EXHIBIT 10.19
CONVERTIBLE SUBORDINATED NOTE PURCHASE AGREEMENT
This Convertible Subordinated Note Purchase Agreement is made as of the
20/th/ day of April, 2000 (this "Agreement"), by and among Entravision
Communications Company, L.L.C., a Delaware limited liability company (the
"Company"), Entravision Communications Corporation, a Delaware corporation (the
"Corporation") (with the Company and the Corporation jointly referred to herein
as "Entravision"), and the investor listed on Schedule "A" hereto, herein
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referred to as an "Investor," with reference to the following facts:
WHEREAS, the Investor wishes to purchase Ninety Million Dollars
($90,000,000) in the principal amount of a Convertible Subordinated Note (the
"Note") from the Company.
WHEREAS, the Company operates a diverse Hispanic-oriented media business.
WHEREAS, it is contemplated that the Corporation will become the successor
in interest to the Company in accordance with the terms of that certain Exchange
Agreement by and among Entravision Communications Company, L.L.C., its members
and Univision Communications Inc., a copy of which is attached hereto as Exhibit
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"A", in an exchange transaction (the "Roll-Up").
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WHEREAS, the Company is party to that certain Acquisition Agreement and
Plan of Merger dated December 21, 1999, (the "LCG Acquisition Agreement")
pursuant to which it is contemplated that the Company will acquire Latin
Communications Group, Inc. (the "LCG Acquisition").
WHEREAS, Entravision, ZSPN Acquisition Corporation, Z-Spanish Media
Corporation and its stockholders have entered into that certain Acquisition
Agreement and Plan of Merger (the "Z-Spanish Agreement") effective April 20,
2000, pursuant to which it is contemplated that the Corporation will acquire Z-
Spanish Media Corporation (the "Z-Spanish Merger") concurrently with the Roll-
Up.
WHEREAS, the Corporation plans to consummate an underwritten initial public
offering of its Class A Common Stock (the "IPO").
WHEREAS, the Note is mandatorily exchangeable into Series A Convertible
Preferred Stock of the Corporation (the "Series A Preferred Stock") concurrently
with the closing of the Roll-Up.
WHEREAS, the Corporation has provided to the Investor, and the Investor has
thoroughly reviewed, the Corporation's draft registration statement on Form S-1
as prepared on April 18, 2000 to be filed with the Securities and Exchange
Commission (the "Registration Statement").
WHEREAS, the Company and the Corporation wish to sell the Note to the
Investor on the terms set forth herein and enter into the Investor Rights
Agreement substantially in the form attached hereto as Exhibit "B" and
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incorporated herein by this reference (the "Investor Rights Agreement").
The parties hereby agree as follows:
1. Purchase and Sale of Convertible Promissory Note.
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1.1. Sale and Issuance of Convertible Promissory Note. Subject to
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the terms and conditions of this Agreement, the Investor agrees to purchase at
the Closing and the Company agrees to sell and issue to the Investor a Note in
substantially the form attached hereto as Exhibit "C" in the principal amount
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specified with respect to the Investor on Schedule "A" to this Agreement. The
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purchase price of the Note shall be equal to 100% of the principal amount of
such Note.
1.2. Closing. The purchase and sale of the Note shall take place at
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the offices of Proskauer Rose LLP 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at
1:00 p.m. (local time) on the day before the closing of the LCG Acquisition
(assuming that all conditions to closing have been satisfied), or at such other
time and place as the Company and the Investor mutually agree upon orally or in
writing (which time and place are designated as the "Closing"). At the Closing,
the Company shall deliver to the Investor the Note to be purchased by the
Investor against payment of the purchase price therefor by wire transfer in same
day funds.
2. Representations and Warranties of Entravision. All representations
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made by Entravision in this Section 2 shall be made jointly and severally by
both the Company and the Corporation and references to Entravision shall apply
to both the Company and the Corporation. Entravision hereby represents and
warrants to the Investor that, except as set forth in the Registration Statement
or as set forth on the Schedule of Exceptions attached hereto as Schedule "B"
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(the "Schedule of Exceptions"), which exceptions shall be deemed to be
representations and warranties as if made hereunder:
2.1. Organization, Good Standing and Qualification. The Company is a
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limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business or
properties. Copies of the Company's Certificate of Formation and Operating
Agreement (as amended) and Corporation's First Amended and Restated Certificate
of Incorporation (the "Restated Certificate"), Bylaws, minutes and consents of
stockholders and of the Board of Directors are available for inspection at the
Company's
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offices and true, correct and complete copies of such documents have been
previously made available to the Investor or the Investor's special counsel.
