-----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, IBsYd/RU8rNRP9PPwQ+7jbY7ZJG8ZImcLJUE7Nxkat7uMZ7U6SmogyBrpG20TLrl Wx+ccCJJcG1Pi2Y9mS2LQQ== /in/edgar/work/20000915/0000944209-00-001500/0000944209-00-001500.txt : 20000923 0000944209-00-001500.hdr.sgml : 20000923 ACCESSION NUMBER: 0000944209-00-001500 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTRAVISION COMMUNICATIONS CORP CENTRAL INDEX KEY: 0001109116 STANDARD INDUSTRIAL CLASSIFICATION: [4833 ] IRS NUMBER: 954783236 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15997 FILM NUMBER: 723642 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 10-Q 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-15997 ENTRAVISION COMMUNICATIONS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of 95-4783236 incorporation or organization) (I.R.S. Employer Identification No.) 2425 Olympic Boulevard, Suite 6000 West Santa Monica, California 90404 (Address of principal executive office) (Zip Code) (310) 447-3870 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [ ] NO [X] As of September 15, 2000, there are 65,626,063 shares, $0.0001 par value per share, of the registrant's Class A common stock outstanding, 27,678,533 shares, $0.0001 par value per share, of the registrant's Class B common stock outstanding and 21,983,392 shares, $0.0001 par value per share, of the registrant's Class C common stock outstanding. ENTRAVISION COMMUNICATIONS CORPORATION TABLE OF CONTENTS Page Number ------ PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets as of June 30, 2000 (Unaudited) and December 31, 1999.......................................... 1 Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2000 (Unaudited) and 1999 (Unaudited) 2 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 (Unaudited) and 1999 (Unaudited)........... 3 Notes to Consolidated Financial Statements (Unaudited)......... 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 12 Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 23 PART II. OTHER INFORMATION Item 1. Legal Proceedings.............................................. 23 Item 2. Changes in Securities and Use of Proceeds...................... 24 Item 3. Defaults Upon Senior Securities................................ 25 Item 4. Submission of Matters to a Vote of Security Holders............ 25 Item 5. Other Information.............................................. 26 Item 6. Exhibits and Reports on Form 8-K............................... 27 ENTRAVISION COMMUNICATIONS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data)
June 30, 2000 December (Unaudited) 31, 1999 ------------- -------- ASSETS Current assets Cash and cash equivalents.............................................................. $ 4,606 $ 2,357 Restricted cash........................................................................ 9,597 - Receivables: Trade, net of allowance for doubtful accounts of 2000 $1,909; 1999 $979.............. 23,596 12,392 Related parties...................................................................... 273 273 Prepaid expenses and taxes............................................................. 5,449 355 --------- --------- Total current assets................................................................... 43,521 15,377 Property and equipment, net.............................................................. 40,356 27,230 Intangible assets, net................................................................... 488,271 152,387 Other assets, including deposits on acquisitions of 2000 $23,303; 1999 $8,742............ 32,153 10,023 --------- --------- $604,301 $205,017 ========= ========= LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND OWNERS' EQUITY Current liabilities Current maturities of notes and advances payable, related parties...................... $ 231 $ 231 Current maturities of long-term debt................................................... 117,306 1,389 Accounts payable and accrued expenses (including related parties of 2000 $460; 1999 $280)..................................................................... 22,981 7,479 --------- --------- Total current liabilities............................................................ 140,518 9,099 --------- --------- Long-term debt Subordinated note payable to Univision................................................. 120,000 10,000 Notes payable, less current maturities................................................. 250,004 155,917 --------- --------- 370,004 165,917 Deferred taxes........................................................................... 65,080 1,990 --------- --------- Total liabilities.................................................................... 575,602 177,006 --------- --------- Commitments and contingencies Series A mandatorily redeemable convertible preferred stock, $0.0001 par value,.......... - - 11,000,000 shares authorized; no shares issued or outstanding Members' capital Entravision Communications Company, L.L.C.............................................. - 59,645 Common stock of member corporations.................................................... - 1,256 Additional paid-in-capital of member corporations...................................... - 16,329 Accumulated deficit.................................................................... - (48,635) Stockholders' equity Class A common stock, $0.0001 par value, 260,000,000 shares authorized;................ 1 - shares issued and outstanding 2000 5,506,062 Class B common stock, $0.0001 par value, 40,000,000 shares authorized;................. 5 - shares issued and outstanding 2000 27,678,533 Class C common stock, $0.0001 par value, 25,000,000 shares authorized; no.............. - - shares issued or outstanding Additional paid-in capital............................................................. 36,017 - Deferred compensation.................................................................. (6,728) - Accumulated deficit.................................................................... - - --------- --------- 29,295 28,595 Less: stock subscription notes receivable................................................ (596) (584) --------- --------- 28,699 28,011 --------- --------- $604,301 $205,017 ========= =========
See Notes to Consolidated Financial Statements. 1 ENTRAVISION COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except share, per share and per membership unit data)
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ---------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------- Gross revenue (including network compensation from Univision of $2,258, $618, $3,304 and $1,358).................. $ 39,899 $ 16,141 $ 59,239 $ 29,154 Less agency commissions..................... 4,239 1,655 6,315 2,939 ------------ ------------ ------------ ------------ Net revenue............................... 35,660 14,486 52,924 26,215 ------------ ------------ ------------ ------------ Expenses: Direct operating (including Univision national representation fees of $1,028, $692, $1,950 and $1,286)................ 13,073 5,896 20,956 10,568 Selling, general and administrative (excluding non-cash stock-based compensation of $3,563, $7,286, $3,563 and $14,572)............................ 8,588 2,924 12,337 5,434 Corporate expenses (including related parties of $114, $70, $183 and $151).... 2,180 1,383 4,028 2,687 Non-cash stock-based compensation......... 3,563 7,286 3,563 14,572 Depreciation and amortization............. 10,260 4,059 15,137 7,380 ------------ ------------ ------------ ------------ 37,664 21,548 56,021 40,641 ------------ ------------ ------------ ------------ Operating (loss)........................ (2,004) (7,062) (3,097) (14,426) Interest expense (including amounts to Univision of $2,103, $175, $2,919 and $350)................................... (10,034) (1,933) (14,140) (3,976) Non-cash interest expense relating to beneficial conversion option............ (5,461) - (37,061) - Interest income........................... 237 8 446 28 ------------ ------------ ------------ ------------ Loss before income taxes................ (17,262) (8,987) (53,852) (18,374) Income tax (expense)...................... (165) (155) (159) (81) ------------ ------------ ------------ ------------ Net (loss).............................. $ (17,427) $ (9,142) $ (54,011) $ (18,455) ============ ============ =========== ============ Loss per membership unit.................. $(8.55) $(4.23) $(26.77) $(8.62) ============ ============ =========== ============ Pro forma provision for income taxes benefit................................. 2,676 462 4,454 1,083 ============ ============ =========== ============ Pro forma net loss....................... $ (14,586) $ (8,525) $ (49,398) $ (17,291) ============ ============ =========== ============ Pro forma per share data: Net loss per share: basic and diluted..... $(0.45) $(0.26) $(1.52) $(0.53) ============ ============ =========== ============ Pro forma weighted average common shares outstanding: basic and diluted .. 32,635,302 32,431,427 32,501,900 32,431,427 ============ ============ =========== ============
See Notes to Consolidated Financial Statements. 2 ENTRAVISION COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
Six Months Ended June 30, ------------------------- 2000 1999 ----------- --------- Cash Flows from Operating Activities: Net (Loss)............................................................... $ (54,011) $(18,455) Adjustments to Reconcile Net (Loss) to Net Cash Provided by Operating Activities: Depreciation and amortization............................................ 14,484 7,250 Deferred tax expense (benefit)........................................... - (106) Amortization of debt issue costs......................................... 653 130 Intrinsic value of subordinated note exchange option..................... 37,061 - Non-cash stock-based compensation........................................ 3,563 14,572 Changes in assets and liabilities, net of effect of business combination: (Increase) in accounts receivable........................................ (3,705) (527) (Increase) in prepaid expenses and other assets.......................... (3,059) (383) Increase (decrease) in accounts payable, accrued expense and other....... 9,772 (1,526) ----------- --------- Net cash provided by operating activities................................ 4,758 955 ----------- --------- Cash Flows from Investing Activities: Proceeds from sale of equipment.......................................... 25 - Purchases of property and equipment...................................... (5,066) (5,666) Cash deposits and purchase price on acquisitions......................... (313,860) (20,107) ----------- --------- Net cash (used in) investing activities.................................. (318,901) (25,773) ----------- --------- Cash Flows from Financing Activities: Principal payments on note payable....................................... (61,796) (175) Proceeds from borrowings on notes payable................................ 381,602 25,078 Dividends paid to members for income taxes............................... - (2,400) Payments of deferred debt costs.......................................... (3,414) - ----------- --------- Net cash provided by financing activities................................ 316,392 22,503 ----------- --------- Net increase (decrease) in cash and cash equivalents..................... 2,249 (2,315) Cash and Cash Equivalents: Beginning................................................................ 2,357 3,661 ----------- --------- Ending................................................................... $ 4,606 $ 1,346 =========== ========= Supplemental Disclosures of Cash Flow Information Cash Payments for: Interest............................................................... $ 7,785 $ 4,466 =========== ========= Income taxes........................................................... $ 327 $ 385 =========== ========= Supplemental Disclosures of Non-Cash Investing and Financing Activities: Deferred stock compensation.............................................. $ 6,728 $ - =========== ========= Assets Acquired and Debt Issued in Business Combinations: Current assets, net of cash acquired..................................... $ 19,621 $ 86 Broadcast equipment and furniture and fixtures........................... 11,816 3,091 Intangible assets........................................................ 343,386 49,105 Other assets............................................................. 959 - Current liabilities...................................................... (5,730) - Deferred taxes........................................................... (63,090) (2,112) Notes payable............................................................ - (12,000) Other liabilities........................................................ (1,545) - Increase in subordinated debt exchange option............................ - (13,915) Estimated fair value allocated to option agreement....................... (3,015) - Less cash deposits from prior year....................................... (8,500) (4,200) ----------- --------- Net cash paid.......................................................... $ 293,902 $ 20,055 =========== =========
See Notes to Consolidated Financial Statements. 3 ENTRAVISION COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2000 1. Basis of Presentation The condensed consolidated financial statements included herein have been prepared by Entravision Communications Corporation (the "Company" or "ECC"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements and notes thereto should be read in conjunction with the Company's audited combined financial statements for the year ended December 31, 1999 included in the Company's Registration Statement on Form S-1 (No. 333-35336) and the amendments thereto. The unaudited information contained herein has been prepared on the same basis as the Company's audited combined financial statements and, in the opinion of the Company's management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2000 or any other future period. 2. Initial Public Offering On August 9, 2000, the Company completed an underwritten initial public offering ("IPO") of 46,435,458 shares of its Class A common stock at a price of $16.50 per share. The Company also sold 6,464,542 shares of its Class A common stock directly to Univision Communications Inc. ("Univision") at a price of $15.47 per share. The net proceeds to the Company, after deducting underwriting discounts and commissions, and offering expenses, were approximately $818 million. 3. The Company and Significant Accounting Policies On February 11, 2000, ECC was formed. The First Restated Certificate of Incorporation of ECC authorizes both common and preferred stock. The common stock has three classes identified as A, B and C which have similar rights and privileges, except the Class B common stock provides ten votes per share as compared to one vote per share for all other classes of common stock. Additionally, Univision, as the holder of all Class C common stock, upon conversion of its subordinated note, is entitled to vote as a separate class to elect two directors, and will have the right to vote as a separate class on certain material transactions. Class B and C common stock is convertible at the holder's option into one fully-paid and nonassessable share of Class A common stock and is required to be converted into one share of Class A common stock upon certain events as defined in the First Restated Certificate of Incorporation. The Series A mandatorily redeemable convertible preferred stock has limited voting rights, and accrues an 8.5% dividend. Effective August 3, 2000, an exchange transaction was consummated whereby the direct and indirect ownership interests in Entravision Communications Company, L.L.C. (ECC LLC) were exchanged for Class A or Class B common stock of ECC. The Class B common stock was issued to Walter F. Ulloa, Philip C. Wilkinson and Paul A. Zevnik (and certain trusts and controlled entities of such individuals) in exchange for their direct and indirect membership interests in ECC LLC. Each of the remaining individuals, trust and other entities holding direct membership interests in ECC LLC exchanged such interests for Class A common stock of ECC. In addition, the remaining stockholders (other than Messrs. Ulloa, Wilkinson and Zevnik) of Cabrillo Broadcasting Corporation, Golden Hills 4 Broadcasting Corporation, Las Tres Palmas Corporation, Tierra Alta Broadcasting, Inc., KSMS-TV, Inc., Valley Channel 48, Inc. and Telecorpus, Inc. (collectively, the "Affiliates") exchanged their common shares of the respective corporations for Class A common stock of ECC. Accordingly, the Affiliates became wholly-owned subsidiaries of ECC. Additionally, Univision exchanged its subordinated note for Class C common stock. The number of shares of common stock of ECC issued to the members of ECC LLC and the stockholders of the Affiliates was determined in such a manner that the ownership interest in ECC equaled the direct and indirect ownership interest in ECC LLC immediately prior to the exchange. ECC LLC and Affiliates were considered to be under common control and, as such, the exchange will be accounted for in a manner similar to a pooling of interests. Accordingly, these consolidated financial statements, including share data and the stock option exercise price, have been presented as if ECC LLC was incorporated and the exchange transaction took place as of June 30, 2000. Earnings Per Membership Unit Basic earnings per membership unit is computed as net income (loss) divided by the weighted average number of membership units outstanding for the period. Diluted earnings per membership unit reflects the potential dilution that could occur from membership units issuable through options and convertible securities. For the three months and six months ended June 30, 2000 and 1999, all dilutive securities have been excluded as their inclusion would have had an antidilutive effect on earnings per membership unit. If options and convertible debt securities had not been excluded, 1,530,591, 1,309,518, 736,753 and 700,887 membership units, respectively, would have been included in the denominator. The following table sets forth the calculation of loss per membership unit:
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2000 1999 2000 1999 ---------- ---------- ---------- ----------- (In thousands of dollars, except membership units) Earnings (Loss): Net loss $ (17,427) $ (9,142) $ (54,011) $ (18,455) Less loss of member corporations (736) (1,067) (1,757) (2,018) ---------- ---------- ---------- ---------- Net loss applicable to members $ (16,691) $ (8,075) $ (52,254) $ (16,437) ========== ========== ========== ========== Membership units outstanding 1,952,035 1,907,731 1,952,035 1,907,731 ========== ========== ========== ==========
Pro Forma Income Tax Adjustments and Pro Forma Earnings Per Share The pro forma income tax information is included in these financial statements to show what the significant effects might have been on the historical statements of operations had the Company and its affiliates not been treated as flow-through entities not subject to income taxes. The pro forma information reflects a benefit for income taxes at the assumed effective rate in the three months and six months ended June 30, 2000 and 1999. The weighted average number of shares of common stock outstanding during the periods used to compute pro forma basic and diluted net loss per share is based on the conversion ratio used to exchange ECC LLC membership units and member corporation shares for shares of ECC's common stock immediately prior to the effective date of the IPO. As of June 30, 2000, the number of shares that would be included in determining the weighted average shares outstanding for diluted earnings per share if their effect was not antidilutive are as follows: 27,848,495 for convertible debt securities and 549,293 for 5 stock grants subject to repurchase. New Pronouncements In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which is required to be adopted in all fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS No. 133 permits early adoption as of the beginning of any fiscal quarter after its issuance. The Company will adopt SFAS No. 133 effective January 1, 2001. SFAS No. 133 will require the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities or firm commitment through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. Because of the Company's minimal use of derivatives, management does not anticipate that the adoption of SFAS No. 133 will have a significant effect on the Company's earnings or financial position. In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial Statements. SAB 101 provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. This accounting bulletin, as amended in March 2000, is effective beginning in the fourth quarter of 2000. Management does not believe that the adoption of SAB 101 will have a material impact on our or our acquired companies' financial statements. In March 2000, FASB issued Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation - an interpretation of APB Opinion No. 25. Interpretation No. 44 clarifies the definition of employee for purposes of applying APB Opinion No. 25, Accounting for Stock Issued to Employees, the criteria for determining whether a plan qualifies as a non-compensatory plan, the accounting consequence of various modifications to the terms of previously fixed stock options or awards and the accounting for an exchange of stock compensation awards in a business combination. Interpretation No. 44 is effective July 1, 2000, but certain conclusions in Interpretation No. 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Management believes that Interpretation No. 44 will not have a material effect on the financial position or the results of operations of the Company upon adoption. 4. Business Combinations During the six months ended June 30, 2000, the Company acquired the following companies, all of which were accounted for as purchase business combinations with the operations of the businesses included subsequent to their respective acquisition dates. The allocation of the respective purchase prices are generally based upon management's estimates of the discounted future cash flows to be generated from the broadcast properties for intangible assets and replacement cost for tangible assets, and reflects management's preliminary allocation of purchase price. Magic Media, Inc. On July 19, 1999, the Company entered into an asset purchase agreement with Magic Media, Inc. to acquire substantially all of the assets relating to the operations of radio stations KATH(FM) and KOFX(FM) in El Paso, Texas for approximately $14.0 million. The acquisition closed on January 14, 2000 and was accounted for as a purchase business combination. The purchase price was allocated as follows: $0.6 million to fixed assets, $10.7 million to the Federal Communications Commission (the 6 "FCC") license, $2.2 million to goodwill and $0.5 million to a noncompetition agreement. XHAS-TV In March 2000, Televisora Alco S.A. de C.V., a Mexican corporation in which the Company holds a 40% minority, limited voting interest (neutral investment stock), executed a stock purchase agreement to acquire the outstanding capital stock of a Mexican corporation which holds the necessary authorizations from the Mexican government to own and operate television station XHAS, Channel 33, Tijuana, Mexico. In March 2000, the Company also entered into agreements to acquire a 47.5% interest in each of Vista Television, Inc. and Channel 57, Inc. The Company has an option, which must be exercised at the expiration of the five-year term, to acquire an additional 47.5% interest in each of these companies for $3.5 million. Additionally, ECC entered into time brokerage agreements in connection with these acquisitions. The aggregate consideration paid in connection with these transactions was approximately $35.2 million. These transactions closed on March 16, 2000. The purchase price has been preliminarily allocated as follows: $1.0 million to fixed assets, $27.5 million to intangibles and $6.7 million to other assets. Latin Communications Group Inc. ("LCG") On April 20, 2000, the Company acquired all of the outstanding capital stock of LCG for approximately $256.0 million. LCG operates radio stations in California, Colorado, New Mexico and Washington D.C. and also owns and operates two Spanish-language publications. In connection with this acquisition, the Company amended certain financial covenants related to its credit facility to provide for this acquisition and the issuance of a $90.0 million convertible subordinated note. Effective with the IPO, as discussed in Note 2, the subordinated note converted into 5,865,102 shares of Series A mandatorily redeemable convertible preferred stock of ECC. The Series A preferred stock is convertible into Class A common stock on a share-per-share basis at the option of the holder at any time and accrues dividends at 8.5% per annum, compounded annually and payable upon the liquidation of the Company or redemption. All accrued and unpaid dividends are to be waived and forgiven upon the conversion of the Series A preferred stock into Class A common stock. The Series A preferred stock is subject to redemption at face value plus accrued dividends at the option of the holder for a period of 90 days beginning five years after its issuance, and must be redeemed in full ten years after its issuance. The Company also has the right to redeem the Series A preferred stock at its option at any time one year after its issuance, provided that the trading price of the Class A common stock equals or exceeds 130% of the IPO price of the Class A common stock for 15 consecutive trading days immediately before such redemption. In connection with the $90.0 million convertible subordinated note, the Company will realize additional non-cash interest expense of approximately $19.5 million based on the intrinsic value of the beneficial conversion feature over the period the note becomes convertible, of which approximately $5.5 million was recorded through June 30, 2000. Additionally, the Company entered into a $115.0 million term loan with its bank group, the proceeds from which were used to finance the LCG acquisition. Under the terms of this loan, the Company was obligated to maintain a portion of the proceeds in a restricted bank account in an amount sufficient to cover the future interest charges during the term of the loan. This term loan was subsequently repaid with proceeds from the IPO. 7 The excess of the purchase price over the tangible net assets of $302.7 million has been preliminarily allocated to identifiable intangibles consisting of $219.2 million to FCC licenses, $9.8 million to presold commercial advertising contracts, $0.2 million to a non-compete agreement and $11.2 million to other identifiable intangibles. The remaining excess purchase price of $62.3 million was allocated to goodwill. Pro Forma Results The following pro forma results of continuing operations assume the 2000 and 1999 acquisitions discussed above occurred on January 1, 1999 and 1999, respectively. The unaudited pro forma results have been prepared using the historical financial statements of the Company and each acquired entity. The unaudited pro forma results give effect to certain adjustments including amortization of goodwill, depreciation of property and equipment, interest expense and the related tax effects.
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2000 1999 2000 1999 ---------- ------------ --------- ----------- (In millions of dollars, except per membership unit) Net Revenue $ 38.9 $ 26.4 $ 67.3 $ 47.6 Net (loss) (18.0) (13.9) (58.8) (29.5) Basic and diluted net (loss) per $(9.21) $(7.29) $(30.12) $(15.45) membership unit
The above pro forma financial information does not purport to be indicative of the results of operations had the 2000 and 1999 acquisitions actually taken place on January 1, 1999 and 1998, respectively, nor is it intended to be a projection of future results or trends. Acquisitions Subsequent to June 30, 2000 Z-Spanish Media Corporation On April 20, 2000, the Company agreed to acquire all of the outstanding capital stock of Z-Spanish Media Corporation ("Z-Spanish Media"). This transaction closed on August 9, 2000. Z-Spanish Media owns 33 radio stations and an outdoor billboard business. The purchase price, as amended on July 25, 2000, was approximately $448 million, including approximately $109 million of debt. The purchase price consisted of approximately $224 million in cash and the remainder in a newly-issued Class A common stock of the Company after the reorganization as discussed in Note 3. To comply with a preliminary Department of Justice inquiry, six of Z-Spanish Media's radio stations were transferred to a trust. The beneficiary of the trust is Z-Spanish Media. If the Department of Justice permits the Company to acquire these stations, the Company would be obligated to purchase these stations for an aggregate purchase price of up to $23.0 million. If the Company is not permitted to purchase these stations, the Company would be obligated to remit the proceeds from the sale of these stations to the former stockholders of Z-Spanish Media. In connection with this acquisition, the Company issued approximately 1.5 million options to purchase its Class A common stock in exchange for Z-Spanish Media's previously outstanding stock options. In connection with these stock options, the Company will record as additional purchase price approximately $7.0 million for the excess of the estimated fair value over the intrinsic value of the options. In addition, the Company will recognize approximately $11.0 million as non-cash stock-based compensation over the remaining three-year vesting period. 8 Citicasters Co. In March 2000, the Company entered into an asset purchase agreement with Citicasters Co., a subsidiary of Clear Channel Communications, Inc., to acquire the FCC licenses relating to the operations of radio stations KACD(FM) Santa Monica, California, and KBCD(FM) Newport Beach, California, for $85.0 million. On March 3, 2000, the Company deposited $17 million in escrow relating to this acquisition. This transaction closed on August 24, 2000. Radio Stations KFRQ(FM), KKPS(FM), KVPA(FM) and KVLY(FM) On May 22, 2000, the Company agreed to acquire certain assets relating to the operations of radio stations KFRQ(FM), KKPS(FM), KVPA(FM) and KVLY(FM) from Sunburst Media, LP for $55.0 million. This transaction closed on September 12, 2000. Pending Transactions WHCT-TV In February 2000, the Company entered into an agreement to acquire the FCC license of television station WHCT in Hartford, Connecticut, for $18.0 million. Management intends to close on this transaction upon receiving FCC approval, which it anticipates receiving in the third quarter of 2000. WNTO-TV On April 14, 2000, the Company agreed to acquire certain assets of television station WNTO-TV, Orlando, Florida, for $23.0 million. The Company anticipates that the closing of this transaction will occur in the third quarter of 2000. Infinity Broadcasting Corporation On June 13, 2000, the Company agreed to acquire certain outdoor advertising assets from Infinity Broadcasting Corporation for a total of $168.2 million. The closing of this acquisition is subject to conditions, including the receipt of required approvals. The Company will finance the acquisition with proceeds from its IPO. 5. Stock Options and Grants 2000 Omnibus Equity Incentive Plan The Company adopted a 2000 Omnibus Equity Incentive Plan that allows for the award of up to 11,500,000 shares of Class A common stock. Awards under the plan may be in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock or stock units. In August 2000, the Company awarded 4,054,497 stock options to employees and consultants. Stock Grants In June 2000, the Company granted stock awards to employees, directors and consultants totaling 245,276 shares of Class A common stock and 249,220 shares of Class B common stock. As a result of these grants, the Company recorded $0.2 million in non-cash stock-based compensation during the three months ended June 30, 2000 relating to these grants. The shares contain a nominal repurchase option that expires ratably over three to five years and as a result the unrecognized compensation 9 expense has been recorded as deferred compensation in stockholders' equity. In addition, on April 8, 2000, the Company granted stock awards to its Chief Financial Officer totaling 240,737 shares of Class A common stock. As a result of this grant, the Company recorded $3.4 million in non-cash stock-based compensation during the three months ended June 30, 2000 relating to these grants. 6. Litigation The Company is a defendant to a lawsuit filed in the Superior Court of the District of Columbia by First Millenium Communications, Inc. to resolve certain contract disputes arising out of a terminated brokerage-type arrangement with First Millenium. The litigation primarily concerns the payment of a brokerage fee alleged to be due in connection with the acquisition of television station WBSV in Sarasota, Florida for $17.0 million. In addition to its various contractual claims, First Millenium also has asserted claims for fraud, RICO, misappropriation, breach of fiduciary duty, defamation and intentional infliction of emotional distress. First Millenium is seeking in excess of $60 million including the right to a 10% ownership interest in WBSV and the right to exchange such interest in the reorganization described in Note 3. First Millenium has made similar claims relating to other pending acquisitions. No accrual has been recorded in the accompanying financial statements beyond the amount management believes is the remaining contractual obligation of $0.3 million since the ultimate liability in excess of the amount recorded, if any, cannot be reasonably estimated. Management intends to vigorously defend against these claims and does not believe that any resolution of this litigation is likely to have a material adverse effect on the Company's financial position, results of operations or cash flows. On July 20, 2000, Telemundo Network Group LLC, Telemundo Network, Inc. and Council Tree Communications, L.L.C. filed an action against the Company and certain of the Company's affiliates in the Circuit Court of the 11/th/ Judicial Circuit in and for Miami-Dade County, Florida relating to the Company's investment in XHAS-TV, Channel 33 in Tijuana, Mexico. The action seeks to have the sale voided and other unspecified damages for breach of contract relating to Telemundo's attempted exercise of a right of first refusal to buy the assets of XHAS-TV. In addition to its contract claim, Telemundo asserts tortious interference, fraud and conspiracy to defraud. The Company intends to vigorously defend against this action. Subsequently, the Company filed an action in the Superior Court of the State of California for the County of San Diego against the same Telemundo entities seeking unspecified damages and a declaratory judgment that, among other things, Telemundo failed to timely exercise its right of first refusal with respect to the acquisition of the assets of XHAS-TV. The Company does not believe that any resolution of these matters is likely to have an adverse material impact. 7. Segment Information Upon the acquisition of LCG, management has determined that the Company operates in three reportable segments consisting of television broadcasting, radio broadcasting and newspaper publishing. Prior to the acquisition of LCG, the Company had a single reportable segment. Information about each of the operating segments follows: Television Broadcasting 10 The Company operates 31 television stations primarily in the southwestern United States, and consist primarily of Univision affiliates. Radio Broadcasting The Company operates 26 radio stations (16 FM and 10 AM) located primarily in California, Colorado, Nevada, New Mexico and Texas. Newspaper Publishing The Company's newspaper publishing operations consists of two publications in New York, New York. Separate financial data for each of the Company's operating segments is provided below. Segment operating loss is defined as operating loss before corporate expenses and non-cash stock-based compensation. The Company evaluates the performance of its operating segments based on the following:
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2000 1999 2000 1999 -------- -------- ----------- -------- Net Revenue TV $ 22,678 $ 13,941 $ 38,917 $ 25,252 Radio 8,772 545 9,797 963 Print 4,210 - 4,210 - -------- -------- -------- -------- Total $ 35,660 $ 14,486 $ 52,924 $ 26,215 ======== ======== ======== ======== Direct Expenses TV $ 8,720 $ 5,532 $ 15,956 $ 9,920 Radio 2,199 364 2,846 648 Print 2,154 - 2,154 - -------- -------- -------- -------- Total $ 13,073 $ 5,896 $ 20,956 $ 10,568 ======== ======== ======== ======== Selling General and Administrative Expenses TV $ 4,101 $ 2,774 $ 7,618 $ 5,183 Radio 3,271 150 3,503 251 Print 1,216 - 1,216 - -------- -------- -------- -------- Total $ 8,588 $ 2,924 $ 12,337 $ 5,434 ======== ======== ======== ======== Depreciation and Amortization TV $ 5,547 $ 3,884 $ 10,008 $ 7,030 Radio 4,614 175 5,030 350 Print 99 - 99 - -------- -------- -------- -------- Total $ 10,260 $ 4,059 $ 15,137 $ 7,380 ======== ======== ======== ======== Segment Operating Profit TV $ 4,310 $ 1,751 $ 5,335 $ 3,119 Radio (1,312) (144) (1,582) (286) Print 741 - 741 - -------- -------- -------- -------- Total $ 3,739 $ 1,607 $ 4,494 $ 2,833 ======== ======== ======== ======== Corporate Expenses 2,180 1,383 4,028 2,687 Non-Cash Stock-Based Compensation 3,563 7,286 3,563 14,572 -------- -------- -------- -------- Consolidated Operating (loss) $ (2,004) $ (7,062) $ (3,097) $(14,426) ======== ======== ======== ======== Total Assets TV $515,698 $171,178 $515,698 $171,178 Radio 84,258 5,942 84,258 5,942 Print 4,345 - 4,345 - -------- -------- -------- -------- Total $604,301 $177,120 $604,301 $177,120 ======== ======== ======== ========
11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This Form 10-Q contains forward-looking statements, including statements under the captions "Factors that May Affect Future Results" and elsewhere in this Form 10-Q concerning our expectations of future revenue, expenses, the outcome of our growth and acquisition strategy and the projected growth of the U.S. Hispanic population. Forward-looking statements often include words or phrases such as "will likely result," "expect," "will continue," "anticipate," "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 under the heading "Factors that May Affect Future Results." Our results of operations may be adversely affected by one or more of these factors. 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 Form 10-Q. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. The section entitled "Factors That May Affect Future Results" set forth in this Form 10-Q and similar discussions in our registration statement declared effective by the SEC on August 1, 2000 discuss some of the important risk factors that may affect our business, results of operations and financial condition. You should carefully consider those risks, in addition to the other information in this report and in our other filings with the SEC, before deciding to invest in our company or to maintain or increase your investment. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. The information contained in this Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that discuss our business in greater detail. We operate 31 television stations (and have three additional television stations that are not yet operational) and 26 radio stations 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 Univision affiliates serving 17 of the top 50 U.S. Hispanic markets. Our radio stations consist of 16 FM and ten AM stations serving portions of the California, Colorado, 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 3, 2000 we completed a reorganization in which all of the outstanding direct and indirect membership interests of our predecessor and Univision's subordinated note and option were exchanged for shares of our common stock. We generate revenue from sales of national and local advertising time on television and radio stations and advertising in our publications. Advertising rates are, in large part, based on each station's ability to attract audiences in demographic groups targeted by advertisers. We recognize advertising revenue when the commercials are broadcast and publishing services are provided. We incur 12 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, marketing, promotion and selling costs, technical, local programming, engineering costs and general and administrative expenses. Our local programming costs for television consist of costs related to producing a local newscast in each of our markets. We have 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. Accordingly, no discussion of income taxes is included in this section. We are now a taxpaying organization. We have included in our historical financial statements a pro forma provision for income taxes and a pro forma net loss to show what our net income or loss would have been if we were a taxpaying entity. We anticipate that our future effective income tax rate will vary from 40% due to a portion of our purchase price for the LCG and Z-Spanish Media acquisitions being allocated to non-tax deductible goodwill. Three Months and Six Months Ended June 30, 2000 Compared to the Three Months and Six Months Ended June 30, 1999 The following table sets forth selected data from our operating results for the three months and six months ended June 30, 1999 and 2000 (dollars in thousands):
Three Months Ended Six Months Ended ----------------------- ----------------------- June 30, June 30, % June 30, June 30, % 2000 1999 Change 2000 1999 Change ---------------------------------------------------------------------------- Statement of Operations Data: Gross revenue $ 39,899 $16,141 147% $ 59,239 $ 29,154 103% Less agency commissions 4,239 1,655 156% 6,315 2,939 115% --------- ------- --------- -------- Net revenue 35,660 14,486 146% 52,924 26,215 102% Direct operating expenses 13,073 5,896 122% 20,956 10,568 98% Selling, general and administrative expenses 8,588 2,924 194% 12,337 5,434 127% Corporate expenses 2,180 1,383 58% 4,028 2,687 50% Depreciation and amortization 10,260 4,059 153% 15,137 7,380 105% Non-cash stock-based compensation 3,563 7,286 (51%) 3,563 14,572 (76%) --------- ------- --------- -------- Operating (loss) (2,004) (7,062) 72% (3,097) (14,426) 79% Interest expense, net 9,797 1,925 409% 13,694 3,948 247% Non-cash interest expense relating to beneficial conversion option 5,461 - - 37,061 - - --------- ------- --------- -------- Loss before income tax (17,262) (8,987) (92%) (53,852) (18,374) (193%) Income tax benefit (expense) (165) (155) (6%) (159) (81) (96%) --------- ------- --------- -------- Net loss $ (17,427) $(9,142) (91%) $ (54,011) $(18,455) (193%) ========= ======= ========= ======== Other Data: Broadcast cash flow $ 13,999 $ 5,666 147% $ 19,631 $ 10,213 92% EBITDA (adjusted for non-cash stock-based compensation) $ 11,819 $ 4,283 176% $ 15,603 $ 7,526 107% Cash flows from operating activities $ 3,730 $ 56 66% $ 4,758 $ 955 398% Cash flows from investing activities $(255,075) $(8,728) 2822% $(318,901) $(25,773) 1137% Cash flows from financing activities $ 252,438 $ 6,933 3541% $ 316,392 $ 22,503 1306%
13 Broadcast cash flow means operating income (loss) before corporate expenses, depreciation and amortization, non-cash stock-based compensation and gain on sale of assets. We have presented broadcast cash flow which we believe is comparable to the data provided by other companies in the broadcast industry, because such data is commonly used as a measure of performance for companies in our industry. However, broadcast cash flow should not be construed as an alternative to operating income (as determined in accordance with generally accepted accounting principles) as an indicator of operating performance or to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) as a measure of liquidity. EBITDA means broadcast cash flow less corporate expenses (adjusted for non- cash stock-based compensation) and is commonly used in the broadcast industry to analyze and compare broadcast companies on the basis of operating performance, leverage and liquidity. EBITDA, as presented above, may not be comparable to similarly titled measures of other companies unless such measures are calculated in substantially the same fashion. EBITDA should not be construed as an alternative to operating income (as determined in accordance with generally accepted accounting principles) as an indicator of operating performance or to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) as a measure of liquidity. Net Revenue. Net revenue increased to $35.7 million for the quarter ended June 30, 2000 from $14.5 million for the quarter ended June 30, 1999, an increase of $21.2 million. This increase was primarily attributable to the acquisition of LCG which accounted for $11.7 million. Other acquisitions accounted for $2.7 million of the increase. Net revenue increased to $52.9 million for the six months ended June 30, 2000, from $26.2 million for the six months ended June 30, 1999, an increase of $26.7 million. This increase was primarily related to the acquisition of LCG. Direct Operating Expenses. Direct operating expenses increased to $13.1 million for the quarter ended June 30, 2000 from $5.9 million for the quarter ended June 30, 1999, an increase of $7.2 million. This increase was primarily attributable to the acquisition of LCG and television stations purchased in Tampa, Florida and San Diego, California. As a percentage of net revenue, direct operating expenses decreased to 37% for the quarter ended June 30, 2000 from 41% for the quarter ended June 30, 1999. Direct operating expenses increased to $21.0 million for the six months ended June 30, 2000 from $10.6 million for the six months ended June 30, 1999, an increase of $10.4 million. This increase was primarily attributable to the acquisition of LCG and television stations purchased in Tampa, Florida and San Diego, California. As a percentage of net revenues, direct operating expenses remained consistent at 40% for the six months ended June 30, 2000 and June 30, 1999. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $8.6 million for the quarter ended June 30, 2000 from $2.9 million for the quarter ended June 30, 1999, an increase of $5.7 million. This increase was primarily attributable to the acquisition of LCG and television stations in Tampa, Florida and San Diego, California. As a percentage of net revenue, selling, general and administrative expenses increased to 24% for the quarter ended June 30, 2000 from 20% for the quarter ended June 30, 1999 due to the increase in selling expenses. Selling, general and administrative expenses increased to $12.3 million for the six months ended June 30, 2000 from $5.4 million for the six months ended June 30, 1999, an increase of $6.9 million. This increase was primarily attributable to the acquisition of LCG and television stations in Tampa, Florida and San Diego, California. As a percentage of net revenue, selling, general and administrative 14 expenses increased to 23% for the six months ended June 30, 2000 from 21% for the six months ended June 30, 1999. Corporate Expenses. Corporate expenses increased to $2.2 million for the quarter ended June 30, 2000 from $1.4 million for the quarter ended June 30, 1999, an increase of $0.8 million. This increase was primarily due to the acquisition of LCG and the hiring of additional corporate personnel due to our growth and the costs associated with being a public company. As a percentage of net revenue, corporate expenses decreased to 6% for the quarter ended June 30, 2000 from 10% for the quarter ended June 30, 1999 due to an increase in sales. Corporate expenses increased to $4.0 million for the six months ended June 30, 2000 from $2.7 million for the six months ended June 30, 1999, an increase of $1.3 million. This increase was primarily due to the acquisition of LCG and the hiring of additional corporate personnel due to our growth and the costs associated with being a public company. As a percentage of net revenue, corporate expenses decreased to 8% for the six months ended June 30, 2000 from 10% for the six months ended June 30, 1999. Depreciation and Amortization. Depreciation and amortization increased to $10.3 million for the quarter ended June 30, 2000 from $4.1 million for the quarter ended June 30, 1999, an increase of $6.2 million. This increase was primarily attributable to the acquisition of LCG. Depreciation and amortization increased to $15.1 million for the six months ended June 30, 2000 from $7.4 million for the six months ended June 30, 1999, an increase of $7.8 million. This increase was primarily attributable to the acquisition of LCG. Non-Cash Stock-Based Compensation. Non-cash stock-based compensation decreased to $3.6 million for the quarter ended June 30, 2000 from $7.3 million for quarter ended June 30, 1999 a decrease of $3.7 million. Non-cash stock- based compensation consists primarily of compensation expense relating to stock awards granted to our employees during the second quarter of 2000, and the first six months of 1999. Operating Loss. As a result of the above factors, we recognized an operating loss of $2.0 million for the quarter ended June 30, 2000 compared to an operating loss of $7.1 million for the quarter ended June 30, 1999 and an operating loss of $3.1 million for the six months ended June 30, 2000 compared to an operating loss of $14.4 million for the six months ended June 30, 1999. Excluding non-cash stock-based compensation, we recognized operating income of $1.6 million for the quarter ended June 30, 2000, compared to operating income of $0.2 million for the quarter ended June 30, 1999, an increase of $1.3 million. The increase was primarily due to the increase in net revenue offset by the increase in direct operating expenses. Interest Expense, Net. Interest expense increased to $9.8 million for the quarter ended June 30, 2000 from $1.9 million for the quarter ended June 30, 1999, an increase of $7.9 million. This increase is primarily due to increased bank loan facilities in connection with the acquisition of LCG. Interest expense increased to $13.7 million for the six months ended June 30, 2000 from $3.9 million for the six months ended June 30, 1999, an increase of $9.8 million. This increase is primarily due to increased bank loan facilities in connection with the acquisition of LCG. The non-cash interest expense of $5.5 million for the quarter ended June 30, 2000 relates to the estimated intrinsic value of the conversion option feature in our $90.0 million convertible subordinated note, used to finance our acquisition of LCG. The non- cash interest expense of $37.1 million for the six months ended June 30, 2000 relates to the estimated intrinsic value of the conversion option in our $90.0 million convertible 15 subordinated note, and our subordinated note with Univision. Net Loss. We recognized a net loss of $17.4 million for the quarter ended June 30, 2000 compared to a net loss of $9.1 million for the quarter ended June 30, 1999. Excluding non-cash stock-based compensation and interest expense relating to the estimated intrinsic value of the conversion option feature in our $90.0 million convertible subordinated note, our net loss increased to $8.4 million for the quarter ended June 30, 2000 from $1.9 million for the quarter ended June 30, 1999. We recognized a net loss of $54.0 million for the six months ended June 30, 2000 compared to a net loss of $18.5 million for the six months ended June 30, 1999. Excluding non-cash stock-based compensation and interest expense relating to the estimated intrinsic value of the conversion option feature in our $90.0 million convertible subordinated note and our subordinated note to Univision, our net loss increased to $13.4 million for the six months ended June 30, 2000 from $3.9 million for the quarter ended June 30, 1999. Broadcast Cash Flow. Broadcast cash flow increased to $14.0 million for the quarter ended June 30, 2000 from $5.7 million for the quarter ended June 30, 1999, an increase of $8.3 million. As a percentage of net revenue, broadcast cash flow was consistent at 39% for the quarters ended June 30, 2000 and June 30, 1999. Broadcast cash flow increased to $19.6 million for the six months ended June 30, 2000 from $10.2 million for the six months ended June 30, 1999, an increase of $9.4 million. As a percentage of net revenue, broadcast cash flow decreased to 37% for the six months ended June 30, 2000 from 39% for the six months ended June 30, 1999. EBITDA. EBITDA increased to $11.8 million for the quarter ended June 30, 2000 from $4.3 million for the quarter ended June 30, 1999, an increase of $7.5 million. As a percentage of net revenue, EBITDA increased to 33% for the quarter ended June 30, 2000 from 30% for the quarter ended June 30, 1999. The increase in EBITDA was primarily due to the increase in direct sales, general and administrative expenses offset by the increase in net revenue. EBITDA increased to $15.6 million for the six months ended June 30, 2000 from $7.5 million for the six months ended June 30, 1999, an increase of $8.1 million. As a percentage of net revenue, EBITDA was consistent at 29% for the six months ended June 30, 2000 and June 30, 1999. EBITDA was unchanged due to the increase in direct sales, general and administrative expenses offset by the increase in net revenue. Liquidity and Capital Resources Overview Our primary sources of liquidity are cash provided by operations, available borrowings under our bank credit facilities and investments made by Univision and TSG Capital Fund III, L.P. in 2000. We intend to enter into a new $600 million credit facility which will be comprised of a $250 million revolver, a $150 million term loan expiring in 2007 and a $200 million term loan expiring in 2008. After consummation of all of the transactions set forth in Note 4 of the Notes to Consolidated Financial Statements (Unaudited) above, we expect to have approximately $200 million of debt outstanding under our proposed new bank credit facility. The new facility has been committed to and is expected to be in place by September 30, 2000. It will replace the current credit facility for Entravision. Our obligations under this facility will be secured by all of our assets as well as a pledge of the stock of several of our subsidiaries, including our special purpose subsidiaries formed to hold our FCC licenses. The facility will contain financial covenants, including a requirement not to exceed a maximum debt to cash flow ratio and interest and fixed charge coverage ratios. The facility will require us to maintain our FCC 16 licenses for our broadcast properties and will contain other operating covenants, including restrictions on our ability to incur additional indebtedness and pay dividends. During 2000, we anticipate our capital expenditures will be approximately $23.0 million, including the building of two studio facilities, the transition to digital television for three stations and upgrades and maintenance on broadcasting equipment and facility improvements to radio stations in some of our markets, including Dallas and Phoenix. We anticipate paying for these capital expenditures out of net cash flow from operating activities. The amount of these capital expenditures may change based on future changes in business plans, our financial conditions and general economic conditions. We currently anticipate that the net proceeds from our initial public offering, funds generated from operations and available borrowings under our credit facilities will be sufficient to meet our anticipated cash requirements for the foreseeable future. We continuously review, and are currently reviewing, opportunities to acquire additional television and radio stations as well as billboards and other opportunities targeting the U.S. Hispanic market. We expect to finance any future acquisitions through funds generated from operations and borrowings under our proposed new credit facility and through additional debt and equity financings. Any additional financings, if needed, might not be available to us on reasonable terms or at all. Failure to raise capital when needed could seriously harm our business and our acquisition strategy. If additional funds were raised through the issuance of equity securities, the percentage of ownership of our stockholders would be reduced. Furthermore, these equity securities might have rights preferences or privileges senior to our Class A common stock. New Pronouncements In June 1998, FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which is required to be adopted in all fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS No. 133 permits early adoption as of the beginning of any fiscal quarter after its issuance. The Company will adopt SFAS No. 133 effective January 1, 2001. SFAS No. 133 will require the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities or firm commitment through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. Because of the Company's minimal use of derivatives, management does not anticipate that the adoption of SFAS No. 133 will have a significant effect on the Company's earnings or financial position. In December 1999, the SEC issued SAB No. 101, Revenue Recognition in Financial Statements. SAB 101 provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. This accounting bulletin, as amended in March 2000, is effective beginning in the fourth quarter of 2000. Management does not believe that the adoption of SAB 101 will have a material impact on our or our acquired companies' financial statements. In March 2000, FASB issued Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation - an interpretation of APB Opinion No. 25. Interpretation No. 44 clarifies the definition of employee for purposes of applying APB Opinion No. 25, Accounting for Stock Issued to Employees, the criteria for determining whether a plan qualifies as a non-compensatory plan, the accounting consequence of various modifications to the terms of previously fixed stock options or awards and the accounting for an exchange of stock compensation awards in a business combination. 