-----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, GKLO2p02VW+SyhKzQzaWbQ9ZBu4Nww4eJzJo88HhxOjNlFp5Dl38XgppSgMghzMT 7sRh1g3y6YjucboTh4KviA== 0001047469-02-003092.txt : 20021114 0001047469-02-003092.hdr.sgml : 20021114 20021114165313 ACCESSION NUMBER: 0001047469-02-003092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HISPANIC BROADCASTING CORP CENTRAL INDEX KEY: 0000922503 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 990113417 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-15859 FILM NUMBER: 02825836 BUSINESS ADDRESS: STREET 1: 3102 OAK LAWN AVENUE STREET 2: STE 215 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145257700 MAIL ADDRESS: STREET 1: 3102 OAK LAWN AVENUE STREET 2: SUITE 215 CITY: DALLAS STATE: TX ZIP: 75219 FORMER COMPANY: FORMER CONFORMED NAME: HEFTEL BROADCASTING CORP DATE OF NAME CHANGE: 19940502 10-Q 1 a2092910z10-q.htm 10-Q

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INDEX

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

ý	Quarterly report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2002
or
o	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 0-24516

HISPANIC BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		99-0113417 (I.R.S. Employer Identification No.)
3102 Oak Lawn Avenue, Suite 215 Dallas, Texas (Address of principal executive offices)		75219 (Zip Code)

(214) 525-7700
(Registrant's telephone number, including area code)

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 ý No o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class		Outstanding at November 1, 2002
Class A Common Stock, $.001 Par Value		80,499,197
Class B Non-Voting Common Stock, $.001 Par Value		28,312,940

HISPANIC BROADCASTING CORPORATION

SEPTEMBER 30, 2002

INDEX

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001	2
	Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended September 30, 2002 and 2001 and the Nine Months Ended September 30, 2002 and 2001	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 6.	Exhibits and Reports on Form 8-K	19

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands except share information)

			September 30, 2002			December 31, 2001
ASSETS
Current assets:
	Cash and cash equivalents		$	46,741		$	59,587
	Accounts receivable, net			52,686			50,241
	Prepaid expenses and other current assets			1,559			748

		Total current assets		100,986			110,576
Property and equipment, at cost, net				53,132			54,428
Intangible assets, net				1,140,281			1,023,400
Restricted cash				1,250			3,151
Deferred charges and other assets				13,633			50,188

		Total assets	$	1,309,282		$	1,241,743

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	3,390		$	4,700
	Accrued expenses			17,678			15,968
	Income taxes payable			7,271			3,349
	Current portion of long-term obligations			6			6

		Total current liabilities		28,345			24,023

Long-term obligations, less current portion				16,416			1,418

Deferred income taxes				134,386			119,486

Stockholders' equity:
	Preferred Stock, cumulative, $.001 par value; authorized 5,000,000 shares; no shares issued or outstanding			—			—
	Class A Common Stock, $.001 par value; authorized 175,000,000 shares; issued 81,184,697 shares and outstanding 80,499,197 shares in 2002 and issued 80,923,786 shares and outstanding 80,238,286 shares in 2001			81			81
	Class B Common Stock, convertible, $.001 par value; authorized 50,000,000 shares; issued and outstanding 28,312,940 shares			28			28
	Additional paid-in capital			1,046,841			1,042,907
	Retained earnings			93,293			63,908
	Treasury stock, at cost, 685,500 shares			(10,108	)		(10,108	)

		Total stockholders' equity		1,130,135			1,096,816

		Total liabilities and stockholders' equity	$	1,309,282		$	1,241,743

See accompanying notes to unaudited condensed consolidated financial statements.

HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (UNAUDITED)

(in thousands except per share data)

		Three Months Ended September 30,						Nine Months Ended September 30,
		2002			2001			2002		2001
Net revenues		$	70,248		$	65,801		$	190,794	$	179,493
Operating expenses (exclusive of depreciation and amortization)			21,557			22,355			59,427		56,650
Wages, salaries and benefits			22,159			19,541			64,669		57,777
Provision for bad debts			808			1,223			1,947		2,246
Depreciation and amortization			2,982			8,992			9,124		27,259
Corporate expenses			2,373			979			6,984		2,838

Operating income			20,369			12,711			48,643		32,723
Interest income (expense), net			(15	)		465			169		3,002
Other, net			—			618			—		984

Income before income tax			20,354			13,794			48,812		36,709
Income tax			8,329			5,302			19,427		14,353

Net income		$	12,025		$	8,492		$	29,385	$	22,356

Net income per common share:
	Basic	$	0.11		$	0.08		$	0.27	$	0.21
	Diluted	$	0.11		$	0.08		$	0.27	$	0.20
Weighted average common shares outstanding:
	Basic		108,777			109,007			108,691		109,001
	Diluted		109,187			109,606			109,587		109,823
Other comprehensive income, net of tax:
	Unrealized gain on marketable equity securities	$	—		$	(655	)	$	—	$	418
Net income			12,025			8,492			29,385		22,356

Comprehensive income		$	12,025		$	7,837		$	29,385	$	22,774

See accompanying notes to unaudited condensed consolidated financial statements.

HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

				Nine Months Ended September 30,
				2002			2001
Cash flows from operating activities:
	Net income			$	29,385		$	22,356
	Adjustments to reconcile net income to net cash provided by operating activities:
		Provision for bad debts			1,947			2,246
		Depreciation and amortization			9,124			27,259
		Deferred income taxes			14,900			6,200
		Changes in operating assets and liabilities			(14	)		2,625
		Other, net			322			1,648

			Net cash provided by operating activities		55,664			62,334

Cash flows from investing activities:
	Acquisitions of radio stations				(75,875	)		(80,061	)
	Cash deposited in restricted cash account related to the Albuquerque acquisition				(1,250	)		—
	Property and equipment acquisitions				(7,646	)		(11,091	)
	Dispositions of property and equipment				765			15
	Additions to intangible assets				(1,589	)		(135	)
	Increase in deferred charges and other assets				(1,738	)		(5,288	)

			Net cash used in investing activities		(87,333	)		(96,560	)

Cash flows from financing activities:
	Borrowing on long-term obligations				15,000			—
	Payments on long-term obligations				(2	)		(39	)
	Proceeds from stock issuances				3,825			2,992
	Stock repurchase				—			(10,108	)

			Net cash provided by (used in) financing activities		18,823			(7,155	)

Net decrease in cash and cash equivalents					(12,846	)		(41,381	)
Cash and cash equivalents at beginning of period					59,587			115,689

Cash and cash equivalents at end of period				$	46,741		$	74,308

See accompanying notes to unaudited condensed consolidated financial statements.

HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2002

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Hispanic Broadcasting Corporation and subsidiaries (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

2. New Accounting Pronouncements

In 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized and to be tested for impairment at least annually in accordance with the provisions of SFAS No. 142. The Company adopted the provisions of SFAS No. 142 on July 1, 2001 and January 1, 2002 for intangible assets acquired in business combinations completed after June 30, 2001 and prior to July 1, 2001, respectively.

On January 1, 2002, we were required by SFAS No. 142 to reassess the useful lives of all intangible assets acquired on or before June 30, 2001, and make any necessary remaining amortization period adjustments by March 31, 2002. No remaining amortization period adjustments were necessary. In addition, to the extent that an intangible asset is identified as having an indefinite useful life, we are required to perform a transitional test to determine if there is an asset impairment in accordance with the provisions of SFAS No. 142. Any impairment loss is measured as of January 1, 2002 and recognized as the cumulative effect of a change in accounting principle in the six months ended June 30, 2002.

In connection with the transitional cost in excess of fair value of net assets acquired impairment evaluation, SFAS No. 142 requires us to perform an assessment of whether there is an indication that cost in excess of fair value of net assets acquired is impaired as of January 1, 2002. To accomplish this, we identified the reporting units and determined the carrying value of each reporting unit. The Company defines its reporting unit to be an individual radio market. To the extent a reporting unit's carrying amount exceeds its fair value, the reporting unit's cost in excess of fair value of net assets acquired may be impaired and we must perform the second step of the transitional impairment test. In the second step, we must compare the implied fair value of the reporting unit's cost in excess of fair value of net assets acquired, determined by allocating the reporting unit's fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with SFAS No. 141, to its carrying amount, both of which would be measured as of January 1, 2002. Any transitional impairment loss is recognized as the cumulative effect of a change in accounting principle in our statement of income. No impairment loss was recognized for the nine months ended September 30, 2002 as a result of the transitional test discussed above.

In 2001, the Financial Accounting Standards Board issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121, Accounting for

the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. SFAS No. 144 retains the requirements of SFAS No. 121 to (a) recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable from its undiscounted cash flows and (b) measure an impairment loss as the difference between the carrying amount and fair value of the assets. The statement also removes goodwill from its scope and covers the accounting for the disposal of long-lived assets. The Company adopted the provisions of SFAS No. 144 on January 1, 2002. Management does not believe adoption of this statement will materially impact the Company's financial position or results of operations.

3. Pending Merger

On June 12, 2002, the Company announced a merger with Univision Communications, Inc. ("Univision"). Univision will acquire the Company in an all-stock transaction. Under the agreement, each share of the Company's common stock will be exchanged for a fixed 0.85 shares of Univision Class A Common Stock. If the Federal Communications Commission determines that the holders of the Company's Class B Common Stock have an attributable interest in Univision under the Federal Communications Act then their shares will be exchanged for a fixed 0.85 shares of Univision Class B Common Stock. The boards of directors of both companies have approved the merger and we are hopeful that it will close by year-end 2002. The merger is subject to approval by the shareholders of both companies as well as regulatory approvals and customary closing conditions.

Included in corporate expenses are merger expenses of $0.6 and $3.0 million for the three and nine months ended September 30, 2002. Under the terms of an agreement with the Company's investment bankers, the Company will pay a $10.5 million success fee upon the completion of the merger. The $10.5 million success fee will be recognized in expense upon the completion of the merger.

4. Acquisitions and Radio Signal Upgrades

2002 Acquisitions and Radio Signal Upgrades

On August 10, 2001, the Company entered into an asset purchase agreement to acquire for $16.0 million the assets of KQMR(FM), serving the Las Vegas market (the "Las Vegas Acquisition"). On March 22, 2002, the Company closed on the Las Vegas Acquisition. The Company used its available cash to fund the acquisition.

The fair value of the assets acquired in the Las Vegas Acquisition as of March 22, 2002 is as follows (in thousands):

Property and equipment	$	26
Intangible assets		16,014

	$	16,040

On October 10, 2001, the Company entered into an asset purchase agreement to acquire for $5.0 million the assets of KZOL(FM), serving the Fresno market (the "Fresno Acquisition"). On March 29, 2002, the Company closed on the Fresno Acquisition. The Company used its available cash to fund the acquisition.

The fair value of the assets acquired in the Fresno Acquisition as of March 29, 2002 is as follows (in thousands):

Property and equipment	$	90
Intangible assets		4,931

	$	5,021

On December 17, 2001, the Company entered into an asset purchase agreement to acquire for $58.0 million the assets of KSOL(FM), serving the San Jose and San Francisco markets (the "San Jose Acquisition"). On April 1, 2002, the Company closed on the San Jose Acquisition. The Company used its available cash to fund the acquisition along with $15.0 million borrowed from the $191.3 million revolving credit facility (the "Credit Facility") on April 1, 2002.

The fair value of the assets acquired in the San Jose Acquisition as of April 1, 2002 is as follows (in thousands):

Property and equipment	$	415
Intangible assets		57,874

	$	58,289

On August 26, 2002, the Company entered into an asset purchase agreement to acquire for $22.5 million the assets of KJFA(FM) (formerly KKRG(FM)), KIOT(FM), KVVF(FM) (formerly KOSZ(FM)), KKSS(FM) and KAJZ(FM) (formerly KRQS(FM)), serving the Albuquerque market (the "Albuquerque Acquisition"). On November 1, 2002, the Company closed on the Albuquerque Acquisition. The Company used its available cash to fund the acquisition.

Radio stations KPTY(FM) in Houston and KDXX(FM) and KDXT(FM) in Dallas have been involved in a variety of proceedings before the Federal Communications Commission to upgrade each of the stations' signal strength. The radio signal upgrade projects for KPTY(FM) in Houston and KDXX(FM) in Dallas were substantially completed in February 2002 and the stations began broadcasting according to their new authorized signal authority. The upgrade costs of $34.9 million incurred by the Company and included in deferred charges and other assets were reclassified to intangible assets in February 2002 and are not subject to amortization. The radio signal upgrade project for KDXT(FM) in Dallas was substantially completed in July 2002 and the station began broadcasting according to its new authorized signal authority. The upgrade costs of $2.6 million incurred by the Company and included in deferred charges and other assets were reclassified to intangible assets in July 2002 and are not subject to amortization. The Company is obligated to pay an additional $0.8 million related to the upgrade projects of KDXX(FM) and KDXT(FM).

2001 Acquisitions

On April 24, 2001, the Company entered into an asset purchase agreement to acquire for $80.0 million the FCC licenses of a radio station broadcasting at 106.5 MHz (KOVE(FM)), serving the

Houston market (the "Houston Acquisition"). The Houston Acquisition closed on July 20, 2001. The asset acquisition was funded with available cash.

