-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RC/56Fjh2ag9jYAV1yZ8DJpD2RWTJflR9CJ9z3OdUOwd3vPfnwBWLfdzeoUa+zOh CPUx7uc3a4GRbK3N8S7aPQ== 0000898430-02-000293.txt : 20020414 0000898430-02-000293.hdr.sgml : 20020414 ACCESSION NUMBER: 0000898430-02-000293 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTRAVISION COMMUNICATIONS CORP CENTRAL INDEX KEY: 0001109116 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 954783236 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-81652 FILM NUMBER: 02521332 BUSINESS ADDRESS: STREET 1: 2425 OLYMPIC BLVD STREET 2: STE 6000 WEST CITY: SANTA MONICA STATE: CA ZIP: 90404 BUSINESS PHONE: 3104473870 MAIL ADDRESS: STREET 1: 2425 OLYMPIC BLVD STREET 2: STE 6000 WEST CITY: SANTA MONICA STATE: CA ZIP: 90404 S-3 1 ds3.txt FORM S-3 As filed with the Securities and Exchange Commission on January 30, 2002 Registration No. 333-____ ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------- ENTRAVISION COMMUNICATIONS CORPORATION (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404 (310) 447-3870 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Walter F. Ulloa Chairman and Chief Executive Officer 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404 (310) 447-3870 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copy to: ------------------- Lance Jon Kimmel, Esq. Foley & Lardner 2029 Century Park East, 35/th/ Floor Los Angeles, California 90067 (310) 277-2223; Fax: (310) 557-8475 ------------------- Approximate Date of Commencement of Proposed Sale to the Public: As soon as practicable from time to time after the effective date 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 any of the 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, check the following box and list the Securities Act registration statement number of 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 ======================================================================================================================= Proposed Maximum Proposed Maximum Title of Each Class of Securities Amount to be Offering Price Per Aggregate Offering Amount of to be Registered Registered Share(1) Price(1) Registration Fee - ----------------------------------------------------------------------------------------------------------------------- Class A Common Stock, par value $.0001 3,896,580 $11.02 $42,940,311.60 $3,956.00 per share................................ =======================================================================================================================
(1) Estimated solely for purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act of 1933. Based on the average of the high and low prices per share of Class A Common Stock of the registrant as reported on the New York Stock Exchange on January 28, 2002. - ------------------- The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. ================================================================================ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. PROSPECTUS Subject to Completion Dated January 30, 2002 3,896,580 SHARES ENTRAVISION COMMUNICATIONS CORPORATION CLASS A COMMON STOCK Berlwood Two, Ltd. (the "Selling Stockholder") is offering to sell up to 3,896,580 shares of our Class A common stock (the "Stock"). We are not offering or selling any of the Stock. The Selling Stockholder may sell the Stock on the open market at market price in ordinary broker transactions or in negotiated transactions, and it may pay broker commissions in connection with such transactions. We will not receive any of the proceeds of sale of the Stock nor pay any broker commissions in connection with such sales. Our Class A common stock is listed on the New York Stock Exchange under the symbol EVC. On January 29, 2002, the closing price of our Class A common stock was $11.10 per share. ___________________ You should carefully consider each of the risk factors described under "Risk Factors" beginning on page 6 of this prospectus. ___________________ The Selling Stockholder and any broker-dealer executing selling orders on behalf of or purchasing from the Selling Stockholder may be deemed to be an "underwriter" within the meaning of the Securities Act of 1933. Commissions received by any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. ___________________ Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ___________________ The date of this prospectus is _____________, 2002 TABLE OF CONTENTS
Page ---- FORWARD-LOOKING STATEMENTS........................................ 1 PROSPECTUS SUMMARY................................................ 1 RISK FACTORS...................................................... 6 USE OF PROCEEDS................................................... 14 SELLING STOCKHOLDERS.............................................. 14 DILUTION.......................................................... 15 PLAN OF DISTRIBUTION.............................................. 15 LEGAL MATTERS..................................................... 17 EXPERTS........................................................... 17 INCORPORATION OF DOCUMENTS BY REFERENCE........................... 17 INDEMNIFICATION................................................... 19
i FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements, including statements concerning our expectations of future revenue, expenses, the outcome of our growth and acquisition strategy and the projected growth of the Hispanic population in the United States. Forward-looking statements often include words or phrases such as "will likely result," "expect," "will continue," "anticipate," "may," "estimate," "intend," "plan," "project," "outlook," "seek" or similar expressions. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed in the forward-looking statements. Factors which could cause actual results to differ from expectations include those discussed under the heading "Risk Factors" below. Our results of operations may be adversely affected by one or more of these factors. These factors do not include all factors which might affect our business and financial condition. We caution you not to place undue reliance on these forward-looking statements, which reflect our management's view only as of the date of this prospectus. PROSPECTUS SUMMARY You should read this summary together with the other information contained in other parts of this prospectus and the documents which are incorporated by reference. Because it is a summary, it does not contain all of the information that you should consider before investing in our common stock. We will provide copies of documents incorporated by reference to you upon request and without cost to you. Unless the context otherwise requires, the terms "we" or "us" as used herein includes Entravision Communications Corporation, a Delaware corporation, and its subsidiaries. Business Overview Introduction ------------ We own and/or operate 47 television stations and 54 radio stations located primarily in the southwestern United States where the majority of U.S. Hispanics live, including the U.S./Mexican border markets. Our television stations consist primarily of affiliates of the two television networks of Univision Communications Inc. serving 22 of the top 50 U.S. Hispanic markets. Our radio stations consist of 39 FM and 15 AM stations serving portions of the Arizona, California, Colorado, Florida, Illinois, Nevada, New Mexico and Texas markets. We were organized as a Delaware limited liability company in January 1996 to combine the operations of our predecessor entities. On August 2, 2000 we completed a reorganization in which all of the outstanding direct and indirect membership interests of our predecessor were exchanged for shares of our Class A and Class B common stock and a $120 million subordinated note and option held by Univision was exchanged for shares of our Class C common stock. We generate revenue from sales of national and local advertising time on television and radio stations and advertising on our billboards and in our publication. Advertising rates are, in large part, based on each media's ability to attract audiences in demographic groups targeted by 1 advertisers. We recognize advertising revenue when commercials are broadcast, outdoor services are provided and publishing services are provided. We incur commissions from agencies on local, regional and national advertising. Our revenue reflects deductions from gross revenue for commissions to these agencies. Our primary expenses are employee compensation, including commissions paid to our sales staffs and our national representative firms, marketing, promotion and selling, technical, local programming, engineering and general and administrative. Our local programming costs for television consist of costs related to producing a local newscast in most of our markets. Prior to our August 2, 2000 initial public offering, we had historically not had material income tax expense or benefit reflected in our statement of operations as the majority of our subsidiaries have been non-taxpaying entities. Federal and state income taxes attributable to income during such periods were incurred and paid directly by the members of our predecessor. However, we are now a taxpaying entity. Business Strategy ----------------- We seek to increase our advertising revenue through the following strategies: Effectively Use Our Networks and Media Brands. We are the largest Univision --------------------------------------------- television affiliate group for each of the Univision networks, the largest operator of Spanish-language radio stations and the largest centrally programmed Spanish-language radio network in the United States. Univision makes its networks' Spanish-language programming available to our television stations 24 hours a day, including a prime time schedule on its primary network of substantially all first-run programming (i.e., no reruns) throughout the year. We operate our radio networks using three primary formats designed to appeal to different listener tastes. We format the programming of our network and radio stations to capture a substantial share of the U.S. Hispanic audience. Invest in Media Research and Sales. We believe that continued use of ---------------------------------- reliable ratings and surveys will allow us to further increase our advertising rates and narrow the gap which has historically existed between our audience share and our share of advertising revenue. We use industry ratings and surveys, including Nielsen, Arbitron, the Traffic Audit Bureau and the Audit Bureau of Circulation, to provide a more accurate measure of consumers that we reach with our operations. We believe that our focused research and sales efforts will enable us to continue to achieve significant revenue growth. Continue to Build and Retain Strong Management Teams. We believe we have ---------------------------------------------------- one of the most experienced management teams in the industry. Walter F. Ulloa, our Chairman and Chief Executive Officer, Philip C. Wilkinson, our President and Chief Operating Officer, Jeanette Tully, our Chief Financial Officer, Jeffrey A. Liberman, the President of our Radio Division, and Glenn Emanuel, the President of our Outdoor Division, have an average of more than 20 years of media experience. We intend to continue to build and retain our key management personnel and to capitalize on their knowledge and experience in the Spanish- language markets. 2 Emphasize Local Content, Programming and Community Involvement. We believe -------------------------------------------------------------- that local content in each market we serve is an important part of building our brand identity within the community. By combining our local news and quality network programming, we believe we have a significant competitive advantage. We also believe that our active community involvement, including station remote broadcasting appearances at client events, concerts and tie-ins to major events, helps to build station awareness and identity as well as viewer and listener loyalty. Increase In-Market Cross Promotion. Our strategy is to cross-promote our ---------------------------------- television, radio, outdoor and publishing properties. In addition, we believe we will add significant value to our advertisers by providing attractive media packages to target the Hispanic consumer. Target Other Attractive Hispanic Markets and Fill-In Acquisitions. We ----------------------------------------------------------------- believe our knowledge of, and experience with, the Hispanic marketplace will enable us to continue to identify acquisitions in the television, radio and outdoor markets. Since our inception, we have used our management expertise, programming and brand identity to improve our acquired media properties. Television ---------- We own and/or operate Univision-affiliated stations in 22 of the top 50 Hispanic markets in the United States. Our television operations are the largest affiliate group of the Univision networks. Univision's primary network is the leading Spanish-language network in the United States, reaching more than 97% of all Hispanic households. Univision's primary network is the most-watched television network (English-or Spanish-language) among Hispanic households, representing approximately an 81% market share of the U.S. Spanish-language network television primetime audience as of December 2001. Univision's networks make available to our Univision-affiliated stations 24 hours a day of Spanish- language programming. Univision's prime time schedule on its primary network is all first-run programming (i.e., no reruns) through the year. We believe that the breadth and diversity of Univision's programming, combined with our local news and community-oriented segments, provide us with an advantage over other Spanish-language and English-language broadcasters in reaching Hispanic viewers. Our local content is designed to brand each of our stations as the best source for relevant community information that accurately reflects local interests and needs. As a result, all but one of our Univision affiliated stations rank first in Spanish-language television viewership in their markets. Radio ----- We currently own and/or operate 54 radio stations in 24 markets. Our radio stations cover in aggregate approximately 58% of the Hispanic population and 53 of our stations are located in the top 50 Hispanic markets. Our radio operations combine network programming with local time slots available for advertising, news, traffic, weather, promotions and community events. This strategy allows us to provide quality programming with significantly lower costs of operations than we could otherwise deliver solely with independent programming. 3 Outdoor Advertising/Publishing ------------------------------ Our outdoor and publishing operations complement our television and radio businesses and will allow for cross-promotional opportunities. Because of its repetitive impact and relatively low cost, outdoor advertising attracts national, regional and local advertisers. We offer the ability to target specific demographic groups on a cost-effective basis as compared to other advertising media. In addition, we provide businesses with advertising opportunities in locations near their stores or outlets. Our outdoor portfolio adds to our television and radio reach by providing local advertisers with significant coverage of the Hispanic communities in Los Angeles and New York. Our outdoor advertising strategy is designed to complement our existing television and radio businesses by allowing us to capitalize on our Hispanic market expertise. The primary components of our strategy are to leverage the strengths of our inventory, continue to focus on ethnic communities and increase market penetration. We publish El Diario/la Prensa, the oldest major Spanish-language daily newspaper in the United States and one of only two Spanish-language newspapers in New York. The newspaper reports news of interest to the Hispanic community, focusing primarily on local news events and daily occurrences in Latin America. El Diario/la Prensa has a daily paid circulation of over 58,000 as of December 31, 2001, up from 55,000 as of December 31, 2000. Recent Developments ------------------- In August 2001, we entered into an agreement with Lotus Hispanic Reps Corp. to establish a company named Lotus/Entravision Reps LLC. Lotus/Entravision is the exclusive national advertising representative for all Spanish-language radio stations owned or operated by Lotus Communications and us, as well as other radio stations currently represented by Lotus Hispanic Reps. Lotus/Entravision represents over 130 Spanish-language radio stations serving 50 markets in the United States. Lotus Hispanic Reps and we own Lotus/Entravision equally, have equal representation on its board of directors and serve as co-managers. Our business and operations are subject to numerous risks, some of which are described in the "Risk Factors" section beginning on page 6 of this prospectus. The Offering This prospectus concerns an offering of the Stock by the Selling Stockholder. We are not offering or selling any of the Stock. We are registering the Stock in connection with certain rights we granted to the assignor of the Selling Stockholder when we issued our secured promissory note dated December 18, 2000 in the principal amount of $37,500,000 (the "Note"). We issued the Note to Jasas-27, Inc. and Jasas Broadcasting 27, L.P. in connection with our purchase of television station WUNI-TV, Boston, Massachusetts. Through a series of assignments, the Note was assigned to the Selling Stockholder. The Note is payable as follows: . Interest only is due beginning 13 months after the date of the Note and is payable quarterly. 4 . Principal is due in five equal annual installments beginning 13 months after the date of the Note. . The Note may be prepaid at any time without premium or penalty. We have the option to make payments under the Note in any combination of cash or our registered Class A common stock, valued at the average of the last trading price for our Class A common stock for the 20 days prior to delivery of the shares to the Selling Stockholder. We have elected to pay the Selling Stockholder up to 3,896,580 shares of our Class A common stock and will issue the shares to the Selling Stockholder when this registration statement, of which this prospectus is a part, is effective. The Selling Stockholder is not required to sell the Stock and sales of the Stock are entirely at the discretion of the Selling Stockholder. The Selling Stockholder may sell the Stock either on the open market at market price in ordinary broker transactions or in negotiated transactions, or they may sell the Stock under Rule 144 of the Securities Act of 1933, as amended, and they may pay broker commissions in connection with such transactions. We will not receive any of the proceeds of sale of the Stock nor pay any broker commissions in connection with such sales. We will pay the costs of registering the sale of the Stock by the Selling Stockholder with the Securities and Exchange Commission and any required state securities agencies. Our Class A common stock is listed on the New York Stock Exchange under the symbol "EVC." On January 29, 2002, the closing price for our Class A common stock was $11.10 per share. Class A Common Stock Offered by the Selling Stockholder.........3,896,580 Shares New York Stock Exchange Symbol...............................................EVC Walter F. Ulloa Chairman and Chief Executive Officer Entravision Communications Corporation 2425 Olympic Boulevard, Suite 6000 West Santa Monica, California 90404 (310) 447-3870 5 RISK FACTORS Investing in our common stock involves a significant degree of risk. You should carefully consider the following risk factors and all the other information contained in this prospectus or incorporated by reference before investing in our common stock. If any of the following risks actually occurs, our business, financial condition and results of operations could suffer, in which case the trading price of our common stock may decline. Risks Related To Our Business We have a history of losses that if continued into the future could adversely affect the market price of our Class A common stock and our ability to raise capital. We had net losses of approximately $40.0 million and $92.2 million for the years ended December 31, 1999 and 2000, and $79.2 million and $43.9 million for the nine month periods ended September 30, 2000 and 2001. In addition, we had a pro forma net loss of $86.3 million for the year ended December 31, 2000, and a net loss applicable to common stock of $48.5 million for the nine month period ended September 30, 2001. We believe losses may continue while we pursue our acquisition strategy. If we cannot generate profits in the future, it could adversely affect the market price of our Class A common stock, which in turn could adversely affect our ability to raise additional equity capital or to incur additional debt. Cancellations or reductions of advertising could cause our results to fluctuate, which could adversely affect the market price of our Class A common stock. We do not obtain long-term commitments from our advertisers, and advertisers may cancel, reduce or postpone orders without penalty. Cancellations, reductions or delays in purchases of advertising could adversely affect our revenue, especially if we are unable to replace such purchases. Economic, political and other risks associated with international sales and operations could adversely affect our sales. Our expense levels are based, in part, on expected future revenue and are relatively fixed once set. Therefore, unforeseen fluctuations in advertising sales could adversely impact our operating results. These factors could cause our quarterly results to fluctuate, which could adversely effect the market price of our Class A common stock. If we cannot successfully integrate our recent and future acquisitions, it could decrease our revenue or increase our costs. To integrate these and other pending and future acquisitions, we need to: . retain key management and personnel of acquired properties; . successfully merge corporate cultures and business processes; . realize sales efficiencies and cost reduction benefits; and . operate successfully in markets in which we may have little or no prior experience. 