2.2. Authority; No Conflict; Consents.
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(a) This Agreement constitutes the legal, valid and binding
obligation of the Company and the Corporation, enforceable against the Company
and the Corporation in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and is
subject to general principles of equity. Except for third party consents which
have already been obtained, the Company and the Corporation have the absolute
and unrestricted right, power, authority and capacity to execute and deliver
this Agreement, the Note, the Investor Rights Agreement and to perform their
respective obligations thereunder.
(b) Neither the execution and delivery of this Agreement by the
Company or the Corporation nor the consummation or performance of any of the
transactions contemplated by this Agreement by the Company or the Corporation
will give any Person the right to prevent, delay or otherwise interfere with any
of the transactions contemplated by this Agreement pursuant to: (i) any material
provision of the respective organizational documents of the Company and the
Corporation; (ii) any resolution adopted by the members, stockholders or the
Board of Directors of the Company or the Corporation, as the case may be; (iii)
any material legal requirement or material order to which the Company or the
Corporation may be subject; or (iv) any material contract to which the Company
or the Corporation is a party or by which the Company or the Corporation may be
bound.
(c) Except as set forth on Schedule 2.2(c), the Company and the
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Corporation are not and will not be required to give any notice to or obtain any
third-party consents from any Person in connection with the execution and
delivery of this Agreement, the Note or the Investor Rights Agreement or the
consummation or performance of any of the transactions contemplated by this
Agreement.
2.3. Broker's or Finder's Fees. Neither the Company, the
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Corporation, nor their agents have incurred any Liabilities for broker's or
finder's fees or agents commissions or other similar payment in connection with
this Agreement.
2.4. Capitalization.
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(a) The authorized capital stock of the Corporation as of the
Roll-Up shall consist of (i) 305,000,000 shares of Class A Common Stock, $0.0001
par value per share, none of which are issued and outstanding, (ii) 60,000,000
shares of Class B Common Stock, $0.0001 par value per share, none of which are
issued and outstanding, (iii) 50,000,000 shares of Class C Common Stock, $0.0001
par value per share, none of which are issued and outstanding and (iv)
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50,000,000 shares of Preferred Stock $0.0001 par value per share, none of which
are issued and outstanding.
(b) Schedule 2.4(b) sets forth a pro forma fully-diluted
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capitalization of the Corporation as of the closing of the Roll-Up. The fully-
diluted capitalization of the Corporation as of the closing of the Roll-Up shall
be as set forth on Schedule 2.4(b), subject only to any adjustment in the
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Exchange Number (as defined in the Exchange Agreement).
(c) The outstanding units of membership interest in the Company
(the "Units") consist of an aggregate of 2,019,879 Units, 1,555,037 of which are
designated Class A Units, none of which are designated Class B Xxxxx, 000,000 of
which are designated Class C Xxxxx, 000,000 of which are designated Class D
Units, 10,313 of which are designated Class E Units and 10,313 of which are
designated Class F Units.
(d) Except as set forth on Schedule 2.4(d), (i) there are no
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other options, warrants, stock appreciation rights, subscriptions, convertible
debentures or other rights, commitments or any other similar agreements for the
purchase of any securities of Entravision, (ii) there are no material contracts
relating to the issuance, sale, registration or transfer of any equity
securities or other securities of Entravision and (iii) there are no voting
trust agreements or other material contracts, agreements or arrangements
restricting voting rights or transferability with respect to Entravision.
2.5. Entravision Subsidiaries.
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(a) Schedule 2.5 sets forth a list of all of the direct or
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indirect subsidiaries of Entravision (the "Entravision Subsidiaries"). Except as
set forth on Schedule 2.5, Entravision owns, either directly or indirectly
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through one or more of the Entravision Subsidiaries, all of the capital stock or
membership interests of each of the Entravision Subsidiaries free and clear of
any material encumbrance.
(b) The authorized capital stock and number of outstanding
shares or membership interests of each of the Entravision Subsidiaries is set
forth on Schedule 2.5 (the "Entravision Subsidiary Shares"). Entravision is and
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will be on the Closing Date the record and beneficial owner and holder of all of
the Entravision Subsidiary Shares, which will be at Closing free and clear of
all material encumbrances. No legend or other reference to any purported
encumbrance appears upon any stock certificate representing the Entravision
Subsidiary Shares. All of the Entravision Subsidiary Shares have been duly
authorized and validly issued and are fully paid and nonassessable. None of the
Entravision Subsidiary Shares were issued in violation of the Securities Act or
any other material legal requirement.