The fair value of the assets acquired in the Houston Acquisition as of July 20, 2001 is as follows (in thousands):

Property and equipment	$	2,028
Intangible assets		78,036

	$	80,064

On September 4, 2001, the Company entered into an asset purchase agreement to acquire for $34.0 million the assets of KOMR(FM), KMRR(FM), KKMR(FM) and KHOV(FM), serving the Phoenix market (the "Phoenix Acquisition"). The Phoenix Acquisition closed on October 31, 2001. The asset acquisition was funded with available cash.

The fair value of the assets acquired in the Phoenix Acquisition as of October 31, 2001 is as follows (in thousands):

Prepaid expenses and other current assets	$	24
Property and equipment		2,052
Intangible assets		31,989

	$	34,065

The intangible assets acquired in the Las Vegas Acquisition, the Fresno Acquisition, the San Jose Acquisition, the Albuquerque Acquisition, the Houston Acquisition and the Phoenix Acquisition are not subject to amortization.

All of the acquisitions discussed above were accounted for using the purchase method of accounting. Accordingly, the accompanying financial statements include the operations of the acquired businesses from the respective dates of acquisition.

Unaudited pro forma results of operations for the nine months ended September 30, 2002 and 2001, calculated as though the Las Vegas Acquisition, the Fresno Acquisition, the San Jose Acquisition, the Albuquerque Acquisition, the Houston Acquisition, and the Phoenix Acquisition had occurred at the beginning of each period, is as follows (in thousands, except per share data):

	Nine Months Ended June 30,
	2002		2001
Net revenues	$	194,373	$	190,134
Operating income	$	48,809	$	32,716
Net income	$	30,423	$	20,448
Net income per common share—basic and diluted	$	0.28	$	0.19

The pro forma information is presented for comparative purposes only and does not purport to be indicative of what would have occurred had the acquisitions actually been made at such dates, nor is it indicative of future operating results.

5. Intangible Assets

Intangible assets as of September 30, 2002 are summarized as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Amount
Intangible assets subject to amortization	$	12,737	$	10,925	$	1,812
Intangible assets not subject to amortization		1,238,036		99,567		1,138,469

	$	1,250,773	$	110,492	$	1,140,281

Amortization expense for the three and nine months ended September 30, 2002 is $0.2 and $0.4 million, respectively. Estimated amortization expense of intangible assets acquired as of September 30, 2002 with finite useful lives are summarized as follows (in thousands):

Year	Amount
2002	$	512
2003		525
2004		395
2005		193
2006		105

The reconciliation of reported net income to adjusted net income, which is adjusted for the effect of amortization of intangible assets with an indefinite useful life (net of income taxes) is as follows (in thousands except per share data):

			Three Months Ended September 30,				Nine Months Ended September 30,
			2002		2001		2002		2001
Reported net income			$	12,025	$	8,492	$	29,385	$	22,356
Broadcast licenses amortization, net of income tax				—		3,630		—		11,078
Cost in excess of fair value of net assets acquired amortization, net of income tax				—		401		—		1,223
Other intangible assets amortization, net of income tax				—		21		—		64

Adjusted net income			$	12,025	$	12,544	$	29,385	$	34,721

Adjusted net income per common share:
	Basic:
		Reported net income	$	0.11	$	0.08	$	0.27	$	0.21
		Broadcast licenses amortization, net of income tax		—		0.03		—		0.10
		Cost in excess of fair value of net assets acquired amortization, net of income tax		—		—		—		0.01
		Other intangible assets amortization, net of income tax		—		—		—		—

		Adjusted net income	$	0.11	$	0.11	$	0.27	$	0.32

	Diluted:
		Reported net income	$	0.11	$	0.08	$	0.27	$	0.20
		Broadcast licenses amortization, net of income tax		—		0.03		—		0.10
		Cost in excess of fair value of net assets acquired amortization, net of income tax		—		—		—		0.01
		Other intangible assets amortization, net of income tax		—		—		—		—

		Adjusted net income	$	0.11	$	0.11	$	0.27	$	0.31

6. Long-Term Obligations

The Company's ability to borrow under the Credit Facility is subject to compliance with certain financial ratios and other conditions set forth in the Credit Facility. The Credit Facility is secured by the stock of the Company's subsidiaries. Borrowings under the Credit Facility bear interest at a rate based on the LIBOR rate plus an applicable margin as determined by the Company's leverage ratio. The Company borrowed $15.0 million from the Credit Facility on April 1, 2002. As of September 30, 2002, the Company has $176.3 million of credit available. The Credit Facility commitment began reducing on September 30, 1999 and continues quarterly through December 31, 2004.

7. Contingencies

The Company is subject to legal proceedings and other claims which have arisen in the ordinary course of its business and have not been fully adjudicated. These actions, when ultimately concluded,

will not, in the opinion of management, have a material adverse effect upon the financial position, results of operations or liquidity of the Company.

On June 12, 2002, Spanish Broadcasting System, Inc. filed Spanish Broadcasting System, Inc. v. Clear Channel Communications, Inc. and Hispanic Broadcasting Corporation. The case is pending in the United States District Court for the Southern District of Florida. Plaintiff alleges a variety of claims against the defendants including claims for federal and state antitrust violations under the Sherman Act, the Florida Antitrust Act, and California's Cartwright Act. Plaintiff's complaint also includes numerous other state law causes of action including, among others, tortious interference, defamation, and violation of the California Unfair Competition Act. The plaintiff, and both defendants, own and operate radio stations throughout the United States, and plaintiff's claims arise out of steps the defendants allegedly took to undermine plaintiff's radio station business. On July 31, 2002, plaintiff amended its complaint. The amended complaint seeks actual damages in excess of $500 million before any trebling under federal or state statute along with attorney fees and other unspecified damages. The parties have begun document discovery and deposition discovery is scheduled to begin in January 2003. The Company is vigorously contesting this matter.

8. Stockholders' Equity

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (in thousands):

			Three Months Ended September 30,				Nine Months Ended September 30,
			2002		2001		2002		2001
Numerator:
	Net income		$	12,025	$	8,492	$	29,385	$	22,356

Denominator:
	Denominator for basic earnings per share			108,777		109,007		108,691		109,001
	Effect of dilutive securities:
		Stock options		389		584		882		810
		Employee Stock Purchase Plan		21		15		14		12

	Denominator for diluted earnings per share			109,187		109,606		109,587		109,823

Stock options which were excluded from the computation of diluted earnings per share due to their antidilutive effect amounted to 2.0 and 1.5 million shares for the nine months ended September 30, 2002 and 2001, respectively.

9. Supplemental Cash Flows Information

Noncash investing and financing activities for the nine months ended September 30, 2002 are as follows (in thousands):

	Increase (Decrease)
	Property and equipment, net			Intangible assets, net		Restricted cash			Deferred charges and other assets
Amounts reclassified due to the completion of radio station upgrades	$	29		$	36,830	$	—		$	(36,859	)
Amounts reclassified due to radio station acquisitions		(18	)		3,493		(3,151	)		(324	)

	$	11		$	40,323	$	(3,151	)	$	(37,183	)

10. Long-Term Incentive Plan

On May 21, 1997, the stockholders of the Company approved the Hispanic Broadcasting Corporation Long-Term Incentive Plan (the "Incentive Plan"). The types of awards that may be granted under the Incentive Plan include (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) rights to receive a specified amount of cash or shares of Class A Common Stock, and (e) restricted stock. In addition, the Incentive Plan provides that directors of the Company may elect to receive some or all of their annual director compensation in the form of shares of Class A Common Stock. Subject to certain exceptions set forth in the Incentive Plan, the aggregate number of shares of Class A Common Stock that may be the subject of awards under the Incentive Plan at one time shall be an amount equal to (a) ten percent of the total number of shares of Class A Common Stock outstanding from time to time minus (b) the total number of shares of Class A Common Stock subject to outstanding awards on the date of calculation under the Incentive Plan and any other stock-based plan for employees or directors of the Company (other than the Company's Employee Stock Purchase Plan). The Company has incentive and non-qualified stock options outstanding for 5,643,266 shares of Class A Common Stock primarily to directors and key employees. The exercise prices range from $8.22 to $50.57 per share and were equal to the fair market value of the Class A Common Stock on the dates such options were granted.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion of the consolidated results of operations for the three and nine months ended September 30, 2002 and 2001, the cash flows of the Company for the nine months ended September 30, 2002 and 2001, and consolidated financial condition as of September 30, 2002 and December 31, 2001 should be read in conjunction with the unaudited condensed consolidated financial statements of the Company and the related notes included elsewhere in this report.

Our primary source of revenues is the sale of broadcasting time for advertising. We generate the majority of our gross revenues from local advertising, which is sold primarily by each individual local radio station's sales staff, and from national spot advertising, which is sold by independent advertising sales representatives. The balance of our revenues are derived from political and network advertising sales, and miscellaneous revenues, such as rental income from tower sites, and from our Internet operation.

The most significant operating expenses are programming expenses, and advertising and promotion expenses. Operating expenses are affected in part by the timing of promotion campaigns to improve audience ratings, the timing of acquisitions, and the financial performance of our new station formats.

The Company has historically purchased primarily English-language radio stations and converted the formats to a variety of Spanish-language formats. As a result, the historical financial performance of acquired radio stations is not a good indicator of future financial performance. A new start-up radio station typically generates operating losses in its first one to two years of operation. The magnitude of operating losses is determined in part by the size of the market served by the radio station, the amount of promotion expense required to attract an audience to the station, and the size of the acquisition. Thus, the Company's financial results in any given period can be affected by the timing, number, acquisition cost and operating expenses of its start-up stations in that period.

EBITDA consists of operating income or loss excluding depreciation and amortization. EBITDA is not calculated in accordance with generally accepted accounting principles. This measure should not be considered in isolation or as a substitute for or as superior to operating income, cash flows from operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with accounting principles generally accepted in the United States of America. EBITDA does not take into account the Company's debt service requirements and other commitments and, accordingly, it is not necessarily indicative of an amount that may be available for dividends, reinvestment in the Company's business or other discretionary uses. In addition, our definition of EBITDA is not necessarily comparable to similarly titled measures reported by other companies.

We calculate same station results by measuring the operating performance of each radio station format in the current period to the performance in the comparable period of the prior year for each station format that has been in a Spanish-language format for two or more years. In some instances, existing station formats are moved to new radio frequencies. In most cases, the same station designation follows the format and the start-up becomes the station that launches a new Spanish-language format.

On June 12, 2002, the Company announced a merger with Univision. Univision will acquire the Company in an all-stock transaction. The boards of directors of both companies have approved the merger and we are hopeful that it will close by year-end 2002. The merger is subject to approval by the shareholders of both companies as well as regulatory approvals and customary closing conditions.

Results of Operations for the Three and Nine Months Ended September 30, 2002 Compared to the Three and Nine Months Ended September 30, 2001

The results of operations for the three and nine months ended September 30, 2002 are not comparable to the results of operations for the same period in 2001 primarily due to the programming format change on KQBU(FM) in Houston on August 18, 2001 and the acquisitions of KOVE(FM) in Houston on July 20, 2001, KOMR(FM), KMRR(FM), KKMR(FM) and KHOV(FM) in Phoenix on October 31, 2001, KQMR(FM) in Las Vegas on March 22, 2002, KZOL(FM) in Fresno on March 29, 2002 and KSOL(FM) in San Jose on April 1, 2002. In addition, in January 2002, the Company launched HBC Sales Integration, Inc. ("HBCSi"). The Company has adopted the marketing name HBCSi to brand all aspects of its national and network sales efforts, including HBC Radio Network sales, new business development, and, in cooperation with Katz Hispanic Media, national spot advertising sales.

Net revenues increased by $4.4 million or 6.7% to $70.2 million for the three months ended September 30, 2002 from $65.8 million for the same period in 2001. Net revenues for the nine months ended September 30, 2002 increased by $11.3 million, or 6.3% to $190.8 million, compared to $179.5 million for the same period in 2001. Net revenues increased for the three and nine months ended September 30, 2002, compared to the same periods in 2001 primarily because of (a) revenues from start-up stations acquired or reformatted in 2000, 2001 and 2002, which represent an increase of $2.0 and $4.9 million for the three and nine months ended September 30, 2002, compared to the same periods in 2001, and (b) revenue growth of same stations, which represent an increase of $3.6 and $6.9 million for the three and nine months ended September 30, 2002, compared to the same periods in 2001.

Operating expenses decreased by $0.9 million or 4.0% to $21.5 million for the three months ended September 30, 2002 from $22.4 million for the same period in 2001. Operating expenses for the nine months ended September 30, 2002 increased by $2.7 million or 4.8% to $59.4 million, compared to $56.7 million for the same period in 2001. Operating expenses decreased for the three months ended September 30, 2002, compared to the same period in 2001 because of (a) $1.5 million promotion expenses to improve audience ratings on new or existing stations in 2001, (b) $1.3 million impairment loss in 2001 associated with an investment, (c) partially offset by both a $1.4 million increase in 2002 for start-up stations, and (d) $0.7 million increase in 2002 for special event expenses in Los Angeles, San Francisco and HBCSi. Operating expenses increased for the nine months ended September 30, 2002, compared to the same period in 2001 because of $3.5 million for start-up stations and the $1.3 million impairment loss associated with an investment. As a percentage of net revenues, operating expenses decreased to 30.6% from 34.0% for the three months ended September 30, 2002 and 2001, respectively, and decreased to 31.1% from 31.6% for the nine months ended September 30, 2002 and 2001, respectively.