17 Interpretation No. 44 is effective July 1, 2000, but certain conclusions in Interpretation No. 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Management believes that Interpretation No. 44 will not have a material effect on the financial position or the results of operations of the Company upon adoption. FACTORS THAT MAY AFFECT FUTURE RESULTS In future periods, our business, financial condition and results of operations may be affected by many factors, including, without limitation, to the following: 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 $3.7 million and $40.0 million for the years ended December 31, 1998 and 1999, and $18.5 million and $54.0 million for the six months ended June 30, 1999 and 2000. In addition, we had a pro forma net loss of $95.5 million for the year ended December 31, 1999, and a pro forma net loss of $58.8 million for the six months ended June 30, 2000. 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. If we cannot successfully integrate our recent, pending and future acquisitions, it could decrease our revenue or increase our costs. We acquired LCG on April 20, 2000, we acquired Z-Spanish Media on August 9, 2000 and we have agreed to acquire certain outdoor advertising assets of Infinity Broadcasting Corporation. As a result of these acquisitions, our number of employees grew from 562 as of December 31, 1999 to approximately 1,050 as of June 30, 2000. To integrate these and other pending and future acquisitions, we need to: . retain key management and personnel of acquired companies; . 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. 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. If we are unable to completely integrate into our business the operations of the companies that we have recently acquired or that we may acquire in the future, our revenue could decrease or our costs could increase. Our acquisition of certain outdoor advertising assets from Infinity Broadcasting Corporation is being made as a divestiture of assets in accordance with the final written judgment of an antitrust proceeding between the Department of Justice and Infinity Broadcasting, among others. Pursuant to the final judgment, the Department of Justice must be satisfied, in its sole discretion, that the divestiture of these outdoor advertising assets will remedy the competitive harm alleged by the Department of Justice in the complaint underlying the antitrust proceeding. The Department of Justice has informed us in writing that it is reviewing the terms of our acquisition of such assets in order to approve us as a buyer. If, in its sole discretion, the Department of Justice determines that we are not an appropriate buyer for 18 these assets, we will not be permitted to consummate the acquisition and our outdoor advertising revenue will be significantly reduced. 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. After repaying some of our outstanding indebtedness with a portion of the proceeds from our IPO, and after the consummation of our pending acquisitions described elsewhere in this Form 10-Q, we expect to have approximately $200 million of debt outstanding under our proposed new 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 repay outstanding indebtedness if we are unable to meet our debt service obligations. If the amounts outstanding under our bank credit facilities are accelerated, our assets may not be sufficient to repay in full the money owed to such lenders. The terms of our current bank credit facilities restrict, and our proposed new bank credit facility will restrict, our ability to make acquisitions or investments and to obtain additional financing. Our bank credit facilities contain, and our proposed new bank credit facility will contain, covenants that restrict, among other things, our ability to: . incur additional indebtedness; . pay dividends; . make acquisitions or investments; and . merge, consolidate or sell assets. Our bank credit facilities also require, and our proposed new bank credit facility will require, us to maintain specific financial ratios. A breach of any of the covenants contained in our bank credit facilities, or our proposed new bank credit facility, could allow our lenders to declare all amounts outstanding under such facilities to be immediately due and payable. Our executive officers have control over our policies, affairs and all other aspects of our business and future direction. Walter F. Ulloa, our Chairman and Chief Executive Officer, Philip C. Wilkinson, our President and Chief Operating Officer, and Paul A. Zevnik, our Secretary (or trusts or controlled entities of such individuals), own all of the shares of our Class B common stock, and have approximately 77% of the combined voting power of our outstanding shares of common stock. The holders of our Class B common 19 stock are entitled to ten votes per share on any matter subject to a vote of the stockholders. Accordingly, Messrs. Ulloa, Wilkinson and Zevnik 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, Amador S. Bustos, the President of our Radio Division, 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. Univision will have significant influence over our business and could make certain transactions more difficult or impossible to complete. 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. The ratings of Univision's network programming 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 any one television network. 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. For example, we could be adversely affected by the current dispute between Univision and Televisa. Under its program license agreements with Televisa, Univision has the first right to air Televisa's Spanish-language programming in the United States through 2017. Televisa now asserts that it can directly broadcast that same programming into the United States through a direct satellite venture in Mexico. Cancellations or reductions of advertising could cause our quarterly 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. 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. Risks Related to the Television, Radio, Outdoor Advertising and Publishing Industries 20 If we are unable to maintain our FCC license at any station, we may 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 could 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 credit facilities and cause an acceleration of our indebtedness. Our bank credit facilities require us to maintain our FCC licenses. If the FCC were to revoke any of our material licenses, our lenders could declare all amounts outstanding under the bank credit facilities 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. 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 channels previously used fro broadcasting for auction to wireless services or assignment to public safety services, the number of available broadcast channels has been narrowed. 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 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 by May 1, 2002 for all of our U.S. television stations and, generally, to stop broadcasting analog signals by 2006. Our costs to convert our television stations to digital television could be significant, and there may not be any consumer demand for digital television services. The imposition of digital television and the removal of Channels 60-69 from use for television broadcasting have reduced available channels, which may affect our continued ability to operate certain of our low-power television stations. 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: 21 . 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 make such stations primary stations and give them protections against full-service stations; . plans to license 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, 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 "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. 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 revenues. 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. 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. 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. Stockholders who desire to change control of our Company may be prevented from doing so by provisions of our charter, applicable law and our credit agreement. 22 Our charter could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders. Our charter provisions could diminish the opportunities for a stockholder to participate in tender offers. In addition, under our charter, 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 charter 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. 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 Entravision 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. Item 3. Quantitative and Qualitative Disclosures about Market Risk. General Market risk represents the potential loss that may impact our financial position, results of operations or cash flows due to adverse changes in the financial markets. We are exposed to market risk from changes in the base rates on our variable rate debt. We periodically enter into derivative financial instrument transactions such as swaps or interest rate caps, in order to manage or reduce our exposure to risk from changes in interest rates. Under no circumstances do we enter into derivatives or other financial instrument transactions for speculative purposes. Our credit facilities require us to maintain an interest rate protection agreement. Interest Rates Our bank revolving line of credit bears interest at a variable rate of LIBOR (7.77% at June 30, 2000) plus 1.625%, and our term loan used to finance the LCG acquisition bears interest at LIBOR plus 4% at April 19, 2000. At June 30, 2000 we had $178.6 million of variable rate bank debt. We currently hedge a portion of our outstanding variable rate debt by using an interest rate cap. This interest rate cap effectively converts $50 million of our variable rate debt to a LIBOR fixed rate of 7% for two-year period. Based on the current level of borrowings under our credit facilities at our interest rate cap agreements, an increase in LIBOR from the rates at June 30, 2000 to the cap rates would not materially change our interest expense. The estimated fair value of this interest rate cap agreement was not material and we expect to continue to use similar types of interest rate protection agreements in the future. PART II. OTHER INFORMATION Item 1. Legal Proceedings. None, during the quarter ended June 30, 2000. On July 20, 2000, Telemundo Network Group LLC, Telemundo Network, Inc. and Council Tree 23 Communications, L.L.C. filed an action against the Company and certain of the Company's affiliates in the Circuit Court of the 11/th/ Judicial Circuit in and for Miami-Dade County, Florida relating to the Company's investment in XHAS-TV, Channel 33 in Tijuana, Mexico. The action seeks to have the sale voided and other unspecified damages for breach of contract relating to Telemundo's attempted exercise of a right of first refusal to buy the assets of XHAS-TV. In addition to its contract claim, Telemundo asserts tortious interference, fraud and conspiracy to defraud. We intend to vigorously defend against this action. Subsequently, we filed an action in the Superior Court of the State of California for the County of San Diego against the same Telemundo entities seeking unspecified damages and a declaratory judgment that, among other things, Telemundo failed to timely exercise its right of first refusal with respect to the acquisition of the assets of XHAS-TV. We do not believe that any resolution of these matters is likely to have an adverse material impact. Item 2. Changes in Securities and Use of Proceeds. (C) Recent Sales of Unregistered Securities. On April 19, 2000, we entered into an Exchange Agreement with our predecessor, certain exchanging members and stockholders and Univision in which an aggregate of 1,953,924 direct and indirect membership units in our predecessor would be exchanged for an aggregate of 5,538,175 shares of our Class A common stock and 27,678,533 shares of our Class B common stock, and Univision's subordinated note and option would be exchanged for 21,983,392 newly-issued shares of our Class C common stock as part of our recapitalization from a limited liability company to a C-corporation. The Exchange Agreement was amended and restated in its entirety effective as of July 24, 2000. This reorganization was consummated on August 3, 2000. These shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). On April 20, 2000, we entered into an Acquisition Agreement and Plan of Merger, as amended in July 2000, with our predecessor, ZSPN Acquisition Corporation, Z-Spanish Media and certain of its stockholders pursuant to which we agreed to acquire all of the outstanding capital stock of Z-Spanish Media for approximately $448 million, including the repayment of approximately $109 million in debt. The transaction was consummated on August 9, 2000. The consideration paid to the stockholders of Z-Spanish Media consisted of approximately $224 million in cash and 7,187,902 shares of our Class A common stock. These shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act. (D) Use of Proceeds from Sales of Registered Securities. On August 9, 2000, the Company completed an initial public offering (the "Offering") of its Class A common stock. The underwriters for the Offering were represented by Donaldson, Lufkin & Jenrette Securities Corporation, Credit Suisse First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Bear, Stearns & Co. Inc. and DLJdirect Inc. The shares of Class A common stock sold in the Offering were registered under the Securities Act on a Registration Statement on Form S-1 (the "Registration Statement") (Reg. No. 333-35336) that was declared effective by the SEC on August 1, 2000. The Offering commenced on August 2, 2000. 46,435,458 shares of Class A common stock registered under the Registration Statement were sold by the underwriters at a price of $16.50 per share. The Company also sold 6,464,542 shares of its Class A common stock 24 directly to Univision at a price of $15.47 per share. The aggregate public offering price was approximately $866,191,522. In connection with the Offering, the Company paid an aggregate of $47.9 million in underwriting discounts and commissions to the Underwriters. In addition, the following table sets forth an estimate of all expenses incurred in connection with the Offering, other than underwriting discounts and commissions. All amounts shown are estimated except for the fees payable to the SEC, National Association of Securities Dealers, Inc. ("NASD") and the New York Stock Exchange. SEC registration fee $ 195,519 NASD filing fee 30,500 New York Stock Exchange listing fee 500,000 Blue sky fees and expenses 7,500 Printing and engraving expenses 600,000 Legal fees and expenses 1,475,000 Accounting fees and expenses 1,398,000 Transfer agent fees 3,500 Miscellaneous 250,000 ---------- Total $4,460,019 ==========
Use of Proceeds The net proceeds to us from the sale of 52,900,000 shares of Class A common stock in the Offering were approximately $818 million, after deducting the underwriting fees and offering expenses. We closed the acquisition of Z-Spanish Media on August 9, 2000. Approximately $333 million of the net proceeds of the Offering were used to pay the cash portion of the purchase price for Z-Spanish Media and to extinguish the Z-Spanish Media indebtedness. We intend to use the balance of the net proceeds from the Offering as follows: To repay the existing loan on LCG $115,000,000 To acquire certain billboards from Infinity Broadcasting Corporation 168,200,000 To acquire two radio stations from Citicasters Co. 68,000,000 To acquire four radio stations from Sunburst Media, LP 53,000,000 To repay part of the balance on Entravision's credit facility 50,000,000 To acquire a television station in Orlando, Florida 21,500,000 For working capital and general corporate purposes 9,300,000 ------------ Total $485,000,000 ============
Until we use the net proceeds of the Offering as described above, we will invest them in short-term, interest-bearing, investment grade securities. None of the Company's net proceeds of the Offering were paid directly or indirectly to any director, officer, general partner of the Company or their associates, persons owning 10% or more of any class of equity securities of the Company, or an affiliate of the Company. Item 3. Defaults upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. 25 By Unanimous Written Consent of the Sole Stockholder of Entravision Communications Corporation, effective as of June 12, 2000, the sole stockholder approved the authorization and sale of the Company's Class A common stock in the initial public offering, the grant to the underwriters of an over-allotment option, the reservation of shares of Class A common stock for issuance upon conversion of the Class B common stock, the reservation of shares of Class A common stock for issuance upon the conversion of shares of Class C common stock, and the reservation of shares of Class A common stock for issuance upon the conversion of the Series A preferred stock. By Unanimous Written Consent of the Sole Stockholder of Entravision Communications Corporation, effective as of June 12, 2000, the sole stockholder approved the 2000 Omnibus Equity Incentive Plan and the reservation for issuance under the Plan of 11,500,000 shares of Class A common stock. By Unanimous Written Consent of the Sole Stockholder of Entravision Communications Corporation in Lieu of Annual Meeting, effective as of June 12, 2000, the sole stockholder elected Walter F. Ulloa and Philip C. Wilkinson as directors of the Company, effective immediately. By Unanimous Written Consent of the Sole Stockholder of Entravision Communications Corporation, effective July 31, 2000, the sole stockholder elected the following individuals as directors of the Company, effective August 2, 2000, to serve until the next annual meeting of the stockholders or until their successors are duly elected and have qualified, unless such individuals are removed or are otherwise disqualified from serving as a director of the Company: Class A/B Directors Class C Directors ------------------- ----------------- Walter F. Ulloa Andrew W. Hobson Philip C. Wilkinson Michael D. Wortsman Paul A. Zevnik Darryl B. Thompson Amador S. Bustos Item 5. Other Information. Z-Spanish Media On April 20, 2000, the Company agreed to acquire all of the outstanding capital stock of Z-Spanish Media. Z-Spanish Media owns 33 radio stations and an outdoor billboard business. The acquisition closed on August 9, 2000. The purchase price, as amended on July 25, 2000, was approximately $448 million, including approximately $109 million of debt. The purchase price consisted of approximately $224 million in cash and the remainder in newly-issued Class A common stock of the Company. In connection with this acquisition, the Company issued approximately 1.5 million options on its Class A common stock in exchange for Z-Spanish Media's previously outstanding stock options. In connection with these stock options, the Company will record as additional purchase price approximately $7.0 million for the excess of the estimated fair value over the intrinsic value of the options. In addition, the Company will recognize approximately $11.0 million as non-cash stock-based compensation over the remaining three-year vesting period. Citicasters Co. In March 2000, the Company entered into an asset purchase agreement with Citicasters Co., a subsidiary of Clear Channel Communications, Inc., to acquire the FCC licenses relating to the operations 26 of radio stations KACD(FM) Santa Monica, California, and KBCD(FM) Newport Beach, California, for $85.0 million. On March 3, 2000, the Company deposited $17 million in escrow relating to this acquisition. This transaction closed on August 24, 2000. Radio Stations KFRQ(FM), KKPS(FM), KVPA(FM) and KVLY(FM) On May 22, 2000, the Company agreed to acquire certain assets relating to the operations of radio stations KFRQ(FM), KKPS(FM), KVPA(FM) and KVLY(FM) from Sunburst Media, LP, for $55.0 million. This transaction closed on September 12, 2000. Infinity Broadcasting Corporation On June 13, 2000, the Company agreed to acquire certain outdoor advertising assets from Infinity Broadcasting Corporation for a total of $168.2 million. The closing of this acquisition is subject to conditions, including the receipt of required approvals. The Company will finance the acquisition with proceeds from its IPO. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits The following exhibits are attached hereto and incorporated herein by reference.
Exhibit Number Exhibit Description 2.1(1) Acquisition Agreement and Plan of Merger dated April 20, 2000 by and among the registrant, Entravision Communications Company, L.L.C., ZSPN Acquisition Corporation, Z-Spanish Media Corporation and certain of its stockholders. 2.2(1) Exchange Agreement dated April 19, 2000 by and among the registrant, Entravision Communications Company, L.L.C., certain exchanging members and stockholders and Univision Communications Inc. 2.3* Amended and Restated Exchange Agreement dated July 24, 2000 by and among the registrant, Entravision Communications Company, L.L.C., certain exchanging members and stockholders and Univision Communications Inc. 2.4(1) Asset Purchase Agreement dated as of June 14, 2000 by and between the registrant and Infinity Broadcasting Corporation. 2.5* First Amendment to Acquisition Agreement and Plan of Merger dated August 9, 2000 by and among the registrant, Entravision Communications Company, L.L.C., ZSPN Acquisition Corporation, Z-Spanish Media Corporation and certain of its stockholders. 2.6(1) Asset Purchase Agreement dated as of February 29, 2000 by and between Citicasters Co. and the registrant. 2.7* Asset Purchase Agreement dated as of May 22, 2000 by and between Sunburst Media, LP and the registrant. 3.1* First Restated Certificate of Incorporation of registrant. 3.2* First Amended and Restated Bylaws of registrant. 10.1(1) 2000 Omnibus Equity Incentive Plan of the registrant. 10.2(1) Form of Voting Agreement by and among Walter F. Ulloa, Philip C. Wilkinson, Paul A. Zevnik and the registrant. 10.3(1) Third Amendment to Amended and Restated Credit Agreement dated April 18,
27 2000 by and among KSMS-TV, Inc., Tierra Alta Broadcasting, Inc., Cabrillo Broadcasting Corporation, Golden Hills Broadcasting Corporation, Las Tres Palmas Corporation, Valley Channel 48, Inc., Telecorpus, Inc., Entravision Communications Company, L.L.C., the lender parties thereto and Union Bank of California, N.A., as agent. 10.4(1) Term Loan Agreement dated April 20, 2000 by and among LCG Acquisition Corporation, the lender parties thereto and Union Bank of California, N.A. 10.5(1) Security Agreement dated April 20, 2000 by and between LCG Acquisition Corporation and Union Bank of California, N.A. 10.6(1) Pledge Agreement dated April 20, 2000 by Walter F. Ulloa and Philip C. Wilkinson in favor of Union Bank of California, N.A. 10.7(1) Convertible Subordinated Note Purchase Agreement dated as of April 20, 2000 by and among Entravision Communications Company, L.L.C., the registrant and certain investors 10.8(1) Subordinated Convertible Promissory Note dated April 20, 2000 in the principal amount of $90 million from Entravision Communications Company, L.L.C. in favor of TSG Capital Fund III, L.P. 10.9(1) Investor Rights Agreement dated April 20, 2000 by and among Entravision Communications Company, L.L.C., the registrant and TSG Capital Fund III, L.P. 10.10* Employment Agreement dated August 1, 2000 by and between the registrant and Walter F. Ulloa. 10.11* Employment Agreement dated August 1, 2000 by and between the registrant and Philip C. Wilkinson. 27.1* Financial Data Schedule.
- ----------------- * Filed herewith. (1) Incorporated by reference from our Registration Statement on Form S-1, No. 333-35336, filed with the SEC on April 21, 2000, as amended by Amendment No. 1 thereto, filed with the SEC on June 14, 2000, Amendment No. 2 thereto, filed with the SEC on July 10, 2000, Amendment No. 3 thereto, filed with the SEC on July 11, 2000 and Amendment No. 4 thereto, filed with the SEC on July 26, 2000. (b) Reports on Form 8-K None. 28 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ENTRAVISION COMMUNICATIONS CORPORATION By: /s/ Jeanette Tully -------------------------------------------- Jeanette Tully Executive Vice President, Treasurer and Chief Financial Officer Dated: September 15, 2000 29 EX-2.3 2 0002.txt AMENDED AND RESTATED EXCHANGE AGREEMENT EXHIBIT 2.3 AMENDED AND RESTATED EXCHANGE AGREEMENT --------------------------------------- This Amended and Restated Exchange Agreement (the "Agreement") is dated as of July 24, 2000 by and among Entravision Communications Corporation, a Delaware corporation (the "Corporation"), Entravision Communications Company, L.L.C., a Delaware limited liability company (the "Company"), each of the individual, trust and/or other entity members of the Company listed on Schedule "A" attached ------------ hereto and incorporated herein by this reference (each, an "Exchanging Member" and collectively, the "Exchanging Members"), each of the stockholders of the Member Companies (as defined below) of the Company listed on Schedule "A" ------------ attached hereto (each, an "Exchanging Stockholder" and collectively, the "Exchanging Stockholders") and Univision Communications Inc., a Delaware corporation ("Univision"). The Exchanging Members, the Exchanging Stockholders and Univision are individually referred to herein as an "Exchanging Party" and collectively as the "Exchanging Parties." WHEREAS, the parties hereto have previously executed that certain Exchange Agreement dated as of April 19, 2000 (the "Original Exchange Agreement"), and the parties hereto now desire to amend and restate the Original Exchange Agreement as set forth hereinbelow. WHEREAS, the Company is a duly formed Delaware limited liability company engaged in the ownership and operation of television stations, radio stations, outdoor billboards and publishing facilities. WHEREAS, each of the Exchanging Members is an individual, trust and/or other entity that owns a direct membership interest in the Company as set forth on Schedule "A" attached hereto. ------------ WHEREAS, each of Cabrillo Broadcasting Corporation, a California corporation ("Cabrillo"), Golden Hills Broadcasting Corporation, a Delaware corporation ("Golden Hills"), KSMS-TV, Inc., a Delaware corporation ("KSMS"), Las Tres Palmas Corporation, a Delaware corporation ("Las Tres"), Tierra Alta Broadcasting, Inc., a Delaware corporation ("Tierra Alta"), Valley Channel 48, Inc., a Texas corporation ("Valley"), and Telecorpus, Inc., a Texas corporation ("Telecorpus"), (collectively, the "Member Companies"), is a corporation that owns a direct membership interest in the Company as set forth on Schedule "A" ------------ attached hereto. WHEREAS, each of the Exchanging Stockholders is an individual, trust and/or other entity that owns an indirect membership interest in the Company by virtue of his, her or its respective stockholdings in the Member Companies as set forth on Schedule "A" attached hereto. ------------ WHEREAS, the Exchanging Members together with the Member Companies own all of the outstanding membership interests in the Company. WHEREAS, Univision is the holder of that certain First Amended and Restated Non-Negotiable Subordinated Note (the "Note") dated March 2, 2000 from the Company in the principal amount of $120,000,000, and the Company, certain of the Member Companies, the Managing Members of the Company and Univision are parties to that certain Second Amendment to Amended and Restated Subordinated Note Purchase and Option Agreement (as amended, the "Option Agreement") dated as of March 2, 2000, pursuant to which Univision holds an option to acquire a 40.0% equity interest in the Company for a total exercise price of $120,000,000. WHEREAS, the Corporation is a duly incorporated Delaware corporation formed by the Company, among other things, for the purpose of effecting the Roll-Up (as defined below) contemplated by this Agreement. WHEREAS, in accordance with Section 26(i) of the First Amended and Restated Operating Agreement of the Company, as amended (the "Operating Agreement"), (i) each of the Exchanging Members is obligated to transfer to the Corporation his or its respective membership interest in the Company in exchange for newly- issued shares of Class A Common Stock or Class B Common Stock of the Corporation, (ii) each of the Exchanging Stockholders is obligated to transfer his, her or its respective stockholdings in the Member Companies to the Corporation in exchange for newly-issued shares of Class A Common Stock or Class B Common Stock of the Corporation and (iii) Univision desires to contribute to the Corporation its entire interest in and to the Note and the Option Agreement in exchange for newly-issued shares of Class C Common Stock of the Corporation, all pursuant to the terms and conditions of this Agreement (with such transactions collectively referred to herein as the "Roll-Up"). The Class A Common Stock, Class B Common Stock and Class C Common Stock of the Corporation are referred to collectively herein as the "Common Stock." WHEREAS, the Exchanging Members and the Member Companies executed that certain Amended and Restated Sixth Amendment to the Operating Agreement effective as of March 31, 2000 (the "Sixth Amendment"). WHEREAS, the Corporation has filed a Registration Statement with the Securities and Exchange Commission (the "Registration Statement") pursuant to which it intends to consummate the initial underwritten public offering of its Class A Common Stock (the "IPO") concurrently with the closing of the Roll-Up. WHEREAS, the Corporation and the Company have entered into that certain Acquisition Agreement and Plan of Merger (the "Merger Agreement") by and among the Corporation, the Company, and ZSPN Acquisition Corporation, a wholly-owned subsidiary of the Corporation ("Acquisition Co."), on the one hand, and Z- Spanish Media Corporation ("ZSPN") and its stockholders, on the other hand, pursuant to which the Corporation will acquire ZSPN pursuant to a merger of Acquisition Co. with and into ZSPN (the "Merger"). -2- WHEREAS, pursuant to Section 3.2 of the Merger Agreement, if the closing of the Merger has not taken place by the Interim Closing Deadline (as defined in the Merger Agreement) ZSPN, in certain instances, may elect to waive the IPO as a condition to the closing of the Merger and to require the Corporation to proceed with the closing of the Merger and the Roll-Up (with such closing referred to herein as the "Interim Closing"). WHEREAS, counsel for the Corporation and the Company has previously filed certain applications with the Federal Communications Commission (the "FCC") requesting its written consent (the "FCC Consent") to the assignment of the beneficial ownership of the FCC licenses held by Entravision Holdings, LLC, a California limited liability company and a wholly-owned subsidiary of the Company, to the Corporation in accordance with the Roll-Up contemplated by this Agreement. WHEREAS, all the parties hereto intend for the Roll-Up as set forth in this Agreement to be tax-free to all parties pursuant to Section 351(a) of the Internal Revenue Code of 1986, as amended (the "Code"). WHEREAS, concurrently with the execution of the Original Exchange Agreement, the Company consummated a financing pursuant to that certain Convertible Subordinated Note Purchase Agreement dated as of April 20, 2000 by and between TSG Capital Fund III, L.P. ("TSG") and the Company involving the issuance of a Subordinated Convertible Promissory Note in the principal amount of $90,000,000 (the "TSG Note") by the Company in favor of TSG (the "TSG Financing"). NOW, THEREFORE, in consideration of the premises and of the mutual agreements, covenants and provisions herein contained and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE 1. EXCHANGE AND CLOSING 1.1. Exchange. -------- (a) Subject only to the terms and conditions of this Agreement, each Exchanging Member shall as of the Closing (as defined below) assign, transfer and convey to the Corporation all right, title and interest in and to the entire direct membership interest in the Company held by such Exchanging Member, all as set forth opposite each such Exchanging Member's name on Schedule "A" attached ------------ hereto, (ii) each Exchanging Stockholder shall as of the Closing assign, transfer and convey to the Corporation all right, title and interest in and to the entire indirect membership interest in the Company held by such Exchanging Stockholder by virtue of his, her or its stockholdings in each of the Member Companies, all as set forth opposite each such Exchanging Stockholder's name on Schedule "A" attached hereto, and (iii) Univision shall as of the Closing - ------------ assign, transfer and convey to the Corporation all right, title and interest in and to the entire interest of Univision in the Note and the Option Agreement. -3- (b) The Corporation shall as of the Closing accept the assignment and transfer by (i) each Exchanging Member of his or its entire direct membership interest in the Company and hereby assumes and agrees to perform and be bound by any and all of the conditions, covenants and obligations of such Exchanging Member pursuant to the Operating Agreement, (ii) each Exchanging Stockholder of his, her or its respective stockholdings in each of the Member Companies and hereby assumes and agrees to perform and be bound by any and all of the conditions, covenants and obligations of such Exchanging Stockholder pursuant to the organizational documents of each respective Member Company and (iii) Univision of its entire interest in and to the Note and the Option Agreement and hereby assumes and agrees to perform and be bound by any and all of the conditions, covenants and obligations of Univision pursuant to the Note and the Option Agreement; provided, however, that in the event that Univision is granted the Univision Bridge Option (as contemplated by a proposed Third Amendment to Amended and Restated Subordinated Note Purchase and Option Agreement (the "Third Amendment") to be entered into in connection with a proposed bridge loan to be made to the Company by Univision) pursuant to Section 1 of the Third Amendment, this Section 1.1(b) shall be deemed to specifically exclude the assignment and transfer by Univision of all relevant terms and conditions of the Third Amendment relating to the Univision Bridge Option, and such terms and conditions shall survive this Agreement. (c) At the Closing, each Exchanging Party shall receive, in consideration for the Roll-Up, that number of shares of that class of Common Stock set forth on Schedule "B" attached hereto and incorporated herein by this ------------ reference computed by multiplying the fully-diluted as-converted direct and indirect membership units held by each such Exchanging Party times seventeen (17). The rights, privileges, preferences and restrictions of the Common Stock shall be as set forth in the First Restated Certificate of Incorporation of the Corporation, substantially in the form attached hereto as Exhibit "A" and ----------- incorporated herein by this reference (the "Restated Certificate"), which shall be filed with the Delaware Secretary of State by counsel to the Corporation and the Company prior to the Closing. (d) Each Exchanging Party acknowledges and agrees that the number of shares of Common Stock to be received by such Exchanging Party in the Roll-Up represents the amount due and owing each such Exchanging Party on a liquidation of the Company and a distribution of proceeds after allocations of Net Income and Net Loss (as such terms are defined in the Sixth Amendment) as provided for in the Sixth Amendment. (e) Each Exchanging Member or Exchanging Stockholder further acknowledges and agrees that the number of shares of the Common Stock received by such Exchanging Party in the Roll-Up contemplated by this Agreement is good and valuable consideration for the interests being exchanged hereunder, and is an accurate reflection of the fair market value of such interests as of the date hereof. -4- 1.2. Termination of Rights. From and after the Closing: --------------------- (a) the entire capital account and share of profits and losses of each Exchanging Member in the Company shall be deemed to be the capital account and share of profits and losses of the Corporation, such Exchanging Member shall have no further interest or rights of any kind in or with respect to his or its membership interest in the Company or under the Operating Agreement and such Exchanging Member shall be released from all further obligations under the Operating Agreement; (b) all of the rights and obligations of Univision under the Note and the Option Agreement shall be deemed to be rights and obligations of the Corporation, Univision shall have no further interest or rights of any kind in or with respect to the Note or the Option Agreement and Univision shall be released from all further obligations under the Note and the Operating Agreement; and (c) 1,000 shares of Common Stock of the Corporation held by the Company shall be deemed canceled for all purposes and the Company shall promptly submit the applicable share certificate to the Corporation for cancellation. 1.3. Consent of Executive Committee. By their respective execution hereof ------------------------------ in any capacity, the Company and each member of the Executive Committee acknowledges that the Executive Committee of the Company (i) has approved the form of this Agreement, (ii) acknowledges receipt of a duly executed copy of this Agreement and (iii) in accordance with the provisions of the Operating Agreement, consents to the assignment and transfer of the membership interests of the Exchanging Members to the Corporation and to the admission of the Corporation as a new member of the Company. 1.4. Consent of Exchanging Parties. By its execution hereof, each ----------------------------- Exchanging Party (i) approves the form of this Agreement, (ii) acknowledges that it has received and reviewed in full the current form of the Registration Statement, (iii) approves, ratifies and consents to the consummation of the Roll-Up, the IPO, the Merger and the TSG Financing in accordance with the documentation made available to each Exchanging Party (with such changes as the management of the Company and the Corporation may determine in its reasonable discretion) and (iv) waives any right of consent or approval, any preemptive right, right of first refusal or anti-dilution protection or any other restriction by or privilege in favor of such Exchanging Party of any kind to prevent, restrict, delay, adversely effect or hinder the consummation of the Roll-Up, the IPO, the Merger and/or the TSG Financing. Each Exchanging Party agrees to promptly execute all documents requested by the Company or Corporation reflecting the terms of this Section 1.4. 1.5. Closing. The closing of the Roll-Up and the other transactions ------- contemplated by this Agreement (the "Closing") will take place at the offices of Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P. in Los Angeles, California at 10:00 a.m. (Pacific time) upon the earlier to occur of: (i) two (2) business days following the execution of the underwriting agreement by the Corporation in connection with the IPO, (ii) the consummation of the Interim -5- Closing or (iii) ten (10) days after written notice from the Corporation to the Exchanging Parties, provided that the FCC Consent has become a Final Order (as defined below), which requirement may be waived by the Corporation in its discretion at any time after initial issuance of the FCC Consent, or on such other date as the parties may mutually agree, or at such other time and place as the parties may mutually agree. For purposes of this Agreement, "Final Order" shall mean an order, action or decision of the FCC that has not been reversed, stayed, enjoined, annulled or suspended and as to which (i) no timely request for stay, appeal, petition for reconsideration, application for review or reconsideration by the FCC on its own motion is pending and (ii) the time for filing any such request, appeal, petition or application or for reconsideration by the FCC on its own motion, has expired. 1.6. Closing Obligations of Corporation. At the Closing, the Corporation ---------------------------------- will have fulfilled or have caused to be fulfilled the following obligations: (a) within a reasonable period of time after the Closing, deliver or cause to be delivered to each Exchanging Party a duly executed stock certificate representing the number of shares of Common Stock set forth opposite each Exchanging Party's name on Schedule "B" attached hereto (subject to the ------------ obligation of each Exchanging Party pursuant to Section 2.4 below); (b) have executed a certificate of the Secretary of the Corporation attesting to (i) the incumbency of the officers executing the Agreement and the other agreements and certificates delivered by the Corporation at the Closing and (ii) the authenticity of the Restated Certificate and the Amended and Restated Bylaws (as defined below); (c) have executed written resolutions of the sole stockholder and the Board of Directors of the Corporation authorizing (i) the execution, delivery and performance of this Agreement, (ii) the execution and filing of the Restated Certificate with the Delaware Secretary of State and (iii) the execution of the Amended and Restated Bylaws, certified by the Secretary of the Corporation; (d) have received a certificate of good standing for the Corporation issued by the Delaware Secretary of State not more than ten (10) days prior to the date of the Closing; and (e) have executed such other documents as may be reasonably requested by the Exchanging Parties as necessary to consummate the transactions contemplated by this Agreement. 1.7. Closing Obligations of Exchanging Parties. At the Closing, each of ----------------------------------------- the Exchanging Parties will deliver or cause to be delivered to the Corporation: (a) with respect to Univision, the original of the Note and the Option Agreement; provided, however, that in the event that Univision is granted the Univision Bridge -6- Option, this Section 1.7(a) shall be deemed to specifically exclude the delivery by Univision of all relevant terms and conditions of the Third Amendment relating to the Univision Bridge Option, and such terms and conditions shall survive this Agreement; (b) to the extent applicable to each Exchanging Party, signature pages to the documents referred to in Section 2.4 below; and (c) such other documents as may be reasonably requested by counsel for the Corporation and the Company as necessary to consummate the transactions contemplated hereby. ARTICLE 2. ADDITIONAL INFORMATION AND AGREEMENTS 2.1. Corporation. Each Exchanging Party understands and acknowledges that ----------- the Corporation is a Delaware corporation organized to be the direct or indirect owner of all of the equity interests in the Company. 2.2. Amendment to Operating Agreement. Each Exchanging Party acknowledges -------------------------------- and agrees that, effective as of the Closing, this Agreement shall constitute an amendment of those provisions of the Operating Agreement which are inconsistent with the provisions of this Agreement. Each Exchanging Party consents to and approves such amendment, subject to its effectiveness. The provisions of the Operating Agreement as in effect on the date hereof will continue to apply to each Exchanging Party until the Closing. 2.3. First Amended and Restated Bylaws. The First Amended and Restated --------------------------------- Bylaws of the Corporation at the Closing shall be substantially in the form attached hereto as Exhibit "B" and incorporated herein by this reference (the ----------- "Amended and Restated Bylaws"). 2.4. Stockholders' Agreement. Solely in the event the Roll-Up is triggered ----------------------- by the occurrence of the Interim Closing or at the Corporation's option not in connection with the IPO, at the Closing, each Exchanging Party shall execute and deliver to the Corporation a counterpart signature page to a Stockholders' Agreement, in form and substance to be determined in good faith and reasonably acceptable to the parties hereto and consistent with the covenants, limitations and restrictions contained in the Operating Agreement, pursuant to which such Exchanging Party will be subject to customary certain transfer restrictions and a right of first refusal on the Common Stock, and each Exchanging Party agrees to be bound by and subject to any and all restrictions set forth therein. Such Stockholders' Agreement shall terminate as of the IPO. 2.5. Tax Distributions. Notwithstanding anything to the contrary herein, ----------------- the Company shall continue making distributions after the Closing to the Exchanging Members and the Member Companies in accordance with Section 12(a) of the Operating Agreement with respect -7- to any tax liability incurred by such persons by reason of membership in the Company through and including the Closing. 2.6. Senior Lender Matters. --------------------- (a) Solely in the event the Roll-Up is triggered by the occurrence of the Interim Closing or at the Corporation's option not in connection with the IPO, each Exchanging Party acknowledges and agrees that all of the equity interests in the Company and the Member Companies held by the Exchanging Parties have been pledged to Union Bank of California, N.A. ("Union Bank") in accordance with the terms of that certain Amended and Restated Credit Agreement (as amended, the "Credit Agreement") dated November 10, 1998 by and among the Company, the Member Companies, Union Bank and certain lenders, and each Exchanging Party hereby agrees to execute any documents and take such acts as are reasonably necessary to cause Union Bank to release to the Corporation all indicia of ownership in the Company and the Member Companies, including, without limitation, all original stock certificates and pledges. Each Exchanging Stockholder hereby further agrees, if necessary, to execute a new stock power for the shares in the Member Companies held by such Exchanging Stockholder, endorsed in blank, in favor of the Corporation. (b) Solely in the event the Roll-Up is triggered by the occurrence of the Interim Closing or at the Corporation's option not in connection with the IPO, each Exchanging Party other than Univision acknowledges and agrees that all shares of the Common Stock issued to such Exchanging Party in accordance with this Agreement are subject to the terms of the Credit Agreement, and that such shares must be pledged to Union Bank concurrently with the Closing. In connection therewith, each Exchanging Party agrees to execute any document and to take any act reasonably required by Union Bank at or following the Closing in order to perfect the pledge of such shares in favor of Union Bank. 2.7. Release. Each Exchanging Party other than Univision hereby ------- irrevocably releases the Corporation, the Company and each and every affiliate, stockholder, subsidiary, partner, officer, member, director and employee of the Corporation and the Company in their capacities as such, and each other Exchanging Party (each, a "Releasee") from any claims, liabilities, costs, expenses, actions, suits or demands however arising, whether at law or in equity, contingent, known or unknown, which such Exchanging Party may have or assert, in respect of any equity or membership interest in the Company or arising out of any membership in the Company that such Exchanging Party or such Exchanging Party's heirs, successors or assigns had with any such Releasee on or prior to the Closing; provided that this release shall not extend to (i) indebtedness owing to such Exchanging Party by any Releasee, (ii) representations or warranties made, or agreements entered into, by a Releasee in connection with this Agreement and (iii) any conduct that resulted from a Releasee's bad faith, fraud or criminal act or omission. 2.8. Waiver. Each of the Company and the Exchanging Parties acknowledges ------ and agrees that the provisions of Section 24 of the Operating Agreement shall not apply to TSG upon conversion of the TSG Note into Class A Units of the Company. -8- ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE COMPANY The Corporation and the Company (where applicable) hereby make the following representations and warranties to each Exchanging Party, each of which is deemed to be a separate representation and warranty by the Corporation and the Company (where applicable), and this Agreement is made in reliance on same: 3.1. Organization, Good Standing, Corporate Power and Qualification. The -------------------------------------------------------------- Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 3.2. Authority; Enforceability. All corporate action on the part of the ------------------------- Corporation, its officers and directors necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Corporation hereunder and the authorization, issuance and delivery of the shares of the Common Stock being issued to the Exchanging Parties hereunder has been or will be taken prior to the Closing, and each of this Agreement and the other documents contemplated hereby has been duly executed and delivered by the Corporation and constitutes a legal, valid and binding obligation of the Corporation enforceable against the Corporation in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or other laws relating to or affecting creditors' rights generally and the exercise of judicial discretion in accordance with general equitable principles. 3.3. No Conflicts. Subject to compliance with the federal and state ------------ securities laws, the execution, delivery and performance of this Agreement and the other documents contemplated hereby, and the consummation of the transactions contemplated hereby and thereby, will not (i) result in a material violation or breach of any term or provision of the Restated Certificate or the Amended and Restated Bylaws or the Certificate of Formation or Operation Agreement of the Company, or of any material statute, rule or regulation applicable to the Corporation or the Company, or (ii) conflict with in a material fashion, contravene in a material fashion, result in a material violation or breach of or default under (with or without the giving of notice or the lapse of time or both), permit any party to terminate, amend or accelerate the provisions of, or result in the imposition of any material lien upon any of the property or assets of the Corporation or the Company under any material contract, agreement, indenture, letter of credit, mortgage, security agreement, pledge agreement, deed of trust, bond, note, guarantee, surety obligation, warranty, license, franchise, permit, power of attorney, lease, instrument or other agreement to which the Corporation or the Company is a party or by which any of its material property or material assets may be bound. -9- 3.4. Consents and Approvals. Except for the FCC Consent, the consent of ---------------------- the senior lenders of the Company in accordance with the terms of the Credit Agreement and the filings under applicable federal and state securities laws which filings are required to be made by the Corporation after the Roll-Up contemplated hereunder, no material consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority or any other third party on the part of the Corporation is required in connection with the consummation of the transactions contemplated by this Agreement. 3.5. Capitalization. The authorized capital of the Corporation shall as of -------------- the Roll-Up consist of two classes of stock designated "Common Stock" and "Preferred Stock." The total number of shares which the Corporation is authorized to issue is 375,000,000 shares, $0.0001 par value per share, as follows: (i) 325,000,000 shares of Common Stock, $0.0001 par value per share, consisting of 260,000,000 shares of Class A Common Stock, $0.0001 par value per share, 40,000,000 shares of Class B Common Stock, par value $0.0001 per share, 25,000,000 shares of Class C Common Stock, $0.0001 par value per share, and (ii) 50,000,000 shares shall be Preferred Stock, $0.0001 par value per share, consisting of 11,000,000 shares of Series A Preferred Stock, par value $0.0001 per share, and 39,000,000 undesignated shares. There are 1,000 shares of Common Stock issued and outstanding as of the date hereof. No shares of Preferred Stock are issued and outstanding on the date hereof. The capitalization of the Corporation with respect to the Exchanging Parties immediately after the Roll-Up shall be as set forth in Schedule "B" attached hereto. The rights, preferences, ------------ privileges and restrictions of the Common Stock are as stated in the Restated Certificate. Except as contemplated by (i) this Agreement, (ii) the IPO, (iii) the TSG Note, (iv) the Merger Agreement, (v) the exercise of the Univision Bridge Option and (vi) stock options to be issued by the Corporation to certain key employees prior to the IPO, at the IPO, no subscription, warrant, option, convertible security or other right (contingent or other) to purchase or otherwise acquire from the Corporation any equity securities of the Corporation will be authorized or outstanding, and there will be no commitment by the Corporation to issue shares, subscriptions, warrants, options, convertible securities or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. 3.6. Issuance of Common Stock. The shares of the Common Stock that are ------------------------ being acquired by the Exchanging Parties hereunder, when issued in accordance with the terms of this Agreement and for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable. 3.7. Litigation. Except as disclosed in the Registration Statement, there ---------- is no material action, suit, claim, proceeding or investigation pending against the Corporation or the Company at law or equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, arbitration proceeding relating to the Corporation or the Company pending under collective bargaining agreements or otherwise, or governmental inquiry pending or, to the knowledge of the -10- Corporation or the Company, threatened against the Corporation or the Company (including, without limitation, any inquiry as to the qualification of the Corporation or the Company to hold or receive any license or permit), which questions the validity of this Agreement or the right of the Corporation or the Company to enter into it, or to consummate the transactions contemplated hereby, nor is either the Corporation or the Company aware that there is any basis for the foregoing. Neither the Corporation or the Company is a party or subject to the provisions of any material order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Corporation or the Company currently pending. 3.8. Compliance with Law. Neither the Corporation nor the Company is in ------------------- material violation or default of any material instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound or of any provision of material federal or state statute, rule or regulation applicable to the Corporation or the Company. 3.9. Disclosure. The Corporation has fully provided each Exchanging Party ---------- with all the information which he, she or it has requested for deciding whether to participate in the Roll-Up hereunder and all information which the Corporation believes is reasonably necessary to enable such Exchanging Party to make such decision including, without limitation, the current form of the Registration Statement. Neither this Agreement, the Registration Statement nor any other statements or certificates made or delivered in connection herewith contains any material untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not materially misleading. 