(c) Except as set forth on Schedule 2.5, (i) there are no
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options, warrants, stock appreciation rights, subscriptions, convertible
debentures, registration rights agreements, or other rights, commitments or any
other similar agreements for the purchase of any securities of any of the
Entravision Subsidiaries, (ii) there are no material contracts relating to the
issuance,
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sale or transfer of any equity securities or other securities of any of the
Entravision Subsidiaries and (iii) there are no voting trust agreements or other
material contracts, agreements or arrangements restricting voting rights or
transferability with respect to any of the Entravision Subsidiaries.
2.6. Entravision Financial Statements. Entravision has delivered to
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the Investor true, complete and correct copies of the audited balance sheets of
Entravision as of December 31, 1999, and the related statements of income and
cash flows for the period then ended (including notes thereto), included in the
Registration Statement as audited by McGladrey & Xxxxxx, LLP, certified public
accountants (the "Entravision Financial Statements"). Except as set forth on
Schedule 2.6, the Entravision Financial Statements fairly present in all
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material respects the consolidated financial condition of Entravision and the
Entravision Subsidiaries and the assets and liabilities of Entravision and the
Entravision Subsidiaries as of the respective dates thereof and the results of
operations, changes in stockholders' equity and cash flows for the periods
therein specified, and have been prepared from the books and records of
Entravision and the Entravision Subsidiaries in accordance with generally
accepted accounting principles, applied on a consistent basis ("GAAP"). The
Entravision Financial Statements reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements, and except that the unaudited
Entravision Financial Statements were prepared on an interim basis, are subject
to normal year-end adjustments and do not contain all of the footnote
disclosures required by GAAP.
2.7. No Undisclosed Liabilities. Except as set forth on
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Schedule 2.7, Entravision and the Entravision Subsidiaries do not have any
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material liabilities, either accrued or contingent (whether or not required to
be reflected in financial statements in accordance with GAAP), and whether due
or to become due, which individually or in the aggregate could reasonably be
expected to have a material adverse effect on the assets, liabilities or
properties of Entravision and the Entravision Subsidiaries collectively,
excluding matters affecting the broadcasting or print industries generally and
excluding general economic condition (an "Entravision Material Adverse Effect"),
other than (i) liabilities reflected in the Entravision Financial Statements,
(ii) liabilities specifically described in this Agreement or in the Entravision
Schedules or (iii) normal or recurring liabilities incurred since the date of
the Entravision Financial Statements in the ordinary course of business.
2.8. Taxes.
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(a) Each of Entravision and the Entravision Subsidiaries have
accurately prepared and timely filed (or will so file) all material tax returns
required to be filed at or before the Closing relating to any and all taxes
concerning or attributable to Entravision or any of the Entravision Subsidiaries
or to their operations, and such tax returns are true and correct in all
material respects and have been completed in all material respects in accordance
with applicable law. Entravision has made available to the Investor true,
complete and correct copies of all such tax returns filed by Entravision and the
Entravision Subsidiaries in the past five (5) years.
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(b) There is no tax sharing agreement that will require any payment by
Entravision or any of the Entravision Subsidiaries after the date of this
Agreement.
(c) Each of Entravision and the Entravision Subsidiaries as of the
Closing: (i) will have paid all material taxes it is required to pay prior to
the Closing and (ii) will have withheld with respect to its employees all
material federal and state income taxes, FICA, FUTA and other taxes required to
be withheld, except in each case for taxes contested in good faith by
appropriate proceedings for which adequate reserves have been taken and except
where the failure (if any) to pay or withhold such taxes could not reasonably be
expected to have an Entravision Material Adverse Effect.
(d) There is no material tax deficiency outstanding, proposed or
assessed against Entravision or any of the Entravision Subsidiaries that is not
reflected as a liability on the most recently prepared balance sheet of
Entravision nor has Entravision or any of the Entravision Subsidiaries executed
any waiver of any statute of limitations on or extending the period for the
assessment or collection of any tax.
(e) Neither Entravision nor any of the Entravision Subsidiaries has
any material liability for unpaid federal, state, local or foreign taxes that
has not been accrued for or reserved on the Entravision Financial Statements,
whether asserted or unasserted, contingent or otherwise.
2.9. Employee Benefit Plans.
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(a) Entravision has made available to the Investor or its special
counsel all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans, and all
unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of Entravision or any of the
Entravision Subsidiaries or any trade or business (whether or not incorporated)
which is a member or which is under common control with Entravision within the
meaning of Section 414 of the Internal Revenue Code of 1986, as amended ("IRC")
(together, the "Entravision Employee Plans"). Entravision does not maintain and
has never maintained or contributed to any employee benefit plan subject to
Title IV of ERISA (including a multiemployer plan as defined in Section 3(37) of
ERISA).
