of the Common Stock Offering,
Hearst will own approximately 73% (and up to approximately 74% after giving
effect to the issuance of the Adjustment Shares) of the Company's common stock
(in each case assuming the Underwriters' over-allotment option is not
exercised). Through its ownership of the Company's Series B Common Stock,
Hearst has the right to elect nine of the 11 members of the Company's Board of
Directors.
The Hearst Corporation. Hearst, one of the nation's largest privately-held
companies, is a diversified communications company engaged in a broad range of
publishing, broadcasting, cable television networks and other communications
activities. Hearst publishes 14 monthly consumer magazines that include
Cosmopolitan, Harper's Bazaar, Town & Country, Red Book, Good Housekeeping,
Country Living, Esquire and Popular Mechanics, among others. Hearst's 12 daily
and seven weekly newspapers include The Houston Chronicle, The San Francisco
Examiner, The Seattle Post-Intelligencer, The San Antonio Express-News and The
Albany Times Union. Hearst was a founding partner in Lifetime, A&E and The
History Channel cable networks. Hearst and The Walt Disney Company, through
ABC, Inc., wholly own the Lifetime network as equal partners, and are equal
partners in the A&E network, in which NBC owns a 25% interest. Hearst also
owns 20% of ESPN, which includes ESPN2 and ESPNews. Hearst's book publishing
businesses include William Morrow and Avon Books, and its entertainment
activities include the production of made-for-television movies and television
series, as well as the syndication and licensing of cartoon characters and
features.
The Stations. The Company owns 12 television stations, eight of which are in
the top 50 of the 211 generally recognized geographic designated market areas
("DMAs") according to A.C. Nielsen Co. ("Nielsen"). In addition, the Company
manages two television stations and two radio stations that are owned by
Hearst: WWWB-TV in Tampa, Florida, WPBF-TV in West Palm Beach, Florida and
WBAL(AM) and WIYY(FM) in Baltimore, Maryland. The Company also provides
management services to Hearst in order to allow Hearst to fulfill its
obligations under a program services and time brokerage agreement between
Hearst and the permittee of KCWB-TV in Kansas City, Missouri (the "Missouri
LMA"). For the year ended December 31, 1996, on a pro forma basis after giving
effect to the consummation of the Hearst Transaction, the Company's total
revenues and broadcast cash flow were $370.2 million and $160.0 million,
respectively, of which approximately 28% and 26%, respectively, were
attributable to WCVB-TV in Boston, Massachusetts, the nation's 6th largest DMA
.
Under the order of the Federal Communications Commission (the "FCC")
approving the Hearst Transaction, because of signal overlaps the Company must
divest two of its television stations (WNAC-TV in Providence, Rhode Island,
and WDTN-TV in Dayton, Ohio) and file by February 28, 1998 an application with
S-3
<PAGE>
the FCC for the transfer of ownership of such stations. A letter of intent has
been signed for the divestiture of WNAC, and the Company is negotiating with a
third party for the divestiture of WDTN. The Company is seeking to complete
these divestitures through a tax-deferred exchange of such stations for one or
more television stations of a third party, although there can be no assurance
that the Company will be able to accomplish such exchange on a fully tax-
deferred basis, if at all.
The following table sets forth certain information for each of the Company's
owned and managed television stations:
<TABLE>
<CAPTION>
PERCENTAGE OF
MARKET NETWORK U.S. TELEVISION
MARKET RANK(1) STATION AFFILIATION CHANNEL HOUSEHOLDS(2)
------ ------ --------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C>
*Boston, MA............. 6 WCVB ABC 5 2.22%
*Tampa, FL(3)........... 15 WWWB WB 32 1.47%
*Pittsburgh, PA......... 19 WTAE ABC 4 1.16%
*Baltimore, MD.......... 23 WBAL NBC 11 1.01%
Cincinnati, OH.......... 30 WLWT NBC 5 0.81%
*Kansas City, MO........ 31 KMBC ABC 9 0.81%
*Kansas City, MO(3)..... 31 KCWB WB 29 ***
*Milwaukee, WI.......... 32 WISN ABC 12 0.81%
*West Palm Beach, FL(3). 43 WPBF ABC 25 0.61%
Oklahoma City, OK....... 44 KOCO ABC 5 0.61%
Providence, RI(4)....... 49 WNAC FOX 64 0.57%
*Dayton, OH(4).......... 53 WDTN ABC 2 0.52%
Honolulu, HI............ 71 KITV ABC 4 0.39%
Jackson, MS............. 90 WAPT ABC 16 0.30%
Fort
Smith/Fayetteville,
AR..................... 116 KHBS/KHOG ABC/ABC 40/29 0.22%
-----
Total............... 11.51%
=====
</TABLE>
- --------
*Denotes a station owned or operated by the Company as a consequence of the
Hearst Transaction.
(1) Market rank is based on the relative size of the DMA among the 211
generally recognized DMAs in the U.S., based on Nielsen estimates for the
1997-98 season.
(2) Based on Nielsen estimates for the 1997-98 season.
(3) WWWB-TV and WPBF-TV are managed by the Company under a management
agreement with Hearst. In addition, the Company provides certain
management services to Hearst in order to allow Hearst to fulfill its
obligations under the Missouri LMA with KCWB.
(4) WNAC-TV's (Providence, RI) broadcast signal overlaps with WCVB-TV's
(Boston, MA) broadcast signal, and WDTN-TV's (Dayton, OH) broadcast signal
overlaps with WLWT-TV's (Cincinnati, OH) broadcast signal. Under FCC
rules, a single entity cannot own stations with overlapping signals. The
Company will divest WNAC and WDTN, and has entered into a letter of intent
to divest WNAC.
(5) Subject to a Joint Marketing and Programming Agreement with Clear Channel
Communications, Inc.
The Company has an option to acquire WWWB-TV and Hearst's interests and
option with respect to KCWB-TV (together with WWWB-TV, the "Option
Properties"), as well as a right of first refusal until approximately August
2000 with respect to WPBF-TV (if such station is proposed by Hearst to be sold
to a third party). The option period for each Option Property commences in
February 1999 and terminates in August 2000 and the purchase price is the fair
market value of the station as determined by the parties, or an independent
third-party appraisal, subject to certain specified parameters. If Hearst
elects to sell an Option Property prior to the commencement of, or during, the
option period, the Company will have a right of first refusal to acquire such
Option Property. The exercise of the option and the right of first refusal
will be by action of the independent directors of the Company, and any option
exercise may be withdrawn by the Company after receipt of the third-party
appraisal.
S-4
<PAGE>
Business Strategy. The Company's strategic objective is to maintain and
build on its position as the largest, "pure-play" publicly owned television
broadcast group in the United States. To facilitate this strategy, the Company
focuses on the following key areas:
. Size and Market Presence. The Company's newly-expanded station group
provides the Company with the critical mass necessary to remain
competitive with other station group owners. The Company intends to take
advantage of the benefits of scale to obtain attractive programming
pricing and terms, strengthen relationships with networks and national
advertising sales representatives, attract and retain talent and obtain
timely performance and satisfactory service from equipment suppliers.