3.10. Brokers and Finders. Neither the Corporation nor any or its officers, ------------------- directors, employees or agents or any affiliate thereof have employed any broker or finder, or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transaction contemplated hereby. 3.11. Representations and Warranties Survive Closing. The Company and the ---------------------------------------------- Corporation hereby acknowledge and agree that all representations and warranties contained in this Article 3 shall be true and correct in all material respects as of the Closing, except to the extent any inaccuracy would not have a material adverse effects on the assets, liabilities or properties of the Corporation, the Company and all of their respective subsidiaries taken as a whole, and that the representations and warranties of the Company and the Corporation shall survive the Closing. ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF EXCHANGING PARTIES Each of the Exchanging Parties, severally and only with respect to himself, herself or itself, hereby makes the following representations and warranties to the Corporation, each of -11- which is deemed to be a separate representation and warranty by such parties, and this Agreement is made in reliance on same: 4.1. Authority; Enforceability. Such Exchanging Party has the right, ------------------------- authority and legal capacity to enter into, execute and deliver this Agreement and the other documents contemplated hereby and perform his, her or its obligations hereunder and thereunder, and each of this Agreement and the other documents contemplated hereby has been duly executed and delivered by such Exchanging Party and constitutes a legal, valid and binding obligation of such Exchanging Party enforceable against such Exchanging Party in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or other laws relating to or affecting creditors' rights generally and the exercise of judicial discretion in accordance with general equitable principles. 4.2. No Conflicts. Subject to compliance with the federal and state ------------ securities laws, the execution, delivery and performance of this Agreement and the other documents contemplated hereby, and the consummation of the transactions contemplated hereby and thereby, will not conflict with, contravene, result in a material violation or breach of or material default under (with or without the giving of notice or the lapse of time or both), permit any party to terminate, amend or accelerate the provisions of, or result in the imposition of any material lien (or any obligation to create any material lien) upon any of the property or assets of such Exchanging Party under any contract, agreement, indenture, letter of credit, mortgage, security agreement, pledge agreement, deed of trust, bond, note, guarantee, surety obligation, warranty, license, franchise, permit, power of attorney, lease, instrument or other agreement to which such Exchanging Party is a party or by which any of his, her or its property or assets may be bound. 4.3. Consents and Approvals. No consent, approval, order or authorization ---------------------- of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority or any other third party on the part of such Exchanging Party is required in connection with the consummation of the transactions contemplated by this Agreement. 4.4. Title. ----- (a) Each Exchanging Member owns, beneficially and of record, his or its membership interest in the Company set forth opposite his or its name on Schedule "A" attached hereto, this is the only membership interest in the - ------------ Company owned by such Exchanging Member and this membership interest is held by such Exchanging Member free and clear of any claim, lien, pledge, deed of trust, option, charge, security interest, hypothecation, encumbrance, right of first offer, voting trust, proxy, right of third parties or other restriction or limitation of any nature whatsoever (each, a "Lien" and collectively, "Liens") other than in the Credit Agreement. At the Closing, the Corporation will acquire good and valid title to such membership interests, free and clear of any Liens other than any Lien created under the Credit Agreement. -12- (b) Each Exchanging Stockholder owns, beneficially and of record, his, her or its stockholdings in each of the Member Companies set forth opposite his, her or its name on Schedule "A" attached hereto, these are the only shares in ------------ the Member Companies owned by such Exchanging Stockholder and these shares are held by such Exchanging Stockholder free and clear of any Liens other than in the Credit Agreement. At the Closing, the Corporation will acquire good and valid title to such shares, free and clear of any Liens other than (solely in the event the Roll-Up is triggered by the occurrence of the Interim Closing or at the Corporation's option not in connection with the IPO) any Lien created under the Credit Agreement. (c) Univision's rights under the Note and the Option Agreement are the only rights to equity ownership in the Company owned by Univision and such rights are held by Univision free and clear of any Liens other than any Lien created under the Credit Agreement. 4.5. Accredited Investor. Such Exchanging Party is an "accredited ------------------- investor," as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the "Securities Act"). 4.6. Restricted Securities. Such Exchanging Party understands that the --------------------- shares of the Common Stock are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Corporation in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act, only in certain limited circumstances. In this connection, such Exchanging Party represents that he, she or it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. 4.7. Investment Purpose. Such Exchanging Party is acquiring the Common ------------------ Stock under this Agreement for his, her or its own account for investment purposes, and not with a view to, or for resale in connection with, any distribution thereof other than in compliance with the Securities Act and other applicable securities laws. Such Exchanging Party acknowledges that he, she or it must bear the economic risk of an investment in the Common Stock for an indefinite period of time because, among other reasons, the shares of the Common Stock received by such Exchanging Party have not been registered under the Securities Act and, therefore, such securities cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available. Such Exchanging Party also acknowledges that transfers of the shares of the Common Stock received are further restricted by applicable federal and state securities laws. 4.8. Access to Information. Such Exchanging Party understands the risks --------------------- of, and other considerations relating to, his, her or its acquisition and ownership of the Common Stock received. Such Exchanging Party has been provided an opportunity to ask questions of, and has received answers satisfactory to him, her or it from, the Corporation, the Company and their representatives regarding the Common Stock received, has received the current form of the -13- Registration Statement in its entirety and has obtained any and all additional information from the Corporation and its representatives that such Exchanging Party deems necessary regarding the Common Stock received. 4.9. Evaluation of and Ability to Bear Risks. Such Exchanging Party has --------------------------------------- such knowledge and experience in financial affairs that he, she or it is capable of evaluating the merits and risks of, and other considerations relating to, the ownership of the Common Stock received, and has not relied in connection with his, her or its acquisition of the Common Stock received upon any representations, warranties or agreements other than those set forth in this Agreement. Such Exchanging Party's financial situation is such that he, she or it can afford to bear the economic risk of holding the Common Stock for an indefinite period of time, and such Exchanging Party can afford to suffer the complete loss of his, her or its investment in such securities. 4.10. No Dispositions. Except as set forth in the Registration Statement, --------------- such Exchanging Party does not currently have, and at the Closing will not have, any plan, agreement, commitment, intention or arrangement, whether written or oral, to dispose of any of the shares of the Common Stock to be received by such Exchanging Party. For purposes of this representation, a "disposition" shall include any direct or indirect offer, offer to sell, sale, contract of sale or grant of any option to purchase, gift, transfer, pledge or other disposition, including any disposition of the economic or other risks of ownership through hedging transactions or derivatives and any other transaction that would constitute a "constructive sale" within the meaning of Section 1259 of the Code, including, without limitation, a short-sale, forward sale, equity swap or other derivative contract with respect to the Common Stock or substantially identical property, or other transaction having substantially the same effect as the foregoing. 4.11. Further Limitations on Disposition. Without in any way limiting the ---------------------------------- representations set forth above, such Exchanging Party further agrees not to make any disposition of all or any portion of the Common Stock unless and until: (i) there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or (ii) such Exchanging Party shall have notified the Corporation of the proposed disposition and shall have furnished the Corporation with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if requested by the Corporation, such Exchanging Party shall have furnished the Corporation with an opinion of counsel, reasonably satisfactory to the Corporation, that such disposition will not require registration of such shares under the Securities Act. It is agreed that the Corporation will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. 4.12. Legends. Such Exchanging Party understands and acknowledges that the ------- certificates evidencing shares of the Common Stock shall bear the following legend: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR -14- HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. 4.13. Brokers and Finders. Neither such Exchanging Party nor any of his, ------------------- her or its officers, directors, employees or agents or any affiliate thereof have employed any broker or finder, or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transaction contemplated hereby. 4.14. Representations and Warranties Survive Closing. Each Exchanging Party ---------------------------------------------- hereby acknowledges and agrees that all representations and warranties contained in this Article 4 shall be true and correct in all respects as of the Closing and that the representations and warranties of each Exchanging Party shall survive the Closing. ARTICLE 5. CONDITIONS PRECEDENT TO CLOSING 5.1. Conditions Precedent to Obligation of Corporation to Close. The ---------------------------------------------------------- obligation of the Corporation to effect the transactions contemplated by this Agreement and to take the other actions required to be taken by the Corporation at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Corporation, in whole or in part, where permissible): (a) Accuracy of Representations and Warranties. All of the ------------------------------------------ representations and warranties of the Exchanging Parties in this Agreement, considered collectively, must be accurate in all material respects when made, and as of the date of the Closing as if made on the date of the Closing. (b) Performance. All of the covenants and obligations that the ----------- Exchanging Parties are required to perform or to comply with pursuant to this Agreement at or prior to the Closing, considered collectively, and each of these covenants and obligations, considered individually, must have been duly performed and complied with in all respects, including, without limitation, the obligations of the Exchanging Parties pursuant to Section 1.7 above. (c) Consents. The FCC Consent shall have become a Final Order, and -------- all other consents, approvals, authorizations, exemptions and waivers that shall be required in order to enable the Corporation to consummate the transactions contemplated by this Agreement shall have been obtained, including, without limitation, the consent of the senior lenders of the Company in accordance with the terms of the Credit Agreement. (d) No Proceedings. Since the date of this Agreement, there must not -------------- have been commenced or threatened against any of the Exchanging Parties any proceeding involving any challenge to, or seeking damages or other relief in connection with, any of the transactions -15- contemplated by this Agreement or that may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the transactions contemplated by this Agreement. 5.2. Conditions Precedent to Obligation of Exchanging Parties to Close. ----------------------------------------------------------------- The obligation of the Exchanging Parties to effect the transactions contemplated by this Agreement and to take the other actions required to be taken by the Exchanging Parties at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Exchanging Parties, in whole or in part, where permissible): (a) Performance. All of the covenants and obligations that the ----------- Corporation are required to perform or to comply with pursuant to this Agreement at or prior to the Closing, considered collectively, and each of these covenants and obligations, considered individually, must have been performed and complied with in all respects, including, without limitation, the obligations of the Corporation pursuant to Section 1.6 above. (b) No Proceedings. Since the date of this Agreement, there must not -------------- have been commenced or threatened against the Corporation or the Company any proceeding involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement or that may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the transactions contemplated by this Agreement. ARTICLE 6. TERMINATION 6.1. Termination Events. This Agreement may, by written notice given prior ------------------ to or at the Closing, only be terminated: (a) by any party (i) if the FCC dismisses or denies the application for the FCC Consent and such order is a Final Order or (ii) if there shall be any final decree or order that would prevent or make unlawful the Closing; or (b) by the Corporation solely in the event the Merger Agreement has been terminated in accordance with its terms. 6.2. Rights of Parties Upon Termination. If this Agreement is terminated ---------------------------------- as provided in Section 6.1 above, the transactions contemplated by this Agreement shall be abandoned without further action, rights or obligations by the parties hereto to one another, and all filings, applications and other submissions made hereunder shall, to the extent practicable, be withdrawn from the persons to which they were made. 6.3. Power of Attorney. The Exchanging Parties do hereby constitute and ----------------- appoint Walter F. Ulloa as their true and lawful attorney-in-fact and agent to act for them in their names, -16- place and stead, and for his use and benefit in any and all capacities, for the limited purpose of executing any and all documentation to be executed by the Exchanging Parties in connection with the Roll-Up and the other transactions contemplated by this Agreement. The Exchanging Parties do further acknowledge and agree that the signature of Walter F. Ulloa alone on any document to be executed by any of the Exchanging Parties in connection with the transactions contemplated by this Agreement shall be effective to bind each of the Exchanging Parties and the Exchanging Parties hereby ratify and confirm the binding authority of the signature of Walter F. Ulloa on any such document. ARTICLE 7. GENERAL PROVISIONS 7.1. Tax Matters. The parties hereto intend the Roll-Up to qualify under ----------- Section 351(a) of the Code and will use all reasonable efforts to cause the Roll-Up to so qualify. Each party hereto will not take, and will cause such party's affiliates and representatives not to take, any actions or positions which may be expected to cause the Roll-Up not to so qualify. Each of the exchanging parties agrees to take all actions and execute all documents deemed reasonably necessary to effectuate such qualification, including, without limitation, acquisition of the Member Companies via merger. 7.2. Entire Agreement. This Agreement, the exhibits and schedules hereto ---------------- and any other document to be furnished pursuant to the provisions hereof embody the entire agreement and full understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, inducements, representations, warranties, covenants or undertakings other than those expressly set forth or referred to in such documents. This Agreement and such other documents supersede all prior negotiations, agreements and understandings, both written and oral, among the parties with respect to such subject matter. 7.3. Incorporation by Reference. The recitals set forth above, and all -------------------------- exhibits and schedules attached hereto, are hereby incorporated by reference into this Agreement. 7.4. Headings. The headings of the articles and sections of this Agreement -------- are inserted as a matter of convenience and for reference purposes only, are of no binding effect, and in no respect define, limit, extend or interpret the scope of this Agreement or the intent of any section, and are not to be considered in construing or interpreting this Agreement. 7.5. Gender; Statutory References. All pronouns and any variations thereof ---------------------------- shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons or the context may require. Any reference to the Securities Act or other statutes or laws will include all amendments, modifications or replacements thereto. 7.6. Amendments. Subject to applicable law, this Agreement and any exhibit ---------- or schedule attached hereto may only be amended by the parties hereto pursuant to an amendment in -17- writing executed by the Corporation and members of the Company holding a majority of the voting power therein. 7.7. Successors and Assigns. Except as otherwise provided herein, the ---------------------- terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors, assigns, heirs, legatees, legal representatives, executors and administrators of all the parties hereto. Nothing in this Agreement, express or implied, is intended to or shall be construed to confer upon or give to any person, entity or other party (other than the parties hereto or their respective successors and assigns) any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 7.8. Severability. Each term, covenant, condition and provision of this ------------ Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision shall be held by a court of competent jurisdiction to be illegal, invalid or unenforceable under applicable law, such term, covenant, condition or provision shall be excluded from this Agreement and the remaining terms, covenants, conditions and provisions shall continue in full force and effect to the maximum extent permitted by applicable law as if such term, covenant, condition or provision were excluded. 7.9. Counterparts; Facsimile. This Agreement may be executed in any number ----------------------- of counterparts, each of which shall be an original and shall not need to contain the signature of more than one party, but all of which together when fully-executed and delivered by the parties hereto shall constitute one and the same instrument, binding on all of the parties. To the maximum extent permitted by applicable law or any applicable governmental authority, each counterpart signature page delivered to the Corporation via facsimile shall be deemed to be an original and may be relied on by the parties hereto as such. 7.10. Necessary Acts. Each party to this Agreement agrees to perform any -------------- further acts, and to execute and deliver any further documents, that may be reasonably necessary to give effect to the provisions of this Agreement and the transactions contemplated herein, whether before or after the Closing. 7.11. Representation of Corporation and Company. Each Exchanging Party ----------------------------------------- hereby acknowledges and agrees that Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P., as corporate counsel to the Corporation and the Company, have represented the interests of the Corporation and the Company in the preparation of this Agreement, without regard to the individual interests of the Exchanging Parties. Each Exchanging Party has been urged to, and has been given the opportunity to, utilize independent legal and tax counsel in connection with this Agreement, and the rights and obligations of each Exchanging Party hereunder. Each Exchanging Party, by execution of this Agreement where indicated below, gives his, her or its informed consent to and waives any potential conflict with respect to the representation of the Corporation and the Company by Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P. -18- 7.12. Assignment. No party hereto shall have the right to assign all or any ---------- portion of its rights and interests under this Agreement or to delegate all or any portion of its duties under this Agreement without the prior written consent of each other party hereto. 7.13. Joint Effort. The provisions of this Agreement have been examined, ------------ negotiated and revised by counsel for each party and no implication shall be drawn against any party hereto by virtue of the drafting of this Agreement. 7.14. Attorney's Fees. In case any proceeding, whether at law, in equity or --------------- in arbitration, shall be brought by any party to enforce or interpret the terms or provisions of this Agreement, or any controversy arising therefrom, the prevailing party, as determined by the court or arbitrator, shall be entitled to the payment of reasonable attorney's fees and costs. 7.15. Expenses. Each party hereto shall be responsible for all expenses of -------- such party incurred in connection with the transactions contemplated by this Agreement. 7.16. Notices. All notices, requests, demands, waivers and other ------- communications to be given by any party hereunder shall be in writing and shall be (i) mailed by first-class, registered or certified mail, postage prepaid, (ii) sent by hand delivery or reputable overnight delivery service or (iii) transmitted by facsimile (provided that a copy is also sent by reputable overnight delivery service) addressed to the parties at the respective addresses for such parties as reflected on the then-current records of the Corporation or the Company (and in the case of the Corporation and the Company, with a required copy to Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P., Attention: Kenneth D. Polin, Esq., 101 West Broadway, 17th Floor, San Diego, California 92101), or, in each case, to such other address as may be specified in writing to the other parties hereto. All such notices, requests, demands, waivers and other communications shall be deemed to have been given and received (a) if by personal delivery or facsimile, on the day of such delivery, (b) if by first- class, registered or certified mail, on the fifth (5th) business day after the mailing thereof or (c) if by reputable overnight delivery service, on the day delivered. 7.17. Signatory Authority. The individual or individuals signing this ------------------- Agreement on behalf of any party hereto represents to the other parties hereto that he or she has full authority to do so, has received all required consents, and that his or her signature (together with the signature or signatures of any other individual signing below on behalf of such party) is (are) the only signatures required to bind the party on whose behalf he or she is signing this Agreement. 7.18. Consent of Spouse. In connection with the execution and delivery of ----------------- this Agreement, each married Exchanging Member or Exchanging Stockholder residing in a community property jurisdiction agrees to deliver a consent of spouse, substantially in the form attached hereto as Exhibit "C" and ----------- incorporated herein by this reference. -19- 7.19. Governing Law; Venue. Notwithstanding the place where the Agreement -------------------- may be executed by any of the parties hereto, this Agreement, and the rights and obligations of the parties hereto, and any disputes relating thereto, shall in all respects be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws. The exclusive venue for any controversy arising out of the terms of this Agreement or the breach thereof shall be the Superior Court of California for the County of Los Angeles or the United States District Court for the Central District of California. 7.20. Specific Performance. Each of the Exchanging Parties acknowledges and -------------------- agrees that any refusal to perform under this Agreement will cause irreparable injury to the Company and the Corporation and their respective members and stockholders and that the Corporation shall be entitled to obtain injunctive relief for specific performance of the obligations set forth herein. Accordingly, if any Exchanging Party refuses to close the transactions contemplated by this Agreement or seeks to prevent the closing hereunder due to a breach of this Agreement, the Corporation shall have the right to obtain specific performance of the obligations of such Exchanging Party. 7.21. Additional Parties. The parties hereto agree that additional parties ------------------ holding membership interests in the Company may execute this Agreement and such additional parties shall, after executing counterpart copies of this Agreement as Exchanging Parties hereunder, shall be parties hereto and have all rights and obligations (as applicable) of the Exchanging Parties hereunder. The Company covenants to use best efforts to obtain the signatures of all members of the Company to this Agreement. The parties further acknowledge and agree that the holders of Class D Units of the Company as set forth on Schedule "C" attached ------------ hereto and incorporated herein by this reference have previously executed a counterpart signature page to the Original Exchange Agreement, and that such parties will be bound by the terms and conditions of this Agreement and will continue to have all of the rights and obligations (as applicable) of the Exchanging Parties hereunder without having to execute a counterpart signature page to this Agreement. [Remainder of Page Intentionally Left Blank] -20- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. Corporation 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 Company ENTRAVISION COMMUNICATIONS COMPANY, L.L.C., a Delaware limited liability company 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 Univision UNIVISION COMMUNICATIONS INC., a Delaware corporation By: /s/ Robert V. Cahill ---------------------------------------------------------- Name: Robert V. Cahill -------------------------------------------------------- Title: V.P. & Secretary ------------------------------------------------------- [Signature Page No. 1 to Amended and Restated Exchange Agreement] Exchanging Members THE WALTER F. ULLOA IRREVOCABLE TRUST OF 1996 (DATED OCTOBER 9, 1996) By: /s/ Edith Seros --------------------------------------------------------- Edith Seros, Trustee Number of Units: 23,920 Class A Units THE 1994 WILKINSON CHILDREN'S GIFT TRUST (DATED SEPTEMBER 30, 1994) By: /s/ Philip C. Wilkinson --------------------------------------------------------- Philip C. Wilkinson, Trustee By: /s/ Wendy K. Wilkinson, Trustee --------------------------------------------------------- Wendy K. Wilkinson, Trustee Number of Units: 23,920 Class A Units THE PAUL A. ZEVNIK IRREVOCABLE TRUST OF 1996 (DATED NOVEMBER 2, 1996) By: /s/ Kevin Grenham --------------------------------------------------------- Kevin Grenham, Trustee By: /s/ Steven G. Rowles --------------------------------------------------------- Steven G. Rowles, Trustee Number of Units: 23,920 Class A Units /s/ Paul A. Zevnik ------------------------------------------------------------ Paul A. Zevnik, individually Number of Units: 22,119 Class C Units 10,313 Class E Units [Signature Page No. 2 to Amended and Restated Exchange Agreement] /s/ Walter F. Ulloa ------------------------------------------------------------ Walter F. Ulloa, individually Number of Units: 225,139 Class C Units /s/ Philip C. Wilkinson ------------------------------------------------------------ Philip C. Wilkinson, individually Number of Units: 25,131 Class C Units NORTON PROPERTIES LIMITED PARTNERSHIP, a Nevada limited partnership By: Norton Investments, Inc., a Nevada corporation Its General Partner and Managing Partner By: /s/ George Soneff ------------------------------------------------- Name: George Soneff ----------------------------------------------- Title: President ---------------------------------------------- Number of Units: 13,817 Class C Units /s/ Larry Safir ------------------------------------------------------------ Larry Safir, individually Number of Units: 54,284 Class D Units /s/ Jeanette Tully ------------------------------------------------------------ Jeanette Tully, individually Number of Units: 14,161 Class D Units /s/ Bram Watkins ------------------------------------------------------------ Bram Watkins, individually Number of Units: 4,835 Class D Units [Signature Page No. 3 to Amended and Restated Exchange Agreement] THE ZEVNIK-HARVARD FUND (DATED DECEMBER 31, 1997) By: /s/ Steven G. Rowles ------------------------------------------------------------- Steven G. Rowles, Trustee Number of Units: 5,000 Class F Units THE ZEVNIK CHARITABLE FOUNDATION, a California nonprofit public benefit corporation By: /s/ Paul A. Zevnik ------------------------------------------------------------- Paul A. Zevnik, Chairman and President By: /s/ Steven G. Rowles ------------------------------------------------------------- Steven G. Rowles, Chief Financial Officer and Secretary Number of Units: 813 Class F Units LJ HOLDINGS, L.L.C., a Delaware limited liability company By: /s/ Michael Rosen ------------------------------------------------------------- Name: Michael Rosen ----------------------------------------------------------- Title: Managing Member ---------------------------------------------------------- Number of Units: 4,500 Class F Units [Signature Page No. 4 to Amended and Restated Exchange Agreement] Exchanging Stockholders THE WILKINSON FAMILY TRUST (DATED JUNE 2, 1988) By: /s/ Philip C. Wilkinson ---------------------------------------------------- Philip C. Wilkinson, Trustee By: /s/ Wendy K. Wilkinson, Trustee ---------------------------------------------------- Wendy K. Wilkinson, Trustee Number of Shares: 8,000 Common Stock (Cabrillo) 3,454 Common Stock (Valley) 1,734 Common Stock (Telecorpus) THE CAROL K. LUERY REVOCABLE TRUST (U/A/D 7/27/89) By: /s/ Carol K. Luery, Trustee ---------------------------------------------------- Carol K. Luery, Trustee Number of Shares: 963.8 Common Stock (Cabrillo) 319 Common Stock (Valley) 334 Common Stock (Telecorpus) /s/ Walter F. Ulloa ------------------------------------------------------- Walter F. Ulloa, individually Number of Shares: 481.9 Common Stock (Cabrillo) 2,100 Common Stock (Golden Hills) 3,000 Common Stock (KSMS) 5,000 Common Stock (Las Tres) 6,750 Common Stock (Tierra Alta) 3,454 Common Stock (Valley) 1,734 Common Stock (Telecorpus) /s/ Philip C. Wilkinson ------------------------------------------------------- Philip C. Wilkinson, individually Number of Shares: 1,475 Common Stock (Golden Hills) 3,000 Common Stock (KSMS)
[Signature Page No. 5 to Amended and Restated Exchange Agreement] /s/ Paul A. Zevnik ------------------------------------------------------------ Paul A. Zevnik, individually Number of Shares: 1,475 Common Stock (Golden Hills) 3,000 Common Stock (KSMS) 5,000 Common Stock (Las Tres) 6,750 Common Stock (Tierra Alta) /s/ Richard D. Norton ------------------------------------------------------------ Richard D. Norton, individually Number of Shares: 1,000 Common Stock (Golden Hills) 1,000 Common Stock (KSMS) 2,000 Common Stock (Tierra Alta) 509 Common Stock (Valley) 533 Common Stock (Telecorpus) /s/ Yrma G. Rico ------------------------------------------------------------ Yrma G. Rico, individually Number of Shares: 4,500 Common Stock (Tierra Alta) 356 Common Stock (Valley) 247 Common Stock (Telecorpus) THE WALTER F. ULLOA IRREVOCABLE TRUST OF 1996 (DATED OCTOBER 9, 1996) By: /s/ Edith Seros --------------------------------------------------------- Edith Seros, Trustee Number of Units: 1,880 Common Stock (Telecorpus) [Signature Page No. 6 to Amended and Restated Exchange Agreement] THE 1994 WILKINSON CHILDREN'S GIFT TRUST (DATED SEPTEMBER 30, 1994) By: /s/ Philip C. Wilkinson ------------------------------------------------------- Philip C. Wilkinson, Trustee By: /s/ Wendy K. Wilkinson, Trustee ------------------------------------------------------- Wendy K. Wilkinson, Trustee Number of Shares: 1,880 Common Stock (Telecorpus) THE PAUL A. ZEVNIK IRREVOCABLE TRUST OF 1996 (DATED NOVEMBER 2, 1996) By: /s/ Kevin Grenham ------------------------------------------------------- Kevin Grenham, Trustee By: /s/ Steven G. Rowles ------------------------------------------------------- Steven G. Rowles, Trustee Number of Shares: 1,533 Common Stock (Telecorpus) THE ZEVNIK FAMILY L.L.C., a Delaware limited liability company By: /s/ Paul A. Zevnik ------------------------------------------------------- Paul A. Zevnik, Manager Number of Shares: 1,466 Common Stock (Valley) [Signature Page No. 7 to Amended and Restated Exchange Agreement] SCHEDULE "A" EXCHANGING MEMBERS ------------------
Name Number of Units - ---- --------------- The Walter F. Ulloa Irrevocable Trust of 1996 23,920 Class A Units The 1994 Wilkinson Children's Gift Trust 23,920 Class A Units The Paul A. Zevnik Irrevocable Trust of 1996 23,920 Class A Units Walter F. Ulloa 225,139 Class C Units Philip C. Wilkinson 25,131 Class C Units Paul A. Zevnik 22,119 Class C Units Norton Properties Limited Partnership 13,817 Class C Units Larry Safir 54,284 Class D Units Jeanette Tully 14,161 Class D Units Bram Watkins 4,835 Class D Units Persons Listed on Schedule "C" 29,088 Class D Units Paul A. Zevnik 10,313 Class E Units The Zevnik-Harvard Fund 5,000 Class F Units The Zevnik Charitable Foundation 813 Class F Units LJ Holdings, L.L.C. 4,500 Class F Units
EXCHANGING STOCKHOLDERS -----------------------
Member Company/Stockholders Number and Class of Shares - --------------------------- -------------------------- Cabrillo Broadcasting Corporation, a California corporation The Wilkinson Family Trust 8,000 Common Stock The Carol K. Luery Revocable Trust 963.8 Common Stock Walter F. Ulloa 481.9 Common Stock Golden Hills Broadcasting Corporation, a Delaware corporation Walter F. Ulloa 2,100 Common Stock Philip C. Wilkinson 1,475 Common Stock Paul A. Zevnik 1,475 Common Stock Richard D. Norton 1,000 Common Stock KSMS-TV, Inc., a Delaware corporation Walter F. Ulloa 3,000 Common Stock Philip C. Wilkinson 3,000 Common Stock Paul A. Zevnik 3,000 Common Stock Richard D. Norton 1,000 Common Stock
Las Tres Palmas Corporation, a Delaware corporation Walter F. Ulloa 5,000 Common Stock Paul A. Zevnik 5,000 Common Stock Tierra Alta Broadcasting, Inc., a Delaware corporation Walter F. Ulloa 6,750 Common Stock Paul A. Zevnik 6,750 Common Stock Yrma G. Rico 4,500 Common Stock Richard D. Norton 2,000 Common Stock Valley Channel 48, Inc., a Texas corporation Walter F. Ulloa 3,454 Common Stock The Wilkinson Family Trust 3,454 Common Stock The Zevnik Family L.L.C. 1,466 Common Stock Richard D. Norton 509 Common Stock Yrma G. Rico 356 Common Stock The Carol K. Luery Revocable Trust 319 Common Stock Telecorpus, Inc., a Texas corporation The Walter F. Ulloa Irrevocable Trust of 1996 1,880 Common Stock The 1994 Wilkinson Children's Gift Trust 1,880 Common Stock Walter F. Ulloa 1,734 Common Stock The Wilkinson Family Trust 1,734 Common Stock The Paul A. Zevnik Irrevocable Trust of 1996 1,533 Common Stock Richard D. Norton 533 Common Stock The Carol K. Luery Revocable Trust 334 Common Stock Yrma G. Rico 247 Common Stock
SCHEDULE "B" FULLY-DILUTED EQUITY OWNERSHIP OF CORPORATION ---------------------------------------------
Exchanging Party Units(1) Shares(2) - ---------------- ----- ------ Walter F. Ulloa 623,501 10,599,517 The Walter F. Ulloa Irrevocable Trust of 1996 52,344 889,848 Philip C. Wilkinson 69,101 1,174,717 The Wilkinson Family Trust 554,400 9,424,800 The 1994 Wilkinson Children's Gift Trust 52,344 889,848 Paul A. Zevnik 127,213 2,162,621 The Paul A. Zevnik Irrevocable Trust of 1996 47,098 800,666 Richard D. Norton 84,893 1,443,181 Norton Properties Limited Partnership 13,817 234,889 Yrma G. Rico 67,128 1,141,176 The Carol K. Luery Revocable Trust 61,916 1,052,572 Larry Safir 54,284 922,828 Jeanette Tully(3) 14,161 240,737 Bram Watkins 4,835 82,195 The Zevnik-Harvard Fund 5,000 85,000 The Zevnik Charitable Foundation 813 13,821 LJ Holdings, L.L.C. 4,500 76,500 The Zevnik Family L.L.C. 102,148 1,736,516 Persons Listed on Schedule "C"(4) 14,428 245,276 Univision Communications Inc.(5) 21,983,392 Total 1,953,924 55,200,100 ===== ========= ==========
(1) Represents membership interests owned directly and indirectly. (2) Represents exchange ratio of 1 membership unit for 17 Shares of Common Stock in the Roll-Up. (3) Shares to be held in The Jeanette Tully 1996 Revocable Trust. (4) Represents issuances of additional Class D Units in the Company other than issuances to Walter F. Ulloa, Philip C. Wilkinson and Paul A. Zevnik. Class D Units issued to Messrs. Ulloa, Wilkinson and Zevnik as set forth on Schedule "C" attached hereto have been added to the respective holdings of ------------ such individuals set forth above. (5) Represents contribution by Univision of Note and Option Agreement. SCHEDULE "C" ADDITIONAL HOLDINGS OF CLASS D UNITS ------------------------------------
Name D Units Shares - ---- ------- ------ Walter F. Ulloa 6,050 102,850 Philip C. Wilkinson 6,050 102,850 Paul A. Zevnik 2,560 43,520 Jeanette Tully(1) 500 8,500 Yrma G. Rico 300 5,100 Russell Sakamoto 625 10,625 Manuel Cavasos III 500 8,500 Roy Piwinski 400 6,800 Maria Navarro 250 4,250 Kenneth D. Polin 850 14,450 Michael G. Rowles 500 8,500 Jorge Alonso 600 10,200 Gabriel Quiroz 550 9,350 David Candelaria 550 9,350 Carlos Ramos 350 5,950 Luis Hernandez 550 9,350 Tony Billet 450 7,650 Araceli de Leon 450 7,650 Rudy Guernica 350 5,950 Carlos Sanchez 450 7,650 Sam Fuller 325 5,525 Robert M. Flynn 325 5,525 Eric Gams 300 5,100 John Burton 300 5,100 Joel Olivares 325 5,525 Margarita Wilder 350 5,950 Tim Foster 300 5,100 Alberto Mier Y Teran 325 5,525 Diana de Lara 300 5,100 Natalie Quarantino 300 5,100 Willie Rosales 300 5,100 Lyndora Valdez 300 5,100 Bob Morrison 150 2,550 Sam Calaway 125 2,125 Erma Atencio 250 4,250 Jose Sevilla 125 2,125 Zoltan Csanyi 125 2,125 Florencia Cano 125 2,125 Annie Doucet 125 2,125
Mary Salazar 100 1,700 Irmgard Dimery 125 2,125 Milena Pardo 100 1,700 Alex La Brie 150 2,550 Entravision Latino Educational Fund 953 16,201 Total 29,088 494,496 ===== ====== =======
(1) Shares to be held in The Jeanette Tully 1996 Revocable Trust. EXHIBITS - -------- Exhibit A First Restated Certificate of Incorporation Exhibit B First Amended and Restated Bylaws Exhibit C Consent of Spouse The registrant hereby agrees to furnish a copy of any omitted schedule or exhibit upon request. EX-2.5 3 0003.txt FIRST AMENDMENT TO ACQUISITION AGREEMENT EXHIBIT 2.5 FIRST AMENDMENT TO ACQUISITION AGREEMENT AND PLAN OF MERGER ---------------------------------------- This First Amendment to Acquisition Agreement and Plan of Merger (the "First Amendment") is dated August 9, 2000 by and among Entravision Communications Corporation, a Delaware corporation (the "Corporation"), Entravision Communications Company, L.L.C., a Delaware limited liability company (the "Company"), and ZSPN Acquisition Corporation, a Delaware corporation ("Acquisition Co."), on the one hand, and Z-Spanish Media Corporation, a Delaware corporation ("ZSPN"), and the individuals and entities set forth on the signature pages hereto, who are stockholders of ZSPN owning approximately seventy-nine percent (79%) of the issued and outstanding shares of common stock of ZSPN as of the Execution Date (the "Major Stockholders"), on the other hand, with respect to the following facts: WHEREAS, the parties hereto have previously entered into that certain Acquisition Agreement and Plan of Merger dated April 20, 2000 (the "Original Agreement"), pursuant to which Acquisition Co. is to merge with and into ZSPN (the "Merger"), which shall be the Surviving Corporation. Following the Merger, ZSPN will be a wholly-owned subsidiary of the Corporation. WHEREAS, the Federal Communications Commission (the "FCC") has consented to the assignment by Z-Spanish Media Licensing Company, LLC, a Delaware limited liability company and a subsidiary of ZSPN to Salinas Holdings Partnership, a Connecticut partnership ("Salinas Holdings") of the FCC Licenses for radio stations KZSA (FM) in Placerville, California; KRAY-FM in Salinas, California; KZSF (AM) in San Jose, California; KSQR (AM) in Sacramento, California; KZSL (FM) in King City, California; KHNZ (FM) in Soledad, California; and K277AH, Watsonville, California, (individually a "DOJ Excluded Station" and collectively, the "DOJ Excluded Stations"); and radio stations KHMZ(FM) in Salinas, California; KTGE(AM) in Salinas, California; KCTY(AM) in Salinas, California; and KLOC(AM) in Ceres, California, (individually a " FCC Excluded Station" and collectively, the "FCC Excluded Stations"). WHEREAS, the FCC has approved the assignment of the Licenses for the FCC Excluded Stations to the Z-Spanish Trust created under that certain trust agreement dated August 8, 2000 (the "Z-Spanish Trust I"). WHEREAS, Salinas Holdings has agreed to file an application with the FCC to request consent to assign the licenses for the DOJ Excluded Stations to the Z- Spanish Trust II created under that certain Trust Agreement dated August 7, 2000 (the "Z-Spanish Trust II"). WHEREAS, under the Communications Act of 1934, as amended, and the rules, regulations and policies of the Federal Communications Commission (the "FCC") (collectively, the "Communications Act"), the FCC has raised certain objections to the ownership by the Corporation of the FCC Excluded Stations. WHEREAS, the Department of Justice (the "DOJ") has raised certain objections with respect to the acquisition by the Corporation of the DOJ Excluded Stations. WHEREAS, in order to address both the FCC's and the DOJ's concerns and to consummate the Merger in a timely fashion, the FCC Licenses for the FCC and DOJ Excluded Stations will be transferred to Salinas Holdings immediately before the Closing, and then to the Z-Spanish Trust I and the Z-Spanish Trust II, as appropriate, upon receipt of FCC consent for such assignment, pursuant to the Trust Agreements. For the same reasons, until DOJ and FCC stations are assigned to Entravision or sold or transferred and the licenses assigned to a third party, all rights, title and interest in the assets used exclusively for the DOJ and FCC Excluded Stations shall be placed in trust immediately following the Effective Time of the Merger with the Z-Spanish Trust II. WHEREAS, pursuant to that certain letter agreement dated August 7, 2000, and subject to DOJ's and FCC's approval, the Corporation has agreed, on the conditions set forth therein, to reacquire the Assets of the DOJ Excluded Stations to be managed by Salinas Holdings or the Z-Spanish II Trust and the Trustee thereof. WHEREAS, the parties hereto desire to amend the Original Agreement as set forth herein. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by each signatory hereto, it is agreed as follows: 1. All capitalized terms used in this First Amendment and not otherwise defined shall have the meaning ascribed to such terms in the Original Agreement. The recitals of this First Amendment are incorporated herein by this reference. 2. Schedule "A" of the Original Agreement (which was inadvertently ------------ omitted) shall be amended to read in full with regard to ZSPN's radio stations and Internet sites as set forth on Schedule "A-1" to this First Amendment. -------------- Schedule A-2 shall list ZSPN's Billboard assets. 3. Section 1.33 of the Original Agreement is hereby amended to read in full as follows: "1.33. "Exchange Agreement" shall mean that certain Amended and Restated Exchange Agreement dated effective as of July 24, 2000 by and among the Company, its members and Univision Communications Inc. attached to this First Amendment as Exhibit "A-1" and incorporated herein by this ------------- reference." 4. Section 1.74 of the Original Agreement is hereby amended to read in full as follows: -2- "1.74. "Registration Statement" shall mean the Corporation's final prospectus filed with the SEC prior to the date of this First Amendment in connection with the IPO which has been made available to the Stockholders and their counsel." 5. Section 2.7 of the Original Agreement is hereby amended to read in full as follows: "2.7 Acquisition Consideration. ------------------------- (a) Fixed Consideration. The aggregate fixed consideration to be ------------------- paid in any event in the Merger for the Shares shall be an amount equal to $339,829,614, less the sum of the following additional consideration for the Merger (i) the Option Roll-Over Amount, (ii) the Termination Payments, (iii) the TSG Loan and (iv) an amount equal to $1,750,000 (the "Escrow Amount") to be used by the ZSPN Representatives to pay for costs and expenses incurred in connection with the transactions contemplated by this Original Agreement and this First Amendment, including expenses incurred in connection with disposition of the FCC Excluded Stations and the DOJ Excluded Stations (the "ZSPN Fixed Equity Consideration"). The ZSPN Fixed Equity Consideration shall be paid as follows: (i) $220,719,752 in cash (the "Cash Consideration Value"), plus (ii) 7,187,902 newly-issued shares of Class A Common Stock of the Corporation (the "Stock Consideration Value"). Notwithstanding the foregoing, the Cash Consideration Value shall be reduced on a dollar-for-dollar basis for all amounts of ZSPN Indebtedness in excess of $108,670,117 incurred by ZSPN after receipt of Entravision's written consent pursuant to Section 7.2 below and not repaid prior to the Closing. References to ZSPN Equity Consideration in the Original Agreement shall be deemed to be amended to refer to ZSPN Fixed Equity Consideration as defined in this Section 2.7(a). (b) Contingent Consideration. Following the Closing, the ------------------------ Corporation shall pay additional contingent cash consideration (the "Contingent Cash Consideration") as follows: (i) An amount of Contingent Cash Consideration equal to fifty percent (50%) of the cash actually received in connection with the sale of the FCC Excluded Stations after payment of or provision for all costs and expenses incurred by or on behalf of the Corporation or its Affiliates in connection with such sale, including, without limitation, commissions, trustee fees and professional fees (the "Net Cash Proceeds"). (ii) An amount of Contingent Cash Consideration equal to all Net Cash Proceeds actually received by The Z-Spanish II Trust in connection with the sale of any of the DOJ Excluded Stations to third parties. -3- (iii) If the DOJ approves the retention of any or all of the DOJ Excluded Stations by the Corporation or any of its Affiliates, the Corporation shall pay additional Contingent Cash Consideration in the amount of the Agreed Value (as defined below) of each such station. If the DOJ approves the retention of any such station by the Corporation or its Affiliates within ninety (90) days after the Closing of the Merger, the Agreed Value will be as set forth on Exhibit "B-1" hereto. If the DOJ ------------- approves of the retention of any such station by the Corporation or its Affiliates after the expiration of the ninety (90) day period following the Closing of the Merger, but before December 31, 2000, the Agreed Value of each such station shall be 19.23 times broadcast cashflow relating to such station or stations computed with respect to the twelve (12) month period ending at the end of the month immediately preceding sale of any such station or station, as the case may be, but in no event more than the price that would have been paid for such station as set forth on Exhibit "B-1" ------------- hereto. If the DOJ shall fail to approve before December 31, 2000 the retention of any station by the Corporation or its Affiliates (or if at any time before December 31, 2000 the ZSPN Representatives shall determine to discontinue to seek the DOJ's approval for the retention of any such station(s) by the Corporation or its Affiliates, including without limitation because the ZSPN Representatives believe that it may be impractical to obtain such DOJ approval or for any other reason), then any station(s) with respect to which there shall have been such a failure to obtain DOJ approval or such a determination to discontinue to seek DOJ approval, shall not be transferred to the Corporation or its Affiliates, shall cease to be covered by this subsection (iii), and shall instead to be sold to third part(ies) as contemplated by subsection (ii) above. (iv) For purposes of computing the Net Cash Proceeds of the sale of any of the FCC Excluded Stations or DOJ Excluded Stations under the foregoing subsection (i), costs incurred in connection with the sale shall include Taxes (the "Disposition Tax Cost") incurred on any income or gain recognized by the Corporation or any of its Affiliates in connection with the sale of such station; provided that such taxes shall not be treated as incurred in an amount which exceeds that amount of Taxes (the "ZSPN Tax Amount") that would have been payable by ZSPN and its Affiliates with respect to such income, determined as if such corporations continued to file their returns on the same basis as such returns were filed for the periods ending on the Closing Date, including taking into account as offsets against such income or gain any federal and state losses or loss carryforwards of ZSPN and its Affiliates that existed at the time of the Merger and would have been usable in the first taxable year of any of such corporations beginning after the Closing, and without regard to any income of such corporations arising after the Closing Date other than income and gain attributable to the sale of the FCC Excluded Stations and DOJ Excluded Stations. -4- (v) All amounts of Contingent Cash Consideration payable pursuant to this Section 2.7(b) shall be treated as Cash Consideration Value for purposes of Section 2.9(a) and shall be paid by wire transfer of immediately available funds, as directed by the ZSPN Representatives pursuant to Section 2.9(b). Payments required by Section 2.7(b)(i) or (ii) shall be made by Entravision within two (2) business days after receipt of the proceeds of a sale of any station requiring such payments (treating for purposes of this initial payment the ZSPN Tax Amount (or a good faith estimate thereof) as if it were equal to the Disposition Tax Cost), and payments required by Section 2.7(b)(iii) shall be made within two (2) business days after the approval of the retention or transfer referred to therein. Promptly after sufficient facts become available to make a final determination of the ZSPN Tax Amount or the actual Disposition Tax Cost with respect to any station sale, but not later than date of the filing of the income tax returns reflecting the gain recognized on the sale of any such station, the excess, if any, of the Contingent Cash Consideration over the amount previously paid under Section 2.9(b) shall be paid by wire transfer of immediately available funds, as directed by the ZSPN Representatives pursuant to Section 2.9(b). In the event the ZSPN Tax Amount or the Disposition Tax Cost is subsequently determined to be different than the amounts previously reflected in the determination of the amount of the Contingent Cash Consideration paid pursuant to this Section 2.7(b), the Contingent Cash Consideration payable hereunder shall be recumputed. Any additional Contingent Cash Consideration payable (or any excess of prior payments over the corrected Contingent Cash Consideration) shall be paid promptly to (or by) the ZSPN Representatives, as may be necessary to cause the total Contingent Cash Consideration paid hereunder to be correct. 6. Section 2.14 of the Original Agreement is hereby amended to read in full as follows: "2.14. FCC Licenses, Permits and Authorizations. The parties hereto ---------------------------------------- acknowledge and agree that, in connection with the FCC Consent, with the exception of the license for KLNZ-FM which shall remain in KLNZ License Co., LLC, Entravision may cause ZSPN and its Affiliates to assign all of its right, title and interest in and to all FCC licenses, permits and authorizations (and the call letters with respect thereto) held by ZSPN and the ZSPN Subsidiaries to Holdings, and that the FCC consent will reflect Holdings as the assignee of the FCC licenses held by ZSPN and the ZSPN Subsidiaries." 7. A new Section 2.15 shall be added to the Original Agreement to read in full as follows: -5- "2.15. Escrow Amount. At the Closing, Entravision shall pay the ------------- Escrow Amount to the ZSPN Representatives by wire transfer of immediately available funds to such account as may be designated by the ZSPN Representatives. Expenditure of the Escrow Amount shall be in the sole discretion of the ZSPN Representatives, and any amounts of the Escrow Amount not expended by the ZSPN Representatives shall be paid to the ZSPN Stockholders as if it were additional Cash Consideration Value payable at the time of the Closing of the Merger." 8. Section 3.1 of the Original Agreement is hereby amended to read in full as follows: 3.1. "Closing. The closing of the Merger provided for in this -------- Agreement (the "Closing") will take place at the offices of Proskauer Rose LLP in New York, New York at 10:00 a.m. (Eastern Time) within two (2) business days after which each of the following has occurred (or is occurring concurrently): (i) the Corporation shall have received the proceeds from the IPO, (ii) the Roll-Up has closed, (iii) the FCC Consent becomes a Final Order and (iv) the applicable waiting period under the HSR Act has expired or been terminated, or such date as Entravision and ZSPN may mutually agree, or at such other time and place as Entravision and ZSPN may mutually agree, and Entravision, Acquisition Co. and ZSPN agree to cooperate and use their Best Efforts to close the Contemplated Transactions as soon as practicable after the FCC Consent becomes a Final Order; provided, however, that Entravision and ZSPN, by mutual agreement, may waive the condition to the Closing that the FCC Consent be a Final Order and, in such case, the Closing shall occur at such time and place as the parties may mutually agree after grant of FCC Consent and upon the occurrence of all other required conditions to the Closing. Subject to the provisions of Article 11 below, failure to consummate the Merger on the date and time and at the place determined pursuant to this section will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement." 9. Section 3.4(n) of the Original Agreement is hereby amended to delete the reference to Arthur Rockwell. 10. Section 3.4(l) of the Original Agreement is amended and restated to read as follows: "(l) the written legal opinions of Proskauer Rose LLP, corporate counsel for ZSPN and the Stockholders, and Shaw Pittman, FCC counsel for ZSPN and the Stockholders, substantially in the forms attached hereto as Exhibits "H-1" and "H-2" and incorporated herein by this reference. -------------- ----- Additionally, Proskauer Rose LLP's written legal opinion will contain a provision expressly -6- allowing Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P. ("Zevnik Horton"), counsel for Entravision and Acquisition Co., to rely on Proskauer Rose LLP's written legal opinion in rendering its legal opinion to the Corporation's lead underwriter in the IPO, as required under that certain Underwriting Agreement entered into by and among the Corporation, Donaldson, Lufkin & Jenrette Securities Corporation, Credit Suisse First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Bear, Stearns & Co. Inc. and DLJdirect Inc., as representatives of the several Underwriters named in Schedule I thereto." 