Wages, salaries and benefits increased by $2.6 million or 13.3% to $22.1 million for the three months ended September 30, 2002 from $19.5 million for the same period in 2001. Wages, salaries and benefits for the nine months ended September, 30, 2002 increased by $6.9 million or 11.9% to $64.7 million, compared to $57.8 million for the same period in 2001. Wages, salaries and benefits for the three and nine months ended September 30, 2002 increased because of (a) start-up stations, which represent an increase of $0.8 and $2.0 million for the three and nine months ended September 30, 2002, compared to the same periods in 2001, (b) expenses related to the launch of HBCSi, which represent an increase of $0.5 and $1.7 million for the three and nine months ended September 30, 2002, compared to the same periods in 2001, (c) costs associated with increased ratings in Dallas, which represent an increase of $0.2 and $0.6 million for the three and nine months ended September 30, 2002, compared to the same periods in 2001, (d) group insurance in all markets, which represent an increase of $0.2 and $0.5 million for the three and nine months ended September 30, 2002, compared to the same periods in 2001, and (e) costs associated with the corporate office, which represent an

increase of $0.2 and $0.7 million for the three and nine months ended September 30, 2002, compared to the same periods in 2001. As a percentage of net revenues, wages, salaries and benefits increased to 31.5% from 29.6% for the three months ended September 30, 2002 and 2001, respectively, and increased to 33.9% from 32.2% for the nine months ended September 30, 2002 and 2001, respectively.

The provision for bad debts decreased $0.4 million or 33.3% to $0.8 million for the three months ended September 30, 2002 from $1.2 million for the same period in 2001. The provision for bad debts decreased $0.2 million or 9.1% to $2.0 million for the nine months ended September 30, 2002 from $2.2 million for the same period in 2001. As a percentage of net revenues, the provision decreased to 1.1% from 1.8% for the three months ended September 30, 2002 and 2001, respectively, and decreased to 1.0% from 1.2% for the nine months ended September 30, 2002 and 2001, respectively.

Corporate expenses increased $1.4 million or 140.0% to $2.4 million for the three months ended September 30, 2002 from $1.0 million for the same period in 2001. Corporate expenses for the nine months ended September 30, 2002 increased by $4.2 million or 150.0% to $7.0 million, compared to $2.8 million for the same period in 2001. Included in corporate expenses are merger expenses of $0.6 and $3.0 million for the three and nine months ended September 30, 2002, respectively, related to the Company's merger with Univision and an increase in legal and professional fees unrelated to the merger. As a percentage of net revenues, corporate expenses increased to 3.4% from 1.5% for the three months ended September 30, 2002 and 2001, respectively, and increased to 3.7% from 1.6% for the nine months ended September 30, 2002 and 2001, respectively.

Depreciation and amortization for the three and nine months ended September 30, 2002 decreased 66.7% for each period to $3.0 and $9.1 million, respectively, compared to $9.0 and $27.3 million for the same periods in 2001, respectively. The decrease is due to the adoption of SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized.

Interest income (expense), net decreased to zero and $0.2 million from $0.5 and $3.0 million for the three and nine months ended September 30, 2002 and 2001, respectively. The decrease for the three and nine months ended September 30, 2002 compared to the same periods in 2001 was due to cash and cash equivalents and interest rates being higher in 2001 than in 2002.

Other, net decreased to zero from $0.6 and $1.0 million for the three and nine months ended September 30, 2002 and 2001, respectively. The decrease was due to the final award received by the Company in 2001 related to an arbitration proceeding.

Federal and state income taxes are being provided at an effective rate of 40.9% and 38.4% for the three months ended September 30, 2002 and 2001, respectively, and 39.8% and 39.1% for the nine months ended September 30, 2002 and 2001, respectively. The increase in the effective rate is due to merger expenses in 2002 which are not deductible for tax purposes.

For the three months ended September 30, 2002, the Company's net income totaled $12.0 million ($0.11 per common share) compared to $8.5 million ($0.08 per common share) in the same period in 2001. For the nine months ended September 30, 2002, the Company's net income totaled $29.4 million ($0.27 per common share) compared to $22.4 million ($0.20 per common share—diluted) in the same period in 2001.

Our business is affected by general economic conditions, which are more favorable than this same time last year due to the events of September 11, 2001. The revenue growth of the Company is significantly impacted by its Los Angeles operations, which have experienced a net revenue decline for the nine months ended September 30, 2002 compared to the comparable period last year due to increased competition. The Company's Los Angeles operations accounted for approximately 25.6% and 24.2% of total consolidated net revenues for the three and nine months ended September 30, 2002, and experienced period-over-period net revenue growth of approximately 3.7% and negative net revenue

growth of 6.4% when comparing those periods to the same periods in the prior year. The financial impact on the Company of the increased competition in Los Angeles has been partially offset by the Company's success in adding to its station line-up and geographically diversifying its revenue streams over the last few years. The upgrade of radio station signals also impacts revenue growth of the Company. Signal upgrades expand the signal coverage and have resulted in additional listening share, which should translate into additional revenue in the future. Corporate expenses increased in the third quarter of 2002 compared to the same period in 2001 primarily as a result of merger costs and higher legal and professional fees unrelated to the merger. The Company anticipates that these higher legal and professional fees unrelated to the merger will continue during the next twelve to eighteen months.

Liquidity and Capital Resources

Net cash provided by operating activities for the nine months ended September 30, 2002 was $55.7 million as compared to $62.3 million for the same period in 2001. The $6.6 million decrease from 2001 to 2002 is due to merger expenses of $3.0 million being recognized in 2002 and changes in operating assets and liabilities. Net cash used in investing activities was $87.3 and $96.6 million for the nine months ended September 30, 2002 and 2001, respectively. The $9.3 million decrease from 2001 to 2002 is due to the Houston Acquisition in 2001 being an amount greater than the aggregate cost of the 2002 acquisitions for Las Vegas, Fresno and San Jose. The cash flows used in the acquisitions is partially offset by a lower amount of spending in 2002 compared to 2001 in property and equipment and deferred charges and other assets due to the completion in February 2002 of the radio signal upgrade projects for KPTY(FM) in Houston and KDXX(FM) in Dallas. Net cash provided by financing activities was $18.8 and net cash used in financing activities was $7.1 million for the nine months ended September 30, 2002 and 2001, respectively. The $25.9 million increase from 2001 to 2002 is due to a $15.0 million borrowing from the Credit Facility in 2002 and the purchase of $10.1 million of Class A Common Stock of the Company in 2001.

The Company paid $75.9 and $80.1 million for radio station acquisitions for the nine months ended September 30, 2002 and 2001. These acquisitions were funded with available cash, except $15.0 million of the 2002 amount was funded with an amount borrowed from the Credit Facility.

Generally, capital expenditures are made with cash provided by operations. Capital expenditures totaled $7.6 and $11.1 million for the nine months ended September 30, 2002 and 2001. Approximately $3.2 million of the capital expenditures incurred during the nine months ended September 30, 2002 related to radio signal upgrade projects for three different radio stations in Houston and Dallas, transmitter projects in Los Angeles, Phoenix, San Antonio and San Francisco and the build-out of studio and office space in Las Vegas, Dallas, Houston, Phoenix, San Francisco, Fresno and Los Angeles compared to $7.6 million incurred in the same period of 2001 for three radio signal upgrade projects and the build-out of studio and office space in Los Angeles, San Francisco, New York, Miami and San Antonio.

The short-term liquidity needs of the Company are $51.9 million which is the sum of current liabilities, excluding the current portion of long-term obligations, and the current portion of long-term obligations as shown in the table below. The long-term liquidity needs of the Company are shown in the table below.

The Company is obligated to pay $0.8 million in addition to the costs incurred as of September 30, 2002, related to the upgrade projects of KDXX(FM) and KDXT(FM).

Available cash on hand plus cash flow provided by operations was sufficient to fund the Company's operations, meet its debt obligations, and to fund capital expenditures. Management believes the Company will have sufficient cash on hand and cash provided by operations to finance its operations, satisfy its debt service requirements, and to fund capital expenditures. Management regularly reviews

potential acquisitions. Future acquisitions will be financed primarily through proceeds from borrowings under the Credit Facility, available cash on hand, and proceeds from securities offerings.

Long-Term Debt

The scheduled maturities of long-term obligations, future minimum rental payments under noncancellable operating leases, radio station acquisition commitments and radio signal upgrade projects as of September 30, 2002 are as follows (in thousands):

	Payments Due by Period
	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Long-term obligations	$	16,422	$	6	$	15,015	$	18	$	1,383
Operating leases		68,320		1,625		15,677		13,778		37,240
Radio station acquisition, net of amount held in escrow (restricted cash)		21,081		21,081		—		—		—
Upgrade projects		800		800		—		—		—

Total contractual cash obligations	$	106,623	$	23,512	$	30,692	$	13,796	$	38,623

On April 1, 2002, $15.0 million was borrowed on the Credit Facility. As of September 30, 2002, the Company has $176.3 million of credit available. Borrowings under the Credit Facility bear interest at a rate based on LIBOR plus an applicable margin as determined by the Company's leverage ratio. The Credit Facility is secured by the stock of the Company's subsidiaries. Availability under the Credit Facility reduces quarterly commencing September 30, 1999 and ending December 31, 2004. Our ability to make additional borrowings under the Credit Facility is subject to compliance with certain financial ratios and other conditions set forth in the Credit Facility.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. The Company believes that its critical accounting policies are limited to those described below.

Impairment of Long-Lived Assets

The Company records impairment losses when events and circumstances indicate that long-lived assets might be impaired. Long-lived assets other than goodwill and intangible assets with an indefinite useful life are determined to be impaired if the undiscounted cash flow estimated to be generated by those assets is less than the carrying amount of those assets. Goodwill and intangible assets with an indefinite useful life are determined to be impaired if the fair value of a reporting unit is less than the carrying value of the respective reporting unit. When specific assets are determined to be impaired, the cost basis of the assets is reduced to reflect their current fair market value.

We performed a recoverability assessment of all of our long-lived assets as of January 1, 2002 and no impairment loss was required to be recognized.

Revenue Recognition

Revenue is derived primarily from the sale of advertising time to local and national advertisers. Revenue is recognized as commercials are broadcast. Revenues from barter transactions are recognized as income when commercials are broadcast. Barter transactions are recorded at the estimated fair value of the goods or services received.

Allowance For Doubtful Accounts

The allowance for doubtful accounts is estimated using a combination of the aging of the accounts receivable balances and knowledge related to the ability of the Company to collect specific accounts. Older accounts receivable are seen to be less likely to be collected and require a greater allowance. Specific accounts which are estimated to not be collected increase the allowance.

For additional information on our significant accounting policies, see Note 1 to our Annual Report on Form 10-K for the year ended December 31, 2001.

Inflation

Inflation has affected financial performance due to higher operating expenses. Although the exact impact of inflation is indeterminable, we have offset these higher costs by increasing the effective advertising rates of most of our radio stations.

Forward Looking Statements

Certain statements contained in this report are not based on historical facts, but are forward looking statements that are based on numerous assumptions made as of the date of this report. When used in the preceding and following discussions, the words "believes," "intends," "expects," "anticipates" and similar expressions are intended to identify forward looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to, industry-wide market factors and regulatory developments affecting the Company's operations, acquisitions of broadcast properties described elsewhere herein, the financial performance of start-up stations, and efforts by management to integrate its operating philosophies and practices at the station level. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2001. The Company disclaims any obligation to update the forward looking statements in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is subject to interest rate risk on the interest earned on cash and cash equivalents and the interest incurred on amounts borrowed from the Credit Facility. A change of 10% in the interest rate earned on short-term investments or charged on amounts borrowed from the Credit Facility would not have had a significant impact on the Company's historical financial statements.

ITEM 4. CONTROLS AND PROCEDURES

Our principal executive and financial officers have concluded, based on their evaluation as of a date within 90 days before the filing of this Form 10-Q, that our disclosure controls and procedures (as defined in Rule 13a-14 of the Securities Exchange Act of 1934) are effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

Subsequent to our evaluation, there were no significant changes in internal controls or other factors that could significantly affect these internal controls.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in various claims and lawsuits, which are generally incidental to its business. The Company is vigorously contesting all such matters and believes that their ultimate resolution will not have a material adverse effect on its consolidated financial position or results of operations.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a): Exhibits

Exhibit No.		Description
2.1		Agreement and Plan of Reorganization, dated June 11, 2002, by and among Univision Communications Inc., Univision Acquisition Corporation and Hispanic Broadcasting Corporation (incorporated by reference to Univision Communications Inc. Current Report on Form 8-K, dated June 12, 2002, File No. 001-12223).
2.2		Univision Stockholder Support Agreement, dated June 11, 2002, by and among Univision Communications Inc., Hispanic Broadcasting Corporation, and A. Jerrold Perenchio (incorporated by reference to Univision Communications Inc. Current Report on Form 8-K, dated June 12, 2002, File No. 001-12223).
2.3		HBC Stockholder Support Agreement, dated June 11, 2002, by and among Univision Communications Inc., Univision Acquisition Corporation, and the stockholders listed on Exhibit A thereto (incorporated by reference to Univision Communications Inc. Current Report on Form 8-K, dated June 12, 2002, File No. 001-12223).
3.1		Second Amended and Restated Certificate of Incorporation of the Company dated February 14, 1997 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on March 3, 1997).
3.2		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 4, 1998 (incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q filed on November 12, 1998).
3.3		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 3, 1999 (incorporated by reference to Exhibit 3.3 to the Company's Form 10-Q filed on August 12, 1999).