6 In addition, after we have completed an acquisition, our management must be able to assume significantly greater responsibilities, and this in turn may cause them to divert their attention from our existing operations. We believe these challenges are more pronounced when we enter new markets rather than expand further in existing markets. If we are unable to completely integrate into our business the operations of the properties that we have recently acquired or that we may acquire in the future, our revenue could decrease or our costs could increase. One of our strategies is to supplement our internal growth by acquiring media properties that complement or augment our existing markets. This growth has placed, and may continue to place, significant demands on our management, working capital and financial resources. We may be unable to identify or complete acquisitions for many reasons, including: . competition among buyers; . the need for regulatory approvals, including FCC and antitrust approvals; and . the high valuations of media properties. Some of the media properties we may seek to acquire may be marginally profitable or unprofitable. For these acquired media properties to achieve acceptable levels of profitability, we must improve their management, operation and market penetration. We may not be successful in this regard and may encounter other difficulties in integrating acquired media properties into our existing operations. If we cannot raise required capital, we may have to curtail existing operations and our future growth through acquisitions. We may require significant additional capital for future acquisitions and general working capital needs. If our cash flow and existing working capital are not sufficient to fund future acquisitions and our general working capital requirements and debt service, we will have to raise additional funds by selling equity, refinancing some or all of our existing debt or selling assets or subsidiaries. None of these alternatives for raising additional funds may be available on acceptable terms to us or in amounts sufficient for us to meet our requirements. Our failure to obtain any required new financing may prevent future acquisitions and have a material adverse effect on our ability to grow through acquisitions. Our substantial level of debt could limit our ability to grow and compete. We have approximately $214.0 million of debt outstanding under our bank credit facility. We expect to obtain a portion of our required capital through debt financing that bears or is likely to bear interest at a variable rate, subjecting us to interest rate risk. A significant portion of our cash flow from operations will be dedicated to servicing our debt obligations and our ability to obtain additional financing may be limited. We may not have sufficient future cash flow to meet our debt payments, or we may not be able to refinance any of our debt at maturity. We have pledged substantially all of our assets to our lenders as collateral. Our lenders could proceed against the collateral granted to them to 7 repay outstanding indebtedness if we are unable to meet our debt service obligations. If the amounts outstanding under our bank credit facility are accelerated, our assets may not be sufficient to repay in full the money owed to such lenders. The terms of our bank credit facility restrict our ability to make acquisitions or investments and to obtain additional financing. Our bank facility requires us to maintain specific financial ratios. A breach of any of the covenants contained in our bank credit facility could allow our lenders to declare all amounts outstanding under such facilities to be immediately due and payable. Univision has significant influence over our business. Univision, as the holder of all of our Class C common stock, has significant influence over material decisions relating to our business, including the right to elect two of our directors, and the right to approve material decisions involving our company, including any merger, consolidation or other business combination, any dissolution of our company and any transfer of the FCC licenses for any of our Univision-affiliated television stations. Univision's ownership interest may have the effect of delaying, deterring or preventing a change in control of our company and may make some transactions more difficult or impossible to complete without its support. Our television ratings and revenue could decline significantly if our relationship with Univision or if Univision's success changes in an adverse manner. If our relationship with Univision changes in an adverse manner, or if Univision's success diminishes, it could have a material adverse effect on our ability to generate television advertising revenue on which our television business depends. Univision's ratings might decline or Univision might not continue to provide programming, marketing, available advertising time and other support to its affiliates on the same basis as currently provided. Additionally, by aligning ourselves closely with Univision, we might forego other opportunities that could diversify our television programming and avoid dependence on Univision's television networks. Univision's relationships with Grupo Televisa, S.A. de C.V. and Corporacion Venezolana de Television, C.A., or Venevision, are important to Univision's, and consequently our, continued success. Our ongoing success is dependent upon the continued availability of certain key employees. We are dependent in our operations on the continued availability of the services of our employees, many of whom are individually key to our current and future success, and the availability of new employees to implement our company's growth plans. In particular, we are dependent upon the services of Walter F. Ulloa, our Chairman and Chief Executive Officer, and Philip C. Wilkinson, our President and Chief Operating Officer. In August 2000, we have entered into five-year employment agreements with Messrs. Ulloa and Wilkinson. The market for skilled employees is highly competitive, especially for employees in technical fields. While our compensation programs are intended to attract and retain the employees required for us to be successful, there can be no assurance that we will be able to retain the services of all of our key 8 employees or a sufficient number to execute on our plans, nor can there be any assurances that we will be able to continue to attract new employees as required. Risks associated with terrorism. In the event of a terrorist attack on our facilities and properties, we do not believe that we would be vulnerable to significant or prolonged disruptions in our ability to broadcast or provide other media services. We do not believe that, but we do not know whether, our network television programming would be vulnerable to significant or prolonged disruptions in the event of a terrorist attack. The effect of any resulting decline in our revenue cannot be determined. Risks Related to the Television, Radio, Outdoor Advertising and Publishing Industries If we are unable to maintain our Federal Communications Commission license at any station, we would have to cease operations at that station. The success of our television and radio operations depends, in part, on acquiring and maintaining broadcast licenses issued by the FCC, which are typically issued for a maximum term of eight years and are subject to renewal. Pending or future renewal applications submitted by us may not be approved, and renewals may include conditions or qualifications that could restrict our television and radio operations. In addition, third parties may challenge our renewal applications. If the FCC were to issue an order denying a license renewal application or revoking a license, we would be required to cease operating the broadcast station covered by the license. Our failure to maintain our FCC broadcast licenses could cause a default under our bank credit facility and cause an acceleration of our indebtedness. Our bank credit facility requires us to maintain our FCC licenses. If the FCC were to revoke any of our material licenses, our lender could declare all amounts outstanding under the bank credit facility to be immediately due and payable. If our indebtedness is accelerated, we may not have sufficient funds to pay the amounts owed. Displacement of any of our low-power television stations could cause our ratings and revenue for any such station to decrease. A significant portion of our television stations are licensed by the FCC for low-power service only. Our low-power television stations operate with far less power and coverage than our full-power stations. The FCC rules under which we operate provide that low-power television stations are treated as a secondary service. In the event that our stations would cause interference to full-power stations, we are required to eliminate the interference or terminate service. As a result of the FCC's initiation of digital television service and actions by Congress to reclaim broadcast spectrum, channels 52-69 previously used for broadcasting will be cleared and put up for auction to wireless services or assignment to public safety services. The result is that in a few urban markets where we operate, including Washington, D.C. and San Diego, there are a limited number of alternative channels to which our low-power television stations can migrate as they are displaced by full-power broadcasters and non-broadcast services. If we are unable to move our signals to replacement channels, we may be unable to maintain the same 9 level of service, which could harm our ratings and advertising revenue or, in the worst case, cause us to discontinue operations at those low-power stations. The required conversion to digital television could impose significant costs on us which may not be balanced by consumer demand. The FCC requires us to provide a digitally transmitted signal ("DTV") by May 1, 2002 for all of our U.S. television stations and, possibly, to stop broadcasting analog signals by 2006 if the market penetration of DTV receivers reaches certain levels. The FCC recently released rules which allow our company to initially satisfy its DTV conversion obligation by broadcasting a digital signal that serves, at least, each station's applicable community of license. In most instances, this new rule will permit us to temporarily install facilities of a lower-power level, which will not require the initial degree of capital investment we had anticipated to meet the requirements of our stations' DTV authorizations. Our initial costs of converting the qualifying television stations to DTV, therefore, will be considerably lower than it would have been if we were required to operate pursuant to our DTV authorizations by the May 1, 2002 deadline. Our final costs to convert our television stations to full-power DTV could be significant, and there may not be sufficient consumer demand for DTV services to recover our investment in DTV facilities. Changes in the rules and regulations of the FCC could result in increased competition for our broadcast stations that could lead to increased competition in our markets. Recent and prospective actions by the FCC could cause us to face increased competition in the future. The changes include: . relaxation of restrictions on the participation by regional telephone operating companies in cable television and other direct-to-home audio and video technologies; . the establishment of a Class A television service for low-power stations that makes such stations primary stations and gives them protection against full-service stations; . procedures for licensing low-power FM radio stations that will be designed to serve small localized areas and niche audiences; and . permission for direct broadcast satellite television to provide the programming of traditional over-the-air stations, including local and out-of-market network stations. Because our full-power television stations rely on "must carry" rights to obtain cable carriage, new laws or regulations that eliminate or limit the scope of our cable carriage rights could have a material adverse impact on our television operations. Pursuant to the "must carry" provisions of the Cable Television Consumer Protection and Competition Act of 1992, a broadcaster may demand carriage on a specific channel on cable systems within its market. However, the future of those "must carry" rights is uncertain, 10 especially as they relate to the carriage of digital television stations. The current FCC rules relate only to the carriage of analog television signals. It is not clear what, if any, "must carry" rights television stations will have after they make the transition to digital television. New laws or regulations that eliminate or limit the scope of our cable carriage rights could have a material adverse impact on our television operations. Our low-power television stations do not have cable "must carry" rights. In seven markets where we currently hold only a low-power license we may face future uncertainty with respect to the availability of cable carriage. With the exception of the San Angelo market, all of our low-power stations reach a substantial portion of the Hispanic cable households in their respective markets with their over-the-air broadcasts. The policies of direct broadcast satellite companies may make it more difficult for their customers to receive our local broadcast station signals. The Satellite Home Viewer Improvement Act of 1999 ("SHVIA") allows direct broadcast satellite ("DBS") television companies (currently DirecTV and EchoStar/Dish Network) for the first time to transmit local broadcast television station signals back to their subscribers in local markets. In exchange for this privilege, however, SHVIA requires that in television markets in which a DBS company elects to pick-up and retransmit any local broadcast station signals, the DBS provider must also offer to its subscribers signals from all other qualified local broadcast television stations in that market. This is known as the "carry one/carry all" rule. Our broadcast television stations in markets for which DBS operators have elected to carry local stations, have sought to qualify for carriage under this rule, which we expect will increase our viewership in those markets. A problem has arisen however, in the way that one of the DBS operators has implemented the carry one/carry all rule. In order to get signals from all local stations, including the signals from our stations, EchoStar/Dish Network subscribers are being required to install a second receiving dish. This is an inconvenience for the typical DBS subscriber and, as a result, limits the size of the viewership for our stations available only on the "second dish" under the carry one/carry all rule. There is a proceeding pending at the FCC to determine if DBS operators, in carrying out their SHVIA obligations, can require use of a second dish for carriage of local signals. If we are unable to compete effectively for advertising revenue against other stations and other media companies, some of which have greater resources than we do, we could suffer a decrease in advertising revenue. We compete with Spanish-language and general market media in each of our business segments. Some of our competitors are larger and have significantly greater resources than we do. In addition, the Telecommunications Act facilitates the entry of other broadcasting companies into the markets in which we operate stations or may operate stations in the future. If we are unable to compete successfully in the markets we serve, we may suffer a decrease in advertising revenue, which could adversely affect our business and financial condition. 11 If regulation of outdoor advertising increases, we could suffer decreased revenue from our outdoor operations. Our outdoor operations are significantly impacted by federal, state and local government regulation of the outdoor advertising business. These regulations impose restrictions on, among other things, the location, size and spacing of billboards. If we are required to remove our existing billboards, or are unable to construct new billboards or reconstruct damaged billboards, our outdoor business could be harmed. In addition, we may not receive compensation for billboards that we may be required to remove in the future. Additional regulations may be imposed on outdoor advertising in the future. Legislation regulating the content of billboard advertisements has been introduced and passed in Congress from time to time in the past. Additional regulations or changes in the current laws regulating and affecting outdoor advertising at the federal, state or local level may harm the results of our outdoor operations. Strikes, work stoppages and slowdowns by our employees could disrupt our publishing operations. Our publishing business depends to a significant degree on our ability to avoid strikes and other work stoppages by our employees. The Newspaper and Mail Deliverers' Union of New York and Vicinity and the Newspaper Guild of New York represent our publishing employees. Our collective bargaining agreement with the Newspaper and Mail Deliverers' Union of New York and Vicinity expires on March 30, 2004. Our collective bargaining agreement with the Newspaper Guild of New York expires on June 30, 2002. We anticipate that negotiations will commence prior to the expiration of the agreement. Future collective bargaining agreements may not be negotiated without service interruptions, and the results of these negotiations may result in decreased revenue in our publishing operations. Risks Related To Our Capital Structure and Common Stock Our officers and directors and stockholders affiliated with them own a large percentage of our voting stock. As of January 28, 2002, Walter F. Ulloa, our Chairman and Chief Executive Officer, Philip C. Wilkinson, our President and Chief Operating Officer, and Paul A. Zevnik, our Secretary, own all of the shares of our Class B common stock, and have approximately 75% of the combined voting power of our outstanding shares of common stock. The holders of our Class B common stock are entitled to ten votes per share on any matter subject to a vote of the stockholders. Accordingly, Messrs. Ulloa, Wilkinson and Zevnik will have the ability to elect each of the remaining members of our board of directors, other than the two members of our board of directors to be appointed by Univision, and will have control of all aspects of our business and future direction. Messrs. Ulloa, Wilkinson and Zevnik have agreed contractually to elect themselves and a representative of TSG Capital Fund III, L.P. as directors of our company. This control may discourage certain types of transactions involving an actual or potential change of control of our company, such as a merger or sale of our company. 12 Consequently, our directors and executive officers, acting in concert, will have the ability to significantly affect the election of our directors and have a significant effect on the outcome of corporate actions requiring stockholder approval. Such concentration may also have the effect of delaying or preventing a change of control of our company. Stockholders who desire to change control of our company may be prevented from doing so by provisions of our first restated certificate of incorporation, as amended, applicable law and our credit agreement. Our restated certificate of incorporation and other agreements contain provisions that could discourage a takeover. Our restated certificate of incorporation could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders. The provisions of our restated certificate of incorporation could diminish the opportunities for a stockholder to participate in tender offers. In addition, under our restated certificate of incorporation, our board of directors may issue preferred stock that could have the effect of delaying or preventing a change in control of our company. The issuance of preferred stock could also negatively affect the voting power of holders of our common stock. The provisions of our restated certificate of incorporation may have the effect of discouraging or preventing an acquisition or sale of our business. In addition, Section 203 of the Delaware General Corporation Law imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our common stock. The transfer restrictions imposed on the broadcast licenses we own also restrict the ability of third parties to acquire us. Control of our licenses may only be transferred with prior approval by the FCC. Accordingly, the number of potential transferees of our licenses is limited, and any acquisition, merger or other business combination involving our company would be subject to regulatory approval. In addition, the documents governing our indebtedness contain limitations on our ability to enter into a change of control transaction. Under these documents, the occurrence of a change of control transaction, in some cases after notice and grace periods, would constitute an event of default permitting acceleration of our outstanding indebtedness. The issuance by us of preferred stock could affect the rights of our other stockholders. Our restated certificate of incorporation authorizes our board of directors to issue up to 50,000,000 shares of preferred stock in one or more series, to fix the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued shares of preferred stock, to fix the number of shares constituting any such series, and to fix the designation of any such series, without further vote or action by its stockholders. The terms of any series of preferred stock, which may include priority claims to assets and dividends and special voting rights, could adversely affect the rights of the holders of common stock and thereby reduce the value of our common stock. We have approximately 5.9 million shares of Series A convertible preferred stock outstanding. We have no present plans to issue any additional shares of preferred stock. The issuance of preferred stock, coupled with the concentration of ownership of common stock in certain directors and executive officers, could discourage certain types of transactions involving an actual or potential change in control of our company. This includes transactions in which the holders of common stock might otherwise receive a premium for their shares over then 13 current prices, otherwise dilute the rights of holders of common stock, and may limit the ability of such stockholders to cause or approve transactions which they may deem to be in their best interests. All of this could have a material adverse effect on the market price of our common stock. Our restated certificate of incorporation limits the liability of our directors, which may limit the remedies that we or our stockholders have available. Our restated certificate of incorporation provides that, pursuant to the Delaware General Corporation Law, the liability of our directors for monetary damages shall be eliminated to the fullest extent permissible under Delaware law. This is intended to eliminate the personal liability of a director for monetary damages in an action brought by us, or in our right, for breach of a director's duties to us or our stockholders and may limit the remedies available to us or our stockholders. This provision does not eliminate the directors' fiduciary duty and does not apply for certain liabilities: (i) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law; (ii) for acts or omissions that a director believes to be contrary to our best interests or our stockholders or that involve the absence of good faith on the part of the director; and (iii) for any transaction from which a director derived an improper personal benefit. USE OF PROCEEDS The Selling Stockholder is selling the Stock and will receive all of the proceeds from any sales. We will not receive any sales proceeds. SELLING STOCKHOLDERS All of the Stock being offered in this prospectus is being offered by the Selling Stockholder listed below. We have registered this offering in connection with certain rights we granted to the assignor of the Selling Stockholder under the Note. The Selling Stockholder is not required to sell all or any of the Stock. The Stock consists of up to 3,896,580 shares of our Class A common stock which we will issue to the Selling Stockholder when the registration statement, of which this prospectus is a part, is declared effective.