11. Section 3.5(a) of the Original Agreement is amended and restated to read as follows: "(a) The ZSPN Fixed Equity Consideration; provided, however, that the Corporation will deliver to its transfer agent a letter of transmittal and instruction irrevocably instructing that stock certificates representing the Stock Consideration Value (as defined in Section 2.7 above) be issued and delivered to the ZSPN Stockholders in such amounts as designated by the ZSPN Representatives as soon as possible after the Closing and the Corporation will continue to use reasonable and diligent efforts to cause its transfer agent to promptly issue such stock certificates." 12. Section 5.4 of the Original Agreement is hereby amended to read in full as follows: "5.4 Capitalization. -------------- (a) The authorized capital stock of the Corporation consists of (i) 260,000,000 shares of Class A Common Stock, $0.0001 par value per share, none of which are issued and outstanding, (ii) 40,000,000 shares of Class B Common Stock, $0.0001 par value per share, none of which are issued and outstanding, (iii) 25,000,000 shares of Class C Common Stock, $0.0001 par value per share, none of which are issued and outstanding and (iv) 50,000,000 shares of Preferred Stock $0.0001 par value per share, none of which are issued and outstanding. (b) Schedule 5.4(b)-1 to this First Amendment sets forth the pro ----------------- forma fully-diluted capitalization of the Corporation as of the Closing (but without giving effect to the IPO) subject only to adjustment of the Exchange Number (as defined in the Exchange Agreement). The "Entravision Fully-Diluted Shares" as defined in this Agreement shall be as of the Closing as set forth on Schedule 5.4(b)-1 to this First Amendment. ----------------- -7- (c) The outstanding units of membership interest in the Company (the "Units") consist of an aggregate of 1,953,924 Units, 1,555,037 of which are designated Class A Units, none of which are designated Class B Units, 286,206 of which are designated Class C Units, 102,368 of which are designated Class D Units and 10,313 of which are designated Class E/F Units. (d) Except as set forth on Schedule 5.4(d), (i) there are no --------------- other options, warrants, stock appreciation rights, subscriptions, convertible debentures or other rights, commitments or any other similar agreements for the purchase of any securities of Entravision, (ii) there are no Contracts relating to the issuance, sale, registration or transfer of any equity securities or other securities of Entravision and (iii) there are no voting trust agreements or other Contracts, agreements or arrangements restricting voting rights or transferability with respect to Entravision. (e) The shares of Class A Common Stock of the Corporation issuable as the ZSPN Equity Consideration and the shares of Series B Preferred Stock issuable pursuant to the Certificate, when issued, sold and delivered in accordance with the terms of this Agreement, will be duly and validly issued, fully-paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement, the Investor Rights Agreement and applicable federal and state securities laws and will not have been issued in violation of any preemptive rights." 13. Section 9.3(b) of the Original Agreement shall be amended to read in full as follows: "(b) From and after the Effective Time, each outstanding ZSPN Option shall be assumed by Entravision and shall be deemed to constitute a substitute option under the Entravision Communications Corporation 2000 Omnibus Equity Incentive Plan to acquire, on the same terms and conditions as were applicable under such ZSPN Option (including credit for vesting periods elapsed under the ZSPN 1999 Stock Incentive Plan), a number of shares of Entravision Class A Common Stock (rounded down to the nearest whole number) equal to the product of (i) the number of ZSPN shares pursuant to such ZSPN Option and (ii) ZSPN Share Consideration divided by (iii) the Entravision Share Consideration. The exercise price per share of Entravision Class A Common Stock (rounded up to the nearest whole cent) pursuant to such newly issued Entravision option shall be calculated as the quotient of (a) the exercise price per share of ZSPN Common Stock pursuant to such ZSPN Option and (b) the quotient of ZSPN Share Consideration and the Entravision Share Consideration. An illustration of the above calculation is attached hereto as Annex II. Consistent with the respective -------- option agreements entered into by the participants under the -8- ZSPN 1999 Stock Incentive Plan (the "Optionees"), the Optionees shall agree not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, grant any option, right or warrant purchase, or otherwise transfer or dispose of directly or indirectly any Class A Common Stock received by the Optionees upon exercise of any substitute option under the Entravision Communications Corporation 2000 Omnibus Equity Incentive Plan for a period of one hundred eighty (180) days after the date of the final prospectus relating to the Corporation's IPO. In connection with the ZSPN Options, ZSPN represents and warrants that there are currently 1,997,861 ZSPN Options, none of which have been exercised as of the date hereof. Therefore, in the event that the ZSPN Options exceed 1,997,861 (the "ZSPN Non-Disclosed Options"), the Corporation will be entitled to a credit on the ZSPN Fixed Equity Consideration, which will be payable from the Escrow Amount, in the amount equal to the net equity value of such ZSPN Non-Disclosed Options calculated in the same manner as the Option Rollover Amount." 14. Section 12.1 shall be amended to read in full as follows: "12.1. Authorization of the ZSPN Representatives. Upon adoption of ----------------------------------------- this Agreement by the Board of Directors of ZSPN and approval of this Agreement by the Major Stockholders pursuant to the Certificate of Incorporation and Bylaws of ZSPN and the applicable provisions of the Delaware Code, the ZSPN Representatives (and each successor appointed in accordance with Section 12.3 below) hereby is appointed, authorized and empowered to act, by decision of both of the ZSPN Representatives (if there is more than one), as the ZSPN Representatives, on behalf of the Major Stockholders, in connection with and to facilitate the consummation of the Contemplated Transactions, for the purposes and with the powers and authority hereinafter set forth in this Article 12, which shall include the power and authority: (a) to deliver all Certificates representing the Shares tendered therewith to Entravision and to collect and receive all moneys and stock payable to the Major Stockholders pursuant to Section 2.7 and 2.8 above to disburse and pay the same to each of the Major Stockholders pursuant to Section 2.8 above; (b) to take all actions deemed necessary or appropriate by the ZSPN Representatives in connection with or arising out of the disposition of the FCC Excluded Stations and DOJ Excluded Stations; (c) disburse the Escrow Amount; and -9- (d) to make, execute, acknowledge and deliver all such other agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, letters and other writings, and, in general, to do any and all things and to take any and all action that the ZSPN Representatives, in their sole and absolute discretion, may consider necessary or proper or convenient in connection with or to carry out the activities described in paragraphs (a), (b) and (c) above and the Contemplated Transactions. The grant of authority provided for in this Section 12.1: (i) is coupled with an interest and is being granted, in part, as an inducement to Entravision and Acquisition Co. to enter into this Agreement, and shall be irrevocable and survive the death, incompetency, bankruptcy or liquidation of any Major Stockholder and shall be binding on any successor thereto; and (ii) subject to the provisions of Section 12.3 below, may be exercised by any of the ZSPN Representatives acting by signing as an ZSPN Representative of each of the Major Stockholders. 15. Annex I and Annex II to the Original Agreement are hereby amended to ------- -------- read in full as Annex I-1 and Annex II-1 attached to this First Amendment. --------- ---------- 16. Except as expressly amended hereby, all other terms and conditions of the Original Agreement shall remain in full force and effect. 17. This First Amendment 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 facsimile 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. [Remainder of Page Intentionally Left Blank] -10- IN WITNESS WHEREOF, the parties have duly executed this First Amendment as of the date first written above. Corporation 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 Company ENTRAVISION COMMUNICATIONS COMPANY, L.L.C., a Delaware limited liability company By: /s/ Walter F. Ulloa --------------------------------------------------------- Walter F. Ulloa, Chairman, Chief Executive Officer and Managing Member By: /s/ Philip C. Wilkinson --------------------------------------------------------- Philip C. Wilkinson, President, Chief Operating Officer and Managing Member Acquisition Co. ZSPN ACQUISITION 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 ZSPN Z-SPANISH MEDIA CORPORATION, a Delaware corporation By: /s/ Amador S. Bustos --------------------------------------------------------- Name: Amador S. Bustos -------------------------------------------------------- Title: President ------------------------------------------------------- [Counterpart Signature Page No. 1 to the First Amendment to Acquisition Agreement and Plan of Merger] Major Stockholders Z-SPANISH MEDIA HOLDINGS, L.L.C. By: /s/ Darryl B. Thompson ---------------------------------------------------- Name: Darryl B. Thompson -------------------------------------------------- Title: Manager ------------------------------------------------- TSG ASSOCIATES II, INC. By: /s/ Darryl B. Thompson ---------------------------------------------------- Name: Darryl B. Thompson -------------------------------------------------- Title: Sr. Vice President ------------------------------------------------ TSG ASSOCIATES III, LLC By: /s/ Darryl B. Thompson ---------------------------------------------------- Name: Darryl B. Thompson -------------------------------------------------- Title: Senior Vice President ------------------------------------------------- TSG CAPITAL FUND III, L.P. By: TSG Associates III, LLC, its General Partner By: /s/ Darryl B. Thompson ---------------------------------------------------- Name: Darryl B. Thompson -------------------------------------------------- Title: Senior Vice President ------------------------------------------------- TSG VENTURES, L.P. By: TSG VI Associates, Inc., its General Partner By: /s/ Steven J. Lamb ---------------------------------------------------- Name: Steven J. Lamb -------------------------------------------------- Title: Vice President ------------------------------------------------- [Counterpart Signature Page No. 2 to the First Amendment to Acquisition Agreement and Plan of Merger] TSG CAPITAL FUND II, L.P. By: TSG Associates II, L.P., its General Partner By: TSG Associates II, Inc., its General Partner By: /s/ Darryl B. Thompson ---------------------------------------------------- Name: Darryl B. Thompson -------------------------------------------------- Title: Senior Vice President ------------------------------------------------- /s/ Amador S. Bustos ------------------------------------------------------- Amador S. Bustos /s/ Salvador H. Campos ------------------------------------------------------- Salvador H. Campos /s/ John S. Bustos ------------------------------------------------------- John S. Bustos /s/ Glenn Emanuel ------------------------------------------------------- Glenn Emanuel /s/ Arthur Rockwell ------------------------------------------------------- Arthur Rockwell BUSTOS ASSET MANAGEMENT, LLC By: /s/ Amador S. Bustos ---------------------------------------------------- Name: Amador S. Bustos -------------------------------------------------- Title: Manager ------------------------------------------------- [Counterpart Signature Page No. 3 to the First Amendment to Acquisition Agreement and Plan of Merger] EXHIBITS - -------- Exhibit A-1 Amended and Restated Exchange Agreement Exhibit B-1 Adjustment to Cash Consideration Value The registrant hereby agrees to furnish a copy of any omitted schedule or exhibit upon request. EX-2.7 4 0004.txt ASSET PURCHASE AGREEMENT EXHIBIT 2.7 ================================================================================ ASSET PURCHASE AGREEMENT by and between Entravision Communications Corporation and Sunburst Media, LP dated May 22, 2000 ================================================================================ ASSET PURCHASE AGREEMENT ------------------------ This Asset Purchase Agreement (the "Agreement") is entered into this 22nd day of May, 2000 by and between Entravision Communications Corporation, a Delaware corporation ("Entravision"), and Sunburst Media, LP, a Delaware limited partnership ("Sunburst"), with respect to the following facts: WHEREAS, Entravision is a duly formed Delaware corporation engaged in the ownership and operation of television and radio stations and other media properties. WHEREAS, Sunburst is a duly formed Delaware limited partnership that owns and operates radio stations KFRQ(FM), 94.5 MHz, Harlingen, Texas, KKPS(FM), 99.5 MHz, Brownsville, Texas, KVPA(FM), 101.1 MHz, Port Isabel, Texas and KVLY(FM), 107.9 MHz, Edinburg, Texas (collectively, the "Stations"). WHEREAS, Sunburst desires to sell, transfer and assign to Entravision, and Entravision desires to purchase, accept and receive, all of Sunburst's right, title and interest in and to substantially all of the assets of the Stations, all for the consideration and on the terms set forth in this Agreement. WHEREAS, the Board of Directors of Entravision and the Board of Directors of Sunburst Media Corporation, a Delaware corporation and the sole general partner of Sunburst ("Sunburst Media"), have each approved the sale by Sunburst and the purchase by Entravision of substantially all of the assets of the Stations (the "Asset Acquisition"). WHEREAS, the parties hereto desire to make certain representations, warranties and agreements in connection with the Asset Acquisition and also to prescribe certain conditions with respect thereto. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each signatory hereto, the parties hereto covenant and agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement, the following terms shall have the following meanings: 1.1 "Accounts Receivable" means all of Sunburst's accounts receivable for cash and Sunburst's right to bill and receive cash for the sale of air time and all other services and business of the Stations at any time prior to 11:59 p.m. (Brownsville, Texas time) on the day immediately preceding the Closing Date (as defined below). 1.2 "Applicable Contract" means any Contract (as defined below) relating to the Stations (i) under which Sunburst has or may acquire any rights, (ii) under which Sunburst has or may become subject to any Liability or (iii) by which Sunburst or any of the Assets are or may become bound. 1.3 "Best Efforts" means the efforts that would be used by a prudent Person (as defined below) under similar circumstances desiring to achieve a result as expeditiously as possible. 1.4 "Breach" means any inaccuracy in or breach of, or any failure to perform or comply with, any representation, warranty, covenant, obligation or other provision of this Agreement or any instrument delivered pursuant to this Agreement. 1.5 "Cash Contracts" means those Applicable Contracts for the sale for cash of air time and other services of the Stations that are entered into in the Ordinary Course of Business (as defined below). 1.6 "Closing Date" means the date and time as of which the Closing (as defined below) actually takes place. 1.7 "Consent" means any approval, consent, ratification, waiver or other authorization required of any Person for the consummation of the Contemplated Transactions (as defined below), including, without limitation, the FCC Consent (as defined below), the expiration of any applicable waiting period required under the HSR Act (as defined below) and any other necessary Governmental Authorization (as defined below). 1.8 "Contemplated Transactions" means all of the transactions contemplated by this Agreement, including, without limitation, the sale of the Assets by Sunburst to Entravision pursuant to the Asset Acquisition and the performance by Entravision and Sunburst of their respective covenants and obligations under this Agreement. 1.9 "Contract" means any agreement, contract, obligation, promise or undertaking (whether written or oral and whether express or implied) that is legally binding. 1.10 "Employee Benefit Plan(s)" means any "employee benefit plan" as defined in Section 3(3) of ERISA (as defined below) and any other similar plan, policy, program, practice or arrangement maintained by Sunburst for the benefit of the employees of the Stations. 1.11 "Encumbrance" means any encumbrance, liability, charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, mortgage, right of first refusal or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership. 1.12 "Environmental Law(s)" means all federal, state and local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, -2- directives, requests, licenses, authorizations, permits and agreements issued or signed by any federal, state or local government authority relating to environmental, health or safety matters, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Water Act of 1977, the Clean Air Act, the Resource Conservation and Recovery Act of 1976, the Federal Insecticide, Fungicide and Rodenticide Act, the Toxic Substances Control Act, the Emergency Planning and Community Right-to- Know Act of 1986, the Occupational Safety and Health Act of 1970 and the Safe Drinking Water Act, and state and local counterparts to such acts. 1.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor law, and the rules and regulations issued pursuant to that act or any successor law. 1.14 "Facilities" means the physical facilities of the Stations located at any transmitter site and at any studio site currently owned or operated by Sunburst. 1.15 "FCC" means the Federal Communications Commission, or any successor agency. 1.16 "FCC Consent" means an Order (as defined below) or Orders of the FCC granting its Consent (without conditions outside the normal course) to the assignment to Entravision of the FCC Governmental Authorizations for all of the Stations. 1.17 "Final FCC Consent" means that the FCC Consent has become a Final Order (as defined below). 1.18 "Final Order" means an order, action or decision of the FCC that has not been reversed, stayed, enjoined, annulled or suspended and as to which (i) no timely request for stay, appeal, petition for reconsideration, application for review or reconsideration, or action by the FCC on its own motion with comparable effect is pending and (ii) the time for filing any such request, appeal, petition or application, or for the taking any such action by the FCC on its own motion, has expired. 1.19 "GAAP" means generally accepted accounting principles, applied on a consistent basis. 1.20 "Governmental Authorization" means any Consent, license or permit issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement. 1.21 "Governmental Body" means (i) any nation, state, county, city, town, village, district or other jurisdiction of any nature, (ii) any federal, state, local, municipal, foreign or other government, (iii) any governmental or quasi- governmental authority of any nature (including any governmental agency, branch, department, official or entity and any court or other tribunal), (iv) -3- any multi-national organization or body, (v) any body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature or (vi) the FCC. 1.22 "Hazardous Substance(s)" means (i) any substance, the presence of which requires investigation or remediation under any Environmental Law or under common law, (ii) any dangerous, toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous substance which is regulated by any Environmental Law, (iii) any substance, the presence of which causes or threatens to cause a nuisance upon property presently and/or previously owned, leased or otherwise used by the Stations (or poses or threatens to pose a hazard to the health or safety of persons on or about the property or adjacent properties) and (iv) radon, ureaformaldehyde, polychlorinated biphenyls, asbestos or asbestos-containing materials, petroleum and petroleum products. 1.23 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 1.24 "IRC" means the Internal Revenue Code of 1986, as amended, or any successor law, and the rules and regulations issued by the Internal Revenue Service, or any successor agency, pursuant to the IRC or any successor law. 1.25 "Knowledge" means, as to an individual Person, (i) the actual knowledge of a particular fact or (ii) the knowledge that a prudent individual would be expected to discover in the course of conducting a reasonably comprehensive investigation, but only when a prudent individual would consider such an investigation warranted. A non-individual Person will be deemed to have "Knowledge" of a particular fact if any individual who is serving as an officer, director or management-level employee of such Person has Knowledge within the meaning of the preceding sentence. 1.26 "Legal Requirement" means any FCC, federal, state, local, municipal or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute or treaty. 1.27 "Liabilities" means, with respect to any particular Person, all debts, adverse claims, liabilities, duties, responsibilities and obligations of such Person of every kind or nature, whether accrued or unaccrued, known or unknown, direct or indirect, absolute, fixed or contingent, liquidated or unliquidated and whether arising under, pursuant to or in connection with any Contract, Legal Requirement, tort, strict liability, rule of law or otherwise, and regardless of whether or not reflected, or required by GAAP or any other method of accounting to be reflected, in such Person's balance sheets or other books and records. 1.28 "Material Adverse Change" means with respect to the Stations (excluding for purposes of this definition KVPA(FM), taken as a whole, and not individually, a material adverse -4- change in the assets, liabilities, properties, business or financial condition of the Stations which shall mean any of the following: (i) as to the revenues of the Stations, a decrease of ten percent (10%) or more in the combined revenues of the Stations for the three (3) full calendar months prior to the Final FCC Consent as compared to the same three (3) month period in 1999, excluding political advertising in the measurement of both periods; (ii) as to the ratings of the Stations, a decrease of twenty percent (20%) or more in the combined Spring 2000 Arbitron ratings of the Stations, 12+ share for the Harlingen- Weslaco-Brownsville-McAllen, Texas radio market, all persons, Monday-Sunday, 6:00 a.m. to 12:00 p.m., as compared to the Spring 1999 Arbitron ratings for the same radio market; and (iii) as to any other matter other than revenues and ratings, the occurrence of a Station Event (as defined below). Notwithstanding the foregoing, a Material Adverse Change shall not include the voluntary termination of employment by any one or more employees of the Stations from and after May 2, 2000 and the adverse effects resulting from such voluntary terminations. 1.29 "Order" means any award, decision, injunction, judgment, order, ruling, subpoena or verdict entered, issued, made or rendered by any court, administrative agency or other Governmental Body or by any arbitrator. 1.30 "Ordinary Course of Business" means an action taken by a Person in the ordinary course of the normal day-to-day operations of such Person that is consistent with past practices. 1.31 "Organizational Documents" means (i) the articles or certificate of incorporation and the bylaws of a corporation, (ii) the partnership agreement and any statement of partnership of a general partnership, (iii) the limited partnership agreement and the certificate of limited partnership of a limited partnership, (iv) the certificate of formation and operating agreement of a limited liability company, (v) any charter or similar document adopted or filed in connection with the creation, formation or organization of a Person and (vi) any amendment to any of the foregoing. 1.32 "Permitted Encumbrances" means any of the following: (i) liens for current Taxes not yet due and payable; (ii) easements, oil and gas leases, zoning and other local ordinances, deed restrictions or restrictive covenants, all of record, which do not impair the current use of the Facilities; and (iii) all Encumbrances set forth on Schedule 1.32 existing against the Assets prior to ------------- the Closing, all of which shall be released at the Closing. 1.33 "Person" means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union or other entity or Governmental Body. 1.34 "Proceeding" means any action, arbitration, mediation, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, bankruptcy, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator. -5- 1.35 "Real Property" means the real property owned by Sunburst set forth on Schedule 2.1(a). --------------- 1.36 "Real Property Leases" means the real property leases set forth on Schedule 2.1(a). - --------------- 1.37 "Related Person" means an "affiliate" (as such term is defined in the rules promulgated under the Securities Exchange Act of 1934, as amended) of a Person. 1.38 "Representative" means with respect to a particular Person, any director, officer, employee, agent, consultant, advisor or other representative of such Person, including legal counsel, accountants and financial advisors. 1.39 "Schedules" means the schedules attached hereto and incorporated herein by this reference relating to the representations and warranties of the parties hereto. 1.40 "Station Event" means any event, circumstance or other occurrence of any nature or description that either singularly or in the aggregate prevents any Station from being operated in the Ordinary Course of Business, including, without limitation, acts of nature (e.g. fires, floods, earthquakes and storms), calamity, casualty, condemnation, loss of any rights, titles, interests, licenses, leases and/or privileges necessary for the operation of the Stations in the Ordinary Course of Business, the act or failure or refusal to act of any Governmental Body having jurisdiction over the Stations or any of the Assets or any environmental condition occurs that is not cured by Sunburst in accordance with Section 6.15 below. 1.41 "Station Expenses" means all expenses arising out of the business and operation of the Stations of any nature, kind and type whatsoever and however arising, including, without limitation, tower rent, all utilities, insurance, vehicle expense, programming costs, repairs and maintenance, travel expenses, employee compensation, business and license fees, FCC annual regulatory fees, employee benefits, including accrued vacation and sick leave, health, dental and medical benefits, employee expense reimbursements, sales commissions and fees and other commissions and fees, SESAC, ASCAP and BMI payments, expenses under Contracts, property taxes and other Taxes, office expenses, property and equipment rentals, applicable copyright or other fees, sales and service charges, general and administrative expenses, accounts payable and trade payables. 1.42 "Sunburst Financial Statements" means (i) the audited balance sheets of Sunburst as of December 31, 1998 and December 31, 1999 for the twelve (12) month periods then ended and the related statements of income and cash flows for the periods then ended (including the notes thereto), as compiled by PricewaterhouseCoopers LLP (as to 1998) and Deloitte and Touche LLP (as to 1999) and (ii) the unaudited balance sheets of Sunburst as of April 30, 2000 for the four (4) month period then ended. -6- 1.43 "Tax(es)" means taxes of any kind, accrued or accruing, including any and all federal, state or local taxes, charges, fees, levies or other assessments of any nature whatsoever (including, without limitation, all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, excise, estimated, severance, stamp, occupation, property or other taxes, customs, duties, fees, assessments or charges of any kind whatsoever) together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority (domestic or foreign) upon the entity to which reference is being made or any Related Person thereof or upon any consolidated, combined or unitary group of which any such entity is or was a member, and any and all protest expenses (of any nature whatsoever) incurred in connection therewith. 1.44 "Tax Return" means any return (including any information return), report, statement, schedule, notice, form or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax. 1.45 "Threatened" means a claim, Proceeding, dispute or other matter will be deemed to have been "Threatened" if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person to conclude that such a claim, Proceeding, dispute or other matter is likely to be asserted, commenced, taken or otherwise pursued in the future. ARTICLE 2. ASSET ACQUISITION 2.1 Asset Acquisition. At the Closing and subject to the terms and ----------------- conditions of this Agreement, Sunburst shall convey, transfer, assign and deliver to Entravision, and Entravision shall purchase, acquire and accept all right, title and interest of Sunburst in and to (i) the FCC Governmental Authorizations (and the call letters with respect thereto) for the Stations as set forth on Schedule 4.10(b) (collectively, the "FCC Licenses") and (ii) all of ---------------- the real and personal property, furniture, fixtures, equipment and other tangible and intangible assets owned or leased by Sunburst on the Closing Date that are used in the operation of the Stations (collectively, the "Assets") for the Purchase Price (as defined below). The Assets will be sold and purchased subject to the representations and warranties contained in this Agreement and the Schedules. The Assets shall include, without limitation, the following: (a) all fee simple ownership, leaseholds, easements and other interests in real property of every kind and description and improvements thereon owned or leased by Sunburst on the Closing Date that are used in the operation of the Stations, as set forth in more detail on Schedule 2.1(a); --------------- -7- (b) all equipment, software, intellectual property, machinery, vehicles, office furniture and fixtures, transmitting tuners, towers, transmitters, antennae, office materials and supplies, spare parts and other tangible personal property of every kind and description, owned or leased by Sunburst on the Closing Date that are used in the operation of the Stations, including any replacements thereof and those acquired by Sunburst between the date of this Agreement and the Closing Date, including, without limitation, those set forth on Schedule 2.1(b); --------------- (c) all Applicable Contracts listed, described or cross-referenced on Schedule 2.1(c) (all of the same are referred to herein as the "Assigned - --------------- Contracts"), together with all additional Applicable Contracts entered into in the Ordinary Course of Business of the Stations between the date of this Agreement and the Closing Date, which additional Applicable Contracts, to be included within the Assigned Contracts, must be approved in advance in writing by Entravision; (d) all technical materials and guidelines, brochures, promotional material and other selling material of the Stations; and (e) all papers, documents, instruments, books and records, files, agreements, books of account and other records relating or pertaining to the Assets, including, without limitation, customer invoices, customer lists, vendor and supplier lists, drafts and other documents and materials relating to customer transactions, blueprints, specifications, designs, drawings, operating and marketing plans and all other documents, tapes, discs, programs or other embodiments of information related thereto. 2.2 Excluded Assets. Notwithstanding anything to the contrary herein, --------------- Sunburst shall not sell, transfer, assign, convey or deliver to Entravision, and Entravision will not purchase or accept, and the Assets shall not include, the following assets used in, associated with or related to the business and operations of the Stations: all of Sunburst' right, title and interest in and to all (i) cash and cash equivalents; (ii) the utility deposits, security deposits and cash deposits set forth on Schedule 2.2 under Assigned Contracts, which to ------------ the extent a reimbursement by the third-party holding the deposit is not practical will be paid by Entravision to Sunburst at the Closing and Sunburst will assign its rights to such deposit to Entravision; (iii) all Accounts Receivable; and (iv) any Applicable Contracts that are not Assigned Contracts. 2.3 Conveyance of Assets; Non-Assumed Liabilities. The Assets shall be --------------------------------------------- sold and conveyed to Entravision free and clear of all Liabilities (except the Assumed Liabilities) and Encumbrances, other than Permitted Encumbrances, as of the Closing Date. On and after the Closing Date, Entravision will assume and discharge only those Liabilities of Sunburst under the Assigned Contracts that arise under such Assigned Contracts on or after the Closing Date and which are attributable solely to periods of time occurring on or after the Closing Date (such Liabilities assumed by Entravision are referred to herein as the "Assumed Liabilities"). Except only for the Assumed Liabilities, Entravision will not assume or be obligated to pay or discharge any Liabilities of Sunburst. -8- 2.4 Payment of Station Expenses. Entravision and Sunburst agree to the --------------------------- following provisions regarding the payment of Station Expenses. (a) Sunburst shall bear the cost of, and indemnify Entravision from, all Station Expenses attributable to the operations of the Stations at any time prior to the Closing Date. Entravision shall bear the cost of, and indemnify Sunburst from, all Station Expenses attributable to the operations of the Stations at any time on or after the Closing Date. (b) On the Closing Date, or as soon thereafter as is practical, (i) Sunburst shall pay all unpaid invoices for Station Expenses which are the responsibility of Sunburst to pay and (ii) Sunburst shall pay to the employees of the Stations all accrued wages, salaries, bonuses, commissions and all other accrued Liabilities and payments, including accrued vacation pay and sick leave, that are due to such employees of Sunburst. After the Closing Date, Sunburst agrees that it will promptly pay any of its remaining unpaid Station Expenses when same shall become due. (c) On the Closing Date, Entravision and Sunburst will prepare a prorations schedule allocating between themselves, in accordance with the principle set forth in Section 2.4(a) above, the Liability for all items of Station Expenses, or receipt by Sunburst of pre-paid sums with respect to any Assigned Contracts, that cover any period of time beginning before the Closing Date and ending after the Closing Date, whether or not actually paid by the Closing Date, including, without limitation, FCC regulatory fees, property taxes and rents. The net amount of all such prorations will be paid at Closing by Sunburst to Entravision, or by Entravision to Sunburst, as the case may be, with Sunburst and Entravision assuming responsibility to pay the prorated Station Expenses in a manner consistent with such allocations. Sunburst and Entravision shall include within this proration schedule, an allocation of the third-party rents due Sunburst under the third-party leases of the KVLY(FM) tower facility. (d) Sunburst and Entravision agree that within forty-five (45) days after the Closing Date each of them will provide the other with an accounting of any Station Expenses paid by such party (or with respect to which such party has received an invoice) that are the responsibility of the other party to pay. At such time Sunburst and Entravision agree to make adjusting payments between themselves and/or promptly make appropriate third-party payments, as the case may be, such that Sunburst and Entravision shall have each paid their own respective Station Expenses. 2.5 Savings Clause for Non-Assignable Contracts. This Agreement shall not ------------------------------------------- constitute an agreement to assign any Schedule 6.10 Contract (as defined below) if the mere agreement to assign such Contract without the consent of the other party thereto would constitute a breach thereof or in any way impair the rights of Sunburst thereunder. -9- 2.6 FCC Licenses. The parties hereto acknowledge and agree that at the ------------ Closing, Sunburst shall convey the FCC Licenses to Entravision Holdings, LLC, a California limited liability company and wholly-owned subsidiary of Entravision ("Entravision Holdings"). ARTICLE 3. CLOSING 3.1 Closing. The closing of the Assets Acquisition (the "Closing") ------- provided for in this Agreement will take place at the offices of Winstead Sechrest & Minick P.C. in Dallas, Texas on the date ten (10) days after receipt by the parties of the Final FCC Consent, or at such other time and place as the parties may agree. Notwithstanding the foregoing, the parties will endeavor in good faith to effect the Closing simultaneously in different locations to avoid the travel and additional expense of requiring all parties to be located in the same place and in connection therewith the parties will deliver, in escrow to opposing counsel and other appropriate parties, all agreements, instructions, documents, releases, certificates, wire transfer instructions, pay-off instructions, UCC-3 termination statements (if applicable) and other matters and things necessary to effect Closing in such manner. Subject to the provisions of Article 10 below, failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this section will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement. 3.2 Purchase Price. The aggregate consideration (the "Purchase Price") to -------------- be paid by Entravision for the Assets shall be Fifty-Five Million Dollars ($55,000,000), payable to Sunburst in cash at the Closing by wire transfer pursuant to instructions provided by Sunburst. The Purchase Price shall be increased or decreased, as the case may be, by the net prorations as provided in Section 2.4 above. 3.3 Escrow Deposit. -------------- (a) Upon the execution and delivery of this Agreement, Entravision shall promptly deliver to Union Bank of California, N.A. (the "Escrow Agent"), either via cashier's check or wire transfer of immediately available funds, the amount of Two Million Dollars ($2,000,000) (the "Escrow Deposit"), to be held by the Escrow Agent in an interest bearing account pursuant to the terms and conditions of that certain Escrow Agreement of even date herewith by and among Entravision, Sunburst and the Escrow Agent (the "Escrow Agreement"). The Escrow Deposit represents an earnest money deposit by Entravision for the Contemplated Transactions. (b) The Escrow Deposit shall be held by the Escrow Agent in accordance with the Escrow Agreement and shall be either (i) applied toward the Purchase Price at the Closing or (ii) returned to Entravision if Entravision otherwise pays the full Purchase Price. It is expressly acknowledged and agreed by the parties hereto that Entravision is entitled to all interest earned on the Escrow Deposit and that such interest shall not be part of the Purchase Price. -10- (c) If this Agreement is terminated by Sunburst pursuant to Section 10.1(b)(i) below and Sunburst is not in Breach of this Agreement, the Escrow Deposit shall be disbursed in accordance with Section 10.2(b) below. 3.4 Allocation. ---------- (a) The parties agree to allocate the Purchase Price among the Assets for all purposes (including financial accounting and tax purposes) in accordance with the allocation schedule to be prepared by BIA Financial Network within one hundred twenty (120) days following the Closing. (b) Notwithstanding the foregoing, the parties agree to allocate One Million Dollars ($1,000,000) of the Purchase Price to the Noncompetition Agreement, substantially in the form attached hereto as Exhibit "A" and ----------- incorporated herein by this reference (the "Noncompetition Agreement"), to be executed by Sunburst, Sunburst Media, Sunburst Dallas, LP, Sunburst Dallas, Inc. and Sunburst Media Management, Inc. 3.5 Closing Obligations of Sunburst. At the Closing, Sunburst will ------------------------------- deliver or cause to be delivered to Entravision: (a) a bill of sale and assignment of interests as to all Assets not otherwise covered by a separate assignment or conveyance; (b) an assignment of the FCC Licenses; (c) a special warranty deed for each parcel of Real Property conveying good and indefeasible title to Entravision; (d) a separate written assignment for each Real Property Lease, and in such case as Sunburst's leasehold interest is a matter of public record, then the separate written assignment shall be in recordable form; (e) the closing certificate required by Section 8.1(c) below; (f) wire transfer instructions for the payment of the Purchase Price (which shall be provided to Entravision in writing no later than two (2) business days prior to the Closing); (g) to the extent applicable, pay-off instructions for Sunburst's secured debt, including, without limitation, Sunburst's indebtedness to FINOVA Capital Corporation; -11- (h) to the extent applicable, UCC-3 termination statements and other necessary releases signed by the appropriate parties releasing all Encumbrances against the Assets; (i) releases of all deeds of trust signed by the appropriate parties releasing all deeds of trust and any other mortgages filed against any of the Real Property or Real Property Leases; (j) a certificate of the Secretary of Sunburst (i) attesting to the incumbency of its officers executing the Agreement and the other agreements and certificates delivered by Sunburst at the Closing and (ii) certifying resolutions of the Board of Directors of Sunburst Media authorizing the execution, delivery and performance of this Agreement by Sunburst; (k) with respect to the KVLY(FM) main transmitter site, a written commitment by Fidelity National Title Insurance Company, 5430 LBJ Freeway, Suite 260, Dallas, Texas 75240, Attention: Polly Kendall (the "Title Company") to issue a Texas standard owner's title insurance policy insuring Entravision in the amount of $300,000, subject only to the standard printed exceptions and the Permitted Encumbrances and with survey exceptions deleted, provided that Entravision has obtained the survey for such Real Property pursuant to Section 6.14 below; (l) with respect to the studio site located at 901 East Pike Road, Weslaco, Texas, a written commitment by the Title Company to issue a Texas standard owner's title insurance policy insuring Entravision in the amount of $325,000, subject only to the standard printed exceptions and the Permitted Encumbrances and with survey exceptions deleted, provided that Entravision has obtained the survey for such Real Property pursuant to Section 6.14 below; (m) the Noncompetition Agreement, executed by the Persons named in Section 3.4(b) above; (n) an affidavit to the effect that Sunburst is not a "foreign person" within the meaning of Section 1445 of the IRC; (o) a certificate of good standing for Sunburst and Sunburst Media issued by the Delaware Secretary of State not more than ten (10) days prior to the Closing Date; (p) a certificate of existence/authority for each of Sunburst and Sunburst Media issued by the Texas Secretary of State not more than ten (10) days prior to the Closing Date; and -12- (q) a certificate of good standing for each of Sunburst and Sunburst Media issued by the Texas Comptroller of Public Accounts not more than ten (10) days prior to the Closing Date. 3.6 Closing Obligations of Entravision. At the Closing, Entravision will ---------------------------------- deliver or cause to be delivered to Sunburst: (a) the Purchase Price, as adjusted in accordance with Section 3.2 above and Section 6.1 below; (b) the closing certificate required by Section 8.2(c) below; (c) a certificate of the Secretary of Entravision (i) attesting to the incumbency of its officers executing the Agreement and the other agreements and certificates delivered by Entravision at the Closing and (ii) certifying the resolutions of the Board of Directors of Entravision authorizing the execution, delivery and performance of this Agreement; (d) the Noncompetition Agreement, executed by Entravision; and (e) a certificate of good standing for each of Entravision and Entravision Holdings issued by the Delaware Secretary of State and California Secretary of State, respectively, not more than ten (10) days prior to the Closing Date. ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SUNBURST Sunburst hereby represents and warrants to Entravision as follows: 4.1 Organization and Good Standing. Sunburst is a limited partnership ------------------------------ duly organized, validly existing and in good standing under the laws of the State of Delaware, with full power and authority to conduct its business as it is now being conducted. Sunburst is duly qualified to do business as a foreign limited partnership and is in existence under the laws of the State of Texas. 4.2 Authority; No Conflict. ---------------------- (a) This Agreement constitutes the legal, valid and binding obligation of Sunburst, enforceable against Sunburst in accordance with its terms, subject as to enforceability to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity regardless of whether enforcement is sought in a proceeding at law or in equity. Subject to obtaining the necessary Consents, Sunburst has the absolute and unrestricted right, power, -13- authority and capacity to execute and deliver this Agreement, and to perform its obligations hereunder. (b) Neither the execution and delivery of this Agreement by Sunburst nor the consummation or performance of any of the Contemplated Transactions by Sunburst will, directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of any provision of the Organizational Documents of Sunburst or any resolution adopted by the general partner or limited partners of Sunburst; (ii) subject to obtaining the necessary Consents, contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which Sunburst or any of the assets owned or used by Sunburst, may be subject; (iii) subject to obtaining necessary Consents, contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify any Governmental Authorization that is held by Sunburst or that otherwise relates to the business of, or any of the assets owned or used by, Sunburst; (iv) subject to obtaining the necessary Consents, contravene, conflict with or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any Assigned Contract; or (v) result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by Sunburst. Except as set forth on Schedule 4.2 and Schedule 6.10, Sunburst ------------ ------------- neither is nor will be required to give any notice to or obtain any Consent from any Person or Governmental Body in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 4.3 Sunburst Financial Statements. Sunburst has delivered to Entravision ----------------------------- copies of the Sunburst Financial Statements. The Sunburst Financial Statements fairly present the financial condition and the results of operations of Sunburst as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP. The Sunburst Financial Statements reflect the consistent application of such accounting principles throughout the periods involved, except as disclosed in the notes to such financial statements. 4.4 Title to Assets; Encumbrances. The Assets are all of the assets ----------------------------- owned, leased or otherwise used by Sunburst in the operation of the Stations. Sunburst owns good and indefeasible title in and to all of the Assets that Sunburst purports to own free and clear of all Encumbrances, except for the Permitted Encumbrances. To the extent any of the Assets are leased, the governing lease agreement is set forth on Schedule 2.1(c). All of the Assets --------------- are located at the Facilities. 4.5 Condition and Sufficiency of Assets; Broadcast Equipment. -------------------------------------------------------- (a) The improvements located on each item of Real Property are structurally sound with an immaterial amount of deferred maintenance. All items of tangible personal -14- property that are currently being used by the Stations with a replacement value in excess of $1,000 are in good operating condition and repair, subject to normal wear and tear, and are adequate for the uses to which they are being put. (b) All towers, transmitters, antennas and related broadcast equipment that are used by Sunburst in the operation of the Stations, including, without limitation, any backup or auxiliary towers or antennas (the "Broadcast Equipment") are in material compliance with Legal Requirements of all applicable Governmental Bodies. The Broadcast Equipment is in sufficiently good condition and repair and is appropriately engineered to permit the operation of the Stations, and the broadcast of their programming to the intended audiences and in compliance with the FCC Licenses, after the Closing Date without any foreseeable upgrade or replacement. Within the three (3) months immediately preceding the date of this Agreement, there has not been any material unscheduled interruption in the broadcast of the Station caused by a failure of the Broadcast Equipment. 4.6 No Undisclosed Liabilities. Except as set forth in the Sunburst -------------------------- Financial Statements and for current Liabilities incurred in the Ordinary Course of Business since April 30, 2000, Sunburst has no other Liabilities relating to the Stations. 4.7 Tax Matters. Sunburst has timely paid (and after the Closing Date ----------- will timely pay) all Taxes for periods prior to and including the Closing Date that are due and payable, nonpayment of which would (i) result in an Encumbrance on any of the Assets, (ii) have a material adverse effect on Sunburst or (iii) result in Entravision becoming liable therefor. Sunburst has complied with (and will comply with through and including the Closing Date) all applicable Legal Requirements relating to the filing of Tax Returns or the payment and withholding of Taxes relating to employee wages, salaries and other compensation and has timely withheld and paid over (and will timely withhold and pay over through and including the Closing Date) to the proper governmental authorities all amounts required to be withheld and paid over for all periods under all applicable laws with respect to the employees of Sunburst. 4.8 No Material Adverse Change. Since April 30, 2000, there has not been -------------------------- any Material Adverse Change and no event has occurred or circumstance exists that may result in such a Material Adverse Change. 4.9 Employee Benefits. Schedule 4.9 lists each Employee Benefit Plan ----------------- ------------ relating to the Stations to which Sunburst contributes or is a party or is bound and under which it may have liability. Sunburst has delivered or made available to Entravision true, correct and complete copies of all such Employee Benefit Plans. Entravision will not incur any Liability whatsoever under any such Employee Benefit Plans in connection with the Contemplated Transactions. 4.10 Compliance with Legal Requirements; Governmental Authorizations. --------------------------------------------------------------- -15- (a) The Stations are in material compliance with each Legal Requirement that is applicable to the Stations or to the conduct or operation of business or the ownership or use of any of the Assets. To the Knowledge of Sunburst, no event has occurred or circumstance exists that (with or without notice or lapse of time) may constitute or result in a violation by the Stations of, or a failure on the part of the Stations to comply with, any Legal Requirement or may give rise to any obligation on the part of the Stations to undertake, or to bear all or any portion of the cost of, any remedial action of any nature. With respect to the Stations, Sunburst has not received any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement, or any actual, alleged, possible or potential obligation on the part of the Stations to undertake, or to bear all or any portion of the cost of, any remedial action of any nature. (b) Schedule 4.10(b) contains a complete and accurate list of the FCC Licenses and antenna structure registrations for all antenna structures used by Sunburst at the Stations and required to be so registered. The FCC Licenses are valid and in full force and effect. The Stations are in full compliance with all of the terms and requirements of each FCC License. To the Knowledge of Sunburst, no event has occurred or circumstance exists that may (with or without notice or lapse of time) constitute or result directly or indirectly in a violation of or a failure to comply with any term or requirement of any FCC License or result in the revocation, withdrawal, suspension, cancellation, termination of or any modification to any FCC License. Sunburst has not received any notice or other communication (whether oral or written) from the FCC or any other Person regarding any actual, alleged, possible or potential violation of or failure to comply with any term or requirement of any FCC License or any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of or modification to any FCC License. All filings required to have been made with respect to the FCC Licenses have been duly made on a timely basis with the appropriate Governmental Bodies. The FCC Licenses listed on Schedule -------- 4.10(b) collectively constitute all of the FCC Licenses necessary to permit the - ------- Stations to conduct business in the manner they currently conduct such business. Other than the FCC Licenses, there is no other material Governmental Authorization necessary for the operation of the Stations or that otherwise relates to the business of the Stations, or to any of the Assets. 4.11 Legal Proceedings; Orders. ------------------------- (a) Except only for Proceedings set forth on Schedule 4.11(a) arising ---------------- in connection with employment related claims made by past employees of Sunburst, all of which are being responded to by Sunburst and none of which will have a material adverse effect on the Assets or Sunburst, there is no pending Proceeding (i) that has been commenced by or against Sunburst with respect to the Stations or that otherwise relates to or may affect any of the Assets or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Contemplated Transactions. Entravision shall assume no Liability whatsoever relating to any of the Proceedings set forth on Schedule 4.11(a). To the ---------------- -16- Knowledge of Sunburst, no additional Proceedings have been Threatened and no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such Proceeding. (b) There is no Order relating to the Stations or any of the Assets to which Sunburst is subject. To the Knowledge of Sunburst, no employee of Sunburst at the Stations is subject to any Order that prohibits such employee from engaging in or continuing any conduct, activity or practice relating to the business of the Stations. 4.12 Absence of Certain Changes and Events. Since April 30, 2000, ------------------------------------- Sunburst has conducted the business of the Stations only in the Ordinary Course of Business. Since April 30, 2000 there has not been: (i) except in the Ordinary Course of Business, any payment or increase by Sunburst of any bonuses, salaries or other compensation to any employee of the Stations or entry into any employment, severance or similar Contract with any employee of the Stations; (ii) adoption of any new Employee Benefit Plan for or with any employees of the Stations; (iii) any material damage to or destruction or loss of any of the Assets, whether or not covered by insurance; (iv) other than matters occurring in the Ordinary Course of Business, any sale, lease or other disposition of any material Asset or mortgage, pledge or imposition of any Encumbrance (except for the Permitted Encumbrances) on any material Asset; (v) material change in the accounting methods used by Sunburst with respect to the Stations (except for the IRC (S)481(a) adjustment); or (vi) any agreement, whether oral or written, by Sunburst with respect to the Stations to do any of the foregoing. 