. Growth. As a consequence of the consolidation of ownership occurring in
the television broadcast industry, the Company believes continued growth
is necessary in order to achieve its strategic objective. The Company
intends to generate growth both internally through continuous improvement
of existing operations, as well as externally through acquisitions of
television station groups and individual stations. The Company intends to
finance such acquisitions through a combination of debt and equity in a
manner that will permit continued growth in the Company's business and
provide flexibility in its capital structure. In combination with such
financing, the Company will seek to complete acquisitions at price levels
that will increase after-tax cash flow per share.
. Geographic and Network Diversity. Ten of the Company's existing stations
are affiliated with ABC, two with NBC, two with the WB Network and one
with Fox. The stations are located in several distinct regions of the
United States, mitigating any potential adverse effect on the Company of
any regional economic fluctuations. In pursuing external growth
opportunities, the Company intends to focus on network-affiliated
television stations in the top 100 markets, with a view to enhancing the
geographic and network diversity of its stations.
. Strong News and Local Station Identities. The Company positions each of
its stations within the station's market to create and enhance a local
"brand" with which viewers and advertisers can identify, thereby seeking
to build the franchise value of the station and attain the number one or
strong number two position in the market in terms of audience delivery,
revenue share and profitability. The Company considers strong news and
local events programming to be critical in station branding.
. Cost Control. The Company closely monitors costs and implements cost
controls at each station it operates in a manner consistent with building
each station's market position. The Company also intends to capitalize on
its newly-expanded station group to generate cost savings through the
group acquisition of programming, equipment and services.
Principal Offices. The principal executive offices of the Company are
located at 888 Seventh Avenue, New York, New York 10106; its telephone number
is 212-649-2300.
RECENT DEVELOPMENTS
Concurrent Common Stock Offering. Concurrently with the Debt Offering, the
Company and certain stockholders of the Company (the "Selling Stockholders")
are offering to sell an aggregate of 6,791,705 shares (assuming the
Underwriters' over-allotment option is not exercised) of Series A Common
Stock, par value $.01 per share, by a separate prospectus supplement. Of the
shares of Series A Common Stock being offered, 6,000,000 shares are being
offered by the Company and 791,705 are being offered by the Selling
Stockholders. The Series A Common Stock is traded on the Nasdaq National
Market under the symbol "HATV." The sale of the Notes pursuant to this
Prospectus Supplement is not contingent on the completion of the Common Stock
Offering. See "Use of Proceeds."
Recent Financial Results. The information set forth below is based on
preliminary, unaudited data prepared by the Company and is subject to
adjustments and the completion by the Company of its financial statements with
respect to the quarter ended September 30, 1997. There can be no assurance
that actual results, when finalized, will not vary from the financial data set
forth below. The following financial data gives effect to the Hearst
Transaction as if it occurred at the beginning of the periods presented.
S-5
<PAGE>
For the nine months ended September 30, 1997, total revenues on a pro forma
basis are estimated to have increased by approximately $7.4 million, or 2.8%,
to approximately $274.9 million from $267.5 million for the comparable period
ended September 30, 1996. Broadcast cash flow (station operating income, plus
depreciation and amortization and write down of intangible assets, plus
amortization of program rights, minus program payments) on a pro forma basis
for the nine months ended September 30, 1997 is estimated to have increased by
approximately $12.4 million, or 11.5%, to approximately $120.2 million from
$107.8 million for the comparable period ended September 30, 1996. For the
three months ended September 30, 1997, total revenues on a pro forma basis are
estimated to have increased by approximately $3.7 million, or 4.3%, to
approximately $89.6 million from $85.9 million for the comparable period ended
September 30, 1996. Broadcast cash flow on a pro forma basis for the three
months ended September 30, 1997 is estimated to have increased by
approximately $4.9 million, or 15.2%, to $37.1 million from $32.2 million for
the comparable period ended September 30, 1996. The Company is currently
reviewing whether or not the Hearst Transaction will result in a one-time
restructuring charge to the Company, which could amount to approximately $10.0
million.
S-6
<PAGE>
USE OF PROCEEDS
The net proceeds from the Debt Offering are estimated to be approximately
$396 million after giving effect to underwriting discounts and commissions and
expenses payable by the Company. Concurrently with the Debt Offering, the
Company is conducting the Common Stock Offering (together with the Debt
Offering, the "Offerings"), the net proceeds to the Company of which are
estimated to be approximately $172 million ($200 million if the Underwriters'
over-allotment option is exercised in full), assuming a public offering price
of $30.125 per share (the closing price of the Series A Common Stock on the
Nasdaq National Market on October 15, 1997) and after giving effect to
underwriting discounts and commissions and expenses payable by the Company.
The Company will not receive any of the net proceeds from the sale of Series A
Common Stock by the Selling Stockholders in the Common Stock Offering. The
Company expects to utilize the net proceeds from the Offerings to repay
outstanding indebtedness as follows:
<TABLE>
<CAPTION>
APPROXIMATE
DOLLAR PERCENTAGE
INDEBTEDNESS AMOUNT OF NET PROCEEDS
------------ ------------ ---------------
<S> <C> <C>
Credit Facility............ $398 million(/1/)(/2/)(/3/) 70.1%(/1/)(/2/)
Subordinated Notes......... 170 million(/2/) 29.9%(/2/)
------------ ------
Total.................... $568 million 100.0%
============ ======
</TABLE>
- --------
(1) If only the Debt Offering is completed, the approximate dollar amount of
indebtedness the Company expects to repay under the Credit Facility will be
$396 million, or 100% of the net proceeds.
(2) All of the net proceeds initially will be used to repay a portion of
outstanding indebtedness under the Credit Facility. After such repayment,
the Company may make additional borrowings under the Credit Facility to
redeem all or a portion of the Subordinated Notes. The amount indicated
assumes that no Subordinated Notes will be repurchased in the Change of
Control Offer described below and that all of the Subordinated Notes will be
repurchased. See "--Subordinated Notes." Morgan Guaranty Trust Company, an
affiliate of J.P. Morgan Securities Inc., is an agent and a lender under the
Company's Credit Facility and is expected to receive approximately $57.7
million of repayment under the Credit Facility from the net proceeds of the
Offerings. See "Underwriting."
(3) Assumes that the $275 million principal amount of private placement debt
that was assumed by the Company as part of the Hearst Transaction (the
"Private Placement Debt") and related make-whole premium of approximately
$16 million will have been refinanced using borrowings under the Credit
Facility. The Company expects to refinance the Private Placement Debt on or
about October 31, 1997.
Credit Facility. Upon consummation of the Hearst Transaction, the Company
entered into a $1 billion credit facility with the Chase Manhattan Bank, which
matures on December 31, 2004 (the "Credit Facility"). At October 15, 1997,
outstanding indebtedness under the Credit Facility was approximately $140
million as a result of borrowings made to (i) finance the cash consideration
of approximately $100 million payable in connection with the Hearst
Transaction; (ii) refinance the Company's previous credit facility of
approximately $40 million, net of repayments; and, (iii) pay certain fees and
expenses associated with the Hearst Transaction. Such borrowings bear interest
at an applicable margin that varies based on the Company's ratio of total debt
to operating cash flow, plus, at the Company's option, LIBOR or an alternate
base rate (such interest being approximately 6% at October 15, 1997). The
Company expects to use the net proceeds from the Offerings to repay a portion
of borrowings under the Credit Facility.