Shares Owned Shares to be Shares Owned Name Upon Issuance (1) Sold in Offering (1) After Offering (2) - ---- ----------------- -------------------- ------------------ Number Percentage Number Percentage Number Percentage ------ ---------- ------ ---------- ------ ---------- Berlwood Two, Ltd. 3,896,580 5.6% 3,896,580 5.6% 0 0
- ------------- (1) Consists of the maximum number of shares of Class A common stock which may be issued to the Selling Stockholder. (2) Assumes the completion of this offering and that the Selling Stockholder disposes of all of its shares of Class A common stock covered by this prospectus, that it does not dispose of Class A common stock owned but not covered by this prospectus and that it does not acquire any additional shares of Class A common stock. 14 Percentage of ownership for the Selling Stockholder is calculated based on 66,144,109 shares of Class A common stock outstanding on January 28, 2002, after giving effect to the issuance of the Stock to the Selling Stockholder. Percentage of ownership for the Selling Stockholder is 3.3% based on all shares of all classes of our common stock outstanding on January 28, 2002, after giving effect to the issuance of the Stock to the Selling Stockholder. Beneficial ownership is determined in accordance with the SEC Rule 13d-3 and generally includes shares over which the holder has voting or investment power, subject to community property laws. All shares of Class A common stock obtainable upon conversion of securities or exercise of stock options or warrants (including those that are not currently exercisable but will become exercisable within 60 days hereafter) are considered to be beneficially owned by the person holding the options or warrants for computing that person's percentage, but are not treated as outstanding for computing the percentage of any other person. DILUTION Purchasers of our Class A common stock offered by this prospectus will suffer an immediate and substantial dilution in net tangible book value per share. Dilution is the amount by which the offering price paid by the purchasers of the shares of Class A common stock will exceed the net tangible book value per share of our common stock after this offering. The net tangible book value per share of common stock is determined by subtracting total liabilities from the total tangible assets and dividing the difference by the number of shares of our common stock deemed to be outstanding on the date the tangible book value is determined. As of September 30, 2001, we had a deficit tangible book value of $(283.7) million, or $(2.45) per share. After giving effect to the conversion of $37.5 million from debt to equity, our deficit tangible book value per share at September 30, 2001 is a deficit of $(246.3) million, or $(2.06) per share. Assuming the sale of 3,896,580 shares at an offering price of $11.10 per share, our net tangible book value as of September 30, 2001 would have been a deficit of $(246.3) million, or $(2.06) per share. This represents an immediate dilution to new investors of $13.16 per share. The following table illustrates this per share dilution:
Per Share --------- Assumed offering price (1).............................................. $11.10 ------ Deficit tangible book value per share as of September 30, 2001.......... (2.45) To give effect of debt conversion....................................... 0.39 ------ Deficit tangible book value after this offering......................... (2.06) ------ Dilution per share to new investors..................................... $13.16 ======
- -------- (1) Based on the closing price of our Class A common stock on January 29, 2002. PLAN OF DISTRIBUTION The Selling Stockholder and any of its pledgees, assignees and successors-in-interest may, from time to time, sell any or all of its shares of Class A common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholder may use any one or more of the following methods when selling shares: 15 . ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; . block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; . purchases by a broker-dealer as principal and resale by the broker-dealer for its account; . an exchange distribution in accordance with the rules of the applicable exchange; . privately negotiated transactions; . short sales; . broker-dealers may agree with the Selling Stockholder to sell a specified number of such shares at a stipulated price per share; . a combination of any such methods of sale; and . any other method permitted pursuant to applicable law. The Selling Stockholder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholder does not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The Selling Stockholder may from time to time pledge or grant a security interest in some or all of the Stock owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell shares of the Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus. The Selling Stockholder also may transfer the shares of the Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. The Selling Stockholder and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Stockholder has 16 informed us that it does not have any agreements or understandings, directly or indirectly, with any person to distribute the Stock. We are required to pay all fees and expenses incident to the registration of the Stock. LEGAL MATTERS The law firm of Foley & Lardner will pass upon certain legal matters relating to the validity of the securities offered by this prospectus. EXPERTS Our consolidated financial statements, appearing in our Annual Report (Form 10-K) for the year ended December 31, 2000, have been audited by McGladrey & Pullen, LLP, independent auditors, as set forth in their report included therein and incorporated in this prospectus by reference. The consolidated financial statements are incorporated in this prospectus in reliance upon such report given upon the authority of that firm as experts in accounting and auditing. INCORPORATION OF DOCUMENTS BY REFERENCE The Securities and Exchange Commission allows us to "incorporate by reference" in this prospectus certain information which we file with the Securities and Exchange Commission. This means we can fulfill, and fulfilled, our obligations to provide you with certain important information by referring you to other documents which we have filed with the Securities and Exchange Commission. The information which is incorporated by reference is an important part of this prospectus. We are incorporating by reference in this prospectus the following documents which we have filed, or may later file, with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The information we file with the Securities and Exchange Commission later will automatically update and supersede the present information. 1. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (SEC file number 0-23125). 2. Our Quarterly Reports on Form 10-Q for the three months ended March 31, 2001, June 30, 2001 and September 30, 2001 (SEC file number 0- 23125). 3. All reports which we file with the Securities and Exchange Commission under the Securities Exchange Act after the date of the initial registration statement of which this prospectus is a part and prior to the effective date of such registration statement. 4. The description of our capital stock in our registration statement on Form 8-A (File No. 001-15997) filed under the Securities Exchange Act on July 20, 2000, which, in turn, incorporated such description by reference to page 78 of our Preliminary Prospectus, dated April 20, 2000, filed with the Securities and 17 Exchange Commission on April 21, 2000, as part of our Registration Statement on Form S-1 (No. 333-35336), and any amendments or reports filed to update the description. All documents which we file under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act between the date of this prospectus and the termination of the offering shall be deemed to be incorporated by reference into this prospectus. We will provide to each person to whom a prospectus is delivered, including any beneficial owner, a copy of any or all of the information which is incorporated by reference in this prospectus but which is not delivered with this prospectus. We will provide such information, at no cost to the requesting person, upon written or oral request made to: General Counsel Entravision Communications Corporation 2425 Olympic Boulevard, Suite 6000 West Santa Monica, California 90404 (310) 447-3870 You should rely only on the information in this prospectus or any prospectus supplement or incorporated by reference in them. We have not authorized anyone else to provide you with different information. Offers of the securities are being made only in states where the offers are permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents. If information in incorporated documents conflicts with information in this prospectus, you should rely on the most recent information. If information in an incorporated document conflicts with information in another incorporated document, you should rely on the most recent incorporated document. This prospectus is part of a registration statement on Form S-3 that has been filed with the Securities and Exchange Commission. It does not include all of the information that is in the registration statement and the additional documents filed as exhibits with it. For more detailed information, you should read the exhibits themselves. We are subject to the informational requirements of the Securities Exchange Act and, in accordance with it, are required to file reports, proxy and information statements, and other information with the Securities and Exchange Commission. Such reports, proxy and information statements and other information can be inspected and copied at the Securities and Exchange Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information about the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. We electronically file reports, proxy and information statements, and other information with the Securities and Exchange Commission. The Securities and Exchange Commission maintains an Internet website that contains our electronically filed reports, proxy and information statements, and other information at http://www.sec.gov. ------------------ We maintain an Internet website at http://www.entravision.com. -------------------------- 18 INDEMNIFICATION Our restated certificate of incorporation allows us to indemnify our officers and directors to the maximum extent allowed under Delaware law. This includes indemnification for liability which could arise under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant under these provisions, the registrant has been informed 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. 19 _________________ No dealer, salesperson or other person has been authorized to give any information or to make any representations not contained in this prospectus in connection with the offering covered by this prospectus. If given or made, such information or representations must not be relied upon as having been authorized by Entravision Communications Corporation, a Selling Stockholder or any underwriter. This prospectus does not constitute an offer to sell, or a solicitation of any offer to buy, Class A common stock in any jurisdiction to any person to whom, it is unlawful to make such an offer or solicitation in such jurisdiction. Neither the delivery of this prospectus nor any sale made under this prospectus shall, under any circumstances, create any implication that the information contained in this prospectus is correct as of any time after the date of the prospectus or that there has been no change in the affairs of Entravision Communications Corporation after the date of this prospectus. _________________ 3,896,580 SHARES ENTRAVISION COMMUNICATIONS CORPORATION CLASS A COMMON STOCK _________________ PROSPECTUS _________________ __________, 2002 PART II ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth an itemized estimate of fees and expenses payable by the registrant in connection with the offering described in this registration statement: Securities and Exchange Commission registration fee........... $ 3,956 New York Stock Exchange additional listing fee................ $13,650 Counsel fees and expenses..................................... $35,000* Accounting fees and expenses.................................. $30,000* Blue Sky fees and expenses.................................... $ 0 Transfer agent and registrar fees............................. $ 700* Miscellaneous................................................. $10,000* ------- Total......................................................... $93,306* ======= - ------------ *Estimate All of the above expenses will be paid by the registrant. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS We are incorporated under the laws of the State of Delaware. Section 145 of the Delaware General Corporation Law, as the same exists or may hereafter be amended, provides that a Delaware corporation may indemnify any persons who were, are or are threatened to be made, parties 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 such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reasons of the fact that such person was a director, officer, II-1 employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorney's fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer, director, employee or agent is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses which such officer or director has actually and reasonably incurred. Section 145 of the Delaware General Corporation Law further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him or her and incurred by him or her in any such capacity, arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him or her under Section 145. Our restated certificate of incorporation provides that, to the fullest extent permitted by Delaware law, as it may be amended from time to time, none of our directors will be personally liable to us or our stockholders for monetary damages resulting from a breach of fiduciary duty as a director, except for (i) liability resulting from a breach of the director's duty of loyalty to us or our stockholders, (ii) acts or omissions which are not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) unlawful payment of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law or (iv) a transaction from which the director derived an improper personal benefit. Our restated certificate of incorporation also provides mandatory indemnification for the benefit of our directors and officers and discretionary indemnification for the benefit of our employees and agents, in each instance to the fullest extent permitted by Delaware law, as it may be amended from time to time. In addition, we have entered into individual indemnification agreements with each of our directors and officers providing additional indemnification benefits. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors or officers or persons controlling us pursuant to the foregoing provisions, we have been informed 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. We provide directors' and officers' liability insurance coverage for our directors and officers. II-2 ITEM 16. EXHIBITS Exhibit No. Description - ---------- ----------- 5 ........... Opinion of Foley & Lardner 10.1 ........ Secured Promissory Note dated December 18, 2000 10.2 ........ Limited Liability Company Agreement of Lotus/Entravision Reps LLC dated as of August 10, 2001 23.1 ........ Consent of Foley & Lardner (included in Exhibit 5) 23.2 ........ Consent of McGladrey & Pullen, LLP ITEM 17. UNDERTAKINGS 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 to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) 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 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to 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. (5) 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 provisions described in Item 15, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, II-3 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. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant 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 registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Monica, State of California, on this 29th day of January, 2002. Entravision Communications Corporation By: /s/ Walter F. Ulloa ----------------------------------------- Walter F. Ulloa, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Walter F. Ulloa Chairman and Chief Executive Officer January 29, 2002 - ----------------------------- Walter F. Ulloa (principal executive officer) /s/ Philip C. Wilkinson President, Chief Operating Officer and January 29, 2002 - ----------------------------- Philip C. Wilkinson Director Executive Vice President, Treasurer and January 29, 2002 /s/ Jeanette Tully Chief Financial Officer (principal financial - ----------------------------- Jeanette Tully officer and principal accounting officer) /s/ Paul A. Zevnik - ----------------------------- Secretary and Director January 29, 2002 Paul A. Zevnik /s/ Darryl B. Thompson - ----------------------------- Director January 29, 2002 Darryl B. Thompson /s/ Amador S. Bustos - ----------------------------- Director January 29, 2002 Amador S. Bustos /s/ Andrew W. Hobson - ----------------------------- Director January 29, 2002 Andrew W. Hobson /s/ Michael D. Wortsman - ----------------------------- Director January 29, 2002 Michael D. Wortsman
II-5 Signature Title Date --------- ----- ---- /s/ Michael S. Rosen - ----------------------------- Director January 29, 2002 Michael S. Rosen - ----------------------------- Director January __, 2002 Esteban E. Torres /s/ Patricia Diaz Dennis - ----------------------------- Director January 29, 2002 Patricia Diaz Dennis II-6 EX-5 3 dex5.txt OPINION OF FOLEY & LARDNER [Letterhead of Foley & Lardner] EXHIBIT 5 January 30, 2002 Entravision Communications Corporation 2425 Olympic Boulevard, Suite 6000 West Santa Monica, California 90404 Re: Class A Common Stock of Entravision Communications Corporation -------------------------------------------------------------- Ladies and Gentlemen: We have acted as counsel to Entravision Communications Corporation, a Delaware corporation (the "Company"), in connection with the preparation and filing with the United States Securities and Exchange Commission under the Securities Act of 1933, as amended, of the Company's registration statement on Form S-3 (the "Registration Statement"), relating to the registration for resale by certain persons of up to 3,896,580 shares of the Company's Class A Common Stock, par value $.0001 per share (the "Shares"), which will be issued in satisfaction of that certain Secured Promissory Note dated December 18, 2000 (the "Note") in the principal amount of $37,500,000, pursuant to the terms of the Note. In arriving at the opinions expressed below, we have reviewed the Note and the Registration Statement and the Exhibits thereto. In addition, we have reviewed the originals or copies certified or otherwise identified to our satisfaction of all such corporate records of the Company and such other instruments and other certificates of public officials, officers and representatives of the Company and such other persons, and we have made such investigations of law, as we have deemed appropriate as a basis for the opinions expressed below. In rendering the opinions expressed below, we have assumed that the signatures on all documents that we have reviewed are genuine and that the Shares will conform in all material respects to the description thereof set forth in the Registration Statement. Based on the foregoing, we are of the opinion that the Shares to be issued in satisfaction of the Note have been duly authorized by all necessary corporate action of the Company and, when issued in accordance with such authorization and delivered, will be validly issued, fully paid and nonassessable. The foregoing opinions are limited to the federal law of the United States of America and the General Corporation Law of the State of Delaware. We hereby consent to the filing of this opinion as Exhibit 5 to the --------- Registration Statement and to the use of our name under the caption "Legal Matters" in the Registration Statement and in the Prospectus included therein. Very truly yours, /s/ Foley & Lardner EX-10.1 4 dex101.txt SECURED PROMISSORY NOTE DATED 12/18/2000 EXHIBIT 10.1 SECURED PROMISSORY NOTE ----------------------- U.S.$37,500,000 December 18, 2000 Entravision Communications Corporation, a Delaware corporation ("Entravision"), and Entravision 27, LLC, a single purpose Delaware limited liability company ("Entravision 27") (Entravision and Entravision 27 are collectively referred to as to the "Obligors"), for value received, hereby jointly and severally promise to pay to the order of Jasas - 27, Inc., a Texas corporation, and Jasas Broadcasting 27, L.P., a Texas limited partnership (collectively "Payee"), in lawful money of the United States at the address of Payee set forth below, the principal sum of Thirty Seven Million Five Hundred Thousand Dollars (U.S.$37,500,000), together with interest on the unpaid principal balance at a rate equal to eight percent (8%) per annum for the first two (2) years, ten percent (10%) per annum for the third year and twelve percent (12%) per annum for years four and five of this Convertible Promissory Note (the "Note"). The unpaid principal sum together with all accrued interest shall be due and payable as follows: (A) interest only shall be due at the end of thirteen (13) months from the date of this Note; (B) interest only shall be payable quarterly commencing three (3) months after the initial interest payment and every three (3) months thereafter; and (C) the principal shall be due in five (5) equal annual installments of Seven Million Five Hundred Thousand Dollars ($7,500,000) commencing thirteen (13) months after the date of this Note and every twelve (12) months thereafter. Obligors, in their discretion, may make Note payments in any combination of cash or freely tradeable shares of Entravision Class A Common Stock registered with the Securities and Exchange Commission ("SEC") valued at the average of the last trading price for the Class A Common Stock over twenty (20) trading days prior to delivery of the shares as a portion of payment due on the Note. The Note may be prepaid at any time in whole or in part without premium or penalty. This Note will be secured by the pledge of one hundred percent (100%) ownership interest of Entravision in Entravision 27, under a Pledge Agreement, substantially in the form attached hereto as Exhibit "A". ----------- Any of the terms of this Note may be waived or modified only in writing, signed by the Obligors and the Payee. If any payment of principal or interest on this Note shall become due on a Saturday, Sunday, or a public holiday under the laws of the State of Delaware, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment. In the event that Obligors: (i) fail to make payment on any date for payment herein above specified of all principal and interest due hereunder on such date; (ii) admit in writing their inability to pay their debts as they become due, or make a general assignment for the benefit of creditors or file any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law, or any other law or laws for the relief of, or relating to, debtors; or (iii) an involuntary petition is filed against Obligors under any bankruptcy, reorganization, insolvency or moratorium law, or any other law or laws for the relief of, or relating to, debtors unless such petition shall be dismissed or vacated within sixty (60) days of the date thereof, Obligors shall be deemed to be in default (the "Default") hereunder. In the event of such Default, Payee may, at Payee's option and in Payee's sole discretion, ten (10) business days after giving notice of Default to Obligors, provided, however, that Obligors have not resumed paying the principal or interest on this Note within such ten (10) day term, accelerate the maturity of all amounts due under this Note by giving notice of such acceleration (the "Early Maturity Date"). From the Early Maturity Date, Obligors will have thirty (30) business days to make full payment of the unpaid principal sum together with all accrued interest on the Note in cash. The acceptance by Payee of any payment hereunder which is less than the payment in full of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to accelerate at that time or any subsequent time or nullify any prior acceleration without the express consent of Payee except as and to the extent otherwise provided by law. Obligors waive presentment, demand for performance, notice of nonperformance, protest, notice of protest, and notice of dishonor (but not notice of default). No delay on the part of Payee in exercising any right hereunder shall operate as a waiver of such right under this Note. This Note is being delivered in and shall be construed in accordance with the laws of the State of Delaware as applied to contracts entered into by Delaware residents within the State of Delaware, which contracts are to be performed entirely within the State of Delaware, without regard to conflicts of laws principles. The right to plead any and all statutes of limitations as a defense to any demand on this Note, or any guaranty hereof, or any agreement to the same, or any instrument securing this Note, or any and all obligations or liabilities arising out of or in connection with this Note, is expressly waived by Obligors to the fullest extent permitted by law. The provisions of this Note are intended by Obligors to be severable and divisible and the invalidity or unenforceability of a provision or term herein shall not invalidate or render unenforceable the remainder of this Note or any part thereof. If the indebtedness represented by this Note or any part thereof is collected at law or in equity or in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, Obligors agree to pay, in addition to the principal and interest payable hereon, reasonable attorneys' fees and costs incurred by Payee. Notwithstanding any provision in this Note, the total liability for payments in the nature of interest shall not exceed the applicable limits imposed by any applicable state or federal interest rate laws. If any payments in the nature of interest, additional interest, or other charges made hereunder are held to be in excess of the applicable limits imposed by any applicable state or federal laws, it is agreed that any such amount held to be in excess shall be considered payment of principal and the indebtedness evidenced thereby shall be reduced by such amount, or if such excessive interest exceeds the unpaid principal balance of this Note, such excess shall be refunded to Payee. All sums paid pursuant to this Note, to the extent permitted by applicable law, shall be amortized, prorated, allocated and spread throughout the full term of this Note until payment in full so that the actual rate of interest is uniform throughout the actual term of this Note or does not exceed the maximum lawful rate throughout the entire term of this Note as appropriate. 