3.4		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated May 25, 2000 (incorporated by reference to Exhibit 3.4 to the Company's Form 10-Q filed on August 11, 2000).
3.5		Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Amendment No. 3 to Form S-1 (Registration No. 33-78370) filed on July 8, 1994).
4.1		Specimen certificate for the Class A Common Stock (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Amendment No. 3 to Form S-1 (Registration No. 33-78370) filed on July 8, 1994).
4.2		Specimen certificate for the Class B Common Stock (incorporated by reference to Exhibit 4.2 to the Company's Form 10-Q filed on August 13, 2002).
10.1		Asset Purchase Agreement, dated August 26, 2002, by and among Simmons-NM, LLC, Simmons-NM, LS, LLC and Hispanic Broadcasting Corporation.

(b): Reports on Form 8-K

The Company filed a report on Form 8-K dated August 13, 2002, disclosing that McHenry T. Tichenor, Jr., Chief Executive Officer and Jeffrey T. Hinson, Chief Financial Officer submitted unqualified certifications to the SEC, relating to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002, pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Signature

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.

		Hispanic Broadcasting Corporation (Registrant)
		By:	/s/ Jeffrey T. Hinson Jeffrey T. Hinson Senior Vice President/ Chief Financial Officer Principal Financial Officer

Dated: November 14, 2002

Certification

I, McHenry T. Tichenor, Jr., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Hispanic Broadcasting Corporation;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/ McHenry T. Tichenor, Jr.

McHenry T. Tichenor, Jr.
President and Chief Executive Officer

Certification

I, Jeffrey T. Hinson, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Hispanic Broadcasting Corporation;

2.

3.

4.

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/ Jeffrey T. Hinson

Jeffrey T. Hinson
Senior Vice President/
Chief Financial Officer
Principal Financial Officer

Index To Exhibits

Exhibit No.		Description
2.1		Agreement and Plan of Reorganization, dated June 11, 2002, by and among Univision Communications Inc., Univision Acquisition Corporation and Hispanic Broadcasting Corporation (incorporated by reference to Univision Communications Inc. Current Report on Form 8-K, dated June 12, 2002, File No. 001-12223).
2.2		Univision Stockholder Support Agreement, dated June 11, 2002, by and among Univision Communications Inc., Hispanic Broadcasting Corporation, and A. Jerrold Perenchio (incorporated by reference to Univision Communications Inc. Current Report on Form 8-K, dated June 12, 2002, File No. 001-12223).
2.3		HBC Stockholder Support Agreement, dated June 11, 2002, by and among Univision Communications Inc., Univision Acquisition Corporation, and the stockholders listed on Exhibit A thereto (incorporated by reference to Univision Communications Inc. Current Report on Form 8-K, dated June 12, 2002, File No. 001-12223).
3.1		Second Amended and Restated Certificate of Incorporation of the Company dated February 14, 1997 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on March 3, 1997).
3.2		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 4, 1998 (incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q filed on November 12, 1998).
3.3		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 3, 1999 (incorporated by reference to Exhibit 3.3 to the Company's Form 10-Q filed on August 12, 1999).
3.4		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated May 25, 2000 (incorporated by reference to Exhibit 3.4 to the Company's Form 10-Q filed on August 11, 2000).
3.5		Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Amendment No. 3 to Form S-1 (Registration No. 33-78370) filed on July 8, 1994).
4.1		Specimen certificate for the Class A Common Stock (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Amendment No. 3 to Form S-1 (Registration No. 33-78370) filed on July 8, 1994).
4.2		Specimen certificate for the Class B Common Stock (incorporated by reference to Exhibit 4.2 to the Company's Form 10-Q filed on August 13, 2002).
10.1		Asset Purchase Agreement, dated August 26, 2002, by and among Simmons-NM, LLC, Simmons-NM, LS, LLC and Hispanic Broadcasting Corporation.

EX-10.1 3 a2092910zex-10_1.htm EXHIBIT 10.1
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Exhibit 10.1

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement ("Agreement"), made as of the 26 day of August, 2002, is by and among Simmons-NM, LLC, a Utah limited liability company ("SNM"), and Simmons-NM, LS, LLC, a Utah limited liability company ("LS," and collectively with SNM, the "Seller"), and Hispanic Broadcasting Corporation, a Delaware corporation ("Buyer").

RECITALS

A.: LS is the licensee of Radio Stations KIOT(FM), KOSZ(FM), KKRG(FM), KRQS(FM) and KKSS(FM), licensed in New Mexico and identified on Schedule 1.1(a) hereto (the "Stations), together with related licenses and authorizations issued by the Federal Communications Commission (the "FCC").
B.: SNM is the owner of the operational assets used in the broadcasting of the Stations.
C.: SNM operates and manages the Stations for LS pursuant to a License Subsidiary Management Agreement (the "Management Agreement") dated as of May 18, 2001.
D.: SNM desires to sell to the Buyer substantially all of the assets relating to the operation of the Stations, and the Buyer desires to purchase such assets on the terms and conditions contained in this Agreement.
E.: LS desires to assign its Federal Communications Commission ("FCC") licenses related to the Stations to Buyer, subject to consent of the FCC and the terms of this Agreement.
F.: The defined terms shall have the meanings ascribed to them in Article 13.

WITNESSETH:

NOW, THEREFORE, in consideration of the mutual covenants contained herein, Seller and Buyer hereby agree as follows:

ARTICLE 1
ASSETS TO BE CONVEYED

1.1 Closing. Subject to (i) the provisions of Section 10.1 and (ii) the satisfaction or, to the extent permissible by law, waiver (by the party for whose benefit the closing condition is imposed), on or prior to the date scheduled for the Closing, of the closing conditions set forth in Article 7 hereof, including, for example, the consent of the FCC to the transaction contemplated by this Agreement, the closing (the "Closing") of the sale and purchase of the Station Assets (as defined in Section 1.2) shall take place in the offices of the Buyer, at 11:00 a.m., local time, on the seventh day following the satisfaction or waiver of the conditions set forth in Article 7 (or on the next normal business day if the seventh day is not a normal business day), or at such other place, time or date as Buyer and Seller may mutually agree in writing.

1.2 Transfer of Assets. Subject to the terms and conditions set forth in this Agreement, Seller hereby agrees to sell, assign, transfer, convey and deliver to Buyer on the Closing Date, and Buyer agrees to purchase all of Seller's right, title and interest in, the following assets, together with any additions thereto (pursuant to paragraph (a) or paragraph (e) below) between the date of this Agreement and the Closing Date, free and clear of all Liens, except as otherwise provided in this Agreement, but excluding the assets described in Section 1.3 (collectively, the "Station Assets"):

(a) All licenses, permits, construction permits, and other authorizations issued by the FCC, the Federal Aviation Administration, or any other federal, state or local governmental authority to Seller, currently in effect and used in the conduct of the business or operations of the Stations, together with renewals or modifications thereof and any additions thereto between the date hereof

and the Closing Date, including, without limitation, the licenses, permits and authorizations listed on Schedule 1.2(a) attached hereto (the licenses, permits and authorizations issued by the FCC collectively are referred to herein as the "FCC Licenses;" and the FCC Licenses and the licenses, permits and other authorizations issued by any other governmental authority collectively are referred to herein as the "Station Licenses");

(b) All of Seller's right, title and interest in the towers, equipment, spare parts and other tangible personal property located at the Stations' transmitters or studio site and used exclusively in the operation of the Stations and in any other tangible personal property identified on Schedule 1.2(b) (the "Personal Property");

(c) All contracts which (i) are listed on Schedule 1.2(c) hereto and designated as "material contracts" (the "Material Contracts"), (ii) are listed on Schedule 1.2(c) and designated as "other contracts" provided that, as to any such contract the assignment of which requires the consent of a party other than Seller, such consent is obtained prior to the Closing (the "Other Contracts"), or (iii) are entered into between the date hereof and the Closing which Seller has agreed to assign, and Buyer has agreed to assume, in writing at the Closing provided that, with respect to any such contract the assignment of which requires the consent of a party other than Seller, such consent is obtained prior to the Closing (the "Post-Agreement Contracts"); the Material Contracts, Other Contracts and Post-Agreement Contracts being referred to in this Agreement as the "Assumed Contracts;"

(d) Seller's public inspection file, filings with the FCC relating to the Stations, and such technical information, engineering data, rights under manufacturers' warranties as exist at Closing and relate exclusively to the assets being conveyed hereunder;

(e) All copyrights, logos, slogans, trademarks, trade names, service marks, websites, website domain names and other intellectual property used by the Stations, as listed on Schedule 1.2(e), together with any associated goodwill (the "Intellectual Property");

(f) Copies of the Assumed Contracts, and all records required by the FCC to be kept by the Stations;

(g) All of Seller's proprietary information, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints and schematics, including filings with the FCC, relating to the business and operation of the Stations;

(h) All of Seller's right, title and interest in and to the agreements with advertisers to broadcast commercial messages on the Stations ("Time Sales Agreements") which have not been performed as of the Closing; and

(i) All of Seller's right, title and interest in and to the real property listed on Schedule 1.2(h) hereto, including, without limitation, the fee and/or leasehold interest in the real property and all of the improvements thereon (the "Real Property"), free and clear of all Liens except as indicated on Schedule 1.2(h) hereto.

1.3 Excluded Assets. The Station Assets shall not include the following:

(a) All cash, cash equivalents or similar investments such as certificates of deposit, treasury bills and other marketable securities on hand and/or in banks, deposits or prepaid expenses of Seller;

(b) All accounts receivable of Seller;

(c) Any insurance policies, promissory notes, amounts due from employees, bonds, letters of credit, certificates of deposit, or other similar items, and any cash surrender value in regard thereto;

(d) Any pension, profit-sharing or cash or deferred (section 401(k)) plans and trust and assets thereof any other employee benefit plan or arrangement and the assets thereof of Seller;

(e) Duplicate copies of such records as may be necessary to enable Seller to prepare and file tax returns and reports, all original financial statements and supporting materials, all books and records that Seller is required by law to retain, and all records of Seller relating to the sale of the Station Assets;

(f) Any interest in and to any refunds of federal, state or local franchise, income or other taxes for periods prior to the Closing;

(g) All tangible and intangible personal property disposed of or consumed between the date of this Agreement and the Closing, as permitted under this Agreement;

(h) Any other assets identified on Schedule 1.3(h);

(i) The account books of original entry and general ledges and all limited liability company records of the Seller, including, but not limited to, tax returns and transfer books;

(j) Those agreements and arrangements for the exchange of advertising time for consideration other than money which remain in effect and unfulfilled as of the Closing Date ("Barter Obligations"); and

(k) Assets not used by Seller in the operation of the Stations.

1.4 Assumption of Liabilities and Obligations. As of the Closing Date, Buyer shall assume and undertake to pay, discharge and perform all obligations and liabilities of Seller arising or accruing after the Closing under the Station Licenses, Time Sales Agreements and Assumed Contracts. Buyer shall not assume any other obligations or liabilities of Seller or the Stations, including (i) any obligations or liabilities under any contract or agreement not included in the Assumed Contracts, (ii) any obligation or liabilities under the Assumed Contracts relating to the period prior to the Closing except insofar as an adjustment therefore is made in favor of Buyer under Section 2.5, (iii) any claims or pending litigation or proceedings relating to the operation of the Stations prior to the Closing, (iv) any obligations or liabilities of Seller which are unrelated to the Stations, (v) any agreements, executed or executory, relating to the exchange of broadcast time on the Stations for goods, wares, services, advertising, promotions, merchandising or anything other than cash, (vi) any obligations relating to current or former employees of the Stations and (vii) any obligations relating to the Excluded Assets.

ARTICLE 2
PURCHASE PRICE

2.1 Purchase Price. The purchase price (the "Purchase Price") for the Station Assets shall be $22.5 million.

2.2 Deposit. The Buyer has delivered $1,250,000 (the "Deposit Amount") to Star Media, as the "Escrow Agent," subject to an escrow agreement in substantially the form set forth on Schedule 2.2. The Deposit Amount is to be held subject to the following:

(a) If the purchase of the Assets under this Agreement is not consummated due to a breach by the Buyer of any of its obligations under this Agreement, the Seller shall be entitled to the Deposit Amount (together with interest thereon) as liquidated damages, to compensate the Seller for the damages resulting to the Seller from such breach.

(b) If the purchase of the Assets under this Agreement is not consummated due to the failure of any of the conditions in Section 7 (other than as a result of the Buyer's breach of any of its obligations under this Agreement), the Seller shall not be entitled to the Deposit Amount (or interest thereon) and, promptly after the termination of this Agreement in accordance with Section 7, the Deposit Amount (together with interest thereon) shall be paid by the Escrow Agent to the Buyer.

(c) At the closing, the parties shall cause the Deposit Amount (and any interest earned thereon) to be paid to the Seller.

2.3 Payment of Purchase Price. At the Closing, Buyer shall pay Seller the Purchase Price, less the Deposit Amount and interest earned thereon, and subject to the prorations set forth in Section 2.5, by wire transfer of immediately available funds to an account at a bank or other financial institution pursuant to wire transfer instructions that Seller shall deliver to Buyer at least five (5) days prior to the Closing Date.

2.4 Allocation. The Purchase Price shall be allocated for income tax purposes in a manner as mutually agreed between the parties based upon an appraisal prepared by Bond & Pecaro (whose fees shall be paid by Purchaser). Such agreed allocations shall be used by the parties in preparing all relevant tax returns, information reports and other tax documents and forms.