Subordinated Notes. The Company currently has outstanding $150 million
principal amount of senior subordinated notes, which it issued in October 1995
(the "Subordinated Notes"). The Subordinated Notes are due in 2005 and bear
interest at 9 3/4% payable semiannually. Under the indenture governing the
Subordinated Notes, the consummation of the Hearst Transaction constituted a
"change of control" of Argyle, which required the Company to commence an offer
to repurchase the Subordinated Notes for cash at 101% of their principal
amount plus accrued and unpaid interest to the date of repurchase (the "Change
of Control Offer"). This Change of Control Offer expires on October 27, 1997.
Within 180 days after the completion of the Change in Control Offer, the
Company is permitted under the indenture governing the Subordinated Notes to
redeem Subordinated Notes that are not repurchased in the Change of Control
Offer. After using the net proceeds from the Offerings initially to repay a
portion of outstanding indebtedness under the Credit Facility, the Company may
make additional borrowings under the Credit Facility in such requisite amounts
to repurchase all or a portion of the Subordinated Notes and to pay any
applicable redemption premium and accrued and unpaid interest.
S-7
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1997, (i) on a pro forma basis giving effect to the Hearst Transaction;
(ii) on a pro forma basis as adjusted to give effect to the consummation of
the Debt Offering and the application of the net proceeds therefrom as
discussed under "Use of Proceeds;" and, (iii) on a pro forma basis as adjusted
to give effect to the consummation of the Offerings and the application of the
net proceeds therefrom as described under "Use of Proceeds." This table should
be read in conjunction with and is qualified by reference to the selected
historical and pro forma financial data contained in this Prospectus
Supplement and the unaudited pro forma combined condensed financial statements
and notes thereto included in documents incorporated by reference in the
accompanying Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------------------------------
PRO FORMA AS
PRO FORMA ADJUSTED FOR PRO FORMA AS
HEARST DEBT ADJUSTED FOR
TRANSACTION(/1/)(/2/) OFFERING(/3/) OFFERINGS(/4/)
--------------------- ------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Long-term debt:
Notes................... -- $400,000 $400,000
Credit Facility(/2/).... $454,000 228,000 56,000
Subordinated Notes...... 150,000 -- --
-------- -------- --------
Total long-term debt.. $604,000 $628,000 $456,000
======== ======== ========
Shareholders' equity:
Preferred Stock, $.01
par value; 1,000,000
shares authorized:
Series A preferred
stock, 10,938 shares
issued and
outstanding.......... 1 1 1
Series B preferred
stock, 10,938 shares
issued and
outstanding.......... 1 1 1
Series A common stock,
$.01 par value;
100,000,000 shares
authorized; 8,277,054
shares issued and
outstanding prior to
Common Stock Offering;
14,277,054 shares to
be issued and
outstanding after
Common Stock
Offering(/5/)......... 82 82 142
Series B common stock,
$.01 par value;
100,000,000 shares
authorized; 39,611,002
shares issued and
outstanding(/6/)...... 396 396 396
Additional paid-in
capital............... 183,531 183,531 355,471
Retained earnings
(deficit)............. (17,672) (17,672) (17,672)
-------- -------- --------
Total shareholders'
equity............... 166,339 166,339 338,339
-------- -------- --------
Total capitalization.. $770,339 $794,339 $794,339
======== ======== ========
</TABLE>
- --------
(1) The pro forma information gives effect to the Hearst Transaction, does not
give effect to the divestiture of WDTN and WNAC and does not give effect
to the issuance of 1.7 million of the total 2.7 million Adjustment Shares.
For a description of pro forma adjustments, see the Company's unaudited
pro forma combined condensed financial statements incorporated by
reference in the accompanying Prospectus.
(2) Assumes that the Private Placement Debt assumed by the Company in the
Hearst Transaction and related make-whole premium will have been
refinanced from the proceeds of additional borrowings under the Credit
Facility.
(3) The pro forma, as adjusted for the Debt Offering, information gives effect
to (i) the Hearst Transaction; (ii) the Debt Offering; and, (iii) the
application of the net proceeds from the Debt Offering. See "Use of
Proceeds."
(4) The pro forma, as adjusted for the Offerings, information gives effect to
(i) the Hearst Transaction; (ii) the Common Stock Offering (assuming the
Underwriters' over-allotment option is not exercised), assuming a public
offering price of $30.125 per share; (iii) the Debt Offering; and, (iv)
the application of the net proceeds from the Offerings. See "Use of
Proceeds."
(5) Excludes 1,794,125 shares of Series A Common Stock issuable upon exercise
of stock options. Options for 216,125 shares of Series A Common Stock are
currently exercisable.
(6) Includes 1.0 million shares of the total 2.7 million Adjustment Shares to
be issued to Hearst in connection with the working capital adjustments and
pension-related matters associated with the Hearst Transaction.
S-8
<PAGE>
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
The selected unaudited pro forma financial data for the year ended December
31, 1996 have been derived from the unaudited pro forma combined condensed
financial statements of Argyle and the audited historical financial statements
of the assets and properties of Hearst's six network-affiliated television
broadcast stations and Hearst Broadcast Productions contributed by Hearst to
Argyle prior to consummation of the Hearst Transaction (the "Hearst Broadcast
Group"), in each case included in documents incorporated by reference in the
accompanying Prospectus. The selected unaudited pro forma financial data for
the six months ended June 30, 1996 and 1997 have been derived from the
unaudited pro forma combined condensed financial statements of Argyle and the
unaudited historical financial statements of the Hearst Broadcast Group, in
each case included in documents incorporated by reference in the accompanying
Prospectus. The following data should be read in conjunction with the
Company's consolidated financial statements and related notes thereto included
in Argyle's Annual Report on Form 10-K for the year ended December 31, 1996,
Argyle's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997,
and June 30, 1997, Argyle's Current Report on Form 8-K dated January 31, 1997,
filed on February 14, 1997, as amended by Current Report on Form 8-K/A dated
January 31, 1997, filed on April 15, 1997, Argyle's Proxy Statement/Prospectus
filed on July 31, 1997, the Company's Form 8-K/A filed on September 4, 1997,
the Company's Current Report on Form 8-K dated August 29, 1997, filed on
September 15, 1997, as amended by Current Report on Form 8-K/A dated August
29, 1997, filed on September 26, 1997 and, the Company's Current Report on
Form 8-K dated August 29, 1997, filed on October 16, 1997, each of which is
incorporated by reference in the accompanying Prospectus.
S-9
<PAGE>
HEARST-ARGYLE TELEVISION, INC.