2 Any notice or other communication (except payment) required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery if personally delivered or one day after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid, and addressed as follows: If to Obligors: Entravision Communications Corporation Entravision 27, L.L.C. Attention: Walter F. UIloa and Philip C. Wilkinson 2425 Olympic Boulevard, Suite 6000 West Santa Monica, California 90404 Telephone: (310) 447-3870 Facsimile: (310) 447-3899 with a required copy to: Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P. Attention: Kenneth D. Polin, Esq. 101 West Broadway, Seventeenth Floor San Diego, California 92101 Telephone: (619) 515-9600 Facsimile: (619) 515-9628 If to Payee: Jasas - 27, Inc. Jasas Broadcasting 27, L.P. Attention: John Foster 1201 North Watson Road, Suite 145 Arlington, Texas 76006 Telephone: (817) 633-3355 Facsimile: (817) 633-3411 with a required copy to: John D. Mixon, P.C. Attention: John D. Mixon, Esq. 1201 N. Watson Road, Suite 142 Arlington, Texas 76006 Telephone: (817) 633-5800 Facsimile: (817) 633-4949 Any payment shall be deemed made upon receipt by Payee. Payee or Obligors may change their address for purposes of this paragraph by giving to the other party notice in conformance with this paragraph of such new address. [Remainder of Page Intentionally Left Blank] 3 IN WITNESS WHEREOF, the Obligors have executed this Note effective as of the date first above written. "OBLIGORS" ENTRAVISION COMMUNICATIONS CORPORATION, a Delaware corporation By: /s/ Walter F. Ulloa --------------------------------------------------------- Walter F. Ulloa, Chairman and Chief Executive Officer By: /s/ Philip C. Wilkinson --------------------------------------------------------- Philip C. Wilkinson, President and Chief Operating Officer ENTRAVISION 27, L.L.C. a Delaware limited liability company By: Entravision Communications Corporation Its: Sole Member and Manager By: /s/ Walter F. Ulloa ---------------------------------------------------- Walter F. Ulloa, Chairman and Chief Executive Officer By: /s/ Philip C. Wilkinson ---------------------------------------------------- Philip C. Wilkinson, President and Chief Operating Officer [Signature Page to Secured Promissory Note] EXHIBIT "A" PLEDGE AGREEMENT ---------------- 5 PLEDGE AGREEMENT This Pledge Agreement (the "Agreement") is entered into and effective as of December 18, 2000 by and between Entravision Communications Corporation, a Delaware corporation (the "Pledgor"), and Jasas - 27, Inc., a Texas corporation, ------- and Jasas Broadcasting 27, L.P., a Texas limited partnership (collectively, the "Pledgee"). ------- RECITALS -------- A. Pledgee, Pledgor and Pledgor's wholly-owned subsidiary, Entravision 27, L.L.C., a single purpose Delaware limited liability company, have entered into that certain Asset Purchase Agreement dated as of September 22, 2000 (the "Purchase Agreement"). A copy of the Purchase Agreement is attached as Exhibit ------------------ ------- "A" hereto. - --- B. In connection with the Purchase Agreement, on even date herewith, Pledgor and Entravision 27 have executed a Secured Promissory Note in the principal sum of Thirty Seven Million Five Hundred Thousand Dollars (U.S.$37,500,000) (the "Note"), in favor of Pledgee, representing the balance of ---- the purchase price under the Purchase Agreement. A copy of the Note is attached as Exhibit "B" hereto. ----------- C. In order to secure the payment of the Note, Pledgor desires to pledge one hundred percent (100%) of its entire limited liability company interest in Entravision 27 in favor of Pledgee. D. Capitalized terms defined in the Note and not otherwise defined herein have the same respective meanings when used herein. AGREEMENT --------- NOW, THEREFORE, in consideration of the foregoing Recitals and for other good and valuable consideration, the receipt and adequacy of which hereby is acknowledged, the Pledgor hereby represents, warrants, covenants, agrees, assigns and grants as follows: 1. Definitions. Unless the context otherwise requires, terms defined in ----------- the Uniform Commercial Code of the State of Delaware (the "Uniform Commercial ------------------ Code") and not otherwise defined in this Agreement shall have the meanings - ---- defined for those terms in the Uniform Commercial Code. In addition, the following terms shall have the meanings respectively set forth after each: "Certificates" means all certificates, instruments and other documents now ------------ or hereafter representing or evidencing any Pledged Security. "Collateral" means and includes all present and future right, title and ---------- interest of the Pledgor in or to, and all rights and powers of the Pledgor to transfer any interest in or to, any and all of the following property, whether now owned or existing or hereafter arising or acquired and wheresoever located: (a) All Certificates and Pledged Security, and all rights, preferences, privileges, dividends, distributions (in cash or in kind), redemption payments or liquidation payments with respect thereto; and (b) All rights, remedies, powers and/or privileges of the Pledgor with respect to any of the foregoing. "Issuer" means the issuer of any Collateral hereunder. ------ "Pledged Entity" means Entravision 27, L.L.C. -------------- "Pledged Security" means Entravision's one hundred percent (100%) interest ---------------- in Entravision 27. 2. Creation of Security Interest. The Pledgor hereby assigns and pledges ----------------------------- to the Pledgee, and grants to the Pledgee a security interest in and to, all right, title and interest of the Pledgor in and to all presently existing and hereafter acquired Collateral. The security interest and pledge created by this Section 2 shall continue in effect so long as any Obligations (as defined below) remain unpaid. 3. Security for Obligations. This Agreement and the security interests ------------------------ granted herein secure the prompt payment, in full in cash, and full performance of, all obligations of Pledgor now or hereafter existing under the Note, and all interest that accrues (whether or not allowed) at the then applicable rate specified in the Note (the "Obligations"). ----------- 4. Delivery of Pledged Collateral. ------------------------------ (a) A Certificate representing Pledgor's one hundred percent (100%) ownership interest of the Pledged Entity, currently with the execution of this Agreement, will be delivered to and held by the Pledgee and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed undated endorsements, instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Pledgee. (b) Subject to any necessary prior approval of the FCC, and with Five (5) days written notice after the expiration of the Ten (10) day period after the notice of Default given under the Note, the Pledgee shall have the right, to transfer to or to direct the Pledgor or any nominee of the Pledgor to register or cause to be registered in the name of the Pledgee or any of its nominees the Pledged Security. 5. Further Assurances. ------------------ (a) At any time and from time to time at the reasonable written request of the Pledgee, the Pledgor shall execute and deliver to the Pledgee, at the Pledgor's expense, all such financing statements and other instruments, certificates and documents in form and substance reasonably satisfactory to the Pledgee, and perform all such other acts as shall be necessary or reasonably desirable to fully perfect or protect or maintain, when filed, recorded, delivered or performed, the Pledgee's security interests granted pursuant to this Agreement or to enable the Pledgee to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without 2 limiting the generality of the foregoing, the Pledgor shall execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Pledgee may reasonably request, in order to perfect and preserve, with the required priority, the security interests granted, or purported to be granted hereby. (b) The Pledgor hereby authorizes the Pledgee to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of the Pledgor where permitted by law. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. 6. Voting Rights: Dividends; etc. Subject to any necessary prior approval ----------------------------- from the FCC, so long as no Default under the Note shall have occurred and be continuing: (a) Voting Rights. The Pledgor shall be entitled to exercise any and all ------------- voting and other consensual rights pertaining to the Pledged Security. (b) Dividend and Distribution Rights. Subject to the terms of the Purchase -------------------------------- Agreement, the Pledgor shall be entitled to receive and to retain and use any and all dividends or distributions paid in respect of the Pledged Security. 7. Irrevocable Proxy. The Pledgor hereby revokes all previous proxies ----------------- with regard to the Pledged Security and, subject to any necessary prior approval of the FCC, appoints the Pledgee as its proxyholder and attorney-in-fact to attend and vote at any and all meetings of the members of the Pledged Entity and any adjoumments thereof, held on or after the date of the giving of this proxy and to execute any and all written consents, waivers and ratifications of the Pledged Entity executed on or after the date of the giving of this proxy and prior to the termination of this proxy with the same effect as if the Pledgor had personally attended the meetings or had personally voted, signed the consents, waivers or ratifications; provided, however, that the Pledgee as proxy -------- ------- holder shall have rights hereunder only upon the occurrence of a Default under the Note and the expiration of Ten (10) day period after Pledgor has received --- the notice of Default under the Note, without resuming the payments of the principal and interest owed under the Note. 8. Pledgor's Representations and Warranties. The Pledgor represents and ---------------------------------------- warrants as follows: (a) The address of Pledgor's business is set forth in the Note. (b) The Pledgor is the legal and beneficial owner of the Collateral free and clear of all Encumbrance as defined in the Purchase Agreement. The Pledgor has the power, authority and legal right to grant the security interests in the Collateral purported to be granted hereby, and to execute, deliver and perform this Agreement. The pledge of the Collateral pursuant to this Agreement creates a valid security interest in the Collateral. Upon the filing of appropriate financing statements with the Secretary of State of Delaware by the Pledgee, the Pledgee will have a first-priority perfected security interest in the Collateral. 3 (c) The Pledged Security has been duly authorized and validly issued and are fully paid and non-assessable. 9. Pledgor's Covenants. In addition to the other covenants and agreements ------------------- set forth herein, the Pledgor covenants and agrees as follows: (a) The Pledgor shall not withdraw as a member of any Pledged Entity, or file or pursue or take any action which may, directly or indirectly, cause a dissolution or liquidation of or with respect to any Pledged Entity or seek a partition of any property of any Pledged Entity. (b) The Pledgor agrees to take any action which the Pledgee may reasonably request in order to obtain from the FCC such approval as may be necessary to enable the Pledgee to exercise and enjoy the full rights and benefits granted to it by this Agreement, including the use of the Pledgor's best efforts to assist in obtaining the approval of the FCC for any action or transaction contemplated by this Agreement for which such approval is required by law. 10. Possession of Collateral by Pledgee. All the Collateral now, ----------------------------------- heretofore, or hereafter delivered to the Pledgee shall be held by the Pledgee in its possession, custody and control. So long as the Pledgee exercises reasonable care with respect to any Collateral in its possession, custody or control, the Pledgee shall not have any liability for any loss of or damage to any Collateral, and in no event shall the Pledgee have liability for any diminution in value of Collateral occasioned by economic or market conditions or events, absent the gross negligence or willful misconduct of the Pledgee. 11. Remedies. -------- (a) Rights Upon Default. Upon the occurrence and during the continuance of ------------------- a Default under the Note and the expiration of the Election Period, the Pledgor --- shall be in breach hereunder and the Pledgee shall have, the following rights and remedies, all of which may be exercised with or without further notice to the Pledgor except such notice as may be specifically required by applicable law: (a) to sell, assign or otherwise dispose of any Collateral or any part thereof, either at public or private sale or at any broker's board, in lot or in bulk, for cash, on credit or otherwise, with or without representations or warranties and upon such terms as shall be commercially reasonable; (b) to collect by legal proceedings or otherwise all dividends, distributions, interest, principal or other sums now or hereafter payable upon or on account of the Collateral; and (c) to exercise all rights, remedies, powers or privileges provided under the Note. Nothing herein contained shall be construed to give the Pledgee or any purchaser of the Collateral the right to operate the Station WUNI-TV, Channel 27, Worcester, MA and television translator W46CS Channel 46, Springfield, MA (formerly W69AQ Channel 69, Springfield, MA) without the prior consent of the FCC. (b) Private Sales. Subject to proper registration of the Pledged Security ------------- under the Securities Act of 1933, as amended, and compliance with Blue Sky or other applicable laws, or exemption from such registration under any applicable laws, the Pledgee may, in its sole and absolute discretion, sell all or any part of such Pledged Security at private sale in such manner and under such circumstances as the Pledgee may deem necessary or advisable in order that the sale may be lawfully conducted in a commercially reasonable manner. To the extent permitted 4 by applicable law, if such Pledged Security is sold for a price which is not commercially reasonable, then the Pledgor shall be entitled to a credit against the Obligations in an amount equal to the commercially reasonable purchase price. (c) Disposition of Proceeds of Sale. The proceeds resulting from the ------------------------------- collection, liquidation, sale or other disposition of the Pledged Security shall be applied, first, to the reasonable costs and expenses (including reasonable ----- attorneys' fees) of retaking, holding, storing, processing and preparing for sale, selling, collecting and liquidating the Pledged Security, and the like; second, to the satisfaction of all Obligations; and third, any surplus remaining - ------ ----- after the satisfaction of all Obligations, provided no Obligations exists under the Note to be paid over to the Pledgor or to whomsoever may be lawfully entitled or designated by Pledgor to receive such surplus. (d) Remedies Cumulative. The rights and remedies provided under this ------------------- Agreement are cumulative and may be exercised singly or concurrently, and are not exclusive of any other rights and remedies provided by law or equity. (e) Compliance with Communications Act and FCC Rules and Regulations. ---------------------------------------------------------------- Notwithstanding any other provision of this Agreement, any foreclosure on, sale, transfer or other disposition of, or the exercise of any right to vote or consent with respect to, the Pledged Security as provided herein or any other action taken or proposed to be taken by the Pledgee hereunder which would affect the operational, voting or other control of the Pledged Entity shall be made in accordance with the Communications Act of 1934, as amended, and any applicable rules and regulations of the FCC. (f) Notice. The Pledgee shall use reasonable efforts to give the Pledgor ------ prior written notice of the exercise of any remedy provided for herein. 12. Costs and Expenses. The Pledgor agrees to pay to the Pledgee all ------------------ reasonable costs and out-of-pocket expenses (including, without limitation, reasonable attorneys' fees and disbursements) incurred by the Pledgee in the enforcement or attempted enforcement of this Agreement, whether or not an action is filed in connection therewith, and in connection with any waiver or amendment of any term or provision hereof. All reasonable advances, charges, costs and expenses, including reasonable attorneys' fees and disbursements, incurred or paid by the Pledgee in exercising any right, privilege, power or remedy conferred by this Agreement (including, without limitation, the right to perform any Obligations of the Pledgor), or in the enforcement or attempted enforcement thereof, shall be secured hereby and shall become a part of the Obligations and shall be due and payable to the Pledgee by the Pledgor on demand therefor. 13. Amendments. No amendment or waiver of any provision of this Agreement ---------- nor consent to any departure by the Pledgor here from shall in any event be effective unless the same shall be in writing and made in accordance with the notice provisions on the Note, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 5 14. Notices. All notices and other communications provided for hereunder ------- shall be given in the manner set forth in the Note. 15. Continuing Security Interest: Transfer of Notes: Termination. This ------------------------------------------------------------ Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until payment in full of Pledgor's Obligations under the Note. 16. Release of Pledgor. This Agreement and all Obligations of the Pledgor ------------------ hereunder and all security interests granted hereby shall be released and terminated when all Obligations have been indefeasibly paid in full as provided in the Note. All rights in and to the Collateral pledged or assigned by the Pledgor hereunder shall automatically revert to the Pledgor, and the Pledgee shall return any pledged Collateral in its possession to the Pledgor, or to the Person or Persons legally entitled thereto, and shall endorse, execute, deliver, record and file all instruments and documents, including but not limited to termination of UCC financing statements, and do all other acts and things, reasonably required for the return of the Collateral to the Pledgor, or to the Person or Persons legally entitled thereto, and to evidence or document the release of the interests of Pledgee arising under this Agreement, all as reasonably requested by, and at the sole expense of, the Pledgor. 17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ------------- ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REFERENCE TO ITS CHOICE OF LAW PROVISIONS), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF DELAWARE ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION. 18. Jurisdiction; Service of Process. Any action or proceeding seeking to -------------------------------- enforce any provision of, or based on any right arising out of, this Agreement must be brought against any of the parties in the state or federal courts located in the State of Delaware and each of the parties hereto consent to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. The parties hereto agree that prior to the initiation of litigation, the parties will pursue non-binding mediation to resolve any dispute arising between them. 19. Executed Counterparts. This Agreement may be executed in one or more --------------------- counterparts, all of which when fully-executed and delivered by all parties hereto and taken together shall constitute a single agreement, binding against each of the parties. To the maximum extent permitted by law or by any applicable governmental authority, any document may be signed and transmitted by telecopy with the same validity as if it were an ink-signed document. Each signatory below represents and warrants by his or her signature that he or she is duly authorized (on behalf of the respective entity for which such signatory has acted) to execute and deliver this instrument and any other document related to this transaction, thereby fully binding each such respective entity. 6 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. "Pledgor" ENTRAVISION COMMUNICATIONS CORPORATION, a Delaware corporation By: /s/ Walter F. Ulloa --------------------------------------------------------- Walter F. Ulloa, Chairman and Chief Executive Officer By: /s/ Philip C. Wilkinson --------------------------------------------------------- Philip C. Wilkinson, President and Chief Operating Officer "Pledgee" JASAS - 27, Inc., a Texas Corporation By:_________________________________________________________ John B. Foster, Its Authorized Officer JASAS BROADCASTING 27, L.P. a Texas limited partnership By: JASAS - 27, Inc., Its General Partner By:____________________________________________________ John B. Foster, Its Authorized Officer [Signature Page to Pledge Agreement] 7 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. "Pledgor" ENTRAVISION COMMUNICATIONS CORPORATION, a Delaware corporation By:_________________________________________________________ Walter F. Ulloa, Chairman and Chief Executive Officer By:_________________________________________________________ Philip C. Wilkinson, President and Chief Operating Officer "Pledgee" JASAS - 27, Inc., a Texas Corporation By: /s/ John B. Foster --------------------------------------------------------- John B. Foster, Its Authorized Officer JASAS BROADCASTING 27, L.P. a Texas limited partnership By: JASAS - 27, Inc., Its General Partner By: /s/ John B. Foster ---------------------------------------------------- John B. Foster, Its Authorized Officer [Signature Page to Pledge Agreement] 7 EXHIBIT "A" ASSET PURCHASE AGREEMENT ------------------------ [This Exhibit "A" to Exhibit "A" of Exhibit 10.1 has been deleted, since it is not material to the transaction.] 8 EXHIBIT "B" SECURED PROMISSORY NOTE ----------------------- [The Secured Promissory Note is included as Exhibit 10.1 to this registration statement.] 9 EX-10.2 5 dex102.txt LIMITED LIABILITY COMPANY AGREEMENT DTD 08/10/2002 EXHIBIT 10.2 LIMITED LIABILITY COMPANY AGREEMENT OF LOTUS/ENTRAVISION REPS LLC, A DELAWARE LIMITED LIABILITY COMPANY TABLE OF CONTENTS
Page Article 1 ORGANIZATIONAL MATTERS................................................................................ 1 1.1 Defined Terms................................................................................... 1 1.2 Formation....................................................................................... 7 1.3 Name............................................................................................ 7 1.4 Principal Place of Business..................................................................... 7 1.5 Registered Office and Resident Agent............................................................ 8 1.6 Term............................................................................................ 8 1.7 Business Purpose................................................................................ 8 Article 2 COMPANY CAPITAL; CAPITAL CONTRIBUTIONS................................................................ 9 2.1 Initial Capital Contributions of Members........................................................ 9 2.2 Additional Capital Contributions................................................................ 9 2.3 Additional Members.............................................................................. 10 2.4 No Withdrawal; No Interest...................................................................... 11 2.5 Member Loans.................................................................................... 11 2.6 Liability of Members............................................................................ 11 2.7 Additional Provisions Regarding Capital Contributions........................................... 11 Article 3 MANAGEMENT OF THE COMPANY............................................................................. 12 3.1 Managers........................................................................................ 12 3.2 Board of Directors.............................................................................. 12 3.3 Members of the Board of Directors............................................................... 12 3.4 Meetings of the Board of Directors.............................................................. 12 3.5 Appointment of Officers......................................................................... 13 3.6 Material Decisions.............................................................................. 13 3.7 Dispute Resolution for Material Decisions....................................................... 15 3.8 Standards of Care; Liability and Indemnification................................................ 15 3.9 Reorganization as a Corporation................................................................. 16 3.10 Contractual Authority........................................................................... 16 3.11 Transactions Between the Company and Members.................................................... 16 3.12 Incentive Compensation.......................................................................... 17 3.13 Other Employee Benefits......................................................................... 18 3.14 Insurance....................................................................................... 18 Article 4 CAPITAL ACCOUNTS, DISTRIBUTIONS AND ALLOCATIONS....................................................... 18 4.1 Capital Accounts................................................................................ 18 4.2 Allocations..................................................................................... 19 4.3 Regulatory Allocations.......................................................................... 20 4.4 Tax Allocations................................................................................. 22 4.5 Other Provisions................................................................................ 22 4.6 Distributions................................................................................... 23