4.13 Assigned Contracts; No Defaults. Schedule 2.1(c) contains a complete ------------------------------- --------------- and accurate list of, description of or reference to each Assigned Contract. The Assigned Contracts set forth on Schedule 2.1(c) are all of the material --------------- Applicable Contracts. Sunburst has delivered to Entravision true and correct copies of all Assigned Contracts (other than Cash Contracts). (i) Except for a management agreement by and between Sunburst and Sunburst Media Management, Inc. which is not one of the Assigned Contracts, no Related Person of Sunburst has or may acquire any rights under, nor has or may become subject to any Liability under any Contract that relates to the business of the Stations, or any of the Assets; (ii) to the Knowledge of Sunburst, no employee of the Stations is bound by any Contract that purports to limit the ability of such employee to engage in or continue any conduct, activity or practice relating to the business of the Stations; (iii) Sunburst is in material compliance under each of the Assigned Contracts; (iv) to the Knowledge of Sunburst, each other Person that is a party to any Assigned Contract is in material compliance with the Assigned Contract; (v) to the Knowledge of Sunburst, no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with or result in a violation or breach of, or give the Stations or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any Assigned Contract; and (vi) Sunburst has not given to or received from any other Person any notice or other communication (whether oral or written) regarding any actual, alleged, possible or potential violation or breach of, or default under, any Assigned Contract. Each Assigned Contract is in full force and effect and is valid and -17- enforceable in accordance with its terms. Except in the Ordinary Course of Business, there are no renegotiations of, attempts to renegotiate or outstanding rights to renegotiate any material amounts paid or payable to Sunburst under any of the Assigned Contracts and no Person has made written demand for such renegotiation. 4.14 Real Property. ------------- (a) Schedule 2.1(a) lists all of the Real Property. Sunburst has --------------- delivered or made available to Entravision true, complete and copies of the deeds and other instruments (as recorded) by which Sunburst acquired such Real Property, and true, complete and copies of all title insurance policies, opinions, abstracts and surveys in the possession of Sunburst relating to such Real Property. Sunburst owns and has good and indefeasible title to all of the Real Property. All improvements owned by Sunburst on each item of Real Property lie wholly within the boundaries of the Real Property and do not encroach upon the property of, or otherwise conflict with the property rights of, any adjoining landowner, and are in good mechanical and structural condition and repair. With respect to the Real Property, there are no matters pending before any Governmental Body having jurisdiction over zoning that would prohibit or make non-conforming the present use by Sunburst of such Real Property or any pending or Threatened condemnation or eminent domain Proceeding or proposed sale in lieu thereof. There are no violations of restrictive covenants affecting the Real Property. (b) Schedule 2.1(a) lists all of the Real Property Leases. Sunburst --------------- has delivered to Entravision correct and complete copies of the Real Property Leases. With respect to each Real Property Lease: (i) the lease is legal, valid, binding, enforceable and in full force and effect; (ii) the lease will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms immediately upon the consummation of the Contemplated Transactions; (iii) Sunburst is not, and to the Knowledge of Sunburst, the other parties to the lease are not, in material breach or default, and no event has occurred which, with notice or lapse of time, would constitute a material breach or default or permit termination, modification or acceleration thereunder; (iv) Sunburst has not, and to the Knowledge of Sunburst, the other parties to the lease have not, repudiated any provision thereof; (v) there are no disputes, oral agreements or forbearance programs in effect as to the lease; (vi) except for the Permitted Encumbrances, Sunburst has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold; (vii) to the Knowledge of Sunburst, all facilities leased thereunder have received all approvals of all Governmental Bodies (including licenses and permits) required in connection with the operation thereof by Sunburst and, to the Knowledge of Sunburst, have been operated and maintained in accordance with all Legal Requirements; (viii) all facilities leased thereunder are supplied with utilities and other services necessary for the operation of said facilities; and (ix) all facilities leased thereunder are in good mechanical and structural condition and repair. 4.15 Insurance. Sunburst has delivered to Entravision true and complete --------- copies of all current policies of insurance procured by Sunburst with respect to the operations of the Stations -18- and the Assets. Sunburst shall keep each of such policies of insurance in full force and effect through the Closing Date. 4.16 Compliance with Environmental Laws. (i) The Stations and all their ---------------------------------- operations are in compliance with all Environmental Laws as currently in effect, (ii) Sunburst has not used, released or disposed of any Hazardous Substance in any manner that could reasonably be expected to result in material liability, (iii) none of the Facilities are contaminated by any Hazardous Substance, (iv) none of the Facilities is affected by any condition that could reasonably be expected to result in liability under any Environmental Law currently in effect and (v) there is no condition, activity or event respecting the Stations or any of the Facilities that could reasonably be expected to subject Entravision to any material liability under any Environmental Law currently in effect. 4.17 Employees. Sunburst has delivered to Entravision a complete and --------- accurate list of the following information for each employee of the Stations, including each employee on leave of absence or layoff status: employee name, position, current annual compensation paid, whether an employment Contract exists and hire date. To the Knowledge of Sunburst, no employee of the Stations is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, noncompetition or proprietary rights agreement, between such employee and any other Person that in any way adversely affects (i) the performance of his or her duties as an employee or (ii) the ability of the Stations to conduct their business. 4.18 Labor Relations; Compliance. Sunburst is not a party to any --------------------------- collective bargaining or other labor Contract. There has not been while Sunburst has owned the Stations, there is not presently pending or existing, and to the Knowledge of Sunburst, there is not Threatened, (i) any strike, slowdown, picketing, work stoppage or employee grievance process relating to the Stations, (ii) except as set forth on Schedule 4.11(a), any Proceeding against or ---------------- affecting the Stations relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters, including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission or any comparable Governmental Body, organizational activity or other labor or employment dispute against or affecting the Stations or (iii) any application for certification of a collective bargaining agent for the Stations. To the Knowledge of Sunburst, no event has occurred at the Stations or circumstance exists at the Stations that could provide the basis for any work stoppage or other labor dispute. There is no lockout of any employees of the Stations, and no such action is contemplated by Sunburst. Sunburst has complied in all respects with all Legal Requirements applicable to the Stations relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health and plant closing. Sunburst is not liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing Legal Requirements. -19- 4.19 Intellectual Property. The term "Intellectual Property Assets" --------------------- includes the all of the following items of intellectual property owned or licensed by Sunburst and relating to the Stations: (i) the FCC call letters "KFRQ," "KKPS," "KVPA" and "KVLY," all fictional business names, trading names, slogans, monikers, registered and unregistered trademarks, service marks and applications; (ii) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings and blue prints owned, used or licensed by the Stations as licensee or licensor; and (iii) all Internet websites relating to the Stations. Sunburst owns no patents or copyrights relating to the Stations. Sunburst has the right to use all of the Intellectual Property Assets. Sunburst's use of the Intellectual Property Assets does not infringe on the legally enforceable rights of any other Person. Other than for the Stations' call letters (which are not listed on any Schedule to this Agreement), all material items of the Intellectual Property Assets are listed on Schedule 2.1(c). ---------------- 4.20 Disclosure. No representation or warranty of Sunburst in this ---------- Agreement and no statement in the Schedules omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading. No notice given pursuant to this Agreement will contain any untrue statement or omit to state a material fact necessary to make the statements therein or in this Agreement, in light of the circumstances in which they were made, not misleading. There is no fact of which Sunburst has Knowledge that has specific application to Sunburst (other than general economic or industry conditions) and that materially adversely affects the assets, business, financial condition or results of operations of the Stations that has not been set forth in this Agreement or the Schedules. 4.21 Relationships With Related Persons. No Related Person of Sunburst ---------------------------------- has any interest in any property (whether real, personal or mixed and whether tangible or intangible), used in or pertaining to the business and operation of the Stations. Except for the management agreement by and between Sunburst and Sunburst Media Management, Inc., no Related Person of Sunburst has owned (of record or as a beneficial owner) an equity interest or any other financial or profit interest in, a Person that has (i) had business dealings or a material financial interest in any transaction with the Stations other than business dealings or transactions conducted in the Ordinary Course of Business with the Stations at substantially prevailing market prices and on substantially prevailing market terms or (ii) engaged in competition with the Stations (a "Competing Business") in any market presently served by the Stations except for ownership of less than five percent (5%) of the outstanding capital stock of any Competing Business that is publicly-traded on any recognized exchange or in the over-the-counter market. No Related Person of Sunburst is a party to any Contract with, or has any claim or right against, the Stations. 4.22 Brokers or Finders. Except for fees due to Salomon Smith Barney, ------------------ which fees shall be borne solely by Sunburst, neither Sunburst nor its Representatives has incurred any liability for brokerage or finder's fees or agents commissions or other similar payment in connection with the Contemplated Transactions. -20- ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF ENTRAVISION Entravision hereby represents and warrants to Sunburst as follows: 5.1 Organization and Good Standing. Entravision is a corporation duly ------------------------------ organized, validly existing and in good standing under the laws of the State of Delaware. Entravision Holdings is a limited liability company duly organized, validly existing and in good standing under the laws of the State of California. 5.2 Authority; No Conflict. ---------------------- (a) This Agreement constitutes the legal, valid and binding obligation of Entravision, enforceable against Entravision in accordance with its terms, subject as to enforceability to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity regardless of whether enforcement is sought in a proceeding at law or in equity. Subject to obtaining the necessary Consents, Entravision has the absolute and unrestricted right, power, authority and capacity to execute and deliver this Agreement, and to perform its obligations hereunder. (b) Neither the execution and delivery of this Agreement by Entravision nor the consummation or performance of any of the Contemplated Transactions by Entravision will, directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of any provision of the Organizational Documents of Entravision or any resolution adopted by the Board of Directors or stockholders of Entravision; (ii) subject to obtaining the necessary Consents, contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which Entravision or any of the assets owned or used by Entravision, may be subject; and (iii) contravene, conflict with or result in a violation of any provision of any Contract to which Entravision is a party. Except as set forth on Schedule 5.2, ------------ Entravision is not and will not be required to give any notice to or to obtain any Consent from any Person or Governmental Body in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 5.3 FCC and Other Qualifications. Entravision Holdings is qualified to be ---------------------------- the assignee of the FCC Licenses under the Communications Act of 1934, as amended, and the rules, regulations and policies of the FCC. 5.4 Certain Proceedings. There is no pending Proceeding that has been ------------------- commenced against Entravision that challenges, or may have the effect of preventing, delaying, making illegal -21- or otherwise interfering with, any of the Contemplated Transactions. To the Knowledge of Entravision, no such Proceeding has been Threatened. 5.5 Brokers or Finders. Except for fees due to Media Venture Partners, ------------------ which fees shall be borne solely by Entravision, neither Entravision nor its Representatives have incurred any liability for brokerage or finder's fees or agents commissions or other similar payment in connection with the Contemplated Transactions. ARTICLE 6. COVENANTS OF SUNBURST PRIOR TO CLOSING DATE 6.1 Filing Under HSR Act. Within fifteen (15) business days after full -------------------- execution of this Agreement, Sunburst agrees to make a separate filing of the Notification and Report Form pursuant to the HSR Act with respect to the Contemplated Transactions as promptly as practicable and supply any additional information or documentary material that may be required under the HSR Act and to take all other actions as reasonably necessary to cause the expiration or termination of the applicable waiting period under the HSR Act as soon as possible. Sunburst will use its Best Efforts to cooperate in all respects with Entravision in conjunction with any such filing submission or other inquiry and to promptly notify Entravision of any communication received from or given to the Antitrust Department of the Department of Justice (the "DOJ") or the Federal Trade Commission (the "FTC") and to permit the other party to review such communication. Each party shall pay one-half (1/2) of the filing fees relating to compliance with the HSR Act, provided that Entravision shall initially pay the filing fees and shall be reimbursed by Sunburst for one-half (1/2) of such fee at the earlier of the Closing or a termination of this Agreement, unless this Agreement is terminated by Sunburst pursuant to Section 10.1(b)(i) below. 6.2 Application for FCC Consent. Within ten (10) business days after the --------------------------- execution of this Agreement, Sunburst will complete, sign and deliver to Entravision those portions of the applications for the FCC Consent applicable to Sunburst which portions of the applications shall be in form and substance acceptable for filing with the FCC. Sunburst will diligently take, or cooperate in the taking of, all steps that are necessary, proper or desirable to expedite the preparation of such applications and their prosecution to a favorable conclusion. Sunburst will promptly provide Entravision with a copy of any pleading or other document served on it relating to such applications. If the FCC Consent imposes any condition on Sunburst, Sunburst shall use its Best Efforts to comply with such condition. If reconsideration or judicial review is sought with respect to the FCC Consent, and such reconsideration or review relates to Sunburst or its operations of the Stations, Sunburst shall vigorously oppose such reconsideration or judicial review at its own expense. Entravision and Sunburst shall each bear one-half (1/2) of the costs associated with the filing of the application for the FCC Consent. -22- 6.3 Access to Personnel, Books, Records and Properties. Between the date -------------------------------------------------- of this Agreement and the Closing Date, Sunburst shall use its Best Efforts to cause to be afforded to Entravision and its Representatives reasonable access to the personnel (which shall be supervised access and shall be limited to, at the Station level, the general manager only, and at the corporate offices in Dallas, Texas, such employees who have relevant knowledge regarding the Stations, such as regarding financial and engineering matters) books and records, tangible assets, agreements and licenses of the Stations as may be reasonably requested by Entravision or its Representatives. Entravision's inspections and other access shall be conducted at such times and under such conditions as Sunburst shall specifically determine in each instance so as to minimize any disruption to Sunburst's operations. Entravision shall indemnify Sunburst for any and all damages to persons or property caused by Entravision while conducting such inspections and other physical access. Sunburst agrees that prior to consummation of the Contemplated Transactions, Entravision will be furnished with such accounting information and reports Entravision deems reasonably necessary to enable Entravision to satisfy disclosure requirements to its lenders, or state and federal regulators. Sunburst agrees to cooperate in providing Entravision full access to its records relating to the Sunburst Financial Statements, and to exert its Best Efforts to make its outside independent accountants (and their available work papers) available to Entravision and its accountants; provided, however, that Entravision will pay any fees and expenses of Sunburst's outside independent accountants for services rendered in connection with Entravision's activities. At the request of Entravision, Sunburst shall provide monthly unaudited balance sheets for any full calendar month prior to the Closing within twenty-five (25) days of the end of any such month. No later than ten (10) days prior to the Closing Date, Sunburst shall deliver to Entravision the revenue and rating information for the Stations referred to in Section 1.28 above (unless the Closing Date is to occur within the first ten (10) days of any calendar month, in which case, the time period for the delivery of such information shall be extended for such reasonable number of days to accommodate the availability of such information). 6.4 Operation of the Businesses of the Stations. Between the date of this ------------------------------------------- Agreement and the Closing Date, Sunburst will: (i) conduct the business of the Stations only in the Ordinary Course of Business; (ii) use its Best Efforts to preserve intact the current business organization of the Stations, keep available the services of the current employees of the Stations, and maintain the relations and goodwill with suppliers, customers, landlords, creditors, employees, agents and others having business relationships with the Stations; (iii) advise Entravision concerning operational matters of a material nature; and (iv) provide Entravision with the monthly income statements for the operations of the Stations by no later than the twenty-fifth (25th) day of each calendar month with respect to the prior calendar month for each month after the date of this Agreement. 6.5 Negative Covenant. Except as otherwise expressly permitted by this ----------------- Agreement, between the date of this Agreement and the Closing Date, Sunburst will not, without the prior written consent of Entravision, take any affirmative action, or fail to take any reasonable action -23- within its control, that causes any of the changes or events listed in Section 4.12 above occurs or become likely to occur. 6.6 Notification. Between the date of this Agreement and the Closing ------------ Date, Sunburst will promptly notify Entravision in writing if Sunburst becomes aware of any fact or condition that causes or constitutes a Breach of any of the representations and warranties of Sunburst in this Agreement, or if Sunburst becomes aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a Breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. Should any such fact or condition require any change in the Schedules if the Schedules were dated the date of the occurrence or discovery of any such fact or condition between the date of this Agreement and the Closing Date, Sunburst will promptly (i) deliver to Entravision a supplement to the Schedules specifying such change and (ii) notify Entravision of the occurrence of any Breach of any covenant of Sunburst in this Article 6 or of the occurrence of any event that may make the satisfaction of the conditions in Article 8 impossible or unlikely; provided, however, that the parties hereto acknowledge and agree that any such change shall not create any Liabilities of any kind for Entravision and shall not affect the express condition to Closing of Entravision based on Material Adverse Change as set forth in Section 8.1(h) below. 6.7 Broadcast Transmission Interruption. Sunburst shall give prompt ----------------------------------- written notice (a "Service Interruption Notice") to Entravision if any of the following (a "Service Interruption") occurs: (i) the regular broadcast transmissions of any of the Stations is interrupted or discontinued or (ii) any of the Stations is operated from a site other than its licensed transmitter site or with less than eighty percent (80%) of its licensed authorized power; provided, however, that an interruption or discontinuance in broadcast transmissions due either to (a) a disruption in power provided by a utility provider or (b) normal and customary repair, replacement, tuning, adjusting and maintenance of equipment will not be deemed a Service Interruption. If between the date hereof and the Closing, any of KVLY(FM), KKPS(FM) or KFRQ(FM) has experienced Service Interruptions aggregating seventy-two (72) consecutive hours in any thirty (30) consecutive day period, then Entravision may, at its option, terminate this Agreement upon written notice delivered to Sunburst no later than ten (10) days after receipt by Entravision of a Service Interruption Notice. In the event of termination of this Agreement by Entravision pursuant to the preceding sentence, the Escrow Deposit shall be returned to Entravision and the parties shall be released and discharged from any further obligation hereunder. If Entravision does not elect to terminate this Agreement, then the parties shall proceed as though a Service Interruption has not occurred. In addition, if at the time of any proposed Closing, any of the Stations shall not be broadcasting from its main licensed transmitter site with at least eighty percent (80%) of its licensed authorized power, then Entravision shall have the option, by written notice delivered to Sunburst, to postpone the Closing until three (3) days after normal broadcast transmissions have resumed. -24- 6.8 No Negotiation. Until the Closing Date, or such time, if any, as this -------------- Agreement is terminated pursuant to Article 10 below, Sunburst and each of its Representatives will not, directly or indirectly solicit, initiate or encourage any inquiries or proposals from, discuss or negotiate with, provide any non- public information to or consider the merits of any unsolicited inquiries or proposals from, any Person (other than Entravision or its Related Persons) relating to any transaction involving the sale of the business or any of the assets (other than in the Ordinary Course of Business) of the Stations. 6.9 Best Efforts. Between the date of this Agreement and the Closing ------------ Date, Sunburst will use its Best Efforts to cause the conditions in Section 8.1 below to be satisfied. 6.10 Third-Party Consents and Estoppel Certificates. Attached hereto as ---------------------------------------------- Schedule 6.10 is a list of those Assignable Contracts (each a "Schedule 6.10 - ------------- Contract") with respect to which Sunburst has agreed to use its Best Efforts to seek the Consent of the other party(ies) to such Contracts to the assignment and assumption of such Contracts from Sunburst to Entravision upon the Closing. If Sunburst is unable to obtain third-party Consent to such assignment and assumption of any Schedule 6.10 Contract identified under the heading "Other Consents," then Sunburst shall continue after the Closing using its Best Efforts after the Closing to obtain any such Consent. Until such time as such Consent has been obtained, Sunburst will hold and administer the affected Contract for the sole and exclusive benefit of, and at the sole cost and expense of, Entravision. If Sunburst is unable to obtain third-party Consent to such assignment and assumption of any Schedule 6.10 Contract identified under the heading "Real Property Consents," then Entravision shall have the option exercisable within ten (10) days after Sunburst notifies Entravision of such fact to either (i) terminate this Agreement without any liability of either party hereto and Entravision shall receive a refund of the Escrow Deposit or (ii) waive the condition to the Closing that such Consent be obtained and proceed with the Closing if the Contemplated Transactions and direct Sunburst to hold and administer the affected Contract for the sole and exclusive benefit of, and at the sole cost and expense of, Entravision. Sunburst will also request reasonable, normal and customary estoppel certificates, in a form supplied by Entravision, from the landlords under all Real Property Leases and will use Best Efforts to obtain such certificates; provided that if such estoppel certificates are not obtained, Sunburst shall have no liability to Entravision and the failure to obtain any estoppel certificate will not excuse Entravision's obligation to perform hereunder. 6.11 No Inconsistent Action. Sunburst shall not take any action which is ---------------------- materially inconsistent with its obligations under this Agreement, or that would hinder or delay the consummation of the Contemplated Transactions. Sunburst will not take any action that would disqualify or impair Sunburst as an assignor of the Stations or as an owner and operator of the Stations. 6.12 Sales and Transfer Taxes. All costs of transferring the Assets in ------------------------ accordance with this Agreement (if any), including, without limitation, recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be borne by Sunburst. -25- 6.13 Risk of Loss. The risk of loss or damage to any of the fixed and ------------ tangible Assets to be conveyed to Entravision hereunder from fire or other casualty or cause shall be upon Sunburst at all times up to the Closing Date and it shall be the responsibility of Sunburst to repair or to cause to be repaired and to restore the Assets to their condition prior to any such loss or damage or, at its sole option, in lieu of performing such repair and restoration obligations, Sunburst may tender to Entravision the insurance proceeds in the amount sufficient to fully repair and restore such Assets. In the event of any such loss or damage, Sunburst shall notify Entravision of the same in writing immediately, specifying with particularity the loss or damage incurred, the cause thereof (if know or reasonably ascertainable) and the insurance coverage applicable to such loss and the estimated amount of the loss in excess of the insurance proceeds plus deductible. If the loss exceeds the insurance proceeds plus deductible by more than $500,000, Entravision shall have the option to either (i) terminate this Agreement without being deemed in Breach of the Agreement or (ii) proceed to the Closing and deducting the amount by which the loss exceeds the insurance proceeds plus deductible from the Purchase Price. 6.14 Surveys. With respect to each parcel of Real Property as to which an ------- owner's title insurance policy is to be procured, Sunburst will assist Entravision in the procurement of a current land title survey of the Real Property certified to Entravision prepared by a licensed surveyor and conforming, as to Texas real estate, to current Texas Land Title Association Minimum Detail Requirements for Land Title Surveys disclosing the location of all improvements, easements, party walls, sidewalks, roadways, utility lines and other matters shown customarily on such surveys, and showing access affirmatively to public streets and roads (the "Surveys"). If any of the Surveys shall disclose any problems with access to and from a public roadway, the encroachment or protrusion of improvements from or onto the Real Property or any similar defects which substantially impair the current use or occupancy the Real Property as a tower site or studio site, as applicable, then such matter will either be cured by Sunburst prior to the Closing or insured over by the Closing; and if not, then Sunburst will indemnify Entravision as provided in Section 11.2 below. Entravision shall pay the cost of the Surveys. 6.15 Environmental Assessments. Sunburst will assist Entravision in ------------------------- obtaining with respect to each parcel of Real Property as to which an owner's title insurance policy is to be procured, a current Phase I Environmental Site Assessment ("ESA") and, if suggested by the Phase I ESA, a Phase II ESA, from an environmental consultant or engineer reasonably satisfactory to Entravision. If any of the ESAs shall conclude that there is an environmental condition that needs remediation or if any event should occur on any property covered by the ESAs prior to the Closing (which is not directly caused by Entravision) that results in an environmental condition requiring remediation, then Sunburst shall provide for such remediation at Sunburst's own cost prior to the Closing, or if Entravision elects, credit the Purchase Price at the Closing with the estimated amount of the remediation and final accounting once remediation is completed. Notwithstanding the foregoing, if the estimated cost of any such remediation shall exceed $500,000 and if Entravision does not elect to pay for the remediation costs in excess of $500,000, then either party shall have the right to terminate this Agreement without any -26- obligation to the other party, and Entravision shall be entitled to the return of the entire Escrow Deposit, including interest. Entravision shall pay the cost of the ESAs. ARTICLE 7. COVENANTS OF ENTRAVISION PRIOR TO CLOSING DATE 7.1 Filing Under HSR Act. Within fifteen (15) business days after full -------------------- execution of this Agreement, Entravision agrees to make a separate filing of the Notification and Report Form pursuant to the HSR Act with respect to the Contemplated Transactions as promptly as practicable and supply any additional information or documentary material that may be required under the HSR Act and to take all other actions as reasonably necessary to cause the expiration or termination of the applicable waiting period under the HSR Act as soon as possible. Entravision will use its Best Efforts to cooperate in all respects with Sunburst in conjunction with any such filing submission or other inquiry and to promptly notify Sunburst of any communication received from or given to the Antitrust Department of the DOJ or the FTC and to permit the other party to review such communication. Each party shall pay one-half (1/2) of the filing fees relating to compliance with the HSR Act, provided that Entravision shall initially pay the filing fees and shall be reimbursed by Sunburst for one-half (1/2) of such fee at the earlier of the Closing or a termination of this Agreement, unless this Agreement is terminated by Sunburst pursuant to Section 10.1(b)(i) below. 7.2 Application for FCC Consent. Within ten (10) business days after the --------------------------- execution of this Agreement, Entravision will complete those portions of the applications for the FCC Consent applicable to Entravision, which applications shall be in form and substance acceptable for filing with the FCC, assimilate Sunburst's portions of the applications and the file such applications with the FCC requesting its written consent to Contemplated Transactions. Entravision will diligently take, or cooperate in the taking of, all steps that are necessary, proper or desirable to expedite the preparation of such applications and their prosecution to a favorable conclusion. Entravision will promptly provide Sunburst with a copy of any pleading or other document served on it relating to such applications. If the FCC Consent imposes any condition on Entravision, Entravision shall use its Best Efforts to comply with such condition. If reconsideration or judicial review is sought with respect to the FCC Consent, and such reconsideration or review relates to Entravision, Entravision shall vigorously oppose such reconsideration or judicial review at its own expense. Entravision and Sunburst shall each bear one-half (1/2) of the costs associated with the filing of the application for the FCC Consent. 7.3 Notification. Between the date of this Agreement and the Closing ------------ Date, Entravision will promptly notify Sunburst in writing if Entravision becomes aware of any fact or condition that causes or constitutes a Breach of any of the representations and warranties of Entravision in this Agreement, or if Entravision becomes aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a Breach of any such representation or warranty had such -27- representation or warranty been made as of the time of occurrence or discovery of such fact or condition. Should any such fact or condition require any change in the Schedules if the Schedules were dated the date of the occurrence or discovery of any such fact or condition between the date of this Agreement and the Closing Date, Entravision will promptly (i) deliver to Sunburst a supplement to the Schedules specifying such change and (ii) notify Sunburst of the occurrence of any Breach of any covenant of Entravision in this Article 7 or of the occurrence of any event that may make the satisfaction of the conditions in Article 8 impossible or unlikely; provided, however, that the parties hereto acknowledge and agree that any such change shall not create any Liabilities of any kind for Sunburst. 7.4 Best Efforts. Between the date of this Agreement and the Closing ------------ Date, Entravision will use its Best Efforts to cause the conditions in Section 8.2 below to be satisfied. 7.5 No Inconsistent Action. Entravision shall not take any action which ---------------------- is materially inconsistent with their obligations under this Agreement, or that would hinder or delay the consummation of the Contemplated Transactions. Entravision will not take any action that would disqualify or impair Entravision (or any of its Related Persons) as an assignee of the Stations or as an owner and operator of the Stations. ARTICLE 8. CONDITIONS PRECEDENT TO PARTIES' OBLIGATIONS TO CLOSE 8.1 Conditions Precedent to the Obligation of Entravision to Close. The -------------------------------------------------------------- obligation of Entravision to effect the Contemplated Transactions and to take the other actions required to be taken by Entravision at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Entravision, in whole or in part): (a) Accuracy of Certain Representations and Warranties. All of the -------------------------------------------------- representations and warranties of Sunburst contained in Sections 4.1, 4.2, 4.3 and 4.4 above, considered collectively, and each of such representations and warranties, considered individually, must be accurate in all respects when made, and as of the Closing Date as if made on the Closing Date. All of the representations and warranties of Sunburst contained in Section 4.5 above through Section 4.22 above shall be deemed made again at and as of the Closing; provided, however, that it is understood that any Breach of any of the representations and warranties of Sunburst contained in Section 4.5 above through Section 4.22 above, whether as of the date hereof or at the time of the Closing, shall only give rise to Entravision's claim for indemnification pursuant to Section 11.2 below (subject to the provisions of Section 11.9 below). (b) Performance. All of the covenants and obligations that Sunburst ----------- is required to perform or to comply with pursuant to this Agreement at or prior to the Closing, considered collectively, and each of these covenants and obligations, considered individually, must have been duly performed and complied with in all respects; provided, however, that if -28- Entravision believes that Sunburst has Breached any of its covenants and obligations under this Agreement, then Entravision shall give Sunburst written notice thereof setting forth in reasonable detail the nature of the failure and the Closing shall be extended to permit Sunburst a reasonable opportunity (of no less than fifteen (15) days and no more than thirty (30) days) to cure. (c) Closing Certificate. Entravision shall have received from ------------------- Sunburst a certificate, dated as of the Closing, certifying that the conditions specified in Sections 8.1(a) and 8.1(b) above have been fulfilled. (d) Delivery of Closing Items. Each item required to be delivered by ------------------------- Sunburst pursuant to Section 3.5 above must have been tendered for delivery at the Closing. (e) Consents. The Final FCC Consent and the Consent identified under -------- "Real Property Consents" on Schedule 6.10 must have been obtained and must be in ------------- full force and effect. All parties hereto acknowledge and agree to the requirement of the Final FCC Consent as an express condition to the Closing. (f) Opinion of Counsel. Winstead, Sechrest & Minick P.C., counsel for ------------------ Sunburst, shall have delivered to Entravision a written legal opinion, dated as of the Closing Date, which shall be substantially in the form attached hereto as Exhibit "B-1" and incorporated herein by this reference. - ------------- (g) Opinion of Counsel. Pepper & Corazzini, L.L.P., FCC counsel for ------------------ Sunburst, shall have delivered to Entravision a written legal opinion, dated as of the Closing Date, which shall be substantially in the form attached hereto as Exhibit "B-2" and incorporated herein by this reference. - ------------- (h) No Material Adverse Change. There shall not have been any -------------------------- Material Adverse Change. (i) HSR Act. To the extent applicable, the waiting period under the ------- HSR Act shall have expired or have been terminated with respect to the Contemplated Transactions. (j) Environmental Remedies. Subject to the provisions of Section 6.15 ---------------------- above, any environmental problems identified by Entravision in its due diligence of the Stations shall be remedied, to Entravision's reasonable satisfaction, by Sunburst at its own expense. (k) No Injunction. There must not be in effect any Legal Requirement ------------- or any injunction or other Order that (i) prohibits the sale of the Assets by Sunburst to Entravision and (ii) has been adopted or issued or has otherwise become effective, since the date of this Agreement. -29- 8.2 Conditions Precedent to the Obligation of Sunburst to Close. The ----------------------------------------------------------- obligation of Sunburst to effect the Contemplated Transactions and to take the other actions required to be taken by Sunburst at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Sunburst, in whole or in part): (a) Accuracy of Certain Representations and Warranties. All of the -------------------------------------------------- representations and warranties of Entravision contained in Sections 5.1, 5.2 and 5.3 above, considered collectively, and each of such representations and warranties, considered individually, must be accurate in all respects when made, and as of the Closing Date as if made on the Closing Date. All of the representations and warranties of Entravision contained in Section 5.4 above and Section 5.5 above shall be deemed made again at and as of the Closing; provided, however, that it is understood that any Breach of any of the representations and warranties of Entravision contained in Section 5.4 above and Section 5.5 above, whether as of the date hereof, or at the time of the Closing, shall only give rise to Sunburst's claim for indemnification pursuant to Section 11.4 below (subject to the provisions of Section 11.9 below). (b) Performance. All of the covenants and obligations that ----------- Entravision is required to perform or to comply with pursuant to this Agreement at or prior to the Closing, considered collectively, and each of these covenants and obligations, considered individually, must have been performed and complied with in all respects; provided, however, that if Sunburst believes that Entravision has breached any of its covenants and obligations under this Agreement, then Sunburst shall give Entravision written notice thereof setting forth in reasonable detail the nature of the failure and the Closing shall be extended to permit Entravision a reasonable opportunity (of no less than fifteen (15) days and no more than thirty (30) days) to cure. (c) Closing Certificate. Sunburst shall have received from ------------------- Entravision a certificate, dated as of the Closing, certifying that the conditions specified in Sections 8.2(a) and 8.2(b) above have been fulfilled. (d) Delivery of Closing Items. Each item required to be delivered by ------------------------- Entravision pursuant to Section 3.6 above must have been tendered for delivery at the Closing. (e) Consents. The Final FCC Consent must have been obtained and must -------- be in full force and effect. All parties hereto acknowledge and agree to the requirement of the Final FCC Consent as an express condition to the Closing. (f) HSR Act. To the extent applicable, the waiting period under the ------- HSR Act shall have expired or have been terminated with respect to the Contemplated Transactions. (g) No Injunction. There must not be in effect any Legal Requirement ------------- or any injunction or other Order that (i) prohibits the sale of the Assets by Sunburst to Entravision and (ii) has been adopted or issued or has otherwise become effective, since the date of this Agreement. -30- ARTICLE 9. EMPLOYMENT MATTERS 9.1 Termination of Stations' Employees. Sunburst shall have terminated ---------------------------------- all of the employees of the Stations immediately prior to the Closing, including, without limitation, those employees under written employment agreements, with Sunburst to incur any and all Liabilities related to such terminations and to the employment of such employees through the Closing Date. Sunburst shall remain solely responsible for any termination benefits to which any of the employees are entitled by reason of such termination whether or not such person is subsequently employed by Entravision. Entravision shall have no obligation to offer employment to any of the employees of the Stations. 9.2 Continued Employment with Entravision. Notwithstanding the foregoing, ------------------------------------- on the Closing Date, Entravision may offer probational employment only to those employees of the Stations that Entravision elects to do so in its sole and absolute discretion, and each such employee shall be asked to execute an acknowledgment of continued employment with Entravision, acknowledging, among other things, that: (i) the employee has no carry over rights with respect to any and all employee benefits relating to any former employment with Sunburst; (ii) upon execution of the appropriate documentation, such employee will be fully covered under the standard Entravision health insurance benefits; (iii) such employee shall be on a ninety (90) day probationary period, and that continued employment with Entravision is subject to the review and approval of Entravision in its sole and absolute discretion; (iv) demotion and transfer of such employee may occur in the sole and absolute discretion of Entravision at any time, with or without cause and/or notice; (v) employment with Entravision is "at-will;" and (v) such employee has received a copy of the Entravision's Employment Policy & Procedures Manual. ARTICLE 10. TERMINATION 10.1 Termination Events. This Agreement may, by written notice given prior ------------------ to or at the Closing, be terminated: (a) by Entravision: (i) if any of the conditions precedent to Entravision's obligation to close as set forth in Section 8.1 above shall not have been met (or waived by Entravision) by the time the Closing is to have taken place, including any extensions of the Closing permitted or required hereunder; (ii) if the FCC dismisses or denies the application for the FCC Consent and such order is a Final Order; or (iii) if there shall be any Order that would prevent or make unlawful the Closing; (b) by Sunburst: (i) if any of the conditions precedent to Sunburst's obligation to close as set forth in Section 8.2 above shall not have been met (or waived by Sunburst) by the time the Closing is to have taken place, including any extensions of the Closing permitted or required hereunder; (ii) if the FCC dismisses or denies the application for the FCC Consent and -31- such order is a Final Order; or (iii) if there shall be any Order that would prevent or make unlawful the Closing; (c) by mutual consent of Entravision and Sunburst; or (d) by Entravision or Sunburst if the Closing has not occurred (other than through the failure of the party seeking to terminate this Agreement to comply fully with its obligations under this Agreement) on or before March 31, 2001, or such later date as the parties may agree upon in writing. 10.2 Rights of Parties for Nonperformance or Upon Termination. -------------------------------------------------------- (a) If Sunburst does not have a right to terminate under Section 10.1 above, but Sunburst refuses to close the Contemplated Transactions or prevents the Closing due to a Breach of this Agreement, Entravision shall have the right to waive any grounds it may have to terminate under Section 10.1 above and to obtain specific performance of the obligations of Sunburst to consummate the Contemplated Transactions. Sunburst acknowledges and agrees that the Assets and the Stations are unique assets and Sunburst expressly agrees monetary damages would be inadequate to compensate Entravision for the refusal of Sunburst to perform the obligations for which the remedy of specific performance is granted herein. Accordingly, Sunburst acknowledges and agrees that such refusal to perform will cause irreparable injury to Entravision and that Entravision shall be entitled to obtain injunctive relief for specific performance of the obligations specifically listed in this Section 10.2. (b) If this Agreement is terminated for any reason other than by Sunburst under Section 10.1(b)(i) above on account of the failure of the conditions precedent set forth in any of Sections 8.2(a), (b), (c) and/or (d) above, the parties acknowledge and agree that Entravision shall be entitled to the return of the entire Escrow Deposit, plus interest. If this Agreement is terminated by Sunburst under Section 10.1(b)(i) above on account of the failure of the conditions precedent set forth in any of Sections 8.2(a), (b), (c) and/or (d) above, the parties acknowledge and agree that Sunburst shall be entitled to receive the entire Escrow Deposit, less interest. In such event, Entravision shall immediately instruct the Escrow Agent to deliver the Escrow Deposit, less interest, to Sunburst. The parties acknowledge and agree that the remedy provided to Sunburst in this Section 10.2(b) shall not constitute either liquidated damages or Sunburst's sole remedy for a Breach of this Agreement by Entravision. (c) If this Agreement is terminated as provided in this Article 10, the Contemplated Transactions shall be abandoned without further action, rights or obligations by the parties hereto to one another, and all filings, applications and other submissions made hereunder shall, to the extent practicable, be withdrawn from the Persons to which they were made; provided, however, that nothing herein shall relieve either party from liability for any Breach of any representation, warranty, covenant or agreement in this Agreement prior to such termination. -32- ARTICLE 11. INDEMNIFICATION; REMEDIES 11.1 Survival; Right to Indemnification Not Affected by Knowledge. All ------------------------------------------------------------ representations, warranties, covenants and obligations in this Agreement, the Schedules and any other certificate or document delivered pursuant to this Agreement will survive the Closing for a period of two (2) years from the Closing Date, unaffected by any Knowledge or either party with respect thereto; provided, however, that the representations, warranties and covenants contained in Sections 4.2, 4.4, 4.7 and 4.16 shall survive until the expiration of the applicable statute of limitations; provided, further, that, with respect to claims asserted by third-parties, all representations, warranties, covenants and obligations shall survive until the applicable statute of limitations. 11.2 Indemnification and Payment of Damages by Sunburst. Provided that the -------------------------------------------------- Closing shall occur, Sunburst hereby agrees to indemnify and hold harmless Entravision, and its officers, directors, successors and assigns (collectively, the "Indemnified Parties") for, and will pay to the Indemnified Parties the amount of, any loss, liability, claim, damage (including incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorney's fees) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), arising, directly or indirectly, from or in connection with any or all of the following: (a) any Breach of any representation, warranty, covenant or obligation made by Sunburst in this Agreement, the Schedules or any other certificate or document delivered by Sunburst pursuant to this Agreement; (b) any and all Liabilities of Sunburst, except only for the Assumed Liabilities; (c) all operations of the Stations occurring at any time prior to the Closing Date; and (d) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with either Sunburst (or any Person acting on its behalf) in connection with any of the Contemplated Transactions. 11.3 Indemnification and Payment of Damages -- Environmental Matters. --------------------------------------------------------------- (a) In addition to Section 11.2 above, Sunburst will further indemnify and hold harmless the Indemnified Parties for, and will pay to the Indemnified Parties the amount of, any Damages (including costs of cleanup, containment or other remediation) arising, directly or indirectly, from or in connection with any Environmental Laws arising out of or relating to: (i) the ownership, operation or condition at any time prior to the Closing Date of the Facilities, or -33- any Hazardous Substances or other contaminants that were present on the Facilities prior to the Closing Date; or (ii) any Hazardous Substances or other contaminants, wherever located, that were, or were allegedly, generated, transported, stored, treated, released or otherwise handled by the Stations or by any other Person for whose conduct the Stations may be held responsible at any time prior to the Closing Date, or any hazardous activities that were, or were allegedly, conducted by the Stations or by any other Person for whose conduct the Stations may be held responsible. (b) Entravision will be entitled to control any cleanup, any related Proceeding, and, except as provided in the following sentence, any other Proceeding with respect to which indemnity may be sought under this Section 11.3. The procedure described in Section 11.5 below will apply to any claim solely for monetary damages relating to a matter covered by this Section 11.3. Notwithstanding any provision to the contrary in this Section 11.3, Entravision and Sunburst agree that any Damages arising out of any violation of any Environmental Laws or Hazardous Substances covered by this Section 11.3 shall be apportioned in a manner so that Sunburst is responsible for any Damages accruing from activities occurring up through the Closing Date (other than for any Damages caused by Entravision) and Entravision is responsible for any Damages accruing from activities occurring from and after the Closing Date (other than for any Damages caused by Sunburst). 11.4 Indemnification and Payment of Damages by Entravision. Provided that ----------------------------------------------------- the Closing shall occur, Entravision will indemnify and hold harmless Sunburst, and will pay to Sunburst the amount of any Damages arising, directly or indirectly, from or in connection with any of the following: (a) any Breach of any representation, warranty, covenant or obligation made by Entravision in this Agreement or in any certificate delivered by Entravision pursuant to this Agreement; (b) any Breach by Entravision of any covenant or obligation of Entravision in this Agreement; (c) any and all of the Assumed Liabilities; (d) all operations of the Stations occurring at any time on or after the Closing Date; (e) any third-party claim arising directly from information set forth in the Public Filings (as defined below) (except for any claim arising directly from the negligent or intentional misconduct of Sunburst or from the inaccuracy of any information provided by Sunburst to Entravision contained in such Public Filings); and -34- (f) any claim by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Entravision (or any Person acting on its behalf) in connection with any of the Contemplated Transactions. 11.5 Procedure for Indemnification -- Third-Party Claims. --------------------------------------------------- (a) Promptly after receipt by an indemnified party in this Article 11 of notice of the commencement of any Proceeding against it, such indemnified party will, if a claim is to be made against an indemnifying party under such article, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnified party's failure to give such notice. (b) If any Proceeding referred to in Section 11.5(a) above is brought against an indemnified party and it gives notice to the indemnifying party of the commencement of such Proceeding, the indemnifying party will, unless the claim involves Taxes, be entitled to participate in such Proceeding and, to the extent that it wishes (unless the indemnifying party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate or the indemnifying party fails to provide reasonable assurance to the indemnified party of its financial capacity to defend such Proceeding and provide indemnification with respect to such Proceeding), to assume the defense of such Proceeding with counsel satisfactory to the indemnified party and, after notice from the indemnifying party to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will not, as long as it diligently conducts such defense, be liable to the indemnified party under this section for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such Proceeding, other than reasonable costs of investigation. If the indemnifying party assumes the defense of a Proceeding: (i) it will be conclusively established for purposes of this Agreement that the claims made in that Proceeding are within the scope of and subject to indemnification; (ii) no compromise or settlement of such claims may be effected by the indemnifying party without the indemnified party's consent unless there is no finding or admission of any violation of Legal Requirements or any violation of the rights of any Person and no effect on any other claims that may be made against the indemnified party and the sole relief provided is monetary damages that are paid in full by the indemnifying party; and (iii) the indemnified party will have no liability with respect to any compromise or settlement of such claims effected without its consent. If notice is given to an indemnifying party of the commencement of any Proceeding and the indemnifying party does not, within ten (10) days after the indemnified party's notice is given, give notice to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will be bound by any determination made in such Proceeding or any compromise or settlement effected by the indemnified party. -35- (c) Notwithstanding the foregoing, if an indemnified party determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its Related Persons other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the indemnified party may, by notice to the indemnifying party, assume the exclusive right to defend, compromise or settle such Proceeding, but the indemnifying party will not be bound by any determination of a Proceeding so defended or any compromise or settlement effected without its written consent (which may not be unreasonably withheld). 