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
HEARST-ARGYLE PRO FORMA(A)
--------------------------------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------ -------------------
1996(A) 1996(A) 1997(A)
------------ -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues............................... $370,249 $181,571 $ 185,332
Station operating expenses................... 161,103 79,990 80,947
Amortization of program rights............... 45,522 23,765 21,187
Depreciation and amortization................ 31,848 16,119 15,725
-------- -------- ---------
Station operating income..................... 131,776 61,697 67,473
Corporate expenses........................... 11,000 5,500 5,500
-------- -------- ---------
Operating income............................. 120,776 56,197 61,973
Interest expense, net........................ 44,650 22,325 22,325
-------- -------- ---------
Income from continuing operations before
income taxes................................ 76,126 33,872 39,648
Income taxes................................. 33,027 14,799 17,162
-------- -------- ---------
Income from continuing operations............ 43,099 19,073 22,486
Less preferred stock dividends............... (1,422) (712) (712)
-------- -------- ---------
Earnings applicable to common stock.......... $ 41,677 $ 18,361 $ 21,774
======== ======== =========
Earnings per common share.................... $ 0.87 $ 0.38 $ 0.45
======== ======== =========
Number of shares used in per share
calculation(b).............................. 47,888 47,888 47,888
OTHER DATA:
Broadcast cash flow, as defined(c)........... $159,952 $ 75,576 $ 83,062
Broadcast cash flow margin(d)................ 43.2% 41.6% 44.8%
Operating cash flow, as defined(e)........... $148,952 $ 70,076 $ 77,562
Operating cash flow margin(f)................ 40.2% 38.6% 41.8%
After tax cash flow (g)...................... $ 74,947 $ 35,192 $ 38,211
Program payments(h).......................... 49,194 26,005 21,323
PRO FORMA
AS OF
JUNE 30,
BALANCE SHEET DATA: 1997
---------
Cash and cash equivalents.......................................... $ 7,210
Total assets....................................................... 910,522
Total debt......................................................... 604,000
Stockholders' equity............................................... 166,339
</TABLE>
See notes on the following page.
S-10
<PAGE>
NOTES TO SELECTED UNAUDITED PRO FORMA FINANCIAL DATA OF HEARST-ARGYLE
(DOLLARS IN THOUSANDS)
(a) Includes the unaudited pro forma combined results of operations of Argyle
and the historical results of operations of the Hearst Broadcast Group on a
combined pro forma basis as if the Hearst Transaction had occurred at the
beginning of the periods presented. The data does not include the required
divestiture of WNAC and WDTN. See the Company's unaudited pro forma
combined condensed financial statements incorporated by reference in the
accompanying Prospectus.
(b) Excludes any effect of preferred stock conversion and the effect of any
Company options.
(c) Broadcast cash flow is defined as station operating income, plus
depreciation and amortization and write down of intangible assets, plus
amortization of program rights, minus program payments. Pro forma broadcast
cash flow would be $162,452 for the year ended December 31, 1996 and
$77,076 for the six months ended June 30, 1996 using normalized program
payments for each respective period. (See note (h) below.) Broadcast cash
flow does not present a measure of operating results and does not purport
to represent cash provided by operating activities. Broadcast cash flow
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. This measure may not be comparable to similarly titled measures
used by other companies.
(d) Broadcast cash flow margin is broadcast cash flow divided by total
revenues, expressed as a percentage.
(e) Operating cash flow is defined as operating income, plus depreciation and
amortization, and amortization of program rights, minus program payments
and adjusted for any non-cash compensation expense. Pro forma operating
cash flow would be $151,452 for the year ended December 31, 1996 and
$71,576 for the six months ended June 30, 1996 using normalized program
payments for each respective period. (See note (h) below.) Operating cash
flow is presented here not as a measure of operating results, but rather as
a measure of debt service ability. Operating cash flow does not purport to
represent cash provided by operating activities and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. This
measure may not be comparable to similarly titled measures used by other
companies.
(f) Operating cash flow margin is operating cash flow divided by total
revenues, expressed as a percentage.
(g) After tax cash flow is defined as net income plus depreciation and
amortization. After tax cash flow does not present a measure of operating
results and does not purport to represent cash provided by operating
activities. After tax cash flow should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with
generally accepted accounting principles. This measure may not be
comparable to similarly titled measures used by other companies.
(h) Program payments for the year ended December 31, 1996 and the six months
ended June 30, 1996 include $2.5 million and $1.5 million, respectively, of
the last year of Hearst Broadcast Group scheduled program payments for a
program that was replaced during the end of 1995. Without these amounts,
program payments are normalized period to period.
S-11
<PAGE>
SELECTED FINANCIAL DATA OF ARGYLE
The historical financial data for the years ended December 31, 1992, 1993
and 1994 have been derived from the audited combined financial statements
consisting of Northstar Television of Grand Rapids Inc., Northstar Television
of Jackson, Inc. and Northstar Television of Providence, Inc., collectively
the "Northstar Stations," the accounting predecessor to Argyle, included in
documents incorporated by reference in the accompanying Prospectus. The
historical financial data for the years ended December 31, 1995 and 1996 have
been derived from the audited consolidated financial statements of Argyle
included in documents incorporated by reference in the accompanying
Prospectus. The historical financial data for the six months ended June 30,
1996 and 1997 have been derived from the unaudited condensed consolidated
financial statements of Argyle, included in documents incorporated by
reference in the accompanying Prospectus. The pro forma consolidated financial
data for the year ended December 31, 1996 and for the six months ended June
30, 1996 and 1997 have been prepared as if the acquisition of KHBS and KHOG
(the "Arkansas Stations"), acquired effective June 1, 1996; the Company's
Joint Marketing and Programming Agreement with Clear Channel Communications,
Inc. relating to WNAC (the "Clear Channel Venture"), which occurred effective
July 1, 1996; and the exchange of two television stations owned by the Company
with two television stations owned by Gannett, Inc. (the "Gannett Swap"),
which occurred effective January 31, 1997, had been completed at the beginning
of the periods presented. Such pro forma data is not necessarily indicative of
the actual results that would have occurred or of results that may occur.
The historical financial data for the six months ended June 30, 1996 and
1997 are unaudited but, in the opinion of the Company's management, have been
prepared on the same basis as the audited consolidated financial statements
and include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial position and results of
operations for those periods. Results for the six month periods ended June 30,
1996 and 1997 are not necessarily indicative of the results for a full year.