(b) With respect to each Entravision Employee Plan, Entravision has
made available to the Investor or its special counsel, a true and correct copy
of (i) the most recent annual report (Form 5500) filed with the IRS with respect
to an Entravision Employee Plan subject to such filing requirement, (ii) such
Entravision Employee Plan, (iii) each trust agreement and group annuity
contract, if any, relating to such Entravision Employee Plan, and (iv) the most
recent determination letter issued with respect to any plan which is intended to
be qualified under Section 401(a) of the IRC.
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(c) With respect to the Entravision Employee Plans, individually and
in the aggregate, no event has occurred, and to the Knowledge of Entravision
there exists no condition or set of circumstances, in connection with which
Entravision or any of the Entravision Subsidiaries could be subject to any
material liability under ERISA, the IRC or any other applicable law.
(d) With respect to the Entravision Employee Plans, individually and
in the aggregate, there are no material funded benefit obligations for which
contributions have not been made or properly accrued and there are no material
unfunded benefit obligations which have not been accounted for by reserves, or
otherwise properly footnoted in accordance with GAAP, on the Entravision
Financial Statements.
(e) Except as set forth in Schedule 2.9, and except as provided for in
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this Agreement, neither Entravision nor any of the Entravision Subsidiaries is a
party to any oral or written (i) union or collective bargaining agreement, (ii)
material agreement with any officer or other key employee of Entravision or any
of the Entravision Subsidiaries, the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving Entravision of the nature contemplated by this Agreement or a Change
in Control (as defined in the Note), (iii) agreement with any officer of
Entravision or any of the Entravision Subsidiaries providing any term of
employment or compensation guarantee extending for a period longer than one year
from the date hereof or for the payment of compensation in excess of One Hundred
Thousand Dollar ($100,000.00) per annum, or (iv) material agreement or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or a Change
of Control [as defined in the Note] or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement.
2.10. Compliance with Legal Requirements. Except as set forth on Schedule
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2.10: (i) Entravision and the Entravision Subsidiaries are in compliance in all
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material respects with each material legal requirement that is or was applicable
to them; (ii) to the knowledge of Entravision, no event has occurred or
circumstance exists that (with or without notice or lapse of time) constitutes
or results in a material violation by Entravision of, or a material failure on
the part of Entravision or the Entravision Subsidiaries to comply with, any
material legal requirement or gives rise to any obligation on the part of
Entravision or the Entravision Subsidiaries to undertake, or to bear all or any
material portion of the cost of, any remedial action of any material nature; and
(iii) neither Entravision nor any of the Entravision Subsidiaries has received
any written notice or other written communication from any governmental body or
any other person regarding any actual or alleged material violation of, or
material failure to comply with, any material legal requirement, any actual,
alleged, possible or potential material obligation on the part of Entravision or
any of the Entravision Subsidiaries to undertake, or to bear all or any portion
of the cost of, any remedial action of any material nature.
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2.11. Legal Proceedings. There is no action, suit or proceeding, claim,
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arbitration or, to the knowledge of Entravision, investigation against
Entravision or any of the Entravision Subsidiaries pending or, to the knowledge
of Entravision, threatened, or as to which Entravision or any of the Entravision
Subsidiaries has received any written notice of assertion, which, if decided
adversely to Entravision or such Subsidiary, could reasonably be expected to
have an Entravision Material Adverse Effect or a material adverse effect on the
ability of Entravision to consummate the transactions contemplated by this
Agreement.
2.12. Applicable Contracts; No Defaults.
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(a) Entravision has made available to the Investor or its special
counsel, true, complete and correct copies of each contract under which
Entravision or the Entravision Subsidiaries has any material rights or have
become subject to any material obligation or liability or by which Entravision,
the Entravision Subsidiaries or any of the material assets owned or used by them
are bound (an "Applicable Contract"). Each Applicable Contract is in full force
and effect and is valid and enforceable in all material respects in accordance
with its terms.
(b) Except as set forth on Schedule 2.12: (i) Entravision or the
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Entravision Subsidiaries, as the case may be, are, and at all times during the
last twelve (12) months have been, in material compliance with the applicable
terms and requirements of each Applicable Contract; (ii) to the knowledge of
Entravision, no event has occurred or circumstance exists that (with or without
notice or lapse of time) would be reasonably likely to contravene, conflict with
or result in a material violation or material breach of, or give Entravision or
the Entravision Subsidiaries, as the case may be, or other Person the right to
declare a default or exercise any materially adverse remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate or modify,
any Applicable Contract; and (iii) Entravision and the Entravision Subsidiaries,
as the case may be, have not given to or received from any other Person any
written notice or other written communication regarding any actual, alleged,
possible or potential material violation or material breach of, or material
default under, any Applicable Contract, which has not been cured, waived or
otherwise resolved in full.