i Article 5 TRANSFER AND ASSIGNMENT OF INTERESTS................................................................ 24 5.1 Transfers..................................................................................... 24 5.2 Substitution of Members....................................................................... 24 5.3 Affiliate Transfers........................................................................... 24 5.4 Buy/Sell Agreement............................................................................ 25 Article 6 BOOKS AND RECORDS; ACCOUNTING....................................................................... 26 6.1 Company Books and Records..................................................................... 26 6.2 Inspection of Records......................................................................... 26 6.3 Company Tax Returns and Tax Elections......................................................... 26 6.4 Reports....................................................................................... 27 6.5 Tax Matters for the Company................................................................... 27 Article 7 DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY............................................. 27 7.1 Events of Dissolution......................................................................... 27 7.2 Effect of Dissolution......................................................................... 28 7.3 No Capital Contribution Upon Dissolution...................................................... 28 7.4 Priority of Liquidating Distributions......................................................... 28 Article 8 AMENDMENTS.......................................................................................... 28 8.1 General....................................................................................... 28 8.2 Special Rules................................................................................. 29 Article 9 INVESTMENT REPRESENTATIONS.......................................................................... 29 9.1 Preexisting Relationship or Experience........................................................ 29 9.2 Investment Intent............................................................................. 29 9.3 No Registration of Interests.................................................................. 29 9.4 Restricted Securities......................................................................... 29 9.5 No Obligations to Register.................................................................... 29 9.6 No Disposition in Violation of Law............................................................ 30 9.7 Investment Risk............................................................................... 30 9.8 Investment Experience......................................................................... 30 9.9 Restrictions on Transferability............................................................... 30 9.10 Information Reviewed.......................................................................... 30 9.11 No Advertising................................................................................ 30 9.12 Indemnity..................................................................................... 30 Article 10 MISCELLANEOUS...................................................................................... 31 10.1 Notices....................................................................................... 31 10.2 Confidentiality............................................................................... 31 10.3 Arbitration................................................................................... 31 10.4 Entire Agreement.............................................................................. 32 10.5 Further Assurances............................................................................ 32 10.6 Counterparts/Facsimile........................................................................ 32 10.7 Governing Law................................................................................. 32 10.8 Binding Effect................................................................................ 33
ii 10.9 Provisions Severable.......................................................................... 33 10.10 Construction of Agreement..................................................................... 33 10.11 Use of Pronouns/References to a Member........................................................ 33 10.12 Jurisdiction.................................................................................. 33 10.13 Reliance on Authority of Person Signing Agreement............................................. 33 10.14 Parent Guaranty............................................................................... 33
Exhibit A Members, Capital Contributions and Percentage Interests Exhibit B Initial Members of the Board of Directors and Officers of the Company iii LIMITED LIABILITY COMPANY AGREEMENT OF LOTUS/ENTRAVISION REPS LLC, A DELAWARE LIMITED LIABILITY COMPANY This Limited Liability Company Agreement (this "Agreement") of --------- Lotus/Entravision Reps LLC, a Delaware limited liability company (the "Company"), is made and entered into as of August 10, 2001 (the "Effective ------- --------- Date") by and between Entravision Communications Corporation, a Delaware - ---- corporation ("ECC"), and Lotus Hispanic Reps Corp., a California corporation --- ("Lotus"), with reference to the following facts: ----- WHEREAS, effective as of July 9, 2001, the Company was duly formed under the Delaware Limited Liability Company Act (the "Delaware Act") by the ------------ filing of a Certificate of Formation (the "Certificate of Formation") with the ------------------------ Delaware Secretary of State, Division of Corporations; and WHEREAS, the parties hereto now desire to enter into this Agreement in order to delineate their rights and obligations as Members, to provide for the Company's management, and to provide for certain other matters, all as permitted under the Delaware Act. NOW THEREFORE, in consideration of the mutual covenants expressed herein, and for other good and valuable consideration, the parties hereto agree as follows: ARTICLE 1 ORGANIZATIONAL MATTERS 1.1 Defined Terms. For purposes of this Agreement, capitalized terms ------------- utilized herein and not otherwise defined herein shall, unless the context clearly indicates otherwise, have the following definitions: 1.1.1 "Adjusted Capital Account Deficit" means, with respect to -------------------------------- any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments: (a) Add to such Capital Account the following items: (i) The amount, if any, that such Member is obligated to contribute to the Company upon liquidation of such Member's Interest; and (ii) The amount that such Member is obligated to restore or is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (b) Subtract from such Capital Account such Member's share of the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). (c) The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704- 1(b)(2)(ii)(d) and shall be interpreted consistently therewith. 1.1.2 "Affiliate" shall mean any Person that, directly or --------- indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the specified party. 1.1.3 "Applicable Law" shall mean, with respect to any Person, -------------- all statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting such Person, such Person's assets or the securities of such Person, whether now or hereafter enacted and in force, including, without limitation, the Securities Act and the Exchange Act. 1.1.4 "Available Cash" shall mean the amounts which the Board of -------------- Directors determines is available for distribution to the Members, taking into account all debts, liabilities, and obligations of the Company, working capital reserves, reserves for other contingencies and other amounts which the Board of Directors deems necessary or appropriate for the Company's business or to place in reserves for customary and usual claims with respect to such business. 1.1.5 "Book Value" shall mean, with respect to any asset, the ---------- asset's adjusted basis for federal income tax purposes, except as follows: (a) The initial Book Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the Board of Directors and the contributing Member. (b) The Book Values of all Company assets immediately prior to the occurrence of any event described in subsection (i), subsection (ii), subsection (iii), subsection (iv) or subsection (v) hereof shall be adjusted to equal their respective gross fair market values, as determined by the Board of Directors using such reasonable method of valuation as it may adopt, as of the following times: (i) the acquisition of an additional interest in the Company (other than in connection with the execution of this Agreement) by a new or existing Member in exchange for more than a de minimis Capital Contribution, if the Board of Directors reasonably determines that such adjustment is necessary or appropriate to reflect the relative Economic Interests of the Members in the Company; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company assets as consideration for an interest in the Company, if the Board of Directors reasonably determines that such adjustment is necessary or appropriate to reflect the relative Economic Interests of the Members in the Company; (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); 2 (iv) the issuance of any interests in the Company for services; and (v) at such other times as the Board of Directors shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2. (c) The Book Value of any Company asset distributed to a Member shall be the gross fair market value of such asset on the date of distribution as determined by the Board of Directors. (d) The Book Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Book Values shall not be adjusted pursuant to this Section 1.1.5(d) to the extent that the Board of Directors reasonably determines that an adjustment pursuant to Section 1.1.5(b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this Section 1.1.5(d). (e) If the Book Value of a Company asset has been determined or adjusted pursuant to Section 1.1.5(a), (b), or (d) hereof, such Book Value shall thereafter be adjusted by the Depreciation taken into account with respect to such Company asset for purposes of computing Net Profits and Net Losses. 1.1.6 "Capital Contributions" shall mean, with respect to any --------------------- Member, the total amount of money and the initial Book Value of property (other than money) contributed or deemed hereunder to have been contributed to the capital of the Company by such Member, whether as an initial Capital Contribution or as an additional Capital Contribution. 1.1.7 "Code" shall mean the Internal Revenue Code of 1986, as ---- amended. 1.1.8 "Company Minimum Gain" shall have the meaning set forth in -------------------- Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase "partnership minimum gain." 1.1.9 "Contribution Agreement" shall mean that certain ---------------------- contribution agreement, dated as of the date hereof, among ECC, Lotus and the Company. 1.1.10 "Depreciation" shall mean, for each fiscal year or other ------------ period, an amount equal to the federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Book Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Book Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization or other cost 3 recovery deduction for such year or other period is zero, Depreciation shall be determined with reference to such beginning Book Value using any reasonable method selected by the Board of Directors. 1.1.11 "Economic Interest" shall mean a Person's right to share ----------------- in the Net Profits, Net Losses, or similar items of, and to receive distributions from, the Company, but does not include any other rights of a Member including, without limitation, the right to vote or to participate in the management of the Company, or, except as specifically provided in this Agreement or required under the Delaware Act, any right to information concerning the business and affairs of the Company. 1.1.12 "Exchange Act" shall mean the Securities Exchange Act of ------------ 1934, as amended. 1.1.13 "Member" shall mean ECC, Lotus and any additional Persons ------ admitted as Additional Members or Substitute Members in the Company. 1.1.14 "Member Minimum Gain" shall mean an amount, with respect ------------------- to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i) with respect to "partner minimum gain." 1.1.15 "Member Nonrecourse Debt" shall have the meaning set ----------------------- forth in Regulations Section 1.704-2(b)(4) for the phrase "partner nonrecourse debt." 1.1.16 "Member Nonrecourse Deductions" shall have the meaning ----------------------------- set forth in Regulations Section 1.704-2(i) for the phrase "partner nonrecourse deductions." 1.1.17 "Membership Interest" or "Interest" shall mean the entire ------------------- -------- ownership interest of a Member in the Company at any particular time, including without limitation, the Member's Economic Interest, any and all rights to vote and otherwise participate in the Company's affairs, and the rights to any and all benefits to which a Member may be entitled as provided in this Agreement, together with the obligations of such Member to comply with all of the terms and provisions of this Agreement. 1.1.18 "Net Profits" and "Net Losses" shall mean for any given ----------- ---------- period, the taxable income or taxable loss of the Company for such period determined in accordance with section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be separately stated pursuant to section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments: (a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Profits and Net Losses shall increase such income or decrease such loss, as the case may be. (b) Any expenditures of the Company described in section 705(a)(2)(B) of the Code or treated as section 705(a)(2)(B) expenditures by Regulations Section 4 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Profits and Net Losses, shall decrease such Net Profits or increase such Net Losses, as the case may be. (c) Any income, gain, loss, or deduction required to be specially allocated to Members under Section 4.3 or Section 4.5.2, below, shall not be taken into account in computing Net Profits or Net Losses. (d) In lieu of any depreciation, amortization and other cost recovery deductions taken into account in computing taxable income or loss, the Company shall compute such deductions based on Depreciation for such period. (e) Gain or loss resulting from a disposition of Company property where such gain or loss is recognized for federal income tax purposes shall be computed by reference to the Book Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Book Value. (f) If the Book Value of Company assets is adjusted as provided in Section 1.1.5 above, then the Net Profits or Net Losses of the Company shall include the amount of any increase or decrease in such Book Values attributable to such adjustments. (g) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member's Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for the purposes of computing Net Profits and Net Losses; 1.1.19 "Nonrecourse Deductions" shall have the meaning set forth ---------------------- in Regulations Sections 1.704-2(b)(1) and 1.704-2(c). 1.1.20 "Nonrecourse Liability" shall have the meaning set forth --------------------- in Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2). 1.1.21 "Percentage Interest" shall mean the percentage interest ------------------- set forth opposite each Member's name on Exhibit A hereto, subject to adjustment from time to time as provided in this Agreement, which corresponds to each Member's relative ownership of Membership Interests. 1.1.22 "Person" shall mean and include any individual, ------ corporation, partnership, limited liability company, trust, unincorporated organization, government or any department or agency thereof, or any entity similar to any of the foregoing. 1.1.23 "Presumed Enterprise Value" shall mean, at any given ------------------------- point in time, the aggregate fair market value of all exclusive representation contracts pursuant to which the Company is serving as exclusive sales representative as of such time. For this purpose, the "fair market value" of any given exclusive representation contract shall be the Standard Rep Buy-Out Amount with respect to that contract as of such time. 5 1.1.24 "Priority Amount" shall mean (i) with respect to Lotus, --------------- an amount equal to the aggregate amount of Termination Allocations (as defined in the Representation Contract between the Company and ECC or its Affiliates) to which Lotus is entitled pursuant to the Representation Contract between the Company and ECC or its Affiliates; and (ii) with respect to ECC, an amount equal to the aggregate amount of Termination Allocations (as defined in the Representation Contract between the Company and Lotus or its Affiliates) to which ECC is entitled pursuant to the Representation Contract between the Company and Lotus or its Affiliates, plus the aggregate amount of ECC Allocations to which ECC is entitled pursuant to Section 3.12, below. 1.1.25 "Regulations" shall mean proposed, temporary, and final ----------- Treasury Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of successor Treasury Regulations). 1.1.26 "Securities Act" shall mean the Securities Act of 1933, -------------- as amended. 1.1.27 "Spanish-language Radio Station" shall mean a radio ------------------------------ station that broadcasts exclusively or predominantly in the Spanish language and is directed towards a Spanish-speaking audience. 1.1.28 "Standard Rep Buy-Out Amount" shall mean, with respect to --------------------------- any given exclusive representation contract being terminated, an amount, at any given point in time, calculated by multiplying (i) the average monthly commissions actually paid pursuant to such contract over the prior full twelve (12) months, by (ii) the number of months remaining in the existing term of the contract, plus two (2). 1.1.29 "Termination Allocations" shall be defined in the ----------------------- Representation Contracts between the Company and each of Lotus and ECC. 1.1.30 "Transfer" means, with respect to any interest in the -------- Company, a sale, conveyance, exchange, assignment, pledge, encumbrance, gift, bequest, hypothecation or other transfer or disposition by any other means, whether for value or no value and whether voluntary or involuntary (including, without limitation, by operation of law), or an agreement to do any of the foregoing. 1.1.31 Other Defined Terms. The following terms shall have the ------------------- meanings set forth with respect to such terms in the Sections listed below: Term Section Additional Members 2.3 Agreement Intro. Paragraph Board of Directors 3.1 Budget 1.7.2 Business 1.7.1 Business Day 2.2.3(a) Buy/Sell Notice 5.4 Capital Accounts 4.1 6 Term Section Capital Transaction 4.2.3 Certificate of Formation Recitals Claim 10.3 Company Intro. Paragraph Contribution Shortfall 2.2.3(b) Defaulting Member 2.2.3(b) Delaware Act Recitals ECC Intro. Paragraph ECC Board Members 3.3.1 ECC Chairperson 3.5 Effective Date Intro. Paragraph Indemnitee 3.8.2 Lotus Intro. Paragraph Lotus Board Members 3.3.1 Lotus Chairperson 3.5 Material Decisions 3.6 Notice of Alternative 3.7 Officer 3.5 Parent 10.14 Parent Guaranty 10.14 Plan 3.12 Presumed Tax Liability 4.6.1 Prime Rate 2.2.3(a) Receiving Party 5.4.1 Regulatory Allocations 4.3.8 Representation Contracts 1.7.3 Submitting Party 5.4.1 Term 1.6 1.2 Formation. The Company has been organized as a limited liability --------- company by the filing of the Certificate of Formation with the Delaware Secretary of State, Division of Corporations, in accordance with and pursuant to the Delaware Act. The rights and liabilities of the Members shall be determined pursuant to the Delaware Act and this Agreement. To the extent that there is any conflict or inconsistency between any provision of this Agreement and any non- mandatory provision of the Delaware Act, the provisions of this Agreement shall control and take precedence. 1.3 Name. The name of the Company shall be "Lotus/Entravision Reps ---- LLC." The Company may conduct business under that name or any other name selected by the Board of Directors, from time to time, in accordance with Applicable Law. 1.4 Principal Place of Business. The principal place of business of --------------------------- the Company shall be at 6290 Sunset Boulevard, Suite 1500, Los Angeles, California, 90028, or such other place within or outside the State of Delaware as the Board of Directors may from time to time designate. The Company may maintain offices and places of business at such other place or places within or outside the State of Delaware as the Board of Directors deems advisable. 7 1.5 Registered Office and Resident Agent. The Company shall ------------------------------------ continuously maintain a registered office and a designated and duly qualified agent for service of process on the Company in the State of Delaware. 1.6 Term. The Company shall continue from the Effective Date until ---- such time as the Company is dissolved pursuant to the terms of this Agreement or the Delaware Act (the "Term"). 1.7 Business Purpose. ---------------- 1.7.1 General. The Company has been formed for the purpose of ------- (i) conducting the business of representing Spanish-language Radio Stations (or English-language Radio Stations which are owned or operated by each of Lotus or ECC (or their respective Affiliates), at the election of either Lotus, in the case of such stations owned or operated by Lotus or its Affiliates, or ECC, in the case of such stations owned or operated by ECC or its Affiliates) in connection with the sale of national advertising time, including, but not limited to, acting as the exclusive national representative for all Spanish- language Radio Stations owned or operated by each of Lotus and ECC, or their respective Affiliates, and Spanish-language Radio Stations owned or operated by third parties, (ii) entering into any other lawful business, purpose or activity in which a limited liability company may be engaged under Applicable Law (including, without limitation, the Delaware Act) as the Board of Directors may determine from time to time in accordance with the terms of this Agreement, and (iii) entering into any lawful transaction and engaging in any lawful activities in furtherance of the foregoing purposes and as may be necessary, incidental or convenient to carry out the business of the Company as contemplated by this Agreement (collectively, the "Business"). 1.7.2 Budget. Concurrently herewith, the Members have approved ------ and adopted an initial budget (as amended or supplemented from time to time, the "Budget" ) for the operation of the Business. No later than September 30 of each fiscal year of the Company, management shall present to the Board of Directors an updated Budget for the following fiscal year. The Board of Directors shall use its best efforts to approve the Budget for such fiscal year no later than forty-five (45) days prior to the commencement of such fiscal year. If the Board of Directors is unable to agree on the terms of the Budget prior to the commencement of a fiscal year, the Company shall continue to operate under the previous year's Budget until such disputed terms shall have been resolved by arbitration pursuant to the procedures set forth in Section 10.3, below. Such Budget may be modified, updated, amended and revised for periodic approval by the Board of Directors, such approval to be given or withheld in the sole discretion of the Board of Directors. 1.7.3 Exclusive Representation Contracts. ---------------------------------- (a) Each of ECC and Lotus shall cause each of the Spanish-language Radio Stations owned or operated by ECC or Lotus or their respective Affiliates to enter into representation agreements with the Company (the "Representation Contracts") with such terms and conditions as the parties shall agree. 8 (b) It is agreed that the representation of Spanish language Radio Stations owned by persons other than the Members or their respective Affiliates shall be regarded and treated by the Members and their respective Affiliates as a business opportunity of the Company. ARTICLE 2 COMPANY CAPITAL; CAPITAL CONTRIBUTIONS 2.1 Initial Capital Contributions of Members. The names, addresses, ---------------------------------------- and Percentage Interests of the Members are set forth on Exhibit "A" attached hereto and incorporated herein. Each Member shall contribute to the Company the amount of cash and other property set forth opposite each Member's name on Exhibit "A". The amount of cash to be contributed by each party pursuant to the preceding sentence (i.e., $650,000 each) shall (unless otherwise agreed to by the Members) be advanced to the Company by each such Member in five equal monthly installments of one hundred and thirty thousand dollars ($130,000) each, with the first such installment from each Member being due and payable concurrently with the execution of this Agreement and with each subsequent installment being due and payable by each Member on the first business day of each of the four successive calendar months thereafter. All Members acknowledge and agree that the initial Capital Contributions set forth in Exhibit "A" represent the amount of cash and the Book Value of all property (other than cash) contributed by the Members as of the date hereof pursuant to the Contribution Agreement. 2.2 Additional Capital Contributions. -------------------------------- 2.2.1 Except as required by Applicable Law or as otherwise provided below, no Member shall be required or permitted to make any additional Capital Contributions to the Company beyond the initial Capital Contributions set forth on Exhibit "A." 2.2.2 Each Member agrees that it will make additional Capital Contributions, in cash, in such amounts and at such times as determined on a quarterly or other basis by the Board of Directors as necessary to fund the working capital and cash flow needs of the Company, in accordance with the approved Budget. 