S-12
<PAGE>
SELECTED FINANCIAL DATA OF ARGYLE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------- ------------------------------------
ARGYLE ARGYLE
PREDECESSOR HISTORICAL ARGYLE HISTORICAL PRO FORMA ARGYLE HISTORICAL PRO FORMA
-------------------------- ------------------ --------- ------------------ ----------------
1992 1993 1994 1995(A) 1996(B) 1996(C) 1996(B) 1997(D) 1996(C) 1997(C)
-------- ------- ------- -------- -------- --------- -------- -------- ------- -------
STATEMENT OF (IN THOUSANDS) (IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues........ $ 27,103 $28,440 $34,538 $ 46,944 $ 73,294 $ 84,243 $ 34,057 $ 39,765 $41,049 $40,740
Station operating
expenses............. 13,209 14,295 16,430 23,603 37,639 41,772 18,372 21,367 22,497 21,641
Write-down of
intangible assets ... 25,500 -- -- -- -- -- -- -- -- --
Amortization of
program rights....... 4,670 3,876 3,600 3,961 4,725 5,225 2,571 2,119 2,289 2,135
Depreciation and
amortization......... 3,511 2,884 3,126 12,294 23,965 26,075 10,724 12,760 12,378 12,898
-------- ------- ------- -------- -------- -------- -------- -------- ------- -------
Station operating
income (loss)........ (19,787) 7,385 11,382 7,086 6,965 11,171 2,390 3,519 3,885 4,066
Corporate expenses.... 786 1,174 1,103 2,324 4,285 4,285 1,867 1,904 1,867 1,904
Non-cash compensation
expense.............. -- -- -- 675 675 675 337 503 337 504
-------- ------- ------- -------- -------- -------- -------- -------- ------- -------
Operating income
(loss)............... (20,573) 6,211 10,279 4,087 2,005 6,211 186 1,112 1,681 1,658
Interest expense,
net.................. 7,849 5,885 4,745 12,052 16,566 18,119 7,304 9,407 8,376 9,407
-------- ------- ------- -------- -------- -------- -------- -------- ------- -------
Income (loss) from
continuing operations
before income taxes.. (28,422) 326 5,534 (7,965) (14,561) (11,908) (7,118) (8,295) (6,695) (7,749)
Income taxes.......... -- 301 170 -- -- -- -- -- -- --
-------- ------- ------- -------- -------- -------- -------- -------- ------- -------
Income (loss) from
continuing
operations........... (28,422) 25 5,364 (7,965) (14,561) (11,908) (7,118) (8,295) (6,695) (7,749)
Cumulative effect of a
change in accounting
principle (e)........ -- (213) -- -- -- -- -- -- -- --
Extraordinary
item(f).............. -- -- (774) (7,842) -- -- -- -- -- --
-------- ------- ------- -------- -------- -------- -------- -------- ------- -------
Net income (loss) .... $(28,422) $ (188) $ 4,590 (15,807) (14,561) (11,908) (7,118) (8,295) (6,695) (7,749)
======== ======= =======
Less preferred stock
dividends (g)........ -- (829) (1,422) (118) (711) (712) (712)
-------- -------- -------- -------- -------- ------- -------
Loss applicable to
common stock......... $(15,807) $(15,390) $(13,330) $ (7,236) $ (9,006) $(7,407) $(8,461)
======== ======== ======== ======== ======== ======= =======
Loss per common
share................ $ (1.25) $ (1.37) $ (1.17) $ (0.65) $ (0.79) $ (0.65) $ (0.75)
Number of shares used
in per share
calculation.......... 6,388 11,246 11,347 11,144 11,347 11,347 11,347
OTHER DATA:
Broadcast cash flow,
as defined(h)........ $ 9,577 $ 9,868 $14,223 $ 20,440 $ 31,889 $ 37,800 $ 13,776 $ 16,060 $16,458 $16,884
Broadcast cash flow
margin(i)............ 35.3% 34.7% 41.2% 43.5% 43.5% 44.8% 40.4% 40.4% 40.1% 41.4%
Operating cash flow,
as defined(j)........ $ 8,791 $ 8,694 $13,120 $ 18,116 $ 27,604 $ 33,515 $ 11,909 $ 14,156 $14,591 $14,980
Operating cash flow
margin(k)............ 32.4% 30.6% 38.0% 38.6% 37.7% 39.7% 35.0% 35.6% 35.5% 36.8%
Cash flow from (used
in) operating
activities........... $ 9,681 $ 9,734 $12,774 $ 6,859 $ 6,943 N/A $ (260) $ 1,601 N/A N/A
Cash flow used in
investing
activities........... (666) (1,103) (668) (237,501) (28,745) N/A (10,450) (27,179) N/A N/A
Cash flow from (used
in) financing
activities........... (9,727) (8,734) (10,887) 232,846 20,545 N/A 11,382 26,789 N/A N/A
Capital expenditures.. 669 1,136 701 3,767 6,633 3,590 4,091 N/A N/A
Program payments ..... 4,317 4,277 3,885 2,901 3,766 $ 4,671 1,909 2,338 $ 2,094 $ 2,215
BALANCE SHEET DATA (AT
PERIOD END):
Cash and cash
equivalents.......... 196 93 1,313 2,206 949 736 2,878 2,160 N/A N/A
Total assets.......... 79,079 76,015 78,575 291,141 328,608 356,974 322,886 338,468 N/A N/A
Total debt (including
current portion)..... 66,635 63,235 42,670 150,000 171,500 191,500 161,500 199,000 N/A N/A
Stockholders' equity
(deficit)(l)......... (3,078) (3,440) 24,513 116,293 129,152 144,082 136,969 120,650 N/A N/A
</TABLE>
See notes on the following page.
S-13
<PAGE>
NOTES TO SELECTED FINANCIAL DATA OF ARGYLE
(a) Includes the results of operations of Argyle, the results of operations of
the acquired WZZM (Grand Rapids, MI), WAPT (Jackson, MS) and WNAC
(Providence, RI) for the full period, the results of operations of the
acquired KITV (Honolulu, HI) from June 13, 1995 and the results of
operations of the acquired WGRZ (Buffalo, NY) from December 5, 1995.
(b) Includes the results of operations of Argyle, the results of operations of
the acquired Arkansas Stations from June 1, 1996 and the Clear Channel
Venture from July 1, 1996.
(c) As to 1996, gives effect to the acquisition of the Arkansas Stations, the
Clear Channel Venture and the Gannett Swap as if all such transactions had
occurred at the beginning of 1996. As to 1997, gives effect to the Gannett
Swap as if such had occurred at the beginning of 1997. The acquisitions
have been accounted for using the purchase method of accounting.
(d) Includes the results of operations of Argyle and the effect on the Gannett
Swap, which occurred effective January 31, 1997.
(e) Represents the cumulative effect of the adoption of SFAS No. 109,
"Accounting for Income Taxes."
(f) Represents the write-offs of unamortized financing costs due to early
extinguishment of bank debt.
(g) Dividends associated with preferred stock related to the acquisition of
the Arkansas Stations.
(h) Broadcast cash flow is defined as station operating income (loss), plus
depreciation and amortization and write down of intangible assets, plus
amortization of program rights, minus program payments. Broadcast cash
flow does not present a measure of operating results and does not purport
to represent cash provided by operating activities. Broadcast cash flow
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. This measure may not be comparable to similarly titled
measures used by other companies.
(i) Broadcast cash flow margin is broadcast cash flow divided by total
revenues, expressed as a percentage.
(j) Operating cash flow is defined as operating income (loss), plus
depreciation and amortization, write down of intangible assets and
amortization of program rights, minus program payments, plus non-cash
compensation expense. Operating cash flow is presented here not as a
measure of operating results, but rather as a measure of debt service
ability. Operating cash flow does not purport to represent cash provided
by operating activities and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. This measure may not be
comparable to similarly titled measures used by other companies.
(k) Operating cash flow margin is operating cash flow divided by total
revenues, expressed as a percentage.
(l) Argyle has not paid any dividends on its common stock since inception.