2.13. Compliance with Environmental Laws. Except as set forth on
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Schedule 2.13, (i) all of the operations Entravision and the Entravision
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Subsidiaries are and have been in compliance with all environmental laws as
currently in effect, (ii) neither Entravision, the Entravision Subsidiaries nor
any of their predecessors used, released or disposed of any hazardous substance
in any manner that could reasonably be expected to result in material liability,
(iii) none of the property owned, leased or operated by Entravision or the
Entravision Subsidiaries is contaminated by any hazardous substance, and (iv)
none of the property owned, leased or operated by Entravision or the Entravision
Subsidiaries is affected by any condition that could reasonably be expected to
result in liability under any environmental law as currently in effect.
2.14. Intellectual Property.
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(a) The term "Entravision Intellectual Property Assets" includes the
following proprietary items of Entravision and the Entravision Subsidiaries: (i)
the name and FCC call letters listed on Schedule 2.14, all fictional business
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names, trading names, domain names or URLs, registered and unregistered
trademarks, service marks and applications; (ii) all patents, patent
applications and inventions and discoveries that may be patentable; (iii) all
copyrights in both published works and unpublished works; (iv) all rights in
mask works; (v) all know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology, plans,
drawings and blue prints owned, used or licensed by Entravision or the
Entravision Subsidiaries as licensee or licensor.
(b) There are no outstanding and, to the knowledge of Entravision,
no Threatened material disputes or disagreements with respect to the Entravision
Intellectual Property Assets or any Applicable Contract related to the
Entravision Intellectual Property Assets. The Entravision Intellectual Property
Assets are all those necessary for the operation of the businesses of the
Entravision media properties as they are currently conducted in all material
respects. Entravision and the Entravision Subsidiaries are the owners of all
right, title and interest in and to each of the Entravision Intellectual
Property Assets, free and clear of all material encumbrances, and have the right
to use without payment to a third-party all of the Entravision Intellectual
Property Assets.
2.15. Relationships With Related Persons. Except as set forth in Schedule
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2.15, no "affiliate" (as such term is defined in the rules promulgated under the
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Securities Exchange Act of 1934, as amended (the "Exchange Act")) of a Person (a
"Related Person") of Entravision or the Entravision Subsidiaries has had any
interest in any property (whether real, personal or mixed and whether tangible
or intangible), used in or pertaining to the businesses of the Entravision media
properties. No Related Person of Entravision or the Entravision Subsidiaries
has owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (i) had business dealings or
a material financial interest in any transaction with the Entravision media
properties other than business dealings or transactions conducted in the
ordinary course of business with the Entravision media properties at
substantially prevailing market prices and on substantially prevailing market
terms or (ii) engaged in competition with the businesses of the Entravision
media properties (a "Competing Business") in any market presently served by the
Entravision media properties except for less than five percent (5%) of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market. Except as set forth
on Schedule 2.15, no Related Person of Entravision or the Entravision
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Subsidiaries is a party to any Applicable Contract with, or has any claim or
right against, the Entravision media properties.
2.16. Disclosure. None of the representations or warranties made by
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Entravision (as modified by the Schedules), nor any statement made in the
Registration Statement or any other schedule or certificate furnished by
Entravision pursuant to this Agreement, (to the extent such documents were
prepared by or include information provided by Entravision), contains or will
contain at the Closing, any material untrue statement or omits, or will omit at
the Closing to state
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any material fact necessary in order to make the statements contained therein
not materially misleading.
2.17. Valid Issuance of Note. The Note that is being purchased by the
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Investor hereunder, when issued, sold and delivered in accordance with the terms
of this Agreement for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable, and will be free of restrictions
on transfer other than restrictions on transfer under this Agreement, the Note,
the Investor Rights Agreement and applicable state and federal securities laws.
The units of membership interest issuable upon conversion of the Note purchased
under this Agreement have been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Operating Agreement of the Company,
will be duly and validly issued, fully paid, and nonassessable and will be free
of restrictions on transfer other than restrictions on transfer under this
Agreement and the Operating Agreement and under applicable state and federal
securities laws. The Series A Preferred Stock that may be issued to the
Investor upon exchange of the Note, when issued and delivered in accordance with
the terms thereof, will be duly and validly issued, fully paid and
nonassessable, and free of restrictions on transfer other than restrictions on
transfer under this Agreement, the Investor Rights Agreement and applicable
state and federal securities laws. The Class A Common Stock issuable upon
conversion of the Series A Preferred Stock purchased under this Agreement has
been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Restated Certificate, will be duly and validly issued,
fully paid, and nonassessable and will be free of restrictions on transfer other
than restrictions on transfer under this Agreement and the Investor Rights
Agreement and under applicable state and federal securities laws.