2.2.3 Failure to Contribute. --------------------- (a) For purposes of this Section 2.2.3, the following capitalized terms have the following meanings: (i) "Business Day" means any weekday excluding any legal holiday observed pursuant to United States federal, or California state, law or regulation. (ii) "Prime Rate" means the rate of interest publicly announced by The Chase Manhattan Bank from time to time as its prime rate or, if such rate is no longer so announced or is otherwise unavailable from such financial institution, then the prime rate listed from time to time in The Wall Street Journal, which listing appears as of the date hereof under the caption "Money Rates." 9 (b) If any Member fails to contribute timely all or any portion of any Capital Contribution required to be made by such Member pursuant to this Agreement (the amount of such failure to contribute, a "Contribution Shortfall"), and such failure continues for a period of five Business Days after receipt by such Member of written notice from the Board specifying such failure, then such Member shall be designated a "Defaulting Member" and the provisions of the following paragraph (c) shall apply. (c) The Board shall immediately notify each nondefaulting Member of the Defaulting Member's failure to make a required Capital Contribution, and shall further specify the amount of such Contribution Shortfall, and each nondefaulting Member's pro rata share of such Contribution Shortfall. Each nondefaulting Member shall have the option of advancing all or part of its pro rata share of the Defaulting Member's Contribution Shortfall, on the following terms: (i) the sums thus advanced shall be deemed to be demand recourse loans from the Members participating therein to the Defaulting Member and a contribution of such sums to the Company by the Defaulting Member; (ii) such loans shall bear interest at a rate of interest equal to the lesser of (x) the Prime Rate plus 5% per annum and (y) the highest lawful rate, from the date that the advance was made until the date that such advance, together with any costs and expenses incurred by the Company as a result of the Defaulting Member's failure to make the required Capital Contribution, and together with all interest accrued thereon, is repaid to the Members and the Company, as appropriate; (iii) unless otherwise previously paid, the repayment of these loans shall be made from any distribution from the Company otherwise to be made to the Defaulting Member before any distribution is made to the Defaulting Member during the term of the Company or after dissolution and, to the extent not repaid out of such distributions, from the proceeds of any sale of any of the Defaulting Member's Membership Interest (whether pursuant to the provisions of Section 5.4 hereof or otherwise); and (iv) all such repayments shall be first applied to any costs and expenses incurred by the Company as a result of the Defaulting Member's failure to contribute, then to interest earned and unpaid, and then to principal. For purposes of this Section 2.2.3(c), each participating Member's pro rata share of the Contribution Shortfall shall equal its relative Percentage Interest. Any such election shall be made to the Board in writing within 30 days after notice of the option to fund a Contribution Shortfall is given by the Board, and shall be funded not less than five (5) Business Days after the expiration of such 30-day period. If less than all nondefaulting Members so elect to participate in funding the Contribution Shortfall as provided herein, the Board shall re-offer each nondefaulting Member that did so elect to participate the option of participating further in funding the Contribution Shortfall in an amount determined equitably by the Board taking into account each nondefaulting Member's relative Percentage Interest, with such re-offer and election to participate therein being made in a manner substantially similar to the manner in which the original offer and election to participate were made. Notwithstanding any other provision in this Article 2, in the event a Member is designated a Defaulting Member, the nondefaulting Member shall be excused and released from any and all obligations under this Article 2. 2.3 Additional Members. With the unanimous approval of the Members ------------------ and subject to the preemptive right of each of Lotus and ECC to maintain its pro rata ownership interest in the Company, the Board of Directors may issue additional Membership Interests directly from the Company and admit one or more recipients of such Membership Interests as additional Members ("Additional Members") from time to time, on such terms and conditions 10 and for such Capital Contributions, if any, as the Board of Directors may determine. As a condition to being admitted to the Company, each Additional Member shall execute documents acceptable in form and substance to the Members evidencing such Additional Member's agreement to be bound hereby. Upon the admission of any Additional Members, the Board of Directors shall make appropriate revisions to Exhibit "A." 2.4 No Withdrawal; No Interest. Except as otherwise provided in this -------------------------- Agreement: (a) no Member shall demand or be entitled to receive a return of or interest on any portion of its Capital Contributions or Capital Account, (b) no Member shall withdraw any portion of its Capital Contributions or Capital Account or receive any distributions from the Company as a return of capital on account of such Capital Contributions or Capital Account, and (c) the Company shall not redeem or repurchase the Membership Interest of any Member. 2.5 Member Loans. No Member shall be required to make any loans or ------------ otherwise lend any funds to the Company. The Members shall be permitted (but not required) to make loans to the Company to the extent the Board of Directors reasonably determines that such loans are necessary or advisable for the business of the Company, provided that the terms of such loans are no less favorable to the Company than may be available from independent third parties. No loans made by any Member to the Company shall have any effect on such Member's Percentage Interest or Capital Account, and such loans shall represent a debt of the Company payable or collectible solely from the assets of the Company in accordance with the terms and conditions upon which such loans are made. 2.6 Liability of Members. Except as otherwise required by any non- -------------------- waivable provision of the Delaware Act or other Applicable Law and except as provided in other agreements between the Company and one or more Members or their Affiliates: (a) no Member shall be personally liable in any manner whatsoever for any debt, liability or other obligation of the Company, whether such debt, liability or other obligation arises in contract, tort, or otherwise; and (b) no Member shall in any event have any liability whatsoever in excess of (i) the amount of its Capital Contributions, (ii) its share of assets and undistributed profits of the Company, if any, (iii) the amount of any unconditional obligation of such Member to make additional Capital Contributions to the Company pursuant to this Agreement, and (iv) the amount of any wrongful distribution to such Member, if, and only to the extent, such Member has actual knowledge (at the time of the distribution) that such distribution is made in violation of Section 18-607 of the Delaware Act. 2.7 Additional Provisions Regarding Capital Contributions. ----------------------------------------------------- Notwithstanding anything else in this Article 2 to the contrary, if any Member (or other Person acquiring an Economic Interest in the Company) is deemed to have received an interest in the capital of the Company not in exchange for property, the parties agree to treat the receipt of such an interest as a cash payment by the Company to the affected Member (or other Person) in exchange for that for which such interest was issued, followed immediately by a cash contribution to the Company by the affected Member (or other Person) equal in amount to the amount of the deemed cash payment by the Company. The amount of such deemed cash contribution shall be treated as a Capital Contribution for all purposes hereunder. 11 ARTICLE 3 MANAGEMENT OF THE COMPANY 3.1 Managers. Subject to the provisions of this Article, and except -------- as otherwise provided hereunder, the Company shall be managed by the Managers. The Company shall have two (2) Managers and those Managers shall be ECC and Lotus. The Managers hereby establish a board of directors for the Company (the "Board of Directors") which shall have the rights, powers and duties set forth in this Article 3. 3.2 Board of Directors. Except as otherwise provided in this ------------------ Agreement, the business, property and affairs of the Company will be governed by, and all powers of the Company will be exercised by, or under the direction of, the Board of Directors. Every decision approved by a majority of the members of the Board of Directors at a meeting at which at least a quorum has participated shall be the act of the Board of Directors (unless the Board of Directors decides to establish a higher standard for any particular action). For this purpose, a quorum shall consist of at least four (4) members of the Board of Directors, at least two (2) of whom are ECC Board Members and at least two (2) of whom are Lotus Board Members. 3.3 Members of the Board of Directors --------------------------------- 3.3.1 Initial Board Members; Qualifications. The Board of ------------------------------------- Directors shall consist of six (6) members, three (3) of whom shall be appointed by ECC (each an "ECC Board Member" and collectively the "ECC Board Members") and three (3) of whom shall be appointed by Lotus (each a "Lotus Board Member" and collectively the "Lotus Board Members"). The initial ECC Board Members and Lotus Board Members are set forth on Exhibit "B," attached hereto. 3.3.2 Resignation or Removal and Replacement of Board Members. ------------------------------------------------------- Each member of the Board of Directors shall serve as such until resignation or removal hereunder. A member of the Board of Directors may resign at any time by giving written notice thereof to the Managers and to the other members of the Board of Directors. Any such resignation will take effect upon receipt of such notice by all such persons or at such later time, if any, as may be specified in such notice. Unless otherwise specified in the notice, the acceptance of the notice shall not be necessary in order to make it effective. Any ECC Board Member may only be removed by ECC (such removals (if any) by ECC being undertaken by ECC from time to time in its sole discretion, for any reason, with or without cause) and any Lotus Board Member may only be removed by Lotus (such removals (if any) by Lotus being undertaken by Lotus from time to time, in its sole discretion, for any reason, with or without cause). Upon the resignation or removal hereunder of an ECC Board Member, ECC, and only ECC, shall promptly appoint a replacement who, upon acceptance thereof, shall thereupon serve as an ECC Board Member hereunder. Upon the resignation or removal of a Lotus Board Member, Lotus, and only Lotus, shall promptly appoint a replacement who, upon acceptance thereof, shall thereupon serve as a Lotus Board Member hereunder. 3.4 Meetings of the Board of Directors. ---------------------------------- 12 3.4.1 Notice and Conduct of Meetings. Meetings of the Board of ------------------------------ Directors may be called in the discretion of the Board of Directors or by either of the co-Chairmen of the Company. Meetings of the Board of Directors may be held at any place designated in the notice of the meeting or at such place as may be approved by the Board of Directors. In the absence of any such designation, meetings of the Board of Directors shall be held at the offices of ECC located at 2425 Olympic Boulevard, Santa Monica, California. Board of Director members may participate in a meeting through the use of conference telephone or similar communications equipment, so long as all members of the Board of Directors participating in such meeting can hear one another. Participation in a meeting in such manner constitutes presence in person at such meeting. 3.4.2 Meetings. The provisions of this Section 3.4.2 govern -------- meetings of the Board of Directors if the Board of Directors elects, in its discretion, to hold meetings. Unless the Board of Directors decide otherwise, the Board of Directors will have regular, quarterly meetings. Any action required or permitted to be taken by the Board of Directors may be taken by the members of the Board of Directors without a meeting if a quorum of the members of the Board of Directors individually or collectively consent in writing to such action. Such action by written consent will have the same force and effect as a vote at a meeting of the members of the Board of Directors. 3.5 Appointment of Officers. The Board of Directors may at any time ----------------------- appoint one or more officers of the Company (each, an "Officer"). The officers of the Company may include, without limitation, a chairperson (and co- chairpersons, if more than one), a chief executive officer (or co-chief executive officers, if more than one), a president, one or more vice presidents, a chief operations officer (and one or more assistants), a secretary (and one or more assistants), and a chief financial officer or treasurer (and one or more assistants). Except as otherwise provided, the officers will serve at the pleasure of the Board of Directors. Any individual may hold any number of offices. The general areas of responsibility and specific powers and duties of each officer will be as determined by the Board of Directors from time to time. ECC shall be entitled to appoint (or substitute) one co-Chairperson from time to time (herein referred to as the "ECC Chairperson") and Lotus shall be entitled to appoint (or substitute) one co-Chairperson from time to time (herein referred to as the "Lotus Chairperson"). The co-Chairpersons shall, in addition to other duties and responsibilities designated from time to time, have such duties and responsibilities as like-titled officers of a Delaware corporation. The president will, in addition to other duties and responsibilities designated from time to time by the Board of Directors, manage the marketing and other day-to- day operations of the Company. The initial Officers of the Company are set forth on Exhibit B, attached hereto. 3.6 Material Decisions. Notwithstanding any other provision to the ------------------ contrary hereunder, neither the Board of Directors nor any officer of the Company shall have the authority to adopt any Material Decisions (as defined below) without the written approval of both of the Managers, which approval may be given or withheld in their sole discretion. For this purpose, ECC, as Manager, may act through the ECC Chairperson who is hereby authorized to give or withhold such approval in his or her sole discretion on behalf of ECC, and Lotus, as Manager, may act through the Lotus Chairperson who is hereby authorized to give or withhold such approval in his or her sole discretion, provided, however, that with respect to matters described 13 in Sections 3.6.8, 3.6.9, 3.6.13 or 3.6.14, below each Member may act through one or more of its authorized officers. The term "Material Decisions" shall consist of any of the following actions: 3.6.1 Any sale of all or substantially all of the assets of the Company; 3.6.2 Any merger, consolidation or other reorganization involving the Company; 3.6.3 Any amendment to the Certificate of Formation or this Agreement; 3.6.4 Any issuance or redemption of any Membership Interests by the Company; 3.6.5 Any increase or decrease in the authorized number of members on the Board of Directors; 3.6.6 The adoption, approval or termination of any equity incentive plan, profit-sharing, pension or other similar arrangement; 3.6.7 Any issuance and/or authorization by the Company of any equity securities and/or securities convertible into equity securities of the Company (except pursuant to any previously approved equity incentive plan or other similar arrangement); 3.6.8 The execution of any promissory note, guarantee or other form of indebtedness in excess of ten thousand dollars ($10,000) which is not contemplated by the Budget; 3.6.9 Enter into (i) any mergers or joint ventures involving the Company, or acquisitions of assets or businesses (other than acquisitions of assets in excess of ten thousand dollars ($10,000) in the ordinary course of business) or (ii) any divestitures of assets of the Company in excess of ten thousand dollars ($10,000), except in each case, to the extent contemplated by the Budget; 3.6.10 Any dissolution or liquidation of the Company, or reorganization of the Company as a corporation pursuant to Section 3.9 hereof; 3.6.11 Any transaction involving the direct or indirect assignment, sale, licensing or other transfer of any trademark, logo, brand or other similar intangible asset owned by the Company; 3.6.12 Any amendments to the Budget and any negative variance from any line item in such Budget of greater than ten percent (10%); 3.6.13 The Company's entering into any representation agreements with third-party broadcasting companies using Spanish language, except that the president shall be authorized, on behalf of the Company, to enter into representation agreements with a single station or with a group of stations consisting of not more than two (2) at any one time on customary terms then being employed by the Company; 14 3.6.14 Approve the settlement of any claim, suit, action, case or proceeding involving payment by the Company in excess of ten thousand dollars ($10,000) (after taking into account insurance proceeds payable in connection therewith to the Company) or injunctive relief against the Company; 3.6.15 Approve transactions between the Company and any Member or its Affiliates; and 3.6.16 Termination or amendment of any Representation Contracts. 3.7 Dispute Resolution for Material Decisions. If the Managers do not ----------------------------------------- agree on a proposed Material Decision, then within fifteen (15) business days after receipt of written notice from either co-Chairperson of the Company that a Material Decision is required, either Manager shall be entitled to submit to the other Manager in writing a bona fide, specific course of action which such Manager believes is more advantageous to the Company than the course of action (if any) proposed by the Board of Directors (a "Notice of Alternative"). In the event that neither Manager submits a Notice of Alternative within said fifteen (15) business day period, then the decision of the Board of Directors shall be final and management of the Company shall be authorized to operate and control the affairs of the Company in accordance with said decision. If either Manager submits a Notice of Alternative in a timely fashion and the Managers fail to agree on the Material Decision within fifteen (15) business days after receipt by the non-submitting Manager of the Notice of Alternative, then the matter or disagreement shall be resolved by binding arbitration conducted in accordance with the procedures set forth in Section 10.3 of this Agreement. 3.8 Standards of Care; Liability and Indemnification. ------------------------------------------------ 3.8.1 Standards of Care. The duty of care of any Manager or any ----------------- member of the Board of Directors in the discharge of his, her or its duties, in his, her or its capacity as such, to the Company and its Members is limited to acting in good faith and in a manner reasonably believed to be in the best interests of the Company. No Manager or member of the Board of Directors will be liable to the Company or to any Member for any act or failure to act pursuant to this Agreement or otherwise if he, she or it acted in good faith and reasonably believed that such act or failure to act was in the best interests of the Company. 3.8.2 Indemnification. The Company shall indemnify, defend and --------------- hold harmless, each member of the Board of Directors, each Manager, their respective Affiliates and subsidiaries, and any and all officers, directors, employees, and agents of any of the foregoing (individually, an "Indemnitee") to the fullest extent permitted by law from and against any and all losses, claims, demands, costs, damages, liabilities, joint or several, expense of any nature (including attorneys' fees and disbursements), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Indemnitee may be involved, or threatened to be involved as a party or otherwise, relating to the performance or nonperformance of any act concerning the activities of the Company, if (i) the Indemnitee acted in good faith and in a manner it believed to be in, or not contrary to, the best interests of the Company, and (ii) the Indemnitee's conduct did not constitute gross negligence or willful misconduct. The termination 15 of an action, suit or proceeding by judgment, order, settlement, or upon a plea of nolo contendere or its equivalent, shall not, in and of itself, create a presumption or otherwise constitute evidence that the Indemnitee acted in a manner contrary to that specified in clauses (i) or (ii) above. Any indemnification provided hereunder shall be satisfied solely out of the assets of the Company, as an expense of the Company. No Member shall be subject to personal liability by reason of these indemnification provisions. The provisions of this Section 3.8.2 are for the benefit of the Indemnitees and shall not be deemed to create any rights for the benefit of any other Person. 3.8.3 Reliance. The Managers and the members of the Board of -------- Directors will be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any of its other Managers, other members of the Board of Directors, Members, officers, employees, or by any other person, as to matters such person reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company including information, opinions, reports, or statements as to the value and amount of the assets, liabilities, profits or losses of the Company or any other facts pertinent to the existence and amount of assets from which distributions to Members may be paid. 3.9 Reorganization as a Corporation. If the Board of Directors ------------------------------- determines that the conversion of the Company from a limited liability company to a corporation would be advantageous to the Company and its Members, and such conversion is approved by the Managers, the Members agree to take all actions necessary to effect such conversion, including either the approval of a merger of the Company with a newly formed corporation, or the contribution of all of the Company's Membership Interests (either directly or indirectly) to a newly formed corporation, in each case with each Member receiving substantially equivalent ownership interests, voting rights, and investor protections as existed immediately prior to such merger or contribution; it being agreed that (by way of example, and not by way of limitation) common stock in a successor corporation will be considered to be a "substantially equivalent ownership interest" if the number of shares received by each Member in exchange for such Member's interest in the Company is based on the proportionate dollar amounts that each would have received had the Company been liquidated and the proceeds distributed in accordance with the provisions of this Agreement (i.e., in accordance with positive Capital Account balances). 3.10 Contractual Authority. Only those Officers of the Company and/or --------------------- any other individuals associated with the Company who have been given authority by the Board of Directors to do so may execute on behalf of the Company any note, mortgage, evidence of indebtedness, contract, certificate, statement, conveyance, or other instrument in writing, or any assignment or endorsement thereof. Any person dealing with the Company or the Board of Directors may rely upon a certificate signed by any member of the Board of Directors as to (a) the identity of the members of the Board of Directors or any other Member of the Company, (b) the persons who are authorized to execute and deliver any instrument or document for or on behalf of the Company or (c) any act or failure to act by the Company or as to any other matter whatsoever involving the Company or any Member. 3.11 Transactions Between the Company and Members. The Company may -------------------------------------------- engage in transactions with any Member or its Affiliates (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service, or the 16 establishment of any salary, other compensation or other terms) so long as such transaction is not expressly prohibited by this Agreement, is in accordance with the Budget and so long as such relationship is fully disclosed among the parties and the terms and conditions of such transaction are, on an overall basis, fair and reasonable to the Company and are at least as favorable to the Company as those that are otherwise available from persons capable of similarly performing them and in similar transactions between parties operating at arm's length. 