(See note (g) above.)
S-14
<PAGE>
SELECTED FINANCIAL DATA OF THE HEARST BROADCAST GROUP
The historical financial data for the six months ended June 30, 1996 and
1997 and for the years ended December 31, 1992 and 1993 have been derived from
the unaudited combined financial statements of the Hearst Broadcast Group,
included in documents incorporated by reference in the accompanying
Prospectus. The historical financial data for the years ended December 31,
1994, 1995 and 1996 have been derived from the audited combined financial
statements of the Hearst Broadcast Group, included in documents incorporated
by reference in the accompanying Prospectus.
The historical financial data for the years ended December 31, 1992 and 1993
and for the six months ended June 30, 1996 and 1997 are unaudited but, in the
opinion of management of the Hearst Broadcast Group, have been prepared on the
same basis as the audited combined financial statements and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations for
those periods. Results for the six month periods ended June 30, 1996 and 1997
are not necessarily indicative of the results for a full year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Total revenues.......... $221,159 $224,067 $259,459 $279,340 $283,971 $139,616 $143,566
Station operating
expenses............... 106,430 103,880 106,281 117,535 121,501 58,594 60,596
Amortization of program
rights................. 36,768 37,087 40,266 38,619 40,297 21,476 19,052
Depreciation and
amortization........... 26,107 26,008 23,071 22,134 16,971 8,584 8,190
-------- -------- -------- -------- -------- -------- --------
Station operating
income................. 51,854 57,092 89,841 101,052 105,202 50,962 55,728
Corporate expenses...... 5,657 5,924 8,007 7,857 7,658 3,965 4,467
-------- -------- -------- -------- -------- -------- --------
Operating income........ 46,197 51,168 81,834 93,195 97,544 46,997 51,261
Interest expense, net... 22,510 22,773 22,678 22,218 21,235 12,823 12,485
-------- -------- -------- -------- -------- -------- --------
Income from continuing
operations before
income taxes........... 23,687 28,395 59,156 70,977 76,309 34,174 38,776
Income taxes............ 10,658 17,123 25,265 30,182 31,907 14,244 16,054
-------- -------- -------- -------- -------- -------- --------
Net income.............. $ 13,029 $ 11,272 $ 33,891 $ 40,795 $ 44,402 $ 19,930 $ 22,722
======== ======== ======== ======== ======== ======== ========
OTHER DATA:
Broadcast cash flow, as
defined(a)............. $ 82,077 $ 82,626 $113,999 $123,038 $117,947 $ 57,111 $ 63,862
Broadcast cash flow
margin(b).............. 37.1% 36.9% 43.9% 44.0% 41.5% 40.9% 44.5%
Operating cash flow, as
defined(c)............. $ 77,891 $ 79,147 $108,749 $117,087 $109,457 $ 50,637 $ 56,017
Operating cash flow
margin(d).............. 35.2% 35.3% 41.9% 41.9% 38.5% 36.3% 39.0%
Cash flows from
Operating Activities... N/A N/A $ 44,460 $ 61,185 $ 65,802 $ 29,116 $ 22,122
Cash flows used in
Investing Activities... N/A N/A (8,430) (8,621) (7,764) (3,185) (1,683)
Cash flows used in
Financing Activities... N/A N/A (33,584) (52,020) (58,145) (24,991) (18,271)
Capital expenditures.... $ 6,398 $ 4,879 8,430 8,621 7,764 3,185 1,683
Program payments ....... 32,652 37,561 39,179 38,767 44,523 23,911 19,108
BALANCE SHEET DATA:
Cash and cash
equivalents............ N/A N/A 2,446 2,990 2,882 3,930 5,050
Total assets............ N/A N/A 387,984 385,406 366,956 355,990 349,836
Due to Parent Company
and Affiliates......... N/A N/A 283,988 272,762 259,020 267,700 263,471
</TABLE>
See notes on the following page.
S-15
<PAGE>
NOTES TO SELECTED FINANCIAL DATA OF THE HEARST BROADCAST GROUP
(a) Broadcast cash flow is defined as station operating income, plus
depreciation and amortization, plus amortization of program rights, minus
program payments. Broadcast cash flow does not present a measure of
operating results and does not purport to represent cash provided by
operating activities. Broadcast cash flow should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles. This measure may
not be comparable to similarly titled measures used by other companies.
(b) Broadcast cash flow margin is broadcast cash flow divided by total
revenues, expressed as a percentage.
(c) Operating cash flow is defined as operating income, plus depreciation and
amortization, plus amortization of program rights, minus program payments,
and adjusted for non-cash compensation expense. Operating cash flow is
presented here not as a measure of operating results, but rather as a
measure of debt service ability. Operating cash flow does not purport to
represent cash provided by operating activities and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. This
measure may not be comparable to similarly titled measures used by other
companies.
(d) Operating cash flow margin is operating cash flow divided by total
revenues, expressed as a percentage.
S-16
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements and, to the extent inconsistent therewith, replaces the
description of the general terms and provisions of the Notes set forth in the
accompanying Prospectus under the caption "Description of Debt Securities," to
which description reference is hereby made. The following summary is qualified
in its entirety by reference to the Indenture referred to in the accompanying
Prospectus.
GENERAL
The 2007 Notes and the 2027 Debentures offered hereby each constitute a
series of debt securities under the Indenture. The 2007 Notes will be limited
to $ aggregate principal amount and will mature on November , 2007, and
the 2027 Debentures will be limited to $ aggregate principal amount and
will mature on November , 2027.
The Notes will bear interest from November , 1997 at the rate shown in
their title, payable semi-annually (to holders of record at the close of
business on or immediately preceding the interest
payment date) on May and November of each year beginning November ,
1998. Upon issuance, each series of Notes will be represented by one or more
registered Global Securities that will be deposited with, or on behalf of, the
Depositary and will be registered in the name of the Depositary or its
nominee. For so long as the Notes are registered in the name of the
Depositary, or its nominee, the principal and interest due on the Notes will
be payable by the Company or its agent to the Depositary for payment to its
participants for subsequent disbursement to the beneficial owners. See "Book-
Entry System" below and "Description of Debt Securities--Global Securities" in
the accompanying Prospectus.
The Notes will be unsubordinated and unsecured obligations of the Company
ranking pari passu with all existing and future unsubordinated and unsecured
obligations of the Company. Claims of holders of Notes will be effectively
subordinated to the claims of direct creditors (including the lenders under
the Credit Facility) of the Company's subsidiaries. The Company had
approximately $140 million of indebtedness outstanding under its Credit
Facility as of September 30, 1997, and the Company's subsidiaries have
guaranteed the Credit Facility. The two lead banks under the Credit Facility
have indicated to the Company that they are willing to terminate the
subsidiaries' guaranty and that the process of receiving the requisite consent
for such termination from other banks participating in the Credit Facility
should be completed as soon as practicable. If such requisite consent is
received, the Notes will be pari passu with the Credit Facility upon the
termination of such subsidiaries' guaranty.