2.18. Registration Rights. Except as provided in the Investor Rights
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Agreement or the Registration Rights Agreement to be entered into in connection
with the Z-Spanish Agreement, the Corporation has not granted or agreed to grant
any registration rights, including piggyback rights, to any person or entity.
2.19. Ownership Condition and Sufficiency of Assets. The material assets
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of Entravision are structurally sound, are of reasonable good operating
condition and repair and are reasonably adequate for the uses to which they are
being put, and none of such assets is in need of maintenance or repairs, except
for ordinary routine maintenance and repairs that are not material in nature or
cost. The assets of Entravision taken as a whole are sufficient for the
continued conduct of its media business in substantially the same manner as
conducted prior to the Closing.
3. Representations and Warranties of the Investor. The Investor hereby
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represents and warrants that:
3.1. Authorization. The Investor has full power and authority to
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enter into this Agreement and the Investor Rights Agreement and each such
Agreement constitutes its valid and legally binding obligation, enforceable in
accordance with their respective terms, except (a) as
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limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (c) to the
extent the indemnification provisions contained in the Investor Rights Agreement
may be limited by applicable federal or state securities laws.
3.2. Purchase Entirely for Own Account. This Agreement is made with
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the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Note, the Series A Preferred Stock to be received by the
Investor upon exchange of the Note, the Class A Units issuable upon conversion
of the Note, and the Common Stock issuable upon conversion of the Series A
Preferred Stock (collectively, the "Securities") will be acquired for investment
for the Investor's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and that the Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Investor further
represents that the Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.
3.3. Disclosure of Information. The Investor believes it has
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received all the information it considers necessary or appropriate for deciding
whether to purchase the Note. The Investor further represents that it has
reviewed the Registration Statement and had an opportunity to ask questions and
receive answers from Entravision regarding the terms and conditions of the
offering of the Securities and the business, properties, prospects and financial
condition of Entravision. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of the Investor to rely thereon.
3.4. Investment Experience. The Investor is an investor in
---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Note. If
other than an individual, Investor also represents it has not been organized for
the purpose of acquiring the Securities.
3.5. Investor Suitability. The Investor represents that it qualifies
--------------------
as an "accredited investor" as such term is defined in Rule 501(a) or Regulation
D under the Securities Act. To be an accredited investor, the Investor
understands that it must fall within one of the following categories at the time
of the sale of Securities to the Investor:
(a) any bank as defined in Section 3(a)(2) of the Securities Act
or any savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary
capacity; any broker or dealer
-11-
registered pursuant to Section 13 of the Exchange Act; any insurance company as
defined in Section 2(13) of the Securities Act; any broker or dealer registered
pursuant to Section 15 of the Exchange Act: any investment company registered
under the Investment Company Act of 1940 or any business development company as
defined in Section 2(a)(48) of the Act; any Small Business Investment Company
licensed by the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions for the benefits of its
employees, if such plan has total assets in excess of $5,000,000; any employee
benefit plan within the meaning of Title I of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a self-
directed plan, with investment decisions made solely by persons that are
accredited investors;
(b) any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(c) any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Note, with
total assets in excess of $5,000,000;
(d) any Executive Committee member or executive officer of the
Company;
(e) any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds $1,000,000;
(f) any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and who has a reasonable
expectation of reaching the same income level in the current year;
(g) any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D; or
(h) any entity in which all the equity owners are accredited
investors as defined above.
3.6. Restricted Securities. The Investor understands that the Note
---------------------
it is purchasing is characterized as "restricted securities" under the federal
securities laws inasmuch as it is being acquired from the Company in a
transaction not involving a public offering and that
-12-
under such laws and applicable regulations such securities may be resold without
registration under the Act only in certain limited circumstances. In this
connection, the Investor represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
3.7. Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Note unless and until the transferee
has agreed in writing for the benefit of the Company to be bound by this Section
3 and the Investor Rights Agreement provided and to the extent this Section and
such agreement are then applicable, and:
(a) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) The Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a reasonably
detailed statement of the circumstances surrounding the proposed disposition,
and (ii) if reasonably requested by the Company, the Investor shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company that such disposition will not require registration of such shares under
the Act. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such Registration Statement or opinion of counsel shall be necessary
for a transfer by an Investor that is a partnership to an Affiliate, a partner
of such partnership or a retired partner of such partnership who retires after
the date hereof, or to the estate of any such partner or retired partner or the
transfer by gift, will or intestate succession of any partner to his or her
spouse or to the siblings, lineal descendants or ancestors of such partner or
his or her spouse, or by an Investor that is a trust to any affiliate or
successor trust or trustee if the transferee agrees in writing to be subject to
the terms hereof to the same extent as if he or she were an original Investor
hereunder.