2.5 Prorations. All income and expenses arising from the conduct of the business and operations of the Stations shall be prorated between Buyer and Seller as of 12.01 a.m. local time, on the Closing Date in accordance with generally accepted accounting principles. Such prorations shall be based upon the principles that Seller shall be entitled to all income earned and shall be responsible for all liabilities and obligations accruing in connection with the operation of the Stations until the Closing Date, and Buyer shall be entitled to such income earned and be responsible for such liabilities and obligations accruing in connection with the operation of the Stations thereafter. Such prorations shall include, without limitation, all ad valorem and other property taxes (but excluding taxes arising by reason of the transfer of the Station Assets as contemplated hereby, which shall be paid as set forth in Section 12.1 of this Agreement), deposits, utility expenses, liabilities and obligations under all Time Sales Agreements and Assumed Contracts, rents and similar prepaid and deferred items and all other expenses attributable to the ownership and operation of the Stations; provided, however, there shall be no adjustment for, and Seller shall remain solely liable for, any contracts or agreements not included in the Assumed Contracts and any other obligation or liability not being assumed by Buyer in accordance with Section 1.4. All real estate taxes shall be apportioned on the basis of the number of days that each party owned the Real Property during the relevant tax year.

2.6 Replacement Cost. At the closing, Seller shall pay to Buyer $130,000 by wire transfer of immediately available funds to an account designated by Buyer as the replacement cost for the backup transmitters at each of the KKRG(FM), KOSZ(FM), and KIOT(FM) stations.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

LS and SNM, each as to itself as may be applicable, represents and warrants to Buyer that, except as otherwise disclosed in the schedules to this Agreement (the "Schedule of Exceptions"), the following representations and warranties will be true and correct on the Closing Date, except for those representations and warranties specifically noted as being true and correct as of the date of this Agreement through the Closing Date:

3.1 Organization and Standing.

(a) As of the date of this Agreement through the Closing Date, SNM (i) is a Utah limited liability company duly formed, validly existing and in good standing under the laws of the State of Utah; (ii) is qualified to do business in the State of New Mexico; and (iii) has all necessary power and authority to carry on the business of the Stations.

(b) As of the date of this Agreement through the Closing Date, LS (i) is a Utah limited liability company duly formed, validly existing and in good standing under the laws of the State of Utah; (ii) is qualified to do business in the State of New Mexico; and (iii) has all necessary power and authority to carry on the business of the Stations.

3.2 Authorization and Binding Obligation. As of the date of this Agreement through the Closing Date, SNM and LS each has all necessary power and authority to enter into and perform its respective obligations under this Agreement and the documents contemplated hereby and to consummate the transactions contemplated hereby and thereby. As of the date of this Agreement through the Closing Date, this Agreement has been duly executed and delivered by both SNM and LS and is enforceable in

accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally or the availability of equitable remedies.

3.3 Absence of Conflicting Agreements or Required Consents. As of the date of this Agreement through the Closing Date, the execution, delivery and performance of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both) by SNM and LS, respectively: (a) do not and will not violate any provisions of their organizational documents; (b) do not and will not conflict with, result in a material breach of, constitute a default under, or violate any applicable law, judgment, order, ordinance, injunction, decree, rule regulation or ruling of any court or governmental authority; (c) do not and will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of, result in a material breach of, constitute a material default under, or accelerate or permit the acceleration of any performance required by the terms of, any agreement, lease, instrument, license or permit to which SNM or LS is a party or by which either SNM or LS is bound; and (d) will not create any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance upon any of the Station Assets.

3.4 Litigation. There is no claim, action, counterclaim, suit, litigation, labor dispute, arbitration, or other legal, administrative, or tax proceeding, nor any order, decree, or judgment, pending, or to the knowledge of either SNM or LS threatened, against or relating to either SNM or LS with respect to the ownership or operation of the Stations or otherwise relating to the Station Assets or the business or operations of the Stations.

3.5 Station and Other Licenses.

(a) Schedule 1.2(a) contains a true and complete list of the Station Licenses, and there are no other licenses, permits or other authorizations required for the lawful operation of the Stations in the manner now operated. LS has made available to Buyer true and complete copies of the Station Licenses (including any amendments and other modifications thereto). LS is the authorized legal holder of the Station Licenses. The Station Licenses are in good standing and in full force and effect. To the best of the knowledge of LS, the Stations and the facilities of the Stations are being operated in all material respects in accordance with the FCC Licenses and all material FCC rules and policies.

(b) Except as set forth in Schedule 1.2(a), and except for proceedings affecting the radio broadcasting industry generally, there are no applications, petitions, complaints, investigations, forfeitures, proceedings or other actions pending or, to the best of the knowledge of either SNM or LS, threatened before the FCC relating to the Stations or the Station Licenses. Should any such filing be made or action initiated, SNM and LS shall promptly notify Buyer thereof. To the best of the knowledge of SNM and LS, the Stations' transmission towers and equipment have been operated and maintained by SNM in material compliance with the Communications Act and the rules and regulations of the FCC and the Federal Aviation Administration ("FAA"), and the towers have been properly registered with the FCC and approved by the FAA as necessary.

(d) In addition to the Station Licenses, to the best of the knowledge of SNM and LS, either SNM and LS, as may be the case, possess all licenses and other required governmental or official approvals, permits or authorizations, the failure to possess which would have a material adverse effect on the business, financial condition or results of operations of the Stations. To the knowledge of SNM and LS, such licenses, approvals, permits and authorizations are in full force and effect, SNM or LS, as the case may be, is in compliance with their requirements and no proceeding is pending or threatened to revoke or amend any of them. Schedule 1.2(a) contains a complete list of such licenses, approvals, permits and authorizations.

3.6 Title to and Condition of Real and Personal Property.

(a) Except as disclosed on Schedule 1.2(b), SNM and LS, respectively, have good and marketable title to the Personal Property free and clear of all Liens. Except as disclosed on Schedule 1.2(h), SNM has either (i) good and marketable title to the Real Property which is

indicated on Schedule 1.2(h) as being owned by Seller ("Owned Real Property") or (ii) valid leasehold interest in and to the Real Property which is indicated on Schedule 1.2(h) as being leased by SNM ("Leased Real Property"), in each case free and clear of all Liens. LS owns no real property, nor does it have any leasehold interests in real property. The buildings, structures and improvements situated on the Owned Real Property are in good condition and repair, reasonable wear and tear excepted, and are adequate and sufficient to carry on the operations of the Stations as presently conducted.

(b) At the Closing, the Personal Property will be in reasonable condition and working order, ordinary wear and tear excepted, and reasonably suitable for the uses for which intended, free from any defects known to either SNM or LS, normal wear and tear excepted, and will be in material compliance with the published rules and regulations of the FCC and, to the best of the knowledge of SNM or LS, all other applicable federal, state and local statutes, ordinances, rules and regulations.

(c) Both the Personal Property and the Real Property are available for immediate use in the operation of the Stations. SNM has not received written notice of any violation of law, municipal or county ordinances or other legal requirements with respect to the Real Property or with respect to the use, occupancy or construction thereof. SNM has not received any written notice of any pending or threatened termination or impairment of access to the Real Property or discontinuation of necessary sewer, water, electrical, gas, telephone or other utilities or services.

(d) SNM has not received any written notice (i) that either the whole or any portion of the Real Property is to be condemned, requisitioned or otherwise taken by any public authority, (ii) of violation of restrictive covenants, deed restrictions or governmental requirements on the Real Property which have not been remedied, (iii) of any proceedings which would cause the change, redefinition or other modification of the zoning classification or (iv) any proceedings to widen or realign any street or highway adjacent to the Real Property.

3.7 Assumed Contracts. To the best of the knowledge of SNM and LS, respectively, the Assumed Contracts are in full force and effect and are legally valid, binding and enforceable by Seller in accordance with their respective terms, except as limited by laws affecting creditor's rights or equitable principles generally. To the best of the knowledge of SNM and LS, respectively, neither SNM nor LS is in any material respect in default under Assumed Contracts.

3.8 Compliance with Laws. To the best of the knowledge of SNM and LS, SNM and LS, respectively, have complied in all material respects with, and neither is in any material respect in violation of, any federal, state or local laws, statutes, rules, regulations or orders relating to the ownership and operation of the Stations.

3.9 Broker's Fees. As of the date of this Agreement through the Closing Date, other than a payment owed by Seller to Star Media Group, neither Seller nor any person or entity acting on Seller's behalf has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity, and no person or entity is entitled to any such payment from Seller in connection with the transactions contemplated by this Agreement.

3.10 Consents. As of the date of this Agreement, except for the FCC Consent provided in Section 5.1 and the consents with respect to certain of the Material Contracts so designated on Schedule 1.2(c), no consent, approval, permit, or authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (a) to consummate the transactions contemplated hereby; or (b) to permit either SNM or LS to assign or transfer the Station Assets to Buyer. The assignment or transfer of the Material Contracts, including leases, shall be completed at no additional cost to Buyer, and Seller shall save and hold Buyer harmless from any and all such costs.

3.11 Taxes.

(a) SNM and LS has each filed all federal, state, county and local tax returns and reports required to be filed by them with respect to taxes for which successor liability will apply, including

payroll, property, withholding, social security, sales and use taxes, to the extent that such taxes relate to the Station Assets; have either paid in full all such taxes that have become due, as reflected on any return or report, and any interest and penalties with respect thereto or have fully accrued on its books or have established adequate reserves for all taxes payable but not yet due; and have made required cash deposits with appropriate governmental authorities representing estimated payments of taxes, including employee withholding tax obligations. No extension or waiver of any statute of limitations or time within which to file any return has been granted to or requested by either SNM or LS with respect to any such tax. No unsatisfied deficiency, delinquency or default for any such tax, assessment or governmental charge has been assessed (or, to the knowledge of either Seller, claimed or proposed) against SNM or LS, nor has either SNM or LS received notice of any such deficiency, delinquency or default.

(b) SNM and LS have paid all required state, county, and local sales tax resulting from sales made in Albuquerque, New Mexico, as such taxes relate to the Station Assets.

3.12 Reports. All reports and statements that either SNM or LS are required to file with the FCC in respect of the Stations have been filed, and all reporting requirements of the FCC have been complied with in all material respects.

3.13 Trademarks and Similar Rights. To the knowledge of SNM and LS, respectively, the use of the Intellectual Property in connection with the conduct or operation of the Stations has not infringed, is not infringing upon and is not otherwise violating the rights of any third party in or to such Intellectual Property or the asserted proprietary rights of others, and no notices have been received by either SNM or LS that the use of the Intellectual Property in connection with the conduct or operation of the Stations infringes upon or otherwise violates any rights of a third party in or to the Intellectual Property or the proprietary rights of others.

3.14 Financial Statements of the Stations. SNM and LS have previously delivered to Buyer the unaudited balance sheet and income statement for the Stations as of and for the year ended December 31, 2001 and unaudited balance sheet and income statement as of and for the seven (7) months ended July 31, 2002. These financial statements have been prepared in all material respects in accordance with generally accepted accounting principles consistently followed by SNM and LS throughout the periods indicated (except that they may omit certain footnotes required by such principles and the interim financial statements do not reflect normal year-end adjustments and accruals) and fairly present financial position of the Stations as of the respective dates of the balance sheets included and the results of their operations for the respective periods indicated.

3.15 Absence of Changes in Seller's Business Operations. With reference to the Station Assets and the operations of the Stations, from May 31, 2002 to the date hereof, there has not been any:

(a) Transaction by SNM or LS related to the Stations entered into except in the ordinary course of business;

(b) Material adverse change in the financial condition, liabilities, assets, business or prospects of SNM or LS with respect to the Stations;

(c) Destruction, damage, or loss of any asset of SNM or LS (insured or uninsured) that materially and adversely affects the financial condition, business, or prospects of SNM or LS with respect to the Stations;

(d) Material change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by SNM or LS with respect to the Stations;

(e) Sale or transfer of any material asset used by either SNM or LS in the operation of the Stations, except in the ordinary course of business;

(f) Amendment or termination of any contract, agreement, or license related to the operation of the Stations, except in the ordinary course of business;

(g) Commencement or notice or threat of commencement of any civil litigation or any governmental proceeding against or investigation of SNM or LS or the affairs of either of them; or

(h) Labor trouble or claim of wrongful discharge or other unlawful labor practice or action.

3.16 Personnel.

(a) Neither SNM nor LS is a party to or subject to any collective bargaining agreements with respect to the Stations. To the best knowledge of SNM and LS, there is no representation or organizing effort pending or threatened against or involving or affecting either SNM or LS, as the case may be, with respect to employees employed at the Stations. There is no pending or, to the knowledge of SNM and LS, threatened labor dispute, strike, or work stoppage affecting the Stations.

(b) Each employee benefit plan that is maintained by SNM or LS or any member of either company's controlled group of companies (within the meaning of Code Section 414) and in which any Covered Employee participates and that is intended to be "qualified" under Code Section 401(a) has been determined by the Internal Revenue Service to be so qualified (or an application for such a determination has been filed with the Internal Revenue Service); no event has occurred that would have a material adverse effect on the qualified status of any such employee benefit plan; and each trust maintained in connection with each such employee benefit plan is tax-exempt under Code Section 501(a).

(c) Neither SNM nor LS maintains or has maintained, contributes to or has contributed to, or otherwise has any liability for or obligation under any employee pension benefit plan that is a defined benefit plan (as described in Section 3(35) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a multiemployer plan (as described in ERISA Section 4001(a)(3)).