11.6 Procedure for Indemnification -- Other Claims. A claim for --------------------------------------------- indemnification for any matter not involving a third-party claim may be asserted by notice to the party from whom indemnification is sought. 11.7 Limitation on Amount. Notwithstanding the preceding provisions of -------------------- this Article 11 and except as provided below, the parties shall have no liability to the other with respect to the indemnification obligations under this Article 11 unless and until the aggregate amount of Damages equal or exceed $25,000 (the "Threshold Amount"). At such time as the aggregate Damages equal or exceed the Threshold Amount, the parties shall be indemnified to the full extent of all such Damages (including Damages counted in determining whether the aggregate Damages equal or exceed the Threshold Amount). Notwithstanding the preceding provisions of this section, the Threshold Amount shall not apply and each party shall be fully liable for indemnification claims for (i) payment of Station Expenses, (ii) performance by Entravision of the Assumed Liabilities, (iii) payment of expenses incurred in connection with the Contemplated Transaction, (iv) intentional or fraudulent Breach by either party of any representation, warranty, covenant or obligation contained in this Agreement or (v) remittance to Sunburst of the collections on the Accounts Receivable. 11.8 Maximum Indemnification. The aggregate amount of all claims subject ----------------------- to indemnification hereunder by Sunburst, on one hand, and Entravision, on the other hand, shall not exceed Fifteen Million Dollars ($15,000,000); provided, however, that the amount of any Damages incurred by a party pursuant to this Article 11 shall be reduced by (i) the actual tax benefit realized with respect to payment of all or any portion of such Damages by the indemnified party and (ii) the amount of any insurance proceeds actually paid to such indemnified party as reimbursement for such Damages. 11.9 Exclusivity. Each of the parties hereby acknowledges and agrees that ----------- from and after the Closing, and except in cases of fraud or intentional misconduct, the indemnity obligations set forth in this Article 11 shall constitute the sole and exclusive remedy of either party with respect to the Contemplated Transactions. ARTICLE 12. POST-CLOSING COVENANTS -36- The parties agree as follows with respect to the period following the Closing: 12.1 Further Assurances. In case at any time after the Closing any ------------------ further action is necessary to carry out the purposes of this Agreement, each of the parties will take such further action (including the execution and delivery of such further instruments and documents) as any other party reasonably may request, all the sole cost and expense of the requesting party (unless the requesting party is entitled to indemnification therefor under Article 11 above). After the Closing, Sunburst will execute any further documents consistent with this Agreement, provide any further reasonably available information and take any other actions not imposing significant financial or operational obligations in excess of the other obligations imposed by this Agreement, upon the request of Entravision based upon Entravision's reasonable determination that those actions are required to enable Entravision to effectuate this Agreement. After the Closing, Entravision will execute any further documents consistent with this Agreement, provide any further reasonably available information and take any other actions not imposing significant financial or operational obligations in excess of the other obligations imposed by this Agreement, upon the request of Sunburst based upon Sunburst's reasonable determination that those actions are required to enable Sunburst to effectuate this Agreement. 12.2 Access to Books and Records. At Sunburst's reasonable request, --------------------------- Entravision shall provide Sunburst with reasonable access during business hours to such books and records of the Stations as Sunburst may reasonably require to comply with its tax reporting and filing obligations or to collect any unpaid Accounts Receivable. 12.3 Confidential Information. Entravision shall continue treat as ------------------------ confidential after the Closing Date, in the same manner as required by Section 13.3 below prior to the Closing Date, all of the information regarding Sunburst (exclusive of information relating to the Stations and the operations of the Stations) received from Sunburst in connection with the Contemplated Transactions. 12.4 Litigation Support. In the event and for so long as either party is ------------------ actively contesting or defending against any charge, complaint, Proceeding, claim or demand in connection with any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act or transaction involving the Stations, the other party will provide reasonable access to its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending party (unless the contesting or defending party is entitled to indemnification therefor under Article 11 above); provided, however, that such access and cooperation does not unreasonably disrupt the normal operations of the cooperating party. 12.5 Collection of Accounts Receivable. --------------------------------- (a) For a period commencing on the Closing Date and ending on the last day of the fourth (4th) full calendar month following the Closing Date (such period is referred to as -37- the "Collection Period"), Entravision will have the right and the obligation to collect for the account of Sunburst the Accounts Receivable. Within three (3) business days following the Closing Date, Sunburst will furnish Entravision with a complete Accounts Receivable list current as of the Closing Date, detailing customer name, amount owed, aging and invoice numbers. (b) All receipts on the collection of an Account Receivable from a particular account debtor shall be applied first to the oldest outstanding invoice, unless the payment is made with reference to a specific invoice, in which case the payment shall be allocated to the specific invoice. Any monies or payments received by Entravision which are in payment for commercial air time or for other services or business provided by Entravision on or after the Closing Date shall belong to Entravision and Entravision shall not be obligated to remit any of such sums to Sunburst. Entravision will not, without the written consent of Sunburst, compromise or settle for less than full value any of the Accounts Receivable. (c) If any account debtor shall dispute its obligation to Sunburst, if any account debtor shall pay any invoice of Entravision's before having paid in full all outstanding invoices due to Sunburst or if any Account Receivable shall be deemed uncollectible by Entravision, then Entravision shall notify Sunburst of same and the rights to collect such disputed, unpaid or deemed uncollectible account will thereupon revert to Sunburst and Entravision will thereafter have no further responsibility with respect to the collection thereof. (d) On the tenth (10th) day of each month immediately following each calendar month end during the Collection Period, Entravision will provide Sunburst with a list of all Accounts Receivable collected during the preceding calendar month and Entravision will at that time also remit to Sunburst all sums collected by Entravision in connection with the Accounts Receivable (and not theretofore remitted to Sunburst) during such preceding month, without offset or deduction. (e) The obligation of Entravision hereunder will be to use reasonable efforts to collect the Accounts Receivable in the Ordinary Course of Business and does not extend to the institution of litigation, employment of counsel or other collection agency, or any other extraordinary means of collection, including the sending of demand letters. If requested by Entravision, Sunburst will provide Entravision with a power of attorney which will be sufficient for the purposes of evidencing to the various account debtors the exclusive authority of Entravision to collect the Accounts Receivable. (f) At the conclusion of the Collection Period, the collection rights to all of the remaining uncollected Accounts Receivable shall automatically revert to Sunburst, and Entravision will thereafter have no further responsibility with respect to the collection of the Accounts Receivable. 12.6 Cooperation Regarding Financial Information. Sunburst acknowledges ------------------------------------------- that Entravision will use compilations, carve out audits and other derivatives of Sunburst's financial -38- information regarding the Stations in connection with future public filings of Entravision filed under the Securities Act of 1933, as amended, or under the Securities and Exchange Act of 1934, as amended (the "Public Filings"). For a period of three (3) years from the Closing Date, Sunburst shall cooperate in a commercially reasonable manner with Entravision so that Entravision may obtain any additional information concerning the Stations that Sunburst has in its possession that Entravision may need for the preparation of its Public Filings, in each case at Entravision's sole cost and expense. The foregoing cooperation of Sunburst shall consist of Sunburst (i) supplying financial information related to the Stations and (ii) granting Entravision (and its accountants) access to (a) the books and records relating to the Stations, (b) Sunburst personnel who are knowledgeable about such books and records and (c) subject to their consent, Sunburst's outside accountants. ARTICLE 13. GENERAL PROVISIONS 13.1 Expenses. Except as otherwise expressly provided in this Agreement, -------- each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of agents, representatives, counsel and accountants. 13.2 Public Announcements. Other than those incidental to filings -------------------- required to comply with Legal Requirements, neither party shall make any public announcement, press release or similar publicity with respect to this Agreement or the Contemplated Transactions, regardless of whether the Contemplated Transactions are consummated, without the prior written consent of the other party. The parties will consult with each other concerning the means by which the employees, customers and suppliers of Sunburst and others having dealings with Sunburst will be informed of the Contemplated Transactions, and Entravision will have the right to be present for any such communication. 13.3 Confidentiality. Between the date of this Agreement and the Closing --------------- Date, the parties will maintain in confidence, and will cause the Representatives of Entravision and Sunburst to maintain in confidence, any information furnished by another party in connection with this Agreement or the Contemplated Transactions, unless (i) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (ii) the use of such information is necessary or appropriate in making any filing or obtaining any Consent required for the consummation of the Contemplated Transactions or (iii) the furnishing or use of such information is required by or necessary or appropriate in connection with legal Proceedings. If the Contemplated Transactions are not consummated, each party will return or destroy as much of such written information as the other party may reasonably request. Whether or not the Closing takes place, Sunburst waives any cause of action, right or claim arising out of the access of Entravision or its Representatives to any trade secrets or other confidential information of -39- Sunburst except for the intentional competitive misuse by Entravision of such trade secrets or confidential information. 13.4 No Solicitation of Employees. If this Agreement shall terminate ---------------------------- without the Closing having occurred, or, if the Closing has occurred, except as otherwise provided for in Article 9 above, Entravision agrees that neither it nor any Related Person of Entravision will employ or solicit the employment of any employee of Sunburst at the Stations or any other employee of Sunburst or employee of any Related Person of Sunburst for a period of two years from and after the date hereof. 13.5 Notices. All notices, consents, waivers and other communications ------- under this Agreement must be in writing and will be deemed to have been duly given when (i) delivered by hand (with written confirmation of receipt), (ii) sent by facsimile (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested, or (iii) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties): If to Entravision: Entravision Communications Corporation Attention: Walter F. Ulloa 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 Sunburst: Sunburst Media, LP Attention: John Borders and Don L. Turner 1350 One Galleria Tower 13355 Noel Road Dallas, Texas 75240 Telephone: (972) 702-7371 Facsimile: (972) 503-2183 with a required copy to: Winstead Sechrest & Minick P.C. -40- Attention: Robert Q. Stanton, Esq. 5400 Renaissance Tower 1201 Elm Street Dallas, Texas 75270 Telephone: (214) 745-5159 Facsimile: (214) 745-5867 with a required copy to: Stephen F. Gormley Great Hill Partners One Liberty Square Boston, Massachusetts 02109 Telephone: (617) 790-9414 Facsimile: (617) 345-7201 13.6 Further Assurances. The parties agree to furnish upon request to ------------------ each other such further information, execute and deliver to each other such other documents and to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement. 13.7 Waiver. The rights and remedies of the parties to this Agreement are ------ cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law, (i) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party, (ii) no waiver that may be given by a party will be applicable except in the specific instance for which it is given and (iii) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 13.8 Entire Agreement and Modification. This Agreement supersedes all --------------------------------- prior agreements between the parties with respect to its subject matter, including, without limitation, that certain Letter of Intent dated April 10, 2000, and constitutes (along with the recitals hereto, and the exhibits, Schedules and documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the party to be charged with the amendment. 13.9 Schedules. The Schedules are hereby incorporated by reference into --------- this Agreement in their entirety. The disclosures in the Schedules must relate only to the -41- representations and warranties in the section of the Agreement to which they expressly relate and not to any other representation or warranty in this Agreement. In the event of any inconsistency between the statements in the body of this Agreement and those in the Schedules (other than an exception expressly set forth as such in the Schedules with respect to a specifically identified representation or warranty), the statements in the body of this Agreement will control. 13.10 Assignment, Successors and No Third-Party Rights. Neither party may ------------------------------------------------ assign any of its rights under this Agreement without the prior consent of the other parties, which will not be unreasonably withheld or delayed, except that either party may assign any of its rights under this Agreement to any Related Person; provided that such assignment will not delay, impede or impair the Final FCC Consent process as compared to no such assignment having been made. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and permitted assigns. 13.11 Severability. If any provision of this Agreement is held invalid or ------------ unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 13.12 Section Headings; Construction. The headings of sections in this ------------------------------ Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding section or sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 13.13 Time of Essence. With regard to all dates and time periods set --------------- forth or referred to in this Agreement, time is of the essence. 13.14 Attorney's Fees. The prevailing party in any Proceeding relating to --------------- the enforcement or interpretation of this Agreement may recover from the unsuccessful party all costs, expenses and actual attorney's fees (including expert witness and other consultants fees and costs) relating to or arising out of (i) the Proceeding (whether or not the Proceeding proceeds to judgment) and (ii) any post-judgment or post-award proceeding including, without limitation, one to enforce or collect any judgment or award resulting from the Proceeding. All such judgments and awards shall contain a specific provision for the recovery of all such subsequently incurred costs, expenses and actual attorney's fees. -42- 13.15 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED ------------- UNDER THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 13.16 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 San Antonio, Texas, and each of the parties consents 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. 13.17 Counterparts; Facsimile. 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 facsimile with the same validity as if it were an ink-signed document. Each signatory below represents and warrants by his signature that he 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. [Remainder of Page Intentionally Left Blank] -43- IN WITNESS WHEREOF, the parties have executed and delivered this Asset Purchase Agreement as of the date first written above. Entravision 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 Sunburst SUNBURST MEDIA, LP, a Delaware limited partnership By: Sunburst Media Corporation Its: Sole General Partner By: /s/ Don L. Turner ------------------ Don L. Turner, Vice President [Signature Page to Asset Purchase Agreement] EXHIBITS - -------- Exhibit A Noncompetition Agreement Exhibit B-1 Legal Opinion of Counsel for Sunburst Exhibit B-2 Legal Opinion of FCC Counsel for Sunburst The registrant hereby agrees to furnish a copy of any omitted schedule or exhibit upon request. EX-3.1 5 0005.txt FIRST RESTATED CERTIFICATE OF INCORPORATION EXHIBIT 3.1 FIRST RESTATED CERTIFICATE OF INCORPORATION OF ENTRAVISION COMMUNICATIONS CORPORATION Entravision Communications Corporation, a corporation organized and existing under and by virtue of the provisions of the Delaware General Corporation Law, does hereby certify: FIRST: That the name of the corporation is Entravision Communications Corporation and that the corporation was originally incorporated on February 11, 2000 under the name "Entravision Communications Corporation." SECOND: That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of the corporation, declaring said amendment and restatement to be advisable and in the best interests of the corporation, which resolution setting forth the proposed amendment and restatement is as follows: RESOLVED, that the Certificate of Incorporation of the corporation be amended and restated in its entirety as follows: ARTICLE 1. The name of the corporation is Entravision Communications Corporation. ARTICLE 2. The address of the registered office of the corporation in the State of Delaware is 15 East North Street, County of Kent, Dover, Delaware 19903-0899. The name of its registered agent at such address is Incorporating Services, Ltd. ARTICLE 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law. ARTICLE 4. 4.1. Classes of Stock. The corporation shall have the authority to issue ---------------- 325,000,000 shares of Common Stock, par value $0.0001 per share, divided into the following classes: (i) 260,000,000 shares of Class A Common Stock (the "Class A Common Stock"); (ii) 40,000,000 shares of Class B Common Stock (the "Class B Common Stock"); and (iii) 25,000,000 shares of Class C Common Stock (the "Class C Common Stock" and together with the Class A Common Stock and the Class B Common Stock, the "Common Stock"). The corporation shall also have the authority to issue 50,000,000 shares of Preferred Stock, par value $0.0001 per share (the "Preferred Stock"). The Common Stock and the Preferred Stock are collectively referred to herein as the "Capital Stock." 4.2 Certain Definitions. As used in this First Restated Certificate of ------------------- Incorporation, the following terms have the meanings indicated: "Affiliate" means any person or entity directly or indirectly controlling or controlled by or under direct or indirect common control with another Person (as defined below). "Board" means the Board of Directors of the corporation. "Class B Holder(s)" means Walter F. Ulloa, Philip C. Wilkinson or Paul A. Zevnik, or any Permitted Transferee (as defined below) of Walter F. Ulloa, Philip C. Wilkinson or Paul A. Zevnik (hereinafter each of such individuals and his respective Permitted Transferee(s) is referred to as "Ulloa," "Wilkinson" and "Zevnik," respectively). "Class B Required Amount" means, in the case of each Class B Holder, a number of shares equal to thirty percent (30%) of the Class B Base Amount. The Class B Base Amount shall be equal to 11,489,365 shares of Class B Common Stock with respect to Ulloa, 11,489,365 shares of Class B Common Stock with respect to Wilkinson and 4,699,803 shares of Class B Common Stock with respect to Zevnik, which shall be increased to give effect to stock dividends and stock splits and shall be decreased to give effect to reverse stock splits and repurchases by the corporation of the Class B Common Stock approved by the Board in accordance with the bylaws. "Class C Holder" means Univision Communications Inc. ("Univision"), or any Permitted Transferee of Univision. "Class C Required Amount" means, in the case of the Class C Holder, a number of shares equal to thirty percent (30%) of the Class C Base Amount. The Class C Base Amount shall be equal to 21,983,392 shares of Class C Common Stock, which shall be increased to give effect to stock dividends and stock splits and shall be decreased to give effect to reverse stock splits and repurchases by the corporation of the Class C Common Stock approved by the Board in accordance with the bylaws. "Communications Act" means the Communications Act of 1934, and the rules, regulations, decisions and written policies of the Federal Communications Commission (the "FCC") thereunder (as the same may be amended from time to time). "Entire Board" means the number of directors of the corporation which would be in office if there are no vacancies on the Board and no unfilled newly- created directorships. -2- "Permitted Transferee" means: (i) any entity all of the equity (other than directors' qualifying shares) of which is directly or indirectly owned by the transferor that is not an Affiliate of any other Person; (ii) in the case of an transferor who is an individual, (a) such transferor's spouse, lineal descendants, adopted children and minor children supported by such transferor, (b) any trustee of any trust created primarily for the benefit of any, or some of or all of such spouse or lineal descendants (but which may include beneficiaries that are charities) or any revocable trust created by such transferor, (c) the transferor, in the case of a transfer from any "Permitted Transferee" back to its transferor and (d) any entity all of the equity of which is directly or indirectly owned by any of the foregoing which is not an Affiliate of any Person other than the Persons described in clauses (a) through (c) above; and (iii) in the case of a Class B Holder, any other Class B Holder. "Person" means any individual, a corporation, a partnership, an association, a limited liability company or a trust. "Transfer" means any direct or indirect sale, pledge, hypothecation, voluntary or involuntary, and whether by merger or other operation of law, other than a bona fide pledge of shares to secure financing; provided that a foreclosure on such pledged shares shall constitute a Transfer. 4.3. Common Stock. Except as otherwise provided by law or by this First ------------ Restated Certificate of Incorporation, each of the shares of Common Stock shall be identical in all respects, including with respect to dividends and upon liquidation. (a ) Stock Dividends; Stock Splits. ----------------------------- (i) A dividend of Common Stock on any share of Common Stock shall be declared and paid only in an equal per share amount on the then outstanding shares of each class of Common Stock and only in shares of the same class of Common Stock as the shares on which the dividend is being declared and paid. For example, if and when a dividend of Class A Common Stock is declared and paid to the then outstanding shares of Common Stock: (i) the dividend of Class A Common Stock shall be paid solely to the outstanding shares of Class A Common Stock; and (ii) a dividend of Class B Common Stock and Class C Common Stock shall similarly be declared and paid in an equal per share amount solely to the then outstanding shares of Class B Common Stock and Class C Common Stock, respectively. (ii) If the corporation shall in any manner subdivide or combine, or make a rights offering with respect to, the outstanding shares of Class A Common Stock, Class B Common Stock or Class C Common Stock, the outstanding shares of the other classes of Common Stock shall be proportionally subdivided or combined, or a rights offering shall be made, in the same manner and on the same basis as the outstanding shares of Class A Common Stock, Class B Common Stock or Class C Common Stock, as the case may be, that have been subdivided or combined or made subject to a rights offering. -3- (b) Voting Rights. ------------- (i) The holders of the Class A Common Stock and the Class C Common Stock shall have one (1) vote for each share held; the holders of the Class B Common Stock shall have ten (10) votes for each share held. (ii) Members of the Board shall be elected as set forth in Section 4.5 below. (iii) Without the consent of the holders of at least a majority of the shares of Class C Common Stock then outstanding, voting as a separate class, given in writing or by vote at a meeting of such Class C Holder called for such purpose, the corporation will not: (A) merge, consolidate or enter into a business combination, or otherwise reorganize the corporation with or into one or more entities (other than a merger of a wholly-owned subsidiary of the corporation into another wholly-subsidiary of the corporation); (B) dissolve, liquidate or terminate the corporation; (C) directly or indirectly dispose of any interest in any FCC license with respect to television stations which are affiliates of Univision; (D) amend, alter or repeal any provision of the First Restated Certificate of Incorporation or bylaws of the corporation, each as amended, so as to adversely affect the rights, privileges or restrictions provided for the benefit of the holders of the Class C Common Stock. (c) Conversion Rights. ----------------- (i) Voluntary Conversion. Each share of Class B Common Stock or -------------------- Class C Common Stock shall be convertible into one fully paid and non-assessable share of Class A Common Stock at any time at the option of the holder thereof. (ii) Class B Automatic Conversion. Each share of Class B Common ---------------------------- Stock shall convert automatically into one (1) fully paid and non-assessable share of Class A Common Stock upon its Transfer to any party other than a Permitted Transferee of the holder thereof. Each share of Class B Common Stock held by a Class B Holder or his respective Permitted Transferee(s) shall convert automatically into one (1) fully paid and non-assessable share of Class A Common Stock (i) upon the death of such Class B Holder, (ii) when such Class B Holder is no longer actively involved in the business of the corporation or (iii) if such Class B Holder (or his Permitted Transferee(s)) owns less than the Class B Required Amount. Each share of Class B Common Stock shall automatically convert into one (1) fully paid and non-assessable share of Class A Common Stock (i) upon the death of the second to die of Ulloa and -4- Wilkinson or (ii) when the second of Ulloa and Wilkinson ceases to be actively involved in the business of the corporation. (iii) Class C Automatic Conversion. Each share of Class C Common ---------------------------- Stock shall convert automatically into one (1) fully paid and non-assessable share of Class A Common Stock upon its Transfer to any party other than Permitted Transferee of the holder thereof. Each share of Class C Common Stock shall convert automatically into one (1) fully paid and non-assessable share of Class A Common Stock when the Class C Holder (or its Permitted Transferee) owns less than the Class C Required Amount. (iv) Unconverted Shares. If less than all of the shares of Class B ------------------ Common Stock or Class C Common Stock are converted pursuant to subparagraphs (i), (ii) or (iii) above, and such shares are evidenced by a certificate surrendered to the corporation in accordance with the procedures as the Board may determine, representing shares in excess of the shares being converted, the corporation shall execute and deliver to or upon the written order of the holder of such certificate, without charge to the holder, a new certificate evidencing the number of shares of Class B Common Stock or Class C Common Stock, as the case may be, not converted. (v) Reservation. The corporation hereby reserves and shall at all ----------- times reserve and keep available, out of its authorized and unissued shares of Class A Common Stock, to effect conversions, such number of duly authorized shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock and Class C Common Stock. The corporation covenants that all of the shares of Class A Common Stock so issuable shall, when so issued, be duly and validly issued, fully paid and non-assessable, and free from liens and charges with respect to the issue. The corporation will take all such action as may be necessary to assure that all such shares of Class A Common Stock may be so issued without violation of any applicable law or regulation. (d) Elimination of Class Rights. --------------------------- (i) Class B Common Stock. Upon the occurrence of a Class B Voting -------------------- Election, the rights of the Class B Holders to vote as a separate class with respect to any matter (except as required by law) shall cease and be eliminated. The "Class B Voting Election" shall be conclusively deemed to have occurred upon receipt by the Secretary of the corporation of a written consent signed by the record holders of a majority of the outstanding shares of Class B Common Stock electing to eliminate the voting rights of the Class B Common Stock as provided in the preceding sentence and such election shall be irrevocable. Additionally, if at any time any of the Class B Holders own less than the Class B Required Amount (a "Class B Voting Event," and together with a Class B Voting Election, a "Class B Voting Conversion"), the rights of such Class B Holder(s) to vote as a separate class with respect to any matter (except as required by law) shall cease and be eliminated. From and after a Class B Voting Conversion, such Class B -5- Holder(s) shall vote together as a class with the holders of the Class A Common Stock (and, if a Class C Voting Conversion has occurred, the Class C Holder), except as required by law. (ii) Class C Common Stock. Upon the occurrence of a Class C Voting -------------------- Election, the rights of the Class C Holder to vote as a separate class with respect to any matter (except as required by law) shall cease and be eliminated. The "Class C Voting Election" shall be conclusively deemed to have occurred upon receipt by the Secretary of the corporation of a written consent signed by the record holders of a majority of the outstanding shares of Class C Common Stock electing to eliminate the voting rights of the Class C Common Stock as provided in the preceding sentence and such election shall be irrevocable. Additionally, if at any time the Class C Holder (or its Permitted Transferee) owns less than the Class C Required Amount (a "Class C Voting Event," and together with a Class C Voting Election, a "Class C Voting Conversion"), the rights of the Class C Holder to vote as a separate class with respect to any matter (except as required by law) shall cease and be eliminated. From and after a Class C Voting Conversion, the Class C Holder shall vote together as a class with the holders of the Class A Common Stock (and, if a Class B Voting Conversion has occurred, the Class B Holders), except as required by law. 4.4 Preferred Stock. The Board is authorized, subject to limitations --------------- prescribed by law and the provisions of this First Restated Certificate of Incorporation and the bylaws, by resolution or resolutions of the Board, from time to time to provide for the issuance of the shares of the Preferred Stock in one or more series and to establish the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The authority of the Board with respect to each series shall include, without limitation, determination of the following: (i) the number of shares constituting that series and the distinctive designation of that series; (ii) the dividend rate, if any, on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series; (iii) whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; (iv) whether that series shall be subject to conversion or exchange, and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the Board shall determine; (v) whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the type and amount of consideration per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; (vi) whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; (vii) the rights, if any, of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; and (viii) any other relative rights, preferences and limitations, if any, of that series. -6- 4.5. Election of Directors. The directors of the corporation shall be --------------------- elected as follows: (a) Unless a Class C Voting Conversion has occurred, the holders of the Class C Common Stock, voting as a separate class, shall be entitled to elect two (2) directors to the Board. The directors that the holders of the Class C Common Stock have the right to elect hereunder are referred to as the "Class C Director(s)." Unless a Class C Voting Conversion has occurred, the holders of the Class C Common Stock, voting as a separate class, shall also have the sole right to remove any Class C Director without cause. Unless a Class C Voting Conversion has occurred, any vacancy in the office of a Class C Director shall be filled solely by (i) the holders of the Class C Common Stock, voting as a separate class, or (ii) the sole Class C Director. At such time as a Class C Voting Conversion has occurred, the voting rights of the holders of the Class C Common Stock pursuant to this Section 4.5(a) shall terminate and the directors formerly denominated Class C Directors shall be redesignated Class A/B Directors and shall be elected pursuant to the provisions of Section 4.5(b) below. (b) The remainder of the Entire Board after the elections described in Section 4.5(a) above shall be elected by all holders of the Class A Common Stock and Class B Common Stock (and if a Class C Voting Conversion has occurred, the Class C Common Stock) voting together as a single class, and shall be referred to herein as the "Class A/B Director(s)." All holders of Class A Common Stock and Class B Common Stock (and if a Class C Voting Conversion has occurred, the Class C Common Stock), voting together as a single class, shall also have the sole right to remove any of the Class A/B Directors without cause. Any vacancy in the office of a Class A/B Director or any newly-created Class A/B directorship shall be filled solely by the holders of the Class A Common Stock and Class B Common Stock (and if a Class C Voting Conversion has occurred, the Class C Common Stock), voting together as a single class. The number of Class A/B Directors shall be increased by the number of directors formerly denominated Class C Directors pursuant to Section 4.5(a) above upon the occurrence of a Class C Voting Conversion. ARTICLE 5. Except as otherwise provided herein, in furtherance and not in limitation of the powers conferred by statute, the Board is expressly authorized to make, repeal, alter, amend and rescind any or all of the bylaws of the corporation, but the stockholders may make additional bylaws and may repeal, alter, amend or rescind any bylaw whether adopted by them or otherwise. ARTICLE 6. The number of directors of the corporation shall be fixed from time to time by, or in the manner provided in, the bylaws or amendment thereof duly adopted by the Board or by the stockholders. -7- ARTICLE 7. Elections of directors need not be by written ballot except and to the extent provided in the bylaws of the corporation. ARTICLE 8. Meetings of the stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provisions contained in applicable statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the bylaws of the corporation. ARTICLE 9. Directors of the corporation shall, to the fullest extent permitted by the Delaware General Corporation Law as it now exists or as it may hereafter be amended, not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article 9 to authorize corporate action further eliminating or limiting the personal liability of directors, then the personal liability of directors of the corporation shall be further eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law. Any repeal or modification of any of the foregoing provisions by the stockholders of the corporation, or the adoption of any provision hereof inconsistent with this Article 9, shall not adversely affect any right or protection of directors of the corporation existing at the time of, or increase the liability of directors of the corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification. ARTICLE 10. The corporation reserves the right to amend, alter, change or repeal any provision contained herein in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders, directors and officers of the corporation herein are granted subject to such revision. ARTICLE 11. 11.1. Right to Indemnification. Each person who was or is made party or is ------------------------ threatened to be made a party to or is otherwise involved (including involvement as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by -8- reason of the fact that he or she is or was a director or officer of the corporation or, while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation (including any subsidiary of the corporation) or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide for broader indemnification rights than permitted as of the date this First Restated Certificate of Incorporation is filed with the State of Delaware), against all expense, liability and loss (including attorney's fees, judgments, fines, excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that except as provided in Section 11.2 below, with respect to proceedings to enforce rights to indemnification, the corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred in this Section 11.1 shall be a contract right and shall include the obligation of the corporation to pay the expenses incurred in defending any such proceeding in advance of its final disposition (an "advance of expenses"); provided, however, that if and to the extent that the Board requires, an advance of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the corporation of an undertaking (an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this Section 11.1 or otherwise. The corporation may, by action of its Board, provide indemnification to employees and agents of the corporation with the same or lesser scope and effect as the foregoing indemnification of directors and officers. 11.2. Procedure for Indemnification. Any indemnification of a director or ----------------------------- officer of the corporation or advance of expenses under Section 11.1 above shall be made promptly, and in any event within forty-five (45) days (or, in the case of an advance of expenses, twenty (20) days) upon the written request of the director or officer. If a determination by the corporation that the director or officer is entitled to indemnification pursuant to this Article 11 is required, and the corporation fails to respond within sixty (60) days to a written request for indemnity, the corporation shall be deemed to have approved the request. If the corporation denies a written request for indemnification or advance of expenses, in whole or in part, or if payment in full pursuant to such request is not made within forty-five (45) days (or, in the case of an advance of expenses, twenty days), the right to indemnification or advances as granted by this Article 11 -9- shall be enforceable by the director or officer in any court of competent jurisdiction. Such person's costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in such action shall also be indemnified by the corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of expenses where the undertaking required pursuant to Section 11.1 above, if any, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the corporation. Neither the failure of the corporation (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Delaware General Corporation Law, nor an actual determination by the corporation (including its Board, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. The procedure for indemnification of other employees and agents for whom indemnification is provided pursuant to Section 11.1 above shall be the same procedure set forth in this Section 11.2 for directors or officers, unless otherwise set forth in the action of the Board providing for indemnification for such employee or agent. 11.3. Insurance. The corporation may purchase and maintain insurance on its --------- own behalf and on behalf of any person who is or was a director, officer, employee or agent of the corporation or was serving at the request of the corporation as a director, officer, employee or agent of another corporation (including any subsidiary of the corporation), partnership, joint venture, trust or other enterprise against any expense, liability or loss asserted against him or her and incurred by him or her in any such capacity, whether or not the corporation would have the power to indemnify such person against such expenses, liability or loss under the Delaware General Corporation Law. 11.4. Service for Subsidiaries. Any person serving as a director, officer, ------------------------ employee or agent of another corporation, partnership, limited liability company, joint venture or other enterprise, at least fifty percent (50%) of whose equity interests are owned by the corporation (a "subsidiary" for purposes of this Article 11) shall be conclusively presumed to be serving in such capacity at the request of the corporation. 11.5. Reliance. Persons who after the date of the adoption of this -------- provision are directors or officers of the corporation or who, while a director or officer of the corporation, or a director, officer, employee or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this Article 11 in entering into or continuing such service. The rights to indemnification and to the advance of -10- expenses conferred in this Article 11 shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof. 11.6. Non-Exclusivity of Rights. The rights to indemnification and to the ------------------------- advance of expenses conferred in this Article 11 shall not be exclusive of any other right which any person may have or hereafter acquire under this First Restated Certificate of Incorporation or under any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise. 11.7. Merger or Consolidation. For purposes of this Article 11, references ----------------------- to "the corporation" shall include any constituent corporation (including any constituent of a constituent) absorbed into the corporation in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article 11 with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued. ARTICLE 12. 12.1. Foreign Ownership Restrictions. ------------------------------ (a) The corporation shall at all times be in compliance with 47 C.F.R. (S) 310(a) and (b) and interpretations thereof by the FCC (the "Foreign Ownership Restrictions"). The Board shall have all powers necessary to insure compliance with this Article 12, including, without limitation, the redemption of shares of capital stock the transfer or ownership of which resulted in a violation of the Foreign Ownership Restrictions; provided, however, that the corporation may, at the request of a stockholder, first seek a waiver of such Foreign Ownership Restrictions from the FCC in the event that any violation thereof results from open-market purchases of publicly traded shares of the corporation, whether shares of capital stock in the corporation or shares of capital stock in an entity which holds capital stock of the Corporation, the foreign ownership of which is attributed to the corporation by operation of the rules of the FCC. As a last resort, the Board shall be required to redeem the shares of capital stock the transfer or ownership of which resulted in the violation of the Foreign Ownership Restrictions to insure such compliance (subject, however, to Sections 12(b) and (c) below). (b) In exercising powers or taking actions to achieve or preserve such compliance, the Board (acting in good faith and based upon advice of outside counsel expert in FCC matters) shall select the method that is least detrimental to the stockholders of the corporation affected by the action. In the case of redemption by the corporation of shares of different classes, the shares of the class having greater voting rights shall occur first. -11- (c) If the Board, pursuant to Section 12(a) above, should invoke its powers to redeem any of the capital stock held by a party in order to secure compliance with the Foreign Ownership Restrictions, such redemption shall be at fair market value as determined by a third-party valuation expert retained by the Board, whose costs and expenses shall be charged to the party from whom the shares are redeemed. 12.2. FCC Compliance Restrictions. The corporation shall at all times be --------------------------- in compliance with, and shall not take any action, nor shall it cause any act to be done, that would cause it to be in violation of the limitations on ownership of mass media, cable television and newspaper (or such other interests as the legislation or the FCC shall require in the future) interests, as set forth in the Communications Act or the rules of the FCC. THIRD: That the foregoing amendment and restatement was duly adopted in accordance with the provisions of Section 242 and Section 245 of the Delaware General Corporation Law by obtaining a majority vote of the Common Stock in favor of said amendment and restatement in the manner set forth in Section 228 of the Delaware General Corporation Law. THIRD: That the foregoing amendment and restatement was duly adopted in accordance with the provisions of Section 242 and Section 245 of the Delaware General Corporation law by obtaining a majority vote of the Common stock in favor of said amendment and restatement in the manner set forth in section 228 of the Delaware General Corporation Law. [Remainder of Page Intentionally Left Blank] -12- IN WITNESS WHEREOF, this First Restated Certificate of Incorporation has been executed by the President and Secretary of the corporation effective as of this 24th day of July, 2000. /s/ Philip C. Wilkinson -------------------------------------------- Philip C. Wilkinson, President /s/ Walter F. Ulloa --------------------------------------------- Walter F. Ulloa, Secretary [Signature Page to First Restated Certificateof Incorporation of Entravision Communications Corporation] -13- EX-3.2 6 0006.txt FIRST AMENDED AND RESTATED BYLAWS OF REGISTRANT EXHIBIT 3.2 ================================================================================ FIRST AMENDED AND RESTATED BYLAWS OF ENTRAVISION COMMUNICATIONS CORPORATION a Delaware corporation ================================================================================ FIRST AMENDED AND RESTATED BYLAWS OF ENTRAVISION COMMUNICATIONS CORPORATION a Delaware corporation ARTICLE 1. OFFICES 1.1. Registered Office. The registered office of Entravision ----------------- Communications Corporation, a Delaware corporation, shall be in the State of Delaware, located at Incorporating Services, Ltd. 15 East North Street, County of Kent, Dover, Delaware 19903-0899 and the name of the resident agent in charge thereof is the agent named in the Certificate of Incorporation of the corporation (as may be amended from time to time, the "Certificate of Incorporation") until changed by the Board of Directors (the "Board"). 1.2. Principal Office. The principal office for the transaction of the ---------------- business of the corporation shall be at such place as may be established by the Board. The Board is granted full power and authority to change said principal office from one location to another. 1.3. Other Offices. The corporation may also have an office or offices at ------------- such other places, either within or without the State of Delaware, as the Board may from time to time designate or the business of the corporation may require. ARTICLE 2. MEETINGS OF STOCKHOLDERS 2.1. Place of Meetings. Meetings of stockholders shall be held at such ----------------- time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. 2.2. Annual Meetings. An annual meeting of stockholders shall be held for --------------- the election of directors at such date, time and place, either within or without the State of Delaware, as may be designated by resolution of the Board from time to time. Any other proper business may be transacted at the annual meeting. 2.3. Special Meetings. Special meetings of the stockholders of the ---------------- corporation for any purpose or purposes may be called at any time by the Board and shall be called by the President or Secretary at the request in writing of (i) the Chairman of the Board, (ii) a majority of the Board or (iii) stockholders owning a majority in voting power of the issued and outstanding shares of Common Stock of the corporation. 2.4. Stockholder Lists. The officer who has charge of the stock ledger of ----------------- the corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete -1- list, by class, of stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting during ordinary business hours for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or at the place of the meeting, and the list shall also be available at the meeting during the whole time thereof and may be inspected by any stockholder who is present. 2.5. Notice of Meetings. Written notice of each meeting of stockholders, ------------------ whether annual or special, stating the place, date and hour of the meeting, and in the case of a special meeting, the purpose of such meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) (or such other period as may be required under applicable law) nor more than sixty (60) days before the date of the meeting. 2.6. Quorum and Adjournment. Except as set forth below, the holders of a ---------------------- majority in voting interest of capital stock of the corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for holding all meetings of stockholders, except as otherwise provided by applicable law, these Bylaws or the Certificate of Incorporation. Notwithstanding the above, holders of a majority of the voting interest of the corporation's Class A Common Stock, Class B Common Stock or Class C Common Stock, as the case may be, shall each constitute a quorum for the holding of a meeting of stockholders of such class(es) for the sole purpose of electing or removing without cause the director or directors that such class(es) has the right to elect or to fill a vacancy or a newly created directorship which such class has a right to fill. If it shall appear that such quorum is not present or represented at any meeting of stockholders, the Chairman of the meeting shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.7. Voting. In all matters other than the election of directors, the ------ vote of the holders of a majority in voting interest of the capital stock of the corporation as defined in the corporation's Certificate of Incorporation that are present in person or represented by proxy at a meeting at which a quorum is present, shall decide any question brought before such meeting of stockholders, unless the question is one upon which by express provision of applicable law, of the Certificate of Incorporation or of these Bylaws a different vote is required, in which case such express provision shall govern and control the decision of such question. Each director of the corporation shall be elected (i) by a plurality of the votes of the shares of the class(es) of stock which has the right to elect such director, present in person or represented by proxy at a meeting at which a quorum is present or (ii) by the written consent of the holders of a majority in voting -2- interest of the outstanding shares of such class(es). Each Class A and Class C stockholder shall be entitled to cast one (1) vote for each share of the capital stock entitled to vote held by such stockholder upon the matter in question, and each Class B stockholder shall be entitled to cast ten (10) votes for each share of the capital stock entitled to vote held by such stockholders. The presiding officer at a meeting of stockholders, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot. 2.8. Proxies. Each stockholder entitled to vote at a meeting of ------- stockholders may authorize another person or persons to act for him or her by proxy, but no proxy shall be voted or acted upon after three (3) years from its date, unless the person executing the proxy specifies therein a longer period of time for which it is to continue in force. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by delivering a proxy in accordance with applicable law bearing a later date to the Secretary of the corporation. 2.9. Inspector of Election. The Board shall, if required by law, appoint --------------------- an Inspector or Inspectors of Election for any meeting of stockholders. Such Inspectors shall decide upon the qualification of the voters and report the number of shares represented at the meeting and entitled to vote, shall conduct the voting and accept the votes and when the voting is completed shall ascertain and report the number of shares voted respectively for and against each position upon which a vote is taken by ballot. An Inspector need not be a stockholder, and any officer of the corporation may be an Inspector on any position other than a vote for or against a proposal in which he or she shall have a material interest. 2.10. Action Without Meeting. Subject to Section 228 of the Delaware ---------------------- General Corporation Law, any action which may be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing setting forth the action so taken, shall be signed by the holders of outstanding capital stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall, to the extent required by law, be given to those stockholders who have not consented in writing. ARTICLE 3. DIRECTORS -3- 3.1. Powers. Subject to any limitations set forth in the Certificate of ------ Incorporation, the Board shall have the power to manage or direct the management of the property, business and affairs of the corporation and, except as expressly limited by law, to exercise all of its corporate powers. Subject to applicable law, the Board may establish procedures and rules or may authorize the Chairman of any meeting of stockholders to establish procedures and rules, for the fair and orderly conduct of any stockholders' meeting, including without limitation, registration of the stockholders attending the meeting, adoption of an agenda, establishing the order of business at the meeting, recessing and adjourning the meeting for the purposes of tabulating any votes and receiving the result thereof, the timing of the opening and closing of the polls and the physical layout of the facilities for the meeting. 3.2. Number, Term and Classes. The Board shall consist of not less than ------------------------ seven (7) nor more than eleven (11) members, as shall be determined from time to time by resolution of the Board. Until otherwise determined by such resolution, the Board shall consist of seven (7) members. Except as provided in the Certificate of Incorporation, there shall be two (2) classes of directors: Class A/B Directors and Class C Directors, all of which shall be elected as provided in the Certificate of Incorporation. 