3.8. Legends. It is understood that the certificates evidencing the
-------
Note may bear legends in substantially the following forms:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT."
-13-
(b) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
4. Conditions of Investor's Obligations at Closing. The obligations of
-----------------------------------------------
the Investor under subsection 1.1 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against the Investor unless consented to
in writing:
4.1. Representations and Warranties. The representations and
------------------------------
warranties of Entravision contained in Section 2 shall be true in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.
4.2. Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement in all
material respects that are required to be performed or complied with by it on or
before the Closing.
4.3. Compliance Certificate. The Chief Financial Officer of the
----------------------
Company shall deliver to the Investor at the Closing a certificate stating that
the conditions specified in Sections 4.1 and 4.2 have been fulfilled and stating
that, except as set forth in the Registration Statement, there shall not have
been any material adverse change in the assets, liabilities or properties of the
Company since January 1, 2000.
4.4. Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Note pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
4.5. Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investor or to the Investor's special counsel, as the case may
be, and they shall have received all such counterpart original and certified or
other copies of such documents as they may reasonably request.
4.6. Opinion of Company Counsel. The Investor shall have received
--------------------------
from Xxxxxx Xxxxxx Xxxxxxx XxXxxxxx Xxxxxx & Fognani, L.L.P., counsel for the
Company, an opinion, dated as of the Closing, in the form attached hereto as
Exhibit "D."
-----------
4.7. Investor Rights Agreement. The Company and the Investor shall
-------------------------
have entered into the Investor Rights Agreement.
4.8. Consents and Waivers. The Company shall have obtained on or
--------------------
before Closing any and all consents, permits and waivers necessary for
consummation of the
-14-
transactions contemplated by this Agreement, including, without limitation,
consent of the Company's senior lender and Univision Communications, Inc.
4.9. LCG Acquisition. The LCG Acquisition Agreement shall be in full
---------------
force and effect and Entravision shall be proceeding diligently to close the LCG
Acquisition within forty-eight (48) hours of the Closing.
4.10. Z-Spanish Merger Agreement. The Z-Spanish Merger Agreement
--------------------------
shall have been executed and shall be in full force and effect.
4.11. Management Rights Letter. Entravision will execute and
------------------------
deliver a Management Rights Letter substantially in the form of Exhibit "E"
-----------
attached hereto to TSG Capital Fund III, L.P.
5. Conditions of the Company's Obligations at Closing. The obligations
--------------------------------------------------
of the Company to the Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Investor:
5.1. Representations and Warranties. The representations and
------------------------------
warranties of the Investor contained in Section 3 shall be true and correct on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2. Payment of Purchase Price. The Investor shall have delivered
-------------------------
the purchase price as specified in Section 1.2.
5.3. Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6. Certificate of Designation. Prior to the automatic exchange of the
--------------------------
Note for Series A Preferred Stock as provided for in Section 8 of the Note, the
Company shall file the Certificate of Designation of Series A Preferred Stock in
the form attached hereto as Exhibit "F."
----------
7. Miscellaneous.
-------------
7.1. Termination by the Investor. If the Company does not timely
---------------------------
satisfy the conditions to closing set forth in Section 4.9 and 4.10 above, the
Investor may terminate its commitment to purchase the Note by delivery of
written notice to Company.
7.2. Survival of Warranties. The warranties, representations and
----------------------
covenants of Entravision and the Investor contained in or made pursuant to this
Agreement shall survive the
-15-
execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investor or the Company.
7.3. Successors and Assigns. Except as otherwise provided herein,
----------------------
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.4. Governing Law; Submission to Jurisdiction; Venue. This
------------------------------------------------
Agreement shall be governed by, and construed in accordance with, the law of the
State of New York. All judicial proceedings brought against Entravision or the
Investor with respect to this Agreement shall be brought exclusively in any
state or federal court of competent jurisdiction in New York County, New York,
and by execution and delivery of this Agreement Entravision accepts, the
exclusive jurisdiction of the aforesaid courts for such purpose. Entravision
hereby waives any claim that New York County, New York is an inconvenient forum
or an improper forum based on lack of venue. The exclusive choice of forum for
Entravision as set forth in this Section 7.4 will not be deemed to preclude the
enforcement by the Investor of any judgment obtained in any other forum or the
taking by the Investor of any action to enforce the same in any other
appropriate jurisdiction.