3.17 Environmental Matters. In respect of the Real Property:

(a) SNM has not received any written notice from any governmental authority that SNM is in violation or alleged violation of any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including, without limitation those arising under the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control Act, the Solid Waste Disposal Act, as amended, the Federal Clean Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance, order or decree relating to the environment, (hereinafter "Environmental Laws");

(b) SNM has not received written notice from any third party, including without limitation any federal, state or local governmental authority, that any hazardous waste, as defined by 42 U.S.C. §6903(5), any hazardous substance as defined by 42 U.S.C. §9601(33) or any toxic substance, oil or hazardous material or other hazardous chemical or hazardous substance regulated by any Environmental Laws ("Hazardous Substances") which SNM has generated, transported or disposed of has been found at any site at which a federal, state or local agency or other third party has conducted or has ordered that SNM conduct a remedial investigation, removal or other response action pursuant to any Environmental Law;

(c) No portion of any of the Real Property has been used by SNM for the handling, manufacturing, processing, storage or disposal of Hazardous Substances in material violation of applicable Environmental Laws; and

(d) To the knowledge of SNM, there have been no releases (i.e., any past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping) by SNM or threatened releases by SNM of Hazardous Substances on, upon, into or from any of the Real Property in material violation of applicable Environmental Laws.

3.18 Tower Height. The Sandia Peak, KSOZ(FM) tower measures 60' high from the base terrain.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller as follows:

4.1 Organization and Standing. Buyer is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware.

4.2 Authorization and Binding Obligation. Buyer has all necessary power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement and all other documents required hereby have been duly executed and delivered by Buyer and constitute valid and binding obligations enforceable against Buyer in accordance with their terms except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally or the availability of equitable remedies.

4.3 Absence of Conflicting Agreements or Required Consents. Except for the FCC Consent, the execution, delivery and performance of this Agreement by Buyer: (a) do not and will not violate any provision of Buyer's organizational documents; (b) do not and will not require the consent of any third party or governmental authority; (c) do not and will not violate any law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority; and (d) do not and will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination or acceleration of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any agreement, lease, instrument, license or permit to which Buyer is now subject.

4.4 Absence of Litigation. There is no claim, litigation, arbitration or proceeding pending or, to the best of Buyer's knowledge, threatened, before or by any court, governmental authority or arbitrator, that seeks to enjoin or prohibit, that questions the validity of or that might materially hinder or impair Buyer's performance of its obligations under this Agreement.

4.5 FCC Qualifications. To the best of Buyer's knowledge, Buyer is qualified under the Communications Act of 1934, as amended, and the rules and regulations of the FCC to be the assignee of the FCC Licenses, it being understood that Buyer has a duty to ascertain what would cause it to lose such qualification. There are no facts known to Buyer that would delay the consummation of the transactions contemplated by this Agreement. Buyer has no reason to believe that the FCC assignment contemplated hereby might be challenged or might not be granted by the FCC in the ordinary course solely because of its qualifications.

4.6 Broker's Fees. Neither Buyer nor any person or entity acting on its behalf has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity, and no person or entity is entitled to any such payment from Buyer in connection with the transactions contemplated by this Agreement.

4.7 Financial Qualifications. Buyer is financially qualified to consummate the transactions contemplated by this Agreement and to certify to its financial qualifications on FCC Form 314.

4.8 Seller's Representations and Warranties. Buyer has not relied on or been induced to enter into this Agreement by any statement, representation or warranty other than those expressly set forth in Article 3 of this Agreement.

ARTICLE 5
GOVERNMENTAL CONSENTS

5.1 FCC Application.

(a) The assignment of the FCC Licenses as contemplated by this Agreement is subject to the prior consent and approval of the FCC. Prior to the Closing, Buyer shall not directly or indirectly control, supervise, direct, or attempt to control, supervise, or direct, the operations of the Stations,

and all such operations, including complete control and supervision of all of the Stations' programs, employees, and policies, shall be the sole responsibility of Seller until the Closing.

(b) No later than ten (10) days after the date of this Agreement, Buyer and Seller shall prepare and jointly file a complete and grantable FCC Application, and the parties shall use reasonable efforts to cause the FCC to accept the FCC Application for filing as soon as practicable. Seller and Buyer shall thereafter prosecute the FCC Application in good faith and with all reasonable diligence and otherwise use their best efforts to obtain the grant of the FCC Application as expeditiously as practicable; provided, however, that neither Seller nor Buyer shall have any obligation to satisfy any complainant or the FCC by taking any steps which would have a material adverse effect upon Seller or Buyer or upon any affiliated entity, but neither the expense nor inconvenience to a party of defending against a complainant or an inquiry by the FCC shall be considered a material adverse effect on such party. If the FCC Consent imposes any condition on any party hereto, such party shall use its best efforts to comply with such condition; provided, however, that no party shall be required to comply with any condition that would have a material adverse effect upon it or any affiliated entity. If rehearing, reconsideration or judicial review is sought by a third party or by the FCC on its own motion with respect to the FCC Consent, Buyer and Seller shall vigorously oppose such efforts for rehearing, reconsideration or judicial review; provided, however, that nothing herein shall be construed to limit either party's right to terminate this Agreement pursuant to Article 10 (Termination Rights).

(c) All FCC filing or grant fees with respect to the assignment of the FCC Licenses from Seller to Buyer shall be paid equally by Buyer and Seller. Each party shall otherwise bear its own costs and expenses (including the fees and disbursements of its counsel) in connection with the preparation of the portion of the FCC Application to be prepared by it and in connection with the processing and defense of the application.

5.2 Other Filings and Governmental Consents. Promptly following the execution of this Agreement, the parties shall prepare and file with the appropriate governmental authorities any other requests for approval or waiver that are required from such governmental authorities in connection with the transactions contemplated hereby and shall diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such requests for approval or waiver and all proceedings necessary to secure such approvals and waivers. Each party shall bear its own costs and expenses in connection with the preparation of any filings, documents or requests to be prepared by it in order to obtain such governmental consents, approvals or waivers and in connection with any prosecution or defense by it of such filings, documents or requests.

ARTICLE 6
COVENANTS

6.1 Conduct of Business.

(a) Affirmative Covenants. Between the date of this Agreement and the Closing Date; except as expressly permitted by this Agreement or with the prior written consent of Buyer, which consent shall not be unreasonably withheld, Seller shall:

(i) Comply in all material respects with all laws applicable to Seller's use of the Station Assets and continue to operate and maintain the Stations in conformity with the Station Licenses, the Communications Act of 1934, as amended, and the rules and regulations of the FCC.

(ii) Maintain the Station Assets in customary repair, maintenance and condition.

(iii) Use reasonable efforts to obtain the consent of any third party necessary for the assignment to Buyer, without any material adverse change, of the contracts listed on Schedule 1.2(c).

(iv) Timely make or provide all payments, services or other consideration due for the Assumed Contracts so that all payments required to be made as of the Closing Date will have been paid, except for any amounts being contested by Seller in good faith.

(v) Maintain in full force and effect the Station Licenses and all other licenses, permits and authorizations relating to the Stations and take any action necessary before the FCC, including the preparation and prosecution of applications for renewal of the FCC Licenses, if necessary, to preserve such licenses in full force and effect without material adverse change.

(vi) Maintain insurance on the Station Assets.

(vii) To the extent Seller may do so without penalty, terminate, or send notice of termination of, such of the Assumed Contracts as Buyer may request.

(viii)Use its best efforts to complete all of the Stations' Barter Obligations prior to the Closing.

(ix) Exercise all renewal options on the transmitter site leases for which notice of renewal would be required to be given prior to the Closing.

(x) Intentionally Deleted.

(xi) Repair, at its expense, all items of Personal Property included in the Station Assets to the extent Buyer's inspection of same reveals items which, in the reasonable opinion of Buyer, require such repair.

(b) Negative Covenants. Between the date of this Agreement and the Closing Date, except as expressly permitted by this Agreement or with the prior written consent of Buyer, which consent shall not be unreasonably withheld, Seller shall not:

(i) Terminate, modify or amend any Assumed Contract except as contemplated in Section 6.1(a)(vii).

(ii) Create any Lien on any of the Station Assets.

(iii) Sell, assign, lease or otherwise transfer or dispose of any of the material Station Assets now owned or hereafter acquired, except for assets consumed or disposed of in the ordinary course of business.

6.2 Access. Between the date hereof and the Closing Date, Seller will afford Buyer reasonable access to the Stations and the Station Assets. Buyer, at its sole expense, shall be entitled to make such engineering and other inspections of the Station Assets as Buyer may desire, so long as such inspection would not unreasonably interfere with the operation of the Stations.

6.3 No Inconsistent Action. Between the date of this Agreement and the Closing, each party shall use its reasonable efforts to cause the fulfillment at the earliest practicable date of all of the conditions to the obligations of the other party to consummate the sale and purchase and shall take no actions which are inconsistent with its obligations under this Agreement or that would materially hinder or delay the consummation of the transactions contemplated by this Agreement. In particular, neither party shall take any action that would jeopardize the Station Licenses, result in its disqualification to hold the FCC Licenses or in any way delay grant of the FCC Application or consummation of the transactions contemplated by this Agreement, and Buyer shall take no action which would impair its financial or other qualifications to consummate this transaction in accordance with its terms. Should either party become aware of any such fact or circumstance, such party shall promptly inform the other.

6.4 Confidentiality.

(a) Buyer and Seller shall each keep confidential all information obtained by it with respect to the other in connection with this Agreement, except where such information is known through other lawful sources or where its disclosure is required in accordance with applicable law. If the transactions contemplated hereby are not consummated for any reason, Buyer and Seller shall

return to the other, without retaining a copy thereof in any medium whatsoever, any schedules, documents or other written information, including all financial information, obtained from the other in connection with this Agreement and the transactions contemplated hereby. Except as is required for the consummation of the transaction contemplated by this Agreement, during the period from the date hereof through the Closing Date, both Buyer and Seller shall also keep confidential the fact that the parties have entered into this Agreement and all other matters relating to this transaction.

(b) Except as required by the FCC in connection with the filing of the FCC Application, without the prior consent of both Buyer and Seller, there shall be no public announcement relating to this Agreement.

6.5 Further Assurances. Seller and Buyer shall cooperate and take such actions, and execute such other documents, at the Closing or subsequently, as may be reasonably requested by the other in order to carry out the provisions and purposes of this Agreement, including, for example, promptly advising each other of all communications relevant to the transactions contemplated by this Agreement received from the FCC after the date of this Agreement and furnishing each other with copies of all such written communications and summaries of all such oral communications.

6.6 Intentionally Deleted.

6.7 Employees; ERISA.

(a) Employment. The Buyer may, but is not obligated to, offer employment to any or all of the employees of the Stations in positions and on terms substantially similar to their present employment. To the extent the Buyer employs any employees of the Stations and terminates such employees after the Closing, the Buyer (except as set forth in the last sentence of this paragraph) shall be responsible for any severance pay owed to such employee of the Stations that the Buyer terminates within one year after the Closing Date. To the extent the employees are not offered employment with Buyer and are terminated by Seller, the Seller shall pay to any such employee severance in accordance with the policy of the Stations. Further, to the extent that Buyer employs the general manager of the Station, R. Bruce Pollock ("the GM"), and assumes his employment contract, and within one year from the Closing Date, the GM's employment is terminated in such a manner as to require a one-year severance payment as provided for in the GM employment contract, Seller agrees to reimburse Buyer for such amount.

(b) Employee Benefits Generally. The Buyer shall provide all employees of the Stations that become employees of the Buyer ("Covered Employees") employee benefits that are maintained by the Buyer generally for its employees (the "HBC Plans") in accordance with their terms. To the extent permitted by the terms of the HBC Plans, the Buyer will (i) waive all deductibles, waiting periods and limitations with respect to pre-existing conditions and other conditions applicable to employees of Seller under the HBC Plans, and (ii) grant full past service credit (including credit for eligibility, benefit accrual and for vesting) to the Covered Employees for service with Seller or its subsidiaries or affiliates under any and all of the HBC Plans. Neither this Agreement nor the consummation of the transactions contemplated by this Agreement will entitle any employee, including but not limited to, Covered Employees, to any other severance benefits nor will it accelerate compensation due any such Covered Employee as of the Closing Date. Subject to the foregoing, the Buyer shall have the right in the good faith exercise of operations and managerial discretion to make changes or cause changes to be made after the Closing Date in compensation, benefits and other terms of employment and to terminate any such employee.

(c) Transition Services. Buyer may identify one or more employees of the Stations that Buyer does not intend to hire on a permanent basis and become Covered Employees but as to whom Buyer would desire to receive assistance, for a period not to exceed 60 days after Closing, in connection with the transition of the operations of the Stations to Buyer. As to these employees, Seller will use reasonable efforts to continue the employment of such persons for such transition period after the Closing; provided, however, that Buyer shall reimburse Seller for its incremental

out-of-pocket costs associated with the continued employment of such persons during said transition period.