3.12 Incentive Compensation. The Company may develop a program for ---------------------- incentive compensation to employees and other service providers of the Company consisting of cash bonuses and/or other profit sharing mechanisms on such terms as may be determined by the Board of Directors. In addition, ECC agrees to consider the issuance of shares of its Class A Common Stock (and/or options on the same) to employees and other service providers of the Company pursuant to ECC's 2000 Omnibus Equity Incentive Plan (the "Plan"), such issuances (if any) to be on terms and conditions determined from time to time by the Board of Directors (and subject to approval by ECC's board of directors); provided, however, that any time ECC issues a share of its Class A Common Stock (whether pursuant to an exercise of stock option, a direct issuance of stock, or otherwise) to an employee or other service provider of the Company pursuant to the Plan, the following shall occur (or shall be deemed to occur): 3.12.1 The Company shall be deemed to have purchased from ECC such share of Class A Common Stock for an amount of cash equal to the fair market value of such share of stock at the time of issuance; 3.12.2 ECC shall be deemed to have made a Capital Contribution to the Company at the time of such stock issuance in an amount of cash equal to the amount of cash deemed paid to ECC pursuant to the immediately preceding clause; 3.12.3 The Company shall thereupon be deemed to have transferred such share of stock to the recipient thereof and any cost, deduction or expense of the Company as a result thereof shall, notwithstanding any other provision of this Agreement, be specially allocated to ECC to the extent of the amount of ECC's deemed capital contribution under Section 3.12.1, above; and 3.12.4 Any net proceeds payable in respect of such share of stock by the recipient of such share of stock in cash or other property (including the amount of any exercise price payable upon exercise of a stock option or upon the receipt of restricted stock, but excluding any amounts in the nature of repayment of a loan to the recipient made by the Company in respect of the recipient's acquisition of the shares) shall be paid directly to ECC, provided, however, that amounts so paid shall be treated for purposes of this Agreement as if they had been received by the Company and then immediately distributed to ECC, but only to the extent that the amount of the deemed Capital Contribution described in Section 3.12.1, above, exceeds the amount of the Company's deduction with respect to the issuance of such shares allocable to ECC pursuant to this Section 3.12 (such deemed distribution to be treated as a distribution for all purposes under this Agreement). 3.12.5 ECC shall thereafter be entitled to receive a priority distribution and allocation of Net Profits (the "ECC Allocation") pursuant to Article 4, below, in an amount 17 equal to the excess of the fair market value of such share of stock (as described under Section 3.12.1, above), over the amount of such proceeds paid by the recipient to ECC for such share of stock. 3.13 Other Employee Benefits. To the extent possible, all employees ----------------------- of the Company shall be covered by Lotus' insurance programs and employee benefit programs. The Company will reimburse Lotus for its actual expenses incurred pursuant to this Section 3.13. 3.14 Insurance. The Company may purchase and maintain insurance, to --------- the extent and in such amounts as the Board of Directors shall in their sole discretion deem reasonable on behalf of any Member, members of the Board of Directors, Officer, Affiliate of a Member, or employee or agent of the Company or of any Person listed in this Section 3.14. ARTICLE 4 CAPITAL ACCOUNTS, DISTRIBUTIONS AND ALLOCATIONS 4.1 Capital Accounts. A capital account for each Member (the "Capital ---------------- Accounts") will be established on the Company's books and records. The Capital Accounts will be maintained in accordance with the following provisions: 4.1.1 To each Member's Capital Account there shall be added (a) such Member's Capital Contributions, (b) such Member's allocable share of Net Profits and any items in the nature of income or gain that are specially allocated to such Member pursuant to Sections 4.2, 4.3, or 4.4 hereof or other provisions of this Agreement, and (c) the amount of any Company liabilities assumed by such Member or which are secured by any property distributed to such Member. 4.1.2 From each Member's Capital Account there shall be subtracted (a) the amount of (i) cash and (ii) the Book Value of any Company assets (other than cash) distributed to such Member (other than any payment of principal and/or interest to such Member pursuant to the terms of a loan made by the Member to the Company) pursuant to any provision of this Agreement, (b) such Member's allocable share of Net Losses and any other items in the nature of expenses or losses that are specially allocated to such Member pursuant to Sections 4.2, 4.3, or 4.4 hereof or other provisions of this Agreement, and (c) liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company. 4.1.3 In the event any interest in the Company is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest. 4.1.4 In determining the amount of any liability for purposes of Sections 4.1.1 and 4.1.2 hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations. 4.1.5 The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with 18 Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted and applied in a manner consistent with such Regulations. In the event that the Board of Directors shall determine that it is prudent to modify the manner in which the Capital Accounts, or any additions or subtractions thereto, are computed in order to comply with such Regulations, the Board of Directors may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Member pursuant to Section 7.2 hereof upon the dissolution of the Company. The Board of Directors shall also make (a) any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company's balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (b) any appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Sections 1.704-1(b) and 1.704-2. 4.2 Allocations. After giving effect to the special allocations set ----------- forth in Section 4.3, below, and except as may otherwise be provided in this Agreement, Net Profit or Net Losses for any period shall be allocated at the end of the Company's fiscal year and at such times as the Book Value of any Company asset is adjusted pursuant to Section 1.1.5 among the Members as follows: 4.2.1 Net Profits. Net Profits of the Company [(other than Net ----------- Profits arising in connection with any Capital Transaction, as described in Section 4.2.3, below)] for any period shall be allocated among the Members in the following order and priority: (a) First, to each of the Members in proportion to and to the extent of the excess of the aggregate amount of Net Losses allocated to such Member pursuant to Section 4.2.2(c), below, over the aggregate amount of Net Profits allocated to such Member pursuant to this Section 4.2.1(a). (b) Then, to each of the Members in proportion to and to the extent of the excess of (i) the sum of (A) the aggregate Priority Amount (if any) of such Member plus (B) the aggregate amount of Net Losses previously allocated to such Member pursuant to Section 4.2.2(b), below, over (ii) aggregate amount of Net Profits previously allocated to such Member pursuant to this Section 4.2.1(b). (c) Thereafter, to each of the Members in proportion to their respective Percentage Interests. 4.2.2 Net Losses. Net Losses of the Company for any period shall ---------- be allocated among the Members in the following order and priority: (a) First, to each of the Members in proportion to and to the extent of the excess of the aggregate amount of Net Profits previously allocated to each such Member pursuant to Section 4.2.1(c), above, over the aggregate amount of Net Losses allocated to such Member pursuant to this Section 4.2.2(a). (b) Then, to each of the Members in proportion to and to the extent of the excess of the aggregate amount of Net Profits previously allocated to such Member 19 pursuant to Section 4.2.1(b), above, over the aggregate amount of Net Losses allocated to such Member pursuant to this Section 4.2.2(b). (c) Thereafter, to each of the Members in proportion to their respective relative Capital Account balances (increased for purposes of this Section 4.2.2 by each Member's share of Company Minimum Gain and Member Minimum Gain). 4.2.3 Net Profits From Capital Transactions. Any Net Profits of ------------------------------------- the Company with respect to any period arising in connection with a sale of all or substantially all of the Company's assets (including, for this purpose, any adjustments to the Book Value of the Company's assets pursuant to Section 1.1.5(b), above) (a "Capital Transaction"), shall be allocated among the Members in the following order and priority: (a) First, to each of the Members in proportion to and to the extent of the excess of the aggregate amount of Net Losses allocated to such Member pursuant to Section 4.2.2(c), above, over the aggregate amount of Net Profits allocated to such Member pursuant to Section 4.2.1(a), above or pursuant to this Section 4.2.3. (b) Then, to each of the Members in proportion to and to the extent of the excess of (i) the sum of (A) the aggregate Priority Amount (if any) of such Member plus (B) the aggregate amount of Net Losses previously allocated to such Member pursuant to Section 4.2.2(b), above, over (ii) the aggregate amount of Net Profits allocated to such Member pursuant to Section 4.2.1(b), above, or pursuant to this Section 4.2.3(b). (c) Then, to each of the Members in a manner which, to the fullest extent possible, results in a Capital Account balance for each Member (determined without regard to any allocation amounts pursuant to Section 4.2.3(b) or Section 4.2.1(b)) which, as a proportion of the aggregate Capital Account balances of all Members, is equal to such Member's Percentage Interest.] 4.3 Regulatory Allocations. Notwithstanding the foregoing provisions ---------------------- of this Article 4, the following special allocations shall be made in the following order of priority: 4.3.1 If there is a net decrease in Company Minimum Gain during a Company taxable year, then each Member shall be allocated items of Company income and gain for such taxable year (and, if necessary, for subsequent years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, determined in accordance with Regulations Section 1.704-2(g)(2). This Section 4.3.1 is intended to comply with the minimum gain chargeback requirement of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith. 4.3.2 If there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Company taxable year, each Member who has a share of the Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704- 2(i)(5), shall be specially allocated items of Company income and gain for such taxable year (and, if necessary, subsequent years) in an amount equal to such Member's share of the net decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in a manner consistent with the provisions of 20 Regulations Section 1.704-2(g)(2). This Section 4.3.2 is intended to comply with the partner nonrecourse debt minimum gain chargeback requirement of Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith. 4.3.3 If any Member unexpectedly receives an adjustment, allocation, or distribution of the type contemplated by Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of income and gain shall be allocated to all such Members (in proportion to the amounts of their respective Adjusted Capital Account Deficits) in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit of such Member as quickly as possible. It is intended that this Section 4.3.3 qualify and be construed as a "qualified income offset" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d). 4.3.4 If the allocation of Net Loss to a Member as provided in Section 4.2.2 hereof would create or increase an Adjusted Capital Account Deficit, there shall be allocated to such Member only that amount of Net Loss as will not create or increase an Adjusted Capital Account Deficit. The Net Loss that would, absent the application of the preceding sentence, otherwise be allocated to such Member shall be allocated to the other Members in accordance with their relative Percentage Interests, subject to the limitations of this Section 4.3.4. 4.3.5 To the extent that an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its interest in the Company, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company in the event that Regulations Section 1.704- 1(b)(2)(iv)(m)(2) applies, or to the Members to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies. 4.3.6 The Nonrecourse Deductions for each taxable year of the Company shall be allocated to the Members in proportion to their Percentage Interests. 4.3.7 The Member Nonrecourse Deductions shall be allocated each year to the Member that bears the economic risk of loss (within the meaning of Regulations Section 1.752-2) for the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable. 4.3.8 The allocations set forth in this Sections 4.3 (the "Regulatory Allocations") are intended to comply with certain requirements of Regulations Sections 1.704-1(b) and 1.704-2(i). Notwithstanding the provisions of Section 4.2, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other items and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to each such Member if the Regulatory Allocations had not occurred. 21 4.4 Tax Allocations. --------------- 4.4.1 Except as provided in Sections 4.4.2 hereof, for income tax purposes under the Code and the Regulations each Company item of income, gain, loss and deduction shall be allocated between the Members as its correlative item of "book" income, gain, loss or deduction is allocated pursuant to this Article 4. 4.4.2 Tax items with respect to Company assets that are contributed to the Company with a Book Value that varies from its basis in the hands of the contributing Member immediately preceding the date of contribution shall be allocated between the Members for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation. The Company shall account for such variation under any method approved under Code Section 704(c) and the applicable Regulations as chosen by the Board of Directors, including, without limitation, the "traditional method" as described in Regulations Section 1.704-3(b). If the Book Value of any Company asset is adjusted pursuant to Section 1.1.5, subsequent allocations of income, gain, loss and deduction with respect to such Company asset shall take account of any variation between the adjusted basis of such Company asset for federal income tax purposes and its Book Value in the same manner as under Code Section 704(c) and the Regulations promulgated thereunder under any method approved under Code Section 704(c) and the applicable Regulations as chosen by the Board of Directors. Allocations pursuant to this Section 4.4.2 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Net Profits, Net Losses and any other items or distributions pursuant to any provision of this Agreement. 4.5 Other Provisions. ---------------- 4.5.1 For any fiscal year during which any part of a Membership Interest or Economic Interest is transferred between the Members or to another Person, the portion of the Net Profits, Net Losses and other items of income, gain, loss, deduction and credit that are allocable with respect to such part of a Membership Interest or Economic Interest shall be apportioned between the transferor and the transferee under any method allowed pursuant to Section 706 of the Code and the applicable Regulations as determined by the Board of Directors. 4.5.2 In the event that the Code or any Regulations require allocations of items of income, gain, loss, deduction or credit different from those set forth in this Article 4, the Board of Directors is hereby authorized to make new allocations in reliance on the Code and such Regulations, and no such new allocation shall give rise to any claim or cause of action by any Member. 4.5.3 For purposes of determining a Member's proportional share of the Company's "excess nonrecourse liabilities" within the meaning of Regulations Section 1.752-3(a)(3), each Member's interest in Net Profits shall be such Member's Percentage Interest. 4.5.4 The Members acknowledge and are aware of the income tax consequences of the allocations made by this Article 4 and hereby agree to be bound by the 22 provisions of this Article 4 in reporting their shares of Net Profits, Net Losses and other items of income, gain, loss, deduction and credit for federal, state and local income tax purposes. 4.6 Distributions. -------------- 4.6.1 Quarterly Tax Distributions. The Company shall, upon --------------------------- resolution of the Board of Directors, make distributions of Available Cash (if any) to the Members as soon as is practicable following the close of each of the first three calendar quarters of each calendar year in amounts equal to the Presumed Tax Liability with respect to each Member relating to such quarter (as estimated by the Board of Directors based on the results of such quarter). The Company may follow the procedures described in the preceding sentence with respect to the fourth quarter of each such calendar year, or, at the option of the Board of Directors, the Company's accountants shall compute the exact amount of the annual tax liability with respect to each Member relating to allocations of income and gain, loss and deduction from the Company and the Company shall, upon resolution of the Board of Directors, distribute to each Member out of Available Cash (if any) an amount equal to the excess (if any) of such actual tax liability over the three previous quarterly distributions of Available Cash with respect to such Member set forth above. Any amounts distributed to a Member pursuant to this Section 4.6.1 shall be treated as a dollar-for-dollar advance against the first amounts otherwise distributable to such Member pursuant to Section 4.6.2, below. "Presumed Tax Liability" means, with respect to any Member, the positive amount, if any, equal to (a) the aggregate amount of items of Company income, gain, loss, deduction, and credit (as computed for income tax purposes) allocated to the Member pursuant to this Agreement for an applicable period, multiplied by (b) the highest marginal rate (as determined by the Board of Directors) of Federal, state, local and foreign income, franchise and similar Taxes applicable to any Member in respect of such items for such period, taking into account the character of such items of income, the deductibility of state and local taxes for Federal income tax purposes and the creditability or deductibility of foreign income taxes for Federal income tax purposes. 4.6.2 Operating Distributions. Except as otherwise provided ----------------------- herein, any Available Cash shall be distributed at such times as determined by the Board of Directors on a pro rata basis to all Members in the following order and priority: (a) First, to each Member in proportion to and to the extent of the excess of the Priority Amount (if any) of such Member over the aggregate amounts distributed to such Member pursuant to this Section 4.6.2(a). (b) Then, among all the Members in proportion to their respective Percentage Interests. 4.6.3 Liquidating Distributions. Distributions in connection ------------------------- with the dissolution and liquidation of the Company shall be made among all Members in proportion to and to the extent of such Member's positive Capital Account balance. 4.6.4 Withholding. The Company may withhold distributions or ----------- portions thereof if it is required to do so by any applicable rule, regulation, or law, and each Member hereby authorizes the Company to withhold from or pay on behalf of or with respect to 23 such Member any amount of federal, state, local or foreign taxes that the Board determines that the Company is required to withhold or pay with respect to any amount distributable or allocable to such Member pursuant to this Agreement. Any amount paid on behalf of or with respect to a Member pursuant to this Section 4.6.4 shall constitute a loan by the Company to such Member, which loan shall be repaid by such Member within fifteen (15) days after notice from the Company that such payment must be made; provided, however, that there shall be no such loan treatment if (a) the Company withholds such payment from a distribution which would otherwise be made to the Member or (b) the Board determines, in its sole and absolute discretion, that such payment may be satisfied out of Available Cash which would, but for such payment, be distributed to the Member. Each Member hereby unconditionally and irrevocably grants to the Company a security interest in such Member's Membership Interests in the Company to secure such Member's obligation to pay to the Company any amounts required to be paid pursuant to this Section 4.6.4 In the event that a Member fails to pay any amounts owed to the Company pursuant to this Section 4.6.4 when due, the remaining Member(s) may, in their respective sole and absolute discretion, elect to make the payment to the Company on behalf of such defaulting Member, and in such event shall be deemed to have loaned such amount to such defaulting Member and shall succeed to all rights and remedies of the Company as against such defaulting Member (including, without limitation, the right to receive distributions). Any amounts payable by a Member hereunder shall bear interest at 15.0% from the date such amount is due (i.e., 15 days after demand) until such amount is paid in full. Each Member shall take such actions as the Company shall request in order to perfect or enforce the security interest created hereunder. A Member's obligations hereunder shall survive the dissolution, liquidation, or winding up of the Company. ARTICLE 5 TRANSFER AND ASSIGNMENT OF INTERESTS 5.1 Transfers. Except as provided in this Article 5, no Member may --------- Transfer all or any portion of its Membership Interest or Economic Interest (or beneficial interest therein) to any other Person. Any purported Transfer which is not in accordance with this Agreement shall be null and void. After the consummation of any Transfer of any part of a Membership Interest, the Membership Interest so Transferred shall continue to be subject to the terms and provisions of this Agreement and any further Transfers shall be required to comply with all the terms and provisions of this Agreement. 5.2 Substitution of Members. A transferee of a Membership Interest ----------------------- shall have the right to become a substitute Member only if consent of the Board of Directors is given in accordance with Section 5.1, such transferee executes an instrument satisfactory to the Board of Directors accepting and adopting the terms and provisions of this Agreement, and such transferee pays any reasonable expenses in connection with his, her or its admission as a new Member. The admission of a substitute Member shall not result in the release of the Member who assigned the Membership Interest from any liability that such Member may have to the Company. 5.3 Affiliate Transfers. Any Member may, at any time, without the ------------------- consent of any other Member, Transfer its entire Membership Interest (but not a portion thereof) to any Affiliate of such transferring Member. 24 5.4 Buy/Sell Agreement. ------------------ 5.4.1 At any time after August 10, 2003, Lotus or ECC may, by written notice to the other (the "Buy/Sell Notice"), offer to either buy all (but not less than all) of the other party's Membership Interests pursuant to this Section 5.4 or to sell all (but not less than all) of its Membership Interests to the other party pursuant to this Section 5.4 (any party, be it Lotus or ECC, submitting such a Buy/Sell Notice is herein referred to as the "Submitting Party" and any party, be it Lotus or ECC, receiving such a Buy/Sell Notice is herein referred to as the "Receiving Party"). Such Buy/Sell Notice shall state that it is being submitted pursuant to this Section 5.4 and shall set forth the material terms and conditions pursuant to which the Submitting Party wishes to buy or sell and a proposed closing date for any such sale or purchase, which closing date shall (unless otherwise agreed by the parties) not be less than thirty (30) days after submission of the Buy/Sell Notice nor more than sixty (60) days after such submission. Within thirty (30) days of having received such Buy/Sell Notice from the Submitting Party, the Receiving Party may either (i) provide the Submitting Party with written notice of its acceptance of the Submitting Party's offer in which case the transaction contemplated by the Buy/Sell notice shall be consummated pursuant to the terms set forth therein and in this Section 5.4, or (ii) in the case of a Buy/Sell Notice pursuant to which the Submitting Member is offering to buy all of the Receiving Member's Membership Interests, provide the Submitting Party with a written notice electing to purchase all (but not less than all) of the Submitting Party's Membership Interest, in which case the Submitting Party's Membership Interest shall be sold to the Receiving Party pursuant to the terms and conditions set forth in the Buy/Sell Notice and in this Section 5.4, or (iii) in the case of a Buy/Sell Notice pursuant to which the Submitting Member is offering to sell all of the Submitting Member's Membership Interests to the Receiving Member, provide the Submitting Member with a written notice electing to sell all (but not less than all) of the Receiving Member's Membership Interests to the Submitting Member pursuant to the terms set forth in the Buy/Sell Notice and in this Section 5.4. If the Receiving Party does neither of the three events described in the preceding sentence, it shall be deemed to have accepted the Submitting Member's offer set forth in the Buy/Sell Notice. The applicable purchase price in any transaction triggered by a Buy/Sell Notice shall be an amount of cash (payable at the closing of such transaction) equal to the greater of (A) the sum of $2,650,000 plus any cash Capital Contributions made by the selling Member (be it ECC or Lotus) pursuant to Section 2.2, above (i.e., not including the initial Capital Contributions of the Members set forth in Section 2.1, above, such initial Capital Contributions, if in the form of cash, being included in the $2,650,000 figure set forth above), or (B) the product of the Presumed Enterprise Value and the selling Member's Percentage Interest. 5.4.2 Notwithstanding the foregoing, however, any Membership Interest which is transferred from Lotus to ECC or from ECC to Lotus pursuant to the procedures of this Section 5.4, shall not include the selling party's (be it a Submitting Party or a Receiving Party) rights to receive any Priority Amounts from the Company; instead, within sixty (60) days of the close of such transfer of a Membership Interest, the selling member (again, be it a Submitting Party or a Receiving Party) shall receive from the Company a final distribution consisting of previously accrued Priority Amounts with respect to which such party has, on or before such closing date, received a net allocation of Net Income from the Company, but only to the extent such party has not previously received distributions from the Company pursuant to Section 4.6.2(a), above. 