7.5. Counterparts; Facsimile. This Agreement may be executed in one
-----------------------
or more counterparts, all of which when fully executed and delivered by all
parties hereto and taken together shall constitute a single agreement, binding
against each of the parties. To the maximum extent permitted by law or by any
applicable governmental authority, this Agreement may be signed and transmitted
by facsimile with the same validity as if it were an ink-signed document. Each
signatory below represents and warrants by his or her signature that he or she
is duly authorized (on behalf of the respective entity for which such signatory
has acted) to execute and deliver this instrument and any other document related
to this transaction, thereby fully binding each such respective entity.
7.6. Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.7. Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by facsimile or by overnight courier or upon deposit with the United
States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such party on
the signature page hereof, or at such other address as such party may designate
by ten (10) days' advance written notice to the other parties.
-16-
7.8. Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finder's fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Investor from
any liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.9. Expenses. Each party shall pay all costs and expenses that it
--------
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement. Notwithstanding the foregoing, (a) if the Company does not
satisfy the conditions of closing contained in Section 4.9 and 4.10 above, and
the Investor terminates its commitment pursuant to Section 7.1 above, the
Company shall reimburse the Investor for documented costs reasonably incurred up
to a maximum of Fifty Thousand Dollars ($50,000); and (b) if the transactions
contemplated hereby are completed, the Company will pay the reasonable fees and
disbursements of one special counsel for the Investor, in connection with the
preparation, negotiation, execution and delivery of this Agreement, the Note and
the other Transaction Agreements and any amendment, waiver or consent, or
request therefor, under this Agreement, the Note or any Transaction Agreement.
If any action at law or in equity is necessary to enforce or interpret the terms
of this Agreement, the Investor Rights Agreement, or the Restated Certificate,
the prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.10. Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the principal amount of the Note. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
7.11. Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
-17-
7.12. Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
[Remainder of Page Intentionally Left Blank]
-18-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Company ENTRAVISION COMMUNICATIONS COMPANY, L.L.C.,
a Delaware limited liability company
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------------------
Xxxxxx X. Xxxxx, Chairman, Chief Executive Officer and
Managing Member
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------------------------------
Xxxxxxxx X. Xxxxx, Chief Financial Officer
Corporation ENTRAVISION COMMUNICATIONS CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------------------
Xxxxxx X. Xxxxx, Chairman and Chief Executive Officer
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------------------------------
Xxxxxxxx X. Xxxxx, Chief Financial Officer
Investor TSG CAPITAL FUND III, L.P.
By: TSG Associates III, LLC, its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------------------
Name:
-------------------------------------------------
Title:
------------------------------------------------
[Signature Page to Convertible Subordinated Note Purchase Agreement]
Schedule A Investor
Schedule B Schedule of Exceptions
Schedule 2.2(c) Required Third Party Consents
Schedule 2.4(b) Pro Forma Fully-Diluted Capitalization Table
Schedule 2.4(d) Options, Convertible Debentures, Contracts for Sale of
Securities and Voting Trusts
Schedule 2.5 Corporate Structure and Capitalization
Schedule 2.6 Financial Statements
Schedule 2.7 Potential Liabilities
Schedule 2.9 Employee Benefit Plans
Schedule 2.10 Compliance with Legal Requirements
Schedule 2.12 Material Contracts
Schedule 2.13 Environmental Law Compliance
Schedule 2.14 Intellectual Property
Schedule 2.15 Relationships with Related Persons
Exhibit A Exchange Agreement
Exhibit B Investor Rights Agreement
Exhibit C Convertible Promissory Note
Exhibit D Opinion of Counsel
Exhibit E Management Rights Letter
Exhibit F Form of Certificate of Designation
The registrant hereby agrees to furnish a copy of any omitted schedule or
exhibit upon request.
INVESTOR
--------
TSG Capital Fund III, L.P.
Attention: Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
SCHEDULE "B"
SCHEDULE OF EXCEPTIONS
----------------------
EXHIBIT "A"
EXCHANGE AGREEMENT
------------------
EXHIBIT "B"
INVESTOR RIGHTS AGREEMENT
-------------------------
EXHIBIT "C"
CONVERTIBLE PROMISSORY NOTE
---------------------------
EXHIBIT "D"
OPINION OF COUNSEL
------------------
EXHIBIT "E"
MANAGEMENT RIGHTS LETTER
------------------------
EXHIBIT "F"
FORM OF CERTIFICATE OF DESIGNATION
----------------------------------