6.8 Cooperation Relative to Accounts Receivable. Following the Closing Date, the Buyer shall (i) assist the Seller, as reasonably requested in the collection of the Accounts Receivable for a period of 120 days (it being understood that Buyer is not required to expend any of its own funds in connection therewith), (ii) endorse and deliver to the Seller, on or before the 15^th, 30^th, 45^th, 60^th, 75^th, 90^th, and 120^th days following the Closing Date (each, a "Turnover Date") and thereafter, any checks or other instruments received by the Buyer in respect of the Seller's Accounts Receivables. In addition, the Buyer hereby agrees and acknowledges (a) that the Accounts Receivable are solely the property of the Seller, (b) that all payments received by the Buyer or Buyer's lender on account of the Accounts Receivable shall be held in trust for the benefit of the Seller, (c) that payments received from customers of the Buyer that owe payments to the Buyer in respect of the operations of the Stations and also owe payments to the Seller shall be applied first and to the full extent to Seller's Accounts Receivable (unless otherwise specified by the payor), and (d) that all such payments shall be delivered to the Seller together with any necessary endorsements thereon, on each Turn Over Date and thereafter. To the extent that Seller has not received payment on any Accounts Receivable as of the 120th day following the Closing Date, the Buyer shall have no further obligation or right to collect the Accounts Receivable, unless otherwise agreed upon by the Seller and the Buyer and the Buyer shall promptly return any and all documentation related to the Accounts Receivable to the Seller. Notwithstanding the foregoing, Buyer shall have no obligation to contact account debtors or undertake other collection efforts in respect of the Seller's Accounts Receivables except as specifically provided in this paragraph.

6.9 ADA Compliance. On or before the Closing, Seller shall, at Seller's sole cost and expense, bring that certain two-story office building located at 8009 Marble Avenue NE, Albuquerque, New Mexico (as more specifically set forth on Schedule 1.2(h), the "Studios") into compliance with all federal, state and local laws (including the Americans with Disabilities Act ("ADA")), which shall include, but not be limited to, installing an ADA compliant access lift (which does not have to be an elevator), and remedy all such other non-compliant issues (whether or not ADA compliance issues), reasonable wear and tear excepted, that are identified on any pre-closing inspection performed at the direction of Buyer, and reasonably agreed to by the parties.

6.10 Barter. Seller shall ensure that at the Closing Date, any and all barter obligations existing under any Assumed Contracts will not in the aggregate exceed $25,000.

6.11 Dish. On or before the Closing, Seller shall relocate that certain dish that is located on or near the Studios and encroaches on the neighboring property so that it does not encroach on the neighboring property. Prior to relocating that certain dish, Seller shall obtain Buyer's written consent to such relocation.

6.12 Billboard. Seller shall proceed to close the contract being negotiated with Clear Channel Outdoor for that certain billboard designated as Location #30512; provided, however, that Seller shall keep Buyer apprised of negotiation progress and give Buyer the right to comment on such contract prior to its closing.

6.13 AM Stations. Prior to the expiration of 60 days following the Closing, Seller shall move all of its operations that pertain to the Excluded Assets out of the Studios. Prior to the expiration of such 60-day period Buyer shall allow such operations to remain in the Studios.

6.14 Arbitron Agreement. During the term of that certain Station License Agreement to Receive and Use Arbitron Radio Listening Estimates, Seller shall reimburse Buyer for ²/7 of all costs incurred by Buyer associated with and relating to performance under such contract. Seller's obligations under this Section 6.14 shall survive closing.

ARTICLE 7
CONDITIONS PRECEDENT

7.1 To Buyer's Obligations. The obligations of Buyer hereunder are, at its option, subject to satisfaction or waiver by Buyer (except for prior FCC consent), at or prior to the Closing Date, of each of the following conditions:

(a) Representations, Warranties and Covenants.

(i) All representations and warranties made by Seller in this Agreement shall be true and correct in all material respects (except as otherwise expressly permitted by this Agreement) on and as of the Closing Date as if made on and as of that date.

(ii) All of the terms, covenants and conditions to be complied with and performed by Seller under this Agreement on or prior to Closing Date shall have been complied with or performed by Seller in all material respects.

(b) FCC Consent. The FCC Consent shall have been obtained, without the imposition of any condition materially adverse to Buyer except those that are customary in the assignment of FM licenses. LS shall have complied with any conditions imposed on it by the FCC Consent, and (solely in the event that a petition to deny was filed in connection with the FCC Consent) the FCC Consent shall have become a Final Order (unless Buyer elects to waive the Final Order).

(c) No Injunction. No order of any court or administrative agency shall be in effect which restrains or prohibits the transactions contemplated by this Agreement in accordance with its terms.

(d) Governmental Authorizations. LS shall be the holder of all FCC Licenses, and there shall not have been any modification of any Station License relating to the Stations that could have an adverse effect on the Stations or the conduct of the business and operations of the Stations. No proceeding (other than proceedings affecting the broadcasting industry generally) shall be pending which presents a substantial probability of revocation, failure to renew, suspension or materially adverse modification of any FCC License.

(e) Consents. Seller shall have obtained all necessary approvals and consents to the assignment to Buyer of each Assumed Contract without any adverse change in the terms or conditions of such contracts.

(f) Deliveries. Seller shall have made or stand willing to make all deliveries required under Section 8.1.

(g) Title Insurance. A title insurance company reasonably acceptable to Buyer shall be prepared to issue an owner's title insurance policy in a standard ALTA form insuring Buyer's fee simple title to the Owned Real Property, free and clear of all Liens, subject only to the delivery of the documents, materials and funds described in Section 8.1, the recordation of the grant deed referred to Section 8.1 and payment of the applicable title insurance premiums.

7.2 To Seller's Obligations. The obligations of Seller hereunder are, at its option, subject to satisfaction or waiver by Seller (except for prior FCC Consent), at or prior to the Closing Date, of each of the following conditions:

(a) Representations, Warranties and Covenants.

(i) All representations and warranties made by Buyer in this Agreement shall be true and correct in all material respects (except as otherwise expressly permitted by this Agreement) on and as of the Closing Date as if made on and as of that date.

(ii) All of the terms, covenants and conditions to be complied with or performed by Buyer under this Agreement on or prior to the Closing Date shall have been complied with or performed by Buyer in all material respects.

(b) FCC Consent. The FCC Consent shall have been obtained, without the imposition of any condition materially adverse to Seller except those that are customary in the assignment of FM licenses. Buyer shall have complied with any conditions imposed on it by the FCC Consent, and (solely in the event that a petition to deny was filed in connection with the FCC Consent) the FCC Consent shall have become a Final Order (unless Seller elects to waive the Final Order).

(c) No Injunction. No order of any court or administrative agency shall be in effect which restrains or prohibits the transactions contemplated by this Agreement in accordance with its terms.

(d) Deliveries. Buyer shall have made or stand willing to make all the deliveries required under Section 8.2 and shall have paid or stand willing to pay the Purchase Price as provided in Section 2.3.

(e) Consent. All necessary approvals and consents to the assignment to Buyer of each Assumed Contract shall have been obtained.

ARTICLE 8
DOCUMENTS TO BE DELIVERED AT THE CLOSING

8.1 Documents to be Delivered by Seller. At the Closing, Seller shall deliver to Buyer the following:

(a) Copies of resolutions of the managers of SNM and LS authorizing the execution, delivery and performance of this Agreement by SNM and LS, respectively, and the consummation of the transactions contemplated hereby, certified by a duly authorized officer or manager of SNM and of LS, as being true, correct and complete as of the Closing Date;

(b) A certificate, dated as of the Closing Date, executed by an officer or manager of SNM and of LS, certifying that the closing conditions specified in Section 7.1(a) have been satisfied;

(c) Duly executed instruments of conveyance and transfer, in form and substance reasonably satisfactory to Buyer, effecting the sale, transfer, assignment and conveyance of the Station Assets to Buyer free and clear of all Liens, including, but not limited to, the following:

(i) an assignment of the FCC Licenses;

(ii) bills of sale for all Personal Property;

(iii) a grant deed for any Owned Real Property; and

(iv) an assignment of Seller's rights under the Assumed Contracts;

(d) A copy of any instrument evidencing receipt of any of the required consents described in Section 7.1(e);

(e) Such other documents, information, certificates and materials as may be required by this Agreement.

8.2 Documents to be Delivered by Buyer. At the Closing, Buyer shall deliver to Seller the following:

(a) Copies of resolutions of the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement by Buyer and the consummation of the transactions contemplated hereby;

(b) A certificate, dated as of the Closing Date, executed on behalf of Buyer by a duly authorized representative of Buyer, certifying that the closing conditions specified in Section 7.2(a) have been satisfied;

(d) Such other documents, information, certificates and materials as may be required by this Agreement.

ARTICLE 9
INDEMNIFICATION, SURVIVAL

9.1 Seller's Indemnities. From and after the Closing, Seller shall indemnify, defend, and hold harmless Buyer and its affiliates and their respective members, managers, partners, directors, officers, employees, and representatives, and the successors and assigns of any of them, and any person claiming by or through any of them, from and against, and reimburse them for, all claims, damages, liabilities, losses, costs and expenses, including, without limitation, interest, penalties, court costs and reasonable attorneys' fees and expenses, resulting from:

(a) The ownership or operation of the Station Assets prior to the Closing, including without limitation any liabilities arising under the Station Licenses or the Assumed Contracts which relate to events occurring prior to the Closing;

(b) Any liabilities of Seller not assumed by Buyer under this Agreement, including without limitation any liabilities arising at any time under any contract or agreement not included in the Assumed Contracts;

(c) Any untrue representation, breach of warranty or nonfulfillment of any covenant by Seller contained in this Agreement or in any certificate, document or instrument delivered by Seller to Buyer under this Agreement;

(d) Any failure of Seller to comply with any "bulk sales" laws applicable to the transactions contemplated hereby; or

(e) Any actions, suits, proceedings, claims, demands, assessments, judgments, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity.

9.2 Buyer's Indemnities. From and after the Closing, Buyer shall indemnify, defend and hold harmless Seller and its affiliates and their respective members, managers, partners, directors, officers, employees, and representatives, and the successors and assigns of any of them, and any person claiming by or through any of them, from and against, and reimburse them for, all claims, damages, liabilities, losses, costs and expenses, including, without limitation, interest, penalties, court costs and reasonable attorneys' fees and expenses, resulting from:

(a) any untrue representation, breach of warranty or nonfulfillment of any covenant by Buyer contained in this Agreement or in any certificate, document or instrument delivered by Buyer to Seller under this Agreement;

(b) the ownership or operation of the Station Assets from and after the Closing;

(c) any actions, suits, proceedings, claims, demands, assessments, judgments, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity; or

(d) any liability or obligations assumed by Buyer under this Agreement or arising from the conduct of Buyer after the Closing Date.

9.3 Procedure for Indemnification. The procedure for indemnification shall be as follows:

(a) The party seeking indemnification under this Article 9 (the "Claimant") shall give notice to the party from whom indemnification is sought (the "Indemnitor") of any claim, reasonably specifying (i) the factual basis for the claim; and (ii) the amount of the claim if then known. If the claim relates to an action, suit or proceeding filed by a third party against Claimant, notice shall be given by Claimant within fifteen (15) days after written notice of the action, suit or proceeding was given to Claimant. In all other circumstances, notice shall be given by Claimant within thirty (30) days after Claimant becomes aware of the facts giving rise to the claim. Notwithstanding the

foregoing, Claimant's failure to give Indemnitor timely notice shall not preclude Claimant from seeking indemnification from Indemnitor if Claimant's failure has not materially prejudiced Indemnitor's ability to defend the claim or litigation.

(b) The Claimant shall make available to Indemnitor and/or its authorized representatives the information relied upon by the Claimant to substantiate the claim for indemnity.

(c) With respect to any claim by a third party as to which the Claimant is entitled to indemnification hereunder, the Indemnitor shall defend against the claim with counsel reasonably acceptable to Claimant, and the Claimant shall cooperate fully with the Indemnitor, subject to reimbursement for reasonable expenses incurred by the Claimant as the result of a request by the Indemnitor. The Claimant shall have the right to participate in the defense of the claim at its own expense. If the Indemnitor does not assume control of the defense of any third party claim, Claimant may, but shall have no obligation to, defend or settle such claim or litigation in such a manner as it deems appropriate, and in such event Indemnitor shall be bound by the results obtained by the Claimant with respect to the claim (by default or otherwise) and shall promptly reimburse Claimant for the amount of all expenses (including the amount of any judgment rendered), legal or otherwise, incurred in connection with such claim or litigation. The Indemnitor shall be subrogated to all rights of the Claimant against any third party with respect to any claim for which indemnity was paid.

9.4 Limitations. Neither party shall be required to indemnify the other party under this Article 9 unless (i) written notice of a claim under this Article 9 was received by the party within the pertinent survival period specified in Section 9.5; and (ii) the aggregate amount of claims against the party to which the other party (as a Claimant) is entitled to be indemnified under this Agreement exceeds $25,000, after which the Claimant shall be entitled to recover, and the Indemnitor shall be obligated for, all additional losses, costs, liabilities, damages and expenses for Claimant. In calculating the amount of losses to the Buyer or the Seller under Section 9.1 and Section 9.2, (a) such losses shall be reduced by any recovery received from any third party (including insurance proceeds) as a result of the facts or circumstances giving rise to the losses, and (b) no amount shall be included in such losses except for the party's actual out-of-pocket costs and expenses.

9.5 Survival of Representations, Warranties and Covenants. The representations, warranties, covenants, indemnities and other agreements contained in this Agreement or in any certificate, document or instrument delivered pursuant to this Agreement are and will be deemed and construed to be continuing representations, warranties, covenants, indemnities and agreements and shall survive the Closing for a period of 18 months (the "Survival Period"). No claim may be brought under this Agreement unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the Survival Period. In the event such notice is given, the right to indemnification with respect thereto shall survive the Survival Period until such claim is finally resolved and any obligations thereto are fully satisfied. Any investigation by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any representation, warranty, covenant or agreement contained herein.