25 ARTICLE 6 BOOKS AND RECORDS; ACCOUNTING 6.1 Company Books and Records. The books and records of the Company ------------------------- will be maintained at the principal office of the Company and will be available for examination by any Member or such Member's duly authorized representatives at any reasonable time upon written notice by such Member to the Company. The Company will maintain the following books and records: 6.1.1 A current list of the full name and last known business address of each Member, their respective Percentage Interests together with the Capital Contributions and Capital Account balances of each Member; 6.1.2 A copy of the Certificate of Formation and any and all amendments thereto together with executed copies of any powers of attorney pursuant to which the Certificate of Formation or any amendments thereto have been executed; 6.1.3 A copy of this Agreement and any and all amendments thereto or restatements thereof, together with executed copies of any powers of attorney pursuant to which this Agreement or any such amendments or restatements thereto have been executed; 6.1.4 Copies of the Company's federal, state, and local income tax or information returns and reports, if any, for the six (6) most recent taxable years; and 6.1.5 Copies of the annual financial statements of the Company, if any, for the six (6) most recent fiscal years. 6.2 Inspection of Records. Each Member shall have the right, upon --------------------- reasonable written request and subject to such reasonable standards as the Board of Directors may from time to time establish, to obtain from the Board of Directors for purposes reasonably related to the Member's interest as a Member of the Company, the information set forth above in Section 6.1, as well as information regarding the status of the business and financial condition of the Company (generally consisting of financial statements of the Company) and such other information regarding the affairs of the Company as is just and reasonable in light of the purpose related to the Member's interest as a Member for which such information is sought. The Board of Directors may, however, keep confidential from any Member any information that the Company is required by law or agreement to keep confidential. 6.3 Company Tax Returns and Tax Elections. The Company's accountants ------------------------------------- will be instructed by the Board of Directors to prepare and file all required tax returns for the Company. The Board of Directors will cause the Company to make any tax election necessary for completion of the Company tax returns. In the event of a distribution of property made in the manner provided in Section 734 of the Code, or in the event of a transfer of an interest in the Company by a Member made in the manner provided in Section 743 of the Code, the Board of Directors may, in its discretion, cause the Company to file an election under Section 754 of the Code. The Members agree to cooperate with the Board of Directors in connection with the making of any such elections. 26 6.4 Reports. ------- 6.4.1 The Company's books and records shall be audited at the Company's expense by such auditor as may be selected in the discretion of the Board of Directors. Monthly unaudited reports and financial statements will be distributed by the Company to each Member. Within one hundred and twenty (120) days following the end of each of the Company's fiscal years, the Company shall furnish to each Member an audited balance sheet, statement of operations, annual budget and business plan, all of which shall have been prepared in accordance with generally accepted accounting principles consistently applied (except as therein may be noted). 6.4.2 The Company shall cause to be filed, in accordance with the Delaware Act, all reports and documents required to be filed with any governmental agency. The Company shall cause to be prepared at least annually, information concerning the Company's operations necessary for the completion of the Member's federal and state income tax returns. The Company shall send or cause to be sent to each Member within ninety (90) days after the end of each taxable year such information as is necessary to complete the Member's federal and state income tax returns and a copy of the Company's federal, state and local income tax returns for such year. 6.5 Tax Matters for the Company. ECC shall be the "Tax Matters --------------------------- Partner" for the Company within the meaning of Section 6231 of the Code. The Tax Matters Partner shall have no authority to settle or compromise any matter in respect of taxes of the Company, to waive any period of limitations, or to otherwise bind the Company in any proceeding or claim in respect of Taxes of the Company, unless such authority is expressly conferred on the Tax Matters Partner by the Board of Directors. In addition, unless the Board of Directors expressly provides otherwise, the Board of Directors shall control any proceeding in respect of Taxes of the Company. The Board of Directors may, in their discretion, and subject to the requirements of the Code, remove and replace the Tax Matters Partner at any time and from time to time. ARTICLE 7 DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY 7.1 Events of Dissolution. The Company shall be dissolved and wound --------------------- up on the first to occur of any of the following events: 7.1.1 A sale of all or substantially all of the Company's assets; 7.1.2 The vote of all of the Members to dissolve the Company; 7.1.3 Any other event that Applicable Law specifies must operate as an event causing the dissolution of a limited liability company, notwithstanding any provision to the contrary in this Agreement; 7.1.4 At the election of a non-breaching Member, if it is determined in arbitration that a Member has materially breached this Agreement and the breaching Member 27 fails to pay the arbitration award or to otherwise comply with the arbitration order within sixty (60) days of the date that the final arbitration order is issued in accordance with Section 10.3. 7.1.5 At the election of the non-terminating Member, upon termination of the Representation Contracts applicable to a Member or its Affiliates. 7.2 Effect of Dissolution. The dissolution of the Company shall be --------------------- effective on the day on which the event occurs giving rise to the dissolution, but the Company shall not terminate until it wound up and its assets have been distributed as provided in Section 7.4 of this Agreement. Notwithstanding the dissolution of the Company, prior to the termination of the Company, the business of the Company and the affairs of the Members, as such, shall continue to be governed by this Agreement. 7.3 No Capital Contribution Upon Dissolution. Each Member shall look ---------------------------------------- solely to the assets of the Company for all distributions with respect to the Company, its Capital Contribution thereto, its Capital Account and its share of Net Profits or Net Losses, and shall have no recourse therefor (upon dissolution or otherwise) against any other Member. Accordingly, if any Member has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which the liquidation occurs), then such Member shall have no obligation to make any Capital Contribution with respect to such deficit, and such deficit shall not be considered a debt owed to the Company or to any other person for any purpose whatsoever. 7.4 Priority of Liquidating Distributions. Upon the occurrence of a ------------------------------------- dissolution event described in Section 7.1 above, the Company shall terminate. In the event of the dissolution and termination of the Company, the Board of Directors shall proceed with an orderly liquidation of the Company and the proceeds of such liquidation shall be applied and distributed in the following order of priority: 7.4.1 To creditors of the Company, whether they are or are not Members, for payment of the debts and liabilities of the Company and the expenses of liquidation; 7.4.2 To the setting up of any reserves that the Board of Directors may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company. Such reserves shall be paid over by the Board of Directors to a bank or other institutional escrow agent to be held for the purpose of disbursing such reserves in payment of the aforementioned contingencies, and at the expiration of such period as the Board of Directors may deem advisable, to distribute the balance in the manner provided in this Section 7.4; and 7.4.3 To the Members in the manner set forth in Section 4.6.3, above. ARTICLE 8 AMENDMENTS 8.1 General. Except as set forth in Section 8.2 below, any and all ------- amendments to this Agreement may be made only with the written consent of each Member. In making any 28 amendments, there shall be prepared and filed by, or for, the Board of Directors such documents and certificates as may be required under the Delaware Act and under the laws of any other jurisdiction applicable to the Company. 8.2 Special Rules. Notwithstanding Section 8.1, above, this Agreement ------------- may be amended by the Board of Directors, without the consent of any Member (a) to cure any ambiguity, to correct or supplement any provision hereof which may be inconsistent with any other provision hereof, or to make any other provision with respect to matters or questions arising under this Agreement not inconsistent with the intent of this Agreement, and (b) as provided elsewhere in this Agreement. ARTICLE 9 INVESTMENT REPRESENTATIONS Each Member hereby represents and warrants to, and agrees with, the other Members and the Company as follows: 9.1 Preexisting Relationship or Experience. By reason of its business -------------------------------------- or financial experience, or by reason of the business or financial experience of its financial advisor who is unaffiliated with and who is not compensated, directly or indirectly, by the Company or any affiliate or selling agent of the Company, it is capable of evaluating the risks and merits of an investment in the membership interest of the Company and of protecting its own interests in connection with this investment. 9.2 Investment Intent. It is acquiring the membership interest in the ----------------- Company for investment purposes for its own account only and not with a view to or for sale in connection with any distribution of all or any part of such membership interest. No other person will have any direct or indirect beneficial interest in or right to such membership interest. 9.3 No Registration of Interests. It acknowledges that the Membership ---------------------------- Interests of the Company have not been registered under the Securities Act, or under any applicable blue sky laws in reliance, in part, upon its representations, warranties, and agreements herein. 9.4 Restricted Securities. It understands that the Membership --------------------- Interests in the Company are "restricted securities" under the Securities Act in that such Membership Interests will be acquired from the Company in a transaction not involving a public offering, and that the Membership Interests may be resold without a registration under the Securities Act only in certain limited circumstances and that otherwise the Membership Interests must be held indefinitely. 9.5 No Obligations to Register. It represents, warrants, and agrees -------------------------- that the Company and the Board of Directors are under no obligation to register or qualify the Membership Interests of the Company under the Securities Act or under any state securities law, or to assist it in complying with any exemption from registration and qualification. 29 9.6 No Disposition in Violation of Law. Without limiting the ---------------------------------- representations set forth above, and without limiting anything contained elsewhere in this Agreement (including Article 5 concerning transfers of interests in the Company), it will not make any disposition of all or any part of its membership interest in the Company which will result in violation by it or by the Company of the Securities Act, or any other applicable securities laws. Without limiting the foregoing, it agrees not to make any disposition of all or any part of its membership interest in the Company unless and until it has notified the Company of the proposed disposition and has furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and, if reasonably requested by the Board of Directors, it has furnished the Company with a written opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of any securities under the Securities Act or the consent of or a permit from appropriate authorities under any applicable state securities laws. 9.7 Investment Risk. It acknowledges that the Membership Interests in --------------- the Company are speculative investments which involve a substantial degree of risk of loss of its entire investment in the Company, that it understands and takes full cognizance of the risks related to the purchase of such Membership Interests. 9.8 Investment Experience. It is an experienced investor in --------------------- unregistered securities of limited liability companies. 9.9 Restrictions on Transferability. It acknowledges that there are ------------------------------- substantial restrictions on the transferability of the Membership Interests in the Company pursuant to this Agreement, that there is no public market for such Membership Interests and that none is expected to develop, and that, accordingly, it may not be possible for it to liquidate its investment in the Company. 9.10 Information Reviewed. It has received and reviewed this -------------------- Agreement and the other information provided by the Company it considers necessary or appropriate for deciding whether to invest in the Company. 9.11 No Advertising. It has not seen, received, been presented with, -------------- or been solicited by any leaflet, public promotional meeting, article or any other form of advertising or general solicitation with respect to the sale of Membership Interests in the Company. 9.12 Indemnity. It, as applicable, agrees, severally and not jointly, --------- to indemnify and hold harmless the Company, each and every Member and members of the Board of Directors, and any officers, directors, shareholders, managers, members, employees, partners, agents, attorneys, registered representatives, and control persons of any such entity against any losses, liabilities, claims, damages and reasonable expenses whatsoever (including but not limited to reasonable attorneys' fees and any and all reasonable expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact, or arise out of or are based upon the omission or alleged omission to 30 state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. ARTICLE 10 MISCELLANEOUS 10.1 Notices. ------- 10.1.1 Any notice, election, demand, request, consent, approval, concurrence or other communication given or made under any provision of this Agreement shall be deemed to have been sufficiently given or made for all purposes only if it is in writing and it is: (i) delivered personally to the party to whom it is directed, (ii) sent by first class mail or overnight express mail, postage and charges prepaid, addressed to the party to whom it is directed, at its address set forth opposite its name on Exhibit "A", or (iii) telecopied to the party to whom it is directed, at its fax number set forth opposite its name on Exhibit "A". Any Member may change its address or facsimile number for purposes of this Agreement by giving the Company and any other Member, notice of such change in the manner provided above for the giving of notices. 10.1.2 Except as otherwise expressly provided in this Agreement, any such notice, election, demand, request, consent, approval, concurrence or other communication (i) given or made in the manner indicated in clause (i) of Section 10.1.1 above shall be deemed to be given or made on the day on which it was delivered; (ii) given or made in the manner indicated in clause (ii) of Section 10.1.1 above shall be deemed to be given or made on the second business day after the day on which it was deposited in a regularly maintained receptacle for the deposit of the United States' mail, or in the case of overnight express mail, on the business day immediately following the day on which it was deposited in a regularly maintained receptacle for the deposit of overnight express mail; and (iii) given or made in the manner indicated in clause (iii) of Section 10.1.1 above shall be deemed to be given or made when received by the telecopier or other device owned or operated by the intended recipient thereof. 10.2 Confidentiality. Each Member agrees that all non-public --------------- information received from or otherwise relating to, the Company or its Members or their respective Affiliates which constitutes proprietary trade secrets, know how, secret formulae, techniques or strategies or similar items of the Company, its Members or their respective Affiliates, shall be confidential, and shall not be disclosed or otherwise released to any other Person (other than another party hereto), without the written consent of the Members. The obligations of the parties hereunder shall not apply to the extent that the disclosure of information otherwise determined to be confidential is required by Applicable Law, provided that, prior to disclosing such confidential information, a party shall notify the Company thereof, which notice shall include the basis upon which such party believes the information is required to be disclosed. 10.3 Arbitration. The parties hereby agree that, claims, disputes or ----------- controversies of whatever nature, arising out of, in connection with, or in relation to the interpretation, performance or breach of this Agreement (or any other agreement contemplated by or related to this Agreement), including, without limitation, any claim based on contract, tort or statute, or the arbitrability of any claim hereunder (collectively, a "Claim") or final resolutions 31 of Material Decisions referred to in Section 3.6 shall be settled promptly and expeditiously, at the request of any party to this Agreement, exclusively by final and binding arbitration conducted in Los Angeles. Each Member shall appoint an arbitrator and the arbitrators selected by the Members shall jointly select another arbitrator. The final decision regarding the Claim or Material Decisions shall be determined by a majority vote of the arbitrators and in accordance with the Commercial Arbitration Rules then in effect of the American Arbitration Association. The parties expressly agree that the arbitrators shall determine the discovery methods that shall be available to the parties under this Section 10.3 as appropriate under the circumstances. Each party hereto expressly consents to, and waives any future objection to, such forum and arbitration rules. Judgment upon any award may be entered by any state or federal court having jurisdiction thereof. Except as required by law, no party nor the arbitrators shall disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties. Except as provided herein, the Federal Arbitration Act shall govern the interpretation, enforcement and all proceedings pursuant to this Section 10.3. The arbitrators' fees and any filing or other fees required by the Commercial Arbitration Rules shall, to the extent required, initially be paid by the party requesting arbitration, but shall be assessed against the party which does not prevail in the arbitration. Adherence to this dispute resolution process shall not limit the right of the parties hereto to obtain any provisional remedy, including without limitation, injunctive or similar relief, from any court of competent jurisdiction as may be necessary to protect their respective rights and interests pending arbitration. Notwithstanding the foregoing sentence, this dispute resolution procedure is intended to be the exclusive method of resolving any Claims arising out of or relating to this Agreement and is intended to be the final method of resolving any Material Decisions. 10.4 Entire Agreement. This Agreement, together with the Contribution ---------------- Agreement, the "Other Agreements" (as such term is defined in the Contribution Agreement) and such other documents contemplated herein or therein, constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and fully supersede any and all prior or contemporaneous agreements or understandings between the parties hereto pertaining to the subject matter hereof. 10.5 Further Assurances. Each of the parties hereto does hereby ------------------ covenant and agree on behalf of itself, its successors, and its assigns, without further consideration, to prepare, execute, acknowledge, file, record, publish, and deliver such other instruments, documents and statements, and to take such other action as may be required by law or reasonably necessary or advisable to effectively carry out the purposes of this Agreement. 10.6 Counterparts/Facsimile. This Agreement may be executed in any ---------------------- number of counterparts and all so executed shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original or the same counterpart. This Agreement may be executed by facsimile. 10.7 Governing Law. This Agreement is deemed to have been entered ------------- into and executed in the State of California, and all questions with respect to the construction of this Agreement and the rights and liabilities of the parties shall be determined in accordance with the 32 provisions of the internal laws of the State of California, without regard to conflicts of laws principles. 10.8 Binding Effect. Except as otherwise provided herein to the -------------- contrary, this Agreement shall be binding upon and inure to the benefit of the parties signatory hereto and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns. 10.9 Provisions Severable. The provisions of this Agreement are -------------------- severable. If any article, section, paragraph, provision or clause of this Agreement shall be enforceable or invalid, it shall not affect the enforceability or validity of any one or more of the other articles, sections, paragraphs or provisions of this Agreement. 10.10 Construction of Agreement. This Agreement shall be construed as ------------------------- if all parties prepared this Agreement. 10.11 Use of Pronouns/References to a Member. References to a Member -------------------------------------- in the singular or plural, as him, her, it or other like references, shall also, where the context so requires, be deemed to include the singular or the plural, or masculine, feminine or neuter reference, as the case may be. 10.12 Jurisdiction. Each Member hereby consents to the exclusive ------------ jurisdiction of the state and federal courts sitting in California in any action on a claim arising out of, under or in connection with this Agreement or the transactions contemplated by this Agreement (provided such claim is not otherwise required to be arbitrated). Each Member further agrees that personal jurisdiction over him, her or it may be effected by service of process by registered or certified mail addressed as provided in Section 10.1, above, and that when so made shall be as if served upon him, her or it personally within the State of California. 10.13 Reliance on Authority of Person Signing Agreement. If a Member ------------------------------------------------- is not a natural person, neither the Company nor any Member will (a) be required to determine the authority of the individual signing this Agreement to make any commitment or undertaking on behalf of such entity or to determine any fact or circumstance bearing upon the existence of the authority of such individual or (b) be responsible for the application or distribution of proceeds paid or credited to individuals signing this Agreement on behalf of such entity. 10.14 Parent Guaranty. As an inducement to ECC's execution of this --------------- Agreement, Lotus agrees to obtain the signature of Lotus Communications Corp., a California corporation (the "Parent"), on a Guaranty by Parent (the "Parent Guaranty"). [Remainder of Page Intentionally Left Blank] 33 IN WITNESS HEREOF, the parties have executed this Agreement as of the date first above written. ENTRAVISION COMMUNICATIONS CORPORATION, a Delaware corporation /s/ Walter F. Ulloa ------------------------------------ Walter F. Ulloa, Chairman and CEO LOTUS HISPANIC REPS CORP., a California corporation By:__________________________________ Name:________________________________ Its:_________________________________ [Signature Page to Limited Liability Agreement of Lotus/Entravision Reps LLC, a Delaware Limited Liability Company] IN WITNESS HEREOF, the parties have executed this Agreement as of the date first above written. ENTRAVISION COMMUNICATIONS CORPORATION, a Delaware corporation ____________________________________ Walter F. Ulloa, Chairman and CEO LOTUS HISPANIC REPS CORP., a California corporation By: /s/ Jerry Roy ---------------------------------------- Name: Jerry Roy -------------------------------------- Its: Senior Vice President and Secretary --------------------------------------- [Signature Page to Limited Liability Agreement of Lotus/Entravision Reps LLC, a Delaware Limited Liability Company] EXHIBIT "A"
Member Initial Capital Contrib.* Percentage Interest - ------ ------------------------- ------------------- Entravision Communications Corporation Cash $650,000 50% 2425 Olympic Boulevard, 6000 West Santa Monica, CA 90404 Phone: (310) 447-3870 Fax: (310) 447-3899 Attention: Chairman Lotus Hispanic Reps Corp. Cash $650,000 50% 6290 Sunset Boulevard, Suite 1500 Going Concern $100,000 Los Angeles, CA 90028 Phone: (323) 464-1311 Fax: (323) 464-0549 Attention: President
*The Initial Capital Accounts being based upon Capital Contributions to be made by each of the Members pursuant to the Contribution Agreement and Article 2 of this Agreement. 35 EXHIBIT "B" INITIAL MEMBERS OF BOARD OF DIRECTORS AND OFFICERS ECC Board Members - ----------------- Walter F. Ulloa Philip C. Wilkinson Jeffery A. Liberman Lotus Board Members - ------------------- Jim Kalmenson William Shriftman Mike Addison Officers/Titles - --------------- Co-Chairman (ECC Chairman) - Walter F. Ulloa Co-Chairman (Lotus Chairman) - Jim Kalmenson President - Mary Hawley 36 EX-23.2 6 dex232.txt CONSENT OF MCGLADREY & PULLON, LLP EXHIBIT 23.2 Independent Auditors' Consent We consent to the incorporation by reference in this Registration Statement of Entravision Communications Corporation on Form S-3 of our report, dated February 5, 2001, appearing in the Annual Report on Form 10-K of Entravision Communications Corporation for the year ended December 31, 2000. We also consent to the reference to our firm under the caption "Experts" in the Prospectus, which is part of this Registration Statement /s/ McGladrey & Pullen, LLP Pasadena, California January 30, 2002 -----END PRIVACY-ENHANCED MESSAGE-----