The defeasance and covenant defeasance provisions of the Indenture described
under the caption "Description of Debt Securities--Defeasance and Covenant
Defeasance" in the accompanying Prospectus will apply to the Notes.
OPTIONAL REDEMPTION
The 2007 Notes and the 2027 Debentures will be redeemable as a whole or in
part, at the option of the Company at any time, at a redemption price equal to
the greater of (i) 100% of their principal amount or (ii) the sum of the
present values of the remaining scheduled payments of principal and interest
thereon discounted to the date of redemption on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Yield plus
basis points in the case of the 2007 Notes and basis points in the
case of the 2027 Debentures, plus in the case of each of clauses (i) and (ii)
accrued interest to the date of redemption. The Notes are not subject to any
mandatory sinking fund.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
S-17
<PAGE>
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Note or Debenture that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the 2007 Notes and the 2027 Debentures, as the case may be.
"Independent Investment Banker" means Credit Suisse First Boston Corporation
or, if such firm is unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such business day, (A) the
average of the five Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such Quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average as determined by the Trustee of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by the Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date.
"Reference Treasury Dealer" means (i) Credit Suisse First Boston
Corporation, J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated and their respective successors, provided however, that if
any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer and (ii) any other Primary
Treasury Dealer selected by the Trustee after consultation with the Company.
Holders of 2007 Notes and 2027 Debentures to be redeemed will receive notice
thereof by first-class mail at least 30 and not more than 60 days prior to the
date fixed for redemption.
Unless the Company defaults in payment of the redemption price, on or after
the applicable redemption date, interest will cease to accrue on Notes or
portions thereof called for redemption.
BOOK-ENTRY SYSTEM
The 2007 Notes and the 2027 Debentures will be represented by one or more
Global Securities registered in the name of Cede & Co., the nominee of The
Depository Trust Company, the Depositary. The Depositary is a limited-purpose
trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. The Depositary holds
securities that its participants (the "Direct Participants") deposit with the
Depositary. The Depositary also facilitates the settlement among Direct
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Direct Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. The Depositary is owned by a number of its Direct
Participants and by The New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the Depositary's system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through,
or maintain a custodial relationship with, a Direct Participant, either
directly or indirectly (the "Indirect Participants," and together with the
Direct Participants, the "Participants"). The rules applicable to the
Depositary and its Participants are on file with the U.S. Securities and
Exchange Commission.
S-18
<PAGE>
Purchases of the Notes within the Depositary's system must be made by or
through Direct Participants, which will receive a credit for the Notes on the
Depositary's records. The ownership interest of each actual purchaser of each
Note (a "Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' respective records. Beneficial Owners will not receive
written confirmation from the Depositary of their purchase, but Beneficial
Owners are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interest in the Notes are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interest in Notes except in the event that use of
the book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by Direct
Participants with the Depositary will be registered in the name of Cede & Co.
The deposit of the Notes with the Depositary and their registration in the
name of Cede & Co. effect no change in beneficial ownership. The Depositary
has no knowledge of the actual Beneficial Owners of the Notes; the
Depositary's records reflect only the identity of the Direct Participants to
whose accounts such Notes are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Notes
are being redeemed, the Depositary's practice is to determine by lot the
amount of the interest of each Direct Participant in such series to be
redeemed.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
the Notes. Under its usual procedures, the Depositary mails an omnibus proxy
(an "Omnibus Proxy") to the Participants as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Notes are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Principal, redemption premium, if any, and interest payments on the Notes
will be made to the Depositary. The Depositary's practice is to credit Direct
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on the Depositary's records unless the Depositary
has reason to believe that it will not receive payment on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities for the
accounts of customers in bearer form or registered in "street-name," and will
be the responsibility of such Participant and not of the Depositary, the
Underwriters, or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal,
redemption premium, if any, and interest to the Depositary is the
responsibility of the Company or the respective trustees. Disbursement of such
payments to Direct Participants is the responsibility of the Depositary, and
disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants. Registered Global Securities will settle
in immediately available funds in the secondary trading market. No assurance
can be given as to the effect, if any, of settlement in immediately available
funds on trading activity in the Notes.
The Depositary may discontinue providing its services as securities
depository with respect to the Notes at any time by giving reasonable notice
to the Company. Under such circumstances and in the event that a successor
securities depository is not obtained, Notes certificates are required to be
printed and delivered. In addition, the Company may decide to discontinue use
of the system of book-entry transfers through the Depositary (or a successor
securities depository). In that event, Notes certificates will be printed and
delivered.
S-19
<PAGE>
The Company will not have any responsibility or obligation to Participants
or the persons for whom they act as nominees with respect to the accuracy of
the records of the Depositary, its nominee or any Direct or Indirect
Participant with respect to any ownership interest in the Notes, or with
respect to payments to or providing of notice for the Direct Participants, the
Indirect Participants or the Beneficial Owners.
The information contained herein under the caption "Description of Notes--
Book-Entry System" concerning the Depositary and the Depositary's book-entry
system has been obtained from the Depositary. Neither the Company, the Trustee
nor the Underwriters, dealers or agents take responsibility for the accuracy
or completeness thereof.
THE TRUSTEE
The Notes will be issued under an Indenture entered into by and between the
Company and Bank of Montreal Trust Company, as Trustee (the "Trustee"). Harris
Trust and Savings Bank, an affiliate of the Trustee, acts as the Company's
transfer agent and registrar, and acted as exchange agent in connection with
the Hearst Transaction.
S-20
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement (the "Underwriting Agreement"), the Underwriters named below (the
"Underwriters"), for whom Credit Suisse First Boston Corporation is acting as
representative (the "Representative"), have severally but not jointly agreed
to purchase from the Company the following respective principal amounts of the
Notes:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT PRINCIPAL AMOUNT
OF 2007 OF 2027
UNDERWRITER NOTES DEBENTURES
----------- --------- ----------------
<S> <C> <C>
Credit Suisse First Boston Corporation............... $ $
J.P. Morgan Securities Inc...........................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................
------- -------
Total........................................... $ $
======= =======
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all the Notes, if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in
certain circumstances the purchase commitments of non-defaulting Underwriters
may be increased or the Underwriting Agreement may be terminated.
The Company has been advised by the Representative that the Underwriters
propose to offer the 2007 Notes and the 2027 Debentures to the public
initially at the public offering prices set forth on the cover page of this
Prospectus Supplement and to certain dealers at such prices less a concession
of % of principal amount per 2007 Note and % of principal amount per 2027
Debenture. The Underwriter and such dealers may allow a discount of % of
principal amount per 2007 Note and % of principal amount per 2027 Debenture
on sales to certain other dealers. After the initial public offering, the
public offering prices and concessions and discounts to dealers may be changed
by the Underwriters.
The 2007 Notes and the 2027 Debentures are each a new issue of securities
with no established trading market. The Underwriters have advised the Company
that they intend to act as market makers for the Notes. However, the
Underwriters are not obligated to do so and may discontinue any market making
in either the 2007 Notes or 2027 Debentures at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or
contribute to payments which the Underwriters may be required to make in
respect thereof.