ARTICLE 10
TERMINATION RIGHTS

10.1 Termination.

(a) In addition to other available remedies, this Agreement may be terminated by either Buyer or Seller, if the party seeking to terminate is not in material default or breach of this Agreement, upon written notice to the other if:

(i) the other party is in material breach of this Agreement and such breach has been neither cured within thirty (30) days after written notice of such breach nor waived by the party giving such termination notice;

(ii) a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; or

(iii) the Closing has not occurred by a date that is one (1) year from the date the FCC Application is accepted by the FCC for filing (the "Upset Date");

(b) This Agreement may be terminated by mutual written consent of Buyer and Seller.

(c) If either party believes the other to be in breach or default of this Agreement, the non-defaulting party shall, prior to exercising its right to terminate under Section 10.1(a)(i), provide the defaulting party with notice specifying in reasonable detail the nature of such breach or default. Except for a failure to pay the Purchase Price, the defaulting party shall have thirty (30) days from receipt of such notice to cure such default; provided that, if the breach or default is due to no fault of the defaulting party and is not capable of cure within such thirty (30) day period, the cure period shall be extended as long as the defaulting party is diligently and in good faith attempting to effect a cure. Nothing in this Section 10.1(c) shall be interpreted to extend the Upset Date.

10.2 Effect of Termination. The following sections shall survive the termination of this Agreement pursuant to Section 10.1(a): 6.4 (Confidentiality), 11.1 (Default), 11.3 (Limitations on Damages), 12.3 (Entire Agreement; Schedules; Amendment; Waiver), 12.4 (Headings), 12.5 (Computation of Time), 12.6 (Governing Law; Waiver of Jury Trial), 12.7 (Attorneys' Fees), 12.9 (Notices), 12.10 (Counterparts) and 13.1 (Definitions).

ARTICLE 11
REMEDIES UPON DEFAULT

11.1 Remedies Generally. The parties acknowledge that the Station Assets and the transactions contemplated hereby are unique, that a failure by Seller or Buyer to complete such transactions will cause irreparable injury to the other, and that actual damages for any such failure may be difficult to ascertain and may be inadequate. Consequently, Seller and Buyer agree that each shall be entitled, in the event of a default by the other, to specific performance of any of the provisions of this Agreement in addition to any other legal or equitable remedies to which the non-defaulting party may otherwise be entitled.

11.2 Limitations on Damages. Notwithstanding the foregoing, neither party shall be liable to the other for special, consequential, punitive or exemplary damages, and in no event shall Seller's total liability to Buyer under this Agreement (including, for example, Seller's liability to Buyer pursuant to Section 9.1 (Seller's Indemnities) and Buyer's liability to Seller pursuant to Section 9.2 (Buyer's Indemnifies)) exceed the amount of the Purchase Price if after Closing, or the Deposit Amount, if before Closing.

ARTICLE 12
OTHER PROVISIONS

12.1 Transfer Taxes and Expenses. All recordation, transfer, and documentary fees (but not including FCC fees or sales taxes, if any) imposed on this transaction shall be paid one-half by Buyer and one-half by Seller. Sales taxes, if any, imposed in connection with the transactions contemplated by this Agreement shall be paid one-half by Buyer and one-half by Seller. Seller shall pay the premium for the title insurance referred to in Section 7.1(g). Except as otherwise provided in this Agreement, each party shall be solely responsible for and shall pay all other costs and expenses (including attorney and accounting fees) incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement.

12.2 Benefit and Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Neither Buyer nor Seller may assign its rights under this Agreement without the prior written consent of the other; provided, however, that Buyer may assign this Agreement to one or more of its wholly-owned subsidiaries so long as (i) such assignment does not result in any delay of the Closing and (ii) Hispanic Broadcasting Corporation continues to remain liable hereunder for the obligations of the assignee(s).

12.3 Entire Agreement; Schedules; Amendment; Waiver. This Agreement and the exhibits and schedules hereto and thereto, embody the entire agreement and understanding of the parties hereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein. Any matter that is disclosed in a schedule hereto shall be deemed to have been included in other pertinent schedules, notwithstanding the omission of an appropriate cross-reference. No amendment, waiver of compliance with any provision or condition hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment or consent is sought. No failure or delay on the part of Buyer or Seller in exercising any right or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.

12.4 Headings. The headings set forth in this Agreement are for convenience only and shall not control or affect the meaning or construction of the provisions of this Agreement.

12.5 Computation of Time. If after making computations of time provided for in this Agreement, a time for action or notice falls on Saturday, Sunday or a federal holiday, then such time shall be extended to the next business day.

12.6 Governing Law;. The construction and performance of this Agreement shall be governed by the law of the State of New Mexico without regard to its principles of conflicts of law.

12.7 Attorneys' Fees. In the event of any dispute between the parties to this Agreement, Seller or Buyer, as the case may be, shall reimburse the prevailing party for its reasonable attorneys' fees and other costs incurred in enforcing its rights or exercising its remedies under this Agreement. Such right of reimbursement shall be in addition to any other right or remedy that the prevailing party may have under this Agreement.

12.8 Severability. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.

12.9 Arbitration.

(a) Arbitration Disclosures.

(i) ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT.

(ii) IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.

(iii) DISCOVERY IN ARIBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT.

(iv) ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR TO SEEK MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED.

(v) IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION.

(b) Arbitration Provisions. Any dispute or controversy between the parties arising under or in connection with this Agreement and by execution and delivery of this Agreement shall be resolved under the Commercial Arbitration Rules of the American Arbitration Association (the "Administrator"). In this regard:

(i) Any claim or controversy ("Dispute") between the parties and their assigns, including, but not limited to, Disputes arising out of or relating to this Agreement, this Section 12.9 ("arbitration clause"), or any related agreements or instruments relating hereto or delivered in connection herewith ("Related Documents"), shall, at the request of either party, be resolved by binding arbitration in accordance with the applicable arbitration rules of the Administrator. The provisions of this arbitration clause shall survive any termination, amendment or expiration of this Agreement or the Related Documents. If any provision of this arbitration clause should be determined to be unenforceable, all other provisions of this arbitration clause shall remain in full force and effect.

(ii) The arbitration proceedings shall be conducted in Albuquerque, New Mexico at a place to be determined by the Administrator. The Administrator and the arbitrator(s) shall have the authority to the extent practicable to take any action to require the arbitration proceeding to be completed and the arbitrator(s)' award issued within one hundred twenty (120) days of the filing of the Dispute with the Administrator.

(iii) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitrator shall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by a majority vote of the three arbitrators, at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be a practicing attorney. The arbitrator(s) shall award to the prevailing party recovery of all costs and fees (including attorneys' fees and costs, arbitration administration fees and costs, and arbitrator(s)' fees). The arbitrator(s), either during the pendency of the arbitration proceeding or as part of the arbitration award, also may grant provisional or ancillary remedies, including but not limited to an award of injunctive relief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver.

(iv) Judgment upon an arbitration award may be entered in any court having jurisdiction, and the amount of the arbitration award shall be binding. The computation of the total amount of an arbitration award shall include amounts awarded for attorneys' fees and costs, arbitration administration fees and costs, and arbitrator(s)' fees.

(v) Either party may initiate arbitration with the Administrator; however, if either party initiates litigation and another party disputes any allegation in that litigation, the disputing party, upon the request of the initiating party, must file a demand for arbitration with the Administrator and pay the Administrator's filing fee. The parties may serve by mail a notice of an initial motion for an order of arbitration.

Notwithstanding the applicability of any other law to this Agreement, the arbitration clause or Related Documents between the parties, the Federal Arbitration Act, 9 U.S.C. Section 1, et seq., shall apply to the construction and interpretation of this arbitration clause.

12.10 Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be addressed to the following addresses or to such other address as any part may request:

If to Seller:		Simmons-New Mexico, LLC 515 South 700 East, #1C Salt Lake City, Utah 84102 Attention: David E. Simmons Telephone: 801-323-9315 Telecopier 801-323-9316 E-mail: dsimmons@simmonsmedia.com
With a copy to:		Dorothy C. Pleshe Callister Nebeker & McCullough Gateway Tower East #900 East South Temple Street Salt Lake City, UT 84133 Telephone: 801-530-7367 Telecopier: 801-364-9127 E-ail: dcpleshe@cnmlaw.com
If to Buyer:		Hispanic Broadcasting Corporation 3102 Oak Lawn Avenue, Suite 215 Dallas, Texas 75219 Attn: Jeffrey T. Hinson, Senior Vice President Fax: 214-525-7750 E-mail: jhinson@hispanicbroadcasting.com
With a copy to:		Hallett & Perrin 2001 Bryan St., Suite 3900 Dallas, Texas 75201 Attn: Bruce H. Hallett Fax: 214-922-4170 E-mail: bhallett@hallettperrin.com

Any such notice, demand or request shall be deemed to have been duly delivered and received (a) on the date of personal delivery, (b) on the date of transmission if sent by facsimile, (c) on the date of receipt if mailed by registered or certified mail, postage prepaid and return receipt requested, or (d) on the date of a signed receipt if sent by an overnight delivery service.

12.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument.

ARTICLE 13
DEFINITIONS

13.1 Defined Terms. Unless otherwise stated in this Agreement, the following terms when used herein shall have the meanings assigned to them below (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

"Agreement" shall mean this Asset Purchase Agreement.

"Assumed Contracts" shall have the meaning set forth in Section 1.2(c).

"Buyer" shall have the meaning set forth in the preamble to this Agreement.

"Claimant" shall have the meaning set forth in Section 9.3.

"Closing" shall have the meaning set forth in Section 1.1.

"Closing Date" shall mean the date on which the Closing is completed.

"Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations thereunder, or any subsequent legislative enactment thereof, as in effect from time to time.

"FCC" shall have the meaning set forth in the preamble to this Agreement.

"FCC Application" shall mean the application or applications that Seller and Buyer must file with the FCC requesting its consent to the assignment of the FCC Licenses from Seller to Buyer.

"FCC Consent" shall mean the action by the FCC granting the FCC Application.

"FCC Licenses" shall have the meaning set forth in Section 1.2(a).

"Final Order" shall mean action by the FCC with respect to the FCC Application (i) which has not been vacated, reversed, stayed, set aside, annulled or suspended, (ii) with respect to which no timely appeal, request for stay or petition for rehearing, reconsideration or review by any party or by the FCC on its own motion is pending, and (iii) as to which the time for filing any such appeal, request, petition or similar document or for the reconsideration or review by the FCC on its own motion under the Communications Act of 1934, as amended, has expired.

"Indemnitor" shall have the meaning set forth in Section 9.3.

"Liens" shall mean mortgages, deeds of trust, liens, security interests, pledges, collateral assignments, condition sales agreements, leases, encumbrances, claims or other defects of title, but shall not include (i) liens for current taxes not yet due and payable, (ii) other liens imposed by law (such as materialman's mechanic's, carrier's, worker's and repairman's liens) arising in the ordinary course of business (provided that such liens do not interfere in any material respect with the use of the Station Assets as currently used and that Seller remains liable for paying such liens), (iii) valid leases or subleases to third parties with respect to property not used in the operation of the Stations, and which are listed on Schedule 1.2(h); and (iv) in respect of the Real Property, defects in title or other matters that do not materially adversely affect the continued use of the Real Property as currently used by Seller.

"Material Contracts" shall have the meaning set forth in Section 1.2(c).

"Other Contracts" shall have the meaning set forth in Section 1.2(c).

"Personal Property" shall have the meaning set forth in Section 1.2(b).

"Purchase Price" shall have the meaning set forth in Section 2.1.

"Real Property" shall have the meaning set forth in Section 1.2(i).

"Seller" shall have the meaning set forth in the preamble to this Agreement.

"Station" shall have the meaning set forth in the preamble to this Agreement.

"Station Assets" shall mean the assets to be transferred to Buyer hereunder, as more fully specified in Section 1.2.

"Station Licenses" shall have the meaning set forth in Section 1.2(a).

"Survival Period" shall have the meaning set forth in Section 9.5.

"Upset Date" shall have the meaning set forth in Section 10.1(a)(iii).

13.2 Miscellaneous Terms. The term "or" is disjunctive; the term "and" is conjunctive. The term "shall" is mandatory; the term "may" is permissive. Masculine terms apply to females as well as males; feminine terms apply to males as well as females. The term "includes" or "including" is by way of example and not limitation.

[Remainder of page intentionally left blank]

[signature page of Simmons New Mexico/Hispanic Broadcasting Asset Purchase Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement to be duly executed as of the date first written above.

SELLER	Simmons-New Mexico, LLC
	By:	/s/ D. Simmons David E. Simmons, Chairman and Manager
	Simmons-New Mexico, LS, LLC
	By:	/s/ D. Simmons David E. Simmons, Manager
BUYER	Hispanic Broadcasting Corporation
	By:	/s/ Jeffrey T. Hinson Jeffrey T. Hinson, Senior Vice President

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Exhibit 10.1

ASSET PURCHASE AGREEMENT
ARTICLE 1 ASSETS TO BE CONVEYED
ARTICLE 2 PURCHASE PRICE
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
ARTICLE 5 GOVERNMENTAL CONSENTS
ARTICLE 6 COVENANTS
ARTICLE 7 CONDITIONS PRECEDENT
ARTICLE 8 DOCUMENTS TO BE DELIVERED AT THE CLOSING
ARTICLE 9 INDEMNIFICATION, SURVIVAL
ARTICLE 10 TERMINATION RIGHTS
ARTICLE 11 REMEDIES UPON DEFAULT
ARTICLE 12 OTHER PROVISIONS
ARTICLE 13 DEFINITIONS
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