3.3. Qualifications. Directors need not be stockholders, and each -------------- director shall serve until his or her successor is elected and qualified or until his or her earlier death, retirement, resignation or removal. 3.4. Vacancies and Newly-Created Directorships. Any vacancy on the Board ----------------------------------------- caused by death, resignation or removal or a newly-created directorship may be filled as provided in the Certificate of Incorporation. A director so elected to fill a vacancy or newly-created directorship shall serve until his or her successor is elected and qualified or until his or her earlier death, retirement, resignation or removal. 3.5. Regular Meetings. Regular meetings of the Board shall be held ---------------- without call or notice at such time and place within or without the State of Delaware as shall from time to time be fixed by standing resolution of the Board. 3.6. Special Meetings. Special meetings of the Board may be held at any ---------------- time or place within or without the State of Delaware whenever called by the Chairman of the Board, a majority of the Board or any Class C Director. Notice of a special meeting of the Board shall be given to all directors by the person or persons calling the meeting at least seventy-two (72) hours before the special meeting. 3.7. Telephonic Meetings. Members of the Board or any committee thereof ------------------- may, and shall be given the opportunity to, participate in a regular or special meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this section shall constitute presence in person at such meeting. -4- 3.8. Quorum. At all meetings of the Board, a majority of the Entire Board ------ (as defined in the Certificate of Incorporation) shall constitute a quorum for the transaction of business. Except as otherwise set forth in these Bylaws, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. Any meeting of the Board may be adjourned to meet again at a stated day and hour. Notice of any adjourned meeting need not be given. 3.9. Fees and Expenses. Each director and each member of a committee of ----------------- the Board, shall receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending meetings. Each director and each member of a committee of the Board, in each case who is neither (i) an owner of more than a five percent (5%) direct or indirect beneficial interest in the stock of the corporation (or the spouse, child or other family member of such an owner (a "Related Person")); (ii) an employee (a) of the corporation, (b) of any direct or indirect subsidiary of the corporation or (c) of such an owner or Related Person or an Affiliate (as defined in the Certificate of Incorporation of the corporation) of such owner or Related Person; nor (iii) any person who controls any such owner and the spouse, child or other family members of any such person, shall also receive a fee to be determined by the Board for attending any meeting of the Board or any such committee (provided that no director shall be entitled to receive such fee if such director is receiving a fee for attending a meeting of the Board or any other committee of the corporation held on the same day). Other than as set forth above, no director or stockholder of the corporation shall be reimbursed for any expenses incurred by it in its role as an investor or director. 3.10. Committees. Subject to the Certificate of Incorporation, the Board ---------- may, by resolution passed by a majority of the Entire Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee. At least one Class C Director shall sit on the compensation and audit committees of the Board, if any. Any such audit or compensation committee, to the extent provided in a resolution of the Board and to the extent permitted by law and not inconsistent with the Certificate of Incorporation, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. 3.11. Action Without Meetings. Unless otherwise restricted by applicable ----------------------- law, the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or committee. 3.12. Super Majority Board Approvals. Without the approval of the Board ------------------------------ (or where permitted under applicable law, a duly constituted committee of the Board which includes at least -5- one Class C Director) by a vote which includes, in addition to any other required vote of directors, the affirmative vote of at least one (1) of the Class C Directors (so long as a Class C Voting Conversion (as defined in the Certificate of Incorporation) has not occurred) on the Board or such committee, as the case may be, the corporation shall not directly or through its subsidiaries engage in any of the following acts or transactions: (a) create, designate, issue or sell out of treasury any Common Stock or Preferred Stock of, or other equity interests in, the corporation, any securities that are convertible into, exchangeable for, or participate in dividends with, the Common Stock or Preferred Stock of, or other equity interests in, the corporation, or any options or conversion, exchange or other rights in respect of the foregoing (other than (i) shares of Common Stock issued upon conversion of shares of Preferred Stock or as a dividend or distribution on Preferred Stock, (ii) shares of Common Stock issued to banks, lenders and equipment lessors in connection with debt financings or equipment leases, (iii) shares of Common Stock issued for consideration other than cash in connection with mergers, consolidations, acquisitions of assets and other acquisitions as approved by the Board, (iv) shares of Common Stock issuable or issued to officers, directors, employees of, or consultants to, the corporation pursuant to any equity incentive plan and/or stock option plan of the corporation, subject to appropriate adjustments for stock splits, stock dividend combinations or other recapitalizations, (v) shares of Common Stock issued or issuable in the initial public offering of the corporation or upon exercise of warrants or rights granted to underwriters in connection with such initial public offering or (vi) shares of Common Stock issued by way of dividend or other distribution on shares of Common Stock); (b) amend this Article 3, Section 3.12 of these Bylaws by action of the Board; (c) acquire or dispose of assets in any one transaction or series of related transactions for a purchase or sale price in excess of $25,000,000; or (d) incur debt (other than capitalized lease obligations) as of any date in an aggregate amount outstanding in excess of (x) the corporation's EBITDA for the twelve (12) month period ending on the last day of the quarter preceding such date, multiplied by (y) five (5). For purposes of this subparagraph (iv), EBITDA means the sum of net income, total depreciation expense, total amortization expense, interest expense and taxes as determined in conformity with generally accepted accounting principles; provided, however, that in the case of debt incurred for the purposes of an acquisition, EBITDA shall be determined on a pro-forma basis giving effect to such acquisition. ARTICLE 4. OFFICERS 4.1. Officers. The corporation shall have a Chairman of the Board, a -------- President, one or more Vice Presidents, a Secretary and a Treasurer. The corporation may also have, at the discretion of the Board, one or more Assistant Secretaries, one or more Assistant Treasurers and -6- such other officers as may be elected or appointed in accordance with the provisions of Section 4.2 below. Any two or more of such offices may be held by the same person. 4.2. Election. The officers of the corporation shall be elected annually -------- by the Board and, subject to whatever rights an officer may have under a contract of employment with the corporation, all officers shall serve at the pleasure of the Board. 4.3. Removal and Resignation. Any officer may be removed, either with or ----------------------- without cause, by the Board at any time. Any such removal shall be without prejudice to the rights, if any, of the officer under any contract of employment of the officer. Any officer may resign at any time by giving written notice to the corporation, but without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 4.4. Vacancies. A vacancy in any office because of death, resignation, --------- removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular election or appointment to such office. 4.5. Chairman of the Board. The Chairman of the Board shall preside at --------------------- all meetings of the stockholders and of the Board and shall be the Chief Executive Officer of the corporation unless the President is the Chief Executive Officer. 4.6. President. The President shall be the Chief Operating Officer of the --------- corporation and, if designated by the Board, the Chief Executive Officer of the corporation. Subject to the control of the Board (and to the Chief Executive Officer, if the President does not hold such office) and to the powers vested by the Board in any committee or committees appointed by the Board, the President shall have general supervision, direction and control of the business and officers of the corporation. The President shall have the general powers and duties of management usually vested in the Chief Executive Officer of a corporation and shall have such other powers and duties as may be prescribed by the Board or these Bylaws. 4.7. Vice Presidents. In the absence or disability of the President, the --------------- Vice Presidents, in order of their rank as fixed by the Board, or, if not ranked, the Vice President designated by the Board shall perform all the duties of the President and when so acting shall have all of the powers of and be subject to all of the restrictions upon the President. The Vice Presidents shall have such other powers and perform such duties as may be prescribed for them, respectively, from time to time, by the Board, the President or these Bylaws. 4.8. Secretary. The Secretary shall keep, or cause to be kept, at the --------- principal executive office and such other place as the Board may order, a book of minutes of all meetings of stockholders, the Board and its committees, with the time and place of holding, whether regular -7- or special, and if special, how authorized, the notice thereof given, the names of those present at Board and committee meetings, the number of shares present or represented at stockholders' meetings and the proceedings thereof. The Secretary shall keep, or cause to be kept, a copy of these Bylaws of the corporation at the principal executive office or business office. The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the corporation's transfer agent or registrar, if one be appointed, a share register or a duplicate share register showing the names of the stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board and any committees thereof required by these Bylaws or by law to be given, shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board. 4.9. Treasurer. The Treasurer is the Chief Financial Officer of the --------- corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation and shall send or cause to be sent to the stockholders of the corporation such financial statements and reports as are by law or these Bylaws required to be sent to them. The books of account shall at all times be open to inspection by any director. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board, shall render to the President and the directors, whenever they request it, an account of all transactions as Treasurer and of the financial condition of the corporation and shall have such other powers and perform such other duties as may be prescribed by the Board. ARTICLE 5. STOCK CERTIFICATES 5.1. Form of Stock Certificate. Every holder of capital stock in the ------------------------- corporation shall be entitled to have a certificate signed by, or in the name of, the corporation by the Chairman of the Board, the President, the Chief Executive Officer or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the corporation certifying the number of shares owned by him, her or it in the corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of the issue. -8- 5.2. Transfers of Stock. Subject to any restrictions on transfer ------------------ applicable thereto, upon surrender to the corporation or a transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. 5.3. Lost, Stolen or Destroyed Certificates. The corporation may direct a -------------------------------------- new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of the fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 5.4. Record Date. In order that the corporation may determine the ----------- stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which record date: (i) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; (ii) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten (10) days from the date upon which the resolution fixing the record date is adopted by the Board; and (iii) in the case of any other action, shall not be more than sixty (10) days prior to such other action. If no record date is fixed: (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (b) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation in accordance with applicable law, or, if prior action by the Board is required by law, shall be at the close of business on the day on which the Board adopts the resolution taking such prior action; and (c) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. -9- 5.5. Registered Stockholders. The corporation shall be entitled to treat ----------------------- the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by applicable law. ARTICLE 6. NOTICES 6.1. Manner of Notice. Whenever under the provisions of applicable law, ---------------- the Certificate of Incorporation or these Bylaws, notice is required to be given to any director, committee member, officer or stockholder, it shall not be construed to mean personal notice, but such notice may be given, in the case of stockholders, in writing, by mail, by depositing the same in the post office or letter box, in a postpaid sealed wrapper, addressed to such stockholder, at such address as appears on the books of the corporation, and, in the case of directors, committee members and officers, by telephone, by facsimile or other electronic transmission, or by recognized delivery service to the last business address known to the Secretary of the corporation, and such notice shall be deemed to be given at the time when the same shall be thus mailed, telephoned, sent via facsimile, transmitted or delivered. 6.2. Waiver of Notice. Whenever any notice is required to be given under ---------------- the provisions of applicable law, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE 7. AMENDMENTS 7.1. Amendments. Subject to the provisions of the Certificate of ---------- Incorporation, the Board shall have the power to make, adopt, alter, amend and repeal from time to time these Bylaws, subject to the right of the stockholders entitled to vote with respect thereto to adopt, alter, amend and repeal Bylaws made by the Board, provided no amendment made by the Board may adversely affect the rights accorded to the holders of the Class B Common Stock or the Class C Common Stock which affects such class differently from the other classes of Common Stock of the corporation without the consent of a majority of the Class A/B Directors or a majority of the Class C Directors (unless a Class C Voting Conversion has occurred), as the case may be. ARTICLE 8. GENERAL PROVISIONS 8.1. Fiscal Year. The fiscal year of the corporation shall be determined ----------- by resolution of the Board. -10- 8.2. Seal. The corporate seal shall have the name of the corporation ---- inscribed thereon and shall be in such form as may be approved from time to time by the Board. 8.3. Waiver of Notice of Meetings of Stockholders, Directors and ----------------------------------------------------------- Committees. Any written waiver of notice, signed by the person entitled to - ---------- notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice. 8.4. Form of Records. Any records maintained by the corporation in the --------------- regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. 8.5. Representation of Shares of Other Corporations. The Chief Executive ---------------------------------------------- Officer or any other officer or officers authorized by the Board are each authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officer. 8.6. Dividends. Dividends upon the capital stock of the corporation, --------- subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 8.7. Checks. All checks or demands for money and notes of the corporation ------ shall be signed by such officer or officers or such other person or persons as the Board may from time to time designate. 8.8. Loans to Officers. The corporation may lend money to, or guarantee ----------------- any obligation of, or otherwise assist any officer or other employee of the corporation or of its -11- subsidiaries, including any officer or employee who is a director of the corporation or its subsidiaries, whenever, in the judgment of the Board, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. 8.9. Inspection of Books and Records. Any stockholder of record, in ------------------------------- person or by attorney or other agent, shall, upon written demand upon oath stating the purpose thereof, have the right during the usual hours of business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean any purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in the State of Delaware or at its principal place of business. 8.10. Section Headings. Section headings in these bylaws are for ---------------- convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein. 8.11. Inconsistent Provisions. In the event that any provision of these ----------------------- bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the Delaware General Corporation Law or any other applicable law, the provision of these bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect. [Remainder of Page Intentionally Left Blank] -12- CERTIFICATE OF SECRETARY OF ENTRAVISION COMMUNICATIONS CORPORATION The undersigned, Walter F. Ulloa, hereby certifies that he the duly elected and acting Secretary of Entravision Communications Corporation, a Delaware corporation (the "Company"), and that the First Amended and Restated Bylaws attached hereto constitute the First Amended and Restated Bylaws of the Company as duly adopted by the Board of Directors of the Company by unanimous written consent effective as of July 24, 2000. IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name as of this 24th day of July, 2000. /s/ Walter F. Ulloa --------------------------------------------- Walter F. Ulloa, Secretary -13- EX-10.10 7 0007.txt EMPLOYMENT AGREEMENT FOR WALTER F. ULLOA EXHIBIT 10.10 EMPLOYMENT AGREEMENT This Employment Agreement (the "Agreement") entered into as of August 1, 2000, by and between Entravision Communications Corporation, a Delaware corporation (together with its successors and assigns permitted under the Agreement) (herein the "Company"), and Walter F. Ulloa (herein "Executive") with reference to the following facts: WHEREAS, Executive has been employed pursuant to the terms of that certain Employment Agreement by and between Entravision Communications Company, L.L.C. (as predecessor to the Company) and Executive dated October 1, 1996 (the "Original Agreement"). WHEREAS, the Company and Executive desire to enter into an agreement to provide for Executive's employment by the Company, upon the terms and conditions set forth herein. WHEREAS, the Company and Executive desire to supersede and terminate the Original Agreement in its entirety. NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Employment. The Company hereby agrees to Executive's employment, and ---------- Executive hereby accepts such employment and agrees to perform his duties and responsibilities, in accordance with the terms and conditions hereinafter set forth. 1.1 Employment Term. The term of Executive's employment under this --------------- Agreement shall commence as of the date hereof (the "Effective Date") and shall continue until the fifth (5/th/) anniversary of the Effective Date, unless earlier terminated in accordance with Section 4 or Section 5 hereof. The period commencing as of the Effective Date and ending on the fifth (5/th/) anniversary of the Effective Date, or such later date to which the term of Executive's employment under the Agreement shall have been extended is hereinafter referred to as the "Employment Term." 1.2 Duties and Responsibilities. Executive shall serve as Chairman --------------------------- and Chief Executive Officer of the Company. During the Employment Term, Executive shall perform all duties and accept all responsibilities incident to such position or other appropriate duties as may be assigned to him by the Company's Board of Directors (the "Board"). Except to attend to those business interests of Executive set forth on Schedule "1.2" attached hereto and incorporated herein by this reference and any Opportunity (as defined in Section 3.2 hereof) which Executive pursues pursuant to Section 3.2, Executive shall devote his full productive time and best efforts to the performing of his duties and responsibilities under this Section 1.2. 1.3 Base Salary. For all of the services rendered by Executive ----------- hereunder for the first calendar year following the Effective Date, the Company shall pay Executive an annual base salary (his "Base Salary") of Six Hundred Thousand Dollars ($600,000), payable in installments at such times as the Company shall pay its other senior level executives (but in any event no less often than monthly). On each of the first four (4) anniversaries of the Effective Date, Executive's base salary shall be increased by an increment of Fifty Thousand Dollars ($50,000). 1.4 Annual Bonus. In addition to the Base Salary provided for in ------------ Section 1.3 above, the Company shall pay Executive an annual bonus (the "Annual Bonus") in an amount equal to: (i) seventy-five percent (75%) of Executive's then-current Base Salary each calendar year during the Employment Term if the total Company annual growth rate of earnings before interest, taxes, depreciation and amortization as computed in accordance with generally accepted accounting principles ("EBITDA") (pro forma as defined by the Board's Compensation Committee) exceeds twenty percent (20%) over the previous calendar year, sixty-three percent (63%) if EBITDA growth rate exceeds seventeen percent (17%) over the previous calendar year, and fifty percent (50%) of the Base Salary will be paid to Executive if EBITDA growth rate exceeds fourteen percent (14%) over the previous calendar year and (ii) up to an additional twenty-five percent (25%) of Executive's Base Salary may be paid at the end of each calendar year based upon the discretion of the Compensation Committee of the Company's Board taking into account achievement of operating and financial performance goals and the increase in stockholder value. The Annual Bonus for any partial calendar year within the Employment Term shall be prorated and the EBITDA growth targets shall be adjusted proportionately. The Annual Bonus will be payable promptly after the issuance of the Company's year-end audited financial statements. 1.5 Stock Options. Executive shall be eligible for grants of stock ------------- options, restricted stock and other equity incentives pursuant to the Entravision Communications Corporation 2000 Omnibus Equity Incentive Plan on the same terms applicable to the Company's other executive officers. 1.6 Automobile Allowance. During the Employment Term, Executive -------------------- shall be entitled to receive a One Thousand Dollar ($1,000) monthly automobile allowance, payable monthly in advance, which shall include all costs attendant to the use of the automobile, including, but not limited to, liability and property insurance coverage, costs of maintenance and fuel. Notwithstanding the foregoing, the amount of the monthly automobile allowance shall be reviewed by the Company annually. 1.7 Benefit Coverages. During the Employment Term, Company shall ----------------- provide medical and dental coverage for Executive and Executive's dependents at no cost to Executive. During such Employment Term, Executive shall also be entitled to participate in all employee pension and welfare benefit plans and programs made available to the Company's senior level executives as a group or to its employees generally, as such plans or programs may be in effect from time to time (the "Benefit Coverages"), including without limitation, pension, profit sharing, savings and other retirement plans or programs, short-term and long- term disability and life insurance plans, accidental death and dismemberment protection and travel accident insurance. -2- 1.8 Reimbursement of Expenses; Vacation; Residence. Executive shall ---------------------------------------------- be provided with full and prompt reimbursement of expenses related to his employment by the Company (including mobile telephone usage) on a basis no less favorable than that which may be authorized from time to time by the Board, in its sole discretion, for senior level executives as a group, and entitled to not less than four (4) weeks vacation per year and holidays in accordance with the Company's normal personnel policies. Executive currently resides in the Los Angeles, California area, and the Company agrees that he shall not be required to relocate his residence from that area without his prior written consent (which may be withheld in his sole discretion), or from any other area to which he may voluntarily move with the Company's prior written consent, during the Employment Term. 1.9 Tax Withholding. The Company may withhold from any compensation --------------- or other benefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 1.10 Life Insurance. The Company may obtain a "key man" life -------------- insurance policy, or policies, on the life of Executive in face amounts to be determined by the Company. The Company shall be the owner and beneficiary of such life insurance policy; provided, however, upon the termination of Executive's employment with the Company for any reason, the Company shall, upon Executive's request, assign such life insurance to Executive, subject to the Executive's obligation to maintain such life insurance after the Employment Term. Executive agrees to submit to a physical examination at any reasonable time requested by the Company for the purpose of obtaining life insurance on the life of Executive; provided, however, that the Company shall bear the entire cost of such examination. 2. Indemnification; Insurance. The Company shall indemnify the Executive -------------------------- to the fullest extent allowed by applicable law pursuant to that certain Indemnification Agreement dated July 1, 2000, between the Executive and the Company attached hereto as Exhibit "A" and incorporated herein by this reference, as the same may be amended from time to time. The Executive shall be covered by the Company's director and officer liability insurance policy, if any. 3. Proprietary Information; Non-Compete. ------------------------------------ 3.1 Confidential Information. Executive recognizes and acknowledges ------------------------ that by reason of his employment by and service to the Company during and, if applicable, after the Employment Term, he has had and will continue to have access to certain confidential and proprietary information relating to the Company's business ("Confidential Information"). Executive covenants that he will not, unless expressly authorized in writing by the Company, at any time during the course of his employment divulge or disclose any Confidential Information to any person, firm or corporation except in connection with the performance of his duties for the Company and in a manner consistent with the Company's policies regarding Confidential Information. Executive also covenants that at any time after the termination of such employment, directly or indirectly, he will not divulge or disclose any Confidential Information to any person, firm or corporation, unless such information is in the public domain through no -3- fault of Executive or except when required to do so by law. All written Confidential Information (including without limitation, in any computer or other electronic format) which comes into Executive's possession during the course of his employment shall remain the property of the Company. Except as required in the performance of Executive's duties for the Company, or unless expressly authorized in writing by the Company, Executive shall not remove any written Confidential Information from the Company's premises, except in connection with the performance of his duties for the Company and in a manner consistent with the Company's policies regarding Confidential Information. Upon termination of Executive's employment, Executive agrees immediately to return to the Company all written Confidential Information in his possession. 3.2 Non-Compete. Except for those existing business activities set ----------- forth on Schedule "1.2" attached hereto, Executive shall not engage in, independently or with others, any business activity of any type or description that is in competition with the Company. Notwithstanding the foregoing, Executive may own securities of publicly traded or private companies competitive with the business of Company so long as such shares do not constitute five percent (5%) or more of the outstanding securities of any such company. Executive further agrees that for as long as the Agreement remains in effect and for a period of twelve (12) months after the termination of this Agreement by Company for Cause or by Executive after a Constructive Termination Without Cause (as defined in Section 4.4 below), Executive will not induce or attempt to induce, directly or indirectly, any person to leave his or her employment with Company. 4. Termination. The Employment Term shall terminate upon the occurrence ----------- of any one of the following events: 4.1 Disability. The Company may terminate the Employment Term if ---------- Executive is unable substantially to perform his duties and responsibilities hereunder to the full extent required by the Company by reason of illness, injury or incapacity for six (6) consecutive months, or for more than six (6) months in the aggregate during any period of twelve (12) calendar months. In the event of such termination, the Company shall pay Executive his Base Salary through the date of such termination. In addition, Executive shall be entitled to the following: (i) a pro rata Annual Bonus for the year of termination; (ii) any other amounts earned, accrued or owing but not yet paid under Section 1 above; (iii) continued participation for the Remaining Employment Term in those Benefit Coverages in which he was participating on the date of termination which, by their terms, permit a former employee to participate; and (iv) any other benefits in accordance with applicable plans and programs of the Company. In such event, the Company shall have no further liability or obligation to Executive for compensation under this Agreement except as otherwise specifically provided in this Agreement. Executive agrees, in the event of a dispute under this Section 4.1, to submit to a physical examination by a licensed physician selected by the Company. The Company agrees that Executive shall have the right to have his personal physician present at any examination conducted by the physician selected by the Company. -4- 4.2 Death. The Employment Term shall terminate in the event of ----- Executive's death. In such event, the Company shall pay to Executive's executors, legal representatives or administrators, as applicable, Executive's Base Salary through the date of such termination. In addition, Executive's estate shall be entitled to (i) a pro rata Annual Bonus for the year of termination; (ii) any other amounts earned, accrued or owing but not yet paid under Section 1 above; and (iii) any other benefits in accordance with applicable plans and programs of the Company. The Company shall have no further liability or obligation under this Agreement to his executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through him except as otherwise specifically provided in this Agreement. 4.3 Cause. The Company may terminate the Employment Term, at any ----- time, for "Cause," in which event all payments under this Agreement shall cease, except for Base Salary to the extent already accrued. For purposes of this Agreement, Executive's employment may be terminated for "Cause" (i) immediately if Executive is convicted of a felony or (ii) following the determination by the Board (without Executive's participation) that Executive has engaged in intentional fraud, intentional misconduct or intentional misappropriation of Company assets. 4.4 Termination by the Company Without Cause. The Company may ---------------------------------------- terminate the Employment Term, at any time, without Cause. In the event Executive is terminated without Cause, Executive shall be entitled to receive: (i) any amounts earned, accrued or owing but not yet paid pursuant to Section 1 above; (ii) a lump sum severance payment in an aggregate amount equal to the remaining balance of Executive's Employment Term (calculated as a fraction with twelve (12) months equaling 1) times the then-current base salary and Executive's then-current base salary plus (y) three (3) times Executive's then- current maximum bonus pursuant to Section 1.4 above (computed by annualizing the Company's EBITDA through the end of the year of termination); (iii) a continuation of all Benefit Coverages for which Executive is eligible to participate as of the Termination Date in a fashion which is similar to those which Executive is receiving immediately prior to the Termination Date for a period of two (2) years after such termination without cause; and (iv) acceleration of all unvested stock options held by Executive. Amounts payable and benefits to be received pursuant to subsections (i), (ii), (iii) and (iv) of the preceding sentence will be collectively referred to herein as the "Severance Package." 4.5 Constructive Termination Without Cause. -------------------------------------- (a) Constructive Termination Without Cause shall mean a termination of the Executive's employment at his initiative following the occurrence, without the Executive's written consent, of one or more of the following events: i) a reduction in Executive's then current Base Salary; ii) a material diminution in Executive's duties, title, responsibilities, authority as Chairman and Chief Executive Officer or the assignment to -5- Executive of duties which are materially inconsistent with his duties or which materially impair the Executive's ability to function in his then current position; and iii) a requirement by the Company that Executive move his residence from Los Angeles, California, or from any other area to which he may have voluntarily moved with the Company's prior written consent. (b) In the event of a Constructive Termination Without Cause, Executive shall be entitled to receive the Severance Package. 5. Payments Upon a Change in Control. --------------------------------- 5.1 Definitions. For all purposes of this Section 5, the following ----------- terms shall have the meanings specified in this Section 5.1 unless the context clearly otherwise requires: (a) "Change in Control" means: (i) a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the State of the Company's incorporation; (ii) a stockholder approved sale, transfer or other disposition of all or substantially all of the assets of the Company; (iii) a transfer of all or substantially all of the Company's assets pursuant to a partnership or joint venture agreement or similar arrangement where the Company's resulting interest is less than fifty percent (50%); (iv) any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company's outstanding voting stock is transferred to holders different from those who held the stock immediately prior to such merger; (v) on or after the date hereof, a change in ownership of the Company through an action or series of transactions, such that any person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the securities of the combined voting power of the Company's outstanding securities; or (vi) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of such appointment of election. (b) "Termination Date" shall mean the date of receipt of a Notice of Termination of this Agreement or any later date specified therein. -6- (c) "Termination of Employment" shall mean the termination of Executive's actual employment relationship with the Company. (d) "Termination Upon a Change in Control" shall mean a Termination of Employment upon or within one (1) year after a Change in Control initiated by the Company for any reason permitted under this Agreement other than (x) the Executive's disability, as described in Section 4.1 hereof, (y) death, or (z) for "Cause," as described in Section 4.3 hereof. 5.2 Notice of Termination. Any Termination upon a Change in Control --------------------- shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 13 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for a Termination of Employment and the applicable provision hereof, and (iii) if the Termination Date is other than the date of receipt of such notice, specifies the Termination Date (which date shall not be more than fifteen (15) days after the giving of such notice). 5.3 Severance Compensation upon Termination. In the event of --------------------------------------- Executive's Termination upon a Change in Control, Executive shall be entitled to receive the Severance Package. In such event, the Company shall have no further liability or obligation to Executive for compensation under this Agreement except as otherwise specifically provided in this Agreement. A voluntary resignation by Executive shall not be deemed a breach of this Agreement and shall not effect any rights of Executive accrued through the date of such resignation. 6. Acceleration of Equity Incentives. As of the occurrence of the --------------------------------- termination of Executive's employment by the Company without Cause, by Executive in the event of a Constructive Termination Without Cause, a termination upon a Change in Control, notwithstanding any provision in the Entravision 2000 Omnibus Equity Incentive Plan (or any agreement entered into thereunder or any successor stock compensation plan or agreement thereunder) to the contrary, any stock option then held by Executive shall be exercisable and any restriction on any restricted stock then held by Executive shall lapse or be deemed fully satisfied, as applicable. 7. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or ------------------------- limit Executive's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any affiliate and for which executive may qualify; provided, however, that if Executive becomes entitled to and receives all of the payments provided for in this Agreement, Executive hereby waives his right to receive payments under any severance plan or similar program applicable to all employees of the Company. 8. Survivorship. The respective rights and obligations of the parties ------------ hereunder shall survive any termination of the Executive's employment to the extent necessary to the intended preservation of such rights and obligations. -7- 9. Release. Upon receipt of the Severance Package pursuant to Sections ------- 4.4, 4.5 or 5.3 shall be in lieu of all other amounts payable by the Company to Executive and in settlement and complete release of all claims Executive may have against the Company other than those arising pursuant to payment of the Severance Package. Executive acknowledges and agrees that execution of the general release of claims in favor of the Company setting forth the terms of this Section 9 and otherwise reasonably acceptable to the Company and Executive shall be a condition precedent to the Company's obligation to pay the Severance Package to Executive. The cash portion of the Severance Package shall be due and payable by the Company within thirty (30) days after applicable termination of the Employment Period. 10. Mitigation. There shall be no offset against amounts due the ---------- Executive under this Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. 11. Gross-Up Amounts. If, in the opinion of tax counsel selected by the ---------------- Company and reasonably acceptable to the Executive, the Executive has received compensation hereunder which constitutes an "excess parachute payment," as defined in Section 280G of the Internal Revenue Code, arising from the Change of Control, the Company will pay Executive an additional amount (the "Additional Amount") equal to the sum of: (A) all taxes payable by Executive under Section 4999 of the Internal Revenue Code applicable to such "excess parachute payment" and the Additional Amount; and (B) all federal, state and local income and employment taxes payable by Executive with respect to the Additional Amount. In the event that amounts are paid to Executive as Additional Amounts pursuant to the preceding sentence and the amount of taxes payable by Executive under Section 4999 of the Internal Revenue Code applicable to any compensation paid pursuant to this Agreement is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Company, at the time that the amount of such reduced amount of taxes is finally determined, the portion of such Additional Amount attributable to such reduction in the amount of such taxes plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code. In the event that the amount of taxes payable by Executive under Section 4999 of the Internal Revenue Code applicable to any compensation paid pursuant to this Agreement is subsequently determined to be in excess of the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the payment of any Additional Amounts), the Company shall make additional payments of Additional Amounts to Executive in respect of such excess (plus any interest, penalties or additions payable by Executive with respect to such excess taxes) at the time such excess is finally determined. 12. Arbitration; Expenses. --------------------- (a) In the event of any dispute under the provisions of this Agreement other than a dispute in which the sole relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in the City of Los Angeles, California in accordance with the commercial arbitration rules then in effect -8- of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and Executive, respectively, and the third of whom shall be selected by the other two arbitrators. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration (including reasonable attorneys' fees and expenses) shall be paid as determined by the arbitrators. (b) In the event of an arbitration or lawsuit by either party to enforce the provisions of this Agreement following a Change in Control, if Executive prevails on any material issue which is the subject of such arbitration or lawsuit, he shall be entitled to recover from the Company the reasonable costs, expenses and attorneys' fees he has incurred attributable to such issue. 13. Notices. Any notice required to be given hereunder shall be delivered ------- personally, shall be sent by first class mail, postage prepaid, return receipt requested, by overnight courier, or by facsimile, to the respective parties at the addresses given below, which addresses may be changed by the parties by notice conforming to the requirements of this Agreement. If to the Company, to: Entravision Communications Corporation Attn: Philip C. Wilkinson 2425 Olympic Boulevard, Suite 6000 West Santa Monica, California 90404 With a required copy to: Kenneth D. Polin, Esq. Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P. 101 West Broadway, Seventeenth Floor San Diego, California 92101 If to Executive, to: Walter F. Ulloa 15304 Sunset Boulevard, Suite 204 Pacific Palisades, California 90272 Any such notice deposited in the mail shall be conclusively deemed delivered to and received by the addressee four (4) days after deposit in the mail, if all of the foregoing conditions of notice shall have been satisfied. All facsimile communications shall be deemed delivered and received on the date of the facsimile, if (a) the transmittal form showing a successful transmittal is retained by the sender, and (b) the facsimile communication is followed by mailing a copy thereof to the addressee of the facsimile in accordance with this paragraph. Any communication sent by overnight courier shall be deemed delivered on the earlier of proof of actual receipt or the first day upon which the overnight courier will guarantee delivery. -9- 14. Contents of Agreement; Amendment and Assignment. ----------------------------------------------- (a) This Agreement supersedes all prior agreements, including, but not limited to, the Original Agreement, and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment approved by the Company and executed on its behalf by a duly authorized officer. (b) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Executive hereunder are of a personal nature and shall not be assignable or delegable in whole or in part by Executive. 15. Severability. If any provision of this Agreement or application ------------ thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances. 16. Remedies Cumulative; No Waiver. No remedy conferred upon a party by ------------------------------ this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by a party in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion. 17. Beneficiaries; References. Executive shall be entitled, to the extent ------------------------- permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. 18. Captions. All section headings and captions used in this Agreement -------- are for convenience only and shall in no way define, limit, extend or interpret the scope of this Agreement or any particular section hereof 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 -10- 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 facsimile with the same validity as if it were an ink-signed document. Each signatory below represents and warrants by his signature that he 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. 20. Governing Law. This Agreement shall be governed by and interpreted ------------- under the laws of the State of California without giving effect to any conflict of laws provisions. [Remainder of Page Left Intentionally Blank] -11- IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Company ENTRAVISION COMMUNICATIONS CORPORATION a Delaware corporation By: /s/ Philip C. Wilkinson ----------------------------------------------- Philip C. Wilkinson President and Chief Operating Officer Executive /s/ Walter F. Ulloa ----------------------------------------------- Walter F. Ulloa [Signature Page to Employment Agreement] -12- EXHIBIT "A" INDEMNIFICATION AGREEMENT ------------------------- INDEMNIFICATION AGREEMENT ------------------------- This Indemnification Agreement (the "Agreement") is made and entered into as of ________________, 2000 by and between Entravision Communications Corporation, a Delaware corporation (the "Company"), and _______________________ (the "Indemnitee"). WHEREAS, the Indemnitee is an officer or director of the Company and performs a valuable services for the Company. WHEREAS, the First Restated Certificate of Incorporation (the "Certificate of Incorporation") of the Company provides for the indemnification of the officers or directors of the Company to the maximum extent authorized by the Delaware General Corporation Law, as amended (the "Law"). WHEREAS, the Certificate of Incorporation and the Law, by their nonexclusive nature, permit contracts between the Company and the officers or directors of the Company with respect to indemnification of such officers or directors. WHEREAS, in accordance with the authorization as provided by the Law, the Company may purchase and maintain a policy or policies of directors' and officers' liability insurance, covering certain liabilities which may be incurred by its officers or directors in the performance of their obligations to the Company. WHEREAS, in order to induce the Indemnitee to continue to serve as an officer or director of the Company, the Company has determined and agreed to enter into this contract with the Indemnitee. NOW, THEREFORE, in consideration of the Indemnitee's service as an officer or director after the date hereof, the parties hereto agree as follows: 1. Indemnity of the Indemnitee. The Company hereby agrees to hold --------------------------- harmless and indemnify the Indemnitee to the full extent authorized or permitted by the provisions of the Law, as such may be amended from time to time, and Article 11 of the Certificate of Incorporation, as such may be amended. In furtherance of the foregoing indemnification, and without limiting the generality thereof: (a) Other Than Proceedings by or in the Right of the Proceedings ------------------------------------------------------------ Company. The Indemnitee shall be entitled to the rights of indemnification - ------- provided in this Section l(a) if, by reason of his or her Corporate Status (as defined below), he or she is, or is threatened to be made, a party to or participant in any Proceeding (as defined below) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), the Indemnitee shall be indemnified against all Expenses (as defined below), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal Proceeding, had no reasonable cause to believe his or her conduct was unlawful. (b) Proceedings by or in the Right of the Company. The Indemnitee --------------------------------------------- shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his or her Corporate Status, he or she is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with such Proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which the Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Chancery Court of Delaware shall determine that such indemnification may be made. (c) Indemnification for Expenses of a Party Who Is Wholly or Partly --------------------------------------------------------------- Successful. Notwithstanding any other provision of this Agreement, to the - ---------- extent that the Indemnitee is, by reason of his or her Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he or she shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by him or her or on his of her behalf in connection therewith. If the Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 1(c) and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. 2. Additional Indemnity. In addition to, and without regard to any -------------------- limitations on, the indemnification provided for in Section 1 above, the Company shall and hereby does indemnify and hold harmless the Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf if, by reason of his or her Corporate Status, he or she is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of the Indemnitee. The only limitation that shall exist upon the Company's obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to the Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 below) to be unlawful under Delaware law. -2- 3. Contribution in the Event of Joint Liability. -------------------------------------------- (a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring the Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against the Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against the Indemnitee. (b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, the Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by the Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company other than the Indemnitee who are jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and the Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than the Indemnitee who are jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and the Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company other than the Indemnitee who are jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and the Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, ad the degree to which their conduct is active or passive. (c) The Company hereby agrees to fully indemnify and hold the Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company other than the Indemnitee who may be jointly liable with the Indemnitee. -3- 4. Indemnification for Expenses of a Witness. Notwithstanding any other ----------------------------------------- provision of this Agreement, to the extent that the Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which the Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith. 5. Advancement of Expenses. Notwithstanding any other provision of this ----------------------- Agreement, the Company shall advance all Expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding by reason of the Indemnitee's Corporate Status within ten (10) days after the receipt by the Company of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by the Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of the Indemnitee to repay any Expenses advanced if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. Notwithstanding the foregoing, the obligation of the Company to advance Expenses pursuant to this Section 5 shall be subject to the condition that, if, when and to the extent that the Company determines that the Indemnitee would not be permitted to be indemnified under applicable law, the Company shall be entitled to be reimbursed, within thirty (30) days of such determination, by the Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if the Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that the Indemnitee should be indemnified under applicable law, any determination made by the Company that the Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and the Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). 6. Procedures and Presumptions for Determination of Entitlement to --------------------------------------------------------------- Indemnification. It is the intent of this Agreement to secure for the - --------------- Indemnitee rights of indemnity that are as favorable as may be permitted under the law and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether the Indemnitee is entitled to indemnification under this Agreement: (a) To obtain indemnification (including, without limitation, the advancement of Expenses and contribution by the Company) under this Agreement, the Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the Indemnitee has requested indemnification. -4- (b) Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 6(a) above, a determination, if required by applicable law, with respect to the Indemnitee's entitlement thereto shall be made in the specific case by one of the following three methods, which shall be at the election of the Indemnitee: (i) by a majority vote of the disinterested directors, even though less than a quorum, (ii) by independent legal counsel in a written opinion or (iii) by the stockholders. (c) If the determination of entitlement to indemnification is to be made by Independent Counsel (as defined below) pursuant to Section 6(b) above, the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board of Directors). The Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to the Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 13 below, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by the Indemnitee of a written request for indemnification pursuant to Section 6(a) above, no Independent Counsel shall have been selected and not objected to, either the Company or the Indemnitee may petition the Chancery Court of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or the Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) above. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) above, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed. (d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement if the Indemnitee has submitted a request for indemnification in accordance with Section 6(a) above. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. (e) The Indemnitee shall be deemed to have acted in good faith if the Indemnitee's action is based on the records or books of account of the Enterprise (as defined -5- below), including financial statements, or on information supplied to the Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to the Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that the Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. (f) If the person, persons or entity empowered or selected under this Section 6 to determine whether the Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to make the Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such thirty (30) day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(g) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) above and if (i) within fifteen (15) days after receipt by the Company of the request for such determination the Board of Directors or the Disinterested Directors (as defined below), if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (ii) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat. (g) The Indemnitee shall cooperate with the person, persons or entity making such determination with respect to the Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board of Directors, or stockholder of the Company shall act reasonably and in good faith in making a determination under the Agreement of the Indemnitee's -6- entitlement to indemnification. Any costs or expenses (including attorney's fees and disbursements) incurred by the Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to the Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold the Indemnitee harmless therefrom. (h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which the Indemnitee is a party is resolved in any manner other than by adverse judgment against the Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that the Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. 7. Remedies of the Indemnitee. -------------------------- (a) In the event that (i) a determination is made pursuant to Section 6 above that the Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 above, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 6(b) above within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that the Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 above, the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his or her entitlement to such indemnification. The Indemnitee shall commence such proceeding seeking an adjudication within one hundred eighty (180) days following the date on which the Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company shall not oppose the Indemnitee's right to seek any such adjudication. (b) In the event that a determination shall have been made pursuant to Section 6(b) above that the Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination under Section 6(b) above. (c) If a determination shall have been made pursuant to Section 6(b) above that the Indemnitee is entitled to indemnification, the Company shall be bound by such -7- determination in any judicial proceeding commenced pursuant to this Section 7, absent a prohibition of such indemnification under applicable law. (d) In the event that the Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his or her rights under, or to recover damages for breach of, this Agreement, or to recover under any directors' and officers' liability insurance policies maintained by the Company the Company shall pay on his or her behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 below) actually and reasonably incurred by him or her in such judicial adjudication, regardless of whether the Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery. (e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. 8. Non-Exclusivity; Survival of Rights; Insurance; Subrogation. ----------------------------------------------------------- (a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws of the Company, any agreement, a vote of stockholders or a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of the Indemnitee under this Agreement in respect of any action taken or omitted by such the Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy. (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, the Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. -8- (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. 9. Exception to Right of Indemnification. Notwithstanding any other ------------------------------------- provision of this Agreement, the Indemnitee shall not be entitled to indemnification under this Agreement with respect to any Proceeding brought by the Indemnitee, or any claim therein, unless (i) the bringing of such Proceeding or making of such claim shall have been approved by the Board of Directors of the Company or (ii) such Proceeding is being brought by the Indemnitee to assert, interpret or enforce his or her rights under this Agreement. 10. Duration of Agreement. All agreements and obligations of the Company --------------------- contained herein shall continue during the period the Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as the Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 above) by reason of his or her Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives. This Agreement shall continue in effect regardless of whether the Indemnitee continues to serve as an officer or director of the Company or any other Enterprise at the Company's request. 11. Security. To the extent requested by the Indemnitee and approved by -------- the Board of Directors of the Company, the Company may at any time and from time to time provide security to the Indemnitee for the Company's obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee, which shall not be unreasonably withheld. -9- 12. Enforcement. ----------- (a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce the Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that the Indemnitee is relying upon this Agreement in serving as an officer or director of the Company. (b) The Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof. 13. Definitions. For purposes of this Agreement: ----------- (a) "Corporate Status" shall describe the status of a person who is or was a director, officer, employee or agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the express written request of the Company. (b) "Disinterested Director" shall mean a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee. (c) "Enterprise" shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary. (d) "Expenses" shall include all reasonable attorney's fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating or being or preparing to be a witness in a Proceeding. (e) "Independent Counsel" shall mean a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, -10- claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. (f) "Proceeding" shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which the Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that the Indemnitee is or was a director of the Company, by reason of any action taken by him or of any inaction on his or her part while acting as an officer or director of the Company, or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not he or she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement; and excluding one initiated by an the Indemnitee pursuant to Section 7 above to enforce his or her rights under this Agreement. 14. Severability. If any provision or provisions of this Agreement shall ------------ be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. 15. Modification and Waiver. No supplement, modification, termination or ----------------------- amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 16. Notice by the Indemnitee. The Indemnitee agrees promptly to notify ------------------------ the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company. -11- 17. Notices. All notices, requests, demands and other communications ------- hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed to the addresses for the Company and the Indemnitee set forth on the signature page hereto, or to such other address as may have been furnished to the Indemnitee by the Company or to the Company by the Indemnitee, as the case may be. 18. Counterparts; Facsimile. This Agreement may be executed in one or ----------------------- more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement. To the maximum extent permitted by applicable law, this Agreement may be executed by facsimile. 19. Headings. The headings of the paragraphs of this Agreement are -------- inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. 20. Governing Law. The parties agree that this Agreement shall be ------------- governed by, and construed and enforced in accordance with, the laws of the State of Delaware without application of the conflict of laws principles thereof. 21. Gender. Use of the masculine pronoun shall be deemed to include usage ------ of the feminine pronoun where appropriate. [Remainder of Page Intentionally Left Blank] -12- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written. Company ENTRAVISION COMMUNICATIONS CORPORATION By:_______________________________________________ Name:_____________________________________________ Title:____________________________________________ Address: 2425 Olympic Boulevard, Suite 6000 West Santa Monica California 94101 Indemnitee __________________________________________________ ___________________________ Address: _______________________________________ _______________________________________ [Signature Page to Indemnification Agreement] SCHEDULE "1.2" LIST OF PERMISSIBLE BUSINESS ENDEAVORS 1. Beach 43 Corporation and Tidewater Capital Corporation, including, but not limited to, licenses and operations ancillary to: WVBT, Ch. 43 Virginia Beach 2. Biltmore Broadcasting Corporation, including, but not limited to, licenses and operations ancillary to: K50CN, Las Vegas, Nevada K17, Palm Springs K59CA, San Bernardino, California 3. Rancho Palos Verdes Broadcasters, Inc., including, but not limited to, licenses and operations ancillary to: KRPA, Ch. 44, Rancho Palos Verdes, California 4. Zeus Corporation of Washington, Inc., including, but not limited to, licenses and operations ancillary thereto. 5. Costa de Oro Television Inc., including, but not limited to, licenses and operations ancillary to: KSTV, Ch. 57, Ventura, California K44CO, Santa Paula, California K25CX, Santa Maria, California K38DX, Santa Barbara, California K21LS, San Luis Obispo, California 6. CVCG L.P. (Communications Venture Capital Group, Inc.), including, but not limited to, specifically interests held in two radio properties in Honolulu, Hawaii. 7. Ulloa Media Partners. EX-10.11 8 0008.txt EMPLOYMENT AGREEMENT FOR PHILIP C. WILKINSON EXHIBIT 10.11 EMPLOYMENT AGREEMENT This Employment Agreement (the "Agreement") entered into as of August 1, 2000, by and between Entravision Communications Corporation, a Delaware corporation (together with its successors and assigns permitted under the Agreement) (herein the "Company"), and Philip C. Wilkinson (herein "Executive") with reference to the following facts: WHEREAS, Executive has been employed pursuant to the terms of that certain Employment Agreement by and between Entravision Communications Company, L.L.C. (as predecessor to the Company) and Executive dated October 1, 1996 (the "Original Agreement"). WHEREAS, the Company and Executive desire to enter into an agreement to provide for Executive's employment by the Company, upon the terms and conditions set forth herein. WHEREAS, the Company and Executive desire to supersede and terminate the Original Agreement in its entirety. NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Employment. The Company hereby agrees to Executive's employment, and ---------- Executive hereby accepts such employment and agrees to perform his duties and responsibilities, in accordance with the terms and conditions hereinafter set forth. 1.1 Employment Term. The term of Executive's employment under this --------------- Agreement shall commence as of the date hereof (the "Effective Date") and shall continue until the fifth (5/th/) anniversary of the Effective Date, unless earlier terminated in accordance with Section 4 or Section 5 hereof. The period commencing as of the Effective Date and ending on the fifth (5/th/) anniversary of the Effective Date, or such later date to which the term of Executive's employment under the Agreement shall have been extended is hereinafter referred to as the "Employment Term." 1.2 Duties and Responsibilities. Executive shall serve as President --------------------------- and Chief Operating Officer of the Company. During the Employment Term, Executive shall perform all duties and accept all responsibilities incident to such position or other appropriate duties as may be assigned to him by the Company's Board of Directors (the "Board"). Except to attend to those business interests of Executive set forth on Schedule 1.2 attached hereto and incorporated herein by this reference and any Opportunity (as defined in Section 3.2 hereof) which Executive pursues pursuant to Section 3.2, Executive shall devote his full productive time and best efforts to the performing of his duties and responsibilities under this Section 1.2. 1.3 Base Salary. For all of the services rendered by Executive ----------- hereunder for the first calendar year following the Effective Date, the Company shall pay Executive an annual base salary (his "Base Salary") of Six Hundred Thousand Dollars ($600,000), payable in installments at such times as the Company shall pay its other senior level executives (but in any event no less often than monthly). On each of the first four (4) anniversaries of the Effective Date, Executive's base salary shall be increased by an increment of Fifty Thousand Dollars ($50,000). 1.4 Annual Bonus. In addition to the Base Salary provided for in ------------ Section 1.3 above, the Company shall pay Executive an annual bonus (the "Annual Bonus") in an amount equal to: (i) seventy-five percent (75%) of Executive's then-current Base Salary each calendar year during the Employment Term if the total Company annual growth rate of earnings before interest, taxes, depreciation and amortization as computed in accordance with generally accepted accounting principles ("EBITDA") (pro forma as defined by the Board's Compensation Committee) exceeds twenty percent (20%) over the previous calendar year, sixty-three percent (63%) if EBITDA growth rate exceeds seventeen percent (17%) over the previous calendar year, and fifty percent (50%) of the Base Salary will be paid to Executive if EBITDA growth rate exceeds fourteen percent (14%) over the previous calendar year and (ii) up to an additional twenty-five percent (25%) of Executive's Base Salary may be paid at the end of each calendar year based upon the discretion of the Compensation Committee of the Company's Board taking into account achievement of operating and financial performance goals and the increase in stockholder value. The Annual Bonus for any partial calendar year within the Employment Term shall be prorated and the EBITDA growth targets shall be adjusted proportionately. The Annual Bonus will be payable promptly after the issuance of the Company's year-end audited financial statements. 1.5 Equity Incentives. Executive shall be eligible for grants of ----------------- stock options, restricted stock and other equity incentives pursuant to the Entravision Communications Corporation 2000 Omnibus Equity Incentive Plan and any future equity incentive plans. 1.6 Automobile Allowance. During the Employment Term, Executive -------------------- shall be entitled to receive a $1,000 monthly automobile allowance, payable monthly in advance, which shall include all costs attendant to the use of the automobile, including, but not limited to, liability and property insurance coverage, costs of maintenance and fuel. Notwithstanding the foregoing, the amount of the monthly automobile allowance shall be reviewed by the Company annually. 1.7 Benefit Coverages. During the Employment Term, Company shall ----------------- provide medical and dental coverage for Executive and Executive's dependents at no cost to Executive. During such Employment Term, Executive shall also be entitled to participate in all employee pension and welfare benefit plans and programs made available to the Company's senior level executives as a group or to its employees generally, as such plans or programs may be in effect from time to time (the "Benefit Coverages"), including without limitation, pension, profit sharing, savings and other retirement plans or programs, short-term and long- term disability and life insurance plans, accidental death and dismemberment protection and travel accident insurance. -2- 1.8 Reimbursement of Expenses; Vacation; Residence. Executive shall ---------------------------------------------- be provided with full and prompt reimbursement of expenses related to his employment by the Company (including mobile telephone usage) on a basis no less favorable than that which may be authorized from time to time by the Board, in its sole discretion, for senior level executives as a group, and entitled to not less than four (4) weeks vacation per year and holidays in accordance with the Company's normal personnel policies. Executive currently resides in the San Diego, California area, and the Company agrees that he shall not be required to relocate his residence from that area without his prior written consent (which may be withheld in his sole discretion), or from any other area to which he may voluntarily move with the Company's prior written consent, during the Employment Term. 1.9 Tax Withholding. The Company may withhold from any compensation --------------- or other benefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 1.10 Life Insurance. The Company may obtain a "key man" life -------------- insurance policy, or policies, on the life of Executive in face amounts to be determined by the Company. The Company shall be the owner and beneficiary of such life insurance policy; provided, however, upon the termination of Executive's employment with the Company for any reason, the Company shall, upon Executive's request, assign such life insurance to Executive, subject to the Executive's obligation to maintain such life insurance after the Employment Term. Executive agrees to submit to a physical examination at any reasonable time requested by the Company for the purpose of obtaining life insurance on the life of Executive; provided, however, that the Company shall bear the entire cost of such examination. 2. Indemnification; Insurance. The Company shall indemnify the Executive -------------------------- to the fullest extent allowed by applicable law pursuant to that certain Indemnification Agreement dated July 1, 2000, between the Executive and the Company attached hereto as Exhibit "A" and incorporated herein by this reference, as the same may be amended from time to time. The Executive shall be covered by the Company's director and officer liability insurance policy, if any. 3. Proprietary Information; Non-Compete. ------------------------------------ 3.1 Confidential Information. Executive recognizes and acknowledges ------------------------ that by reason of his employment by and service to the Company during and, if applicable, after the Employment Term, he has had and will continue to have access to certain confidential and proprietary information relating to the Company's business ("Confidential Information"). Executive covenants that he will not, unless expressly authorized in writing by the Company, at any time during the course of his employment divulge or disclose any Confidential Information to any person, firm or corporation except in connection with the performance of his duties for the Company and in a manner consistent with the Company's policies regarding Confidential Information. Executive also covenants that at any time after the termination of such employment, directly or indirectly, he will not divulge or disclose any Confidential Information -3- to any person, firm or corporation, unless such information is in the public domain through no fault of Executive or except when required to do so by law. All written Confidential Information (including without limitation, in any computer or other electronic format) which comes into Executive's possession during the course of his employment shall remain the property of the Company. Except as required in the performance of Executive's duties for the Company, or unless expressly authorized in writing by the Company, Executive shall not remove any written Confidential Information from the Company's premises, except in connection with the performance of his duties for the Company and in a manner consistent with the Company's policies regarding Confidential Information. Upon termination of Executive's employment, Executive agrees immediately to return to the Company all written Confidential Information in his possession. 3.2 Non-Compete. Except for those existing business activities set ----------- forth on Schedule "1.2" attached hereto, Executive shall not engage in, independently or with others, any business activity of any type or description that is in competition with the Company. Notwithstanding the foregoing, Executive may own securities of publicly traded or private companies competitive with the business of Company so long as such shares do not constitute five percent (5%) or more of the outstanding securities of any such company. Executive further agrees that for as long as the Agreement remains in effect and for a period of twelve (12) months after the termination of this Agreement by Company for Cause or by Executive after a Constructive Termination Without Cause (as defined in Section 4.4 below), Executive will not induce or attempt to induce, directly or indirectly, any person to leave his or her employment with Company. 4. Termination. The Employment Term shall terminate upon the occurrence ----------- of any one of the following events: 4.1 Disability. The Company may terminate the Employment Term if ---------- Executive is unable substantially to perform his duties and responsibilities hereunder to the full extent required by the Company by reason of illness, injury or incapacity for six (6) consecutive months, or for more than six (6) months in the aggregate during any period of twelve (12) calendar months. In the event of such termination, the Company shall pay Executive his Base Salary through the date of such termination. In addition, Executive shall be entitled to the following: (i) a pro rata Annual Bonus for the year of termination; (ii) any other amounts earned, accrued or owing but not yet paid under Section 1 above; (iii) continued participation for the Remaining Employment Term in those Benefit Coverages in which he was participating on the date of termination which, by their terms, permit a former employee to participate; and (iv) any other benefits in accordance with applicable plans and programs of the Company. In such event, the Company shall have no further liability or obligation to Executive for compensation under this Agreement except as otherwise specifically provided in this Agreement. Executive agrees, in the event of a dispute under this Section 4.1, to submit to a physical examination by a licensed physician selected by the Company. The Company agrees that Executive shall have the right to -4- have his personal physician present at any examination conducted by the physician selected by the Company. 4.2 Death. The Employment Term shall terminate in the event of ----- Executive's death. In such event, the Company shall pay to Executive's executors, legal representatives or administrators, as applicable, Executive's Base Salary through the date of such termination. In addition, Executive's estate shall be entitled to (i) a pro rata Annual Bonus for the year of termination; (ii) any other amounts earned, accrued or owing but not yet paid under Section 1 above; and (iii) any other benefits in accordance with applicable plans and programs of the Company. The Company shall have no further liability or obligation under this Agreement to his executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through him except as otherwise specifically provided in this Agreement. 4.3 Cause. The Company may terminate the Employment Term, at any ----- time, for "Cause," in which event all payments under this Agreement shall cease, except for Base Salary to the extent already accrued. For purposes of this Agreement, Executive's employment may be terminated for "Cause" (i) immediately if Executive is convicted of a felony, or (ii) following the determination by the Board (without Executive's participation) that Executive has engaged in intentional fraud or intentional misappropriation of Company assets. 4.4 Termination by the Company Without Cause. The Company may ---------------------------------------- terminate the Employment Term, at any time, without Cause. In the event Executive is terminated without Cause, Executive shall be entitled to receive: (i) any amounts earned, accrued or owing but not yet paid pursuant to Section 1 above; (ii) a lump sum severance payment in an aggregate amount equal to the remaining balance of Executive's Employment Term (calculated as a fraction with twelve (12) months equaling one (1)) times the sum of Executive's then-current base salary and Executive's then-current maximum bonus pursuant to Section 1.4 above (computed by annualizing the Company's EBITDA through the end of the year of termination); (iii) a continuation of all Benefit Coverages for which Executive is eligible to participate as of the Termination Date in a fashion which is similar to those which Executive is receiving immediately prior to the Termination Date for a period of two (2) years after such termination without cause; and (iv) acceleration of all unvested stock options or other equity incentives held by Executive. Amounts payable and benefits to be received pursuant to subsections (i), (ii), (iii) and (iv) of the preceding sentence will be collectively referred to herein as the "Severance Package." 4.5 Constructive Termination Without Cause. -------------------------------------- (a) Constructive Termination Without Cause shall mean a termination of the Executive's employment at his initiative following the occurrence, without the Executive's written consent, of one or more of the following events: i) a reduction in Executive's then current Base Salary; -5- ii) a material diminution in Executive's duties, title, responsibilities, authority as President and Chief Operating Officer or the assignment to Executive of duties which are materially inconsistent with his duties or which materially impair the Executive's ability to function in his then current position; and iii) a requirement by the Company that Executive move his residence from San Diego, California, or from any other area to which he may have voluntarily moved with the Company's prior written consent. (b) In the event of a Constructive Termination Without Cause, Executive shall be entitled to receive the Severance Package. 5. Payments Upon a Change in Control. --------------------------------- 5.1 Definitions. For all purposes of this Section 5, the following ----------- terms shall have the meanings specified in this Section 5.1 unless the context clearly otherwise requires: (a) "Change in Control" means: (i) a merger or acquisition in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the State of the Company's incorporation; (ii) a stockholder approved sale, transfer or other disposition of all or substantially all of the assets of the Company; (iii) a transfer of all or substantially all of the Company's assets pursuant to a partnership or joint venture agreement or similar arrangement where the Company's resulting interest is less than fifty percent (50%); (iv) any reverse merger in which the Company is the surviving entity but in which fifty percent (50%) or more of the Company's outstanding voting stock is transferred to holders different from those who held the stock immediately prior to such merger; (v) on or after the date hereof, a change in ownership of the Company through an action or series of transactions, such that any person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the securities of the combined voting power of the Company's outstanding securities; or (vi) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of such appointment of election. -6- (b) "Termination Date" shall mean the date of receipt of a Notice of Termination of this Agreement or any later date specified therein. (c) "Termination of Employment" shall mean the termination of Executive's actual employment relationship with the Company. (d) "Termination Upon a Change in Control" shall mean a Termination of Employment upon or within one (1) year after a Change in Control initiated by the Company for any reason permitted under this Agreement other than (x) the Executive's disability, as described in Section 4.1 hereof, (y) death, or (z) for "Cause," as described in Section 4.3 hereof. 5.2 Notice of Termination. Any Termination upon a Change in Control --------------------- shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 13 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for a Termination of Employment and the applicable provision hereof, and (iii) if the Termination Date is other than the date of receipt of such notice, specifies the Termination Date (which date shall not be more than fifteen (15) days after the giving of such notice). 5.3 Severance Compensation upon Termination. In the event of --------------------------------------- Executive's Termination upon a Change in Control, Executive shall be entitled to receive the Severance Package. In such event, the Company shall have no further liability or obligation to Executive for compensation under this Agreement except as otherwise specifically provided in this Agreement. A voluntary resignation by Executive shall not be deemed a breach of this Agreement and shall not effect any rights of Executive accrued through the date of such resignation. 6. Acceleration of Equity Incentives. As of the occurrence of the --------------------------------- termination of Executive's employment by the Company without Cause, by Executive in the event of a Constructive Termination Without Cause, a termination upon a Change in Control, notwithstanding any provision in the Entravision 2000 Omnibus Equity Incentive Plan (or any agreement entered into thereunder or any successor stock compensation plan or agreement thereunder) to the contrary, any stock option then held by Executive shall be exercisable and any restriction on any restricted stock then held by Executive shall lapse or be deemed fully satisfied, as applicable. 7. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or ------------------------- limit Executive's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any affiliate and for which executive may qualify; provided, however, that if Executive becomes entitled to and receives all of the payments provided for in this Agreement, Executive hereby waives his right to receive payments under any severance plan or similar program applicable to all employees of the Company. -7- 8. Survivorship. The respective rights and obligations of the parties ------------ hereunder shall survive any termination of the Executive's employment to the extent necessary to the intended preservation of such rights and obligations. 9. Release. Upon receipt of the Severance Package pursuant to Sections ------- 4.4, 4.5 or 5.3 shall be in lieu of all other amounts payable by the Company to Executive and in settlement and complete release of all claims Executive may have against the Company other than those arising pursuant to payment of the Severance Package. Executive acknowledges and agrees that execution of the general release of claims in favor of the Company setting forth the terms of this Section 9 and otherwise reasonably acceptable to the Company and Executive shall be a condition precedent to the Company's obligation to pay the Severance Package to Executive. The cash portion of the Severance Package shall be due and payable by the Company within thirty (30) days after applicable termination of the Employment Period. 10. Mitigation. There shall be no offset against amounts due the ---------- Executive under this Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. 11. Gross-Up Amounts. If, in the opinion of tax counsel selected by the ---------------- Company and reasonably acceptable to the Executive, the Executive has received compensation hereunder which constitutes an "excess parachute payment," as defined in Section 280G of the Internal Revenue Code, arising from the Change of Control, the Company will pay Executive an additional amount (the "Additional Amount") equal to the sum of: (A) all taxes payable by Executive under Section 4999 of the Internal Revenue Code applicable to such "excess parachute payment" and the Additional Amount; and (B) all federal, state and local income and employment taxes payable by Executive with respect to the Additional Amount. In the event that amounts are paid to Executive as Additional Amounts pursuant to the preceding sentence and the amount of taxes payable by Executive under Section 4999 of the Internal Revenue Code applicable to any compensation paid pursuant to this Agreement is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Company, at the time that the amount of such reduced amount of taxes is finally determined, the portion of such Additional Amount attributable to such reduction in the amount of such taxes plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code. In the event that the amount of taxes payable by Executive under Section 4999 of the Internal Revenue Code applicable to any compensation paid pursuant to this Agreement is subsequently determined to be in excess of the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the payment of any Additional Amounts), the Company shall make additional payments of Additional Amounts to Executive in respect of such excess (plus any interest, penalties or additions payable by Executive with respect to such excess taxes) at the time such excess is finally determined. -8- 12. Arbitration; Expenses. --------------------- (a) In the event of any dispute under the provisions of this Agreement other than a dispute in which the sole relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in the City of Los Angeles, California in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and Executive, respectively, and the third of whom shall be selected by the other two arbitrators. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration (including reasonable attorneys' fees and expenses) shall be paid as determined by the arbitrators. (b) In the event of an arbitration or lawsuit by either party to enforce the provisions of this Agreement following a Change in Control, if Executive prevails on any material issue which is the subject of such arbitration or lawsuit, he shall be entitled to recover from the Company the reasonable costs, expenses and attorneys' fees he has incurred attributable to such issue. 13. Notices. Any notice required to be given hereunder shall be delivered ------- personally, shall be sent by first class mail, postage prepaid, return receipt requested, by overnight courier, or by facsimile, to the respective parties at the addresses given below, which addresses may be changed by the parties by notice conforming to the requirements of this Agreement. If to the Company, to: Entravision Communications Corporation Attn: Walter F. Ulloa 2425 Olympic Boulevard, Suite 6000 West Santa Monica, California 90404 With a required copy to: Kenneth D. Polin, Esq. Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P. 101 West Broadway, Seventeenth Floor San Diego, California 92101 If to Executive, to: Philip C. Wilkinson Post Office Box 2630 Rancho Santa Fe, California 92067 Any such notice deposited in the mail shall be conclusively deemed delivered to and received by the addressee four (4) days after deposit in the mail, if all of the foregoing conditions of notice shall have been satisfied. All facsimile communications shall be deemed delivered and received on the date of the facsimile, if (a) the transmittal form showing a successful transmittal is -9- retained by the sender, and (b) the facsimile communication is followed by mailing a copy thereof to the addressee of the facsimile in accordance with this paragraph. Any communication sent by overnight courier shall be deemed delivered on the earlier of proof of actual receipt or the first day upon which the overnight courier will guarantee delivery. 14. Contents of Agreement; Amendment and Assignment. ----------------------------------------------- (a) This Agreement supersedes all prior agreements, including, but not limited to, the Original Agreement, and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment approved by the Company and executed on its behalf by a duly authorized officer. (b) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Executive hereunder are of a personal nature and shall not be assignable or delegable in whole or in part by Executive. 15. Severability. If any provision of this Agreement or application ------------ thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances. 16. Remedies Cumulative; No Waiver. No remedy conferred upon a party by ------------------------------ this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by a party in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion. 17. Beneficiaries; References. Executive shall be entitled, to the extent ------------------------- permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. -10- 18. Captions. All section headings and captions used in this Agreement -------- are for convenience only and shall in no way define, limit, extend or interpret the scope of this Agreement or any particular section hereof 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 facsimile with the same validity as if it were an ink-signed document. Each signatory below represents and warrants by his signature that he 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. 20. Governing Law. This Agreement shall be governed by and interpreted ------------- under the laws of the State of California without giving effect to any conflict of laws provisions. [Remainder of Page Left Intentionally Blank] -11- IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Company ENTRAVISION COMMUNICATIONS CORPORATION a Delaware corporation By: /s/ Walter F. Ulloa ------------------------------------ Walter F. Ulloa Chairman and Chief Executive Officer Executive /s/ Philip C. Wilkinson ------------------------ Philip C. Wilkinson [Signature Page to Employment Agreement] -12- EXHIBIT "A" INDEMNIFICATION AGREEMENT ------------------------- INDEMNIFICATION AGREEMENT ------------------------- This Indemnification Agreement (the "Agreement") is made and entered into as of ________________, 2000 by and between Entravision Communications Corporation, a Delaware corporation (the "Company"), and _______________________ (the "Indemnitee"). WHEREAS, the Indemnitee is an officer or director of the Company and performs a valuable services for the Company. WHEREAS, the First Restated Certificate of Incorporation (the "Certificate of Incorporation") of the Company provides for the indemnification of the officers or directors of the Company to the maximum extent authorized by the Delaware General Corporation Law, as amended (the "Law"). WHEREAS, the Certificate of Incorporation and the Law, by their nonexclusive nature, permit contracts between the Company and the officers or directors of the Company with respect to indemnification of such officers or directors. WHEREAS, in accordance with the authorization as provided by the Law, the Company may purchase and maintain a policy or policies of directors' and officers' liability insurance, covering certain liabilities which may be incurred by its officers or directors in the performance of their obligations to the Company. WHEREAS, in order to induce the Indemnitee to continue to serve as an officer or director of the Company, the Company has determined and agreed to enter into this contract with the Indemnitee. NOW, THEREFORE, in consideration of the Indemnitee's service as an officer or director after the date hereof, the parties hereto agree as follows: 1. Indemnity of the Indemnitee. The Company hereby agrees to hold --------------------------- harmless and indemnify the Indemnitee to the full extent authorized or permitted by the provisions of the Law, as such may be amended from time to time, and Article 11 of the Certificate of Incorporation, as such may be amended. In furtherance of the foregoing indemnification, and without limiting the generality thereof: (a) Other Than Proceedings by or in the Right of the Proceedings ------------------------------------------------------------ Company. The Indemnitee shall be entitled to the rights of indemnification - ------- provided in this Section l(a) if, by reason of his or her Corporate Status (as defined below), he or she is, or is threatened to be made, a party to or participant in any Proceeding (as defined below) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), the Indemnitee shall be indemnified against all Expenses (as defined below), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal Proceeding, had no reasonable cause to believe his or her conduct was unlawful. (b) Proceedings by or in the Right of the Company. The Indemnitee --------------------------------------------- shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his or her Corporate Status, he or she is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with such Proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which the Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Chancery Court of Delaware shall determine that such indemnification may be made. (c) Indemnification for Expenses of a Party Who Is Wholly or Partly --------------------------------------------------------------- Successful. Notwithstanding any other provision of this Agreement, to the - ---------- extent that the Indemnitee is, by reason of his or her Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he or she shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by him or her or on his of her behalf in connection therewith. If the Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 1(c) and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. 2. Additional Indemnity. In addition to, and without regard to any -------------------- limitations on, the indemnification provided for in Section 1 above, the Company shall and hereby does indemnify and hold harmless the Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf if, by reason of his or her Corporate Status, he or she is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of the Indemnitee. The only limitation that shall exist upon the Company's obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to the Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 below) to be unlawful under Delaware law. -2- 3. Contribution in the Event of Joint Liability. -------------------------------------------- (a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring the Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against the Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against the Indemnitee. (b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, the Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by the Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company other than the Indemnitee who are jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and the Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than the Indemnitee who are jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and the Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company other than the Indemnitee who are jointly liable with the Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and the Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, ad the degree to which their conduct is active or passive. (c) The Company hereby agrees to fully indemnify and hold the Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company other than the Indemnitee who may be jointly liable with the Indemnitee. -3- 4. Indemnification for Expenses of a Witness. Notwithstanding any other ----------------------------------------- provision of this Agreement, to the extent that the Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which the Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith. 5. Advancement of Expenses. Notwithstanding any other provision of this ----------------------- Agreement, the Company shall advance all Expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding by reason of the Indemnitee's Corporate Status within ten (10) days after the receipt by the Company of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by the Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of the Indemnitee to repay any Expenses advanced if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. Notwithstanding the foregoing, the obligation of the Company to advance Expenses pursuant to this Section 5 shall be subject to the condition that, if, when and to the extent that the Company determines that the Indemnitee would not be permitted to be indemnified under applicable law, the Company shall be entitled to be reimbursed, within thirty (30) days of such determination, by the Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if the Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that the Indemnitee should be indemnified under applicable law, any determination made by the Company that the Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and the Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). 6. Procedures and Presumptions for Determination of Entitlement to --------------------------------------------------------------- Indemnification. It is the intent of this Agreement to secure for the - --------------- Indemnitee rights of indemnity that are as favorable as may be permitted under the law and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether the Indemnitee is entitled to indemnification under this Agreement: (a) To obtain indemnification (including, without limitation, the advancement of Expenses and contribution by the Company) under this Agreement, the Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the Indemnitee has requested indemnification. -4- (b) Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 6(a) above, a determination, if required by applicable law, with respect to the Indemnitee's entitlement thereto shall be made in the specific case by one of the following three methods, which shall be at the election of the Indemnitee: (i) by a majority vote of the disinterested directors, even though less than a quorum, (ii) by independent legal counsel in a written opinion or (iii) by the stockholders. (c) If the determination of entitlement to indemnification is to be made by Independent Counsel (as defined below) pursuant to Section 6(b) above, the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board of Directors). The Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to the Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 13 below, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by the Indemnitee of a written request for indemnification pursuant to Section 6(a) above, no Independent Counsel shall have been selected and not objected to, either the Company or the Indemnitee may petition the Chancery Court of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or the Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) above. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) above, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed. (d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement if the Indemnitee has submitted a request for indemnification in accordance with Section 6(a) above. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. (e) The Indemnitee shall be deemed to have acted in good faith if the Indemnitee's action is based on the records or books of account of the Enterprise (as defined -5- below), including financial statements, or on information supplied to the Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to the Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that the Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. (f) If the person, persons or entity empowered or selected under this Section 6 to determine whether the Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to make the Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such thirty (30) day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(g) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) above and if (i) within fifteen (15) days after receipt by the Company of the request for such determination the Board of Directors or the Disinterested Directors (as defined below), if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (ii) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat. (g) The Indemnitee shall cooperate with the person, persons or entity making such determination with respect to the Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board of Directors, or stockholder of the Company shall act reasonably and in good faith in making a determination under the Agreement of the Indemnitee's -6- entitlement to indemnification. Any costs or expenses (including attorney's fees and disbursements) incurred by the Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to the Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold the Indemnitee harmless therefrom. (h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which the Indemnitee is a party is resolved in any manner other than by adverse judgment against the Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that the Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. 7. Remedies of the Indemnitee. -------------------------- (a) In the event that (i) a determination is made pursuant to Section 6 above that the Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 above, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 6(b) above within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that the Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 above, the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his or her entitlement to such indemnification. The Indemnitee shall commence such proceeding seeking an adjudication within one hundred eighty (180) days following the date on which the Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company shall not oppose the Indemnitee's right to seek any such adjudication. (b) In the event that a determination shall have been made pursuant to Section 6(b) above that the Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination under Section 6(b) above. (c) If a determination shall have been made pursuant to Section 6(b) above that the Indemnitee is entitled to indemnification, the Company shall be bound by such -7- determination in any judicial proceeding commenced pursuant to this Section 7, absent a prohibition of such indemnification under applicable law. (d) In the event that the Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his or her rights under, or to recover damages for breach of, this Agreement, or to recover under any directors' and officers' liability insurance policies maintained by the Company the Company shall pay on his or her behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 below) actually and reasonably incurred by him or her in such judicial adjudication, regardless of whether the Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery. (e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. 8. Non-Exclusivity; Survival of Rights; Insurance; Subrogation. ----------------------------------------------------------- (a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws of the Company, any agreement, a vote of stockholders or a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of the Indemnitee under this Agreement in respect of any action taken or omitted by such the Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy. (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, the Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. -8- (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. 9. Exception to Right of Indemnification. Notwithstanding any other ------------------------------------- provision of this Agreement, the Indemnitee shall not be entitled to indemnification under this Agreement with respect to any Proceeding brought by the Indemnitee, or any claim therein, unless (i) the bringing of such Proceeding or making of such claim shall have been approved by the Board of Directors of the Company or (ii) such Proceeding is being brought by the Indemnitee to assert, interpret or enforce his or her rights under this Agreement. 10. Duration of Agreement. All agreements and obligations of the Company --------------------- contained herein shall continue during the period the Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as the Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 above) by reason of his or her Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives. This Agreement shall continue in effect regardless of whether the Indemnitee continues to serve as an officer or director of the Company or any other Enterprise at the Company's request. 11. Security. To the extent requested by the Indemnitee and approved by -------- the Board of Directors of the Company, the Company may at any time and from time to time provide security to the Indemnitee for the Company's obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee, which shall not be unreasonably withheld. -9- 12. Enforcement. ----------- (a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce the Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that the Indemnitee is relying upon this Agreement in serving as an officer or director of the Company. (b) The Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof. 13. Definitions. For purposes of this Agreement: ----------- (a) "Corporate Status" shall describe the status of a person who is or was a director, officer, employee or agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the express written request of the Company. (b) "Disinterested Director" shall mean a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee. (c) "Enterprise" shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary. (d) "Expenses" shall include all reasonable attorney's fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating or being or preparing to be a witness in a Proceeding. (e) "Independent Counsel" shall mean a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, -10- claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. (f) "Proceeding" shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which the Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that the Indemnitee is or was a director of the Company, by reason of any action taken by him or of any inaction on his or her part while acting as an officer or director of the Company, or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not he or she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement; and excluding one initiated by an the Indemnitee pursuant to Section 7 above to enforce his or her rights under this Agreement. 14. Severability. If any provision or provisions of this Agreement shall ------------ be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. 15. Modification and Waiver. No supplement, modification, termination or ----------------------- amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 16. Notice by the Indemnitee. The Indemnitee agrees promptly to notify ------------------------ the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company. -11- 17. Notices. All notices, requests, demands and other communications ------- hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed to the addresses for the Company and the Indemnitee set forth on the signature page hereto, or to such other address as may have been furnished to the Indemnitee by the Company or to the Company by the Indemnitee, as the case may be. 18. Counterparts; Facsimile. This Agreement may be executed in one or ----------------------- more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement. To the maximum extent permitted by applicable law, this Agreement may be executed by facsimile. 19. Headings. The headings of the paragraphs of this Agreement are -------- inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. 20. Governing Law. The parties agree that this Agreement shall be ------------- governed by, and construed and enforced in accordance with, the laws of the State of Delaware without application of the conflict of laws principles thereof. 21. Gender. Use of the masculine pronoun shall be deemed to include usage ------ of the feminine pronoun where appropriate. [Remainder of Page Intentionally Left Blank] -12- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written. Company ENTRAVISION COMMUNICATIONS CORPORATION By:_______________________________________________ Name:_____________________________________________ Title:____________________________________________ Address: 2425 Olympic Boulevard, Suite 6000 West Santa Monica California 94101 Indemnitee __________________________________________________ ___________________________ Address: _______________________________________ _______________________________________ [Signature Page to Indemnification Agreement] SCHEDULE "1.2" LIST OF PERMISSIBLE BUSINESS ENDEAVORS Wilkinson Capital Corp., which is involved in real estate development. EX-27.1 9 0009.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 14,203 0 25,505 1,909 0 43,521 55,108 14,752 604,301 140,518 370,004 0 0 6 28,693 604,301 52,924 52,924 56,021 56,021 0 885 51,201 (53,852) 159 (54,011) 0 0 0 (54,011) (26.77) (26.77)
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