The Representative, on behalf of the Underwriters, may engage in over-
allotment, stabilizing transactions, syndicate covering transactions, and
penalty bids. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Representatives to reclaim a selling concession from a
syndicate member when the Notes originally sold by such syndicate member are
purchased in a syndicate covering transaction to cover syndicate short
positions. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Notes to be higher than it would
otherwise be in the absence of such transactions.
From time to time certain of the Underwriters or their affiliates engage in
transactions, including commercial banking and investment banking
transactions, with and perform services for the Company and its affiliates in
the ordinary course of business, for which they have received and will
continue to receive customary fees. In addition, in the ordinary course of
business the Underwriters may actively trade securities of the Company for
S-21
<PAGE>
such Underwriter's own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
For its advisory services to the Company in connection with the Hearst
Transaction, the Company paid Merrill Lynch a fee of $2.1 million, reimbursed
Merrill Lynch for its out-of-pocket expenses and agreed to indemnify Merrill
Lynch and certain related persons against certain liabilities, including
certain liabilities under the federal securities laws, arising out of its
engagement. For its advisory services to Argyle Television Investors, L.P.,
the Company's largest stockholder prior to the Hearst Transaction, the Company
paid Credit Suisse First Boston Corporation a fee of $800,000, reimbursed
Credit Suisse First Boston Corporation for its out-of-pocket expenses and
agreed to indemnify Credit Suisse First Boston Corporation and certain related
persons against certain liabilities, including certain liabilities under the
federal securities laws, arising out of its engagement. For its advisory
services to Hearst in connection with the Hearst Transaction, Hearst paid J.P.
Morgan Securities Inc. a fee of $1.5 million, reimbursed J.P. Morgan
Securities Inc. for its out-of-pocket expenses and agreed to indemnify J.P.
Morgan Securities Inc. and certain related persons against certain
liabilities, including certain liabilities under the federal securities laws,
arising out of its engagement. The Company reimbursed Hearst for amounts paid
to J.P. Morgan Securities Inc.
Merchant GP, Inc., Credit Suisse First Boston Fund Investments 1995, L.P.
and Credit Suisse First Boston Fund Investments 1994, L.P., each an affiliate
of Credit Suisse First Boston Corporation, (collectively, the "CSFB Funds")
collectively beneficially own 4.2% of the Company's Series A Common Stock and
are parties to a Registration Rights Agreement with the Company and certain
other holders of the Company's Series A Common Stock providing the CSFB Funds
and such other holders with piggyback registration rights with respect to any
proposed offering of the Company's Series A Common Stock for cash through a
firm commitment underwriting sought by the Company, and, subject to certain
limitations and conditions, with the right to require the Company to register
for distribution through a firm commitment underwriting of all or any portion
of the Company's Series A Common Stock issued to them in the Hearst
Transaction. The CSFB Funds have advised the Company that they intend to
include in the Common Stock Offering the 351,218 shares of Series A Common
Stock that they hold in the aggregate.
Morgan Guaranty Trust Company of New York, an affiliate of J.P. Morgan
Securities Inc., acts as the documentation agent and a lender under the
Company's Credit Facility, for which it has received and will continue to
receive customary fees. It is expected that Morgan Guaranty Trust Company will
receive approximately $57.7 million of repayment under the Credit Facility
from the net proceeds of the Offerings. The Company believes it is in
compliance under the terms of the Credit Facility. Under the Conduct Rules of
the National Association of Securities Dealers, Inc. (the "NASD"), special
considerations apply to a public offering of securities where more than 10% of
the net proceeds thereof will be paid to a participating underwriter or any of
its affiliates. Therefore, this offering is being conducted pursuant to Rule
2710 (c)(8) of the NASD Conduct Rules which establishes certain procedural
safeguards in connection with offerings in such circumstances in which NASD
member firms intend to participate and where more than 10% of the offering
proceeds are to be paid to them or their affiliates. See "Use of Proceeds."
The decision of J.P. Morgan Securities Inc. to underwrite the Offerings was
made independently of Morgan Guaranty Trust Company of New York, which had no
involvement in determining whether or when to underwrite the Offerings or the
terms of the Offerings. J.P. Morgan Securities Inc. will not receive any
benefit from the Offerings other than its respective portion of the
underwriting discounts and commissions payable by the Company.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file
a prospectus with the securities regulatory authorities in each province where
trades of Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of the Notes.
S-22
<PAGE>
REPRESENTATION OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent, and (iii)
such purchaser has reviewed the text above under "Resale Restrictions."
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available,
including common law rights of action for damages or rescission or rights of
action under the civil liability provisions of the U.S. federal securities
laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the Company's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the Company and such persons may be located outside of Canada and, as a
result, it may not be possible to satisfy a judgment against the Company or
such persons in Canada or to enforce a judgment obtained in Canadian courts
against such issuer or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes
acquired by such purchaser pursuant to this Debt Offering. Such report must be
in the form attached to British Columbia Securities Commission Blanket Order
BOR #95/17, a copy of which may be obtained from the Company. Only one such
report must be filed in respect of Notes acquired on the same date and under
the same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of Notes should consult their own legal and tax advisors
with respect to the tax consequences of an investment in the Notes in their
particular circumstances and with respect to the eligibility of the Notes for
investment by the purchaser under relevant Canadian Legislation.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Prospectus Supplement contains forward-looking statements that are
subject to risks and uncertainties. Forward-looking statements include the
information concerning possible or assumed future results of operations of the
Company set forth under "The Company" and "Recent Developments," and those
preceded by, followed by or that include the words "believes," "expects,"
"anticipates" or similar expressions. For those statements, the Company claims
the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995. Prospective purchasers
should understand that the following important factors, in addition to those
discussed elsewhere in this Prospectus Supplement and in the documents that
are incorporated by reference, could affect the future results of the Company
and could cause those results to differ materially from those expressed in
each forward-looking statement: material adverse changes in economic
conditions in the markets served by the Company; future regulatory actions and
conditions in the television stations operating areas; the possibility that
currently unanticipated difficulties may arise in integrating the operations
of the Company's predecessors; and, competition from others in the broadcast
television markets served by the businesses.
S-23
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
The Company................................................................ S-3
Recent Developments........................................................ S-5
Use of Proceeds............................................................ S-7
Capitalization............................................................. S-8
Selected Unaudited Pro Forma Financial Data................................ S-9
Selected Financial Data of Argyle.......................................... S-12
Selected Financial Data of the Hearst Broadcast Group...................... S-15
Description of Notes....................................................... S-17
Underwriting............................................................... S-21
Notice to Canadian Residents .............................................. S-22
Cautionary Statement Concerning Forward-Looking Statements................. S-23
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 4
Use of Proceeds............................................................ 5
Ratio of Earnings to Fixed Charges......................................... 6
General Description of Securities and Risk Factors......................... 7
Description of Debt Securities............................................. 7
Description of Capital Stock............................................... 17
Plan of Distribution....................................................... 21
Legal Matters.............................................................. 22
Experts.................................................................... 22
</TABLE>
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[LOGO]
$
% Senior Notes Due , 2007
$
% Debentures Due , 2027
PROSPECTUS SUPPLEMENT
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
MERRILL LYNCH & CO.
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